Bits Bucket For July 1, 2010
Post off-topic ideas, links and Craigslist finds here.
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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MSNBC’s Ratigan: Stock market an ‘obviously corrupt’ fraud
“Seventy percent of the volume [of trades on the stock market] is computers that are run by the banks playing ping pong with stocks for 10 seconds at at time,” Ratigan said.
http://www.youtube.com/user/MOXNEWSd0tCOM#p/u/58/tgmzG10lOrk
“The stock market at this point, which used to be a reflection of the future value of actual businesses in this country, has been turned by our government and our banks into little more than a paper shredding facility [about which] we can make up reasons why it goes up and down,” Ratigan said. “But when the computers … at the banks are controlling the action, most everything else is kind of silly.”
Ratigan concluded that it’s time to create an “alternative investment structure” that would allow people to invest their money without putting it “into the obviously corrupt stock market in this country.”
Investors can always buy hard assets, like houses….
Bwaahaaahaaaa!!
isnt that the guy that used to smirk and laugh at peter schiff?
he’s singing a different tune now isn’t he.
michael,
Well, you never caught ‘me’ sneering at Peter. But Dylan has a point. If banks and HF’s want to play on a 10 min. cycle, that’s great!
We just need to formulate a vehicle working folks can participate in towards their retirement without becoming just so much cannon fodder. Personally, I don’t think it’s so much to ask? This is why I’ve banged on the mismanagement of local ( read speculative ) banks for so long. What does it say when you can’t even “invest locally” any more?
Yes, Dylan and all the Fast Money paid help smirked at Schiff but he did get religion as the meltdown was occurring and really did a 180* turn to be an anti-bank crusader ever since.
Anytime you collect a bunch of money anywhere, the finance vampires will figure out a way to bleed it dry. Little people just need to get used to the idea that when they are forced to retire, they will spend the rest of their lives in poverty.
AmazingRuss,
A few weeks ago Spokaneman drew the distinction between having prevailing CD rates available in his 401k over the years ( vice mmkt funds ) He calculated just that disparity would have been meaningful, over time.
I agree, there’s a natural tendency for skimming any time too much gathers in one place, so wouldn’t the key be to prevent too much for gravitating in any ‘one’ place?
We complain a lot but I haven’t seen (1) solid suggestion as to an alternative, why, when it’s so much more fun to b!tch all day?
Look at the middle chart and you will see why you are better off investing in India, hedge funds have more of a buy and hold mentality in India., because they don’t have 10 minute trading cycles.
http://stockcharts.com/charts/gallery.html?s=%24bse
“isnt that the guy that used to smirk and laugh at peter schiff?”
It’s easy to smirk at Peter Schiff when he goes off and starts forecasting $10,000 per ounce gold. He’s no different than the shills who were screaming $500 per barrel oil when it was approaching $150.
“It’s easy to scoff at an old man’s folly… but check out his adam’s apple too!”
- Jack Handey
Does anyone really think the US will get their fiscal house in order anytime soon? The solution to 15 million unemployed (forget about the underemployed) is to take away their cobra benefits and unemployment insurance? Tea party or no tea party - the future is more and more deficit spending. Perhaps you can hide in Canadian or Australian dollars, but gold has been the store of value for thousands of years and I would put more faith in Peter Schiff’s gold calls than Turbo Tax Timmy or Benny’s policies to lead us into a recovery….
Peter Schiff was right about the housing bubble. But he was way wrong about almost everything else, particularly his predictions of a dollar crash and safe haven foreign stocks. As a result, when everything crashed his clients were wiped out.
http://tinyurl.com/23hhbwq
Speaking of fraud…
It makes sense that the gov wouldn’t want to regulate this kind of BS activity. Why??
Because it gets corporations and people to buy and sell stock. That creates more tax revenue. If people just invested and let their money sit who would pay taxes.
Not to mention all of the kickbacks Wall Street gives our gov officials.
“That creates more tax revenue”
Uh… true dat! But I’m referring more to the rough approximation of an FDA for 401K’s. USDA? The Following Stocks are “safe for consumption”?
And before we open the floodgates ( as SFBAGal notes below ) I’d prefer to see those safeguards in place ‘prior’. Just a thought.
You aint seen nothing yet.
Right now Obama’s fiscal commission is pushing to invest a significant portion of the Social Security trust fund in private companies through the stock market.
Link? I hadn’t heard this.
That would be one way to “solve” the SS future obligations problem. Invest it all in the stock market, then create another stock market bubble.
However it would add to the treasury debt problem.
From the revelations about high frequency trading, starting with the arrest of the Goldman Sachs programmer a year or two ago, to the big flash crash, to the questionable Citigroup stock movements recently - I’ve been suspecting that the stock market is eminently manipulable. Eminently. See Gollum’s recent “Perfect Quarter” - not a day of losses in trading.
I remember the fall of Nasdaq back in March 2000 began like this. It was new highs every day, for a few years. Then some Canadian teenager decided to shut down some of the really large cap site, with a denial of service attack. Eventually it sunk into people’s heads that, “Wait a minute. What exactly is so valuable that it can be shut down by one piqued teenager?”
Now it’s something like, “What is it that we’re pouring our money into, that can be moved up and down by individual traders?”
Perhaps.
Pretty sure the main trigger for the Nasdaq’s fall though was the apparent victory in the Microsoft anti-trust suit. MSFT - at the time I think the biggest cap stock in the world - went from 56 to 33 in just 4 weeks after it was announced that it would be broken up (which was later reversed).
I haven’t heard this either sfbaGal. Can you post a link?
We’re gonna need a bigger war…
National debt soars to highest level since WWII.
The federal debt will represent 62% of the nation’s economy by the end of this year, the highest percentage since just after World War II, according to a long-term budget outlook released today by the non-partisan Congressional Budget Office.
Once the “masses” realize that the so called “war on terror” is just a military industrial spending program; they will launch the “war on aliens”.
Terror attacks will be blamed on aliens from outer space.
Osama Bin Laden will come to the white house and give a joint news conference with Obama calling on all the people of the world to unite against the alien attacks.
They gotta do something because people are getting smarter faster than they can be lied to.
Someone said this same thing over the weekend at a scifi event I was at. Hmmm.
people are getting smarter
Lost me right there.
Heh. Smarter? Two words for you: Sarah Palin. Not really seeing this outbreak of intelligence.
Read my comment, genius.
I did, I was agreeing with your response to Spook.
Once the “masses” realize that the so called “war on terror” is just a military industrial spending program; they will launch the “war on aliens”.
All they need to do is adapt that missle shield technology.
People understand that a hammer shouldn’t cost 700 dollars and a case of coke 100 dollars.
When stealing you need high technology, who knows what a laser should cost? Or you need special ops that can’t be looked at, take it away Xe/blackwater.
Well, there is a company selling 1 watt blue laser pointers for $200. Instantly permanently blind someone from a good distance away, set near objects on fire. I think $200 is too cheap.
Will we have more luck find the space aliens than we’ve had finding bin Laden?
+1
Answer: Probably about the same. Hey it worked once already, didn’t it?
And while we’re not Greece, the cost of servicing that debt can snowball very quickly if interest rates go up.
That’s why the Fed won’t allow interest rates to go up.
When my wife falls for MSM propaganda that the recovery is underway, I point to the rate. I tell her when it goes up , THEN the recovery is working.
One might have thought that in 2005/2006 as well.
Key is that the rates have to remain up for several years to declare that the recovery is working. 2005/2006 proved that just a brief pop up in rates (less than about 5 years) doesn’t indicate a strong economy.
“2005/2006 proved that just a brief pop up in rates (less than about 5 years) doesn’t indicate a strong economy.”
Also proved that all it takes to pop a housing bubble is a brief pop up in rates (heh heh…).
That rather assumes that the Fed can set the rates at which people are willing to lend the US government money. The problem is that once potential lenders believe that they have to worry about either inflation or exchange rate lowering the value of the future dollars that they anticipate getting paid back in, there’s little that the Fed can do.
As long as there is nowhere else that is safe for money to go the U.S. will be able to sell it’s debt instruments. Right now - and for the foreseeable future (whatever that means) - there is nowhere else that is safe for money to go.
Combo, of course the question is: How safe do people believe US Debt is? While I don’t think think that soverign default is in our future, an inflationary spiral may well be. And people may well start to look for better inflation hedges if the Treasury is paying less than the anticipated rate of inflation. The bond market for MBSs shows that people’s perception of risk can change prettey darn quickly.
“…there’s little that the Fed can do.”
Isn’t this where quantitative easing comes into play — the Fed basically runs the virtual printing press in order to produce dollars to finance T-bond purchases by the buyer of last resort (aka the Fed), without ever clearly revealing to bond market investors to what extent rates are suppressed due to Fed purchases of T-bonds and MBS?
As long as there is nowhere else that is safe for money to go the U.S. will be able to sell it’s debt instruments. Right now - and for the foreseeable future (whatever that means) - there is nowhere else that is safe for money to go.”
looks like some investors are choosing Gold .. but no there isn’t really any good place to park money these days
‘That’s why the Fed won’t allow interest rates to go up.’
I have asked this before. If rates rise, that will apply only to the new issues, not all the existing debt? We will not see $14 trillion get a ARM raise. Of course, the government issues debt to pay the debt. Who am I kidding, interest rates are of no use.
We’re gonna need a bigger war…
We have a bigger war……..the war on savers and people who are prudent with their money. it’s been going on throughout the Greenspan/Bernanke terms at the Federal Reserve money printing club, but has gone into overdrive with Obama’s “stimulus” fund, a slush fund sold as a “jobs creation and saving program, but more like a political payoff scheme.
There has been no job creation with the money wasted by Obama, just free lunches for political cronies. Now, we get mandatory fees for “health care”, and additional costs in the form of Cap and Trade for Carbon credits.
We have a war. A big war. It’s a war on working people to provide money and benefits to the political class and the parasites who they support. The war you are talking about is just a distraction so we don’t pay too much attention to what’s going on in our government where there is the real war. That war is against us, the citizens.
“We have a bigger war …, the war against savers and people who are prudent with their money.”
That’s yesterday’s war. Today’s war is waged against spenders and those who are imprudent with their money.
They have met the enemy and it is them.
Like those that jumped for the $8,000 last fall - only to see interest rates and prices fall further. Now they have to refinance, and spend even more on fees.
Yeah, they’re out a few bucks for sure. Meanwhile, those that passed on the gimmick are now relatively wealthier.
not true, i paid cash for my house at prices last seen in 1996-80k, my monthly bills are under $300 for utilities, water, trash, taxes! i can spend $6k a year and not spend any more than my studio apartment. and i live in 1500 sq/ft vs 300 sq/ft. so, although i did not buy due to the 8k, it went along way toward remodelling with me doing the work. now, i have a brand new interior nicer than most home builders. soon, i will be looking for a second house, should i leave all my cash in the bank waiting for our printing presses to cause inflation! i wan’t hard assets at this point in my life…and not the bubble going on in gold. no stocks, no bonds! money in the bank will earn you nothing for 3-5 years. i’ll bet on housing at these prices! i have two renters lined up to give be a 10% return on my investment on the second house if i decide to rent. that will cover any costs and no there will be no loan on the second house either. so, for me this crash is setting me up quite nicely!
John, I don’t know where you live, but your case would certainly be an anomaly, at least in the bubble markets. There’s no way a rental would pan out at today’s prices in most markets. And before you go double-down, consider that your asset may decline a lot further in value, along with rents, lest you become upside-down just like all of the other real estate geniuses over the last 10 years. I’m not saying it CAN’T work, I’d just like to know more about the specifics, and also just sayin’, be careful lest you too become irrationally exuberant.
That’s yesterday’s war. Today’s war is waged against spenders and those who are imprudent with their money.
That’s not the war that’s the blowback.
My hope was, that since the “science” behind global warming had turned out to be largely bogus; carbon credits, cap and trade had gone into the scrap heap.
They still dragging that hobgoblin out?
(scratches head)
What do they mean “by the end of this year”? We’ve already been there for well over a year.
Oh wait, they’re using that goofy “debt owed to the public” thing, completely ignoring the debt owed to the various government trust funds.
