Bits Bucket For July 11, 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
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We lowly responsible renters will never get the least little break from our guvmint.
It’s most profitable in the current housing market situation for households to to walk in the narrow valley between unscrupulous and illegal. Those who play by the rules will find they are the bag holders in the government’s myriad hare brained bubble reflation schemes.
Those who play by the rules will find they are the bag holders in the government’s myriad hare brained bubble reflation schemes.
In all due respect could it be possible that when you connect all the dots that there are no decent jobs being created, the economy has tanked, peoples faith in the government and the financial sector has waned. At this point, the government has no other choice but try anything, even if it is a hare brained scheme of re-inflation of the bubble. I wonder what would you advice. From the government’s perspective, can I make an argument that they think it is better, to appear like they are doing something rather than let this “sucker go down”.
I didn’t mean to suggest the government has a better choice than the course they are pursuing, at least from a political standpoint. Rather, I was merely noting that the natural result of these bubble reflation schemes is to shift the bad gambling debt from the hands of those who gambled foolishly into the hands of those who prudentially eschewed foolish gambles and tried to play by the rules.
While in any other activity the “do nothing” option is considered viable and valid, it is not, and never has been, for government.
“…it is not, and never has been, for government.”
First do no harm.
No, you’re never going to get a break from Wall St. Gubmint is just Wall St’s front.
Now, now…the taxpayer-citizen’s gov’t representatives are full of “TrueAngerLite™”
75 agencies push public pension cuts in California:
July 11th, 2010, by Teri Sforza, OC Register staff writer
As public ire rises over generous public employee pension systems, momentum for overhaul is rising as well.
“Local governments across California are poised to roll back pension benefits for public employees,” the Bee reports. “Sacramento County officials have had more than a half dozen meetings with their counterparts in nearby counties and cities as part of a collaborative effort to set more conservative, uniform pension guidelines.
“Other agencies, including Placer County, already are negotiating with unions to lower retirement benefits for new hires. In Alameda County, sheriff’s deputies agreed to such a rollback earlier this year.”
They need to get out of the pension business altogether. 401(k) and 403(b) plans work for everyone else, why not public servants?
401 and 403 DON’T work for everyone. Unless by everyone you mean those who make over 75K, then it works just fine. Because that’s the point where a person can afford to set aside enough from their paycheck to actually have a retirement where they are not eating cat food or mortgaging the house to pay for medical care.
Bulls**t.
I worked at a highly reputable, extremely well-known mutual fund company for nine years. (You know the one - it starts with a “V”). More than half of fund holders at that company earned less than $50K per HOUSEHOLD.
They made lots of money during the 1990s, and lost plenty as did everyone else in the 2000s. (Index funds make the same amount of money on a percentage basis for everyone invested in them; the “poor” have equal access).
Your statement is baseless, at least where I worked.
How many of those that earned less than 50K were on track to save enough to retire on? Where did they live? How many dependents did they have? Just curious.
What percentage of people who earn less than 50K are saving anything for retirement? You may have been seeing the creme de la creme.
Creme de la creme in terms of behaving responsibly and addressing their future needs themselves? You bet.
Funny, I get the distinct impression that you believe all persons should be “taken care of” by corporations or the government if they fail to take adequate care of themselves.
I don’t share that view, if that’s indeed what yours is.
Government programs that spank of “moral authoritiarianism” is what has bankrupted this country. Why behave responsibly when you can enact rules that allow you to behave irresponsibly AND steal money from the young.
We’re not where we’re at because people at all levels of economic scale behaved responsibly. In fact, it’s just the opposite.
Question for you: Why are so many people so irresponsible? What lets them get away with it, yet thrive? (Note, I didn’t say “get rich”. Thrive doesn’t necessarily mean wealth).
Experience has taught me that even when you plan well, you can get smacked down by things beyond your control.
There are also folks who will never be able to provide for themselves, much less make enough to plan for retirement.
Should we throw the unlucky under the bus?
And my point was that even the responsible who make less than 50K may not be able to save ENOUGH to be able to retire at a subsistence level.
Should we throw these folks under the bus?
Sounds like California may need to cede its ability to attract well-qualified new hires to positions in government in order to save the public pension system?
What would be the difference? Since when are most government workers “well-qualified”? To do what? Steal from the private sector? To screw everyone else? If so, yes, I’d say they’re more than qualified.
Finding unqualified government workers may actually IMPROVE the budget situation. Maybe that hasn’t dawned on you. Maybe it should. I don’t see that “qualified” workers have done such a great job. From where I sit, our government sucks. Beholden onto themselves only. Since when have they ever given a s**t about what happens to the ordinary American?
They want power.
It’s why they tax people and come up with government programs that everyone else must obey. Using their legally-sanctioned ability (i.e., guns) to harrass and punish those who disagree.
If you don’t like their sense of “morality”, then it’s off to the slammer for you.
Buy the government health care, or be heavily fined. Do that in the private sector, and you’re in the pen for coercion. This is what “qualified” government workers did to the average American, mind you.
And they’re rewarded with massive salary and pensions for literally enslaving the masses.
It IS slavery. Work for the Master (yessum, massah) and he’ll take care of you as he sees fit.
Like it? If you’re a government employee or a Fascist (same difference nowadays), you probably do.
Outside of CA, NY, or IL, most government employees are NOT making fat bank.
And the biggest problem in those three state is not government employee pay. It’s political favors contracting.
Let’s say the average household income in the United States is $50K annually.
ANY government employee making $50,001 or more annually is, therefore, “making fat.”
Per capita income is what? $35K annually? So, if you’re a government employee making $35,001 annually, then you’re “making fat”.
‘What would be the difference? Since when are most government workers “well-qualified”?’
Sounds like California may need to
cede its ability to attract well-qualifiedsettle for less-qualified new hires to positions in government in order to save the publicpension system…
Fixed it.
A shame that didn’t happen in real life.
Problems CAN be fixed that rapidly. We could start fixing the problems in a meaningful way within a week if people had any guts.
Instead, we’ll mamby-pamby our way through and ruin the lives of 100 million people over the next 50 years.
Congratulations on that, Bomb-thrower. You must feel proud.
The best and brightest on Wall Street, in fairness, did figure out a way to make chicken salad out of chicken sh-t. They were able to make money on valueless, toxic, junk debt. Quite a feat really.
They figured out a way to extract huge amounts of wealth from the rest of the economy, and de facto hold the economy - and the government - hostage (with the government’s complicity of course. They simply gave the politicians cocaine - money - in return for cooperation).
They figured out ways to privatize the profits and socialize the losses.
I think it’s time for the best and brightest to be exiled from Wall Street and go back into more productive - or at least less gigantically destructive - pursuits.
It isn’t government employees that make laws. Elected representatives make the laws. Government employees are hired to carry out the laws.
Talk of public pension cuts today will lead to talk of private and corporate pension cuts tomorrow.
And talk of Social Security cuts.
And Medicare cuts.
It is what it is. When there’s no money for everything that’s been promised then something has to give.
For months now the MSM has been firing up the American population concerning extra-large public pensions - “shaping public opinion” is what they call it. Expect this “shaping” to be expanded to cover other promised financial commitments.
“shaping public opinion” is what they call it.
I’ve always been fascinated by the concept of turd sculpting.
Marketers will confirm that one can sell anything if it is packaged properly.
Does anyone remember the famous “artist” who was having his very own sh*t canned and presented as art?
Robert Mapplethorpe?
No, but years ago one of my sisters told me of an artist who displayed some mural of dirty diapers and passed it off as “art.”
Here it is from a segment on 60 minutes.
Morley Safer and Murphy Brown Take on the Experts
Twice in the past year, millions of American viewers had the pleasure of seeing the contemporary art establishment get its comeuppance on prime-time network television.
