Bits Bucket For April 6, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Just out:
Going For Broke: Reforming California’s Public Employee Pension Systems
http://www.stanford.edu/group/siepr/cgi-bin/siepr/?q=/system/files/shared/GoingforBroke_pb.pdf
Governor Schwarzenegger Issues Statement on Stanford Pension Report
According to the study, California taxpayers are on the hook for over a half trillion dollars.
http://gov.ca.gov/press-release/14745/
Tick-tock…….tick-tock………
IMO, there should be no talk of any sort of bailout before they repeal Prop 13. This is California’s answer to NYC style rent control. I’m sure the rest of the country doesn’t want to be on the hook for subsidizing California’s legacy property owners.
ISTM that the root of the probem is the same as with the RE bubble: making promises that one is unwilling (or even unable) to fulfill.
Aren’t these calculations based on, what today would be considered, optimistic ROI, something like 7%-8%?
You have it all WRONG…….rent control goes with the apartments.
If you don’t like it Don’t buy them….
Prop 13 was designed to control government spending…Its not prop 13 fault CA wants to pay for all the illegals and refuse to bill Mehiko for the damages. Or pay guv works outrageous benefits.
My mom is lucky she has a 2 fam. house so the $2500 a year tax increase (50%) in the last 10 year (to over $7000)could be covered by the increase in rent….no so for the SFH homeowner
If it weren’t for Prop 13, I would be paying $30,000 year property tax on a 3/2 house in 94087 just because some idiot paid $1.4 Million at the peak of the bubble for the identical house next door.
Even with Prop 13, property taxes can rise 2% year. CA’s property taxes are above median for the nation. Combined with the highest sales tax and income tax, there’s NO REASON california should be out of money.
“If it weren’t for Prop 13, I would be paying $30,000 year property tax on a 3/2 house in 94087 just because some idiot paid $1.4 Million at the peak of the bubble for the identical house next door.”
Your example sure does point up the absurdity of bubble era pricing. Can you imagine very many people willing to offer to pay $30,000 a year in property tax on $1.4 million homes if they did not believe they were going to get rich off future home equity gains? I can’t…
Exactly!
I pay about $5000/year in taxes for my paid-up house in 94087. By national standards, that’s no bargain, despite what the anti-prop 13 people will tell you.
A friend of mine, who could well afford it, bought a $2M house nearby about 3 years ago. He pays around $27K/year in property taxes, plus–because the house is so large–about $12,000 in PG&E bills. (My utility bill on this 3/2 without high ceilings, etc, is very low!)
I can’t imagine having to pay $39K a year just to keep what you supposedly own!
But Prop 13 is also a little like Socialism like the bailouts right?
From the governor’s response:
“Last summer, I proposed a comprehensive solution to address this issue while ensuring that current pension promises are honored, and I reiterated my commitment to tackling the problem in my State of the State address. We cannot wait any longer. I look forward to working with the legislature on a solution that will stop the growth of pension debt, increase transparency, enforce strict funding rules and protect California’s budget priorities.”
New workers “getting less” will be expected to “provide more” for those before them, or something like that. Will they figure it out?
That’s the new system!
New people get less and are expected to “contribute” more. Meanwhile, they can also enjoy paying stupid-high prices for real estate (and education, etc.) just so the previous generation can get rich. But hey - we need to take pay cuts and overpay for a house since somebody else “needs” to buy a new boat to go with their vacation house, right?
It’s like they WANT a generational war. Once your victims have nothing left to lose, they become dangerous.
They want conflict of any kind among the citizens. Keeps them from going after the real crooks.
Not just the State either…Counties and cities are in big trouble…Just look at the fee increases recently…The most outrageous being “ticket fines”…Los Angeles runs out of cash on May 5th….All this happy talk on the economy is just that…Happy Talk….
Our municipality only provides 401(k) type of plans (430(b) I believe) to its employees (except cops and firefighters, it pays to have a good union). We definitely have problems here, but at least its not as bad as in shake n bake land.
Some counties and cities had a balance budget. Then the state takes their money to try to balance the state budget.
It’s okay. Everything is contained to Main Street. The banksters are fine, so all is well!
“Right now it is all about democrat cities/counties/states holding on until after the November elections.
If they win - they play these games for another two years and hope for another obama bailout.
If they lose - they can blame it all on Republicans who will declare bankruptcy shortly after taking power.
Either give states/localities the right to print $$$, bailout said states/localities or get rid of the printing presses across the board.
The answer is quite simple. Hard to implement but simple. The lame legalism fed reserve apologists use doesn’t seem to work anymore.
HOUSING BUBBLE BLOG….
CPT(P)Stpn2me: FALL IN! Receive the Report….
SFC Ben: 1st Platoon all accounted for! Salutes.
SFC Polly: 2nd Platoon all accounted for! Salutes.
SFC Professor Bear: One out of ranks.
CPT(P) Stpn2me: Who?
SFC Prof Bear: PVT Eddietard!
CPT(P) Stpn2me: Label him FTR!
CPT(P) Stpn2me: SING!
Pick up your boots, boots, boots
And parachutes, chutes, chutes
We’re going up, up, up
Were going down, down, down
We’re All American and proud to be
For we’re the soldiers of LIBERTY
Some ride their gliders to the enemy
Others are SKY PARATROOOOOOPERS
We’re All American and FIGHT we will
Till all the guns of the foe are still (GET READY)
AIRBORNE, the skys are blue, we’re coming thru.. LETS GO!
CPT(P) Stpn2me: Carry on!
9 more days to go guys!!!!
All the way! Airborne!
http://en.wikipedia.org/wiki/82nd_Airborne_Division
Cash out your bonds, bonds,bonds
the same for your stocks, stocks, stocks
they’re all going down, down,down
(so) You won’t need your jocks, jocks, jocks
We’re ALL Forlorn and deserve to be
For we bought into Berneke’s Mon-Op-Oly
Some go Bilderberg in shiny new g-4’s
while Ben pushes $$ out the helicopter door
All we Americans are over the hill
‘cause Goldman Sachs gave us the bill
while talkin’ blarney till his gums bled
Hank snuggled up with Timmy… in the FedBed.
So jump out of Berneke’s helicopter door
and grab up all that tumbling loot
but please don’t call me a bore
when I tell you that you forgot your chute
LET’S NOT GO!!
Can I call for a sanity strike on central Maryland (Land of the Eternal Housing Bubble)?
Somebody needs to pound some sense into people here!
1 Cdn HBB BG on maneouvers in the north. Meeting dogged resistance from IDH units and locals are largely unfriendly due to intensive info ops from the REIC.
“locals are largely unfriendly due to intensive info ops from the REIC.”
Default them all, let God sort ‘em out!
Default them all, let God sort ‘em out!
If we had signatures on this blog, I’d sig this. Nice work.
Stay the course! Hope we provided an entertaining diversion for you during your tour of duty…
Are you still a leg?
I was a civilian tech rep doing TDY with the 82nd at Ft. Bragg once….the intel spaces were staffed by troops who’d hurt themselves in parachute jump training. A bunch of guys and gals hobbling around with casts on their legs. They pulled office duty while healing up.
Yeah…but those night tailgates out of a C-130 with a short stick were simply a Magic Carpet Ride. Nothing like it and few things equal the Rush or the love of a properly opened canopy.
Those thrills were right up and young paratroopers are EZ.
Like a few special minutes with that 1 st wonderful woman or a in high performance sports car on a deserted, windy road with good music heading home after a long absence.
Glide into that curve on the downshifts, gently accelerate your way out on the upshift and fly on. Brakes are for traffic and tourists.
Smooth as Silk and cool…
“AIRBORNE”
(Separate)
Completely honored to be designated an NCO in your ranks, but I’m afraid my father told me never to jump out of an airplane unless it was going to hit the ground faster/more uncoltrolled than I would by jumping out. I’m going to have to take a very careful look at that plane before I can jump out of it, as I take dad’s advice very seriously. X-GSfixer around to provide the expert opinion?
Yes, he was Airforce, though not a pilot. Tells awsome stories about bobbing around the middle east in the early 60’s with nuke codes in his briefcase and a pistol on his hip.
bopping, not bobbing.
Why would anyone want to jump out of perfectly good airplane?
The only way I’ll ever jump from one is if it is A) on fire, or B) with a major structural component detached (wing, tail)
One of my old A&P instructors told us back in 1978….”There’s only two things that fall from the sky……bird sh#t and fools”
“One of my old A&P instructors told us back in 1978….”There’s only two things that fall from the sky……bird sh#t and fools”
Let’s just be gratful that we may never need the young men and woman willing to exit that perfectly good aircraft with “a handful of silk and God” to defend these immediate shores if need be. These are neither bird shit or fools, they are our kids and dedicated young soldiers.
..and although real silk hasn’t been used in decades and choppers are the main delivery systen today, I appreciate such young men and woman that are personally prepared to go into the breach first, even when our idiot leaders my have the gun barrels pointed in the wrong directions.
Lighten up, he was just joking……and he was a WWII/Korea vet, so as far as I was concerned he could make all the jokes he wanted to.
And besides, he was mainly referring to recreational skydivers.
Why do we even have paratroopers? I guess “paratrooper” sounds cooler than “Riding-in-the-back-of-a-helicopter trooper”
And they aren’t going to be doing nothing productive, unless they have an aircrew that takes them to the right place.
I guess I’d better not tell my “Gyrene” joke my old Navy CPO/QC Inspector told me once.
Polly
Google “The Goldsboro Incident”. The pilot was was my best friends Dad and his B-52 with contents crashed 7 miles from our off-post house.
There was always thrills, spills and ulcers hanging around SAC bases and crazy Gen. Curtis Emerson LeMay.
Say what you will about LeMay, but he did raise the bar on the professional standards for aviation. A lot of that knowledge got transferred, when those SAC guys went to work in the civilian world.
Can you imagine what would have happened to those people that “accidentally” flew those nukes across country, if LeMay was still in charge?
My father was pretty much apoplectic when that incident was revealled. I think he was ready to personally rip someone’s head off.
Yeah… Curtis, he’d have shot everybody…twice then rolled them over and stabbed them.
As a kid, I knew Curtis and his wife and his wife as well. Even his wife wondered about that fool. He had me on the carpet with his adjudant and some of our local brass once. For 15 minutes and threatened to have me shot with my Dad present. He did have a weird sense of humor but I still think he was semi-nuts.
Him kicked back with the cigar, ” my name is Gen. Curtis E. LeMay, I’m in charge of The United States AF, why don’t you try and blow some smoke up my a$$ Son.” Like I didn’t know that. “Don’t you DARE look at your Dad when I’m talking to YOU!!”
Yeah Curtis, like my Mom, the President and the local newspaper was gonna allow you to take me out back and shot me.
Get real Boss !!
U.S. Economy: Services Expand by Most Since May 2006 (Update1)
(Bloomberg) — Service industries expanded in March at the fastest pace since May 2006, indicating the U.S. recovery is spreading beyond manufacturing and starting to create jobs.
The Institute for Supply Management’s index of non- manufacturing businesses that make up almost 90 percent of the economy rose to 55.4, higher than anticipated, from 53 in the prior month. Readings above 50 signal expansion. Pending home sales in February jumped by the most since 2001, another report showed today.
A pickup in consumer purchases is benefiting companies such as Carnival Corp. and Best Buy Inc. and points to a broad-based expansion that may stimulate hiring. Sustained job gains on the heels of the biggest payroll increase in three years would lift incomes, giving households the wherewithal to keep spending, which accounts for about 70 percent of the economy.
“The recovery is looking increasingly self-sustaining,” said James O’Sullivan, chief economist at MF Global Ltd. in New York, who forecast the services index would rise to 55. The economy is “broadening and gaining traction. It’s not booming, but signaling fairly healthy growth.”
“…recovery is looking increasingly self-sustaining, …”
What is this? How does it work?
1) Many bubble area houses in default with people living for free or have mailed in the keys and moved on. Therefore, the money that went to those lunatic-level house payments is now being used to pay off the credit cards or fancy car payments or trips to the mall. Consumer spending is now rising and jobs are being created because of resurrected retail demand. “Lazarus come forth!” is flashing in my mind.
2) Banks are being allowed to list the real estate debt as fully performing asset and not marking to market. This only - we hope - applies to performing loans where the keys are still in the borrowers possession and the house payments are being made.
3) The real junk is on the Fed’s balance sheet and not on the TBTF banks balance sheet. I’m told the Fed payed far more than these “legacy assets” were worth. Local banks are toast.
4) The only market for the MBS market is Fanny/Freddy which is supported by the US Gov’t. If not for this partnership, the market would not exist.
5) Fed has set interest rates to zero. The Fed appeared to set this rate in a panic when the markets were declining due to a French problem with a rogue trader. Yes, it certainly appears that “The Fed Panicked.”