Fed Officials Avoid Talk of Further Stimulus to Stoke Growth.
Jul 1, 2010
Federal Reserve policy makers expressed caution about the outlook for the U.S. recovery and bank lending without backing any new steps by the central bank to stimulate growth.
Atlanta Fed President Dennis Lockhart said yesterday that while the recovery isn’t sustainable enough yet to warrant raising interest rates, he doesn’t see a need for additional asset purchases to aid the economy. Fed Governor Elizabeth Duke said it may take years to return to pre-recession credit levels and that there’s “no single step” to unclog lending markets.
Fed Governor Elizabeth Duke said it may take years to return to pre-recession credit levels and that there’s “no single step” to unclog lending markets.
Might that be decades, not years?
Why not start with the single step of more accurately valuing the assets owned by financial institutions?
Why not start with the single step of more accurately valuing the assets owned by financial institutions?
The short answer: Because it would reveal them as “insolvent”, thereby needing more FED money to have anything on the asset side of their balance sheets.
My question is how the FED proposes to re-sell all those bad mortgages it “BOUGHT” from the big banks? What was that? 1.4 Trillion dollars? I don’t recall now, but they essentially own all the bad paper. They traded the bad paper for dollars they printed to boost the bank balance sheets.
Now we are pretending that they have some real value, better than 50% of the loan amount. Yea, I get it. It really is all a game of make-believe. A confidence game. But I think, based on the reactions of the markets over the past couple of weeks that confidence is eroding and the scheme may be coming apart.
“The short answer: Because it would reveal them as ‘insolvent’, thereby needing more FED money to have anything on the asset side of their balance sheets.”
True that. And as long as everyone pretends they are solvent they get to stay in business. And as long as they are in business they get to keep sucking out money circulating through the economy and stashing it away to build up their asset bases.
Money that flows into the banks as payments on previous loans stays in the bank instead of being put out into circulation in the form of new loans. This relentlessly reduces the supply of circulating money which creates a shortage of the stuff.
As shortage of money in circulation (as does the shortage of anything else) makes the remaining money in circulation more precious, more valuable, harder to get, harder to hang onto.
I think I can hear the giant sucking sound –
of newly-created money getting sucked under mattresses.
combotechie,
You’re so 2006! The simple act of “being solvent” is not only no longer a requirement, it’s for chumps!
Then there’s this:
New York’s Paterson joins governors lobbying for Medicaid assistance to balance state budgets
Washington, D.C. — Gov. David Paterson warned Wednesday that New Yorkers could face “unimaginable pain” from additional budget cuts if Congress fails to approve promised Medicaid assistance to the states.
Paterson joined a bipartisan group of governors in Washington, D.C., to lobby for the stalled aid, of which New York is due to receive $1 billion this fiscal year.
http://www.syracuse.com/news/index.ssf/2010/06/new_yorks_paterson_joins_gover.html
You can pain me now or you can pain me later.
That Fram oil filter tagline was pure genius.
said it may take years to return to pre-recession credit levels
So they’re actually using that as a goal?
As a medical analogy - the goal of medicine is to get back to healthy enough levels to allow you to ingest the poison again that got you sick in the first place?
NIce.
As a drinking analogy, the goal is to use enough hair-of-the-dog stimulus to achieve the same euphoric state of drunkenness which was enjoyed before the hangover ensued.
Yes, and there ain’t enough booze on the planet to recreate the previous drunken orgy.
An important point. Was housing the last biggest baddest alcohol (investment asset), with no more bigger ones available to avoid the inevitable painful, and long-term, hangover?
Only one good answer: heroin.
Heroin in the financial world being - government debt?
Good lord! Credit IS the problem!
Good lord! Credit IS the problem!
I hear NPR on the Radio interveiwing somone ( a CA economist maybe) that we need to open the boarders to immigration. I guess the thought is Americans are tapped out so we need more solvent folks to sell homes to ??
Cactus:
put 40% down and get a green card…..and deport all the other illegals
Money talks
Boolsheet walks back across the border
Yeah, I’m sure busboys, janitors and other similarly paid individuals can afford to buy 500K houses.
I find it pays to look outside the U.S. MSM for an unvarnished perspective on our economic picture — kind of like the way the citizens of the former Soviet Union must have treasured access to the Voice of America broadcasts.
Ben Bernanke needs fresh monetary blitz as US recovery falters
Federal Reserve chairman Ben Bernanke is waging an epochal battle behind the scenes for control of US monetary policy, struggling to overcome resistance from regional Fed hawks for further possible stimulus to prevent a deflationary spiral.
By Ambrose Evans-Pritchard, International Business Editor
Published: 9:44PM BST 24 Jun 2010
Ben Bernanke needs fresh monetary blitz as US recovery falters
Ben Bernanke needs fresh monetary blitz as US recovery falters
Photo: GETTY IMAGES
Fed watchers say Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam. The ECRI leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so.
Key members of the five-man Board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed’s balance sheet from $2.4 trillion (£1.6 trillion) to uncharted levels of $5 trillion. But they are certain to face intense scepticism from regional hardliners. The dispute has echoes of the early 1930s when the Chicago Fed stymied rescue efforts.
“We’re heading towards a double-dip recession,” said Chris Whalen, a former Fed official and now head of Institutional Risk Analystics. “The party is over from fiscal support. These hard-money men are fighting the last war: they don’t recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again.”
Mr Bernanke is so worried about the chemistry of the Fed’s voting body – the Federal Open Market Committee (FOMC) – that he has persuaded vice-chairman Don Kohn to delay retirement until Janet Yellen has been confirmed by the Senate to take over his post. Mr Kohn has been a key architect of the Fed’s emergency policies. He was due to step down this week after 40 years at the institution, depriving Mr Bernanke of a formidable ally in policy circles.
The Fed’s statement this week shows growing doubts about the health of the recovery. Growth is no longer “strengthening”: it is “proceeding”. Financial conditions are now “less supportive” due to Europe’s debt crisis.
The subtle tweaks in language have been enough to set bond markets alight. The yield on 10-year Treasuries has fallen to 3.08pc, the lowest since the gloom of April 2009. Futures contracts have ruled out tightening until well into next year.
…
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AEP rules. He’s my favorite reason for buying the Telegraph every morning.
The only default option left is to crank up the printing presses again.
Yes, for several values of “default”.
Trickle-down nonsense. If they want to crank up the economy - increase the velocity of money - they must get spendable money down to the masses.
“Buying more assets” just enriches the financiers who will pay themselves yet more, while crumbs may trickle down to the masses.
A fantastically inefficient way to juice the economy.
Yep.
We’re better off just putting out huge tax cuts / rebates and then firing up QE to pay for them. Or for that matter just sending a check to every citizen.
Not that I’d propose that; I think instead we just simply need a very long bout of austerity.
But that aside - if you’re going to QE anyway - then the best way to do it is to not filter it through Wall Street’s very sticky hands.
As others have pointed out here, an unintended “stimulus” is all the free rent FB’s have been getting living in their as-yet unforeclosed houses. It’ll be interesting to see how much of a damper that’ll put on things once that’s tightened up a bit.
Also - the PTB are so convinced that debt-peddling is the cornerstone of the economy, that they can’t see beyond that sector.
“Homeowners who paid in some cases more than a million dollars for condos in a pricey La Jolla enclave five years ago want their money back.
So do a lot of people who bought new houses in 2005.”
http://www.voiceofsandiego.org/housing/article_8a26ee30-7da9-11df-9cd4-001cc4c03286.html
“But the denizens of Seahaus, a sleek coastal condo and townhome development in Bird Rock, say this is more than just wishful thinking. They’re suing the builders of their homes, alleging their complex was poorly constructed and developers concealed water damage on the inner beams. They’re demanding developers pay to fix it or else undo their entire purchases.”
“A central point: Homeowners assert that while the complex was being constructed, the beams used to frame the buildings were exposed to the winter rain and got wetter than recommended, but weren’t thoroughly examined before the building’s walls went up.”
“Around the complex right now, there are no obvious gaping holes or walls falling down. But inspectors for the homeowners have opened the walls and found splintering and deteriorating wood beams. Now some parts of the building have been temporarily buttressed with extra supports and painted over.”
Osama Alkasabi, a plaintiff in the most recent suit, said he wants to regain what he remembers being promised. “I thought Seahaus was going to be the Beverly Hills of La Jolla,” he said.
Let’s see, condos in a land of multimillion dollar houses, wouldn’t that be the El Cajon of La Jolla? As it turns out, that might have been truth in advertising.
SDGreg,
Well, we ‘all’ did things in 2005 we regret? ( Paying $1.6 mil. for a POS not among them! ) It’s just another way of expressing buyer’s remorse though.
Btw, I’ve stayed in military barracks that had more ‘flair’.
“Well, we ‘all’ did things in 2005 we regret? ( Paying $1.6 mil. for a POS not among them! ) It’s just another way of expressing buyer’s remorse though.”
They seem to have both a case of buyer’s remorse and legitimate claims with bubble era construction defects.
My biggest regret in 2005 might turn out to be not emigrating to another country after the 2004 elections. But considering all of the things that have happened in the past 5 years and what may happen in the next decade, it might not be until 2020 or 2025 before I know if whatever choice I might have made in 2005 or might consider now would have been better than doing nothing. In the decade that’s unfolding, I’m not sure there will be any good areas, just some areas that will be less bad than others.
“just some areas less bad than others” LOL!
( That is… the reason we all congregate here everyday, isn’t it? ) Gauge the fallout as it were.., hmm?
Yeah, these condo owners don’t realize just how fortunate they are! Our builder has since deceased and ‘we’ are left holding the bag, alone. At least they have someone to whine to ( and agreed their complaints not without merit ) But the builder seems attentive enough and thinks enough of their reputation to at least attempt to salvage it?
Why do I get the impression the owners are playing this like an ace in the hole?
“Why do I get the impression the owners are playing this like an ace in the hole?”
Maybe trying to execute a put?
Don’t let the door hit you on your way out.
I lived down the street from Seahaus in a $1300/mo 2bedroom apartment, with a roommate literally 4 blocks away. I watched the whole thing get rained on while it was being built, and my roommate and surfer friends would often comment about how for $1.6 million (what we heard they were selling for) those suckers were sure going to get a rude moldy awakening to beach living. Unlike inland San Diego developments where it could rain on an unbuilt house, and the sun would come out the next day and dry things out completely, the coastal fog rolls in early every morning usually into mid July, and things stay continually damp if you don’t cover them.
We just laughed and paid our $650 each with access to some of the best surfing in La Jolla that those suckers were paying $1.6 million to be near. Funny thing is, they probably don’t even surf, and the beaches in most of La Jolla are basically unfit for anything *but* wave riding due to their rocky/reefy nature.
mathguy,
You’re totally… missing the point. The Boom was all about The View. Some got it, some don’t?
Yeah, I lived in IB for over a year on 2 s/o. Don’t look for it to be blistering any time early in the day. In fact, as a MW ( I was a little surprised at how chilly it was until later in the PM.
As you get in your car and headed east, it would get prog. warmer.
Having lived in Bird Rock, I can say I appreciated the proximity to culture and to some extent the feeling of seculsion, even isolation, in an area surrounded by the mobs in PB and downtown LJ. It truly does have beautiful areas with access to the shores and PB beaches. I get that it’s a nice place to live. Honestly though, the only real reason I see to pay to live in La Jolla/Bird rock is to be near the surf and reefs. I like the “high culture” available in downtown La Jolla, but maybe I am just unique in thinking that I would prefer a bit of diversity with easier access, and come visit La Jolla (assuming I didn’t surf) when I want the “culture”. OTOH, I do see painters, yoga/tai chi/meditation people, and joggers out, so if I was really into that, LJ would be ideal too.
However, La Jolla/Bird Rock is truly a pain to get into and out of to do “other stuff”. I had to take the bus to work a few times in downtown SD (about 15 miles away). Took over 2 hours each way every time. Driving is at least 20-30 minutes to get in/out. The ingress/egress routes are jammed every day from 7:30 - 9:00 and 4:30-6:00. And starbucks is the CHEAP coffee. I live in University City now, and I drive into LJ to surf… since it’s not every day, things are MUCH MUCH better.
