Bits Bucket For September 9, 2010
Post off-topic ideas, links and Craigslist finds here
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Looks like housing prices still falling in Vegas. Even thought the local Realestate pro’s are telling it differently.
You should listen to the Realtors. They are qualified professionals and know how to diagnose a market.
From StrategyOne Insight survey — (Americans fear Double Dip recession and European Financial problems)
“Impact of the Recession on Americans:
Significant numbers of Americans have experienced hardship as a result of the recession.
42% say that they or their spouse has had wages or salary reduced
34% say they or their spouse lost their job or has been laid off
33% have taken on more hours or another job to try and make ends meet
28% dipped into a planned retirement account like an IRA or 401K because they needed the money
14% say they have been forced to sell or liquidate a major asset like their car or home
9% have had their house foreclosed on
8% had their child delay college (or graduate school) or drop out to save money
In terms of their own personal finances, 2 in 10 expect say they will recover by the end of 2011 (20%), 3 in 10 say after the end of 2011 (27%), and a quarter say their personal finances won’t ever fully recover (24%).”
Survey link follows…
survey story link…( I think)
http://tinyurl.com/2885beq
RealtWhores are “pro’s” alright….. Prophylactics
Hey, watch it, buddy! You just insulted prophylactics.
And, unlike many real estate agents, prophylactics do perform a useful function.
LOL, exeter. You have a great sense of humor, too.
LOL, exeter. Good one.
Personally, I think that’s a terrible condomnation.
They’re a nation of condoms all to themselves.
The local pros in Vegas have a long history of whispering sweet nothings to the highest bidder.
Isn’t that what Realtors do?
Reminds me of the Fleet Wood Mac Song. Tell Me Lies Tell Me Sweet Little Lies…
Will the real estate market ever settle down to a resting point before the ravages of the Great Recession ultimately pass, or is it all churn from here on out, due to shadowy all-cash “investors,” who keep a floor under the bid when end-user demand has dropped off the face of the earth? Either the market will eventually settle down, or the end-user share of the used home market is virtually shut-down for the foreseeable future.
Home sale listings rose in August: ZipRealty
By Julie Haviv
NEW YORK | Wed Sep 8, 2010 2:00pm EDT
NEW YORK (Reuters) - The number of U.S. homes listed for sale rose in August compared to July, marking the 8th consecutive monthly rise, according to data released by real estate brokerage ZipRealty.
The trend is likely to continue this year as a large number of foreclosed properties come on the market, according to Emeryville, California-based ZipRealty.
Homes are sitting on the market longer and more inventory could add to existing pressures on home prices. Stabilization of the hard-hit U.S. housing market, where the latest recession took root, is seen as key to economic recovery in the United States.
The total number of single-family homes and condos listed for sale by the Multiple Listing Service (MLS) increased in August from July by 0.43 percent, bringing the total number of active listings in the 26 major U.S. metropolitan markets to 671,874, ZipRealty reported.
On a year-over-year basis, housing inventories increased by 10.65 percent, it said.
“Sellers are realizing that they cannot sell at the price they want, so we do expect sellers to take their homes off the market,” said Patrick Lashinsky, president and CEO of ZipRealty. “I think housing inventory will continue to increase over the rest of the year - - with distressed homes coming on the market faster than normal sellers can take them off.”
…
Note he isn’t claiming that the Wishers (you can’t really call them sellers) will actually sell their houses, just pull them off the market. I believe that implies more pent up supply to come flooding out at the first sign of market stability.
It’ll take several years of bouncing along at cash-flow positive prices before the market clears all the foreclosures and frustrated sellers.
WSJ Blogs
Developments
Real estate news and analysis from The Wall Street Journal
* September 8, 2010, 3:58 PM ET
Builders Brief Land Buying Spree Gets Grounded
By Dawn Wotapka
Several months ago, builders were so convinced that the real-estate market was set to turn positive, they went on a land buying spree. Alas, following the home buyer tax credit’s April 30 expiration, the residential market has only soured.
As I write in today’s Journal, that’s forcing some builders to hurriedly change strategies. They’re re-examining land contracts, asking land sellers for lower prices or abandoning deals entirely. Some have halted land acquisitions until the downturn’s extent is more clear.
“The builders are looking at sales in the last three months and they’re saying, ‘Holy cow! Our sales are down,’” says Richard Gollis, co-founder of the Concord Group, a real-estate consulting firm. “They’re slowing down on their lot buys coming into the fall season.”
…
“Several months ago, builders were so convinced that the real-estate market was set to turn positive, they went on a land buying spree. Alas, following the home buyer tax credit’s April 30 expiration, the residential market has only soured.”
Are these people just plain stupid? How is it these people cannot figure out some very simple rules of cause and effect?
Are these people just plain stupid? How is it these people cannot figure out some very simple rules of cause and effect?
I’ve known more than a few builders in my time. Both commercial and residential. For the most part, I wouldn’t label them as bright, insightful people.
I’ve noticed that as well.
They don’t know about HBB
They shouldn’t need to know about the HBB to realize that a temporary stimulous by the government would result in the market looking better temporarily. I agree with Combo that they’re stupid.
+1. It obviously did not occur to them that the tax credit was pulling demand forward.
And apparently they didn’t take any lessons from Cash 4 Clunkers.
Even the “Smartest folks in the county” seem to be jumping in down here in the OC. The Irvine Company has shifted back into a buy mode. I know there are differences between the residential housing market and the commercial/multifamily market, but I still have to question the wisdom of jumping in at this point.
As far as I can tell the OC is overflowing with REIC Bulls and the kool aid streams nonstop even in the midst of a complete housing bust. So I guess I should not be too surprised if even the hallowed Irvine Company does not see a dead cat bounce for what it is. OR they do see it and are expecting a huge migration of folks from homes to apartments.
“There are “significant acquisition opportunities that now exist in the commercial and multifamily real estate segments,” the memo said.
“We believe that there will be increasing opportunities in our markets that were not available over the last few years,” Gilchrist said in an e-mail to the Business Journal. “As a result, we are highly focused on identifying appropriate apartment and office projects that will enhance our existing portfolio of high quality, well located projects.”
If a renewed acquisition push plays out, it would be a shift for Irvine Co. The company’s stayed on the sidelines in the past few years as numerous properties—many of them financially distressed—traded hands in its key markets.”
http://www.ocbj.com/news/2010/aug/22/irvine-company-looking-buy/
I pay more attention to raw land than houses, and the prices being paid are still absurd. There are no good deals to be had on land, which shows that we’re not anywhere near the end of this bust. The speculation is still rampant. I have commented on this before, as it boggles the mind as to what these people are thinking. I believe some are loading up on it, and plan to hold long term. It doesn’t pencil out for today’s house prices. And, people don’t want townhomes, condos, or zero lot lines, which is what you get when developers overpay.
GrizzlyBear,
Correct, unless you’ve a keen interest in joining the fray for a bit of good old fashioned Vegas-style specuvestment ( best to keep your eye on the ball? )
Like Robert Schiller said “It’s a LAND Bubble!” I’ve looked.., and I’m getting nothing but wore out. Sure, there’s ‘values’ to be had, as long as you don’t mind an hour and half drive to Yreka to go to a clinic?
But I’ll be damned if my ret./vac. home pricing is based off some metric/’discount’ to peak wishing prices. I’ll start from scratch if no one minds? Hang in there Bud.
In metro Phoenix AZ:
“Home prices in the region fell 5 percent in August, as did the number of home sales. It was the second consecutive month of declines.”
http://www.azcentral.com/news/articles/2010/09/09/20100909phoenix-housing-market-homebuyers.html
A lot of laugh-out-loud lines in this article.
I am doing what I can to at least help the number of homes sold in the Phoenix area. Can’t help them much on the dropping prices though.
At least I have made an offer on something. That ought to count for something.
BTW. Have not heard a word back on the offer. My UHS (wife’s uncle) hasn’t contacted us regarding the offer. Fortuntely, I have plenty of time and patience.
Glad to learn that wealthy hedge fund and private equity investors are pouring their money down this rat hole, as perhaps the American taxpayer may be thereby spared the unwelcome burden.
WSJ Blogs
Developments
Real estate news and analysis from The Wall Street Journal
* September 8, 2010, 2:29 PM ET
Hedge Funds Can’t Always Save Home Builders
By Robbie Whelan
Dozens of home builders—mostly small, privately-owned companies—have lost business or gone under because of the housing bust. Some of them have turned to private sources of capital for a way out. But hedge funds can’t always be saviors.
Local press in California last week reported that a deal between Luxor Capital Partners LP, a small New York hedge fund with just over $1 billion in assets, and bankrupt builder California Coastal Communities, Inc., fell through after Luxor got cold feet and let the deal’s Aug. 31 expiration date expire.
Luxor was going to provide $184 million in high interest rate financing to bail out a luxury housing development in Huntington Beach, the Brightwater project, which is saddled with $181.5 million in debt. Irvine-based California Coastal, which was traded on the Nasdaq stock exchange, filed for bankruptcy protection last October. Brightwater was its main source of debt problems.
In a securities filing, the builder said that despite the deal being canceled, the company “continues to have discussions with its stakeholders regarding a consensual restructuring; however, there can be no assurance that such a consensual restructuring can be achieved.” Dismal stuff. An employee of Luxor did not immediately return a call Wednesday seeking comment.
California Coastal wouldn’t be the first builder to turn to private capital for post-crash support.
…
I wonder what “high interest rate financing” means these days. Is it 10%?
“which *WAS* traded on the Nasdaq stock exchange”
( There, fixed )
I’m sure it depends on the level of leverage. If it’s 60% LTRV (Loan to Real Value), then the “high rate” might be 8-10%. Any $ above that would be priced more like equity and demand returns of 15-20% or higher.
Hey HBBers,
I’m reading all over the web this morning that letting house prices/sales fall will be the cure for the housing bubble. It will bring in buyers from all over if we just let the market seek its own level. Life will be beautiful. No, it won’t. Still, we must do it. There will be no future for our country if we don’t.
I think that the housing market will be required to seek its own level for sure. Prop it up and houses will remain a major drag. Ok. What I don’t believe is that buyers will come “swooping in to snap up” bargains. (Snap up. Sheesh I just felt my stomach turn.) What will be left will be a vandalize, neglected, poorly constructed, maintenance disaster. Many of these houses will need to be torn down.
Housing will become affordable, however. The market will clear. Banks will be required to write down bad, unsustainable debt. The Zombies will cease to exist. We will be in for a bad time. It will not be “blue skies and clear sailing” as Brian Westbury said at the end of 2007.
Let me be clear:
1) More banks will fail. We will need an orderly wind down of them.
2) More people will walk away. This will cause more of item #1.
3) More people will be underwater. See items #1 and #2.
4) Politics will be come polarized and even nastier since everyone will be upset because of the effects of letting it seek its own level.
5) The economic “recovery” will enter a double dip with the second dip being worse than the first. There will be a greater risk of a depression. I may lose (got it right this time!) my job.
6) FBs will again become renters with rental properties being in demand. This demand will be met with the houses the FBs used to live in.
I’m sure you,the HBBers, will add much more to that list and have a clarifying discussion that will educate and inform during the process.
…and so on and so forth. Add more items here.
I would like the final item in the list to be kept as:
N) The Market Will Clear.
We can finally start on the job of remaking our jobs machine and economy. I don’t really care who does this as long as it is done. It would go a long way toward breaking the Oligarchy that we find ourselves in. Note: I doubt the Republicans nor Democrats will want this action and will fight it to the end. I haven’t heard ANY of these two parties assume a position on this. Individuals maybe, but as a group…
Roidy
P.S. WS will decline also. There will be more “lost wealth” or debt destruction as I like to put it.
‘What I don’t believe is that buyers will come “swooping in to snap up” bargains.’
Even with billions of ill-gotten Wall Street mattress money finding its way into hedge funds and private equity funds?
The only way I can see your scenario coming about is if the next leg down in U.S. home prices is so resounding that even the greatest fool decides that real estate is “the worst investment.” See Japanese home prices twenty years after their bubble popped for an example of how this can happen.
It’s a long flight of stairs down and we’ve just bounced off the first step, IMO. Change does not go in a straight line. So a few more people have begun to come out of denial. Again, just IMO, we are already in a Depression, and yes, “I might lose my job”.
In the long run, I certainly do expect revival, but before we get there the unhealthy symbiosis between the monied interest on WS and the so-called representatives of the people will have to be broken. In the meantime, anger will be misdirected and so will action. It is base human nature and our government is not by the best and brightest, nor even the selfless. So buckle up and remember the popcorn.
“unhealthy symbiosis”
While we’re at it we need to perma-destruct the connection between Housing and Infestment.
NY Times contemplates letting the housing market correct itself
A recent New York Times article raises the possibility that government intervention may have done all it can, and that the market must be left alone.
When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.
Ya don’t say!
http://www.csmonitor.com/Business/Mises-Economics-Blog/2010/0908/NY-Times-contemplates-letting-the-housing-market-correct-itself
Sounds like *someone* in the admin is floating the idea.
Let ‘er rip, I say.
More like the same NYTimes article is being linked and relinked to. The article itself- a George Mason University professor saying the gov should get out of whatever market, is about as newsworthy as saying dogs like to bark.
What he said (as did I the other day). It’s not “someone in the administration” - it’s a GMU professor, nothing more.
The administration has made its intent perfectly clear - keep pumping as before.
I hope this is true, because if we keep them off the market or let them deteriorate to the point of bulldozing them then rents will have to go up a lot to compensate.
Second The big OH should let the Bush tax cuts expire with a different rationale:
Most of you rich people got rich by off-shoring as many jobs as possible, so now if you want the tax cuts to be permanent just on-shore those millions of jobs back to America
we need your tax money to pay for the extra unemployment, welfare, food stamps and medicaid you cost us…….ok?
6) FBs will again become renters with rental properties being in demand. This demand will be met with the houses the FBs used to live in.
Second The big OH should let the Bush tax cuts expire with a different rationale:
umm…sunsetting of the tax cuts will affect us all. I’m not “rich” by any stretch, but I’m sure going to feel the effects of a higher tax rate.
You’re also already feeling the effects of the tax cuts in massive government debt, and the drag on the future that represents. So, either way, you (and I) are in pretty bad shape.
IAT
You’re also already feeling the effects of the tax cuts in massive government debt
I’d argue the gov’t debt is not related to tax income at all - as Ben is quick to point out. The debt is simply a function of Congress’ inability and unwillingness to live within its means.
Given that inability, the tax cut exacerbated it.
Put another way, what do you think holders of the debt will do when they have an opportunity if the tax cuts don’t expire?
IAT
” Ok. What I don’t believe is that buyers will come “swooping in to snap up” bargains. (Snap up. Sheesh I just felt my stomach turn.”
Old eagle-eye mikey noticed his struggling prey house and he studied it long and carefully. He did his research and watched it wiggle and flop about. With his low-ball offer in one tiny claw and his idiot RE agent in the other, the mighty mikey, bird of prey swooped in from the fence.
Kerrr-Splat!!
Ouch..Owie…Owie.. OUCH! Short Sales can be like a Brick Wall.