The end result is the Consumer has been saved - for the present. Will the Consumer resume the spending levels of yore? I don’t know. Is this a new bubble that will explode? My instincts tell me that this bubble will not burst in the same manner that we saw in 2007 to the present.
In my past posts, I have expressed a very dark vision on the future. I have worried about wide spread war and financial decline. I firmly believe that this could have come about under those circumstances. But those circumstances have changed, and I’m not so alarmed right now. That could change.
History’s chorus is sounding a dissonance in it’s rhyming. I’m trying to look to the past to understand the present and a possible future.
I’m really drawing a complete blank. I don’t understand where we are. I do know that we are no longer making investments or provisions for the future. Most people want to go back to $500 dollar trips to the mall once or twice a month and reflate the economy. We really shouldn’t do that.
But we will try. Sigh.
Roidy
Don’t pay back debt = no one loans you any more money (or charges insane interest rates).
It is all ending.
Just a little more slowly than predicted as 0bama pumps in trillions of dollars of government debt.
That is ending soon too as 10 year T-Bills rates just broke through 4%…
That is ending soon too as 10 year T-Bills rates just broke through 4%…
Yippee! Savers have been screwed for the past 10 years. You can no longer save of a few million and retire, because interest rates need to be low to prop up Debbie Deadbeat.
Most people never made enough money to save that kind of dough in the first place.
Yeah I will start buying 10 year notes when they are yielding above 10%. For now rates are starting to appear to change fast on the low end. 52-week T-bills just auctioned this week are yielding 0.48%. But four weeks ago were yielding 0.33%. I don’t mind the low yields for now.
I think we’re heading down the hole to a dismal, new “normal.” One where corruption will be required, honesty will be punished, poverty will be rampant, and the underground economy will practically be mandatory. Jobs will be under the table, debts will be piled up only to be ignored and defaulted upon, banks will do whatever they want, and slowly but surely, the key elements that made our nation great will wither up and blow away on the wind. Most people won’t care since they’ll still be able to go shopping, and that is all that matters these days.
My day is depressing enough as it is, and you have to go post that. Thanks a lot.
I think we’re heading down the hole to a dismal, new “normal.” One where corruption will be required, honesty will be punished, poverty will be rampant, and the underground economy will practically be mandatory. Jobs will be under the table,
If we’re going to have all that we should at least get more time off, learn samba, make out in public, have universal health-care, get free condoms and have tighter abs.
Hey Rio,
That is America’s basic problem. We don’t do that anymore. I’m from New Orleans and Mardi Gras has changed for the worse over the years.
We need to get back to having a life and not a stock portfolio.
I mean jeez, I read recently a guy worth 9 billion died in the morning before going to work. He just keeled over. He was in his late 70’s. Now, this guy wasn’t a WS type, he actually did things like develop the modern oil pipeline system. I don’t begrudge him his money at all. Still, when I read this on Yahoo, I reflected a moment. It seems obvious that huge amounts of money won’t change the end result.
We have only one life. We should be productive, we should work, we should samba, we should goof off, we should live. Living to pay a mortgage is a fools errand.
Roidy
P.S. Oh, and we should blog on HBB.
“…learn samba…”
Now if you can get SAMBA to deploy a Windows local group policy through a kerberos network…
Laissez les bon temps rouler!
and all I want is to make $$$ being a zydeco dj…LOL
Guess I’m not the only geek on the blog…
Now if you can get SAMBA to deploy a Windows local group policy through a kerberos network…
I’ve never heard of kerberos but I hear FaceBook is a pretty cool social network.
We have only one life. We should be productive, we should work, we should samba, we should goof off, we should live. Living to pay a mortgage is a fools errand.
Great points. I’ve always said that the USA and Brazil could both learn different parts of those lessons from each other.
Sorry to hear about Mardi Gras. The Carnival in Rio is actually a lot better now in that there are over a hundred free, local block music/dance parties in addition to the highly produced spectacle.
“Most people won’t care since they’ll still be able to go shopping, and that is all that matters these days.”
If I didn’t know better I’d say you we’re stealing my material!
The self-sustaining recovery… how does that work?
1) We’ll go back to swapping houses at ever increasing prices while at the same time taking money out of them and not paying for them?
2) We’ll all end up working for Wal-mart and thus only able to afford Wal-mart products, which is “self-sustaining” in a sick way?
3) We’ll print so much money that everyone will be a millionaire, but bread will cost 2 million a loaf?
What is with these morons? As long as jobs are vanishing, the debt is rising, and corruption for short-term gains is rewarded, there can be no long-term recovery.
Self-sustaining will disappear when the state/county/local lay offs become reality, not just threats. Not sure when that will happen. School related ones may start in the summer. Others in the fall as they get a grip on what the actual tax receipt numbers for the year will be.
Money is going to be taken out of circulation. It has to have an effect. But people in these jobs are not used to anything more dire than losing a pay increase or perhaps a mandatory furlough day or week, they will not adjust spending for the likelihood of lay off until it happens. Besides, the bubble mentality hasn’t really gone, so people who have been spending less really do have “pent up” spending desires, even if a rational analysis would reveal they need the cash much, much more.
The local government layoffs have already begun.
Where have you been?
I have yet to hear of a SINGLE case where an administrator or manager in government had to be laid off. I doubt things are as bad as they make out.
CertainTeed to Close Mountain Top Plant.
WNEP
CertainTeed announced Monday it is closing its fiberglass insulation plant in Mountain Top. Nearly 140 workers will lose their jobs.
The plant has been in the Crestwood Industrial Park in Mountain Top since 1964. It made insulation for homes and businesses.
Ralph Demchak will soon be without a job. He put in 41 years with the company.
“These guys got families, they young kids, they have mortages, they have to go out and find a new job, I feel for them, I really do,” said Demchak.
Michael Loughery, a company spokesperson, blames a slumping economy for the shut down.
“It’s a truly unfortunate circumstance of the economy, said Loughery. “The housing market is not recovery like we had hoped. The demand for product particularly in the northeastern United States continues to go down.”
Nearby businesses like Luigi’s Pizza say the shut down hits hard.
“It’s sad to see them leave,” said Luigi Carannante. “I got a lot of business from them, big orders, business meetings, I had my regulars I knew exactly what they want.”
Production at the CertainTeed plant has stopped. Over the next few months workers will prepare for the closing. Ralph Demchak says he’ll help with that . He then plans to collect unemployment. He worries about his coworkers finding jobs.
“The way things are today where are you gong to find a new job that pays seventy to eighty thousand dollars a year their ain’t no jobs out there that pay that.”
CertainTeed Corporation is a North American manufacturer of building materials for both commercial and residential construction. It is the largest manufacturer of building materials in North America and is a wholly-owned susidiary of Compagnie de Saint-Gobain SA of France. CertainTeed exports building material products to over 50 countries worldwide.
wikipedia
So, this company is all about building materials… not surprising they have problems.
And, btw, this was originally based in the USA but was majority owned by Saint-Gobain in 1983 (57%) and completely owned by 1988.
So, it’s essentially a foreign company since ‘88 which “outsourced” manufacturing to the USA.. and now our outsourced manufacturing jobs are being out-outsourced!
Here’s a few more CertainTeed/Compagnie de Saint-Gobain subsidiaries:
Modular Sciences Inc.
Bowles & Eden Co and the Rohan Company, pipe distribution businesses.
Realtec Inc and Builders Investment Group, an REIT.
AirVent, Inc, a manufacturer of attic and ridge vents.
Bay Mills, Ltd., Wolverine Technologies, Ludowici Roof Tile, Inc.
Bufftech Vinyl Fencing, Bird Roofing, Unisul and GS Roofing, Celotex Roofing
Norandex Distribution Group and Vytec Vinyl Siding.
Ottawa Fibre expanding its insulation presence into Canada.
“So, it’s essentially a foreign company since ‘88 which “outsourced” manufacturing to the USA.. and now our outsourced manufacturing jobs are being out-outsourced!”
Which helps kill the notion that “all the jobs will come back here eventually.”
As long as there’s some near-slave in a dung hut somewhere willing to do your job for 1 bowl of rice a day, he’ll get the job, a bowl of rice will be the standard wage, and you won’t have a chance of employment until you’re also reduced to the same horrid living conditions. The endgame of run-away greed - poverty for nearly everyone.
There’s two sides to the coin.
Why is our job security based on us doing tasks that any dung-hut slave can do?
There’s two sides to the coin.
But the false-free-market uber alles side failed the middle-class, therefore the country. The corportists are one major collapse away from being swept into the dustbin of history.
This why the monopolistic-corportists are ginning up the propaganda machine to divide Americans with the boogieman of socialism. It is my estimation that 40% of the country will believe it somewhat but this represents no gain in believers.
good lord.. where did you learn all those words and phrases.. and wtf do you mean by them? Can’t you speak in plain English?
The “middle class” is doing jobs that any idiot can do and being paid 50 times as much for doing them as any idiot would be paid, foreign or domestic.
Are we not the world’s leader in innovation? Are we not the best and brightest? Is this still a great country or what?
.serious questions, btw.. questions we have to answer honestly instead of whining and blaming someone else for our woes.
good lord.. where did you learn all those words and phrases.. and wtf do you mean by them? Can’t you speak in plain English?
I apologize for any confusion, angst or feelings of inadequacy cause by my utilization of undergraduate level words or phrases.
It’s just that it’s more productive to intellectually work the sincere, the unlearned and/or the intentionally dumbed-down PR shills than to simply “rip ‘em a new one”.
don’t apologize.. just relax.. talk natural, like you would to anyone in real life conversation.
Do you say “Hey mom.. I’m going to the monopolistic-corporatist false-free-market for some cigs.. you want anything?”
talk natural,
It’s not talking, it’s writing. People have earned graduate degrees (in college and stuff) clarifying the difference.
And I’m sure it’s the content, not the style, that is threatening to you.
Do you say “Hey mom.. I’m going to the monopolistic-corporatist false-free-market for some cigs.. you want anything?”
No. That would be silly because I don’t smoke.
What are you saying? oops.. i mean.. What are you writing? Do you propose to say ..oops.. i mean..Do you propose to write that we are not having a conversation?
Do you propose to write that we are not having a conversation?
Are we really? I don’t think you engage in many meaningful conversations. I can’t recall you asking many sincere questions.
I’m not sure engaging in “conversations” is part of your mission statement.
Conversations are the ideal form of communication in some respects, since they allow people with different views on a topic to learn from each other. wiki
Joey, you have been exchanging dialong with Brazil’s Wesley Mouch.
Joey, you have been exchanging dialong with Brazil’s Wesley Mouch.
Dang,
That really stings coming from you Ebenezer.
“The way things are today where are you gong to find a new job that pays seventy to eighty thousand dollars a year their ain’t no jobs out there that pay that.”
Methinks this was a union shop. But he’s right. They’ll be lucky to find something that pays half that much.
Where’s the next bubble when you need it?
I have Certainteed branded vinyl windows in my house here in Boise. They are labeled “Insulate” on the hardware.
What’s funny is that there is no “Certainteed” window factory. I checked into this a couple of years ago as I wanted to tear out a non-opening window and replace it with a matching opening one. They apparently license subcontractors in different places across the US to produce “Certainteed” windows for the local market.
Certainteed windows are cheap pieces of sh!t.
But tell us how you *really* feel….
The educational bill in Florida is horrifying. FWIW, I am going through physical therapy after I was knocked to the ground by a kid on probation (back in jail on felony battery). This was the same kid I’d administered an FCAT test to hours before the incident.
So… if the bill completely passes, I will receive pay based upon this student’s performance. Lovely. The beating will continue until morale improves!
Now I am reviewing my offer to see if we can wiggle out of it. I’d rather move back and teach in upstate NY and have my wife stay at home than deal with all of this madness.
Muggy - sorry to hear the troubles you’re going through.
I’m in the middle of watching season four of The Wire…yeah. I wonder what accountability the punk’s parents will be held to?
Thanks — I can handle what I’ve gone through, but I don’t think legislators understand what this bill would look like on the ground level. I think this qualifies as my career Black Swan, which many of you have warned about. What’s so absurd is that I’m considering moving to L.A. and re-entering the music business.
I’m simply is disbelief at all of this.
What should I do about the house offer? It is contingent upon inspection… “Whoa, that hurricane shutter is missing a screw. Later!”
It is contingent upon inspection…
This is your out. Make a very long list of everything you want fixed to the point that they don’t want to deal with you. We did this on a house my wife got cold feet on. The realtor will tell you that you have to expect some things in an older house. Tell them that is not your understanding. Don’t give in on any of them easily if at all. A new roof was the tipping point for us. We thought it was in better shape when we made the offer (Purely subjective). I think you can get out of it but they will try to keep your “good faith” money. Hopefully you did not put up a lot of it. The realtor will try to get you to say you “just want out”. Don’t do it!!! Especially not over the phone where who knows who else is listening. Insist that you would take the house if they did all the repairs but not otherwise (importance of making your list long and expensive). Good Luck.