First, there was the segment entitled “Yes . . . But Is It Art?” last September 19 on the long-running CBS newsmagazine “60 Minutes,” which exposed the fraudulence of the contemporary work hyped by most dealers, critics, and curators–work ranging from so-called abstract art to a “piece” consisting of two basketballs submerged in a fish tank. Morley Safer, the intrepid reporter for the segment, aptly derided the art world’s impenetrable Artspeak, and deprecated the status-seeking collectors of such work by invoking the old adage “There’s a sucker born every minute.”
Four months later, on the January 17 episode of CBS’s popular “Murphy Brown” show, the sit-com’s fictional TV anchorwoman also mocked the fashionable art world, including its pseudo-artists. Undoubtedly inspired by the “60 Minutes” segment and its aftermath, the “Murphy Brown” episode was as trenchant a social satire as any play by Molière–a witty denuding of intellectual pretension and charlatanry.
In one scene, Murphy, facing off against art “experts” on a PBS talk show (a scene modeled on Morley Safer’s appearance on the “Charlie Rose” show), ridiculed a work entitled “Commode-ity,” which was nothing more than an actual toilet affixed to a wall. The sit-com writer did not exaggerate. “Commode-ity” was no more bizarre than the real-life commodities of the postmodernist whose “artworks” consisting of urinals and sinks had been featured on “60 Minutes”–or than the urinal that the early modernist Marcel Duchamp presented in 1917 as an artwork entitled “Fountain.”
http://www.aristos.org/backissu/yesbutis.htm
Pet Rock anyone?
I thought this was hilarious about specifically the art scene in Marfa, TX - but applicable anywhere I suppose.
thebloggess.com/?p=6749
Good grief! No wonder it seems a good idea to buy gold bullion coins. Humanity is nuts!
The trade in art is nothing more than than the trade in beanie babies for the rich.
“It is what it is. When there’s no money for everything that’s been promised then something has to give.”
As I suggested in a post yesterday, the trick (at least in the case of Social Security, and perhaps in other cases as well) is to shift the collective paradigm so that pensions are once again viewed as a form of old age insurance rather than a cash bonanza to fund a lengthy and lavish post-retirement lifestyle. The political difficulty will resemble a problem FDR faced when initially passing OASDI: How can those with sufficient means to fund their own retirements be induced to support a “Share the Wealth” transfer to others who are not sufficiently wealthy to do so? Once that political hurdle is cleared, the technical challenge of redefining pensions as old age insurance (and scaling back benefits accordingly) will be relatively minor.
“shift the collective paradigm so that pensions are once again viewed as a form of old age insurance rather than a cash bonanza to fund a lengthy and lavish post-retirement lifestyle.” ?
Define: cash bonanza as it is applied to current SS payouts, are all payments equal?
“Define: cash bonanza as it is applied to current SS payouts”
Unreduced payouts from a system initially designed to protect those who outlive their life expectancy which begin 15 years earlier than life expectancy…
It is what it is. When there’s no money for everything that’s been promised then something has to give.
I think you can try to contain this promised pension business all you want. The ultimate solution will be printing and borrowing more money. Remember the pensioners have the full faith of the US government. This has been done repeatedly in third world countries.
“The ultimate solution will be printing and borrowing more money.”
Could be (was in the 1970s, that’s for sure!). This is a great way for the Fed to impose a stealth inflation tax on fixed-income pensions without publicly admitting to the tax increase. It is totally deceptive, in line with stoopid Republican voter-approved ‘no new taxes’ rhetoric, and poorly understood by the average American voter.
“shaping public opinion” aka The Engineering Of Consent” - one of Edward Bernays legacies.
From Wiki: The Engineering of Consent:
“He (Edward Bernays) defines ‘engineering consent’ as a weapon which is used to manipulate people, specifically, the American public, who are described as ‘fundamentally irrational people … who could not be trusted’.”
The nail has been hit squarely on the head.
More …
“The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who mainpulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our conttry. …We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of. This is a logical result of the way in which our democratic society is organized. Vast numbers of human beings must cooperate in this manner if they are to live together as a smoothly functioning society. …In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons … who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”
combotechie
Oh yeah. When I learned about Edward Bernays in college, it took away my idealism and innocence. I grew up. The next step was 28 yrs later, when I became a Political Atheist.
Some of Bernays’ legacy:
*bacon & eggs - turned it into The American Breakfast (his clients)
*jewelery & designer clothes - red carpet moments for entertainment awards (his clients jewelers & designers)
*Third Reich used his methodology
*women’s smoking rights hitched to women’s right to vote. “The Torch Of Freedom”.
*Politicians and Political Parties hired him to brainwash the public
*lead in Gasoline -GM was a client/medical community bought off
I know a lot…. but will stop here.
Combo
Edward Bernays was Sigmund Freud’s nephew. When Freud went broke and needed help , Bernays sent for his uncle, and got him a visa to live in America. Of German Jewish decent, as Einstein, they used their intelligence differently (think the dark side, imho). Freud wasn’t fond of America.
Bernays’s daughter isn’t proud of her father’s legacy. I really absorbed this stuff. It was interesting.
OK the only FAIR way to do this…
is first force all those who retired to roll back their pensions based on their last base pay with NO overtime vacation pay etc…..
Those working will have 401K’s
Then roll back new hires…
Its the blatant stacking of pay before you retire, that really is the issue then If no one can do it…it would save tons of money and be fair to all..
“Its the blatant stacking of pay before you retire, that really is the issue then If no one can do it…”
Call it for what it is.
It’s theft.
“…is first force all those who retired to roll back their pensions based on their last base pay with NO overtime vacation pay etc…..”
1) Not clear that it would be fair to do this to people whose labor contracts were based in part on pension promises.
2) Unlikely to clear legal hurdles to rolling back pension benefits; once they are granted, they tend to be irrevocable (refer to the San Diego pension shortfall and how it came about for a recent example).
All I’m saying is hopefully when a city files bankruptcy a Judge will roll back the pensions to just the salary of the last few years…that’s all…doubling your pay by working massive OT in the last years before retirement should be retroactively eliminated… they get their base pay and that’s it…
Lets see them guv retirees squirm and whine about sharing the pain
—————-
1) Not clear that it would be fair to do this to people whose labor contracts were based in part on pension promises.
No, they’ll steal 401K money before they’ll ever touch government pensions.
Steal from those who have earned and saved it first. You know the drill.
Stealing 401k money?
That’s grounds for a revolution by the savers. And a bloody one at that.
Over our dead bodies they will do this.
I take it you live in Los Angeles?
Well…guess what. One of your representatives (don’t know if it was a House rep or a Senator) already proposed doing just that.
I put NOTHING past our Federal government. Every aspect of it is corrupt. As proof, I offer the millions upon millions of pages of legislation. That’s all the proof you need if you think about it. Every goverment deal, every negotiation is a Foray to Fraud. How could it be anything but? At every stage of the game, the wants of the average American are compromised and marginalized, and the wants of the politicians and lawyers are sated.
Consider, if you will, that those born from 1900 to 1955 have largely relied on “The Art of Negotiation”. Look at what “negotiation” has left behind. Now, these same people are trying to negotiate the Constitution of the United States!
Our highly “moral authoritarian” elders, who pursued their own interests most of their lives at the expense of everyone younger than they (including their own kids), are continuing to destroy their progeny’s future to feed their belly-button gazing egos.
I’m not open to debate, as I know I’m right. What else would you call national healthcare if not “moral authoritarianism”?
I, for one, am sick to death of the moralistic proselytizing. Listening to such people is worse than listening to a religious fanatic.
Today’s 55-, 60-, 70- and 80-year-olds still don’t care about their kids. They’re still pre-occupied with pursuing their ego-driven need of moral authority (for example, “national health care”) instead of doing that which might actually work.
I guess gthe rest of us will have to wait another 20-30 years until all these people are DEAD to begin cleaning up the near-fathomless mess these A-hole beatnik/hippie/new age “moralists” created.
God, I hate these people.
