Bits Bucket For July 12, 2010
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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Let’s get on with the next phase of the housing price collapse.
House prices do not collapse all on their own, like dreams, they need a good smack down. So, what you are asking for is the next act in the economic reality show.
“…prices do not collapse all on their own,…”
Sans ongoing government interventions to prevent further housing price declines, the prices would collapse on their own. No smack down is needed; the unopposed force of economic gravity would suffice.
Yes.
Much like a hot air balloon. It’ll go down just fine if you stop applying hot air. No propellers or extra weight required.
Gravity is a harsh mistress.
You’re not going to like this. Detailed MRIS data for my county (suburb of DC).
Median prices are back up quite a bit from their lows a year and a half ago.
Median means nothing. I’ll wager price per square foot is lower YoY.
Probably is up less than the overall median, which is up 13%. I doubt it’s actually down though. Keep in mind C/S is up YoY nationwide, and that takes into account $/sf. Plus this area around DC has reaped the rewards of big guv.
There’s actually quite a bit of building going on around here.
(Not trying to gloat by any means - just giving the picture.)
I believe you’re incorrect about C/S measuring $/sq ft.
Correct it doesn’t measure $/sf, but it does take it into account, because it doesn’t use median prices or use new home sales - it only cares about resales. Thus the sale of any house is only compared to itself, not to other houses. Thus if there’s a trend towards sales of smaller houses it doesn’t affect C/S, because it only compares each houses’ sale price vs. the same house.
“Correct it doesn’t measure $/sf, but it does take it into account, because it doesn’t use median prices or use new home sales - it only cares about resales.”
You da packman!
But Packman,
I would expect an increase even in C/S for YOY just about anywhere right now, after all the government intervention. But let’s see what things look like in a couple more months!
Packman, where are you?
You missed the DC hookup?
I was bummed big-time. Unfortunately I was out on a 2-week business/vacation trip, and didn’t get back until the Monday everyone left.
I’m west of DC, in the far suburbs (about 45 minutes from downtown if no traffic).
Yeah, I was sorry I missed it too…
It was a good time.
It was a good time.
Well, inquiring minds want to know what you did, and if there are any pictures!
That’s because government jobs are on the rise so people are moving to the area in droves!
Yep.
I resemble that remark. And can you blame us? The private sector is not exactly a paragon of job security.
here here! or hear hear!
Not to start off Monday on the wrong foot, but what would lead any of us to believe that a crater in pricing will bring anything but another round of musical houses?
What’s really needed here is a tax code that encourages long-term ownership where cap gains dwindle slowly to zero over at least a ten year period.
1 to 2 years, face the music.
3 to 5, PITA.
6 to 10, patience pays off
Good luck with that bottom feeding thing all.
but what would lead any of us to believe that a crater in pricing will bring anything but another round of musical houses?
Depends on the impending bank regulation. When there is no free money from the Fed, and no mechanism to sell the risk up the food chain (<– this is key), then banks will shy at the risk. They will go right back to the original lending standards of 20% down and verified income. In that case, a house price crater will be simply that. A house price crater and a whole lot of insolvent banks with crap on their balance sheets.
But if lending standards remain loose, with NINJAS and HELOCS and Neg-ams and No-doc and everything else that HBB has been steaming about for the past 5 years, then yes, we start the cycle again until China finally throws the emergency stop.
They won’t allow a collapse until the banks have off loaded the vast majority of their bad paper onto tax payers and pensions. Then they will be glad to let home prices resume their fall. At the bottom they will buy back all the bad paper from the FED using borrowed money from the FED for pennies on the dollar.
They won’t allow a collapse until the banks have off loaded the vast majority of their bad paper onto tax payers and pensions. Then they will be glad to let home prices resume their fall. At the bottom they will buy back all the bad paper from the FED using borrowed money from the FED for pennies on the dollar.
Yep.
P.S. - keep in mind this is all being done using tools that were originally created in the name of “stability” and “affordability” - helping to bring housing to the masses.
Rinse and repeat for education, health care, etc.
“for pennies on the dollar”
Oh agreed ( and I lost a post there? ) but the reality is, as I’ve mentioned before is that -none- of this will do any regulars here a lick of good?
Unless you’re currently in your early 20’s? Have tons of cash and an investment horizon that reaches out to infinity. Again, there may be select pockets and rare windows of opportunity but I don’t see a mass sell off where we’ll be able to pick & chose. Probably never.
The seller will sit on his wishing price ( until it goes into default ) whereupon the BANK will take over with an even more defiant line in the sand. My bunko neighbor ( transferred to WMT after H’wood Video closed ) is still asking $349,500 for his OP POS. And no doubt he’ll let go back to the bank before he takes a penny less!
keep in mind this is all being done using tools that were originally created in the name of “stability” and “affordability” - helping to bring housing to the masses.
Also keep in mind that inflationary-bubble-followed-by-deflationary-crash (with the big boyz cashing in on both ends), was the standard cycle of the economy back in the good ole days of no regulation. This cycle was greatly smoothed out by FDRs financial reforms, and didn’t return to rear its ugly head (at least to this degree) until we once again began following the deregulationists’ golden brick road to doom.
Of course 20% down, verified income etc. were the standard BECAUSE of market interventions by Fannie (and latter Freddie) Those sorts of loans were called conforming because the conformed to the standards that the GSEs would purchase. Before they created a market for ammortizing 30yr FRMs the standard was closer to 50% down 5 year IO loans, with the entire balance due at the end of the 5 year term.
This cycle was greatly smoothed out by FDRs financial reforms
Hook, line, and sinker.
Hook, line, and sinker.
Yeah, the historical record is pretty convincing.
Yeah, the historical record is pretty convincing.
Apparently so, when presented just so.
Winston would be proud.
This cycle was greatly smoothed out by FDRs financial reforms
It’s pretty easy to smooth things out at a very low level just by outlawing all productive economic activity. Unemployment hardly budged in the first 6 years of FDR’s tenure, and the stock market bottomed out at 10% of its previous peak. I don’t think that’s the kind of “smoothness” most people are looking for.
Apparently so, when presented just so. Winston would be proud.
So we can’t trust history, and we actually had depressions during the FDR/Glass Steagall reform period? When, pray tell?
And if historical evidence is so untrustworthy, then why do you produce so many charts using it? How can we trust them?
FDR’s reforms outlasted the Depression, Lehigh. They worked quite well for about forty years, began to be dismantled by Reagan, and were finished off with the gutting of Glass-Steagall. And now we’re having another depression.
See a pattern?
That’s always been my position. Capital gains tax rates should bow to the reality that many “cap gains” are merely keeping up with inflation. Right now it’s just the 1-year mark deviding “long term” and “short term” - that’s just not right. There should be more categories, such as 1 year, 5 years, 10 years, 15 years, and so on.
Inflation itself is a tax. Pretty unfair to be taxed on the inflation a second time via cap gains tax.
For more on this see
http://www.forbes.com/2009/03/12/obama-capital-gains-treasury-opinions-columnists-federal-reserve.html
DennisN,
Right, when we essentially legislated that pri. res. would be Exempt after only 2 years.., guess what? We took a generation’s worth of CG’s and compressed them into that 2 years!
By the time ‘05 rolled around I think most flippers weren’t even bothering to report home sale transactions on their returns?
People here love to get all worked up over fed. budgets but the truth is, had we simply plugged ‘that’ alone, we probably could well afforded HC for everyone.
I got nailed because I’m one of those un-American “single” people. I sold a house I’d owned for 25 years and got nailed for about $65K in cap gains taxes. If I were one of those virtuous married people, I’d have paid zip, nada, zilch.
let me take a shot at this. 250k tax free. 15% tax on 430k over the 250k equal 65k. and you are mad as hell?
In NY State, say Orange, Ulster, Dutchess, Sullivan, Rensslaer counties for example, explain to me what you can possibly be employed at, so you can afford more than a $60,000 house mortgage? Best Buy wages?
It’s “Chapter 66” as U.S. States Face De Facto Bankruptcy
Economics / US Debt Jul 11, 2010 By: Justice_Litle
A number of U.S. states are facing bankruptcy – in fact if not in name – with Illinois and California leading the way.
When an individual goes bankrupt in the United States, it’s usually a Chapter 7. When a business goes under, it’s Chapter 11. Farmers have a Chapter 12, and there is a more complex individual option known as Chapter 13.
But what do you call it when a U.S. state goes under? There’s no official “chapter” for that. But it’s looking more and more like there should be. Your humble editor proposes “Chapter 66,” in honor of a famed stretch of interstate.
U.S. Route 66, also known as “Will Rogers Highway,” “Main Street of America” and “the Mother Road,” was one of the original routes in the U.S. highway system. Opened up to cars in the year 1926, it originally ran 2,448 miles, from Chicago, Ill., to Los Angeles, Calif.
Route 66 was also a major path for westbound migrants, seeking relief from the “dust bowl” conditions of the 1930s.
It’s fitting that Illinois and California were the termination points of that iconic road, because “Chapter 66” is a dark and looming reality for those two states now – with a number of others on the same path. As America endures a sort of new financial dustbowl, the “state of the states” looks grim.
Amber Waves of Debt
http://www.marketoracle.co.uk/Article21010.html
How about the old Rt 6? Grand Army of the Republic Highway. Kind of connects NY/PA with Illinois and California.
But wasn’t “deadman’s curve” on highway 99 north of Los Angeles?
The “original” Deadman’s Curve from the Jan & Dean song was on Sunset Blvd. in Los Angeles. There’s another one on Mulholland Dr. just a couple miles away…
Chapter 666?
End of Census, and for Many, End of Job. ~ NY Times
PROVIDENCE, R.I. — It was a finely honed machine, this United States Census team, and it had a good run. But in the coming days and weeks, many of its members will experience the pain of unemployment — once again.
Christine Egan, a 31-year-old massage therapist, says her census job offered shelter from the economic storm last year. “The economy was terrible; there was nothing,” she says. “I’ve already gone through ‘horrific,’ so I’m immunized.” She smiles, optimism almost extending to her eyes. “It must be better now, right?”
When the Census Bureau hired upward of 700,000 Americans over the last two years — most in the last six months — it landed more experienced workers with more sophisticated skills than any time in recent memory. This was the unintended upside of the nastiest recession of the last 70 years.
So let’s have the census every year and those 700K jobs can be permanent.
We can also make school 12 months instead of 9 months. That’s a 33% increase in the need for teachers.
Why have only 2 senators per state. Let’s have 200. Presto, we have just created 9900 new, high paying jobs.
See, government can be the solution to all our problems if we just get creative.
AT least Eddie’s thinking outside of the box. Brilliant (though possibly less pragmatic) stuff!
My daughter only missed one question in the test and she was hired towards the very end, apparently there were plenty of perfect scores with military bonus points. The gig only lasted about 12 weeks.
LOTS of ex military.
Any points for being black, hispanic, etc.?
What would the employment numbers look like without these census jobs? I guess we’re going to find out real soon.
If the Dems really want to help people that need jobs, they should do some things that take the uncertainty out of the future costs.
They should think about:
1) Cutting spending,
2) Quit talking about increasing taxes on everyone, especially businesses, and
3) Repeal Obamacare
But this group wants the masses to be depending on Big Government. If I’m wrong, show me where they haven’t pushed for ever increasing reliance on Gov.
Lip
I know…. The poor banks….. the poor insurance companies!!!! They need MORE free money via “taxcuts”….. paid for by us peons.
Just a thought, when companies pay taxes, where do they get the money from?
You’re not thinking again.
Profits?
via tax payer subsidies?
“But this group wants the masses to be depending on Big Government. ”
Ah yes, Rush’s signature tin-foil hat theory. He bleats about this almost every day. A few times, I’ve tried to argue that government doesn’t deliberately push for reliance on big government. Instead, Big Corp screws over the little guy (outsourcing, insourcing, consolidation, monopoly…) and the government responds to help the little guy. The operative word being RESPOND.
As an example, I used the new law that allows kids to be on their parents’ health insurance until age 26. So tell me, did we have legions of young 24-year-old adults happily employed with basic HC benefits…and then the evil socialist government suddenly “pushed” Obamacare onto them, just to make them into Obamabot voters? Uh, hell no. Young adults had NO jobs and NO affordable HC. Government respsonded with the new law. And I suspect that a lot of this “socialism” came about in the same way, little by little, not by some grand and deliberate scheme hatched in some arugula-filled back room. Little by little, it’s the corporations that are driving this country to semi-socialism, whether they know it or not.
We all know what cutting taxes on business does; we’ve had 10 years of it. It creates jobs in India and China and imports exploitable cheap labor. The tax-break money trickles down right into the pockets of the CEO’s.
Repeal Obamacare?…good gracious you’re behind the times. That talking point was debunked a few months ago. Try the deficit one. That seems to be gaining some traction. Too bad they didn’t push that point when Saint Ronnie said deficits don’t matter.
“it’s the corporations that are driving this country to semi-socialism, whether they know it or not”
You mean that focusing on quarterly gains and a single bottom line might cause them to miss out on the big picture?? Say it ain’t so!
The corporations and Wall Street are driving this country into poverty. Dictatorial Chavez type socialism or dictatorial facism will be the result, if you check the history books. People are mixing up cause and effect.
Excellent post oxide, couldn’t agree more.
” I used the new law that allows kids to be on their parents’ health insurance until age 26. So tell me, did we have legions of young 24-year-old adults happily employed with basic HC benefits.”
Our 18yr. lasted one semester at school and was taken off our company policy because he is no longer enrolled…are we missing something? Has the new law been put into effect?
+1 oxide
I can say for sure that the government has become more and more dependant on me over the years. They are going to have to get weaned off of that shortly.
Good one! Sooner or later, they run out of other people’s money.
Why wait? Reduce personal consumption and hurry it along. Cutting one’s hosuehold budget and overhead right now is win-win for you, but not so much for them.
john, I’ve been drastically reducing personal consumption for six years like you say, only I haven’t yet reduced earnings so much, so my taxes have been substantial. That train is headed for the station soon.
Blue Skye,
I’ve abandoned that strategy. Only my modest upbringing keeps me from being an out-of-control spendaholic.
There’s just so much one can jettison over the side. Our frugality has been in essence backfilled by local pols. The water & sewer rates went up 500% in our town.
I give up.
Tell it, D.
A friend of mine is a real utility bill watcher. To the point where I’d say that he’s got an obsession.
Any-hoo, in the last year, he notes that his water usage has stayed the same, but the bill (which includes sewer and trash/recycle pickup) has gone up 40%.
Arizona Slim,
And I ‘hear’ about it everyday. To me, it’s not an “obsession” any more than ‘not’ wanting to have your car stall on the train tracks is an “obsession”?
Not long ago ( and I’m sure the posts are in the archives here ’somewhere’ ) I went to great lengths to conserve energy etc. No more. Just this past weekend I finally… fixed our leaking shower. But not so much b/c I gave a rip about the HOA’s or the environment?
( Mostly b/c it had gotten SO bad I think the unit downstairs could actually hear the steady drip whoosh splash ) Kind of made it obvious.
