Bits Bucket For September 29, 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.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Where do they get these 6% to 7% price drops for next year? Every week I am seeing 20% price reductions on listed houses that still don`t sell because they are still overpriced.
Home prices to take hit next year in many markets
By ALAN ZIBEL and JANNA HERRON
AP Real Estate Writers
WASHINGTON — Don’t take the latest snapshot of U.S. home prices too seriously.
The Standard & Poor’s/Case-Shiller 20-city index released Tuesday ticked up in July from June. But the gain is merely temporary, analysts say. They see home values taking a dive in many major markets well into next year.
Among the areas likely to endure big price drops, according to Veros, a real estate analysis company:
- Port St. Lucie, Fla., and Reno, Nev., where prices could fall 7 percent over the next year.
- Orlando and Daytona Beach, Fla., which face price drops of at least 6 percent.
- Las Vegas, which led all declines in the latest report, is also expected to post a 6 percent drop. Home values there have already tumbled 57 percent from their peak four years ago.
July was the worst month for home sales in 15 years. August wasn’t much better. The record number of foreclosures, job concerns and weak demand from buyers have combined to weigh down prices.
“The market, at best, is weak, and starting to decline,” said Michael Feder, chief executive of Radar Logic Inc., which tracks the housing market.
http://www.miamiherald.com/2010/09/28/1846511/home-prices-to-take-hit-next-year.html#ixzz10uot0UMq
“Where do they get these 6% to 7% price drops for next year?”
I’d have to guess they pulled it out of their arse, like many of the other numbers the MSM serves up. In San Diego County, household incomes have decreased back to below year 2000 levels, while San Diego home prices have so far corrected to a temporary low at 44.43 percent above year 200 levels (S&P/Case-Shiller index, April 2009).
Basic numbskulled equilibrium reasoning suggests there will be a further downside correction of at least (44.43/144.43)*100 = 30%, assuming no overshooting. Of course, the ‘6% to 7% price drops’ are presumably meant to apply at the national level; markets which were formerly considered to be ‘a bit frothy’ should be expected to face larger price declines.
I have a question for anyone who thinks they know the answer: How do Census median household income statistics handle unemployment? For instance, if 18 percent of households in a region have unemployment, and hence (effectively) $0 income, would that be reflected in the distribution of incomes used to compute the median? Or does the median calculation ignore unemployed households, only considering those with current labor market participation, and hence current incomes above $0?
Regardless, the long slog back from high unemployment to more normal levels, coupled with downward pressure on wages from a moribund global labor market facing weak aggregate demand, is sure to keep a lid on (real) wages, in San Diego and most other places in America, for the next several decades. I guess it will be up to investors and central banks to keep a floor under housing prices over the foreseeable future, as households are not going to be up to the task for some time.
It appears that the statistic is only “of those who are employed.”
http://www.bls.gov/cew/cewfaq.htm#Q03
Check out the response to “What types of data are collected and reported by the Quarterly Census of Employment and Wages (QCEW) program?”
This has to be the wage data. Our government wouldn’t collect wage data more than once, would it? BwahahahhaHaHAHaAHAHAHA (FPSS)!
‘…only “of those who are employed.”’
As I suspected, which implies that $60K is a wildly optimistic characterization of San Diego household income at a point when unemployment tops 10 percent.
Unemployment compensation is income. This is median income, not median earnings, so all sorts of pension, interest, dividend, and welfare income should be included.
How this income gets counted is another matter, household surveys most likely. Probably accurate to well within 10%, there are, of course, errors in all data.
Perhaps, although I would also factor in lower interest rates to your calculation which would lessen the decline.
The thirty year mortgage rates are holding firm at 4.5% versus 6.5% or so back in the day.
Where do they get these 6% to 7% price drops for next year? Every week I am seeing 20% price reductions on listed houses that still don`t sell because they are still overpriced.
I think they’re giving such conservative estimates because they don’t want to scare off the FIRE (finance, insurance, and real estate) advertisers.
The 6-7% is probably the lowest number they figured people might believe.
There have been plenty of folk predicting larger declines than that, but those people don’t make it into the news. They are disregarded as funny little curiosities who should probably be strumming the banjo for tips on the side of the road.
Those ‘funny little curiosities’ sure did out-forecast the ‘experts’ on the first wave down, didn’t they? Time will tell who looks smarter after the massive dead cat bounce is clearly visible through the lens of the rear view mirror.
…the massive dead cat bounce is clearly visible through the lens of the rear view mirror.
-Professor Metaphor
Us funny little people have been living through it. Florida will revert back to 1994-1996 price levels. Other states will also on a zip code basis like ours. Other states will simply return to the mean which would be around 1998-1999 pricing levels.
But hey, who cares about REALITY. Let the bedbugs sing in unison “Joy to the World” because everything is beautiful to the Bubblemedia….
It looks like the bank is going to accept my daughter’s all cash offer of $33,000 on a waterfront one bedroom condo here in Florida.
That’s well below replacament cost.
*replacement
Congrats, Marko!
This is a very interesting article about new rules for disclosing the actual sales price of houses in Idaho.
Idaho is one of just a few states - there were four in 2008 - that don’t require home sale prices to be disclosed to tax assessors. Lawmakers have discussed the concept for years, but a bill to require disclosure has never passed - in part, supporters say, because some fear disclosing the prices could make it easier to create a sale tax-like fee on home purchases.
But in 2008 - facing yet another full-disclosure proposal - the Idaho Association of Realtors pushed through a bill that made it clear that real estate agents could disclose prices to multiple listing services, regardless of the wishes of the buyer and seller…..
The private company that lists most of the homes for sale in Ada and Canyon counties will require real estate agents to disclose the price of all local sales - even if the home buyers and sellers want to keep it a secret.
The Intermountain Multiple Listing Service Rules and Policy Committee voted for the requirement Sept. 13 at the request of real estate agents, appraisers and county assessors.
I wonder which are the other three states that don’t mandate the reporting of actual sales prices.
I’ve often thought that sites like Zillow are probably less accurate in Idaho than in states like California, where it’s simply a legal requirement to disclose the actual sales prices and where they become a matter of public record.
http://www.idahostatesman.com/2010/09/29/1359543/all-home-prices-will-be-reported.html
Montana is one.
http://tinyurl.com/2g2ewgf
How do they know what their homes are worth then, in a normal market? Is that a secret among realtors?
How silly. If we report the price to the assessor, thereby making the information available for free, then there might be a new tax. But if we only report the price to the MLS, thereby making the information available for a hefty fee, then there can’t be a new tax. !!!???
Foreclosed, vacant homes a headache for neighbors
by George Ford
28 September 2010
When the grass and weeds approached shoulder height in July at the vacant, foreclosed home across the street from Harrison Elementary School, Becca English and her neighbors decided it was time for action.
“Field mice had been going in and out of the house through holes in the kick plate under the side door,” said English, who operates a day care business in her home next to the vacant house. “We also had snakes when the grass was really high.
“I finally sent a photo to the city of Cedar Rapids, and within four days after the city sent out a letter, we had someone here mowing the front and backyards.”
More than 6,400 Iowa homes were in foreclosure at the end of August, including 2,399 in Linn County and 1,789 in Johnson County, according to RealtyTrac of Irvine, Calif., which tracks foreclosures nationwide. A growing number of vacant, foreclosed homes are causing problems for police and depressing neighboring property values.
“Why does it take so long for a foreclosure to get settled?” Page said. “I just hate to see a once nice home in such disrepair and empty for so long. We take care of our houses, and this has the potential to hurt the value of the homes in this neighborhood.”
Homeowners who live close to vacant, foreclosed houses may have trouble refinancing or selling their homes. Appraisers have to report to lenders any vacant or boarded-up homes nearby and analyze how they influence the value of the house being sold or refinanced.
While a majority of Americans (59 percent) say it is unacceptable for homeowners to stop making mortgage payments and abandon their homes, a recent Pew Research Center survey found that more than a third (36 percent) believe walking away is acceptable, at least under certain circumstances.
“The police were called when a neighbor saw a bedroom window was broken,” English said. “When the officer arrived, she entered the bedroom to secure the house and found several guns stacked next to the window. Apparently, whoever broke into the house planned to come back later for the guns, which the officer seized.”
http://thegazette.com/2010/09/28/foreclosed-vacant-homes-a-headache-for-neighbors-too/ -
Yep, saw this happen in Texas, La, Mississippi during the ’80’s RE crash
Entire neighborhoods went belly-up with Foreclosures & walk-aways
Some still haven’t recovered even to this day!
Homeowners who live close to vacant, foreclosed houses may have trouble refinancing or selling their homes. Appraisers have to report to lenders any vacant or boarded-up homes nearby and analyze how they influence the value of the house being sold or refinanced.
Oh, goodie. There’s a boarded up house in the next block.
Why do poeple think the vacant houses are causing their property values to decrease? That is not the case. The decreasing property vaues and vacant homes are actually both being caused by they same thing (overpricedness). Hence, they tend to occur simultaneously.
“(overpricedness)” LOL
Is that anything like ‘truthiness’? Good one V.
I like it. BV…. good point.
…and unjoblessness.
http://www.telegraph.co.uk/finance/economics/8031203/Capital-controls-eyed-as-global-currency-wars-escalate.html
The Fed’s profligate money-printing is feeding dangerous speculation in global currency markets.
Exactly why gold is above $1300 now. The currency devaluation wars are starting up.
Touching that stuff will make you crazy.
Not if you have a set asset allocation percentage and stick to it.
Life is good!
Not if you have a set asset allocation percentage and
stick tohave been too lazy to re-balance it.Some thoughts from a thread from yesterday:
If ours is a consumer-based economy and China’s is a production based economy, and what we consume here is made there, then ultimately any money drops by the Fed in our economy will ultimately end up in China.
IMO economics is all about money flow. If money flows into a place then that place prospers; If money flows out of a place then that place suffers. Detroit is a good example: Money used to flow into Detroit because Detroit used to build the cars we Americans liked to drive and Detroit propered as a result. Now we Americans like to drive cars made elsewhere and hence Detroit is in decay.
Right now money flows out of the U.S. and flows into China.
China produces and the U.S. consumes. China doesn’t produce EVERYTHING we consume but it produces enough to cause a hefty gap in our trade deficit. So, if our government’s answer to our great recession is to dump money in to our economy so consumers can keep consuming then the ultimate benefactor will be China, not the U.S.
More …
Many years ago a study of money flow was made in South Central L.A. and comparisons were made with the Fairfax District of L.A. The Fairfax District was mostly jewish, South Central was mostly black.
A dollar that entered the Fairfax District traded hands an average of ten times before it left the district. That’s because the jews that live in the Fairfax district like to do business with each other, hence the Fairfax District prospered from all the dollar transactions.
A dollar that entered South Central L.A. traded hands, on average, a little more that one time before it left South Central L.A., and South Cental L.A.’s economy deterioated as a result.
Compare these two cases with how things used to be in the U.S. some years ago and how things are today. It used to be things we bought in the U.S. were made in the U.S. hence the dollars spent here continued to circulate here many time before they left for other parts of the world. Now, because things we buy are made somewhere else, the circulation of dollars is cut short because the dollars leave the country almost immediately.
Retailers are but distributors. Things made in factories are sent to retailers who distribute them to consumers. In other words, retailers are the middle-men who connect producers to consumers. Money drops by the government to consumers will flow in to the retailers and then out to the producers. If the producers are companies in the U.S. then the money will stay in the U.S. If the producers are companies outside the U.S. then that’s where the money will end up going.
My goodness, a light has appeared.
It used to be things we bought in the U.S. were made in the U.S. hence the dollars spent here continued to circulate here many time before they left for other parts of the world.
Excellent Combo. Thank you for that.
Of course part of the problem is that as others have more dollars than they need to buy stuff from the US, they have to “invest” that money in either treasuries, equities, or commercial bonds. This is part of the reason our current economy is so bubble prone, the “big pile of money” buying financial assets.
Good post, combo.
Really, the only solution is for the dollar to fall until the values of imports and exports equalize. The thing to remember is that China’s increased competetiveness isn’t something that we’re doing wrong, rather the fact that they’ve gone from an economy that was a complete clusterf**k (google “great leap forward”) to one that is in many ways equivalant to our “robber baron” dominated one from the 19th century.
“Really, the only solution is for…” ( us to become Jewish? )
Is that what combo is telling us? ( Hey, if it means keeping the dollars local, Shalom! )
Or maybe Mormon. They have a similar dollar-recycling community.
Moi-mon.., Jewish, ‘who’s’ so picky huh?
The other option is to restrict trade with China.
This would likely cause the dollar to fall as they stopped purchasing treasuries and used the dollar to buy hard assets.
That is not a good solution. It is a race to the bottom, and will result in poverty for everyone but the privileged few (read: not you).
The solution is to return to a more balanced state of affairs, with tariffs imposed on imports to compensate for disparities in currency values. It is quite simple and has always worked in the past.
The globalists will have you believe that sovereign currencies, and even sovereign NATIONS are the problem. All we have to do is cast off our chains of currency, and then all will be solved. We will be free of domination by evil governments. Not. The emergence of such conditions would only lead to domination by evil CORPORATIONS. That is, entities that are not representative AT ALL of the people.
People like J___inCalif love to predict the accretion of globalization. If you ask them, it’s “inevitable”. But is it? People have been predicting it for millenia. It’s in the Bible, for chrissake (remember Armaggedon?). But yet it hasn’t happened. IMO, it probably never will happen, but it is up to US to stop the movement in its tracks before the likes of J____inCalif get an opportunity to devalue our precious currency in their failed globalist attempts.
To clarify, when I said “This is not a good solution”, I was referring to purposeful degradation of the US dollar.
You’re assuming that the dollar would fall relative to goods and services. I think Jim was referring to letting it fall vs. other currencies. They are not the same thing. The dollar could fall vs. other currencies and still remain constant vs. goods and services.
This is, in fact, what Geithner and Co. have been proposing the China - unpeg the Yuan and let it rise.
This would cause the dollar to fall relative only to Chinese-made goods and services. The costs/prices of U.S.-made would remain constant; thus increasing the competitiveness of U.S. goods, and decreasing U.S. unemployment.
proposing
theto ChinaIf that’s what Jim meant, then I think it’s fine. We shouldn’t be comparing our dollar to anyone else’s currency. We should just concentrate on what people can buy with their own dollars in their own country.
