Bits Bucket For February 27, 2010
Post off-topic ideas, links and Craigslist finds here. Please visit the HBB Forum.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
April 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Fannie to U.S.: We need another $15.3 billion
February 26, 2010
NEW YORK (CNNMoney.com) — Battered by the housing crisis, mortgage finance company Fannie Mae said Friday that it needs another $15.3 billion in bailout money from the federal government.
Fannie Mae (FNM, Fortune 500), which is controlled by the government, reported a fourth-quarter loss of $16.3 billion, including $1.2 billion in dividend payments to the Treasury Department. This is down from $25.2 billion a year earlier and $19.8 billion in the third quarter.
For 2009, however, Fannie’s losses ballooned to $74.4 billion, compared with $59.8 billion in 2008.
“Fannie’s losses ballooned to $74.4 billion, compared with $59.8 billion in 2008.”
Will the next bailout be called a ‘balloon payment’?
“Will the next bailout be called a ‘balloon payment’?
We’re going to need a bigger balloon!
Well, I hope this balloon is more entertaining than the deflating sub-prime bubble, which has been like one long, laborious gas passing.
Hopefully, the Fannie [I’ll refrain from a cheap joke based on the last clause in the prior sentence] balloon will deflate so fast it shoots around congress and DC poking people in the eye and knocking things over.
“We’re going to need a bigger balloon!”
And what’s inside that balloon? This is looking a lot like the Hindenburg.
Sales pace Cools Off:
-More like freezes over!
http://www.news-journalonline.com/news/local/east-volusia/2010/02/27/home-sales-pace-cools-off.html
When I first saw this reported on TV news, I was laughing because the numbers were so astronomical that whoever wrote them on the ticker running at the bottom of the the news show and whoever checked it both allowed $75M instead of $75B to be written about Fannie Mae without realizing it was wrong.
Desperation on the factory floor.Blue-collar workers hanging on by thread
The Detroit News ~ 2-26-10
Garden City — They arrive at work at 7:25 a.m. and many of their cars are rusting buckets of crud. Except for the boss’s. He drives a Volvo.
Walk in the door at Schaefer Screw Products and there is the enemy — the clock. The oil vapors and solvents are overwhelming. The yellow light is dispiriting. The workers don’t want to be here. The liquor bottles in the weedy lot out back tell part of the story. The graffiti in the bathroom — profanely denouncing “hard workers” — tells the rest.
The workers punch the clock at precisely 7:30 a.m., not a minute later since they would be docked 14 minutes and nobody in America works 14 minutes for free. A quiet resignation settles over them as the roar of the screw grinding machines rev up. Want it or not, they need to be here. After this place, there is no place. Not in today’s America.
This machine shop may be the next wobbling domino in the collapse of the American manufacturing sector and the struggles of its blue-collar workers. There are at least seven shops nearby that are available for lease.
Schaefer Screw is in an industrial section of Garden City north of Ford Road, about two miles west of Detroit.
My brother Bill Parker and his wife Kim work there. Bill, 35, made $70,000 shuffling subprime mortgages for Rock Financial in 2006. He used to wear suits and now he wears oily jeans making $8.50 an hour counting and cleaning screws. For Christmas, he got a $43.80 bonus and evicted from the house he wrote the mortgage on.
“Dude, I was making more than that in high school,” he said. Then he recited the new battle cry of a generation: “I’m just glad to be working.”
And like Um we should feel sorry for him?????
——————————————–
For Christmas, he got a $43.80 bonus and evicted from the house he wrote the mortgage on.
At least he’s working. He took what’s available instead of declaring this job beneath him and getting on the welfare dole. Morally speaking, that’s not so bad for a former mortgage broker, no?
These mortgage broker types are just hibernating waiting for next trendy bubble.
I remember visiting my aunt and uncle in Garden City, MI, when they bought their first little house. It was new at the time, three little bedrooms and one little bathroom. It was aboue 1960. I don’t think it would be the end of the world if we headed back to tiny, modest houses.
REhobbyist
I have those type of memories too. It’s those early memories that endear you to the concept of family. Like you, I have fond memories of my aunts and uncles, not their homes. I could have cared less.
Schaefer Screw Products.
Whoaaa! Talk about target-rich ironic joke article.
Fire away!
I got a great chuckle out of that story. He’s learning what real work is. Lying through your teeth pushing toxic mortgages for bloated salaries isn’t work, it’s a criminal activity.
A lot of blue-collar types tend to be more deferential around “suits”, which also made them more susceptible to silver-tongued realtors and mortgage brokers. If this guy happens to be working with any low-wage FBs who saw their “investment” go up in smoke, he may end up with the occasional “dump” in his lunch pail.
But but but I lost my house…I’m just as dumb as you….
Goodnight from Australia…. the most expensive place to live on earth (bubble hasn’t burst yet, but it soon will, in spectacular, perhaps even overnight, fashion…)
Tsunamis Earthquakes 8.8 in Chile…massive snow storms…lowest consumer confidence levels, and lowest new housing starts….what a great time to buy a house..
And it’s cold and rainy in Phoenix. The end times are upon us…
It was a pleasant misty morning in the South Bay part of LA this morning. I had a great indoor lap swim. 4200 yards and I maintained a strong pace through 3300 yards of it.
I think SUguy (whatever his screenname) is right about giving up coffee (sorry Rancher!). I feel more energy since. Instead of my one cup of coffee a day I just drink a Grande green tea. when I’m in a hurry I get the Starbucks oatmeal and drop in a few blueberries. My ulcer was starting to reoccur, so that prompted me to give up coffee. In fact, I haven’t had this much energy in months.
I gave up soda too.
For anyone interested in music I recommend the group named Beach House, based in Baltimore. Songs such as “Zebra,” “Take Care,” “Walk in the Park.” They are a three person group. Female vocalist on the keyboard, a guitarist, a percussionist. I don’t know how to compare them to. Somewhere between “Catherine Wheel,” and “the Divynls,” and “The Association” I guess! Look them up on today’s AOL.com, as it has four videos of ‘em.
Bill, at my age coffee is necessary for that jump
start in the morning. Then the gym to keep
loose. I do two miles on an inclined treadmill
in 28 minutes, and that’s walking because of the
old knees…laughing.
I gave up soda too.
Bill Caffeine is found not only in coffee but also in colas, chocolate and other cocco products. Most people who find when they stop drinking coffees that they go thru withdrawal: they feel tired, think fuzzily, get head aches, and become a little depressed and low on energy. After 3 or 4 days of this, though, you will notice a new calmness. Your fuse will get longer and you wont find yourself feeling as tired later in the day.
Also let go of the 2buck chuck. Alcohol has a direct, toxic effect on the muscle of the heart. Over time this can cause the heart to beat less effectively, a condition known as alcohol cardiomyopathy. Alcohol is toxic to a number of other organs systems especially liver. Drinking more than one drink per day doubles the risk of hemorrhagic stroke as compared to the non drinkers. Alcohol raises the good cholesterol is only half the story. There are two types of HDL. HDL2 and HDL3. HDL2 helps protect against coronary heart disease but HDL3 does not. Alcohol raises HDL3.
Let’s discuss being a vegetarian some time. As far as exercise I like the Nike commercial “Just do it”
Hmm…It’s interesting what you say on the alcohol. I’ve become a regular drinker (two glasses per day) for the last couple of years. Before that it was occasional.
I will work on reducing consumption of those things. It is certainly a revelation to finally get a better feeling of more energy and a deeper sleep.
In reality, I’ve typically had far more caffeine daily than just from coffee. I would drink the sodas, have green teas, one candy bar per day. So effectively my “one cup of coffee” was probably six cups of coffee.
Awhile back you posted that you are experimenting with an uncaffeinated tea - was it green tea? Even a regular cup of green tea has 30% of the caffeine of a cup of coffee.
I do remember I was not much of a coffee drinker before my 40s, but I certainly had a lot of caffeine.
In regard to wine, it’s hard to let go of the findings of wine and the “French paradox.” The French eat rich foods, include chocolate, albeit in tiny amounts. They are practitioners of moderation. One exception is that I think they are heavy smokers. Yet they are not obese and live longer than people on the American junk food diet.
From the google search, I still find far more positives than negatives on red wine: For men, 2 glasses (or one fifth of a 750 ml bottle) of red wine is the maximum per day. For women, one glass. To get the best benefits, only one bottle per week is safest.
Any more than those two glasses can cause liver problems in time. It’s all a matter of self control. Men have an enzyme that can handle a little more alcohol than women.
My rule of thumb: One fifth of a bottle for better health, two-fifths to enjoy more of the taste. I had Wolf Blass Yellow Tail recently and it was very good!
Bill exercise will make you fit, but fitness and health are not synonymous. Exercise alone is not enough to make you healthy to achieve good health exercise is an essential part of a comprehensive lifestyle program. Research shows people who drink “moderately” may live longer is that they often have more social support than others who do not drink. In our culture Happy hour is a socially acceptable way to take a break from work and spend time relaxing with friends or spouses. Scientist suspect the same benefits would result from having social supports in activities not centered around alcohol. Another thing never exercise after alcohol consumption as it may precipitate heart arrhythmias.
SUGuy, my own rule is never drink before 4pm. I exercise long before that. As for social effects being the real deal about wine, I’m extremely skeptical. You need to provide me the links.
Can you say resveratrol? I can point you to a number of links on the French Paradox.
Does “SU” stand for “Southern Utah?” Are you a closet Mormon? Mormons don’t drink coffee, soda, or alcohol as a rule.
Oh, and I guess Jack LaLanne must be BSing then? He’s 95, drinks red wine in the evenings, swims 90 minutes every morning followed by a half hour walk or weightlifting.
http://www.shareguide.com/LaLanne2.html
Jack LaLanne was 91 at the time of the interview below.
Share Guide: You believe that a little bit of red wine with dinner is okay, right?
Jack LaLanne: Yes. Doctors say that one or two glasses of wine a day is okay. But they don’t tell you drink a gallon! Look at the French people, one of the longest lived people on this earth. They have wine for lunch and for dinner, but they don’t get drunk. You know, if you can’t have something that gives you a little pleasure in life, then what the heck is the good of living?
Hah! I gave up coffee too. Haven’t felt better in ages, LOL.
I moved to Houston in the middle of 2008 racing to sidestep any FNM implosion. We bought a nice old house for 153k and sold the previous one in the nick of time. I couldn’t imagine (even then) that we would loose much on this new one, and it was significantly cheaper than rent.
Of course, now there is the potential for 7,000 job losses (including mine) at the nearby Johnson Space Center with 3000 more from local businesses. I doubt they are all renters…
Housing market shows weakness for 2nd month
Big drop in January home sales show housing market could falter after federal support ends ~ February 26, 2010
WASHINGTON (AP) — Sales of previously owned homes plunged in January to their lowest level since summer, evidence that high unemployment and tight lending standards are undercutting the government’s attempts to prop up the market.
The results Friday, the weakest since June, were far worse than forecast and suggest the housing recovery will sputter without government support. The government has spent billions to keep mortgage rates low and give buyers tax breaks, but both programs are set to end this spring.
“Most of the improvement that we’ve seen in housing over the past year has been tied to some sort of stimulus program,” said Wells Fargo economist Mark Vitner. “Now that we’re seeing those programs wind down, we’re seeing that housing is quite a bit weaker than many people had thought.”
Ok, so January existing sales reflect “deals” made 30~60 days prior, correct? (NOV & DEC). It follows then that existing sales may indeed fall quite a bit yet for FEB and MAR as that dealmaking window passes over JAN and FEB.
That would loosely coincide with both the much vaunted withdrawal of Fed assistance (end MAR) and the end of the credit (late APR). So, it looks like there might be some dismal sales numbers to fire up the call for continued zombiefication after all.
Hence the inane calls for such things as disallowing foreclosures unless channeled through government agencies.
It seems that the Feds are doing everything they can to extend the pain…
Incidentally, as of this time last week, just above one-third of taxpayers (37% if I remember correctly) has filed their taxes. That’s down 9% from this time last year. Could it possibly be that the Feds are stealing MORE taxpayer money this year than last? Or that more people are broke after paying for government shenanigans?
They reduced withholding last year to stimulate the economy. I suspect that more people owe money this year than last year.
“Ok, so January existing sales reflect “deals” made 30~60 days prior, correct”?
That’s my understanding, and I agree the up coming sales numbers will not be good.So D.C. will “do” something in the not to distant future, I would think.
~ On a local note from the midlands of S.C. Looked at two houses yesterday, I asked the real-a-tor how he was doing sales wise. Very slow he said. He’s been selling houses for 20 years, said that the 3 houses he sold in Jan/Feb were “first time” buyers credit deals.
At least he sold something. I know one in Westchester NY that has only sold 1 house since 2008.
Time for Plan B (*)
(*) Handj_bs by the highway for a dollar.
“(*) Handj_bs by the highway for a dollar.”
The guy is already a realtor. Read it again.
Yeah. Geez, Faster. Get on the stick already
Muggy,
There goes my morning coffee, all over the keyboard.. Thanks a bunch..
ROFLMAO.
eudemon,
And there goes the blueberry smoothie. Thanks a bunch…
Hey, a new and creative way for Realitgals to hand out cards!
I believe most here are in agreement with me: if the tax credit were actually going to expire, it would have been designed to end July 30 or August 30, not April 30. Setting up the tax credit to expire for purchase agreements signed after April 30 is designed only to provide political cover for extending it. Once again.
And I suspect that the new deadline will be November 30, because it worked so well last time. I wouldn’t put it past Congress to pick December 30 in an effort to goose Christmas real estate deals and allow for extension during a slow news season.
I would be very surprised if the credit is not extended, along with other ’stimuli’ toward years end. Elections in Nov. The #1 job of a politician is to get re-elected, and tossing out ‘free’ money has a way of working.
Never mind it can’t be paid back.
test
OK, looks like I can’t do long posts. How abut a series of short ones.
I disagree. This was timed very carefully.