Birdrock Roasters coffee is worth the drive and the money.
the El Cajon of La Jolla
Ha!
Sounds to me like they went looking for an excuse. Look hard enough and you’ll find any reason for your suit.
I got up too early this morning. Thought i’d log on and see what was news today. What? no news? no comments?
My only observation is that during my house search this past few months, I did come across some really good prices on some houses. The problem with each of them was that they needed extensive repairs and just didn’t make much sense from an investment point of view.
I looked at one canal front property in Pasco County. It was in need of lots of repair, having been built in 1960, with little maintenance.
The floors were soft and sagging from lack of proper support (wood joists on piles), but had been skinned over with fresh veneer to give a new appearance. The outside walls were wood, covered with stucco to the ground, leaving no crawlspace and inviting subterranean termites to have a nice dinner. The floor-plan was functionally obsolete, with and adjoining office area, next to the one bedroom, thus called a 2 bedroom.
All the windows needed replacing, the doors were in the frames crooked to the walls. The rear sliding glass doors didn’t slide, as the tracks were worn out and the rollers bad. The set-backs against the side lot had been ignored, so the house was about 5 ft from the property line adjoining the neighbors house. It had window a/c units, both old and probably not working, and an obsolete electrical panel box. (I’m told i can still get the breakers but at about $40, rather than $4 for a GE or Square D).
About all that seemed to be okay was the roof, which was old shingles, but appeared to be dry. However, the entire structure supporting the roof was in question, along with the elimination of an interior bearing wall to provide a more open feel.
The house started around $69,000 from a local foreclosure investor. He worked the price down weekly. At $47,000, I went and had a look.
A few days later, he called and said he had an offer from a doctor at $42,000, and if i couldn’t get a better offer, was going to sell at that price. I almost jumped, but did the math on the amount of repair, excluding my time and said “no”.
Oh, i forgot to mention. The “canal” is about 2 feet deep at average tide, so yes, you can get a small boat in behind your house, and then move through a maze of canals, about 2 miles to the open gulf of mexico. There are, however, lots of houses in this area, many in foreclosure and the neighborhood has been in disarray since the prices stalled in 2006-2007.
I would like to buy another waterfront house, but this just looked like a money pit. Walking away seemed the most sensible. Also, since I am out of work, I am more miserly concerning any purchases. A year ago, I may have bought the place. Now, I may need the money for things like food and gas, insurance, property taxes, electricity and water.
Be careful out there. Lot’s of “investments” are coming on the market.
Good for you for being prudent. Honestly the house sounds like a tear-down. Save the foundation and the septic hook-up and start over. How much land would you have gotten for 47K?
That place sounds like a disaster.
Foundation? Diogenes stated the main beam was supported on piles, presumably very shallow and founded on yielding subgrade that is undoubtebly saturated given the fact it’s next to a canal.
There is no salvaging that dump.
The house probably was a tear-down and the current owner was trying to sell it as the “land value”. The lot was probably 60 x 90 to 100. The front was perpendicular to the canal, so the lot dimensions were unclear to me. In other words, you could see the “back yard” from the street.
But in terms of Tear down value, that had a few setbacks. First of all, it would COST more money to tear down and remove the existing structure, making it worth LESS than a comparable lot.
Because the minimum set-back lines had been violated (it may have been only 3 feet from the side lot), any new structure would need to meet the minimums which i think are between 7.5 and 10 feet, thus moving any new structure closer to the canal.
Additionally, here in Florida, the new codes create quite a few new additional costs for hurricane protection. It would also need to meet the new flood elevation requirements. The entire area is about 3 to 5 feet about the water. Minimums are 10 to 12 feet, so the “new” house would need to be on piers are an elevated foundation. All much more money, in an area that just wouldn’t justify the added costs.
I prefer ‘remodel’ jobs. You can usually do ‘repair’ work without getting much attention from the building departments. Once you start the permit process, you can expect you costs and aggravation to rise considerably.
I prefer ‘remodel’ jobs. You can usually do ‘repair’ work without getting much attention from the building departments. Like illegaly enclosing the area below that 10′ flood level. LOTS of that going on in coastal flood areas.
I’ve had good luck in getting the utilities turned on and cleaning up the outside to look like a normal lived in home.
Then, I act as my own general contractor and hire licensesed tradesman to take out permits and repair or upgrade the mechanicals.
If the house is deemed unsafe and the utility companies refuse to turn on the utilities, then it gets problematic and expensive.
MD
*tradesmen
Sounds like a tear down or a…. RENTAL! Huh? It reminds me of something…. Oh yeah! The house I’m renting! The bathroom floors are all soggy from years of water damage. Some of the windows don’t even open. Termites galore. Oh… except the roof leaks. YES! I win!
1.3 million unemployed won’t get benefits restored.
WASHINGTON (AP) — More than 1.3 million laid-off workers won’t get their unemployment benefits reinstated before Congress goes on a week long vacation for Independence Day.
An additional 200,000 people who have been without a job for at least six months stand to lose their benefits each week, unless Congress acts.
For the third time in as many weeks, Republicans in the Senate successfully filibustered a bill Wednesday night to continue providing unemployment checks to people who been laid off for long stretches. The House is slated to vote on a similar measure Thursday, though the Senate’s action renders the vote a futile gesture as Congress prepares to depart Washington for its holiday recess.
My son’s employer here in NY has been on four day weeks for a while under a state UI program. Four days of work and one of UI. They are getting close to layoffs now. I wonder how NYS will figure these one day a week of benefits already paid when the laid off file for full benefits.
“1.3 million unemployed won’t get benefits restored”
…and the pitchforks are coming out. Read the comments section to get a sense of the anger out there (on both sides).
thehill com/blogs/on-the-money/801-economy/106625-senate-adjourns-for-july-4-recess-without-passing-an-unemployment-extension?page=1#comments
Kim,
Why the pitchforks? My old buddy up in Portland didn’t get ‘his’ ( 3rd. ) extension! ‘He’ didn’t get angry about it? ( But he’s off the wagon and drinks all day w/ a six mo. old Springer Spaniel named ‘Lucy’? )
At what point do we just switch them over to welfare admitting those jobs aren’t coming back?
When does the safety net turn into simple largesse?
Two brother of mine are trained to get drowning victims out of the water. The biggest danger to the rescuer is that the vicim drags you down with them. Then you’re both dead.
Oh, I remember this from boy scouts… basically you have to put the person in a headlock to pull them in with out drowning you.
Occasionally you need to punch the person a few times to get them under control. I don’t think they phrased it quite that way.
For what it is worth, my 5 yr old put me under the water in the surf a few weeks ago and I got a lung full of water. Dropped into a hole maybe 20′ from the shoreline playing in the waves.
Basically she climbed up on top of my head to get above water.
Anyhow… sounds like those who got the sweetheart deal get extended and allowed 99 weeks. Everyone else gets the shaft.
I was always taught blow all the air out of my lungs and sink to the bottom. Usually they will freak out and let go.
I’m sure there is a financial analogy here somewhere.
Carrie Ann,
Good points all. Nothing the rest of us haven’t wondered ( if only to ourselves ) As the ranks of the unemp. went thru their various phases.., so did our attitudes ‘toward’ them?
At first, pity and shame. Then acceptance for the fallen, then.. ENVY!? Like my Spaniel owning pal above, he went thru all the anger and then denial, depression etc. But in the end concluded that it was the -best- thing that could have happened to him given the circumstances!
He waited this whole thing out on the sidelines. Who knows, after the rest of us are medically excused for having nervous breakdown ( they can swoop in and take ‘our’ positions? )
I remember during the ‘91 recession reading story about former high-flying tech or sales guys, never really working again, selling their houses and renting in some garden apt somewhere. Then I watched that exact scenario play out for my brother when he lost his job at 51.
He was actually pretty buoyant, between my father’s support and his home equity. He seemed to be busy all the time, still fun to party with…no health insurance but finally made it to SS and Medicare in good health. It should happen to me.
Yeah, I’ve had a few friends that really seem to step into some deep doo doo but always somehow land on their feet. They really do have some crappy luck but they never give up. They bitch, moan and complain but they also never stop trying to figure out their next move. And they keep their sense of humor. In the end, I think people want to help them.
Loan Giants Threaten Energy-Efficiency Programs.
The New York Times
SAN FRANCISCO — The Obama administration is devoting $150 million in stimulus money for programs that help homeowners install solar panels and other energy improvements, which they pay for over time on their property tax bills.
At the same time, the two government-chartered agencies that buy and resell most home mortgages are threatening to derail the effort by warning that they might not accept loans for homes that take advantage of the special financing.
http://www.nytimes.com/2010/07/01/business/energy-environment/01solar.html?_r=2&ref=business
I’m not installing solar until the cost comes way down. So, phooey on the loans and the tax credits.
Or the costs of electricity go way up?
Here in AZ we just put another fuel rod in the fire.
Should read
Soft recovery certainly unexpected and more uncertainty expected.
Fed officials see soft recovery and more uncertainty
July 1, 2010 1:01 AM ET
BATON ROUGE, Louisiana (Reuters) - Jitters that financial strains may derail the U.S. economic recovery mean the Federal Reserve will be in no rush to end its ultra-low interest rates, comments by officials of the U.S. central bank suggested on Wednesday.
One senior Fed official went as far as acknowledging that falling inflation could spur the central bank to further ease financial conditions, and another policy maker would not rule out additional measures to stimulate growth.
When asked whether lower inflation would prompt the Fed to try to push borrowing costs even lower, Atlanta Federal Reserve President Dennis Lockhart told a Rotary Club audience: “It’s appropriate to think about what we would do under a deflationary scenario. At this point, no specific planning in my view is occurring but discussion in all likelihood will be on the agenda.”
The president of the Chicago Fed, Charles Evans, said the central bank had “provided a tremendous amount of accommodation,” but he also would not rule out further action to stimulate the economy.
“I’m going to be looking at the circumstances, and if we need to adjust policy in either direction, I am going to be responding,” he told business news channel CNBC.
“It’s appropriate to think about what we would do under a deflationary scenario. At this point, no specific planning in my view is occurring but discussion in all likelihood will be on the agenda.”
There’s that reference again to the other “D” word and both seem to run as a pair.
“One senior Fed official went as far as acknowledging that falling inflation could spur the central bank to further ease financial conditions, and another policy maker would not rule out additional measures to stimulate growth.”
“falling inflation” - incipient deflation?
As of a a few days ago there were no plans for changes. Now we’re seeing carefully worded references to combating deflation. That appears to be where their concern really lies even if they’re afraid to say it more forcefully.
Got cash?
Mr Market’s slope of hopium isn’t looking so hopeful any more. I am starting to wonder if our stock market isn’t doomed to follow Japan’s down the rabbit hole, with a 1-decade lag?
Japan led the way for ZERO interest rate policies and the Yen became a “carry trade” currency for years. They also tried lots of government spending, resulting in a collapsing economy. Ten years ago, it was referred to as the “lost decade”. It’s now been 20 years that Japan has had property and market declines, going nowhere but down.
Greenspan had criticized Japan at the time and suggested austerity measures. Then, when we needed a boost, he did exactly the same thing, and patted himself on the back for his creativity and financial innovation.
Yes, we are going the way of Japan. That is why I fear “recovery” is just a dream that politicians sell us rubes here in the hinterland. We took some bad medicine from Greenspan and Bernanke and rather than purging our system, they want us to take another dose.
I think this time, though, they are going to try an enema. Do you feel it coming?
“It’s now been 20 years that Japan has had property and market declines”
Which proves that there is absolutely no connection between property valuations & wages across a National scale…
Diogenes,
Here’s what is really sad. There’s been coverage of late ( and I’m sure our posters to the North would concur ) but the Canadians don’t seem to be anywhere’s -near- in a funk?
There’s no ‘law’ in Canada that says you ‘can’t’ make Subprime/No-Doc loans etc. ( their banks just chose NOT to! ) Nobody’s exactly doing cartwheels up there but at least they’re in a situation from which there ‘is’ hope for recovery!