People aged 50 and younger are going to have to kick and scream a hell of a lot louder than we already have been, apparently. The Boomers and Silents still aren’t listening, and if they are, they must enjoy what is happening. Otherwise, they’d FIX THE PROBLEM.
They’re the ones with the power, and rather than FIX THE PROBLEM, they’d rather add even more layers of moralistic authoritarian bullshit for their kids to suffer through. Gee, thanks. A-holes.
“As proof, I offer the millions upon millions of pages of legislation.”
Wow — that’s pretty convincing proof…NOT.
You’re a government stooge, I take it.
“One of your representatives (don’t know if it was a House rep or a Senator) already proposed doing just that.”
BFD. A proposal is a proposal. I can get my money out of my IRAs faster than the legislative bodies can get the executive branch to sign in such a law.
It takes me no more than 15 days. And yes, I can have them withold the money in advance too. Thank you Uncle Sam, now you go your way and I will go my way.
This is another reason why the shrewd saver does not rely on 401k or IRA alone, but puts as much as he can in non-tax-deferred investing.
So I guess we should all go fall on our swords tomorrow. (Yeah, that’s the ticket - tomorrow
)
talk of private and corporate pension cuts tomorrow.
“talk of?” No, that’s already happened. New hires get no such thing (they’re lucky to have a job), and older workers already had their pensions discharged during the Great Bankruptcy Frenzy in the 90’s.
I’m all for FB’s walking away from obligations. Hoist the corporations on their own petard.
Prove it. I want a before and after of what federal employees make in retirement prior and after the nebulous “1990s” that you cite here.
I want sources and numbers from government websites.
combotechie is right, except that private sector pensions have been getting cut for almost 20 years now.
And then there’s the fun game of “fire the employee just before retirement.”
What has happened is that big business has killed off REAL pensions and now MSM is making everyone jealous of those who still have a pension, instead of uniting with them and demanding to get pensions back.
Another successful divide and conquer the stupid program. There’s going to be a lot of PO’d, but ineffective and ignored seniors in the future. Because you can always kick the poor around. Don’t think it won’t happen to you.
I find all this fascinating because as a school teacher I have faced a fair amount of ridicule in my 24 years about how hard I work for such low pay. This ridicule of course coming from people during boom times making boom time wages. Soon enough, we’ll be out of this recession and the derision will begin again. In the meantime, the politicians will start class warfare to decimate what’s left of the middle class. Is there anyone out their without a provincial pondunk mind?
How will rolling back benefits for new hires improve state’s budget problems? They need to renegotiate current hire pensions which were often voted in by council members who personally benefited.
You need to think this through more thoroughly.
Government people don’t give a rat’s ass about budgets. (Want proof? Tell me - what’s the Congressional budget this year? You’ll find they don’t have one).
All they give a damn about is whether they live well as they steal from others. They need that money so they can proselytize to all of us what is morally just and what is not. It’s what they’ve done in every area of our lives, whether it be real estate, food, civil rights, etc.
They’re evil people. Literally. They’re no different than fundamentalist religious fanatics. Like religious fanatics, they assume they know what’s best for everyone else.
Oh it’s worse than that. A lot of government is just a front for big business.
A whole lot of generalization going on there, Colorado Springs. After being on this earth for almost 60 years, and working about the same number of years in the private sector as the public one I’m in now, I have found just as many jerks and crooks in either sector. But there are more good people than bad out there - whether they are the loathed gubmit workers or privates - or under or over 50 years old.
I don’t like a lot of what is happening government-wise - and have always been cynical about it - but then just think “Enron” - or any number of so-called private enterprises where fraud and corruption run rampant.
It’s good to vent but, quite frankly, if you maintain that much “hate” with such vigor, you’re not going to need to worry about retirement.
Limbaugh Gets Mega Millions on Condo Sale
* The Wall Street Journal * NY REAL ESTATE RESIDENTIAL
A year after railing about the high tax burden on wealthy New Yorkers, Rush Limbaugh, the conservative radio talk-show host, is severing one more tie with New York, selling his lushly decorated Fifth Avenue penthouse to an undisclosed buyer.
Mr. Limbaugh’s 10-room condominium, which features a 30-foot-wide living room with fireplace and four terraces overlooking Central Park at East 86th Street, went into contract Thursday for a bit under the final $12.95 million asking price, brokers said.
One broker familiar with the transaction said the final price was about $11.5 million. Mr. Limbaugh paid just under $5 million for the apartment as well as a maid’s room and a storage locker, in 1994.
At that price, city officials said that the sale would usually trigger a payment from the seller at the closing of about $325,000 in transfer taxes, including about $164,000 for New York City and $161,000 for New York state to help close the state’s huge budget deficit.
Much as I don’t like that guy, he did a financially savvy move. If I’m not wrong, $500,000 of that gain is tax free (if he and his wife file jointly).
On the same line, if we are lucky, a national sales tax will replace the income tax, capital gains tax, dividends tax, and corporate tax after we “throw all the bums out.” In such a situation, RL would have several million bucks capital gain tax free.
Hello HBB Folks,
Well, I’m funking of putting in an offer this week on a foreclosed house. I found it on Zillow and got a chance to do a self tour (as the back door was open). The house is clearly vacant with signs of grabbing the important stuff and just bolting. It’s in decent shape but needs a lot of elbow grease to get up to par with the other houses.
Looking through the house I found a court document from their divorce. They bought the house in 1997 for 350K, and Zillow listed it’s Zestimate at 769K, which is waaaaay off for the condition it’s in.
I called the listing agent to see what the story was - after three phone calls I finally got ahold of him. He said the bank hasn’t decided what to list it at and he’ll call me ‘When I get back to the office’. It’s been ten days and I haven’t heard back from him. So, today I’m going to call another agent (One I’ve met before and believe him to be a decent one) and put in a low ball offer.
Only question: How low do I go? I’ve bought a foreclosure before and went low but felt I could have really molested them and went deeper. Any thoughts/suggestions? Thanks for your time.
Lowball, lowball, lowball. It’s going to get worse before it gets better. Always be willing to walk away from the deal.
Have you looked for comps on Craig’s List? I only ask because we recently stayed with friends who found a very attractively situated fixer-upper on Craig’s List at a deeply discounted price. After investing sweat and cash equity to fixing up the place, they are enjoying life in a lovely part of the Bay Area (Lafayette).
If it’s not on the market yet (i.e. not in the MLS) then you could be in for a long wait. Be sure your offer has a “drop dead” date at which time the offer is null and void and your deposit is returned if there’s no agreement. Otherwise you’re in limbo.
To have any chance at all, your offer is going to have to be totally non-contingent. Get any needed financing locked in, get a home inspection, and be ready to settle quickly once the offer is accepted.
The foreclosure we bought here in 2005 was similar to your description. Dingy, with some cosmetic improvements the bank had put in. Overgrown shrubbery outside, musty and dusty inside. But no structural defects and no termites. We could see what we would have to do to make it a pleasant dwelling, and estimate the costs to do it. BTW, you never finish remodeling and updating an older house, you just stop.
Compared to similar houses in the neighborhood, the bank was asking about 20% below “market.” Remember this was 2005; foreclosures were rare. We offered 15% less than the asking price, and settled at 10% less. They even threw in an owners title insurance policy.
Ya know what? Adding our remodel/renovation costs to the purchase price, we’d lose at least 20% if we had to sell right now. But at least we have no mortgage.
Are you sure you don’t want to keep renting?
It should say in the beginning “thinking” not “funking”. I’ve been listening to too much George Clinton lately.
We are renting now, and thinking of renting a new place when I found this foreclosure. It really does have everything we want in a house without going overboard and both my wife and I loved rehabbing our old house - we are gonna try to do it again. Believe me, I’m not upset we are renting, I don’t get all wet over the “pride of ownership” nor will I fall in love with this house and get emotional about it. I have my limit and will not go a penny over that.