The credit was extended for a fairly limited time because they wanted to try to avoid what it happening now - the collapse of deals because demand was pulled forward. I think they figured they would have enough deals in the first few months from the ones that couldn’t quite get finished in time to make the first deadline and enough deals in the the next few months from people rushing to make the next deadline to keep the numbers up steadily over the course of the extension.
Then they expected the “momentum” to keep things up through the regular “rush to buy so the kids can start school in the new district” season. They wanted the stimulus to end just as the normal rythm of unstimulated deals would take over the volume.
What they didn’t figure on is how much the recent sales are all dependent on the credit. The folks who wanted to get that credit the first time pretty much didn’t miss that deadline, so there wasn’t much hold over. The numbers will pick up for the next deadline, but they won’t create any momentum for the late spring selling season, they will BE the numbers that otherwise would have happened during the late spring selling season. The current collapse numbers just might look like sunshine and happiness compared to the next set of collapse numbers.
I actually think they will let this expire this time because of the momentum theory. No guarantees, but I do think it will happen. It might get revived again in the fall, but people with “momentum” theories are notoriously stubborn. They will have to see the sales collapse happen.
Oh, and if they want to extend it, it will have to get past Senator Bunning. He is blocking the extend unemployment/don’t cut Medicare payment to doctors by 21% bill because he says there aren’t any budget cuts in it to pay for it. And he has said that he plans to do this to all bills that don’t pay for themselves from now on. So, unless he is completely owned by the real estate people, he might do it for an extension of the credit - you sure can’t argue it pays for itself.
By the way, if you can’t tell, I HATE people who use momentum in a non-physics context.
[And that is the end of the post that wouldn't go through. Guess I need to learn to write shorter.]
I agree with your analysis. I would add that the general time frame of core Keynesian theory of government stimulus is near ending. Beyond this we move into the realm of central planing like China.
Nature requires refractory periods. Eventually.
Do you have to live in the property to get the tax credit…owner occ? Or can it be a first time investment property?
http://www.irs.gov/newsroom/article/0,,id=204671,00.html
Homebuyer Credit Expanded and Extended
The Worker, Homeownership and Business Assistance Act of 2009, signed into law on Nov. 6, 2009, extends and expands the first-time homebuyer credit allowed by previous Acts.
Under the new law, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2010 and close on the home by June 30, 2010. For qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 return.
Thanks, Polly.
George
Tight lending standards are frequently given as the “reason” sales are slowing and prices falling, but from where I stand lots of folks still seem to be getting oversize loans and future risk remains.
I believe Credit will get a whole lot tougher to get over the next five years as lenders begin to realize even previously solid risks such as govt workers now pose a serious threat and general unemployment continues to rise.
“I believe Credit will get a whole lot tougher to get over the next five years as lenders begin to realize even previously solid risks such as govt workers now pose a serious threat and general unemployment continues to rise”.
I believe you are correct, but there in-lies the problem. When the wheels of your economy are greased with E-Z credit, you can’t jump start it by taking away the grease. My question for a long while has been ‘if’ the government says to banks, lend damn-it and that’s an order. Can they also order the population to borrow?
Not if Berserker Ben decides to print another trillion into circulation.
You’re right. My son talked to a Wells Fargo loan officer yesterday about getting a $40K loan to buy a $60K condo. He wants to put 30% down. The lender told him that conventional loans only require 5% down starting recently. This is crazy.
I believe Credit will get a whole lot tougher to get over the next five years as lenders begin to realize even previously solid risks such as govt workers now pose a serious threat and general unemployment continues to rise.
Only if GSE based securitization does not increase, or China stops sending us money.
I expect a third “unexpectedly” weak month of home sales in February, to be blamed on blizzards. And after that, the red hot spring sales season will begin!
Wait a minute. Didn’t housing sales take off once the Super Bowl had been played?
You misspelled Souper Bowl.
I am suggesting a couple possible topics of conversation today.
1. Ways the government has made the problems worse.
A. Such as suspending the capital gains tax on forgiven debt, encouraging defaults.
B. Modification programs that encourage defaults, in order to apply for the program.
C. Foreclosure moratoriums, increasing the backlog in foreclosures.
2. Ways in which the tax payers are steadily being made to bear the costs of the losses, ie: Freddie, Fannie and AIG. Essentially, the shifting of losses from the private sector to the taxpayer.
Don’t forget the immoral 8k tax credit. Anyone with a grade C or above in Econ 101 knows that 99.9% of any buyer concessions/credits goes into the seller’s pocket. Of course most here know it really was just to help the bank lien holders and investors get made whole while the first time home buyer overpays for something that will be underwater shortly, and renters must continue to rent as prices are artifically supported above affordable levels. All in the name of helping to common man. God bless America. We screw you with a smile.
You are preaching to the choir, Natalie, but your word choice is admirable…
Isn’t your State kicking in additional funds. I just wish they would stop trying to give incentives to buy homes so that I would actually have an incentive to buy a home.
CA gave out a bunch of $10K credits last year for new house purchases. They quickly exhausted the allocated funds, and mercifully, the legislature didn’t renew the credit.
“They quickly exhausted the allocated funds”
From everything I’ve read lately, they never had the funds to begin with…
“From everything I’ve read lately, they never had the funds to begin with…”
It gets tough to throw money down real estate rat holes when you don’t own the printing press technology. CA-issued I.O.U.s just don’t cut it.
They’re trying to revive the CA tax credit, but I believe they want it to apply to existing homes, too. Last year, it was only good for new homes.
The 8K tax credit is, indeed, the one that’s got me the most upset. And allowing this credit to be used on expensive houses is just a sham. Also, raising the FNM/FRE limits to 700K+ (in some areas) also has me furious with rage, why on earth do we (the taxpayers) need to subsidize interest rates for people making 250K+ a year (which, they need to be making to afford their 700K homes)?
Of course the 8K goes in the sellers pocket. But it’s even worse than that.. The typical “constraint” for most new buyers is cash on hand, not loan limit. So, 8K of “downpayment” give them much more buying power because they are leveraging that 5-10X (20 or 10% downpayment). So, handing the buyer 8K, could, in theory, push up home prices by 40K+. It’s a huge “gimmie” to the sellers, and it’s really wrong of the government to pitch it any other way.
I agree with you, this is really immoral, they are taking advantage of people who don’t understand economics/finance by putting a false sense of urgency around, what is for most people, the most important financial decision of their lives. The government should do NOTHING to encourage people to no do their diligence and make sure that they are getting a good/fair deal.
My realtor contacts here in Coeur d’Alene Idaho tell me there are lines of young couples waiting to buy homes in the $100k bracket armed with only the $8k credit and precious little skin for the game, which is showing a steady 12% ave. home value drop per year.
Where else can you lose 12% a year for thirty years by borrowing $8k?
I believe this is the case almost everywhere. There is a seemingly endless number of flat broke dimwits willing to sign up for low end depreciating assets because of the $8k credit which can be used as purchase money. This is terrible policy.
Yes, we’re seeing the same thing in So California.
Not only is it immoral, it has a very high fraud rate, up to 50% by some estimates.
http://www.bloomberg.com/apps/news?pid=20601103&sid=aAGF6QYV3qdk
Can you imagine any other tax “loophole” that would have this much fraud which Congress and the IRS wouldn’t be clamoring to stop?
We don’t have anything else going but our housing industry, the feeder upstream downstream industries to housing, some tech, D-FENSE and lots of Gov jobs. Housing being the largest part of private sector pie. At this point nobody cares about the fraud, just get houses moving, people buying, whatever it takes to get the housing-related upstream and downstream industries going.
Printing money destroys free markets. It temporarily creates losers out of winners and winners out of losers. How can anyone claim housing is a ‘free market’ when it is supported with trillions of dollars that did not exist a year ago?
Heck, mischievous housing market meddling by the central planners in Washington and their pals on Wall Street is precisely what created this housing bubble apocalypse.
I will not buy until those evil bastards stop their mischievous meddling.
“I will not buy until those evil bastards stop their mischievous meddling.”
Agreed. And know this - you are gaining by not buying. Because prices of RE will certainly fall more the next few years. Probably long enough for most people to regard a house as a depreciating asset and no longer appreciating!
“Probably long enough for most people to…”
Probably long enough and far enough from here so most people conclude that real estate is a terrible investment.
Christie looks to reduce jobless benefits
TRENTON, N.J.
Looking to blunt a steep business tax increase, Republican Gov. Chris Christie on Thursday proposed reducing some unemployment benefits.
Under Christie’s proposal, the state would reduce the maximum weekly benefit for newly unemployed residents from $600 to $550. The governor also wants to require a one-week waiting period before benefits can be received.
Employers were set to see an increase in their unemployment tax starting July 1 because the state’s unemployment fund ran out of money and has been borrowing from the federal government.
On average, employers would have seen an increase of about $400, or more than 50 percent, per employee. The governor’s proposed changes would have only given them an increase of about $130 per employee, or a 17 percent hike, this year and would allow companies to prepare for future increases in advance.
According to the governor’s office, more than $4.6 billion was raided from the fund from 1992 to 2006 to pay for other state programs.
“This is the wrong time, under the wrong economic conditions, to impose such an onerous and undeserved tax hike on New Jersey businesses,” Christie said. “If we want to grow payrolls and improve our economy, we cannot ask businesses to shoulder the full brunt of the irresponsible budgeting policies that bankrupted the unemployment compensation fund in the first place.”
New Jersey, barely functional and ugly to boot - what a place!
Not so. Traveled the NJ turnpike northward last year and it was gorgeous forested mountain terrain. Every state has sucky areas….
At least the fellow is doing something, may not be popular, but what does one do on a personal level when times are tight? You cut back, you don’t keep putting it on the charge card.
I do wonder if Christie knows how many people live pay check to pay check. He’s about to find out. Also he should set an example like all politicians should, take a pay cut! And ride a bike to work!
It will be interesting to see what happens when the millions upon millions of unemployed in this country watch their last lifeline disappear. Even the MSM is admitting that the jobs “recovery” is many years away.
I wonder if we’ll see a return to the 50’s model of “one of the parents” staying home with the children. What was the unemployment rate in the 50s, when a high percentage of the women were technically out of work? If we can redistribute those jobs to where there’s only one per household, it might work.
But I see two huge problems with that. First, today’s expenses are simply too high for one income. Not cell phones and Applebees — housing, cars, gas, insurance, tuition. Companies know that households are two incomes and price accordingly. (Elizabeth Warren is the expert on this.) Secondly, we have too many youngsters with college degrees who need to use them — not to mention the college loans.
Companies know that households are two incomes and price accordingly. (Elizabeth Warren is the expert on this.)
Warren writes beautifully on the subject, but there are all sorts of end-arounds one can do on the two-income trap (as she calls it). The necessary re-calibration requires frugality, low debt loads, and the ability to budget and prioritize — so, naturally, a large percentage of Americans are ineligible right away.
Suspect it’ll be more like the 1930s multigenerational model.
More parents moving in with kids
USA Today
In the 1990s, your family came for dinner. Now, they’re moving in.
The number of parents, siblings and other relatives who live with adult heads of households grew 42 percent from 2000 to 2007, according to data released today by the U.S. Census Bureau.
Leading the way: parents, up 67 percent, to 3.6 million.
The figures suggest it isn’t only elderly parents moving in. The number of parents under 65 in these households increased by 75 percent, and those 65 and older were up 62 percent. Both groups outpaced the increase in the number of people in family households overall, which is up 6 percent since 2000.
A store clerk told me that she, her boyfriend, and many of her college friends in their late 20s had to move back home after they lost their first job out of college and were not able to find another job or one that paid enough to pay rent. Her boyfriend had to move back with his parents in New Jersey. One of my neighbors who is in her 40s lost her job three years ago and has been living in her father’s basement.
More parents moving in with kids
Of course, this has no effect on the number of empty houses, and hence the supply.
The oversupply of housing, is dwarfed by the oversupply in rooms and sq feet of housing.
I must admit, if I had to live in a multi-generational home, I’d want the biggest McMansion easy money could buy.
As I predicted we will soon see a major shrinkage of colleges (student loans) and more toward a technical after high school educational system. Unemployed people will not be able to sit for 26-52 79 weeks they will have to be retrained…
We need people who can fix things cheaply…then apply that knowledge to make new products, and solutions.
—————————————————–
Secondly, we have too many youngsters with college degrees who need to use them — not to mention the college loans.
Nothing can be fixed “cheaply” anymore. It’s all designed to be basically unrepairable.
Example: my LED display on my cellphone went Tango-Uniform. Broke out my electronics tool kit, figured out how to get the cellphone apart, and the thing used a plug-in module……so far, so good.
Got a part number off the display. The OEM doesn’t have a parts division. Did a Google search on the p/n, and the cheapest price I could find on the internet was half the price of a new phone. Plus shipping.
There’s no parts commonality anymore. For example, you used to be able to go to a car parts store and tell him you wanted a “General Motors alternator”, he’d go in the back, bring back an alternator, and it would fit about 95% of the GM cars on the road, back when GM was 50% of the market.
Now, there is little standardization between product lines of the same manufacturer; don’t even talk about the lack of standardization between manufacturers.
Hmm…I have some very high quality folding chairs my parents received for their wedding. My mother replaced the original aqua vinyl seats and backs with black vinyl seats and backs she got from Sears once my brother and I got past our most destructive ages. A few have rips and I have had a heck of a time finding replacements. Sears doesn’t sell them. The original company still exists but doesn’t sell them. I found one place on the internet but have to contact them to make sure that their product will fit and that I have enough tools to do the job.
Of course, I could just replace the chairs, but I like them and the quality of the frames is excellent. It is too bad that I only have one choice for replacing the damaged parts.
Is that something an upholsterer could do for you? They work with vinyl.
Back about fifteen years ago, my brother and his wife made a decision that she would stay home with the kids because the finances didn’t work out for her to work. And they explained this to me at an age where it made a big impression. So one of the goals for us has been to get our finances to the point where we’re dependent upon one income only.
We’re actually pretty close. In fact, we could do it today if we cut out all extraneous purchases, which includes books* as well as CDs. But the quality-of-life amount is such that I’m fine working one day a week so that we can have that extra cushion, and when we get to that point I’ll still probably work that day for sanity and keeping my resume current.