The mighty mikey has a bump on his head and “his stomach is turning” too.
Hopping around with ruffled feathers and pecking at everything in sight, mikey is considering lighting a fire or using dynamite to get the FB Banksters dying house on his dinner table.
“Hello, Acme Supply Company, this is mighty mikey and I’m a friend of Wile E. Coyote and….”
LOL. pressboard and you, Mikey, have a great sense of humor.
The banks are hiring “Property Preservation Specialists” to care for their precious inventory of homes. They are having career fairs and bringing 25 on at a time. I’ve been in the room. Why not cut their carrying costs, and start unloading. I understand Mark to Market and Rule 157, but they have carrying costs too.
Regarding Short Sales Mikey, a good chunk don’t close. Asset Managers have a formula and it’s a fantasyland. Most SS aren’t a great deal. (the car isn’t yours, and you’ve paid for it.) Knowing you, you’ll make a deal. Best of luck.
Thanks awaiting wipeout,
They have a fantastic city outdoor swimming pool and tricked-out park 2 blocks from this shack.
I have already packed away my swimsuit, yellow rubber duck and Johnsonville Beer n’ Bratwurst party plan.
I am working on Plan B and I’m hunting for my ice skates.
…adds his mittens on a string and bolt cutters to ‘Plan B”.
mikey
Is the HBB family invited?
There are some good websites with Short Sale webinars you could watch. They are from the Agent and Bank perspective. They’re free.
“mikey
Is the HBB family invited?”
Sure, it’s a rather large house.
First I have to get the stupid place in a SS, then furnish it, so you either have to come with an armful of oak logs for the fire, your own bedroom suit or tough it out in your sleeping bags until we can steal some more furniture somewhere.
They’ve sometimes listed as a 4-5 br with a huge rec room and theater room so I do have plenty of room somewhere, even in the basement. It has two nice stairwells to the basement, so I get lost a lot down there and won’t really know what I will have without a little idiot map diagram in the beginning.
It’s a very nice 23 yr old custom built house but confusing.
oops. It’s “bedroom suite.”…I knew that!
Home theater room, eh? Front projectors are cheap these days…..around $1K for a really nice DLP 1080P projector. Search and you can find a paint recipe for a good screen painted on the wall.
Wow, that sounds like a sweet place, worth trying for. I’ll cross my fingers and toes for you.
Did the agent hire a SS firm to represent you to the bank? (Agent pays) They are helping the SS deals go through here in So Ca.
Johnsonville Beer n’ Bratwurst party plan
Does that include sauerkraut?
Hey…if I get this shack and when I get set up, there will be a big party offered to anyone on the HHB that wants help me coordinate it and visit a nice small town in Wisconsin.
Be advised that Ben Jones and his lady will have 1st dibs on one of the bedrooms if they can make it though. I have 3-4 lightwieght sleeping bags somewhere but everyone else is on their own.
Visits other than a party date, just contact me and let me know when you are coming through flyover country. If ya don’t come, I’m not above eating all the food by myself.
I already have a newer 48″ or something Samsung, their external speaker system and their BlueRay or whatever it is so we’ll suffer through with NetFlix because I just figured out how to work that with wifi. With food, drink and Netflix, we will survive.
I only forsee a few problems.
1. I have to get this shack yet and may not.
2. Parking, I think that I can get 6 cars in the driveway and 2 in the garage.(20-30 fairly secure spots 2 blocks away at the pool right in front of nice residenal houses and I can bribe the small town cops with bag of donuts to watch them)
3. I need about at least 20-40k worth of decent furniture.
4. I also need a few hundred dollars worth of new towels and stuff…I have toothpaste.
Oooh, and I will need one of those high tech barbecue machines and a funny hat too.
You’re afraid of our banksters and my SS plan. Well, you should be. Personally, I’d give us one chance in three. More tea anyone?
Comment by DennisN,
I looked at this contractors house in another small town that he is still trying to sell FSBO.
It is in a sub-division hell but has a custom basement bar, theater to die for. Cream city brick/tea/ oak bar, 106 inch projection, two bar HDTV, pool table, ect.
I went for ideas and I have the all of the photos.
It’s newer, the kitchen is way nicer than the one I’m after but the upstairs is decent yet unremarkable but he has a basement that I have only seen in high end houses for that price.
http://milwaukee.craigslist.org/reo/1942898047.html
“Ouch..Owie…Owie.. OUCH! Short Sales can be like a Brick Wall.”
This is what I have heard as well. I think the PTB would rather bulldoze the surplus inventory than let prices fall.
I think the PTB would rather bulldoze the surplus inventory than let prices fall.
Regardless of what they say, I believe their actions have made that quite clear. Which means there may never be the deals for bubble sitters that there should have been in a functioning market. By the time the “deal” is available it will be falling down.
I’ve submitted over two dozen short sale offers in the last two years. Over half had no response at all. The others say they have multiple offers and counter at a not-worth-it price.
Banks are very concerned with price per square foot/keeping the market propped. This will change at some point.
Oh the triplex offer in Hemet…they countered 25K higher and “another investor” bought it. Two months later the property is still vacant with no for sale sign or mls listing. Back to hidden inventory I suppose.
Yeah…banks are a Bit$h with SS.
In fact the very bank that is holding up the show on my short sale with their 2nd lien is one of my very own banks. I only have about 12-13k left with them. They aren’t competent enough to handle any more than that.
They borrowed 1.7 billion from the gov’t, haven’t turned a profit in 8 quarters and hate me because I marched well before that with over 6 figures.
Actually, I should deposit 100k in their bank. The minute they screw over my SS offer, march right back in and withdraw 113k and close all accounts for just for fun.
Mikey, don’t be afraid to resort to “Whale-Wars” tactics including throwing butyric-acid stink bombs at the place as you drive by. Booby-trapping the place against realtors by digging hidden pits in the front yard with sharpened-sticks at the bottom should also be given careful consideration.
Can’t chat now pressboardbox.
I’m working on my “Plan B” high explosive “Property Preservation Specialist” anti-personel mines.
Mikey,
Gosh, I hope that wasn’t a dig. My BIL is a
Mortician after all. His best customer is Greedo.
Well, they are likely thinking of foreign investors, who, of course, are not affected by our downtown (sarcasm off).
Analysis: Homebuilders buying land despite falling sales
By Helen Chernikoff
NEW YORK | Wed Sep 8, 2010 4:24pm EDT
NEW YORK (Reuters) - Homebuilders in the United States, who lost hundreds of millions of dollars when land they bought during the housing boom lost value after the bust, are bidding up lots despite new softness in the market.
Home sales have slumped since the federal home buyer tax credit expired in April. In July, new home sales were at their slowest pace since the Commerce Department started tracking them in 1963.
But builders keep restocking land inventories because they fear shortages and because they see rivals doing it, said industry consultant John Burns, who has been advising them to “back off for now.”
If demand for new homes does not revive, these lot purchases could jeopardize profitability into 2012, when they would build on land they are currently buying.
Falling home prices would mean they are overpaying today, especially because they are increasingly focused on the same markets, where they are cannibalizing each other’s business.
The economy softened more than anybody anticipated, Burns said. He and the rest of the industry is well aware economists would have builders stop altogether rather than add to the already excessive supply.
“But builders need to build enough to justify their existence,” Burns said.
…
“But builders keep restocking land inventories because they fear shortages and because they see rivals doing it…”
True lemming-like behavior. What a bunch of dummies.
“But builders need to build enough to justify their existence,” Burns said.
Sums it up rather nicely.
combo
That’s what get me, these people have access to analytics, are educated, and have experience with business cycles. Are they believing each others, and the REIC press releases?
I’ve been to BIA (Builders Industry Assoc.) meetings. They love to throw the infrastructure (roads,drainage,etc.)costs at the taxpayer. Privatize the profits, and socialize the cost. They wrote the book. I kept my mouth shut and learned a lot. I was in commercial for a REIT.
“But builders need to build enough to justify their existence,” Burns said.
I believe this phenomenon (builders having no choice but to build even when supply is already saturated) has been predicted on this blog since at least 2005.
Apparently, there are still many fools to be parted from their money. This goes to show that some of these guys made some serious hay during the boom, and still have quite a bit to fritter away on retarded land purchases.
Dump the mortgage deduction to revive U.S. housing
Aug 25, 2010 12:34 EDT
Some sacred cows need to be sacrificed in order for a country to prosper again. Let’s start with the deduction for mortgage interest on U.S. tax forms.
Killing the mortgage deduction wouldn’t be heresy for the American dream; it would allow more people to buy homes. The money saved by eliminating this break could actually boost homeownership, reduce payroll taxes or pare the budget deficit.
This sounds wildly counter-intuitive in light of the dismal home sales reported on Tuesday — the worst in 15 years. With the expiration of the $8,000 first-time homebuyer tax credit, buyers retreated to caves and thousands of more foreclosures came on the market.
I know the industry doesn’t want to hear this, but removing the interest break would lower prices — and ultimately sell more homes — if the deduction is transformed into a dollar-for-dollar credit that anyone can use.
…
Killing the mortgage deduction wouldn’t be heresy for the American dream; it would allow more people to buy homes. The money saved by eliminating this break could actually boost homeownership, reduce payroll taxes or pare the budget deficit.
It is a nice pipe dream - but any savings from this deduction will be immediately spent by congress to buy more votes…
Agree..
The one thing I like about the home mortgage interest deduction is that it is an indirect way to punish people who can’t do math - meaning they can’t figure out the difference between a deduction and a credit and don’t realize the only benefit they get is related to the difference between the standard deduction and their itemized deduction, not the total amount of deductible payments. It doesn’t make up for the fact that it is distorting, but I kind of like the fact that it punishes the people who can’t bother to run the numbers.
ooh ooh does Polly have a little evil streak/????////?/??
Yep. Polly, you may be good at math, but I bet you don’t know as much as I do about algebraic topology. So I think you should be punished for that.
bet you don’t know as much as I do about algebraic topology.
Wasn’t that the science that studied the relationships between a person’s character and the bumps on their skull ?
How can you tell who are the topologists at the math department meeting?
I bet Polly knows the difference between a doughnut and a coffee cup, though!
Easy, they’re the ones looking for everyone’s bald spots (zeroes of a vector field on a sphere).
But I’ll bet Polly doesn’t keep her vino in a Klein bottle.
Wasn’t that the science that studied the relationships between a person’s character and the bumps on their skull ?
No. Polly will now send you a bill for $200/month. And BTW, aren’t you the one always saying that “math” proves we need further government strangulation of the health care system?
aren’t you the one always saying that “math” proves we need further government strangulation of the health care system?
but math is still hard
The topologists are the ones dunking their coffee cups in their donuts.
Tada! I know two other bad math jokes/riddles. But they are just abstract algebra. Nothing to do with topology.
So, if you can’t guess, jbunniii wins.
So, jbunniii, how about these:
What is purple and commutes?
What is yellow and equivalent to the axiom of choice?
Ha-ha.
Seriously, eliminating the home mortgage deduction (hmd), on that I have a serious question. Here’s my set-up:
1)Stable rules help societies work.
2) The help by allowing everyone to learn the rules and act accordingly.
3)Constantly changing the rules only multiplies the chance of concentrating loss and gain (differently), because with each change those who benefited from an early rule can re-write the rules to keep benefiting even when they no longer benefit from the early rule.
4)The hmd is a good example; it has been in existence for about 70 years.
5)Baby boomers fully gained lots of benefits thereby.
6)Dumping it now cheats younger people out of having the same benefit (i.e., being able to use the same rules) compared to their elders.
7)Thus, to be equitable across generations, whatever revenue one would like to get by ending the hmd, one should get by doing something that concentrates the take from the baby boomers.
Note: This isn’t about screwing baby boomers. Its about writing rules with an aim of *not* concentrating the costs on some groups to the repeated benefit of other groups.
Comments welcomed.
IAT
polly-
The first one is obviously an abelian grape!
Second one sounds like the good old Banana Tarski paradox? It’s called a paradox because it’s actually about how to cut an orange into pieces.
itsabouttime -
People who haven’t bought yet will benefit by lower house prices, which will compensate for nondeductible interest. (Same thing happens, in theory, when interest rates rise.) Grandfather those with existing mortgages, or maybe phase out the deduction slowly.
Already the deduction benefits some and not others. Those who do not benefit (or do not benefit as much) are those with incomes too low for itemization, and those with incomes high enough that the deduction is phased out, or is canceled by the alternative minimum tax.
If it’s too much of a third-rail issue to have a chance (likely true until the government starts to feel a real pinch from all the deficit spending), then how about a more modest reform: limit the deductibility to interest paid on a primary mortgage on the primary residence only. No secondary/vacation/investment properties, no home equity loans. Refinancing won’t lose the deductibility, but if the principal increases, you can still only deduct the interest on the original (house purchase) principal.
If they were serious about this as a way to tax wealthy people who would buy a house anyway, they would be talking about allowing the deductible only for primary residences. Again, they are using the idea of it only benefits the rich to take from the young something the old long used.
In general, continuous tinkering only hurts the little guy/gal.
IAT
“ooh ooh does Polly have a little evil streak/????////?/??”
Dunno…but I sure wouldn’t poke her with a sharp stick just to find out !!
You want evil? You should meet my newest kitty, an all black female I’ve named “Condoleezza”.
“…the difference between the standard deduction and their itemized deduction, not the total amount of deductible payments.”
This means the mortgage interest deduction mainly works for those wealthy enough (i.e. who bought sufficiently expensive homes with expensive enough mortgages) so the mortgage interest deduction swamps out the standard deduction. By contrast, modestly-housed members of the middle class may not even have enough mortgage interest to save them a penny’s worth of taxes. In short, the mortgage interest deduction is a tax giveaway to the wealthy, which is why I don’t expect it to go away any time soon.
Depends. If you go by Barry’s definition of “wealthy” - those making above $250k - this is not true. The MID can be significant for anyone making over about $80k per year. I would consider that middle class.
It also depends of course on how much other deductions people take. E.g. a family making $80k with significant deductions for charity can see more benefit from MID than a family making $120k a year but with no charitable deductions (or work-related deductions, or whatever).
A lady I work with could own her home mortgage free. She has enough $$ that she has a financial advisor. He advised her to mortgage her property for ID and invest her $$ in the market a few years ago. Well I’m sure I don’t have to ask if you know how that turned out.
I could never understand the logic that paying x amount of taxes to get a 33% deduction made sense. Takes quite an investment to recoup the 67% lost.
Lately she’s been in my offfice double checking the advice of her advisor.
I posted a worked-example a week or two ago showing how a median income couple buying an median priced house in Ada county would still come up short of the std. deduction with their mortgage deduction. Ada county is about the highest wage and house price county in Idaho.
One thing to keep in mind about places like Idaho and Utah is that there is a good chance the hypothetical owner is a 10% tithe-paying Mormon. When you include that with the mortgage deduction, almost all of them benefit compared to the standard deduction.
If the Bush tax cuts expire, then phaseout limits are reinstated to previous levels and high income people again begin phasing out (depending on AGI) of the mortgage interest deduction beginning in 2011. The only year that there is no phaseout limits at all for mortgage deductions is 2010.