Having said that, I’m thinking of putting in a bid for 100K with a contingency specifically for toxic mold, foundation, termite, lead paint and asbestos. I hear you about the no contingencies, but I’m not gonna walk into a house that needs major foundation repair or has been chomped on by bugs for years. It’s just not worth it.
I feel like I sit on the sidelines and just watch the game. Yes, 100K is low for the area (DC Metro) but what are they gonna do? Say no?That’s fine by me - I’ll wait for the next one.
with a contingency specifically for toxic mold, foundation, termite, lead paint and asbestos
If there is humidity problem from the foundation such as humidity above 60 percent you definitely will have mold. You mentioned musty smell. Musty, dank, earthy is the breath of mold. If there was standing water for over 2 weeks and the humidity levels reached above 90 percent. Then toxic mold such as statchybotrs and chaetomium will be present. Otherwise all you will find is Asperigillus and pennacillium mold. They are considered the early colonizers. If the house is pre 1976 chances are it does have lead. Asbestos can be spotted easily unless it is sprayed. Termites either you have them or you don’t.
You can also get more info information
http://caltexmoldservices.com/Caltex/section/home/
I don’t know how much credibility you’ll get if it’s a low low offer and you’re not payinig cash. The minute they find out you’re financing, they’ll presume you’re weak. And if you’re financing, I’d agree… you’re in a weakened position.
P-Funk *thumbs up*
By the way… I recently heard Diaper Man died. Too bad. He, Bootsy Collins and George were classic.
prequalify for a loan first…it’s difficult to get ANY loan these days.
Could be wasting your time. It seems like banks are interested in cash offers first.
Do MSM-favored SoCal economists live inside of an echo chamber? Because methinks I detect the echo of Bernanke’s ‘Green Shoots’ econoganda in their commentary.
A double-dip recession? Three local views
By Dean Calbreath, UNION-TRIBUNE STAFF WRITER
Originally published July 10, 2010 at 10:46 p.m.,
updated July 11, 2010 at midnight
At the end of June, a flurry of bad news drove the stock market to its lowest point since last October and raised fears that the country was slipping back into recession — or worse.
As government data showed rising layoffs, a slowdown in manufacturing, declining home sales and drooping consumer confidence, Nobel Prize-winning economist Paul Krugman proclaimed the world might be on the verge of a depression. University of Maryland economist Peter Morici warned that “the nation is at risk of a terrible calamity.”
…
The San Diego Union-Tribune asked three local economists to give their thoughts on how the national, state and county economies will cope with the lingering effects of the recession.
Although these analysts are more optimistic than Krugman or Morici, they do not believe there will be strong growth any time soon. They also predict that California will perform worse than the nation or county because of continuing problems with the state budget.
NATIONAL ECONOMY
James Hamilton , University of California San Diego
… I don’t think we will go through a second dip of recession or a third depression. Instead, I think we’ll see positive growth in both employment and the gross domestic product through the second half of the year.
…
CLICK!
STATE ECONOMY
Esmael Adibi, Chapman University, Orange
…
A double dip is more likely in the state than the nation, although I still think it’s unlikely here.
…
I think our job growth will stay positive, but it will be very, very weak.
CLICK!
SAN DIEGO ECONOMY
Alan Gin, University of San Diego
…
I don’t think we’re going to see any dip in the national level that would be severe enough to pull us into a double-dip recession.
CLICK!
The Big Interview: Morgan Stanley’s Stephen Roach
http://online.wsj.com/video-center/big-interview.html
I would think a potential shock along the lines of those Roach suggests could precipitate a double-dip recession would be a worse-than-expected global spillover from a collapsing Chinese property bubble.
I love how the interviewer cornered Roach on the resemblance of his “no Chinese property bubble” argument to that Alan Greenspan made for the U.S. a few years back. Roach seemed shocked to learn that he might be succumbing to the very same myopia of U.S. economists he has criticized.
My personal view is that he overestimates the ability of central planners to coordinate the pace of development to sustainable levels.
What’s the Chinese sinogram for: “It’s Contained!” ?
The WSJ supports HTML5 video. Cool!
Does predicting a double dip influence its likelihood?
“That the US dollar today is worth 3¢ in purchasing power, compared to a 1913 US dollar, stands as evidence of the need for a long-overdue overhaul of American currency, banking and lending practices.”
~Bill Sardi
Amen, brothah!
Barn door left open
All of the horses have fled
Hurry — shut the door!
(Hwy will note who votes against this bill, because my siblings will strongly argue at Thanksgiving that being a “TrueDoNothing™ / “TrueObstructionists™ / TrueGridLokers™” is more productive than attempting to do ANYTHING at all…at which point I’ll just smile and put on my wine stained t-shirt that says: wu wei)
Volcker Pushes for Reform, Regretting Past Silence
By LOUIS UCHITELLE Published: July 9, 2010 NYT
“The thing went from what is best to what could be passed,”
If he were a teacher, and not a senior White House adviser and the towering former chairman of the Federal Reserve, he says, he would have given the new rules just an ordinary B — not even a B-plus.
Mr. Volcker says that most of the deregulation came after he left the Fed. His reluctance to deregulate contributed in part to his departure under pressure from the Reagan administration. His replacement, Alan Greenspan, openly campaigned to weaken and finally repeal Glass-Steagall, and President Bill Clinton signed the repeal into law in 1999.
Although Mr. Volcker opposed the repeal, he didn’t go public with his concerns. “It is very difficult to take restrictive action when the economy and the financial markets seemed to be doing so well,” he says of his silence at the time. “But eventually things blew up.”
In the wake of those changes, banks were suddenly free to charge more for risky loans, and that encouraged risky lending. The subprime mortgage market grew out of this dynamic, as did the panoply of complex, mortgage-backed securities, credit-default swaps and heart-stopping leverage that finally produced the 2008 crisis.
Mr. Volcker disagreed. Let Goldman Sachs and others trade to their hearts’ content, he argued in Congressional testimony last fall, and if they fail they can lose their own money, not get a dime in bailouts from taxpayers, and then be dismantled by the government in an orderly fashion.
In retrospect, Mr. Volcker regrets not challenging the widely held assumptions that underpinned much of this. “You had an intellectual conviction that you did not need much regulation — that the market could take care of itself,” he says. “I’m happy that illusion has been shattered.”
“There is a certain circularity in all this business,” he concedes. “You have a crisis, followed by some kind of reform, for better or worse, and things go well for a while, and then you have another crisis.”
(But what has not gone “circular” is 14+% interest rates…yet.)
Here, Volcker is simply passing the bulls**t baton.
When will people realize that endless negotiations often end up with worst-possible solutions? I’m sick and tired of all the mamby-pamby seen throughout government during the past 30 years. All parties, all positions.
Fix the damn problems, allow the pain, and get on with it. Get it done.
There’s no reason to allow future generations to get screwed to the extent that Gen-X will be for the rest of their lives.
The behavior of our “leaders” is despicable. Moral authoritarianism since 1965 has ruined the prospects for 100-150 million people in the USA alone.
The millenials (the ones in their early 20s) who know Mandarin should be getting great jobs in China these days and investing in emerging market economies. If they save, save, save, the few savvy ones who do this will become decamillionaires by the time they are in their late 40s.
While that’s a good thing for Millennials, that doesn’t help today’s 30-50 year-olds who are going to be left holding the bag.
As usual.
So what fixes are you proposing?
No fixes. Because social engineering always has unintended consequences and unintended consequences are usually negative. The key is for a young sharp enthusiastic individual to think of himself as an individual, then seek out the best opportunities in the world.
It’s far easier to take the direct approach to decision-making than to try to persuade others to agree with your views.
IMO, America is screwed. 45% want to rob Peter to pay Paul. Another 42% have their number one goal to make this a Christian Taliban country. 3% want to be left alone in their hedonistic capitalistic lifestyle.
Lots.