Well a dollar that falls compared to other currencies WILL cause the prices of imported goods or goods made from imported materials to rise. But of course the Chicoms and others don’t WANT the dollar to fall relative to their currencies.
How would you propose to solve this?
“How would you propose to solve this?”
If I had a solution I would be President. It’s hard enough just to determine root causes.
It’s sort of like cancer: Researchers may learn what causes cancer but that doesn’t mean they will learn how to cure it.
Anyway, I’m just throwing out my thoughts for discussion.
Didn’t cancer used to be called consumption?
No. Consumption was TB.
And the answer then was to move to Arizona.
And the answer then was to move to Arizona.
Nowadays, doctors tell patients (who have moved here) that this isn’t the best place for lung conditions. Since so many people have moved here — and brought their cars with them — our air quality is terrible.
Previously people with bad lungs were sent to Los Angeles - circa 1920. You already know how that worked out.
and brought their cars with them
Not just the cars. The olive trees and oleander did a real number on the air quality, as well.
Tuscon in the late fortys and fifty’s was the
winter home of the mob from the east coast.
The air was sparkling clean and it was a great
place for young kids to grow up, even knowing the the funny guy down the street was a hit man for the mob.
Maybe we could do what everyone else does: raise trade barriers and enact high tarriffs.
As for those who will claim that will result in a pair of socks costing $10: socks aren’t any cheaper now that they are imported than when we made them here. THe same is true for just about anything else.
Generally speaking barriers to trade are detrimental for all involved if trade is based on a fair exachange.
China just put a 100% tariff on US poultry products to protect their own producers and accused the US of dumping.
As far as US-China trade is concerned we have:
a. theft of intelectual property/patents/piracy
b. slave labor/ no benefits, no retirement, etc.
c. complete lack of environmental protection (very expensive)
d. currency manipulation (on both sides)
The only way to protect your own economy against such unfair practices is to quit trading all together or enforce tariffs. However, look at all the US firms that are exploiting cheap Chinese labor. You think they are interested having their profit margins encroached upon by tariffs? Since we live in a facist state (merger of political & corporate interest) you can forget about tariffs on Chinese goods.
BINGO
As for those who will claim that will result in a pair of socks costing $10: socks aren’t any cheaper now that they are imported than when we made them here. THe same is true for just about anything else.
This is where the wealth extraction from the middle class happens. Management and ownership of distributors (formerly manufacturing companies) gets most of the benefit from outsourcing labor. Labor spends up it’s meager savings and then is destitute.
theft of intelectual property/patents/piracy
“Theft” is incorrect. Theft means that you deprive someone of something. You cannot deprive someone of something that exists in his mind (Intellectual property). You do not deprive someone of something when you make a copy (what I assume you are referring to by “piracy”)
“Infringement” is the correct term.
I only make this distinction because I think it is very important for people to recognize the difference.
“Theft” and “piracy” are terms used by some in the media industries (film, music, software) in an attempt to gain control over devices and the internet in order to avoid coming to grips with technological change.
I only make this distinction because I think it is very important for people to recognize the difference.
————————-
Sounds to me like a pointless distinction and one that implies that value of the sales you are stealing is $0 , but if it makes you feel better about stealing music and movies, then whatever.
I think Lavi’s point is, in cases of infringement there’s no evidence that you actually are stealing any sales.
that implies that value of the sales you are stealing is $0
It’s a very meaningful distinction when the blurring of it is being used to impact very important issues like freedom of speech and censorship.
There is no way to prove that someone copying something means that they would have bought it instead. The media industries like to bat around the assumption that they have “lost” X dollars to unauthorized copying. This is absolutely impossible to quantify.
but if it makes you feel better about stealing music and movies, then whatever
Copying is not stealing. I’m not saying unauthorized copying is right - but they are still not the same thing.
Yes it is. There are mediums set up where you can listen to songs you don’t want to purchase and watch TV you don’t want to purchase, and those mediums pay a cost for you to do so. Any methods outside of those are theft.
Sniggle around with lawyer words all you want.
Not being able to price something properly doesn’t mean it is free or has no costs: IE: POLLUTION.
If you disagree, then you obviously must feel that the hoods in your neightborhood should be able to borrow your car and drive around while you are sleeping as long as they refill the tank to where it was before they left.
I’d agree there is room for argument here - around items you *have* purchased and your rights to use them as you see fit, but let’s not conflate the two as equal.
If you disagree, then you obviously must feel that the hoods in your neightborhood should be able to borrow your car and drive around while you are sleeping as long as they refill the tank to where it was before they left.
I wouldn’t have a problem with “hoods” making an exact copy of my car and driving around the neighborhood with it.
They could leave me a tank of gas in my original car too, but Iet’s not get crazy.
The bottom line is that copies of digital products cost zero to make. That has fundamentally changed the business of making and selling copies. Most of the people in these copy industries who equates “copying” with “theft” are trying to get the government to abrogate your rights so that they can go on making money from something (the copy) that costs nothing to make.
To go even further, if you could put a gallon of gas in a machine and push a button and get two gallons of gas out, would you owe Exxon-Mobile for the second gallon?
Sniggle around with lawyer words all you want.
By “lawyer words” you mean THE LAW, right?
Copyright infringement is a civil matter. Theft is criminal. The laws were written that way for a reason.
Copying something doesn’t deprive anyone of the right to what they had before. And it doesn’t (necessarily) mean lost income, either. But lost income isn’t theft either.
Libraries should be banned as they deprive the authors of the books of income, as books are used by multiple people. Buying a used CD deprives the author, and is no different than downloading from a torrent tracker, etc.
Great topic and thoughts combo, and worthy of great discussion.
Often w/regards to trade I like to try to use micro-scale analogies - sometimes it works, sometimes not.
For example when I hire a babysitter, in essence it’s the same principle, where I’m receiving a service from them, and paying them money in return. So I have a trade deficit with the babysitter.
In an ideal economy though, even though one entity may have a trade deficit with another, the money flows in a “circle” instead of just one way. E.g. the babysitter buys clothes with the money, the clothes company uses some of their income to buy tech equipment, and my company may provide some of that tech equipment, and so the money flows back to me via my paycheck.
Over the long run what this means though is that there has to be a trade balance eventually. I can’t forever put out more money than I take in.
Unless (maybe) I actually create new money. If I can keep creating new money, I can keep this net outflow going forever; or at least as long as the outside entity receiving that money is willing to accept it. The problem is that as the new money is created, the value of all the existing money goes down (inflation), and thus the outside entity may decide to just stop accepting my money. This is what I think we’re seeing with China; I think it’s why they’ve stopped buying treasuries for the past year.
Maybe, at least. They are still accepting our money in the form of private payments for goods. I think they’re looking for ways though to try and do that outside of US$ though - e.g. last year they announced agreements for some of their trade with non-U.S. countries - e.g. Brazil and I think Russia - to be done in that country’s currency, not in US$.
Anyhow - in the long run we cannot keep up this trade deficit. By hook or by crook, it cannot continue forever. It’s been fed by an ever-growing amount of debt, and that has limits. This is another reason why I think Krugman was wrong in his article the other day - he’s assuming that reducing our consumption will hurt the U.S. by hitting our production (the paradox of thrift) - however most of what we consume - especially on the retail side - doesn’t even come from the U.S. - it comes from China.
“Anyhow - in the long run we cannot keep up this trade deficit.”
The term “trade deficit” is a fancy term for a transfer of wealth.
Dollars held by China (or any other country) are claims on American goods and services. When the time is right these claims just may be implemented.
There are already hints of what may be store for us: Recently some states have been offering up for sale some of their infrastructure - selling their publicly owned properties to private investors - because they are desperate for money.
States are desperate for money, China has a trillion-or-so dollars. The time may be getting right for a game of Let’s Make A Deal.
Sept. 28 (Bloomberg) — The U.S. dollar is “one step nearer” to a crisis as debt levels in the world’s largest economy increase, said Yu Yongding, a former adviser to China’s central bank.
Any appreciation of the dollar is “really temporary” and a devaluation of the currency is inevitable as U.S. debt rises, Yu said in a speech in Singapore today.
“Such a huge amount of debt is terrible,” Yu said. “The situation will be worsening day by day. I think we are one step nearer to a U.S.-dollar crisis.”
“fancy term for transfer of wealth” LOL
Right, one time I had a “trade deficit” with a casino…
Dollars held by China (or any other country) are claims on American goods and services. When the time is right these claims just may be implemented.
There are already hints of what may be store for us: Recently some states have been offering up for sale some of their infrastructure - selling their publicly owned properties to private investors - because they are desperate for money.
States are desperate for money, China has a trillion-or-so dollars. The time may be getting right for a game of Let’s Make A Deal.
——————–
combo,
You just hit on something I’ve been worried about for quite awhile. If the Chinese (or anyone else holding too many dollars) decide to buy up all of our most valuable assets, is there any way to stop them?
“If I had a solution I would be President.”
If you had a solution, you wouldn’t be president; you would be considered by the government as one of those nut-cases we are told not to listen to.
How would you propose to solve this?
A well defined problem is half solved.
Combo has done a terrific job defining the problem that can be easily understood by every body. The answer is starring us in the face. Start producing. Good Manufacturers have control over their destiny. Manufacturers if they are good have control even over their customers. The world of retailers and customers will seek out good manufacturers. Now how do we get there is the question. We will have to start small cottage type of manufacturing industries and build from there. This will take time and will be somewhat uneasy. I have always believed that it is easy to make money than it is to make a living. Most people pick the secure hard way to make a living. Starting manufacturing industries is also a lot of fun imo.
Starting manufacturing industries is also a lot of fun imo.
Agreed!
And I speak from personal experience, being the relative of a manufacturing company co-founder. Relative is no longer able to participate in the affairs of the company, so I’m now on the board of directors.
Helluva way to become a board director, that’s for sure. However, it’s been one of the most interesting things I’ve done in many years.
It seems so obvious: our country needs more manufacturing done right here. Why aren’t more people starting small manufacturing companies? For one thing, they need to raise capital. That requires someone to lend it to them. This usually involves a bank. So, there is one immediate problem. Banks don’t seem too interested in taking chances on a start-up these days.
It also helps to have an endless supply of labor willing and able to work for $2 an hour.
Therein lies the problem.
(… that everyone in this discussion seems to be ignoring)
I would also propose to be in industries that have relatively less competition. When a market is saturated companies compete on price. Hence packman’s model comes into play. “Pay as little as possible and charge as much as possible and pocket the difference”. That model is seen every where in the service industries. If a company manufactures a product and competes based on quality, need, and demand for the product then paying a decent living wage to workers can be accomplished. For example I think apple could manufacture its i-gadgets in the US, pay a living wage to its workers and still make money. American companies and their CEO’s will need to learn that perhaps companies have a social responsibility. Like it or not we have gone full circle and at some point even the stubborn greedy outsourcing gurus will see the advantages of keeping jobs home.
A strong commitment and loyalty among American will help. Americans should buy American on their own even if the prices are slightly higher. I would rather have fewer shirts made in the US than have twice as many shirts made in China. Our stores can have made in the US aisles. So consumers know exactly where to find made in the USA products. Buying American can be made culturally cool. SAVE OUR COUNTRY CAMPAIGN
As far as lending money for start up is concerned. Money always finds a path to a good idea. There is so much money on the side lines that entrepreneurs will take equity shares. Money for a start up is just a small hurdle and imo not a big one to over come. People see and fund decent ideas and companies all the time.
Rant off
I’ve seen a few manufacturers come and go here. One guy spent years raising VC (I was in the next office unit and could hear him pleading on the phone), got lots of local press and promised, by God he, they were going to provide a living wage and good benefits! Opened up and lasted little over a year. Saw it happen again…I don’t know why promoters have to brag up their wages and what good guys they are before they even get going.
Another company pays the local prevailing wage, and slowly started to provide various benefits after starting out with nada. The pay is nothing to brag about, but it’s right about local median, and the company has lasted well over 20 years. There’s something to be said for that.
“Money always finds a path to a good idea.”
Stop! Yer killin’ me! I can’t believe people still believe this fairy tale.
Reality is that good ideas are bought out and ruined or outright crushed by the competition that is threatened by it. If people only knew how 2nd and 3rd rate almost everything is…
A good, somewhat recent, example: ever heard of the Delta Clipper? The DC-X?
We could also start by agreeing to avoid buying stuff at places like WalMart. It’s impossible to not buy things from China, but WM’s dominance sets the bar so low that even competitive US manufacturers can’t swing it. sam walton is turning in his grave. he wanted low prices, but he sure didn’t envision this. His heirs are multi-billionaires whose trust funds are built on shaving pennies off wholesale prices to the point that only the chinese can afford to make their goods.
I remember back in the day when Wal-Mart prided itself on selling merchandise “Made in the USA.” It used to be plastered all over their stores back in Arkansas (where we used to visit family).
“How would you propose to solve this?”
Confucius say, “Buy gold.”
Cramer says that too, now.
When I was growing up in the 60’s a Child’s bike cost about $35. (about the same as $200 today).When you bought one it lasted til you outgrew it , and then some . It is possible to buy one today for just a bit more then that ($35.) , including the shipping from China . You’re lucky if it lasts till Christmas , though , and are mostly Throw-a-way if they break . There are no more neighborhood bike shops. who made it that way ? We, the consumer did . The Market goes where the consumer leads .
If the Chinese ever come up with a decent car for half price , it will , and should put the domestic makers out of business.
The kid’s bike I see at the “mart” stores cost a lot more than $35. More like $100. We do have a couple of bike shops here in our little burb that sell bikes that don’t weigh 1000 lbs. They cost about $300 and up.
We had a Schwinn shop that I loved (in Pasadena) as a kid in the early 70’s. Those bikes were so well made.
If I recall correctly, a major domestic bike maker ended up moving all their manufacturing off-shore due to pricing pressure from everyone’s favorite mega retailer…
I had a “Royce Union” ( British made ) 3-speed we used to “ghost ride” ( dismounting and letting land where it ‘may’ ) and it demolished everything in it’s path!
It is possible to buy one today for just a bit more then that ($35.) , including the shipping from China . You’re lucky if it lasts till Christmas , though , and are mostly Throw-a-way if they break . There are no more neighborhood bike shops. who made it that way ? We, the consumer did .
When I worked in a bike shop, we did quite the business in fixing Wal-Mart bikes. However, since those bikes were poorly made and poorly assembled, there was only so much we could do with them.