BTW, isn’t any deduction, tax credit, or refundable tax credit a tax giveaway?
short, the mortgage interest deduction is a tax giveaway to the wealthy, which is why I don’t expect it to go away any time soon.
I’d say to the upper middle class
Most people have plenty of other tax deductions with kids etc.
I thought AMT affected the deduction but when I plugged it into Turbotax it looks like it does not. State property taxes are however affected by AMT.
Only those who live in low tax areas. My combined income and property taxes are enough to equal my standard dedeuction.
They also can’t figure out that they actually have to pay interest to get the tax break in the first place. After all, this break is often touted as a reason to buy. Ummmm.
That would be a long-term-benefit action. Such things lose more votes than they gain. Go away.
A comment from that mortgage interest deduction article:
“I may be the only person to comment so far who doesn’t own a home. I am an Occupational Social Worker with a Bachelor’s degree. I owe several thousand dollars of student loan debt that I cannot pay off and have been in “financial hardship” status since 2005 when I graduated. I work 40 hours a week, for less than $2000 a month salary with 5 years experience and believe me I am in the top of my wage bracket for my region of the Pacific Northwest. I have a wife and 2 kids and we struggle to get by with my wife earning equal wages to mine – without a college education. We would love to find a home mortgage for $800 a month but that is proving to be impossible. We currently pay $600 a month for rent and that is a steal of a deal we only accomplished by renting from friends. All of these government “incentives” don’t add up to enough to help us afford a home of our own. Anyone who says my family doesn’t deserve a home of our own because we cannot afford it and calls working class people like us irresponsible for buying into the American Dream is not giving us the credit we deserve for our efforts. When the cost of living is so high that we cannot afford maintenance on our cars that get us to work, when daycare takes more than a third of our monthly income, when putting pregnant wife on my Kaiser health insurance costs half of my gross monthly income, how do you expect me to be able to afford a screwy mortgage? Truth is Millions of people just like me are living from paycheck to paycheck, praying to keep my health and sanity long enough to pull my family to economic self sufficiency.”
That person sounds fairly sane. So actually I would state they he indeed doesn’t deserve to own a home. However in this context I’m using “deserve” in the negative sense - e.g. like that person doesn’t deserve a bullet to the head.
Keep on renting buddy. You’re making the right call. A few years from now if/when you’re making more money and when prices come down further - then it’ll be a good move. Not now, though.
I didn’t buy until long after this fellow, and that was with no kids and a higher income, and not until after the college loans were paid off.
“That person sounds fairly sane.”
I agree. However I get the feeling that he won’t be supporting me in my retirement. I’m not inspired when I read about the misery of the younger generation(s) who appear to be working diligently, doing the right thing, but are going nowhere.
I’m not inspired when I read about the misery of the younger generation(s) who appear to be working diligently, doing the right thing, but are going nowhere.
For a good illustration of this, read Anya Kamenetz’s first book, Generation Debt. You won’t be surprised to learn that one of their biggest debt millstones is from student loans. Which leads me to recommend her second book, DIY U.
With regards from your HBB Librarian…
It was the same way in the 1980s.
Wonder why the wife got pregnant?
Sounds like just another person convinced they should have it all, with all defined as:
1)house I need
2)job I like
3)kids I love
I’d call anyone with two of those lucky.
1)house I need
2)job I like
3)kids I love
I’d call anyone with two of those lucky.
Agree. I think collectively we’ve lost sight of how lucky we are and we’ve come to just expect everything to work out and go our way.
I’ve spent a lot of time thinking about this while reflecting on my last relationship. As I’ve mentioned here, me and the ex- broke up because she wants kids and I don’t. I spent a lot of time reflecting on why I felt how I did, what others’ experiences are, etc. What I learned was that we have “better” lives these days, mainly due to having more choices. Having kids is a choice. Women entering the workforce vs staying home is a choice. So many different career options, vs just working on the family farm.
It’s a mixed blessing. Without the choice, you simply did what was expected, and enjoyed your life as it was. My parents never thought about *whether* to have kids…simply about how many to have. It wasn’t seen as a choice of whether to have them. Likewise, it was just expected that my mom would stay home and raise us.
People were generally happy with their lives, even though they seem quite constrained when we look back today. I believe people were more grateful for what they had, as they weren’t constantly thinking about what they could do differently to have more, or questioning decisions they’ve made along their path that might have led to their current lot, or decisions they have to make in the future.
Today, with all of our choices, we feel that we CAN have it all. We’re not content with having 75% of what is out there, as we see it as an option to have 100% of what the universe can possibly deliver. We want the husband/wife, the kids, the nice car, and the nice house, and we feel we can get it - we just have to make the right choices.
What’s lost in that is being appreciative of what we have, and happy about it. Why risk the wonderful things you have, reaching for that little bit more you think the universe can give you?
That Reuters link above is presently FUBAR.
What kind of “credit” are they talking about? Refundable? Non-refundable? Would there be a cap on it depending upon income?
Since a great number of people of modest income/houses still are better off with the std. deduction, won’t this cost more than the present MID?
There’s another perversity in the present MID that I haven’t seen discussed.
Most people start working for a modest salary and their income grows over the years. In contrast, the MID starts out at its maximum value and shrinks as the mortgage balance is amortized over the years.
That’s right - when your salary gets bigger and you could really use the MID, the amount gets smaller! The value of the MID is greatest right when you need it the least: when you are starting out and your salary is small.
DennisN,
That’s never been lost on me? Been there. In theory, it should work out perfectly as ppl grad. to their move up/dream home and then downsize appropriately. ( Not filp on a bi-annual basis? )
Can’t say though that I’m not disappointed by the way the mere mention of doing away w/ the MID is rec’d here? This has been one of the cornerstones of bubble-blogging for years and now that it’s within our grasp, we’ve already dismissed it. That’s really starting to bug me.
The point of the mortgage interest deduction is that interest is a business expense for landlords and deductible. The mortgage interest deduction for home-owners makes it an even playing field.
sfbb,
…..well then let’s just do away w/ it for LL’s too? No, I get your point, and in spite of what’s been shared here ( Sched. A has saved my bacon more than once? )
Or get rid of the standard deduction so that everybody benefits from mortgage interest deduction.
Oh wait, the standard deduction was designed so that you always got a reasonably large deduction regardless of how small your itemized deduction would be. That would hurt poor people and renters.
My point is it’s not a cut and dried proposition.
Really good point Dennis.
It seems the “Mortgage Interest Deduction Benefit” fits right in with HowMuchAMonth, in terms of not looking very far below the surface to weigh the finances of something.
I seem to recall reading that the UK recently got rid of its home mortgage deduction.
The peps in power do not want lower prices and I doubt they could ever pass this tax increase as millions would loose their incentive to buy.
How about bringing back the deductibility of interest payments as this would increase consumption?
I’ve been a fan of eliminating the mortgage interest deduction for years. Now’s the time to do it.
In general I agree
but make no mistake this is a hit to the middle class.
Thus the housing bubble which has destroyed the middle class and gov finances will be paid for by the middle class.
I like the idea of a payroll tax deduction using the funds though.
But of course landlords always get to deduct property taxes as a business expense. The deduction doesn’t really incentivise owner occupation, rather it de-incentivises a landlord tennant relationship from a tax point of view.
“51% Of Phoenix Homes Underwater”
http://www.kpho.com/news/24935721/detail.html
I’ve become
Comfortably numb
Time to consider renaming it “Atlantis”
ZING!
I never understood why any would want to live there. The place is a blast furnace except during winter.
Yeah but it’s a dry blast furnace.
Its lucky Phoenix is a small city or the amount of people that walk away would trample all of the delicate desert plants.
Actually the Phoenix metro area is in the top 10 regarding population size, I think 8th.
We like it here because it’s always sunny, the winters are mild, we have access to the mountains and in the summers we have AC and swimming pools to keep us cool.
And, best of all, you’re only 125 miles away from Tucson.
“I’ve become Comfortably numb”
Hello hello hello
Is there anybody in there?
Just nod if you can hear me.
Is there anyone at home?
Who’d've thunk?
The mortgage interest deduction not about mortgages at all?
I’d always taken it as obvious that the mortgage interest deduction was policy Congress put in place specifically to encourage home ownership. But Barry Ritholtz says that’s not true at all. Instead, it’s a holdover from decisions made to soften the blow of the very first income tax.
…
The first income tax
Was very small (about a 5% rate) and was only supposed to be a tax on the rich…
That’s how they get the camel’s nose into the tent. The sheeple then, as now, were too dumb to realize the larger implications of what had been foisted on them.
(without having read the article yet - )
Yep. Originally when the income tax was introduced all interest payments were tax deductible. They were removed one by one, with credit card interest being the last big domino to fall in 1986. (I remember that, since it was about the time I got my first credit card - I was bummed. Now I don’t care since I know better and don’t pay interest.)
Thus interest deductions have morphed from being a general “subsidy of all spending” to being a “subsidy of spending on houses”.
IIRC, the government allowed the deduction of interest payment for individuals because businesses are allowed to deduct interest as an expense.
I wouldn’t be opposed to eliminating mortgage interest tax deduction, to be fair, it would have to apply to landlords too.
I researched this a couple of years ago and found this to be true.
Originally there was very little “consumer credit”. Almost all interest-charging loans were for business purposes. Interest on debt became deductable as a legitimate business expense. This rule wasn’t changed as more and more consumer credit was introduced, e.g. the 30 year amortizing home loan.
Over the years the interest on most consumer loans (cars, credit cards) was made non-deductable. This occured IIRC in the 1980’s. I remember that my first new car’s interest was deductable - it was a 1978 model year purchase.
Finally only the interest on mortgages was left - sort of the “last man standing” as it were.
Right, and if they want to re-start the economy all we need to do is go back to when plastic and auto int. WAS deductible.
As I recall the way around this was to get Home Equity Loan line of credit, use the money to buy the car or whatever and then the interest was deductable.
Not only that but the interest on a HELOC tends to be a lot cheaper than credit cards.
(Thus the billions of $$ in the industry created for just such a purpose, with hundreds of annoying commercials every day.)
Is HELOC interest tax deductible though? Not sure, I’ve never even looked into one.
Disclaimer .. NOT a tax advisor here, but I believe the fine print demands that the HELOC money be used to improve the investment. Not that they’d ever be able to control and prosecute as history has shown.
Tax\mortgage professionals … what you say?
Ask and you shall receive.
http://www.irs.gov/pub/irs-pdf/p936.pdf
Thanks Dennis. Don’t have one so headache started to kick in on page 1. God bless those who must read this stuff regularly.
Friday, September 03, 2010
The home-mortgage-interest deduction: Dump it?
A conversation on this topic has broken out in another comment thread, so I thought I’d bring it to the front here:
…
Dump the income tax.
And the military? And the federal highway system? And air traffic control? Anything else?
We HAD all of those before the Federal income tax (well, air traffic control had to only worry about a dozen planes).
How did America SURVIVE and actually prosper????
It’s real mystery, innit? But let’s help polly out here, because she asked “anything else?”.
Whew, where to start. Surely our redundant spy organizations could be pared drastically. Massive foreign aid. Slim down that eddimication system. That’d be a start. Not to mention all those silly things like funding for ant research, etc.
I don’t know why it always hits a nerve when I mention dumping the income tax, which is basically a perpetual war tax. I guess folks like to hold out their wrists for the handcuffs.
1) No freeway system.
2) No modern military technology.
3) No air traffic control (no planes, etc)
4) No Social Security system
etc etc etc
I will not argue that everything Uncle Sam does is worth the tax payer’s dime; for instance, I am guessing if HUD, FNM, FRE and the FHA were all shut down, the mortgage interest deduction and other federal housing subsidies were eliminated and the Fed got its hand out of local housing markets, affordable housing would result, almost overnight.
FWIW - the freeway system by and large is not paid for by federal income taxes at all. It’s almost all paid for by gas taxes and state funds. Only a very small portion is paid from the general fund.
palmetto,
Great call on the “redundant spy organizations”. My BIL has made a very secure and lucrative living peeping in the keyholes of fellow service members for years.
The bigger the budget, the more ‘dirt’ they can find. There’s always ‘more’ to investigate.
“Great call on the “redundant spy organizations”. My BIL has made a very secure and lucrative living peeping in the keyholes of fellow service members for years.”
In Big Brother’s Brave New World, everyone is “A Person of Interest.”
My name is not mikey, this HBB incident “Never Happened” and I was never here…Understand !!!
Not to worry, polly, the income tax can always be replaced with something else a little less penalizing on productive folks.
We should just be given an allowance, just as our parents gave us an allowance when we were kids.
The government should confiscate ALL of our incomes and then ration out to us just enough money to meet our daily needs.
Each of us citizens should focus our energies on what we do best, whatever it is. The handling of money should be done by folks who do what they do best, which is handle money.
Bankers, as a profession, are in the business of handling money - that’s what bankers do. Thus bankers should be placed in charge of handling all our money.
Ya’ll are making me cross my eyes so hard,I have a headache…
catatonic
In which key do cats sing?
‘A Major’ ( annoyance ) ?
How about interest on the national debt and health care for seniors. That’s where all the money is going after all.
People need to understand, and accept, that a decision was made to socialize the income support and care of older Americans, which had previously taken place in families. Previously those who got old without families or savings ended up in the poor house, living rather poorly.
You can be for it or against it, but you can’t be honest and imagine the money is going somewhere else. From the history of Social Security (Medicare would come later and cost more).
“Security was attained in the earlier days through the interdependence of members of families upon each other and of the families within a small community upon each other. The complexities of great communities and of organized industry make less real these simple means of security. Therefore, we are compelled to employ the active interest of the Nation as a whole through government in order to encourage a greater security for each individual who composes it . . . This seeking for a greater measure of welfare and happiness does not indicate a change in values. It is rather a return to values lost in the course of our economic development and expansion . . .”
Franklin D. Roosevelt: Message of the President to Congress, June 8, 1934.
The complexities of great communities and of organized industry make less real these simple means of security.
Ah yes, the old statist canard. Society has grown so complex, you see, that we need government to manage it properly. Actually, it’s the opposite. The more complex a society, the LESS realistic it is for a central bureaucracy to keep track of everything. The human mind can only know so much about other people’s work, and responds only in a limited way to non-economic incentives.
“People need to understand, and accept, that a decision was made to socialize the income support and care of older Americans, which had previously taken place in families. Previously those who got old without families or savings ended up in the poor house, living rather poorly.”
Yeah…and IF anyone of you have a super-secret plan to murder off all the old people, just remember, I get a lot, lot meaner, the older I grow !!
I’d like to know how many of those pointing out this problem invited both theirs and their spouses parents to come live with them once those parents reached age 65. With lengthening life expectancies, that means 30 years or so of taking care of your parents. How many of you are signing up for that?
I’m critical of social security. But, come on, something had to be done. Any good ideas would be welcomed with open arms.
IAT
I’ve often thought we should repeal all 4 of the “Progressive Era” Constitutional amendments (16th through 19th).
We already have a good head start since the 18th Amd. was repealed by the 21st Amd.
Some people thought when women were given the vote, that we’d never go to war again. Turns out women aren’t so peaceful.
