Bits Bucket For February 11, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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I thought Suzanne researched this, and this is single-family homeowners. I wonder how the condo crowd is doing?
41 percent of South Florida homeowners owe more than their homes are worth
By Paul Owers
Sun-Sentinel Staff Writer
Posted: 8:29 a.m. Wednesday, Feb. 10, 2010
Roughly four in 10 single-family homeowners with a mortgage in South Florida owe more than the property is worth, Zillow.com said Wednesday.
About 41 percent of the 836,723 single-family home mortgages in Palm Beach, Broward and Miami-Dade counties are “underwater,” according to a fourth-quarter report from Zillow. The Seattle-based real estate firm compiles data from public property records.
The percentage of borrowers with so-called negative equity has decreased slightly since it hit 47 percent in the second quarter of last year. It dropped to 46.2 percent in the third quarter. Still, the problem here remains far greater than it is nationwide, where 21.4 percent of single-family mortgage holders are underwater.
Because prices have fallen so far, it will take a decade or longer for many of these borrowers to sell their homes for what they paid. But some won’t wait around and instead will walk away from the mortgages, adding to the glut of foreclosures.
“…it will take a decade or longer for many of these borrowers to sell their homes for what they paid.”
That’s gotta be a bitter pill to swallow for boom time aspirational buyers and other upwardly mobile types. Puts a crimp on all those magnificent plans to retire at 45!
Retire, sell their homes, and, what, move to Florida?
But, but … they already live in Florida. Why not just keep their homes and be done with it?
“41 percent of South Florida homeowners owe more than their homes are worth.”
You could probably make the same statement about drivers and the new cars they just drove off the lot.
Which means drivers should turn around and sell their cars as soon as they become underwater so they can go buy new ones?
I don’t think many people thought their car would finance their retirement.
Real estate only goes up. Cars go down, silly.
Given the new reality of the eternally mobile/freelance/outsource-at-any-moment workforce, I predict that 90% of these people will walk away at some point. Nobody can keep a job or stay healthy for that long.
In my neck of the woods (website development for universities), you can freelance from anywhere. Right now, I’m dealing with clients in Arizona, Iowa, and Michigan.
However, I’m the sort of freelancer who’s ideally suited for such a thing. I do project-based work. Which means that my clients don’t need me on an ongoing basis. Once the project’s done, my smiling face goes away.
If the work isn’t project-based, my little business model just doesn’t fly.
Yeah, we know. Things are bitchin’ for ya. Congrats.
Yeah, we know. Things are bitchin’ for ya. Congrats.
No need to be snarky… we have too much “doom and gloom” on this blog at times. We should celebrate our successes.
Anecdotally, the tech market is doing quite well here in Boston. I started looking for a new job the first week of Jan, applied to three positions local to Boston, had multiple interviews for those jobs over the last few weeks and just received offers on two of them. Compensation for both is approx. 15 percent higher than my current position. I’m a senior-level staffer, already earning low six-figures, so to say that companies aren’t hiring or are paying lower comp packages because of weakness in the labor market is not accurate. Tech, in the right geographic areas, with the right skill-set and experience is doing just fine.
We’ve had about 50 percent turnover in development at my current company over the last two months, and every one of those developers took a job for higher comp than they were earning here… some in Boston, some in San Francisco. Additionally, my company is hiring .Net developers in San Francisco and paying top dollar for them. One of the companies I was offered a job with, RSA, is hiring 9 software developers in Boston. There are jobs people, you just have to have the right skillset and be looking in the right places…
I’m strictly an hourly, sit-at-my-desk-in-my-cube-and-do-things-to-things-to-make-things-happen type of worker (i.e., code charges or collect money from insurers, and I’m good at both), but I have always wondered how freelancers find their next gigs or projects. Do you have your own websites and people contact you ? Just wondering.
Or maintain their income levels.
Yes. They HAVE to walk. Or be foreclosed.
As I’ve said, at some point, rising prices had to cross the vector of falling wages, and for a consumer driven economy, that means “game over.”
The day to day reality will a slow but steady decline in our standard of living. Much like the proverbial frog in the slowly heated pan of water, we’ll never know something is wrong until it’s too late.
“The percentage of borrowers with so-called negative equity has decreased slightly since it hit 47 percent in the second quarter of last year. It dropped to 46.2 percent in the third quarter.”
With everything that has been thrown at this, Help for homeowners, eight grand for first time buyers ect. It dropped from 47 to 46.2 percent.
All the kings horses and all the kings men, couldn`t put Humpty together again.
It would have probably dropped much faster without anything being thrown at it, as more people would have elected for the 0 equity solution. From the PTB standpoint, that small drop is a grand success.
“the 0 equity solution” LOL!
Didn’t Sir Arthur Conan Doyle write that? You-are-correct-Sir! With our tax code carefully crafted to insure no aspect of RE doesn’t benefit to the full.., that equity part was just the icing on the cake.
7% Solution? A little help here?
Nicholas Meyer wrote the 7% solution.
Arthur Conan Doyle *did* write it, as a snippet of dialogue in the beginning of one of the earlier Holmes stories. The good Dr. Watson browbeats Holmes for jacking up and Holmes answers “It is a 7% solution.” Just then an exciting case comes in, so the subject is dropped.
[/lapsed Sherlockian scholar]
Googled it for ya. It’s in the beginning of The Sign of the Four:
I suddenly felt that I could hold out no longer.
“Which is it to-day?” I asked. “Morphine or cocaine?”
He raised his eyes languidly from the old black-letter volume which he had opened. “It is cocaine,” he said; “a seven percent solution. Would you care to try it?”
“that small drop is a grand success.”
At what cost?
jeff saturday,
( And I can’t believe I’m ‘doing’ this? )
In fairness to Suzzane, I don’t believe it was ever the thrust of that NAR ad/propaganda campaign to suggest that Suzzane was in any qualified to make macro-economic calls?
Just local comps, schools, prop. taxes etc. Come to think of it, had they stuck to that, we wouldn’t all be f’d now would we?
NAR Issues More ‘Now Is a Great Time to Buy’ Propaganda
Published Nov 15, 2007
The National Association of Realtors (NAR) is working overtime to convince potential buyers to step up and buy into the tanking housing market. In addition to penning a number of misleading press releases, the association has spent a ton of money on a public awareness campaign that relies on skewed data and bogus claims.
When the air began to seep out of the housing bubble in 2006, the NAR launched an aggressive media campaign using the catch phrase, ‘It’s a great time to buy or sell a home.’
The NAR kicked off the 2007 campaign at the beginning of this month. To get their desperate pitch across, the association has assembled a number of radio, television and newspaper ads.
All of the ads are geared towards would-be homebuyers who are sitting on the sidelines and waiting to see what the market will do. The majority are filled with fuzzy facts and misinformation.
NAR ad are in quotes, commentary follows:
‘ If you have been waiting for the right time to buy a home, you should know the facts about home ownership. Right now, interest rates are still at historic lows, conventional financing is available, and FHA mortgage applications are on the rise. The more you know the more you’ll realize it’s a decision you shouldn’t postpone any longer.’
‘On average, the value of a home nearly doubles every 10 years. That’s a return most investments can’t match.’
That is an outright lie. Although home valuations have increased, returns aren’t that impressive. The real returns on housing between 1890 and 2004 were a very modest 0.4 percent a year. There are many investment opportunities that could have easily matched that return in the same period.
‘Homeownership is key to climbing up the economic ladder. When you own a home, you’re essentially paying yourself and building up equity.’
First off, a renter can invest money wisely and climb the ‘economic ladder’ just like a homeowner can. Second, you do not begin ‘paying yourself’ until you own a home outright. Until then, you pay a lender for loaning you money. Finally, you can’t build equity when home prices are falling at unprecedented speed.
‘Very few people look back and regret their decision to purchase a home.’
The 635,159 people who filed for foreclosure in the third quarter of this year could probably argue this point. (’nuff said.)
More NAR High Jinks
The quotes shown above were from a national ad. Sunday’s LA Times carried an alternate version of the same ad with an interesting edit:
‘You might wonder if buying a home is a smart financial decision these days, given some of the misinformation presented in the national media. Your local realtor associations want you to know that in the second quarter of 2007, over 22,000 homes were sold in the Los Angeles area.’
Misrepresentation? If anything, the national media has under-reported the severity of the issues affecting the housing market. This is why so many people are turning to sites like this one, Patrick.net, and The Housing Bubble Blog to get the full story.
The media did not cause the housing crash; it was the disconnect between home prices and fundamentals, lax lending standards, the Federal Reserve, and greed. If buyers are nervous it’s because they should be nervous.
As for the 22,000 homes sold in the Los Angeles area during the second quarter–well, that part is true. Of course, the NAR forgot to mention that the LA home sale market collapsed in August. According to HomeData Corp, Los Angeles home sales fell 50 percent compared to the previous year.
Bottom Line
Before you believe the fodder spouted by the NAR, remember that they are a trade organization and that their members are realtors.
Realtors are in the business of selling houses. As far as they and the NAR are concerned, there is no such thing as a bad time to buy.
Because prices have fallen so far, it will take a decade or longer for many of these borrowers to sell their homes for what they paid.
Didn’t it take until the most recent bubble for Florida real estate sold during the mid 1920’s bubble to return to its peak inflation adjusted mid 1920’s value? Most likely this time as in the 1920’s, the buyers won’t live long enough for values to recover.
For the next bubble, we patiently wait. Don’t make us wait too long, Mr Bernanke - and don’t you forget we are the “instant gratification” generation.
“Roughly four in 10 single-family homeowners with a mortgage in South Florida owe more than the property is worth, Zillow.com said Wednesday.”
Citibank is going to take the underwater houses back, so its all good. (see CarrieAnn’s thread below for details)
I thought Suzanne researched this
The only thing Suzanne researched was what she was going to do with her commission.
No she also researched about 100 Glamour Shots and picked one for her business card. She was really busting @ss.
Well c’mon! Would you want an ugly chick to sell your house?
Considering Zillows price estimates in MY neighborhood, I’d guess that the actual number is North of 50%.
Property Tax Assessors, Anchorage AK version…
So yesterday I went to appeal my municipal property valuation, which seems to go up yearly despite a down market real estate market for the past two years.
Turns out that the city had “mistakenly” measured the dimensions of my house and decided it was 600 sq ft. bigger than how they had measured it for the last 30 years, even though I removed a deck and did no other modifications. Apparently the “increased” square footage increased the price of the house proportionately from what I actually paid. Huh?
Also turns out that even though Alaska is a non-disclosure state for property values, some realtard reported my property sales price to the MLS, and they got it from an unnamed “someone” who reported the sales price in the most recent assessment, and were now using it as comps. They couldn’t tell me who, why or when this person violated my confidentiality. Strike two.
Finally, the local comps they used are all less than the price of my house, but because the comps were all houses that sold in the past year, they instituted a “correction factor” that increased their value to reflect the dollar value of the cost of my home at the time I bought it. Huh?
It was all so confusing I thought my head was going to explode. Municipalities are really getting desperate and devious in making sure that property tax revenues continue to increase despite a down housing market. I’m just curious if anyone else has noticed bizarre shenanigans from their local property tax assessors.
luckily they did the assessments here before everyone realized how broke the govts are.
In Montana,
There are a whole bunch of people with their panties in a knot up there. The area around Whitefish lake especially. I know the Google boyz can make the nut no problemo but the old locals are getting hurt pretty bad. I’ve got a little land in the Swan so I stay up on the local issues.
I’m just curious if anyone else has noticed bizarre shenanigans from their local property tax assessors.
We have a new state law requiring taxpayers to pay 55 percent of last year’s property tax bill in the first installment instead of the usual half.
In my county, the remainder of what homeowners owe can’t be calculated until 400,000 assessment appeals are heard, which will push back second installment due dates perhaps until January 2011.
As a result, homeowners are forced to pay bigger first-installment property tax bills just three months after last year’s delayed second-installment bills were due.
(Our property tax bills are already higher than many states, I think because much of that revenue is earmarked for education funding.)
Ouch!
I was able to get my prop tax bill lowered by 10%.
Comps do come in handy. A much nicer house across the street sold for 375K after being on the market for 3 years. Its ‘Z-estimate’ is still a whopping 420K (down from 460K a few months ago).
One could hear some groans when those first installment bills went out! In typical form, Huberman just told Springfield that CPS is facing “doomsday”. So, the groundwork is being laid for a double whammy next year - state income (50%) and property tax (who knows how much) increases!
There’s a big hurt coming, and there is no getting around it this time. It might be frustrating at times, but one needs to stay lean, mean, and liquid until this plays out.
Oh, those wildly painted condo towers at the Bryn Mawr Red Line stop made a segment on WBEZ a few weeks back. Some of their on air personalities live in the neighborhood and they reported how the developer undercut 2006 vintage buyers by amounts approaching 50% in an auction last summer. The walkaways have now started there and it ain’t good for the ‘hood.
Closer to home, two units in my tier just listed in JAN. Their agents advised pricing below $100k - but there’s a direct foreclosure comp of $60k - so it’ll be interesting to watch! I’ve decided to stay put and enjoy my front row seat to all this. Things are hitting full force here now. How’s it by you?
Things are hitting full force here now. How’s it by you?
There’s not much up for sale around me. The two condos on my block keep putting up and taking down sales signs — I’ve lost count of the number of times that’s happened. I mentioned a few weeks ago that my wife’s boss turned down a job in the NYC area because he discovered he’s slightly underwater on his Lincoln Square single family home (a nice one, IMO).
A friend of ours just won a HUD foreclosure auction for a two-flat around California and Augusta for $40K. She is a contractor, veteran rehabber / DIY queen. She is waiting for an inspection by a structural engineer before signing the papers. If she walks, she’s only out a $100 deposit + the engineer’s fee ($300-400, I believe). If she buys it, there’s a lot of work ahead — but she’s capable of doing it.
ET, this is actually good news to me. It means our taxes didn’t go up as much as I thought.
The local funding of schools through property taxes is a major source of inequality in education throughout northern Illinois. Good schools keep home prices up and in turn the high taxes on those homes keep the money flowing to the schools. Meanwhile the less affluent districts have less money to spend per student. It’s a classic chicken-egg story.
Fed in Talks With Money Market Funds to Help Drain $1 Trillion.
Feb. 11 (Bloomberg) — The Federal Reserve is in talks with money-market mutual funds on agreements to help drain as much as $1 trillion from the financial system as policy makers prepare for the first interest-rate increase since June 2006, according to a person familiar with the discussions.
The central bank is looking to the $3.2 trillion money- market mutual-fund industry because the 18 so-called primary dealers that trade directly with the Fed have a capacity limited to about $100 billion, estimates Joseph Abate, a money-market strategist at Barclays Capital in New York.
Can they perhaps talk with the U.S. Treasury about theirs?
This passage makes no sense to me at all. Could someone translate, please?
“Could someone translate, please?”
It means the war on savers is turning.
Not helpful, dearie.
Does this mean Treasury is going to borrow money market funds? Maybe that conspiracy theory that Obama will (effectively) have access to our checking accounts is true after all?
Maybe it would have been better if Paulson and Bernanke had just nationalized the banks, socialism or no. Turn the banking over to some $150K government bureaucrats. At least the government workers aren’t taking home billions in bonuses.