In short, they were cheap junk that was meant to be thrown away.
“Chicago Schwinn” frames are tanks and still much sought after. A local resale shop by me specializes in them - at a hefty markup. Once and a while they surface at garage sales - but they don’t every last long. A coworker snagged a cherry Collegiate from the Salvation Army for $20 - but that kind of luck is very, very rare.
They left town some thirty years ago though. IIRC, they first went to Japan or Taiwan. The catalyst was their workers voted to join the UAW and they pretty much went straight to being on strike. An early chapter in the book we’re reading now.
edgewaterjohn ( and other Chicagoans! )
Noticed that ( of all places ) Schaumburg is actually lowering taxes! Not much mind you, but it beats a swift kick in the teeth?
Please keep us posted as to how that little experiment pans out won’t you?!
“I had a “Royce Union” ( British made ) 3-speed we used to “ghost ride” ( dismounting and letting land where it ‘may’ ) and it demolished everything in it’s path!”
YEEEEHAW!!!!! And I thought we invented Bicycle Demolition Derby!!
That was one of our favorite pastimes. Thanks for reminding me of it.
Yep, the old “demo derby”. A good HILL ( always a pre-requisite! ) Sure, the handlebars would get twisted but that was about it? I think ’scores’ were based on overall distance and the number of barrel rolls on dismount?
Suffice to say we got good at working on bikes.
And ramps…. gotta have a target!
We do have a couple of bike shops here in our little burb that sell bikes that don’t weigh 1000 lbs. They cost about $300 and up.
Those’re the basic truisms about bikes and what I always tell people when they ask for advice on buying a bike.
The lighter it is, the more it’s gonna cost, good bikes start at $300 and, you won’t find a good bike at a dept store.
Our “disposable” culture, where things are cheaper to replace than repair, combined with an “early adopter” mentality that wants the newest and most fashionable, has brought us to a really sad place.
But I’m not entirely sure if the consumer led us here or was led here by cheap imported stuff that provides instant gratification. When you can instantly obtain a new toaster for about the same price as you’d pay to wait to get one repaired, it’s hard for most people not to go for the fast solution.
And so many people are locked into the “work/spend/service debt” cycle, like hamsters on a wheel, so they can pay for all that stuff that they don’t think about the possible consequences.
My dad’s generation knew at least how to change the oil and filters in their cars and do basic home maintenance. And for jobs he didn’t do, he at least had a clue about whether the repair person was competent and honest.
In my generation and younger it’s hard to find anyone who can (or has the time) to do those kinds of things OR respects those who can.
I collect and restore radios and TVs from the 20’s-50’s. Back then there was an entire industry tied to repairing these things. Most sets I get to restore have been repaired MANY times with lots and lots of replacement parts and sometimes some jerry-rigged parts. The parts I buy to restore them are dirt-cheap. The fact that I have some radios that are now almost 80 years old and they STILL work great is testament to the level of attention given to making things in the not-so-distant past.
We have a four-years-old Panasonic plasma TV that is acting up. The red color spectrum is kaput, so everything onscreen is green. W call it the Shrek TV. The cost of having a repairman show up to even look at it starts at $125. A new TV would cost around $800. Might as well buy a new one. It makes me sick.
Our old TV is 20 years old and still going strong in my dad’s bedroom.
My mom’s old vacuum cleaner pre-dated my birth in the late 60s. I sold it at her estate sale in 2007. It still worked very well. It was VERY expensive when she bought it, but it lasted over 40 years! That sort of quality is also much more eco-friendly because you have less pollution and resource extration on the build side, and fewer things ending up in the dump because the life cycle is so long when something’s made well.
You can’t buy that kind of quality anymore.
I heard that Taiwan has the most sophisticated Carbon Fiber bicycle frame plants in the world. I think in 2010 even Cannondale started making their carbon frames there, and they are at least as good as when they made them in the USA.
Most of the guys in the Tour De France are riding bikes with Taiwanese or Chinese frames. If everything that was made in China and Taiwan was junk, we’d have an easier time getting out of this.
You have light, strong, and cheap. Pick two.
“There are no more neighborhood bike shops.”
I’ve got 3 in walking distance where I live. But these aren’t the Walmart niche bikes. Prices start at $500 and go up from there. One owner had his bike on display before a race. $15k
How’s business? One of these shops only opened this spring and he was already in the black by August. Syracuse just hosted its first Ironman. Guess doing a tri is the new thing for more than a few locals.
Yes, tri is driving it I think. Plus quality comfort/fitness bikes for newbies. Mtn biking, not so much anymore.
We have 4 local shops here.
It wasn’t the consumer who caused this, so much as the voter. We did not do a good enough job of protecting ourselves from the globalist lie (see above). The lie is that we will prosper from globalization through cheaper products. The truth is that we will be ruined through cheaper wages. A person living in the US cannot compete for US wages with a person living in China because US dollars buy more in China than they do in the US.
Because our trade relationsip with China is neither free nor fair, we should terminate it immediately and replace it with a more fair version (which would involve tariffs). That would prevent China’s communist system from replacing ours. I totallly disagree that Chinese manufacturers should be encouraged to replace American manufacturers. That would be the case if their country were playing by the same rules as our country, but they’re not.
They day that China becomes a free country, with representative labor and environmental laws, is the day that the US can begin truly fair trade with that nation.
Agree with all, except perhaps this:
They day that China becomes a free country, with representative labor and environmental laws
So adding new restrictions will make them free? Not sure I follow.
Representative regulations are those passed by voters/elected representatives. They reflect the will of the people, and tend to serve the betterment of all. If they go wrong, then the voters suffer, so they will probably change it.
Contrast that with “regulations” imposed by a totalitarian government, which will always benefit the powerful, regardless of how much it hurts everyone else.
Totally agree with you, Big V.
I have 2 bike shops within a half mile of where I live, so not sure what you mean by that. Having said that, their bikes are astronomically priced and definitely geared to the monied yuppie.
Chinese bought out the Huffy Bike Co. in flyover country, central Ohio a few years back. Couple hundred lost their standard of living; they shipped it overseas. Wanna bet you can still buy one? Wonder how many of those families are getting food stamps?
The consumer hasn’t “led” anything, ever. That’s just more capitalist propaganda. All we get are the choices of dumb or dumber or the cousin.
At best, we get to decide among those choices which one to punish. And sometime we don’t even get that right.
How do you give American consumers an incentive to buy less stuff from China?
Outsource their jobs and leave them unemployed and insolvent. That might curtail their habit of buying Chinese-made crap they could really do without.
No, that just makes it worse. When they are living off the state, Chinese crap is ALL they can afford. Not just Chinese crap, but food and vitamins, and even screws and tape for repairing what they have left.
Well.., “Let me be clear” (TM) I don’t have a thing again the Chinese ( personally ) and to a degree, I think it’s great they’re just now joining the Ind. Rev?
But isn’t it possible we could trade w/ a handful of ‘other’ nations once in awhile? Do you know how boring it is to go shopping and not even have the thrill of turning over an item to see where it’s made?
How about charging a ‘disposal’ fee on every item bought new? Landfills could be free and paid for out of this tax. The fee would be based on the object characteristics, not the cost, so that all toasters would pay the same fee, regardless of the price of the toaster.
If a person wants to buy something new, make them pay the landfill cost right up front. If the fee is high enough, that will provide an incentive to buy a quality item and reuse it as often as possible.
Before we move to disposal fees, please tell me where the quality 30 year product can even be found anymore. I have a few items that are true joys to own because they are a testament to that old fashioned quality. The items were not cheap.
But most of what I own embraces the planned obsolescense model and some items even break w/in single digit number of uses. I used to always buy quality and hang onto it forever but its getting more and more difficult to continue in that vein. Unfortunatley higher price no longer guarantees quality.
Leatherman multi-tools. Still made in the USA. Stunning quality and longevity.
Carrie Ann,
Like you, I’m always willing to pay more for a better-quality item.
It was so disappointing the other week to go shopping for a new clothes washer only to find out none of them were made in the USA. Same thing with a food processor. I was almost in tears, and let them know we weren’t buying anything if we couldn’t get something made in the USA.
CincyDad,
The Voice Of Reason as… ‘usual’!
Wow, it’s so crazy it just might work? Not to mention the energy cost to get said POS ‘to’ the dump? Expand on it, roll. I see a PETITION in the making. Duuuude.
You charge tariffs on Chinese goods that compensate for the currency problem. Now there is no reason to spend $200 on a crappy Chinese bike, when you get a quality bike for the same price, maybe even produced by your own employer.
Raising fuel costs will have the same effect as tariffs. And China will cause it themselves.
I’ve been thinking about the issue of US manufactures losing out to Chinese manufacturing for awhile. Basically its all due to US company shareholders wanting to see rapid cuts in manufacturing costs- the key word here being “rapid”. Its entirely possible for a US firm to compete with a Chinese firm simply because at this stage Chinese manufacturing plants are grossly inefficient. Go to any number of Chinese factories and you’ll see thousands and thousands of workers doing really mundane tasks, like sticking knobs onto radios or applying stickers and so on. In the US there would be a tiny fraction of workers with almost all of the mundane tasks being automated. It probably takes more time to automate a US plant versus simply shut it down and ship the work to China.
I was listening to the news today and there was a story about the Maglight Corp- the company that makes all those nice big aluminum flashlights police officers use. I have a few myself and the things are indestructible. The company makes a good profit but makes almost the entire flashlight in Southern California. Why? Because its a private company and the founder REFUSES to send the work overseas.
Its also not like you can’t make something in the US and sell it at a competitive price. For example I own a set of Lodge cast iron pans. They are all made in Tennessee. I got em’ at Wal-Mart and the most expensive pan was $17. The quality is very high and they cost even less than even the cheapest, crappiest stamped steel Chinese pan. What’s more, the pans I have will last a lifetime. I even own a pair of New Balance running shoes that are made in the US. I didn’t buy them because they were made in the US. I did so because they were cheap.
Its a delicate situation as far as how to handle the trade misbalance with China. Protectionism is a easy way to lead to a depression- as seen in the 30’s. But I do feel that we do need to take some actions to level the playing field. Japan and China both have for decades basically gotten away with manipulating their currencies and heaping on huge tariffs to our goods. The gut instinct in me says we do the same. Unfortunately we’re in no position to do so because they have all of our cash.
Protectionism is a easy way to lead to a depression- as seen in the 30’s.
Like the one we’re in now?
Protectionism need not automatically lead to another depression.
But this observation does not take away from the fact that that was a good post.
Protectionism hurts net exporters. It hurt us in the 30’s because we were China back then.
Unfortunately we’re net exporters of debt.
I think I’d prefer the pain of the net exporters of manufactured goods.
“protectionism”….. Here we go again with buzzwords and propaganda created by the wealthy elite to rob you and me blind.
Would you protect your wallet from a thief? Would you protect your family from _____? It you don’t value it, you wouldn’t protect it. Do you value you your wallet? Do you value your family? Ooops…… let’s not confuse value with the cheap counterfeit called “values” by the wealthy elite.
What a play on words the corporatists and their minions(social conservatives, “fiscal” conservatives) have created…. protectionism. /gag
“Would you protect your wallet from a thief?”
Funny how so many people why decry protectionism lock their doors and even wire their houses with alarm systems.
Right on exeter.Very good point Colorado that we were net exporters in the 30’s ,yet the PR machine leaves out that fact .
What about the fact that a lot of that crap you buy these days you have to assemble it yourself .I just don’t remember assembling products 30 years ago .I’m sure it’s easier to ship that junk from Foreign shores if it isn’t assembled .Add the labor costs of assembly that you have to do yourself to the price. We are not getting value for the dollar either with the price fixing Health Care Monopolies.
Don’t forget all the packaging that’s needed because everything has to be shipped overseas.
Back in the day, when you bought a toy, you didn’t have to fiddle with clamshell packaging and all those ties, rubber bands, etc.
Precor manufactures its exercise equipment (at least a large portion of it) here in the states. I don’t know the details of why, exactly - their parent company is German, so it’s not strictly a “we’re an American company thing”. But yes, companies can - and do - manufacture in the US, and do quite well doing it.
Something I’ve been thinking about is that perhaps US companies should make more “upscale” items versus trying to compete on lower costs. I worked in a hardware store in college. This wasn’t ancient history either. It was in the late 90’s. Most of the stuff in the store was US-made. Most of it was cheaply stamped together crap. Some of it was good. On the other hand Germany still retains a spot as one of the top exporters. Most of what they sell is at least perceived as higher quality. Compare ant BMW or Mercedes to even a econo- Toyota and the quality is simply not there. They are rank with electrical and mechanical problems. Yet people are willing to pay more for german cars because they have that quality reputation.
Some US companies do this to an extent. A good example is All-Clad, the company in PA that makes upscale pots and pans. They’re like $100 each. Yet every professional chef and hoity-toity household has them.
I did want to add that after all this talk about American companies losing out to Chinese companies, ironically the best selling import car in China is Buick. As a matter of fact, GM sold more cars in China than they did in the US this year so far. Of course most of those cars were actually made in China, but still- its a US brand doing well in China.
My understanding is that all those Buicks sold in China are made in China. Heck, the new Lacrosse is partially Chinese designed. Also, some engines in GM cars (especially the 3.4L pushrod engine) are made in China.
Yep. The Lacrosse is actually a global effort. The drivetrain was developed in Germany, a lot of the electronics in the US, the exterior design was from the Detroit studio and the interior from the Shanghai studio.
We’re in a depression right now. It wasn’t caused by protectionism. Also, we had tariffs for a long time, and most of that time was not accompanied by a depression. Tariffs do not cause depressions.
Good posts Big V ,you are right on the money always on this subject as far as I’m concerned . It should be so clear to people but it isn’t.
It’s also a security issue having so much manufacturing going to Foreign Countries ,or should I say Middlemen replacing production and jobs in the US and the cheap wage base manufacturing from Foreign shores is junkie and not even worth the lower price .
It became all about how the Middle-men could extract higher profits
at the expense of our manufacturing and job based ,just like in the financial field the Middlemen of Wall Street in their greed didn’t care what they were doing to the economy with their Ponzi-Scheme marketing of junk securities World wide .