There is always something wrong with every house. Use the inspeciton contengency.
If that doesn’t work, judges are very reluctant (espically these days) to make you follow through with a puchase of real estate if you don’t really want it. Explain to your representative agent that you are no longer interested in the house, that you wish to withdraw your offer, and be done with it. If they paint a doom and gloom senario, get a $125 an hour lawyer to spend two hours writing a nice letter on that expensive letterhead of theirs…
(When I was working with Redfin, they were observent to note the first thing about inspection contingencies…)
He can always back out of the deal, but will he get his earnest money back?
Bad Chile
We plan on using Redfin for our purchase. What was your experience with them? I love their business model and how they compensate their agents on customer satisfaction.
Muggy-
I hope you’ll heal quickly. They’ll be losing a great educator, and L A will gain a mench. I’ll warn you, most of L A is a third world cesspool now.
So is Houston. Here’s a story about what laughingly passes for education in Houston.
http://www.chron.com/disp/story.mpl/metropolitan/falkenberg/6945452.html
We loved working with them - no pressure at all. At one point, our Redfin representative and us were looking at a house, with myself and Mrs Chile in attendance.
There were many flaws with the layout and yard, but the house itself was lovely. Finally the agent just told us that the house had too many flaws and that we shouldn’t consider it whatsoever.
Another house we really liked on a corner lot, but there was a somewhat major road at one of those corners and a gun club about 1/2 mile away. We also felt it was overpriced by about 10% based on comps. Our rep just said to stop considering the house, there will be others.
We haven’t had contact with the rep for a couple months because there has been nothing on the market. No phone calls, no emails telling us to buy now, nothing. Which is how I like it.
If you’re not comfortable finding the houses on the Redfin website, or if you can’t look at an map and realize the house might not be for you, you’re probably better off with a tradditional agent. But if you know what you want, have the ability to spend 10 minutes every morning looking over the new listings that get sent to you (automatically) you’ll be very happy.
“He can always back out of the deal, but will he get his earnest money back?”
Dale covered that above (excellent advice, I might add…). The key is to
(1) not back out of the deal;
(2) make the list of things that need to be fixed comprehensively long and costly enough so either the home is perfect after repairs (and easily resalable) or else the seller decides to back out of the deal.
L A is a third world cesspool now ??
And they are broke…
Thanks Bad Chile. I really appreciated your feedback. I’ve heard raving reviews, so your experience doesn’t surprise me, and you’re a person I kind of know and I respect.
I hold a license, and attended Shopping Ctr School (U San Diego/ICSC), but I am delegating our residential buy to Redfin. It will be a better ROI (MLS/Assocation Fees-they’ve already paid) if I let Redfin handle it. I
We’ve been waiting for the $8K to expire to buy our “toe tag” house. Prices were adjusted 5 fold. What new scheme will be next, who knows.
No worries (have I been around that long that I have a reputation on this blog? Doh, but thanks for the kind words!)
I just remembered another story with our Redfin rep.
A house came on the market about 10 weeks ago (FSBO but listed on MLS) that my wife liked enough to schedule a visit. The evening before the visit our Redfin rep called my wife to say the seller contacted her with the statement that there were two other serious purchasers that were ready to make offers, and that the seller wanted us to “bring our checkbook and be ready to make an offer!”
My wife, sitting next to me on the couch, repeated the story, and we both knew the answer: “Tell the seller in that case we’re no longer interested in visiting the house.”
Our Redfin rep didn’t flinch when told this information, said thanks, and passed on the info to the seller. A couple weeks later she mentioned how much she enjoyed telling the seller our response.
The house in question? Still listed for sale.
“My wife, sitting next to me on the couch, repeated the story, and we both knew the answer: “Tell the seller in that case we’re no longer interested in visiting the house.””
BRAVO. That is EXACTLY our position and almost our word for word response to the lying realtor broker who stated “there are two other offers on the house”.
And that was a month ago. Since that time there has been a 5% price reduction and still for sale.
————————————————————————–
I gotta bulletin for you lying scumbag realtors….. your bullshit games aren’t working anymore. You screwed others and now you’re screwed.
“…seller contacted her with the statement that there were two other serious purchasers that were ready to make offers…”
The sad thing is this tactic would have worked in 9 cases out of 10 (or something like that.) They weren’t ready for an educated buyer like yourself Bad Chile.
Bad Chile, great story with a well deserved ending. I hope after numerous reductions the house still doesn’t sell, because the seller is an a-hole.
If the seller wasn’t an a-hole, they would have told the UHS not to do that. Usually they discuss their “urgency/multiple offers” tactic with the seller. I’ve been the seller who said no.
“The sad thing is this tactic would have worked in 9 cases out of 10″
This is what happened with the house we’re in contract on. They said there was “a lot of interest” when they declined our counter to their counter. We left it as a standing offer, and sure enough, they called back two weeks later.
It’ll be interesting to see how this plays out. I have to be careful not to drive my wife any crazier than I already have.
In other words you can presume either/or/both of these two;
1) They were lying
2) The “high level of interest” is expressed by empty pockets and tire kickers.
LOL. You should have gotten all excited, like ooh! ooh! we better buy now or we’ll be priced out forever!…which house was this again? oops, never mind…
If FL is like NY, your lawyer should be able to get you out. Mine told me if you want out before the inspection they can basically say they don’t approve of the deal. No details necessary. Then you can say the inspection contingency will not be removed. Deal over.
I think CarrieAnn has it about right but I don’t think you even need a Lawyer…A contingency for inspection is just that…IMO, you don’t need a reason, you just inspect and then change your mind… Furthermore, if they retain your deposit you possible retain a binding contract limiting their ability to sell it to someone else…
CarrieAnn,
No other state is like NY (except maybe a couple of surrounding states). NY is run by lawyers and is a highly litigeous state.
In NY, it is pretty standard that each party in an RE transaction retains its own privage lawyer. From what I’ve seen, in no other part of the country is that a practice. when I inquired about it after moving back to Ohio, no one had ever heard of hiring a lawyer for an RE transaction.
In NY, I had contingency clauses in house purchase offers that said the deal was contingent on my lawyer approving it. Pretty common in Syracuse area, I believe. I even used it once to back out of a deal. Not sure that clause is ever used anywhere else.
Muggy, I emailed my legislators and Gov. Crist yesterday about this ridiculous piece of legislation. My kids are all in public school and any law that is bad for teachers is bad for my kids. And about the house - we had a contract on a house in Gainesville (right after Hurricane Wilma and I was ready to leave South FL). After reality sunk in and my husband’s business partner wasn’t too keen on us leaving, we called our agent and they made it all go away. We didn’t lose any money, thankfully.
Recently unexpected health problems are forcing me to terminate my offer.
Who says there aren’t kids like this in New York State?
Or is it the educational bill that has you frustrated?
(And no, I don’t think it’s right that “educators” are putting the onus on teachers. Teachers aren’t the only variable in schools; they are only the most visible and therefore the easiest scapegoat. Yes there are some bad apple teachers, but the problem is with the quality of the home and the parents, not the teachers.
We now have the first generation of kids whose parents were taught in school that obedience at home is not required, and that discipline is evil. Dysfunction Nation.
Skye,
I agree with you. When society took away the ability to discipline your children it set in motion what we are seeing today.
When I was in PS there was the strap. It didn’t get used very often; the threat of it was enough. Add in the follow up phone call to the parents who would always side with the teacher…..
When society took away the ability to discipline your children it set in motion what we are seeing today.
Did I miss the memo that we can’t discipline our children anymore??
Measton,
I’m not sure where you’re located but here on the west coast it is the unspoken truth. Next time your at your childs school, take off your belt and administer some discipline. The reaction may surprise you.
“…take off your belt and administer some discipline.”
You’ll leave the school in handcuffs. However, there are other ways to discipline kids that aren’t illegal which I believe was measton’s point.
The high schools in LA had paddles for students back the 1950s. I think boys and girls both could be paddled, by the boys and girls’ deans respectively. In wood shop my brothers each made a paddle with their names engraved on it.
Unfortunately they still both dropped out and joined the navy the day they turned 17. Poor students but not exactly gangbangers either.
And that is the goal.
A nation full of angry morons who enjoy trouble and who hate achievement will be easy to manipulate into being the dumb bought-and-paid-for voters of tomorrow.
Things like this don’t happen accidently… there’s always a long-term goal in mind.
Hey Oxide, yes, it’s the bill that has me upset. I love working in challenging schools, but I think it’s really absurd to base my pay on that risk.
“How I joined Teach for America and Got Sued for $20 Million”
http://www.city-journal.org/html/13_1_how_i_joined.html
Fascinating!
the parents ??
Ding, Ding, Ding….We have a winner…
“So … if the bill completely passes I will reveive pay based on this student’s performance.”
And this message won’t be lost on the students. Power will transfer from the teachers to the students.
My daughter teaches third grade in the inner city of Oakland, CA. You should hear some of her stories.
Power has already transferred from the teachers to the students. I’ve heard stories of kids acting “dead” in the classroom until the teacher is forced to tap them on the shoulder to answer. The minute the teacher does that, BAM! Harassment lawsuit.
Kids know they have the advantage. What is the school gonna do? Throw them out? Now you have uneducated youth in the streets swelling the prisons. Move the bad kids to alternate schools? At the moment, too expensive and doesn’t work anyway.
I read about one interesting inadvertant “experiment.” At one junior high, through some glitch in the computer scheduling, the classes were either all boys or all girls, except for four boys that got stuck in the girls’ classes. Rather than re-run the scheduler, the principal just moved the four boys to make all the classes single-gender. They had an amazingly quiet school year with higher-than-usual achievement. Just something to think about.
My daughter is a teacher also combo…
Muggy, I hope you put some verbage in there that gives you a get out of jail card. I haven’t paid attention, was your offer accepted?
Seems like any deficiency on the inspection report that may cost ANY money to rectify would qualify as a get out of jail free card, if there is a contingency that you need to accept the results from the report. ie We cant afford to replace that shutter screw, we offered our last dime on the prop!
“Muggy, I hope you put some verbage in there that gives you a get out of jail card.”
I did.
It’s contigent upon an acceptable insurance quote — acceptable was not defined. I was surprised that they signed off on that. It’s also contigent upon inspection, but the house is flawless.
Well, if you never get an insurance quote I think you’re off the hook.
Wow Muggy,
I missed this whole event. When did it happen?
“I missed this whole event. When did it happen?”
About two weeks ago. I try my best two keep it mildly housing-related here, so I didn’t mention it. But now it’s all wrapped up into one big problemo. This bill has rolled out way faster than anyone had imagined.
Anyway, here is the chain of events:
1. Moves to FL (no jobs in Upstate)
2. Starts family, gets masters degree, gets promoted
3. Finally gets used to really, really hot weather
4. Makes offer on short-sale
5. Gets levelled by student during fracas
6. Offer accepted, but short sale not approved yet
6. Spends vacation and freetime in PT and not being able to play with son
7. Education bill makes speedy progress, would tie pay to student performance
8. Wonders if it’s all worth it
Each event overlaps the other a little. Basically I woke up today ready to leave; my flight impulse is crushing my fight impulse now.
Not exactly a “Stand and Deliver” moment, eh?
Maybe it’s time for the pubic education system to be drastically scaled back. Because clearly, it’s not working out. Maybe it shouldn’t be mandatory, but more based on merit and desire for the students.
More and more parents are choosing home schooling for their children.
I’m VERY skeptical of home schooling, my cousins wife allegedly home schools their kids…
BUT
1) She was a special ed student and is borderline literate. (slow reader, can’t balance a checkbook, etc.)
2) She works at a day church day care center (mostly with toddlers) and her own older kids spend the day there. (Hard to work and teach at the same time!)
3) Their state has no meaningful oversight to insure the kids are learning something/anything.
I think a lot of the home schoolers are dissatisfied with what they think our culture is teaching (evolution, diversity, etc.) as much as the quality of the “three r”s”.
I think a lot of the home schoolers are dissatisfied with what they think our culture is teaching (evolution, diversity, etc.) as much as the quality of the “three r”s”.
Given that the lion’s share of homeschoolers are Protestant Fundamentalists your guess is probably right.
I agree Colorado…I think its more about sheltering independent thinking than anything else…
Maybe it shouldn’t be mandatory, but more based on merit and desire for the students.
Okay, so what do you do with the kids that don’t make it or don’t care?
“Okay, so what do you do with the kids that don’t make it or don’t care?”
Yes, especially now when there aren’t a lot of ways to employ the unskilled.
