Bits Bucket For August 29, 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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“The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.”
Karl Marx
“The subjects of every state …”
Right here, right at the concept of me being a “subject”, is where I begin to have problems with Karl Marx’s philosophy.
A citizen is not a subject, end of story.
That statement is absolutely subjective.
Kings have “subjects.”
Is it better to be a subject or an object?
What’s all this talk about citizens and subjects? I thought we were consumers…
Exactly. Hope everyone is enjoying their gilded cage.
I guess you did not hear that the banks have turned the clock back to 300 years before the start of the American experiment. Welcome to the dawn of the new feudal era!
That actually started back in the 1980s.
Ummm… Are you or are you not subject to the laws of the state?
The idea we have of individual sovereignty is a lovely fantasty…
Marx was born in Prussia in 1818. He eventually settled in England. Why exactly would you expect him to a work other than “subject” for the residents of a particular country? That is the word that is used for people who are ruled by a monarch.
“to use a word” not “to a work”
Does the state work for the people…
or…
Do the people work for the state??
I’m confused on our status today.
The people beg from the state.
The right of the people to alter or abolish Karl Marx.
Neither, you work for the corporations.
Why? You have problem with Corporate Communist Capitalism©®™, comrade?
Sounds like a recipe for initial distribution or in our the case of a previously-capitalist society “redistribution of wealth”.
As with any organization, government or social groups. And always to the top.
It used to be that groups of people banded together for their mutual benefit. Now groups of band together for the benefit of a few.
They tried that in the former Soviet Union. There were these large farms (”collective farms”) where the farmers were all required to “contribute to the government, as nearly as possible, in proportion to their respective abilities.” The same farmers, who forcibly tilled the vast collectives, were also each allowed to grow their own produce on a small backyard plot.
Can you guess which of the collectives or the backyard plots were more productive?
Stalin came down hard on the kulaks. The 1930s - what a decade in the USSR. First, the forced collectivization of farms starves tens of millions, then Stalin’s late 30s purges, followed by the bloodiest theater of of the bloodiest war. Untold millions gone.
They tried to collectivize the farms right after the revolution, but the kulaks (land owning peasants) were having none of it. So out of expedience Lenin struck a very uneasy truce with them. It wasn’t until Joe came into full power that things really got bleak.
In and of itself, pimping houseownership is not the road to what lots of people are fearing right now (some sort of Soviet nightmare). That said, the dependency on the state that is created by people buying overpriced housing - well that’s another story. The state could probably care less if anyone owns a house or not - just so long as the fruits of their labor go to the state. But hey, if they let you paint the walls - then I guess it’s all good.
“The state could probably care less if anyone owns a house or not - just so long as the fruits of their labor go to the state.”
Pimping unaffordable housing, through ‘affordable housing’ policy, is just such a sneaky way to collect taxes. To each his own, but I would prefer honest taxation to the status quo, which creates terrible negative distortions to macroeconomic productivity.
in proportion to the revenue which they respectively enjoy under the protection of the state.
Doesn’t really sound like a call for collective farms so much as a call for the state to get a cut of the revenue that its citizens generate under its aegis.
“In proportion to the revenue which thee respectively enjoy under the protection of the state” is a very apt description of a flat tax.
“In proportion to the revenue which they respectively enjoy” sounds more like a graduated income tax to me.
“In proportion to the revenue which they respectively enjoy” sounds more like a graduated income tax to me.
Would not a flat % be “in proportion to the revenue”?
There is nothing in the phrase “in proportion to” that indicates the proportion (otherwise known as a fraction and for amounts between 0 and 1 inclusive also called a percentage) changes for larger amounts. If you earn half the money, you pay half the taxes. If you earn one tenth the money, you pay one tenth the taxes. That can only happen in a flat tax system with no deductions or exemptions of any kind.
Yeah, you guys are probably right. I guess ‘in rising proportion to’ would mean a graduated income tax, but ‘in proportion to’ would not necessarily mean one. Although I’m not so sure it rules it out, just that it doesn’t rule it in.
But just before that phrase, he says ‘in proportion to their respective abilities’. That gives a little wiggle room, no? The rich might be shown to be ‘able’ to pay a larger percentage of their income than the poor.
Problem is, people aren’t ants. They’re not going to mindlessly toil to provide fruits of their labor to other just because some third party says they should. This is the behavior of ants.
While they are some similarities to ants, there are many more differences. People are more like wolfpacks than ants. Self-interested, vying for power, but also very social and in need of the other members of the pack to survive.
Simpletons, no matter how prolific their literary output or glittery their prose, insist on seeing the world in extremes and black and white, rather than all the rich shades of gray which exist between the extremes.
Problem is, people aren’t ants. They’re not going to mindlessly toil to provide fruits of their labor to other just because some third party says they should.
Want to bet? They will as long as they get the basics and some bread and circuses in return.
Every. Damn. Time. And whoa unto the independent minded.
In Marx’s fantasy world, people’s abilities equate with their incomes.
same with meritocracies
Not so. In a meritocracy, the people’s incomes equate with their abilities.
isn’t either side of an equation equal?
Both are fantasies. But we’re a lot closer to a Soviet Corporate model than we are to meritocracy.
What are Paris Hilton’s abilities?
ah come on she has the ability to be a stupid moron and make 100 times what you make
They pay her to get stupid at all those parties…so maybe she is not as dumb as we think..
Hey Joey — long time, no post!
I would slightly rephrase the problem with Marxism:
In Marx’s fantasy world, people’s efforts equate with their abilities, regardless of who enjoys the fruits of their labor.
Been couple months no post..? but I read the blog fairly regularly… hoping to spy some faint glimmer of light at the end of the tunnel.
MArx’s problem..
Marx had unending trust and faith in the State, believing that it could both own the means of production AND command all political power, and it would still act wisely and justly towards the people.
I suppose he just couldn’t fathom greedy, corrupt and inept politicians and bureaucrats spoiling his Utopia.
btw.. as alpha says further down, there’s something wrong with the quotation…
It seems to me that Karl was wide of the mark.
-IF- the purpose of the state is to protect life and property then shouldn’t wealth be taxed proportionally along with income?
Karl Marx was a !@!$%^^##$ @#$$%^$
Little known fact: you wold be surprised at how many businessmen, leaders and PTB have not only read Marx, but know large portions of it by heart.
And while publicly espousing direct opposition to it, often run their businesses along the Soviet model, i.e. treat their employees like crap.
The subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.
Karl Marx
Holy cow. Holy, holy cow. Holy, holy, holy, cow, cow, cow. (That’s when it’s really serious.)
I just realized I made a big mistake with that quote. Really, really big. ‘Bigger than Dallas’ as we used to say in the People’s Republic of Texas.
So big, I’m not even going to say what it was. I’m just going to back towards the door… and…Hey! What’s that interesting thing over there? (Points across room, the door slams, running footsteps, car door slams, engine revs, tires squeal, car roars into distance…)
Economy edges closer to stalling, government says
A blinking yellow light for the economy: Growth is even slower than first thought.
WASHINGTON(AP) — The economy turns out to be weaker than we thought, and the outlook for the rest of the year is now looking dimmer.
New figures issued Friday show the economy struggled this spring, growing at a meager 1.6 percent annual pace. The initial estimate was 2.4 percent, and even that was anemic. Analysts say the summer should be disappointing, too.
Shortly after the government’s revision, Federal Reserve chief Ben Bernanke said the Fed was ready to take additional steps to prevent a second recession, if the economy deteriorates further. But he stopped short of promising any action.
The Fed “will do all that it can to ensure continuation of the economic recovery,” he said.
I picture a diesel locomotive at the head of a freight train, stalled on a siding. Ben and TTT are looking in the fuel tank opening and agreeing that they’ll add even more water if necessary to get the engine going.
…while they proceed to hich dozens of new freight cars to the rear of the train.
Unless it is initial use or reuse of money already appropriated, Secretary Geithner can’t “add more water” unless Congress appropriates it. I have no idea what funds are still around from the original Congress approved kitty, but the chance of getting more added to it before the November election is approaching nil very rapidly. After the elections there is maybe a month when something could be forced through, though I consider the probability to be well below half. After the new Congress takes power? Welcome to gridlock, boys and girls.
After $26,000,000,000.00 divvied up for teachers and other assorted state employees, the obamma libodems give Ohio teachers and assorted eduspenders another $400,000,000.00 of walking around money. Who says those unicorn ranchers in Foggy Bottom are running out of livestock? Couldnt prove it here in Foreclosure City …. er, I mean the Forrest City. Just what could flyover country L shaped recession Rust Belt Ohio have that they want?
Yeah. That $26 billion was appropriated. The governors put enough pressure on their Reps and Senators to get it through. School is starting and parents with kids sitting in rooms with 35 kids to a teacher get vocal very quickly. The trillions upon trillions needed to inflate enough to keep asset deflation at bay is not something you can get past Congress. It can only be done by the Fed. And they can’t control where the money goes all that well. They can a little by deciding which debt instruments to buy, but it isn’t completely effective since even if they say they are going to buy some mortgage backed securities, they are never going to announce that they will buy all of them.
Fannie and Freddie and FHA are about the only game in town now and they are under attack. Refusing to finance stuff is a very powerful thing. Representative Sander Levin of Michigan is currently the acting chairman of the House Ways and Means Committee. Oddly enough the Ranking member is Representative David Camp, also of Michigan. If you would like to argue that they are identical in outlook, go ahead, but that isn’t what a quick look at their websites says to me, though it looks like they both care quite a bit about manufacturing.
After $26,000,000,000.00 blah blah blah $400,000,000.00
It’s easier on the reader when you leave off the decimals.
But you dont complain when its $13.99 for the 12 pack.
Watch out below! WMBZ has gone ALL CAPS!
Let’s hope Mr. Fancypants doesn’t get too big for his font.
Economy edges closer to stalling,
…for the rich.
There. Fixed it.
Jackson Hole Debate on Recession Risk Shows Bernanke Challenge
Central bankers and economists at a Federal Reserve symposium clashed over how to best contain asset-price bubbles three years after a crash in U.S. housing prices led to the worst global recession since World War II.
Bank of England Deputy Governor Charles Bean told the meeting in Jackson Hole, Wyoming, yesterday that regulatory tools would be most efficient at deflating a boom without inflicting broad economic damage. Stanford University Professor John Taylor, creator of an interest-rate-setting formula used by central banks, said the tools are “unproven” and using them may cause central bankers to lose focus on adjusting rates properly.
“In a sense, the Fed caused the bubble” in home prices, said Taylor, a former Treasury undersecretary for international affairs. “A priority would therefore be not to create bubbles in the first place,” he said in an interview during a break.
The disagreement highlights the challenges Fed Chairman Ben S. Bernanke and other central bankers face as they seek to sustain the global recovery through unprecedented stimulus measures while not encouraging investors to take excessive risks. Kansas City Fed President Thomas Hoenig, the conference’s host, has warned this year that the Fed’s near-zero rate policy risks creating new, potentially destructive price bubbles.
“In a sense, the Fed caused the bubble” in home prices, said Taylor, a former Treasury undersecretary for international affairs. “A priority would therefore be not to create bubbles in the first place,” he said in an interview during a break.”
This just in: The body of former Treasury undersecretary John Tayor was found at the bottom of a ravine just north of Jackson Hole, Wyoming yesterday. Federal Reserve officials last seen with Taylor had no comment.
BERNANKE: “Although output growth should be stronger next year, resource slack and unemployment seem likely to decline only slowly. The prospect of high unemployment for a long period of time remains a central concern of policy.’
TRANSLATION: (by Gary North): “The job market will be a disaster for years. ‘A central concern for policy’ means nobody knows what to do about it; nothing has worked.”
“The prospect of high unemployment for a long period of time remains a central concern of policy.”
What is one to expect in a CONSUMER BASED ECONOMY when the consumers that the economy is based upon stop consuming?
Is this rocket science?
“Is this rocket science?”
Another one I like (paraphrasing): The housing market won’t recover until employment rises. With nearly 20% of total US GDP housing related, exactly how can employment rise with housing out of the picture until the next housing bubble takes hold? What can replace that huge hole in GDP anytime soon? From a pure boom/bust cycle perspective we are several years away from another housing bubble - so enter Japan lost decade scenario is all I can guess.
Is this rocket science?
Apparently.
“nobody knows what to do about it; nothing has worked.”
They know darned well what to do about it, and they know what would work. They don’t have the political cojones to do it.
Preach it, Palmy.
Hey Bernake…I’m still waiting for my $3000 paydown of my Credit cards…or maybe a $1000 coupon towards a new laptop….If ya read CL so many ads today require you to have a current laptop with LEGAL software to be an “Intern” today
oh heck my engine light went on its a damm oxygen sensor….
I’ll spend my stimulus on real needs huh buddy can a renter get equal opportunity in your world???
Time to face the music, NYCdj: you’re going to have to pay off your own credit cards - or default on them.
Renters don’t own as many congressmen as the NAR.
>>Renters don’t own as many congressmen as the NAR.<<
The same is of most Joe 6 Packs.
And those who are gloating about not paying the mortgage while they fire up their new Harley will eventually be evicted and with bad credit it will be a chore to find a LL who will rent to them.
But but but Kim….I have a Dream……..
—————————-
Time to face the music,
We will need:
1) Debt destruction. It won’t be fair, but I would rather that than paying those Wall Street criminals the bonuses they do for the work they don’t do.
2) Investment. We need Wall Street to do the tasks they are supposed to do which is invest in new business ideas, start ups, and viable concepts. What they do now is borrow from the FEDResv at 0% and buy gov’t treasuries at 3%.
3) Gov’t needs to insure that more money to lend to private businesses is available. They do this by raising the discount rate so that item #2 actually works. As long as the Fed keeps the interest rate @ 0% WS will not lend to private business and will not take risks with private business.
No More Mickey Mouse Economy!
Roidy
“1) Debt destruction.”