*Books are mandatory when you have two adults with 150+ books/year habit. And that is, in fact, an underestimation. Thankfully, used books and re-reads are both things we are happy with.
So, let’s see if I understand this. An employer is taxed for every employee he employs, which adds to his expense of doing business. Then the recession kicks in and rips into his revenue stream thus his earnings.
He desperately needs to cut expenses as he goes into survival mode. Then comes along a tax INCREASE levied against him for having employees.
His employees are already on thin ice due to the recession and the last thing they need to keep their jobs is a added expense tacked on to their employer for keeping them employed.
It’s destroying small businesses here in Florida.
Govts hate small business. It’s too difficult to enforce tax compliance. Govts like huge corporations that pay the tax collector billion$ withheld from employee paychecks every other week.
Heard a story about a guy at work that needed to buy a USB hub to connect several machines so they could be configured quickly instead of hooking them up one at a time each morning.
This turns out to be under the purview of the contract that outsourced IT services, so it is almost impossible to buy anything for a reasonable price using the usual system.
The solution is to put the $10 charge on the department’s credit card. The new problem: The account is too close to the $100K limit.
Why is it they always talk about how we can’t have big business pay anything and they are entitled to profits ,yet the taxpayers should pay for everything . Its not like Corporations are keeping employees to pitch in or cutting profits ,if you go by the Stock Market hype . In fact in some cases Corporations are resorting to outsourcing more . Look at how much underfunding of pension plans Corps have gotten away with .
Just like the Banks they want the benefit of the up side and the benefit of the down side also. These are human beings that are fired and in some cases have low chance of reemployment in this market . I understand that Corporations have to make a profit to survive ,but can’t that be less profit during down times . Why do the people always have to take the hit ? Small business is having the most problems with survival .
No surprise here, the FED reserve runs congress, not the other way round. Of course the intention was to give the impression that congress would going to get tough on the banksters. Not going to happen.
Sen Dodd’s bank super-cop may be doomed: source
Feb 26, 2010
WASHINGTON (Reuters) - A bold proposal by Senate Banking Committee Chairman Christopher Dodd to set up a single supervisor for U.S. banks looks doomed, said a source familiar with Senate committee discussions on Friday.
The Financial Institutions Regulatory Administration, which Dodd proposed in November, likely will not be included in revised legislation expected to be released next week by the committee, said the source, cautioning plans could change.
Instead, the Federal Reserve may keep its role as overseer of large bank holding companies, and the Comptroller of the Currency’s office may remain in place, said the source.
No surprise here, the FED reserve runs congress, not the other way round
correction, Wall Street owns the FED and Congress and all other arms of gov.
“Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?”
~Charlie Reese
We don’t need to “wonder” - we know the answer.
because politicians are spineless weasels?
because not only are politicians are weasels, but also because many constituents are leeches.
Congress is a reflection of the voting public. So you are correct.
I posted a couple of times what I’m about to post here and am surprised I did not get flamed for it, but here goes my attempt again: More than 90% of the American public is dishonest - will lie to get ahead in life. The 9% approval rating of Congress is a way to substantiate that claim.
You’re much more optimistic than I.
Congress is a reflection of the voting public.
Partially, however Congress is not a total reflection of the public because most of the public has no idea of the complicated layers of corruption involved nor are they aware of the cunning, insidious nature of the corruption’s evolution.
The public’s disapproval of Congress is an indication that the public feels something is very wrong, however the people are mostly powerless to change the system because the system has been rigged to to sustain itself.
In Orwell’s Animal Farm, were the Pigs really a reflection of the less sophisticated, hard working animals? I don’t think the Pigs were a reflection of the sheep or that workhorse.
More than 90% of the American public is dishonest - will lie to get ahead in life.
“Honesty,” Plato wrote, “is for the most part, less profitable than dishonesty.”
For the past 30 years the powers have been incessantly pounding the drumbeat of “profit” at any cost being the highest goal of businesses and economies.
If we have become more dishonest, it is not because the government and businesses were influenced by the people but rather the people were influenced by a system that encourages selfishness and dishonesty in order to survive.
Most people look towards those higher up for guidance, examples and inspiration, not the other way around.
Rio,I agree .
Rio,
Another excellent post.
They can resist everything except temptation.
Because saying you’re against deficits, and voting to cut programs, are two different things.
Welcome to Cali, there isn’t an unfunded Proposition that voters won’t say Yes to if includes the words kids or crime.
“SACRAMENTO — Feeling a little salty, Californians? Better get it out of your system while you can.
Amid the ongoing — and occasionally tense — debate over how to clean up California’s budget mess, lawmakers are trying to tidy something else, almost as unmanageable: our language. Thursday morning, the Assembly approved a ceremonial resolution turning the first week of March into “Cuss Free Week.” Mercurynews.com
Let’s get the emotion out! Damn things just keep getting worse and weirder. It must not be ‘fun’ to hold a government seat anymore and have to make tough decisions. If you can’t take the heat move over and let those who can take over!
They need a “STFU Week” more than a “Cuss Free Week”.
n a state where corruption abounds, laws must be very numerous.
Sorry missed the I
In a state where corruption abounds, laws must be very numerous.
“Cuss Free Week.”
What the cuss?
“Thursday morning, the Assembly approved a ceremonial resolution turning the first week of March into “Cuss Free Week.”
That’ll happen in reality about the same time the state budget is balanced in reality.
What are those Olympic medals worth?
Once upon a time, a gold medal was gold, a silver metal was silver, and a bronze metal was, well, bronze.
* A gold medal contains 550 grams of silver and is layered with just 6
grams of gold.
* A silver medal has 509 grams of silver and about 41 grams of copper.
* The bronze medals contain about 450 grams of copper and 50 grams of mostly tin and zinc.
At current market prices, a gold medal is exchangeable for about $494, a silver for about $260, and a bronze for just $3.
They’d sell for more than that on eBay
I’m sure you will be able to get them on the cheap. Surely, a few of these people are FB’s.
Ironic that when Olympic athletes were barred from playing for pay, they were rewarded with real money. Now that the athletes are pros, they are rewarded with ersatz.
700s B.C.E.
Wiki:
“The winner of an Olympic event was awarded an olive branch and often was received with much honor throughout Greece, especially in his home town, where he was often granted large sums of money (in Athens, 500 drachma, a small fortune) and prizes including vats of olive oil. Sculptors would create statues of Olympic victors, and poets would sing odes in their praise for money.”
Now:
Cheap medals = olive branch
500 drachma = Multi-year contracts with Nike/Gillette etc.
Poets & Sculptors = Modern Mass Media?
PS: Back then if you died during the competition you were declared a winner!
I’d think they would be worth millions to anyone who gets ad endorsements out of the deal. Figure skaters can also look forward to going professional, which I imagine is quite lucrative.
Other Olympic medalists (or even top competitors who win no medals) can look forward to having a very valuable addition to their resume. There is nothing like the proven payoff to years of disciplined effort to convince a prospective employer that your services will be a valuable asset to their operation.
have a relative who went to beis ng olympics for the sync swimming competition, lost, and works in vegas shows now
Realtors: January home resales drop 5.2% in West, but less than nationwide ~ Denver Business Journal
Existing-home sales in Colorado and other western states dropped 5.2 percent in January from the previous month, less than the 7.2 percent decline nationwide, the National Association of Realtors reported Friday.
Year over year, home resales in the West were up 7.6 percent in January from the same month of 2008, NAR said. Nationally, existing home sales rose 11.5 percent in a year.
The median price of a resold home in the West was $203,400 in January, down 5.8 percent from a year earlier.
The figures include resales of single-family homes, townhomes, condominiums and co-ops.
Lawrence Yun, NAR chief economist, said the numbers reflect a lag between when homebuyers shop for a house and close the deal.
“Most of the completed deals in January were based on contracts in November and December,” Yun said in a statement. “People who got into the market after the home buyer tax credit was extended in November have only recently started to offer contracts, so it will take a couple months to close those sales.”
Nevertheless, he said. “the latest monthly sales decline is not encouraging, and raises concern about the strength of a recovery.”
Let me translate Yun:
We were able to suck in idiots with the credit, and now we’re having trouble again..
It’s a great time to buy.
The market is going to collapse if you (govt) don’t re-extend the tax credit..
Basically, perfectly talking out both sides of his mouth. Trying to get the government to extend the credit (because he knows the market will collapse if they don’t) but, at the same time, trying to get people to buy because the market is great, and prices are “firming up”.
I hate these people.. I really do.
One item worth pondering and discussing - the 5.2% drop in sales last month and the drop in sales the month before mean more income losses for RE brokers, as they do not get as much commisssion.
Wasn’t it mentions somewhere/somewhen that at the RE peak in California, 500,000 people in CA alone were licensed RE agents?
Probably the number is down to 100,000 these days. Still, this means income cuts, less consumption, and so on. Leading to cuts in other industries and job cuts. Vicious cycle continues.
cuts in other industries
I should think that dramatic reduction in RE agents would lead to dramatic decrease in nail, hair, skin, clothing maintenance jobs.
Also decrease in business for those selling / leasing fancy cars.
You forgot poodle grooming shops.
“Also decrease in business for those selling / leasing fancy cars”
I’ve been test driving some late model fancy cars as I’m not going to take the bite on new one. My friends nephew works for a Hyundai dealership and gave me a call.
He had a cherry certified low milage 2007 Hyundai Azera Limited Utimate3.8/A5 that he said would blow the doors off of a BMW 530i and a Benz S430 from 0-60 MPH for a fraction of the cost and upkeep.
I said you’re full of crap but I did some fast researh and went over to see this kid yesterday afternoon. He handed me the keys and said if I could afford the tickets, there’s the highway, bring it back hot and boy I did.
What a sleeper and I don’t car if it’s Korean or Tahitian, it flys, drives like a gem and Hyundai has an extended warranty. We argued price, re-sale value, warranty and service and I walked.
They called me today, met my price and I wrote a check. Screw those high priced fancy expensive cars.
I’m hunting BMW 5’s and baby Benzes 0-60 on a freakin’ budget !
Would you telll us what your price was? My ancient Taurus won’t last forever…..
My friends nephew kinda worked the used sales manager but we wrote it up for about $13,700 with my old trade. It listed then about 29k MSRP new.
Hey, it has 30k on the odometer, and the Limited Ultimate was their primier in 2007. My g/f likes it a whole lot better than a nice used BMW 5 I was looking at so who can complain.
She really like the auto ajusting seat memory, heated seats and auto foot pedal adjust and black leather interior, premuim sound packge with 6 CD loader.
She has my stupid little car right now…somewhere.
PS…I’m still reading the freakin’ manual, she took my car and my CD’s and she’s …long gone !
LOL!
Congratulations on buying your new car, Mikey. Sounds like you got quite a deal.
There’s a home down the street from me (4 houses down) that listed for 1.4 and is sale pending within three weeks.
Apparently the kool-aid still flows.
NY Times - The Psychology of Moving
Doug LeBow, whose co-op board has rejected three buyers for his one-bedroom on 11th Street and Broadway, said he felt “imprisoned.”
Therapists say that they often hear upsetting language from their clients when they talk about real estate, words like trapped, stuck, imprisoned and — Mr. Klein’s description of himself — “refugee.”
http://www.nytimes.com/2010/02/28/realestate/28cov.html
The landlord probably offered him $5-10,000 to move…a pittance of what he could have gotten had he played hardball.
And now what will their payments be $3000 a month?…and he is in TV post and ABC news is laying off 400 workers…
And then the co op board rejected an all cash offer…man they must really HATE Mr LeBow’s guts…now at $300K less they still reject the buyer.
————————————————————-
The place has allowed him and his wife, Lynn Van Lith, who have two daughters, ages 1 and 3, a bit of a financial cushion. But in some ways it has also been a burden: Giving up a $1,200 two-bedroom apartment in Manhattan is not an easy decision, even if you are eager to go.
The logjam broke when Mr. Cox was offered an incentive by his landlord. He is moving today to an apartment he and Ms. Van Lith bought in Fort Greene, Brooklyn
—————————–
Mr. LeBow, 40, said he received an offer of $1.12 million in cash on his 1,100-square-foot apartment in 2007; he had paid $545,000 for it shortly before the real estate boom
And we thought HOA’s were evil. A co-op board can reject someone who wants, and is financially able, to buy your apartment? Wow.
Yeah, that’s why co-op’s in Manhattan are like the devil’s own spawn. The absolute worst people sit on these boards - it is power-mongering, and they know it.
Get into a bad co-op, and you will rue the day you were born.
“In New York City, co-op boards have wide legal latitude for rejecting buyers.”
I would think some of that wide legal latitude would be curbed by good ol’ fashioned housing anti-discrimination laws. I’m puzzled as to how they can apparently skirt those statutes. In NYC, of all places.
They skirt the statutes regularly. It is the norm not the exception.
It’s an open secret.
I once heard that “good” lawyers for co-op boards recommend that the board roll a pair of dice every time they have a possible purchase and reject them every time they get 9 or some other pre-chosen number as the total. It is to allow for plausible deniablity if they decide to reject other purchasers for a reason that is illegal.
In other words, you roll the dice and reject all 9’s so that when you want to reject the interracial couple, you can show they weren’t the only ones to be rejected.
Nice, huh?
This guy’s co-op board rejected three buyers. Those must be some loaded dice!
At least in my old HOA if they wanted to reject a buyer they had to pay the seller the buyer’s offer price. Thus no buyer was ever rejected.
Yes coops can reject buyers for a lot of reasons beyond the financial ability to pay (as long it is not illegal discrimination on race, etc.) for small reasons or no reasons. Some don’t like lawyers (fear of litigation) or celebrities (the inconvenience of paparazzi). Years ago one rejected Richard Nixon because they didn’t want the security issues.
Coops aren’t “real” real estate, but shares in a corporation. You own shares and have a lease on your unit. One friend used to rent a coop that was owned by a 19 year old… he inherited it free and clear from his grandfather, but was not allowed to occupy it because he was under age.
