Bits Bucket For July 8, 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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Name:Ben Jones
Location:Northern Arizona, United States
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12 Charts That Show The Broken State Of The US Labor Market
www dot businessinsider.com/12-charts-june-jobs-data-2010-6#the-civilian-employment-ratio-remains-near-historic-lows-hardly-bouncing-at-all-1
When one considers today’s headline:
US STOCKS-Wall St set to rise on retail sales, job claims data
NEW YORK, July 8 (Reuters) - U.S. stocks were set for a higher open on Thursday after several top U.S. retail chains reported better-than-expected sales in June, and new claims for jobless benefits fell more than forecast.
The stock market has got to be the most blatant display of artificial/manipulated supply and demand ever in the history of the world. It is like an innacurate speedometer that reads 60 when you are really going 30. Nobody should pay the slightest bit of attention to it and maybe it will go away and take all of the theives who control it with it.
That won’t happen until the other 150 million idiots who make up the working age population figure this out.
We had this discussion the other day. Without the stock market, where will relatively young folk like us get their magic of compounding? Mattresses just won’t cut it. Scrounging online for 5% ladder CD’s probably won’t cut it either, unless there is massive deflation (unlikely).
unless there is massive deflation (unlikely).
Shhh…Don’t tell Combo!
Oxide,
I think reigning in the Fed and their inflationary ways would be a good first step.
Well I have a job interview for a 1 day a week job….the economy is on the rebound
That’s 1 day a week more than 20% of the population.
Don’t let it screw up your Obama-money if you are getting any.
Glad you are looking–and wish you the best in your job hunt.
I heard a phrase the other day that almost made my head explode–”funemployment”. People taking the money and using it for fun and not looking for work.
Friends of a friend are not really looking because they don’t want to work for the marginal few bucks per hour. They make all the honest folks who are actually fighting to find a job look bad.
I have $30,120 remaining on my mortgage this morning, and home values are still about 35% above the purchase price. Fingers crossed!
Sounds like you need to lever up a bit! How about a vacation home? Investment property? Time share? New car or two? Put that equity to work, don’t be a debt slacker!
“Git ’bout the bizness of ‘Merikuh.”
You have 30k in the house-ATM, don’t let that just sit there! (joking of course)
You have 30k in the house-ATM
No, he has 30k left to pay off. The ATM balance is the house value minus that 30k.
I’m thinking a 35′ sailboat would be nice this time of year…let’s go shopping!
We didn’t experience a housing bubble, but lots of suckers took the 125% HELOC bait according to a RE contact.
rms,
While we’re all more than happy for you ( if you had ppl going 125%, you had a bubble! )
“While we’re all more than happy for you ( if you had ppl going 125%, you had a bubble! )”
Yes, a credit bubble for sure.
New spec housing is roughly $105/sqft, which is high, IMHO. I bought at $80/sqft. The Columbia Basin reminds me of the Hesperia, CA piece a couple of days ago, i.e., baked in the summer, frozen in the winter, and scoured year round by strong winds. Our winters are seven months long!
However, average people here can still marry their high school sweetheart, and buy an older home without a college degree.
rms,
Where are you at again? The Dalles? Hood River? Just curious. Good wind surfing though!
Right, and it’s as if the builders are “trying to make it up to us!” by swearing off the bottle ( for the time being? ) and actually making an effort to offer value.
Finally learned they have to compete w/ the new normal on existing homes/comps.
“Where are you at again?”
Moses Lake, WA area toward Ephrata / Quincy where the new data centers are located.
rms,
Oh…! So you’re just north of “Washington’s Mexico”!
Great area. Nice people. May they forever be Income Tax Free! ( Please tell me they’re not ’serious’ about considering that? )
“Oh…! So you’re just north of “Washington’s Mexico”!”
Too funny; I service SCADA equipment in Mattawa.
So, does Price equal Value as far as you are concerned? If the price of you house changes does your feelings about your house change along with it?
Once it’s paid for changes in value are relative, IMHO.
Don’t you mean changes in price?
At any rate, so long as you extract maximum use value from it - you’ll get ahead. I’m hell bent on extracting every bit of use value from my place as a means to offset the obvious decline in its price.
Calculations being based off its rental price (I’m lucky enough to have direct and current rent comps) and my actual carrying costs. I suppose if feeling generous I could throw in the savings from not having a car - which the location of my place allows for me to do. (but I don’t)
OTOH, I know more than a few people with trophy kitchens and “guest” bedrooms - who eat nearly every meal out and get out of town every weekend they can. For such a lifestyle they bought much too much house and their use value extraction will be non-existant. And that, is the equivalent of burning money.
That’s an interesting way of looking at the value of a house. More sophisticated than, say, my personal opinion that it’s too much trouble to have a second place to take care of, and who wants to drive all that way every weekend anyway.
“does your feelings about your house change along with it?”
Kind of my point where my former ( True Believer ) neighbor was concerned. Neither he nor his wife were ‘from’ our little town outside Salem, OR.
They both waxed poetic about it’s ‘charm’ and “sense of history” and of course they loved the ‘topography’ where their upgrade/dream home was nestled in!
Then, things changed. It wasn’t going up 20+ % a year any more and now they’ve left town without so much as saying goodbye? The wife and I tracking and it’s currently listed. I’m sure they’re hoping we all just forget about it as it slides into FC along w/ legions of others. Funny how things work out huh?
Don’t pay the mortgage for 90 days and apply for an obama bailout and principle reduction…
2banana,
I’d say this is no time for complacency! Anyone “that close” to paying off their mortgage should be on pins & needles. Sure, I wish I was ‘there’, don’t we all.
But it’s just as easy to lose that catbird seat due to ( God forbid ) an illness or tax/employment issue etc. Don’t laugh folks, we’ve all seen it happen.
Man, if I were that close I’d be scrimping and saving and shoving every dime I had don’t the banker’s throat trying to get that thing paid off.
I cannot WAIT to get there myself! I’m still in the “OMG MY MORTGAGE IS MASSIVE” stage of the game. It is 19.39% of our net income, (25% for full PITI) and that fact always scares me.
Fact is, putting extra money into the mortgage in year 5 pays more than it does in year 25. After all that’s 20 years of interest you’re saving. But of course for most people it’s much easier to pay a little extra in year 25 than year 5.
My back of the envelope way of figuring has been to look at the ammount of principal I’m paying. ISTM that if I were to put THAT much extra, I’d cut a month off of the term.
I currently stuff dimes down the banker’s throat. My goal is to cut an extra month off for every two months paid as a minimum, and try to ‘catch up’ if we get windfalls. It’s easy at the front end as each payment only has a minuscule amount of principal in it, so you only really need to match the principal to buy off an extra month. By the end of the loan, you need to virtually double your payment to ‘buy an extra month.’
But I’d still be trying to pay that thing down even more if I was close to paying it off. The psychological relief of being mortgage free is something I miss from my renting days.
What would it be if it was just you making that payment — since you said ‘our’?
It’d be about twice as much. We have roughly comparable salaries. But we have 2 years of salary in savings, another year in 401(k), and put down 30% in the first place, so we’re about as covered as we can be.
You know I forgot to mention that the next mortgage payment is due in December; I like having the winter payments complete by October since my overtime is seasonal.
Pull the refi lever, if you get 3 oranges that new SUV and big screen could be yours.
And all 3 cherries could get you granite counter tops and all new stainless steel appliances.
Don’t forget the 18-inch tiles, 12-inch is so 2002.
Don’t forget the possibility of a high-end remodel with stainless appliances, granite, and of course travertine tile. Max that $hit out!
Good luck rms on discharging the remaining debt.
I’ll make it.
Back in November 2008 I owed $68,000.
I’m a bit north of 60k and considering paying a bit of extra principal.
About like my alimony. I paid the last payment in June. All I got was my freedom!
I’m married with two children; a stay at home mom too. No Carnival Cruise adventures for us.
I have $28,000 left on my mortgage but home values are slightly lower than when I bought in January 2000. It does feel good to see the balance drop.
I could not imagine living with these large mortgages and watching your savings and equity just drip away month after month in depreciation.