One heavy dose of debt destruction coming right up. Many of those who think they are owed will not get paid; The money is just not there.
This money that is owed but will not be paid is not limited to just BORROWED money, it also consists of PROMISED money. In fact, most of the owed money that won’t be paid out is promised money.
Think Social Security and Medicare and underfunded pensions as a starting point and go on from there.
“Think Social Security and Medicare and underfunded pensions as a starting point and go on from there.”
Look for that task to fall to neocon repubs. Who will dig in with relish to destroy SS and all those “entitlements”.
Liberals and groups in favor of preserving Social Security are calling for the co-chair of President Obama’s deficit commission to resign after he said in an e-mail that Social Security is “a milk cow with 310 million t!ts.”
In a letter responding to criticisms against him from a group representing older women, former Wyoming Sen. Alan Simpson wrote that he has “spent many years in public life trying to stabilize” Social Security. However, he wrote, “Yes, I’ve made some plenty smart cracks about people on Social Security who milk it to the last degree. You know ‘em too. It’s the same with any system in America. We’ve reached a point now where it’s like a milk cow with 310 million t!ts!”
“Who will dig in with relish to destory SS and all those ‘entitlements’”.
Digging is no longer necessary. All the digging has already been done.
Now it’s time for the eulogy.
“However, he wrote, “Yes, I’ve made some plenty smart cracks about people on Social Security who milk it to the last degree. You know ‘em too.”
So expecting to collect a benefit that is promised to us every single year in a “statement” that the SSA sends us in the mail, a benefit that we and our employers contribute 12.4% of our incomes into is somehow “milking the system.”?
If they want to dismantle Social Security then I expect to be refunded all those contributions that were made plus interest.I think at 5% interest that 400K would cover it for me.
If they want to dismantle Social Security then I expect to be refunded all those contributions that were made plus interest.I think at 5% interest that 400K would cover it for me.
I suspect what you don’t get, is that the money was largely already spent on the cold war to safeguard you and your loved ones from communists and now from terrorists. You are free today because the money was spent yesterday.
I too have contributed a great deal into Social Security, but frankly I just see it as another worthless tax.
“milking the system” is people collecting SSD or SSI who paid very little or nothing in, and the way it’s extended to those other than the payor. Plus, getting on SS qualifies you for Medicare too. Also it’s paid to people who have not retired and are still working.
I don’t think it was meant to work that way originally.
“I suspect what you don’t get, is that the money was largely already spent”
Oh, I understand that they pissed it away and that if they dismantle the system I won’t see one dime of what I contributed. My earlier statemet was rhetorical.
““milking the system” is people collecting SSD or SSI who paid very little or nothing in”
What percentage of the system is that? And how about we fix that part of the system? Or is it just another right wing red herring to screw the middle class (again) that did pay into the system?
“I don’t think it was meant to work that way originally.”
Actually, it was:
wikipedia
the amendments of 1939….added wives, elderly widows, and dependent survivors of covered male workers to those who could receive old age pensions. These individuals had previously been granted lump sum payments upon only death or coverage through the Aid to Dependent Children program. If a married wage-earning woman’s own benefit was worth less than 50% of her husband’s benefit, she was treated as a wife, not a worker.[37]
The first monthly payment was issued on January 31, 1940 to Ida May Fuller of Ludlow, Vermont. In 1937, 1938 and 1939 she paid a total of $24.75 into the Social Security System. Her first check was for $22.54. After her second check, Fuller already had received more than she contributed over the three-year period. She lived to be 100 and collected a total of $22,888.92.[2
Yes, I know. I live in Louisiana which has one of the worst records of over-promised underfunded pensions and retirement benefits of all states. I’m ready to endure a reduced pension commitment, but I know many who aren’t and with good reason.
If we ever really get to the end of this, a revival of the economy and good paying jobs will increase tax revenues and pension contributions. 10% unemployment and 20% underemployment will not allow this. Even worse we are in for a “baby bust” since the birthrate is falling due to the downturn. Also, legal immigration is down since many people have found opportunity for employment and careers in their original country that rivals the US opportunities.
I’ll bet that the Fed Gov’t will “freak” when the US population goes static at around 310 million or so. They will completely loose it. Watch and see.
Roidy
“If we ever really get to the end of this, a revival of the eocnomy and good paying jobs will increase tax revenues and pension contributions.”
We will EVENTUALLY get to the end of this but first there needs to be a wake-up call heard by a lot of people.
Some people are already hearing the call: The personal savings rates has increased at the same time personal debt is being paid off. This a GOOD THING over the long haul but in the short haul it screws an economy that is seventy-percent based on consumer spending.
But we are early in the game. More innings need to be played out IMO. It won’t be fun, but it sure will be interesting.
Even worse we are in for a “baby bust” ??
I have mentioned before that my house was always full of children due to all three of my children being close in age and involved in a multitude of sports…I also coached youth sports for 13 years…
I am still in touch with and close to maybe 25-30 of these kids…Now 30ish + or -…Of all these kids, there are a grand total of 3, “thats right” three babies…Two of which are with one couple…By the time I was of the same age I had three children…
Baby bust ?? Well, within the group of adult kids that I know I would say yes…
“I’ll bet that the Fed Gov’t will “freak” when the US population goes static at around 310 million or so. They will completely loose it. Watch and see.”
No problem. If it comes to that they will turn an even blinder eye to illegal immigration while handing out even more visas and green cards to educated immigrants.
Three kids here, all over 29, 2 grand kids; no additional on the 3-4 year horizon. Most likely no more unless some baby momma shows up “unexpectedly.”
“The money is just not there.”
Dumb question of the day: Why couldn’t the Fed just use a balance sheet expansion to create the money? After all, the debt is denominated in nominal, not real, dollars.
Because money needs to be backed by something. In the case of fiat money it is backed by what it can be exchanged for.
If there is more money available that things the money can be exchanged for then the value of the money get diluted resulting in run-away inflation.
If there is more money available that things the money can be exchanged for then the value of the money get diluted resulting in run-away inflation.
But if the money is expected now, but has been frittered away over the previous two or three decades, would the addition of the money now trigger new inflation, or merely monetize the past inflation?
Why couldn’t the Fed just use a balance sheet expansion to create the money?
From the FED’s position, it’s probably better to let the government wallow in this hole so they can become a ward of the FED.
Give me control of a nations money supply, and I care not who makes it’s laws.
Amschel Rothchild
The problem of course is that the money has not been “frittered away”, real money (wealth) was never there. What is left, and is real, is debt. Someone somewhere let the government borrow their real wealth and expects to get as much + interest in real wealth (not watered down dollars worth half what you gave them) back. That someone is much more likely to be your neighbor or your relative than some faceless Chinese guy.
“Because money needs to be backed by something.”
I suggest gold. If the Fed bought lots of gold, pumping up the price and sucking in lots of gold bug noise traders who would pump it up even higher, then the Fed could sell gold and drive the price back down. Once the price was knocked down, the Fed could ‘print’ more money, blow another gold bubble and suck in more greater fool investors, then sell off their holdings and knock the price down again.
It seems like the Fed could use the above strategy with gold or any other asset class of its choosing to create a perpetual real wealth generation machine, funded by greater fools who don’t realize when they are picking up nickels in front of a rapidly advancing steam roller.
Bill in Los Angeles wrote:
“So Vanguard 500 index fund, which has been in operation since August of 1976 with an annual yield of 10.30% since then is part of this skimming operation? Or the other Vanguard index funds? Vanguard is client-owned. So we Vanguard investors are ripping off ourselves? “
Everyone only invests in the Vanguard loss-leader.
Bears Sterns was in operation since 1923.
Relevance of an investment company being “owned by its investors” is quite dubious.
After all many life insurance companies have been mutual companies, that is “owned by policyholders” and that fact isn’t worth a fig in relation to their ethics or returns.
Are you also a partner at Wellington who actively manage the host of other funds offered by Vanguard?
If you are a Vanguard investor take a look at the difference between VUG and VIGRX, which would you buy?
VIGRX, because I dollar cost average. VUG has a great expense ratio but I don’t time the stock market. If I had $100k I could get VIGAX and dollar cost average into that. Same expense ratio as VUG.
Note VIGRX lost 2.67% per year for the last ten years on the average. This is why you diversify and dollar cost average. VFINX lost 1.67% per year over the last ten years on the average.
Like politics, markets are cyclic. Growth is way out of style these days and may not come back for ten years. But growth will come back. You cannot predict when. Socialism will go out of style in a few years too.
“Note VIGRX lost 2.67% per year for the last ten years on the average.”
And one should invest his hard-earned money in VIGRX because …?
I’m with BILA on this. Some day growth will return, the stock market will rocket up, and many who stayed on the sidelines will be heard to say, “no one could have seen it coming.” It could be a decade or two into the future from now, but those out of the market at that point will miss big opportunities.
a decade or two into the future from now ??
Maybe okay for someone say 40 and under…
SCDave, in the meantime the ups and downs of the stock mutual fund may put you ahead of the NAV.
The S&P lost an average 1.67% the last ten years, but my cost basis is only 6% higher than what the purchase price is now in VFINX.
Cycle.
Concerning the phrase “no one could have seen it coming”, how is it no one could have seen the coming of the massive shrinking of record Price/Earning ratios of stocks over the past ten years, which is a secular process that is still unfolding?
Not a good argument for riding the thing down. If you know there are generational cycles, then that is your clue for when to place your bet. I got out of the “market” in 2000, with these cycles in mind. So far it has been a good bet.
Well I think we certainly can argue until we are blue in the face because we each have our own risk tolerances. They depend on age.
A 22 year old may be perfectly comfortable with cash and savings bonds, but will lose out to inflation and the cyclic nature of investing which historically showed stock index funds produce the best returns over anything.
A 65 year old may be comfortable with stocks, thinking he will live to 95. Very foolish gamble on his part. But if he is not 100% into stocks, he may not be so foolish.
Altogether I have essentially one mutual fund that is 34% cash, 12% gold, and 54% stocks. In reality I have several retirement plans, probably 20 mutual funds, several cash accounts, and physical metal in several locations hundreds of miles apart. Pretty much diversified.
If I was 22 again, I would be 100% into stock index mutual funds
“To every thing there is a season …”
Take a look at a chart showing the stock market’s P/E over the past century and note how many times it has gone below 8.
History rhymes. History has been very kind to investors who waited for P/Es to decline, less kind to investors who dollar cost averaged during these declines. One can’t call an absolute market bottom but one can easily identify a PRICE ZONE where the bottom is nearby. P/Es are good indicators, so are dividend yields and book values.
IMHO.
“Maybe okay for someone say 40 and under…”
Don’t know about other posters here, but I am at least planning to still be around in two decades, and I assume a little rainy day fund may be useful to have around by then, given where Social Security appears headed…
“…no one could have seen the coming of the massive shrinking of record Price/Earning ratios of stocks over the past ten years, which is a secular process that is still unfolding?”
Does your crystal ball suggest when the unfolding will end? I don’t know how to predict such events, given a Fed which seems steadfastly determined to avoid deflation at all costs.
Combo, that does not bother me. I just don’t know how to time the market. I’m only an engineer working 50 hours per week and spend most of those hours in a windowless lab with hardware and no internet. Not even a radio. I don’t want to own my own business. So the best thing to do is not work to get filthy rich but work because it’s fun. And in the meantime save and enjoy working with people.
It’s getting close to morning in America.
“Does your crystal ball suggest when the unfolding will end?”
Yeah, it will end when people think of buying stocks is a good place to get a decent return on their money as a part owner of a going concern rather that as a way to get instantly super rich. Right now the way the stock market is operated more closely resembles a casino than it does a capital allocation machine.
It will end when the ratings of the business channels drop off, when P/Es go below 8, when many great stocks sell below book value, when dividend yields are higher than competing interest rates.
It will end when the last place one would ever want to even think of putting their hard-earned and very valuable and very scarce money would be the stock market.
Such as it was in the Fall of 1974
“I just don’t know how to time the market.”
Neither do I. But I do think I know how to price it. Right now I think it is overpriced.
I’m sure you remember how dismal the market looked in the late 1970s. Was it overpriced then? Then the 80s and 90s boom happened.
The Club of Rome put out books on “Limits to Growth.” Carl Sagan was the Al Gore of the late 1970s predicting nuclear winter instead of global warming. The middle east arabs had us by the gonads. Then unknown variables were added to the equation.
If all things stay the same and no new variables are added, I would say that hundreds of thousands more high paying jobs will be outsourced, we will run out of water, house prices will fall another 60%, and so forth. But there are almost always unforeseen events that overturn the doom and gloom.
Dollar Cost Averaging through the Great Depression (the last one) according to Brett Arends of WSJ:
” When the market turned, those who stuck quietly to their plan got repaid quickly. Forget that stuff about 1954. According to Ibbotson data, someone who dollar cost averaged was back on level terms by 1933. And by 1936 he had doubled his money (though the crash of 1938 then knocked him back to evens for a while).”
“Unforseen events”
Tech boom in tandem with housing boom largely saved US then. The housing starts in the 1980’s exceeded 2000’s, can you believe that?
Technology wise - MS Office, Intranets and ERP gave mind numbing new operational efficiencies and lower costs skyrocketing productivity, P/E in virtually every US company/industry.
Time-based competitive positioning will continue to be center stage for improving P/E, but that goal typically goes hand in hand with less labor - so not sure how this will play out.
But you’ve got to understand why. Stagflation took hold in the late 70s; then Reagan started deficit spending like mad; then the tech bubble; finally, the housing bubble and Dow 14K.
My issue with stocks has always been the “why” of why they are priced as they are, why they have the movements they do, and thus identify some reliable way to predict where they will move in the future. I’ve never satisfactorily been able to answer those questions. The answers I have heard sound like accomplished bettors at the horse track.
My experience with stocks involved putting low five figures into an S&P 500 index fund almost 10 years ago. It’s lower today than it was then. Buy and hold. Diversify. Did all that. Could have had better returns in a savings account.