My broker had the same problem with his co-op. He had two young doctors lined up to buy his place and they were rejected. Their income easily qualified them. One of the parents, who was a prominent surgeon, was willing to personally guarantee all monies due. Still denied.
SV made a mental note. Add co-ops to the f-no list.
Therapists say that they often hear upsetting language from their clients when they talk about real estate, words like trapped, stuck, imprisoned and — Mr. Klein’s description of himself — “refugee.”
What happended to Suzanne researched this, house prices always go up, and now is the best time to buy?
How about “Real estate is the best investment”? I haven’t heard that one in quite a while…
“…trapped, stuck, imprisoned…”
Many long-time readers here know I used to post under the blog handle Get Stucco, until some evil troll stole it and started posting pure BS under it. This was a reference to a monologue by Groucho Marx’s character, Hammer, in the first Marx Brother’s movie, The Cocoanuts (1929):
“You can have any kind of a home you want. You can even get stucco. Oh, how you can get stucco.”
I am not sure how many readers here fully grasped the meaning of that last line until just recently.
I didn’t know that some troll started posting nonsense under your old moniker. I liked “Get Stucco.”
Professor Bear is kind of laughably pretentious, too. But then financial humor is my schtick…
Always wondered and now I know
The tragically hilarious thing about Groucho is that while he obviously enjoyed heaping scorn on those who lost their shirts in the Great Florida Land Boom (as immortalized in The Cocoanuts), which blew up circa 1926, he missed the obvious parallel to the stock market. Consequently, he lost a large fortune in the Great Crash.
I note that we have numerous Hollywood icons who appear determined to relive Groucho’s role in the history of financial bubbles during the present episode:
1. Brad Pit
2. Nicholas Cage
3. Arnold Schwarzenegger
Other?
Comedy And The Economic Crash Of 1929
Heard on All Things Considered
October 26, 2009 - MELISSA BLOCK, host:
People need comedy during tough times. But during the great stock market crash of 1929, there was a problem. Large numbers of entertainers lost everything too. Well, this week is the 80th anniversary of the market crash, and NPR’s Robert Smith went in search of what happened to humor.
…
(Soundbite of music)
ROBERT SMITH: In 1929, everything was booming - the stock market, radio, movies. And riding that wave were four brothers named Marx: Groucho, Chico, Harpo and Zeppo were even making their first talking movie about a speculative bubble, “The Florida Land Rush.”
(Soundbite of movie, “The Florida Land Rush”)
Mr. GROUCHO MARX (Comedian): Do you know that property values have increased 1929 to 1,000 percent?
Unidentified Woman: You told me about this yesterday.
Mr. MARX: I know, but I left out a comma.
SMITH: But the Marx brothers were obsessed with a different kind of investment. After Groucho finished filming each scene, he’d call his broker. Groucho had stuffed all of his money into stocks.
Professor MAURY KLEIN (History, University of Rhode Island): He became just your classic innocent investor. He didn’t have a clue what was happening. He didn’t know why the prices went up when they did.
SMITH: Maury Klein is a professor of history and the author of “Rainbow’s End: The Crash of 1929.”
Prof. KLEIN: Every day he’d go in and he’d look on the big board and he’d see that his stock had climbed X number of prices, and he had made several thousand dollars without lifting a finger. And he thought, well, this is easy.
(Soundbite of song, “I’m In the Market for You”)
Mr. GEORGE OLSEN (Singer): (Singing) I’ll have to see my broker, find out what he can do, ’cause I’m in the market for you.
SMITH: Show business and Wall Street hadn’t always mixed. But by 1929, everyone was in the market. The Marx Brothers were getting hot tips from Joe Kennedy. They even left an audience waiting one afternoon because they were trying to buy up shares of Anaconda Copper. You’d think they would have known better, since the entire plot of their movie “Cocoanuts” was about bad investments.
(Soundbite of movie, “The Cocoanuts”)
Mr. MARX: You can have any kind of a home you want. You can even get stucco. Oh, how you can get stucco. Now is the time to buy while the new boom is on. Remember that old saying: A new boom sweeps clean. And don’t forget the guarantee. If these lots don’t double in value in a year, I don’t know what you can do about it.
Prof. KLEIN: Groucho was very conservative. But there’s this increasing belief that almost becomes a fantasy that all you have to do is put your money in the market and the story will have a happy ending, which, of course, in Hollywood is supposed to happen.
SMITH: But not on Wall Street. Their script called for a tragedy. Over six days at the end of October 1929, the stock market plunged by a third. Groucho Marx later recalled the exact words from his financial adviser. Marx, he said, the jig is up. Groucho lost a quarter of a million dollars. He later joked that he would’ve lost more, but that was all the money he had. Harpo was also wiped out. Their friend and fellow vaudevillian Eddie Cantor was no longer a millionaire.
Mr. EDDIE CANTOR (Performer): Well, folks, they got me in the market just as they got everybody else. I know thousands and thousands of married men who will have to leave their sweethearts and go back to their wives.
SMITH: Canter was left with $60 in his pocket and a debt of $300,000.
Mr. CANTOR: Personally, I shouldn’t worry about my stocks. I know my broker is going to carry me. Yes, sir - he and three other pallbearers.
SMITH: Sure, it was dark, but at least they were still making jokes. You have to remember, stocks had crashed before and then gone right back up. The Great Depression was a year off and there was still a hope that everyone could laugh this whole thing off.
…
I would love to see a reporter do a follow up on Peggy Joesph in Fla. The one who would not have to worry about putting gas in her car or paying her mortgage. Because Barry was going to take care of her if she voted for him.
I’m googling now. She lives in Broward, give me a minute here…
Well, Sunrise FL is in Broward county, and there are only two Joesphs on the prop. appraiser website, neither of them Peggy.
There are two “Peggy Josephs” in Miami Dade, but neither appear to be FBs. Enough searching for a day.
Search under the bridges and freeway overpasses.
The one who would not have to worry about putting gas in her car or paying her mortgage.
No need to worry about paying the mortgage as she’s probably homeless.
I’m googling now. She lives in Broward, give me a minute here…
Heh Heh, this will be fun! Looking forward to seeing info.
Youtube has the original interview. Search for Peggy Joseph.
The way that we’re headed, nobody has to pay their mortgage anymore! We all just need to embrace the HAMP.
(CNNMoney.com) — With a 21% cut to Medicare reimbursement rates set to take effect Monday, the nation’s largest physician organization has informed its members about their options — which include shutting off practices to new Medicare patients. Physician Backlash?
< Many doctors are highly peeved and may stop taking new Medicare patients, or, in rare instances, possibly close their practices.
Have they a right to do that? Yes! Unless the U.S. is now a full-fledged slave state in which physicians can be forced to work against their will.
Sounds a lot like a union style work slow down. Unions are bad if they are factory workers or civil servants but not if they are “Associations”.
Mmmm…
If this was the transportation system or the communications system the Government would be sending in the troops. But doctors pull this stuff and you want to call this a slave state? Get real dude. Doctors have the same ethics as bankers and politicians. They all come from the same education system.
“Doctors have the same ethics as bankers and politicians.”They all come from the same education system”.
So what education system does everyone else come from?
Don’t get me wrong. Doctors, bankers, generals and politicians are all smart people. If they seek to take advantage of their position and power whats to stop them? If not the law then their morals and ethics are all that’s left. I just don’t know.
Univeristy of sheeple?
Maybe not forced to work against their will but maybe forced to work to pay back their student loans.
“student loans”.
The largest unpaid private debt in the U.S.A. has been for a very long time.
This is what the “proposed” Government run Healthcare would bring:
1) Lower fees to the doctors,
2) Rationing of care (we won’t do that surgery for x $)
3) Fewer doctors willing to learn the trade and in the end
4) Longer lines for your turn to be treated. (Rationing)
Why would any of us want a bureaucrat to run anything so important? Oh yeah, that’s right, it’s free. Free my a$$.
“Why would any of us want a bureaucrat to run anything so important? Oh yeah, that’s right, it’s free. Free my a$$”.
Of course it’s not free, but the gubmint is telling the serfs that the evil rich will be forced to pay for it. While they are in bed ’sleeping’ with said evil rich. The class warfare game has worked for centuries, why stop now.
I’m thinking how much business would Doctors have if they didn’t have the Medicare business as part of their income . With millions of healthy payers under 65 being priced out of the market ,wouldn’t it be stupid to let go of the Medicare patients ? I don’t know ,I’m just asking .
It will depend completely on the location. Places with lots of patients on private insurance may find docs refusing to take on new Medicare patients. Places where Medicare patients are the best paying ones around, will see disgruntled docs, but little change. A 20% cut would still have Medicare paying more than Medicaid in every state as far as I know.
All this is assuming that the cut lasts more than a few days. Bunning is enjoying himself. Not sure if he will cave into the pressure he is bound to face very soon. This is the best entertainment in DC these days. IMO it is much more interesting than the TV summit was.
I hope that Rand Paul gets elected to replace Bunning… More of the same antics. Living/working inside the beltway is so funny as of late, almost surreal.
Plenty of free beer and hordes wild girls would have to be flowing in waves from DuPont Circle on down to Georgetown to ever get me back in DC.
The class warfare game has worked for centuries, why stop now.
It’s worked very well for the richest class lately…
In Class Warfare, Guess Which Class Is Winning NYT By BEN STEIN November 26, 2006
“There’s class warfare, all right,” Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.”
Lip, it’s nice of you to be concerned about us “poor” physicians, but I can assure you that 1) while incomes have risen modestly for physicians over the past 15 years, the average workers’ have stagnated. Also, the number of hours worked by physicians has decreased from 55 hours to 52 during the same time period. Average income for all physicians is $180K in 2008; 2) there are surgeons now who do unnecessary surgery for $$. I would guess that they are the same people who would decide not to do necessary surgery if they were paid less. 3) the only thing limiting the number of doctors is specialty organizations who try to limit their numbers to maintain high compensation; 4) the numbers and quality of applicants to US medical schools and residencies rises every year. Despite your pity for us, we physicians have it pretty good.
As a doc, do you consider some of the insurance company practices to already be a sort of rationing?
I have a glaucoma monitoring test that my insurer won’t pay for.
My BIL is a doc. Not only does he have the biggest, swankiest McMansion, replete with decked out man cave and photography studio used for his wife’s business, but they also seem to spend every moment when he is not working on some kind of exotic, expensive vacation. Either the guy is soon going to go bankrupt, or he makes an ungodly amount of money, or both…
REH,
If you like Medicare and are willing to get squeezed, go for it. I know at least one surgeon that “will retire” and he’s one of the best orthopedic surgeons in our area.
Lip
Thank you for posting this, REhobbyist.
wmbs,
I just found this study (Feb. 2010) by the BLS. It is a study that breaks down the various sectors by occupation, size and pay. Very interesting data.
http://www.bls.gov/oes/highlight_employment_growth.htm
physicians avg. $80-$92 per hour.
medical workers avg. $14-$15 per hour
Over the last 2 years 758,000 private sector jobs were created, an increase of approximately 4.9 percent.
Doctors whine about Medicare reimbursements, but it’s unusual for them to opt out of Medicare. I have only known one doctor in my specialty who opted out, and they were only in it for the money. Having a “boutique” doctor is great as long as you’re an outpatient. As soon as you get admitted to the hospital your opt-out doctor won’t visit you there because he/she won’t get paid to do so.
New York might be different (more may opt out there). My friends who practice in NYC make huge incomes, and their rich patients seem willing to pay cash for things that California patients would expect to be covered by insurance. I think that Wall Street riches have skewed things.
A colleague of mine at work was discussing this with me yesterday morning. He mentioned that malpractice insurance typically costs a physician $16,000 per month.
You spend ten years in school and establishing a residency and finally open a practice at age 30 if you are lucky. Then you get burned out by all the red tape and move onto something else. Then you wonder why you spent ten years just to make your mom happy to say “My son is a doctor,” or “My daughter is a doctor.”
I cannot see why it’s worthwhile for anyone to go into medicine. The authors of “The millionaire next door” mentioned that lawyers and doctors are expected to drive fancy cars, live in expensive neighborhoods and wear fancy clothes. Most often they are high income but low net worth.
There was a somewhat recent poll, asking docs if they would recommend their children enter the profession. Majority said no way.
WMBZ….. your talking points are blatantly transparent.
Could you compose a post using your own thoughts instead of the ideological think tank tripe? Just once? Please?
Ok, let me get this straight. We, the good citizens of this country, are paying off our debts. Getting out of debt is good. Now, paying down of debt is considered deflation. Ben Bernanke does not want deflation, so he will do anything he can to prevent it. He is dropping money out of helicopters.
So, Ben Bernanke wants us to be debt slaves all of our lives. He wants our children to be debt slaves, too.
The twit.
Roidy
“He is dropping money out of helicopters.”
Any chance of sneaking a peek at his flight plan?
Oh, I can tell you where he is flying, try S. Manhattan. Definitely not N. Louisiana or anywhere else that “just us folks” live and work.
Just anywhere that has enormously rich people who don’t really do anything to increase the country’s actual wealth and health. You know, AIG, GS, WS, dark derivatives markets, etc.
It will be a real show when Ben is found to be wrong. I really enjoyed it when Mr. Magoo’s flaw remark was made. I’d like more of that sort of thing, and I may get it.
Of course I’m like to get more than I want or need until the next “flaw” confession if you know what I mean.
Roidy
“I really enjoyed it when Mr. Magoo’s flaw remark was made.”
Flaw remark : Among the most expensive flaws ever made.
“Flaw remark : Among the most expensive flaws ever made.”
Oh no doubt. I have to be content with Mr. Magoo knowing he will forever be viewed as a failure and an incompetent. The enormity of his actions and “inaction” cannot be fully and completely understood or damage undone by anyone or any institution.
There can be no justice in this matter. His actions have killed and caused misery for a millions of people.
How can Mr. Magoo make up for that? Prison? Shoot him? It won’t make up for it. It’s like the Oklahoma City bomber, no real justice was possible.
Sigh.
Roidy
“I have to be content with Mr. Magoo knowing he will forever be viewed as a failure and an incompetent.”