Okay, I’ll give it another shot: The Fed wants to drain $1 trillion from the nation’s money supply. The Money Market funds only have the capacity to handle $100 billion of this amount. So the Fed is trying to figure out other ways to get the draining done.
Draining money from the system makes money scarce. Scarce money rewards savers, punishes debtors.
Did they look at selling some of their worthless debt for the nothing that it is worth?
Wouldn’t restoring ‘mark to market’ drain a lot of liquidity? Too much, maybe?
Many they want them to buy goldman stock or even citi?
Combo, are you suggesting that the Fed is trying to deflate on purpose by doing a poof-a-thon on money market funds? My understanding is that money market funds are real money, painfully earned by J6P, taken painfully from each paycheck. Not money created by derivatives. They want to poof labor money? How can you reward savers by poofing their real money? If I wanted to destroy a cool trill, I’d send my consigliari directly to Freddie Mac with a shiv (as alpha sloth suggests).
The primary dealers don’t have a trillion.
Give MMFs a relatively safe place to park a lot of money which will remove liquidity at the same time.
The Fed isn’t currently talking about transferring assets, just CASH (liquidity).. MMFs use their cash to buy Fed paper, liquidity is reduced.
However, back in 09 the FED was suggesting the use of
reverse repurchase agreements involving some of the huge portfolio of mortgage-backed securities and U.S. Treasuries that it acquired as it fought the financial crisis. Suspect this could still be on the table.
Wonder if the new rules that allow for the freezing of distributions from MMF is laying the ground work for the BB plan.
Combo, are you suggesting that the Fed is trying to deflate on purpose by doing a poof-a-thon on money market funds? My understanding is that money market funds are real money, painfully earned by J6P, taken painfully from each paycheck. Not money created by derivatives. They want to poof labor money? How can you reward savers by poofing their real money? If I wanted to destroy a cool trill, I’d send my consigliari directly to Freddie Mac with a shiv (as alpha sloth suggests).
I think you’re right. This isn’t something that’s going to be easily done by the Fed - at all. Money market funds? Nope - well’s not deep enough. Treasuries? Nope - see deficit projections. MBS? Nope - will crash the housing market again.
Rock and a hard place. That money’s going to be out there for a long, long time.
Probably what’s going to end up happening is it’ll come out of equities. In other words - I’ll bet there’s another big leg down coming in stocks. Like maybe a really, really big leg.
Just conjecture though.
All the fed needs to do is take money off the street.. some trillion has to be removed..
If the MMFs will play along and buy stuff from the fed, the money has effectively disappeared from the economy. Buying and selling stuff is how the fed regulates the money supply.
This particular tactic, using the deep pockets of the MMFs, is nothing special. While it remains to be seen if a deal can be worked out, the MMFs do need someplace safe to invest tons of cash.. and the fed is a good spot.
——
The ultimate purpose is to raise interest rates. Less cash in circulation makes the available cash more precious, and that should force rates up (in a perfect world).
If there’s a problem, it’ll be that the economy in general still sucks so bad nobody can “charge more” for lending money, and interest rates DO NOT rise as expected.
God I hope so. I made $0.10 in interest on my money market account with Vanguard in January on almost $3000. I’m pretty sure that extra dime can still buy some bubblegum.
Just over a year ago (Second half of 2008), I was earning 3.5% on FDIC insured Money Market accounts (XXXXXX First National Bank), By the end of the first quarter of 2009 it had dropped to 75 baisis points.
It makes it tough to do any retirement planning. There just are no safe places to put money that will earn any kind of return.
It makes it tough to do any retirement planning.
What’s this retirement thing you speak of?
That’s the goal: no “safe” investments = people have to gamble in the various markets and lose their money to the Wall Street crooks. Preventing retirement is only part of it; they don’t want us to keep any of our wealth.
My retirement plan is to live in my son’s basement.
ING is paying 1.25% on their FDIC insured money market. You would have made about $3.00 there.
The only problem is your son’s backup plan is to live in your basement.
OK, so they’ll share the basement.
So are you all trying to say that maybe, just maybe, privatizing Social Security might be a bad idea?
I think the FED wants to raise rates on Money Market funds so banks will deposit money in these funds instead of loaning it out. Less loans = less money in circulation
right now money funds pay about 0% so banks are not paid to save money but are being encourged to loan it the FED may want to slow this down.
No I don’t know who besides the FED ( by buying Treasuries)banks are loaning money to
That won’t happen.
They’ll somehow “drain” the trillion dollars from our savings: the hose to inflate the next Bubble will never be unplugged, IMHO.
Whats are these “savings” you speak of sir?
Aren’t MMF supposed to be liquid? Unless the Fed agrees to liquefy the securities at a moments notice, why would MMFs want to buy illiquid MBSs from the Fed? Furthermore, doesn’t this arrangement defeat the intended purpose of draining liquidity?
Fannie Mae, Freddie Mac Loan Purchases May Spur ‘Wad of Cash’
Feb. 11 (Bloomberg) — Fannie Mae and Freddie Mac’s plan to step up purchases of delinquent loans may boost prepayments on their securities to rates that in some cases would erase all of the debt within a year.
The constant prepayment rate, or CPR, for Freddie Mac’s 30- year fixed-rate securities with 6.5 percent coupons will likely surge by 70 this month under the plan released yesterday by the McLean, Virginia-based company, based on Bloomberg calculations. The measure, which was 17.2 last month, represents the share of the debt that would be retired in a year at the current pace.
Freddie Mac said yesterday that it would buy “substantially all” loans with payments late by 120 days or more from its securities in the next month. Fannie Mae said later that it will “increase significantly” its buyouts, setting a less aggressive timeline. The value of Freddie Mac’s delinquent loans is $70 billion, while Fannie Mae has $130 billion of the debt, according to Citigroup Inc. data.
I read this three times and still can make no sense of it. Can anybody explain?
yeah it’s pretty deep today…
Guessing, but maybe they’re buying back defaulting securities that they sold to investors, instead of paying out the insurance.
Whether I’m right or not, it definitely involves big losses for Fannie/Freddie/taxpayers.
As I read I think they are buying more bad loans from other banks so the taxpayer can take the loss via tarp.Freddie and fannie have a blank check from uncle sam.What a scam.
Fannie and Freddie absorb all losses on the mortgage securities they issue, not the investors in those securities. F&F’s primary business is a loan guarantee business and they clip a fee (insurance premium) from every mortgage, say 25 basis points, to issue that guarantee. As loans go delinquent, F&F must buy the loan from the securitization at 100 cents on the dollar. I am assuming that F&F didn’t have the capital to buy delinquent loans for awhile, but with the new Treasury Dept unlimited commitment to F&F, they now have the capital. So to investors in the securities a default looks like a prepayment, principal is being paid out and the mortgage pool shrinks by the loan amount. A backlog of delinquent loans being bought out in one month creates a huge monthly prepayment rate.
So if we read into this action, a set-up for cramdowns of epic proportions is occurring?
Oh, please can we have a cramdown of epic proportions? Pretty-please with a cherry on top?
Another possibility,
F/F et al. start renting the buildings out to their former ‘owners’ at well below market rent. They do this for several years until the banks have slowly unloaded any houses on their books. Then F/F start selling.
This is the most unjust way I can see it playing out, and thus is my prediction.
pretty hard to rent out an overgrown craphole with leaks and no appliances.
Pressboard, will be worse than that.
Will probably be debt forgiveness.
No bankruptcy involved.
Then perhaps a good measure of taxes to help pay for this generalized insolvency.
Remember the democrats mantra: throw money at a problem till it goes away.
Not sure what the hell the repubs mantra is. Probably “Jesus made me do it” or some such nonsense.
Since most of the debt is unrepayable they might as well forgive it and start over.
No Colorado, We might as well procede with liquidation of the bad debt and allow the asset values to crash. The bond holders, stock holders take a bath. A bunch of pension funds fail. Housing becomes affordable. New banks replace the insolvent ones. FDIC bailout out depositiors only.
The current approach is leading to more inequity in the system. Rewards foolish and risky behavior. Leading to more foolish and risky behavior in the future.
The current plan is rewarding investors that sought yeild in the bond market, largely rich folk, allowing people who overspent to keep homes and punish people who were saving for the future.
Further the system is still rewarding banks that run on the brink of insolvency.
Think about it. You have a bunch of houses no one can afford so you split the mortgage on to the community. That is the current proposal. Bank gets made whole. Bond holder gets made whole. Those of us that made prudent decisions or god forbid, were retired get crushed by the debt. And the debt is crushing. One of those over priced clunkers could easily take out the finances of three families.
I think FNM and FRE are buying back non-performing loans from the securities that they created and sold on the open market, thus improving the performance of the security. While this may increase the likelihood that future securities get bought by the private market, I have to wonder where FNM and FRE get $200B to repurchase these things.
What, you didn’t feel that tug as your wallet was pulled out of your hip pocket?
Had to drive to San Jose yesterday and was listening to a talk radio show. Topic “Save the PIGS”. We (world banking system) need to bail out the PIGS to survive. Who or what are the PIGS? Portugal, Italy, Greece and Spain.
You forgot Ireland. Which turns PIGS into PIIGS.
And what about Iceland. PI3GS?
GIIPSIs?
Shouldn’t USA be included with this bunch since they were already bailed out every which-way? Cute acronyms aside…
PIGIIS, here pigiis, pigiis, pigiis
Your right little pigiis, the slop bucket is only half full today. Time to go on a financial diet.
You’ve got to wonder how the euro zone can hold together. Assuming the Greeks get bailed, then none of the rest of the PIGS, or any other member, is going to do a damned thing until they get theirs. Can you see the massive Gallic shrug (mais, non!) and the foot-stomping Teutonic tantrum (nein, nein, nein!) on the horizon? After all, these countries are well-known for looking out for their own, first and foremost.
From a MSN slide show:
“According to the European Central Bank, half of the 16 euro area countries are assessed as high risk in terms of the sustainability of their public finances. These include Ireland, Greece, Spain, Cyprus, Malta, the Netherlands, Slovenia and Slovakia.
Belgium, Germany, France, Italy, Luxembourg, Austria and Portugal are assessed as medium risk, while Finland is the only euro area country that is assessed as low risk.”
Does that mean Finland will get to bail out the other 15?
Who bails out Finland?
“After all, these countries are well-known for looking out for their own, first and foremost.”
Sounds prudent to me. If your whole street is on fire you extinguish your fire first. Then you help your neighbors.
I think Greece should play hardball like Wall Street. They should slash taxes on the entire population. Then state that many suggest this will increase revenue to the state, they can use FOX NEWS clips as evidence. Then they should increase spending. Then they should start yelling that “This sucker could go down” if you don’t bail us out.
SV guy has a point. And it’s the same point that the flight attendants are making when they tell you to put your oxygen mask first.
Then the euro would be Finnished …
“Who bails out Finland?”
I’m sure after all the other countries are bailed out they will have spectacular recoveries and be able to bail out Finland. Absolutely, positively no problem. Unless of course they all sink together.
measton,
E-mail that suggestion to George Papandreou. You must.
What happens when this turns into a list of about 35 countries? Will we have PIUILSSEFGRIKMCBCJKAPECAGS?
It appears that Germany and France will bear the burden of bailing out profilgate Greece, where 1 out of 6 workers is a government employee, women retire at age 60 (men have to wait until 65 for their guaranteed government pension), and tax evasion is a national sport. Needless to say, your Germans aren’t too happy with the idea of footing the bill for a system like Greece’s. But balance that with the concept of the euro going under, especially since Germans loved their deutschmark. Merkel has no good options.
http://news.yahoo.com/s/ap/20100209/ap_on_bi_ge/eu_europe_financial_crisis
it will be similair to when America bails out CA
no good options
I’ve proposed this before.
Get some budget agreements in place to balance out the spending and run a surpluss. Have the treasury refiance the debt at the fed funds rate and pay that down.
Has to be a plan tword solvency. No running up new debt.
Would free up a lot of money that is funneled back to wall street so the urge to run up more debt might be contained along with the balanced budget agreement.
On a positive note: they should do this behind doors while taking a very hardline stance. Hopefully GS will eat it on a bunch of credit default swaps.
Looking forward to that… CA is no fun without green shoots of liquidity to blow…
Welcome to the next phase of world socialism. Phase 2 - a tie-together of continental financial systems - appears to be complete.
“Corporate socialism.”
Because J6P will never see any benefits of it.
Riiiiiggghhttt…. The decades long push toward deregulation and globalization is actually socialism.
I don’t care anymore. I got gold.
Riiiiiggghhttt…. The decades long push toward deregulation and globalization is actually socialism.
Pretty much, yes. Well, except apparently they have you fooled as well about the whole “deregulation” thing. Don’t worry - it’s happened to a lot of people.
Here’s a hint - deregulation by its very nature includes shrinkage of government. And guess what? This ain’t no frightened turtle.
(google “Seinfeld” and “frightened turtle” if you don’t get my reference)
Since team bozo and company have no clue what makes business’s tick. It comes as no surprise that ‘they’ would be in a hurry to pass a bill that will do nothing but cost money. Just trying to make Barry look good.
PROMISES, PROMISES: Jobs bill won’t add many jobs. (AP)
WASHINGTON – It’s a bipartisan jobs bill that would hand President Barack Obama a badly needed political victory and placate Republicans with tax cuts at the same time. But it has a problem: It won’t create many jobs.
Even the Obama administration acknowledges the legislation’s centerpiece — a tax cut for businesses that hire unemployed workers — would work only on the margins.
As for the bill’s effectiveness, tax experts and business leaders said companies are unlikely to hire workers just to receive a tax break. Before businesses start hiring, they need increased demand for their products, more work for their employees and more revenue to pay those workers.
“We’re skeptical that it’s going to be a big job creator,” said Bill Rys, tax counsel for the National Federation of Independent Business.
“WASHINGTON – It’s a bipartisan jobs bill that would hand President Barack Obama a badly needed political victory and placate Republicans with tax cuts at the same time. But it has a problem: It won’t create many jobs.”
I’m not sure it’s in the public interest for Barack Obama or the Republicans to obtain a political victory. Up to the present moment, every single change, initiative, or proposal from the Obama camp or the Republicans has meant an unmitigated disaster for the public. All aspects of current economic policies DEEPEN, PROLONG, AND WORSEN the Greater Depression the paid-for MSM tries so desperately to mask. “Extend and pretend” is not a viable answer to the Housing Bubble, of course. “Extend and pretend” is simply a large and politically connected criminal conspiracy. Most of the Bush and Obama administrations should already be facing criminal charges, in my opinion.
We may have already crossed the point where a majority of Americans understand that neither the Democrats or Republicans will deliver a better future for themselves, their children, or grandchildren. Watch for the MSM and PTB to furiously oppose all movement to independent thinking and voting, and to continuously promote One World Government and Economy views and treaties to try the fuse the status quo into a Thousand Year Reign of the embedded elite.
wmbz,
In a curious turn of events, my wife explained their employer’s parking lot was a complete mess yesterday! So I asked why?
She said they had to dedicate a staging area to recovery all the equipt. they had shipped to China a few years back! HR is tracking down the ‘former’ employees that used to run it!
In all the time they had that gear ( med. tech. ) they couldn’t get (1) prdt. to pass QC.
Enough time for China companies to reverse-engineer the stuff and start making it themselves.