“I have $28,000 left on my mortgage but home values are slightly lower than when I bought in January 2000. It does feel good to see the balance drop.”
I bought the dip in March 2003 after renting for five years; a former Californian I am well versed with housing volatility. I looked at the area’s median income given a four year college degree and five years experience, and bought at 2.5x that number, which was $125k.
“I could not imagine living with these large mortgages and watching your savings and equity just drip away month after month in depreciation.”
Equity locusts move here, and the first thing they do is buy these huge 4,500-sqft homes on acreage (think water well, septic system, riding lawn mower, etc.). When trouble sets in they can’t sell ‘em because the local wages can’t support it. The RE rags at Safeway are packed with huge places that can’t be sold right now.
I bet they COULD sell them. You know, if they priced them so that local wages could afford them… then discounted them a bit to account for the heating/lawn care/maintenance issues.
There is no Prop-13 here in WA. My 3/2 rancher might fetch about $155k if the planets lined up, but the assessor says it’s worth $181k. BTW, when you own a home your bills are actually liens.
I am one of those suckers too. Paying down my mortgage. Even throw in a grand here and there before it burns a hole into my pocket. The thing to do would be to liberate the equity and then default on the payment. Then cry for help and negotiate some principal reduction to get in on the bailout action. The lesson everybody should have learned over the last 2 years is that being responsible is for suckers. I guess I am just a slow learner.
I’m a bigger sucker. I bought before the bottom. I struck the knife in the seller as hard as I could and twisted, but I know we didn’t get in at the bottom. On the other hand, my wife is now happy, and we didn’t pay more than we can afford and still kept a buffer big enough to weather 2 years of both of us losing our jobs.
We overpay the mortgage each month, and any ‘windfalls’ from family or bonuses get 50% put into the mortgage automatically.
Chipping away, day by day.
sfbubblebuyer,
That’s the ticket! ( Hint: You can’t be charged int. on $’s you no longer OWE! )
Yes, and I’m not making a call for out and out -panic- by any means. It’s just that all too often I see ppl that figure they’re “over the hump” and hey, we can afford to relax. You know, enjoy… life a little?
Open Floodgate! Once the old millstone looks more like a ‘pebble’ all sorts a’ weird stuff starts happen? “Appearing” top o’ the line golf carts, Harley’s etc. One needn’t fall prey to becoming a MEW-aholic to screw up within sight of the finish line.
I just hope I manage to avoid the pitfall her parents hit, which was paying off the house, then thinking “That’s not so bad! Now let’s trade it in for a 3x as expensive house!”
Pay off the $30k with your credit card and then refi the house and hide the cash then default on the whole lot. Then rent.
Then rent.
Or perhaps you could become a squatter for a period of time.
I have about twice that to go (9 years left on a 15-year 5% mortgage), and I’m not in any hurry to pay it off, although I could do it next week if I really wanted to. I like having a mortgage as hyperinflation insurance, and I’m making a lot more than 5% a year on my investments.
That is, I still owe about $65K.
There were 454,000 initial jobless claims filed in the week ended July 3, down 21,000 from an upwardly revised 475,000 in the previous week, the Labor Department said.
I just don’t get it. How can there be any kind of positive reaction to this? One, it’s a drop of 4% from the revised number, but it’s only ~1% less than the estimated number. And since last month was upwardly-revised, wouldn’t one reasonably expect this number to be rounded up?
Last week and this week are prime vacay weeks too. Seems like everyone is off - so not much should be happening in HR depts.
What’s not to get? The consensus was X. The number was less than X. Therefore it is a positive number. You can’t assume this number will be revised because the last one was revised.
The consensus was X. The number was less than X. Therefore it is a positive number.
And if the difference isn’t statistically significant? Or the “real” number is likely to be revised to be ABOVE estimates?
Why is there any reaction at all to the estimated number?
Only a person with vested interest in a fake recovery would call this a “positive number”. Why are you so “on-board” with the MSM, Eddie?
Eddie’s a big supporter of the Obama recovery.
“You can’t assume this number will be revised because the last one was revised.”
Eddie, if I’m not mistaken, you basically said a couple of days ago that we were in debt up to our eyeballs after the Revolutionary War, and our country hasn’t collapsed yet.
So if you indeed said that a couple of days ago, your argument was basically because “x” hasn’t happened in the past, it won’t happen in the future, and now you’re saying just because “y” has happened in the past doesn’t mean we should assume it will happen in the future.
If we were in debt to our eyeballs then, we’re about two stories down now.
1792 debt/GDP: 35%
2010 debt/GDP: 92%
(and noting that our GDP back then had a lot more upside potential than it does now)
“consensus?”
And you don’t see the problem here?
Map/terrain ring any bells?
And even if it isn’t revised upward it’s a terrible number (above 400K), a sure fire sign that we are in a perma-recession/depresion.
Harvest the equity
A no brainer
the recovery is moving full steam ahead.
my wife got laid off yesterday…worked for a large accounting firm.
Sorry to hear that, Michael.
Sorry bro. I was super worried this year, too.
Sorry
When you pull accounting numbers out of the thin air to manipulate the stock market you don’t need accountants that actually examine a companies books. They sometimes uncover inconvenient facts.
What about SarbOx? I thought accountants were in high demand because of Sarbox requirements.
NYT
The Sarbanes-Oxley Act was passed by Congress in 2002. The Enron scandal — in which it turned out that one of the largest companies in America had ridden roughshod over, under and through accounting rules to report billions in profits when it had no hope of paying its debts — got that effort started. The final push came when the WorldCom scandal broke.
Accounting firms had largely escaped any real regulation before, and the law created the board to inspect and regulate the firms. Board reports have forced major firms to change practices, and the board is generally viewed as having done a good job.
Under the law, the five members of the board are appointed by the Securities and Exchange Commission but are legally not government employees. The board is financed by fees paid by publicly listed companies, and its budget is subject to approval by the S.E.C.
The argument before the court is that under the Constitution, Congress should have allowed the president — or someone he directly appoints and can remove at will — to make the appointments. That argument could well appeal to some justices, particularly Samuel A. Alito Jr., who has supported stronger executive power.
By itself, that dispute over appointment powers might not be too important. But in passing the Sarbanes-Oxley Act, Congress did not put in a severability clause — a normal part of many laws saying that if part of the law is unconstitutional, the rest can stand on its own. So that has raised the prospect that the entire law would fall at the same time.
Out would go requirements for audits of corporate financial controls and for corporate executives to certify that their financial statements were accurate, among other things.
Colorado, rules, laws and regulations are for the “little people.” You know, the “losers” who won’t lie, cheat, steal, bribe, threaten, back stab or even kill to rule the roost.
In all the companies I’ve worked at, auditors certainly take over for a several months out of the year.
My 2 cents on this — SOX requirements as posited by the likes of KPMG, etc. went way over and above what the Act was all about. The auditors are covering their asses by making their demands from companies really ridiculous - down to the nitty, gritty that was never asked for in the first place.
Why wouldn’t they — they were the ones that have made out like a bandit since the law was passed.
This is my second calendar year in a row of being super cautious with my spending. One of my sisters is earning $12,000 more per year in her new job in the East Bay of the SF area than her old job in Sonoma county that she left in the Fall of 2008. So that is good for her. I don’t think she appreciates the opportunity she has to save money and prepare for another six months without a job. I am nervous for her, as a result. And I feel I have to save money for several people (two other sisters) to help them out in case of a few months of downtime. This is a depression. If my sisters took responsibility for their own emergency funds I would be able to have an upper middle class standard of living.
Charity belongs within blood relatives, spouses and super close friends.
Charity or Brother Sugar?
i am the same way about my two brothers. they are both frugal but i still feel compelled to consider their futures in my decision making.
i have always attributed it to the middle child syndrome.
In my case the youngest child gets the “duty” / “guilt.”
Bill, they are lucky to have you holding a safety net. It sure would be cheaper for you if they would take your free advice now rather than your hard earned savings later.
I find my friends and dear relatives universally fail to consider sound advice until after it is proven. My children are an exception (mostly).
I’ve given them advice for the last 20 years to save, save, save, and they ignored me.