And BB seems content to follow in his footsteps and never, ever acknowledge how closely current Fed policy resembles the Greedscam policies which got into the mess we are in.
…got us into…
ACH. This is why I hate Ben Bernanke with a purple passion .Hes a Ivory
Tower tool for Banks and Wall Street . Look ,only history will reveal what
happened and who benefited by the Decision Makers because there isn’t enough transparency to even know yet .I know special interest has even produced Documentary hype in trying to convince the public that this meltdown had no other answers than the ones that BB and Hank Paulson
employed ,yet all their projections of the state of the economy have turned out to be wrong .Keeping the corrupt systems in place and than having the Feds oversee it is the dumbest idea in a long time . We have already discovered that regulatory agencies sleep on the job . This financial system problems require a intense overhaul and law change ,not another jerk Fed panel that makes decisions based on the interests of a industry that created this mess to begin with .
Aren’t these the very same reasons for the French revolution - against the privileged aristocracy?
Oh yeah!
The one thing that WS, GS, US, AIG, Fed, BB, TTT, don’t want is what Brooksley Born was hung for: transparency. If the markets were transparent and above board, what’s the problem?
You can’t legislate stupidity. Mr. Magoo was right about that. My problem comes when Stupid is made to appear intelligent, educated, and sexy.
I want transparency and accountability. With those you don’t have Great Depression I or Great Recession I.
Pig, here is lipstick, a nice dress, and something “naughty” for later in the evening. Oh wait, don’t forget the PhD. You need that to allow Pig to call something “Science” when it isn’t.
Roidy
P.S. I really like science and like my work in it. Yes, it is tedious at times - most times. I hate it when science is presented as something it isn’t. I really hate it when something that isn’t science is presented as if it were. Google Milton Friedman or The Chicago School of Economics for examples of both.
Roidy –
Why am I surprised to learn that (1) you are a proper scientist and (2) you are not an economist? Neither surprise me.
There is an audible tinge of “I am better than those slimy economists who pretend to be scientists but are not” in your voice.
P.S. I work with lots of “real scientists” who are utterly clueless about economics. But it is fun to discuss economics with them, as they understand my explanations as quickly as I can utter them.
“Look ,only history will reveal what
happened and who benefited by the Decision Makers because there isn’t enough transparency to even know yet .”
What makes you think bought historians won’t whitewash the whole episode?
You guys should check out the new Ghost Writer movie (Polanski). It is utterly chilling, right down to the final scene (which relates to the whitewashing idea I just mentioned…).
I refer to Bernanke as Bernokio - a relative of Pinocchio, except that Bernokio’s nose doesn’t grow when he lies.
Bernocchio and Timocchio…
Dumb question of the day:
Why is the interviewer in the linked video asking Timocchio questions about the proposed Fed audit, rather than going straight to the chairman of the “independent central bank”?
Bernanke and co have a “bank-centric” view of the economy. Being a bank president, this is not surprising. Thus, he will do whatever is necessary to keep the banks in good shape.
Freddie Mac (FRE: 1.18 -0.84%) will stop purchasing and securitizing interest only mortgages on Sept. 1, 2010, the government-sponsored enterprise announced Friday
Always ahead of the curve…
Yep, and Fannie needs another 15 billion. Funny how their stock price stays just above the magic $1.00 amount.
I sure hope the Fed audit gets to the bottom of which stock prices get plunge protection and why. In my view, artificially propping up the value of stocks provides investors with a misleading impression of the value of the underlying companies, and unfairly rewards said companies by giving them the ability to issue paper and sell it at a price above fundamental value. How is the U.S. economy served by having a bunch of zombie companies whose stock prices are artificially inflated?
To push the point a bit farther, it appears there is some unwritten qualification standard for companies to enter the “too-big-to-fail” club. Once inside, a company can generate losses indefinitely and can always raise capital by issuing paper (stock shares) and selling it at a price above fundamental value.
If I started a company today, how would I go about qualifying for free helicopter money?
P.S. Look at the AIG five-year stock chart and consider its current $25/share price if you want a good case in point; why shouldn’t the price of AIG stock be around $0 by now?
“… a company can generate losses indefinitely and can always raise capital by issuing paper (stock shares) and selling it at a price above fundamental value.”
‘Adam Smith’ (not the old one, the new one) called these stock shares “supermoney” and wrote a book with “Supermoney” as its title.
People who like to argue about what money is what it isn’t might want to read this book.
Reverse stock split reduces float and makes it easier to squeeze the bejeebers out of the shorts.
“Reverse stock split reduces float and makes it easier to squeeze the bejeebers out of the shorts.”
Does that amount to artificially reducing the number of shares by 1/2 and (presumably) doubling the price per share, in order to keep the share price above the option (or short) strike price?
Isn’t this patently illegal? Perhaps the SEC could investigate the practice. It seems like the rules on short sales should automatically adjust the strike price (i.e., double it) to account for splits.
Isn’t this patently illegal? Perhaps the SEC could investigate the practice. It seems like the rules on short sales should automatically adjust the strike price (i.e., double it) to account for splits.
PB,
The strike prices are adjusted accordingly (based on my experiences with splits/reverse splits and options trading).
Won’t this drive down house prices? Unacceptable for the powers that be.
In its fourth quarter results this week, Freddie Mac said the unpaid principal balance of IO loans was almost $130 billion at the end of December, or 7 percent of its total portfolio.
Nearly 18 percent of those loans were seriously delinquent, meaning at least 90 days late.
“Our decision to stop purchasing all interest-only type mortgages — through all flow and bulk purchase paths — and to retire our Initial Interest fixed-rate and adjustable-rate mortgage products in the coming months is a result of continuing poor performance of these products in aggregate,” Cosgrove said.
…is a result of continuing poor performance of these products in aggregate,” Cosgrove said.
—————
Gee, imagine that. People who don’t want to make principal payments (because the appreciation will to all the equity building for ya, baby!) are more likely to defalut? Gosh, who would have thought?
appreciation will DO all the equity building
(sorry, typo)
I was reading up on the new EPA Lead paint rules coming out in April . All Plumbers , painters , anyone who works on an older house for pay , any house built before 1978 , that is , has to abide by it. The EPA suggests it will cost $35 per Job extra . Contractors say it will easily run up to $500 per job extra, with all the special equitment and all..Even changing out an old window will trigger it . Huge multi- thousand dollar fines are threatened to those who don’t obey. This may be their new idea to Balance the budget ,I can’t believe 10% of all the little remodeling projects will follow those insane rules .
Hmmmm. If older houses are deemed unfit to live in due to lead in paint then that would mean people would be forced to move to newer houses, increasing their demand and hence their prices.
Cash for Clunkers got old cars off the road and onto the junk pile. Maybe some plan is brewing somewhere behind closed doors to get old houses torn down.
Maybe some plan is brewing somewhere behind closed doors to get old houses torn down.
Sounds about right. Force everyone to buy one of those newer sub par throw away McCrap shacks rather than a house that was built to last. Friend bought a new construction approx. 5 years ago. Windows are leaking around the outer frames causing the drywall inside to bulge. Contractor says the siding needs to be taken off in order to evaluate and replace windows if needed. Also suspects a potential mold problem. No surprise - the original builder declared bankruptcy a few years ago.
Holmes on Homes is my new favorite on HGTV. The look on his face when he opens up a bathroom and sees how badly the moisture barrier was done, or finds live wires near uncapped gas lines? Priceless.
And scares the heck out of me.
And we all thought that guy who bulldozed his foreclosed home was simply venting his rage. Really, he may have been trying a novel means of shopping for new employment!
And the new houses, full of Chinese drywall, won’t last, so they will have to move again… more fees, more waste… consume, consume, CONSUME!
Sounds like the EPA is going to have to hire an azz load of lead police, to keep track of this “dangerous” situation. Most small contractors will do what they always do and what I would do… pay no attention.
And there’s your reason they’re a small contractor. And will ALWAYS be a small contractor simply out of arrogance and ignorance.
Enjoy the small potatos work.
Right, many small contractors are very content with their 6 figure small potato’s work, but they are simple like that!
Under the Same Proposal:
“Under that authority, EPA and HUD propose the following requirements. Sellers and lessors, or any agent acting on their behalf, of most residential housing built before 1978 would be required to provide purchasers and lessees with all information known to the seller, lessor, or agent on the presence of lead-based paint and lead-based paint hazards, as well as an EPA pamphlet on lead-based paint hazards. In addition, sellers would be required to grant purchasers 10 calendar days to conduct an inspection or risk assessment for lead-based paint hazards before being obligated under any contract to purchase that housing.”
This is another government regulation that, if followed, will result in a dramatic loss of value. Just about any old house or apartment building were painted with lead based paint. Having to provide this pamphlet is going to reduce the value of that property much more than the $35 or the $500.
http://www.epa.gov/lead/pubs/leadpdfe.pdf
Of course it could be a good thing that these problems are disclosed, but there will be a huge cost, especially in the older cities.
I thought lead paint advisories were already mandated. They’re even on apt leases around here.
Massachusetts has a lead problem.
1) You can’t discriminate against people with children.
2) You can’t rent an apartment to people with children unless you have proof there is no lead paint.
Guess which rule gets broken? If you guessed #1, you’re right. What started as good intentions (”protect the children”, as always) has most landlords avoiding renting to people with children instead of deleading. And I don’t blame them. In theory, if you apply to rent a place and it hasn’t been deleaded, the landlord must pay to delead it. In reality, “someone else got their rental application in just before you” is how it works.
Lip,
We’ve had these disclosures in California for a long time. Most people who buy older homes are well aware of the lead-based paint and other potential risks. It’s just another piece of paper in the ever-growing pile of paperwork one must endure when buying/selling a home. I really don’t think it affects the price at all. People who like older homes will buy older homes, and people who like newer homes will buy newer homes. It’s really not a big deal, IMHO.
How will all the undocumented workers in the trades comply with this new EPA lead regulation? Most of the South American workers in the construction hardly speak any English. They are afraid of the government from being arrested, will they willingly go register their real names and take the course as well as the required exam for their certification. Just asking?
This will really help the resale value of pre-1978 houses. The banks could just decide to quit financing pre-1978 houses, if they think they are going to be left being even bigger bag-holders.
Another example of the government’s left hand not knowing (or caring) about what the right hand is doing. Does anyone in government actually coordinate any of their actions?
Piigs to the slaughter.
Spain braced for general strike as Zapatero tries to force labour law reform
Trade unionists to take to streets as PM faces first rebellion over employment reforms designed to jump-start country out of recession
http://www.guardian.co.uk/world/2010/feb/22/spain-zapatero-strikes-unions-recession
Lenders shy back as Greece makes €5bn cash call
Doubts surfaced yesterday about the willingness of the financial markets to take up a multibillion-euro bond issue by Greece as Germany’s top banker met the Greek Prime Minister in Athens.
http://business.timesonline.co.uk/tol/business/economics/article7043231.ece
Here is a bit of evidence that there is, indeed, a macroeconomic budget constraint, especially at the political state level within a currency union.
Could it happen in California?
* FEBRUARY 27, 2010
Showdown in Athens
Greek Leader Calls for ‘Brutal Steps’ to Win Bailout From Europe
By MARCUS WALKER,COSTAS PARIS AND CARRICK MOLLENKAMP
Associated Press
Greece’s wobbly finances have hit the euro and international financial markets because of fears Greece could become the first euro-zone country to default on its debts. Above, the ancient Parthenon temple on the Acropolis hill, in Athens on Thursday.
Greece prepared additional austerity measures Friday and its prime minister met with the head of Germany’s top bank, as the country raced to soothe international concerns over its debt crisis ahead of a crucial bond sale it may hold next week.
Prime Minister George Papandreou met Deutsche Bank AG chief executive Josef Ackermann on Friday, the Greek government said. Some people familiar with the meeting said Mr. Ackermann was there to help arrange a solution to Greece’s debt woes that could include the assistance of Germany and France. It isn’t clear what that solution is.
German, French and Greek officials wouldn’t confirm details of the discussion. All said Mr. Ackermann wasn’t arranging a deal, just consulting. A senior German official said Mr. Papandreou and German Chancellor Angela Merkel have been in frequent contact.
Mr. Papandreou told Greece’s parliament Friday that “brutal steps” were needed to repair the country’s public finances. “We must do whatever we can now to address the immediate dangers today,” Mr. Papandreou said. “Tomorrow it will be too late and the consequences will be much more dire.”
…
And yet, the euro rose relative to the dollar yesterday because of hopes that Germany would find a way to buy Greek bonds. Another PPT for the dollar!
http://www.marketwatch.com/story/dollar-softens-as-risk-appetite-revives-2010-02-26?dist=afterbell
Oops, PPT for the euro. Sorry.
I think it is important to distinguish situations where political states (e.g. Greece and Germany) work towards a transparent agreement to shore up the common currency, and where a secretive organization (e.g. The President’s Working Group on Financial Markets) hastily makes bailout arrangements behind closed doors in a process which is anything but public. In the latter case, it only becomes obvious who got summarily screwed with the bailout tab when the situation is viewed through the lens of the rear view mirror.
I predict that putting the President in charge of plunge protection will be revealed through the lens of economic history as one of Ronald Raygun’s costliest mistakes, as plunge protection basically destroys the ability of the price mechanism to differentiate between economically viable projects and losers.
“Sec. 2. Purposes and Functions. (a) Recognizing the goals of enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation’s financial markets and maintaining investor confidence, the Working Group shall identify and consider:
(1) the major issues raised by the numerous studies on the events in the financial markets surrounding October 19, 1987, and any of those recommendations that have the potential to achieve the goals noted above; and
(2) the actions, including governmental actions under existing laws and regulations (such as policy coordination and contingency planning), that are appropriate to carry out these recommendations.
(b) The Working Group shall consult, as appropriate, with representatives of the various exchanges, clearinghouses, self-regulatory bodies, and with major market participants to determine private sector solutions wherever possible.
(c) The Working Group shall report to the President initially within 60 days (and periodically thereafter) on its progress and, if appropriate, its views on any recommended legislative changes.”