“Dollar Cost Averaging through the Great Depression”
Mom’s dad did it.
Mom’s mom lived to age 97 and never ran out of savings.
“Right now I think it is overpriced.”
I do, too. That’s why I only buy small amounts at any one time, in fixed nominal installments, and have most of our savings parked in asset classes that are decoupled from the U.S. stock market.
But I also recognize a small probability that one of QE2, QE3, … , QEn might result in ‘higher than expected’ inflation of the ‘nobody could have seen it coming’ variety, which might not be a bad time to hold claims on real assets, particularly if you are not a home owner.
“…when people think of buying stocks is a good place to get a decent return on their money as a part owner of a going concern rather that as a way to get instantly super rich.”
The Way We Live Now
Taking Stock
Benjamin Norman/Redux Pictures
By ROGER LOWENSTEIN
Published: August 27, 2010
It has been three decades since Business Week proclaimed “The Death of Equities” on its cover. That 1979 obituary for the stock market, published when the Dow Jones industrial average languished at a mere 875, became a symbol of an age of doubt. So shattered were ordinary Americans by gas lines, recessions and double-digit inflation that they resorted to pulling cash out of equity mutual funds — for eight straight years.
Investors in the ’70s were stunned by an alarming rise in volatility. The comfortable, ordered system of international exchange, in place since the Bretton Woods accord at the end of World War II, had come apart, leading to violent fluctuations in currency values. Grain shortages sent food prices soaring, and memorably, OPEC put the squeeze on oil. The cumulative effect was a loss of faith in money itself. (Doomsayers urged redeploying assets into metals, oils — anything other than paper.) Inflation, a virulent form of instability, terrified investors, who duly stayed on the sidelines.
It may seem strange to be drawing parallels to the ’70s now — prices are so stable that the fear is of deflation. Yet there is no mistaking the ’70s-ish gloom that has overtaken Wall Street. The trauma of the financial crisis has yet to be dispelled. It is not just Lehman Brothers and Bear Stearns that have disappeared but an ethos of confidence in long-term investing.
Though stocks remain well above 2009 lows, investors are withdrawing money from U.S. equity funds for the third straight year. Dispiritingly, investors are shunning attractively priced stocks in favor of bonds (both government and corporate) on which the returns are anemic.
…
“It will end when the ratings of the business channels drop off, when P/Es go below 8, when many great stocks sell below book value, when dividend yields are higher than competing interest rates.”
I’m holding a chunk of change out of the stock market, just in case this scenario ever materializes…don’t want the Megabanks with ZIRP loans to capture all the eventual fire sale discounts on stocks…
Mom’s dad did it.
My gramps did it too. That plus a fat pension from a lifelong career at ATT led to a long, sweet retirement in Key Biscayne (and New England in the summers).
But he was a tightwad til the end- habits formed in Depressions die hard.
He was also writing letters of protest to companies whose stock he owned, complaining about the ridiculous salaries of the top officers, and this was back in the 70s!
Ah, but The Club Of Rome said that we (northern rich) should give the poor countries two percent of our GDP per year to avoid global disaster. Guess that got shot down quietly….oh, wait!
“…habits formed in Depressions die hard.”
Not only that, but they can transfer across generations…
From the NY Times article I posted above:
“That 1979 obituary for the stock market, published when the Dow Jones industrial average languished at a mere 875, became a symbol of an age of doubt. So shattered were ordinary Americans by gas lines, recessions and double-digit inflation that they resorted to pulling cash out of equity mutual funds — for eight straight years.
…
Though stocks remain well above 2009 lows, investors are withdrawing money from U.S. equity funds for the third straight year.”
So does 2016 seem like a reasonable guess about when it might be safe to re-enter the stock market’s troubled waters? Or is 2019 more like it? My recollection is that the 1979-1982 period was not exactly a period of irrational exuberance…
“So does 2016 seem like a reasonable guess about when it might be safe to re-enter the stock market’s troubled waters?”
Back to the concept of Time and Price. Buying opportuities aren’t a function of time; They are a function of price - the price and how it is related to the stock’s fundamentals.
If one can correctly use the fundamentals to determine the VALUE of a company then he can determine when it is priced right and when it isn’t.
Same goes for real estate.
…cycles.
I here ya Bill…I guess I am at the point in my life where the risk vs. reward scale leans more heavily towards the risk of loss side…The mind set is that “I can’t earn it again” and so preservation is front & center…Not sure but I suspect that Rancher, Ejohn, Hwy and some others here would feel the same…
That’s exactly why I don’t stay out of the stock market. Anyone who did this in the wake of the early-1990s recession saw negative wealth effects by holding on to their cash while Alan Greenspan’s put made those who bought stocks richer and richer, right up until the tech stock bubble collapse.
That’s exactly why I don’t stay out of the stock market ??
I understand Pbear but I am not talking about putting my cash in a pillow and there are others ways of investing for decent returns with much less risk than the stock market and all I need now is a decent return…AZslim would be a good example…
Bear, the U.S. may go through deflation for a few years, but sometime between now and when I kick the bucket the U.S. will go through a period of painful price inflation.
Cycles.
I will never put a penny in equities until they outlaw high frequency trading. Until then, the odds are better in Vegas.
“Until then, the odds are better in Vegas.”
I generally agree with all the posts above that suggest now is an obviously sucky time to buy stocks. But part of me suspects (perhaps due to having read too many of Mark Hulbert’s columns) that so many people have drawn this conclusion that negative sentiment is hammering stocks below wherever they would be without so much negative sentiment. For this reason, I keep buying bit by bit, and against my own better judgment.
I’ve been finding hits on Yahoo’s screener for the following criteria:
Yield < 1% (I don’t want to pay Obama taxes in the 2011 tax year on dividends)
Price to book ratio 1
My stock screener came up with 198 different stocks.
I’ve been finding hits on Yahoo’s screener for the following criteria:
Yield < 1% (I don’t want to pay Obama taxes in the 2011 tax year on dividends)
Price to book ratio 1
Quick Ration > 1
My stock screener came up with 141 different stocks.
Sorry about the double post. Quick ratio is a stronger criteria than current ratio. Coming up with 140 undervalued stocks is a good thing, IMO.
“If I had $100k I could get VIGAX and dollar cost average into that. Same expense ratio as VUG.”
Realistically how many folk do you think invest 100k of their 401k in to one fund? chances are it wouldn’t even be offered in their plan (a much larger issue) .
Count me out of the dollar cost averaging camp. This pretty much explains my take:
“In its purest form, the question of the wisdom of dollar cost averaging boils down to the following hypothetical. Imagine you have $12,000 you wish to invest in the stock market. Do you put it all in now or do you put in $1,000 a month for 12 months?
Assuming that your goal is to maximize your expected return (a fairly safe assumption) and that having that $12,000 in the market is the right thing for you to do (more of a leap, but it’s a premise of the question) then you should put all the money in the market now. Dribbling it out over the next year will only reduce your returns if the market has a tendency to go up, and if it didn’t have a tendency to go up, why would you want to invest in it at all?
Put another way, the dollar cost averaging choice is between buying at today’s price and buying at the average price over the next year. If you think the market is more likely to go up than down, you must also believe that today’s price is more likely to be lower than the average price over the next year. This isn’t really all that subtle or complicated.”
$115,000 or so in RGAEX in my 401k. I buy several hundred dollars worth per week. Before that the other fund family my 401k was in had Massachusetts Investor’s growth fund - something like that. I think its trading symbol was MIGFX. That fund’s inception date was January 1 1935. Average annual return since January 1 1935 was 10.08%. Since 1960 we’ve gone through seven recessions. How many since 1935?
And the clincher is the research by Jeremy Siegel. No 20 year period has there ever been a situation where the general stock indices finished lower at the end than at the beginning.
Well good luck and be careful. You’re making an assumption that the future will be similar to the past, that things haven’t changed much. Remember that until recently no period (of any length) had national house prices go down either. Also remember that 95% of the new yachts cruising the intracoastal down here in Florida this winter will be Wall Street guys. Guess where they got the money?
Umm…like Alpha and Professor posted above, if you lived in the GD and had the cash to keep buying stocks during the downturn, you would not necessarily lose “everything.” The people who bought at the top in 1929 and were in cash up until then, well they lost over 90% of their stocks didn’t they? How about the people who started buying in 1919 and kept buying the same amount of stocks every year for the ten years? There are charts for that somewhere I guess.
My great grandfather was a millionaire before the GD. Lost most of it but had his farm.
Rain
What do you guess is the skim factor of most 401k plans and mutual funds? how many plan participants do you think have the knowledge to understand expense ratios and make informed decisions?
From John Hancock’s website:
# Over 42,000 plans serving over 1.7 million participants***
# #1 in sales of 401(k) plans to companies under 1,000 employees****
Here is a blurb I found from a husband looking over his wife’s 401k:
Doing a little searching online, I see multiple complaints about extortionately high expense ratios on John Hancock 401Ks. Apparently John Hancock is the choice of plan provider for small employers who want to minimize their costs and shift them to their employees in a relatively untransparent manner. For comparison, most index funds have relatively low expense ratios. I have some money invested in USAA’s S&P 500 Members Shares Index Fund, which has an expense ratio of 0.19%. (Once I reach $100,000 in that fund, I can move it to USAA’s S&P 500 Member Rewards Index Fund, which has an even lower expense ratio of 0.09%.) My 401K, through Fidelity, is mostly in Fidelity’s Spartan U.S. Equities Index, another S&P 500 index, with an expense ratio of 0.09%. John Hancock’s 500 Index Fund, by contrast, has an expense ratio of 0.54%, plus an apparently undisclosed “sales and service fee,” which apparently goes to third party plan advisors and managers. That is ridiculously high for an index fund. John Hancock’s other funds are worse. (We at least intentionally selected funds that had the lowest available expense ratios of the types we wanted, which included DFA’s international, emerging markets, and small cap funds.)
Hurry and buy your Viking stove to go with your granite counter tops…
Viking lays off 18 employees in Greenwood
The Associated Press
GREENWOOD, Miss. — A Viking Range Corp. executive confirms that the upscale appliance manufacturer has laid off 18 more workers in Greenwood.
The Greenwood Commonwealth says Bill Crump, Viking’s director of government affairs and executive assistant to the president, confirmed the layoffs Thursday in a one-sentence e-mail.
He said most of the workers were temporary and the layoffs were due to the seasonal nature of some of the company’s product lines.
A week earlier, the company said a shortage of orders had forced 20 layoffs.
Viking has slashed about 350 jobs - almost a quarter of its workforce - since April 2008.
Read more: http://www.sunherald.com/2010/08/28/2435921/viking-lays-off-18-employees-in.html#ixzz0xzoMrezc
You know what is really a ripoff?
When landlords in rent stabilized NYC apartments in orde to really jack up the rent put these $33000 stoves in a 6th floor walk up….with the stainless steel and the granite…
Nope they just cant slap a new paint job and get a $300 sears stove and keep rent affordable.
I used to sell Vikings, DCS and Dacor.
All overpriced. And out of those, DCS was the better made.
Human trafficking becoming an epidemic in Florida. Another historical milestone for the state! Boo-YAH! McCollum, don’t let the door hit ya where the good Lord split ya.
http://www.palmbeachpost.com/news/crime/human-trafficking-becoming-epidemic-in-florida-authorities-say-885374.html
I’m sure he would have solved this issue immediately upon becoming governor. Just like Charlie Crist achieved his promise of lowering my homeowners taxes, which will be $1,500 more than when he started, even though my house value is much less.
The two choices we now have are so horrible that I won’t even vote for governor. I’ll be there to vote in favor of proposition 4 though.
The game of Monopoly is in need of a revision. For instance, in the real world of Monopoly, no one goes to jail so they should do away with that spot on the game board. Perhaps create a chance card that reads “your mortgage backed securities were purchased by the FED, advance immediately to go and collect $200.00″. Perhaps include a mechanism to inflate the prices of the properties.
To be truly contemporary the rules of the game would need to change frequently and at random during play.
My suggestion:
Monopoly 2008: BANK BAILOUT EDITION
+1
Maybe $200 should be updated to 2 trillion?
Politician holds breast implant raffle to fund campaign
Aug 27 07:47 PM US/Eastern
An opposition candidate in next month’s Venezuelan legislative elections is holding a breast implant raffle to fund his campaign, he said in a newspaper interview published Friday.
“The raffle is a legal method. We decided on breast implants because we wanted to target a specific public sector,” Gustavo Rojas told El Universal.
“Raffle tickets on sale now: win a breast implant operation for yourself or your partner,” Rojas announces on his website.
The interview does not mention either the cost of a breast implant operation or how much money Rojas expects to get with the raffle.
Some 30,000 breast implant procedures are carried out yearly in Venezuela.
On September 26 Venezuelans will vote to renew all 167 seats in the single-chamber National Assembly, which since 2005 is dominated by President Hugo Chavez’s United Socialist Party of Venezuela.
Rojas is running for the opposition Justicia Primero (Justice First) party.
“Some 30,000 breast implant procedures are carried out yearly in Venezuela.”
Implants are what, inserted falsies?
Lol. So much for truth in advertising.
(Still another reason why it’s great being a guy.)
What a great way to give a campaign a lift!
Housing Fades as a Means to Build Wealth, Analysts Say
New York Times | 22 August 2010 | David Streitfeld
Housing will eventually recover from its great swoon. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg.
The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.
More than likely, that era is gone for good.
“There is no iron law that real estate must appreciate,” said Stan Humphries, chief economist for the real estate site Zillow. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”
Instead, Mr. Humphries and other economists say, housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.
“Instead, Mr. Humphries and other economists say, housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.”
Party pooper.
Confused here. So what you are saying is that say I buy a house for $250,000 today at reasonable market price, nobody will want to pay $350,000 for it next week or even next year? Not fair! What a cheapskate society we live in.
“So what you are saying is that say I buy a house for $250,000 today at reasonable market price, nobody will want to pay $350,000 for it next week or next year?”