Bill,
That’s a possibility, and I suppose they could have been sandbaggin’ QC ( the 4th Shift? ) but it seems remote. What they do is pretty high tech stuff. Fiber optics etc.
Yeah, they might be reverse engineering stuff. However from the cell phone/wifi business I can tell you it seems unlikely.
Basically you have to go to extrodinary measures to make sure these guys don’t execute chips when they handle them. Looking at the commercial designs, lots and lots of electrostatic discharge diodes on every chip to handle the multiple mistakes. Also see the papers produced over there. It is like looking at design stuff from the 50s and 60s.
Now, in computer prograing they are pretty good and some other aspects they manage to be cheap.
People also have to realize how much stuff is built automated and the jobs are menial assembly type work.
James. Hon Hai makes 85% of ALL consumer electronics.
All.
Their global alias is Foxconn.
Their customers are every brand name you can think of.
You can bet good money they reversed engineer that equipment.
HR is tracking down the ‘former’ employees that used to run it!
I’d love to be a fly on the wall in the HR office. The responses of the ‘former’ employees will be interesting, to say the least.
Foreclosures slow in January but still up from last year ~ CNN MONEY
First, the good news: Foreclosure filings dropped nearly 10% between December and January.
That’s a total of 315,716 notices compared to 349,519 in December, according to RealtyTrac, which issues a monthly report on foreclosure activity.
Now, the bad news: Filings rose 15% compared to a year ago, and the number of people who actually had their homes repossessed jumped 31% to 87,648.
That year-over-year increase in bank repossessions is what Rick Sharga, a spokesman for RealtyTrac, finds most troubling. “A lot of properties that had been stalled in foreclosure are now going all the way through to auction,” he said.
Do you think the “holiday-moratorium” on foreclosures for a month implemented by magabanks this year might have had anything to do with any “slowdown”. Nice reporting CNN, you schmucks!
95,000 jobs per month? Wow,the number of federal employees is going to explode even more.
White House: 95,000 Jobs to Come Each Month. (AP)
WASHINGTON - The United States is likely to average 95,000 more jobs each month this year, while personal savings will remain high as credit remains tight, according to a White House report released Thursday.
The Council of Economic Advisers also trumpeted the $787 billion economic stimulus package, which it said has saved or created about 2 million jobs.
Barry meet with a stellar team of job “creationists” yesterday. One of whom was none other than Al “Tawana” Sharpton, one can only imagine what Al thinks should be done to “create” jobs. Grab your wallet and your ankles.
Maybe Michelle will increase her number of “aides” from the 26 or so she already has. She could get the $5k tax credit for every new position. Michelle O could singlehandedly put America back to work as her own personal slaves (picturing a human-powered 747 like the tanker in Waterworld).
Al Sharpton and his ilk will bang the welfare drum until the end of time. He is nothing more than a corporate extortionist playing the race card.
Larry Kudlow and his ilk will bang the corporate welfare drum until the end of time. He is nothing more than an extortionist playing the class warfare card.
See how that works?
…while personal savings will remain high as credit remains tight
Y’know, there was a time in America’s not-too-distant past when people saved up to buy things.
And, amazingly enough, credit was tight back then. You weren’t granted credit unless you were deemed to be (gasp!) creditworthy.
The dollar was also worth more. A LOT more. And housing was only 1/4 of a person wage.
Example: min wage was $3.10 in 1980-81. In today’s money, using 3-4% inflation a year, (anybody want to argue that’s not conservative enough?) that would equal $11-12hr.
A simple Excel spreadsheet will confirm this.
For you snow bound folks, would you rather freeze or sweat to death?
Heatwave roasts Rio, kills 32 in southern Brazil
RIO DE JANEIRO (AFP) – The worst heatwave to hit Rio de Janeiro in 50 years turned the city into a pre-Carnival furnace Wednesday, and killed 32 elderly people further south, officials said.
According to the Inmet national weather service, recorded temperatures in Rio were well above 40 degrees Celsius (104 degrees) — and felt more like above 50 degrees.
“The heatwave in Rio is seen as historic. February right now is the hottest month for the past 50 years,” meteorologist Giovanni Dolif told the O Globo daily.
“For you snowbound folks, would rather freeze or sweat to death?”
If you place one foot in a pail of freezing 32 degree water and the other foot in a pail of water heated to 104 degrees you get to enjoy an average temperature of 72 degrees.
Good one, Combo! We all need our own corporate jets so we can move around the planet every day to find where it is “just right”.
Would that add to the already 100% humidity that
they have?
Brazilian solution: remove clothing.
Brazilian solution: remove excess hair. (Ouch!!!
)
would you rather freeze or sweat to death?
I’ll take the “freeze” option today please.
The heatwave in Rio is seen as historic. February right now is the hottest month for the past 50 years,”
I guess they won’t be dressed so warmly this year for Carnival.
The heatwave made Rio the hottest place on the planet on Tuesday, save for Ada, a town in eastern Ghana,
Ada cheated to get all the attention. (The rumor here is they’re mad they didn’t get the Olympics)
Yep, it’s REALLY hot. But (except for the dead people) these heat stories make me feel better because now I know it really IS hot and if I can bake it here I can take it anywhere. (I say with swagger while sitting under my red-lined, Chinese made A/C that I brought from the United States.)
2 words: Texas summer.
2 words: Texas summer.
I know and having grown up in the mid-west, I know real heat. The big difference I see is A/C. I’m guessing 80% of Texans have and use A/C. In Rio I’m guessing 20% have and use it.
Home A/C and people from Rio have a funny relationship. Even a lot of the wealthy people don’t like it and some don’t even have it. Something about sore throats and stuff. Also, electricity is probably 3 times more expensive here than in America when compared to income. A $150 window A/C in the USA will cost $375 here.
BUT when it gets this hot, most wish they had A/C.
For at LEAST 2 weeks of every summer that’s a typical Texas summer.
The funny thing is, in America you never read about heat waves in Phoenix or Tucson killing people. You hear about heat waves in Chicago killing dozens of senior citizens.
How is that? Particularly if lots o’ retirees live in the naked Pueblo (Tucson) or Phoenix?
http://news.yahoo.com/s/ap/20100211/ap_on_bi_ge/us_citigroup_foreclosures
n a normal foreclosure, a lender assumes legal control of the property and evicts the homeowner. But Citi’s program, like other “deed in lieu of foreclosure” efforts, allows the homeowner to avoid a completed foreclosure. While the owner must still leave the home after six months, the program results in a less severe hit to the borrower’s credit score.
….”Why should we all go through the foreclosure process and evict people?” said Sanjiv Das, Citi’s top mortgage executive. Avoiding foreclosure, Das said, is “less painful for our borrowers as well as for us.”
Borrowers in Citi’s program will still need to pay their utility bills. But Citi will pay at least $1,000 in relocation costs and will consider helping out with other expenses. Citi also plans to provide relocation counseling.
****************************************************
Now these people who probably haven’t paid their mortgage in months are going to get $1000 relocation costs to boot? I’m so p o’d at Mom for teaching me how to be responsible!
“Borrowers in Citi’s program will still need to pay their utility bills. But Citi will pay at least $1,000 in relocation costs and will consider helping out with other expenses. Citi also plans to provide relocation counseling.”
How nice of them.
Citigroup: TARP loans near $45 billion mark
digg Huffpost
May 12, 2009 12:01 AM EST
NEW YORK — Citigroup Inc. is using its $45 billion in government capital to make nearly that much in new loans.
Citigroup said its committee overseeing the use of taxpayer money approved $44.75 billion in lending initiatives as of March 31. That is up from the $36.5 billion in lending initiatives announced in February, and now includes $5 billion in loans to municipalities.
The loans being offered by Citigroup to state and local governments, municipal agencies, universities and non-profit hospitals would not likely have been made had the bank not received money from the Troubled Assets Relief Program, or TARP.
David Brownstein, Citigroup’s managing director and co-head of public finance, said in an interview with The Associated Press that these municipal borrowers are still very secure, but their borrowing costs have shot higher because of turbulence in the credit markets.
In Citigroup’s report, reviewed by the AP and scheduled for release Tuesday morning, the bank also said it is spending $2 billion more to finance suppliers, $1 billion more in residential mortgages, and $250 million more in auto loans.
In total, Citigroup has extended more than $200 billion in new credit in the United States since last October _ when the bank got its first $25 billion injection of bailout money from the government. Last fall, Congress approved the $700 billion TARP fund, which got handed out to hundreds of financial institutions in an effort to stabilize the financial system and revive lending.
Banks like Citigroup do not lend the TARP money directly to borrowers. Instead, the banks keep the extra capital on their books, which allows them to borrow more money from funding sources. Then, they lend that borrowed money to others. A bank makes money by borrowing cheaply for the short-term and lending at higher rates for the long-term; if a bank has no capital, other institutions and investors won’t lend to it.
In November, Citigroup got an additional $20 billion, bringing its TARP total to $45 billion. In February, it agreed to convert a portion of the TARP investment from preferred stock to common stock.
After the government’s funding and other capital raising efforts, the Federal Reserve found last week in its “stress test” of the country’s 19 largest banks that Citigroup has a capital shortfall of $5.5 billion. Citigroup said last week it plans to make up that shortfall by converting more preferred stock into common stock.
The $1,000 is a bribe Citi hopes will prevent at least some FB’s from trashing the property as they move out.
I hope they take the grand and still leave feces on all of the walls…wait! taxpayers would pay for it? What’s in it for me again?
So do we expect all those foreclosures to hit the market in 6 months, or do they become more ’shadow’ inventory?
During the S&L debacle, it took years for the RTC to clear out the surplus.
“In total, Citigroup has extended more than $200 billion in new credit in the United States since last October ”
Maybe they are trying to become too big to fail!
is this why foreclosures get canceled? saw a list of ours here and most ended up that way, or canceled and refiled and sold.
FB leaves the house; bank gets the house. How is this not a full foreclosure, except with a strange six-month time lag, which the FB would likely have anyway?
“Pay utility bills?” It sounds as if they are “allowing” the FB to stay for the sole purpose of preventing the water pipes from freezing. And to buy another six months to lobby Congress for more extend and pretend. Or something.
By the way, this is the first I’ve heard of the Fannie rental program. Did those FB’s takes a huge FICO hit? I hope so.
If they do that means this bust will last years longer then anyone expects……..bad credit no loans no CC, nothing….which is not a bad idea….except in an emergency….
Yeah we should have cash stashed away…but if they use your credit report in hiring….even less cash people will have
The underground economy will thrive…..and again if you have to prove your income, then NO mortgage for you.
———————————————-
Did those FB’s takes a huge FICO hit? I hope so.
The mortgage Nazi?
No mortgage for you, NEXT!
Wow… that makes me so mad!
So, the bums who knowingly take on a huge mortgage, then HELOC a fortune out of it to live like kings will get even more goodies handed out to them while we, the responsible people, get to keep renting and get stuck with the bill via inflation that’ll eat our savings.
And then they wonder why everything is in decline these days: a nation can’t be run with such corruption at all levels and prosper long term.
Pondering ……..”A Country that does not dole out reward and
punishment in a just manner is doomed to fail .”
Author unknown ….
Hey! At least we’re number one in something besides military spending and nuclear bombs!
Is this on top of the the other 24 free months?
Citi to let Distressed Homeowners stay for 6 mos.
http://finance.yahoo.com/news/Citi-to-let-distressed-apf-1953174036.html;_ylt=Ah4VlAjM3VYQ_jvFD9MAF0y7YWsA;_ylu=X3oDMTFhMm00bGl1BHBvcwMxMQRzZWMDdG9wU3Rvcmllc0Nva2UEc2xrA2NpdGl0b2xldGRpcw–?x=0&sec=topStories&pos=9&asset=6c0efe03b2ecc4251306b23a02df2441&ccode=mp
Citi benifits because the house won’t become a vacant eyesore and add to the equity destruction of other houses it owns in the neighborhood.
The occupants benifit because they get an additional six months to strip the house of everything of value in order to raise much-needed cash.
Oversight panel sees taxpayers carrying cost of guarantees
Source: Citigroup Asset Guarantees May Cost U.S. Taxpayers, Panel Says Bloomberg, November 9, 2009
“U.S. taxpayers may have to share in the losses on $301 billion of Citigroup Inc. loans and securities covered by federal guarantees after unemployment reached a 26-year high, according to the Congressional panel overseeing bank-bailout programs.
The Federal Reserve Bank of New York projected a year ago that the Treasury Department might have to pay $3.96 billion on the guarantees if unemployment hit 9.5 percent, the panel said in a Nov. 6 report. The jobless rate rose to 10.2 percent in October, the Labor Department said last week.
The government hashed out the guarantees over a weekend in November 2008 to help shore up confidence in New York-based Citigroup and head off a run on the bank’s deposits. The New York Fed analysis, which wasn’t previously disclosed, raises questions about whether the Treasury Department and regulators were tough enough in the negotiations, said Joshua Rosner, an analyst at investment research firm Graham Fisher & Co.
“It looks like Citigroup got the better end of that deal,” Rosner said.
The panel overseeing the government’s Troubled Asset Relief Program, led by Harvard Law School Professor Elizabeth Warren, included the analysis in a report last week and criticized the Treasury for being too secretive about the loss projections. Neither Citigroup nor any government agency previously had published estimates of the government’s potential losses.
Under the terms of Citigroup’s asset guarantees, the Treasury and U.S. Federal Deposit Insurance Corp. must absorb a combined 90 percent of any losses beyond Citigroup’s $39.5 billion deductible, up to $16.7 billion. The Federal Reserve would absorb 90 percent of any further losses.
Citi is an absolute disgrace.Our system has become a total joke.the taxpayers dont have the balls to do a thing about it either.They are running scared.
Citi is America’s bank, literally.
Oh I think the taxpayers get it loud & clear. Too bad more of us weren’t on a soapbox in ‘05?
I sure hope so DinOr.
Our local mall expansion is being funded by Citigroup. Citi doesn’t want to give them the money for the next stage because the expansion has no tenants yet secured. Of course, it comes down to contract details and the courts but what makes me shake my head is all the locals that are cheering for the courts to make Citi cough up cash for a commercial venture that appears to be on a direct path to failure. Some days it feels like the whole world’s gone mad.
Do you mean that Syracuse mall, Carussell something…weren’t there plans for a mega mega mall in S. some years ago, with waterfalls and such stuff. Who has money to spend in central NY….Canadians? Or day trippers from Binghamton?
Sagesse,
Carousel Mall is the name of the original mall. And yes, it was at one point supposed to rival the Mall of America. The Canadians reportedly were arriving to shop there in busloads. Not sure if that’s still going on. Although I don’t avoid malls in general that one really seems to irk me and I’m only there 1-2x a year.
A bit of background:
http://blog.syracuse.com/storefront/2010/02/the_destiny_of_xanadu_in_quest.html
Hey Combo, you keep saying cash is king, and most of my savings are in cash, but I don’t get the feeling anyone is saying “my liege.”
The rate of return is zero. I haven’t saved to pay for today’s groceries. I’ve saved for my kids’ college, and college costs are rising relative to cash. When I’m old I might need heatlh care, and health care costs are rising relative to cash. And of course taxes are rising relative to cash. Even food costs are rising relative to cash.
A house? I bought one 16 years ago, and certainly don’t need two. So when will cash start rising in value relative to something else?