I’ll chime in with Colorado and SCDave,
Home-schooling is more about indoctrinating kids with useless fiction and religion-based ideas as opposed to socialist fiction and statist ideas, and less about teaching a child how to think.
Short sale is not yet approved? You can back out whenever you want!
But maybe you’re overreacting to the legislation. My husband is a teacher, and teachers tend to herd together and get hysterical over any changes to the system. These changes to education are aimed at getting rid of tenured, lazy, unmotivated teachers. You’ll be fine.
I had a brief teaching career (math) in a high school in Cary, NC. I worked about 70 hours a week for something like $44K/year. Teaching was secondary, most of my effort was directed at controlling the behavior of adolescents, calling parents and getting back stabbed by the administration. I had nightmares about this job. Each day was the worst day of my life. After 4 month I told them to take this job and shove it. Never again in this life time. That was back in 2003. The US education system is FUBAR.
Good luck to you.
“The US education system is FUBAR.”
Yup. Completely irremediable.
“The US education system is FUBAR.”
“Yup. Completely irremediable.”
In actual practice, the social implementation of progressive liberalism always falls flat on its face, an unmitigated disaster. After so many years of the NEA and cronies of left-leaning leadership in the educational system, epic FAIL.
Of course, the NY Times, the Daily Kos, Huffington Post and Underground Democrat, will always tell you that if only the country could move further to the left, the educational system would sparkle.
Ah, it’s nothing a little more money can’t solve!
snark off/
This public school system seems to be doing just fine…Google this;
Palo Alto Schools - Palo Alto California School Ratings - Public ..
I would like to know the racial make up of the students in Palo Alto. I bet it’s heavily east asian and south asian.
Believe me, these asian parents make their children study….
The Palo Alto High School suicide rate is high too
And yet people are unwilling to take the next logical step and shut down public education.
I see only 2 options if public education is shut down:
1) Make educating young children optional. If parents can’t afford to send their kids to school, they don’t. Of course some parents will chose to not be able to afford it.
2) Make attending a private school mandatory, but provide subsidization for those who can’t afford it, ala the new health care bill.
Neither seems appealing.
A good first step to fix our education system would be to permanently expell trouble makers. Going to school should be a priviledge not a right. Not everybody needs a high school diploma. To work construction, flip burgers or be an inmate you don’t need a degree. keeping trouble makers in school cost money and distracts from what the school’s real mission should be, providing an education.
Don’t let people have kids if they can’t spend a couple of hrs a day helping in kids’ homeworks and studies.
“And yet people are unwilling to take the next logical step and shut down public education.”
And where are the gangstas going to get their three squares?
ditto that
After 3 years full time in Tracy, CA..went back to CT to keep an eye on my elderly mom..CT is uptight..CA is relaxed..
The thing is so easy to fix..sit the misbehaving kids in a 2hour detention and they learn pretty quick..but Administration buckles to any complaint by parents and start looking at teacher as the prob..
1 kid can ruin it..
Sorry about your troubles. As you now see first hand, even jobs that initially seem secure some times turn out otherwise. We have often discussed here that mobility is one of the primary advantages of renting; during tough economic times, the value of mobility increases.
Let them keep the earnest money. You don’t have to buy, particularly if your job circumstances change.
I believe he said the other day that he didn’t have to put down earnest money until the bank actually approves the deal, right Muggy?
Correct. Earnest money is $2k and does not need to be paid until bank accepts offer. Our offer was accepted by the sellers with no earnest money.
You can withdraw the offer if the bank hasn’t signed off on the deal. Seller’s acceptance means nothing if they can’t give you free and clear title. How much time did you give the bank to respond? How much time has elapsed? Tell the seller you found another opportunity and the bank took too long to respond.
Go get a job in a private school.
No huge pension in rainbow land but they don’t put up with this crap either.
they don’t put up with this crap either ??
No they don’t…You are there by invitation only….
At one time - public schools didn’t put up with this crap either.
I have to agree, 2banana. We’ve come far from the days where kids dressed up for class and stood to answer a question. But what do you do with problem kids? Whip them in school? Put them on the street?
Here’s a draconian suggestion: anytime the kid disrupts the class, calculate how much $$ the disruption will cost — in teacher’s time, in principal’s time, in lost student learning, phone calls, even the paper to write up the discipline slip. Then garnish the parent’s wages for that amount. It would certainly make the news…
How about just having the disruptive kid’s parents sterilized as unfit parents?
Some private schools do put up that kind of crap I’ve heard. Kicking out a student = lost revenue. Delicate balancing act for those schools that don’t have a long wait list of potential students.
Dennis, by that time, it’s too late, don’t you think?
My husband teaches at a city public high school. In the city school system, they do expel kids for behavior problems. They end up at so-called “continuation” schools specially designed for rotten kids. My husband has had very few problems with discipline. No he’s not a big, scary guy. But he became a teacher when our older son was a teenager, and I think it made a big difference. He had the requisite realistic expectations, sense of humor, and love of kids that make a great teacher. He enjoys going to work; sometimes agonizes over problem students, but no more than most of us who go to work. Plans to work until he’s 65 at least. I’m proud of him.
probably not a minority school….
No, dj, his high school is 32% Hispanic,31% Asian, 26% white, 11% black. Sacramento is one of the more diverse and integrated cities in the US. My sons’ high school, Kennedy, was 35% Asian, 25% black, 17% Hispanic, and 23% white. And the kids get along pretty well. Gives me hope for the future when kids from many backgrounds come together.
What’s with the sunshine states and these problems? I recall when we lived in SoCal that the public schools were battlezones, cops constantly coming in to arrest kids for violence. I guess we’re luck out here or something. Not saying they’re all angels (ask the poor folks from Columbine) but it just doesn’t have that “battlezone” feel to it. Perhaps because we are more homogenous here?
My sil just pulled my twin nieces (15 yo) out of a Woodland Hills (LAUSD) once highly rated high school and now they do internet high school at home. Their grades are up, no bad influences, and they are learning self responsibility fast. The girls are starting to really like learning. They have Girl Scounts for socializing skills. How’s that for a success story.
We have too many teachers earning too much money and retiring too early in NY as it is. Especially upstate, where it is driver of the economy.
Wait till they unveil the NYC school cuts… it’s gonna be bad.
Muggy, sorry to learn of your double whammy–one literal and one figurative. It’s bad enough being assaulted by some punk felon without having the state legislature pile on you as well. Feel better, and best wishes on your probable upcoming move.
Yeah. There are some problems with the pay for performance that are not related to teachers.
Muggy, sorry to hear about your problems.
Is the house purchase contingent on getting a mortgage? If so, as a last resort, maybe you could tell the mortgage people that you just got laid off (or some other material financial situation) and that you won’t be able to make the payments.
In normal times, the lender would probably deny the mortgage after the last-minute financial review turned up problems.
Muggy:
Sorry about your troubles. Expecting anyone, even a good person like yourself, to be able to change a brat like that once they’re set in their ways is absurd. About the only “improvement in performance” one will see from that punk is in his ability to commit crimes.
Good luck to you.
You can always get out of an offer during the agreed upon inspection period. Point out something that can’t be fixed. For example, look up the closest sex offender in your local registry. Even if he/she’s 15 miles away, say that is too close for you. Or pick ANYTHING that you can claim that you don’t want to live close to and find one in the area. Payday lender, gun club, church of a different religion than your own, etc. Doesn’t have to be rational.
Fannie Mae, Freddie Mac at bottom of reputation list
Washington Business Journal
District-based Fannie Mae and McLean-based Freddie Mac are at the bottom of the list in an annual survey about where company reputations place with Americans.
Berkshire Hathaway Inc. tops the Harris Interactive U.S. Reputation survey, which measures the reputations of the 60 most visible companies in the U.S.
Freddie Mac (NYSE: FRE) ranked dead last on the reputation list, with the lowest score received by a company on the annual Harris list since Enron in 2005. Nine of the bottom 10 companies received government bailouts or government support.
The worst-ranked companies by reputation were Delta Air Lines Inc., Bank of America NA, JPMorgan Chase & Co., General Motors Co., Chrysler Group LLC, Goldman Sachs Group Inc., Citigroup Inc., Fannie Mae, American International Group Inc. and Freddie Mac.
If those at the bottom are considered the worst companies in existence in J6Pack’s opinion, it may be time to buy them.
How much underwater GSE stock do you own that you want to sell, Joey?
Whatever I want to sell get sold without delay, so the answer to your somewhat intrusive question would be zero.
“it may be time to buy them”.
Yes, except that their stock prices (in particular GS, JPM, AIG and BAC) do not reflect the fact that they are bottom of the heap.
well.. i’m half joking.. j6pk’s opinions are to a great degree influenced by the main stream media and are not a true indicator of anything but the MSM’s success in spreding it’s own opinion.
j6pk’s opinions are to a great degree influenced by the main stream media and are not a true indicator of anything but the MSM’s success in spreding it’s own opinion.
But corporate MSM is not always successful in shaping public opinion. For example, almost 2/3s of Americans disprove of the Supreme Court’s ruling eliminating corporate campaign donation restrictions.
Propaganda is not always successful.
Does it matter? There’s a big difference between disapproving of something and actually doing anything about it.
rio.. you didn’t know that the Press, corporate or not, always could donate to politicians just like an individual can?
I think it has something to do with the press being specified in the First Amendment.
…; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
Look here.. corporate donations from 2003.
http://www.guardian.co.uk/media/2003/apr/07/broadcasting.rupertmurdoch
Does it matter?
Not always, but it has mattered many times. Disapproval was the first step in many of America’s change of direction.
rio.. you didn’t know that the Press, corporate or not, always could donate to politicians just like an individual can?
That’s the best straw-man question you can come up with?
Maybe you should ask me if I stopped kicking my dog really hard.
i gotta spell it out for you..
You said “But corporate MSM is not always successful in shaping public opinion. For example, almost 2/3s of Americans disprove of the Supreme Court’s ruling eliminating corporate campaign donation restrictions.”
Knowing that corporate MSM is (was) the only corporate entity that is allowed to make campaign contributions, do you not think they would OPPOSE other corporations having that right? Do you not think they want it all to themselves?
And, do you not think the MSM would influence J6Pk to think likewise? And, that explains why 2/3rds of voters agree with corporate MSM?
Therefore, your example strengthens my assertion. The MSM influences public opinion..
..if you need me to break it down in even simpler terms, lemme know and I’ll give it a shot.
If you’re going to spell it out for me ya gotta “spell” better.
do you not think they (The Media) would OPPOSE other corporations having that right? (of campaign contributions)
I do not think the media would oppose other corporations having that right. Who pays for their ads? Plus, the corporate control of our government goes deeper than your simplistic model implies. There is collusion at a higher level to promote monopolistic corporatism that does not just include the media companies. Where does media advertising money come from? Only from other media companies? No, it comes from other corporations, therefor other corporations have power over the media’s message.
Do you not think they want it all to themselves?
No. Follow the money. See above.
You are again wrong. If you need me to simplify it for you, I can’t.
..therefor other corporations have power over the media’s message…
If that were so, the media would never attack corporations. The exact opposite is true. Corporations are the media’s favorite target.
Corporations are the media’s favorite target.
Yea, they really go after them like a real pit-bull.
Think not? Name a corporation of some reasonable size and significance that the media has never attacked.
Name a corporation of some reasonable size and significance that the media has never attacked.
Do you really think things are that simplistic? These people running the show went to college and stuff and use big words too. (except sometimes when they want to seem like us regular folks)
The media has to appear to attack corporations sometimes or the gig is up. The cover is blown.
I’m sure you know about blown cover and how far cover can be exploited.
Logic, facts, reasoning and common sense are no match for even the poorest conspiracy theory. I surrender.
7 corporations own ALL of the major media in this country.
7.
Their revenue comes from the Fortune 500.
I surrender.
Wise choice.
LBO Capital Raising Plummets 81% From ’08 Peak as Returns Slump
April 6 (Bloomberg) — Carlyle Group, the world’s second- largest buyout firm, needs more time to raise $3 billion. So does Chicago-based Madison Dearborn Partners LLC, even after cutting its target by 25 percent to $7.5 billion.
Private-equity firms, more reliant than in the past on management fees to offset lower profits from selling or taking companies public, saw quarterly fundraising decline 81 percent from the peak in 2008, according to London-based research firm Preqin Ltd., forcing them to extend deadlines and scale back the amounts they seek from investors.
It’s taking almost four times longer to cement commitments for funds of more than $1 billion than it did in 2004, Preqin data show. At the same time, investors are getting stingier and more discriminating. Buyout funds of all sizes raised $13 billion in the first quarter, the least since the fourth quarter of 2004, the firm said. At the peak of fundraising in the first quarter of 2008, they took in $68 billion.
“The prerequisite today for raising capital has gotten harder than at any time over the last 20 years that we’ve been involved in the business,” said Michael Hoffmann, the San Francisco-based president of Probitas Partners LP, a company that helps private-equity firms find investors.