Wow — no comments after mine whatsoever. I guess that makes me the last holdout of the tinfoil hat wearing blog posters…
P.S. What I posted above is completely obvious; any decent economist with a PhD realizes that if the WH assumes responsibility for propping up asset prices, the ability of the price mechanism to function properly as a signal of value will naturally fail.
I will offer three predictions about the above comments:
1) Nobody will agree with me now or in the foreseeable future.
2) Eventually, a critical mass of concerned individuals who are identified by academic credentials and general agreement as “the economics profession) will agree with me and say it was an obvious reason for lagging U.S. economic performance since 1988.
3) Most of those who agree with me will pretend they were saying it all along.
Stoopid foolish drunkard interpretation of U.S. financial milestones from 1987 to the present:
1987 Black Monday Stock Market Crash
1988 President Raygun signs executive order creating PPT
1999 Plunge protection reaches the limit of its ability to artificially inflate asset prices
2000 Credit bubble pops, particularly impacting overvalued telecom and dotcom stocks
2002-2006 Alan Greenspan successfully reflates the bubble by pushing interest rate pedal to the medal; housing prices are the primary bubble asset during this episode
2007 Housing bubble pops
Fall 2008 Wall Street nearly collapse
2009-2010 Extend-and-pretend denial phase of the credit bubble collapse ensues, highlighted by myriad hair-of-the-dog stimuli measures
NEXT???
Regarding my milestones posted above:
It is better to be approximately right than precisely wrong.
Are you asking if we agree with you regarding the existence of the PPT? Quite frankly, I’d say anyone who *doubts* it is the one wearing a tinfoil hat.
“Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar.
“That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now,” he said in a speech on the future mandate of the 186-nation Washington-based lending organization.” (abcnews.go.com)
No problem here idiot, global reserve currency has been around for years; it’s called the ‘gold standard’.
“No problem here idiot, global reserve currency has been around for years; it’s called the ‘gold standard’.
Oh lord, don’t bring that up,a viable monetary back stop,that worked. Besides it’s to late, we have to crash and burn all the way first, and there are mountains of fiat, so it will take a while longer.
“… we have to crash and burn all the way first, and there are mountains of fiat, so it will take a while longer.”
As these mountians of fiat are burned down it is very important to remember that:
1. Crashing and burning fiats destroys them. If you are the holder of the fiats that get destroyed they you are hosed. Debt is part of the equation that sprung fiats into existence in the first place. I you are the holder of the debt that gets destroyed then you are hosed.
2. Destroying fiats creates a shortage of fiats. If you are the holder of debt that survives the massive fiat destruction, or if you hold the fiats in their cash form - then you get to benifit because the value of your increasingly scarce fiats - their buying power - will increase.
“2. Destroying fiats creates a shortage of fiats.”
3. Printing new fiats replaces the destroyed fiats, reducing any shortage that might otherwise develop.
“3. Printing new fiats replaces the destroyed fiats, reducing any shortage that might otherwise develop.”
That’s good to know. Perhaps all those newly printed fiats can be used to pay so many previously unpayable bills and stop this Great Recession thingy dead in its tracks.
Who do I need to contact to get the deed done?
When, exactly, did gold ‘work’? I can find no period in modern history that a gold standard made an economy work without panics, recessions, and depressions. Nor can I find a time when these panics etc ’solved themselves’ quickly due to the supposed superiority of the gold standard.
I’m not knocking the possibility it might work well, I’m just curious if anyone can point to a time and place when it has. There seems to be an assumption that the gold standard used to work quite well.
@ alpha-sloth
I’m guessing that the gold standard “worked” in the sense that responsible people were not made to pay for others’ errors through inflation. Savings were intact. Yes, there were panics because people made mistakes, but they had to bear the full burden of those mistakes.
The panics were usually followed by recessions or depressions, which wiped out many innocent people, as did the numerous bank runs that coincided with the panics. (I guess you could have insured bank deposits and a gold standard, though.)
My main point is that a gold standard doesn’t seem to preclude the malinvestment that causes recessions etc. It does take away the ability of a nation to inflate its way out of economic difficulties, but that may not always be a good thing. And if you’re worried about inflation eating up your savings, you can always hold your savings in gold now. I still don’t see the superiority of a gold standard.
It is not the gold standard that fails. It is fractional reserve banking which allows the banks to inflate the money through loans which causes the panics and failures. Your bank can not fail if it has your money on deposit. Investments should be made only with time deposits of length equal to the investments. Do not borrow short and lend long.
I suppose you could ask the folks in Zimbabwe what their thoughts are regarding a fiat system.
Gold today doesn’t necessarily track inflation the way we’d like it to, so savings in gold as an inflation hedge might not be the best approach. Unless of course we were on a gold standard.
The real issue is the easy money policies that eventually lead us to a financial crisis be it a fiat system or a gold standard. The gold standard would force us to be more disciplined versus allowing crisis after crisis without any meaningful reform. Which leads to - who really benefits from these bubbles? It’s not me and I suspect it’s not you.
My understanding is that every country is on a fiat system, so Zimbabwe isn’t necessarily the only example. China, Australia, Canada, Germany, Brazil, etc are more (currently) successful examples. And we did have crisis after crisis when the US was on a gold standard- check the economic history of the 19th century.
The gold standard and full reserve banking may be preferable alternatives to our current set-up, but they’ve never proven themselves in practice to be the panaceas that some here seem to think they are. At least not that I’m aware of- I’m still awaiting evidence to the contrary, if anyone has it.
“That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now,”
They sure seem to talk about that day quite often any more…
Looking for a place to build a home? They aren’t running out of land in Detroit.
* U.S. NEWS
* FEBRUARY 27, 2010
Detroit’s Smaller Reality
Mayor Plans to Use Census Tally Showing Decline as Benchmark in Overhaul
By ALEX P. KELLOGG
(A neighborhood stands with numerous empty lots in 2008 in Detroit.)
DETROIT—This city is shrinking, and Mayor Dave Bing can live with that.
The nation’s once-a-decade census, which gets under way next month, usually prompts expensive tally-building efforts by cities eager to maximize federal funding tied to the count.
Detroit, which faces a population decline of as much as 150,000, has used that tactic in the past and once fought a successful court challenge to boost its count. But this time, Mr. Bing is pushing the city to embrace the bad news.
The mayor is looking to the diminished tally, down from 951,270 in 2000, as a benchmark in his bid to reshape Detroit’s government, finances and perhaps even its geography to reflect its smaller population and tax base. That means, in part, cutting city services and laying off workers.
(General Motors Corp. world headquarters is seen from an old, mostly abandoned warehouse district in Detroit last March.)
His approach to the census is a product of not only budget constraints but also a new, more modest view of the city’s prospects. “We’ve got to pick those core communities, those core neighborhoods” to sustain and preserve, he said at a recent public appearance, adding: “That’s something that’s possible here in Detroit.”
…
Will the last one out, please turn off the lights.
http://www.100abandonedhouses.com/
It’s heartbreaking to see how urban blight has consumed once-grand houses and neighborhoods in Detroit. These used to be nice, working and middle class areas where people raised families and worked at productive jobs. Now its a wasteland.
Thanks for the link.
So sad, but also oddly beautiful documentation of a tragedy.
If you would have told me 20 years ago that Detroit, the economic engine of the USA, would be a wasteland now I would have never believed it. This is, to me, the best single example of the hollowing out of the american economy.
If you would have told me 20 years ago that Detroit, the economic engine of the USA,
SV guy, I take your point, but your time-line is off. I checked the release date of Michael Moore’s film “Roger and Me,” documenting Flint MI’s deterioration and it is December 1989.
The devastating toll of eight years with W in the White House is only now beginning to come to light. Don’t get the mistaken impression that I solely blame him, as the Clinton dynasty with Franklin Raines at the helm of Fannie Mae set the stage for an economic catastrophe. And the Fed’s bubble vision goggles served nicely to cover it all up right until the point when the SHTF in Fall 2008.
Brown squirts, anyone?
The economy
Back to the crash
The American economy has just had its worst decade since the 1930s
Feb 25th 2010 | CAMBRIDGE, MASSACHUSETTS | From The Economist print edition
THE headquarters of the National Bureau of Economic Research (NBER), on Massachusetts Avenue in Cambridge, Massachusetts, looks out on a row of shops. These used to be thriving places, where people bought furniture and other household goods. But collapsing property prices, foreclosed homes and soaring unemployment, all effects of the recession which the NBER announced on December 1st 2008, have taken their toll. Many shops are now empty, with “For Rent” signs forlornly fastened to them.
But the misery stretches well beyond the recession, as our charts above make clear. Taking the decade between 2000 and 2009 as a whole, growth was slower than in previous decades. These figures, compiled by Christopher Wood, a former journalist with The Economist and now a strategist at CLSA, a Hong Kong-based investment group, provide stark reminders of various aspects of the poor performance the American economy demonstrated during the “noughties”.
Real GDP in America grew by an average of 1.9% a year during the 2000s. This may not sound all that terrible, especially for a decade that saw one short recession and another particularly deep and long one. But it is the economy’s worst performance for a long time. During the previous six decades, average growth was 3.9% a year. Only the 1930s—when growth was a mere 0.9% a year—were worse. And America’s population is growing smartly, so GDP per head has grown a good deal more sluggishly than GDP as a whole. The story is much the same when the growth in Americans’ personal consumption during the ten years to the end of 2009 is compared with previous decades. Again, only the 1930s were worse.
…
“The story is much the same when the growth in America’s personal consumption during the ten years to the end of 2009 is compred with previous decades. Again, only the 1930s were worse.”
I’m calling BS on this claim. These were the ten years when borrowing-and-spending was going full blast, when it was widely acknowleged that our economy was a Consumer-Based Economy.
I also call BS to the story . It just doesn’t make sense with all the debt consumption that was going on during that decade .
I got my monthly newsletter from a financial adviser we used to use. It said 2000-2009 was the absolute worst decade for the stock market- down 0.51 percent average per year. In the 1930’s it was only down 0.27% average per year.
It’s so easy to fool Joe and Jane six-pack. I’ve talked to people who are thrilled with the performance of their 401K in 2009. Never mind that they are still 30% below where they were in 2007. As long as they keep adding money, the numbers go up, but the returns are negative.
The price you pay determines you rate of return. Buyers should rejoice.
Good observation. In light of this being the end of the worst decade since the 1930s, Vanguard’s VFINX lost an average 0.39% per year (ARR) in the last ten years to date 02/28/2010.
And of course we know precious metals, namely gold, increased about 300% in the same period.
If you are a contrarian, you may want to be into the S&P 500. VFINX yields 1.77%, which is certainly better than my beloved 52-week T-bills.
Spire developer sued over unpaid credit cards
By: Eddie Baeb Feb. 24, 2010
(Crain’s Chicago) — Bank of America Corp. is suing Chicago Spire developer Shelbourne Development Group Inc. over an unpaid balance of $110,076 on credit cards that the bank cancelled last fall.
The Dublin, Ireland-based developer took out the business and commercial credit cards in 2006 and 2007 from BofA, which was a lender to the Spire. At some point before early June last year, BofA notified Shelbourne that it was going to cancel the Visa cards due to non-payment, according to filings in U.S. District Court in Chicago.
BofA terminated the cards in August 2009 and demanded full payment of the balance by Sept. 30, the bank says in its lawsuit.
America needs a major overhaul of our housing policy, and all we are getting is a hair-of-the-dog effort to reflate the housing bubble, coupled with bubble denial. We’re frackin’ doomed.
PB
I have my days where I think we are doomed and I have my days where I have my hope that better judgement will prevail regarding all the problems that face America these days . These clowns are so tied into corrupt systems and keeping them functional that they can’t see the forest through the trees .
That earthquake was huge in Chile . I hope Hawaii doesn’t get a really bad wave . At least they have time to get out of the way . I still think people
along the West Coast should stay away from the shores for a while .
Between San Pedro and Santa Monica, the tsunamic waves are expected to increase by two feet between noon and 12:25. LA Times said most people won’t notice the difference.
Put ME in your will anyway Bill…there’s still time !
Bill..Bill, are you still there ?
“I still think people
along the West Coast should stay away from the shores for a while .”
When is the tsunami scheduled to come in to shore? I may drive down to the coast to get a closer look. Of course, it may be hard to find a parking spot, given the likelihood that others will do the same thing.
P.S. It is worth mentioning that the San Diego coast is not very similar to the Gulf coast. In the latter case, I would try to move hundreds of miles inland if ever a tsunami were headed to the shore, as anywhere within a few miles of the water is at or near sea level. By contrast, if you move one mile inland from the water anywhere in San Diego except for a few low-lying areas (downtown, Mission Beach and various other estuaries, etc), you generally gain 300+ feet in elevation. The highest tsunami tide ever recorded, at least of which I am aware, was 130 feet high or so, triggered by the Krakatoa Volcano eruption on August 27, 1883 (Reference: The Day the World Exploded”, Simon Winchester).
More generally, a large percentage of the California coast is similar to the areas around San Diego: Beaches with high cliffs or mountains within a mile of the water — i.e., ideal tsunami-viewing areas.
If there is a God He should focus the wave on Malibu.
Now here’s some logic: There is a tsunami on its way which lures hundreds of people flock to the shore to get a better look?
Free car washes for those parked close enough to the beach.
Is that same Tsunami handing out $8,000 credit as bait?
That tsunami will hit after the $8,000 ripple recedes.
Nice one!
I have been looking at the web cam of hermosawave.com and don’t see much different than the usual white water.
Actually looks like a beautiful day to be at the strand path. The rain storm appears to be over. Very few people out there at the beach right now.
Now LA Times says 12:25 to 12:55 3 foot higher waves for the south Bay…
Tidal surge reported in La Jolla
Originally published February 27, 2010 at 9:05 a.m., updated February 27, 2010 at 1:32 p.m.
San Diego lifeguards reported sighting a tsunami shortly after noon off the coast of La Jolla on Saturday, triggered by an 8.8 magnitude earthquake in Chile.
Authorities had issued a tsunami advisory for the coast of California, including San Diego County, for noon to 2 p.m.