Turns out women aren’t so peaceful.
Currently the fastest growing population of the incarcerated.
Since when did women take over Congress?
Since when did women take over Congress?
If they chose to, they could.
Home, sweet home? A debate over the benefits of home ownership challenges conventional wisdom
Copyright 2010 Houston Chronicle
Sept. 8, 2010, 8:05PM
Rent or own?
This is among the most familiar and defining questions most Americans face.
For decades, the presumed correct answer has been: Own your own home. And so, for tens of millions of young Americans, the rite of passage into adulthood has included weekends spent home-shopping with a Realtor, accompanied by a hawklike tracking of the mortgage interest rates, points and other costs, followed by an often nerve-racking closing at the title company and, at long last, a move into the American dream — a home of their own.
This course has been strongly endorsed and encouraged in thousands of lectures by well-meaning parents and in innumerable stump speeches by politicians. Home ownership is motherhood and apple pie. It is also supported definitively by federal tax policy that has long tilted unabashedly in favor of this major, life-changing purchase.
But that conventional wisdom is being challenged. In this brave new world of housing bubbles, depressed home values, high unemployment and ever-changing concepts of the nature of work and job security, the value of this cornerstone of middle-class American life is being called into question.
Economists, think-tank scholars and others who crunch the economic and demographic numbers, divine the employment trends and otherwise attempt to read the national future are starting to say: “Maybe not. At least not for some.” One of those voices belongs to Richard Florida, the author and social sciences scholar whose writings on the habits and movements of the “creative class” have drawn wide attention in recent years.
Writing in the Wall Street Journal in June, Florida noted, “Today’s idea-driven economy requires a more mobile work force that can seize opportunities wherever and whenever they arise. Owning a home may actually be a drawback given the economic flexibility required to power long-lasting recovery.”
…
Houses are great. When you get married and start having kids and have a stable job that covers the mortgage at a 2.5xincome price.
For most others - renting makes alot of sense.
..Today’s idea-driven economy requires a more mobile work force that can seize opportunities wherever and whenever they arise…
Today’s economy.. idea-driven? While that’s debatable, the more important point is that today’s economy, whatever it might be, is on it’s last legs. Don’t use today when trying to predict tomorrow.
Buy (or rent) a house. Sink roots and settle in. It’s the least expensive way to live.
Especially in Detroit, Gary, and Akron!
somewhat off topic, but i had a thought.. regarding the direction of social evolution soon to come..
Lots of decent people will be more-or-less forced to downscale and live in bad, rough neighborhoods.
Will they demand peace, quiet and tranquility, push out the gangsters and similar, and clean up the neighborhoods?
Will they demand peace, quiet and tranquility, push out the gangsters and similar, and clean up the neighborhoods?
That’s exactly what happened in this nabe. It was one of the few places in central Tucson where people of modest means could afford to buy during the housing bubble. I was one of those people.
Shortly after I moved in, I appointed myself as The Entrance to the Neighborhood Watch. Meaning that you don’t want to annoy me with your noise. I’ve gone so far as to report such folks to the police and the county attorney’s office, and, in a couple of cases, I’ve gone after them via my own attorney. No lawsuits were filed, but those neighbors learned that it would be best not to whack the Slim hornet’s nest.
You also don’t want to be involved in any sort of criminal activity. Why not? Because I’m the fastest 911 dialer in the west, and even the teenager next door has found that out. A couple of years ago, she and her buddies awakened me from my beauty sleep with that boom-boom stereo garbage, and I dialed the magic three-digit number. After the cops showed up, those kiddies got busted for drugs.
So, there ya have it. And I might add that I’m not the only hardnose around here. You should see the neighborhood association. Or, better yet, don’t mess with the neighborhood association.
ok Slim..
So lets say your experience is common and part of a natural evolution, and that these bad neighborhoods have a good chance of being cleaned up by the decent people who move in.
Well. That represents a lot of hidden property value.
Meaning, contrary to popular wisdom, that if you buy one, two, or half a dozen $10,000 “crap-shacks in some ghetto”, they could be way undervalued. They could be “nice, affordable homes in quiet neighborhoods” within the next few years.
——
Of course, picking the ‘hoods” with the best chance of this rise in value would be something of an art.
Would the home buyer (or bottom feeder) want central city or on the outskirts of town? Should one avoid anything near industrialized regions, which tend to be perpetually slummy?
Maybe it’d be best to pick neighborhoods that were good but went downhill recently, like within the last 30 years or less. Maybe the age of the homes is an important factor…
Wall Street Journal in June, Florida noted, “Today’s idea-driven economy requires a more mobile work force that can seize opportunities wherever and whenever they arise. Owning a home may actually be a drawback given the economic flexibility required to power long-lasting recovery.”
Translation: We need our worker bees mobile, so we can move them at will around the country. They can rent from us and buy their goods at the company store, on company credit.
There was a time when IBM was referred to by its employees as “I’ve Been Moved.”
Wall Street Journal in June, Florida noted, “Today’s idea-driven economy requires a more mobile work force that can seize opportunities wherever and whenever they arise
BACK TO THE MEDICARE ARGUEMENT
Hard to have a mobile workforce with men and women working and still take care of old sick parents.
I just wish that there was more of a distinction between owning a home free and clear vs. owing on a home. It is amazing how one little letter can make such a difference.
We need to refer to folks as homeowners, homeowers, renters, homeless or freeloaders. Let’s not lump all the “homeowners” into one group, it really distorts the message - which I realize the real estate community would hate since it sheds light on their big lie.
September 8
After housing crisis, a house is once again just a place to live
Owning a home is not only losing ground as an investment, but may also be a financial disadvantage.
By Greg Kesich
Editorial Writer
Milk is bad for you. Eggs are bad for you.
On a humid summer day, fresh air and sunshine are bad for you. Unless you don’t get enough Vitamin D, that is, and then staying out of the sun is bad for you.
I’ve gotten used to learning that so many things I was brought up to believe were good could actually be pretty bad that I guess I shouldn’t be surprised about this one: Homeownership is bad for you. Or at least, it’s not as nearly as good for you as everyone thought, even just a few years back.
With millions of homes in foreclosure and millions more empty after their owners walked away because they owed more than the house was worth, we all know what this crisis looks like. But depressed values, tight credit and a glut on the market will be with us for a while, and this looks like more than just a dip in the business cycle, raising doubts that homeownership is still the pathway to financial security — if it ever was.
Homeowners are starting to see their houses as just houses and not a source of wealth, either in the short term or as a retirement nest egg. Houses are like cars: expensive and durable, but not something that is going to make us rich.
…
Experts: U.S. can no longer afford housing tax breaks
Updated 8/18/2010 4:29 PM
By Paul Wiseman, USA TODAY
WASHINGTON — Federal housing policy offers the wealthiest Americans billions in tax breaks without delivering much bang for the buck in increased homeownership, critics told government policymakers Tuesday.
“We aren’t getting our money’s worth,” Mark Zandi, chief economist of Moody’s Analytics, said at a government conference on reforming housing policy.
The government spent $230 billion last year to promote homeownership through tax breaks and spending programs. The biggest chunk — $80 billion — went toward the mortgage interest deduction, according to the Congressional Budget Office.
…
This should read “America can no longer afford it’s rich.”
And then soon it will be “the reich can no longer afford its taxes.”
I’ve had it with dividend stocks. Gotta pay for my Roth conversion next year. I’m going to be like a good Democrat and buy low / no dividend growth stocks and just keep buying. You cannot incur a capital gain tax if you don’t sell. Lots of good deals out there in low dividend stocks for the long term.
Pendulum will swing back to capital gain tax cuts on the rich before it’s time to cash out anyway.
This is brilliant
Trap a huge # of people in their home with loans that they can’t refi, then increase the taxes they pay.
With all the misery that exists out there, I wanted to share with the blog something that happened in my side-line “stuff” business that was really kind of cool.
I was contacted via the internet about a piece of folk art that I had up for sale. Nothing fancy, just a nice little painting. Some kid contacted me about getting it for his mom for her birthday. Apparently she’s always wanted one, but they’re usually kind of expensive and mine was reasonably priced, being more contemporary than antique. But despite my fairly low price, the kid only had so much money and started bargaining with me.
At first I thought it was some run of the mill customer trying to jack me down, that’s fairly common these days and I usually negotiate a little, unless they’re rude or nasty, in which case I refuse to do business. But the kid then mentions that maybe he could pay me more for the shipping, but he’d have to wait until later in the week when he got his paper route money and would that be OK with me?
Although I tend to have a curmudgeonly attitude, at that point I said what the heck, kid, I’ll sell you the painting for the price you want and throw in the shipping. He was overjoyed. Then he emails me and says his dad said it was only fair he should pay me more for shipping (the kid was paying money into his dad’s paypal account to pay for it) so he’d wait until later in the week to buy. I told him it would be my pleasure to waive the cost. Made the kid really happy.
Was I played? I dunno, but my sense is that the kid was sincere. Both he and the dad emailed me, and the communication was different depending on who was writing. Their address is in an old, former industrial mill town up in the Northeast that’s been a depressed area even since I visited there back in the 1970s. So they’re probably struggling a bit. The kid has a paper route, and was trying to find something special for his mom. The father was trying to teach the kid something about fairness.
My point, and I do have one, is that if you can do a service for folks like this, it’s well worth it. A close-knit family unit, a kid who cares about his parents, parents who care about their kid enough to guide him. They’re the type of folks who should be treasured and encouraged. Worth WAY more than any Congresscritter, president or Wall Street titan. And we read a lot on the blog about idiot FBs who don’t deserve squat, but think they do. I felt a little ashamed, because I don’t recall being that concerned when I wuz a pup about what I gave my mom on her birthday.
Anyway, there’s some good folks out there. If you’re in a position to make their lives a little better by some small gesture, I highly recommend it. It’s a blast!
Over the years, I’ve “collected” a lot of used/old parts for my early 70s era Dodges and Plymouths.
When I occasionally sell some of my no longer needed spares, I usually get calls from:
-Kids trying to put one together on a shoestring, or
-Guys who low-ball you and are hoarding these parts, trying to sell them at a profit.
I’m done dealing with Group B. I sell to the kids almost exclusively now. They usually can’t pay the going price, but they seem to appreciate it more. Besides, a local Mopar drag racer back in the 70s did the same for me.
Former framing carpenter in the area is doing grunt landscaping work to try to pay the bills. We use him whenever such work is needed and because he’s reliable we’ve recommended him to others.
Blessed are the tradesmen and women who are reliable, for they shall always find work.
As for this guy, ISTR that highway and other public works projects also need some framing-type work. Specifically, for building the forms into which concrete is poured. (Feel free to correct me on this point, fellow HBB-ers.)
So, this may be an opportunity for him, what with all the talk about rebuilding our country’s infrastructure.
I’m sure he appreciates it more than you know, Bill. These are the type of everyday gestures of humanity that help people get by in tough times.
Good on ya, GS. There are so many good, decent kids out there just trying to live in a complex society, they deserve a little help.
Good for you and I agree.
I was taught that somehow, someway, someday you would get twice back what you gave. Just be cautious to who you giveth. Many years down the road I continue to believe this to be true.
WantsOut
I was taught that too from my idealistic mother. I just try to be a decent kind human being, and if people are stinkers that’s their problem. I’ve got to live with myself. They’re not getting out of this alive either.
Although I tend to have a curmudgeonly attitude
ya think?
Anyway, there’s some good folks out there. If you’re in a position to make their lives a little better by some small gesture, I highly recommend it. It’s a blast!
Thanks for sharing that nice story.
You’re welcome, hip. Just trying to do my part to help out some of the kids. Childhood in the Northeast ain’t what it used to be. I had a great childhood and when times were good back in the day. I want kids to have what I had. And any way I can encourage a kid in his endeavors to be thoughtful of his parents, I want to do it.
And my bark is way worse than my bite. I’m really a soft touch. Yesterday I went to the scratch and dent grocery store and grabbed the last two loaves of rye bread off the shelf. Some old guy all bent over kinda whined that he wanted a loaf of rye and they were all gone. So much as I hated to do it, I gave him one of mine. He didn’t really thank me, just snatched it like he deserved it. But what the heck.
Sometimes the so-called “Greatest Generation”, ain’t so great.
I’d also like to share some sideline news.
My primary business is designing websites for university science and technology programs. And I’ve been in waiting mode for a while. One of my clients is getting a big, honking federal grant, which includes the design of public education websites.
Last week, the feds asked for a justification letter from me. Which meant that I had to explain my website production process, but not in so much detail that the poor feds will be confused.
We’ve heard nothing further from DC. Which means that, maybe-just-maybe, they’ll release the funds so that my client can start developing the software that’s also part of this grant and that I can start creating websites so that the public can benefit from this software.
In addition to that cheek-sit, I’m also waiting for the launch of this client’s department website. It’s one that I redesigned — and I worked with a crackerjack programmer on that project. Would love to work with her again. And I am itching to start promoting this new departmental site. It’s very nice, if I may say so myself.
So, here I sit and wait, itchin’ and bitchin’ about the federal grantors and the speed at which this department launches its new site. While I wait, I’m cold-calling for business, and this hasn’t exactly been a banner week on that front. I’ve got some follow-up calls to do tomorrow, so all hope is not lost.
Which leads to my side project good news: On the side, I sell photography. Sent a letter to a local magazine publisher last month, and nothing happened. Then my phone rang this morning. They’re interested in seeing my Tucson event photos, and, man, I have a bevy of those.
Add this to the photo sale I made to another local publisher back in July, and I’m beginning to think that this photography on the side may have some legs.
palmetto
You’re both!
Your story was heartwarming, and with all of lives vicissitudes, I needed that. Thank you. You did a nice thing, and taught the kid there are a some good folks left in this screwed up world. As I’ve told my nieces and nephews, we have enough smart folks in this world, but we surely need more good ones. Here’s smiling at you, palmetto
(This is a duplicate reply-original post went to pergatory
I think)
palmetto
What a lovely story to brighten up life’s vicissitudes. It was just heartwarming. Thank you. As I tell my nieces and nephews, there are lots of smart folks in the world, what we need are more good ones. Kudos to you, palmetto. You’re both!
aw, shucks, wipeout. I’m finding as I get older, I care more about the younger generations. I dunno why that is. If someone told me even 10 years ago I’d be feeling this way, I’d have snorted at them.
palmetto
One thing I have learned if that, if you’re a a-hole in your youth, you’ll just become an older one. You must of had the “good” genes in you all along. I can tell!
Like your bread story above, the guy has alway been, and still is an a-hole. Evidently, the guy has no gratitude. That’s why I judge people on their character and don’t respect my elders anymore, verbatim.
At first I thought you might have been played, because I haven’t had a kid deliver my newspaper(s) in over twenty years, in residences all over the country, urban and rural. I thought by now, for liability reasons, the paper ‘boys’ were all adults. But I looked it up and apparently kids as young as 12 can still have paper routes, at least in some areas. Seems kind of wholesome.