Just like with the Housing Boom debt crash ,the error of a economy based on outsourcing jobs and manufacturing without proper tariffs has crashed the job market in the USA. The PR machine is alive and kicking trying to keep the heat off the real solutions. Cheap wage Monopolies is all we have now along with a lot of price fixing while the Middle-men elite get richer at the expense of the majority .
Cheap wage Monopolies is all we have now along with a lot of price fixing while the Middle-men elite get richer at the expense of the majority.
BINGO, Wiz!
Consumers are not the beneficiaries of globalism; corporations are. Their profits have skyrocketed while workers’ wages have fallen through the floor.
U.S. consumers/citizens have been brainwashed by the elite who benefit from all this “globalization.”
Good point jetson-boy. And this also points to the greed of too many companies which leads them to overprice their products in expectation of high net profits. And when those falter, the folks who got used to living large, are not about to take pay cuts, so they gut their staff and then send the mfg overseas.
Leatherman. Lodge. New Balance. Costco. These are companies that make a great product for great price and pay their employees a living wage.
What are they doing wrong?
Lots of stuff is produced in China, but the money from a sale doesn’t go to China.
Take Hasbro toys. That’s an American corporation which subs out manufacture to Chinese factories which Hasbro does not own.
subject.. a GI Joe doll.
Firstly, China produces almost no plastic raw material. Companies like GE produce it, and China buys that from us. That’s one of our biggest export items, and that money flows to the USA.
Hasbro enjoys very cheap Chinese labor, and might pay that factory $1 for a doll. Complete. In a box. China is now out of the picture.
The finished toy was shipped to a Hasbro warehouse in the USA and sold to a store, for $9. That money goes towards business expenses and profits go to the stockholders of Hasbro corporation… not China. .
A US consumer buys the toy for $15. That money stays in the store.. it’s paid to employees, and goes towards various business expenses. Any profit goes to the store owners. It doesn’t go to China.
I would agree with your assessment. But the fact that we have an enormous trade deficit with China speaks of the disconnect that the US has with a productive economy. Much can be said about general economic stability when the country in question happens to produce and export goods. We have increasingly turned from that model. The result is basically a growing gap between the rich and poor and the eradication of the middle class. In my opinion much of metro California represents what the rest of the country will ultimately resemble: Lots of rich, lots of poor and not a lot in between.
Historically, no advanced economy has lasted for very long without a middle class and no middle class has existed without a production/export based economy.
In my opinion much of metro California represents what the rest of the country will ultimately resemble: Lots of rich, lots of poor and not a lot in between.
This is very visible to those of us who live in flyover country. The last time we visited SoCal (2 years ago) my teenage son made an interesting observation about the cars on the road. He noticed that people either drove a very expensive set of wheels or junkers. Yes, there were ordinary cars, but the number of high end cars was quite noticeable as was the number of junkers. Wheras here in podunky Larimer County that difference wouldn’t be so noticeable.
Also evident in SoCal was people’s impatience behind the wheel (but that’s another matter).
Joey, That’s a good argument proving that American made items need not be much more expensive, if at all, at the retail level.
All that money went to CEO’s and shareholders at the expense of lower middle-class manufacturing jobs. Traitors.
nope..
Pay some American union workers to produce that doll in an American factory which suffers from all sorts of restrictions and regulations along with the generally higher costs of just existing in the USA and it’s gonna have to sell for $45 instead of $15 for it to be profitable..
It will sell for $15, as long as people can afford to spend $15.
Except that is is spectacularly profitable at $15. If made in the US it would be less profitable, but almost certainly not unprofitable. The stockholders will either consider the return on their investment enough, or not. If they can invest in other companies that make spectacular profits by paying pennies for labor and poisoning the environment, then the company might stop making the item. If they have to pay reasonable labor costs and not poison the environment in all their other options, they will simply live with less profit.
“Pay some American union workers to produce that doll in an American factory”
Why does it have to be union?
polly, if it were spectacularly profitable, there would be much competition for those profit-dollars.
The result of that is competitive (lower) pricing to attract sales to me rather than to Hasbro..
..and the result of that is less profit for me.
But someone else is willing to accept even less profit than me, and they cut their price even further.. ad infinitum.
Eventually, just to produce that doll and make ANY profit, you must be big enough and able enough to touch China, and take advantage of that country’s cheap labor..
Which brings us to the realities of today..
in Colorado,
Wouldn’t you prefer to hire union labor? Support the “middle class” and all that? Bridge the gap between rich and poor?
no.. of course not. Business is not a charity and needless spending invites disaster.
Your factory which produces the dolls must cut production costs to the bare minimum, and labor is they highest cost of all… something like 40%.
You may pay higher than union scale and attract excelent people, but you’d get more in return for each labor-dollar.. assuming you have good management skills as well as efficient production methods.. And the company will be much more flexible in the bargain.
Businesses generally hire union only if they are forced to, and if you’re not careful or if you set up shop in the wrong place, you might be forced to.
The TOTAL labor cost of a new car made by GM is around $2000.00 per unit. (two thousand) For any and every type, except the Corvette and the other similar, but rare cars.
What is the other ~$20,000 paying for?
Hint: it ain’t bad, bad, ebil unions.
eco.. that’s only assembly-line labor costs.
There’s also research, development, parts, advertising, marketing, management, product transportation, along with various people who do mundane tasks not directly associated with producing a car.. like lawyers.. maintenance workers.. and whoever.
Determine ALL the hired help, and add it up.. gonna be something close to 40% or more.
Lots of stuff is produced in China, but the money from a sale doesn’t go to China.
That’s the point I was trying to make yesterday. The idea that all or even most of the money in a stimulus program goes to China is a Rush Limbaugh straw man talking point.
It a little of both. It goes to China and some also comes back to the US. We aren’t running a huge trade deficit with them for nothing.
Where it DOESN’T go is to J6P.
So China is working for free then? Whatever.
they make it up in volume.. i’m not kidding.
Anti-austerity protests sweep across Europe
By RAF CASERT The Associated Press
Posted: 3:04 p.m. Tuesday, Sept. 28, 2010
BRUSSELS — Anti-austerity protests erupted across Europe on Wednesday — Greek doctors and railway employees walked out, Spanish workers shut down trains and buses, and one man even blocked the Irish parliament with a cement truck to decry the country’s enormous bank bailouts.
Tens of thousands of demonstrators poured into Brussels, hoping to swell into a 100,000-strong march on European Union institutions later in the day and reinforce the impact of Spain’s first nationwide strike in eight years.
All the actions sought to protest the budget-slashing, tax-hiking, pension-cutting austerity plans of European governments seeking to control their debt.
In an ironic twist, the march in Brussels comes just as the EU Commission is proposing to punish member states that have run up deficits to fund social programs in a time of high unemployment across the continent. The proposal, backed by Germany, is running into opposition from France, which wants politicians to decide on sanctions, not rigid rules alone.
Europe’s sheeple are awakening from their comas, not a minute too soon. One can only hope American zombies awake before the Nov elections, but I’m not optimistic.
Anybody know what Lindsay is doing today? I need to catch up on her whereabouts and all that other important stuff.
Benefits aren’t yet being cut. In fact unemployment was enhanced. When these props are removed that’s when anger, protests, crime, and riots will occur.
Yep.
That comment could be taken both ways…
The problem is they want both lower taxes and more government spending.
Just like Americans.
These two conflicting desires added together are 1) good for precious metals - answer is to keep devaluing the currencies instead of raising taxes and 2) leading all developed nations into street riots at some point.
Better stock up on ammo.
Europeans are hitting the streets because their governments are actually slashing budgets while raising taxes. Us? We’re planning QE2 while preaching to the public all is well.
We’ll see…Massland decided they sure had their fill of King Ted and his ilk.
Sammy, they are protesting spending CUTS. They are not protesting SPENDING. They want to continue pigging out at the trough. I don’t think you read the snippet carefully, as your comment does not reflect your usual posture.
“with a cement truck” ( Why didn’t I think of that! )
Where’s the number to Redi-Mix!
“China doesn’t produce EVERYTHING we consume”
Thats right,
once they master gold chains, drum beats and ____y, we’re finished.
“____y,”
What? Booty?
Joey ,It cannot be underestimated how many USA prior manufacturing and other out-sourced jobs have gone to other Countries . One job creates other jobs because the jobholder is spending money in America .
The one thing that the power elite ignore in their infinite greed is that if Americans are unemployed or working for slave wages like
the Monopolies want than who can afford these products , You have to have closed economic systems and proper trade balances /tariffs.
The top 15% in wealth cannot sustain the buying power needed so you need the other 85% to have jobs and consume .
The middle class lifestyle in the United States was pretty good compared with other Countries rich/poor class systems .Can anyone consider it progress that the USA middle class becomes poor like the wage slave poor of other Countries ?Better that the wage slave poor in a Foreign Country be uplifted to prior USA standards with wage protection/working conditions protection , but the people have to fight for it like the American people did before we gave it all away .Hard to fight for employment rights and wages in a Communist Foreign Country,especially one that has a population problem like China .
When China goes into a area like Africa they bring their work force with them,which really pisses off the locals looking for jobs .The Americans however hire locals and the local job seekers like that .
Joey ,you think more people becoming poor is progress ,and the net result is just more money in the hands of the top tier.
wiz… we decided long ago we prefer a service economy.
look at the store that sells the GI Joe doll.
It pays rent to some American. It pays utility bills to American companies. Same with it’s inventory (like toys from Hasbro).
It’s sales clerks and office staff are Americans. The trucks that deliver are american drivers who work for American companies.
There’s gotta be a hundred occupations that support a retail store, and all are American.
Manufacturing? We don’t want it. It stinks, it’s noisy, it’s filthy, and it’s hard work… Not only that but the manufacturer’s profit margin is the LEAST in the chain.
Let China do the dirty work.
Joey …Who decided we wanted a service economy with all those low paying retail jobs ? Every time I call a Company these days I’m talking to a Foreigner , so forget your point that USA jobs are supporting USA retail.
Are you suggesting that industry and manufacturing in the USA
couldn’t of curbed their pollution ?I think people decided they wanted pollution control but industry didn’t want to go along with it .Every civilized Country starts to see the drawbacks of lack of pollution control in manufacturing and that cost of doing business is built into progress .
Actually, increased automation would of taken American jobs and it would of been much more efficient than various parts shipped to slave wage Countries that pollute and treat their workers like slaves with horrible working conditions .
There are many a American town that dried up after the loss of a manufacturing plant that the town depended on for jobs
and all the other jobs that were created by that plant was lost also .
Your not going to like a 25 to 30% true unemployment rate in this Country Joey .Besides there is no true control over the quality of product made in slave labor Countries and you have never addressed why we should allow unfair trade balances .
All I can say is you must be a middle man Joey.
Instead of getting pollution by manufacturing (that we could of controlled with time ) we get polluted products from other shores ( think Dog food and junk products ).
No joey “we” didn’t decide anything. The board of directors did.
hey wiz..
I must be a middleman?
And what must you be.. some lazy UAW assembly line worker who doesn’t like to see that gravy train come to a stop?
…someone who would wants the rest of us to support your business-killing wages and strangle hold contracts through us paying higher prices for everything, while the country devolves back into an industrial economy?
Look.. i don’t blame you.. really. You guys gotta look out for number one.
I guess it’s better than you being some farmer who’s trying to drive us all back to an agricultural economy.
right eco.. and your motto is Buy American 100%.. otherwise, you’ll can go without it.
What kinda car you own, eco?
Well with the prevalance of sexualy seleced abortions in China, they’re likely to be net importers of booty in the future.
Mortgage Applications Index in U.S. Fell for a Fourth Week
Bloomberg
Falling home values are making it harder for Americans to refinance even as borrowing costs drop.
The number of mortgage applications in the U.S. declined last week for a fourth straight time, led by a drop in refinancing even as mortgage rates declined to the lowest on record.
The Mortgage Bankers Association’s index fell 0.8 percent in the week ended Sept. 24 to the lowest level in almost two months, the Washington-based group said today. Refinancing also dropped to a seven-week low, while purchases increased for the first time in three weeks.
Falling home values are making it harder for Americans to refinance even as borrowing costs drop. At the same time, with the unemployment rate near a 26-year high and stricter lending standards, housing demand will be slow to improve.
“With lack of job growth, with lack of credit growth you’re simply not going to get housing and the economy growing well,” Michael Gregory, a senior economist at BMO Capital Markets in Toronto, said before the report.
Was talking to someone yesterday. They were refinancing a property and they were quite indignant that the appraisal came back at a “ridiculous” price, and that houses need to return to normal because this is crazy. The person went on to say that it was “not fair” that foreclosures prices are being used forcomps.
Then the same person asked me if *I* had considered buying.
I tried to explain that housing was not crazy; it WAS returning to normal, but I stopped because I didn’t want to anger the person. I instead said that whatever was going on, housing prices were not going to go UP, so I have time.
I walked away joyful that foreclosures were considered in comps appraisals. If that’s true, then that would make honestappariser74 (remember him…was that his name?) happy. And prices will fall all the faster.
Noone ever asks me when I am going to buy a house. Maybe it is the stoopid grin I get when they mention their trophy.
Oxide,
I’ve made the mistake of saying what you were thinking. It wasn’t pretty.
Isn’t it amazing how emotional people get about their house prices?
The number of mortgage applications in the U.S. declined last week for a fourth straight time, led by a drop in refinancing even as mortgage rates declined to the lowest on record.
That is amazing, and IMO quite scary.
Why is this news amazing or scary? To me its reality asserting itself.
It’s scary because it’s an indicator of just how “out of normal” our economy really is right now. Up until just these past few months a significant drop in mortgage rates resulted in a spike of refinancing. The fact that it isn’t now means people are getting really freaked out and/or credit is locked up tight as a drum - i.e. the Fed’s interest rate tool is now completely worthless.
The demand side is exhausted for the near term by a combination of the first-time home buyer credit pulling any and all fence-sitters into home ownership with a dearth of new entrants to the purchase demand queue, thanks to no jobs and no desire to move from current owners who sit on negative equity and sunken market values.
The supply side of the market is populated by sellers with inflated expectations, thanks to various government stimulus measure (e.g., the expired first-time buyer credit, rock-bottom interest rates, federal mortgage guarantees, etc). Many also need to hit an unrealistically high figure to pay off their (underwater) mortgages.
Hence homes are priced at levels above where any buyers are forthcoming, and the residential real estate market is in a state of permafrost.