“The prerequisite today for raising capital has gotten harder than at any time over the last 20 years that we’ve been involved in the business…”
Probably because:
1) Cash is scarce.
2) Those who have cash don’t want to pay out hefty fees for increasingly risky ventures brought about by a contracting economy.
U.S. Apartment Rents Decline as Vacancies at Record, Reis Says.
April 6 (Bloomberg) — U.S. apartment rents dropped in the first quarter and the vacancy rate remained at a record as unemployment near a 26-year high limited tenant demand.
Actual rents paid by tenants, known as effective rents, declined 1.5 percent from a year earlier, Reis Inc. said in a report today. Asking rents fell 1.6 percent, according to the New York-based property research firm. Vacancies were unchanged at 8 percent, the highest level since 1980, when Reis began tracking the number, said Victor Calanog, director of research.
U.S. rental demand has slumped as employers cut 8.4 million jobs since the start of the recession in December 2007. The bigger drop in asking rents than effective rents in the first quarter signals that landlords are pricing their properties lower at the outset and minimizing concessions, Calanog said.
“Landlords are saying: ‘Even before we talk about the free month off, and even before we talk about the free gym, we want to lower the asking rents to get you through the door,’” he said in a telephone interview.
The contraction rolls on.
But I have little doubt some poster will soon emerge and rant on about inflation is destroying the dollar.
If I’m not mistaken I think the largest portion of the CPI is Owner’s Equivalent Rent. It serves the FED well to use this over-weighted statistic to push down the inflation numbers. I remember when houses were going up 7-10 percent a year back in 2003-2006 and since they weren’t counted in the CPI # the spike in real-estate values was totally hidden in the official CPI numbers. Now that rentals have slipped back the FED will scream deflation while every other metric (except wages) says inflation. Wage deflation is real so is inflation really only 2%?
If I’m not mistaken I think the largest portion of the CPI is Owner’s Equivalent Rent. It serves the FED well to use this over-weighted statistic to push down the inflation numbers. I remember when houses were going up 7-10 percent a year back in 2003-2006 and since they weren’t counted in the CPI # the spike in real-estate values was totally hidden in the official CPI numbers.
Spot on.
Same principle applies to other assets - like stocks in the 1990’s, commodities after the housing price crash, and now since early 2009 all three are rising - housing, stocks, and commodities!
We’ve had massively underreported inflation for about 28 years now - ever since about the last time reported inflation went below 10%.
Not coincidentally, that’s also when our levels of debt started to take off.
Since debt mostly equals money, then this increase in debt has translated into an increase in money, i.e. inflation.
Currently we are actually in a period of debt deflation. This hasn’t translated so much into price deflation, in large part because of international demand - e.g. China. If not for them we would probably have some pretty significant price deflation right now.
So what happens to the inflation if we pay the debt off?
We’ve had massively underreported inflation for about 28 years now - ever since about the last time reported inflation went below 10%.
I agree. But to what extent can a fake housing bubble contribute to real inflation that house prices are supposed to follow anyway? Did rapidly rising home prices create an inflationary supported base at a much higher price level? I think yes in areas where the rent/own payment differential is not much different than in the past.
I agree. But to what extent can a fake housing bubble contribute to real inflation that house prices are supposed to follow anyway?
It won’t - eventually. We’ve still got a ways to go though yet - prices and inventory are still high by historic norms.
Did rapidly rising home prices create an inflationary supported base at a much higher price level?
No - see above. We’re not on a permanently-high plateau, at least when taken as a national whole.
I think yes in areas where the rent/own payment differential is not much different than in the past.
Some areas are indeed localized, to some extent, and do shift over time. As such - some areas may indeed remain higher than historical norms; but this is only in cases where large-scale shifts in the economy justify. E.g. right now there’s a big shift to bigger government, and this is making DC prices fall less than other areas. This will most likely be permanent. Same thing happened in CA at various times in the past (e.g. during the gold rush, and more recently due to tech in Silicon Valley); thus CA’s home prices have settled permanently (at least in the foreseeable future) at higher prices than other parts of the country.
In the end though, the price/rent ratio will always equalize around the country.
Someone in Congress has to think of a way to “prop-up” these declining rent prices. Maybe a little taxpayer money could be used?
U.S. apartment vacancies at a record… declining rents…
NOBODY COULD HAVE SEEN IT COMING!!!
+ 1 Pbear….
IT WAS UNEXPECTED!!!
OK, not sure why they say it “remained at a record”, because it didn’t.
2009 Q1 10.1%
2009 Q2 10.6%
2009 Q3 11.1%
2009 Q4 10.7%
Am I missing something?
Here in central Maryland, land of the Eternal Housing Bubble, my rent has not gone up in 3 years (counting this next year.)
I distinctly remember being told some years back by some perky Realtor that “everything only goes up!” and that rents here were going to skyrocket because of BRAC, so I need to buy a house “today” (that was in 2005.) The condos in question have already lost over $100,000 in value when one compares their original selling price with today’s asking prices.
Yep, glad I didn’t listen to that Realtor!
“Yep, glad I didn’t listen to that Realtor!”
Yeah, that was the chance of a lifetime…
to get some heavy duty misery.
My rents went down last year. This October I anticipate the Arizona apartment rent will go down more when I renew the lease.
It gets confusing when Bloomberg and the WSJ directly contradict each other.
* The Wall Street Journal
* COMMERCIAL REAL ESTATE
* APRIL 6, 2010
Apartment Rents Rise as Sector Stabilizes
By NICK TIMIRAOS
Apartment rents rose during the first quarter, ending five straight quarters of declines and signaling the worst may be over for the hard-hit sector.
Nationally, the apartment vacancy rate stayed flat at 8%, the highest level since Reis Inc., a New York research firm, began its tally in 1980.
Reis tracks vacancies and rents in the top 79 U.S. markets, and rents rose in 60 of them, led by Miami, Seattle and New York—all cities that have notched big rental declines in the past year.
Rents increased 1.6% in the first quarter in Miami and 0.9% in New York. The gains came during what is usually a seasonally weak period for apartments and suggested that landlords may have some momentum heading into the peak spring and summer leasing season.
“Deterioration seems not to have just been arrested but reversed,” said Victor Calanog, director of research for Reis. “Several markets have bottomed and may be on track to recovery,” he said.
…
So I’m not aware of any incentives driving up demand for renting, are you?
Being that vacancy rate is still near historic highs, thus indicating that price increases are not driven by higher demand - what could explain rents going up?
Could it be - inflated money supply?
U.S. Apartment Rents Decline as Vacancies at Record, Reis Says.
I love being a 50 year old millionaire who rents! And cash is king!
I love being a 50 year old millionaire who rents! And cash is king!
You made your choices.
Britain ‘could lose cherished AAA credit within 12 months’
Investment chief at Pimco warns of disaster facing UK’s public finances and banking. ~ The Independent
One of the world’s most powerful investment houses has given notice that Britain’s cherished AAA credit rating could be lost within a year, with disastrous consequences for the public finances and the stability of the financial system.
Scott Mather, the head of global portfolio management at the world’s largest bond investor Pacific Investment Management Co (Pimco), also said the eurozone’s potential joint bailout of Greece with the International Monetary Fund would be ineffective.
On Monday, there was a marked sell-off of Greek government debt and an auction of bonds on Tuesday went badly. The spread between the yield on Greek bonds and German Bunds soared again to 340 basis points. Pimco has previously said that Greece’s “initial conditions and demographics are abominable”.
Pimco is reducing the weight of UK, US and European sovereign debt in its portfolios. “Miracles are needed in the next six months in order to keep economic growth in the developed world,” Mr Mather said.
“Miracles are needed in the next six months in order to keep economic growth in the developed world,” Mr Mather said.
This statement sharply contradicts that story you posted earlier about the service sector. There’s an increase to the crosscurrents in the news recently and that really muddies up the waters.
The news out of Australia — at least on BBC, is that the Ausi gov. is rasing rates to cool inflation and housing prices.
Are people leaving other places for Australia?
Are people leaving other places for Australia?
Just so happens that a niece is headed there and the son of a close friend is considering it…Both have advanced degrees, are in their twenties, are not married and are deeply rooted in their Christian faith…
Toyota faces legal dilemma as well as record fine
FILE - In this Feb. 24, 2010 file photo, Transportation Secretary Ray LaHood testifies on Capitol Hill in Washington. The Transportation Department on Monday, April 5 said it’s seeking the maximum penalty, more than $16 million, against Toyota for failing to promptly notify the government about defective gas pedals among its vehicles.
By KEN THOMAS
The Associated Press
Posted: 3:51 p.m. Monday, April 5, 2010
WASHINGTON — Already flooded with hundreds of private lawsuits, Toyota now faces a dilemma stemming from safety problems on several popular models: whether to accept a record $16.4 million fine that could be cast as an admission of wrongdoing, or fight the government at the cost of more bad publicity.
The Japanese automaker was weighing its options after the Transportation Department charged Monday that Toyota had hidden a “dangerous defect” and had failed to quickly alert regulators to the safety problems in such models as the best-selling Camry and Corolla. The company has two weeks to accept or contest the penalty.
Meanwhile, back at the ranch …
February 2nd, 2010
US probes Chevy Cobalt steering complaints
WASHINGTON — Federal regulators have opened an investigation into complaints that power steering systems in the Chevrolet Cobalt can fail, making it more difficult to control the car.
The National Highway Traffic Safety Administration says there are 1,132 complaints about the Cobalt’s electric power steering, including reports of eleven accidents and one injury.
The preliminary review covers about 905,000 Cobalts in the model years from 2005 to 2009.
A majority of the complaints have come in the past six months. Some drivers said they couldn’t stay in their traffic lane when steering became difficult.
The Cobalt is made by General Motors.
The company said in a statement that the NHTSA review is the first step in an investigation, and that it will answer questions from the safety agency. After that step, the case will either move to an engineering analysis or it will be closed, GM said.
“The National Highway Traffic Safety Administration says there are 1,132 complaints about the Cobalt’s electric power steering, including reports of eleven accidents and one injury.”
Now, this is to provide full, fair, and adequate disclosure to all HBBers that THIS cobaltblue is not named after or referring to any GM automotive product in any color. However I have had over 1,132 complaints from my wife and kids, neighbors, co-workers, strangers, etc over various misunderstood aspects of my personal demeanor over the course of time. Eleven accidents of any type is not a lot, considering. Injuries and illness that don’t kill you, tend to make you stronger, it has been said. Personally, I have always admired people with a good working knowledge of electrical power steering, fractal-generating software, and nuclear fission…
Geez, I hope it isn’t a hydraulic problem cobalt.
“Eleven accidents of any type is not a lot”
But 51 is worth this witch hunt to prop up the pension fund/insurance company that makes cars and trucks.
A total of 432 customers have reported unintended or sudden acceleration [problems] in their vehicles, resulting in 51 crashes and 12 injuries. Toyota has responded by stating that its Tacoma is not defective and that many reports were “inspired by publicity,” reports the Detroit Free Press.
Stealth Stimulus
I ran across an interesting article suggesting that strategic defaults stimulate the economy. Lots of home debtors have given up and are redirecting their mortgage payments into consumer spending. Of course this will only work for as long as they get to live rent free. Once they’re evicted and have to pay rent the tide will turn. But for now it stimulates the economy.
How much does this add on a yearly basis? I am not exactly sure but lets crunch some numbers. Note, most those numbers are guestimates but all I am trying to do is get some ballpark figure.
Homes in the US? I would guess around 100 million. At a 65% ownership rate that makes about 65 million owner occupied homes. About 1/3 are owned outright, that leaves about 43 million home mortgages. At a delinquency rate of 10.4% we’re looking at somewhere in the neighborhood of 4.5 million delinquent home mortgages. At an average of $1500 (..and I am totally guessing this number) monthly payment (mortgage, tax, insurance) we’re looking at $6.75 billion a month or $81 billion a year in economic stimulus.
The scary thing is that more and more people get the idea that eating Ramen noodles and making the mortgage payment is just plain stupid. They create their own bailout and take the funds to go on a shopping spree instead. Is this a sustainable economic model? Call me a nay sayer, but I would guess not.
Oh, that is just silly talk. That could only happen with a communist government. We are capitalists.
strategic defaults stimulate the economy ??
I looked at a short sale on Saturday…In a good location near town…1st & 2nd loan…Underwater by $100k…Twenty something guy not making payments…Flat screens everywhere…Top notch interior design and furniture…Five high end Mountain & Road bicycles in the garage…Observing his house, you would come away thinking he was doing quite well…
scdave
Regardless of any religious dogma, what the h*ll ever happen to shame, prudence, and a sense of owning up to your responsibilities. I was born in the late 50’s, and I would not dare a lifestyle of privilege without earning it. Evidently, his parents failed. But then again…he has good mentors in our govt and WS.