Ahh to be in Ireland now the reckoning’s here
The mounting cost of a giant bank bailout is pushing Ireland perilously close to sovereign debt crisis territory.
http://finance.fortune.cnn.com/2010/09/08/bank-bailout-fears-batter-ireland/
Yesterday, the Government decided to divide the State-owned lender into a new “funding bank” or savings bank that will take over Anglo’s deposits, while a new “asset recovery bank” will take over €38 billion in loans that are not being transferred to the National Asset Management Agency (Nama).
http://www.irishtimes.com/newspaper/breaking/2010/0909/breaking12.html
In Dublin’s fair city
where the girls are so pretty
I first got bankrupt
from my home purchase loan…..
“Ahh to be in Ireland now the reckoning’s here…”
Better discuss this o’er a drink.
California is 1/2 to that budget gap!
Health insurer faces $9.9 billion in fines
By Ben Rooney, staff reporter
NEW YORK (CNNMoney.com) — California regulators are seeking fines of up to $9.9 billion from Pacificare over allegations the health insurer mismanaged claims from physicians, failed to make payments in a timely manner and other violations.
http://money.cnn.com/2010/09/08/news/companies/Pacificare/index.htm
They should reopen the coastal shelf for drilling, then pray for a large oil spill…
They’re going after Pacificare for $9.9 billion? IMHO, it couldn’t happen to a nicer company. [sarcasm off]
Are you saying the “free market” sometimes rips people off?
But I thought we had the best medical system in the world?
Re: discussion yesterday on CDS:
That market shrunk by 40% in one year?? How much did it further shrink in 2009 and 2010? Where is it today?
referring to 2007->2008 CDS.
Not sure about CDS specifically, but globally overall derivatives rebounded quite a bit after their 2008 drop.
thanks.. interesting.. I wonder where the wikipedia writer came up with those numbers.. i gotta check back for a footnote.
————
I can’t see how the naked CDS market would expand these days. Everyone knows what’s going on with all the bad debt, spreads have been adjusted accordingly, and chances of a windfall are slim.
OTOH, in light of a very uncertain future, people/companies using CDS to hedge against default on debt that they own might be a good strategy in many situations..
There was a footnote. #7
http://www.isda.org/statistics/pdf/ISDA-Market-Survey-annual-data.pdf (a one page PDF)
This chart, from the International Swaps and Derivative Association (ISDA) covers 1987 to 2009.
2007 - $62.2 trillion
2008 - $38.6
2009 - $30.4 trillion
So, “total credit default swap outstandings” shrunk 22% during ‘09.
No numbers for 2010.. yet.
——–
packman.. what’s your source for the numbers in your graph? I can’t find a combined derivative total.
Interesting article about citizens of New Jersey still paying the construction costs of a stadium that no longer exist….
http://www.nytimes.com/2010/09/08/sports/08stadium.html?src=me&ref=homepage
Hint to state/local politicians. If building something sounds really cool, then public funds should not be used. Real infrastructure spending is boring. If you are looking forward to the photo op at the end of the project, then you might want to rethink the whole thing.
BINGO
In my neck of the woods the mayor has had the balls to support a condo hotel expansion project with tax dollars. Well of course there will be a small public area that we’ll get to enjoy for our 15-18million dollars. Oh yes and the jobs we’ll enjoy because of the project?? Short term construction jobs. I’m surprised existing hotels and condo owners aren’t rioting over this crime.
Short term construction jobs.
..and then a few low paying, seasonal service jobs from then on.
There’s quite a fuss being made about a new hotel in Downtown Tucson. Seems that our Downtown will just dry up and blow away without it.
However, more than a few of us locals think the need isn’t quite as urgent as our city fathers would have us believe.
Homeless upset about price increases for McDonald’s (formerly) dollar menu
Between used car prices going up, food prices, etc. - how anyone can state that we’re not experiencing general price inflation is beyond me.
The only thing experiencing price deflation over the past 3-4 years is houses.
+1
And wages are still sliding.
Well, it is just at one MickeyDs, and it looks like it’s more to get rid of the panhandlers.
Yes after reading it again, you’re right. I saw the quote at the bottom from Sierra-Pacific region director, and took it to mean that the dollar menu was changed for the whole region, but it does appear to be just for that one McD’s.
Maybe not.
In my city, the dollar menu went to the $1.25+ menu at all the brands last year.
Boy, if I were one of those homeless people I’d take my business elsewhere!
A few weeks ago, at the nearby gas station convenience store I patronize, a new employee - a gentle humble young Pakistani guy - was being trained. The customer ahead of me (cigarettes and a Slim Jim) was giving him a really hard time, telling him how he should have addressed said customer and what he should have said to him. Then he wouldn’t let the new guy count out his change. He told him to let the regular employee who was training him do it - said ‘oh he does a good job and doesn’t make mistakes’ in a tone so patronizing it sounded an insult rather than a compliment.
The two employees were muttering to each other in Urdu and I said with a smile: ‘I don’t know your language, but I bet I know what you’re saying.’
Leaving the store, I saw that the customer had joined his buddy sitting leaned up against the wall with their backpacks, drinking beer.
He was a homeless drinker, telling the young trainee that he wasn’t working properly !!
Most of the homeless are mentally ill. But this nation closed literally thousands of mental health clinics over the last 20 years.
That means they’ve become the public’s problem and eventually, the courts’.
But hey, plenty of money to dope little Johnny in the classroom!
I heard from a friend the other day who lives in Florida. She has not made a mortgage payment in several years. She told me she was thinking of renting. I asked her why since she lived without a mortgage payment and they had not foreclosed. She said that her property taxes were 1,000 per month,
utilities $600 per month,
HomeOwners Association 300 per month,
groundskeeping $200 per month,
pool maintenance was $100 per month.
Insurance goes into this somewhere plus she has to pay to fix plumbing, AC and the like.
I have never thought of that angle before but those big expensive houses are also expensive to maintain even if you don’t pay the mortgage. This may explain why some folks abandon these properties even though they are not evicted.
My parents made the mistake of buying a 1970s-built trophy house after retirement, a place that is expensive to run.
I had suggested downsizing, but when they looked into a gated townhouse community for seniors, although the purchase price was lower than what they believe they could sell for, the operating costs were much higher thanks to a HOA fee — presumably to pay off the developer’s site costs and common amenities.
They also said that lots of people like them are looking to do the same thing, inflating the price of such communities relative to what they could sell for.
Maybe these are just excuses because they like the house they are in, which is bigger than they need but at least isn’t an exurban McMansion. I guess they’d have to go really cheap to really save money.
She said that her property taxes were 1,000 per month,
utilities $600 per month,
HomeOwners Association 300 per month,
groundskeeping $200 per month,
pool maintenance was $100 per month.
HOLY CRAP!
We really have become two different countries (coasts vs. flyover).
For my house (assessed at 335K, 3000 sq ft + 1000 sq foot basement, 12,000 sq ft lot (with automatic sprinklers):
Property taxes: $175
Utilities (gas, electric, water/sewage, trash collection: $300
HOA: $30
Groundskeeping: HOA does commons, I do my own: $0
Pool: No pool $0
“I guess they’d have to go really cheap really save money”
Yahtzee! Even assuming they were willing to live in an RV the monthly space rent would kill you. There aren’t any easy solutions, even if you are willing to live abroad?
Wow, property taxes $12,000 per year. That must be one heckuva house!
In the Northeast, it might be a shack.
“In the Northeast, it might be a shack.”
Quite literally.
$200 for groundskeeping and $100 for pool maintenance sounds outrageous to me. Does she live on mass acreage with an Olympic sized pool?
Actually $200 for groundskeeping may not be that horrible, depending on the size of the lawn and the services done. Most lawn-mowing services charge $30-50 to cut an average lawn. 4x a month that’s $120-200 right there, not including other non-regular maintenance (trimming, mulching, fertilizing, aerating, etc.).
Don’t they have any teenagers in that neighborhood?
Most teenagers have been run out of business by the El Cheapo lawn services.
And what teenager actually WANTS to mow a lawn? I used to mow ours for free and then go mow the neighbor’s for money. This was in the day when self propelled mowers cost about the same as a Rolls Royce and you edged and trimmed with manual tools. It taught me a valuable lesson… hard work is for suckers and only a few are ever paid fairly for it.
Most teenagers have been run out of business by the El Cheapo lawn services.
At $30-50 a pop? Heck, I’D MOW THE NEIGHBOR’S LAWN FOR $50.
And what teenager actually WANTS to mow a lawn?
My son does our for free. He would gladly do it for the neighbors a lot less than $30, problem is many of them have teens too.
Here it’s $25. Average 100×150 lot. 2-3 guys. Done in 30 minutes or less.
Can’t compete with that.
A gated community in south Florida. The House is probably worth 800,000.
Your post pretty much sums up just how far out of whack things got during the peak, and how far they have yet to fall.
$300 monthly HOA? I’ve never seen anything close to that except in condos, where the HOA takes care of all exterior maintenance. That neighborhood must have one heck of a clubhouse. Being in Florida - I’m guessing it’s a golf community right?
(Meant to post
icon instead)
Test
No golf course but 24 hour security and a clubhouse
If she’s stopped paying her mortgate, why on earth is she still paying the property tax and HOA fees?
or insurance? Has she learned nothing? All that stuff is free now.
Dennis:
For more time to stall everything….plus she has to live with those people…
dont pay taxes or hoa they could get nasty….
+1. I can see why she’d keep paying the utilities, but I’m confused on the rest of it.
Maybe she was just telling him what all she could be paying, in theory.
+1, Dennis.
This woman is none-too-smart. If she is not paying the mortgage, there is ZERO point in paying the property taxes, since the state/county will probably take longer to act on the back-taxes than the bank will to foreclose, and even if they did act, the very worst that they can do is to force a tax-sale.
Similarly with the HOA, except they typically have less power to act, and frequently are less organized to boot. And at the end of the day, any non-payment attaches to the property as a lien, not to the nominal owner.
She should stop paying those immediately, or get her head examined. She’s living in fantasy-land if she thinks staying current on those is sensible.
She should also stay for free for as long as she can. The only “necessity” that I saw in that list of expenses was her utilities, and I’m sure she could reduce those if she tried by conserving.
Taxes are probably recourse though, right? So she would still end up having to pay them, or go to jail or have wages garnished or the like. Not so with mortgage payment.
Same I think may even be true for HOA fees; not sure though.
IIUC property taxes are on the property, not the person, and they would merely put a lien on the house.
Exactly, Dennis. Unpaid property-taxes result in a tax-lien on the property, and the worst that can result is an eventual tax-sale.
There’s no personal liability.
Very good point. I just did not think of those things.
I’m not sure if she could drop paying insurance too.
If she dropped her insurance, would that finally force the lender to foreclose on her?
Theoretically if she maintained her insurance, and something happened (e.g. a tree fell on the house), insurance would still pay. Thus there’s a benefit to maintaining it.
Why would she care? It’s not her house.
The only benefit I can see to maintaining homeowners insurance coverage are:
- personal liability protection (e.g. someone slips on the sidewalk and sues)
- coverage of personal possessions in the home.
Both of those would have some value to her, even if the house is eventually going back to the bank. But the coverage on the house itself is a waste of her money…
squatters insurance?
As I was writing the above, I found myself wondering whether an insurance agent would be willing to write a renter’s insurance policy on the house that you nominally owned… Cause frankly that is the kind of policy that would make sense for her.
The market is up, because of less than expected number of people apply for unemployment. Oh is gives me another warm fuzzy, everything must be OK!
Suck ‘em in, shake ‘em out.
“Shake it up, shake it down
Move it in, move it round, disco lady
Move it in, move it out, move it in round about, disco lady
Shake it up, shake it down
Move it in, move it around, disco lady”
Johnnie Taylor
Move ‘em on, head’ em up
Head ‘em up, move’ em on
Move ‘em on, head’ em up
Rawhide!
Cut ‘em out, ride ‘em in
Ride ‘em in, cut ‘em out
Call ‘em out, ride ‘em in
Rawhide!
“Shake it up, shake it down”
Damn! I hadn’t heard that piece of crap in decades.
Now I can’t get it out of my head. Arghhh! Curse you palmetto!
Shake it
Shake it
Sugaree…
“Now I can’t get it out of my head. Arghhh! Curse you palmetto!”
LOL, In Colorado, sometimes I’m a real stinker, I am.
What are your thoughts on the Bush tax cut situation? I can’t believe the republicans can justify their opposition to those households above the $250,000 threshold and J6pks are buying into it. Even some democrats are balking. The President has to be doing some head scratching on this issue.
Promoting class warfare does not seem to be working anymore.
Government spending under obama is out of control.
People want to keep more of what they earn.
Not that hard to figure out.
The wealthy corporatists are wealthier beyond imagination as a result of their class warfare. They waged war, we lost and are now stuck with the tab for 30 years of Treasury raiding tax breaks for the wealthiest.
Current expenditures are a fraction of the $5 trillion the previous administration BORROWED.
Us little people want to keep more of what they earn. And have no doubt in your mind, you’re a little person too.
It’s not that hard to figure out.
I’ll bet you hundred bucks spending stays out of control when the republicans take over.
It’s great political theater to watch the R&D power war, only to wind up in the same place time and time again. Got popcorn? Yeah Amazing, same party, different costume.
Tweedle-Dee vs. Tweedle-Dum
In the end there is no real difference. Bail outs for the rich, mirage programs (that no one qualifies for) for the middle class, more bennies for illegals.
The beat goes on.
Would you consider it an accomplishment to achieve a “rate of increase” of spending to zero?
Promoting class warfare does not seem to be working anymore.
I’m sure J6P is perfectly happy with all the bail outs for the rich while he gets squat.
I think the real problem is tha J6P has lost faith in the current admin. I guess we can look forward to Caribou Barbie being the next prez.
In Colorado-
“Caribou Barbie” LOL everytime I read that.
Quran book burning= another weapon of mass distraction. Meanwhile both parties and the crooks loot.
Are you close to the fire?
Are you close to the fire?
I know you weren’t asking me, but I am. Actually flew through the smoke Monday afternoon on the way back from Portland. Could smell it in the plane, thought it was farther back in the mountains. Turns out it’s right at the edge of Boulder. I know people who’ve been evacuated, but don’t know any of the people who’ve lost houses. Helicopters coming and going all day from the airfield across the street from work.
Pain in the butt with all the smoke, but nobody’s gotten hurt so far, so can’t complain.
Thanks Carl. I appreciate your experience. Wow, what a nightmare for all those folks. I feel for them.Living in So Ca we’ve had our fill too.
“Smoke on the water,
and fire in the sky.”
(I can’t recall the rock band-mental pause.)
I can’t recall the rock band-mental pause.
Deep Purple.
Az Slim
Thank you.
Might J6pac finally realize some connection between the continued existence of the small business he works for and his own job?
Might he view an effective 13% tax increase on that struggling business during a serious economic downturn as a competitive advantage for Chinese / Mexican imports, as well as a threat to his own livelihood?
Doubtful.. but maybe.
13% tax increase on that struggling business
What increase would that be?
2010 highest tax rate = 35%
2011 highest tax rate = 39.6%
rate of increase = ((39.6-35)/35)x100 = 13%
You make it sound like it would be a 13% increase on his entire income.