“This is a depression.”
+1 Agreed; nasty on the menu for 2012.
My sympathies, michael. Hope she finds some new employer that kicks that big firm in the butt!
Sorry to hear that, Michael.
My wife’s company is also going to boost the job loss number for this week’s stats when they come out. Fortunately my wife isn’t one of those numbers, but she was extremely worried before they announced who was going because her product got canned and her whole group is slated to be ‘absorbed’ into another group… that is located in another state.
So… we’re not counting on her having a job there for long, even if she dodged 2 rounds of layoffs. I suspect mandatory relocation is coming, and we won’t do it.
There has never been a better time to buy a home. Can I interest you in a partially-completed, hardly-vandalized mcmansion?
Can I get a carpet allowance?
When your neighbor loses his job, it’s a recession.
When your spouse loses hers, it’s a depression. (I know — it happened to my spouse’s spouse in the early 1990s…)
Newsweek article about Africa’s failing democracies
Ran the list, noted the mo Ibrahim foundation which offers lucrative prizes to African leaders who help their countries and peacefully leave office decided not to offer an award at alll last year.
Why the backslide?
Tossed much of the blame to China which provides cheap loans and investmetn to resouce rich countries while asking no questions about human rights strengthening the hold of authoritarian govs’.
Also blamed the west
For turning a blind eye.
Expect this trend to continue across Africa and S. America.
We can’t allow inconveniences like freedom, human rights or democracy interfere with business.
“Also blamed the west For turning a blind eye.”
Funny how everyone bitches and moans about the U.S. being the world’s policemen. Until we aren’t.
Lest anyone think I’m advocating either extreme, I’m not.
How about blaming the African governments themselves? Crazy, I know.
Yesterday, or maybe the day before, I mentioned a college friend who later served as the Washington Post bureau chief for Africa.
He went into Africa with an idealist viewpoint, but it quickly turned into cynicism of the darkest sort. Not due to the people he worked with, but due to the corruption and incompetence of the governments in the countries where he covered stories.
We’re talking about places like Somalia, which, truth be told, didn’t have a functioning government then or now. And Zaire. The story he told about trying to get into that country was comical, to say the least. Even his home base of Kenya didn’t come off very well.
Again
When a small minority control all the wealth, they also control the gov. That’s the direction the US is headed.
Nation’s retailers post tepid June sales
Shoppers buying mostly discounted clothing amid job fears
NEW YORK — Americans didn’t go on many shopping sprees in June, resulting in sluggish sales for many retailers. It often took deeply discounted clothing to get shoppers to spend — and then only if they needed it.
The lackluster performance, being compared with a weak June 2009, is raising concerns about the back-to-school shopping season and the health of the economic recovery.
After ramping up spending surprisingly in the first quarter, shoppers have hunkered down since April. Some worry they’ll continue to be tight-fisted through the holiday shopping season.
“My sense is that the consumer is very cautious at this stage given the state of the labor market, the housing market,” said Ken Perkins, president of research firm RetailMetrics. “June sales are going to reflect that caution.” A sluggish June sets up a “disappointing back-to-school season,” he said. “I think (back-to-school) is going to be very promotional.”
Can an economy that skips from consuming season to consuming season truly be considered sustainable?
What are yew, some kinda dang socialeest/commie?!
If people are spending real money and not going into debt…Yes.
Didn’t someone post a piece yesterday that said retail was going to very positive? Now who was the author of that piece?
Aren’t sales tax collections still pretty much in the tank?
I am constantly amused by the irrational exhuberance the stock market keeps showing in spite of the never ending barrage of bad news. Or did it not occur to them that those who will be losing their UE benefits will be tightening their belts even more?
“I am constantly amused by the irrational exhuberance the stock market keeps showing in spite of the never ending barrage of bad news”
It would be interesting if the slot machines in Vegas started dinging like crazy every time someone LOST $1,000!
CarrieAnn,
Just curious, what made you think I was a woman?
Most people in this country are.
Blue:
I think the correct term is Wussies. Its amazing what Gen X and millennials turned into.
Yes, many will emasculate themselves to get nookie, this is true. Living in an urban playground like NYC, I am sure you see many of the same things I see here.
edgewaterjohn,
Well, what was the whole housing boom about!? Never before have I seen so many ‘males’ concerned about everything from flooring selection to towel rods?
Like, wtf?
My husband leaves all the decorating/home improvement decisions to me. As long as I don’t buy anything with a floral pattern (except tablecloths), he doesn’t care what I do. As it should be.
Elanor,
Yes and thank you. My wife and I have the same, ahem “arrangement”. I thereby promise to keep my White Sox memorabilia where it belongs! ( In the garage )
I just know a lot of women, including myself, doing tri’s this year. I jumped to conclusions ’cause I’m using talking workouts with the girls. The men I compare notes with are usually more single sport probably ’cause when you’re working full time tri training is pretty demanding. So now I’m actually extra impressed.
I must remind myself to not post if I’m left with writing something on the fly, a situation that can lead me to trouble. And again I offer my apologies.
Btw, are you hooked are what?
So is there a skew between the sex of triathalon and marathon participants? I know a few guys who have run marathons, but the only friend who’s done a triathalon is a woman.
I haven’t noticed this. There are plenty of both genders on race day.
My observations probably reflect my training times.
I wouldn’t say I’m hooked, but I did sign up for 2 more races. The next one is July 18 in Oxnard, CA (Strawberry Fields). I want to see whether my 2nd place was a fluke or if I can repeat it.
I am fortunate that my job allows me a lot of freedom. I swim in a lunch-time group at the pool with the women’s swim coach and often run then, too. There is a lot of training though. Every day is either run, swim, bike, or two workouts of some combination. It takes a lot of my free time.
OK, this little beauty was hidden in the California thread… brain dead policy from a bankrupt state. Apparently I guessed wrong with my plan to save to buy a house in a few years. Should have bought and got the state and federal tax credit, the defaulted to catch a matching debt forgiveness. Sounds like an easily workable system as well.
The Appeal Democrat. “Out of misplaced compassion, California’s Housing Finance Agency will spend $420 million to pay down private mortgages for delinquent homeowners. This is a horrific idea, couched as kindhearted and benevolent. This misuse of taxpayers’ funds will reward some people who have mismanaged their own money, and probably only delay many inevitable foreclosures.”
“To qualify for the giveaway that begins in November, borrowers must be in imminent danger of default or delinquent. By announcing the giveaway months in advance, housing authorities perversely tip off homeowners there’s still time for them to fall behind in their payments to qualify for the government to pay off $50,000 of what they owe.”
“If this weren’t bad enough, the giveaway also ‘asks’ private lenders to match what the government spends by forgiving an equal amount on each loan…That kind of government encouragement was one of the reasons for the rash of foreclosures beginning in 2007 when buyers defaulted on mortgages they couldn’t afford, but that the government had encouraged lenders to give them, anyway.”
“The mortgage pay-down will be first-come, first-served. ‘Unfortunately, there will likely be more demand than funding,’ lamented a CalHFA official. No doubt.”
as usual renters are not included even if we are scavenging for daily work…$50K heck that’s over 40 months of rent here.
I am glad California has a massive budget surplus of funds to do stuff like this…
Damn you Bush!!
Damn you Bush!!
Right party. Wrong politician.
Something that was unclear to me was the source of the funds. Were they Federal HAMP funds or was it state budgeted? It’s idiotic in either case and made me want to throw up.
I think it’s state HEMP funds — Housing Equity from Marijuana Plants. You see, there’ll be such a tax windfall when pot is legal that CA will be able to buy everyone a house. Or at least the legislators in Sacramento are smokin’ some mighty potent reefer.
I know these Ca Grant Programs (4) were proposed, but I wasn’t aware the Feds had funded their share yet. Are the programs already funded? That’s news to me.
The proposal was submitted to the Treasury Dept in April iirc, and the total amt was $699.1M .
The way I read it back then, was it was mostly Fed $. I have the details of who gets what, and the caps combining the different Grants, to maximize the gift. What a freak’in waste of $. Just kicking the can down the road.