Blue Skye, what do you gain by reducing your earnings? Isn’t it better to make $100 and have $28 of it taxed (you keep $72) than to reduce earnings by $100 (you keep $0)? Or are you going to retire and go to cap gains only?
I still think cap gains should be taxes progressively like income, only with provisions for inflation, as stated above. I for one would be in favor of a threshold of, say, $10K, where cap gains is 0%. This would reward wage-earners for saving but hit those who live off their millions. If nothing else, it would simplify the taxes . So much hassle for so few gains…
“what do you gain by reducing your earnings?”
Call it sticker shock. When you’ve filed ( WITH children! ) for years… trust me, it’s a drag. Beyond that, for the SE, Sched. C can only take you so far?
Unless you want to replace every ‘thing’ every ‘year’. After you’ve fully funded your SEP ( what’s the point? ) So you can buy ‘more’ overpriced POS?
A lot of us don’t have the kind of savings to be able to actively reduce our income in order to ’stick it to the man’ by giving them less taxes. I’m in my 30’s, and still trying to save for kids/retirement/etc, so every dollar I drop in income may hurt the the government 40 cents or so (thanks California), it’ll still hurt me 60 cents. And since those 60 cents probably went into retirement/college, it’s hurting me 60 cents plus 18-30 years of interest/growth/etc.
sfbb,
Don’t think I’ve overlooked the “captives”, I have adult children that would take overtime in a heartbeat if it was offered to them! I get it.
But in truth, I’ve been sticking it to the man for the last several years. Sorry but this just isn’t working. My wife and I are working everyday to get her out of the workforce.
Now that Guard & Reserve guys are getting access to TriCare, this just may be our window. Of course this means I’d be working until I drop but I’d rather at least (1) of us get out of the rat race.
I’m not certain my generation will even have a retirement. I suspect we will be back to ‘work until you drop’ lifestyles like in the 1800s.
sfbb,
May not even work for ppl ‘my’ age ( at 51 )? It will probably be in alignment w/ your thinking. One won’t actually ‘retire’ per se, just be unable… to continue working?
Still though, I’m not sure it’s productive ( or healthy ) for nary a one of us to continue to obsess over “what the big boyz are getting!”? They’re going to get -exactly- whatever it IS that they want! And there’s not a damn thing any of ‘us’ can do about it. Certainly we’ve held no sway to date?
It’s more important for each of us to discover and explore what ‘we’ CAN do for our own very personal situation. One of the things I’m seeing is that for ppl that ‘were’ part of a State retirement sys.., if they will ‘allow’ you to part company and roll your plan elsewhere ( I’d take the deal )
The states have no authority to be making the claims they’ve portrayed to the workers. None at all. “You’ll get X amount a month with guar. COLA’s and when YOU die.. your wife/kid will get X”. It’s perfectly ridiculous. Move on.
Pensions are crazy. It’s like Social Security. The whole theory that you can promise open-ended defined payments based on past contributions is a gimmick. It’s based on predicted rates of returns and average lifespans and all sorts of mushy numbers that leave even fully funded pensions subject to downturns. And if you exceed the expected rate of return, that’s usually when the pension INPUT gets cut to compensate so you don’t wind up with OVER filled pensions (which would help protect from downturns in investments.)
The government originally thought they could get away with it with Social Security because they assumed 1) Always increasing number of workers paying in & 2) Gov can print more money to ‘fix’ it.
sfbb,
For a lot of years ( the government was actually right ) As you say, all predicated on ever rising numbers! But, what ’should’ they have done? Worked off the assumption we couldn’t be trusted as far as we could be thrown and that we’d raid it every chance we got?
Evidently they should have? But no, I definitely get your point and they “mushier” the numbers got, the more stringent ( and realistic… ) we should have become!
All water under the bridge now. And truly every man for himself. Just what our grand parents would have wanted I’m sure!
In the corporate world, over-filled pensions make you ripe for take-over. In the government, over-filled SS makes it ripe for ‘borrowing’.
I understand the premise behind SS, but I don’t believe it was ever supposed to be a comfortable retirement vehicle. It was to make sure you could afford decent catfood and a couple of blankets in retirement.
Government encouragement of retirement savings is good. “Safety nets” prevent widespread social unrest. But it doesn’t work like a safety net in the circus. If you keep hitting the net there, or decide to just hang out like it’s your own personal giant hammock, you get kicked out of the tent. Our social safety nets are not very good at detecting layabouts and booting them from the system.
“…they should do some things that take the uncertainty out of the future costs.”
You huff & puff & the Cheney-Shrub Legacy still remains.
America has a black-eyed pretzel hang-over:
Cheney-Shrub Legacy Item #2: “You wealthy get a tax break for the next 8 years, whilst we work on: Shazam-Islam-is-now-Democracy!”
http://costofwar.com/
“In a July 9, 2008 interview on McCain’s economic plans, Gramm explained the nation was not in a recession, stating, “You’ve heard of mental depression; this is a mental recession.” He added, “We have sort of become a nation of whiners, you just hear this constant whining, complaining about a loss of competitiveness, America in decline.”
Now, now,….they are filled with “TrueAnger™”
“Work ahead,… expect delays…”
Most of us here on the blog agree that big government is the obstacle to growth.
So, to be clear,… US Corporations “derive nothing” from the taxpayers expenditure for the US Military & its soldiers or “fractional costs” of US domestic transportation & infrastructure expenditures?
Therefore, Big Government impedes Corporations distributions of benevolence to the “general welfare” of the country.
The score:
Monsanto CEO = 1
Census Worker = 0
What is your argument if we assume that big Corporation and big Government are organs of the same animal?
“What is your argument…”
Name x1 US Gov’t Executive that ever attempted this:
http://money.cnn.com/2003/10/28/news/companies/tyco_party/
if we assume that big Corporation and big Government are organs of the same animal?
I refuse to make that assumption.
Hwy50,
What’s your point? The guy is in the slammer until the end of time. Not everything is a simple matter of pitting Gov. Vs. Corp, Big Guy Vs. The Little Guy etc.
“Most of us here on the blog agree that big government is the obstacle to growth.” Which would prove absolutely zero even if it were true. But nice try. What’s next, a four out of five bloggers survey?
And I disagree that with your implicit assertion that growth is desirable or sustainable irrespective of the government being an impediment to it or not. Don’t know if “most of us” or anybody believes that, nor do I really care, but it seems that we would be better off with an entirely new system.
MrBubble
Hey Cantankerous - I’ve another government stooge for you!
Growth is bad, but increased taxes is good. Yeah, okay.
If you’ll read more closely, I said nothing about taxes. Only that a priori arguments for growth and using unprovable terms such as “most of us here believe” don’t make a cogent or convincing argument.
But if you prefer knee-jerk reactions, talking points and being another blogger’s lick-spittle, that’s fine with me too.
MrBubble
Depends on the type of “growth”. So Cal used to be a virtual paradise to live in. Then “growth” happened.
And isn’t it funny that the ChiComs are cleaning our clocks in “growth”. Of course that’s easy when destroying the environment is considered an acceptable cost to pay for “growth”.
No Bile….. Only you and a couple other loud ones concur on that fantastic lie.
At one time, when this blog was far more active and not so dominated by the tin-foil hat crowd, most of us agreed that the government needed to do far more to regulate the PRIVATE financial sector. The systematic gutting of regulations and regulatory agencies from Reagan to GW Bush (including the Clinton era) was driven by the brutally simplistic slogans: markets are always right, the private sector knows best, and the best government governs the least.
Yet there are some who still think an unfettered private sector can solve all our ills. Amazing.
Groundhogday,
I certainly hope you don’t count me among them? ( Had there been ’some’ teeth in the regs’ the likes of former car salesman turned mortgage mogul like Daniel Sadek would have never been allowed to get a foot in the door! )
And further, with all the tin-foil reserved for “the big boyz” unless your name is Ben, Tim, Hank or Angelo you basically get a “pass”. Shame.
For what its worth, the CA Coastal Commission saved a lot of beach for us humble folk to enjoy. Not perfect, but at least beaches aren’t walled off compounds for the rich, or a wall of high-rises like Florida, which is where we were headed up until the 1970s.
But its going to be offset by BP hiring workers to clean up the oil spill at $18 an hour.
“1) Cutting spending,”
Wow, someone found a way to bring Herbert Hoover back from the grave.
“2) Quit talking about increasing taxes on everyone, especially businesses, and”
Apparently you missed the featured small business tax cut in the Obama stimulus proposal.
“3) Repeal Obamacare”‘
Because according to the CBO the Obama plan will actually reduce health care expenditures, health care expenditures are the major long-term driver of government deficits, and as an ideologue the last thing you want are real solutions to real problems.
These are not Limberger/Beck/Oreally talking points, therefore they must be socialeest/commie lies.
“1) Cutting spending,”
Wow, someone found a way to bring Herbert Hoover back from the grave.
Check your facts next time.
Did Hoover Really Slash Spending?
mises dot org/daily/4350
“3) Repeal Obamacare”‘
Because according to the CBO the Obama plan will actually reduce health care expenditures
I love how whenever I post a link showing that government plans do not reduce health care expenses, it’s dismissed as being by an industry shill. Yet government agencies are assumed to be completely non-partisan with no political agenda whatever.
Repeat: These are not Limberger/Beck/Oreally talking points, therefore they must be socialeest/commie lies.
LVG,
I’m hearing that ( even if you’re retired ) the amount your employer/former employer paid for your health care will now be taxed as “income”. It will be reflected on your W-2.
If true, well.., you just -had- to know it was going to be coming from our end!
China’s Property Prices Rise at Slower Pace After Crackdown on Speculation
(Bloomberg)
China’s property prices rose at a slower pace for a second month after April’s record gain as the government cracked down on speculation, damping home sales in a bid to avert asset bubbles.
Prices in 70 cities rose 11.4 percent in June from a year earlier, according to a report today in the statistic bureau’s newspaper, China Information News. That compared with 12.8 percent in April and 12.4 percent in May.
Sounds like they’re damping it down reeeeeal good. That is, of course, if inflation is running about 10%. Otherwise it’s totally out of control.
“The Federal Reserve said Thursday that Americans slashed their revolving consumer credit—mainly card balances—by about $7.4 billion in May.”
This was my first thought when I saw this headline last week.
From the arcticle
“They would rather go into arrears on their mortgage—especially if they are underwater on the home anyway—than skip a payment on their card and risk seeing it switched off.”
Posted by Bill in Los Angeles
http://tinyurl.com/27vfxdo
Credit-Card Debt: It’s Worse Than It Looks
by Brett Arends
Thursday, July 1, 2010
Just to be clear - it is not “Americans” who are slashing credit card debt. It is banks who are writing off defaulted debt.
Yeah. It’s uglier than it even looks. It appears we are not even halfway through this depression yet.
I see a boom in collections coming. This will be the new growth industry, but even collections are being outsourced and roboticized.
Not if there is nothing to collect?
I see a boom in collections coming.
Doubtful, more likely a boom in bankruptcies.
From the article:
“People are moving heaven and earth—and eating sky-high interest rates—to make sure they pay at least the minimum on their credit cards each month so they can keep them alive as a final cash lifeline. They would rather go into arrears on their mortgage—especially if they are underwater on the home anyway—than skip a payment on their card and risk seeing it switched off.”
In other words, people can use a credit card to buy food.
It’s hard to eat stucco.
I’m about to slash mine some more this week.
The good news..55% of the people have woken up. The bad news, 45% are still chugging the kool aid.
55% of those asked, said Obama is a socialist in a poll released last week by Democracy Corps. I suppose this could be dismissed as some right wing piece of propaganda. Except the poll was run by James Carville’s polling firm.
Perhaps if people like you have convinced 55% of the idiots anyway, Obama should start trying to implement Socialist policies.
Not what I would choose, but it beats having the government redistribute income up, which is what has been going on recently.
Just goes to show that the majority of us have no clue what Socialism is, or what our President is. Humans are efficient in their opinions, it is easier to just assimilate the opinions of others (or at least of other voices) than it is to think.
If Obama’s such a socialist, then where’s our national health insurance?
Where’s our year of family leave for both parents?
Where are our infinite unemployment benefits?
Where’s our mandatory six weeks of vacation?
Where are our completely free universities?
What’s going on here?
Harrrumph.
+1000. I can’t say that I have seen any meaningful difference between this admin and its predecessor.
” Comment by In Colorado
2010-07-12 08:32:09
+1000. I can’t say that I have seen any meaningful difference between this admin and its predecessor.”
I sure see a difference. dubyah was a crooked, lying, incompetent, bumbling idiot. obama is dubyah on steroids.
So more of the same then?
Be fair. Obama can deliver speeches pretty good.
Apparently the hybrid version only provides the downside of socialism and not the upside.
packman,
LOL. Besides, where’s the sense of having -both- parents off for a full year -every- time they have a kid? Evidently 99 weeks of Unemployment doesn’t qualify as “infinite’?
I just don’t get what so many ppl’s end game is?
Besides, where’s the sense of having -both- parents off for a full year -every- time they have a kid?
Sotto voce: Although I’ve never reproduced, I’ve know plenty of men and women who have. Among the ones I’ve worked with in various jobs, more than a few of the women couldn’t wait to get back to the job.
It wasn’t as if they didn’t love their babies, it was just that they really wanted to get back into the adult world.
My wife loves kids (and her kid and kid-to-be) an excessive amount. So much so that she occasionally floats the idea of doing daycare instead of her job as a computer engineer. But she always snaps out of it after the holiday vacations/etc where she’s away from her job for more than a week or so.
She was pretty stir-crazy by the end of her maternity leave last time.
She was pretty stir-crazy by the end of her maternity leave last time.
I had one boss who did a rather vicious imitation of a crying baby. Not that she didn’t love her son, but the sound of his cries really grated on her after a while.
And yet, according to studies, the happiest people/country is considered to be Norway and the Scandanavian countries - who are nothing if not socialistic.
Their happiness is derived from the fact they don’t have to worry about a damn thing — yes they have high taxes, but everything - health, education, ability to buy a home, never have to be concerned about going hungry, are all taken care of.
I’m all for that. I’m good with socialism. If you were smart, you would be too.
It always amazes me how people who speak of the happiness of Scandis completely ignore demographics, including their extreme isolation.
Let’s move Sweden etc. down to share a long border an extremely impoverished country for a few decades and see what happens. Then we can talk true comparisons.
And maybe throw in a few million other impoverished people from Africa.
(Yes I know that’s of our own doing; nevertheless it very much skews our health care stats.)
packman,
Further, in times like these it’s easy to throw up our hands in disgust and agree to just about anything if only to make the pain go away for ‘awhile’.
Believe me, there’s days where I feel that way too. But it’s not the answer, even if it works for the Scandahoovians. We have altogether too many self-employed ppl here to make a serious go of it, even if we wanted.
People from Vermont are among the happiest in America. Hardly any people, hardly any problems.
“People from Vermont are among the happiest in America.”
Is that true during the eight months of winter?
rms,
LOL ( yeah, try 9 mos. of RAIN in Oregon! ) Why we’re downright silly w/ all the happiness!
Any time ppl bring up all these wonderful examples of where social programs work so swimmingly, it just comes across as being a tad oblivious?