Maybe there are no “subprime” Canadians, they are all so superior to prople elsewhere, but the loans are subprime for sure. With housing at 6 x income, what else would you call it? The banks have no worries, the mortgages are guaranteed by the Federal government.
There is no recession in Canada and there won’t be. Canada is different. They have all the commodities we in the US used to need. Canadians are more in debt that people in the US, but their debt smells like roses.
“The banks have no worries, the mortgages are guaranteed by the Federal government.”
Some mortgages are insured by the federal CMHC, however borrows pay a hefty premium for that coverage. It’s not free and therefore any defaults are not fully funded by Canadian taxpayers.
I personally gaurantee all American debt. Now where do I sign?
Lola,
The ( CNBC ) article went on to say that 4/5ths of the loans ( RECOURSE ) loans are held directly by the banks themselves. 80% pay PMI. They can also go after your personal assets should you decide walking away is for you.
Big differences.
Actually the article in today’s Yahoo Finance says ALL loans on housing in Canada are recourse loans. If one forecloses, the powers that be will come after you. Home buyers in Canada seem to be aware of the consequences of Canadian real estate laws.
Maybe yes, maybe no.
Is it true that less than 50% of the Stimulus Bill hasn’t been spent?
It its true, is it possible that this money is being put aside in order to stimulate the economy in 2011 leading up to the election in 2012? You know the Prez needs to get reelected because he hasn’t finished helping us.
IMO its possible along with the fact that millions get skimmed off into Swiss bank accounts.
What “Stimulus Bill”? Do you think our govt has some money tucked away under a mattress somewhere, just waiting to be taken out and spent whenever they get around to doing so?
I guess you believe in magical money trees whose fruit is ripe for the picking whenever Uncle Sam has hunger pangs, then?
No, the stimulus money is running out after 2010.
The (bogus) criticism was that a package of measured signed in early 2009, after the administration took office, wouldn’t all be spent immediately in 2009, with too much taking place in 2010.
What is it they wanted to stimulate, anyway? It was a collapse prevention program — preventing the unemployed from starving, the housing market and auto industry from tanking, local government services from disapperaing, the unemployed from dying from curable conditions due to lost medical insurance. Now all that goes away, and the collapse occurs anyway.
Because the other thing it stimulated was consumer spending backed by debt, exactly what got us into this mess. No lasting value.
Don’t forget how much went to mask the carnage at the state/muni level. Bridges weren’t built, but holes in state budgets were plugged.
Right, and next year we get the carngage.
Oh, I think the idea with a lot of stimulus was an orderly retreat instead of a spiraling deflation.
Basically they noted all the major banks are insolvent. Some easy math; with 20:1 leverage a 5% price drop wipes you out. We are looking at 30-50%.
Seems like an attempt to do a lot of printing of reserves while making a more orderly liquidation. Looks like it will drag into election season so some people are pissed off.
It’s plunging through the neckline. Death crosses, climax tops, double tops, and H&S tops everywhere.
Foreclosure sales worsen price slump
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 11:21 p.m. Tuesday, June 29, 2010
Sales of foreclosed homes in Florida made up nearly 40 percent of all purchases in the first part of this year, a “terrifying” statistic, one analyst said, and one that led to deeply discounted prices on distressed properties.
In Palm Beach County, 26 percent of home sales were of properties in foreclosure in the early months of 2010, according to a new report from Irvine, Calif.-based RealtyTrac, which aims to measure foreclosure sales and their effect on home pricing.
To compare, fewer than 1 percent of Florida home sales in 2005 were of foreclosed properties, RealtyTrac found.
“Forty percent is a significant number,” said Michael Sichenzia, president of Dynamic Consulting Enterprises in Deerfield Beach. “When you look at where it should be, it’s a terrifying number in the short term and will reverberate throughout the whole system.”
Sichenzia said distressed property sales should make up about 2 percent of total sales.
By 2007, foreclosure sales grew to 4 percent of the total market in Florida. They rose to 38 percent last year.
Nationally, foreclosed property sales during the first quarter made up 31 percent of all sales and had an average sales price of $171,971 - 15 percent below that of regular sales.
Sales prices for Palm Beach County’s foreclosures in the first quarter of 2010 averaged $148,458, which is a 22 percent discount compared with traditional sales during the same period. Statewide, foreclosure sales were discounted 28 percent compared with regular sales.
Banks became more aggressive this year in taking over foreclosed properties as homeowners in trial loan modifications dropped out or were refused permanent payment reductions.
Nationally, 93,777 homes were repossessed by banks in May.
“As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deteriorations,” said James Saccacio, chief executive officer of RealtyTrac.
Sichenzia said he doesn’t believe there is a management plan, and that sales prices will continue to decrease.
“There is a lot of pain that needs to happen between now and the bottom,” he said.
I look for Fridays jobs report to be “unexpectedly” down.
Stock futures head lower to open 3rd quarter- AP
Stocks are set to open the third quarter by extending the losses of the previous quarter. Futures fell modestly Thursday as investors worry the economy is slowing down again, and they are anxious heading into Friday’s key jobs report.
Jobless claims unexpectedly rise
July 1, 2010 8:36 AM ET
WASHINGTON (Reuters) - The number of workers filing new applications for unemployment insurance rose unexpectedly last week, a report showed on Thursday, heightening fears the labor market recovery was stalling.
Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 472,000 in the week ended June 26, the Labor Department said.
Analysts polled by Reuters had expected claims to slip to 452,000 from the previously reported 457,000, which was revised slightly up to 459,000 in Thursday’s report.
A Labor Department official said only one state was estimated.
The four-week moving average of new claims, considered a better measure of underlying labor market trends, rose 3,250 to 466,500 — the highest level since early March.
Oh, there was a labor market recovery?
There’s that “unexpectedly” word again. No news stories without it. Do they “expect” anything anymore?
I think we’ve turned a corner now and there’s no turning back. Hard times are here but harder times are coming. Manufacturing slowing down (even though it was only up to replenish inventories), car sales down again, home sales down as usual, gov’t printing money as fast as possible to no avail.
I never would have dreamed that it would come to this if I hadn’t found this blog. I’m upset but I’m definitely not shocked or surprised.
Ooops I thought the report came out tomorrow, out today.
Jobless Claims in U.S. Increased 13,000 Last Week to 472,000.
Not sure what planet the govt is on but there are no new jobs out there.I wonder how many jobs were lost due to BP debacle?
When you have an economy based on asset appreciation and it goes south then you have real problems.
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100006729/time-to-shut-down-the-us-federal-reserve/
“Like a mad aunt, the Fed is slowly losing its marbles.
“Kartik Athreya, senior economist for the Richmond Fed, has written a paper condemning economic bloggers as chronically stupid and a threat to public order.
Matters of economic policy should be reserved to a priesthood with the correct post-doctoral credentials, which would of course have excluded David Hume, Adam Smith, and arguably John Maynard Keynes (a mathematics graduate, with a tripos foray in moral sciences).
Sammy!
I’d say that’s a must read for all who post here. I’ve never been so flattered to be called a “threat to public order” in my life!
And yes, this wouldn’t be the ‘first’ time.
I’m a threat. The pitchfork totin’ kind of threat.
” I’ve never been so flattered to be called a “threat to public order” in my life!”
You just need to work on it…
She says “threat to public order” like that’s a bad thing.
“A little rebellion, now and then, is a good thing, and as necessary in the political world as storms in the physical…It is a medicine necessary for the sound health of government.”
- Thomas Jefferson
Today, he’d be labeled a terrorist.
“…Simple folk usually have enough common sense to avoid the worst errors. Sometimes they need to take very stern action to stop intellectuals leading us to ruin.”
Does 14+% mortgage rates qualify as “stern action”?
He’s just jealous that Ben was right.
EAT IT, SUCKAZZ!!
“He’s just jealous”
Well that ‘too’, but I think the PTB are furiously trying to jawbone the MSM into dismissing us as nothing more than ‘crackpots’ to begin with!
The sooner the better.
Then I think it’s time for the Official Housing Bubble Blogger Crackpot tee shirt.
Bailed-out Anglo racks up worst losses in world.
LOSSES posted by Anglo Irish Bank are the worst by any bank in the entire world, according to new data from a prestigious financial journal.
The taxpayer-owned bank’s loss in 2009 of €15bn was far bigger than those of giant US, Japanese and German banks, according to ‘The Banker’, an industry magazine listing the 25 biggest losses.
Anglo, which is hoping to split itself into a so-called ‘good’ and ‘bad’ bank, managed to lose almost more money than the two next biggest loss-makers put together, the magazine reveals.
Anglo, nationalized since January 2009, has already set a record with its 2009 loss — the largest ever posted by an Irish company.
Many experts believe such losses may never be recorded again in Irish business. And to cope with future losses, the Government is committed to pumping over €22bn into the bank.
Appears “austerity” is not going over that well…
Spain metro strike continues over austerity.
(Reuters) - A strike by Metro workers snarled traffic for the third day in Madrid on Wednesday and unions said the protest against austerity measures aimed at getting Spain’s deficit under control could become indefinite.
Workers were due to vote later in the morning on extending the three-day stoppage, that has affected 2 million commuters and had far more impact than a nationwide civil servants’ strike called earlier this month.
Unions are angry over public sector pay cuts designed to help cut Spain’s budget deficit, which ballooned to 11.2 percent last year from a pre-crisis surplus.
Spain’s Socialist government aims to save 15 billion euros ($18.3 billion) by, amongst other moves, slashing civil servants’ pay by an average of 5 percent.
The NYT and several other outlets have been running a full court press of fear this week in a Hurculean anti-austerity effort using various Euro examples - Ireland, Greece, etc.
As this plays out it is fascinating to watch the various players selectively use fear to press their agendas. As the press for TARP II or III or whatever materializes it will bring with it a deluge of harrowing tales for sure.
I’ll give them (the civil servants) credit for at least being angry. When my former employer cut wages across the board 5%, even though proits were at record highs, American employees basically said nothing while those overseas (especially in India) screamed bloody murder.
Ah, a real world example that shows exactly why the “ownership” society was pushed so hard.
UN calls for scrapping dollar.
A UN report released on Tuesday calls for abandoning the US dollar as the main global reserve currency to achieve greater stability in the world financial system.
“The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency,” said the World Economic and Social Survey 2010.
The use of the dollar for international trade came under increasing scrutiny when the US economy fell into recession.
The report said a new global reserve system should be created, which “must not be based on a single currency or even multiple national currencies.” Instead, the report advocates using assistance from the International Monetary Fund to create a standardized international system for liquidity transfer.
UN calls for scrapping dollar.
Why bother? The “treasury secretary” and the Fed chairman are both working tirelessly at scrapping the dollar. I don’t think they need any international assistance to get this task completed.
It’s well in hand, now.
Thanks, Tim and Ben. You are my heroes.
I love scrapped dollars. I yearn to become a collector of the things, to gather up as many of them as I can.
Although they are totally worthless fiat pieces of paper the world is populated with millions - billions even - of dupes that consider them to be of some value and are willing to trade things of true value in exchange for these totally worthless fiat pieces of paper.
Hahahahahahahaha, fools all!
Are you dropping some kind of subtle hint on us that you have finally seen the light and converted all your Bernankes to American Eagles?
No, only recognizing that the demand for fiats has never been greater in my lifetime and that this demand for fiats will intensify as fiat circulation continues to be constricted, and as a result of this fiat constriction the price one must pay to earn a fiat - measured in hours worked - will continue to rise, and demand for fiats will also continue to rise as benifits such as pensions and Medicare and Social Security and other transfer payments are cut.
Will we be able to take advantage of some sort of UN Dollar conversion? Surely those will be a much more stable store of value.
Wow - getting pretty audacious in their push towards anti-Christendom, aren’t they?
Apparently they haven’t noticed that the US$ is still the Mommy that everyone’s running home to when they get a bad booboo.
That being said - I’m not exactly a big US$ fan myself. But it seems the Euro has shown that a unified currency system has its… pitfalls, to say the least.
Cool. All those worthless US dollars can be then used on a big infrastructure project - a new layer of pavement for the road to serfdom.
(being that it certainly won’t be paved with gold)
We’ve been through this before… Either go with gold, gold backed dollar or ????