Name of Grant Programs:
*Unemployment Mortgage Assistance Program
CalHFA
*The Mortgage Reinstatement Program
*The Pricipal Reduction Program
*The Transition Assistance Program - from homemoaner to renter relocation Grant. The most sensible of the 4, with a $5,000 cap.
My guess is that state employee insiders and friends of the legislature will be the primary winners in this little gem.
This will probably be a big gift for 30k people.
Of course, we will all get to help pay for it.
Another gift to the banks too. Those people that fall behind will get racked with fees to help drain the value as well.
I’ve posted many times to that effect. How much of these gov’t giveaways get eaten up by “diversity coordinators” and “urban re-investment secretaries of blahbity-blah?”
…who are actually somebody’s bother-in-law or political-favor-owed friend.
Btw, the combined cap for the mix of match of Grants was $50,000- per household. That’s a nice sum. Lenders had to match the funds in a few of those programs, iirc.
Yeah, the banks will clean up if those Grants are funded. Does anyone know the status?
“…who are actually somebody’s bother-in-law or political-favor-owed friend.”
Bother-in-law, what a great term!
Danial Gross from Newsweek
The next reading of the CPI comes out in mid-July. A negative number will mark the third straight decline and will surely inflate the volume of talke about deflation. But when considering the risks of deflation, we shouldn’t look at hte CPI in isolation. The phenonmenon of prices falling modestly at a time when the economy at large is growing at 3 percent, as it is today, isn’t much to worry about. The combination of slow growth or stagnation and deflation is the thing that’s scary, says Michael Bordo. In other words, look out for stagflation.
Does Danial Gross even know what stagflation is? It sure doesn’t sound like it. He’s Newsweeks financial expert?
LOL. He must be younger than 40.
So true. Like those who complain about how inflation is eating their savings, or who regard 5.5% mortgages as shocking high. Or even those who complain about Nixon taking us off of the gold standard. If your citizens can be arrested and jailed for attempting to own gold bullion, you’re NOT on the gold standard.
“stagflation” — doesn’t that have something to do with bachelor parties?
bachelor party?
Lots of drinking? Strippers? Large sums of money spent? Out of control stupidity?
You must be thinking of TARP.
Tattoos that you regret in the morning.
ecofeco
REYKJAVIK (AFP) – Representatives of Iceland, Britain and the Netherlands met in Reykjavik this week to prepare further talks on a new repayment deal to cover the collapse of the Icesave bank, the Icelandic government said Friday.
“The negotiation committee representing the Icelandic government on the Icesave issue met yesterday and today (Thursday and Friday) with representatives of the UK and Dutch governments in Reykjavik for discussions,” the finance ministry said in a statement.
“The purpose of the meetings was primarily to exchange information and to prepare further talks later this year,” it said, pointing out that “this is the first time the parties meet since the talks were adjourned on March 5.”
The three parties had held intense discussions leading up to a March 6 referendum on a deal for Iceland to repay Britain and the Netherlands 3.9 billion euros (4.9 billion dollars) to compensate for money they paid to 340,000 of their citizens hit by the fall of the online Icesave bank in October 2008.
However, after more than 93 percent of Icelandic voters rejected the deal to repay the money by 2024 at what was widely considered a high interest rate of 5.5 percent, the talks stalled and speculation has been rife over when they would resume.
The dispute is considered one of the main sticking points as Iceland begins negotiations to join the EU
My take
Iceland may want to stear clear of the EU. They have natural resources to sell. My guess is they will do just as well on their own.
The reality
1. The banks are patient. They will wait for the public furor to die down and then push it through a back door, or they will finance the campaign of a stooge who will force Icelanders to swallow all that bad debt.
However, after more than 93 percent of Icelandic voters rejected the deal to repay the money by 2024 at what was widely considered a high interest rate of 5.5 percent, the talks stalled and speculation has been rife over when they would resume.
Yay for that Icelandic backbone! Stay strong, people!
At some point, they may have to actually use the torches, not just wave them around in the air.
I thought they were geothermal powered.
Headline should read: “Futile European Attempt to Extract Blood from a Stone. Doomed to Fail”.
Geothermal energy is hard to export and fisheries are centuries long decline. Unless they want to become a blonde haired, blue eyed Bankok of the West, where would they get the money to pay people back?
Seems like they’d be good at making energy intensive products, like Aluminum.
That would require shipping alot of bauxite, and I’m not sure how efficient the Geothermal heat gets turned into electricity. Are there any industrial processes that requrie lots of heat at comparativly low temperatures? ‘Cause geothermal won’t be used to smelt iron in any efficient way.
my understanding is that they use the electricity generated from the geothermal to produce aluminum.
Anecdotal evidence of “TrueNeeds™” continues:
Newport Beach baby food shop to close
July 7th, 2010, by Nancy Luna, Staff Writer OC Register
“Pomme bebe, a Newport Beach organic baby food store, is closing after being in business for nearly three years.
The chic and contemporary store offered a tasting bar that served freshly prepared organic baby food from fruit purees and finger foods for toddlers.”
Boo Hoo We can’t afford to treat you like a King or Queen anymore so It’s back to Beech Nut, baby!
Oh, for pete’s sake. A standalone store just for baby food? Yeesh.
And, while we’re on the subject of pretentious retail that only seems to do well during boom times, I’ve noticed that the Tucson Whole Foods store doesn’t seem to be as packed as a few years ago. Anyone else seeing anything like this?
Whole Paycheck lost most of its granola street cred years ago, when it went $$$$ BOUTIQUE YUPPIE SNOB $$$$. On top of that, regular stores began selling organic produce, and then the granola heads grew tired of the same ol’ corporate california organic and starting going to farmer’s markets. Then the CEO wrote a conservative screed against public option/single payer health care on the editorial page of the WSJ, parroting Republican talking points and pushing the tax advantages of health savings accounts and charity health care. Whole Foods’ primary demographic — bleeding heart liberals — were not amused, and took their business elseware.
I haven’t spent a dime at Whole Paycheck since.
Whole Fools had a snobby attitude since the day they started.
Well, what really amazed me about this place was that there was this yuppie grocery store in the same location. It was called Reays.
Then Reays sold out to Wild Oats. And the Oatie-os proceeded to do something I didn’t think was possible, and that was be more expensive than Reays.
Wild Oats was eaten by Whole Foods, and I understand that WF is even pricier. They also don’t do a lot to support local events, which, I’m told, Wild Oats did.
I no longer buy their prepared meals now I’ve realised how tasteless they are (although they do look fabulous!). Someone needs to tell them about Chef’s using that pinch of salt………….
Mac and Cheese always works - and 33 cents a box!
Ketchup soup!
I have an Irish friend who used to say “hot water soup” a lot. Now I understand.
Kraft is 77 cents here… down from $1 just in the last two weeks or so.
Every once in a while we have sales of 3 boxes for $1.00
…and for your conveinience they put fewer oz in the box so you won’t get fat.
Question for any tax attorneys regarding estate tax.
Next year, say a relative dies, and their estate adds up to $1,000,001(one dollar over the limit), is the resulting estate tax 55 cents, for the amount over the limit, or $550,000 (all estates over 1 million will be taxed at 55%)?
Not for this year but in the future, when the “death tax” kicks back in. Does the 55% tax on estates over 1 million apply to the first million, or only to monies over that?
So would a 2 million dollar estate death tax equal 550k or 1.1 mil?
Anyone with any idea on this answer, cuz it may or may not be a good idea to give away some of one’s money to keep your estate under 1 mil if you want your beneficiaries to receive as much inheritance as possible.
Could your estate tax liabilities escalate from zero to 550k, simply for having one or two extra dollars over the 1 million dollar estate tax trigger?
Thanks in advance for any wizardly input!
Don’t do it Mike.
Don’t do it Mike.
That’s damn funny.
See, the REAL question is how many elderly relatives are going to be gently shuffled off this mortal coil by their younger, in-the-will, decision making relatives?
“Grandma was specific. No extraordinary measures!”
“Sir, I’m just bringing her some lunch. A turkey and cheese sandwich and Jello.”
“NO EXTRAORDINARY MEASURES I SAID!”