“…reasonable market price…”
Lol. Define reasonable. Is a one dollar house in Cleveland a reasonable price?
a $1 brownstone in ghetto infested Harlem in the 90’s was a great deal…but then you wouldn’t let your GF or wife walk home at night. That was true Urban Pioneering!
90’s ? where was I?
“… housing prices will only keep up with inflation.”
Or maybe keep up with deflation.
Not only keep up with deflation, but lead the way.
Not only keep up with deflation, but lead the way.
Right?
+1
Nice article about how greedy the banks got:
http://www.charlotteobserver.com/2010/08/29/1651013/banks-self-dealing-super-charged.html
“…On a billion-dollar deal, managers could earn a million dollars in fees, with little risk. Some small firms did several billion dollars of CDOs in a matter of months.
“All these banks for years were spawning trading partners,” says a former executive from Financial Guaranty Insurance Company, a major insurer of the CDO market. “You don’t have a trading partner? Create one.”
Sounds like the banks made their own “sugar-water” so’s they could also have the the taste of the sweet,sweet nectar called: “Single Large-Transaction / Deposit”
1 Billion / 3 Billion / 8 Billion… here is the fee!
2 Billion / 5 Billion / 9 Billion… here is the fee!
3 Billion / 7 Billion / 10 Billion… here is the fee!
Here we go loopty loo
Here we go loopty lie
Here we go loopty loo
All on a Saturday night
You put your whole bank in
You take your whole bank out
You give yourself a shake, shake, shake
And turn yourself about
Here we go looby loo
Here we go looby light
Here we go looby loo
All on a Saturday night
Good find pbd.
Dammit, I wish we had an edit feature. I meant “pbb.”
Well, JT has a preview feature.
With housing stimulus programs exhausted and no other stimulus programs on the horizon we might finally have the decline which is needed to bring housing in line with incomes. When we reach income & house prices of the mid 90’s look out Asia the USA might be best place to invest.
The stock market & salaries aren’t that far above mid 90’s level. Once housing reaches that level and government (federal, local + state) spend at mid 90’s level things will begin to improve for all Americans. I hope it doesn’t get offshored and outsourced once again.
2 new programs planned to help homeowners
WASHINGTON – The Obama administration’s top housing official says several new programs are in the works to help try to revive the housing market.
Housing and Urban Development Secretary Shaun Donovan said in an interview aired Sunday that his department in the coming weeks will roll out an FHA refinancing program to help borrowers whose mortgages exceed the market value of their homes. He also said the department will launch “an emergency homeowners loan program” to help people who are unemployed keep their homes.
Donovan, on CNN’s “State of the Union,” said a drop in July home sales was expected with the end of the housing tax credit, but that the decline was “clearly worse than we expected.” He said “it’s too early to say” if the credit will be revived.
‘He said “it’s too early to say” if the credit will be revived.’
Why would anyone be dumb enough to buy now if there is a prospect of receiving free money by waiting for renewed cargo drops to be announced?
WWPBD?
What Would Professor Bear Do?
I’d wait and see. Whatever happens, you aren’t going to do worse by waiting to see whether lower prices materialize next year, or further free money appears from the Fed to make sure lower prices don’t happen.
That “emergency homeowners loan program” to help people who are unemployed keep their homes” is a direct funnel from taxpayers to bankers, and a scary example of how corrupt our government has become. There’s no way on God’s green Earth that’s going to help one homeowner.
Rest assured the banks will be lobbying hard to get the “emergency homeowners loan program” into motion given the windfall they’ll reap from the refinancing fees.
Here’s to another round of record bonuses.
Slight correction - banks will be lobbying hard to get the “FHA refinancing program” into motion.
I’m really beginning to seriously dislike this president….my guess he will be like Mayor Dinkins well you elected one of them and they screwed up never again….
I don’t think even Condi could be elected after this..one is enough
Again not a dime for renters….
“… we might finally have the decline which is needed to bring housing in line with incomes.”
Except incomes are declining right along with housing, hence the price/income gap will resist being closed.
Sooner or later (probably later) both prices and incomes will level out and the relationship between the two will stabilize.
Maybe not. There is nothing but theory that says it has too. I’ve seen prices and wages stay out of alignment all my life… mostly with prices too high compared to wages.
CNBC reported last week that morale at IBM and HP is low because both compaines are shedding workers in the US while hiring abroad (Asia primarily China & India).
I for one hope Dell takes 75 million & walks from 3par deal. If HP wins expect more layoffs.
IMO if one has the type of job that cannot be exported then he has a form of job insurance.
The difference between what he could earn from a higher paying job that CAN be exported is the cost of the premium of this job insurance.
I believe, in this job market, the value of this premium should be quite high.
The only difference I would point out that their wages are not set in stone.
If you have a zillion plumbers but people are not willing to pay the premiums for their services then guess where their wages are going?
You underestimate the extent to which paying $100/hr for a plumber was a function of “home equity”, IMNSHO.
Also, everyone and their untalented brother is rushing into exactly these professions since the “non-outsourceableness” of these professions is being drummed loudly in the media. I leave the elementary demand-and-supply analysis to you.
“… their wages are not set in stone.”
No, they are not. But at least their wages will be paid, even if it is at a reduced rate. But the wages of those whose jobs are exported will disappear entirely.
Today if somebody was to offer me a 20 percent wage premium to jump ship to a job that could easily be exported the answer would be an automatic “No!”. This twenty-percent would be a hefty raise to let slide, but in this job market the decision to just say no would be a no-brainer.
I think what you are saying is that they will “always” be “able to eat”.
Well, my response to that is that there are many “ways to eat”. As long as one is not terribly interested in only “one way to eat” for the rest of your life, there will always be a “way to eat”.
Of course, this relies on being above normal but I would wager that almost everyone on this blog qualifies. (Heck, almost everyone here qualifies because they all make more than they spend!)
Saying “No!” becomes even easier when 100% of that 20% increase will be in the maximum state and federal tax brackets.
What I have found with these types is that they are unwilling to drop their prices, even if it means only one gig a day.
I have a friend who is a plumber and he charges me $50/hr for odd jobs that I would rather not do myself.
I have discovered a minor roof leak. I am curious to see what the bids are for the repair work. I expect to see more than a few at pre-bubble burst levels.
Hey faster….you should see here in Long island city when they open up the application slots…they give out 1000 no more they are numbered and registered…… for maybe 100 jobs….
And people camp out over the weekend in rain snow even a tropical storm just to be first in line……they even ship in a dozen porta potties…
If HP wins expect more layoffs.
This HP’s new business model (Mark Hurd has the word “Invent” removed from their Corporate logo).
HP is little more than a Corporate Raider now. They try to buy companies for a bargain (I once saw a video of Hurd bragging about how little he paid for Left Hand Networks), then fire a large percentage of the staff and suck the new acquisition dry while not investing a penny in it for future growth.
Meanwhile they steadily offshore work in the legacy business.
And whie Hurd was shown the door I doubt anything else will change at HP. Employees will continue to work tons of unpaid overtime while not getting raises or bonuses while benfits are cut
(Last year HP only matched 401(k) contributions if the secret stretch goals were met).
It’s sad and amazing how this company went from being one of the best places to work to being material for Dilbert in such as short time).
And I still keep on hearing how Carly was a b!tch and Hurd was such a king.
They both sucked. She was incompetent and Hurd was a one trick pony (cut costs).
My suspicion for the real reason Hurd was fired was that he couldn’t produce organic growth. HP sales only grew because of acquisitions. That, and the EDS acquisition didn’t produce the results he promised. EDS sales have been stagnant and the expected “synergy” that was going to sell more HP equipment never happened.
There was also a lot of bad blood among the board and their QC was going to hell.
They were (and probably still are) banking on some really incredible new IPs, but can’t find a buyer to shoulder the cost of mfg start up.
But yes, he turned HP into a dead end hell for the employees.
OT. Looking to buy a car from Craigslist sold by owner whats best way to make sure it belongs to seller and I don’t end up with stolen or leased car.
easy buy a a station wagon….not much risk there…
Pay $30 for a carfax vehicle history report.
Make sure the car doesn’t have some sort of lien.
The Sherriff may be of help. They can look up the VIN.
Won’t the seller supply a pink slip with their name on it? Cross check the name with their driver’s license.
In CA the lienholder gets to possess the pink slip until the loan is paid off. They then sign-off the pink slip and mail it to the owner.
“In CA the lienholder gets to possess the pink slip until the loan is paid off. They then sign-off the pink slip and mail it to the owner.”
Same here in the Centennial state.
Orwell at work….
A “green card” isn’t green but rather blue.
A CA “pink slip” isn’t pink but now mulitcolored.
My concern is phony pink slip and stolen car. Making the deal I have to ask for 2 days to get the money & in the meantime check with the sheriffs dept.
You could ask him to come with you to the DMV while showing him the cashiers check in your hand. If he’s a con he’ll find an excuse to not go with you.
Get the VIN below the windshield off the actual vehicle and call the DMV. They’ll be able to tell you if the VIN matches the car, if there’s a lien against it, or if it’s been reported stolen. Ask them “if I buy this car today, do you see anything that would stop me from going to the DMV and registering it in my name”.
Get the VIN below the windshield off the actual vehicle and call the DMV. They’ll be able to tell you if the VIN matches the car,
Or send the VIN to your insurance agent.
VIN. Title. Insurance agent.
Flipper Cash Propping Up Housing Market
http://www.npr.org/templates/story/story.php?storyId=129476836
(Infestors are our competition. We’re paying cash for a final modest primary residence.)
The fleecing of cash paying flippers is an absolutely necessary part of the royal flush the housing market needs. The first time buyers using the $8,000 credit was an unsatisfactory sacrifice on Mr. Market’s altar. That altar needs a worthy sacrifice - and infestor cash is it.
OK, as usual the media gets it less than half right. First, this guy was involved in bubble flipping:
‘Fuhr got into the real estate business at a time when banks lent to anyone with a pulse. ‘You could do every single thing wrong and still make money. You could purchase the house for way too much. You could take way too long to rehab it. You could rehab it poorly and still sell it on the back end and make money,’ he says.’
That was then, this is now:
‘A lot of house flippers got burned by the bubble — but Fuhr’s still flipping. ‘You know, if you’ve been doing this as long as we have, you know that you make your money when you purchase the house — not when you sell it,’ he says.’
What I see here is someone taking vacant, torn up houses and turning it into supply. That drives prices down, not up. And here is where NPR gets it flat wrong:
‘Potential rewards like these are drawing investors into the real estate market right now, says Kenneth Wenhold of the real estate research firm Metrostudy. ‘When you’re putting all cash into a particular transaction, it’s an indication that you believe that this is a good price for this home,” Wenhold says, “and [that] you don’t think it’s going to depreciate more, and you’re willing to bet a considerable amount of money that it’s going to start to appreciate again.’
Bzzz. Wrong answer, as the buyer indicates:
‘Fuhr says he may spend close to $100,000 renovating the home he bought for $63,000. Even if the house doesn’t fetch the $250,000 he thinks it will, Fuhr isn’t worried. ‘The market could literally correct itself $50- or $60,000, and we would still break even’
I happen to know about 3 houses like this here in my area. All need 100k or more in repairs. There are all kinds of unknowns regarding structural problems, mold etc. One is on a street with 6 houses for sale. If that house is fixed up and put on the market, it can only force prices even lower. Whoever buys it will be adding value, taking a chance they will lose money, and the neighbors who actually live there are pleased to see something might be happening with the eyesore.
NPR trys to spin this as a ‘propping up the market’ story, but IMO it is the opposite.
‘The market could literally correct itself $50- or $60,000, and we would still break even’
If you read my LLs’ tale of woe posted below, you will note that the market did literally correct itself $50- or $60,000; I’m not sure about the broke part, though. All I can say is that we did our own painting this summer because we didn’t have the heart to ask our landlords to chip in any more of their hard-earned cash to keeping their investment in livable condition.
Why? I would’ve just put the squeeze on them.
Or, I would’ve got them to sign off that I may paint it any color I like - I did that out here in 2002.
My rental is quite attractive because it is not that awful white.
“Why?”
They have been so good to us:
- They pay for our Mexican yard care service so I can focus my Saturday mornings on playing racquetball while all the homeowners on my block are out mowing their yards.
- They pay our rec club membership to help make my racquetball outings more affordable (well, free).
- They pay the principle, interest, taxes and insurance on the mortgage on our place, graciously accepting the capital loss on the home during a period of falling market values.
- They quickly send over the exterminators each time our home is invaded by a swarm of Africanized bees. (Reminds me — I need to notify our LLs about the black widow spider I spotted out on our patio a couple of nights back…)
- They pay for upgrades to our sprinkler system and other costly repairs.
After all that, isn’t a little painting the least we could do to show our appreciation?
“They pay for our Mexican yard care service so I can focus my Saturday mornings on playing racquetball while all the homeowners on my block are out mowing their yards.”
How long can that take with a typical postage stamp sized San Diego yard? 30 minutes?
“They quickly send over the exterminators each time our home is invaded by a swarm of Africanized bees.”
We don’t get those here. Too cold in the winter for them.
“They pay the principle, interest, taxes and insurance on the mortgage on our place, graciously accepting the capital loss on the home during a period of falling market values.”
Now that is the reason to rent!
“How long can that take with a typical postage stamp sized San Diego yard? 30 minutes?”
These guys don’t just mow the grass. We enjoy a flower garden around the side of our LL’s home which they tend — beautiful flowers bloom year-round in San Diego.
If I ever venture back into the real estate purchase market, it will only be after many flippers are heard to say, “Real estate is the worst investment.”
So far it has been mainly upside for them.