If Joe Small Biz Owner is paying income tax at the top marginal rate he’s doing extremely well. That relatively small tax increase won’t force him out of business or to lay people off, just like it didn’t in that past.
Colorado.. ok.. So lets say the owner is “doing extremely well” as you put it.
Business is slow and belts have been tightened.. not starving.. waste has been reduced to a comfortable minimum.
Taxes go up… not much.. maybe only 30K a year.
Will the owner cut into his business, cutback on his lifestyle, or fire some employee he “doesn’t really need right now”?
Taxes go up… not much.. maybe only 30K a year.
He’d be making almost three quarters of a million dollars a year to make your numbers work. Yeah, if he’s faced with 30K less take home this year, he should fire everybody and shut that piece-of-crap business down. Not worth his time.
Nobody but the stupid are paying full freight in the 30%+ tax brackets.
LOOK OUT! IT’S THE BOOGIEMAN!
alpha.. Is he gonna eat the $30K or is he more likely to fire you?
btw.. I overheard him saying he wasn’t really impressed with your work lately..
I think i posted below ….
but rich people did the outsourcing of jobs…..so offer a carrot
want to keep the tax cuts ..bring the jobs home
otherwise the increase in your taxes are for paying unemployment welfare food stamps and medicaid that you caused us to spend extra on.
ok?
Everybody thinks they are going to make $250k someday, even though their education is poor and their interest in their work is low. My wife almost cries for them, even though she only makes $19 an hour. It’s bizarre to experience.
Then, they worry about the tax rates that group has to pay stifling the economy, even though they can pay for accountants and money managers moreso than someone making $70k.
I’m personally a little ticked the lower tax rates for dividend and longer-term investment taxes are going away. I thought those were relatively intelligent taxing policy. If we need more revenue, then bump that 1 year holding at regular tax rate to 2 years.
And Bohner’s alternative is to freeze spending at 2008 (still in the bubble levels). How about rolling that back to 2005-2006 levels?
“Everybody thinks they are going to make $250k someday, even though their education is poor and their interest in their work is low.”
Well sure, everybody knows some sleaze ball douchebag who made that kind of dough. A lot of then were Realtors.
It doesn’t matter what they do, they just need to be definitive about it.
1. State definitively what they will do with taxes so people can plan;
2. State definitively that they will not have another homebuyer credit (if I were in the market to buy a home, I would be sitting on my wallet for fear of buying before the next credit was announced).
3. State definitively that all new taxes proposed for businesses will be vetoed.
People need to have some uncertainty removed from the market. I play both sides of the aisle (I think both sides equally suck)–today I’m hoping for gridlock after November so that some of the uncertainty about government action goes away…
I tend to agree with this. I also think a definitive strategy of spending cuts must be articulated. My sense is that more people would at least be open to raising* taxes if they knew those taxes weren’t to be used to justify more spending.
Otherwise, it gives borrow-and-spend righties more ammo to call lefties tax-and-spenders.
I also think BO would be wise to tie those cuts (and the subsequent spending) to the deficits during the prior admin. Of course, supporters of that admin can’t stand to hear that…
*I say “raising” since that’s how the Repubs are painting it as opposed to the return to past levels that it is.
It’s quite amazing it has taken this long for the fall 2008 financial collapse to finally catch up with Wall Street. I guess those bailouts bought them some time.
Wall Street Firms to Cut 80,000 Jobs in 18 Months, Whitney Says
By Yalman Onaran - Sep 7, 2010 1:55 PM PT
Securities firms around the world will cut as many as 80,000 jobs in the next 18 months as revenue growth begins to slow, said Meredith Whitney, the former Oppenheimer & Co. analyst who now runs her own firm.
The reductions, about 10 percent of current levels, will come after 2010 compensation payments, Whitney, 40, said in a report dated Aug. 31 and obtained by Bloomberg News today. The industry’s payouts will be “down dramatically,” said Whitney, who started New York-based Meredith Whitney Group after correctly predicting Citigroup Inc.’s dividend cut in 2007.
“The key product drivers of Wall Street’s revenues and profits over the past decade have been in a structural decline over the past three years,” Whitney said in the report. “2010 marks the first year in many in which Wall Street-centric firms will go through structural changes.”
…
Anybody else besides that pastor in Florida going to burn a copy of the Q’ran on 9/11?
you don’t want to know what i did to one this morning.
I am going to the BBQ and then teaching my daughters how to shoot…
my girfriend is going to burn one in Vons parking lot.
For those who don’t have a copy of the Qur’an , the free e-book is online.
You can “burn” it to a CD, and then burn the CD.
“Unconfirmed sources have just confirmed that Godzilla, King Kong and Mothra have all come out against the Koran burnings scheduled for September 11th. Sources in the big assed monster community say Bigfoot and the incredible Hulk could not be reached for comment.”
(((Shakin my head)))
I think its a system supported manufactured media event. This guys “outrageous” behavior burning a Muslim book, allows all those engaged in burning muslim PEOPLE to look moderate and tolerant.
Nothing to see here… move along folks…
Clinton calls plan to burn Quran ‘disgraceful act’
WASHINGTON (AP) - Secretary of State Hillary Rodham Clinton on Tuesday called a Florida church’s threat to burn copies of the Muslim holy book to mark the ninth anniversary of the Sept. 11 attacks a “disrespectful, disgraceful act.”
Others in the Obama administration weighed in against the proposed burning, including Attorney General Eric Holder, who called it idiotic and dangerous. A State Department spokesman branded the planned protest “un-American” while other officials warned that it could threaten U.S. troops, diplomats and travelers overseas.
http://apnews.myway.com/article/20100908/D9I3DT3O0.html
This coming Saturday, I’m not going to be burning anything except images onto my camera’s memory cards.
Big event’s happening Downtown on Saturday evening, and I recently sold photos to a local publication. Perhaps I can sell some more from this event.
In addition to burning images onto the aforementioned camera memory cards, I do hope that the phone lines will be burning up during my phone-answering shift at KXCI.
Yes, it’s pledge drive time again, and we’re holding the radio station hostage until we meet our $100k goal.
And, as our on-air volunteer deejays would say, “Make your pledge of support by calling 623-1000 right now. Outside the Tucson area, it’s 520-623-1000…”
“Anybody else besides that pastor in Florida going to burn a copy of the Q’ran on 9/11?”
Why would you? Unless you were willing to throw the Torah, the KJV, the Baga Vadgita, the Tibetan Book of the Dead, the Edda, the Tao Te Ching and every other religious tome on the fire, you have no real conviction and you are a complete milquetoast.
Then again, anybody who throws any book on a fire is even worse than Bradbury portrayed them.
“Fire is bright, and fire is clean!”
- Ray Bradbury
“Anybody else besides that pastor in Florida going to burn a copy of the Q’ran on 9/11?”
What would that accomplish? Will Jesus high five me? Will Yahweh give me a pat on the back?
If I really want to please them, maybe I should help a homeless family instead.
I don’t own one, but if I did, I might compost it. Burning is bad for the atmosphere.
I am going to burn pictures (glamour-shots) of Realtors.
No one on my block seems even vaguely interested. When I tried to organize a good old fashioned book burning, they looked at me like I’m the crazy one. And the only Koran I can find is expensive and in very formal Portuguese that I don’t even know what it’s saying.
So now I’m thinking, hey, maybe… Why should I burn a book that I don’t even understand?
“When I tried to organize a good old fashioned book burning, they looked at me like I’m the crazy one. And the only Koran I can find is expensive and in very formal Portuguese that I don’t even know what it’s saying.”
Obviously, there’s a few copies of Footloose dubbed in Portuguese floating around those parts.
“When I tried to organize a good old fashioned book burning, they looked at me like I’m the crazy one. “
Montag?
Its a good idea….he is doing what the Taliban did blow up those 1500 year old Buddhist statues,
Its is a religious war ..period. Not government not military not the people….but religion.
This is a really big deal Apparently nobody has ever actually set fire to a Quoran book before and the thing could possibly trigger a nuclear explosion. Maybe the Quoran burning will be a success and the energy crisis will be solved. A car that runs on religious books would put any electric vehicle to shame.
Wouldn’t it be more insulting to dip the Koran into a vat of pig excrement rather than simply burning it?
Dennis…. you’re expecting the nattering cretins who want to endanger US troops by burning the Koran to actually *think*.
to dip the Koran into a vat of pig excrement
But Muslims might take that the wrong way.
Nope, but I’ll burn a bible or two.
So people are worried about violence if this Q’ran burning is carried out? Meh, it can’t possibly equal the violence and destruction that took place wherever the crucifix-in-urine was displayed.
LOL, I had forgotten all about “Piss Christ.” Actually, it was only a photograph of a crucifix in urine. There’s a picture of it here; it actually looks kind of cool:
http://en.wikipedia.org/wiki/Piss_Christ
I’d be happy to dip a cross in urine as well. Throw a torah and a copy of the i-ching in the crapper to boot. My point was the Koran burning is covered, I’m just trying to help out in the ‘removing religious texts from the world so the kids won’t get their minds warped by the claptrap’ movement.
” it can’t possibly equal the violence and destruction that took place wherever the crucifix-in-urine was displayed.”
That ones got any Eddietard strawman beat hands down.
We knew you could do it.
“Nope, but I’ll burn a bible or two.”
+1
Looks like book burners are everywhere these days!
From Haaretz dot com:
Orthodox Jewish youths burn New Testaments in Or Yehuda
City’s deputy mayor initiated bonfire of missionary-distributed material, held next to a synagogue in town.
Orthodox Jews set fire to hundreds of copies of the New Testament in the latest act of violence against Christian missionaries in the Holy Land.
Or Yehuda Deputy Mayor Uzi Aharon said missionaries recently entered a neighborhood in the predominantly religious town of 34,000 in central Israel, distributing hundreds of New Testaments and missionary material.
After receiving complaints, Aharon said, he got into a loudspeaker car last Thursday and drove through the neighborhood, urging people to turn over the material to Jewish religious students who went door to door to collect it.
“The books were dumped into a pile and set afire in a lot near a synagogue,” he said.
The newspaper Maariv reported Tuesday that hundreds of yeshiva students took part in the book-burning. But Aharon told The Associated Press that only a few students were present, and that he was not there when the books were torched.
“Not all of the New Testaments that were collected were burned, but hundreds were,” he said.
He said he regretted the burning of the books, but called it a commandment to burn materials that urge Jews to convert.
“I certainly don’t denounce the burning of the booklets, he said. I denounce those who distributed the booklets.”
Jews worship from the Old Testament, including the Five Books of Moses and the writings of the ancient prophets. Christians revere the Old Testament as well as the New Testament, which contains the ministry of Jesus.
Calev Myers, an attorney who represents Messianic Jews, or Jews who accept Jesus as their savior, demanded in an interview with Army Radio that all those involved be put on trial. He estimated there were 10,000 Messianic Jews, who are also known as Jews for Jesus, in Israel.
Police had no immediate comment.
Israeli authorities and Orthodox Jews frown on missionary activity aimed at Jews, though in most cases it is not illegal. Still, the concept of a Jew burning books is abhorrent to many in Israel because of the association with Nazis torching piles of Jewish books during the Holocaust of World War II.
Earlier this year, the teenage son of a prominent Christian missionary was seriously wounded when a package bomb delivered to the family’s West Bank home went off in his hands.
Last year, arsonists burst into a Jerusalem church used by Messianic Jews and set the building on fire, raising suspicions that Jewish extremists were behind the attack. No one claimed responsibility, but the same church was burned down 25 years ago by ultra-Orthodox Jewish extremists.
Sounds like this was material thrust upon those who did not want it. Would throwing it out have been better?
Missionaries are a pain.
Tomasky reflects on an interesting US blog post about the recently-completed rebuilding of a Synagogue in Beirut (damaged in the Israeli bombings of summer of 2006).
http://www.guardian.co.uk/commentisfree/michaeltomasky/2010/sep/07/ground-zero-lebanon
Wanting to avoid passing on disinformation, I checked Haaretz and found from January 2001:
http://www.haaretz.com/jewish-world/news/renovation-work-underway-at-beirut-s-main-synagogue-1.266897
Mid-nineteenth century Bible and church burning in Philadelphia (of all places!)
http://www.hsp.org/default.aspx?id=1251
From the Jerusalem Post:
A singer who performed in front of a “mixed audience” of men and women was lashed 39 times to make him “repent,” after a ruling by a self-described rabbinic court on Wednesday.
http://www.jpost.com/Israel/Article.aspx?id=186154
sounds like had a thing for it.
Of course this isn’t state sanctioned, like what occurs in Iran et al.
100,000 dead from Lebanon’s Christian-Arab vs Muslim-Arab civil war. No jewish folk involved in that one… who knew?
People were passing out New Testaments to students leaving the dining hall one day (many years ago) when my brother was a freshman in college. He paused, put up his hand in refusal and said, “I don’t do sequels.”
I generally don’t think of lines that great until DAYS after the moment has passed. I really envy him that talent.
LOL and kudos to your brother. That was a good one!
I recycle the stuff the Jehovah’s Witnesses leave on my doorstep. Is that insulting to them?
“We’re more popular than Jesus”
EXTRA! EXTRA!
Book Burning Pastor calls off scheduled Koran burn-a-thon. Claims he got the “Ground Zero” mosque to agree to build elsewhere.
http://www.washingtonpost.com/wp-dyn/content/article/2010/09/09/AR2010090900743.html
To quote the great W. C. Fields:
“HOOPALA! HOOPLA!”
Woman: “It was an industrial accident. He drowned in a vat of whiskey”.
W.C. Fields: “Ah, Death! Where is thy sting!”
This Koran Burn-a-Thon has really jumped the shark.
Even Ann Coulter has come out against it!
http://news.yahoo.com/s/ucac/20100909/cm_ucac/bonfireoftheinsanities
Read the last paragraph.
sure its nasty…but will they stop burning the American flag and stop roadside bombings of innocent people? NAH!
Keeping score:
- 1-5 innings: Trillions of dollars down the tubes
- 6-9 innings: Only $268 bn more to go?
EXCELLENT! It’s contained, folks — no worries from here on out.
S&P: Bank crisis still in fifth inning
Posted by Colin Barr
September 8, 2010 3:10 pm
Bank profits seem to be picking up, but it may be years before investors will reap the rewards.
So say the two big rating agencies, Moody’s and S&P. They issued reports Wednesday that were similarly skeptical of U.S. banks’ prospects over the next few years, given the weak economy and the unsettled regulatory picture.
Not the only problem
The agencies differed mostly in their view of the scale of the toxic asset cleanup ahead. Moody’s said the banks have dealt with two-thirds of their losses, while S&P believes the healing process is barely halfway done.
Moody’s wrote that banks are “over the river but not yet through the woods” when it comes to dealing with problem assets. It estimated they have taken $476 billion of losses since the crisis started in 2008, leaving them about two-thirds of the way through their bubble trouble.
That’s the good news, such as it is.
“Although sizeable, the remaining losses are beginning to look manageable in relation to these banks’ loan loss allowances and tangible common equity,” Moody’s Senior Vice President Craig Emrick said. He put the remaining tab at $268 billion.