Sha-la-la-la-la-la, live for today
Sha-la-la-la-la-la, live for today
And don’t worry ’bout tomorrow, hey, hey, hey
Sha-la-la-la-la-la, live for today
Live for today
Called to look at a listed short sale the other day. The listing agent emailed back that the house was foreclosed. I swung by and found a crew gutting the house and getting it ready for resale. Yay! Keep ‘em coming!
Australia is simply importing China’s bubble…they are Australia’s biggest trading partner and are in the process of finalizing negotiations on a Free Trade Agreement. They already supply coal and nuclear materials to China, in spite of historic strategic mistrust of their gigantic neighbor and fears of China’s contribution to global warming and Australia’s worsening wildfires.
The only holdup to the China-Australia FTA is that China wants a trade deal like they have with the US…one that pretty much mostly benefits China. Luckily the Australians are smarter than we are.
One can hope they are smarter… I have doubts (no disrespect intended) after seeing how much stupidity and failure are praises seemingly around the world these days.
It’s not smart vs dumb
It’s how much control do the elite have over gov. If they get rich by a trade deal that kills everyone else in the country then that trade deal goes through.
Let the Short Sales Begin -Diana Olick
http://www.cnbc.com/id/36179757/comid/3#comments_top
(It would be great if the banks would release a “wave of foreclosures”, but I am skeptical.)
Perhaps the banks will eventually catch on to the fact that holding on to shadow inventory only results in perpetual losses; at that point, it may collectively make sense for banks to dump inventory on the market. The private sector could potentially achieve the affordability goal which as so long eluded the GSEs.
Banks dump early at relatively high prices, with govt kick backs to boot. GSEs dump later at relatively low prices. It’s all good, unless you’re a tax payer.
I hope so. If prices fell by another 15% houses would be affordable in most places, and we could get back to normal.
The Collapse of Complex Business Models:
http://www.shirky.com/weblog/2010/04/the-collapse-of-complex-business-models/
US probes foreclosure data provider:
http://online.wsj.com/article/SB10001424052702303450704575160242758576742.html
I love that word “probe”.
“probe” makes me think of lubricant and blue nitrile - a tingly sensation.
Roidy
I’d like to see a lot in Congress thoroughly probed with some Joshua Trees and no lubricant.
(Wait…testing 1..2..3..That was not a threat. Yo, Ya hear me…no threat here. Call off the SWAT Team..rogue keyboard got out of control)
what will happen when state government can no longer pay its obligations to retirees?
“Instead of a government of the people, by the people and for the people, we have become a government of its employees, by its employees and for its employees”
“what will happen when state government can no longer pay its obligations to retirees?”
Retirees won’t get any money, that’s what happens when people or institutions can’t pay. Ask any landlord who’s been stiffed, or any company whose customers can’t pay their bills.
Its likely we will find out fairly soon in California. With a $500 billion shortfall between Calpers, The Teachers Retirement fund and the University Retirement fund and a 49% current year budget gap, its gotta happen. The masses are going to get very tired of losing every essential service they need to shovel money into the retirement system so state employees can retire at 55 with 90% of their base pay. Lots of folks in the private sector are receiving 40% or less of their expected DBPP payouts, so the public sector can step up to that plate as well.
The only question is “are the Public Employee Pension Plans to big to fail?” in the eyes of Washington.
Why do I get the feeling the inevitable collapse is just about here? I really feel that way, weird vibe or something.
There is small enough to fail.
Then there is too big to fail.
And after that, there is too big to bail out.
I believe the states (and therefore, their pension obligations) are too big to bail out, expecially since you can’t help just one. If the feds bailed out CA, they would have to bail out all the others. It is too big. They will have to renegotiate with the unions.
My mom was on our home town school committee. She told me a story recently about negotiations for a teacher contract. She was doing her level best to do right by the tax payers who elected her. During a break, the arbitrator told her she might as well give in. The town had the money and he was never going to side with them when they could afford to pay what the teachers wanted. Too bad for the taxpayers. Well, this time, the towns/counties/states don’t have the money. They just don’t. So the terms of the contracts will have to be broken. The key is to actually break them, not to pretend that you can just modify the terms for new hires and grandfather existing employees with the current deal. There isn’t enough money even for that.
Too big to regulate?
Good regulation is relatively cheap. You eliminate the behavior you don’t want and leave as much of the rest of the behavior alone as you possibly can (sometimes making what is OK and what is not OK easy to understand can lead to forbiding stuff that you really don’t mind that much). Enforcement isn’t easy, but can be done with good people.
Bad regulation is very, very expensive.
“Good regulation is relatively cheap. You eliminate the behavior you don’t want and leave as much of the rest of the behavior alone as you possibly can (sometimes making what is OK and what is not OK easy to understand can lead to forbidding stuff that you really don’t mind that much).”
Polly — Are you a parent? Whether or not you are, you have described a good recipe.
But my kids don’t have enough money or political influence to contest our ‘good regulation’ — I guess that is where the enforcement issue (or lack thereof) comes into play?
Unions are destroying this country. They should be abolished.
Unions are destroying this country. They should be abolished.
No way, because that would be socialism I think.
The Bank of Mom and Dad Closing…
(WSJ.com) FAIRFIELD, Conn. — When Maurice Johnson was laid off a year ago from his six-figure salary as a managing director at GE Capital, it wasn’t his future he was worried about.
It was his children’s.
The family income of the Johnsons is a fifth of what it used to be. And the children are about to feel the pain. Mr. Johnson’s two oldest are attending his alma mater, Johns Hopkins University, at an annual cost of $50,000 apiece. And his youngest daughter, 15 years old, recently began her own college search. Mr. Johnson isn’t sure whether he’ll be able to help her to go to college, or even to get the older kids to graduation.
Mr. Johnson, who watched his own father struggle as an engineer without a college degree, was determined to do better for his own children.
“We saved like crazy from the minute they were born,” he says. “Then, it all fell to pieces.”
Many families such as the Johnsons — upper-middle-class professionals — are suddenly downwardly mobile. For years, they used rising family wealth to help foot the bill for college, down payments for houses and start-up cash for children’s careers. But pay cuts, layoffs and the decadelong flatlining of the stock market means many families can no longer help their children.
This comes as young adults could use a financial helping hand more than ever. The unemployment rate for workers ages 16 to 29 was 15.2% in March, the highest rate since 1948, according to the Bureau of Labor Statistics.
My step’s coming back from the service next month. Not a stellar career, I guess, as they won’t let him re-up.
He’s already informed us that he sure likes our house and hopes we give it to him. I keep asking the DH, please you won’t cosign for anything - please?? We’re set for just a basic impecunious retirement and one stupid mistake like that could really screw things up.
I know of several 30-somethings (not saying all are this way) who got monetary assistance (and prodding) by their parents to buy overpriced real estate.
It’s well past time parents make their youngsters fall out of the nest at the traditional age of 18.
It’s well past time parents make their youngsters fall out of the nest at the traditional age of 18.
Spoken like a true parent….
Extreme foreclosure
ABC’s popular reality show “Extreme Makeover: Home Edition” makes dreams come true. But some people are tapping the equity on their expansive new homes only to fall into foreclosure.
From the looks of that news clip, some of the dreams ABC’s popular show makes come true happen to be nightmares.
But…but didn’t a very smart person once say that if one didn’t liberate his equity he was a fool?
They Have Something to Sell You, Folks!
Goldman Sachs Group Inc. is NOW recommending high-yield, high- risk bonds with rankings in the BB tier, the first below investment grade on the Standard & Poor’s scale. Pioneer Investment Management Inc. favors BB and B bonds, the next lowest bracket, while saying the riskiest debt is overvalued. Debt ranked in the BB category gained 39.1 percent in the past 12 months, underperforming the CCC tier by 66 percentage points, according to Bank of America Merrill Lynch index data.
This sort of “advice” reminds me of Alan Greenspan telling people to go get adjustable rate mortgages when rates were at generational lows.
I want to own bonds in a falling rate environment. Not only do I get an outsized coupon for the duration should I choose to hold to maturity, in addition I get capital gains if I decide to sell early. Finally, credit risk is diminished as rollover and/or issue is easier (cheaper in terms of interest cost) into a falling rate environment.
I most certainly do not wish to hold bonds in a rising rate environment. Not only do I get a diminished coupon relative to new issues of the same credit quality if I decide to hold to maturity, if I have to sell early I’m going to get positively hammered on the net-present-value of those instruments. Worse, whatever alleged credit risk that is embedded in those instruments has an increasing probability of turning into realized credit risk, resulting in not only a mark-to-market loss due to the rising rates, but an actual capital loss due to default.
Of course there’s no mention of these facts in the so-called “free press.”
I wonder why?
I also wonder if someone proffering these “ideas” has a lot of “BB” rated bonds they need to sell…
(From K. Denninger)
Goldman knows best.
Yes, but do they tell best?
Exactly. We now know that they were plugging bonds to their customers in one group and buying CDS “insurance” on the very same bonds for their personal portfolio.
Translation - who cares what Goldman says? They abandoned the idea of serving their customers a long time ago.
Wonder if they Greek Bonds too…
SOS…only the details change.
Whatever Goldman recommends, do the opposite and you’ll probably end up quite well off!
More Job Seekers Opting For Cosmetic Procedures
CHICAGO (CBS) ― 4-6-10
In this troubled economy, you may be thinking about beefing up your resume or adding to your portfolio, but how about going under the knife? As CBS 2’s Mai Martinez found, hundreds of people in the Chicago area are turning to plastic surgery to keep or land a job.
In his 10 years as facial plastic surgeon, Dr. Steven Dayan has had no shortage of patients in his downtown Chicago office. But these days, Dr. Dayan says more and more are looking for an edge in the challenging job market.
“A good 10 to 15 percent of my patients who come in now are requesting treatments in order to make them do better in the workplace,” said Dr. Dayan.
Dr. Dayan says his patients range from CEOs to receptionists to school teachers, and especially sales people. David Wilk, 27, is one of them.
“I didn’t want my nose to be the center of my thoughts during an interview or during a presentation, and with working in sales, I knew that couldn’t be a distraction, so I really wanted to take care of the situation,” said Wilk.
Five weeks after his rhinoplasty, Wilk is excited about the results.
“One thing that I know, especially working in sales, is that your face, you represent the company,” said Wilk, who is hoping to land a better sales job.
Thank heavens we’re not judging people based on performance or something silly like that!
The Housing Bubble has taught everyone that substance doesn’t matter, but looks do.
Yeah, it pi$$es me off. I get a little tired of continually having to prove to people that I have my s##t together.
Because I’m overweight, all the ex-jocks/ex-cheerleaders/beautiful people who seem to infest HR departments nowadays equate my weight with being stupid and having no discipline.
Fortunately, I have enough of a rep and references to get jobs……when the HR department is not involved. Even more fortunately, the BEST jobs in my line of work are filled by word of mouth/rep, instead of going thru the HR pukes.
It only took about five weeks of watching my work for my new Chief Pilot to start laying the groundwork to bring me on full time.
And now that it looks like I may be going somewhere else, the guy that owns the other airplane I work on occasionally is talking about paying me a “retainer”, so I will continue to work his airplane.
Dear X-GSFixer. Congratulations on your success at your new job. I figured that would happen - you’re a bright guy.
..requesting treatments in order to make them do better in the workplace,” said Dr. Dayan.
Five weeks after his rhinoplasty, Wilk is excited about the results.
hmm.. probably had a bit of butt-crack attached to the end of his nose. Bosses love that.
More proof that credit still isn’t tight enough. And you can’t even sell your new nose (for 90% less than you paid for it) at a yard sale.
Depends on who the nose is attached to. Beyonce.. Jennifer Aniston.. Paris Hilton.
I bet michael jackson’s family could sell his for a million bucks.. maybe two, just cause male ones are rarer.
More proof that credit still isn’t tight enough.
Yes.
The problem is that yesterday’s luxuries are today’s “necessities”. At one time running water was a luxury but became a necessity, then electricity, then TV, now broadband.
At one time 10 sets of clothes were a luxury - now it’s considered poverty. A car was a luxury - now at least two are a necessity (for families).
Etc. etc.
So now credit is considered “tight” if someone can’t afford to use debt to pay for what were once luxuries - things that at one time not only did few people have, but those that did usually paid cash.
It’s all relative.
It takes more than a nip, tuck or a nose job to create an honest face.
I watch eyeballs, body langauge and wait for the lies flow in my check if the sales person is still alive.
I also frequently check with Igor to see if the laboratory kite has been getting sufficent lightning.