Well — maybe not my LL, who is down about $60K in nominal dollars — from $540,000 purchase price in fall 2004 to $480,000 market value now, based on recent sale prices for identical comps. For good measure, I tried looking up the SoCal CPI, to make an inflation adjusted loss estimate. Couldn’t find one for San Diego (it’s Sunday, ya know) but for Los Angeles-Riverside-Orange County, CA, I found the Consumer Price Index - All Urban Consumers was at a level of 196.3 in October 2004 and at 225.991 in July 2010. So with the inflation adjustment, and before taking into consideration any ownership expenses in excess of rent we pay, the real home equity loss on this investment so far has been
((480,000/540,000)*(196.3/225.991)-1)*100 = -22.8%.
In terms of 2004 dollars, the home equity loss to date is
540,000*(1-(480,000/540,000)*(196.3/225.991)) = $123,063.
So not all flippers have exactly made out like bandits on their investments! Any questions?
Here is a house purchased by a flipper right before I moved out of the neighborhood 6 months ago. He paid $120,000 and had to put at least $25k in to it because it was in bad shape. Below you will see his new competition.
6292 Launch Club Cir Jupiter, FL 33458
$198,500
Loading Payment…|Estimate My Monthly Payment|Get Mortgage Rates 3 Bed, 2 Bath | 1,642 Sq Ft | MLS #R3104482 |
Property Features
•Single Family Property
•Status: Active
•County: PALMBEACH
•Subdivision: Jupiter Landings
•Year Built: 1986
•3 total bedroom(s)
•2 total bath(s)
•2 total full bath(s)
•Approximately 1642 sq. ft.
•Complex features: Boating
Added on Apr 23, 2010 (128 days ago)
This house is in much better shape and from the pictures looks like the interior remodeling was nicely done.
18358 Flagship Cir Jupiter, FL 33458
$130,000
Loading Payment…|Estimate My Monthly Payment|Get Mortgage Rates 3 Bed, 2 Bath | 1,658 Sq Ft | MLS #R3134585 |
Property Features
•Single Family Property
•Status: New
•County: PALMBEACH
•Subdivision: JUPITER LANDINGS
•Year Built: 1985
•3 total bedroom(s)
•2 total bath(s)
•2 total full bath(s)
•Approximately 1658 sq. ft.
•Complex features: Boating, Sidewalk
Added on Aug 24, 2010 (5 days ago)
Greetings, fellow HBB-ers. I just got back from Spain.
Signs everywhere are “se aquilar” (to rent) or “vende”. I didn’t take pictures because: (a) there were too many, and (b) who on earth wants to see the obvious when there are more pretty things to see?
Oh, and there were “rebajas” (”rebaxas” in Catalunya) everywhere.
¡¡¡Rebajas para CRISIS!!!
Trip of a lifetime but BWAHHAHAHHAHAHHAHAHAHHAHAHAHHHHHHHHHHHHHHHHHH!!!!
Ha, welcome back & a hearty:
Ho ho, hah hah, hehehehehehe, BwaHaHaAhHAHAHAHAHAHA!!! (Cantankerous Intellectual Bomb-thrower™)
right back at ya!
What kind of rebajas?
rebaja
feminine noun
Translation of REBAJA
1: reduction
2 descuento : discount
3 rebajas feminine plural noun : sale
Oh, the usual garbage.
All the “boutique” stores are pretty much at 70-90% “rebajas”. Your wife would probably party a little too hard were she to go there.
Lots of rentals, lots of “wishing prices”, still a bit loony but clearly trending down.
Great food. “Rebajas” if you get a bottle as opposed to a “copa”. It’s what you would expect to see.
Muy bueno!
I simply don’t understand economists who can’t grasp deflation’s silver lining: AFFORDABLE PRICES!!!
I advise all the married men on this blog to head off to Spain (or Portugal or Greece.)
You get great food, wine, scenery, and you can justify it by “Honey, you can shop from all the money we saved by not buying. Let me buy you some jewelry/purses/belts/pearls etc.”
The “honeys” will buy what they end up buying anyway, and you can reap all the, ahem, side-benefits that come along with that.
I’ve been reaping those benefits for decades.
I told her years ago that she can ask me to do
something or tell me how to do it, but not
both.
KILLER!!!
I am soooooooooooooooooooooooooo stealing that absurdly brilliant piece of advice from a codger!
fasty, Did you get to Girona? One of my favorite spots.
I did not.
Next trip! I’m planning it already.
Do include it on your itinerary. It’s a lovely little town, very pretty medieval center. Lots of good tourist sites including Jewish ones. Not a lot of tourists. It’s small.
In addition to the tourism sites, there is a university there that is a hotbed of Catalan cultural activity - lots of exhibits, exhibitions, installments, plays, concerts, festivals. The School of Architecture has a nice cafe called The Bau in an exhibition space. The countryside is beautiful, plenty of sites to visit and places to eat and drink.
I recommend the small Pension Bellmiral in the old center of Girona. It’s been a decade since I was there, but it’s still around - check travel review sites.
It’s a medieval stone building with rooms fitted out - simply, very comfortably. When I was there, it was very charming. The elderly owners were artists and the decor was art and pottery and textiles made by the local “artists’ colony.”
I just got back from Spain ??
I have been wondering where you’ve been…No wireless access in Spain or did you just get tired of all of us ??
Where were you in Spain?
I was wondering if their bust had geographical variances. I assume the southern beach areas are getting hit hard, but I was wondering if other areas were less (or more) affected. Sounds like Catalonia didn’t dodge the bullet.
“Catalunya” was mentioned above…
yuh-huh. I inferred Catalonia from his remarks, but thought perhaps he’d gone further afield.
Sevilla - Córdoba - Granada - Madrid - Barcelona.
Side day-trips everywhere, etc.
Sevilla- best roasted suckling pig (lechon) I’ve ever had. Had it at some restaurant that was full of pictures of the chef roasting suckling pigs, and the awards he’d won for doing it. They weren’t subtle about it, nor should they have been. It was superb. World-class barbecue.
Try finding a Filipino (= ruled by Spain) restaurant that makes lechon!
There will be one near you. They are the second largest Asian group in the US, and yet, it’s “hard” to find their food. Not hard really - if you investigate - there will be restaurants by the “Flips” for the “Flips” - just show up!
I only spent a couple of weeks in Spain but fortunately it was on the government tab.
I needed to hang around Rota (US base in Cadiz harbour) to support a naval exercise but got most days off, so me and my coworker could wander off into Sevilla and Jerez de la Fontera. Many people in the US navy rotated through Rota and were therefore led to retire in southern Spain. They can live like lords on a military retirement, with servants etc., but can still go on-base for US style medical care.
In Puerto de Santa Maria, the tour guides take great pleasure in pointing out the JAIL where Columbus got his crew the night before he sailed in 1492.
I will be frank and state that worrying too much about the housing bubble wasn’t very high on my list of priorities.
As I had said many times before, when the bubble bursts, I was going to go have a good time worldwide.
High on my list was photography and getting to see the geometry of Moorish Spain, both of which I am ecstatic to have done and seen.
I did putter around and sniff here and there about prices but it was all “wishing well, wishing well, grant me a wish”, and “big-hole-in-the-ground, this is never getting done” kind. It was all sad in an entirely predictable kinda way.
You run up public and private debt for 30 years, during a bulge in the labor force when this country should have been saving like mad. It wasn’t just politics. Businesses and households did it too.
And if the aftermath of this epidemic of short sighted selfishness, people blame Bernanke and Obama for the fact that life isn’t free and easy. Perhaps because they themselves believe they could somehow create a booming economy, and if they didn’t say so, they would not have been given their current positions.
The U.S. is deleveraging and depromising slowly. It’s going to be a miserable decade or two for those with excess expectations. Reinhardt has it right.
“The U.S. is deleveraging and depromising slowly.”
Agreed, and like everything in life - the beginning is always the hardest. We are now living that beginning - at least those who believe there is a fundamental structural shift taking place. Meanwhile, lots still deny it and instead hitch their wagon to an unflappable belief that the postwar pattern of cycles is unending.
those who believe there is a fundamental structural shift taking place ??
I believe….And it is structural not cyclical…I think the wild card in what we are going through will be what happens with the tax code and entitlements…Will they just fiddle with it, like in the past, or are we going to see a major overhaul of the entire code and entitlements…
If there is major overhaul, there will be some winners but IMO, there will be some major losers..I think the major losers could be in high cost of living area’s for any number of reasons…
Bits and pieces:
My place will soon have a new comp. A foreclosure in my tier is up for sale at 25% less than I paid. The building super says there’s been lots of showings but not a single offer. It’s halfway down the building from me, but has been heavily renovated. I figure I’m down 30%.
My building super goes bowling with other building engineers and janitors from the other high rises. His buddies tell him that people are renting, and even sometimes buying, only the smallest available units right now. They move in - but they are not unpacking. All their stuff sits in boxes or goes straight to storage to sit. Victims of divorce? Downsizing? I’ll have to watch that trend.
My girlfriend still hasn’t closed here refi. Two weeks ago the bank had her pay off her cc. (They wanted her to close that cc too - her only one - but backed down) Instead the bank demanded proof of exactly which of her accounts the money to pay the bill came from. They insisted on knowing that she did not pay the bill off with outside help.
Bubble in the Great White is starting to pop. Here in Ontario the Provincial Govt. put the death lock on real estate with the intro of the H.S.T. at 13% on goods and services. A new house over 400k is taxed, real estate commissions are taxed, legal fees, inspections all taxed at 13%. Needless to say resales and the condo market are getting hammered. New homes are getting priced below 400k. A V.A.T may be coming your way. Something to look forward to.
Thanks for the post Rosie…I think what has happened in Ontario is “exactly” what will happen here…The Fed’s want a dependable source of revenue to feed the alligator and a VAT on everything will do it…
True, but it does wonders for the underground economy. Car repairs and other unavoidables, like haircuts are going wanting though. Growing your hair long and running the car into the ground may be the new normal up here. Sorta like the seventies.
If this 21 year old turd didn`t dominate the first 5 minutes of the first practice enough to be found out then his athletic skills must be on par with his morals.
FL man allegedly claimed to be 14 to play football
By KIM WILMATH The Associated Press
Posted: 4:44 p.m. Saturday, Aug. 28, 2010
TAMPA, Fla. — Something wasn’t right about Chad Jordan.
He was perfectly nice at youth football practice, his coach said. He never made any trouble. But still, “There just was a lot of stuff that wasn’t adding up, you know?” said Ray McCloud, coach of the Town ‘N’ Country Packers.
McCloud’s instincts were right.
Julious Javone Threatts is 21 years old. He’s now behind bars without bail after Hillsborough County sheriff’s deputies said he used the alias Chad Jordan to pose as a 14-year-old boy, join the Tampa Bay Youth Football League and try to register at a Tampa middle school. Threatts was on probation for burglary charges, authorities later determined.
http://www.palmbeachpost.com/news/state/fl-man-allegedly-claimed-to-be-14-to-884881.html
Creepy! And busted by Facebook, no less.
Trespassing on school grounds, probation violation. Ok. But “obstruction by a disguised person?” What type of law is that? Seems like one that was quickly manufactured to make him “break another law,” IMO.
I wonder what they would have charged this guy with?
91 Okoye, Amobi DT 6-2 283 Louisville
Okoye was drafted by the Houston Texans as the tenth pick of the first round of the 2007 NFL draft. He is the youngest player to ever be drafted in the first round of the NFL Draft at only 19 years old. He was the highest draft pick to come out of the University of Louisville since the AFL-NFL merger.
Eats, shoots & leaves version of title:
No ‘double-dip’ ahead for San Diego economists
No ‘double-dip’ ahead for San Diego, economists say
But it may feel like a slump
By Roger Showley, UNION-TRIBUNE
Originally published August 29, 2010 at 6 a.m., updated August 27, 2010 at 12:47 p.m.
Each week the Business section asks its panel of eight economists to weigh in on an economic issue of concern to San Diegans. They may say yes, no, up, down or decline to participate or remain neutral.
Q: With the stock market, employment, housing, consumer spending and the general economy in jittery condition, do you think San Diego County will fall into recession again in a so-called “double-dip”?
A: Yes — 0; No —7; not participating: 1
…
More Employers Looking for Armed Guards
PHOENIX - Many worries come with tough times, and some employers right now are scared the economy could lead to more violence in the work place, and they’re taking action.
One valley security agency said the troubled economy is driving businesses to ask for armed guards because they are concerned about what some desperate, unemployed people could do. FOX 10 spent the day at an intense training camp.
Bullets thundered in the desert Saturday as men and women trained to become armed security personnel for valley businesses.
Out at the Ben Avery Shooting Range, Lyle Rapacki, director of training for Anderson Security, said the security company has seen a 35 percent increase in calls that appears to be coinciding with the number of layoffs.
He said losing a job can make a person feel hopeless, and when strapped for cash, a person can become desperate.
In early August, a disgruntled employee at a beer distributor in Connecticut fired off a round of shots killing eight of his co-workers before he turned the gun on himself. The Anderson Security Agency said businesses are concerned a tragedy like that could repeat itself in the valley.
Their officers are taking part in an intense 2-day study, both inside the classroom and outside of it. They are taught when they reach for their weapon, they need to shoot to kill.
Well like duh, telling someone you are fired and you have 30 minutes to clear out your desk, just invites trouble….i see a lot more of this in the future.
Been seeing that for over seven years at the client company. For awhile, one of the employees whose task was to usher fired people out was a power lifter. I’ve seen pictures of him bench pressing a bar with eight 45 lb plates on each side. I kid you not. Yup, everyone had nightmares that he would come to visit their office and stand guard while they packed their stuff to go. Rumors are that the power lifter may be joining the company again.
Rumor was that a year ago when a group was laid off, an armed guard was parked outside the office building waiting for trouble.
And what happens when they lay off the guards?
You do that on a conference call from an undisclosed location.
“Their officers are taking part in an intense 2-day study, both inside the classroom and outside of it. They are taught when they reach for their weapon, they need to shoot to kill.”
So now they’re training rent-a-cops to shoot to kill. This is going to end well.