However I wasn’t referring to sales - only refi’s. Even though the job market is weak - it’s no weaker than it was last year, and last year when rates went down to near 5.0% there were refi’s en masse. Now even with them dropping below 4.3% there are almost none.
Refi fees are up, they’ve become a hefty chunk of change in parts. Plus, if the refi story I related a few weeks ago (girlfriend refied her condo) is any indication - the process has become quite the guantlet, it’s not the sign n’ snooze it was four years ago.
Refi fees are up, they’ve become a hefty chunk of change in parts.
I was thinking of doing a refi back in the summer of ‘05. Called a very reputable local mortgage guy, and he told me that the fees alone would be $2k.
Since I had better things to do with two grand, I decided against the refi.
. Even though the job market is weak - it’s no weaker than it was last year,
If the weak job market is at the “same” weakness as last year, isn’t the job market’s current cumulative effect on housing actually more pronounced than the job market’s effect of last year?
Refi fees are up, they’ve become a hefty chunk of change in parts.
Yes this is true - read an article recently on the subject. Not sure the real effect though. Certainly some.
If the weak job market is at the “same” weakness as last year, isn’t the job market’s current cumulative effect on housing actually more pronounced than the job market’s effect of last year?
Seems like that’d be true if new jobless were flat, but cumulative employment was decreasing. However cumulative employment is pretty much flat since last year (139.4M last year, 139.3M this year).
Perhaps people are holding out for zero percent mortgage rates.
HOUSING AND HOME LOANS
If mortgage rates hit 0%
Imagine financing a home purchase with a no-interest loan. You’d probably never move again.
It’s not scary, it’s Japanese!
Mortgage rates have been at these low rates for a while now. Those who wish (and are able) to refi have already done so. I could now refi to a slightly lower rate, but the numbers don’t make sense. I’d be better off throwing a couple thousand at my principal than paying another round of up front refinance costs. Rates would have to go significantly below 4% to make me think seriously about refinancing my current (20 year fixed at 4.5%) loan.
Agree completely. (I’m in the same situation as you).
I think the demand side is not only affected by a derth of first-bime buyers (pulled forward by the $8k credit), but by an exhaustion of qualified people who have yet to refi.
Rates at record lows won’t trigger refinancing if everyone has already refinanced at rates only slightly higher than the current record lows.
Mortgage rates have been at these low rates for a while now.
Not really.
They have been in the 4.3-4.5 range for 4 weeks, however there’s usually a 2-3 week lag for refi’s. Before 4 weeks ago the plummeted steadily from the 5+ range where it was stuck for quite a while. Usually that quick and large of a change is enough to cause a big spike in refi’s.
Lost in the system that took the house
Washington Post
Luis and Miriam Fernandez are living in a cramped suite at an extended-stay hotel while they challenge their eviction after being thrown out of their house in Orlando because of a foreclosure.
Luis Fernandez’s foreclosure documents never looked quite right.Critical papers regarding his Orlando home were missing dates, and some signatures appeared to him to be forged. The mortgage had been sold so often - including once in the middle of the foreclosure process - that at times it was hard to tell which company was trying to seize the house. He challenged the foreclosure in court but failed.
Now, as Fernandez seeks to appeal his eviction and get his home back, he has learned that the law firm representing the banks is under investigation for fabricating foreclosure documents. And his file was signed by Jeffrey Stephan, a document processor who made headlines last week for approving what could be hundreds of thousands of cases without verifying whether the foreclosures were justified.
Fernandez says he longs for the days when homeowners knew the bankers holding their mortgage and could work out a compromise when hard times hit. Today, he said, it’s like “fighting a machine.” “You feel like you’re alone and getting beaten up by the system,” said Fernandez, 59, who missed three monthly payments after a heart attack nearly ruined his greeting card business.
He challenged the foreclosure in court but failed.
Good. Because while there may be some question regarding who actually owns the mortgage, one thing that can be said for certain is that it isn’t Mr. Fernandez.
“while there may be some question regarding who actually owns the mortgage, one thing that can be said for certain is that it isn’t Mr. Fernandez.”
And yet the MSM and the FBs keep missing this fine point.
after a heart attack nearly ruined his greeting card business.
Maybe he should have switched to “get well” cards?
The guy was probably your typical self-employed or small business person, in that he had one of those crappy health insurance policies with the monster deductible. And, even then, it probably didn’t cover every charge above that deductible.
Some insurance policy. But if you’re self-employed or a small business owner, that’s about all you can get.
And this crappy policy — and how it didn’t cover his heart attack — probably left him in a world of financial hurt. Couple that with a small business downturn, and you have a recipe for disaster.
Fernandez says he longs for the days when homeowners knew the bankers holding their mortgage and could work out a compromise when hard times hit. Today, he said, it’s like “fighting a machine.” “You feel like you’re alone and getting beaten up by the system,” said Fernandez, 59, who missed three monthly payments after a heart attack nearly ruined his greeting card business.
Could Mr. Fernandez really afford this house in the first place.
Age 59
Money from greeting cards…
Age 59
Money from greeting cards…
Hey. Not saying this is the case here, but it’s not unusual for people to make decent livings from greeting card work. That is, designing, writing and illustrating cards as opposed to opening a greeting-card shop on a credit card draft.
Sort of like the butt-ton of money some people make from voice-over work for commercials. They are “stealth” industries.
Sort of like the butt-ton of money some people make from voice-over work for commercials. They are “stealth” industries.
Good point.
Matter of fact, one of our KXCI radio deejays (who also was part of our very small staff) left to devote more time to her musical career. Which, I believe, will be subsidized by her commercial voice-over work.
How much worse is money from greeting cards than the money made by the majority that are just pushing digits around. For that matter, how many online here are working to produce anything of lasting value? The mindset of those in power who shower in the morning has been to reduce the standard of living for anyone showering after a day’s work. My sensors tell me that this denigration will not end well: Early Warning Sensor = Aladinsane …. he booked when Au was around 900; now, 1300. Hmmmm.
Right?
Savers told to stop moaning and start spending
Savers should stop complaining about poor returns and start spending to help the economy, a senior Bank of England official warned today.
www telegraph co uk/finance/personalfinance/savings/8028884/Savers-told-to-stop-moaning-and-start-spending.html
“His remarks are likely to infuriate savers, who are among the biggest victims of the recession.”
Savers prison next?
LOL
ZIRP = the bars around the Savers Prison.
I think of it more as water boarding than bars.
The bars will come when the restrict currency exchanges and the purchase of gold.
+1300
Borrow, spend, debt and bailout.
It is how great countries are built…
This is how corrupt political parties maintain their stranglehold on the levers of power, aided and abetted by brain-dead electorates.
It is how great countries collapse.
“Borrow spend, debt and bailout”
Kind of in the same genre as Marriage, divorce, pass the loot. Repeat cycle.
I need to add this for clarification:
Older households could afford to suffer because they had benefited from previous property price rises, Charles Bean, the deputy governor, suggested…
He added: “Very often older households have actually benefited from the fact that they’ve seen capital gains on their houses.”
…he said that savers “might be suffering” from the low Bank Rate. But they had done well from higher rates in the past and would do so again.
So he’s referring more to senior citizens who live off interest frm their homes? I don’t really know, becuase it’s the British system. But either way, it’s the YOUNG responsibles (i.e. ME!) who didn’t get a house 20 years ago, that get the shaft in this too.
They should “not expect” to live off interest, he added, admitting that low returns were part of a strategy… Mr Bean said that encouraging Britons to spend was one reason why the Bank had cut interest rates. They have been held at 0.5 per cent for 18 months, hitting rates offered on savings accounts.
STRATEGY??? Again, this is the British system, but for Americans this isn’t a strategy, it’s pure robbery. By keeping interest returns lower than inflation, they are FORCING us to borrow and spend to add OUR hard-earned money* to the economy to bail THEM out. And sorry, small consumers — who NEED those savings returns, simply aren’t big enough to benefit from large-scale low-interest lending. Instead, our “borrowing” is limited to a few thousand dollars on credit cards, where interest rates are 25 PErCENT! That’s not exactly low, you arrogant bank morons.
————
*and yes, we earn our money, one laborious hour at a time. We don’t sign a paper and collect hundreds of K in 20 seconds like these jokers do… That’s the real problem. Money is fungible, so the *poof* money from the printing press or a NINJA loan from a bailed-out Tan Man Mozilo becomes just a real as a working stiff’s labor.
It is futile to try to make sense of the illogical.
OK. Howabout everybody stop paying their mortgage so they can have money to spend on stuff?
There’s anecdotal evidence that this is already happening. A lot of people have stopping paying the morty so they can afford other things.
The beatings will continue until moral improves!
Even France figured it out…
France Ends Stimulus, Freezes Spending To Trim 2011 Deficit
Wall Street Journal | September 29, 2010 | By Nathalie Boschat
PARIS (Dow Jones)–France Wednesday presented a 2011 budget relying on the end of stimulus measures and a freeze in the value of state spending to trim its bloated public deficit to the maximum 3% of gross domestic product allowed under euro-zone treaties by 2013.
Finance Minister Christine Lagarde and Budget Minister Francois Baroin said the effort, which will cut the public deficit from a record 7.7% of GDP this year to 6% of GDP next year based on a projected 2% growth in output for 2011, is unprecedented.
“Never has such a deficit-reduction effort been undertaken,” Baroin told reporters.
Ending the stimulus plan will both reduce spending and boost tax receipts, helping cut the deficit by EUR8.2 billion.
“Ending the stimulus plan will ….boost tax receipts”
You French guys are so funny!
It’s not the French guys that are funny it’s the WSJ writer. I didn’t see quotes around the last sentence.
The old joke was that the French army was only successful when lead by a foreigner or by a teenage girl….maybe the French will prosper under their foreigner president.
Add seen in the Paris classifieds during WWII;
FS, one French rifle, never fired, only dropped once.
I bought one of those. A beautiful rifle. All acessories. Don’t think anyone even bothered to drop this one. 7.5 french weird, I finally found ammo for it in Serbia.
France is also deporting Roma gypsies en masse. PBS Newshour just had an article on it this week.
France is also deporting Roma gypsies en masse.
To where are they deporting the Roma? ISTR that they’re the ultimate men and women without a country.
Hmmm, lemme look… Romania.
www DOT pbs DOT org/newshour/bb/social_issues/july-dec10/roma_09-27.html
Deporting Roma to Romania? Who’d have thunk it.
Someone came up with the grand idea that all towns have camp grounds. The gypses moved in immediately after and never left.
The campgrounds must be free, I take it.
“…will both reduce spending and boost tax receipts.”
DANGER: oxymoron alert!
Pols delay a dose of reality to keep the illusion going just a little bit longer. Our second installments were way late last year - and this year they’ll even be another month later than that. Locally this is a big deal because the first installments for next year will be hot on the heels of these delayed bills. The result is houseowners will get whacked twice just as their holiday bills arrive.
September 28, 2010|By John Byrne, Chicago Tribune Reporter
Cook County property tax bills won’t be out until around Thanksgiving, meaning voters won’t have sticker shock to fuel their anger toward politicians when they head to the polls Nov. 2.
Bills will be mailed around Nov. 22, Treasurer Maria Pappas estimated Tuesday. That’s nearly a full month later than last year, when second installment bills were sent Oct. 28. Any increase in property tax will be included in the bill, along with the second half of the amount shown in the first installment mailing earlier this year.
The timing of the bills has been a political football for months. Retiring Assessor James Houlihan has accused Joseph Berrios, the tax appeals board member running to succeed him, of slowing the appeals process intentionally to avoid angering voters before Election Day.
“Cook County property tax bills won’t be out until around Thanksgiving, meaning voters won’t have sticker shock to fuel their anger toward politicians when they head to the polls Nov. 2….Retiring Assessor James Houlihan has accused Joseph Berrios, the tax appeals board member running to succeed him, of slowing the appeals process intentionally to avoid angering voters before Election Day.”
Another fine Cook County dirty trick perpetrated on the taxpayers. Personally, I need the extra time to get into the proper mindset for this. And to stock up on the appropriate distilled spirits.
At least San Diego housing prices are going up again.
Household income falls in San Diego County
By Morgan Lee
Originally published September 28, 2010 at 10:49 a.m., updated September 28, 2010 at 11:06 a.m.
* 2010 Census: Checking list twice
* Census finds record gap between rich and poor
* Census data: Marriages in 2009 at record low level
The median household income in San Diego County fell by 4 percent last year, outpacing national and statewide declines as Americans struggled with the effects of the recession and its aftermath, according the statistics released Tuesday by the U.S. Census Bureau.
The regional figure for 2009 was $60,231, down from $62,585 in the previous year. Nationwide, median household income decreased by about $1,500 on average between 2009 and the prior year.
Meanwhile, the county’s poverty rate held steady at 12.6 percent of the county’s nearly 3 million residents, according to data from the bureau’s annual, nationwide survey of socioeconomic conditions. The federal poverty line is $10,956 for an individual and $21,954 for a family of four.
But one in five households was on the cusp of poverty, meaning that they earned between $25,000 and $50,000 in an expensive corner of the country.
The San Diego metro area had the fourth-highest median gross rent in the United States last year — $1,224 — behind San Jose, San Francisco and the Washington D.C.-Arlington, Va. area, the Census Bureau said.
…
I hadn’t realized that U.S. cities were in a race for the most rapid increase in housing unaffordability?
San Diego ranks 2nd in Case-Shiller July housing index
Behind San Francisco and somewhat slower than in June
By Roger Showley
Tuesday, September 28, 2010 at 2:07 p.m.
San Diego continued its national lead in home-price recovery in July with the 15th consecutive monthly increase, the closely watched Standard & Poor’s/Case-Shiller Home Price Index issued Tuesday.
San Diego rose 9.3 percent year-over-year, second only San Francisco’s increase of 11.2 percent. The national average for 20 metro areas was up 3.2 percent.
With all index values set at 100 as of January 2000, San Diego reached a peak of 250.34 in November 2005 and since dropped to a low of 144.43 in April last year.
…
Maybe this time is different, but normally the news that the last few remaining bears are getting converted to bulls is a near-term warning sign of a bubble’s incipient collapse.
* COMMODITIES
* SEPTEMBER 28, 2010
Gold Vaults to New High
Bears Turn Bullish as Metal Settles at $1,306.60 Amid Global Economic Worries
By CAROLYN CUI
Gold prices jumped above $1,300 an ounce for the first time on Tuesday, in a seemingly unstoppable surge that has confounded skeptics and turned bears into bulls.