Contradicting Secretary Geithner. What a hapless tool.
http://baselinescenario.com/2010/04/02/contradicting-secretary-geithner/
One of the comments from the readers in that article:
“The fact that Timmy-the-tax-cheat is still around lays squarely on Obama’s shoulders.
I will NEVER vote for Obama again. He is either gullible and ignorant about financial and economic matters, or he is a collaborator with the Kleptocrats. In either case, he has proven himself to be an enemy of mainstreet and decency.”
I wonder how many others in the voting population are contrasting the conventional wisdom that the “Democrats stand for the little guy” versus the reality of the Obama administration’s total sellout to the Megabank elite? Mouthing populist slogans during the campaign, then delivering trillions to the fat cat corporations during record unemployment and record deficits, is that what Democrats are all about? How is that any better than the Bush years?
Meet the new Boss
Same as the Old Boss
Some things never change
Somebody here coined the phrase “addicted to hope-ium” and that’s what has happen on both sides. That’s why I am a political atheist. This country is over as we have known it ,I am sad to say.
“I will NEVER vote for Obama again. He is either gullible and ignorant about financial and economic matters, or he is a collaborator with the Kleptocrats. In either case, he has proven himself to be an enemy of mainstreet and decency.”
True, but how exactly does that set him apart from most other politicians? Same goes on at the local level. Here in Miami you have some of the best scam artists running the show. Bleeding us dry via property taxes.
Court: FCC has no power to regulate Net neutrality
CNET NEWS 4-6-10
The Federal Communications Commission does not have the legal authority to impose strict Net neutrality regulations on Internet providers, a federal appeals court ruled Tuesday.
A three-judge panel in Washington, D.C. unanimously tossed out the FCC’s August 2008 cease and desist order against Comcast, which had taken measures to slow BitTorrent transfers and had voluntarily ended them earlier in the year.
Because the FCC “has failed to tie its assertion” of regulatory authority to any actual law enacted by Congress, the agency does not have the authority to regulate an Internet provider’s network management practices, wrote Judge David Tatel of the U.S. Court of Appeals for the D.C. Circuit.
Tuesday’s decision could doom one of the signature initiatives of current FCC Chairman Julius Genachowski, a Democrat. Last October, Genachowski announced plans to begin drafting a formal set of Net neutrality rules — even though Congress has not given the agency permission to begin. (Verizon Communications CEO Ivan Seidenberg, for instance, has said that new regulations would stifle innovative technologies like telemedicine.)
Even though liberal advocacy groups had urged the FCC to take action against Comcast, the agency’s vote to proceed was a narrow 3-2, with the dissenting commissioners predicting at the time that it would not hold up in court. FCC Commissioner Robert McDowell, a Republican, said at the time that the FCC’s ruling was unlawful and the lack of legal authority “is sure to doom this order on appeal.”
I hate Comcast as much as the next person (possibly more), but executive branch employees have to restrict themselves to interpreting the laws that are passed. You can’t just make this stuff up. The Constitution means something. And that oath you take to uphold it means something too. Not that you can always predict how the courts will interpret the law, but I always thought this one was probably a step too far. It is contractual thing between the company and the customer. Then again, too many people don’t have a meaningful choice…..
and “telemedicine” is code for…
You guessed it!
Frontline report…
So, visiting family up in NoCal in lovely Vacaville. It’s a nice semi-agricultural community with a fair share of govt work from the military base. Near the jelly belly factory.
Well, the next door neighboor to the family is a member of the sheriff’s department. The mortgage is going to reset and the guy is trying to unload the place. Probably looking at 400K+ on the place.
No miracles happening for that family.
No foreclosure delay.
No modification.
No living in the house with out paying.
Just a small young family preparing to get the heck out.
I don’t know anyone pulling off the scams we hear about or living for free. This is what I’m seeing.
Possible he might get a paycut or lose his job on the force too.
Good times.
I have to agree with you. I don’t know anyone who got a bailout, principal or interest rate reduction, etc. From what I have seen out here the average time to get kicked out after payments stop is 6-9 months.
That is one loophole about “I quit - foreclose on me in 12 months” get out of debt-jail:
1. It may happen alot quicker than you thought
2. If you have a job with any kind of security clearance - they may revoke it and then you won’t have that job.
Wait - that is two loopholes…
Don’t forget the “recourse” loophole! Not in CA, but I suspect recourse is preventing mass walkouts in quite a few states…
It depends on where you live and luck. If you were lucky the bank lost the deed to your home and if you put up a fight they’ll not bother for now, but instead go after the “low hanging fruit” and foreclose on your neighbor. If you get thrown out after 6 - 9 month that’s a though break. I know several houses in my n’hood that have been short sales for 2+ years by now. I don’t know if their current occupants still make payments, I doubt it.
I am always floored when I get inside a house that’s a short sale and the inhabitants have way nicer stuff than I could even dream off. Difference is my place is paid off and they used their’s as an ATM machine.
Can you imagine being in a house with your pregnant wife and young child and saying “Gee honey, lets see how long till they kick us out”.
The woman would eat you.
I believe a lot of people that are scamming the system are scam artists that always do this kind of stuff. The kind of person you hire and somehow ends up on long term disability in a week.
“Difference is my place is paid off and… ”
How great is that to hear! We’re paying cash ourselves this time around. We’re not getting any younger, and we want the security of a lower monthly nut.
Well here is a real report from FL:
House accross street has been vacant for at least two years. (this is the house where I take my pet donkeys and goats every day for the last month to let them graze on the 2 foot-high 2.5 acre lawn). I am sure the mortgage and prop taxes went unpaid long before that. The house sold in ‘06 for $595k and now the “bank” has just lowered the asking price from $450k to $300k and there have been some lookers the last few days. When I check zillow, the recent price change is reflected and what I find most odd is that the property is listed as being a short sale/ “pre-foreclosure”. The reason I find this odd is that the woman who defualted on the loan died less than a year ago (unrelated to the circumstances of the default) so why is the property not a “foreclosure”? Pre-foreclosure my a$$! Donkeys and goats are going to keep squatting until somebody shows up with a mower. Here is a link to the Zillow listing:
http://www.zillow.com/homedetails/1380-Jane-Lacy-Ln-New-Smyrna-Beach-FL-32168/2139307869_zpid/
To clarify why I find it odd: Foreclose already stupid game playing bank! The woman is dead - she is probably not going to go for some stupid Obama-loan-mod plan!
Isn’t there a life insurance component in the house insurance that pays off the mortgage if you die? There is for student loans. Seems odd for a bank to rely on there being enough money in your estate to make up the difference.
Hmmm…? You have a good point. Perhaps the bank murdered her for the payoff. I never thought of that.
Homebuilders May Lag Behind Stock Market, Credit Suisse Says
April 6 (Bloomberg) — U.S. homebuilders will underperform the stock market in the next few months as demand slows after the expiration of a key tax incentive, Credit Suisse analyst Daniel Oppenheim wrote in a note to clients today.
He downgraded KB Home and NVR Inc. to “neutral” from “outperform,” saying companies catering to the low-end of the housing market will suffer most when the homebuyer tax credit expires on April 30. Oppenheim reduced Pulte Group Inc.’s shares to “underperform” from “neutral,” citing their valuation.
While National Association of Realtors data show pending home sales jumped by the most since 2001 in February, U.S. housing prices are at levels last seen in 2003, according to a S&P/Case-Shiller index. The government has taken measures such as the homebuyer tax credit and purchases of mortgage-backed securities to stimulate demand. To be eligible for the tax credit, contracts to buy a home must be signed by April 30 and the deal must close by June 30.
“We expect the market to begin to focus on the slowing following the end of the tax credit, with less focus on the positive trends in recent months,” Oppenheim wrote in a report sent to clients today.
U.S. housing prices are at levels last seen in 2003, according to a S&P/Case-Shiller index
Well - as long as you ignore early 2009, which is when we were also at the current levels.
“U.S. homebuilders will underperform the stock market in the next few months as demand slows after the expiration of a key tax incentive, Credit Suisse analyst Daniel Oppenheim wrote in a note to clients today.”
Given that their share prices appear to be artificially supported, why would fundamental factors such as ‘worse than expected’ sales have any effect?
WASHINGTON (AP) — A federal court threw the future of Internet regulations and U.S. broadband expansion plans into doubt Tuesday with a far-reaching decision that went against the Federal Communications Commission.
The U.S. Court of Appeals for the District of Columbia ruled that the FCC lacks the authority to require broadband providers to give equal treatment to all Internet traffic flowing over their networks. That was a big victory for Comcast Corp., the nation’s largest cable company, which had challenged the FCC’s authority to impose such “Net neutrality” obligations on broadband providers.
The ruling marks a serious setback for the FCC, which is trying to adopt official Net neutrality regulations. FCC Chairman Julius Genachowski, a Democrat, argues that such rules are needed to prevent phone and cable companies from using their control over Internet access to favor some online content and services over others.
It appears that our courts are bought and paid for too. This is why I favor the socialization or regulation of conduits like broadband, highways, telephone lines, cable lines etc. Then you get competition for content, instead of an monopoly or oligopoly controlling your access to content. In the not too distant future you will have broadband providers dictating what you can look at by slowing the content of other sites, or offering cheap packages that restrict you to their approved content. People who want to provide video or other content over the internet will be at the mercy of these pigs, and the public will have higher prices, less variaty, and restrictions.
<i…Then you get competition for content…
you don’t see any competition for content in radio or tv or cell or satellite?.. things the FCC has a solid lock on?
you don’t see it on the internet either?
If it ain’t broke, don’t fix it.. and in any case never try to fix it with more government.
Look forward to Comcast setting tiers of Internet access. Google will have to pay Comcast to have its packets marked as “preferred” so that they travel at the same speed as websites and business owned by Comcast companies. The anti-competitive behavior is about to ramp up. No company with a govt. granted monopoly across large swaths of the US should be allowed to behave as Comcast will.
imo a lot of this is due just to the new technologies… I’d like to see the market have a chance to work it out. First lets see what Comcast actually does.
If Comcast actually has a monopoly, that’s the root source of the problem and that needs to be addressed, otherwise you’re just treating a symptom. So, break it up. We’ve already got laws covering that.
If it doesn’t, then it’s competition can take it’s market share when Comcast doesn’t satisfy customers or it’s service costs more, or is slower.
Once govt gets it’s barbs into something, not only does it never let go, it works it’s way in deeper. Use with extreme caution only when all other avenues have been exhausted.
“First lets see what Comcast actually does.”
Yeah, let’s just wait until the Death Star is fully operational. What could go wrong?
Ran into my old neighbor the other day….used to live on the other side of the duplex I was renting last year. We were both renting on a street that was mainly middle of the road duplexes, that were build for rental income.
Says the rental has been forclosed on. Along with most of the other rental property on the street. He’s moving next month, because he travels extensively for his job, and doesn’t want to come home after a trip, and find all his stuff sitting in the driveway.
Went by and checked the street out. You used to be able to tell that all the places were occupied, because of all the cars sitting in driveways. all the driveways are empty for the most part. The units that were under construction a year ago have stopped dead in their tracks.
Lots of green shoots over there. Mainly weeds and dandelions. This is in a town repeatedly proclaimed by the local PTB as one of the “10 most affordable places to live”.
The new foreclosure wave is here.
By: Diana Olick
CNBC Real Estate Reporter
Yes, banks are ramping up loan modifications and ramping up short sales and ramping up deeds in lieu of foreclosure, but the plain fact is that as the systems are oiled, the loans are moving through faster, and the pig in the python is showing its face.
We won’t get the numbers until next week, but sources tell me they will likely be a new monthly record.
Tens of thousands of loans have been hitting the “notice of trustee sale” bin, and that means they are coming to foreclosure.
And this is just the beginning.
The actual foreclosure numbers have been down recently because of all the modification efforts, but as we see more loans not qualifying for modifications and more loans defaulting on modifications, the foreclosure numbers rise.
Watching this foreclosure tsunami is funner than watching paint dry.
Triangle foreclosures jump 58%
Triangle Business Journal
Civil court filings dealing with Triangle home foreclosures rose 58 percent in the first quarter as compared with the same period in 2009.
Triangle-wide filings for the first three months of the year were 2,056, up from 1,296 in 2009, according to figures complied by the state Administrative Office of the Courts and released by the Office of the North Carolina Commissioner of Banks.
So its not different in Raleigh after all.
I am seeing it in Sacramento. More foreclosures in every neighbohood, but they aren’t priced low enough.
Doesn’t Count as a “Green Shoot”?:
Food stamp rolls break record again
April 6, 2010
About 39.4 million Americans, the most ever, received food stamps in January, the government said.
The number of recipients was up 22% from a year earlier, according to the U.S. Department of Agriculture. The total of Americans getting the subsidy has hit records for 14 consecutive months.
The national unemployment rate has hovered at 9.7% since January, according to the Bureau of Labor Statistics.