What currency are we talking about then?
Quite certain they’re talking about a Euro-ish thing. A basket of currencies that eventually replaces the currencies it can be exchanged for, except this time on a worldwide scale.
IMF SDRs are the start.
No gold required, as backing or otherwise.
Instead, the report advocates using assistance from the International Monetary Fund to create a standardized international system for liquidity transfer.”
that would be Gold and a big depression
“liquidity transfer”
Internationally traded script on the future labor of nobody knows who. Sounds great to me.
+1
I still think we should measure the dollar against something concrete that doesn’t change. For example, a dollar represents the labor it takes to dig a 1 cubic foot hole, using X brand of shovel. It places the value on labor, where it belongs. It’s not limited, like gold. But you can’t print it.
Far too much honesty required in your scenario, imo.
The United States pays 22% of the UN’s budget. I am sure they (UN) don’t mind that money being paid in U.S. Dollars.
Stocks: If you thought the 1st half was bad…
NEW YORK (CNNMoney.com) — Stocks skidded in the first half of the year, particularly in the second quarter. But investors probably haven’t seen the worst of it.
With the S&P 500 down more than 15% from the highs of late April and all three major indexes at more than 6-month lows, a bigger selloff could be brewing.
“By year-end we could be roughly where we are now, but between now and then, we could be substantially lower,” said Karl Mills, president and chief investment officer at Jurika Mills & Keifer.
Going back to World War II, a decline of 15% off the highs has often turned a correction into a bear market — a drop of 20% to 30% — according to Standard & Poor’s chief investment strategist Sam Stovall.
Late Wednesday, S&P cut its 12-month price target for the S&P 500 to 1,190 from 1,270, citing the “intensifying headwinds.”
Ignore the pessimists — it’s time to buy the dip!
Which one - Palin or Biden?
Yes.
+1 packman….
Gee, that sounds like great investment advice!
If you didn’t get out back in 2000 and lost your butt, you could buy the dip in 2001 to 2002 and after about 8 or 9 years, you could be ALMOST back to breaking even, excluding the lost value of your money.
The problem with buying “dips” is you don’t know where the bottom is, so you keep putting money in to “cost average” your way down.
It’s really better to buy on the way up and sell when the market turns. Perhaps shorting the “dip” would be more advantageous.
But really, you don’t stay in one asset. You earn income from your job along the way and work harder to improve your income from there. You save money in various assets - not just stocks. That is the recipe for having a higher net worth in 2010 as compared to 2000. In my case, 4 X the net worth.
Not trying to diminish your accomplishments, but if I was single I would be worth multiples of my present net worth.
Accumulating wealth as a single male has a difficulty factor similar to playing scrabble against a retarded kid, imo.
Well I agree. I have indulgences. The main one is privacy. I only had roommates for one year in my life. Never again. Actually one roommate. He has always had roommates since college and spent $100 per month rent at most for the eleven or more years before he became my roommate. He did all the work on his car. He got people to drive him places even though his car worked perfectly. He got people to buy him stuff. A very big con artist.
But I was not that way. I had to move out since I got a girlfriend (privacy needed). I think I could have saved far more money, maybe five or six times what I had in 2000 if I arranged things differently. For instance I know consultants who would have a mailbox address for a permanent residence. Or their parents’ address for a permanent residence and get a tax writeoff. It’s big money. But I don’t do that. I follow the rules. Sorry.
And no job loss in the interim.
Sell in May and walk away. I did. Anything I put in the accounts goes into the cash or money market. I won’t look at the market again until halftime of the Superbowl. (if only to miss the dreadful halftime show
). By then, we’ll have gotten over the elections either way, received all of the dismal Christmas retail numbers, and finalized Financial Reform 1.0.
Don’t forget stimulus III
I don’t do equities any more. The game is rigged. I only play straight games. You are much better off on a roulette wheel in Las Vegas. They are regulated.
PS - I don’t do roulette wheels either
“Stock indexes added to their declines immediately after the government reported first-time jobless claims climbed 13,000 to 472,000 last week, prompting worry ahead of Friday’s monthly jobs report.”
I really don’t get this. These 2-3 percent variations one way or the other may just be administrative and reporting noise.
The key is that the number is has stopped going down, and remains at recessionary levels.
Perma-recession?
Perma-recession ??
Maybe..Possibly the new normal…
Though I don’t claim to be an ‘expert’ on these matters, like those regularly cited in the MSM, I nonetheless find it hard to believe that weekly new claims steadily running north of 400K coupled with monthly foreclosures steadily running around 300K are consistent with the ‘green shoots of recovery’ meme. Sorry to seem pessimistic here — just remember that stocks and housing always go up, in the long run, and you will feel better.
“Sorry to seem pessimistic here — just remember that stocks and housing always go up, in the long run, and you will feel better.”
No worries Mr. Bear, the global teeter-totter is not balanced very fairly either…
http://en.wikipedia.org/wiki/File:Nominal_GDP_IMF_2008_millions_of_USD.jpg
Go back and look at long-term unemployment charts. The 2001 recession TOPPED with rates of about 470,000, then declined to about the 300,000 level as a flat line for about 5 years.
This time, we BOTTOMED at about the same level as the 2001 TOP. We are starting to go sidesways or back up, more likely back up, but apparently no longer declining.
Our best performance in 2010 compares to the worst performance of 2002. Not very encouraging.
As a point of reference - since these stats started being collected in 1967 the longest we’ve been at or above the 450k level was 1981/1982, for about 96 weeks - from 8/1/81 to about 6/4/83.
We’re just now hitting that in this recession - right at 95 weeks or so. From 8/30/08 to 6/26/10.
In 1983 at least when it did go below 450k, it continued on down and settled in the upper 300’s. Something tells me that’s not around the corner for us this time.
A good reference chart, but difficult to accurately assess, since so much data is crammed in over the time-line.
I do notice, upon perusal that the prior “recessions” did not have levels above about 450,000 to 500 when they claimed the recession had ENDED (grey column). It seems we ended this one, officially, well before the numbers got that low, and now they are hovering around that level on the downside of the slope.
Looking across the board, if i was using employment numbers, I would say that the grey band should continue over to the present time. Perhaps they will add another one before the year is out, or just simply stretch the current “recession” as new data becomes available.
I don’t see how there can be too many FIRST TIME CLAIMS forthcoming, though, as about 20% of the country is already unemployed. It was about 25% during the BIG ONE.
I wonder how high the weekly new claims will climb when the double dip body slams the economy? 600K?
Looking across the board, if i was using employment numbers, I would say that the grey band should continue over to the present time.
Per the NBER it does - they have never declared the end of this recession. Only the Fed has (from whom this chart comes).
TTT and Romer sold the peeps on the notion that there would have been improvement by now, that’s why. People listened, their behavior, plans and expectations plainly reveal their beliefs. Applecarts are starting to get upset.
“Applecarts are starting to get upset”.
With a whole lot more “unexpecteds” on the way. There will be many apples scattered.
I thought it was because Cenus workers are done ??
Maybe this guy will grow up to be a community organizer, too:
HAVANA – Elian Gonzalez says he’s not angry at his Miami relatives who fought to keep him in the United States during a nasty international custody battle a decade ago, and is thankful “a large part of the American public” supported him being reunited with his father in Cuba.
Now 16, Gonzalez’s first comments to foreign reporters in years came after President Raul Castro attended a state celebration Wednesday night marking the 10th anniversary of the famous ex-castaway’s return to the island.
“Even though they didn’t help me in every way possible, they didn’t help me move forward, they are still my own family,” Gonzalez said of his South Florida relatives, speaking in a shy, almost timid voice.
“I don’t have anger for them,” he said. “It’s only that it wasn’t the best effort possible, and thanks to a large part of the American public, and our public, today I’m with my father and I feel happy here.”
When that drama was playing out, I kept thinking to myself that if anyone else was president, Elian would stay here.
I mean, do you think President Reagan would have allowed him to return to the Evil Empire? No way. Likewise, the first President Bush. Ditto for Presidents Carter, Ford, or Nixon.
The second President Bush? Who knows. I think that guy might have been more influenced by the expatriate Cubans in Miami, but then again…
Remember that photo of the masked federal gunman “rescuing” the lad for his trip back to Castro’s Cuba? It was pretty striking.
I wonder how many Florida votes that one cost Al Gore. Of course, Gore would have re-appointed Greenspan anyway, so I guess that Elian is not responsible for the housing bubble.
A few votes away from the Presidency (give or take), and now possibly just another crazed poodle.
I think the world will be much much harsher on Gore because of his indignity to clintons sexcapades…. and not wanting him to be anywhere around his campaign.
And then this…..Al go to your room you bad bad boi!
filed under: ” …and now a word about the “professionals” of “TrueAccuracy™”
“A Gigantic Ponzi Scheme, Lies and Fraud”: Howard Davidowitz on Wall Street:
“…To Davidowitz, that’s perhaps the greatest outrage of all: “Where were the accountants?,” he asks. “They did nothing, checked nothing, agreed to everything” and collected millions in fees while “shaking hands with the CEO.”
To date, the accounting and audit firms have escaped any serious repercussions from the credit crisis, a stark difference to the corporate “death sentence” that befell Arthur Anderson for its alleged role in the Enron scandal
“TrueFinancialCult™” + “TrueSerialLiquiditist™” + “TrueSerialEnablers™” + “TrueAccuracy™” = “TrueFinancialInnovation™”
Jul 01, 2010 by Aaron Task in Newsmakers, Banking Yahoo Finance Tech/Ticker
Hwy50,
True, where WERE the accountants!? Unfortunately what continues to get glossed over is the complete INaction of all the discount firms.
If they really ‘were’ about “smashing convention” and challenging the status quo, why weren’t they more vocal in all of this? Back in the 90’s they stepped up and demanded to get a pice of the IPO action! It was a good and necessary step toward more and better access, along w/ more transparency.
But it stopped ‘there’. I guess all the bigger designs they had was collecting your $7.95 per trade after all?
Maybe they have recognized that there are not enough law enforcement officers, prosecutors,judges, and jail space to actually put everybody in jail who should go to jail.
Peak Crime.
“Peak Crime”
Nicely put. Why not. Worked for Mortgage Fraud? Whatcha’ gonna’ do bout’ it!
Seriously though, I can’t tell you how disappointed I’ve been in the discounters. It was the (1) thing they could have done right. Even w/ 100 shr. orders ( collectively! ) they mounted to something when taking down IPO’s. So they got some traction there.
Then a push toward decimalization. Good too. But Post Tech Wreck they just kind of rolled over and the only bravado they had left was reserved for making sappy commercials about full-svc. firms. Yeah, we -got- that part, thanks! ( Now what? )
Reminds me of an old joke.
Three accountants apply for a job.
During the interview they are all asked the same question: “what is 2 + 2 ?
first applicant: 4 thank you we’ll call
second applicant: 4 thank you we’ll call
third applicant: “what’s it supposed to be?” you are hired
Wondering what the trueserialliquidationist had anything to do with this?
Seriously, what was liquidated in this crisis?
In order to have a genuine skinny dipping party i.e., as in the “Last Picture Show”, yous needs to have a pool filled with water, some might not get in if it’s muddy water, then again,… some might…ifing they means to not reveal to much about their considerable assets.
sounds better than a tiki bar
CNBC breaking news - Housing Sales Pending down 30% in May.
NEW YORK (AP)
The National Association of Realtors says its seasonally adjusted index of sales agreements for previously occupied homes tumbled 30 percent in May. The index fell to 77.6 in May from 110.9 in April. May’s reading was the lowest dating back to 2001.
Economists surveyed by Thomson Reuters had expected the index would fall to 98.4. The index also was down 15.9 percent from the same month a year earlier.
There must be some reporting error here. A Realtor told me home prices always rebound in the spring and summer months.
MD
They do…until they don’t and the real-a-tors NAR haven’t started any seminars to splain this to them.
Today
The National Association of Realtors says its seasonally adjusted index of sales agreements for previously occupied homes tumbled 30 percent in May. The index fell to 77.6 in May from 110.9 in April. May’s reading was the lowest dating back to 2001.