“The rate of return is zero.”
In a deflationary environment the real rate of return on cash is a tax-free amount somewhere above zero.
Cash will be king until it isn’t. I never claimed cash will always be king. There will be a time to move out of cash and into something else.
For me this “something else” will most likely be stocks. With the right stocks the term “Cash is king” becomes “Cash-flow is king”.
For me “something else” will be bonds, when prices drop and yields rise (hopefully later this year.)
As long as your main focus is buying a home, and home prices are falling in dollar terms, cash is king.
Right, but I have a home, all paid off, and other things I intend to use my savings for are inflating not deflating. Thus, cash is not yet king.
There is no king.
I would add this as well. What about the *soon, IMO, to be repatriated chinese US $. Wouldn’t this be inflationary as hell?
* Less than 10 years
“What about the *soon, IMO, to be repatriated chinese US $. Wouldn’t this be inflationary as hell?”
I have no way to predict this. But I will say that when the Chinese bubble pops, the demand for US $ is likely to increase, which would be deflationary…
Over the past year one would be very hard-pressed to find a worse “investment” than holding cash (other than real estate). Like it or not stocks have been king the past year; not cash. I don’t know going forward, but I can look back with 20-20: Stocks have been king and cash has not. I admit the music could stop at any time and people would start scrambling for a chair, just like what happened in housing. But that’s the future. The past says cash has not been king. And unlike housing, one can get out of stocks in seconds - even while sleeping if they’ve set it up properly.
Stocks will be king until they aren’t. Cash won’t be king until it is. I don’t know when - or if - that situation will turn around but when/if it does you’ll be right. Just like all serial bottom callers are eventually right.
stocks are/were king if your holding period was just the past year.
i had a windfall of cash from selling a condo with no basis and large bonuses from work when the DOW was at 14k. folks were telling me then i should not just hold the cash and that i should have some (not all) in the stock market.
thank god i did not listen to them.
That’s right. The previous ~10 years real estate was king. Nobody can predict the future. Nobody knows when the music will stop and people will be scrambling for a chair. I didn’t ride the real estate merry-go-round, and I haven’t been riding the stock merry-go-round. The real estate merry-go-round went at least 5 years longer than I would have believed. Perhaps the stock market merry-go-round will go on 5 years longer than I’ll believe. It’s already done things I can’t believe in the past year. I don’t know what the future will bring, but I know about the past. And the past is this: The past year, the whole time Combo has been saying “cash is king” he has been wrong. The past year, stocks have been king.
this officially all started to fall apart in Q4 2007…when the DOW was at 14K.
that is my perspective at least.
It’s hard to argue stocks are king, because they are now over-valued — and what value they have is supported by having the government borrow and spend what consumers may not.
So if you are holding stocks, the paper value of the paper may have risen, but unless you plan on converting into some purchase right now it doesn’t help you. Now I took some remaining stock funds that had been intended for college and sold them, which was good. But for the time being, and until I pay for the kids’ college begining next year, that just means I have more cash.
And college isn’t a great investment at these prices, either.
Well, I’m not making any statements about the future. No investment is magical forever. Sometimes it’s real estate, sometimes it’s stocks, sometimes it’s gold, sometimes cash, whatever. Maybe now *is* the time to get back out of stocks and maybe starting now cash *is* king. I don’t know. My point is that Combo has been saying Cash is King for a long time now. Looking back the past year, cash has not been king. This is all I’m saying. Perhaps going forward from this day on, it may be king. Who knows? Saying cash is king year after year is no different than serial bottom calling.
Look, I’m in cash. Have been since late ‘07. But I haven’t been crowing around that cash is king. I got lucky and got out at the right time. I did not get lucky and get in at the right time (March ‘09). I’m still out. But my cash has not been king this past year. It’s sat around losing value.
Mikevike,
I’m largely in cash now too. So my returns in this market have stunk it up.
I think it is largely a statement about risk.
Basically this is a somewhat typical bear market. Wild swings up or down depending on changes in the currency/credit environment.
Could be a 4000 in a year and it could be 14000. If you are in cash or conservative investments for last decade you did better than the market. A lot better. You made a 50% increase on your money. The market is at the same point it was at in 1999.
Now all the gamblers out there are happy to tell you how they beat the market. Most of those guys are BS artists of the highest order. It’s really hard to beat the market unless you are an insider OR stick to investments you understand very well. Then you can’t beat it by much.
Reminds me of one of my favorite football posters on another message board.
Guy “had a system” for picking games based on some kind of short term statistical trend. I said lets see how you do after a few weeks. As the guy got creamed on his bets, slightly worse than I did, he finally says “I’ve got to get out of here, you guys are bad luck”. Poof. Gone.
I got real lucky and timed this market well. Next time might not go so good. Actually I timed the NASDAQ bubble poping really well but like this stock/asset bubble I’m not maximizing by jumping in.
Good luck.
WT, you really need to check to check out the blog
edububble dot com
and the associated book. Higher ed is yet another ginormous bubble waiting to pop. Don’t get caught paying full fare.
WTH?
Unions bash Democrats, warn of political fallout ~ Politico ~ 2-10-10
Labor groups are furious with the Democrats they helped put in office — and are threatening to stay home this fall when Democratic incumbents will need their help fending off Republican challengers.
The Senate’s failure to confirm labor lawyer Craig Becker to the National Labor Relations Board was just the latest blow, but the frustrations have been building for months.
“Here’s labor getting thrown under the bus again,” said John Gage, the national president of the American Federation of Government Employees, which represents 600,000 workers. “It’s really frustrating for labor, and a lot of union people are thinking: We put out big time in money and volunteers and support. And it seems like the little things that could have been aren’t being done.”
The 52-33 vote on Becker — who needed 60 to be confirmed — really set labor unions on edge, but the list of setbacks is growing.
Doug Wilder: Obama needs a staff shakeup
http://www.politico.com/news/stories/0210/32741.html
Looks like the rats are starting to jump ship and makes me wonder if the BHO administration is able to listen to any voices of reason.
One of my good friends used to have a favorite saying:
“The problem with telling people you walk on water is sooner or later someone says, ok, walk!”
People here in Idaho walk on water with ease….
…of course, only in midwinter.
“We put out big time in money and volunteers and support. And it seems like the little things that could have been aren’t being done.” ”
Translation, “The banks are getting theirs, why aren’t we getting ours?”
Because the Davos crowd always wins.
You would think a 3-5 day work stoppage would drive the point home better than sissy threats of not voting for the Dem. candidates. Stop the transportation system for about a week and THAT would send a message. Kind of like when Paulson went to congress and scared the sh*t out of them and they handed over 700 Billion. I dare ‘em.
The Dumping Begins: Chinese Reserve Managers Notified That Any Non-USG Guaranteed Securities Must Be Divested.
http://www.zerohedge.com/print/72753
“It appears that this time China’s posturing is for real. Following up on our earlier post that Chinese military officials want to “punish” America by selling Treasuries, Asia Times Online is reporting that an explicit directive by the Chinese government has notified reserve managers to sell all risky US assets, including asset backed and corporates, and just hold on to explicitly guaranteed Treasuries and Agency debt”
Great, maybe its time to buy that cabin in the mountains.
http://www.realtor.com/realestateandhomes-detail/Pine_AZ_85544_1114474612?gate=msn&source=a2mszh1t042
(If you’re gonna dream, you might as well do it right)
Wow, no one comments on this?? One of the biggest holders of US debt is about to start divesting (dumping). Me thinks that mass inflation is rapidly approaching.. If so, it may make sense to get into those houses now at the lower rates before our savings gets wiped out… That is, unless we can hedge our savings against inflation appropriately (metals, foreign currency, hard assets, commodities.) What does everyone think of the Indian rupee as a place to park some cash?
My guess is that if the Chinese dump, dollar deflation will miraculously take hold as a logical consequence. Soon thereafter, all the real estate investments the Chinese bought with the dollars they expected to inflate will begin dropping in value.
As a historical precedent, I reference the Japanese knifecatchers who lost their shirts in U.S. assets during the early 1990s RE bust.
The Chinese are about to get played and played hard.
I just got back from a meeting of a research organization of which I’m the treasurer. Seven years ago we were kicked out of the hotel in St. Petersburg FL where we had met for years, because they wanted to downsize to condos. Since then we’ve been wandering the country looking for a good place to meet, and our members haven’t been happy. I wonder if we should buy a distressed hotel in St. Petersburg. That would certainly be an interesting solution to our problems. Where do you think I should begin to look for a distressed property?
planet earth would be a good place to start then you can narrow your search to suit your particular needs.
Planet earth indeed. Don’t be in any rush, however. CRE prices will spiral downward from here for at least a couple more years.
Ha ha pressboardbox. Since I posted that I’ve surfed some commercial real estate sites and consulting sites. Prices look ridiculous, and the consultants are projecting that price per room will rise in 2011. Yeah, right. I wish I could find a site that shows distressed properties, but there doesn’t seem to be one. Maybe I’ll contact a commercial real estate group in St. Petersburg and ask them to keep an eye out for cheap properties.
“ST. PETERSBURG, FL-Developer Joel Cantor proclaims it his “jihad mission” to sell out his Signature Place condominium tower, the 36-story skyscraper that strikes a sail-shaped profile on the city’s waterfront. But the latest plan to light a fire under condo sales in the high-rise is giving even Cantor the jitters.
His lender, Fifth Third Bank, is putting 35 units up for auction March 7 at starting prices that are two-thirds less than what Cantor had been asking.”
(from St Petersburg Times today)
Seriously REhobbyist, first pick a location and look there and then widen your search to the surrounding areas.
You WILL find something.
DJIA = 10K or bust
That is all that needs to be said. Wall Street = WWF with your money.
- Green shoots of liquidity are sprouting up in the stock market.
- Buy stocks now, or get priced out forever.
- The stock market always goes up, in the long run.
Government to trim nearly 800 positions. Hiring freeze remains for provincial staff. Calgary Herald February 10, 2010
The deficit-strapped Alberta government is cutting its workforce, letting hundreds of vacancies go unfilled and warning as many as 250 public service workers could soon receive pink slips.
In all, the province expects to shrink its pool of workers by 795 full-time equivalent positions, while another 716 employees are being transferred to government-funded agencies.
About $30 million has been set aside to cover severance payments for laid-off workers. Both managers and employees covered by unions are expected to be affected in the first major government layoffs in nearly a decade. A hiring freeze introduced last summer remains in place.
And Alberta is the rich province.
Oil Sands.
Back in 05, we went up to Edmonton Mall on Vacation. Practically every business you passed had a portable billboard in front advertising Help Wanted. The Mickey D’ had signs in the window advertising starting wages of $14.00/hour. Times change fast.
“I voted Democratic because I didn’t like the way Republicans were running the country, which is turning out to be like shooting yourself in the foot to stop your headache.”
~ Jack Mayberry
“Blessed are the young for they shall inherit the national debt.”
Repubican Herbert Hoover, US President
“Hoover tried to combat the following Great Depression with volunteer efforts, none of which produced economic recovery during his term..Hoover’s defeat in the 1932 election was caused primarily by failure to end the downward economic spiral.”
From the Arizona Slim Family Story File, we have…
President Hoover’s 1932 re-election campaign was one of the toughest in American history. According to Wikipedia, “…Hoover was faced with perhaps the most hostile crowds any sitting president had ever faced. Besides having his train and motorcades pelted with eggs and rotten fruit, he was often heckled while speaking, and on several occasions, the Secret Service halted attempts to kill Hoover by disgruntled citizens, including capturing one man nearing Hoover carrying sticks of dynamite, and another already having removed several spikes from the rails in front of the President’s train.”
In Republican-rich Westchester County, New York, it was thought that the President would get a friendlier reception. Well, so much for thinking.
The President stopped in the Pelham, NY neighborhood where my father and his brother and sister were raised. My Aunt Jean was all of five years old, but she went next door to meet the huge man in the white suit. He spoke briefly, my aunt thought he was a bore, and then came the highlight of the gathering. The neighbors’ dog spotted Mr. Hoover, walked over to him, and lifted his leg against Hoover’s white-trousered leg.
Fortunately, the President had a change of clothing.
If you wanted to protest the last president, you were herded off to “Free Speech” zones miles away from the president. This country is hardly as free as some believe.
Is it wrong to think that publicly elected officials should be accessible to the public?
I see Herbert Hoover basically the way I see Barack Obama - largely a victim of circumstance. People don’t realize just how big the bubble was before the Great Depression. It wasn’t just stocks, there was a huge real estate bubble. And it wasn’t just Florida, it was national.
Note the huge rise in mortgage debt between 1920 - 1930, as a percentage of GDP - even as GDP was also skyrocketing! (The post-1930 spike isn’t due to debt going up, but GDP going down).
After the 1929 crash, a severe depression lasting several years was baked into the cake. There was nothing anyone could have done to stop it, regardless of their policies.
“I see Herbert Hoover basically the way I see Barack Obama.”
And Jimmy Carter and George HW Bush.
The difference is, Obama hasn’t managed to get Congress to do very much about the country’s problems, even though he is in the same party, even though he hasn’t tried to ram detailed proposals down their throat.
I don’t blame Obama, I blame Congress.
I’m thinking that grid lock and triage of the badly damaged, aka unemployed, are best options in a lot of ways.
“I don’t blame Obama, I blame Congress.”
I agree to a point. The Republicans do nothing but try to block everything. Corporatist Democrats do little except help the Republicans.
Obama needs to do a better job at identifying policies that would better help ordinary Americans and use selective populism to turn up the heat on the obstructionists in Congress. Some of this is on him until/unless he does that.
However, given the totally dysfunctional media in this country, I’m not sure he could be even marginally successful if he were doing everything right.
What’s lost on most Americans is that we’re unwinding the most massive bubble in history. The best outcome would likely be that we’re only somewhat worse off for a decade or so. That won’t be good enough for many and the end result could be that we put someone in power that would leave most of us in far worse conditions.
Cheney-Shrub Legacy Effect #4: “We Leave behind after our x8 years in Office, the worst US Economy in 80 years”
Cheney-Shrub: “We want him to succeed as President…we really do!”
“TrueGridLok™” = “TrueAnger™” PeeParty tea toaddlers open more campaign recruitment offices in low vacancy suburban malls throughout America
Hark, I here the angels sing: Jobs! Jobs! Jobs!
(not as in Apple OS)
“if” there ain’t no ‘if’ to it.
Smaller banks at risk if commercial real estate falters ~ USA TODAY
A blizzard of commercial real estate defaults could bury hundreds of community banks, a congressional watchdog reports Thursday.
The Congressional Oversight Panel, created to oversee the government’s bailout fund, is warning that losses on commercial real estate loans could reach $300 billion, potentially wiping out “hundreds more community and midsize banks” and drying up the credit needed to restore the economy to health.
Over the next three years, a commercial real estate collapse “could overwhelm an already-weakened financial system,” panel Chair Elizabeth Warren says in an interview. “The commercial real estate problems would be tough to absorb in any economic environment. But they come at a time when the economy is fragile and the banking system is even more fragile.”
Bank failures numbered 140 last year and 16 so far in 2010. Now, commercial real estate is absorbing a one-two punch:
How many people remember that years ago when the regulators wanted to force community banks to reign in their commercial real estate loans, their lobbyists went running to Congress, who quashed it?