I’m actually all for the so-called “death tax.” Too many people are living off inheritances for which they did nothing–no backbreaking work, no sacrifice. Thus the trustafarians. Legal settlements and lottery winnings should also be taxed at a ridiculously high rate, too. And while we’re talking taxes, axe the mortgage interest deduction and capital gains exemption for home sales. It is because of these things we have such massive misallocation of resources to housing in the first place–for which all of us lowly renters subsidize.
I’m with Anthony.
Reason: My family background. Let me explain. On my father’s maternal side, there once was some serious money. I mean major league serious.
When my mother married my father, let’s say that the serious money people looked down on her. Mom’s from a working class background, and, as such, she wasn’t the Scarsdale Junior Leaguer type that my father was supposed to be interested in.
Well, Mom knows contempt when she sees it, and, together with my father, a decision was made to avoid taking any money from that side of the family. AFAIK, Mom and Dad stuck to their guns.
As I was growing up, I noticed that the family members who did take the money-bait in the form of inheritances and other subsidies were a bit short on the initiative side. And they also had, how to put it nicely, emotional and substance abuse problems that were overindulged at every turn. A lot of family money went to pay for drugs, alcohol, and therapists of various sorts.
My parents noticed the same things.
Oh, I should mention what happened to the money. It’s gone now. Got blown away on various things. Some of which were listed above.
Some people fritter away their inheritance. Some do not, and do noble things with the money - like for instance making the lagest ever private donations to the National Park System.
I’ve known lots of people who have inherited large family businesses and/or money, and gone on to do better than their parents, using those resources as a base.
There’s a good chance in fact that the computer you’re looking at is using an OS created by just such a person - Bill Gates.
Some people fritter away their inheritance. Some do not, and do noble things with the money - like for instance making the lagest ever private donations to the National Park System.
Good point, Packman. And the bottom line is the money has been taxed already. The gov’t/other citizens have no right to it just because the person who earned it died.
On the other hand, if you get a succession of good monetary stewards, you will quickly have 3-4 families/corporations owning the entire country.
A 50% tax is not taxing the dead person twice. It’s taxing the kids once for a windfall.
My family has some serious money floating around, and I’m STILL all for the “aristocracy tax”. I’ve told my parents to enjoy their retirement more and not worry about how much they leave behind monetarily.
You can’t replace ‘raising your kids well’ with ‘leaving them money’ and hope for good things.
The money has already been earned. The government should have no claim on it, IMO.
The money has already been earned when we pay sales taxes, property taxes, gas taxes, and sin taxes. Do those chafe just as much? If you run your own business you can wind up paying taxes twice.
Questioning the taxes we pay is good, since we pay too much and too much is wasted. But the estate tax is probably the least onerous tax to an individual ever, and the most progressive.
But the estate tax is probably the least onerous tax to an individual ever
Tell that to people who have to sell the family farm or close down the family business because they can’t afford to pay the taxes.
See - us conservatives can play the “woe is me” card as well.
Only IMO this is a lot more legit - we’re talking about wanting to keep money that’s already been earned, not wanting to take money from others who have earned it.
When somebody want’s to complain about any tax, the standard tactic is to stand behind the poorest person who pays it. But hiding behind a few family busineses and farms you’ll find the big money. THEY’RE the ones who used to pay the highest ammounts of estate taxes.
And of course “taxed more than once” is a silly complaint. Money often gets taxed whenever you do something with it.
The inheritance tax affects less than 10% of the population. An inheritance many people would KILL for. (literally)
You will get NO sympathy from the other 90% and people who complain about it sound like crybabies.
As for taxed once, yes it was taxed once on the person who RECEIVED it the first time and will be taxed again on the next person who RECEIVES it. Regardless of how or why it was received by the next person, it’s still NEW INCOME for that next person.
Tell that to people who have to sell the family farm or close down the family business because they can’t afford to pay the taxes.
You mean tell it to the people who had to sell their parents’ farm, or close down their parents’ business. If it really was a family business, the youngsters would have been working and investing and owning a stake in it long before then, and would have only to pay taxes on the part that their parents still owned. It’s no different than if their parents had sold the farm to retire on and invested the money to live on and left them the remainder.
All the hand wringing and whining about losing the family business is B.S. Buy it from your parents and run it if you want it. If you’re ‘working’ in the family business and earning a salary, why should you get any more consideration than their non-family employees? They did just as much to build up the business as the owner’s kid stocking the shelves or pitching hay.
And if the kid never worked in the store and has an outside career, he or she has even less reason to bitch.
Don’t blame the estate tax for poor estate planning.
why should you get any more consideration than their non-family employees
Because you’re family.
Again - why does the government - or anyone else in society - deserve this money any more than family? The answer is simply - they don’t.
Apparently family doesn’t mean so much to some people these days. Well to be blunt - we have our current and coming societal breakdown to show for it. I would say that we’re degenerating into an “everybody for themselves” mindset, but it’s actually worse - we’re degenerating into an “everybody else for me” mindset.
P.S. I say this as someone who will probably inherit very little from my parents, if any, and as someone who is not part of a family business. Nevertheless I see how important family ties are, including business relationships in family businesses.
The estate tax is to keep families of Rockefeller, Carnegie, Walton, Mellon and the likes from owning the entire country. That is what gives the government to right to tax massive estates.
A landed aristocracy cracking the whips over the wage slaves is not an ideal situation.
Cry all you want, but I’ll gladly suffer a decrease in inheritance to keep Robber Barons at least a LITTLE in check.
And it’s not like kids of wealthy parents don’t get a much better start in life. They do. As middle class kids get a better start over poor kids. And those poor kids get a better start than kids born in squalor in a third world country.
The point is, the estate tax is an attempt to cut down on multi-generational empire building.
You do realize that the “robber barons” rarely if ever built their empires across generations right? E.g. the greatest of all - JDR - built his empire in the course of about 25 years. He then went on to become quite philanthropist - as did his son.
Not to mention that much of of what these guys did was illegal - not the least of which was tax evasion. Taxes are for the little people - these guys who build empires find ways around them generally, through trusts and foundations and the like. They’re not the ones that are affected by inheritance taxes.
I never took you to be the social-engineering type, Slim.
Please tell us why you believe the government, who also didn’t do anything to earn this money, deserves it more than the inheritor.
And while you’re at it - please tell us why parents should feed their children, being that they usually didn’t do jack squat to earn it.
Sorry - guess that sounded pretty snarky / harsh. My apologies.
And while you’re at it - please tell us why parents should feed their children, being that they usually didn’t do jack squat to earn it.
This seems out in left field. Your first comment comes across as you suggesting the gov’t doesn’t deserve the money, and thus you’re against the tax. But then this comment seems like a snarky way to undermine that…?
Just making the same point from two different perspectives.
In this case - it’s valid and noble for parents to work for the betterment of their families’ lives, even if/when those that receive what the parents’ work for don’t “deserve” it. That includes inheritance.
BTW - the same principle should apply to retirees. Once someone retires, they’re now receiving benefits that they aren’t working for. They’re using money that they inherited from an earlier period in their life. Thus by the same principle, everyone’s money and goods should be taken from them when they retire and redistributed equally.
Oh and breadwinners shouldn’t be allowed to buy nice things for their family, since their family didn’t work for them.
Etc. etc.
In other words, the bottom line is this:
If someone pisses away a received gift - be it inheritance, lottery, Christmas gift, food or clothing from parents, or whatever - it’s the fault of the individual giver and/or the individual receiver. It’s not the fault of the system of giving and receiving. Thus all who partake in such a system shouldn’t be punished for those that abuse it.
They are NOT using money they “inherited” from an earlier time in their life. They are using their OWN money they damn well EARNED and were promised in lieu of higher wages during their working life.
To say that they didn’t earn it or don’t deserve it is the mindset of Wall St. and is nothing short of theft.
government, who also didn’t do anything to earn this money
The arguments are
1) Rule of law. Presumably our titan of industry was able to build his business in a relatively safe country where there is relatively good infrastructure and relatively little corruption. For example, paved roads to deliver your product, a working grid to keep the factory humming 24/7 (many countries have nighttime brownouts), and a system of laws where you are protected from fraud and extortion.