Tuesday, June 29, 2010
Banks became more aggressive this year in taking over foreclosed properties as homeowners in trial loan modifications dropped out or were refused permanent payment reductions.
Nationally, 93,777 homes were repossessed by banks in May.
“As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deteriorations,” said James Saccacio, chief executive officer of RealtyTrac.
Sichenzia said he doesn’t believe there is a management plan, and that sales prices will continue to decrease.
“There is a lot of pain that needs to happen between now and the bottom,” he said.
Today
jobless claims climbed 13,000 to 472,000 last week
June 22, 2010
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz., said home prices have been stabilizing all year. “With distressed sales at roughly the same level as a year ago, the gain in home prices is a hopeful sign that the market is in a good position to stand on its own without further government stimulus,” she said.
“Very affordable mortgage interest rates and stabilizing home prices are encouraging home buyers who were on the sidelines during most of the boom and bust cycle,” Golder said.
Pending home sales are expected to decline notably in May and June from the spring surge, but Yun added that job growth and a manageable level of foreclosures are keys to sales and price performance during the second half of the year.
I swear Realtors are like my son’s Elmo doll: Pull the string and it says the same five phrases over and over and over again!
Pull string: “Its a good time to buy”
Pull string: “Interest rates are down”
Pull string: “This is the bottom of the market”
Pull string: “Other areas saw a bubble, but not THIS area”
I heard an ad on the radio yesterday. Apparently, the NAR has discovered that sex sells. The ad featured a super sexy sounding house describing all her special features and saying things like, “Why don’t you come over and see if you like me,” and “Don’t you wanna put your key in my lock?” (I might have made that one up).
“Don’t you wanna put your key in my lock?” (I might have made that one up).
If they use it, make sure you get the creative fee and residuals.
wittbelle, you’re funny. LOL
Are you sure it didn`t say
CNBC breaking news - Housing Sales Pending unexpectedly down 30% in May.
Anyone who didn’t expect this has a very bad memory problem, given the very recent cash-for-clunkers direct precedent.
It was unexpectedly dark last night. But then the sun unexpectedly rose this morning. I wonder what`s next?
if it wasn’t such a sad commentary on the ‘professionals’, it would be very funny.
Ya - totally unexpected.
This “unexpected” stuff is only highlighting the fact that all the highly-paid politicians, advisers, consultants, economists, upper-tier businessmen, etc. who are getting paid ridiculous sums of money to “manage” things, are effing stupid.
Or else, they are just saying this stuff to keep the sheeple calm and in line, because they know that things are too fooked to fix.
I dare say that 10-15 people randomly selected off this blog would do a better job than the dolts currently running the show.
“Or else, they are just saying this stuff to keep the sheeple calm and in line, because they know that things are too fooked to fix.”
That’s all it is imo.
Damn that was so unexpected! We’re gonna need a bigger bailout.
Can’t someone pull the plug on this a–hole, or park him in the corner in a home for old fools.
Greenspan: Recent Decline ‘Typical’ of Recovery ~ CNBC July 1, 2010
Former Federal Reserve Chairman Alan Greenspan said that the recent stock market decline is “typical” of a recovery, and that international instability has more to do with the recent decline than problems in the United States.
“What we’re looking at is an invisible wall, which we’ve run into here. Which, essentially, as far as I can see, is a typical pause that occurs in an economic recovery,” Greenspan said in an interview with CNBC. “Ordinarily we’re saying that the stock market is driven by economic events, I think it’s more in the reverse.”
“I will grant you that this is not a normal economic recovery. We’ve just come out of what I believe is the most extraordinary and virulent global financial crisis that the world has ever seen,” he said.
“This recent decline is more international than it is a domestic affair,” he said, adding that “there is an inherent instability in the euro system.”
The recent decline is typical of a stock market that is 40% overvalued, even now.
It is overvalued based on current and 10 year average earnings.
And those earnings are only made possible by massive increases in debt, which allows companies to profit by paying less and charging more.
What would earings have been without the mortgage equity withdrawl boom? What would earnings be now without the federal government borrowing 10 percent of GDP? What would earnigns be now without free money?
Answer that question, and apply a multiple that reflects not only the risks in the economy, not only the risks in stocks, but the risks that the executives will pillage the company through excess executive compensation and you get the S&P 500 at 600 or less.
“And those earnings are only made possible by massive increases in debt, which allows companies to profit by paying less and charging more.”
Weren’t profits also boosted by cutting employees? There seem to be few examples of companies increasing profits by increasing the size of profitable businesses. Instead, there seem to be lots of mostly short term measures, as you describe, to create the illusion of profitably. Very little of that is sustainable.
An individual business can increase profits by cutting employees. But not business in general. Who are they going to sell to?
That’s the trap we are in. The profits are created by a federal deficit at 10% of GDP.
“I will grant you that this is not a normal economic recovery. We’ve just come out of what I believe caused is the most extraordinary and virulent global financial crisis that the world has ever seen,” Greenspan said.
ok, why didn’t my strike on the word “believe” work?
believe“I will grant you that this is not a normal economic recovery. We’ve just come out of what I
believecaused is the most extraordinary and virulent global financial crisis that the world has ever seen,” Greenspan said.(perfect)
This f-ing clown (Greenspan) is already dead. He just won’t lie down.
Where is Eddie 12,000? Just trying to figure out why we didn’t get there in June. With all that great stimulus and all.
Drinking
Still looking for a parking place because Atlanta’s economy is so freakin’ great.
Edee is a “front runner”…He loves to appear and run his mouth “only” when he has some positive signs he can hang his hat on…
Soon will we need an official propaganda czar. To help the people understand just how good things are, and how we were saved from total financial destruction.
They can block off most of the internet due to terrorist threats and we will have access to only government approved sites. Just the ones that are good for you.
Well, total financial destruction was avoided, and would have occurred. It is misleading to pretend otherwise.
The question is who benefitted, and who will be as bad or worse off than they would have been with the value of financial assets wiped out and 25 percent unemployment?
“25 percent unemployment”?
So since we are around 16% unemployment now (unofficially) what more can government do to stop it reaching 25%? More stimulus?
It’s done nothing but mask the underlying problems so far, and that can not be denied.
Almost right…
” total financial destruction was avoided, and would have occurred. It is misleading to pretend otherwise.”
Total finacial destruction has been DELAYED and it will occur. It is misleading to pretend otherwise.
Dude. Seriously things are good from a historical standpoint.
Don’t go total fear monger on me.
We have plenty of houses, food, fuel, clothing and cars.
We’ve got a banking problem. Hopefully we manage without making a major currency problem.
There are trade issues. Not unusual from a historical standpoint either.
AND… we’ve got an employment problem.
And… we’ve got a global problem…
Au&Ag screaming DEFLATION!
What’s BB gonna do about that? He has long made it clear he will not tolerate the big D.
I’ll bet BB is wearing Depends to work now days.
What’s BB gonna do about that?”
somthing about how the government owns a a printing press
yes I beleive Ben Bernake can destroy the dollar if he tries hard enough but I hope he will NOT be allowed to
Oil off over 4%. Makes me wonder how much of our stimulis money GS just lost.
Please they sold their positions to pension plans or have a contract that says they won’t have to repay money lost during speculation and market manipulation.
Why the Greater Depression Still Lies Ahead
by Michael Pento, Delta Global Advisors, Inc. | June 30, 2010
http://www.financialsense.com/fsu/editorials/delta/2010/0630.html
(He compares the GD GDP & Debt to the Great “Recession” of today.)
Does the body develop a tolerance for Depends?
sleepless- no but the mind does. Ask an Economist or UHS,and they’ll say something about…”it depends…”
Apologies if this is a re-post.
Personal savings rate: worse than we thought
“FORTUNE — The long decline of the savings rate in the United States has been widely discussed, yet every revisit of the data brings new cause for alarm. Hedgeye recently provided its clients a chart showing savings as a percentage of GDP. In the 1970s and 1980s savings were in the 5 - 7% range. In the decades since, personal savings have declined to the 1 - 3% range.
Many pundits suggest the decline in savings is a non-issue, while others, more on the extreme, believe that it one of the primary economic issues currently facing the United States. While the implications can be debated, the fact remains that the savings rate has declined dramatically over the past few decades and is among the lowest of any modern nation state.
As a refresher, the basic formula used to calculate savings rate is as follows:
(Disposable Personal Income -Taxes - Expenditures = Savings) / Disposable Personal Income
The Bureau of Economic Analysis keeps this statistic via its NIPA (National Income and Product Accounts) savings rate. The expenditures include interest payments, but exclude mortgage payments.”
Excludes mortgage payments, eh?
Excludes mortgage payments, eh?
That seems appropriate to me. It’s much like paying back 401k loans. You’re paying the money to yourself. Every $ you pay in mortgage principle is exactly one more $ of home equity you have, so it’s a wash savings-wise.
However that being said - if home equity is considered savings, then this means the 2007-2009 home price drops should have cause the savings rate to plummet, and it didn’t.
And I wonder what happens if you have tons of negative equity and then walk away? Is this reflected as a huge jump in your personal savings rate?
It’d be interesting (though tedious) to parse through all the numbers behind this headline number.
The combo I was thinking of (perhaps worst case extrapolated unfairly) was: low interest rates, high relative payments (the last 8-ish years), and plummeting equity.
ie - You’d think with low interest payments, the savings rate would go up but it hasn’t. Relatively high payments would make the rate go down (hence the excludes part. If included, how low would the rate go). Lastly, I think plummeting equity trumps and overwhelms the equity gained by paying principle…
Every body needs to go out and buy stuff… Hurry up!
Global Manufacturing Shows Weakening From China to Europe, U.S.
July 1 (Bloomberg) — Manufacturing in the U.S. expanded in June at the slowest pace this year as factories received fewer orders and demand from abroad cooled. The Institute for Supply Management’s manufacturing gauge fell to 56.2 last month from 59.7 in May. Meanwhile, U.S. construction spending fell 0.2 percent in May and the index of pending home resales dropped 30 percent.
Manufacturing growth from China to the euro region and the U.S. slowed in June, suggesting the global export-led recovery is losing strength.
In China, manufacturing growth slowed more than economists forecast, and a gauge of factory output in the 16-member euro region weakened for a second month, two surveys showed. The U.S. Institute for Supply Management’s manufacturing index fell more than economists forecast to 56.2 from 59.7 in May.
Ah, the great contradiction. We live in a world that is awash with goods, more than we can consume. Yet at the same time wages in the nations that are expected to consume this treasure trove of goodies are stagnant and in some cases even falling while unemployment and underemployment remains stubborly high.
Lenin and Marx must be laughing their heads off.
Does Craigslist count?
Peterson’s $1 Billion Investment Shows Returns as Deficit Concerns Mount
July 1 (Bloomberg Businessweek) — Wall Street financier Peter G. Peterson got a decent return on his investment last week when Senate Republicans ended the Democrats’ third attempt to push though an extension of unemployment benefits and President Barack Obama failed to persuade his European counterparts at the Group of 20 meeting in Toronto to maintain economic stimulus programs.
“I haven’t seen anything like this kind of concern in the 30 years I’ve been talking and writing about this,” says the 84-year-old fiscal hawk.
Peterson has committed $1 billion of the fortune he made as co-founder of the New York-based private-equity firm Blackstone Group LP to his personal crusade: raising the alarm about the $13 trillion national debt, Bloomberg Businessweek reports in its July 5 issue.
He is paying the bills at a foundation that bears his name, supports a network of like-minded advocacy groups, backs The Fiscal Times, an online newspaper, formed a commission of experts, and organizes conferences with marquee guests such as former President Bill Clinton. The crusade appears to be in sync with the concerns of most voters, with a June 4 Gallup poll showing that the federal debt and terrorism were tied for first place (at 40 percent each) as the biggest threats to Americans’ future well-being.
His influence is raising some hackles, even among those who agree the national debt is a long-term worry.
Interesting that.
It’s worth noting that he’s a consummate Wall Street and political insider, having been chairman of top WS firms Lehman and Blackstone, and a long-time chairman of the CFR. That being the case, his agenda is IMO very suspect, at least in terms of its nobility.