1. Immediate Balanced Budget Amendment to the USA Constitution. If the government doesn’t have the money, it can’t spend it.
2. The government needs to force the banks to put all property on the market. Market forces dictate under uniform standards and most existing rules in effect in 1964. Same access to all, as long as strict standards are met.
After the properties are on the market for two years, the banks then have right to withhold property if they so choose.
3. No national health care plan. All insurance is offered to individuals only. No corporate or government involvement in insurance. No state lines, either. Significant tort reform.
4. Ban lobbyist groups, PACs and corporate interests from D.C. Make it a jail-time offense.
5. Cut off ALL Americans from receiving welfare money beyond $5K annually for ANY reason what-so-ever. That includes corporations. It also includes those affected by natural disasters, health issues, job loss, etc.
6. Reward savers and investors. The more money saved as a proportion to income, the more money they can earn. Keep saving proportion within limits, obviously, as to not freeze the economy. Maybe make the “bonus” range start at 10 percent of wages saved, on up to 15 percent. Money saved at less or more that set range get no added bonus.
Think of it kinda like federal income tax scales in reverse. Save X amount and bump up on your interest rates.
Sorry, Bill. That question was directed at CoSpgs4.
“Fix the damn problems, allow the pain, and get on with it. Get it done.”
Which problems and what is the fix?
‘“You had an intellectual conviction that you did not need much regulation — that the market could take care of itself,” he says. “I’m happy that illusion has been shattered.”’
In retrospect, free financial markets only work in a world without the moral hazard created by free too-big-to-fail bailout insurance.
As we saw in the S&L crisis, it doesn’t work with small-enough-to-fail institutions either.
Uh, the S&L crisis didn’t precipitate a global financial meltdown.
Uh, the S&L crisis didn’t precipitate a global financial meltdown.
It precipitated a country-wide financial meltdown, and was met with a (at the time) huge government ‘bailout’.
Many of the countries involved in the current meltdown were led there by their smaller banks- Spain being a perfect example. Their ‘cajas’ are very similar to our S&Ls, and these cajas are the main lenders in their bubble.
Small size of individual institutions is no cure for systemic failure. They can fail en masse, and bring the system down, too. It’s happened before, it’s happening now.
The S&L disaster did indeed have world wide repercussions. Just ask the Japanese. Or any of the other foreign investments of our RE and banking companies at the time.
There are many parallels from this time to that that one. Only this time it’s bigger. MUCH bigger.
We’ll have an overhaul one day, alright. It will make the current situation look like a cake walk.
It’s because this is a debt-based economy. “Financial Engineering” is a cornerstone of this economy. Limited inflation is good for borrowers and lenders. Borrowers are more inclined to borrow if they can pay in reduced value dollars, and thus lenders have a higher volume.
I guess Sioux City, Iowa must have been quite the real estate investing Mecca back in the first half of the current decade?
Apartment Foreclosures
When owners walk away, taxpayers get the bill
By Lynn Zerschling
Posted: Saturday, July 10, 2010 10:30 pm
SIOUX CITY — City leaders and a private development group have partnered to deal with the high number of apartments in Sioux City that have been foreclosed upon and that, if left vacant, could lead to deteriorating neighborhoods, public hazards and declining property values.
“This is something we haven’t seen before in the number of foreclosures,” Cathy Olson, the city’s community development director, said. “It certainly has put a burden on the community as a whole. When you get somebody walking away from apartments — just leaving them as they are — then somebody else has to deal with it.”
Usually, that “somebody else” is taxpayers.
…
Mapping the foreclosures
Here is a look at the city’s foreclosed properties list.
Address City Action Disposition
315 12th St.
322 W. First St.
405-07 13th St. (Red-tagged, demolished)
406 W. Third St. (Red-tagged)
513 Jackson St.
609-11 Ninth St. (Red-tagged, demolished)
615 Ninth St. (Red-tagged, demolished)
904 S. Alice St.
905-07 12th St.
1015 Pierce St. (Red-tagged, ordered demolished)
1040 Hill Ave.
1103 26th St. (Red-tagged, ordered demolished)
1106-08 Douglas St. (Red-tagged, demolition pending)
11061/2 Douglas St. (Red-tagged, demolition pending)
1119 Douglas St.
1205 Douglas St. (Red-tagged)
1207 25 St.
1211 Douglas St.
1218-24 Douglas St. (Red-tagged, demolished)
1219 Nebraska St. (Red-tagged, demolished)
1301-05 W. 20 St. (Red-tagged, demolished)
1332 Jennings St.
1406 W. 21 St.
1424 Summit St.
1430 Summit St.
Wow, there’s a bubble in the demolition biz!!!!
If the demolition biz is this good in Sioux City, Iowa, imagine how fantastic it is in Detroit?
Another Sunday,…another Eeyore Award!
Hey Palmy:
Wait till FloorRiddah has to bulldoze 50,000+ vacant houses because they are toxic mold termite infested and not worth repairing….
and what about swimming pools…how many of them are algae encrusted cracked and leaking?
Strategic Default Strategy:
A Plan For Illinois Homeowners To Walk Away From Current Mortgages and Moral Obligations
By Daniel T. Zanoza
Saturday, July 10, 2010
Recently, I was shocked to learn about how hundreds or perhaps thousands of Illinois homeowners are using a strategy called “strategic default” to walk away from their current mortgage obligations. Literally thousands of homeowners in Illinois and across the country find themselves “upside down” or “underwater” regarding the homes they currently live in. The terms “upside down” and “underwater” refer to homeowners who owe more money on their homes than they are currently worth.
…
Here’s how this “strategic default” strategy works. Those who are having trouble meeting their current mortgage notes, but may not be in default or foreclosure, or are simply seeking lower mortgage payments, go out and purchase new homes. They find homes with lower mortgage payments more commensurate with their income.
On their credit applications and in meetings, new lenders inquire about the status of the current mortgages held by those seeking to get out from under their old mortgage agreements. The perspective lenders take the applicant’s word, in good faith, that their old homes are in the process of being sold. Technically, though this may not be true, new lenders provide mortgages based on inaccurate or misleading information from perspective buyers. Once a new mortgage is secured, the homeowner then simply walks away from their old mortgage obligation, leaving their credit rating in shambles, but at least these individuals or families are now living in a home they can more readily afford.
…
Illinios is a recourse and judicial forclosure state. But good luck with that.
If they have no assets to go after, then it makes no difference, does it?
You have to plan on LOOKING poor for a long time. Now would be a good time to buy some gold to keep it out of the bank where they can attach your moolah.
Don’t the debt holders have five years to make a claim (or sell it), and twenty years to pursue it after that? That’s a long time to go with no assets- although it is done by many. I think they can go after your wages, too.
They can garnish their wages if they dont declare bankruptcy.
If this trend picks up steam, the U.S. home price distribution is going to get crushed from the top down, just as I have been predicting here for about five years running already. Affordable housing in line with local incomes and rents will be the eventual silver lining to this dark cloud, unless the government some how successfully intervenes to prop up prices above the level Mr Market wants to take them.
Richest homeowners making most defaults
* By David Streitfeld, New York Times
* Memphis Commercial Appeal
* Posted July 11, 2010 at 12:02 a.m.
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 $1 million is 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 lenders. About one in 12 mortgages below the million-dollar mark is delinquent.
Although 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.
…
Hang-the-Elephant score:
Gov’t Bungee-cord Theory = 1
Mr. Bear’s Rope-around-the-Throat = 0
As they say at the roulette table at a “certain point”:
“No more bets…”
Notice the assumption made by the reporter - that having a mortgage for over 1 million equates with being rich. Puleese.
I suspect that many of those million dollar plus mortgages are based on personal ponzi schemes which are just starting to unravel.
If the mil $ mortgages are the pinnacle of the pyramid, then erosion @ the base of the pyramid - those lesser mortgages - will, ultimately, cause the whole thing to topple. The fact that the top is finally beginning to move suggests that attempts to shore up the base are failing.