How many different nationalities do they have over there again? One? Just sounds like the incoming HS seniors bellyaching about how “last year’s senior class ‘would’ have gotten away with it!?”
Number of immigrants from Sweden to USA in 2009 1138.
Number of immigrants from USA to Sweden: 901
As a portion of population
Sweden to US is 1138/ 305M
US to Sweden is 901/9M
Which means relatively speaking and taking into account population differences, for every American that moved to Sweden, 26 Swedes moved to the US.
Which tells me that those “happiest country in the world” studies are full of manure.
And about the “happiest states”….
Not sure where you get Vermont #1 from. According to that vast right wing conspiracy charter member, NY Times the happiest states in 2008 were:
1. Utah
2. Wyoming
Yep, nothing spells happy socialist paradise like Utah and Wyoming.
Oh please, you assume that people move because they are “unhappy” living in Sweden? Those 1000 people that moved from Sweden to the US could have done so for a myriad of reasons: job transfers, they wen to the US to attend a college, it could be anything. Plus its a minuscule number, noise for all practical pruposes.
Many of you are so against the idea of anything to do with socialism that you absolutely refuse to accept that it can work for some countries.
I also suspect many of you have never stepped foot outside the US. Yet here you are — badmouthing the places you have never been to and know absolutely nothing about.
Oh those “studies” are very scientific indeed. Let me guess the “studies” were run by “scientists” who were in no way trying to bias their “studies”.
Ask yourself this…why do millions of people from all over the world move to the evil/unhappy USA and very few people from the evil/unhappy USA move to the rest of the world.
I mean if it’s so horrible here and so wonderful there, you’d think there would be a run on 1-way tickets to Stockholm and Oslo.
Instead there is an 18 year wait list for immigrants (legal ones that is) to come to the US.
Odd don’t you think?
Odd don’t you think?
Not really. Emigrating to countries where one might want to go isn’t easy. One shouldn’t assume that just because Americans aren’t moving to other countries in larger numbers isn’t because they don’t want to move to another country. If it weren’t so difficult, I would have been gone a long time ago.
There are many more issues involved when moving to another country than moving to another state or vacationing almost anywhere.
Remind me again how many trillions we had to give the bankers for our perfect way of life?
I think I would go with the medicine and food for my family and lose the house.
“The reality is people are choosing between medicine and food, or keeping their house and food.”
Clough: Rising hunger leaves the economic recovery feeling a little empty
By Alexandra Clough Palm Beach Post Staff Writer
Posted: 7:58 p.m. Friday, July 9, 2010
The recession is changing the way people live, today and in the future. Pay cuts, job losses and diminished savings have affected about half the U.S. workforce, setting the stage for years of frugal living by consumers, even as the economy struggles to recover.
But for some in Palm Beach County, the recession isn’t about limiting dinners out, or bemoaning the loss of a home’s value.
For some, the recession is about choosing which child gets to eat tonight.
“Anyone who thinks the recovery is just sailing along needs to come down here,” said James Gavrilos, the new executive director of Boca Helping Hands in Boca Raton. “The reality is people are choosing between medicine and food, or keeping their house and food.”
Meanwhile Corporate America continues to offshore jobs while Main St. burns to the ground.
And here i thought $$$Boca Raton$$$ had a pretty darn ritzy Main Street…
Maybe if taxes were lowered, unions given less power, and regulation were lessened (see ObamaCare), corporate America wouldn’t have to send those jobs overseas.
Main St keeps electing the idiots that impose all the taxes and regulation of corporate America. They are complicit in this as much as anyone. Maybe one day Main St will wake up and realize a catchy slogan like Hope doesn’t do much but make cool posters. Until then, they can rot in hell for all I care.
Are you on crack? Corporate America is swimming in profits, and they still send jobs overseas. Where 20% profit used to suffice, now only 40% is enough. Poor Corporate America, pleeeze….gimme back my tax subsidy ….
Yeah, it just doesn’t have the same ring as “Four More Years” or “Mission Accomplished.”
I would, too. But I think for some people, the house is a cheaper, short-term alternative than moving. Renting usually means first, last, and security deposit. And I think eviction generally happens faster when you fall behind on the rent than on the mortgage.
Food can be mitigated by trips to the Food Bank and free school lunches.
Some medicines solve long term problems, like cholesterol lowering medications.
In a cash crunch, spending becomes very short term.
Food banks are tapped and free lunches don’t apply if you have the wrong zip code.
I think the free and reduced price school lunch program is federal. I don’t understand how zip code figures into it.
While contributions to food banks are down and usage is up, I would expect that you could still get some food from the food bank. I could be wrong. I haven’t been to one recently.
More Americans’ credit scores sink to new lows
1 in 4 American consumers are deemed risky as more credit scores sink to lows of 599 or less ~ July 12, 2010
NEW YORK (AP) — The credit scores of millions more Americans are sinking to new lows.
Figures provided by FICO Inc. show that 25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders. It’s unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use.
Because consumers relied so heavily on debt to fuel their spending in recent years, their restricted access to credit is one reason for the slow economic recovery.
“I don’t get paid for loan applications, I get paid for closings,” said Ritch Workman, a Melbourne, Fla., mortgage broker. “I have plenty of business, but I’m struggling to stay open.”
“I have plenty of business, but I’m struggling to stay open.”
Shut your doors now then. You’re going to wish you did 6 months from now.
What is going to happen over the next six months that will make them wish they had shut their doors now?
6 months of operating costs and falling revenue.
Got it…
Yes, but with all media, government, and corporate spokespeople talking about how recovery is either right around the corner or here already, I can understand how he’s been duped into believeing it.
+1
“I don’t get paid for loan applications, I get paid for closings,” said Ritch Workman, a Melbourne, Fla., mortgage broker. “I have plenty of business, but I’m struggling to stay open.”
So the masses do want to buy houses, they just can’t get a loan. What a surprise!
Another article on money dot cnn dor com was lamenting how the great American consumer is saving instead of spening, putting the economy in peril.
Funny how its OK for Corporate America to not spend (in the name of shareholder value), but damn you Joe Six Pack! How dare you save for your retirement (especially after we took your pension away)? Now get out there and spend dammit! Corporate America is counting on you!
+1, Colo. And this is starting to dawn on J6P. The revolution isn’t going to be torches and pitchforks, but tightwads and passbooks. Oh, they’re still spending like gangbusters on little stuff — just saw that when I was shopping this weeked. But the big-tickets items are suffering, and it will eventually trickle down to Wal-mart (assuming the gov shuts off the spigot eventually.)
Oh, they’re still spending like gangbusters on little stuff
Bingo! Pick up some nice steaks at the butcher shop and have a treat at home for way less than a yucky meal at Applebee’s or some other chain.
New cars? Its more cost effective to spend a little on maintenance and maybe an occasional detail job on th eold car. And whe it does need to be replaced, it will be something much more frugal.
“….spend a little on maintenance…..”
Only if it’s something you can do yourself.
I keep wondering where all of these “depreciated 2-3 year old cars” are going to come from, if new car sales continue to stay around the 7-8 million a year level for, say, five years.
Depends on one’s definition of “little”. And I did say maintenance, not repairs. Still, its a lot cheaper to replace a dead trannie (3K) than buy a new car (30K).
I’m hoping that this recession doesn’t choke off the supply of fresh 3-year lease cars. The last 2 cars I’ve bought were about 3 years old, and bought them for about 40% of the new price. Hope to hold onto each of them for at least 7-8 years. If the great American consumer machine were dependent on me, we would’ve gone belly-up a long time ago.
BTW, I’ve been to Cuba and have seen what they can do with what little they have. They have a ton of vintage 50’s American cars (that mostly have diesel engines now).
Well I would put the timing divergence down to the nature of the HELOC nation. Big ticket items are bought AFTER the last HELOC/refi and and small ticket items are bought with CCs BEFORE the ballances are lowered with HELOCs. ISTM that MOST of the FB horror stories mention that they refi’d to “pay down their CC balances” and (health problems OR business failure).
Just got the credit union’s monthly newsletter. Full page ad on the front page for…
…HELOCs.
Because your home has value. (Actual slogan used.)
In tiny type below the slogan was a note saying that new HELOCs could not be used to pay off old ones.
I propose the “reverse HELOC”. When your house is more than 50K underwater, the bank comes and repossesses your toys to hold onto as collateral.
It always boggles my mind when I am in line behind someone at Target and I see them buying expensive toys for Easter or Halloween decorations.
Bingo.
That dang consumer - cutting back on his spending; wrecking our recovery.
(ignore the whole pre-2005 period - that’s just an anomaly)
“Funny how its OK for Corporate America to not spend (in the name of shareholder value)”
Corporate America is spending. The problem is that they aren’t spending it here in North America.
I have said publicly for the last 10 years that the only good the middle-class is for the ulta-rich and our governmental uber-lords is to pay our taxes and buy their
That’s why I wear slacks that are 10 years old to work, don’t shop at malls, drive an 8-year old car instead of a $35,000 leased something-or-other, don’t have a horse, etc. We’ve sold our office and will be paying off some left-over costs of the renovation tonight. Despite the whinings of some about the spendthrift baby boomers, we have deprived ourselves of daily cash spending/higher standard of living in order to save a formidable abount ( based on our income, anyway) for our retirement. I don’t have an i-phone, I don’t give a damn, and I don’t intend to give up my job to anyone who thinks they should have it based on their age versus mine.
sh-t. A lot of people that I said that to were shocked, shocked I tells ya. Now many are in agreement with me. No one cares about me like I do
Amen, sistah!
“the only good the middle-class is for the ulta-rich and our governmental uber-lords is to pay our taxes and buy their
sh-t.”
Especially if that sh*t includes putting one’s life savings in one of their crappy pension plans.
Double amen, sistah!
“I don’t intend to give up my job to anyone who thinks they should have it based on their age versus mine.”
Especially when I may need to provide living accomodations for recently graduated children who can’t find jobs at which they will make enough to move out on their own.
I drive a 14-yr-old car and was thinking of getting a newer used minivan, but geeez they have gotten so big! with batwing mirrors they barely fit through my old-school garage door.
Looking at all the models since about 1990 I saw they’ve done nothing but get bigger and longer. And the simpler smaller ones like the plain Caravan have been dropped.
Not to mention all the transmission problems. So I changed the oil in the Subaru, put on a new steering wheel cover and called it good.
“I don’t get paid for loan applications, I get paid for closings.”
The twist: Those who need to borrow the most can’t borrow because their borrowing needs are great. Because their borrowing needs are great they make poor credit risks hence the lenders won’t loan them any money.
Those with the least risk to the lenders are those who don’t need to borrow. But because these folks don’t need to borrow, they won’t.
Coffee is for closers!!!!!!!!!!
Still trying to raid the shadow cash. Unfortunately, the “shadow cash” is really the “smart money.” And the smart people are hanging onto their shadow cash.
“Shadow cash”. I like it. Says it all.
Shadow cash won’t come out from the shadows as long as non-shadowed cash is being sucked out of circulation - out of the system - by cash-starved banks that eagarly suck in money but don’t put money back out again.
Banks that suck in but don’t put out act to subtract money from the supply of money that circulates, which starves the System that depends on this circulating flow of money.
Note: It not just the SUPPLY of money that makes an economy work, it’s also the CIRCULATION of the supply of money that makes an economy work. If the circulating money disappears from circulation then economic activity slows down. If the only money that is left is not circulating then the economy will freeze up.
Yup. Not a whole lot going on nowdays to inspire the confidence necessary for them to part with that cash.
Contrary to what many pols thought, the “shadow cash” didn’t take the $8,000 housebuyer credit as a sign of strength, but as a sign of weakness and desperation.
We’ve been in the market for a house for the past 3 years, but of course have held back because of all the shenanigans. A ton of people thought I was nuts for “not taking the 8 grand.” Aside from the 8 grand already being baked back into the price directly, it was the down-payment for a lot of people, so it had quite the multiplier effect.
“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.”
- Mark Twain
The lesson? Make or buy your own dang umbrella. Screw the bankers.
Could a bumbershoot double as a parachute in case the rain never ends?
I think you mean ark, don’t you?
(P.S. wow - never heard that term until now. Learn something new everyday.)
Another twist:
Housing price stabilization measures, intended to help preserve the value of current American homeowner households’ most important investment, have the unintended consequence of driving a vast chasm between home purchase budget constraints under recently tightened lending standards and irrationally exuberant seller reservation prices.
A dearth of closings on loan applications is the natural consequence.
combotechie,
Who knows? This guy could just be fabricating that he “has plenty of business”? Certainly wouldn’t be the first time a REIC’ster stretched the truth?
I have plenty of work, just no paying work.
“NEW YORK (AP) — The credit scores of millions more Americans are sinking to new lows.”
But how can that be? Why just last week…
The Federal Reserve said Thursday that Americans slashed their revolving consumer credit—mainly card balances—by about $7.4 billion in May. That’s an annualized rate of 10.5%. And that’s not a one-off. Since the end of 2008, they’ve cut those balances by about $127 billion, or 13%, says the Fed.
As people pay off their debts, you would expect the delinquency rates to fall. No wonder the American Bankers Association said this week that the percentage of cards with payments more than 30 days late fell in the first quarter to the lowest levels since 2002, and even below 15-year averages. “It’s clear that consumer balance sheets are improving,” says James Chessen, the ABA’s chief economist. “People are borrowing less, saving more and building wealth. These are all positive signs.”
Pay offs or write offs? That is the question.
Falling credit scores occuring in tandem with declining revolving credit could best be explained by write offs - not pay offs.
Bingo.
“Americans” aren’t the ones cutting back. - only the small subset of Americans that are bankers are writing off not cutting back.
At first glance, Americans seem to be cutting back on their debts. Total household debt has fallen 2.7 percent, or $374 billion, since peaking in the second quarter of 2008. But, as the Wall Street Journal recently noted, U.S. banks and lenders have written off almost exactly the same amount of loans as unrecoverable. That means, on balance, that Americans are not paying down what they owe in any meaningful way.
He’s not doing it right if he isn’t getting closings.
Time to photoshop the customer’s pay stubs.
cool he can outsource that to the local identity theft ring….
“I have plenty of business, but I’m struggling to stay open.”
I think he is unclear on the concept of “business.” If you’re struggling to stay open, you DON’T have plenty of business.
FICO is relative, kind of like a bell curve. If 50% has a 600 then 600 is average. If 50% has 500 then 500 is average. So as more and more people get lower and lower scores, a low score won’t be so bad. It will get to the point where lenders will have to lend to the 500s or go out of business.
And I am sure that any day now a new proposal from congress will come out that will exclude foreclosures from fico calculations. And then presto everyone is back to 700.
One way or another the lending will not stop. Too many vested interests in keeping the spigot open. You all seem to conveniently forget that Goldman Sachs was Obama’s 2nd biggest contributor.
Yes, but….As we transition from “fog a mirror” credit practices to “does this guy have the capacity to pay us back” lender’s FICO requirements are likely to tighten. Which is a bit screwed up since an overeliance upon FICO scores rather than checking income and collateral is a big part of what got us INTO this mess.