His moves are something to keep an eye on.
That being said - he has indeed been a very consistent deficit hawk; as such I think he’s doing good things. I’m not familiar with the details of his proposals though. (Anyone who is please weigh in)
Was he a deficity hawk 5-10 years ago??
Or is he now flush with cash and pushing for deflation so he can buy up assets?
Yeah actually he has been for some time - e.g. he co-founded the Concord Coalition in 1992. He’s written several books on the subject, starting in 1993.
Given his position and influence though - everything he does has to be taken with a grain of salt. He’s one of the top 200 richest people in America - much of that wealth accumulated recently - e.g. from 2.5 to 2.8 Billion net worth just in 2007 to 2008.
ding ding ding. They want to cut up the credit cards AFTER they’ve used it to buy goodies for themselves.
Then they berate others for using the same credit card.
irks me no end.
Or is he now flush with cash and pushing for deflation so he can buy up assets?
I posted another response that hasn’t show up yet. This is a great point, and wouldn’t surprise me in the least. He’s in a position of power to actually drive the economy - e.g. to deflation as you say.
(In my other post I mention that he has actually been a deficit hawk for a long time, however - the early 90’s at least. However the vocality of such hawking I’m sure can be adjusted to suit his own wants.)
I recently watched the movie “IOUSA,” which was put out by Peterson’s group.
Although it makes some very good points, it went on a bit too long on the point of Americans loading up with debt. Especially from the 1980s onward.
It was if the movie was saying, “Those bad Americans! Running up their credit cards and taking out loans!” It conveniently ignored the fact that, starting in the 1980s, indebtedness was pushed at us in every way possible. So, it’s not surprising that people responded to the message the way they did.
Not coincidentally IMO that debt load-up happened right after the Chrysler bailout in 1980, and furthered by the Continental bank bailout in 1984 (not to mention several other big bailouts in the 1970’s, including NYC and Franklin National Bank). The government had shown that it was willing to put up big bucks to backstop corporations that made bad business decisions.
Voila - banks had implicit permission to get greedy and get loose with their lending.
The huge S&L bailout made it even worse of course. After the effects from that wore off in the mid 90’s it was off to the races for the mortgage lending industry once again.
What’s needed is to start putting these execs in debtors prison. I guarantee that’ll somehow magically make Americans a lot more prudent.
E.g. anyone besides me remember when it was actually a big deal to get a gold credit card? When you actually had to work for it and prove your credit-worthiness?
Same for student loans, auto loans, and of course most especially mortgages.
E.g. anyone besides me remember when it was actually a big deal to get a gold credit card? When you actually had to work for it and prove your credit-worthiness?
You’re not alone, packman. I remember those days too.
Hwy adds this item to the list, just below mandarin oranges in syrup (remember, they use water to make the syrup)
Filed under: “This would never happen in China,…or…Honda, we need more mopeds…”
http://www.vimeo.com/11817894
Hwy
Good Morn’in Sir-
vimeo has some good explantions of economic terms on it from Paddy Hirsh/Marketplace/White Board.
Good afternoon wipeout, I was a little belligerent to you on the cement pond solution the other day, …sometimes the bellachin’, cryin’, piss & moan that comes in HBB tidal surges just plain inflames my Kansas whip-o-willow motivation sensations of remembrance… I understand your hesitations.
Cheers!
Hello Hwy-
My husband was born and raised in Kansas! Came out to So Ca to live with his brother, while going to college. Being raised in Los Angeles, I thought he was good different and married him. Oh, and I’m of the we can agree to disagree flavor, and still like each other. I picked up some Kansas sensibility along the way.
Hwy-
My husband’s response to you regarding the cement pond/mosquitoes incident is one word, “Lawyers”. They grow them like rag weed in these parts, and their hungry pos.
He asked if you still live in Kansas?
Hwy-
Thank you for the video. It was an eye opener. I like Blackened Cajun Catfish, but now will pass. The label of my frozen fish will have a new caveat. I assume fish in included in COOL. (Country Of Origin Law)
I don’t know what the law is for fish, but i’ve noticed that grocery stores have become VERY lax in their COOL labeling. For example, the pork is “produced in USA and/or Mexico.”
You may as well say your fruit was grown in the Northern and/or Southern hemisphere.
Farmer’s market for me.
As an efficiency measure, they should change the labeling requirements. Only “Made in USA” stuff needs to carry an origin label.
Think of all the effort saved in labeling, when everyone just assumes that everything is made in China
Oxide and X-GSfixr-
You both made good points. Thank you.
“The current generation of economists have led the world into a catastrophic cul de sac. And if they think we are safely on the road to recovery, they still fail to understand what they did.”
~Ambrose Evans-Pritchard
Hawaii has a huge Barry-ville, 50 acres.
Huge tent city takes root.
Homeless camps cover 50 acres, from Waipio Point, around Middle Loch to Pearl City ~ STARADVERTISER
WAIPAHU » Pastor Joe Hunkin picked his way around rusted car axles, propane tanks and two-by-fours studded with bent nails to find a homeless encampment where people have been cooking and sleeping directly behind Waipahu High School, in an area that received unwanted national attention this month.
It’s the kind of situation that will only grow worse on Oahu as Honolulu’s homeless continue to migrate away from beaches and parks, said Porter of the Affordable Housing and Homeless Alliance.
“We’re not solving the problem,” Porter said. “We’re just shuffling people from one spot to the other and we’re going to be seeing more of this.”
Hrm. I was just in Waipahu looking at motorcycles. I didn’t see, hear, or smell anything like a homeless camp. I’ll have to snoop around next time.
There have been some articles recently that suggested single, male retirees were moving to Oahu specifically to become homeless in paradise.
I would very VERY surprised if the Barryville moniker gains any traction.
Bammyville
Blockbuster trading halted by NYSE
Dallas Business Journal
The New York Stock Exchange has halted trading on shares of Blockbuster stock after the movie rental giant confirmed in a securities filing that shareholders failed to approve a recapitalization plan that’s necessary for the company to comply with NYSE listing requirements.
Dallas-based Blockbuster said shareholders voted down plans to combine the company’s Class A and Class B common stock into a single stock and an option for a reverse stock split, which were part of a proposed recapitalization compliance plan.
Although Blockbuster believed it had secured a majority of the votes last week, a final count showed neither proposal was approved.
A Blockbuster spokeswoman said the company would respond to the NYSE’s move later today.
Another company that hasn’t heard of Netflix.
Oh they were well aware of Netflix. Let’s just say that momentum is a b****, especially when it comes to having thousands of now-obsolete brick-and-mortar stores.
Sometimes being in the right time and place can turn on you, and become someone else’s time and place. And sometimes it’s a lot easier to start fresh.
Another megatrend: If something can be digitized, it will be. And that’s happening with movies already. Has been for a long time.
“now-obsolete brick-and-mortar stores”
Right, owning all that RE felt like a godsend on the upswing ( and a millstone on the down! ) Hate to say it, but what w/ the garbage H’wood churns out these days, a buck is about all I’m willing to part with to see it?
Regardless of delivery mech. The only thing they even offer for the older crowd is RomCom’s ( invariably “starring” Jennifer Anniston ) Sorry Jen.
By the by, this is the exact same occurence that unfolded for Guitar Center. Practically since it’s inception, small mom & pop shops cov’d the mkt and local guys got all the biz.
Then some genius decides that the mkt. is “too fragmented” and consolidates it by opening up a nat’l chain. Enter Guitar Center! Stock soared all throughout the 90’s. Then as Slim suggests, Musician’sFriend came out and offered everything online!
Didn’t matter that you couldn’t hear the amp or effect pedal “in person” ( they now have ample Youtube videos that show you how every setting works! ) More B & M bites the dust. I give them a few more years.
well, there will always be someone who wants to walk out with overpriced crap the same day they see it - the big thing that places like Tard Center and Scam Cash have over ma & pa music stores is inventory.
My boys have always enjoyed going to Guitar Center and playing with equipment they can’t afford.
Mortgage rates drop to another low, 4.58 pct.
Average rates on 30-year fixed mortgages fall to 4.58 pct., lowest level since mid-1950s
WASHINGTON (AP) — Mortgage rates have sunk to the lowest level in more than five decades, but consumers aren’t rushing to refinance their loans or buy homes.
Mortgage company Freddie Mac said Thursday the average rate for 30-year fixed loans sank to 4.58 percent this week.
That’s down from the previous record of 4.69 percent set last week and the lowest since the mortgage company began keeping records in 1971. The last time they were cheaper was the 1950s, when most long-term home loans lasted just 20 or 25 years.
The last time they were cheaper was the 1950s, when most long-term home loans lasted just 20 or 25 years.
So in other words they’re the lowest in history, at least w/respect to 30-year mortgages.
Listening to ABC radio news.
Ever notice when the, male or female announcer give the DOW numbers, if it’s down they have a depressed inflection to their voice, but when it’s up, all happy and bubbly. They all do it, not just ABC.
Yes, I suppose they are trying to follow the mood. Makes me cringe.
Just spoke with a RE appraiser that I know, he said he has been working 13 hour days for over a month. Lots of foreclosure sales, he said many have been investors bargain hunting.
Said he was shopping also, since things are turning around, he would like to have some investment property to sell/flip in the next year or two at a profit.
Also seeing a lot more of the road side signs reading, come to a foreclosure seminar, we’ll teach how to buy and sell/flip in this market and get rich.
That’s good. We need a few GFs to lower the comps for the rest of us.
All this flip activity has really screwed up us buyers, who are have no loan contingency. The insiders get to them, do minimal work (and leave the important stuff alone-roof, HAVC, etc…) and then put the house on the market for $100K more, 2 months later. One home (not the right one for us) is down $40K. The flippers have been slow at reducing the price. I hope they all lose their shirts. Our specs and price point is being inundated with these a-holes in So Ca.
Wait a minute, I thought the idea was to have everybody working for the gubmint, it doesn’t seem to be working in many countries, but I am sure we can do it…Smarter.
Romania to cut 54,000 jobs ~ Money Jul 1, 2010
BUCHAREST - ROMANIA is to cut 54,000 jobs in the public sector in a move to curb its public deficit, the centre-right government announced on Thursday.
‘53,432 jobs will have to be cut in local administrations,’ Interior Minister Vasile Blaga said after a cabinet meeting.
‘We set up the legal frame of restructuring in the public sector. New job cuts could follow as a consequence of this process,’ the government spokeswoman Ioana Muntean told AFP.
The move is part of the government’s measures to keep the public deficit near the target of 6.8 per cent of the gross domestic product (GDP) stipulated in an agreement with the International Monetary Fund (IMF) and the European Union.
It comes on top of a 25 per cent slash of salaries in the public sector and a raise of the value-added tax to 24 per cent from 19 per cent decided in the last weeks.
“….25 percent slash of salaries in the public sector……”
And Romania pulls out a slight lead, in the”Race to the Bottom”…….
Wow, I guess you do need to be a rocket surgeon to figure all this tricky stuff out…
Count on this: Hiring to be weak.
NEW YORK (CNNMoney.com) — A couple of months ago, a recovery in the U.S. labor market seemed to be at hand. That hope has proved as fleeting as a job with the Census Bureau.
The surge in hiring of census workers in May was responsible for virtually all the 431,000 jobs created that month. Private sector employers, who had added 218,000 jobs in April, added only 41,000 workers in May — and that was mainly from temporary jobs.
The Census Bureau has already started cutting the more than 500,000 temporary workers it brought on to do its count of the U.S. population. But as those jobs come to an end, economists believe it could be months before the private sector is hiring in droves again as it did earlier this year.
“Unfortunately, it looks like it’s going to be a slow, painful grinding improvement in hiring,” said Carl Riccadonna, senior U.S. economist for Deutsche Bank.
360 Los Angeles City Layoffs Set To Begin Today
Jul. 1 2010 ~ City News
About 360 city employees faced layoffs Thursday as the dawn of the new fiscal year means that Los Angeles leaders would have to adhere to a deficit-reduction plan that includes hundreds of pink slips.
A last-ditch effort by three City Council members to avoid layoffs, and to accept some concessions from the Coalition of Los Angeles City Unions instead, fell on deaf ears as L.A.’s budget chief stated that even more layoffs were likely.