Great news for FBs!:
http://www.miamiherald.com/2010/08/29/1797537/2-new-programs-planned-to-help.html
Why don’t all economists simply put their faith in the Fed’s ability to avoid a double-dip? If everyone just collectively believed in the Fed’s omnipotence, then perhaps no double-dip would be necessary.
P.S. Why don’t I find myself reassured by seven out of seven San Diego economists polled by the SD-Union Tribune concurring that “there will be no double dip here”? In light of the global scope of the unmitigated financial panic which started back in August 2007, I am quite skeptical that “all recessions are local.”
* ECONOMY
* AUGUST 28, 2010, 11:55 A.M. ET
Economist Shiller Sees Potential for ‘Double Dip’ Recession
By SIMON CONSTABLE
With the U.S. economic recovery losing steam, the chances of a second phase of a slowdown are increasing, according to a leading economist.
Speaking in The Wall Street Journal’s The Big Interview show, Robert Shiller, professor of economics at Yale University, said he thought the second dip down of a so-called double-dip recession “may be imminent.”
Earlier this month, he told the Wall Street Journal he thought the chance of a double-dip recession, which he noted is a rare event, was greater than 50%.
Mr. Shiller now suspects that when the National Bureau of Economic Research eventually looks back at the data, the third quarter of 2010 might mark the beginning of the second dip of the recession.
In another indication of a faltering economy, the government estimate of second-quarter growth in gross domestic product was revised downward Friday.
Mr. Shiller also said he thinks the U.S. economy is “teetering on the brink of deflation.” Deflation occurs when the general level of consumer prices falls, as was the case in the Great Depression. He said the U.S. is ill-prepared for such an event because of the lack of “indexing” in contracts.
…
President Obama’s economic policy subsidizes failure
August 29, 2010
For someone who provokes swoons among liberals for his great intellect, President Barack Obama has repeatedly evidenced an unsophisticated, one might even say simple-minded, view of the world: workers good, bosses exploitative. Borrowers good, lenders bad. Patients good, insurance companies bad. Again and again, the president and his spokesmen have justified their expansions of government power as efforts to help those who “through no fault of their own” find themselves in difficulties.
Many politicians traffic in such rhetoric in campaigns, but Obama has institutionalized it in policy.
One example, the Home Affordable Modification Program, is now revealed to be a failure.
Recall that in February 2009, Obama proposed to solve a “crisis unlike we’ve ever known.” It wasn’t, the president insisted, that anyone had made poor decisions. “It begins with a young family. … They save up. … They choose a home that feels like the perfect place to start a life. They secure a fixed-rate mortgage at a reasonable rate, and they make a down payment, and they make their mortgage payments each month. They are as responsible as anyone could ask them to be.” But then someone loses a job, a spouse has his or her hours cut, or a child becomes sick.
The president’s $75 billion program guaranteed that homeowners with Fannie or Freddie mortgages would be eligible for refinancing to lower rates if their mortgages were between 80 percent and 105 percent of the home’s worth. Other borrowers facing foreclosure would be able to refinance their mortgages down to 31 percent of their monthly income.
Didn’t this mean that taxpayers who didn’t buy too much house or who paid their mortgages on time would be subsidizing those who did not? No, the president insisted. “I want to be very clear about what this plan will not do: It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans. It will not help speculators. … And it will not reward folks who bought homes they knew from the beginning they would never be able to afford.”
The president never explained how the Treasury Department would differentiate “responsible” borrowers from “speculators” because in fact, it could not.
This March, the Obama administration, tacitly acknowledging the program’s failure, proposed new rules that would give jobless homeowners a three-month break on mortgage payments and offer more incentives to lenders to modify mortgages.
While the administration had boldly predicted in 2009 that the program would save 3 million to 4 million homeowners, only 434,716 had seen monthly payments permanently lowered as of July and 616,839 were booted from the program, usually for failing to make payments on time. As the Los Angeles Times noted in March, “The modifications, while delaying the foreclosure process, did not appear to be a long-term solution. About 52 percent of those with modified loans defaulted again after nine months.”
Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, blasted the program in a July report:
“Treasury’s refusal to provide meaningful goals for this important program is a fundamental failure of transparency and accountability that makes it far more difficult for the American people and their representatives in Congress to assess whether the program’s benefits are worth its very substantial cost.
“The American people are essentially being asked to shoulder an additional $50 billion of national debt without being told, more than 16 months after the program’s announcement, how many people Treasury hopes to actually help stay in their homes as a result of these expenditures … and how the program is performing.”
In contrast to the Obama morality play, the foreclosure crisis was not a conspiracy of the rich and powerful against dutiful homeowners reliably making their monthly payments. It was the result of multiple follies by government, bankers and individuals. Obama’s instinct to insulate people from the consequences of their bad decisions (and, yes, sometimes bad luck) amounts to subsidizing failure. The results are coming in daily — persistent high unemployment, an anemic recovery, and billions upon billions of wasted taxpayer money.
…
insurance companies bad.
I agree with Obama on that one. What if you have insurance and you fall ill, the way it was all bets were off.
Yeah, I agreed with pretty much all of Obama’s supposed good/bad judgments.
Well in hindsight, we all know that it is dumb to stretch to be able to sign a house purchase agreement when you could have easily had a lot of money after taxes and expenses by renting a smaller place. “Through no fault of their own…” - what? Someone forced them to sign a house purchase agreement?
The prudent young person would save for a 50% down payment on a house, then put only 20% down, and on a thirty year loan of 2 and a half times his income. The 30% of the purchase price that he did not spend should be in emergency cash.
It’s up to the individual to plan ahead. No one forced anyone at gunpoint to stretch their budget to get a mortgage. I cannot say no borrower was at fault.
Alpha cannot say any borrower was at fault. That’s the difference between anti capitalism and capitalism.
Alpha cannot say any borrower was at fault. That’s the difference between anti capitalism and capitalism.
Au contraire, mon frere. I think the borrowers were at fault- the fault of stupidity. And they should be punished, that’s how lessons are learned. Especially by the stupid, which most have proven to be. And most of them will be punished, with lawsuits and lost assets and lost jobs.
But I don’t think most borrowers were bad. I reserve that distinction for the banksters, who were far more knowledgeable about loan underwriting, but chose to ignore their own knowledge, because it made them big bucks.
The borrowers were going for the big bucks too, but they were just doing what they were told was ’smart’, by the banksters/PTB. And the banksters knew it was bogus, or they wouldn’t have been betting against the securities they were creating out of the crap mortgages.
There’s a difference between stupid and bad.
We saved the banks, if not homeowners, government says
Published: Tuesday, August 24, 2010, 3:43 PM
Updated: Tuesday, August 24, 2010, 3:57 PM
Brent Hunsberger, The Oregonian Brent Hunsberger, The Oregonian
High-ranking Treasury Department officials made some reportedly stunning statements to financial bloggers last week about the intent of the Obama Administration’s mortgage rescue program.
Treasury officials insisted the Home Affordable Modification Program had been a success. Why? Because it put off a wave of foreclosures. In other words, it kept banks afloat and profitable, even if it put struggling homeowners through the ringer.
…
Yep.
* COMMERCIAL REAL ESTATE
* AUGUST 25, 2010
‘Jingle Mail’: Developers Are Giving Up On Properties
By KRIS HUDSON And A.D. PRUITT
Like homeowners walking away from mortgaged houses that plummeted in value, some of the largest commercial-property owners are defaulting on debts and surrendering buildings worth less than their loans.
Companies such as Macerich Co., Vornado Realty Trust and Simon Property Group Inc. have recently stopped making mortgage payments to put pressure on lenders to restructure debts. In many cases they have walked away, sending keys to properties whose values had fallen far below the mortgage amounts, a process known as “jingle mail.” These companies all have piles of cash to make the payments. They are simply opting to default because they believe it makes good business sense.
“We don’t do this lightly,” said Robert Taubman, chief executive of Taubman Centers Inc. The luxury-mall owner, with upscale properties such as the Beverly Center in Los Angeles, decided earlier this year to stop covering interest payments on its $135 million mortgage on the Pier Shops at Caesars in Atlantic City, N.J.
Taubman, which estimates the mall is now worth only $52 million, gave it back to its mortgage holder.
“Where it’s fairly obvious that the gap is large, as it was with the Pier Shops, individual owners are making very tough decisions,” he said.
…
Interesting detail: All three West Coast states, plus AZ and AK, are non-recourse.
Risks of walking away from mortgage debt
…
Less risky in some states
Despite the potential negative consequences of a strategic default, the move is less risky in some states than others.
“The first question for anyone considering a strategic default is whether the homeowners will be liable for the debt anyway,” says Fredman. “Each state has different rules.”
Non-recourse laws protect homeowners in some states. When a borrower defaults in one of these states, the lender can take the home through a foreclosure but has no right to any other borrower assets. (Home equity loans are not eligible for this protection unless they were used as part of the home purchase.)
According to research from the Federal Reserve Bank of Atlanta, 11 states are “non-recourse” states: Alaska, Arizona, California, Iowa, Minnesota, Montana, North Carolina, North Dakota, Oregon, Washington and Wisconsin.
“In California, we have some of the best anti-deficiency rules around, so banks can foreclose on the home but cannot get any other judgment to claim additional assets,” Fredman says.
In some areas, lenders are so overwhelmed with defaulting customers that homeowners can live in their homes for free for months or even a year or more before the foreclosure is complete.
The average length of time from default to eviction is 400 days in California, Fredman says.
…
Not recourse states, but ripoff states, where deadbeats can rip off the banks.
What if Freddie Mac and Fannie Mae sue the deadbeats? It won’t matter whether they are in recourse states or not.
“…where deadbeats can rip off the banks.”
Any lending officer approving loans in a non-recourse state on terms which don’t protect the lender from the risk of taking the collateral back as REO really ought to look up the definition of caveat emptor.
“man arrested over fake ‘million dollar bills’ in UAE”:
News * AU
“A MAN was arrested in the United Arab Emirates for tricking a woman into trying to get change at the central bank for two souvenir one million dollar notes he persuaded her were real,
In June, three Iranians attempted to fraudulently obtain $14.4 billion from the U.A.E. central bank using fake documents, official WAM news agency reported. Two were arrested, while the third was reportedly still at large in Iran.
In January, Abu Dhabi police arrested seven men for attempting to steal $10.2 billion from the central bank, also using forged documents, WAM said.”
(Hwy wonders if the scheme would have worked ifin’ they had placed Shrub’s mug on the bill?)
“The black and white side features a picture of the first U.S. president, George Washington,…”
Looks like he almost…closed the deal:
News * AU
“AN Illinois real-estate agent was caught naked with a client in the master bathroom of a house he was selling, The Chicago Tribune reported.
The 46-year-old agent and his client, a 25-year-old Chicago man, were found just before noon on Thursday by the Naperville property owner’s son, who was “alarmed and disturbed” by the incident, Police Sergeant Gregg Bell said.
The pair was reportedly cited with a non-traffic related ticket for disorderly conduct and released.”
He hired a realwhore!
Ummmm, that was no “client”.
You’re giving the realtor the keys to your house. Guess what goes on in there!
Trysts with realtors in houses for sale has to be one of old tropes in fiction, no?
brokeback mountain welcome wagon?
That’s a “pimpco” type of gross story.
I like the “tone” of of these AU reports, like this ending: Unfortunately, they would not provide any figures that would support the claims.
Banks blocking homeowners renovation funds:
The Daily Telegraph / August 28, 2010
Industry experts said lenders are increasingly blocking homeowners from bridging finance - intermediate loans that finances the purchase of a new property while existing property is sold, The Daily Telegraph reports.
Previously a common strategy for people selling one home and buying another, banks now claim bridging finance can produce bad debt while other lenders do not even offer the product.
“These loans are now very hard to get, basically because it is just not worth it for the banks,” a mortgage industry expert said.
The static property market is another reason why banks are loath to approve bridging loans.
Several lenders are believed to have been caught out approving such loans to homeowners, only for the eventual sale price of the old home to fall well short of what was agreed to.
“To put it simply, the economics are against bridging loans, and banks don’t want to be increasing their [bad debt] provisions,” the expert said.
Mortgage Choice broker John Manciameli said the banks’ aversion to bridging finance may be due to the fact Sydney homes are taking a lot longer to sell, elevating the lenders’ risk profile into alarm-bell territory.
However, representatives of the major banks yesterday maintained they were “open for business” and were continuing to offer the product.
Unfortunately, they would not provide any figures that would support the claims.
intermediate loans that finances the purchase of a new property while existing property is sold
Instead bring cash in good faith - Problem solved.
Mortgage brokers are becoming a vanishing breed
The Indianapolis Star
INDIANAPOLIS — Most of the mortgage brokers that seemed to populate every office building and commercial street in cities nationwide just five years ago have vanished.
Ken Blaudow, owner of Indy Mortgage had 85 employees originating home loans in 2003. Now he has three and is about to give up his leased office in Castleton, Ind., and move his company into two bedrooms of his house.
“It’s drastically down,” he said of his industry. “And there are a lot of funky new rules.”
Much of the decline has come from the implosion of the housing sector since 2007. Prices and sales plunged during the recession. Foreclosures hit record highs almost everywhere.
As government rushed in to respond to the crisis, caused in part by overselling of risky mortgages by brokers who got rich on exorbitant fees, regulations on the industry multiplied.
States in the past two years began requiring brokers to pass licensing exams and undergo background checks. A criminal record, even a past bankruptcy, can now prevent someone from writing a mortgage. If states don’t already do it, a federal law coming in January will require licensing exams and criminal background checks nationally.
Brokers and loan originators find lenders for people seeking a mortgage on a new home purchase and charge a fee for that service.
Many of the sometimes-exotic products that independent brokers used to push — jumbo loans, sub prime mortgages — also have been restricted or banned.
The new industry that’s emerging is much more conservative, regulated and, some would say, less consumer-friendly.
“And there are a lot of funky new rules.”
Like proving income and debt ratios.