2) Opportunity in a meritocracy. In a real meritocracy, even a poor person should be be able to become successful just by “pulling himself up by his own bootstraps,” just on his talent, intelligence, and perseverence alone. While some think they pulled themselves up by their bootstraps, what they don’t mention is that those “bootstraps” are actually publicly funded secondary education, subsidized public transport, protection from discrimination (for example: “No coloreds” or “No Irish need apply” plus the religious discrim), low-rate college loans and community colleges, ,small business loans (hello!!!), or even cheapr housing and food stamps to during the childhood years. It won’t matter how smart, intelligent, or perservering you are if you didn’t eat or sleep well as a child or can’t afford college. You simply won’t be able to rise (not in general; there are exceptions). Without government providing those opportunies and a level playing field, only a rich person will have the tools to become rich.
That’s what government is providing; and therefore the government deserves “some” — how much is subject to debate — of the spoils so that it can continue to provide those benefits to future entrepreneurs.
Yes but the taxes for these services were already paid when the money was first earned. Taxing inheritance is an additional (double) tax.
I can’t come up with an good argument against that, but by this logic we may as well have a fixed % flat tax on all income rather than the progressive tax bracket system we have now. After all, we enjoy the same roads, we should all pay the same taxes.
Higher taxes are a way to keep the greedy rich in line, maybe? If we didn’t have progressive taxes, then there would rise a moneyed aristocracy.
Yes but the taxes for these services were already paid when the money was first earned. Taxing inheritance is an additional (double) tax.
No it isn’t. It is NEW INCOME to the next person who receives it.
If we didn’t have progressive taxes, then there would rise a moneyed aristocracy.
But we really don’t and we already did. A long time ago.
No it isn’t. It is NEW INCOME to the next person who receives it.
It’s a gift. The income wasn’t received due to any production of products or services, like normal “income” that’s taxed as income or capital gains.
Again - should a child or spouse have to pay tax on the things they receive from their parents? Food? Clothing? Furniture? Money for chores? Money for college? Where do you draw the line? Why should a child have to pay for money they receive from their parents any more than a spouse, if the other spouse makes all the money in the household and then dies? Where do you draw the line?
Most people view that the line should be drawn at immediate family. Anything you receive from immediate family, that isn’t a business transaction based on goods or services rendered (i.e. it’s a gift) should not be taxed, IMO.
Presumably our titan of industry was able to build his business in a relatively safe country where there is relatively good infrastructure and relatively little corruption.
Is this not the argument for income tax, sales tax, gas tax, etc, etc?
So that’s good enough for those that don’t make enough to be over the exemption limit, but those who are should have to pay for those things a second time??
You do know that even gifts are taxable, right?
But the IRS says it’s an inheritance (along with just a few hundreds of years of international common law precedent) and is therefore treated as such.
One should look at prevailing laws and analysis, along with historical precedents and reasoning before just deciding unilaterally that something is so.
You do know that even gifts are taxable, right?
Yes. My point is that it shouldn’t be, when the gift is to family. The reason why gifts are taxed is because of the inheritance tax, to prevent gifting as a workaround.
And the reason they are both taxed is to prevent, or at least mitigate, dynasties run by the dangerous and incompetent.
well, the govt deserves it for providing you the environment to thrive. with a lousy or non-existing govt (somalia?) i doubt if you could even make it.
Anyone who plays the lottery is inherently paying exorbitant taxes. It’s a disgrace to tax them again afterward.
Kind of like, I earn a $1000, get about $550 after tax,ss, med, etc. I invest it and make a short term gain and they tax me again at circa 48%.
So to reiterate my question. What does it mean, if the estate tax (as it is to be reimplemented in 2011) is zero up to the first million, and then 55% for estates over a million.
So, does a $999,999 estate get taxed zero, and a $1,000,000 get taxed $550,000?
Not looking to kill any geese, as seems to be insinuated here, but like it or not, some people would prefer their heirs receive their inheritance(what the recipients do with it or if it does them any good is not my question)
Personally we are busting ass just to make ends meet and not take any state or federal aide beyond EIC that we qualify for, like food stamps, oregon health plan (always paid for semi-worthless private insurance out of pocket).
Even though I do have a paid off home, which admittedly helps.
But thanks for the kind sentiments!
No ill intent–I quite like the company of my parents–but the question remains–
is a 900k estate taxed at 0 and a 1 million estate taxed at 550k, in which case, if you intended on or wanted to be giving your children your saved dough, would a 900k estate result in more $$ for your kids and less for the govt than a 1million $$ estate? My aging father contends that a one million and one dollar estate would be taxed 55 cents, as the first million is tax exempt. Anyone know anything different?
Just askin(not to be flogged) just if anyone here knows the answer to a simple estate tax question.
I don’t know the answer, but will just say that usually the government is fairly fair and reasonable (such as it is) with such things. E.g. many people have the mistaken perception that their paychecks may actually go down due to higher taxes if they “move into a higher tax bracket”, which is false. The higher rate applies only on the income made in the new higher - not on all income.
I would imagine you could find the information in Wikipedia or the like.
irs.gov
0-1,000,000 = $0 tax
anything above $1,000,000 at 55%
fret not
“0-1,000,000 = $0 tax
anything above $1,000,000 at 55%
fret not”
Yep and if a trust is set up properly you can protect $1,000,000 for each spouse.
Legal settlements and lottery winnings should also be taxed at a ridiculously high rate, too
So if someone infringes my copyright and uses my work without permission, and I bring suit to try to recover what I would have gotten in royalties should they actually pay market rate, you’re saying that should be taxed at a ridiculously high rate?
On top of that, I have to pay the lawyer?
(yes, this happened to me)
I suppose he meant that punitive damages would be taxed at higher rate, but what do I know?
Of course legal settlements are SUPPOSED to be merely “making you whole.” In principle there should be a corresponding whole in your balance sheet they they’re trying to fill. Perhaps is only “punitive damages” had a special tax.
ISTR that for copyright infringements, there is a statutory ability to sue for tripple damages.
Triple damages is almost standard for most civil suits involving loss of income from theft (failure to pay/compensate) of IP or services. Sometime it also includes legal fees, but that depends on the state.
The IRS also has a tax table just for that.
I am no tax attorney, but I found this. Seems like $1 million is exempt and every $ after that is 55 percent and the extremely rich will get around it. My mom is worth about $2 million with 5 kids. No way around it.
What will 2011 bring?
Well – if there are no changes – the estate tax and the generation-skipping tax would come back in 2011. Only the first $1 million of an estate would be exempt from estate taxes. Assets above the exemption would be hit with a 55% federal penalty
Wills, Trusts & Estates Prof Blog
A Member of the Law Professor Blogs Network
June 10, 2010
Tips for Avoiding the 2011 Estate Tax
Under the current law, the federal estate tax will rise from the ashes on January 1, 2011. Only $1 million will be exempt from a 55% tax, meaning that many more families need to start planning.
Wealth Matters
Confusion Over the Dormant Estate Tax Keeps Advisers Busy By PAUL SULLIVAN
Published: June 11, 2010
The estate tax in 2011 could “sweep a whole chunk of the upper-middle class into what used to be a fairly elite group,” said Daniel L. Kesten, a lawyer.
Those who work with the extremely rich say they, too, have been exceedingly busy, but for a different reason. The wealthiest are looking to take advantage of a short-term trust that allows people to pass money to heirs tax-free — what’s known as a grantor retained annuity trust — out of fear that the federal government could change the terms of these trusts. Cheryl E. Hader, a partner in the individual clients group at Kramer Levin Naftalis & Frankel, said she set up 30 of these trusts last month, up from six in a normal month. Daniel L. Kesten, a partner in the private client group at Davis & Gilbert, a law firm in New York, said he was working nights and weekends last month setting up the same type of trusts.
How this boon to tax advisers happened is yet another chapter in the partisan gridlock common to Washington these days. At the end of 2009, Max Baucus, the Montana Democrat who is chairman of the Senate Finance Committee, tried to extend for three months the existing estate tax laws, put in place in 2001. But when that motion failed, the estate tax expired for the first time since 1916.