…
Run with the mob or get trampled.
Run with the mob, then get trampled.
I’d walk all over you to see The Who.
True story: Right after the concert that ended so badly in Cincy, I saw The Who at the Pontiac Silverdome.
To say that the normally rowdy Who musicians were subdued would be an understatement. They were downright scared. And so were we. A normally rowdy Michigan crowd was quite subdued.
Strangest concert experience I’ve ever had.
Bear,
We went to Costco yesterday and my wife is
still in shock. She didn’t need to use her little
hand held computer to see that prices has risen
by 30-40% on almost all the items she bought.
I’ve seen the same at Sam’s Club. Prices just keep going up, up and up.
The Fed’s stealth austerity program seems to be working quite well!
Bought some Halloween candy from Target the other day, bite sized Snickers.
They are about 30% smaller than they were 2 years ago
Toilet paper is now smaller, the result of
tighter sphincters.
WalMart shocked me. A year or two ago the 5 quart Motorcraft 5-20 sold for around $10. Last week the price was $15!
A year or two ago a case of 100 shotshells was $15. Last week the price was $22!
Good thing that the ZIRP isn’t causing inflation.
I’m pretty sure that isn’t 3% either.
Could this be a sign that the Chinese government is losing the battle to persistently inflate their currency?
As I keep saying… besides RE and wages, what deflation?!
There was a great quote I saw the other day (paraphrasing):
A bubble pops not when everyone is convinced there’s a bubble - but after that, when everyone’s convinced that maybe it wasn’t a bubble after all and it really is different this time.
We haven’t reached that point yet, IMO.
P.S. Counterpoint - maybe it really is different this time. Until now the only time the U.S. has ever had debt-to-GDP above 50% was in wartime. The relief of that debt-to-GDP was because of winning that war and emerging as the world’s only productive economy.
This time there’s no war to win.
“A bubble pops not when everyone is convinced there’s a bubble - but after that, when everyone’s convinced that maybe it wasn’t a bubble after all and it really is different this time.”
I suspect you are referring to a broad universal belief that fiat currency — particularly the US dollar — is invincible, are you?
If Feddie can print as much money as our government needs, then why do we need taxes? Heck, why do we even need to work or innovate?
If Feddie can print as much money as our government needs, then why do we need taxes? Heck, why do we even need to work or innovate?
Hmmm… you may be on to something there….
“why do we even need to work or innovate?”
Well somebody has to come up with the next unregulated financial swindle and give it a fancy name, now don’t they?
Maybe all the bears got beaned with a zuccinni.
Linkey
http://missoulian.com/news/state-and-regional/article_ce823b74-cac1-11df-84dc-001cc4c03286.html
Heh.
No one at work here has expressed any interest in buying gold or any other precious metals. In fact a Bob Brinker cultist swore off gold for years and only reluctantly thinks he should have bought some - years ago. He does not seem to be interested in buying now. There was only one person I overheard at the gym saying he recently bought gold.
Ok, I’ll put on my nomex and flack jacket.
I bought gold and silver, I have for several years. I don’t consider myself a gold bug. But I will admit I like the shiny things. And they have rewarded me well. Where else should I hold my money? Perhaps a 1.25% account at Ally bank?
I traded a half dozen shiny things to an Iranian business man in Texas last year for a truck. I was happy, he was happy. Could life be any better, or any more cliche?
I buy and hold shiny things because in my less than infinite, less than divine wisdom, I can find no better place for my fiat currency.
Disclosure: My fiat currency seems to find a happy home in Las Vegas
They probably don’t have any money with which to purchase gold.
Here the argument seems to come full circle. We can argue all day about what is the best investment. But if one has no money to invest, does it matter which is best?
Maybe this time is different, but normally the news that the last few remaining bears are getting converted to bulls is a near-term warning sign of a bubble’s incipient collapse.
What percentage of the American public owns Gold? What this looks like is the beginning of stage 3 of a secular bull market.
Stage 3 is where the general public get’s in on the action. If this is so, watch out.
There are reasons to invest in gold other than the gold bug theories. I put my money into gold and silver four years ago simply because I was frustrated with the CD’s and the fee’s brokers charged me on stocks and all the crazy accounting on everything. It just caused me stress.
So I did the gold and silver ETF thing just so I could at least have something when I retire in 20 years or so. I bought it and forgot about it except perhaps every three months or so.
I don’t understand the FED and quantitative easing and all of that. Since I don’t understand, I don’t want to participate in all of that. This BLOB has been wonderful in helping me understand housing and that part of the bubble. But economist to me are like the old men in the bible who would butcher a goat and try to read the future from the entrails.
Without butchering a goat and without a PHD in economics, It is save to say that housing is going to go down and down and down.
If banks are getting killed off by super low yields, who is the beneficiary of the Fed’s cut rate policies?
* The Wall Street Journal
* HEARD ON THE STREET
* SEPTEMBER 28, 2010
Banks and Insurers Face the Killing Yields
By DAVID REILLY
The financial-services industry is built for speed. But while superlow interest rates are meant to be high-octane fuel for the economy, they are gumming up financial engines.
The problem for many banks, insurers and fund managers is that their cost of funding can’t fall below zero. Yet returns from a number of businesses or products continue to decline with already near-record low bond yields. That compresses margins and threatens to make some business lines uneconomic.
While firms have dealt with falling yields for 30 years, this is the first time they have faced a zero floor on funding costs. Adding to the painful mix, the pressure on margins comes at a time of tighter regulation and a moribund U.S. economy.
Signs of angst are emerging. One senior investment banker recently talked in private of rock-bottom rates “decimating” the business if they continue for a number of years. No wonder there is talk of layoffs on Wall Street.
…
Raises hand slowly: Isn’t the real point of QE that our government’s debt is being held in check by these low interest rates?
Geithner Cornered On Tax Hypocrisy
by Jason Mattera
09/28/2010
Either Tim Geithner has elephant-sized chutzpah or he’s completely clueless. How else to explain his insistence that Congress follow the Obama plan to spike taxes on the top income brackets?
Forget for a moment that it is sheer economic lunacy to raise taxes on any quintile when our country is struggling with anemic private-sector growth, coupled with the fact that we’ve had unemployment above 9% for 16 straight months now. Geithner himself doesn’t have the moral authority to push tax hikes on anyone. He’s a tax cheat.
Recall that before his confirmation hearings to head the Treasury Department, Geithner paid $42,702 in back taxes and interest for the years 2001 through 2004. He blamed this “error” on TurboTax. Now he’s out pimping the Obama proposal to repeal portions of the Bush tax cuts, recently telling Fox Business that such tax increases are “good policy” that will “help the economy in the short term and in the long run.”
…
PB,
I like Jason’s articles and he’s not ‘wrong’ here either. Still, and don’t anyone take this the wrong way, but after so many years of filing, I have to admit, it becomes less a priority each successive year.
I get to it when I get to it! I know I’ll owe and… every year the rules ( game ) changes and… it’s a PITA. I think the Right has made about as much hay out of this as they ever ’should’ have. We ALL ‘owe’, can we move on now?
Forget for a moment that it is sheer economic lunacy to raise taxes on any quintile ,
Another talking point. If the top quintile actually did something with their tax savings, that might be valid. But they put it in the mattress, waiting for the destruction of the middle class to be complete. Then they can take their mattress money and use it to build walls and hire private armies a la Venezuela. As for the “small business”/backbone of American/mom/apple/pie talking point, the NewsHour had a piece that only 2% of small businesses are in that quintile.
Meanwhile, Tim Geithner “cheated” on $27,000 of taxes. $27K. Oh come on. Even Willie Nelson cheated better than that to the tune of millions, and most of the time he was high. If the Chair of the Federal Reserve Bank of New York wanted to cheat, he would have either stolen much more or hidden it much better. I hold to “honest mistake.”
“$27K. Oh come on.”
Is there a felony threshold for tax cheating?
I’m guessing if you’re a democrat, the threshold is whether or not the cheater is a democrat. Likewise for republicans.
At one point ( I, me, myself personally ) owed $12k in back taxes to the Feds, and a lesser amt. to the state. I misunderstood the Code as applied to “bunching” and certain deductions were disallowed. ( We worked it out )
I guess that makes me a dispicable ‘cheat’ too. So yeah, 27k isn’t an amt. that ‘impresses’ me either. ALL of us will have tax issues at some juncture in our lives. Just a matter of time.
He was sufficiently contrite about it and should have no bearing on his ability to administer policy going forward. Sheesh already.
Couldn’t find any easy answer, but here is a place to start:
http://www.irs.gov/compliance/enforcement/index.html
No, there is no threshold. You get more prison for stealing a Snickers bar. But I haven’t seen proof of cheating yet. It’s just my opinion that $27K is more likely to be a mistake than deliberate act.
If there is proof, I’ll go down to the Treasury Building myself and hold a sign calling for Timmy’s resignation, if he hasn’t already left to spend more time with his family first.
It doesn’t really matter, once you realize that the rules don’t apply to the rulers.
It’s just my opinion that $27K is more likely to be a mistake than deliberate act.
I had a Civics teacher in high school (really great guy) advise his class that if we were going to steal, don’t steal anything less than $1M.
As for the “small business”/backbone of American/mom/apple/pie talking point, the NewsHour had a piece that only 2% of small businesses are in that quintile.
I would be thrilled to gross $250k a year, let alone take home that much.
I’d be thrilled to gross half that much.
The take-away lesson from Turbo Tax Timmy is not that he “cheated” on his taxes. That would require certain mens rea that is not in evidence. The real lesson is that our tax code is so complicated that even a candidate for Secretary of the Treasury can’t undertand it without help.
Thank you DennisN. This is a more valid answer than the junk I hear on the radio.
“…..build walls and hire private armies…..”
They will probably hire Iraq/Afghanistan vets.
Another subsidy for the rich. The training for their private security forces will be paid for by Joe Taxpayer.
Those poor, poor rich people.
Often purposely hidden fact: the rich often have (one of) their corporation(s) pay their personal taxes.
Southwestern part of the country in for a day of reckoning regarding its water supply.
http://www.nytimes.com/2010/09/28/us/28mead.html
Gee, no one could have seen THAT coming. Thousands of homes built in the desert, population shifts exacerbated by millions of illegal immigrants.
Here in Tucson, there are quite a number of us who’ve been trying to tell local authorities the same thing. But we keep getting dissed as anti-growth NIMBYs.
AZ having among the cheapest water costs in the nation exerbates the issues.
It always staggered my mind that these huge cities were built in the desert. Maybe in the future they will become ghost towns, complete with abandoned skyscrapers.
Interesting the Colorado, Utah, Wyoming and New Mexico do not use their share of the water. Perhaps our people in charge here saw the handwriting on the wall and made other preparations.
Arizona and Nevada are going to be so screwed.
Interesting that Colorado, Utah, Wyoming and New Mexico do not use their share of the water - YET.
There, fixed it for you.
I guess it depends on what happens. Some are predicting Colorado will grow from 5 to 8 million souls in 20 years. I doubt it, as the economy is so anemic that even the illegals are less visible than before (during the “boom” a Saturday at the local WalMart felt like a trip to Mexico, not any more).
As for Wyoming, I know that Laramie and Cheyenne get most of their water from acquifers. There’s only 500K people in the whole state. Utah and New Mexico? I have no idea where they are headed.
Still, 20 years is along time. But I suppose a weak economy does have a silver lining.
Actually Wyoming’s rights to the Colorado River are probably minor. The continental divide cuts across Yellowstone Nat. Park, down the Wind River Range, and exits the state south of Rawlins. The bulk of the state lies east of the divide and gets its water from the North Platte River and other tributaries of the Missouri/Mississippi system. The area around Grand Teton is actually in the Snake River watershed.
There have been no shortage of books on the subject over the last several decades….
At the risk of stepping on Az Slim’s turf, a favorite of mine is The Great Thirst, by Norris Hundley of UCLA.
As I was retiring from California, I was well-aware of the issues surrounding future water shortages. So places in the SW were quick to be stricken from my list.
The article mentions an acre-foot as the amount of water for two families of four members each. Here in suburban Boise, the Boise Project gives my subdivision of 400 houses an allowance of 421 acre-feet for the irrigation season running April through early October. The average irrigation “tax” bill is about $18 per house per year. So we can water the yards freely at very low cost. Last year I turned back 97 acre-feet to the Boise Project so we were way under our allowance.
http://www.usbr.gov/pn/hydromet/boipaytea.cfm
Amazingly enough metro Boise doesn’t draw from the Snake River at all, getting its water from the Boise River instead.
The Colorado River is actually a small river - it only contains about half the water of the Snake River. And yet 28 million people are trying to draw from the Colorado River, in comparison to the 1.5 million people in Idaho who could draw from the Snake River.
At the risk of stepping on Az Slim’s turf, a favorite of mine is The Great Thirst, by Norris Hundley of UCLA.
Also highly worthwhile is Marc Reisner, “Cadillac Desert: The American West and Its Disappearing Water.” It should be required reading for anyone who lives in the western US.
Yep. One of the downsides to making a comittment in real estate in that area. Imagine done with a 30 year mortgage in 2040 but no water for you to shower in.
Meanwhile, the East Coast and the Midwest, with their Great Lakes and 35 inches rainfall, are surprisingly empty.
There are considerable stretches of the Wisconsin coast of Lake Michigan, north of Milwaukee, where the farmland rolls right down to the beach. It’s actually kinda neat to see from the air. Of course that land is being used, but it’s nice to see inland coastline that isn’t wall to wall houses.
There are still place like that even in California, where fields of brussels sprouts end in a cliff that drops into the surf. And places like this may be found only a dozen miles north of Santa Cruz.
Phoenix has a population equal to that of the entire state of Idaho.
Los Angeles has a population equal to that of the entire state of Oregon.
Ugh. We sure as hell got outta Dodge in time, didn’t we.
If you include the suburbs of LA, the population is around 18 million, bigger than Arizona, Oregon, and Washington combined, and larger than any single state except California, Texas, New York, and (maybe) Florida. In a semi-desert.
You mean deserts lack water?
BRAWNDO! It’s what plants crave!
China Takes Further Measures to Cool Real Estate Boom
By Bloomberg News
Sept. 29 (Bloomberg) — China will speed up the
introduction of a trial property tax in some cities and then
expand the levy to the whole country to curb rising real estate
prices, the government said, without giving a timetable.