This is why I always harp on quit blaming the government for our problems. They are nothing but tools for big business. Blame them for being lapdogs, but never forget where the real problem lies.
It is the lobbyists that are our problem.
So true ecofeco .
Jobless Claims in U.S. Decrease More Than Anticipated (Update2)
Feb. 11 (Bloomberg) — Fewer Americans than anticipated filed claims for unemployment insurance last week as an administrative backlog subsided and indicating companies are nearing the end of major staff cuts as the economy recovers.
Initial jobless applications declined by 43,000 to 440,000 in the week ended Feb. 6, the lowest level in five weeks, from 483,000 the prior week, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance and those receiving extended benefits decreased.
I wonder how much higher the inevitable “upwardly revised number” which will be reported on page 32 on the WSJ will be?
Does that article mention how many have exhausted their UE claims?
Rhetorical question, they almost never do.
The Chicago Architectural Club is sponsoring a contest to figure out what to do with the dormant Chicago Spire site. Gotta give all those unemployed architects something to do:
The Chicago Architectural Club is pleased to announce the 2010 Chicago Prize Competition: MINE THE GAP, a single-stage international design ideas competition dedicated to examining one of the most visible scars left after the collapse of the real estate market in Chicago: the massive hole along the Lake Michigan shore that was to have been—and may yet be—the foundation for a singular 150-story condominium tower designed by an internationally-renowned Spanish architect, a tower which was to have become a new icon for the city and region.
What to do with the gap? Whether or not the project is resuscitated, what else can we do with this strategic and highly-charged site? Once the motor of real-estate speculation has stalled, what can we use to propel ourselves, and the discipline, forward?
I should add that these contests rarely produce anything tangible — they’re mostly intellectual exercises for architects, but a strong showing in a competition such as this can raise an architect’s profile and possibly lead to work in the future. And good work is hard to find in architecture right now.
Not just now but over the last decade. I know many architects who’s bread and butter was offshored.
A family friend is a federal judge in Philadelphia. She earned more than a little bit of notoriety for her efforts to improve the Philadelphia penal system. To the point that when construction on the new jail was stalled, the massive excavation was dubbed “the Shapiro hole.”
IIRC, Olygal liked my idea of filling it with water and letting people go scuba diving in it. Of course, she added embellishments such as drowning real estate developers there, and setting up an underwater Gangsterland amusement park. I should submit a proposal in her memory. I’ll bet she would like that.
Fill it up with mud and start a Geo-duck sanctuary. For Oly.
I should submit a proposal in her memory. I’ll bet she would like that.
I’ll bet it’s as good an idea as some of the submissions they’ll get …
Bond Sales Tumble 90%, Junk Returns Go Negative: Credit Markets
Feb. 11 (Bloomberg) — Investment-grade debt sales are drying up and returns on high-yield bonds have turned negative for the year as investors wait to see whether European leaders can contain Greece’s budget crisis.
Borrowers in the U.S. and Europe sold $4.71 billion of high-grade securities this week, the least this year and about 90 percent less than the average $52.9 billion, according to data compiled by Bloomberg. Speculative-grade, or junk, bonds in the U.S. have lost 0.09 percent in 2010 after gaining 1.52 percent in January, Bank of America Merrill Lynch index data show.
Based of the results of the 30 year bond auction today it was declared a near failure. The yield spiked and the number of foreign bidders collapsed from 39.8% down to 28.5%. Who is the buyer of 71.5% of the rest???
Curious - where do you get this info?
W/respect to the question “who is the buyer of the rest”, the answer is largely http://www.sprott.com/Docs/MarketsataGlance/12_2009_MAAG.pdf - or whoever does know at least, ain’t tellin’. (warning pdf)
Well - that was a big “link fail” I see.
try this one
Thx for that link. They sifted through all the data and revealed this amazing factoid.
“At the end of Q3 this Household Sector category now
owns more treasuries than the Federal Reserve itself. This category of buyers bought $15 billion worth of treasuries in 2008, but by Q3 2009 had purchased a whopping $528.7 billion worth!”
So somehow a nation with unemployment near 10% and 1 out of 5 underwater on their mortgage managed to find 528 Billion dollars to “snap up” all those treasuries.
So somehow a nation with unemployment near 10% and 1 out of 5 underwater on their mortgage managed to find 528 Billion dollars to “snap up” all those treasuries.
Yup, Americans are always ready to answer the call when Uncle Sam needs them. Patriotic bunch, they are.
Well - they sold off all their stocks to buy them. Didn’t you notice the huge stock market swoon in 2009?
Wait a minute….
Build baby build…
Spec Houses Rise as Builders Bet on Buyers
WSJ ~ February 10, 2010
Home builders are ramping up speculative construction to attract last-minute home buyers who want to tap a soon-to-expire tax credit.
The strategy is risky. If the buyers don’t materialize, builders could be saddled with unsold homes that will require heavy discounting to sell, hurting profits and slowing the housing recovery. New homes may also continue to lose market share to lower-priced foreclosed houses. Indeed, some economists expect an avalanche of foreclosures in the months ahead as lenders release homes they have been keeping off the market.
But that’s a chance the industry is willing to take. “We know that we’re going to have more people out now,” says Lance Wright, co-owner of CastleRock Communities in Houston, Texas. “Buying is an emotional decision. Seeing the actual product that you’re moving into will certainly make it easier.”
Ken Campbell, chief executive of California-based Standard Pacific Corp. (SPF), agrees. Buyers trying to beat the tax credit’s expiration “will buy a house somewhere,” he says. “It does make a difference if the home is ready, available to go.
It’s like posters here said in the not too distant past. Builders only know how to do one thing: build houses.
If they can find an idiot banker who will float them a construction loan, they’re gonna build!
“
BuyingBuilding is an emotional decision. Seeing the actual product that you’removing intobuilding will certainly make it easier.”‘Buyers trying to beat the tax credit’s expiration “will buy a house somewhere,” he says. “It does make a difference if the home is ready, available to go.’
Are there still people who haven’t yet bought who are also sufficiently stupid to think they will not either extend the credit or replace it with a still larger housing demand fluffer program?
Are there still people who haven’t yet bought who are also sufficiently stupid to think they will not either extend the credit or replace it with a still larger housing demand fluffer program?
Is that a rhetorical question? Once you get into the levels of stupid we’re talking about now, thinking’s got nothing to do with it.
The problem is getting buckets of money into the hands of those with boxes of stupid. I guess that is where the $8K home buyer tax credit, federally-guaranteed FHA subprime loans and similar measures come into play?
Well. I think this desperation move means we are a lot closer to the end.
Also think the political damage from the bailout promises past are begining to unravel things elsewhere.
The political capital for O and the dems to go up and splain why they are bailing out FAN/FRE/FHA is getting very expensive. I think it probably cost them healthcare. I suspect it will cost them the majority in the house soon. Probably a big dent in the senate.
I am not sure that Obama and that team are used to negotiation from a position of weakness. Republicans had 40 years of practice. Democrats never seemed to pick it up in the last decade. Still, everything is so distorted from the bubble.
Late last year, I was having a drink with a local builder.
The occasion was Tucson’s monthly Green Drinks gathering, where people with the sustainability dreamer’s disease come out of the woodwork. And, trust me, they’re a lot more fun to listen to after you’ve had a drink or two.
Well, this builder was trying to get financing to build the Ultimate Sustainable Spec House. This place would cost a pretty penny to build (and for some purchaser to buy), but no matter. After all, it was Sustainable.
Guy couldn’t get a lender to finance him. Just wasn’t happening. Which leads me to ask, where are the builders in this WSJ story getting their loans from?
Texas is a developer’s heaven and Houston especially.
You haven’t SEEN spec development until you’ve lived here.
Ben can tell you.
Sorry if this is duplicitous,
slumburbia:
http://opinionator.blogs.nytimes.com/2010/02/10/slumburbia/
Looks like so many concrete tile roofed, pseudo stucco crap box slum developments all over CA, NV, AZ, NM, UT, CO..
Next up - have you bought enough Chinese Wal Mart junk yet? Time to start learning Chinese phrases like “yes master”.
I saw evidence of this very thing in Marana, AZ, last month. Houses built in the last 10-15 years are already falling apart. Lots of vandalism and gang graffiti on walls, lighpoles, etc. too.
And that’s something that the folks outside Our Fair City say doesn’t happen. Naah. Gang graffiti is just a Tucson problem. Ditto for vandalism.
slumburbia prose:
“In strip malls where tenants seem to last no longer than the life cycle of a gold fish, the bottom-feeders have moved in. “Coming soon: Cigarette City,” reads one sign here in Lathrop, near a “Cash Advance” outlet.”
In Houston, slumburbia is all over place. They are usually older subdivisions made up of sub 100k houses built during the 70s and 80s, 20+ year being the length of time it takes for them to deteriorate.
Funny: “Fear the Boom and Bust” a Hayek vs. Keynes Rap
In the long run, Keynesian economics will die.
F. A. Hayek
The Fatal Conceit
The Errors of Socialism
Edited by W. W. Bartley, III
194 pages, 6 x 9 © 1988
Series: The Collected Works of F. A. Hayek
Cloth $39.00
ISBN: 9780226320687 Published July 1990
Paper $18.00
ISBN: 9780226320663 Published October 1991
Related links: The Plan of the Collected Works of F.A. Hayek.
Hayek gives the main arguments for the free-market case and presents his manifesto on the “errors of socialism.” Hayek argues that socialism has, from its origins, been mistaken on factual, and even on logical, grounds and that its repeated failures in the many different practical applications of socialist ideas that this century has witnessed were the direct outcome of these errors. He labels as the “fatal conceit” the idea that “man is able to shape the world around him according to his wishes.”
Too-big-to-fail socialism:
- Heads-we-win, tails-you-lose
- Privatize profits, socialize losses
- Big banks get richer, and the rest of you are screwed
In Hayaks view there is no privatization in Socialism. What you are describing is the mutated end of capitalism when gov falls under the thumb of a small number of self appointed oligarchs.
Hayak purposely confused communism with socialism to make a point.
Thus ends his credibility.
Hayak purposely confused communism with socialism to make a point.
Thus ends his credibility.
Why?
This video just about sums up my personal view of Keynesian economics, as viewed through the lens of the Austrian perspective.
I love the image of a drunk Keynes, trying to recover from his hangover with a little hair-of-the-dog stimulus.
BwaHahAhAHAHAHAHHAAHAHAHAAAAAAAAAAAAAAAA!!!!!
Way cool Mr. Bear!
Technical question for “clarification”:
Define: Mal-Investments?
(Hwy, the “non-economist” has been using “old school” “throw-back” reliance on this definition):
“The phrase “I know it when I see it” is a colloquial expression by which the user attempts to categorize an observable fact or event, although the category is subjective or lacks clearly-defined parameters. This phrase is best known as a description of a threshold of obscenity”
Obscene: 3 bdrm 2 bth in Chula Vista / Bakersfield: $486,000
BWAHAHAHicHAHAHicHAHAHAHAHicHAHAHic* (DennisN™)
Mal-Investments?
Yep.
Here’s a http://img714.imageshack.us/img714/4453/graphhomevacancyrate.gif of the data.
Wow - so my skills at linking are sinking.
trying again
But your skills at rhyming are climbing!
‘Emergencies’ have always been the pretext on which the safeguards of individual liberty have been eroded.
Friedrich August von Hayek
W’s eight year reign of terror included more than the average number of emergencies…
That’s a accurate and well done video!
Instead of showing owlgores kook video in schools this one should be run.
Keynesian economics is the Fed’s version of Bokononism. Though many recognize the flaws of the Keynesian system, the Kabuki dance of stimulus and bailouts is still practiced with ritualistic regularity. Thanks to the predictability, the managers of Megabank, Inc have become richer than Croesus. Too bad their personal gains came at the expense of America’s economic hegemony.
Couldn’t you just as easily say “free markets” are the Fed’s version of Bokononism? I mean, surely you aren’t saying Greenspan was a Keynesian?
The rap is humorous (albeit painful ‘white-guy’ rap) but it repeats a misunderstanding of Keynesianism that implies it seeks to direct the economy- a view I’m sure you realize is false?
Moreover, the rap explaining Hayek’s views is incomprehensible, just as all free marketers are when asked to explain how no rules will stop market manipulation. It just will, because it has the word ‘free’ in it, just like free trade.
I salute Keynes’s tequila choice, too. 1800- best priced 100% agave tequila, at least around here. Good enough to drink straight, cheap enough to let your friends mix margaritas with. Viva La Revolucion!
I plan to read some more Hayek. I don’t recall the “no rules” part in what I have already read by him; for that matter, Adam Smith even said markets need to be subject to a rule of law.
I think the “no rules” part of “free market economics” is just a straw man cooked up by Keynesians to help support their whacky notion that highly predictable bailout interventions won’t wreak havoc on the banking system.
“I mean, surely you aren’t saying Greenspan was a Keynesian?”
He sure did some mean hair-of-the-dog stimulus back in the day…
Yep. Anyone who denies he was a Keynesian, at least in practice, is flat out wrong.
Or understands Keynesianism…
We are such nerds. Set the markets free, Berserker Ben.
Following the link to the “Future of Capitalism” cast shadow :
PIGS Without Jews
http://www.futureofcapitalism.com/2010/02/pigs-without-jews
The “PIGS’ crisis is roiling the financial markets — fiscal problems in Portugal, Ireland, Greece, and Spain. One interesting question to consider is why Portugal, Greece, Ireland, and Spain would be in worse trouble than other European countries. We’ve already noted Greece’s high marginal tax rate. Bloomberg News’s Matthew Lynn seems to see it as a monetary issue, as does, to a large degree, Paul Krugman. Let me make another speculative explanatory leap — or, to use a phrase of Friedrich Hayek’s, engage in some “conjectural history” — and suggest that one reason Portugal, Greece, Ireland and Spain are in rough shape is they have barely any Jews. Some numbers on this are here and here. This is only a half-serious explanation, prompted in part by the idea that observant Jews don’t eat PIGS, anyway. There are historically contingent explanations of the paucity of Jews in each country — most famously, Spain expelled its Jews in 1492, while the Jewish population of Greece was almost entirely wiped out in the Holocaust. I’m not saying it’s the only explanation, or that, if these countries had more Jews, they wouldn’t still be in trouble. But it’s the sort of thing that could stand some further research and analysis, no? Maybe a next book for Jerry Muller? A column for David Brooks or Thomas Sowell or Joel Kotkin? A blog item for Jeffrey Goldberg, who could come up with some catchy two-word phrase for the theory? You’d have to think about whether the lack of Jews is an actual cause of economic trouble or just an indicator of something else — policies or culture unfriendly to business or capital or outsiders — that is the actual cause. If the theory has predictive power, then Norway and Finland are the next to go. But the theory may not work in countries with large oil reserves.
Now, please explain why Germany isn’t as bad off as the PIIGS countries. We all know that country’s role in the Holocaust.
Argentina has the largest Jewish population after Israel and US, and it’s a mess….
South Florida?
Here is a direct link to the econorap. Those bartenders wearing the name tags Tim and Ben bear a striking resemblance to some familiar public figures… just can’t quite place them…
LOL - thanks for the link. Hmm - the whole “hair of the dog” thing seems to bear a resemblance to someone else’s thoughts… can’t quite place it though…
I don’t know if I originated the “hair of the dog” idea or someone else did… it’s a pretty obvious metaphor.