What this has meant is that the heirs of wealthy people who die this year will owe no taxes. An extreme case, as detailed in an article in The New York Times on Tuesday, is that of Dan L. Duncan, who died two months ago with an estimated wealth of $9 billion. His heirs will inherit his estate without paying the 45 percent tax that was in effect in 2009, billions that would have gone to the Treasury.
But it is possible that next year will bring cases of the other extreme, when the amount exempt from the federal estate tax falls to $1 million, its 2001 level, from $3.5 million in 2009, and the rate rises to 55 percent, from 45 percent.
Thank you for trying to find a reasonable answer to my question! Packman, I think that parents like to help their children in the best ways they know how, if that means finding a way to pass on their assets, rather than give it to the government, god bless them for trying.
So much has been said about the impossibilities of currrent wage earners to save. My wife is underemployed, although she has two jobs, she gets no bennies and only is given 30 or less hours per week at $10 per hour. I work as a certified teacher for $20/hour as a teacher, no bennies as I sub, layed off twice. Work is available though, albeit 3 hours removed from my kids, and we can barely find time to be together.
Yes my wife is foreclosing on her home and I have purchased one with my seperate assets, but who is to judge? We believed the appraisor who told us her home was worth 440k in 2006. Wife was underwritten for 310k loan as grocery clerk.
Now, the neighbors just closed on their home, they got 216k(paid 380k). Wife owes 300k. We did lose our 20% downpayment and are…Hopelessly underwater. Another (realtor) neighbor has a similar unit, funded by the same BAC, he has not made a payment in one year, but BAC has not made a move to take possession(cuz then they would have to pay HOAs?taxes? or its too hard to sell?), so there he squats. Wife has not made a payment since April, it will be interesting who gets foreclosed on first.
So I took what I had out of CDs, bought a home for cash, why not try and come out of this mess with a roof over our heads is our thinking. Sort of like letting a 401k retirement fund sit untouched while a home is lost to foreclosure. Sure one could cash it out and pay for a few more months, but the end result would be no 401k and no house either! Our kids may enjoy having a home to come home to that is ours and stable, even though we bit off more than we could chew on another home and are losing it, at least we still have a home! Not sorry about it one iota!
Banks are being reimbursed(someone posted a you tube link regarding how banks like Indymac make money on foreclosures thanks to sweetheart FDIC reimbursments on mortgages poorly underwritten, that in all likelyhood could never be paid back-also being bet against by their makers whilst they were being written). I think the banks will do just fine regardless of whether wife loses home to BAC via short sale or foreclosure. They get the asset when they want it, and we will keep it in good shape till the day of reckoning w/o damaging it out of anger. Not releasing any pigs and abandoning it! We just keep it up and looking good until they come a knocking, then we will move.
Also if my parents want to put us in their will, well, consider that Gen X retirement fund, cuz we ain’t earning nuff to save our own! They may choose to donate their funds to another charity, that would be fine. But I think they looked up the word in(heir)itance and are going to abide by its definition and pass on their hard earned wealth to their heirs.
Gotta go tutor a kid(summer job/3 hours from home, living in travel trailer out at beach, to pay for health insurance and groceries). Will be missing out on summer fun with the family just cuz someone is willing to pay me $25/hour to tutor a sophmore who still does not know his times tables, and he is not thick headed, only misguided?
This country is in the shitter cuz of loss of cultural integrity, family values, and the ed system is indeed busted due to lack of pride or ethics. This kid does not look me in the eye, dead giveaway as to his character thus far in life. My kids are not that way, hate to give up my time with them on an already lost soul who checks his cell frequently while I drill and kill him. Oh well have license will travel. /Rant off
“someone is willing to pay me $25/hour to tutor a sophmore who still does not know his times tables”
Hearing stuff like this seriously makes me want to homeschool.
Mike, have you read “Glamourous Disasters”? I guess you don’t have to because it sounds like you’re living it (but the tutor in that novel made a lot more than $25/hr. tutoring the hopeless kids of the uber rich - in NYC).
As for an inheritance… well… its great if you have one coming, but don’t count your chickens before they’ve hatched. I’ve seen fortunes lost just paying for end of life care (think dementia patients who live 15 years). Eldercare is one tough responsibility; those who do it (especially for an extended period of time) earn every penny they might inherit.
Thank you for your response. It is disheartening to be a public school teacher due to one parent families, and kids not even knowing how to multiply by 10 w/o a calculator. And awful behaviors that are a disgrace. Some kids are awesome, but they generally have parents who care.
Dignity for a wage, that is the trade off that sub teaching is for me. Unfortunately, I seem to find work far away and not in my home town, where our kids go to a community school and my wife works for the district.
So its not worth moving, but I shall keep trying to find local work in teaching/home school tutoring.
“Now, the neighbors just closed on their home, they got 216k(paid 380k).”
Short sale or scalped haircut?
scalp job. They brought sig. funds to the table.
It’s the amount over the exemption that is taxed, not the whole amount.
A bunch of Donald Trumps turned into Jacque Cousteau.
http://tinyurl.com/29uy486
Banks hold some $176 billion of souring commercial-real-estate loans, according to an estimate by research firm Foresight Analytics. About two-thirds of bank commercial real-estate loans maturing between now and 2014 are underwater
The dollar number just has got to be higher. Kind of like the initial daily flow estimate from the BP hole in the gulf.
You are correct. Commercial banks hold about $1.7 trillion in commercial RE loans and admit to about a 10% delinquency rate. Hence $176 billion in “souring loans”. But banks have been granted alot of leeway to extend and pretend without impairing the loan so the “souring loan” number is much larger. If property is cashflowing the borrower has incentive to stick with the property if bank will allow him to make whatever payment he can make and consider him “current” on his loan. Over time the property goes into total disarray. If you were the borrower would you spend money on maintenance, or attracting new tenants when old ones leave, or just see if the option you have been granted by the bank might be worth something someday? Eventually the property goes back to the bank and the bank takes a much larger loss on the property it would have if it would have foreclosed earlier.
A bunch of Donald Trumps turned into Jacque Cousteau.
At least Cousteau was supposed to be underwater.
Observations:
- Mortgage rates hit yet another new all-time low, at 4.57% now.
- Despite this, demand for homes is still absolutely anemic.
This does not bode well for the housing industry, or for the possibility that interest rates will be going up any time soon.
Houses sold are not a determinate of interest rates, solely decided upon purchase price, $$$$$$$$$$$$$$$$$$…do you like the price of my house? No! No! I do not like the price of your house!…good bye!, …good bye, see you in 6 months…”
Alarm clock radio went off early (to me) in the AM. I’m pretty sure it wasn’t a dream. A local radio ad for VA loans and such. Equity loans of 100% on your house, and home loans with little or nothing down. Aimed at the local military folks I’m sure. Flashback to the old days.
Va Beyatch,
For a good many of us, the “flashback” is in there ‘was’ a time when -only- honorably discharged vets could get 100% financing!
Back then ( the 80’s ) it was actually considered our most valuable benefit. Almost as a way of making up for all the scrawny pay at the time. Hell, during The Boom ( you didn’t even have to be a citizen to get that deal? )
You didn’t even have to be human. Quite a few dogs and cats got no-doc neg am loans and probably one or two birds even got to live the american dream as home-owners.
for the low, low sum of 75k, you too can own your own 4 bedroom private sinkhole, in a Florida swamp
http://tampa.craigslist.org/hil/reb/1830856263.html
Maybe they want to practice their Cat(erpillar)-skinning skills.
Where’s the photos of the sinkhole? SO BORING!
It’s the “States Rights” vs the “The Federal Rights” …Go South Carolina!
Judge declares US gay-marriage ban is unconstitutional:
By Michael Levenson, Globe Staff
(Why should SC worry, all their woman love men, right?” or… is it the other way ’round? I’m living in CA, I’m soooooooo cornfused, right?…)
A federal district court judge in Boston today struck down the 1996 federal law that defines marriage as a union exclusively between a man and a woman.