Or, perhaps it’s more like a dike, so far the dutch boy’s finger has only allowed little mortgage minnows to swim through but now that million $ whales can make it through the dike suggests that a flood will soon follow.
Exactly. Having a million-dollar mortgage is no sign of being rich, as we have well seen.
I wonder if the truly rich will walk away from their mortgages in recourse states. They’d surely be sued for any losses. They’re the most ’stucco’ of all, no? (Arguably, the truly rich shouldn’t need mortgages at all, but I bet a lot of them have one- or more.)
The truly rich have don’t require mortgages.
Exactly. Their shell corporations buy/lease the house for them.
It comes down to your definition of ‘truly rich’. Nicholas Cage would seem to be truly rich, no? He makes millions of dollars per movie. And yet he’s lost several of his homes to foreclosure.
Some of those million dollar homes are in the Ahwatukee foothills area. Pro sports stars own some of them. I see in Zillow that Ahwatukee foothill prices are at the 2004 level, although Phoenix prices on the average are near the 2001 level. Hermosa Beach prices too are at their 2004 level.
Yes “high end” homes are falling in price, but have been doing so very slowly. Perhaps with 1/7 of million dollar homes being in foreclosure, this will really mash down the prices in 2011.
And when the high end prices go down, they will forcefully push down the lower end houses. A $400,000 grotesque stucco box in Gilbert versus a $400,000 quality-constructed house that is not gaudy and in a better location makes the latter a winner in value. People will shop more for value. So that would make the $400,000 Gilbert house fall quite a bit.
BLM selling off water rights. Anyone know about this and what the implications are for the future? Seems really sinister to me.
http://farmwars.info/?p=3253
Cool, I’m gonna email her…tankxs!
I think Oly Gal would have liked Barbara & Rita…:
“Barbara lives on a small ranch in Oregon where she raises geese, chickens, horses, Oggie Dog, a variety of cats, and an opinionated Macaw named Rita. This rural lifestyle is being threatened by a combination of increasing Federal regulations and corporate shenanigans such as NAIS and Monsanto’s invasive GMO technology designed to make it next to impossible to raise animals and organic food.”
Water rights will become a huge issue in the not to distant future.
It’s one of the many reasons I purchased my Montana property. I have plenty of water as well as the water rights.
Yeah right…. I suppose Wall Street is going to suspend the rain cycle too.
Water politics is the oldest game in the book. Ancient.
Yes, adequate water will indeed be very important.. again.
Hyperinflation not on the horizon for 2010.
$13,192,234,850,314.21 was the national public debt as of Thursday, an increase of more than $20 billion since Tuesday! Some people believe government will pay it down through hyperinflation. Others think outright repudiation may be the escape hatch. Still others think it doesn’t really matter. But we can’t forget the ancient admonition….”All debt is paid - either by the borrower or the creditor.”
Yeah well…
Deflationary cloud’s silver lining
By ED ZWIRN
Last Updated: 5:09 AM, July 11, 2010
While most economists agree that deflation is usually no cause for celebration, given its status as a bellwether of decreasing demand, there are “silver lining” aspects to the phenomenon.
“It’s good news and bad news,” says Chris Whalen of Institutional Risk Analytics. “The winners will be those who have little or no debt and cash and are able to discern between good and bad investments.”
Read more: http://www.nypost.com/p/news/business/deflationary_cloud_silver_lining_jQnVs87OQhASLzsafp8MTM#ixzz0tOD0VX00
“The winners will be those who have little or no debt and cash and are able to discern between good and bad investments.”
Exactly.
‘…are able to discern between good and bad investments.”
Put me down in the loser category, then, as I have no clue about what investments are good or bad in the current investing climate.
Good points combo / PB. Inflation could never happen. It’s different here.
“…All debt is paid - either by the borrower or the creditor.”
Debt: Destroy what you can, then pay the remaining with a post-dated I.O.U.
Plausible? :-/
‘But we can’t forget the ancient admonition…
”All debt is paid - either by the borrower or the creditor.”’
You can forget about the ancient admonition.
The ancients had no political mechanism to externalize the burden of bad debt away from the borrowers and creditors who created it onto the backs of innocent third parties. Uncollectible debts were settled by debtor’s prison or perhaps through the extraction of a pound of flesh. Moral hazard was contained through loss of loan and friend.
Now how do I collect my Eeyore Award?
“…or perhaps through the extraction of a pound of flesh”
Are you implying that you would do so against the emaciated bodies of GoldenmanSucks & Relatives?
Daffy: “…that’s desthpicable!”
Now how do I collect my Eeyore Award?
I’ll arrange for the San Diego chapter of AEGoF (”ancient Egyptian god of frustration”) to personally deliver it to you in Encinitas, CA…at a brewery & time of your choice.
(CA Renter & San Diego RE Bear are your local card carrying members of AEGoF don’t ya know.)
“Biggest Defaulters on Mortgages Are the Rich”
In today’s New York Times Business Section.
What a surprise, huh?
Be sure and bookmark it for the next time you hear someone blame the poor again.
Mortgage Investors Turn to State Courts for Relief.~ NY Times
For the most part, banks have said they can’t be called out in court on any of this because they had no idea that so many of these loans went to people who lacked the resources to make even their first mortgage payment.
Wall Street firms were intimately involved in the financing, bundling and sales of these loans, so their Sergeant Schultz defense rings hollow. They provided hundreds of millions of dollars in credit to dubious underwriters, and some even had their own people on site at the loan factories. Many Wall Street firms owned mortgage lenders outright.
It seems to me that we need clawback the bonuses of the investment bankers who profited from creating and selling these worthless mortgage securities. Clawback not just at the firm level, but at the individual employee level.
Like hell they didn’t know.
BP reportedly in talks to sell Alaska oil stake
Prized Prudhoe Bay asset part of $12 billion deal to help pay for Gulf disaster
LONDON — BP is in talks to sell up to $12 billion of assets, including its big stake in Alaska’s Prudhoe Bay, the largest oil field in North America, The Sunday Times of London reported.
A sale would be the latest of several steps the beleaguered oil giant is taking to raise money to pay for damages from the disastrous oil spill in the Gulf of Mexico, the Times said.
BP has entered talks with American rival Apache Corp., which approached the British company, the Times said. Negotiations are under way over the structure of the agreement and what other assets could be included, it said.
Houston, Texas-based Apache describes itself as an independent energy company in exploration and development of natural gas and crude oil. The firm operates in the United States, Canada, Egypt, Australia, North Sea and Argentina. Apache is worth $30 billion and is one of America’s largest independent oil groups, according to Reuters. Apache reported first-quarter earnings of $705 million on revenue of $2.7 billion. Its shares closed Friday up 48 cents at $87.88.
“Give me Liberty,…or give me Bankruptcy!”
BP Is Pursuing Alaska Drilling Some Call Risky:
By IAN URBINA Published: June 23, 2010 (Robbie Brown contributed reporting) NYT
“…But about three miles off the coast of Alaska, BP is moving ahead with a controversial and potentially record-setting project to drill two miles (10,000+ FEET) under the sea and then six to eight miles horizontally to reach what is believed to be a 100-million-barrel reservoir of oil under federal waters.
But BP’s project, called Liberty, has been exempted as regulators have granted it status as an “onshore” project even though it is about three miles off the coast in the Beaufort Sea. The reason: it sits on an artificial island — a 31-acre pile of gravel in about 22 feet of water — built by BP.
Rather than conducting their own independent analysis, federal regulators, in a break from usual practice, allowed BP in 2007 to write its own environmental review for the project as well as its own consultation documents relating to the Endangered Species Act, according to two scientists from the Alaska office of the federal Mineral Management Service that oversees drilling.