…
As the entire financial sector was allowed to maintain Level 3 fantasy valuations, nor have to tell anyone just exactly how much of it they have, EVERYTHING about the toxic assets is pure speculation.
“He put the remaining tab at $268 billion.”
And Bernanke put the subprime tab at $200 bn. These lowball estimates on trillions of dollars worth of economic damage are a joke.
A parody about the hateful authoritarian conservatives…. too funny
http://www.youtube.com/watch?v=vdtFk_V6A4M
It’s like WWF for right wing nutjobs. What a way to co-opt and distort a religion.
On a more serious note, the sanctimonious pandering for patriotism is mysteriously absent for the wing nut dialogue. I can only take that to mean that the “support the troops” rhetoric was just plain bull$hit.
This country has plenty of hard core authoritarian hypocrites that make a Muslim cleric look like a party animal.
On that point, I agree.
I just came across a great article that hasn’t been discussed here. Ben, this might be a good source for an actual post.
http://www.nytimes.com/2010/09/08/business/economy/08leonhardt.html
Basically, the article argues if housing is thought of as a luxury good, that people spend more of as their income rises, then it is now fairly priced on average according to analysts. But if it is a basic good — shelter — than it is overpriced by 30 percent.
The author points out that looking at the Consumer Expenditure Survey, since WWII spending on housing kept the same share of household income as income rose, which makes the luxury good case.
But the chart goes back further, and it shows that in the Great Depression people cut their spending on housing because they had to keep spending on basic goods such as food as their income fell. That is something that has been discussed here — housing is something Americans can spend less on as they get poorer, once they ditch their mortgage.
But only to a point.
In NYC, for example, 1 month rent for a one room dump in a bad neighborhood is more than most people make in the rest of nation outside of the big metros. This is fairly common in most of the top 5 cities.
And when you have no income, there is no rent cheap enough.
But yes, downsizing is rational and is already happening. I live in a nice middle, middle class neighborhood and it’s obvious that people are doubling up.
Angry ageist anglos ain’t too much fun to live with.
How house prices and debts are building ugly tensions between parents and their children (UK)
http://blogs.telegraph.co.uk/finance/ianmcowie/100007530/how-house-prices-and-debts-are-building-ugly-tensions-between-parents-and-their-children/?source=patrick.net#post-100007530
The gap between baby boomers, who continue to enjoy the wealth-enhancing effects of decades of house price inflation, and their adult children, who are burdened with soaring debts and the worst financial crisis since the 1930s, is growing wider.
…the growing financial plight of younger adults is building tensions between the generations that may create some ugly scenes in homes across the country in years ahead. Santander … surveyed 2,000 people to come to the conclusion that student debt and shortage of jobs for young people has created a generation of what it calls “baby boomerangers”.
These are adult children aged over 18 unable to leave their parents’ home who seem to be slouching on sofas across the land, resenting Mum and Dad’s good fortune. More than four in 10 of the families affected see no hope of these young adults flapping their wings and finding a home of their own any time in the foreseeable future.
…a director of Santander, says: “The term ‘flying the nest’ could soon be made redundant as the credit crunch and rising cost of living is altering the structure of Britain’s families.”
It wouldn’t be so bad if the parents didn’t keep thinking that nothing has changed. Like lack of jobs and livable wages.
I know far too many people who live in the past or have no concern about the present because they are “doing just fine” and therefore, have no clue as to how bad things really are.
These are adult children aged over 18 unable to leave their parents’ home who seem to be slouching on sofas across the land, resenting Mum and Dad’s good fortune.
Make a good sitcom.
Don’t forget to include that lousy UK weather–the cherry on top!
Some blasts from the past….
“The continuing shortages of housing inventory are driving the price gains. There is no evidence of bubbles popping.” – David Lereah – Chief Economist for National Association of Realtors – 2005
“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.” – Ben Bernanke – 2005
“House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.” – Ben Bernanke – 2005
And yet Ben’s credibility remains mostly intact.
He IS currently “man of the year”. A hero.
Oooh, oooh, this is fun. Can I join?
“Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well. Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.”
- May 2007
And - going ahead and posting this as a preliminary one for the next (Insert bubble here) Bubble Blog:
“The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.”
- February 2010
“In contrast to the changing moods on Wall Street, Bernanke expressed a broad satisfaction that the nation remains on track for a “soft landing,” a modest slowdown in growth that would reduce upward pressure on prices without aggravating unemployment.”
International Herald Tribune, Feb. 15, 2007
I will go to my grave forever wondering just how morons are ever in charge of anything.
One of life’s great mysteries.
In the army it became obvious that morons were the best suited to survive the stupidity long enough to be put in charge themselves. Most of the non-morons bailed before anybody put them in charge of anything…usually because they’d already done fatal damage to their fledgling careers by being honest at some inappropriate moment. Morons are more likely to be able to survive a bout of accidental honesty because they’re usually not perceptive enough to come up with anything that will rock the boat.
+1 This should be etched in stone!
Help for homeowners who haven’t missed a payment - (300,000-400,000 at best is like peeing in the ocean.)
http://money.cnn.com/2010/09/08/news/economy/refinancing_help_for_underwater/index.htm
The program was announced in March, but wasn’t going to take place until September and to have any hope of benefiting, the FB had to stay current on payments during that time frame. Now the FBs have to get the lenders to agree to a principal reduction, and we all know that doesn’t happen often or overnight.
Near as I can tell, the purpose of this program was to get FBs to make at least six more months of payments. That’s it.
Kim
At least they are trying to throw bones at the FB’s who did the right thing. Yeah, another round of hope-ium. You’ve got that right, but the masses are so shortsighted. They might get excited, and forget about the modification fiasco.
..and maybe burn some Qurans!
Why would a lender agree to a principal reduction if the borrower is making payments on schedule. I could see them wanting to unload a mortgage that is in arrears, but one that is current?
Here’s a good answer to the “free-trade at any cost” argument. We are not playing on the same ball field as them. They laugh at our willingness to give away our way of life for cheap toasters and no billionaire left behind.
U.S. Is “Losing Badly” But Can Win War vs. State-Sponsored Capitalism, Pat Choate Says
http://finance.yahoo.com/tech-ticker/us-is-losing-badly-but-can-win-war-vs-statesponsored-capitalism-pat-choate-says-yftt_535399.html
“While the great economic conflict of the 20th century was Capitalism versus Marxism, the battle in the twenty-first century will be state versus market capitalism.”
And according to Choate, market capitalism is “losing badly” to state-owned enterprises, most notably in China and Japan, but also Korea, Taiwan and parts of Europe.
“What we have seen in industry after industry where the U.S. comes up against these corporations — apparel, textiles, consumer electronics, steel, machine tools - a privately-owned firm cannot compete with what is a state-owned firm,” he says.
For America to win… Choate recommends starting with the following:
Call a TO! Most major trade agreements, including NAFTA and the WTO, have provisions in which member countries can say “we’re going to have a timeout from our obligations under the trade regime until we bring our balance of payments back,” says Choate, who argues the U.S. should do just that.
Keep China in Check: “What I advocate is to set a goal to balance our trade account,” he says. “We can do that with series of simple tariffs. And I would urge we take on [China's] manipulation of their currency and put a 40% or 50% tariff [on Chinese goods] and bring it down as the Chinese balance out their currency and don’t use it as a predatory tool.”
It is not the currency that is China’s advantage. Their currency is low b/c of the trade deficit. Their advantages are:
1. slave labor
2. theft of intelectual property/patents
3. complete lack of environmental regulations…just dump it, the people down river love it!
4. complete lack of any regulations like worker’s security
5. making entry into their market very difficult but expect free access to European and American markets.
The only answer would be for our politicians to tell them you either play by the rules (see 1-5 above) or you don’t play at all. But of course our billionaire caste stands to make a quick buck so it won’t happen.
theft of intellectual property/patents
Which is why more than a few U.S. companies, especially in industries where their IP is protected by trade secrets, rather than patents, won’t outsource to China.
Way OT but if you want to see some kids get ripped off in a football game 3 times it`s worth 3 minutes.
http://www.pbgametime.com/news/fhsaa-suspends-nick-oleary-for-obscene-gesture-dwyer-says-it-will-forfeit-rather-than-play-without-him/96869/
The pain isn’t over in Las Vegas, Nev.
The threshold to pleasure is terrible pain.
VINCENT Browne is philosophical about the necessity to sell Atlanta, the much-loved Coliemore Road home in Dalkey he and his wife, Jean, bought for £94,000 (€119,000) in 1987. The house, a Victorian semi-detached with direct access to the sea, is on the market through Vincent Finnegan, asking €3.25 million.
http://www.irishtimes.com/newspaper/property/2010/0909/1224278507148.html?via=mr
The housing bubble is truely global!
‘Sexy’ Homes Spice Up North Carolina Market
tinyurl com/339omb6
“A Charlotte, N.C. real estate firm says business is booming, thanks to their sexy new marketing plan that involves hiring models to pose in listings photos of luxury homes.”
I know more than a few photographers who’d salivate over that job.
Sounds like the apartment in Soylent Green (the one that actually came with a girl).
That wasn’t a girl, that was “furniture.”
They’re only 100 years behind the times.
Nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government.
According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
The confusion comes because homebuyers were eligible for two different credits, depending on when their homes were purchased.
Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home’s purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.
Had they waited to buy until 2009, they could have gotten a much sweeter deal. Congress extended the credit and made it a refund rather than a loan.
Now, the IRS is developing a strategy for separating the 2009 taxpayers who are required to repay the credit from those who are not.
“Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home’s purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.”
I smell more victims.
When my accountant told me I had to pay back my first-time homebuyer tax credit, I broke my hand on his desk and I haven`t worked since. Now my dog has cancer and my wife has a big toe growing out of her forehead and my house has lost 30% of it`s value.
David Lionhardt in The New York Times:
At times, real estate seems to be in the early stages of a severe double dip. Home sales plunged in July, and some analysts are now predicting that the market will struggle for years, if not decades.
Others argue that the worst is over. As Karl Case, the eminent real estate economist (and the Case in the Case-Shiller price index), recently wrote, “Buying a house now can make a lot of sense.”
No one doubts that prices rose roughly with incomes from 1970 to 2000. The issue is whether that period was an exception. Housing bears like Barry Ritholtz, an investment researcher and popular blogger, say it was. The government was adding new tax breaks for homeownership, and interest rates were falling. These trends won’t repeat themselves, the bears say.
As evidence, they can point to a historical data series collected by Mr. Case’s longtime collaborator, Robert Shiller. It suggests that house prices rose no faster than inflation for much of the last century.
The pattern makes some intuitive sense, too. As people become richer, they spend a shrinking share of their income on the basics. Think of it this way: someone who gets a big raise doesn’t usually spend it on groceries. You can see how shelter seems as if it might also qualify as a staple and, like food, would account for a shrinking share of consumer spending over time. In that case, house prices should rise at about the same rate as general inflation and well below incomes.
Here’s the scary thing, at least for homeowners: if this view is correct, house prices may still be overvalued by something like 30 percent. That’s roughly the gap between average household income growth and inflation over the last generation.
It’s also the overvaluation suggested by Mr. Shiller’s historical index. Today, it is around 130, which is way down from the 2006 bubble peak of 203. But it’s still far above the 1890 to 1970 average of 94.
In effect, the bears are arguing that housing was in a multidecade bubble and has now entered a multidecade slump.
“Buying a house now can make a lot of sense.”
Did the NAR pay him to say that? I mean, he couldn’t he have also said, “Buying a house now can lower your risk of an enlarged prostate”?
“Buying a house now can make a lot of sense.”
Shilling for real estate can make a lot of sense when competing for research grants.
http://money.cnn.com/2010/09/09/real_estate/who_repays_tax_credit/index.htm?cnn=yes&hpt=T2
Funny funny funny
Money money money
Evidently, not all stimuli were created equal.
Homebuyer tax credit: 950,000 must repay
By Les Christie, staff writerSeptember 9, 2010: 2:40 PM ET
NEW YORK (CNNMoney dot com) — Nearly half of all Americans who claimed the first-time homebuyer tax credit on their 2009 tax returns will have to repay the government.
According to a report from the Inspector General for Tax Administration, released to the public Thursday, about 950,000 of the nearly 1.8 million Americans who claimed the tax credit on their 2009 tax returns will have to return the money.
The confusion comes because homebuyers were eligible for two different credits, depending on when their homes were purchased.
Those who bought properties during 2008 were to deduct, dollar for dollar, up to 10% of the home’s purchase price or $7,500, whichever was less. The catch: The money was a no-interest loan that had to be repaid within 15 years.
Had they waited to buy until 2009, they could have gotten a much sweeter deal. Congress extended the credit and made it a refund rather than a loan.
Now, the IRS is developing a strategy for separating the 2009 taxpayers who are required to repay the credit from those who are not.
…
Light bulb factory closes; End of era for U.S. means more jobs overseas
Lights out for ordinary bulbs made in the U.S.
WINCHESTER, VA. - The last major GE factory making ordinary incandescent light bulbs in the United States is closing this month, marking a small, sad exit for a product and company that can trace their roots to Thomas Alva Edison’s innovations in the 1870s.
The remaining 200 workers at the plant here will lose their jobs.
“Now what’re we going to do?” said Toby Savolainen, 49, who like many others worked for decades at the factory, making bulbs now deemed wasteful.
During the recession, political and business leaders have held out the promise that American advances, particularly in green technology, might stem the decades-long decline in U.S. manufacturing jobs. But as the lighting industry shows, even when the government pushes companies toward environmental innovations and Americans come up with them, the manufacture of the next generation technology can still end up overseas.
What made the plant here vulnerable is, in part, a 2007 energy conservation measure passed by Congress that set standards essentially banning ordinary incandescents by 2014. The law will force millions of American households to switch to more efficient bulbs.
The resulting savings in energy and greenhouse-gas emissions are expected to be immense. But the move also had unintended consequences.
Rather than setting off a boom in the U.S. manufacture of replacement lights, the leading replacement lights are compact fluorescents, or CFLs, which are made almost entirely overseas, mostly in China.
This happened to consumer electronics back in the 1980s. Wiped out an entire labor sector.
The same with textiles and clothing.
OH oh better stock up on bulbs for the next 25 years My LL and I have these:
http://cgi.ebay.com/BRUSHED-BRASS-ATOMIC-SPUTNIK-STARBURST-LIGHT-FIXTURE-/130342638144
More good news!
Plugs Bite-Me will be out saying how great it is that ‘only’ 451,000 signed up. We’re on the right track!
Jobless Claims in U.S. Decreased 27,000 to 451,000 Last Week
Initial jobless claims dropped by 27,000 to 451,000 in the week ended Sept. 4, Labor Department figures showed in Washington.
Applications for U.S. unemployment benefits declined more than forecast last week, easing concern that employers will accelerate firings as the world’s largest economy cools.
Initial jobless claims dropped by 27,000 to 451,000 in the week ended Sept. 4, Labor Department figures showed today in Washington. The total number of people receiving unemployment insurance was little changed, while those getting extended payments rose.
27K.
My neighborhood is bigger than that.
Whoopee.
How is the kitchen remodel going?