Over a 10- to 15-minute period starting at noon, lifeguards saw the ocean water recede and then return as outgoing and incoming tides, said San Diego lifeguard Lt. John Everhart.
Normally, such a tidal flow would last several hours. No injuries or coastal damage was reported, Everhart said. The tidal surge was reported in the Bird Rock and La Jolla reef areas.
…
Talked to a friend who works down by the coast today. He said the water surged about 4 feet above its “normal” levels. He believes the fact that the tsunami hit at just about the same time as minimum low tide is what prevented a lot of damage.
Hopefully my clarifying post will soon appear; it is not as crazy as it sounds. For example, if you went to the top of Mt Soledad to get a bird’s eye view, you would have a perfect vantage poitn within one mile of the coast, yet be 823 feet above sea level. A similar vantage point could be had at Cabrillo National Monument, although you would expose yourself to tsunami inundation risk on the drive out there.
P.S. This discussion brings to mind the Great Mississippi River Flood of 1993. My wife and I lived in one of the many cities along the river. Although there is a wide flood plain with farm land across the bottom, the Mississippi flood plain is bracketed for most of its length by hills or cliffs 100 feet or more above water level — much higher than the highest flood that ever has occurred or could occur. We lived above the level of those bracketing hills; this did not stop our out-of-town relatives from frequently calling to make sure we had not been inundated by flood waters.
I suppose people who believe in the literal truth of the Biblical Great Flood story (e.g., the entire planet was recently submerged by rains which made the sea level rise above the highest point on the continental plates) might reasonably be concerned, but anyone familiar with Mississippi flood plain geology and who believes the world behaves according to the laws of physics would instantly recognize the ridiculousness of such a concern.
The tsunami from the 1960 earthquake in Chile severely damaged the downtown waterfront of Hilo on the big island, and killed several dozen people. That quake was 9.4 ( biggest ever recorded on the planet ), near Valdivia, several hundred miles south of today’s quake.
4:17 ET they are thinking it could be 7 1/2 feet at Hilo…..
When visiting Hilo a few years ago we took one of those tours that take you to the top of the mountains by the telescopes… (A bit pricey but worth it.)
Anyway, it is a nearly a day long tour where you visit a variety if places at higher levels in stages to get acclimated to the significant altitude change.
Started out in the harbor and the first story told was of the 1960 tsunami. Before early warning systems, but apparently some of the the older folks knew when the tide went out so quickly and so far that one was coming and warned others to get to higher ground.
‘Granddad Bandit’ hits another bank
(CNN) — A man dubbed the “Granddad Bandit,” suspected in more than a dozen robberies, struck again this week, the FBI said Friday.
The latest incident was Wednesday in Huntsville, Alabama, the FBI said in a release. It offered no further details.
The Granddad Bandit is not the only middle-age bank robbery suspect currently being sought. Authorities in Houston, Texas, are looking for a woman dubbed “Bad Granny,” believed responsible for three recent robberies and attempted robberies of banks in the area.
The woman attempted to rob a bank Friday, the FBI’s Houston office said in a release, but “the teller did not immediately provide any cash” after being handed a threatening note. The woman apparently got nervous, took back the note and left, authorities said. However, she then entered another bank and robbed it.
Occassionally the FBI looks for one related to housing:
http://www.fbi.gov/wanted/fugitives/wcc/oliver_cj.htm
Conincidence?
On October 3, 2005, Craig John Oliver, a convicted felon, plead guilty in the United States District Court, Eastern District of Virginia, to defrauding 68 Virginia and Maryland homeowners of more than $2.5 million.
Oliver is also wanted for probation violation in 1995 which followed a securities fraud conviction in Arlington County, Virginia.
Considering the Fed’s $1.25 trillion MBS buyback is 96.5 complete and wanting some assurance the process had been handled properly I went to the New York Fed’s website for some answers:
newyorkfed.org/markets/mbs_faq_091118.html
Interesting stuff:
“The New York Fed retained Wellington Management Company, LLP for trading, settlement and as a secondary provider of risk and analytics support; and BlackRock Inc. as the primary provider of risk and analytics support “
Interesting both BlackRock and Wellington are major players in the PPIP:
housingwire.com/2010/01/29/ppip-fund-managers-buy-3-4bn-of-legacy-mbs/
At least the process is tightly controlled by “ethical walls” …
“What measures does the Federal Reserve take to ensure that an investment manager implementing the MBS program does not have an unfair advantage relative to other market participants due to the information it receives about the MBS program?
Each investment manager is required to implement ethical walls that appropriately segregate the investment management team that implements the Federal Reserve’s agency MBS program from other advisory and proprietary trading activities of the firm. The New York Fed monitors each investment manager’s compliance with this requirement. “
“…wanting some assurance the process had been handled properly…”
OMG — I have a rival financial markets comedian on the blog.
Keep up the good work
Good stuff, Hard Rain.
No worries, though. I’m sure the “experts” at the Fed have made sure nothing unethical is going on. Move along now.
Waiting for the Tsunami impact. CNN is all over it.
Why do I get the feeling that this is going to end up being a non-event?
I’m in Waikiki, stuck on the 14th floor waiting for something to happen. So far we’ve been delighfully disappointed.. but bored out of our minds.
Don’t expect much… especially on the 14th floor of a hotel.
A non-event such as Al Capone’s vault?
X-GS, it will be a non-event because AIG insured against it -
Twenty after……forecast arrival was five after the hour. All the “experts” are on the clock.
I can barely stand the excitement……..
Quarter before the hour. Lots of discussion about discolored water, and rock outcroppings…….
abcnews.com has a link to live video.
This is a perfect news story. The event hasn’t happened; Instead it is now happening.
The event in Chile - the earthquake - has already happened. Note the lack of news coverage in Chile.
The news media loves to focus attention on happening events, not happened ones, hence the news coverage in Hawaii.
cbsnews.com appears to have better live coverage.
http://www.equipped.org/earthqk.htm
Another earthquake being reported, this one a 6.0 in Argentina.
To all our California HBB readers and posters, especially those in LA, I hope you’re prepared for the worst. In either a natural or man-made disaster preparedness might be the difference between surviving or not. Please review this checklist - it’s one of the better ones I’ve found. The snowstorms on the East Coast and the recent series of earthquakes underscore the need to be ready when disaster strikes.
Not only is the global financial economy falling apart, and the global climate warming up beyond the boiling point, but the entire planet is cracking apart at the seams in a wrenching series of earthquakes.
Enjoy all of God’s punishments in 2010, Year of the Pigman.
Also from cbsnews. Troubling…this should bode well for “confidence”…
Long-Term Joblessness “Off the Charts”
Hitting Middle Class Particularly Hard; Millions of Such Jobs Gone Forever, Reports John Blackstone
“Even though many economists say the Great Recession ended over the summer, you’d never know it by the millions of Americans still struggling to find work. The once prosperous and gainfully-employed middle class is being hit especially hard, reports CBS News Correspondent John Blackstone.
The unemployment rate has backed off a touch from 10 percent to 9.7 percent, but that’s little comfort to the long-term unemployed - those out of work more than six months. They make up 40 percent of people collecting unemployment.
“These people, when you look at their unemployment rate, it’s just off the charts,” says Lakshman Achuthan, managing director of the Economic Cycle Research Institute. “It’s very different from earlier patterns that we’ve seen in recessions.” “
Look on the bright side. At least the housing market is strongly recovering.
Yes ,unemployment of the middle class was predictable a long time ago that it would be “off the charts “( wait ,that’s my line ).
No serious ,I wish the Media/Politicians would start talking about the causes of the unemployment situation and what we could do to remedy it rather than acting like it’s not something to work on immediately .
+1
Mark your calendars; here is a movie to watch for in 2012.
movie profile
The Big Short: Inside the Doomsday Machine
PROFILE OVERVIEW
Theatrical Release:
TBA, 2012 (Development)
Starring:
CAST AND CREW LIST
Directed by: * —
Starring: * —
Screenwriter: —
Producer: * Brad Pitt
Executive Producer: —
Cinematographer: —
Composers: —
Directed by: —
Genres:
Drama
Keywords:
money economy
Distributor:
Paramount Pictures
MPAA Rating: —
SYNOPSIS
Chronicles the recent free fall of the American economy.
Please don’t tell me they’re going to blame it on short sellers.
“Step right up, folks. Get your falling knife real estate assets at fire sale prices right here.”
P.S. How much of the SoCal real estate market does CB Richard Ellis control? I see their “For Lease” signs on vacant CRE all around San Diego these days.
California puts 11 office buildings up for sale
By JUDY LIN (AP) – 1 day ago
SACRAMENTO, Calif. — California has put the “for sale” sign on 11 state office buildings, including the San Francisco Civic Center and the Ronald Reagan State Building in Los Angeles, as a way to raise cash to shrink the budget deficit.
Los Angeles-based real estate firm CB Richard Ellis released a sales brochure Friday titled the “Golden State Portfolio” as part of its marketing strategy to lure potential buyers. Combined, the buildings have more than 7 million square feet of office space.
State officials are hoping to draw offers worth more than $2 billion.
California and other state and local governments have been eyeing their high-rises, prisons and even capitol buildings to generate fast cash for fiscal relief. Arizona has invited investors to buy bonds secured by landmark state government buildings, while Connecticut plans to bring in $60 million over the next two years from real estate sales.
California’s sale is the largest.
…
Not to second guess the infinite economic prudence of our state government, but isn’t this like one of the worst points in the history of California to sell commercial real estate assets?
It helps when your wife is a US Senator.
Yes it does.
——————-
Is anyone else as disturbed as I am regarding the ease with which our govt is willing to sell of public assets at fire-sale prices to unknown entities (megabanks, foreign countries, etc.)?
Yes, better to wait for the state to be reposessed.
Conventional wisdom gone gloopy:
“The problem with the housing market is not unaffordable prices which have not reached a fundamental bottom, but rather a paucity of credit.”
Intelligent Investing
Housing Recovery Needs A Boost
Stuart Saft, 02.17.10, 05:00 PM EST
A lack of available credit will keep the housing market weak, but Congress can get lending going again.
Although sales of new houses have begun to increase, until home loans become readily available, the housing market, homeowners whose largest asset is their home and the broader economy will not recover. Notwithstanding what the pundits may think, the dramatic recovery in the stock market is not an indicator of strength in the housing market, but rather a realization that the stock market was oversold during the panic of 2008.
Unfortunately what is going to cause another slide in housing prices and a continuation of the recessionary psychology that has gripped this country is the paucity of credit and the unreasonable conditions for the credit that is available.
…
Ack!!
These idiots are driving me mad.
Gee, there should be a law against only loaning money to people with a reasonable chance of paying it back.
Or better yet, the 28th Amendment establishing the Right of Credit.
That would solve these unreasonable conditions we have to live under today.
Serial bottom callers are still predicting a housing market bottom in a year from now. Eventually, the natural course of human events will make the last person to make this stopped-clock prediction look like some kind of financial oracle.
Bloomberg
Buffett Says U.S. Housing Woes to End in ‘Year or So’
February 27, 2010, 2:28 PM EST
(Adds comments from Buffett beginning in the ninth paragraph.)
By Andrew Frye
Feb. 27 (Bloomberg) — Billionaire Warren Buffett said the U.S. will recover from the residential real estate slump by about 2011 as demand for homes catches up with the supply that accumulated during the bubble.
“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote today in his annual letter to the shareholders of his Berkshire Hathaway Inc. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits.”
The worst housing decline since the Great Depression, ignited by mortgages to buyers who couldn’t repay, has drained profits from the nation’s largest financial firms. Record foreclosures last year flooded a U.S. real estate market already glutted with unsold property, causing new-home construction to fall to the lowest in at least five decades, according to the U.S. Census Bureau.
“People thought it was good news a few years back when housing starts — the supply side of the picture — were running about two million annually,” said Buffett, the chairman and chief executive officer of Omaha, Nebraska-based Berkshire. “But household formations — the demand side — only amounted to about 1.2 million.”
…
More From Businessweek
* Merkel Slams Greek ‘Scandal’ as Attention Turns to Goldman Role
* Berkshire Profit Jumps to $3.1 Billion on Derivatives (Update2)
* Consumers Just Didn’t Get The Memo – Everything Is Beautiful
* China’s Stocks Decline After New Year Break; Developers Drop
* White House Social Secretary Rogers Steps Down (Update1)
We’re checking out MLS# 7451500 tomorrow. I suspect we will be writing an offer.
I wish you all the best. Frankly, I don’t think now is the best time to buy (or shop), but if you find something that works for you, go for it!
P.S. Several folks at work have bought homes in the past year; I gave them the same advice I gave you above.
“in the past year”
I get that, but what about right now? What if it takes 4-5 years of prices falling 5%/yr. to reach bottom? At the price range I am shopping at (or at least intending to offer/buy at) I will have it completely paid off in 6-7 years at my current salary — mind you, I am inline to be promoted next fall.
I don’t think now is a great time to buy, but given all of my variables, it seems like an o.k. time to lowball the nuts off some of these Floridiot’s faces.
“Floridiot’s faces”
Takes one to know one
Good luck, Muggy.
That IS a beautiful house, and looks like it would suit your needs for as long as you’d care to live there (4 bedrooms).
If we could get something like that for the same price (~$250K-ish), we’d be buying, too.
“What if it takes 4-5 years of prices falling 5%/yr. to reach bottom?”
Why would you assume 4-5 more years of falling price to reach (a near-) bottom? I am expecting the next leg down in housing prices to be fast and brutal, as the collective realization kicks in that Uncle Sam’s housing price support measures were all an exercise in futility. I plan to start shopping for a home by year-end 2010, with a three year time horizon, timed for when my daughter goes off to college and our remaining household will fit comfortably in a 3/2. While I don’t necessarily expect an absolute bottom within three years, I do expect prices to get close enough for decent opportunities to materialize in local markets formerly described as ‘a bit frothy.’
2012 for Manhattan.
“I am expecting the next leg down in housing prices to be fast and brutal”
Can you put a timeframe/percentage on that prediction?
5% in 12 months?
10% in 12 months?