The environmental assessment was taken away from the agency’s unit that typically handles such reviews, and put in the hands of a different division that was more pro-drilling, said the scientists, who discussed the process because they remained opposed to how it was handled.
“The whole process for approving Liberty was bizarre,” one of the federal scientists said.
In promotional materials, BP acknowledges that the Liberty project will push boundaries of drilling technology.
To reduce weight on the rig, BP has developed a new steel alloy for the drill pipe.
So much force is needed to power a drill over such long distances that BP had to invest more than $200 million in what it describes as the largest land rig in the world.
If approved, the Liberty will be the longest horizontal well of its kind in the world. BP’s production plan for the Liberty notes that drilling studies only support horizontal wells up to 8.33 miles. Any horizontal wells longer than that, the plan says, “have not been studied.”
The scientists and other critics say they are worried about a replay of the disaster in the Gulf of Mexico because the Liberty project involves a method of drilling called extended reach that experts say is more prone to the types of gas kicks that triggered the explosion on the Deepwater Horizon.
The language of the “environmental consequences” sections of the final 2007 federal assessment and BP’s own assessment submitted earlier the same year are virtually identical.
Good, because it would only have been a matter of time before BP had an accident in Alaska. You could take that to the bank.
BP has to one of the worse when it comes to safety.
Clintons dealing for $11M Westchester mansion. NY Post
Looks like Bill and Hillary Rodham Clinton are moving on up — to a deluxe mansion away from prying eyes.
Sources told The Post the Clintons are planning to trade their almost-modest suburban Chappaqua home for a sprawling $10.9 million estate in the bucolic Westchester town of Bedford Hills, complete with 20 acres of gorgeous land surrounded by New York’s elite.
The massive compound — sweetly named Clover Hill Farm — comes with high fences, two guesthouses and a mansion fit for Bubba’s millionaire lifestyle.
The home — found only after a long cruise down a private road — is 7,000 square feet with a large foyer, wood paneled library with fireplace, chef’s kitchen with fireplace, five bedrooms, six full bathrooms and two half bathrooms.
ESTATE OF THE UNION: This 20-acre spread could be sold ‘within weeks’ to the Clintons, who have juggled home-hunting with world trips and Chelsea’s wedding plans.
That means plenty of room for grandkids and the Secret Service.
Know the area. Nothing modest about their current digs, but after they have settled into their Ralph Lauren sized digs, I wonder if it’s bye bye Kittle House - hello La Cremaillere? Why not a mansion for a married couple? It’s easier to stay far away from each other but be under the same roof. Warren Buffett is so old fashioned, isn’t he?
China’s Foreign Exchange Reserves Increase at the Slowest Pace in 11 Years. Bloomberg News - Jul 11, 2010
China’s foreign-exchange reserves, the world’s largest, rose at the slowest pace in 11 years in the second quarter as expectations for a yuan appreciation diminished and the European sovereign debt crisis saw capital move out of emerging markets.
The nation’s holdings rose by $7.2 billion to $2.454 trillion yuan at the end of June from the end of March, the People’s Bank of China said today, the smallest increase since the second quarter of 2001. Reserves dropped 2 percent in May, according to data posted on the central bank’s website, the first monthly decline since February 2009.
China’s announcement that it was scrapping its two-year peg to the U.S. dollar was made just 12 days before the end of the quarter. The change in policy could revive bets on the yuan’s appreciation and create added problems for the central bank in its attempts to control liquidity in the financial system and stem inflation.
What’s the big deal, team Barry can just print up a few extra trillion and pass it out to the states, who would dutifully jump in line with their hands out. Problem solved, now back to the golf course.
Economy to Weigh on State Budgets in 2011, Fed Economist Tells Governors. Jul 10, 2010
Tepid economic growth and demands for aid from ailing U.S. cities and towns will combine to make next year “just as tough” for state budget makers, according to Yolanda Kodrzycki, an economist at the Federal Reserve Bank of Boston.
States have closed budget deficits totaling about $169 billion since July 2008 and still face a combined $127 billion gap through fiscal 2012, according to a report last month by the National Governors Association and the National Association of State Budget Officers.
Fiscal recovery will be weighed down by “lackluster” economic growth of about 3 percent a year and the need to help local governments confronting falling property tax collections, Kodrzycki told governors gathered today in Boston.
“Next year is going to be just as tough” for balancing state budgets, Kodrzycki said on a panel on economic development at the National Governors Association meeting. Even if economic growth quickens, it’s not completely “translating into fiscal recovery,” she said.
Build America Bond Program’s Impending End Spurs Extension Plea to Senate. (Bloomberg)
U.S. state, city and county groups urged the Senate to extend the Build America Bond program, the part of the federal economic-stimulus plan that has driven down borrowing costs for public-works projects across the country.
The move to push back this year’s scheduled expiration by two years faltered in the Senate last month. Republicans balked at the cost of the bill that included the measure, as well as extra Medicaid funding and unemployment benefits. Six groups, including those representing mayors, governors and state treasurers, urged Senators to prolong the bond-subsidy program.
“Failure to take prompt action on a BABs extension may have immediate, unintended, and negative consequences for the market for BABs, both in the U.S. and overseas,” the groups said today in a letter to Senators Max Baucus and Senator Charles Grassley. Baucus, a Montana Democrat, is chairman of the Finance Committee, and Grassley, a Republican from Iowa, is the ranking minority-party member of the panel.
This clown is one low POS!
Holder Floats Possibility of Racial Profiling Suit Against Arizona
FoxNews.com
Attorney General Eric Holder, just days after filing a federal lawsuit against Arizona’s immigration law, on Sunday floated the possibility of filing another suit on racial profiling grounds.
The lawsuit filed Tuesday in U.S. District Court in Arizona claimed the state was infringing on federal immigration responsibilities and urged the judge to prevent the law from going into effect at the end of July. Despite some officials’ claims that the law could lead to racial profiling, that concern was not cited as grounds for the suit.
However, Holder said on CBS’ “Face the Nation” that the federal government was leading with its “strongest” argument in the suit filed Tuesday and would not rule out a second suit months down the road — if the law ends up going into effect.
Good luck with that. I’ve read the new law. All 16 pages. It’s pretty damn clear and WELL within federal guidelines.
With end of stimulus, tough times ahead for colleges
Gannet News Service
WASHINGTON — Most state governments depend on federal stimulus money to keep public colleges and universities afloat, a new report says. But these funds may be drying up as the new fiscal year begins.
Thirty-nine states used stimulus money to support higher education in the past year, compared with only 14 states the year before, according to the report by the National Conference of State Legislatures. To receive federal funds, states were required to keep higher education funding at or above 2006 levels.
As a result, public funding for higher education increased an average 2.3 percent last year. Without stimulus money, it would have fallen 2.5 percent, according to the report.
Public funding for colleges and universities still fell in 23 states, despite the overall increase. Hawaii made the most drastic cuts, at 26 percent, and Michigan and Louisiana each reported reductions of more than 5 percent.
Simple solution, just raise tuition’s, and supply the chidrens with gubmint loans.
Just like they’ve been doing for the last 30 years.
In The Palm Beach Post today.
Do you support the Justice Department’s decision to sue Arizona to stop the state from enforcing its new immigration law? (Results)
Yes votes 17%
No votes 83%
I always thought this presidency would be a one term situation. IMHO, this seals the deal.
They ARE making a major mistake with this immigration suit against Arizona.
Big time.
The current administration cares not what happens to Americans or to Mexicans.
What it cares about is precedent, and the ability for the Federal government to completely stomp on states’ rights.
Whether you or anyone else likes it is immaterial. Remember “Nationalized Health Care”? Same thing.
Your leaders don’t represent you or anyone else, regardless of your political voting record. They exist to serve their own interests.
Once you really comprehend and internalize that, everything will suddenly make sense. More and more people are really internalizing this nowadays, which is why you see lots of folk around you who are genuinely, seriously worried and scared at the macro-level.