Britain faces ‘oil crunch’ within five years, Richard Branson warns
An oil crunch more serious than the financial crisis threatens to strike Britain within five years, Sir Richard Branson and other business leaders have warned.
“The report entitled ”The Oil Crunch - a wake up call for the UK economy”. …said Government must acknowledge the risks to the economy and to produce contingency plans for transport, retail, agriculture and alternative power.
‘Unless we do so, we face a situation during the term of the next government where fuel price unrest could lead to shortages in consumer products and the UK’s energy security will be significantly compromised,” it said.
Virgin Group founder Sir Richard - whose airline and rail businesses are sensitive to volatility in the cost of crude - said businesses and Government should work together to prepare the economy.
”UK competitiveness will be hampered unless we can develop viable, affordable and secure long term sources of alternative energy,” he said.
While the report did not address climate change directly, it stressed ”massive areas of overlap” between the issues of depleted resources and pollution.
It said transportation was particularly vulnerable to rising oil prices, with businesses from supermarkets to manufacturers reliant on delivery networks.
The group said alternative methods of powering vehicles - for example electrification of the railways - should be explored and infrastructure developed.
It recommended removing the current £9 billion tax break on fuel for domestic airlines and using the money for public transport investment, while also encouraging a shift away from car travel.
”The UK’s freight network, cars and public transport systems are almost entirely dependent on oil,” Mr Souter said.
*****************
Pickens dropped his campaign saying there wasn’t enough momentum for change and yet here we see the torch picked up in the UK.
http://www.telegraph.co.uk/finance/financetopics/oilprices/7203172/Britain-faces-oil-crunch-within-five-years-Richard-Branson-warns.html
“Britain faces ‘oil crunch’ within five years, Richard Branson warns”
Wonder why it’s always 5 years?
So when 2015 comes and goes and the UK or any place else doesn’t have an oil crunch. I guess they’ll just kick the can to 2020.
“It said transportation was particularly vulnerable to rising oil prices, with businesses from supermarkets to manufacturers reliant on delivery networks.”
They should revisit their own past to see how they wound up in this pickle. I suggest they start with 1965’s Beeching Report. This has been a long time in coming.
Like Pickens, it looks like Branson is looking for some free gov’t subsidy money.
Home prices fell 12% in 2009 ~ February 11, 2010
NEW YORK (CNNMoney.com) — The real estate roller-coaster ride continued last year as the median price of U.S. single-family home plunged 11.9% to $173,200.
The housing situation had been looking up earlier in the year, with prices gaining ground in the first nine months. But the increases weren’t enough to push the median home price above 2008’s bar of $196,600, according to the National Association of Realtors.
And then, prices fell in the fourth quarter, dropping 2.9% compared to the previous three months and 4.1% compared to the last quarter of 2008.
Still, the quarter-over-quarter drop was encouraging to NAR, which tracks home prices and sales.
Given that the recession ended six months ago, I am shocked to learn that home prices are still crashing. Luckily home prices are excluded from inflation statistics; otherwise, this news would be a sign that deflation is underway.
Rent is still falling. Not sure how they get around that.
Probably the govt will buy up oil to create a false spike and cancel the deflationary effect.
Under the last moron we were buying up oil in the middle of a huge price spike. Way to go George!
Paulson’s new book “On the Brink: Inside the Race to Stop the Collapse of the Global Financial System,” says he and Immelt discussed GE’s difficulty in selling commercial paper during a phone call on Sept. 8, 2008, and in person about 6 p.m. on Sept. 15, the day Lehman Brothers Holdings Inc. filed for bankruptcy.
“Now here was Jeff telling me that GE was finding it very difficult to sell its commercial paper for any term longer than overnight,” Paulson, whose book relies in part on memory, writes of the Sept. 15 conversation. “The fact that the single- biggest issuer in this $1.8 trillion market was having trouble with its funding was startling.”
Immelt said he “does not believe they discussed having problems with GE’s” commercial paper in the conversations, GE spokeswoman Anne Eisele said. The company’s public disclosures during the period, in which the “markets were under great stress,” were accurate, she said.
Those disclosures include a Sept. 14 memo to investors that said in part, “GE Capital’s commercial paper programs, which total $90 to $95 billion, remain robust.”
Looks like another CEO caught lieing to investors.
“Inside the Race to
StopCash in On the Collapse of the Global Financial System”Funny stuff from CNN:
“Chase offered my wife and I a 6 mth trial Load Mod. I had been out of work and JUST getting back so we were behind on a few things. Sceptical, we accepted and found out we would be paying hundreds less a month for 6 mths. Ths wld offer us a chance to get back on track with all overdue bills. YEAH !!! So, here comes the very first payment due. My wife and I make the payment over the phone, verify the amount and the money gets taken and we get a confirmation number. We find out the next day that in addition to the Mortgage amont, Chase withdrew thousands more that we had put in the bank to go towards the other past due bills. We are still in the Loan Mod program but Chase NEVER GAVE OUR MONEY BACK. THEY APPLIED IT TO THE MORTGAGE BALANCE !!! Now we are in worse shape !!! They commited Fraud against us and no one cares. If I were to go into a Chase bank and rob it, someone would care about that !! Well guess what, THATS EXACTLY WHAT THEY DID TO US !!!!”
No doubt that somewhere in the microscopic print Chase was within the agreement.
You really think that Chase could actually help themselves to more money than was agreed upon during the phone payment?
…We find out the next day that in addition to the Mortgage amont, Chase withdrew thousands more that we had put in the bank to go towards the other past due bills…
as i see it, here’s what happened..
They get on the phone and negotiate a mortgage deal.. Bank says OK.
That checking account is ALREADY overdrawn by some thousands…probably overdrafts, fees, late fees on previous mortgage payments, etc. adding up to $$$ thousands.
The (stupid) FBs deposited EXTRA dollars in the account, thinking they would write checks for their overdue bills.. car payments.. whatever..
But banks immediately grab what you already OWE the bank as soon as you put some money in the account.
The FBs should have found some other way to pay their non-bank bills. Maybe cash or cashier’s check. Putting the money into an overdrawn checking account was dumb.
Lots of assumptions there Joey. How do you know from those comments that it was even a Chase account? Or that there were $1000’s of overdraft fees due on it? I’m reading that Chase pulled the money meant to go to other bills, not past due bank fees. Is it really so impossible in your world that a big bank can make a verbal promise over the phone (how much they would take out), then go into the account pulling out far more than agreed upon? What the heck is the small time guy supposed to do in this case? How do you prove a phone conversation?
Having dealt with the stupidity of WaMu 10 years ago where they clearly broke the law in dealing with my family (although my lawyer brother did start screaming loudly and obscenely enough that they finally backed down and followed the law), I am well aware the banks will try to do anything to rip off their customers. There is a reason Chase is so low on the trust polls, and it’s not because they deal honestly and fairly with their customers.
Trust polls..
Answer me these “poll” questions:
Who would you rather trust with all your money? That FB or Chase?
Which of the two are more likely to try to steal the other’s money.. the bank with billions or the FB who’s dug himself a deep hole?
That FB’s in serious financial trouble. I have to discount his opinion, veracity and, at this point, maybe his sanity.
Tucson recently celebrated its annual Dillinger Days. The event commemorates the 1934 capture of bank robber John Dillinger.
I went to a Dillinger Days lecture a couple of years ago. It was presented by a retired Tucson Fire Department captain, and he started by listing the Depression Era bank robbers who are still household names. Y’know, Bonnie and Clyde, Pretty Boy Floyd, Al Capone, and John Dillinger.
He asked the audience why these guys are still so well known. We were stumped. Then he told us it was because the bank robbers were folk heroes. After so many homeowners and farmers had been foreclosed on, the banks weren’t too popular. (Shades of modern times, eh?)
In 1960s parlance, the bank robbers were stickin’ it to the man.
The British Great Train robbers were idolised by the masses also. Everyone was rooting for them to escape.
Mike, you are a fool for not walking away a year ago.
Got a link for this? I looked around on CNN and couldn’t find it. I’d like to send it to someone else.
Go in the CNN Money section. Click on
“Denied! No foreclosure help coming”
If you have a facebook profile you can log in and add your 2 cents in the comment section below the article. Pretty funny stuff about FBs belly aching. Also some common sense.
Enjoy.
Denied! No foreclosure help coming
I saw that, but didn’t see the quote that you posted in any of the stories. Still don’t…
it’s one of the comments somebody posted below the article.
Anyone who believes that only the “rich” are going to pay higher taxes is nutz!
Obama ‘Agnostic’ on Deficit Cuts, Won’t Prejudge Tax Increases
February 11, 2010
Feb. 11 (Bloomberg) — President Barack Obama said he is “agnostic” about raising taxes on households making less than $250,000 as part of a broad effort to rein in the budget deficit.
Obama, in a Feb. 9 Oval Office interview, said that a presidential commission on the budget needs to consider all options for reducing the deficit, including tax increases and cuts in spending on entitlement programs such as Social Security and Medicare.
“The whole point of it is to make sure that all ideas are on the table,” the president said in the interview with Bloomberg BusinessWeek, which will appear on newsstands Friday. “So what I want to do is to be completely agnostic, in terms of solutions.”
My guess is
1. tobacco tax
2. Alcohol tax
3. Increased Tax on wage income above 200k
4. Cuts to capital gains and tax on options.
5. Middle class will not be saved from AMT this year.
Then in a few years
1. National Property tax for all those that scopped up bargains and can’t move now due to rising interest rates. Values above 5million will be exempted.
CEO class will see a drop in taxes, working class particularly those with high incomes will take it in the A##.
The Fed tax issue gets a lot of press, but on the local scene tomorrow is already here! Local taxes are going up, up, up with a bullet.
I still maintain that one really needs to consider the possibility that the equation of houseownership has fundamentally changed. Prices will have to overshoot on the downside big time to offset the coming tax increases.
“Local taxes are going up, up, up with a bullet”.
Dead on.
Our little city has a ton of new tax & ‘fee’ proposals, along with utility increases. Of course it’s all for the good of the citizenry.
Good thing we only have 13+% unemployment in our state (S.C) or we’d be in real trouble.
From the four points of the compass we’re hearing stories of severe distress at the local level. Not only are tax revenues falling, they are falling significantly for the first time in many a local politician’s career.
Think of local gov’t spending as a car without brakes - no one cares as long as the car was going uphill!
agnostic.. jeeze.. this guy is so soft..
“The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails.”
-William Arthur Ward
The PPT manipulates the wind to their favor.
All this after the PTB actually creates the wind.
All this after the PTB
actually creates thebreaks wind.US aircraft carriers do not have sails…
He neglected to mention the thrill seekers that snap on the safety harness and enjoy the ride. : )
Citi to Let Distressed Homeowners Stay for 6 Months (AP)
WASHINGTON - Citigroup Inc. plans to let homeowners on the verge of foreclosure stay in their homes for six months — if they turn over the deed to their property.
Citi said Thursday it is launching the pilot program, dubbed “Foreclosure Alternatives,” this week in Texas, Florida, Illinois, Michigan, New Jersey and Ohio. Initially, about 1,000 homeowners are expected to participate. Citi may expand the program nationwide.
In a normal foreclosure, a lender assumes legal control of the property and evicts the homeowner. But Citi’s program, like other “deed in lieu of foreclosure” efforts, allows the homeowner to avoid a completed foreclosure. While the owner must still leave the home after six months, the program results in a less severe hit to the borrower’s credit score.
Anyone else see this as BS? You haven’t made any payments, which is why you are in foreclosure, so your credit has already been hit. Or am I missing something here?
That’s what I was wondering. I am of the understanding that once you become delinquent, they, who ever you owe the debt, report it to the credit reporting agencies.
I will not be surprised in the very least that if some day soon an amnesty is declared for all who had their credit score sullied for being an FB.
Adjusting the sails?
Tell it to the seniors on low fixed incomes I see each week. Most Americans have no idea. You see crazy stuff in the social work field:
“I’m eating tuna fish, not cat food”
“Cut my pills in half and I’ve got twice as many doses!”
“I keep the thermostat at 56 degrees and put on another sweater”
“My kids complain that they have to take their Prius in for a service recall, but if the bus isn’t running I miss my doctor appointment again.”
Adjust those sails.
Thank you, Ria.
Dog waste piling up at Wyoming forest trails (AP)
JACKSON, Wyo. – A smelly problem is piling at trails around Jackson where people go hiking and cross-country skiing with their dogs. How big is this problem? Bridger-Teton National Forest officials say they recently counted 173 piles of dog waste around just one trailhead.
The problem is so bad, it’s contributing to elevated bacteria levels in nearby streams.
District Ranger Dale Deiter said the situation is “not acceptable.” He’s promising to step up enforcement so people clean up their dogs’ acts.
All the more reason to leave the pets at home. And, in case you’re feeling a shortage of such reasons, here’s another:
http://www.berkshireeagle.com/ci_14345724
“But officials warn that people should always be aware that the wily coyote is here to stay, and for folks living near parks or forests, even though you may not see them, you should assume they are out there”.
Yep you never know what’s out there in the country.
Many moons ago in the S.C. low country I was driving near dawn to work on an old plantations pool. As I eased down the long live oak lined drive a large deer ran across about 50 yards in front of me. I stopped because usually if there’s one, another will follow. About 10 seconds later the largest Puma I have ever seen came running across, hot on his hoofs.
I kept close watch the entire few hours I was there. Two dogs in a kennel near the house raised hell for at least an hour.
Coming soon, now dogs allowed.
Better get rid of the bears and other critters too. Rumor is they also shat in the woods.
Given the how some owners handle (or don’t handle) their dogs, a “no dogs allowed” policy is understandable.
On the eve of the Winter Olympics’ opening ceremonies, the waterfront condo complex in Vancouver that is housing more than 2,700 Olympic athletes and team officials is winning almost universal praise from its guests. The suites are, to borrow a favorite snowboarding phrase, sweet, with marble-top counters in the shiny new kitchens. Each unit has a living-room area - a far cry from the dormlike conditions of Villages past. And the views are nothing short of breathtaking. Many apartments look out onto an inlet and the silver downtown skyline, with snowcapped mountains as a backdrop. “It’s blown us away, to be honest,” says U.S. speedskater Chad Hedrick, who won gold, silver and bronze medals at the 2006 Winter Olympics in Turin, Italy, and is a medal contender this year. “They really went big on this. It’s a million-dollar view, for sure.” (See 25 Winter Olympic athletes to watch.)
Paid for, thank you very much, by the taxpayers of Vancouver. More than any other project in recent Olympic history, the $1 billion residential complex represents the risks that urban governments face when trying to host one of the world’s biggest parties. The city planned to invest about $47 million in the project back in 2006. However, cost overruns and the recession forced Vancouver to step in and bail out the private developers who were charged with financing the project. The city avoided the humiliation of welcoming the world with a half-built Olympic Village, but at a great price: in early 2009, new Vancouver mayor Gregor Robertson declared that taxpayers were “on the hook” for the $1 billion project. “What ended up happening was that the city became a bank for private-sector development,” says Mark Cutler, director of Olympic Village Development for the Vancouver Organizing Committee, the body that is operating the complex during the Games. (See what becomes of Olympic stadiums.)