In the local paper some construction worker wrote a letter to the editor moaning how he was making 100K+ during the bubble (he didn’t call it that) and that now only makes 40K. I wish I could have relied to him and eplain to him that 2002-2006 were an anomaly, but I suspect he would be in total denial.
AZ brief: judge made ’serious errors’ in blocking SB 1070
A federal judge in Phoenix made “serious errors” when she agreed with the Obama administration and blocked key sections of a controversial Arizona immigration law, according to lawyers for Arizona Gov. Jan Brewer.
The lawyers made the comments in their opening legal brief asking a federal appeals court in San Francisco to overturn the judge’s order and allow the Arizona law, known as SB 1070, to take full effect.
Justice Department lawyers are expected to file a reply brief with the appeals court by Sept. 23. Oral argument at the Ninth US Circuit Court of Appeals is expected in early November.
US District Judge Susan Bolton ruled on July 28 that the Arizona law was preempted by federal immigration laws. She blocked provisions in the law that required all noncitizen residents to carry their federal immigration card, and that made it a state crime for an illegal immigrant to work in Arizona.
She also enjoined a provision that required Arizona officials to check a person’s immigration status whenever there was reasonable suspicion the individual was illegally present in the US.
Opponents charged that the law would lead to illegal racial profiling and interfere with federal enforcement priorities. Supporters said it was an attempt to enforce at the state level immigration laws on the books that are not being enforced by federal officials.
President Obama entered the debate on the side of opponents of the law, and the Justice Department filed a lawsuit to block its implementation.
This stuff cracks me up, you have a weepy Glenn Beck beating the religious/god drum and he draws 3 to 400,000 meanwhile the race pimp Sharpton does his “march” with a huge crowd of around 3000.
None it adds up to much but a weekend headline. I just think it’s funny that the only thing clowns like Sharpton can come up with is racism and the KKK. Of course when you make a “living” promoting racial divide what else can a moron racist like Al “Tawana” Sharpton say.
Beck, Palin tell thousands to ‘restore America’
By Amy Gardner, Krissah Thompson and Philip Rucker
Sunday, August 29, 2010
Conservative commentator Glenn Beck on Saturday drew a sea of activists to the steps of the Lincoln Memorial, where he championed a religious brand of patriotism and called on the nation to recommit itself to traditional values he said were hallmarks of its exceptional past.
On the anniversary of Martin Luther King Jr.’s “I Have a Dream” speech, steps away from where it was delivered, Beck and fellow “tea party” icon Sarah Palin staked a claim to King’s legacy and to that of the Founding Fathers. They urged a crowd that stretched to the Washington Monument to concentrate on the nation’s accomplishments rather than on its psychological scars.
“Something that is beyond man is happening,” Beck said. “America today begins to turn back to God.”
The event was billed as “nonpolitical,” and Beck steered clear of the partisan commentary that has made him a hero to many conservatives and a nemesis to many on the left. But political overtones were unmistakable, and the rally drew an enormous crowd - including many who said they were new to activism - that was energized and motivated to act.
The effort by Beck and Palin to lay claim to the mantle of the civil rights movement drew protests from the Rev. Al Sharpton and others who marched in a separate and much smaller event, to the Mall from Dunbar High School in Northwest Washington, to commemorate King’s speech 47 years ago.
“The ‘March on Washington’ changed America,” Del. Eleanor Holmes Norton (D-D.C.) said at the Sharpton rally, referring to King’s speech. “Our country reached to overcome the low points of our racial history. Glenn Beck’s march will change nothing.”
Sharpton drew a mostly black crowd of union members, church-goers, college students and civil rights activists. The Obama administration weighed in, too, with Education Secretary Arne Duncan speaking of education as the “civil rights issue of this generation.”
The Beck crowd, meanwhile, was overwhelmingly white, and many in the crowd described themselves as conservatives with deep concern about the country’s political leadership and its direction.
But the mood was peaceful and calm at both events, and by the time the Sharpton march arrived on the Mall, the crowd from Beck’s rally had largely dispersed. Despite the potential for tension, the events appeared to produce none of the politically damaging imagery that emerged from some earlier tea party rallies.
I wonder how far back does Beck want to turn back the clock? Maybe back to the days when the Mormons (he is LDS) were run out of the US and sought refuge in then Mexicn controlled Utah?
Sorry but the “turn back to God” deal may have worked in 1980 but has less likely a chance to work now based on demographics. The more educated a person is, the less religious. Men are less religious than women. Whites and asians are less religious than hispanics and blacks.
The Republicans keep shooting themselves in the foot by scaring away the Warren Buffet types who would really help the RP a lot. Warren Buffet is an atheist. Steve Wozniak is also an atheist.
The Republican mainstream is quick to be ashamed of capitlism and quick to say their imaginary friend is what is really important.
Here’s hoping the outside variable of all the negativity of our economic crisis comes from outside politics and crushes both the religious fanatics and lovers of government - both factions are grave threats to individual liberty.
both factions are grave threats to individual liberty.
So are pursuing on a NATIONAL LEVEL…WRONG IDEAS. For an example look just a few post below bill.
If you need a current example simply Google: “SHOCK & AWE” or ” US National Guards depolyed for America’s FOREIGN WARS” or “NON-BID military Industrial CORPORATION taxpayer funded contracts” or…:-)
wmbz,…your in South Carolina Right, location of Fort Sumtner April 14th 1861
You know ANYTHING about your “local” Herstory?
“…I just think it’s funny that the only thing clowns like Sharpton can come up with is racism and the KKK”
http://theblacksentinel.files.wordpress.com/2007/11/slavery_maryland_0327.jpg?w=305&h=460
Beck, Palin tell thousands to ‘restore America’
Yep, what year do ya all wanna stop at?
http://img.dailymail.co.uk/i/pix/2007/03_02/slavesDM2303_468×313.jpg
Has the stimulus worked?
by Opinion Staff
The Congressional Budget Office says the cost of the federal stimulus program will be $814 billion over 10 years.
That’s actually a decrease from the previous estimate of $862 billion but still an increase from the original $787 billion. Another figure that has gone up is unemployment in Florida. The state’s rate rose to 11.5 percent in July from 11.4 in June. That means about 1.1 million Floridians are looking for work.
Palm Beach County’s jobless rate climbed to 12.2 percent in July from 11.8 percent in June. Martin County unemployment increased to 12.3 percent from 11.7 percent the previous month. St. Lucie County’s jobless rate spiked to 15.2 percent, third-highest in the state.
But the CBO, which is non-partisan, says the stimulus has saved or created up to 3.3 million jobs and boosted gross domestic product by as much as 4.5 percent.
In other words, things would be worse without the stimulus program. Do you think that’s true? Take our poll.
Thank you for voting!
Yes 30% (49 votes)
No 70% (112 votes)
Total Votes: 161
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“The Tea Party movement is a loose-knit coalition of voters seeking limits on government spending, taxes and debt.” ~Bloomberg News.
Is Bloomberg’s description fair? What can be wrong with wanting an overblown federal government to trim its sails and get back on the course outlined in the U.S. Constitution? What is wrong with protesting against ever-increasing taxes? And why should any thinking citizen urge the government to pile up more un-payable debt?
I am still hoping for a widespread public outcry for across the board (foreign aid, entitlements and military) cuts in government spending.
The meatheads / oxides of the world lose credibility when they don’t want cuts in welfare. The Eddies of the world lose credibility when they don’t want cuts in America’s world cop status.
If we do get the second dip recession, there will more likely be a big public outcry against government spending on all programs, including those the socialists love and those the Republicans love. We cannot afford this big government.
And why should any thinking citizen urge the government to pile up more un-payable debt?
Well what if you advocated this POV during the American Revolution, Civil War, WWI or WWII. Well wmbz, upon reflection if YOU actually yelled this out loud in South Carolina in 1941, most of your neighbors would swear that you were a “pinko-yellow-belly-communist” or you were a “gay-abolitionist.”
Somehow I suspect that the common people in 1941 thought the term “gay” meant “happy.” But I may be wrong.
Your Right bill, it would have been: “Fag-abolitionist” and that would have spun quite a few English soldiers heads.
And don’t forget you would have been called “unpatriotic” in GW’s wars in Afghanista and Iraq.
Policy Options Dwindle as Economic Fears Grow ~ NYT
THE American economy is once again tilting toward danger. Despite an aggressive regimen of treatments from the conventional to the exotic — more than $800 billion in federal spending, and trillions of dollars worth of credit from the Federal Reserve — fears of a second recession are growing, along with worries that the country may face several more years of lean prospects.
On Friday, Ben Bernanke, chairman of the Fed, speaking in the measured tones of a man whose word choices can cause billions of dollars to move, acknowledged that the economy was weaker than hoped, while promising to consider new policies to invigorate it, should conditions worsen.
Yet even as vital signs weaken — plunging home sales, a bleak job market and, on Friday, confirmation that the quarterly rate of economic growth had slowed, to 1.6 percent — a sense has taken hold that government policy makers cannot deliver meaningful intervention. That is because nearly any proposed curative could risk adding to the national debt — a political nonstarter. The situation has left American fortunes pinned to an uncertain remedy: hoping that things somehow get better.
It increasingly seems as if the policy makers attending like physicians to the American economy are peering into their medical kits and coming up empty, their arsenal of pharmaceuticals largely exhausted and the few that remain deemed too experimental or laden with risky side effects. The patient — who started in critical care — was showing signs of improvement in the convalescent ward earlier this year, but has since deteriorated. The doctors cannot agree on a diagnosis, let alone administer an antidote with confidence.
AP IMPACT: US wasted billions in rebuilding Iraq
KHAN BANI SAAD, Iraq (AP) — A $40 million prison sits in the desert north of Baghdad, empty. A $165 million children’s hospital goes unused in the south. A $100 million waste water treatment system in Fallujah has cost three times more than projected, yet sewage still runs through the streets
As the U.S. draws down in Iraq, it is leaving behind hundreds of abandoned or incomplete projects. More than $5 billion in American taxpayer funds has been wasted — more than 10 percent of the some $50 billion the U.S. has spent on reconstruction in Iraq, according to audits from a U.S. watchdog agency.
That amount is likely an underestimate, based on an analysis of more than 300 reports by auditors with the special inspector general for Iraq reconstruction. And it does not take into account security costs, which have run almost 17 percent for some projects.
There are success stories. Hundreds of police stations, border forts and government buildings have been built, Iraqi security forces have improved after years of training, and a deep water port at the southern oil hub of Umm Qasr has been restored.
Even completed projects for the most part fell far short of original goals, according to an Associated Press review of hundreds of audits and investigations and visits to several sites. And the verdict is still out on whether the program reached its goal of generating Iraqi good will toward the United States instead of the insurgents.
Col. Jon Christensen, who took over as commander of the U.S. Army Corps of Engineers Gulf Region District this summer, said the federal agency has completed more than 4,800 projects and is rushing to finish 233 more. Some 595 projects have been terminated, mostly for security reasons.
“US wasted billions in rebuilding Iraq”
It seems way too early to draw that conclusion. But this headline does lead me to wonder whether the Marshall Plan faced similar criticism in the first few years after WWII.
My view is that it is much better to rebuild a country into a potential future trading partner, than to desert it and let bitterness fester without limits.
+10
My view is that it is much better to rebuild a country into a potential future trading partner, than to desert it and let bitterness fester without limits.
Geez Mr. Bear kinda “selective revisionism POV” there…? Let me help you with the “recent American-President-elective-past-political-policy-events:
My view is that it is much better to rebuild a country into a potential future trading partner, than to …Bomb-the-living-SHASTA-out of-the-innocent-people & the national-infra-structure-they-need-daily …and let bitterness fester without limits.
“…Bomb-the-living-SHASTA-out of-the-innocent-people & the national-infra-structure-they-need-daily…”
I never was sold on the whole Shock and Awe concept — in fact, I was outright opposed to it — but that water passed under the bridge seven years ago. We need to figure out what to do now, right?
“A U.S. Cheney-Shrub ‘legacy of waste’ in Iraq”
Hey guess what?
NO ONE COULD SEE IT COMING! Especially in 2004!
Suckers!
Honestly I could not see it coming in November of 2004 and voted for Shrub. The first and last time I ever voted for a Republican for President. Boy was I fooled.
One thousand “mea culpa’s” and one thousand shots of tequila. Okay. I feel better.
I won’t get fooled again. I dropped out of being a U.S. citizen, save for paying taxes. I refuse to vote again.
However,
“Meet the new boss, same as the old boss…”
I refuse to vote again.
Voted for Bob Barr last time around. I am not going to bother again. I have been following this Stefan Molyneux guy on youtube lately. He had something to say about voting amongst many other things. Very impressive fellow IMO. Try to catch him if you can.
Thank you for the info. I watched his video. Very great communicator. He says it much better than me.
I refuse to sanction this system which robs the producers and gives to the lazy. I refuse to sanction this system that self-appoints it as the world’s cop and directs hatred by foreignors against innocent Americans. I refuse to sanction this system which incarcerates innocent people who are there in prison for committing mutually consensual adult activities that communities disapprove of based on religion or for ingesting substances communities disapprove of.
I am “dam” sick and tired of this system and I agree with Stefan Molyneux that voting won’t win me any more freedom. The act is just a sanction of more of the same big government.
“Meet the new boss, same as the old boss…”
Really?
Well Bill let me hold you hand why we BOTH stand up and shout: “YOU LIE! at lil’ Opie together.
“On Tuesday, after more than seven years, the United States of America will end its combat mission in Iraq and take an important step forward in responsibly ending the Iraq war,” Obama said in his weekly radio address.
“As a candidate for this office, I pledged I would end this war,” Mr Obama recalled in the address.
“As President, that is what I am doing. We have brought home more than 90,000 troops since I took office.”
THREE days before the official end of the US combat mission in Iraq, US President Barack Obama says that the war in the country was “ending” and called Iraq a “sovereign” nation free to determine its own destiny.