They need to dump the FICO altogether and look at income. I could make $20K a year, charge toothpaste at Target and pay it off religiously, and have a stellar FICO. But I can’t afford to buy a house of any stripe.
“But I can’t afford to buy a house of any stripe.”
You could buy this home, oxide:
http://cnyhomes.com/Listing/Search/info.cgi?mlnum=S235203
Oh you mean you want something clean, without major structural issues, outside the realm of nightly gunfire, a place where you could walk down the street w/o being hit up for or by gang activity?
Well apparently in the new America we don’t have enough of those to go around so you’re going to have to pay up!
Well, I mean *I* could afford to buy a house…I’m choosing not to.
I was being hypothetical. I mean that *IF* I made $20K, I couldn’t afford to buy a house but I could still build enough of a FICO to buy a strawberry McMansion.
That house looks like it was never any good even when it was new. Too bad about the ‘hood, because $3K isn’t bad for land value.
FICO is a great tool to predict future behavior based on past behavior. If you make $20K and pay your bills on time today chances are you will pay your bills tomorrow. If you make $100K and are a deadbeat today, chances are you will be a deadbeat tomorrow.
That is why the FICO calculation ignores income. It doesn’t mean income doesn’t matter when determining a borrowers worth. But it is irrelevant when determining a borrower’s propensity to pay back debts on time.
Well classicaly, FICO serves as a somewhat useful measure of a borrowers history of paying off their debts. Unfortunately stupid banks were using it as a substitute for figuring out whether the borrower had the ABILITY to pay the money back.
Or
more and more people may be forced to fuction without money?
its happened before:
“jump down turn around pickabaleacotton”
http://www.youtube.com/watch?v=aiXLl7clwJE&feature=PlayList&p=934C8EAEB84F1FE9&playnext_from=PL&index=7
Kind of like a moving bell curve whose mean is on a downtrend…
Goldman does primarily ‘investment’ banking ( not spread banking )
That aside, I just think most of us have long stopped CARING about what their damned FICO ’score’ is. We’re just not letting it define us any more?
During Da’ Boom you could just re-fi, pay off the plastic and “re-set” your FICO. I think most of us have finally figured out that all a great credit score will GET you ( is just more debt? ) Glad to see it finally happen.
“That aside, I just think most of us have long stopped CARING about what their damned FICO ’score’ is. We’re just not letting it define us any more?”
You got that right. Its been a while since DH and I checked our FICO (we check the free credit reports to make sure no new accounts have been opened in our name, but those don’t give scores unless you pay, which we don’t). Our numbers must be decent because we haven’t seen notable increases in auto or renters insurance. We’d be the first ones to shop around if premiums did go up, too.
Kim,
It’s just that our total focus as American’s has changed. Rather busying ourselves w/ our current lifestyle ( read consumption ) we’re focusing on friends, family and our weight!
Not that we can’t ramp up again. Heavens no! But right now we’re appropriately dialed into what our retirements will look like? If we have made ample preparation ( what the hell do I care what my fico looks like if everything I need in life is fully paid for? )
It will get to the point where lenders will have to lend to the 500s or go out of business. ”
they will have to charge higher interest rates or they will go out of business anyway
Unless FICO stops being a reliable gage of When you will get paid back
cactus,
It never was! Just last week we featured an article where 1 in 7 mortgages over a mil. were in default. ( Vice 1 in 12 for us riff-raff ) It’s absolutely meaningless, especially when you’re getting jingle mail from ppl w/ 750+ scores.
Many lenders NEED to go out of business.
They don’t have to lend to anyone if a steady flow of tax money is directed to them straight from the taxpayers in the form of endless bailouts. The bailout welfare is now enshrined as an entitlement. This is no different than welfare checks and food stamps to ghetto denizens, except the magnitude of the handouts to the banker leaches is far greater. The reason they don’t lend anymore is there is no reason to, what with the far more “profitable” business of taking handouts.
I’d say the magnitude makes a HUGE difference, not to mention it was by people who supposedly knew better and were quick to castigate the less fortunate.
That’s a big damn difference.
Will we lose mortgage deductions, Medicare?
By GLEN JOHNSON
The Associated Press
BOSTON — The chairmen of President Obama’s national debt commission painted a gloomy picture Sunday as the United States struggles to control its spending.
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.
Continued…
http://seattletimes.nwsource.com/html/businesstechnology/2012335016_debt12.html
“…including curtailing popular tax breaks, such as the home-mortgage deduction,…”
That’s what I call financial reform saber rattling.
Yep.
That option might be on the table if we weren’t in the middle of the biggest housing crash in history. As it is - they only bring up that possibility to make the actual solutions they want (to be announced later) seem more palatable.
On the other hand, given housing is going down, and much of the recent purchases have been by foreign speculators trying to catch themselves falling knives while American households are largely sidelined from making end-user housing purchases, isn’t there an argument for going as far as possible with rolling back housing market subsidies? After all, what do American taxpayers gain by subsidizing foreign investors in U.S. residential real estate?
Besides, the farther Uncle Sam goes with rolling back housing market subsidies, the greater the increase in end-user affordability that will result. Housing prices affordably realigned with local incomes and rents would signal a housing market bottom and the onset of recovery.
I believe the biggest purchaser of real estate - the Federal Reserve - is an American entity is it not?
It stands to not do so hot as housing continues to tank.
Housing prices affordably realigned with local incomes and rents would signal a housing market bottom and the onset of recovery.”
I’m sorry how would this help Banks ?? And who cares about the middle class being able to afford a house ??
Not the government they want there money back from banks and banks need RE prices up
Middle class is down sizing as far as I can tell at least here in CA
How are foreign investors benefiting from mortgage interest deduction? If they’re living in the house, they’re not speculators. If they’re renting it out, the mortgage interest becomes a business expense and is deductible from their rent proceeds, so they’re already getting the benefit free and clear.
You have to get ride of interest payment deductions as a business expense to get rid of the mortgage interest deduction or you’re giving landlords a free ride.
“Simpson said the entirety of the nation’s current discretionary spending is consumed by the Medicare, Medicaid and Social Security programs.
“The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans, the whole rest of the discretionary budget, is being financed by China and other countries,” Simpson said.”
Huh????
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.
Didn’t the UK recently get rid of its home mortgage deduction? And, last I checked, that group of island nations hadn’t sunk.
I’d LOVE to see this deduction eliminated, but seriously doubt that will ever happen. For gosh sakes, the housing industry just managed to get an extension on closings for the woefully inefficient housing tax credit.
In other news, BP is supposed to cap that well today and stop the gusher. I’ll believe it when I see it, but I do have my fingers crossed that they succeed.
Some HBBers will recall that I was screaming for Tony Hayward to be removed from his post, on the grounds that as long as he was in charge, even nominally, things wouldn’t go well. And it does seem that since he’s been out of the picture, there has been some progress.
My point, and I do have one, is that when any organization experiences a screw-up of that magnitude, the first action and most important action is to remove the head honcho who was in charge at the time. That’s because in any organization (company, country, charitable group, etc.) the tone is set from the top. Call it “trickle-down” group dynamics. If you don’t remove the head honcho, it’s just bad ju-ju all around. So I was calling my Congresscritters just about every day, screaming for the guy to be removed. And I wasn’t the only one.
Too bad you can’t remove elected offishuls. 9/11, for example, was a huge screw-up. The head honcho (and his partisans) should have had the decency to promptly resign and failing that, been removed. No excuses. Today we see the results of the failure of the head honcho of the US to resign and as a result, the current honcho is dining out on the guy’s past failures.
Massive screw-up = head honcho has to go. Always.
Hayward isn’t out of the loop, just out of the news. Perception is everything.
You may be right, but I think he is out of the loop at least as far as the spill is concerned. Meaning, he’s not in charge of that aspect anymore, I think he was relieved of that duty, which clearly was a duty he didn’t want. He’s still CEO, yes, but I have a feeling there’s a golden parachute in his future.
There’s a saying: “Success has a thousand fathers. Failure is an orphan.”
Hayward would gladly take credit for any good news, but act like a bewildered child about anything that went wrong. Ditto for the heads for the financial companies.
Massive screw-up = head honcho has to go. Always.
And if massive screw-ups become recurring events, how about re-thinking the organizational structure?
If nobody can seem to do a good job as head honcho, maybe there shouldn’t be one.
Last I heard, it wasn’t going to be capped, just further restricted.
Sold the evil medical office finally; took a 20% down on a 3-year land contract; big discount for the buyer of course; we are very pleased. Even if he reneges, he paid the taxes for the rest of the year, and we don’t think this guy is going to let his down payment go down the drain, so hopefully he will pay off the note. Phew.
Cheers!
Congratulations, Silverback. It has been a long haul for you. Glad you finally got the resolution you wanted.
Awesome, Silverback. Congratulations! Ya done good.
Thanks so much. I always have appreciated the encouragement I received about our situation here on HBB. The only communication we’ve had from the crazy ex-owner/ex-attorney was an email that our saintly present-day attorney received awhile back from her wanting the keypad locks that she put on the doors back. He didn’t bother to reply, and said he will never deal with her again. Ever.
Congrats Silverback. You truly are an RE veteran now.
May your next deals be far smoother.
China, India, energy, food & the future pursuit of happiness…
Uranium Bottoming as China Buys Supplies From Cameco:
July 12 (Bloomberg)
“China’s demand is insatiable,” said Dave Dai, an analyst at the Daiwa Institute of Research in Hong Kong.
“The last time this many reactors were planned was in the 1980s, after the 1973 and 1979 oil shocks prompted the Organization of Petroleum Exporting Countries to boost prices for crude. By 2015, a new reactor may start every five days, compared with an average of one every 17 days during the 1980s
China plans at least 60 new reactors by 2020, Xu Yuming, executive director of the China Nuclear Energy Association, said in Beijing on July 6. The average 1,000-megawatt reactor costs about $3 billion, according to the World Nuclear Association. Loading a new reactor requires about 400 tons of uranium to start”
1,000 megawatts is one gigawatt. Have they considered the possibility of upping the capacity of those plants to 1.21 gigawatts?
We already know how they feel about pollution controls and the health of their little people. What a shame.
Properly done, these reactors are a huge benefit, pollution wise.
What are the odds they’ll be done correctly?
I suspect we’ll see at the least a ton of heat pollution further screwing up fishing and estuaries and the like.
City taxpayers foot 90% of municipal pensions
Taxpayers kick in an average $8.60 for every dollar that city employees contribute to their pensions, a sweet deal costing the Big Apple a bundle.
Even though their own retirements are less secure, as private businesses have shifted from traditional pensions to riskier savings plans like 401(k)s, taxpayers’ support for rock-solid public employee pension plans is growing. That’s because pension funds are guaranteed to grow 8 percent a year — and taxpayers have to make up the difference if they don’t.
Taxpayers’ share of city pension costs has skyrocketed more than 900 percent in the last decade — from $703.1 million in 2000 to $6.5 billion in 2009, according to the city comptroller’s annual reports.
The cost is expected to hit $7.6 billion this fiscal year and $8.7 billion next year.
Big city condoze - hip, urban lifestyle with the priviledge of paying Costa Rica bound pensioners!
There is some serious irony here. The very pensions that got screwed from their Wall St. investments are now having to be supported by the very people who had to bail out Wall St.
And if you don’t like that, wait until you realize that ~80% of almost any dollar you spend on some, though not all, large corporate goods and services goes to… executive “compensation.”
Seems to me I’m getting more bang for my buck with the government pensions paying more people.
Everything is BP’s fault!!!!!!!!!
—————-
New York pension fund to sue BP for investment losses
(Reuters) - New York state’s pension fund plans to sue BP Plc to recover losses from the drop in the company’s stock price following the worst oil spill in U.S. history, state Comptroller Thomas DiNapoli said on Wednesday.
New York’s Common Retirement Fund has a long history of serving as the lead plaintiff in shareholder lawsuits. DiNapoli said the fund owned more than 19 million shares when the Deepwater Horizon rig exploded in the Gulf of Mexico in April.
DiNapoli, the sole trustee of the $132.6 billion state pension fund, has hired law firm Cohen Milstein Sellers & Toll to represent the fund.
“BP misled investors about its safety procedures and its ability to respond to events like the ongoing oil spill and we’re going to hold it accountable,” said the Democratic comptroller, who will stand for election in November in the race for New York comptroller.
“Investors” in the stock of a company are, in effect, owners, no?
Maybe Florida and other Gulf States should be suing New York’s retirement fund.
Man, can you imagine the chaos that would ensue if the courts ruled stockholders liable for company activities?
Dow 0!
That’s the whole point of “corporations”, isn’t it?
It won’t happen. Even in highly socialist nations the corporation rules. (Ever notice how Corporations in French and Spanish speaking countries have an “S.A.” after the company name? It stands for “Anonymous Society”, which protects shareholders from corporate liabilities.
No, investors are only “owners” in theory. In reality, the BODs have all the power and work only to enrich themselves.
Shareholders and investors were stripped of power back in the 1980s.
Poor BP!!!!!!!
The problem of course is
They own the stock
If they sue and win then every stock holder should have the same right.
Then of course the stock would be zero,
Isn’t this cutting off your nose to spite your face.
Now if they sued management it would be completely different.
BP does indeed have the worst historical safety record. This is fact.
The ultimate “compliance” taser weapon: The IRS
Audits, not raids mark U.S. immigration crackdown: report
CHICAGO | Sat Jul 10, 2010
The Times said the Obama administration had conducted such audits at more than 2,900 companies so far — a number it said dwarfed the number of companies affected by the immigration raids at factories and farms during the eight-year administration of Obama’s Republican predecessor, George W. Bush.
Well, I’ve got some nearby neighbors who I’d like to suggest for an audit. Reason: They’re running several businesses under the table. And, as far as I can tell, they’re not in this country legally.
Report them for running a business out of their home, which I assume they’re doing.
My buddy owned so many motorcycles he was constantly wrenching on one or two, and several neighbors reported him for running an illegal motorcycle repair shop.
I’d say it’s a good first step to getting them busted and possibly deported.
Report them for running a business out of their home, which I assume they’re doing.
A few months ago, I was having an issue with their rob-yapping dog. Again.
I’ve already reported them to Animal Care four times and I’ve lost count of how many times I’ve called the Tucson Police to report a noise disturbance. Fat lotta good all that’s done.
So, I had my lawyer write them a letter, and that letter noted the two businesses that I’m aware that they’re running over there. One is a daycare, the other’s one of those shuttle van services that plies the Nogales-Tucson-Phoenix route. And, let’s put it this way, the final Phoenix destination isn’t Sky Harbor Airport.
Well, their lawyer’s response had quite a bit to say about the daycare. As in, the barking dog couldn’t possibly be outside as much as I’m claiming, because how could the little kiddies get any naptime? (Beats me. I’ve wondered about that myself.) Not one word was said about the van biz.
Well, a few weeks after I got and digested their attorney’s response, there was this big ICE raid in South Tucson. That was on April 15, Tax Day. Shuttle companies were targeted, and one of them was the parent company of the shuttle service operated by my neighbors.