The city could recoup its investment if the developer sells enough million-dollar condos to Vancouver residents after the Olympics are over
That’s a bummer eh! Tax payer bill increases from 47 million to 1 billion ????
“The city could recoup its investment if the developer sells enough million-dollar condos to Vancouver residents after the Olympics are over”
So they only need to sell a billion dollars worth of condoz, I just can’t see that being a problem. It has shiny kitchens and million dollar views!
Within Australia, Canada, Republic of Ireland, New Zealand, United Kingdom, and the United States, Vancouver is the most expensive city according to Demographia.
The bubble there is so ready to pop. Just in time for the City to flood the market with extra capacity.
http://www.demographia.com/dhi-ix2005q3.pdf
Didn’t Montreal go heavily into debt to finance the 1976 Summer Olympic Games? How’d that work out for the taxpayers of Quebec?
I remember attending a Montreal Expos baseball game at the Olympic Stadium in 2001 and the place did not age well at all. The retractable roof was stuck in the closed position and overall the place was a real dump.
I seem to recall that the ‘76 Olympics debt took a long time to pay off. And wasn’t Expo ‘67 another debt-fest for Montreal?
from Wikipedia:
The Olympics were a financial disaster for Montreal, as the city faced debts for 30 years after the Games had finished. The Quebec provincial government took over construction when it became evident in 1975 that work had fallen far behind schedule; work was still under way just weeks before the opening date, and the tower was not built. Mayor Jean Drapeau had confidently predicted in 1970 that “the Olympics can no more have a deficit than a man can have a baby”, but the debt racked up to a billion dollars that the Quebec government mandated the city pay in full. This would prompt cartoonist Aislin to draw a pregnant Drapeau on the telephone saying, “Allo, Morgentaler?”
The Olympic Stadium, a daring design of French architect Roger Taillibert, remains a lasting monument to the huge deficit. It is often nicknamed The Big O as a reference to both its name and to the doughnut-shape of the permanent component of the stadium’s roof, though The Big Owe has been used to reference the astronomical cost of the stadium and the 1976 Olympics as a whole. It has never had an effective retractable roof, and the tower was completed only after the Olympics.
In December 2006 the stadium’s costs were finally paid in full. The total expenditure (including repairs, renovations, construction, interest, and inflation) amounted to C$1.61 billion. Today, despite its huge cost, the stadium is devoid of a major tenant, after the Montreal Expos moved in 2005.
Android Industries in Flint to lay off up to 138 workers; Lear Corp. to close Fenton plant. ~ Flint Journal ~ February 10, 2010
GENESEE COUNTY, Michigan — A mass layoff at a Flint automotive supplier and the closing of Fenton’s Lear Corp. plant will further reduce Genesee County’s auto manufacturing related employment by several hundred workers.
Android Industries in Flint, in a letter to the state last month, said it plans to permanently reduce the workforce at its plants, 4400 Matthew Drive and 4444 W. Maple Ave., by 138 employees.
And Lear Corp. will close its seat making assembly plant in Fenton’s industrial park in May, but jobs at the plant will transfer to Rochester Hills, according to the UAW Local 524 president. The move affects a total of 266 workers, though 124 are on layoff.
“May 6th is the last working day and May 7th the doors will close,” said Maxine Kominski, president of the local.
Jeff Brown, shop chairman for UAW Local 524, said Lear workers on Sunday voted 103-5 to an addendum to transfer with their work and to give laid off workers rights to return to work, but at a lower wage.
Rattle rattle thunder clatter boom boom boom!
* The Wall Street Journal
* FEBRUARY 11, 2010, 2:08 P.M. ET
UPDATE: Fannie, Freddie Delinquent-Loan Plan Rattles Market
By Prabha Natarajan
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)–Higher-coupon agency mortgage-backed securities got slammed Thursday as investors reacted to the unexpected news that Fannie Mae (FNM) and Freddie Mac (FRE) plan to buy back as much as $200 billion worth of delinquent home loans.
Risk premiums on bonds with 6.5% interest coupons were as much as 25 basis points wider than comparable Treasurys in the secondary market, while the 6% coupons were 20 basis points wider in the morning. As risk premiums rise, bond prices fall.
The bonds later backed off those stressed levels, but continue to trade at weaker levels. Higher-coupon bonds were hit hardest by the news because they were issued during the housing boom, and house the highest level of delinquent loans.
“The news of Fannie and Freddie buyouts took the investment community by surprise,” said David Cannon, global co-head of asset-backed and mortgage-backed trading at RBS.
Older, higher-coupon securities traded for more than their face, or par, value, in part because they offered a better return but also because newer, lower-coupon bonds are expected to fall in value once the Federal Reserve concludes its $1.25 trillion market-support program on March 31.
On Thursday, however, the older bonds fell because Fannie and Freddie said the day before that together they may buy back billions of dollars worth of loans in arrears for 120 days or more–and that they would exercise their right to buy them back at par.
“The good news is that Fannie and Freddie will come through with their guarantee on delinquent loans,” said Ford O’Neil, senior portfolio manager at Fidelity Investments, one of the largest U.S. mutual fund companies. “The bad news is that something you bought yesterday at 108 cents is [now] worth 100 cents.”
In addition to the loss up front, investors also face the risk of finding suitable assets in which to invest their cash once these loans are prepaid.
“There are not that many trades left,” said Gary Greenberg, senior vice president at Payden & Rygel, which manages $50 billion in assets. “If you go down in coupon, you still have to face the music when the Fed exits.”
…
Not that a retard like Brown or any of the rest of the G-20 give a damn. It’s about money for gubmint coffers. Tax the hell out of the worlds banks, and what will they do?
Global bank tax near, says Brown ~ February 10 2010
Gordon Brown said on Wednesday the world’s leading economies were close to agreeing a global bank tax, amid hopes in Downing Street that a deal can be concluded at the G20 summit in Canada in June.
Mr Brown believes that opinion has shifted decisively in favour of a globally co-ordinated tax after President Barack Obama’s move last month to raise $90bn (£57.7bn) from a US bank levy.
Annnnnd…. phase 3 commences.
“Tax the hell out of the worlds banks, and what will they do?”
Morph into non-bank financial entities (e.g. hedge funds)?
http://finance.yahoo.com/news/Lennar-shares-jump-on-FDIC-apf-410700946.html?x=0&.v=1
Lennar shares jump on FDIC loan portfolio deal
Homebuilder Lennar Corp.’s shares surge on deal with FDIC to work out distressed loans
LOS ANGELES (AP) — Shares of Lennar Corp. surged Thursday, a day after the homebuilder disclosed a deal with the Federal Deposit Insurance Corp. to resolve about 5,500 distressed real estate loans.
The Miami-based builder said the transaction will add to its earnings this year. Lennar announced the transaction after the close of trading Wednesday.
Under the terms of the deal, Lennar and the FDIC, which insures bank deposits, will hold equity interests in two portfolios of loans with a combined unpaid balance of $3.05 billion. The transactions include about 5,500 distressed residential and commercial real estate loans from 22 failed bank receiverships.
Lennar subsidiary Rialto Capital Advisors acquired 40 percent managing member interests in limited-liability companies created to hold the loans for about $243 million. The FDIC is retaining the remaining 60 percent stake, and is providing $627 million in financing at zero percent interest for seven years.
Rialto will conduct the day-to-day management and workout of the distressed loan portfolios.
Deutsche Bank analyst Nishu Sood wrote in a research note Thursday that he anticipates Lennar can earn up to $15 million, or 8 cents per share, this year from working out loans on the distressed assets.
“The deal is well structured and gives management 5,500 assets to mine for value in the coming years,” Sood wrote.
He cautioned that there are long-term risks given the severity of the housing downturn.
“Better assets will be easier to resolve earlier on,” Sood wrote. “Later year recoveries will be dependent on the shape of the housing recovery.”
Some people around here were wondering who would buy those toxic assets. Well, there ya go.
Looks like the Volcker plan is DOA. Made a great sound bite, however. Talk like a Chameleon.
My guess is that First Amendment-protected “free speech” (of the financial sort) sufficed to quell Volcker.
Stay tuned, we haven’t heard the last from Volcker. He’ll be trotted out now and then as needed as this contraction rolls on, but more for image than for substance.
He is doomed to becoming the defunct economist who was right but ignored during this credit bust…
“There’s a lot of foreclosures in the pipeline, and the number is going to continue to get bigger,” said Patrick Newport, an economist with IHS Global Insight.
Last month’s foreclosure activity followed a pattern similar to that of a year ago, when a double-digit percentage increase in December was followed by a 10 percent drop in January.
The dip in January’s numbers may be due to processing delays by lenders during the end-of-year holidays, said Rick Sharga, senior vice president of RealtyTrac, which is based in Irvine, Calif.
“I don’t think it’s an early sign of the coming of the end of the foreclosure crisis,” Sharga said.
A record 2.8 million households were threatened with foreclosure last year, and the numbers are expected to rise to between 3 and 3.5 million homes this year, RealtyTrac said.
A closely watched pot never boils over.
Unless too many pots boil at the same time, that is. In that case, run for cover and duck, because the simultaneous explosion of too many financial pressure cookers could result in third degree financial burns for anyone who is not under protective cover…
LOL.
Why am I getting flashbacks to that Gilligan’s Island episode with the lunar lander camera, the boiling pot of glue the blew its top, and the big pile of feathers?
Why? For the same reason I am. It indicates many afternoons in the mid-70s watching syndicated sitcoms after school. Gilligan’s Island at 4:00, Barney Miller at 4:30, Brady Bunch 5:00 to 6:00.
Three Stooges at 3:30 –
“Nyuck, nyuck, nyuck, nyuck…”
Gold bugs can already hear the sound of the fiat currency presses revving up to cover the Grecian bailout tab.
Volatility, schmolatility…
US gold ends above $1,090/oz on currency volatility
Thu Feb 11, 2010 3:32pm EST
NEW YORK, Feb 11 (Reuters) - U.S. gold futures ended above
$1,090 an ounce on Thursday as investors turned to the metal as
a hedge against currency market volatility after news that
European governments agreed in principle to support heavily
indebted Greece.
GOLD
* COMEX April GCJ0 settles up $18.40, or 1.7 percent, at
$1,094.70 an ounce.
* Range $1,072.90 to $1,098.40.
* April rises on currency volatility as euro moves in wide
range after details emerged from EU plan to aid Greece.
* Gold supported as euro falls against dollar after
spanning from $1.38 to $1.35
* Details of the package not expected to be finalized until
EU finance ministers meeting next week.
* Worries about debts, accommodative monetary policy
friendly to gold prices - Thomas Winmill at Midas Fund.
* December output from top gold producer South Africa down
8.8 percent from November.
* Gold-to-oil ratio at 14.60, against 14.39 in the previous
session.
* COMEX estimated final volume at 170,541 contracts.
* Spot gold XAU= at $1,096.70 at 3:17 p.m. EST (2017
GMT), against $1,071.55 in late New York business in the
previous session.
* London afternoon gold fix XAUFIX= at $1,076.25.
…
Related News
* US gold higher but gains cut after Greece plan
10:46am EST
* US gold ends down as Bernanke remarks boost dollar
Wed, Feb 10 2010
* US gold drops on dollar rise, Bernanke remarks
Wed, Feb 10 2010
* US gold ends up on euro rally, Greece bailout talk
Tue, Feb 9 2010
* US gold rises on economic optimism, CIC stake
Tue, Feb 9 2010
Doesn’t this news pretty much guarantee the Fed will dump helicopter drops of liquidity on Wall Street until this latest wavelet of panic calms down?
The Financial Times
EU pledge on Greece fails to calm fears
By Ben Hall and Tony Barber in Brussels and David Oakley in London
Published: February 11 2010 19:14 | Last updated: February 11 2010 19:14
A pledge by the European Union to stand by crisis-hit Greece punctured hopes in the financial markets yesterday of a swift rescue and raised fears of renewed selling.
Efforts by Nicolas Sarkozy and Angela Merkel, the French and German leaders, to paper over differences between Berlin and Paris on how to deal with the Greek debt crisis led to a summit statement in Brussels that stopped short of providing immediate support for Athens.
The leaders of the 27-nation bloc promised “determined and co-ordinated action if needed to safeguard stability” of the eurozone, which has been shaken by turmoil in bond markets amid fears that Greece’s debt problems could spread.
The accord amounted to an implicit assurance to help Athens if it had problems in refinancing debt in April and May.
But the lack of a detailed bail-out plan underwhelmed investors in financial markets. While global stocks and bonds made modest gains, the euro fell 0.9 per cent against the dollar.
Herman van Rompuy, the EU’s permanent president, described the deal as a “political statement” saying leaders had not come up with a detailed rescue package because Greece had not asked for assistance.
Mr Sarkozy said: “We have committed to a show of solidarity, transparency and discipline.”
…
EDITOR’S CHOICE
Greece to pay price of scrutiny for help - Feb-11
Statement of support from EU leaders - Feb-11
Brussels blog: Germany demands its pound of flesh - Feb-11
FT Alphaville: Greek bail-out ennui - Feb-11
Lex: ContAsian: Greek disease could spread - Feb-11
In depth: Greek debt crisis - Feb-11
That and the expectation of an additional $200B in debt to bail out Fannie and Freddie does wonders for the price of PM’s.
“Gold bubble we hardly knew ye”, eh PB? Oh ye of little faith. You underestimate the creativity of the financial wizards!
US STOCKS-EU’s backing of Greece, data boost Wall Street
Thu Feb 11, 2010 5:25pm EST
* Investors welcome EU’s support for Greece
* Weekly jobless claims fall more than expected
* Dow up 1.1 pct; S&P 500 up 1 pct; Nasdaq up 1.4 pct
By Ellis Mnyandu
NEW YORK, Feb 11 (Reuters) - U.S. stocks rose on Thursday after a pledge by European leaders to support debt-laden Greece eased fears of a broader euro zone crisis and upbeat data from China spurred mining and material stocks.
Data pointing to stabilization in the U.S. labor market gave the market a further boost, along with a broker upgrade of bellwether 3M Co (MMM.N), whose stock rose 2.1 percent.
China, the world’s top base metals consumer, reported a jump in lending and slower inflation, suggesting the economy is on track for growth. Caterpillar Inc (CAT.N), a big mining equipment maker, rose 5.6 percent to $56.15 and provided the biggest boost to the Dow industrials.
But the biggest driver in the nearly 1 percent rise on the day was the European Union pledge to support Greece. Investors saw an EU bid to avert fallout from fiscal troubles in Greece and other European single currency countries like Portugal and Spain.
“They moved everything up on more of a posture by the EU to come up with something creative on Greece as opposed to not knowing what to do,” said Stephen Carl, principal and head of U.S. Equity Trading at the Williams Capital Group in New York.
“It looks like they are putting things in place and the market is reacting favorably just because there is a plan. Let’s see how they implement it.”
…
Related News
* Stocks rise on Greece plan. commodities also gain
4:59pm EST
* US STOCKS-Wall St jumps as EU vows support for Greece
2:26pm EST
* US STOCKS SNAPSHOT-Market jumps as data spurs optimism
12:04pm EST
* US STOCKS-Wall St rises on reports of help for Greece
Tue, Feb 9 2010
Tomorrow I am having lunch with a real estate guy who is looking to store his millions in gold. Should be interesting…
Just wanted to say thanks to everybody for the feedback from yesterday. We should be moving in the next 2 weeks, and I have looked at about 20 houses for rent. I have 2 good candidates now, and hopefully I can close the deal on one of them by this weekend and begin the move next week. As with all negotiating, I’m keeping my timeline discreetly couched, and am ready to walk away at the first smell of horsesh!t.