15% in 12 months?
20% in 12 months?
25% in 12 months?
25% + in 12 months?
I would guess there will be a “worse-than-expected” drop of at least 15% in the next 12 months for most former bubble zone markets in coastal CA and FL, but take this with a grain of salt, as I am a confirmed bear.
P.S. At the moment, I am also half-pickled, and just pulled the above estimate out of my arse. Nonetheless, I have much greater faith in my half-drunk dart toss estimate than anything I read in MSM articles which quote extend-and-pretend real estate porcine beauticians.
PB,
The part about having to wait until your eldest daughter is gone makes me sad.
This wretched bubble has made it so that good, financially-responsible people were not able to raise their families in normal, middle-class homes (that they own). Perhaps you’re not as bummed about having to rent for the last years that your daughter is living with you, but you should have been able to be settled in your own home these past few years.
I HATE this bubble, and all the people who are destroying our money/savings in their efforts to keep prices at permanently unaffordable levels. F*** them. (sorry, don’t like to cuss, but I’m very angry and frustrated about this)
@ FPCSS:
Why 2012 for Manhattan? Why not 2010? 2011?
One more thing: If you have figured out your willingness to pay, based on what monthly payment you could comfortably afford based on your income and non-housing expenses, your biggest risk entering the market at this point is frustration. Provided you have the patience, serial lowballing is the way to go.
Prices in our area are still so bubbly that I see no advantage to wasting my time and energy with this exercise at the moment. Once there is blood in the streets and many people are in general agreement that “real estate is a terrible investment,” I’m in.
“serial lowballing is the way to go”
Haha. Lock your doors!
SERIAL LOWBALLER TERRORIZES MID-PINELLAS
I’m not at a loss of words today — chalk it up to the wine I am drinking, which has freed my virtual tongue.
I realize my comment above may be easily misconstrued by dimwits such as the Joeys and Eddies of the world into a presumption that I am eagerly awaiting blood in the streets.
Such is not the case; rather, I have rational expectations for the natural consequence of the collapse of the largest financial bubble in the history of modern finance, which is that people will get angry and act out when they recognize they were duped by the banksters into making foolish choices. It happened in the 1930s and in the early 1990s, and I expect it to happen again before the present episode ends.
“Blood in the streets” is a highly visible sign a market bottom is nearing, as unbridled fear induces a pucker-butt response which directly leads to a sharp decline in housing demand.
“SERIAL LOWBALLER TERRORIZES MID-PINELLAS”
That’s about as absurd as the suggestion that short sellers can somehow cause stock prices to collapse. How can offering a lower purchase price than the market value cause prices to drop? The idea makes no sense whatsoever, as the seller in a free market always has the right to hold out for a higher offer if he thinks he is being lowballed.
Looks beautiful. I’ll keep my fingers crossed for you!
Ya gotta love Buffett’s ability to find the silver lining inside a dark cloud.
“Within a year or so, residential housing problems should largely be behind us,” Buffett wrote today in his annual letter to the shareholders of his Berkshire Hathaway Inc. “Prices will remain far below ‘bubble’ levels, of course, but for every seller or lender hurt by this there will be a buyer who benefits.”
I would be surprised if buffet’s realtively modest house hasn’t effectively (assuming it was sold) appreciated more than Nicholas Cage’s monstrosities.
All because a non-idiot was actually living in it.
Multi-million dollar homes are taking 50 percent plus haircuts. There has never been a better time to invest in multi-million dollar property!
P.S. Once it become common knowledge that multi-million dollar homes have dropped in value by over fifty percent, it will follow that the price of any home of lesser value will get crushed by over fifty percent as well. Why would inferior homes ever sell for more than the price of the most desirable homes?
REAL ESTATE
High-end home sellers lower their sights
The housing slump is finally bringing down prices in the luxury property market.
February 19, 2010|By Lauren Beale
Billionaire tax cheat Leona Helmsley loved a good bargain. So, were she still around, the late hotelier might appreciate recent happenings at her Greenwich, Conn., estate known as Dunnellen Hall.
…
When the housing bubble popped, the most dramatic declines hit the mid-priced and low-end markets, where home sellers had to compete with cheap foreclosures. Now, even the wealthy are facing the new reality as some luxury homes’ prices have dropped — and dropped again — over the last few years and agents are begging sellers to be realistic in setting an asking price.
“The $10-million-plus market is best priced close to the bone,” said Michael Eisenberg of Keller Williams Realty, Beverly Hills.
At the peak, Eisenberg said, he had clients who were flipping every two or three years and making so much money they almost didn’t need to work anymore. These days he’s happy to take a languishing listing.
“It doesn’t hurt that the state of the market has helped sellers get a better perception as to what their property is currently worth,” he said.
Eisenberg has the listing of a home that tops 14,000 square feet with a 3,500-square-foot detached guesthouse nestled on more than an acre of land — and an asking price that has been reduced by about half to $10.8 million. Its rooftop tennis court has city-to-ocean views, and the ballroom can hold 200 people.
“At the peak, Eisenberg said, he had clients who were flipping every two or three years and making so much money they almost didn’t need to work anymore. These days he’s happy to take a languishing listing.”
I have a college buddy who was doing this in the Hartford, Connecticut area the last time I talked to him, circa 2006. I warned him to be careful; don’t have the will nor the inclination to check up on him now to see how he is faring in the post-bubble collapse.
“Druish princesses are often attracted to money and power, and I have both, and you know it!”
Lord Dark Helmet
Dudd is scrapping the independent consumer protection agency idea ain favor of fox-in-the-chicken coop consumer protection overseen by the Wall Street-owned and operated Treasury Department. What kind of Dumbocrat is this guy?
Bloomberg
Dodd Scraps Obama’s Consumer Agency, Proposes Treasury Bureau
February 28, 2010, 12:02 AM EST
By Alison Vekshin and Robert Schmidt
Feb. 28 (Bloomberg) — Senate Banking Committee Chairman Christopher Dodd abandoned the Obama administration’s stand-alone consumer financial agency and is proposing a bureau in the Treasury Department, seeking to overcome Republican opposition to legislation overhauling Wall Street regulations.
The Bureau of Financial Protection would be run by a director appointed by the president, have power to write rules for companies offering financial services and be funded mainly through industry fees, according to a two-page summary the Connecticut Democrat circulated this weekend.
“It is one of several proposals he has advanced to seek a bipartisan consensus and enhance consumer protection,” Dodd spokeswoman Kirstin Brost said yesterday in an e-mail. “We do not have an agreement.”
…
The 14 Most Troubled Real Estate Markets
Which key real estate markets in the U.S. are being damaged the most by rising mortgage delinquencies? We culled data from First American CoreLogic, the real estate information firm based in Santa Ana, Calif. The following list includes the 14 most troubled real estate markets among those whose metropolitan areas have at least 300,000 residents. In all cases, at least 10% of mortgages are 90 days or more past due and at least 4.5% of mortgages are in foreclosure or converted to REO.
The peer review fraudsters are seeking outside scientific review in a last-ditch attempt to restore credibility. How ironic is that?
If it works for global warming extremists, maybe it could work for the Fed? BwaHahAHaHAHAHAHHAAHAAAA!!!
P.S. I once took a job interview with an IPCC guy; guess I dodged the bullet by not landing that position?
Warming panel, under attack, seeks outside review
By SETH BORENSTEIN (AP) – 7 hours ago
WASHINGTON — The Nobel Prize-winning international scientific panel studying global warming is seeking independent outside review for how it makes major reports.
The Intergovernmental Panel on Climate Change says it’s seeking some kind of independent review because of recent criticism about its four 2007 reports.
Critics have found a few unsettling errors, including projections of retreats in Himalayan glaciers, in the thousands of pages of the reports.
Scientists say the problems are minor and have nothing to do with the major conclusions about man-made global warming and how it will harm people and ecosystems. But researchers acknowledge that they have been too slow to respond to a drip-drip-drip of criticisms in the past three months. And those criticisms seem to have resonated in poll results and media coverage that has put climate scientists on the defensive.
“The IPCC clearly has suffered a loss in public confidence,” Stanford University climate scientist Chris Field, a chairman of one of the IPCC’s four main research groups told The Associated Press on Saturday. “And one of the things that I think the world deserves is a clear understanding of what aspects the IPCC does well and what aspects of the IPCC can be improved.”
An independent review “is much needed,” said University of Colorado environmental studies scientist Roger Pielke Jr., a longtime critic of the IPCC.
“The IPCC has a long road ahead to regain trust,” Pielke said by e-mail.
…
Hey, Lil’ Joey, this one’s for you!
BTW, I can’t speak to other parts of the country, but being 25 percent underwater in California generally means you are at least $125,000 in the hole if you have to sell the home and repay the bank from the proceeds, and that is before the six percent Used Home Seller’s fee and other closing costs are subtracted out.
* ROI
* FEBRUARY 26, 2010
When It’s OK to Walk Away From Your Home
* By BRETT ARENDS
(A real-estate agent moves a torn “Lender Foreclosure” sign outside a foreclosed home in Reno, Nev., last Monday.)
Millions of Americans are now deeply underwater on their mortgage. If you’re among them, you need to stop living in a dream world and give serious thought to walking away from the debt.
No, you shouldn’t feel bad about it, and you shouldn’t feel guilty. The lenders would do the same to you—in a heartbeat. You need to put yourself and your family’s finances first.
How widespread is this? More than 11 million families are in “negative equity”—that is, they owe more on their home than it is worth—according to a report out this week by FirstAmerican Core Logic, a real-estate data firm. That’s a quarter of all families with mortgages. And for more than five million of those borrowers, the crisis is extreme: They are more than 25% underwater—the equivalent of having a $100,000 loan on a property now worth just $75,000 or less. That’s true for a fifth of mortgage holders in California, nearly a third in Florida and an incredible 50% in Nevada.
Are you in this situation? Are you still battling to pay the bills each month, even when it may make little financial sense to do so?
It’s time for some tough talk.
Stop trying to chase your lost equity. That money is gone. Don’t think like the gambler who blows more and more cash trying to win back his losses. That’s how a lot of people turn a small loss into a big one.
And do the math. Even if you hope the real estate market is near the bottom—it’s possible, but by no means certain—it may still take years to see any meaningful recovery. If you are 25% underwater, your home will have to rise by 33% just to get you back to even.
Is that likely? And over what time period? Even if home prices rose by 5% a year from here, that would still take six years. And during that time you could instead be building fresh savings elsewhere.
If you are reluctant to give up on “your” home, realize that it isn’t “yours.” If you are in negative equity, it’s the bank’s home. You’re just renting it. And right now you may be paying way above market rates. You need to be ruthless about your cash flow.
…
HAPPY Purim!
Happy holiday Reuven! I don’t know the reply and am on my way to bed.
Happy Purim to you, Reuven!
There is always a silver lining! If mortgage rates keep rising (particularly when the Fed soon ends its MBS purchase program), nominal home prices will fall, making them more affordable to people with savings. For once, financially prudent people will benefit, while fools with no savings will lose out.
It’s all good, as affordable housing is the GSE mission, isn’t it?
* REAL ESTATE
* FEBRUARY 26, 2010
Mortgage Rates Rise; 30-Year Crests 5%
By JOAN E. SOLSMAN
Home-mortgage rates mostly rose this week, with the average rate on 30-year fixed-rate mortgages jumping back above 5%, according to Freddie Mac’s weekly survey.
Freddie’s chief economist, Frank Nothaft, said rates for 30-year fixed mortgages followed long-term bond yields higher as data about the housing market’s recovery remained choppy. Mortgage rates tend to follow the yields.
Recovery in the U.S. housing market has been fragile. Demand for new and used homes, after strengthening in earlier months, has dropped in recent months because of cold weather and continuing joblessness. New-home sales unexpectedly hit a record low in January, the Commerce Department said Wednesday. Data on existing-home sales are due Friday.
The 30-year fixed-rate mortgage averaged 5.05% for the week ended Thursday, up from last week’s 4.93% average but down from 5.07% a year ago. Rates on 15-year fixed-rate mortgages were 4.4%, up from 4.33% last week but down from 4.68% a year earlier.
…
Ha. No wonder FNM is choosing now to stop losing money on interest only loans
The Wall Street Journal
* REAL ESTATE
* FEBRUARY 25, 2010
Continued Declines Start a Third Year
The Architecture Billings Index began its third year of negative conditions. The index was 42.5 in January, down sharply from a revised reading of 45.4 in December. The latest reading indicates a continued decline in demand for design services. Any reading above 50 indicates an increase in billings. The index is derived from a monthly survey of architectural firms by the American Institute of Architects.
He was just playing with a toy, not trying to hurt anyone…
Whale may have seen ponytail as toy
Orca shows to start up again today at SeaWorld
By John Wilkens, UNION-TRIBUNE STAFF WRITER
Saturday, February 27, 2010 at 12:04 a.m.
SeaWorld will resume its killer-whale shows today, but no trainers will enter the pool until park officials gain a better understanding of what prompted an orca in Florida to drag a veteran handler to her death this week.
A theory emerged yesterday among some orca experts: The whale mistook Dawn Brancheau’s ponytail for a toy and grabbed it.
“We will make improvements and changes, and we will move forward,” SeaWorld President Jim Atchison said during a news conference at the Orlando facility as killer whales swam in a tank behind him.
…
Here is the median list priced home in our zip code. Still sounds too expensive, and I wonder who buys all these million dollar plus homes, now that we seem to be running out of millionaires?
I know San Diegans are all supposedly rich, but how many San Diego households could realistically shoulder a $7500 monthly ($90,000 annual) mortgage payment? Death pledge, indeed…
List Price: $1,125,000
Estimated Monthly Payment: $7,484
7404 LAS LUNAS, SD - Rancho Bernardo, CA 92127**
Neighborhood: Rancho Penasquitos School District: POWAY UNIFIED
Beds: 6 Type: SFR Sq. Ft.: 4,104 Lot Size: 13,041 Sq. Ft. MLS #: 100002558
Baths: 4/1 Built: 2003 $/Sq.Ft.: $274 List Date: 01/03/10 On Market: 55 days