The state also asked commercial banks to stop offering
loans to buyers of third homes and extended a 30 percent down
payment requirement to all first-home buyers, according to a
statement posted on the government website. The down payment
level previously applied only to homes larger than 90 square
meters (969 square feet).
Property prices in 70 major cities rose 9.3 percent in
August from a year earlier, prompting the government to extend a
crackdown on speculators and multiple home purchases. The state
may implement the property tax soon in cities including
Shanghai, Shenzhen and Chongqing, according to Credit Suisse
Group AG.
“The new measures are not dramatic, but they convey a
clear policy message: Beijing is serious about controlling the
property prices,” Qu Hongbin, a Hong Kong-based economist with
HSBC Holdings Plc, said in e-mailed comments today. “This
should help damp the expectations” that housing prices will
rise quickly, Qu said.
China will halve the transaction tax for buyers of non-
luxury homes for use as sole residences starting Oct. 1, the
Finance Ministry said in statement on its website today. The
rate will be 1 percent for units of 90 square meters or smaller,
it said.
Exemption Ends
The country will also end an income-tax exemption on
profits from the sale of real estate reinvested within one year,
the ministry said.
Banks will be ordered to stop lending to property
developers that violate industry regulations, the government
said earlier today.
Credit Suisse analysts led by Jinsong Du recommended
“reducing exposure” to Chinese property stocks in the near
term, saying a tax would hurt real-estate market sentiment,
according to a note to clients dated yesterday.
China may announce property taxes as early as the October
National Day holidays, China Business News reported Sept. 21,
citing an unidentified person. The break runs Oct. 1 to Oct. 7.
The trial measure, which extends the existing commercial
property tax to homes, is more likely to be implemented at the
start of next year, the Chinese-language newspaper said.
China has since April raised the down payment and interest
rates on second-home mortgages and restricted the number of new
homes residents can buy in some cities.
From yesterday:
“Comment by RioAmericanInBrasil
2010-09-28 11:04:11
If Bush’s tax cuts were only for the “elite” then why all the hooplah about extending tax cuts for the middle class? I thought they didn’t get any?
You really like framing issues in words like only, all, none and every when in fact issues rarely come down to only, all, none and every.
Notice how I used the world rarely instead of never.
As you know, the middle class did receive a much smaller percentage of the tax cuts than the rich. It’s complicated but some things are.”
When Bush’s tax cuts are called “tax cuts for the elite” or “tax cuts on the rich”(depending on which bullet point polled better that week) you are implying an only without using the word only. I only respond to what you say.
As far as who received a larger percentage of the tax cuts is concerned, taxes are imposed on us as a percentage of our income, so tax cuts are given to us as a percentage of our income. At the end of the day that does tend to mean that in real dollars someone earning more will receive more back in cuts, but that also means in real dollars they were paying more to begin with. All tax brackets received cuts, however. The middle brackets got screwed a bit(but still received cuts) but the uppermost and the lowermost brackets saw the biggest cuts. Bush’s tax cuts were not “tax cuts for the elite” and to suggest I am framing things incorrectly by taking your words literally is disingenuous at best.
And to suggest that any disagreement with you stems from an inability to comprehend complicated issues is both needlessly insulting and needlessly condescending. Intelligent adults can have opinions and viewpoints that vary from those of other intelligent adults.
Varelse said
” As far as who received a larger percentage of the tax cuts is concerned, taxes are imposed on us as a percentage of our income, so tax cuts are given to us as a percentage of our income. At the end of the day that does tend to mean that in real dollars someone earning more will receive more back in cuts, but that also means in real dollars they were paying more to begin with. ”
1. The elite earn a much larger percentage of their income as dividends and capital gains. Thus a large tax cut on dividends and capital gains will be a much bigger advantage for the elite.
2. The top 400 income tax payers had an effective tax rate of 16%, ie much less than say most middle and upper middle class tax payers. The effective tax rate takes into account all types of income (wage capital gains dividend) and deductions. You might call it the real or true rate of income tax.
You said
Bush’s tax cuts were not “tax cuts for the elite”
You couldn’t be more wrong.
This is an older article but possibly from a source you will trust.
http://www.forbes.com/2009/01/29/irs-high-income-personal-finance-taxes_0129_wealthy_americans.html
…The top 400 income tax payers had an effective tax rate of 16%…
Fine. Cut my tax rate to 16 percent and I’ll be quite satisfied with the tax system.
And to suggest that any disagreement with you stems from an inability to comprehend complicated issues is both needlessly insulting and needlessly condescending.
Unless it is true of course.
Your post yesterday indicated such.
Your post today does not.
Intelligent adults can have opinions and viewpoints that vary from those of other intelligent adults.
New to the internet, huh?
From the WSJ:
“The Tax Foundation has run the numbers and the tax hikes coming down the road are eye-popping. Take a school teacher married to a bus driver, with a combined income $120,000 and two kids. Only Nancy Pelosi would consider them “rich,” but their income taxes will go up $4,499 next year, even before any potential AMT penalty, which could add several thousand dollars to their tax bill.
A family of four with an income of $45,000 would pay $2,083 more in taxes. Ouch. And that hard-working single mom, who Mr. Obama talks all the time? If she makes $40,000 a year, she will pay the IRS $1,607 a year more.”
I don’t know how to make a “TinyURL” but you can find the above quote on the WSJ online website in the opinion section. The article is titled: Walloping the Middle Class
“Tax cuts on the elite” is a misnomer. The tax cuts were for everyone, and the cuts for middle and lower brackets were not insignificant. If that were the case then letting the cuts expire would not even be an issue.
Take a school teacher married to a bus driver, with a combined income $120,000 and two kids. Only Nancy Pelosi would consider them “rich,” but their income taxes will go up $4,499 next year
I call BS on this. That’s our income range. Our taxes didn’t drop that much with the Bush tax cuts, in fact, they hardly dropped at all.
And where do a teacher and bus driver pull down that kind of dough? My son’s HS teachers make 40-50K and local bus drivers here are paid about $14/hr. If you make 120K out here you are considered upper class.
The bus driver was stealing lunch money from the students.
The bus driver was stealing lunch money from the students.
He was copying their money.
“And where do a teacher and bus driver pull down that kind of dough?”
Chicagoland. Maybe not in their first year on the job, but with a few years of experience under their belts and both working full time, that gross income would be in the realm of possibility.
I figured it was that or NYC. Needless to say that is twice the median HH income for the US.
Its easy to forget that a 100K income is a lot. Sure, you can’t live the Lifestyles of the Rich and Famous on it, but you live a lot better than most people. My kid’s schoolmates keep telling them “you guys are rich”.
Contrary to popular belief not every kid wears $100 sneakers, drives a late model car, has an iPhone or a laptop PC. I know plenty of families that have one computer that everyone has to share. I’m almost embarrased to tell them that we have 7 computers in the house (yes, I live in Nerdvana).
“Nervana”
+1
What does Pelosi spend on her jet?
“What does Pelosi spend on her jet?”
About the same amount the previous Speaker of the House Dennis Hastert spent.
Your point?
* POLITICAL DIARY
* SEPTEMBER 29, 2010
Walloping the Middle Class
The Democrats’ tax punt may mean that a family of four with an income of $45,000 will pay $2,083 more in taxes.
…
I’d like to see what assumptions they are making here. Not one word of that in the article.
So would I.
They would get the standard deducton. 11,400
4 dependent deductions 11,000
So their net taxable income would be 22,600
The first 16,700 is taxed at 10%: $1670
The remainder is taxed at: 15% $885
Total: $2555
Minus the Child tax credit: $2000
Net Tax: $555
Looking at the tax cut info on wikipedia it would appear that the only change theis family would face is that $4700 would be taxed at 15% instead of 10%, for a whopping $235.
I too would love to see how this $2083 was calculated.
The Tax Foundation was organized on December 5, 1937 in New York City by Alfred P. Sloan, Jr., Chairman of the General Motors Corporation; Donaldson Brown, GM Financial Vice President; William S. Farish, President of Standard Oil Company of New Jersey; and Lewis H. Brown, President of Johns-Manville Corporation, who later became the first Chairman of the Board of the Foundation
Do think that this group of people would be biased toward the elite??????. Who finances it now????
A school teacher and a bus driver make a combined of maybe $50k/year.
There ya go varelse:
http://tinyurl.com/
Submit the long link in the box, push the button and magically the shortened link appears. However, I seem to recall Ben telling us at some point they were too time consuming to screen and he didn’t want us to use them anymore. Perhaps that’s changed?
Bus drivers make NOWHERE near that kind of money.
29 September 2010 Last updated at 12:21 ET
Austerity protests: The view from the street
Thousands of people across Europe have protested against austerity measures being imposed by some EU governments. Trade union members have demonstrated against cuts in wages, jobs and pensions, triggered by the financial crisis.
…
Do you think the protesters understand what the alternatives are?
Do they realize there is no pain-free option?
Better yet, do we realize there is no pain-free option?
It depends who you are referring to as “we”.
: )
I think they would favor
Tax/fine and regulate/jail the bankers then maybe they’d be more willing to give up a pound of their own flesh.
I was just about to say the same thing.
I find it amazing that the elite can afford to send their children to the finest schools, but somehow, everyone of them doesn’t teach the French Revolution.
“Let them eat cake,” indeed.
That’s what I think — jail time for bankers who perpetrated the financial disaster would reduce the incentives for people to riot.
Fred Reed reports from Mexico: Doin’s in Juarez
“The War on Drugs is of course a farce, having accomplished less than nothing over a half-century. Somewhere the other day I saw a story saying that consumption in the US has just risen by seven percent. This is not surprising since, as a society decays, the escape market prospers. And, despite excited hype about having killed this or that drug lord, there is no hope, no hope at all, of eliminating a business that lets impoverished third-worlders drive BMWs.”
I have no idea how many billions “we” have wasted over the decades on the so called war on drugs.
Illegal drugs have been illegal in the US for a long time, so I guess that’s not what’s causing all that violent activity over in Mexico and on our borders.
More likely the corruption in Mexican politics. The drug lords own the police and the governors.
I also don’t think groups of men or women that have found power and wealth in illegal activity will all of a sudden go straight because governments legalize their current product. They’ll just find something else to distribute. The point is that they work beyond the confines of law to create a lucrative lifestlye not otherwise possible inside the stystem. The product is incidental, a mere tool.
I also don’t think groups of men or women that have found power and wealth in illegal activity will all of a sudden go straight because governments legalize their current product. They’ll just find something else to distribute.
My sentiments exactly. Recall that what later became known as the Mafia profited quite handsomely from bootlegging during Prohibition. And they sure didn’t go out of business after 1933, when Prohibition ended.
As I recall there were fewer bullets flying after prohibition ended. If you legalize it then the profit margin collapses and they have to compete. You also increase tax revenue for the state to go after them and jail them. Mexico is weak financially. They can’t stand up to the drug lords. I suspect this is one of the biggest factors in the recent violance. Poor gov officials are more likely to take drug money as are poorly paid police officers. As security deteriorates business leaves, and there are fewer options for law abiding people who then turn to crime or flee to feed the family.
“As I recall there were fewer bullets flying after prohibition ended.”
The mob was still pretty darn active in the Boston area at least until the early 90s. I missed being in the plaza of one broad daylight shootout of a whole table of victims through an IHOP’s picture window by a matter of 2 hours. There was a 2nd such incident in a 99 Restaurant just a few years later.
I knew eating at IHOP was unhealthy, but never suspected lead poisoning.
Drug war is a complete waste of money and finances drug lords and terrorists around the globe.
Drug war is a complete waste of money and finances drug lords and terrorists around the globe.
Not to mention that a responsible adult In a free society should be able to self-medicate any way he or she sees fit.
I could really get behind the GOP when they talk about doing away with the “Nanny State” if they made that a plank in their platform.
Hell, I could probably even overlook the whole “worship of invisible beings in outer space” thing.
Speaking of Fred Reed, here’s a little gem from him. Sorry it’s not housing related. I am a sucker for good travel and exploration stories, here’s one for your pleasure.
————–
In the Himalayas (Fred Reed)
We caught the seven-o’clock goat-and-chicken out of Kat, my daughter Macon and I, two porters, and our trusty guide Karna. A Nepalese rural bus is not the Stork Club. It is much better, depending on your nerves. For eight hours we bounced higher into the Himalayas with the tires a centimeter from precipices that would have given us time to write our memoirs on the way down. At least three hundred chattering Nepalese were stuffed into that bus. I swear it: three hundred. They aren’t used to motorized vehicles, so much of the time one was hanging out the door and vomiting enthusiastically. Nice people, though. Not too inhibited. On several occasions children detached themselves from the compact mob and sat casually in my lap. Why not? Everything has to be somewhere. It’s a law of physics.
We passed the night in one of those agreeable unfancy tea-houses that punctuate the trails and feed you tea and dolbaht, which means lentils and rice with seasoning. In the morning we set out for real into the mountains. Nepalese have a robust understanding of “mountain.” They think 10,000 feet is practically sea level. They would giggle at those sorry speed-bumps west of Denver.
Up and up and up we humped into the rumpled landscape, tea houses growing sparser, mountains just freaking huge and green and waterfalls everywhere roaring and glowing white and throwing spume and gloomy forests that had never eaten in a chain restaurant, trunks all yellow with damp golden moss. For twelve days we never saw a road or anything with a motor. Whatever finds its way to those little villages comes in on someone’s back.
Having a porter carry your stuff seemed a bit wimpy, but had its charms, such as not having to carry your stuff. The capacity of a 140-pound Nepalese to carry things is astonishing. They would make excellent astronauts, as they don’t need air, and the merest of them could carry the Space Shuffle to its launching pad. So we tramped along, upward, very upward, and occasionally flung everything down and lay back in the vastness and just were. I recommend it.
If there is a prettier country in the world, I haven’t found it.
Fred and daughter Macon in Knee Paul. He is ugly and you probably don’t want to look at him, but he adds the photo for friends and family who may think they have to.
Nepal abounds in miracles. At one point we crossed a long cable-suspension bridge over a gorge that you could have put Massachusetts in and had trouble finding it the next day, and plodded up to a sizable village where we sat at an outdoor table of a tea house. Three children, aged nine to eleven, wandered up inspected us, and asked, “Where have you come from?”