I simply was HOPING someone/anyone would offer my vote something other than: the ol’ McSame: “We’ll stay in Iraq 100 YEARS if that’s what it takes!” …I admit whole-heartily I was voting for a CHANGE in the political mind-set. I was quite surprised I had cast my vote for a (Non-Hawaiian) Socialist-Muslim
First of all the war is not ending. Last time I checked there are still going to be ~50,000 troops (many combat troops) left in Iraq for a while. I could be wrong but I thought the withdrawal has nothing to do with Obama. It was based on the treaty signed under GW.
Like Stefan Molyneux said, America still has military presence in Japan, over 60 years since the war there was supposed to have ended. So I checked out Wikipedia…
From Wikipedia:
As of March 31, 2008, U.S. armed forces were stationed at more than 820 installations in at least 135 countries.[18] Some of the largest contingents are the 50,000 military personnel deployed in Iraq, the 71,000 in Afghanistan, the 52,440 in Germany (see list), the 35,688 in Japan (USFJ), the 28,500 in Republic of Korea (USFK), and the 9,660 in Italy and the 9,015 in the United Kingdom respectively. These numbers change frequently due to the regular recall and deployment of units.
Altogether, 77,917 military personnel are located in Europe, 141 in the former Soviet Union, 47,236 in East Asia and the Pacific, 3,362 in North Africa, the Near East, and South Asia, 1,355 are in sub-Saharan Africa with 1,941 in the Western Hemisphere excepting the United States itself.
Bill:
I don’t have a problem with them being there, but dammmm its about time they pay us Fully for all the expenses of providing for their safety.
Pays us like we are subcontractors…or we move our troops back to America to stop the illegals on our borders…
In 2003 a million South Koreans marched against the US invasion of Iraq.
More homeowners in trouble with mortgages
By Kimberly Miller Palm Beach Post Staff Writer
Updated: 7:19 a.m. Friday, Aug. 27, 2010
Posted: 6:11 p.m. Thursday, Aug. 26, 2010
One in nine Florida households with a mortgage was at risk of foreclosure this summer and the bad news is; that’s the good news.
The 10.97 percent of Florida home loans that had at least one past due loan payment in the second quarter of 2010 is a small dip from earlier in the year, according to a Thursday report from the Mortgage Bankers Association.
Also, the percent of loans statewide in foreclosure or 90 days delinquent slipped from 20.6 percent in the first quarter to 20 percent — still the highest in the nation.
But what’s more worrisome to association economists is an increasing trend of homeowners just starting to have trouble paying their mortgages.
Nationally, the percent of loans one payment behind peaked in 2009 at 3.77 percent, but had since fallen at the end of last year to 3.31 percent.
Thursday’s report puts it at 3.51 percent nationally, and 3.32 percent in Florida. Florida was at 3.12 percent last quarter.
“It takes a paycheck to make a mortgage payment,” said association chief economist Jay Brinkman, who tied the nation’s high unemployment to the increase in new loan delinquencies. “Ultimately, the housing story, whether it is delinquencies, home sales or housing starts, is an employment story.”
Parade Magazine
PERSONAL FINANCE
Your Money or Your Life?
by Lee Eisenberg
published: 08/29/2010
Remember the good old days? Two, three years ago? When a typical house on Extreme Makeover: Home Edition had enough bedrooms to accommodate—individually—every member of the Brady Bunch? When Fido was getting unsolicited credit-card offers in the mail?
Back then, it was easy to confuse having (a lot of stuff) with being (set for life). Now, almost two years after Wall Street’s big crash, that’s not such a problem. The Big Three car companies are profitable again, but the financial markets still ping-pong from day to day. Americans are finally managing to put some savings away, yet personal income remains stagnant. More than 14 million people are still out of work. Nearly one in four homeowners owes more on his house than it’s currently worth. If this represents the new American Dream, wake us when it’s over.
The dawn of a brighter day still seems a long way off. But when it comes, will we step into it older and wiser or just older and poorer? When a true recovery takes hold, will we allow ourselves to be lured back into debt by ads for state-of-the-art pitching wedges, designer everything, and more bedrooms and baths than we need? Or will we strike a healthier balance between living for the moment and planning for the future?
There are, in fact, signs that a more sober mind-set is emerging. The consulting firm Strategic Business Insights refers to it as “conspicuous conservation.” We’re weighing risk against reward now. We’re placing a greater value on value (instead of glitz) when we go shopping, opting for the functional over the flashy, the rational over the reckless.
Most profoundly, we’re remembering what our parents taught us: that money isn’t everything. In a recent Merrill Lynch survey, more than half of retired respondents said that if they could do it all over again, they’d focus more on “life goals” and less on “the numbers.”
…
Money isn’t everything. Experiences are!
Any fool should know that, or figure it out with minimal intervention.
Whether your experience is travel or opera, what you will remember at the end of your life is, most assuredly, NOT how much stuff you have.
Well said, FPSS!!! (and good to have you back)
Unfortunately, I think many never do figure out what seems so obvious.
BTW, there’s a great book by the same title as the linked article: “Your Money or Your Life”.
Whether your experience is travel or opera
or sitting behind some rocks in Afgahistan with a US emblem on your clothes takin’ in the sights.
http://larouchepub.com/pr/2010/100819geithner_hyperinflates.html
TurboTax Timmay says there is a “consensus” that new bailouts are needed. News to me.
Amy Hoak’s Home Economics
Aug. 30, 2010, 12:01 a.m. EDT
A 15-year mortgage isn’t for everyone
More homeowners turn to shorter loan terms
… there might be some psychology at work. “We’re seeing a different view on debt than maybe we’ve seen in the past,” he said. Today, homeowners are saying, “I really want to pay this off. I’m going to bite the bullet and take the payment and work toward paying this down.”
…
This is a huge shift in borrower thinking. “There was a drive a couple of years ago to take out the biggest mortgage that you could and use all of the money you would have otherwise had in the house and put it into stocks and bonds — to think of your house and mortgage as part of your entire investment portfolio,” said Amy Crews Cutts, deputy chief economist for Freddie Mac.
“That worked for people who do investment finance for a living and are good at managing accounts,” she said. “But for the average person, debt is a drag on their psyche as well as their overall budget.”
…
Glenn Beckistan’s Rally Without a Cause:
“We’re against everything and it’s all the gubmint’s fault.”
* POLITICS
* AUGUST 30, 2010
Rally Funnels Anger Toward Washington
By NEIL KING And BOB DAVIS
James Johnson of Delray Beach, Fla., and Jim Davis of Provo, Utah, attend the “Restoring Honor” rally.
WASHINGTON—The rally organized by conservative broadcaster Glenn Beck this weekend was a prominent reminder of the disenchantment many Americans feel about Washington—a sentiment that provides both opportunities and pitfalls for the Republican Party.
The size and geographic diversity of the crowd demonstrated the breadth of anti-incumbent feeling. But many of those interviewed at the rally expressed dissatisfaction not only with Democrats but with the traditional Republican leadership too, saying GOP candidates shouldn’t take their vote for granted.
“I was upset about things even under Bush,” said Sharon Tully, who drove up to the National Mall on Saturday morning and sat with her husband, Joe, under trees near the reflecting pool. “I was a Reagan Democrat who then went over to the Republicans, but now I feel that I belong to no party.”
Attendees on Saturday packed nearly a mile of the Mall at the foot of the Lincoln Memorial, in an event that carried the tone of a religious revival. Many at the event said in interviews that they were drawn by a sense of deep disenchantment over the country’s direction, alarm over government spending and a sense that the country’s political system was broken.
The program, which was organized by Mr. Beck, the conservative Fox News commentator, featured three hours of religious and patriotic speeches but offered few details on how to fix the country’s problems.
Republican strategists said the size of the rally reflected an enthusiasm for change that would bolster their electoral chances. “Rallies like what we saw are another indication of how people at the center and right of the political spectrum can’t wait to get to the polls,” said Republican pollster Whit Ayres. He said a poll he did last month for the Republican National Committee found that 53% of Republicans were very interested in this year’s election, compared with 43% of independents and 38% of Democrats.
Democratic strategist Chris Lehane also noted the anti-establishment feeling. “For the party in power, any time you have this type of energy out there, this kind of fear, it’s not good.”
It is unclear whether those at the rally fall neatly into the Republican camp. The rally—the largest conservative gathering in the country since the tea-party fervor began in early 2009—was different in tone from earlier protest marches, when activists openly mocked President Barack Obama and waved signs that led some critics to label the movement as racist.
On Saturday, the mood was more like a huge church picnic. Some people waved flags, but there were hardly any political signs. Many lugged lawn chairs and blankets and said they hadn’t attended a political gathering before.
Mr. Beck, speaking on “Fox News Sunday,” said the rally reflected the electorate’s dissatisfaction with the direction of the country. “Whether you’re a Democrat, Republican or independent, it doesn’t matter,” he said. “We all know the country is in trouble.”
…
Beggar thy neighbor’s export demand?
* MARKETS
* AUGUST 30, 2010
Japan Battles Soaring Yen
Central Bank Expands Lending in Latest Sign of Pessimistic View on Economy
By MEGUMI FUJIKAWA and TOMOYUKI TACHIKAWA in Tokyo and BOB DAVIS in Washington
Japan’s central bank agreed at an emergency monetary-policy meeting Monday morning to take new steps to rein in the soaring yen and pump up the slumping economy, in the latest sign of currency worries rippling around the world.
The Bank of Japan’s decision to expand a special low-interest lending facility is part of a concerted effort, through words and actions, by Tokyo’s policy makers to blunt the yen’s moves.
Finance Minister Yoshihiko Noda said over the weekend he would take “decisive” steps to prevent a further sharp appreciation of the yen, a signal that the government could soon intervene in currency markets, selling yen to hold down the value of the currency against the dollar. Japan’s prime minister is also preparing to unveil a modest economic-stimulus package on Tuesday.
Markets in Tokyo reacted swiftly and enthusiastically to the news of the BOJ meeting . At least immediately, the central bank’s announcement that it was holding a meeting had precisely the effect intended, as the dollar strengthened nearly half a yen in the hours after the meeting was disclosed, hitting 85.88 yen in Tokyo morning trading. The yen also fell against the euro. The yen strengthened again a bit right after the midday announcement of the details of the action.
The yen’s early weakening gave the slumping stock market a lift. In morning Tokyo trading, the Nikkei Stock Average rose 3% by the midday break, hitting 9265.39 as the index crossed back over the 9000 level it had dropped below amid last week’s gloom. Shares of exporters like Sony Corp. and Honda Motor Co. helped lead the rally, in hopes that a somewhat weaker yen, which lowers the relative price of Japanese-made goods, would improve their sales outlook.
In announcing plans to add 10 trillion yen, or about $117 billion, to an existing 20 trillion yen lending program, the central bank issued a statement saying: “The bank believes that the monetary easing measure, together with government efforts, will be effective in further ensuring Japan’s economic recovery.”
Japan’s new push to pump up its economy and weaken its currency is likely to have a mixed impact on the U.S. and the rest of the world. To the extent that it boosts Japan’s exporters, Tokyo’s growth steps could come at the expense of rival producers in other countries. But the moves could also lift domestic demand in Japan, which would help a global economy sorely in need of new growth engines.
…
Just right now on the Ten O’clock News on KTVU (SF Bay Area station), “Consumer Editor” Tom Vacar says that right now is a good time to buy because FHA loans are available with a low down payment that “doesn’t require sterling credit” or something to that effect.
It seems that some folks still haven’t learned anything from our last experience with people with crappy credit buying homes…
I found a bit, I had no idea they did this, who was it that wanted help for renters? I’m sure if it’s in Iowa, it’s in many other states too, ugh:
Nearly 1,200 in Linn, Johnson aided through state’s rental help
Posted on Jul 15, 2010 by Steve Gravelle.
Nearly 1,200 households in Linn and Johnson counties have had their rent paid under a state program over the past 10 months, Iowa Finance Authority officials said today.
“If it wasn’t for their help, I really don’t know where I’d be right now,” said Tammy Hansen of Harlan.
Hansen is one of 7,827 Iowans receiving aid under the Iowa Rental Help program since it was launched last October with $11 million in federal stimulus money. The program provides temporary help with rent, utility bills, and security deposits to households facing immediate threat of homelessness.
That’s where Hansen, 39, found herself last November, when she and her 5 and 8-year-old daughters left her abusive husband. After a brief stay with her in-laws in a two-bedroom mobile home, Shelby County Community Outreach connected her with Iowa Rental Help.
“When I left I knew I was going to be homeless, but that’s a choice I had to make for me and my girls,” said Hansen. “I was only making around $4 an hour plus tips” working as a waitress.
The program served 1,188 households in Johnson County and 804 in Linn, according to the Iowa Finance Authority, which administers Iowa Rental Help statewide.
“It bridges a gap if there’s some kind of economic crisis, and they can get back on track,” said Carrie Slagle, Waypoint’s director of homeless and housing services. The agency manages Iowa Rental Help in Cedar Rapids.
The program has used $2.7 million of its $11 million appropriation.
“We’re hoping our (allotment) will last another year,” said Slagle.
Hansen said she’s in her last month on the program, which kept a roof over her and her daughters until long-term rental aid from the Department of Housing and Urban Development became available.
“In this area there’s at least a six month waiting period” for HUD assistance, Hansen said.
Hansen has returned to school at Iowa Western Community College, where she’s working toward a degree in social work.
“Because the help I’ve received, I want to return that favor back,” she said.
Iowa Rental Help is open to households earning 50 percent or less of the area’s median income — $23,650 for a single person and $33,800 for a family of four in Cedar Rapids; $26,600 and $38,000, respectively, in Iowa City. Participants must show proof of income and show evidence they’re at risk of homelessness — an eviction notice, in most cases.
http://gazetteonline.com/breaking-news/2010/07/15/nearly-1200-in-linn-johnson-aided-through-state%E2%80%99s-rental-help
well I’ll be dammmmmmed a morsel for a tiny town in Iowa