“Tauro drew on history in his ruling, writing that the states have set their own marriage since before the American Revolution and that marriage laws were considered “such an essential element of state power” that the subject was even broached at the time of the framing of the Constitution. Tauro noted that laws barring interracial marriage were once at least as contentious as the current battle over gay marriage.
“But even as the debate concerning interracial marriage waxed and waned throughout history, the federal government consistently yielded to marital status determinations established by the states,” Tauro wrote. “That says something. And this court is convinced that the federal government’s long history of acquiescence in this arena indicates that, indeed, the federal government traditionally regarded marital status determinations as the exclusive province of state government.”
Rut-Row…
http://finance.yahoo.com/news/IMF-calls-for-deficit-cuts-in-apf-2908150880.html?x=0&sec=topStories&pos=2&asset=&ccode=
“…But the IMF said so far the U.S. rebound “has proved stronger than we had earlier expected” thanks in large part to what it called a “powerful and effective policy response” on the part of the government, including the efforts of the Federal Reserve.”
What would you call a Federal Reserve with a: “powerful and effective policy response?
1. a WOODY?
2. a STIFFY?
3. a BENDER?
4. a Tongue lashing?
5. Be creative…
Hate the US dollar, just hate it! You have alternatives!:
Death by a thousand insinuations of: “we love Israel & their goats”
(CNN) — Iran’s government is denying reports that an Iranian woman convicted of adultery will be executed by stoning, though her death sentence may still be carried out by some other method.
Well, just remember, I was a “free-thinking” American, before I was determined to be a “person-of-interest” and now the chase begins…
WASHINGTON (AP) — Consumer borrowing fell again in May, more evidence that Americans remain jittery over their finances and the durability of the economic recovery.
The Federal Reserve said Thursday that borrowing dropped by $9.1 billion in May. It also said borrowing declined by $14.9 billion in April, revising an initial estimate that showed a gain of $995 million for the month.
Consumer borrowing has fallen in 15 of the past 16 months as households have struggled with uncertain job prospects and battered finances following a deep recession.
In May, consumers borrowed less on their credit cards and took out fewer auto loans. Credit card borrowing has fallen for 20 straight months.
Many consumers, confronted by a deep recession and a weak job market, have tried to get their household finances in better shape by reducing their debt levels. In addition, banks during the recession have imposed tighter lending standards in an effort to cope with their rising levels of bad loans.
Analysts said the significant downward revision to April borrowing and May’s decline show that consumers remain leery about taking on new debt.
“There is simply no way to spin this data, nor the past few months, as anything other than a confirmation that the consumer has not come roaring back,” said Dan Greenhaus, chief economic strategist at Miller Tabak in New York. “The consumer remains quite stressed … with income growth relatively muted and labor improvements few and far between.”
And there you have it. Banks aren’t lending, people aren’t borrowing.
“Jittery?” There’s one of those stupid euphemisms again, for BROKE and JOBLESS.
What if someone called for a colonoscopy of Monsanto?
J&J sales plunge as new drug recall announced:
Johnson & Johnson pain reliever sales plunge, as eighth consumer product recall is announced.
TRENTON, N.J. (AP) — Sales of Johnson & Johnson pain relievers are collapsing as a string of recalls appears to have made consumers wary of once-sterling brands such as Tylenol and Benadryl.
An eighth recall, announced Thursday, could worsen consumer reaction. That wariness and the huge amount of products pulled off store shelves together look to be costing J&J tens of millions of dollars a month.
What if someone called for a colonoscopy of xe, or Halliburton,…or Cheney-shrub, talk about messy…?
Like I’ve said, it’s good to save money in business, but you can save yourself right out of business.
The Bay Citizen
Despite a Rare Pedigree, Plan for Affordable Housing Collapses
By ZUSHA ELINSON
Published: July 8, 2010
The deal was brokered recently in private by an unusual team of rivals, including one of San Francisco’s most prominent developers and a vociferous housing activist. The result, by all accounts, was unprecedented: an estimated $50 million for affordable housing in the city each year.
One developer who participated in the negotiations, which took place over the last six weeks in a City Hall annex, described the agreement as a “once-every-50-years alignment of the planets.”
Last week, however, the ambitious deal — which would have provided financing for affordable-housing projects, and would also have helped developers by subsidizing an affordable-housing requirement — came apart after running into opposition from an unlikely source: Mayor Gavin Newsom, the Democratic nominee for lieutenant governor.
The scuttled initiative, which has not been publicized, left a trail of bitterness and recrimination, much of it directed at Mr. Newsom, whose own aides had helped broker the deal. Three participants who were involved in the discussions said they understood that Mr. Newsom was reluctant to support what amounted to a new tax as he makes a run for statewide office.
“We came up with a plan that addressed a critical need,” said Calvin Welch, the housing advocate who helped broker the deal. “But the only thing that’s critical to Gavin Newsom is becoming lieutenant governor.”
…
Look who is worrying about reining in moral hazard now!
IMF predicts housing market “double dip” without reform
By SANDRINE RASTELLO
Bloomberg News
July 8, 2010, 8:43AM
The International Monetary Fund said the U.S. economy faces the risk of a “double-dip” in housing and urged the Obama administration to fix the nation’s mortgage finance system by overhauling Fannie Mae and Freddie Mac.
“The backlog of foreclosures and high levels of negative equity, combined with elevated unemployment, pose risks of a double dip in housing,” the Washington-based IMF said in a statement dated June 21 after an annual review of the country’s policies and economy. The fund sees unemployment staying above 9 percent this year and in 2011.
Treasury Secretary Timothy F. Geithner has said the Obama administration plans to restructure Fannie Mae and Freddie Mac, telling CNBC yesterday that a goal will be to “remove the moral hazard” from the government-sponsored enterprises.
Fannie Mae and Freddie Mac have been under federal conservatorship since September 2008, after a collapse of the subprime mortgage industry sent the housing market into recession. Before then, the companies benefited from lower borrowing costs in financial markets because of an implicit U.S. government guarantee of their securities.
“A key area of unfinished business in the reform of the housing system” and the “ambiguous public/private status of the GSEs proved unsustainable,” the IMF said.
Their “mandates should be streamlined and their retained portfolios should be privatized, as they have been the source of past losses and are unrelated to their core bundling and guarantee business line,” the IMF said. “Those lines, which arguably provide public goods, should be made explicitly public.”
…
Mortgage rates hit new lows 3 weeks in a row
San Francisco Chronicle
July 8, 2010 04:00 AM
Number of the day
3 weeks
That’s how many weeks in a row mortgage rates have fallen to new lows. The average 30-year fixed rate has dropped to 4.57 percent, the lowest since Freddie Mac began keeping track in 1971. While cheaper loans should be boosting property sales, buyers haven’t been as interested since a government tax credit for new owners ended earlier in the year.
Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/07/08/BU1I1EBG5N.DTL#ixzz0tA1jylsD
There is a huge untested assumption that Americans would not be able to get mortgages without the intervention of GSEs or other government subsidies. I humbly submit the free market could do a better job if Uncle Sam would simply step aside and let it work its magic.
Politics & Policy July 8, 2010, 5:00PM EST text size: TT
Time to Rethink Fannie and Freddie
The debate has begun on how to reform the housing giants
By Lorraine Woellert and Rich Miller
BW Magazine
July 12, 2010
…
“There will be a government role in the market whether we like it or not,” predicts Phillip Swagel, Assistant Secretary for economic policy at the Treasury under President George W. Bush.
At the heart of the emerging consensus across industry and consumer lines is the preservation of the 30-year, fixed-rate mortgage. “People regard it as a right as Americans to get a 30-year, fixed-rate loan,” says Susan Woodward, former chief economist at the Housing and Urban Development Dept. and a founder of Sand Hill Econometrics, a research firm in Palo Alto, Calif.
…
Ruthless people will walk away from their mortgages.
Biggest Defaulters on Mortgages Are the Rich
By DAVID STREITFELD
Published: July 8, 2010
LOS ALTOS, Calif. — No need for tears, but the well-off are losing their master suites and saying goodbye to their wine cellars.
The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves like this one in Silicon Valley.
Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.
More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.
By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.
Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.
“The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
…