Beginning Oct. 1, an average of 40.5 million people are expected to get food stamps each month this year, rising to 43.3 million in 2011, according to White House estimates.
Yep just another “green shoot” and with colleges now recommending students get on the food stamp bus it’s bound to get even greener.
green shoots give America brown squirts.
I just funded my IRA and I have spent several days trying to figure out what to invest in, I come up with nothing. Cash at 1.1% is all I feel good about. There must be something better??!!
Keep it in cash until you feel good about making a decision. No reason to be in a hurry.
better? In what way..
Safer or a higher return?
You can’t have both.
You should define “better” according to your personal situation. If you’re younger you can afford to gamble and lose it all because you have a lot of time to recover.
An older person has less time to bounce back and should gamble less.
Are you the type who can sleep good at night with their money at dangerously high risk, or will it drive you nuts?
There are plenty of good books about how to properly allocate your investment portfolio as well as lots of free advice from professionals.. Your bank or a large bank with an investment arm.. or a broker like Charles Schwab, for instance..
Spend the time getting comfortable with the servicer’s website and running some anti-virus/malware checks on your computer.
I had this problem several years ago. I felt that stocks would go down and that everything was bubble. I did not like cd’s because I felt that banks would fail. I did not want to leave in cash because I feared inflation. So I bought a gold etf, several of them. I doubled my money and it was purely a matter of eliminating things that I felt were in trouble.
I am not a gold bug. Just dam scared.
So you’re sticking with the ETF still?
I got some money in Hussman’s fund. Google him. He writes a weekly news letter about the state of the economy/finance. He’s very conservative. In good years he lags the market but during a meltdown your money is pretty save.
With gold EFTs I am not sure. You never know if the gold they own is of the bullion or the paper variety. It doesn’t matter until it does, if you know what I mean.
Generally I’ve grown pretty tired about Wall Street’s pump and dump schemes.
Anyway, that my $0.02.
Rare violins and bows?
Philly nurses strike over work rule, tuition perk.
Striking nurses in Philadelphia say a proposed speech restriction and the loss of a college tuition benefit are at the heart of a nearly weeklong labor dispute. (AP) ~ PHILADELPHIA
Striking nurses in Philadelphia say a proposed speech restriction and the loss of a college tuition benefit are at the heart of a nearly weeklong labor dispute.
About 1,500 nurses and health professionals have been picketing Temple University Hospital since March 31. Their contract expired Sept. 30.
The strikers rallied Tuesday in hopes of restarting negotiations. Hospital CEO Sandy Gomberg says the two sides met at the request of a state mediator.
Gomberg says eliminating free tuition for employees’ children will mean an extra $5.5 million for patient care.
She says a proposed “non-disparagement” clause is to keep the workers’ union from defaming the hospital. The union says it violates free speech rights.
Temple has hired about 850 temporary workers to keep the hospital running.
WASHINGTON (Reuters) - The Federal Reserve could keep interest rates ultra-low for even longer than investors expect if the economic outlook worsens or inflation drops, minutes from the central bank’s last meeting suggested.
The minutes of the Fed’s March 16 gathering, released on Tuesday showed lingering concern about the U.S. economy’s prospects, with policymakers indicating they were in no hurry to raise interest rates.
What if you expect the Fed to keep rates low forever (say, at least two decades). Is there any way they could surprise one who had rational expectations for an indefinitely protracted period of low rates?
(Reuters) - Japan Airlines Corp (JALFQ.PK) plans to reduce its workforce by a third within the fiscal year to lower labor costs by 81.7 billion yen a year, the Nikkei business daily said.
The restructuring proposal compiled by the carrier and the state-backed Enterprise Turnaround Initiative Corp of Japan (ETIC) suggests to cut 16,500 jobs.
The proposed cuts include 5,405 workers from cargo and other peripheral operations, 2,460 flight attendants, 2,043 sales representatives and 775 pilots. Staffing at Kansai International Airport and Central Japan International Airport will be slashed 70 percent to 642 employees, reflecting reduced flight schedules, the Nikkei added.
RACELAND, Ky. (WSAZ) — CSX laid off 120 workers this morning in Raceland, KY – basically shutting down their long running Raceland Car Shop.
The announcement came at 6am- and took many employees by surprise.
CSX says there’s no need in this economy for the heavy car repairs done at the car shop the past 81 years.
They say many rail shippers are using there own cars now - and there’s no new work.
Progress rail owns the job site.
A progress rail spokesperson told us earlier that company was also furloughing 20 workers, but said later that was incorrect.
The laid off CSX employees will get 60 days severance pay.
Many CSX union workers will get a negotiated 60 percent of their pay for the next six years.
CSX is offering Raceland workers open jobs at other facilities.
They say the layoffs are indefinite - to last at least six months.
Green firggin’ shoots everywhere.
“Many CSX union workers will get a negotiated 60 percent of their pay for the next six years.”
Is that for LAID OFF union workers? (article says its basically shut down so I assume so) If so, cheezus, I could easily live off that and take a world tour.
Three houses we have been watching went into foreclosure this week.
Gonna need a bigger bailout, there Barry. I don’t think the pumps are keeping up!
How are prices, wmbz?
Asking prices are only down slightly, 3-5%. The range we are in is 175 to 215k. So any offer we may make will be 20-30% less. We like many here have been very patient through the years and are in no hurry now.
Nothing a little commuism can’t cure. Bring it, Barry.
CA Inc. to cut about 1,000 jobs
Computer Software CA Inc.
SAN FRANCISCO (MarketWatch) - CA Inc. Tuesday said it plans to cut roughly 1,000 positions as part of a cost-cutting program, the software company said in a regulatory filing with the Securities and Exchange Commission. The company said it expects to incur a pre-tax restructuring charge of about $50 million.
Price for a small business in S.F. up nearly 50%
San Francisco Business Times
It costs about 47 percent more to buy a small business in the Bay Area than it did a year ago.
According to BizBuySell.com, the median asking price for a small business is $220,000, up from $150,000 a year ago. The San Francisco company, owned by LoopNet Inc. (NASDAQ: LOOP), lists 264 businesses in the Bay Area for sale on its site.
Nationally, the median price for a small business is $150,000. That’s down from $165,000 a year ago at the end of the first quarter.
Revenue at Bay Area companies listed for sale is down slightly this year — the median’s $467,500 versus $500,000 a year ago. Median cash flow is also down — $90,692 versus $103,000 a year ago.
BizBuySell data show a “high volume liquor store in San Mateo County” recently sold for $500,000, less than its asking price of $575,000. A “Spanish supermarket” in Contra Costa County sold for $290,000, down from its asking price of $320,000. And a “personal training gym” in Marin County sold for $140,000, less than its $150,000 asking price.
In the past couple of weeks, the state government has started to loudly announce business seizures due to uncollected or unpaid taxes, including press conferences on the 6:00 news.
Talked about mixed emotions. On one hand, businesses need to pay what they owe; OTOH, as weak as the job market is, this smacks of the government eating it’s own young.
I don’t feel too bad, though. One of the businesses has been previously popped for hiring illegals.
“Loudly announced business seizures” tends to instill a newly-found desire to pay taxes among those who previously lacked this desire.
BTW, Rio really got hammered last night. The city and state. Worse rain in 30 years over 100 dead. A real bummer.
Ouch. Stay safe RAIB.
Typing way too fast. I meant “Worst” rain. Maybe I should get hammered…
To DJ and ET
http://www.youtube.com/watch?v=u4pLoRgQ_HM
Good pick muggy…..
http://www.youtube.com/watch?v=Ulm1Oxv8bmw
I keep telling you all the corporations run this country:
“The U.S. Court of Appeals for the District of Columbia ruled that the FCC lacks authority to require broadband providers to give equal treatment to all Internet traffic flowing over their networks. That was a big victory for Comcast Corp., the nation’s largest cable company, which had challenged the FCC’s authority to impose such “network neutrality” obligations on broadband providers.”
- Huffington Post
So, the FCC has just been told they don’t have the power to regulate… when that is in fact, their sole function.
I think I typed my post to fast. Typo. Sorry.
Most Americans say now is time to buy a house-poll
http://www.reuters.com/article/idUSN0621698720100406
(Maybe it’s just me, but I think is article is sheeple food.)
Most Americans say now is time to buy a house-poll
http://www.reuters.com/article/idUSN0621698720100406
How else are American Main Street households supposed to achieve meaningful financial reform to protect themselves from systemic theft without broad-based vilification of the banksters? It isn’t as though Main Street households have brazillians in bailout loot available to pay an army of lobbyists to plead our case on K Street. Lilliputians some times have to resort to wild words to get their message across, Jamie Boy.
* The Wall Street Journal
* BUSINESS
* APRIL 7, 2010
Mr. Dimon Goes To Washington
By ROBIN SIDEL And DAMIAN PALETTA
As Congress prepares to push finance regulation to the front burner, plenty of bank executives—stung by Washington’s Wall Street bashing—are keeping a low profile.
James Dimon, chairman and chief executive of J.P. Morgan Chase & Co., isn’t one of them. Buoyed by J.P. Morgan’s relative good health, he’s spent the past year launching his own campaign to stave off government proposals that would rein in profits, boost consumer protections and impose new fees.
Mr. Dimon’s bank shelled out more for lobbying efforts last year—$6.2 million—than any of its peers, and the CEO has lately been a regular presence in the halls of Congress. He preaches about how new regulations could force J.P. Morgan to further crimp credit-card lending and raise fees for consumers. One move aimed at banks he’s characterized as “un-American.”
His stance represents a turnaround from the early days of the financial crisis, when he emerged as one of Washington’s biggest boosters. A lifelong Democrat, he rallied his Wall Street rivals to support Bush administration rescue efforts. He embraced the Troubled Asset Relief Program, citing a patriotic duty to accept $25 billion in government bailout cash.
But when White House Chief of Staff Rahm Emanuel called a top J.P. Morgan executive to ask for the bank’s support in creating a new consumer-protection agency, the executive—former Commerce Secretary William Daley—said no, according to people familiar with the conversation. His boss believed that sufficient consumer safeguards were already on the books.
At a recent White House lunch with President Barack Obama and a handful of other executives, Mr. Dimon, 54 years old, complained to the president that the administration’s anti-bank rhetoric “isn’t helpful,” because it demoralizes businesses and employees, according to a person familiar with his comments.
Mr. Dimon’s disdain for the process has been crescendoing for some time. Last spring, he showed his irritation over the Treasury’s requirement that banks raise fresh funds before they quit TARP. Speaking at a June hospitality industry conference in New York, Mr. Dimon read aloud a fictitious letter to Treasury Secretary Timothy Geithner. “Dear Timmy, we are happy to be able to pay back the $25 billion you lent us. We hope you enjoyed the experience as much as we did.”
For Mr. Dimon and his less vocal competitors, the proposed legislation would usher in the most sweeping overhaul of financial rules since the 1930s. The measure could push banks to shed certain assets to become smaller and more risk-averse. Upon passage, the country’s largest banks would immediately feel a tightened grip from state and federal regulators in almost all areas of their businesses.
In a recent interview on the 48th floor of J.P. Morgan’s newly redone minimalist Park Avenue headquarters, Mr. Dimon showed little sign of backing down. “The incessant broad-based vilification of the banking industry isn’t fair and it is damaging,” Mr. Dimon said. “Punishing whole industries, whether you were reckless or not, just isn’t the way to do things.”
…
The Federal Reserve Reports on Consumer Credit -
And It Does Not Look Good For The Economy:
(From the Federal Reserve)
“Consumer credit decreased at an annual rate of 5-1/2 percent in February 2010. Revolving credit decreased at an annual rate of 13 percent, and nonrevolving credit decreased at an annual rate of 1-1/2 percent.”
That’s a $9.5 billion decrease in revolving (credit card) debt in one month (February) and a $2 billion non-revolving decrease.
While in the intermediate and longer term de-leveraging is good for the consumer, in the short term it throws cold water all over the improving final demand picture.
Here’s what’s going on folks - the so-called “increased consumer spending” is coming from people not paying their mortgages, blowing it on silly stuff like iPads instead, along with the government borrowing and spending.
That’s not positive for the consumer outlook (or profit outlook) at all, since that decision not to spend on mortgages (e.g. blowing off shelter costs) only works until the bank forecloses and you are forced to start paying rent somewhere. Then that cost which formerly allowed you to go out to eat at Olive Garden every night comes back with vengeance.
Last month’s report was trumpeted as evidence that the consumer had turned the corner and was able to borrow and spend again, raising the possibility that the economy truly was turning and the government could start to cut back on the fire hose.
This month’s report blows that argument to bits - we have a consumer that is tapped out with our GDP being supported only by massive borrow-and-spend at a federal level, aided and abetted by a massive stock market and credit bubble.
This is not going to end well.
(Credit The Market Ticker)