City Administrative Officer Miguel Santana said “I wish I could guarantee that the only number of layoffs we’re going to have is 360. I wish I could do that, but I can’t. The reality is that, unfortunately, we’re probably going to see more layoffs … The economy is, unfortunately, not moving in the robust direction that we want to see.”
Feds wasted millions in utilities program for poor.
Associated Press
MIAMI – A federal program designed to help impoverished families heat and cool their homes wasted more than $100 million paying the electric bills of thousands of applicants who were dead, in prison or living in million-dollar mansions, according to a government investigation.
The U.S. Department of Health and Human Services spent $5 billion through the Low-Income Home Energy Assistance Program in 2009, doling out money to states with little oversight of the program. Some states don’t verify applicants’ identifies or income. For example, the program helped pay the electric bill of a woman who lives in a $2 million home in a wealthy Chicago suburb and drives a Mercedes, according to the yet-to-be released report obtained by The Associated Press.
The Government Accountability Office studied the program after a 2007 investigation by Pennsylvania’s state auditor found 429 applicants received more than $162,000 using the Social Security numbers of dead people.
The GAO investigated Illinois, Maryland, Michigan, New Jersey, New York, Ohio, and Virginia, which represented about one-third of the program’s funding in 2009. The agency found improper payments in about 9 percent of households receiving benefits in those states, totaling $116 million.
The report comes after a dramatic increase in the size of the assistance checks as fuel oil costs soared in 2008 and 2009.
Surely gubmint run sickness care will run as smooth as silk with very little waste. Much like this great program.
Is there no waste and fraud in corporate run healthcare?
Is there more visibility of problems in corporations than in government?
The government is lambasted if they do not roll out assistance programs quickly enough (see Katrina). Too often this means that necessary controls are bypassed in favor of expediency.
Many municipal water systems have leaks in them. Should we shut off the water until we fix all of the leaks?
Retail businesses expect that they will have some losses due to theft and breakage. They take steps to minimize their losses, but recognize that they can not completely eliminate them.
Regardless of whether it is a public or private entity, fraud is will exist. Based on the article, this is a 2% fraud rate. I don’t see this as evidence of a failed program. 98% of the money went to people who really needed it and the audits uncovered problems for which people will be punished.
Perfect example of the waste created by a made up BS “crisis”
Millions of Swine Flu Vaccine Doses Have Expired and Will Be Burned Associated Press
Swine flu vaccines are sorted in San Francisco on Dec. 22, 2009. A whopping 40 million doses of swine flu vaccine expired on Wednesday, June 30, 2010 and will be destroyed. It’s believed to be a record loss. (AP File Photo/Marcio Jose Sanchez)
Atlanta (AP) - About a quarter of the swine flu vaccine produced for the U.S. public has expired — meaning that a whopping 40 million doses worth about $260 million is being written off as trash.
“It’s a lot, by historical standards,” said Jerry Weir, who oversees vaccine research and review for the U.S. Food and Drug Administration.
The outdated vaccine, some of which expired Wednesday, will be incinerated. The amount, more than twice the usual leftovers, likely sets a record. And that’s not even all of it.
I call BS on your BS. If 40 million extra doses is the price we pay for being prepared, then so be it. That’s the price of, what, 6 hours in Iraq? I bet you were one of the people screaming last fall that the government wasn’t doing enough.
The unsung heros of the swine flu epidemic were the public health workers who shut down Mexico City for 10 days. There was a deadly strain down there, and they managed to prevent its spread. It could have been worse, far far worse.
“I call BS on your BS. If 40 million extra doses is the price we pay for being prepared, then so be it. That’s the price of, what, 6 hours in Iraq? I bet you were one of the people screaming last fall that the government wasn’t doing enough”.
Sorry, I was not one of “the ones” screaming last fall about the gubmint not doing enough. They do to much as it is, and are the kings of waste. Just stay stuck in your world, from crisis to crisis, I’m sure they will take good care of you.
“They do to much as it is”
True, unless we are talking about an oil well spewing God knows how many gallons of oil into the Gulf for 70 days. Then they have to see what is cost effective or work on comprehensive immigration reform.
You did not actually take that swine flu vaccine did you? If so then you may be coming down with cancer inside of 10 years.
I didn’t take the swine flu vaccine.
Last vaccine I took was a tetanus booster, which, given my lifestyle, is a darn good idea. Besides, lockjaw sucks.
The unsung heros of the swine flu epidemic were the public health workers who shut down Mexico City for 10 days. There was a deadly strain down there, and they managed to prevent its spread. It could have been worse, far far worse.
Agreed.
What they did, in essence, was a ring quarantine. Same thing that’s done to stop the spread of smallpox and other rapidly spreading, fatal diseases.
“…..kings of waste……”
A lot of Republicans complain about government, because they aren’t as “efficient” as the private sector.
You’ll be waiting a thousand years before that happens. Government typically has different priorities than a for-profit
business.
And besides, the “private-sector” hasn’t exactly been covering themselves in glory lately.
Here are the options on the swine flu vaccine procurement, (as viewed by someone in the government):
A)- Don’t procure any. (and if 20 million people die in a worldwide pandemic, well, we didn’t need those extra people anyway……Those that could afford it would figure out how to get it).
B)- Take “public health” seriously, and consider the multitude of “unintended consequences/black swans” that would happen, if a global pandemic was left unchecked. Consult experts that aren’t in a position to make any money off of a “sky is falling” forecast. Make a big-boy decision on how much vaccine should be procured, and attempt to develop backup plans to procure more vaccine rapidly
C) Hear the wailing of all the hypochondriacs and Soccer Mommies, know that they vote, and consider the downside, if a pandemic happens and there isn’t enough vaccine to go around. When that happens, see A).
When it is found that government employees and the movers and shakers are getting vaccinated, while kids are dying at the same time, there will be hell to pay…..doesn’t even have to be that many kids.
240 million bucks might save 40 million people, or pay for one Wall Street bankster’s yearly bonus, or pay Lebron James for 5-6 years. It’s chump change to the PTB.
Hear, hear! There are some things that government should be doing. Protecting the public health is one of them.
Interesting that both the dollar and gold crashed hard today.
Gold 1245 -> 1199
US$ 86.2 -> 84.5
That’s got to be a first.
Euro appears to be the big recipient - up across the board. European bonds up (yields down).
Central banks are taking preemptive actions before the next trillion dollar money printing blitz.
Also, treasury rates down, VIX down, and stocks down. It was a strange day. Everything connected with USA was down and with EU was up.
It was a strange day.
Not if you imagine people think Europe is on the right track with their austerity and America is on the wrong track with its print! print! print! spend! spend! spend! its way to recovery.
But then why were they still buying treasuries?
Piper Plans Week-Long Plant Closure
Jul 1, 2010 aviationweek.com
Piper Aircraft will shut down from Aug. 9-13 in another round of furloughs designed to avoid layoffs.
Only those working on the Piper Jet and other critical functions will be spared, but the shutdown includes management, says a spokesman.
Despite the shut down, Piper is optimistic about the future and has raised its 2010 production rate to 162 aircraft a year, up from the 90 aircraft produced in2009, says the spokesman. The original production rate this year was 208, he added.
The company has added 340 workers to its payroll, including 100 engineers, this year. Last July, Piper employed 577 workers, and is now at 915, says the spokesperson.
Woooooooo! It’s raining at the Arizona Slim Ranch!
Cool, you’re outside without an umbrella right? OK, admit it, when was the last time you were on a slip & slide?
False alarm. That rain done come and gone without wetting the ground.
However, there are some promising clouds to the southeast. Slim remains hopeful…
You housing skeptics have really done it this time. This sucker is going down.
/sarcasm, except for the going down sucker part.
Good thing GM paid all the money back with interest. Well except for $43 billion. Now here is a question, are they still losing money on every sale? All I could find on profit per vehicle was from 06.
All in all, the report paints a bleak picture. While Nissan (Charts) was making $1800 per vehicle during the first half of 2006, and Toyota and Honda (Charts) racked up $1,400 apiece, nine-month results for Ford saw them losing $1,400 per vehicle - a number that will go up when the fourth quarter’s loss is tallied - while DaimlerChrysler (Charts) dropped $1100 and GM $333.
Automakers see no sign of expected recovery
July 1, 2010 4:17 PM ET
DETROIT (Reuters) - U.S. auto sales slipped in June from the previous month’s pace and major automakers said there was no sign of the second-half recovery that the battered industry had expected at the start of the year.
Monthly U.S. sales results for the Detroit automakers were up by double-digit percentages from June 2009, a month when Chrysler emerged from bankruptcy and General Motors Co filed for protection from its creditors.
But overall sales were down from May on an adjusted basis, raising questions about whether the industry and investors overestimated the strength of what is shaping up as a very limited recovery from the depressed 2009 levels.
Out of the mouths of NARses: (bold emphasis mine)
“To: All REALTORS®
From: Vicki Cox Golder, 2010 NAR President
Date: July 1, 2010
Re: NAR Update: Tax Credit Deadline Extended; Flood Insurance Program Reinstated
Dear fellow REALTOR®,
I am happy to report that Congress has passed a bill extending the Homebuyer Tax Credit closing deadline to September 30, 2010. This is a huge win for REALTORS® and homebuyers, and NAR worked closely with members of Congress to make it happen.
The extension applies only to transactions that had ratified contracts in place as of April 30, 2010, and have not yet closed. There will be no gap between June 30 and the date the President signs the bill into law.
Additionally, Congress has extended the National Flood Insurance Program (NFIP) through September 30th. The bill is retroactive and will cover the lapse period from June 1, 2010, to the date the law is enacted. NAR will continue to work with Congress on the NFIP Reform bill, and we will keep you posted on those efforts.
For additional information on both the tax credit deadline and the NFIP, visit Realtor.org/Government_Affairs.
Neither of these bills would have passed without your support. Nearly 83,000 REALTORS® responded to our latest Call for Action, sending more than 250,000 letters to Congress asking them to extend the National Flood Insurance Program. I know many of you also raised your voices in support of extending the tax credit deadline.
On behalf of NAR, I thank you, and I ask that you visit the RealtorActionCenter.com and make your voice heard on every issue.
Sincerely,
Vicki Cox Golder, CRB
2010 NAR President”
And BTW, the Senate has yet to pass this, although I have no doubt they will. Is she being purposely misleading using the term ‘Congress’?
Oy, my bad. Just realized Senate passed it yesterday. And here I thought I was up on current events. :rolleyes:
“Just realized Senate passed it yesterday.”
Don’t worry about it.
Despite the 409-5 vote, I decided to check my Rep’s vote. It was a Yes, so I guess that I will be casting a futile Libertarian vote in November. It was nice to see that Jeff Flake was one of the “No” votes, but not surprising in light of his anti-earmarking crusade.
“Is she being purposely misleading using the term ‘Congress’?”
I am guessing that a discussion of the nuances of a bicameral legislature would be met with a blank stare from the REALTOR® in Chief.
Vicki Cox Golder hails from this part of Arizona. And, during her brief foray into local politics, she was widely regarded as an idiot.
Now she’s a nationally known idiot.
From the upcoming American Banker Loss Mitigation Conference:
“Residential foreclosures—based on the run-rate of the first quarter—will set a new record this year: 1.24 million units.”
“Going through the foreclosure process—as most any servicer can attest—isn’t easy or cheap and it’s getting more time consuming by the month.”
http://www.americanbanker.com/conferences/lm10/quizresults_usb.html
Boy, those conference registration fees will take your breath away! Here they are:
Final $200 early bird savings expires this Friday, 7/2
TAKE ADVANTAGE OF YOUR EXTRA $120 SAVINGS THIS WEEK!
Use promo code STATS120 to REGISTER NOW
Lending/Servicing Institutions pay today $775, after Friday, 7/2 you pay $1,095
Real Estate Agent/Broker/All Others pay today $975, after Friday, 7/2 you pay $1,295
Slim’s inquiring mind wants to know: Will there be pictures posted from the DC meetup?
Heck I’m wondering whether there will be a Friday desk clearing thread.