It really depends on who runs against him. And a lot can happen in the next 2 years. I say it is still too early to tell.
The 2008 election turned on the financial crisis at the end of September. Until then, McCain was gaining on Obama.
Yeah I’ll admit Oh is a one term guy just like Mayor David Dinkins presided over the worst murder rate ever…then Giuliani finally won ….
They got their one…it will be 30 years before America elects another one.
“I always thought this presidency would be a one term situation.”
It’s baked-in, IMHO; the economy matters.
Realtors Are Scumbags.
Now what?
Just reminding everyone Eco.
One (i have 2 as of today) of friends who was planning a strategic default a few weeks ago just informed me about how he can’t wait for his family vacation at punta Cana in a few weeks.
The world is nuts….the forgotten man is fubared.
One of two of my friends planning a default…not that i only have two friends.
I guess they’ll live it up while they can.. Once they get foreclosed the CC’s will either go bye byte or the interest rates will shoot up to 30% (with severly reduced credit lines).
I heard this person by accident, today on a rebroadcast of a local talk show. She seemed very much on board with the general HBB outlook
Nicole Gelinas: The Recovery Prevention Act of 2010
By: Nicole Gelinas
OpEd Contributor
July 7, 2010
But as Americans pare back their debt, the economy will begin to heal permanently. As house prices fall, for example, because less borrowed money exists to send them higher, Americans will have more money left over after paying the mortgage.
They can invest that money in the stock market for retirement. Those funds, in turn, will go to entrepreneurs who create jobs outside of the financial industry.
The Dodd-Frank bill would pervert this healthy process. It would pit Washington’s too-big-to-fail subsidies and Wall Street’s creativity against Americans who are trying to do the right thing for themselves and the country.
This face-off is terrible for our recovery. Financial firms should be supporting the economy as it goes through a traumatic but vital transition. Banks and investment firms should help people to borrow less and save and invest more. Instead, Washington is encouraging financiers to subvert people’s best instincts.
As long as Wall Street and Washington fend off good American intuition, the economy will remain stuck in a stalemate. The jobless will grow wearier, too, of the party in power.
http://www.washingtonexaminer.com/opinion/columns/The-Recovery-Prevention-Act-of-2010-97887214.html
“As house prices fall, for example, because less borrowed money exists to send them higher, Americans will have more money left over after paying the mortgage.”
Assuming they can get out of their current overpriced mortgage.
Credit card debt (I am sorry if this was posted over the weekend on another bits bucket. I thought the last I saw, bloggers here were marveling about CC debt being cut. So I assume that they did not see this article)
Credit Card Debt: It’s worse than it Looks
http://tinyurl.com/27vfxdo
Got cash?
I loved the last line
Those who can avoid credit-card debt will. For those who can’t, credit cards are the new pawnbrokers.
Of course Wall Street and the Banks have been the new bookie, and loan sharks for the last decade.
The Great Pumpkin of RE bottom is not going to pay a visit this year either Linus.
BOSTON – The heads of President Barack Obama’s national debt commission painted a gloomy picture Sunday as the United States struggles to get its spending under control.
Republican Alan Simpson and Democrat Erskine Bowles told a meeting of the National Governors Association that everything needs to be considered — including curtailing popular tax breaks, such as the home mortgage deduction, and instituting a financial trigger mechanism for gaining Medicare coverage.
This rolling back the home mortgage deduction idea just keeps showing up. Get the sheep to leverage themselves to the eyeballs with discount loans, tax breaks, and tax credits. Then make it impossible for them to move and raise their taxes.
Get the sheep to leverage themselves to the eyeballs with discount loans, tax breaks, and tax credits. Then make it impossible for them to move and raise their taxes.
Oh, its not impossible to move. And with the taxbreaks gone jingle mail AKA “Stragetgic foreclosure” possibly followed by a BK is going to sound better than ever for the millions homedebtors who are underwater.
WASHINGTON (Reuters) – The U.S. Federal Reserve’s list of worries may be getting longer.
A fading recovery, persistently high unemployment, Europe’s debt troubles and commercial real estate losses have garnered most of the attention. But some FED officials have begun talking more about another trouble zone — recession-hit U.S. state and local government finances.
The problem is that they have to balance their budgets, unlike the federal government, which is running a deficit equal to more than 10 percent of total economic output
“They have no choice but to cut spending or raise taxes — or they get some more help from Washington,” said Harm Bandholz, an economist with Unicredit in New York.
<<<
They may draw more attention as the problem gets worse. Next year’s state and local government budget gap is expected to reach $140 billion, or a little more than 1 percent of GDP. Considering economists expect GDP growth of only about 3 percent next year, that is a substantial hit.
In the first quarter of 2010, the most recent period for which full data is available, state and local governments subtracted 0.5 percentage point from gross domestic product. That was equal to the reduction from commercial real estate, a primary area of concern for the Fed.
xxxxx
In the first quarter, state and local governments reduced spending at a 3.9 percent rate, the steepest drop since 1981.
It is likely to become a bigger drag over the next 18 months. As part of last year’s $863 billion stimulus package, the federal government gave money to help close state and local budget gaps. But the transfer payments peaked in the second quarter of last year and are running out.
This is evident in the GDP figures. In the second quarter of last year, when stimulus money flowed in, state and local governments added a half-point to U.S. economic output.
Second-quarter 2010 GDP figures won’t be released until the end of July, but judging from the 34,000 jobs state and local governments cut over that period, it appears this segment once again subtracted from overall growth.
The Fed seems to be watching.
The Federal Reserve Bank of San Francisco published a research paper on “fiscal crises of the states” in late June, less than a week after the Fed’s last policy meeting. (http://www.frbsf.org/publications/economics/letter/2010/el2010-20.html)
“Historically, the health of the national economy determines the health of state finances, not the other way around,” they wrote.
That’s just it the national economy has become paper shuffling and catering to people with easy HELOC money.
WASHINGTON (Reuters) – The U.S. Federal Reserve’s list of worries may be getting longer.
A fading recovery, persistently high unemployment, Europe’s debt troubles and commercial real estate losses have garnered most of the attention. But some FED officials have begun talking more about another trouble zone — recession-hit U.S. state and local government finances.
The problem is that they have to balance their budgets, unlike the federal government, which is running a deficit equal to more than 10 percent of total economic output
“They have no choice but to cut spending or raise taxes — or they get some more help from Washington,” said Harm Bandholz, an economist with Unicredit in New York.
<<<
They may draw more attention as the problem gets worse. Next year’s state and local government budget gap is expected to reach $140 billion, or a little more than 1 percent of GDP. Considering economists expect GDP growth of only about 3 percent next year, that is a substantial hit.
In the first quarter of 2010, the most recent period for which full data is available, state and local governments subtracted 0.5 percentage point from gross domestic product. That was equal to the reduction from commercial real estate, a primary area of concern for the Fed.
xxxxx
In the first quarter, state and local governments reduced spending at a 3.9 percent rate, the steepest drop since 1981.
It is likely to become a bigger drag over the next 18 months. As part of last year’s $863 billion stimulus package, the federal government gave money to help close state and local budget gaps. But the transfer payments peaked in the second quarter of last year and are running out.
This is evident in the GDP figures. In the second quarter of last year, when stimulus money flowed in, state and local governments added a half-point to U.S. economic output.
Second-quarter 2010 GDP figures won’t be released until the end of July, but judging from the 34,000 jobs state and local governments cut over that period, it appears this segment once again subtracted from overall growth.
The Fed seems to be watching.
Historically, the health of the national economy determines the health of state finances, not the other way around,” they wrote.
That’s just it, the the national economy has been reduced to consumption through HELOC loans.
Many of the state PERS plans are heavily invested in commercial real estate, so I expect the state’s pain to get worse in 2011 as these huge developers are unable to refinance.
Elizabeth Warren on commercial real estate
http://www.youtube.com/watch?v=hffYdQu1POQ
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