HELOC deduction on IRS:
Real Estate (Taxes, Mortgage Interest, Points, Other Property Expenses)
Question: Is interest on a home equity line of credit deductible as a second mortgage?
Answer: You may deduct home equity debt interest, as an itemized deduction, if all the following conditions apply:
You are legally liable to pay the interest
You pay the interest in the tax year
The debt is secured with your home
You do not exceed certain limitations
I hadn’t heard of this film before seeing the press release. Google four lions film. I look forward to seeing it.
****FOR IMMEDIATE RELEASE****
DRAFTHOUSE FILMS TO DISTRIBUTE “FOUR LIONS”, THE ACCLAIMED COMEDY FROM DIRECTOR CHRIS MORRIS
Austin, TX—Thursday, September 9, 2010— Alamo Drafthouse CEO and Founder Tim League announced today that he is expanding the renowned Alamo Drafthouse brand into film distribution under the banner Drafthouse Films (www.drafthousefilms.com). The first film to release under the new label will be Chris Morris’s astonishing new comedy Four Lions.
Four Lions is a whip-smart laugh out loud comedy that illuminates the war on terror through satire and farce. Blitzing the notion that a comedy about jihadists is a contradiction in terms, the film grossed an astounding £3M at the UK box office and was hailed by critics as “a brilliant film - astonishingly funny” causing “so many different kinds of laughter its almost incredible”.
Writer director Chris Morris based the idea on extensive research. “These cells have the same group dynamics as bachelor parties and five a side basketball teams. Plans are upset by arguments, egos, testosterone and idiocy. Terrorism is about ideology but it’s also about doofuses.”
Four Lions has taken the festival circuit by storm. Following its sell-out success as the buzz hit of the Sundance Film Festival, Four Lions packed the coveted closing night slot of South by Southwest, won the Independent Camera Award at Karlovy Vary and was voted Best Narrative Feature by audiences at the Los Angeles Film Festival.
“I’ve been a huge fan of Chris Morris’ comedic television and radio for years. To launch our new distribution label with what I consider to be a modern classic is a dream come true,” said Tim League.
Four Lions will kick off a 10 city promotional screening tour with Chris Morris in attendance in mid-October. The film is slated to release this fall in New York, Los Angeles and Austin and will expand wider in the following weeks.
I miss Alamo. Keep thinking maybe it’d make sense to try to open a similar place here.
If you meet a suitable entrepreneur, tell them about the Alamo. Tim and Karrie League still run the Alamo Drafthouses in Austin, but they sold the “brand” a while back. The buyer sells franchises. (Of course, a Seattle entrepreneur could always just adopt and adapt the concept.)
I would think it would be really popular in Seattle. There has been a similar place in Portland for a long time.
The South Lamar Alamo is a block from my house and I go there a lot.
In the same shopping center, the Leagues have converted the old Salvation Army building into a bar and restaurant, The Highball, with 13 vintage bowling lanes (from the Rock n’ Bowl in New Orleans where they filmed The Big Lebowski, bought at auction), skeeball, a dance floor, and themed karaoke rooms. I’ve gone there a couple times with friends. It’s great fun and good food, pricey but worth it.
Yeah, a good friend of mine knows Tim. I’ve not been to the Highball, but heard about it. We went to Alamo Ritz last I was in town, vs S Lamar.
I think such a place would do well up in Seattle as well. Might have to sit down with a buddy of mine who owns a bar and see what he thinks.
Obama mired in surreal US politics
By Edward Luce in Washington
Published: September 9 2010 19:39 | Last updated: September 9 2010 19:39
With friends like Michael Bennet, the embattled Democratic senator for Colorado, President Barack Obama has no need for enemies. Having this week submitted a set of proposals designed to wrong-foot the Republicans ahead of what is widely forecast to be a Democratic defeat in November, Mr Obama was himself instantly wrong-footed by somebody who is supposedly on his own team.
Mr Bennet, who relied on robust White House support throughout the summer to win the Democratic nomination in a tightly fought primary race, derided Mr Obama’s initiatives. To rub salt into the wound, Mr Bennet described Mr Obama’s proposals, which include $50bn in infrastructure investment and tax breaks to encourage higher investment by businesses, as a “second stimulus”.
So toxic has any hint of new public spending become that the White House, which was careful to ensure that Mr Obama’s proposals were self-funding, has essentially banned any use of the word “stimulus”. Mr Bennet apparently did not receive the memo. “We must make a hard choice to significantly reduce the deficit,” said Mr Bennet in a statement on Wednesday evening.
“I will not support any additional spending in a second stimulus package.”
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Mortgage rates edge up; Housing market still slow
By MATTHEW CRAFT and DANIEL WAGNER (AP) – 8 hours ago
NEW YORK — Record-low mortgage rates failed to pull the housing market out of its funk. Now rates are inching higher, but don’t blame them if home sales stay sluggish.
Just as bargain financing couldn’t save the housing market, analysts say, a gradual rise in rates won’t necessarily crush it. Cheap money matters less than the larger forces at work, especially a 9.6 percent unemployment rate, which keeps would-be homebuyers in fear of losing their next paycheck.
“What’s hurting the housing market right now isn’t mortgage rates,” said Michelle Girard, senior economist at the Royal Bank of Scotland. “It’s a lack of confidence about the U.S. economy. It’s concern about losing a job.”
On Thursday, Mortgage buyer Freddie Mac said the average rate for a 30-year fixed loan was 4.35 percent, the second rise in the past 12 weeks. That’s up from 4.32 percent the previous week, the lowest number since Freddie Mac began tracking rates in 1971.
Rates have been falling since spring as investors have shifted money into safe Treasury bonds. That influx of money has lowered Treasury yields, which mortgage rates tend to track.
Even the lowest interest rates in memory couldn’t entice buyers from the sidelines. Sales remain abysmal. The National Association of Realtors reported sales of previously occupied homes plummeted 27 percent in July, the worst showing in 15 years.
Record-low rates combined with falling prices mean houses are now more affordable than in decades. In better times, that might fuel a surge of homebuying. But Americans seem to have taken one lesson from the housing bubble, Girard said: Home prices can fall.
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Take home message from the housing bubble:
Beware of geeks bearing grifts.
Bloomberg
Greenspan Should Have Seen Housing Crisis, Burry Says
September 09, 2010, 6:15 PM EDT
By Jeff Bliss
(Corrects residency, examination of housing market in 14th and 15th paragraphs of story originally published April 5)
April 5 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan should have foreseen the collapse of the U.S. housing market and warned the public, one of the most prominent bettors against the subprime market wrote in a New York Times commentary yesterday.
“He should have seen what was coming and offered a sober, apolitical warning,” Michael Burry, who was head of Scion Capital LLC, wrote in the Times. “Everyone would have listened; when he talked about the economy, the world hung on every single word.”
“Unfortunately, he did not give good advice,” Burry said. In 2005, “Mr. Greenspan trumpeted the expansion of the subprime mortgage market” at a time when “the tide was about to turn,” Burry wrote.
“The signs were all there in 2005, when a bursting of the bubble would have had far less dire consequences and when the government could have acted to minimize the fallout,” Burry said in his commentary.
Burry, who was among the first to bet on subprime mortgage defaults, said Greenspan and other Fed officials have never asked how he came to his conclusions about the market.
“Mr. Greenspan should use his substantial intellect and unsurpassed knowledge of government to ascertain and explain exactly how he and other officials missed the boat,” Burry wrote.
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Just remember: ALL REAL ESTATE IS LOCAL.
Global Housing Rebound Loses Momentum, OECD Says: Chart of the Day
By David Wilson - Sep 9, 2010 8:11 AM PT
The housing market’s recovery from its collapse two years ago is flagging worldwide, according to the Organization for Economic Cooperation and Development.
The CHART OF THE DAY depicts the percentage of OECD countries in which house prices climbed in real terms, adjusted for inflation, on a quarterly basis since 2000. The organization compiled the data, cited in a report today.
Homes became more costly in seven of 17 member countries surveyed in this year’s first quarter, the most recent period available. At 41 percent, the proportion dropped for the first time in six quarters. During the streak, it rose to 63 percent, based on figures for 19 OECD members.
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China Property-Price Gains Slowed in August to 9.3%
By Bloomberg News - Sep 9, 2010 9:26 PM PT
Values in 70 major cities climbed 9.3 percent, the statistics bureau’s newspaper, China Information News, reported today.
Sept. 9 (Bloomberg) — Robert Sinche, chief strategist at Lily Pond Capital Management LLC, talks about China’s policy on the yuan. Sinche, speaking with Carol Massar on Bloomberg Television’s “In the Loop With Betty Liu,” also discusses the potential that the Bank of Japan may attempt to devalue the yen and the outlook for the U.S. dollar. (Source: Bloomberg)
China’s property prices rose 9.3 percent in August from a year earlier, signaling officials may extend a crackdown on speculators and multiple home purchases.
Average prices in 70 major cities were unchanged from a month earlier. Transactions rose last month, the statistics bureau’s newspaper, China Information News, reported today.
Poly Real Estate Group Co. and Beijing Capital Development Co. led shares of Chinese developers lower on concerns Premier Wen Jiabao’s government will implement further tightening measures to damp asset bubbles in the world’s fastest-growing major economy. Policy makers have already raised mortgage rates and down-payment requirements for second-home purchases.
“There’s concern that the government may take bigger actions against the property market going forward,” said Wang Zheng, chief investment officer at Jingxi Investment Management Co. in Shanghai. “A slowdown in price increases isn’t enough and what they want to see is a price decrease.”
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-Housing. Joseph Stiglitz says government intervention won’t fix housing:
“In short, government policies to support the housing market not only have failed to fix the problem, but are prolonging the deleveraging process and creating the conditions for Japanese-style malaise. Avoiding this dismal “new normal” will be difficult, but there are alternative policies with far better prospects of returning the US and the global economy to prosperity. Corporations have learned how to take bad news in stride, write down losses, and move on, but our governments have not. For one out of four US mortgages, the debt exceeds the home’s value. Evictions merely create more homeless people and more vacant homes. What is needed is a quick write-down of the value of the mortgages. Banks will have to recognize the losses and, if necessary, find the additional capital to meet reserve requirements. This, of course, will be painful for banks, but their pain will be nothing in comparison to the suffering they have inflicted on people throughout the rest of the global economy.”
Doesn’t it seem a bit premature to take away the punch bowl at this point? The bond bubble has barely started bulging at the seams…
WSJ Blogs
Real Time Economics
Economic insight and analysis from The Wall Street Journal.
* September 7, 2010, 2:13 PM ET
Kansas City, Dallas Feds Called for Rate Increase
By Luca Di Leo
Two regional Federal Reserve banks continued to call for an increase in the interest rate charged to banks on emergency loans last month, despite signs that the U.S. economy’s recovery was losing steam.
Prior to the Fed’s latest policy-setting meeting Aug. 10, directors of the Federal Reserve Bank of Kansas City and from the Dallas Fed voted to increase the discount rate by a quarter percentage point to 1%. However, they found little support from the majority of U.S. central bank officials, who recommended keeping monetary policy loose amid a fragile recovery.
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WSJ Blogs
Real Time Economics
Economic insight and analysis from The Wall Street Journal.
* September 7, 2010, 10:51 AM ET
Index Points to Slowdown in Hiring
By Kathleen Madigan
An August measure of labor indicators suggests a slowing in hiring in coming months, according to a report released Tuesday by the Conference Board.
The board said its August employment trends index fell to 96.7, down from July’s revised figure of 97.4, first reported as 97.0. The August index is up 9.4% from a year ago.
“Employment growth has been slow lately, and the employment trends index suggests that it may slow even further this fall,” said Gad Levanon, associate director. “However, we still expect job growth rather than an outright decline in the next several months.”
Seven out of the eight components had a negative impact last month. The negative indicators were: the percentage of consumers who say jobs are “hard to get”, jobless claims, the percentage of firms with positions they’re not able to fill right now, involuntary part-time employment, job openings, industrial production and real business sales.
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It’s different there, eh?
DBRS’s Loke Sees Risk of `Modest Correction’ in Canada’s Housing Market
By Alexandre Deslongchamps - Sep 9, 2010 1:05 PM PT
Huston Loke, co-president of the DBRS Ltd. rating company, said he expects a “modest correction” in the Canadian housing market as price increases outstrip income gains.
The relationship between home prices and average income in some areas has “gone out of line in some of those markets,” Loke said in an interview today at Bloomberg’s Ottawa office. “There is a risk of modest correction or perhaps a pullback.”
Loke, 36, said the risk of a “full-blown” housing crisis as was experienced in the U.S. is “extremely low” because of differences in regulations that make it more difficult for Canadian homeowners to walk away from mortgages.
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Found: Government with a housing price policy
September 10, 2010 - 12:52PM
Sometimes it seems we live in a parallel universe when it comes to the Chinese economy - there’s the China of imminent disaster that’s will take us down and the China of solid growth continuing to keep us afloat.
Remember all those scary headlines about the Baltic Dry Index diving, allegedly meaning China’s iron ore imports were collapsing and therefore our economy was about to die? Turned out the scare mongers were overlooking the fact that bulk shipping capacity had jumped by a quarter or so with inevitable consequences.
And there have been plenty of headlines about crashing Chinese real estate prices, a bursting property bubble that was going to make the Chinese economy implode and take us with it. Well, in the real world, today’s stats show average Chinese property prices in 70 major cities are up by 9.3 per cent in the year to the end of August.
Can’t quite call that a crash. Seems there’s a lot more to China than Shanghai and Beijing.
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It’s feeling more and more like spring of 1987. I think I even see green shoots in the bond market.
How often in U.S. corporate bond market history has one day’s worth of issuance exceeded the the total for an entire month of the previous year? I’m guessing this is a first, but if I am wrong, I am keenly interested in hearing of when this record was previously set.
* SEPTEMBER 7, 2010, 5:08 P.M. ET
CREDIT MARKETS: High-Grade Debt Surges Post-Holiday
By Katherine Greene Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)– Investors in high-grade bonds saw a slew of deals as the market came alive in the first session post-Labor Day. Meanwhile, junk bonds remained somewhat quiet, although managers say they are bracing for deals later this month. And at least six new deals are expected to hit the leveraged loan market in the next two days.
Investment-Grade Corporates
A deluge of new investment-grade bonds flooded the market Tuesday, with Dell Inc. (DELL), Home Depot Inc. (HD) and other top-rated companies issuing in debt–exceeding the total of $5.35 billion in all of September last year.
Companies were able to take advantage of low interest rates because investors had few savory alternatives: Stock market volatility spiked on renewed concern about the health of Europe’s biggest banks and yields on money markets and government debt are plumbing record lows.
“Interest rates are low, we got past the payroll numbers on Friday and everyone is chasing yields,” said Patrick Sporl, a senior portfolio manager at American Beacon Advisors in Fort Worth, Texas.
Tuesday was especially busy because this week–the first after the unofficial end of summer–includes two holidays: Labor Day on Monday and Rosh Hashanah, the Jewish New Year starting Wednesday at sundown. “The calendar is such that we have a lot of deals,” Sporl said. In a holiday-shortened week, he added, issuers are keen to sell bonds sooner rather than later.
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