I’ve hardly heard a peep out of the dog since.
Well, at least SOME good came from it. There are child-care licenses and suchlike in California. I don’t know if you have that in AZ, but you could find out whatever agency should be in charge of that and then see if they have a license/report them.
Well, at least SOME good came from it. There are child-care licenses and suchlike in California. I don’t know if you have that in AZ, but you could find out whatever agency should be in charge of that and then see if they have a license/report them.
While the dog was still in full yapping frenzy, I was very tempted to do that. However, the last three months have been almost yap-free. And I like that.
I can’t help thinking that, now that the raid has happened, and, before that, they got a letter from my lawyer, my neighbors are afraid to let the dog bark. After all, my lawyer’s letter pointed out that if they’re running an unlicensed business in a residential area, they could be in big trouble. Not just for being unlicensed, but for operating a business that’s disturbing the peace and quiet of the neighborhood. Leaving a yappy dog outside could be considered such a thing.
Not sure if I agree with this government scheme to empty more pockets.
U.S. Weighs Tax That Has VAT of Political Trouble
At least 139 countries, including most major economies except the U.S., levy a value-added tax on goods and services.
But as the U.S. faces swelling deficits, talk of adopting one has become more commonplace and is likely to intensify. The latest rumblings came earlier this month, at a meeting of a White House commission looking for ways to dig the U.S. out of its fiscal hole.
Asked by a commission member whether corporate leaders could live with what is known as a VAT, Business Roundtable officials said they would consider the idea, but only if Congress agreed to streamline and lower …
http://online.wsj.com/public/page/news-lifestyle-arts-entertainment.html
Throughout history every generation has been faced with challenges. Some crossed oceans to start new lives, others had to tame the frontier, still others fought terrible wars.
Our generational challenge is relatively simple, cut personal consumption and spending. The VAT is a wake up call for those that haven’t gotten one already.
Growing up a lot of people told me “life is not fair” - yet those very same people believe that real estate always goes up, that their salaries should always rise, that retirement is a right. Funny how those hard-nosed tough love fairness freaks allowed themselves to become entitled.
I’d love to see a shift from income to VAT tax revenue, ASSUMING the income tax code will be substantially simplified: lower tax rates and fewer deductions/credits.
At least 139 countries, including most major economies except the U.S., levy a value-added tax on goods and services.
True, but then those countries do not have local sales taxes like we do.
Speaking of bankruptcy, our LL has decided to use that as their means to avoid the 100k hit they took on their house here in Florida. Another statistic comes to life.
How does a BK filing help them avoid a 100K hit on a soured real estate investment? Are you suggesting your LL had no skin in the game?
If they either made a downpayment on their investment property purchase or made a series of mortgage payments in excess of rents collected before filing for BK, it appears they have incurred an investment loss.
“How does a BK filing help them avoid a 100K hit on a soured real estate investment?”
They loose the down payment as well as the principal portions of the payments, of course, but bankruptcy helps them avoid the deficiency judgement for the amount they’re under water. Hopefully Florida hasn’t forgiven income taxes on that amount.
Does Prechter disavow the Fed’s potential to offset deflationary pressures by running the printing press more quickly? I frankly don’t understand how one can argue about future (nominal) stock prices without discussing the role of the central bank in leaning into the deflationary hurricane.
* The Wall Street Journal
* THE INTELLIGENT INVESTOR
* JULY 10, 2010
Get Ready for a Cataclysmic Market Crash! (Or Maybe Not)
* By JASON ZWEIG
Could the Dow really drop 90%?
Earlier this month, in an interview that was widely circulated online, market analyst Robert Prechter predicted that the Dow Jones Industrial Average will fall below 1000 within the next six years. The Dow promptly surged back above 10000, but it is worth asking whether Mr. Prechter might be right anyway.
The president of Elliott Wave International, a newsletter publisher and data service in Gainesville, Ga., Mr. Prechter isn’t the only pundit predicting a cataclysmic bear market. Richard Russell of Dow Theory Letters has called for a monstrous decline; through a spokeswoman, he declined to confirm a specific price target. Even money guru Robert Kiyosaki has gotten in on the act, conjecturing Dow 5000 in his online column.
Mr. Prechter is a technical analyst who studies the past price performance of the markets for clues to the future. He also believes that investors move in and out of the market on predictable waves of optimism and pessimism. “Because the mania [the bull markets of 1982 to 1999 and 2003 to 2007] was so terrific,” he told me this week, “it will be followed by a negative trend in social mood that will lead to a complete retracement.” That would put the Dow back to its levels in 1982, below 1000.
“In a deflationary environment, the last thing you want is to own any financial asset,” Mr. Prechter added. “If you stay out of stocks, real estate, gold and other commodities, which will all come down together, then you can preserve your purchasing power [in cash] for the next great buying opportunity.” He wouldn’t tell me what, if anything, he is selling short; he said only that he is “cash laden” with Treasury bills and Swiss money-market instruments.
…
Dow 1000 = Complete collapse of the system, you will want to own amunition and food at that point. Cash will be suspect as tax revenue will be zero, economic activity will be zero.
Dow 1000 — just like a true real estate price crash — would actually be very healthy for this country.
Capital would be re-allocated away from CEO mega-bonuses, and towards smaller local companies. People might actually start to collaborate with their neighbors and form real communities instead of worshipping Wall Street.
DOW $1000 in 1982? That would approximately be $2193.96 in today’s money. So the DOW is going to loose $8000?
Hmm.
Roidy
This plunge in jumbo mortgage rates should help mitigate the Alt-A and prime-ARM mortgage reset tusnami.
* The Wall Street Journal
* WEEKEND INVESTOR
* JULY 10, 2010
Time to Refinance? Jumbo Mortgage Rates Plunge
By JESSICA SILVER-GREENBERG
Nearly two years after the credit crunch virtually froze mortgage markets, high-end borrowers are seeing some relief: Rates for “jumbo” mortgages on pricier homes are at their lowest since 2003.
Just a year ago, the average rate on a 30-year jumbo mortgage—a loan of more than $729,750 not backed by government-sponsored agencies Fannie Mae or Freddie Mac—was 6.86%, according to Greg McBride, a senior financial analyst at Bankrate.com. Now it is 5.48%—a rate that rivals those available during the height of the credit bonanza.
“In just the past couple of months, jumbo loans have really started to be competitively priced,” says Keith Gumbinger of HSH Associates, a publisher of consumer-loan information.
The lower rates signal relief for homeowners looking to shed an onerous mortgage—and for the high-end housing market itself. More-affordable jumbo loans will likely whet appetites for new home purchases, helping to stabilize prices at the upper end of the market. For consumers, the lower rates will make home purchases more affordable and enable existing homeowners to trim their monthly bills by refinancing.
…
The banks’ collectively taking a thunderous $1.25 Trillion s*** seems to allow for a bit more trips back to the engorgement table, doesn’t it?
“…collectively taking a thunderous $1.25 Trillion s***…”
Sounds fascinating; please clarify.
Let’s just say I’m glad to be upwind of the Eccles building in DC.
If many individual investors are voluntarily leaving the game due to disillusionment with ongoing stock market losses, while others are sidelined due to lack of a job or a dearth of discretionary income, then what keeps the stock market propped up?
* The Wall Street Journal
* MARKETS
* JULY 12, 2010
Small Investors Flee Stocks, Changing Market Dynamics
By E.S. BROWNING
Many individual investors were tiptoeing back into stocks in the spring. Now, they’re running for cover again.
Karen and Roger Potyk, a comfortably retired couple in San Antonio, Tex., had clung to some stock mutual funds despite their anxiety following the financial crisis of 2008. But the renewed market volatility following the “flash crash” of May 6 proved too much to bear.
Karen and Roger Potyk sold the last of their stock mutual funds after May’s market volatility.
“We just didn’t want to put up with it any more,” says Karen Potyk. She and her husband sold the last of their stock holdings on May 20, moving the money to bonds, certificates of deposit and bond-like annuities.
Small investors’ faith in stocks, which surged in the 1990s, has collapsed since the technology-stock debacle and the Enron and WorldCom scandals of 2000-2002. The 2007-2009 financial crisis only made things worse. Now, the pullback among ordinary investors means they are a declining force in a market that is increasingly dominated by professionals.
Some were tantalized by equities during the 70% rally that began in March 2009 and ran through April. But mutual-fund data and other clues suggest that that brief infatuation has ended.
In 2002, investors withdrew more money from mutual funds that invest in U.S. stocks than they put in. Then from 2007 through 2009 they withdrew money for three consecutive years. That marked the first three-year period of withdrawals since 1979-1981, according to the Investment Company Institute, a mutual-fund trade group. This year, U.S.-stock funds saw inflows in January, March and April, but net withdrawals resumed in May.
Investors talk of a growing disillusionment with big institutions, including corporations, government, banks and political parties—as well as fears about the nation’s heavy debt. Some people’s confidence in stocks was seriously shaken by the volatility that returned in May. They worry that the May 6 flash crash, when the Dow Jones Industrial Average fell 700 points in eight minutes before rebounding, is a sign that ordinary people are increasingly at the mercy of anonymous companies that trade with powerful computers.
Individual investors were important market pillars in the 1990s, but their flight from stocks is changing the market dynamic. By adding money to mutual funds, individuals helped push stocks higher in the 1990s and to a lesser extent from 2003 through 2006. Now they are moving money out again on balance, making them a drag on the market.
Ordinary investors are returning to the cautious mentality they developed during the 1970s. That was the last extended period of stock weakness, after which it took many people a decade or more to get comfortable with stocks again.
“I feel like the tail of the dog that is being wagged by institutional investors who are taking a lot of risk, playing a lot of games and just have these computerized orders that affect me a lot,” says Simeon Thibeaux, a semi-retired businessman from Alexandria, La.
…
You got selling boomers trying to sell overpriced stocks to younger generations who are poorer.
I don’t see how this can work, unless the Chinese buy it all.
Why is it that when stocks go up, gold goes down — to $1200/oz and holding?
“I feel like the tail of the dog that is being wagged by institutional investors who are taking a lot of risk, playing a lot of games and just have these computerized orders that affect me a lot,” says Simeon Thibeaux
My god! Somebody else gets it!
Good find CIBT!
House behind me is back on the market again. Third time in five years.
In 2005-06, it was listed for eight months, including a brief time off market so that it could be painted outside (color scheme can best be described as Bad Hotdog Dripping Mustard and Ketchup) and staged inside. Didn’t sell without a substantial price reduction.
The ‘06 purchase was an all-cash deal. (I suspect a HELOC on a primary residence elsewhere.) The whizbang University of Arizona student/real estate agent put it on the market in the spring of ‘07. Same wishing price that the previous owners started out at. Didn’t sell. He’s been renting it out since September ‘07.
This time, he’s listing it for $19k less than three years ago, and if he has to drop price by as much as the previous owners did, he’s lost money on this fabuloso investment.
BTW, the paint job wasn’t very durable. Starting to peel already. And whoever was using the paint sprayer missed a lot of spots. I can see ‘em from my back yard.
Oh, just to pile it on, here are some more fun facts about the whiz-bang owner of the house behind me:
Last year, when I was having my water line replaced, I was researching the ownership of the other two properties that the line traverses before it reaches the Arizona Slim Ranch. The neighborhood association president helped me out, and she reported that Mr. Whizbang was delinquent on his property taxes. I just checked this year’s records, and he’s all up to date.
While the plumbers were replacing my line, they found that the line to Mr. Whizbang’s house was leaking up a storm. Which, no doubt, was costing his tenant megabucks. So, my plumbers sold the guy on replacing the line. They used much cheaper materials for his line (Pex) as opposed to what they used on mine (copper), and, even then, the guy gave my plumbers quite a bit of static about the price.
Methinks this guy is trying to get out from under what turned out to be a crummy investment.
I’m not convinced that plastic would be inferior to copper for a buried water line. IIUC copper can corrode seriously in alkaline soils, e.g. in AZ.
My original water line in CA was galvanized iron. Now THAT was a stupid idea. Originally dating from 1959, the iron pipe was replaced by PVC in 1995. The iron pipe was so full of rust on the inside that the water pressure was severly reduced.
It’s fun to look up the real estate foibles of neighbors, especially when they’ve been particularly annoying. I follow the saga of one of my former neighbors, and it is a real hoot. Bought a condo just past the peak of the market, pressured the former owner at closing for a lower price, then took out a second mortgage, gets a divorce a year later and goes into Lis Pendens, gets a mortgage mod, six months later, another Lis Pendens! Bada-BING!
I saw all that coming, too. I suspect she’s gonna walk away, probably living there and not paying the mortgage.
It’s fun to look up the real estate foibles of neighbors, especially when they’ve been particularly annoying
Of my annoying neighbors, this one hasn’t been too bad.
I’ve only had a few problems with the latest crop of tenants. And, fortunately, they got the message that, if they want to have a loud party, they durn well better take it into the house. I don’t want to listen to their carrying on in their yard at 2 a.m.
Nowadays, if I ever hear such carrying on, I turn on my backyard light, which is just this side of a spotlight. Shuts ‘em up in a New York minute.
What really annoys me is the paint job on the house. Mustard yellow on the walls. Turd brown on the trim. Rustoleum orange on the window frames. Hence the nickname, Bad Hotdog Dripping Mustard and Ketchup.
You need a paintball gun with real paint. It could hardly make it worse, right? Plus it might be fun!
Had a neighbor who painted their house orange. Tangerine orange.
Have you ever noticed it’s the weirdos that have no taste or sense of basic style?
A move to fix Social Security could be made more politically palatable by coupling an increase in the minimum age to receive full benefits with a reduction in Greenspan’s crippling 15.3% payroll tax (including federal medical entitlement programs). I can think of many better uses for that 15.3% slice of my paycheck besides paying for some geezer’s Winnebago purchase. It seems more politically palatable to increase the eligibility age for full benefits to current life expectancy (is it 79 or 80?), thereby restoring Social Security to its intended purpose as old age insurance, and reduce the payroll tax rate, than to leave the payroll tax rate at its currently burdensome level while rolling back benefits. One decade’s worth of increase in full retirement eligibility could produce a windfall of savings.
Robert Powell
July 2, 2010, 12:01 a.m. EDT
Fix Social Security by hiking retirement age
A lawmaker suggests raising the retirement age to 70 — and experts agree
By Robert Powell, MarketWatch
BOSTON (MarketWatch) — The time has come for the nation to face some facts and, according to Republican Rep. John Boehner, the House minority leader, that means fixing Social Security by hiking the normal retirement age to 70 for future retirees, from the current 67.
Boehner wants to increase the retirement age to 70 for people who have at least 20 years until retirement, plus tie cost-of-living increases to wages rather than the consumer price index, and limit payments so they only go to people who need them, according to published reports. The current Social Security “normal retirement age” for those born in 1960 or later is 67.
“We need to look at the American people and explain to them that we’re broke,” Boehner was quoted as saying in The Pittsburgh Tribune-Review. “If you have substantial non-Social Security income while you’re retired, why are we paying you at a time when we’re broke? We just need to be honest with people.”