Since we have at least found some decent places to rent at equivalent prices we will be going with a 6-12 month lease, and continue to monitor the market. Thanks for reeling me in guys
Now if I could just get everyone on board with repealing the personal income tax, I think my life would be totally relaxed again.
This is for Eddie, wherever he may be…
gjfreepress dot com
“The vacancy rate for multi-family units in Grand Junction surged to 13.2 percent in the fourth quarter of 2009.
That was up from 3.1 percent in the same period of 2008. At the same time the average rent decreased to $633.46 from $666.22.”
(This is the heart of Oilpatch, Colorado)
Don’t bother confronting trolls with data. They will simply stick a finger into each year and commence their ritualistic chant:
“Nah-nee-nah-nee-naah-naah…”
Given that prices fell 12% in 2009 and are still falling, of what “price recovery process” is FunYun speaking?
Home prices fell 12% in 2009
By Les Christie, staff writer
February 11, 2010: 12:12 PM ET
NEW YORK (CNNMoney dot com) — The real estate roller-coaster ride continued last year as the median price of U.S. single-family home plunged 11.9% to $173,200.
The housing situation had been looking up earlier in the year, with prices gaining ground in the first nine months. But the increases weren’t enough to push the median home price above 2008’s bar of $196,600, according to the National Association of Realtors.
And then, prices fell in the fourth quarter, dropping 2.9% compared to the previous three months and 4.1% compared to the last quarter of 2008.
Still, the quarter-over-quarter drop was encouraging to NAR, which tracks home prices and sales.
“This is the smallest price decline in over two years, with the most recent monthly data showing a broad stabilization in home prices,” said Lawrence Yun, NAR’s chief economist. “Because buyers are taking on long-term fixed rate mortgages, avoiding adjustable-rate products, and trying to stay well within their budgets, the price recovery process appears durable.”
Another sign of improvement is the increase in the number of homes sold. More than 6 million homes changed hands between October and December — a 27.2% increase from the same time period in 2008.
“The surge in home sales was driven by buyers responding strongly to the tax credit combined with record low mortgage interest rates,” said Yun. “With inventory levels trending down over the past 18 months, we expect broadly balanced housing market conditions in much of the country by late spring with more areas showing higher prices.”
…
I am totally disturbed by the FHA life event thing. Why not get an FHA loan and “plan” on a life event.
More real estate ransom I gotta compete against.
Foreclosures Up 15 Percent From January 2009
5:02 pm
February 11, 2010
A foreclosure in Tempe. (Nick Bastian Tempe, AZ/Flickr)
By Caitlin Kenney
The number of foreclosure filings fell 10 percent in January, but surpassed 300,000 for the 11th straight month.
Real estate data firm, RealtyTrac, reports that 315,716 properties received a notice of default, auction or bank seizure — that’s one in every 409 households. Foreclosure filings also fell in January of 2009, only to rise months later.
“If history repeats itself we will see a surge in the numbers over the next few months as lenders foreclose on delinquent loans where neither the existing loan modification programs or the new short sale and deed-in-lieu of foreclosure alternatives works,” James J. Saccacio, RealtyTrac’s chief executive officer, said in the statement.
According to the Treasury Department, only about 66,000 delinquent loans were permanently modified under the Home Affordable Modification Program as of December 31. That has left many homeowners feeling helpless and mortgage officials searching for new techniques to deal with distressed borrowers.
…
From The Associated Press, February 11, 2010 - 3:04 PM
Hawaii foreclosure filings pass 1,000 in January for the second month in a row
HONOLULU (AP) - The number of foreclosure filings in Hawaii passed the 1,000 mark for the second month in a row in January.
But the 1,302 filings reported by real estate research firm RealtyTrac was lower than the record 1,534 foreclosure filings in the state in December.
The January filings represent a 286 percent increase over the 337 filings recorded in January 2009.
Last month’s foreclosure rate was one filing for every 394 Hawaii households. The national rate in January was one in every 409.
Hawaii ranked 11th nationally for rate of foreclosures last month, one spot below its worst-ever 10th place ranking in December.
January’s figures show Oahu had the most filings at 652, but the lowest rate at one filing for every 517 households.
Buy now, or get priced out forever!
* The Wall Street Journal
* REAL ESTATE
* FEBRUARY 12, 2010
Home Prices Rise in Metro Areas
By JAMES R. HAGERTY
Home prices rose in more than a third of U.S. metropolitan areas in the fourth quarter, the National Association of Realtors said Thursday as it pointed to a “broad stabilization” in values.
The median price for single-family home resales was up from a year earlier in 67 of the 151 U.S. metropolitan areas included in the trade group’s quarterly survey.
…
Among metro areas showing the biggest gains from a year earlier were Cleveland (25%), Akron, Ohio, (23%) and San Francisco (13%). Those increases don’t denote a general surge in home values but rather show that sales of foreclosed homes at fire-sale prices made up a smaller percentage of overall sales than they did a year earlier.
…
Spillover denial will only carry irrationally exuberant bovines so far; after that, green shoots of liquidity will be needed to drunk ‘em up real good.
The Wall Street Journal
* FEBRUARY 11, 2010
Europe Vows to Save Greece
Pledge to Prevent Athens Default Is Watershed for Euro Zone; Details Remain Vague
European Commission President Jose Manuel Barroso, German Chancellor Angela Merkel, Greek Prime Minister George Papandreou, French President Nicolas Sarkozy and EU president Herman Van Rompuy.
BRUSSELS—European leaders said they wouldn’t let Greece succumb to its credit crisis, in an unprecedented pledge of support that could push the 16 countries that share the euro currency closer to collective responsibility for their budgets and debts.
Countries belonging to the euro “will take determined and coordinated action, if needed, to safeguard financial stability in the euro area as a whole,” leaders of the European Union declared at a summit in Brussels on Thursday, after discussing Greece’s budget crisis.
It was a watershed acknowledgment that the fiscal problems of one euro-zone country have now become the problems of all. That’s a historic step for Europe in its 11-year-old experiment with a common currency. Until now, member countries had fiercely defended their sovereignty over taxes and spending, even though they share the euro and a common central bank.
EU officials stopped short of outlining how any bailout would work, however, disappointing many investors who had been looking for concrete details.
Markets reacted in mixed fashion. The euro fell sharply on worries about the lack of a detailed rescue package. However, Greek government bonds, which are at the center of the tumult, rallied to their best levels since mid-January, a sign that investors were more confident about Athens’s ability to service its debt. U.S. markets rose, with the Dow Jones Industrial Average closing up 1.1% at 10144.19, buoyed by the news on Greece and positive economic developments in China and the U.S.
U.S. relief may be short-lived as it sinks in that the EU summit didn’t really solve the fundamental issue of how the euro zone will support its troubled weaker members, some analysts said.
Euro zone officials had initially hoped to keep Greece off the agenda of their summit. But they were forced to act by worsening market turmoil and worries Athens’s problems could spill over to other countries.
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How does the expectation for a new employment mix mesh with hair-of-the-dog measures to reflate the housing bubble?
* The Wall Street Journal
* ECONOMIC FORECASTING
* FEBRUARY 12, 2010
Economists Expect Shifting Work Force
Increased Automation and Relocations Overseas Means a New Employment Mix Will Take Hold When Hiring Resumes
By PHIL IZZO
About a quarter of the 8.4 million jobs eliminated since the recession began won’t be coming back and will ultimately need to be replaced by other types of work in growing industries, according to economists in the latest Wall Street Journal forecasting survey.
While the job market is constantly shifting as some sectors fade and others expand, this recession threw that process into overdrive. Thousands of workers lost jobs as companies automated more tasks or moved whole assembly lines to places like China. As growth returns, so will job creation—just with a different emphasis in the mix of jobs being created.
Economists in the survey are predicting a slow upswing for the economy as a whole. Respondents on average expect economic growth to settle at about 3% in 2010, off sharply from the powerful 5.7% seasonally adjusted annual growth rate in the fourth quarter.
This is why job creation has become such a worrisome issue: Based on that growth projection, over the next year economists estimate the U.S. will add about 133,000 jobs a month. That sounds good and it’s certainly better than more job losses. But with about 100,000 new jobs a month needed just to soak up new entrants to the work force, that pace of job creation will only slowly reduce the high unemployment rate.
About the Survey
The Wall Street Journal surveys a group of 56 economists throughout the year. Broad surveys on more than 10 major economic indicators are conducted every month. Once a year, economists are ranked on how well their forecasts have fared. For prior installments of the surveys, see: WSJ.com/Economist.
That’s why the economists expect the unemployment rate to only fall to 9.4% by the end of the year—down from 9.7% in January. They say job growth needs to average more than 200,000 per month for the U.S. to see a strong recovery in jobs.
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Currency devaluation is no free lunch:
* The Wall Street Journal
* ASIA NEWS
* FEBRUARY 11, 2010, 10:04 P.M. ET
Vietnam’s Devaluation Helps Dong, but Problems Linger
By ALEX FRANGOS And PATRICK BARTA
Vietnam’s devaluation will help shore up its currency system, but inflation and a big trade deficit mean the government has more work ahead—and that could include further devaluations and sharply higher interest rates.
The Southeast Asian nation, which has seen an influx of Western investment capital in recent years, grew 5.5% in 2009, World Bank estimates show, despite the global financial crisis. But in the transition to a more urban, market-based economy, the country has struggled to keep a lid on inflation and trade and budget deficits, which in turn has put pressure on its currency.
Vietnamese residents have responded by hoarding dollars and gold out of fear the currency—the dong—will become even less valuable in the future.
The State Bank of Vietnam on Thursday lowered by 3.4% the official value of the dong, which is pegged to the U.S. dollar, bringing the currency more in line with how it trades on the street in nongovernment sanctioned venues. Now, one U.S. dollar will buy 18,544 dong, compared with 17,941 dong earlier in the week. The country also capped the interest rate on some U.S.-dollar bank accounts at 1% in order to encourage businesses and state enterprises to hold dong instead of dollars.
Vietnam’s problems are unlikely to spread to neighbors such as China, Thailand and Indonesia, which enjoy strong foreign exchange reserves and trade surpluses. The rest of the region is facing pressure for their currencies to rise, rather than weaken.
Hanoi’s moves this week aren’t the first and will unlikely be the last, analysts say. “Unless we see moves to address the inflation and trade-balance issues, we will likely see depreciation pressure continue,” said Daniel Hui, currency strategist at HSBC in Hong Kong. Inflation rose 7.62% in January compared with the year before.
Mr. Hui predicts Vietnam will have to raise its benchmark interest rates four percentage points this year to curb inflation. Higher interest rates will make it more attractive to hold dong, increasing its underlying value. But higher rates also risk snuffing out the economic rebound.
Economists at DBS forecast that the government will let the dong devalue another 5.9% this year. Vietnam announced a 5% dong devaluation in December and has had two other devaluations since June 2008.
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ARSON!!!
* The Wall Street Journal
* EUROPE NEWS
* FEBRUARY 11, 2010, 10:46 P.M. ET
Debt Burdens Hobble Euro Zone
Governments Struggle to Service Obligations Amid a Sluggish Recovery and Pressure From Markets
By BRIAN BLACKSTONE
FRANKFURT—The prospect of prolonged economic malaise in Europe’s most debt-laden countries could undercut the continent’s economy as a whole and linger for years, economists warn, even if European officials manage to solve Greece’s immediate funding crisis.
Massive interest payments that countries such as Greece must make to service their debts will likely constrain spending in other areas that could help boost their economies.
Meanwhile, investors may balk at buying government bonds without a hefty premium that would saddle the countries with even more debt. The countries can’t devalue their currencies to help cope, as they could before joining the euro zone with its shared currency.
Their continuing struggle could weigh on investors’ views of other countries of the 16-nation bloc that carry heavy debt.
“Following a wave of financial crises especially in financial centers, you get a wave of defaults,” economist Carmen Reinhart of the University of Maryland said in a recent interview. “You go from financial crises to sovereign-debt crises. I think we’re in for a period where that kind of scenario is very likely.”
When a nation’s debt rises to more than 90% of its annual economic output, as has happened in Greece, economic-growth rates are reduced on average by about one percentage point a year, according to research by Ms. Reinhart and Kenneth Rogoff of Harvard University.
In the wake of financial crises, tax revenues tend to shrink and expenditures soar as governments try to cushion the blow.
“If [investors] start to think about medium-term prospects for the economy and level of debt, perhaps concerns could spread to Italy and Belgium,” which both have high debt as a share of gross domestic product, said Ben May, economist at the consultancy Capital Economics in London.
Even France is on the “edge” of the radar screen, the firm cautions, because it borrowed more as a share of its economy than any country in Europe except Spain, Greece and Ireland. A big chunk of France’s outstanding debt matures this year.
Sovereign-debt crises aren’t new to international finance. The global economy weathered them in Russia, Mexico and Asia during the 1990s and in the last decade saw Argentina default.
European Central Bank President Jean-Claude Trichet, who has worked on dozens of national debt crises, said that what distinguishes the current situation is that it “started at the heart of the financial markets of the West,” and not in emerging markets.
“This first real stress test of global finance has demonstrated a fragility that is absolutely unacceptable,” he added.
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154,000 down payment on builders price of 359,000 in 2002 when the base price was moving to 410,000. 5.25 percent fix rate thirty year mortgage, income of 140,000 base salary. My payment was in line with income, 2300 a month including 10,000 in yearly taxes for house and property. Many paid for improvements, thirty thousand dollar patios and sixty five thousand dollar pools. I bought the material and did high quality work I did myself. Privacy fences made from landscaping, sound proof master bedroom, patio, Jacuzzi, beautiful house and property all improvements based on six year national real estate study of what added value to homes.
In trying to replace a 140K job I need to sell the house, I lost buyer two days before closing when feds lowered subprime from 485 to 415 in NJ. Never recovered the market began to collapse. I leased the house at cost, maxed my credit making payments without a job. No one considered you a viable candidate with a house in NJ you could not sell, the worst experience of my life.
Needed a crystal ball to see that coming, I was told the market was stable since 1945 after World War II. Prior to this sales where in 10-15 days in NJ since I had been looking in 1999. Now its years with values based on short sales just to recovery debt.
I’m not a fain of two big to fail, what this means to me is they got paid for mortgages, foreclosures, the bailout, there bankruptcy, and our payments of debt, yet they created my debt. The values of a house are not supposed to fluctuate by hundreds of thousands of dollars. This is not just Leyman Brothers slicing it up, AIG insuring it, Citibank and Wachovia selling it, its the real estate firms, employees, and appraisers, the banks, and lawyers, that approved the gains and sales, they gambled away our savings, equity, and investments and we get stuck with debt we have to repair and losses we can never recover from.
Where is the criminal justice system now, silent, people stating CEO’s are not responsible because they are suddenly only brilliant in a very specific discipline and where also scammed? Does anyone actually believe this? Seems like a instruction book on how to collapse a country, congratulations, morons.