…
Life expectancy of 80. People getting their first “real” job in their 30s. Companies wanting to jettison workers in their 50s.
How exactly does one finance 80 years of life on ~20 years of gainful labor? For some it’s looking to be a lot less than even that - school loans nibble on one end - and healthcare/childcare costs nibble on the other end.
If only we could be a nation of 300 million Warren Buffets, Bill Gates’ or LeBron James it would all be ok. We’re such underachievers!
The extended family is going to make a roaring comeback. All those McMansions are going to come in handy as 2 or even 3 generations of adults live under one roof.
Maybe the plantation is gonna make a comeback.
When I was bicycling through the Mississippi Delta back in 1981, I was shocked to learn that the big farms were still called plantations. They were owned and operated by whites, and the labor was, with few exceptions, black.
It already has. It’s called the United States.
Maybe?! We have the weakest worker protection laws of all the 1st world nations.
We work the most hours for more or less the same pay, but less time off.
We have the least social benefits of all the 1st world nations.
We have the worst pension system of all the 1st world nations.
MAYBE?!
On Colorado-
My husband thinks McMansions will be the slums of the future, as the illegals pile 2-4 families into them. He figures, as Americans age and need to downsize their lives and homes, the oversized homes will become boarding houses.
Multi-generational households might make up a block of the coming family formations, but the illegals sharing McMansions is a’comin, in his opinion.
See Detroit (and many other cities around the U.S. and world). Lots of really nice neighborhoods can indeed become slums.
There will be some of that too, especially in marginal communities in places like Nevada, Texas and California.
Of course if there are no jobs and welfare goes bye-bye I think the torrent of illegals rushing across the border will end. Once the sugar is gone they’ll stop coming.
My sister is a bilingual teacher in North Carolina and she has already noticed it as large chunk of her students from previous years simply vanished. A little investigation on her part showed that a non-trivial number of families began to self deport themselves as the jobs disappeared and the welfare wasn’t enough to pay the bills. IIRC NC also cracked down on welfare benefits and other bennies (like driver’s licenses) for illegals. My brother (also bilingual) met a few illegals who told him they were throwing in the towel and heading home.
“Once the sugar is gone they’ll stop coming.”
The sugar is slowly being hoovered up and away. That audit operation the feds are doing to businesses that hire illegals is brilliant. Very economical and does the job with a minimum of muss and fuss. States are cutting back on the benefits to illegals, like food stamps. But of course we have California which, although it is busted, is handing out the free food like it’s manna from heaven.
Speaking of sugar, I did notice in those food program photos that some of those kids were avidly sucking on juice boxes, beatific smiles on their faces. Mmmm, sugarrrrr! Now that’s a future diabetes case waiting to happen. That can’t be good. If they’re gonna hand out free food, it should at least have nutritional value. The gov and various activist groups get their boxers all in a wad about letting kids have sodas. I think the contents of those juice boxes are probably every bit as bad in terms of sugar content.
Speaking of sugar, I did notice in those food program photos that some of those kids were avidly sucking on juice boxes, beatific smiles on their faces. Mmmm, sugarrrrr! Now that’s a future diabetes case waiting to happen. That can’t be good. If they’re gonna hand out free food, it should at least have nutritional value. The gov and various activist groups get their boxers all in a wad about letting kids have sodas. I think the contents of those juice boxes are probably every bit as bad in terms of sugar content.
You’re right about the juice boxes. They aren’t any better than sodas.
Give the kids a drink of water instead. No calories and it hydrates the body.
The sugar gets the kids real wound up, too, and the crash is not pretty.
I don’t know if it’s just here in this neck of the woods (west Central Florida), but if those children of illegals are the future generation of this country, we’re in big trouble unless something changes. Perhaps you, Slimmie, and In Colorado could give me some insight, here. Because I’m seeing some stuff that is really disturbing in terms of temper tantrums on the part of some of these children. It’s far more common than I’d like to see and I wonder what’s going on. I’m not talking some garden variety the-kid-is-hungry-and-tired whiny crying tantrums. I’m talking shrieking at the top of their lungs, hitting, biting, scratching and kicking their mothers type of tantrums, with hate-filled eyes. Really scary. Usually happens when the mother won’t buy some bauble or food item. I’ve never seen anything like it, the expressed violence is truly mind-bending. It actually makes me concerned for the mother.
If I even so much as talked back to a parent, I either saw the back of their hand real fast or got my backside lit up good later on. But these mothers take it with a bovine stoicism or try to placate by giving in. Do they see that sort of stuff in the home between the parents, or what?
“Give the kids a drink of water instead. No calories and it hydrates the body.”
LOL, I always liked the Bernie Mac line, when one of the kids asked for a popsicle, he offered them a water-flavored popsicle.
I don’t know if it’s just here in this neck of the woods (west Central Florida), but if those children of illegals are the future generation of this country, we’re in big trouble unless something changes.
From what I’ve seen out here most of them are extremely obsese and whiney.
They get reported to CPS if they as much as attempt to chastise their kids, never mind ‘back of the hand’.
Just like what was going on back in the early 90s - when kids threatened to tell the police if they were punished.
Yep, the ex and I used to be friends with this couple who had the daughter from hell, always threatening to report them to the DCF (here it is Department of Children and Families).
The West Indian moms around here don’t take any crap off their kids. They used to give them the old backhand in public if they got out of line, but then caught wise to the DCF threats, usually from other shoppers. Now, they have this neat trick, a quick flick of the wrist and the kid gets a good stinging bop on the nose or head. So fast, you can hardly see it, but the kid feels it and howls for a second or two, sniffles, then calms down and behaves hisself. Although most of the time, by my observation, those kids are pretty well behaved and usually don’t even deserve the bop.
Obtained a real first job at 31 along with a house and mortgage. Mortgage will be paid off next year when I’m 42. Next steps are an investment property + have it paid off in 10 years. Not sure how folks with children manage to do it all + have money for retirement.
They don’t.
I made the same point about a week ago. It doesn’t pan out.
Life expectancy is NOT 80. It’s 78 in this country.
If you’re lucky.
You bring to mind a reason that I suspect actuaries may get the wrong answer when they actuarially reduce benefits for early retirement. Since employees often self-select into taking benefits early, one should consider the reasons for doing so in the reduction to full benefits. For instance, do people more typically retire early because they are sick, which might reduce life expectancy and the actuarial present value of future benefit costs, or because they are healthy and wealthy and set to retire early, which might increase them. Not sure of the answer, but the self-selection feature makes this an interesting question to think about (raises possible issues of adverse or favorable selection from the standpoint of the pension provider).
“We need to look at the American people and explain to them that we’re broke, but our generation who bankrupted the U.S. controls it and is not willing to make sacrifices” Boehner was quoted as saying in The Pittsburgh Tribune-Review. “If you aren’t among the generations in power, why should we promise you anything when we can just take more for ourselves? We just need to be honest with people.”
If those now age 55 or over don’t give anything back, any reform will just be more evil.
is that what he really said ? no you’re just writing what he should say if he were not a politician
Scene: The entrance to the clubhouse/pro shop of an upscale retirement community. The owner of a landscaping service and his crew are doing their scheduled work to keep the area looking good, and working up a sweat in the hot weather. An obviously well-off, retired couple drives up in their personal golf cart.
Richie Rich: “Hi guys, it’s the third Wednesday again. Time for all of you to fork over your 7.65 percent. And you, Mr. Business Owner, time to fork over the other 7.65 percent for all your workers and 15.3 percent for yourself.”
They all glumly come over to the cart and hand over their cash, after which the couple drives away laughing and calling out, “See you again next month!”
Cut to a scene of an elderly widow in her sparsely-furnished one-room apartment looking at her small SS direct deposit notice and then at her rent and utility bills. A nearly-empty pantry is visible in the background. Voice-over: “Should Social Security really be for everyone?”
My wife and I receive Social Security. It really must be changed.
Although things may be good for you now, Bill, they can change.
I can see this playing out in my own family, and it’s heartbreaking to watch. But for much-reviled programs like Social Security, some of my fellow family members, who were better off in years past, would be screwed.
My wife’s parents went from seven figure income to squatting in their mansion inside of 5 years. Sadly, they stripped away virtually everything from their retirement accounts trying to ’save everything’ instead of focusing on trying to save the strongest of their assets.
Arizona Slim,
Too bad. But you’re right, things like that happen! Al I can say is that you should be able to get means tested every year.
Dang, sfbubblebuyer. Sorry to hear that. Makes you sick, doesn’t it. I have relatives who have made the same boneheaded moves. I’d like to say I have, but I’ve never had that kind of money and any time I’ve ever come close, someone else would pull the rug out from under me. (ex, boss, business partners, other relatives, etc)
Dang.
If those now age 55 or over don’t give anything back, any reform will just be more evil.
In case you didn’t notice, those over 55 just had everything taken away and are barely hanging on themselves.
In case you didn’t notice, those over 55 just had everything taken away and are barely hanging on themselves.
Say what? What was taken away? SS? Medicare?
Did I miss something?
Are are you referring to them having to bear the consequences of bad financial decisions made with their own money?
And of course we have the jobs to support that?
Hi! Welcome to Wal Mart!
Boehner wants to increase the retirement age to 70 for people who have at least 20 years until retirement,
Again I ask how is this fair? If I have 19 years until retirement at age 65, and my friend has 20 years, then I’ll get to retire 6 years earlier than him, despite there being just a 1 year discrepancy in our work lives. Shouldn’t we start increasing the retirement age incrementally, and now? Spread it out and give everyone a taste, rather than just dumping it all on Gen X, after the boomers get theirs in full.
Agree.
Best method would be to increase in say 1-year increments every 3 years or so.
E.g. now change it to 66, in 2013 change it to 67, in 2014 change it to 68, etc.
That being said - welcome to the world of wealth redistribution alpha. Not exactly easy to handle it fairly, is it?
Life in general isn’t “fair”, but somehow people see government meddling as a panacea of fairness. Not so.
They ARE incrementally upping the SS retirement ages. The thing is anyone can still retire at 62 for partial benefits. It’s 66 right now for anyone born between 1943-1954 and goes up in 2-month increments until anyone born 1960 and after gets full benefits at 67.
Because the only alternative to their meddling is corporate slavery.
Yes, we need to raise the retirement age. But why stop at 70? I suggest to raise it to 150, fair enough. That would free up much needed cash for bank bailouts and military adventures in far flung corners of the globe.
Raising the age to collect SS makes sense. Raising it to 75 would mean fewer people would live to collect it. In addition, the number of years of contribution would increase as people keep working.
SS disability would cover those folks who became unable to work between 65 and 75. And they would probably drop off altogether before too long.
The downside is that there would be some limitation of opportunity for younger folks.
Raising it to 75 would mean fewer people would live to collect it.
Wasn’t that the point of originally having the magic number at 65? Back in the day (when SS began), very few people lived that long. Or, if they did, they were long dead and gone by age 70.
And just where will these jobs come from?
Basically, this nothing short of a death sentence. Most people are NOT in any shape to continue working after 60 except for the easiest and light duty of jobs.
But I agree there should be means testing for SS, but I have no idea how it would work. After all, it was their money to begin with.
Again, most people. AND THIS MEANS YOU, are not able to work past 60. 65 is already stretching it.
“AND THIS MEANS YOU”
Here’s to hoping you are wrong. I hope to still be working, though doing easier work than I am currently engaged in…
As do we all. As do we all.
Good news: Foreign housing market knifecatchers are pumping cash into America’s economy. Keep it coming, greater fools!
Who’s buying America?
Foreigners are ramping up home purchases in the U.S. Find out which states are seeing the most action, how long the trend may last.
Yep, maggots feeding on the flesh of a dying USA. Gotta love it. Sort of the reverse of giving a party and nobody coming. Looks like folks are arriving for the party and finding there isn’t one. There are some foreigners around these parts who bought franchises, small businesses, etc. and you can just feel the seething resentment (all covered over by oily smiles) that the streets, apparently, aren’t exactly paved with gold. I know one immigrant who got hosed into buying a house at the top of the market and added his own insult to his own injury by sinking an extra $25,000 worth of renovations. He was going to buy his daughter a high end automobile with the profits. Boo-yah!
There are some foreigners around these parts who bought franchises, small businesses, etc. and you can just feel the seething resentment (all covered over by oily smiles) that the streets, apparently, aren’t exactly paved with gold.
And I’ll bet everyone here has an ancestor or two who could tell the same tell.
According to my aunt, her grandmother (and my great grandmother) found this country to be highly inadequate in comparison to the Old Country. But did Granny return to the Old Country? Nope. She just stayed here and complained.
Well, not that ‘I’ don’t complain. Stopped in the ( now defunct ) Hollywood Video on Lancaster Ave. in Salem, OR and it was hella’ depressing.
Everything was marked down 70%. Totally ramshackle heap. You had to rummage thru the same BS releases time and again and they had (1) “employee” in the whole dive.
I’m just thinking out loud here, but is it possible to make a go of it as a M & P video store now that these chains have fallen on their sword? Obviously Netflix etc. will continue to dominate but if you didn’t want to work for a living I’ll bet you could get by?
“According to my aunt, her grandmother (and my great grandmother) found this country to be highly inadequate in comparison to the Old Country. But did Granny return to the Old Country? Nope. She just stayed here and complained.”
Kind of like today’s immigrants from south of the border.
Kind of like today’s immigrants from south of the border.
Just wait until their grandchildren and great grandchildren go back and visit the Old Country. I did during the 1970s. Didn’t take me but a day or two to realize why my ancestors left. They had the choice between staying and starving or leaving and eating.
Tremble, Banks, Tremble
Key point from the above:
“Today the former middle class is largely ruined: upside down on its mortgages and unable to add to its debts. With housing prices low and falling, banks are delaying foreclosures because they don’t wish to recognize their losses; it is a sick fact that the cash homeowners conserve by non-payment is one source of the anemic recovery so far.”
Listen to the “Who’s Buying America” news clip I posted above; it sounds like foreign investors making all-cash purchases are coming to the rescue of the U.S. housing market.
And, just like American all-cash investors (case in point: Mr. Whizbang, owner of the house behind me), they’ll find that housing investments aren’t all they’re cracked up to be.
Methinks that, in a few months or years, they’ll be walking away. Be pretty tough to pursue recourse against an overseas buyer too.
Methinks that, in a few months or years, they’ll be walking away. Be pretty tough to pursue recourse against an overseas buyer too.
This’ll be interesting to watch.
“Be pretty tough to pursue recourse against an overseas buyer too.”
Luckily, it sounds like many are buying with all cash, which presumably makes recourse unnecessary.
They’ll still be owing property taxes. Stop paying those and you’ll find out who REALLY owns the property.
And, if they’re leasing the properties, don’t they need to file a U.S. tax return on the rental income?
I liked Galbraith’s opening paragraph too:
“The financial crisis in America isn’t over. It’s ongoing, it remains unresolved, and it stands in the way of full economic recovery. The cause, at the deepest level, was a breakdown in the rule of law. And it follows that the first step toward prosperity is to restore the rule of law in the financial sector.”
But that’s just government meddling socialeesm!
Only the damn leebruls think that people who control billions and billions of dollars can’t be trusted with that kind of money!
Why, after this Saving & Loan crisis is over, what we need is LEES regulation! After all, granny still has some money hidden away somewhere and IT BELONGS TO US!
REO Update
I’ve been sending selected Bank REO & Short Sales Depts unsolicited letters, letting them know were able and willing CASH buyers. This morning Chase calls me. She tells me I need to find a house in the MLS and then tells me about their worthless online website (not current imo). I mention I’m licesensed, but none of the shadow inventory works for us,that is in the MLS. They don’t deal directly with the public ( that’s their preprogative) but if they didnt have a leash by NAR, some of us would be in a suitable home. Frustrating as h*ll.
I give you a lot of credit for trying to go the direct route. For me, it would take a drop a lot steeper than that of a used house salesperson commission to get me to buy now.
Having made a low offer on a short sale (rejected), I can sort of understand why banks won’t deal with the public. It appears they’re able to lowball the used house salesfolks commissions in a way that would never fly for ordinary individual sellers. Just to submit my offer, both listing and buying agents and their brokers had to sign a form agreeing that their commission was going to be re-negotiated by the bank. I’m guessing each brokerage would have been lucky to end up with 1.5% on the deal. Not surprising the banks aren’t set up to drive around unlocking doors for perspective buyers to save 2% or 3%.
Right now the banks are fearful of what the regulators (and shareholders!) would do if they dumped their inventory, booked the losses once and for all, and their balance sheets went kaput.
Kim
Thanks for your intelligent objective opinion, and insightful experience. That Rule 157 is another obstacle we buyers have, so the banks can pump up their financial statements. I agree about commissions. Btw, the organization of the REO cottage industry and banks is REOMac. They have a bi-monthly newsletter within their website, you and others here, might find interesting.
Yeah, life isn’t fair when you play by the rules. I’ve been thinking of hanging my license or working for a bank. I took a Short Sale class last week, which gave me a copy of the docs the sellers agents submit to the Short Sale Depts. After having a career with a REIT, I am use to straight shooters. Grrrrr!
“Btw, the organization of the REO cottage industry and banks is REOMac.”
Thanks for the tip! I’m on the buying side, but I enjoy reading about what the insiders have to say.
Love the cheezy ad on page 9 of the Mar/April 2010 newsletter for “Involuntary Relocation Facilitators”:
reomac com/pdf/newsletters/2010-Mar-Apr-Newsletter.pdf
Kim,
My background is Shopping Centers, which is full of Lawyers, CPA’s, etc…,you know, “thinkers” so the residential side is a little weird to me. I think all us buyers need to know the opposing parties, and their bag of tricks and so forth.
I know that ad. It must be the one with all the sleazy looking folks, on and around a motorcycle. What is frightening, is they live in my area (which is upper middle-class). I could not believe that is the image they wanted to convey. Run, don’t walk.
Interesting… this is from page 15 of the newsletter:
“For listing agents, the servicers cannot require that the listing agent lower their commission as a condition of approving the short sale. Under HAFA, the listing agent has the right to a 6% commission maximum unless the servicer hired a vendor to assist the listing agent in the sale.”
It only applies to short sales being done under the HAMP program (the offer I made was before HAMP’s time). It does not apply to REOs.
Kim
Thanks for refresher. I’m going to re-read that newsletter.
Has anyone else noticed that the ongoing period of housing market weakness is taking its Toll on Wall Street-sponsored home builder share prices?
I never understood why Toll was stuck for so long on $20 a share, though I am almost certain there is an interesting story to be told at some future point…
Toll Brothers Inc
NYSE:TOL
/marketstate/country/us
Toll Brothers Inc
Market open
— Quotes are delayed by 20 min
Jul 12, 2010 12:48 p.m.
$16.70
Change
-0.22 -1.30%
Volume 1.34m
Previous close
$ 16.92
For a stark example of why short ETFs are a ripoff though - check out SRS over the same time period as the various builders.
I scratched my head over the article in the Times this past weekend “Biggest Defaulters on Mortgages are the Rich.”
It was more like a bizarre “class warfare” article than actual news. Why? Because none of the stories they cited were about “the rich”
The “rich” who the NY Times were clucking their tongues over, had stories like this:
At one house, where the lender was owed $1.3 million, there was a couch out front wrapped in plastic. A woman said she and her husband had lost their jobs and were moving in with relatives. At another house, the family said they were renters. A third family, whose mortgage is $1.6 million, said they would be moving this weekend.
At a vacant house with a pool, where the lender was seeking $1.27 million, a raft and a water gun lay abandoned on the entryway floor.
People who lost their jobs and are moving in with relatives are NOT rich! These are simply poor people who managed to get big mortgages.
Let’s see some stories about people who can just write a check to get rid of their mortgage walking away from their properties. So far, I haven’t seen that.
Exeter:
This ones’ for you:
http://www.homesbyowner.com/syracuse/home_view.asp?homeid=70257&PhotoNo=1685303&Version=1
I thought you’d enjoy the laugh when you looked at those photos and then saw the price. Home sales have been slow there.
Sorry, thought this was in the end of thread box.
Reuven,
I kind of noticed that paradox last week on this too. Let me get this straight, you’re ‘rich’ and you have a ‘job’ ( that you lost btw ) ?
Reuvan,
I had the same reaction as you because the story was about million dollar homes which haven’t been the exclusive domain of the rich for a long, long time.
People who lost their jobs and are moving in with relatives are NOT rich! These are simply poor people who managed to get big mortgages.’
Here in costal CA it’s alot of people with high incomes and no savings or maybe used to have high incomes ?
cactus
I hope being back in Moorpark is working out for you guys. We’re still renting in T.O. You descriped most of our former neighbors in the two, 2-story McMansion jungles we’ve owned in. High incomes-high debt= 0 sum game, and they haven’t any rainy day or retirement socked away.
When we were doing well, we saved 50% of our net, and then a life tsunami hit.
cactus/wipeout,
Excellent points guys, something I obviously glossed over. And all too typical in Cali, as well as few other noteworthy “fake it before you make it” areas.
These are the very pitfalls most bubblebloggers sought to avoid. Often though, easier said than done! Most here are at our most aprehensive moments when “things couldn’t be going better!”
They don’t give million mortgages to Wal Mart greeters.
How can this be? I was told all you have to do is print, baby, print!
BOSTON — “The co-chairmen of President Obama’s debt and deficit commission offered an ominous assessment of the nation’s fiscal future Sunday, calling current budgetary trends a cancer “that will destroy the country from within” unless checked by tough action in Washington”.
Someone needs to let this guy know that horse has ALREADY left the barn.
Bernanke: $40B in small biz loans disappears
Federal Reserve Chairman Ben Bernanke spoke about the small business credit crunch and the urgent need to help Main Street businesses.
CNNMoney.com (NEW YORK) — In the last two years, $40 billion worth of loans to small businesses have evaporated, and correcting the problem should be “front and center among our current policy challenges,” Ben Bernanke, chairman of the Federal Reserve, said in a speech Monday.
Loans to small businesses dropped from more than $710 billion in the second quarter of 2008 to less than $670 billion in the first quarter of 2010, according to bank financial reports submitted to the Federal Financial Institutions Examination Council.
Well if you’re a bank that can get money at zero interest from the feds, then invest in Treasuries, then why on earth would you loan it out?
Ugh - that article is just sickening. Sickening.
Ben Bernanke - henceforth I dub thee The Pusher.
“$40B in small biz loans disappears”
EZ come, EZ go.
May be banks are acting smarter this time around. Most of the new small businesses I see are all about selling something as opposed to creating something. These type of businesses last for a year or two until the novelty wears off.
BP Cuts Payments to 40,000, La. Official Says
State Cabinet Member Tells Federal Gov’t of “Devastating” Cuts for Thousands with Incomplete Claim Files. ~NEW ORLEANS, July 10, 2010
(AP) BP has decided to reduce payments to tens of thousands of people whose claim files are incomplete, the secretary of Louisiana’s Department of Children and Family Services said.
“This action is irresponsible and in complete contrast to BP’s repeated promise that they will ‘make things right,’” the secretary, Kristy Nichols, wrote in a letter sent Friday to federal oil spill claims administrator Kenneth Feinberg.
It was not immediately clear how severe the payment cuts would be. BP did not immediately respond to a request for comment.
Nichols said her department discovered the change after reviewing BP’s Thursday claims summary, which showed a significant cut in daily payments.
She said a BP representative estimated more than 40,000 of the 99,508 people who have filed claims may get lower checks. That “will be devastating to individuals surviving financially month-to-month,” she wrote.
I’ll bet you money that BP is taking lessons from the health insurance companies. As in, if you don’t fill out box 23b on page 16, your form is dubbed incomplete and gets bounced back at you.
Then, you dutifully fill out box 23b, send it back, and it gets bounced for a different reason.
Honestly, given how much scamming is going to be going on, I’m surprised they were giving ANY money to people who didn’t have fully documented tax forms for their jobs that they lost because of this.
While I have no love for BP, you are right about the scams.
BP is about to learn how to make some Cajun deals.
“BP has decided to reduce payments to tens of thousands of people whose claim files are incomplete”
Well if their claim file was “complete” the claimants might not be having these problems, right? I’d guess its copies of the claimants 1040s that are missing from these files.
Guess? You KNOW it is! Or 1099 or any other tax form for that matter.
You’ve visited that region right? You have to count your fingers every time you shake hands with somebody.
http://abcnews.go.com/Technology/end-free-internet/story?id=11128321
The End of the Free Internet?
The Times of London, owned by Rupert Murdoch’s News Corp., is about to erect a “pay wall,” requiring online readers to spend about $3 a week or $1.50 a day to read articles. To further fend off freeloaders, search engines such as Google will be banned from linking to The Times’s stories.
The New Yorker magazine plans to offer a “one price pays for all” plan later this year, according to Advertising Age magazine. Subscribers would pay one fee and then be able to read the magazine in all its forms – print, Apple iPad, Amazon Kindle, possibly other e-readers – all for one price, rather than having to buy access to each separately.
Wired Magazine charges $4.99 to view an issue on the iPad tablet computer, the same as its newsstand price. The iPad version includes interactive features not available in print.
“Free distribution of premium content is like eating your babies. You will give value away until you go bust,” says a recent report from Group M, the media-buying agency of the international media and advertising giant WPP. The report calls people who use search engines to find news or information “useless tourists” who don’t pay their way and have little value, even to advertisers.
**************
I’m going to miss this era of free access to information. It meant the least among us really had no excuses other than own laziness because the info was there for the taking. I don’t blame content creators for wanting to pay the bills but if quality doesn’t go up with cost I’m afraid all they’ll do is reduce reach which isn’t going to help ad sales at all. Half the stuff I read is out of complete boredom because the story is redundant or obvious market shill. Charge me and I won’t bother. The people who ask for my time will be happy about it!
I don’t blame content creators for wanting to pay the bills but if quality doesn’t go up with cost I’m afraid all they’ll do is reduce reach which isn’t going to help ad sales at all. Half the stuff I read is out of complete boredom because the story is redundant or obvious market shill.
And here I thought I was the only one who thought the above thoughts.
To further fend off freeloaders, search engines such as Google will be banned from linking to The Times’s stories.
That seems… stupid. Don’t ban them from linking, just ban the content from being cached on Google. No source wants to bank links to itself. I’m guessing this is what the plan is, just got lost in translation.
“Free distribution of premium content is like eating your babies. You will give value away until you go bust,” says a recent report from Group M, the media-buying agency of the international media and advertising giant WPP. The report calls people who use search engines to find news or information “useless tourists” who don’t pay their way and have little value, even to advertisers.”
Propaganda is value? LOL, the MSM has a pretty inflated idea of their “value”.
I am a useless tourist.
Subscription on the Internet only works in very limited instances.
Most companies that have tried it had to abandon it or go completely out business.
I really, REALLY hope they try it. News Corp is scum of the earth.
!!!EXTRA!!!
!!!HBB SELECTED BEST BLOG OF 2010!!!
You know, The Housing Bubble Blog combines a million accumulated personal real estate experiences, along with some pretty sound reasoning.
So Ben, you get the 2010 Cobaltblue Award.
My contribution check is in the mail.
ITEM: “25.5 percent of consumers — nearly 43.4 million people — now have a credit score of 599 or below, marking them as poor risks for lenders.”
It’s unlikely they will be able to get credit cards, auto loans or mortgages under the tighter lending standards banks now use,The ones that do will be getting those “special” interest rates. ~ Credit Scores
< These are rocky times, to be sure. But it’s the payoff for those wild times when credit in abundance was available to almost anybody, whether they could handle it or not.
It took years to get into this jam. It will take quite a while before we get out. Lots of debt to clear, first.
New York Racetracks Face Insolvency Without Slots Revenue, DiNapoli Says. By Justin Doom - Jul 12, 2010
The New York Racing Association Inc., operator of the Aqueduct, Belmont and Saratoga horse tracks, faces insolvency in 2011 without revenue from long- delayed electronic slot machines, New York Comptroller Thomas DiNapoli said.
State officials disqualified all bids but a Malaysian casino operator’s last week to develop an electronic slot- machine parlor, called a racino, that would include more than 4,000 video lottery terminals, or VLTs, and other facilities at Aqueduct Racetrack in New York City.
New York Racing, which has run the state’s horse racing franchise since 1955, sought Chapter 11 bankruptcy protection in 2006. Since emerging from court supervision two years later, the association has run up operating deficits of $8.9 million in 2009 and a projected $19 million in 2010, DiNapoli said today.
Dumb Guidos.
Limited Trash Pickup A Foul Situation In Yonkers
YONKERS, N.Y. (CBS)
With the temperature rising, you can tell you’re in Yonkers because the garbage is mounting and so is the stench.
On practically every block of Yonkers, mountains of ugly black bags of garbage are growing, now that the city of Yonkers has switched to one day a week of garbage pickup.
Residents were not happy. “This not only looks disgusting but it’s unhealthy. A lot of the buildings in the area, we see more rats, mice, roaches, things like that, and a lot of people around here live with little children. This is definitely unsanitary,” said Mayra Gonzalez.
CBS 2HD caught up with one city sanitation crew that said they were trying to do the best they could, but their teamsters shop steward claims that with 38 laid off sanitation workers, the job’s now impossible. “We’re bogged down. We don’t have enough manpower because of layoffs, not enough trucks,” said Anthony Montanarello.
The city claims once-a-week garbage pickup would work if the sanitation workers didn’t call in sick, like 48 of them did on just one day last week.
Like DUH morons 1 day a week is fine when its cold outside…..not when it just hit 100 last week
Does anyone even think about these things????
“At present, available federal revenues are fully consumed by just three programs: Social Security, Medicare and Medicaid. “The rest of the federal government, including fighting two wars, homeland security, education, art, culture, you name it, veterans, the whole rest of the discretionary budget is being financed by China and other countries.”
— Former Republican Senator Alan Simpson of Wyoming, co-chair of Obama’s debt and deficit commission.
Home prices in San Diego County take a breather
By Lori Weisberg, UNION-TRIBUNE STAFF WRITER
Monday, July 12, 2010 at 12:08 p.m.
Some experts believe that sales and prices will taper off in the coming months once the more high-volume summer buying season comes to an end.
Some experts believe that sales and prices will taper off in the coming months once the more high-volume summer buying season comes to an end.
The rapid run-up in San Diego County home prices of the last few months took a breather in June, as sales activity remained relatively flat, although still much more robust than earlier in the year, MDA DataQuick reported Monday.
While still up 6.6 percent from a year earlier — the ninth straight month of year-over-year increases — June’s median price of $335,500 slid 1.3 percent from the May figure of $340,000. June sales, which numbered 3,885, marked the highest June in four years, but were still 17 percent below the average activity for that month since DataQuick began tracking the market in 1988.
…
MEDIAN HOME PRICE
Jun-09 May-10 Jun-10 Change from June 2009
Single-family resale $350,000 $377,000 $380,000 8.6%
Condo resale $210,000 $235,000 $219,250 4.4%
New home $455,500 $399,000 $431,000 5.4%
County $314,250 $340,000 $335,500 6.8%
.
HOME SALES
Jun-09 May-10 Jun-10 Change from June 2009
Single-family resale 2299 2335 2,301 0.1%
Condo resale 1,101 1,212 1,163 5.6%
New home 292 332 421 44.2%
County 3,692 3,879 3,885 5.2%
“Single-family resale 2299 2335 2,301 0.1%”
Forget about the percentage increase. 36 more used single-family homes sold in June 2010 than in June 2009. Looks like the market sure is roaring back to life…
“New home 292 332 421 44.2%”
That 44.2% jump looks a bit more paltry when you do the arithmetic to compute the number of new home sales involved:
332 - 292 = 40 more new homes sold in June 2010 than in June 2009.
Booyah!
To put these statistics into perspective, it is worth noting that the San Diego County residential real estate stock was comprised of on the order of 1,138,388 housing units as of 2008 (U.S. Census statistics).
So new home sales went up over the past year on the order of one additional sale per 28,460 (1,138,388/40) existing housing units while used home sales went up over the period on the order of one additional sale per 31,622 (1,138,388/36) existing housing units.
If that constitutes a housing market recovery, it has to be one of the most tepid recoveries in the modern history of statistical record keeping.
More fun facts from the Census link I provided above:
Median value of owner-occupied housing units, 2000
San Diego $227,200
California $211,500
finance.yahoo.com/banking-budgeting/article/110046/learn-to-love-our-massive-deficit?mod=bb-budgeting
Regarding the paradox of thrift
In fact, when it comes to spending cuts or tax increases, it’s a heck of a lot easier politically to inflict pain that won’t bite for a while. And it gives firms and households time to adapt accordingly.
Making It Work
• We should raise the retirement age for people who are my age (44). This won’t have any fiscal impact for a long time, but it begins the process of getting our entitlement obligations under control.
• We should phase in a carbon tax. If the price of carbon-based fuels begins rising by a dime a year in 2013, we’ll adjust. We will lock in a long-term revenue stream. Firms and households can make conservation decisions that will minimize the impact of rising fuel costs. Innovative firms will get the signal that investments in alternative energy will become increasingly profitable. And the U.S. will begin to get a grip on its oil addiction and all the attendant environmental and geopolitical problems.
• We should do a top-to-bottom review of the tax code and phase out the most egregious loopholes. I’ve not met an economist yet who doesn’t believe that a flatter, simpler tax code wouldn’t be a boon to the economy in the long run.
• We should phase out farm subsidies, which distort our commodity markets in all kinds of pernicious ways and do virtually nothing to help small farms.
And so on. We can quibble about the details. My point here is about the process and the timing, not the substance of the spending cuts and/or tax increases.
The bond markets aren’t worried about next week. And they’re not worried that the U.S. lacks the resources to pay its debts. We still have the most impressive, dynamic, innovative economy on the planet. Investors are worried that we lack the political wherewithal to deal with our budget problems (e.g. California).
Let’s send a signal now that we’re resolved to tackling our fiscal challenges. And have it kick in later. It’s the best of Franklin Roosevelt (fiscal stimulus) and Hoover (fiscal rectitude), all wrapped in one.
FDIC’s powers to investigate banks expand
At issue: Agency couldn’t properly assess institutions’ risk during crisis
WASHINGTON — Federal bank regulators have agreed to give the Federal Deposit Insurance Corp. unlimited authority to fully investigate banks, clarifying the agency’s power that was in question during the financial crisis.
The FDIC’s board on Monday approved the agreement between the insurance agency and regulators at the Federal Reserve and the Treasury Department. It clearly spells out the FDIC’s authority to make special examinations of banks. It was approved 5-0.
Federal bank regulators were widely criticized during the financial crisis for failing to signal high-risk practices before the institutions failed.
The FDIC, which takes over failed banks, has said it lacked access to needed information to evaluate banks’ risk.
Gonna need more granite counter top buyers…
Barre granite company parks trucks, lays off drivers.
TIMES ARGUS ~ July 12, 2010
BARRE - A company that got its start trucking granite for Barre area manufacturers back in 1974 has suspended that end of its operation.
Ron Elliard, a spokesman for Granite Importers Inc., said the company laid off its five drivers and sidelined its 12-truck fleet earlier today in response to an economic downturn that has taken its toll on the local granite industry.
“This really did come as a last resort for us,” he said. “We didn’t want to do this.”
Elliard said he hoped the lay-offs would be temporary and Granite Importers transport division would could be revived when the economy rebounds.
“We’re grounding them until we can get more business,” he said.
Although drivers were informed of the decision this morning, Elliard said it could not have come as a complete surprise since the company’s trucks have been for sale for two months and remain on the market.
“They were, like all of us, in hopes that we would never have to sell the trucks,” he said of the drivers.
Granite, Janet!
Chanel’s Eres division closing its U.S. stores
Swimwear and lingerie seller to vacate Madison Avenue shop in September, part of a retail retrenchment stretching from Beverly Hills to Palm Beach.
Upscale swimwear and lingerie retailer Eres is quietly exiting its U.S. stores. The brand, which is owned by Chanel, will vacate its 900-square-foot store at 621 Madison Ave., between East 58th and East 59th streets, in mid-September.
Earlier this year, Eres shuttered a SoHo outpost. Two additional boutiques, in Palm Beach and Beverly Hills, will also be closed between August and October. The Madison Avenue shop will be closed when Eres’ lease expires.
Jeffrey Roseman, the Newmark Knight Frank Retail broker who represents the retail space in the SL Green Realty Corp.-owned building, said a new tenant is already in negotiations for Eres’ old space. The deal is expected to close by the end of the month.
“It’s amazing, but Madison is back,” said Mr. Roseman. “The minute we put it on the market we got an offer.”
The potential retail tenant sells high-end men’s accessories and apparel. Asking rent for the space is near $850 a square foot, according to Mr. Roseman. The property, called the Revlon Building, also houses luxury tenants such as Stuart Weitzman, Swarovski and Wolford.
“We’re confident of replacing Eres with another high-end boutique that’s in keeping with character of neighborhood,” said Larry Swiger, senior vice president at SL Green.
$850 is low..i would have expected well over $1000
Hmmm $850 x900/365= $2095 a day in rent…and that 900 sqft includes the bathroom and storage space
I’ll leave it at that……
Man I am missing out.
“The average household in the Palm Beach County Housing Authority averages about $11,000 in subsidies a year”
Authorities charge 13 with housing fraud in latest Palm Beach County sweep
By Eliot Kleinberg Palm Beach Post Staff Writer
Posted: 9:34 a.m. Monday, July 12, 2010
WEST PALM BEACH — Authorities this morning began rounding up 16 people they allege lied about their status to get nearly $600,000 in federal rental assistance to which they aren’t entitled.
As part of “Operation Shield,” 13 people were booked this morning into the Palm Beach County jail on 21 counts of grand theft, organized schemes to defraud, public assistance fraud and falsifying homestead exemptions. The other three were expected to be in custody later today, officials said at a news conference this morning.
The sweep is the latest of several crackdowns by the Palm Beach County Sheriff’s Office and the U.S. Department of Housing and Urban Development. According to Palm Beach County Jail records, the seven arrested bring to 30 the number booked on such charges in 2010; more than 100 have been charged since January 2009.
Late last year, detectives said abuses already had cost taxpayers more than $1 million that could have gone to worthy tenants.
One detective has been contracted out to the Palm Beach County Housing Authority and another has been working the abuses nearly full time.
The types of abuses included: tenants had more people were living in the unit than disclosed; the renter or another person in the unit had been convicted of a violent crime or drug charges; and the renter earned too much money to qualify.
Those arrested today include Tanisha Henry, a sergeant at Glades Correctional, who didn’t reveal her income, and Sarah Jeannine Belk, who didn’t disclose she earned $55,000 a year working at Hospice of Palm Beach County.
Deborah Frazier Moore of Boynton Beach and her daughter, Toral Frazier, both of Boynton Beach are in jail now on charges they attacked a pregnant woman with a box cutter and stun gun on June 16 in Boynton Beach. Toral Frazier allegedly submitted updated documents to her housing authority, claiming she still was living in her subsidized apartment, while she was in jail.
Several of those charged did not reveal that they or others in their household had previous arrests which range from sexual assault on a minor to, manslaughter and attempted homicide. Some didn’t disclose they were in probation.
“They’re ripping off the fellow residents and citizens of our community in order to deprive the others of assistance,” State Attorney Michael McAuliffe said at a morning press briefing.
“These are really good programs,” McAuliffe said. “But when they get off track, and people start abusing them and using them for their personal gain, we know we have to step in and do something.”
The average household in the Palm Beach County Housing Authority averages about $11,000 in subsidies a year, so just the 16 arrested would equal about $165,000 per year in ineligible subsidies, housing authority executive director Joe Zalman said.
“If this was every housing authority in the country, all 3,300 of them, that’s about a half billion (dollars) a year,” Zalman said.
Besides ripping off taxpayers, the fraud allows people with criminal records to live where they shouldn’t be allowed, Sheriff Ric Bradshaw said.
“When this (arrests) happens and we solve these problems, these individuals come out of these neighborhoods and the quality of life gets better,” Bradshaw said.
And, he warned, “If you’re one of those people doing this fraud, we’ll be knocking on your door before this is over with.”
Section 8 fraud
A tenant can be evicted under the ‘one strike’ provision if any family member or guest has taken part in criminal activity involving drugs, violence,
sex offenses, firearms, alcohol or defrauding HUD.
Fraud means the head of the household failed to disclose income or assets, real estate
ownership or bank accounts, additional tenants or past criminal history; faked his or her identity; received multiple subsidies; or bribed officials.
Those charged this morning:
Tanisha Henry, 33, of Wellington. Amount: $9,500. Allegation: Henry, a Florida Department of Corrections sergeant at Glades Correctional, didn’t accurately disclose the $9,724 she earned in the fourth quarter of 2009. Supervisors told a detective they are in the process of firing Henry.
Sarah Jeannine Belk, 40, of suburban West Palm Beach. Amount: $1,554. Allegation: Failed to disclose she earned $55,000 a year working at Hospice of Palm Beach County.
Robin Michelle Clark, 43, of South Bay. Amount: $65,302. Allegation: Failed to disclose criminal history of residents Lavoner McCray, which included arrests for sexual assault on a minor and robbery; and Getoya Hessin, which included arrests for robbery.
Lavoner Mineque McCray, 38, of Riviera Beach. Amount: about $40,000. Allegation: Failed to disclose her income, including her employment at a geriatric center, as well as that of residents in her home.
Leon Jackson, 26, of Riviera Beach, Amount: $44,999. Allegation: Failed to disclose his criminal history, which includes arrests for battery and drug possession. Also failed to disclose criminal history of roommate Timothy Auguste, whose arrests include use of an explosive device and gun possession charges
Stephanie Natasha Porter, 31, of West Palm Beach. Amount: $2,660. Allegation: Sublet property and failed to fully disclose her spouse’s existence or income.
Anthony Dearak Bridges, 46, of Belle Glade. Amount: $52,077. Allegation: failed to disclose his criminal history, which includes arrests for aggravated assault and grand theft, and that of other residents.
Suzette Charles, 35, and Victorin Murat, 48 . Amount: $2,085 each. Allegation: Claimed an exemption on property they instead were renting out.
(Still at large:) Leon S. Jackson, 45, and his wife Sylvia Jackson, 44, of Royal Palm Beach. Amount: $1,615 each. Allegation: Claimed an exemption on property they were renting out.
Tammy Temteo Latson, 44, of West Palm Beach. Amount: $82,920. Allegation: Failed to disclose her criminal history, which includes arrests for robbery and aggravated battery on a law enforcement officer; and that of her son, Darryl Latson, which includes arrests for drug possession and sales.
Deborah Frazier Moore, 48, of Boynton Beach. Amount: about $61,000. Allegation: failed to disclose her own criminal history, which includes arrests for aggravated battery on a pregnant victim, and that of Dexter Lewis, a fugitive whose arrests include drug charges and hit and run. Moore and her daughter, Toral Frazier both are in jail on charges that, on June 16, in Boynton Beach, they sought a woman who ran away and instead punched the woman’s aunt, then cut their target’s pregnant cousin in the face wuth a box cutter and shocked her belly with a stun gun.
Toral Lonya Frazier, 32, of Boynton Beach. Amount: $30,000. Allegation: Failed to discuss her household’s criminal history and submitted updated documents, claiming she still was living in her subsidized apartment, while she was in prison.
Sallie Jo Blue, 31, of West Palm Beach. Amount: about $40,000. Allegation: Did not report all residents. Failed to report both incomes and criminal histories of resident James R. Blanks, whose arrests include manslaughter and attempted homicide, and Terrance S. McCray, whose arrests include aggravated battery.
(Still at large:) Courtney Lataurus Gross, 34, of Royal Palm Beach. Amount: $92, 859. Allegation: failed to disclose her criminal history, which includes arrests for aggravated assault with a deadly weapon. She also failed to disclose the criminal history of her son, Kenton Will Ball, which includes arrests for robbery and probation violation; for her boyfriend, Duane Mark Blake, who had 26 arrests, including one for homicide, and a roommate, Eric Alexander Hunter, whose arrests included military desertion, robbery and kidnapping. All four are on probation.
Is it just me, or does it seem to be mostly women?
Oh wait. Section 8. Never mind. :doh:
I’m thinking once Asian markets have tumbled far enough, Asian real estate investors in U.S. residential housing may be sidelined.
Improved CA affordability could result.
Asian gains come undone
Japan, Australia and South Korea turn negative, as the Shanghai Composite tumbles after reports China won’t relax property market policies.
Oh goody — I love fabricated, fractured fairy tales!
Luckily for Wall Street’s heavy hitters, there are no laws against deceptive accounting or stretching the truth to the breaking point.
David Weidner’s Writing on the Wall
July 13, 2010, 12:01 a.m. EDT
The double life of Wall Street
Commentary: Masking debt mars earnings season — and analysts don’t help
By David Weidner, MarketWatch
NEW YORK (MarketWatch) — Fairy tale season is about to begin.
…