Gretgawdamighty: English. I mean real English, not pidgin, not phrase-book, but verbs and tenses. Whole high schools in the US couldn’t do it. Where did you learn, we asked. “Oh, in school. We have two classes a day in Nepali, and the rest in English,” responded this brown implausible mite. I’m not manufacturing the grammar.
Trees grew few as we approached 14,000 feet. Brooding forest gave way to rocky flats and thin grass with interspersed ascents. You find a pace that balances air intake with energy output. At that altitude gringos don’t sprint and gambol. I have heard that at slightly higher villages the elders keep a sacred oxygen molecule in a jar of rare red jade, and show that molecule to the young, so that they won’t be astonished when they descend. However, I never saw the jar.
We drew to within two days march of the Tibetan border, which meant that for practical purposes we were in Tibet, but without the Chinese army. That is the best way to be in Tibet. In fields of pale green grass, fog drifting in ragged patches, we sometimes found water-driven prayer wheels turning, turning, splash splash clink, splash splash clink, loud in the silence of fog and emptiness.
I wondered what it must be like to grow up in a remote Himalayan village. The people are not poor. Or maybe they are. Or maybe we are, but go at it differently. These things are hard to judge. The villagers are not hungry certainly, have adequate clothing, and sleeping on a good mat next to the kitchen stove is neither uncomfortable nor lacking in dignity. The contrivances and nuisances of what we regard as civilization are perhaps not as crucial as we tend to think.
But what must it be to live all of a life under the looming quiet mountains, horses wandering free and yak ambling through, with people known since birth? They live closer to the bone, I think. We live, we die. In the mountains the rest seems to matter less.
The high mountains are not altogether safe for those who don’t know them, which makes a competent guide a splendid idea. Altitude sickness is real and can kill you. Your lungs ooze fluid and you drown in it. Why some people get it and others don’t is a mystery.
One morning at 14K Macon made a strenuous ascent to see some lake or other. When she got back, she wasn’t hungry. Symptom one. Normally she is voracious and would gnaw the varnish off a table if permitted. Karna didn’t like it.
All she wanted, desperately, was to sleep. Symptom two. Karna didn’t like that at all. Did she feel short of breath, he asked? “Only a little.” Symptom three. Bingo, discussion over. Ten minutes later, wrapped in everything warm she had, she headed down the trail with Karna and a porter. Operative word: Down. Into a pitch dark, fog-blurry night on a wickedly treacherous trail.
I wasn’t invited. Karna didn’t elaborate on why. Being Nepalese, he is polite. We both understood that he didn’t need a half-blind guy falling over every available precipice and generally making life complex. He meant to travel fast and I didn’t fit that profile.
The porter didn’t go to carry her gear, which stayed with me. He went to carry her if she collapsed, entirely possible. If you think that small Nepalese porters can’t carry a large gringo in fifteen-minute shifts, you have reason on your side, but not the facts. They can, do, have, and will.
She didn’t collapse, being bull-headed, and six hours later, having passed through herds of yak appearing like dark hairy ghosts on the trail, was safe maybe 1500 feet lower—whereupon the porter walked back through the night to tell me in the morning that Macon was fine. That is service. Next day we heard of a Japanese girl with a less alert guide who had to be helicoptered out.
Herewith a blatant advertisement: Should you need a topnotch guide in them parts, email Karna Magar and his partner Balu. Their English is good. You won’t find better people.
I wondered what it must be like to grow up in a remote Himalayan village.
1 out of 3 die before the age of 1 years.
Life is hard there despite the scenery.
Butters, thank you EXTREMELY for that extract. I had not previously known about Fred Reed. He sounds like the Joe Bageant of travel. I found out about “Deer Hunting with Jesus” from another blog - prepping oriented (as they say in the vernacular). Fred has the same bite to his writing. You just enlarged one person’s life today!
90% of the heroin is grown in Afghanistan by farmer we protect from the Taliban. So don’t forget to include that cost when figuring out how much the War On Drugs costs.
90% of the heroin is grown in Afghanistan by farmer we protect from the Taliban.
Do you have any evidence of that or are you just talking out your arse?
You can Google it. I’m pretty sure the WSJ, Financial Times, Reuters, et al, have that information.
It’s no secret. Taxpayers aren’t getting what they pay for in public education and one state governor aims to do something about it.
Gov. Chris Christie has introduced a tough-love reform package that will make classroom achievement in New Jersey — not seniority or tenure — the basis for pay hikes and career advancement in Garden State public schools. He is demanding that teachers in kindergarten through fifth grade actually pass tests in reading and math in order to be certified.
“It might lead to the firing of lousy teachers and bad principals who hurt our children,” Christie said. ~ New Jersey Education Reform
That going to suck for teachers in the ‘hood where being smart will get you shot.
Yet there will always be some moron whining… We need more regulations and laws, that will ‘fix’ everything. The “level” playing field crowd.
More Regulation: “Great for Lawyers and Accountants,” Bad For Business, Says Frank Holmes
Sep 29, 2010 by Peter Gorenstein in Investing, Banking
Federal regulations are choking America’s small businesses, says Frank Holmes CEO of U.S. Global Investors – a publicly traded money management firm with $2.6 billion in assets under management.
“There are so many unknowns, that’s what’s shown up in the marketplace, this unknown cost factor,” Holmes tells Tech Ticker. “It makes us uncompetitive, especially for small business, for manufacturing, that’s why business are going to other places.”
According to a recent Wall Street Journal op-ed by Nicole and Mark Crain, “the annual cost of federal regulations in the United States increased to more than $1.75 trillion in 2008, a 3% real increase over five years, to about 14% of U.S. national income.”
And that’s before Congress passed the sweeping health care law and the new 2,300 page Dodd-Frank financial overhaul.
To Frank’s point, small businesses do bare the brunt of the regulatory costs, according to The WSJ:
“…small businesses—those with fewer than 20 employees—incur regulatory costs 42% greater than firms with between 20 and 499 employees, and 36% greater than firms with more than 500 employees. The regulatory cost per employee for small businesses was $10,585, compared to $7,454 for medium firms and $7,755 for large firm.”
Sarbanes-Oxley and other recent regulations have added bureaucracy and failed to improve business conditions, in Holmes’ opinion. It’s “great for lawyers and accountants,” but does little to improve competitiveness, he says. “You don’t have to have a gazillion regulations in every part of the economy.”
Regulations are not causing us to be uncompetitive. Globalization is causing that. Regulations are representative of what people want, e.g., let’s not poison the water, let’s not pull our kids out of school so they can pick grapes, yadda yadda yadda.
These people disagree.
Regulations are not causing us to be uncompetitive. Globalization is causing that.
That makes zero sense. Our lack of competitiveness causes globalization, not the other way around. If we were competitive at producing things we want, there would be no reason to buy those things from abroad.
Regulations are representative of what people want
Very true. But wanting something and being willing and able to pay for it are two different things.
As I explained a few days ago, there is a serious collective hypocrisy about regulations in this country. We pass regulations because it’s free, easy, and makes us feel wise and noble. But when we need goods and services, we don’t want to pay the cost of complying w/ the regs. So we buy stuff from countries that don’t have them.
Globalization was forced upon the consumer when our all-wise-and-knowing reps in Congress and the White House decided to eliminate many tariffs and modify many trade agreements in a way that put us to an unecessary disadvantage. This resulted in dire trade imbalances due to the value differentials between our currency and other, less reputable currencies.
We do not purchase from China because China is better at manufacturing. If that were true, then would have started doing so long before Congress actually decreed it. We purchase from China because US companies are able to pay Chinese people a fraction of what they would have to pay a US citizen. The reasons for this are twofold: 1) A dollar buys more in China than it does in the US; and 2) China doesn’t allow its people to vote in reasonable laws to protect laborers and their environment from abuse.
The result, of course, is that people in the US are being forced more and more to live like people in China. Unemployment, low wages, undue corporate influence on government, and the list goes on.
The solution to this problem is to undo the erroneous globalist policies that led us down this path.
Our lack of competitiveness causes globalization, not the other way around. If we were competitive at producing things we want, there would be no reason to buy those things from abroad.
Wrong. It is trade policy. Brazil is not competitive with China but Brazil produces most of its own products. Why? Protectionist trade policy.
And yet there will always be some moron yelling down with all regulation.
See BP oil spill, masey mine collapse, Enron, World Com, etc etc etc.
Hey measton, I have an idea. Why don’t we just pass one big regulation that says that everything in the country shall be done safely and fairly, and there shall be no major disasters or mishaps. And if anyone does anything unfair or unsafe, we will send out a regulator to smack that person upside the head.
That would solve all our problems, right?
or.. we could simply refuse to buy and use gasoline, electricity, natural gas, paper, telecommunications, etc etc etc.
I say we do it! Are ya with me?
Why don’t we just pass one big regulation that says that everything in the country shall be done safely and fairly, and there shall be no major disasters or mishaps. And if anyone does anything unfair or unsafe, we will send out a regulator to smack that person upside the head.
or.. we could simply refuse to buy and use gasoline, electricity, natural gas, paper, telecommunications, etc etc etc.
You’re really helping you cause.
Of course regulations are “bad for business.” Business was doing VERY well when we didn’t have pesky concerns about minor things like kids losing their fingers in the machines at the end of their 10-hour night shift on Sunday.
Now we are those children grown. What legacy shall we lay the foundation of? Those went before gave us much. We took and then some. What shall we put in place, for those young and hopeful faces, the little ones today?
Why, whatever Wall St. tells us to, that’s what!
Hmmm, yet Leatherman, New Balance, Costco and a few other companies CAN make a great product in this country AND pay their employees well.
They must be some kinda dang commies!
Calling NYCdj…..
The last Wednesday night concert of the year here in Boise features zydeco band BeauSoleil.
http://voices.idahostatesman.com/2010/09/29/mdeeds/todays_final_alive_after_five_boise_cajun_band_beausoleil
Byrd’s family will receive remainder of his salary
The must-pass spending bill pending in the Senate includes a little-noticed provision that would pay the family of the late Sen. Robert C. Byrd for the salary he would have commanded in the next fiscal year.
The Senate handbook says that upon the death of a senator who had been serving in office, “in the next appropriations bill, an item will be inserted for a gratuity to be paid to the widow(er) or other next- of-kin, in the amount of one-year’s compensation.”
As a result, the bill calls for “equal shares” of the late senator’s $193,400 salary to be split between Byrd’s seven children and grandchildren.
The practice has been long followed by both parties and in both chambers, including in 2007 when the widows of the late Wyoming GOP Sen. Craig Thomas and the late Rep. Paul Gillmor (R-Ohio) each received $165,200 for the salary that the two men would have received.
..among the poorest people in the Senate.
Net Worth: From $415,004 to $900,000
Rank: 80th in Senate
Assets: 4 totaling $415,004 to $900,000
Liabilities: 0
I know a little about Byrd, and I bet he would prefer the money went to the NAACP.
No stats on his insane public pension that the wife will enjoy? Probably in the millions…
That will be a neat trick.. considering she died 2006 and didn’t remarry.
Wikipedia. How does it work?
Will Dodd-Frank Help High Frequency Traders Crash The Bond Market, Too?- CNBC
Lawmakers may have unintentionally opened the bond-market up to high frequency traders by passing controversial derivatives-clearing requirements as part of the Dodd-Frank financial reform bill.
The financial challenges states face could be the next systemic risk within the financial markets, according to Meredith Whitney.
http://www.ritholtz.com/blog/2010/09/whitney-states-are-next-credit-crisis-for-us/
So much for the failed theory that scale economies make Megabank, Inc a more efficient mortgage lender than local banks. Too-big-to-fail is too-big-to-function.
J.P. Morgan Chase to freeze foreclosures over flawed paperwork
By Ariana Eunjung Cha
Washington Post Staff Writer
Wednesday, September 29, 2010; 11:36 PM
J.P. Morgan Chase, one of the nation’s leading banks, announced Wednesday that it will freeze foreclosures in about half the country because of flawed paperwork, a move that Wall Street analysts said will pressure the rest of the industry to follow suit.
The bank’s decision will affect 56,000 borrowers in 23 states where allegations of forged documents and signatures and other similar problems are being used to try to overturn court-ordered evictions. Yet the impact may be much broader, given J.P. Morgan’s stature in the industry. If other banks adopt the same approach, the foreclosure process in many parts of the country will grind to a halt.
Officials at Fitch Ratings, a credit-rating firm that measures the health of companies, said the “defects” found in foreclosure documents at J.P. Morgan are industry-wide. Underscoring that concern, Fitch said it is considering whether to lower the grades it gives to the mortgage servicing divisions of the nation’s largest lenders.
“Over the next few weeks, we expect to see more and more companies come out with similar announcements,” said Diane Pendley, a managing director at Fitch.
The paperwork problems at J.P. Morgan mirror those uncovered last week at another large mortgage lender, Ally Financial. But J.P. Morgan’s decision is expected to have a much greater effect on the industry because it is held in high regard by its peers. By contrast, Ally, formerly known as GMAC, is still under the cloud of a $17 billion federal bailout package that it has been unable to pay back.
…
I can see the effects in my personal consumption expenditures, as my $5 bottles of wine as of a few weeks back now cost $6 — 20% inflation over a matter of weeks, thanks to QE2 saber rattling by the Fed.
* FOREIGN EXCHANGE
* SEPTEMBER 30, 2010
Dollar Slides Against Euro and Yen
By ANDREW J. JOHNSON
NEW YORK—The dollar weakened broadly as poor prospects for the U.S. economy continued to feed speculation that the Federal Reserve will be forced to introduce further programs to stimulate economic activity.
The dollar reached a two-week low against the yen, amid speculation Japan may again intervene in currency markets.
More monetary easing is seen as negative for the dollar because U.S. interest rates would remain low for a longer period, thus making dollar-denominated assets less attractive to investors. A stream of disappointing U.S. data recently has been seen in the markets as supporting a scenario in which the Fed would embark on a second round of asset purchases known as quantitative easing.
The euro, which pierced $1.36, is at the strongest point since April. The dollar has fallen every day this week and is off roughly 7.5% since Sept. 13 against the euro, according to Brian Dolan, chief currency strategist at Forex.com in Bedminster, N.J.
The dollar also hit 83.51 yen, the weakest point since the Japanese government spent roughly $20 billion on Sept. 15 to weaken its currency. The greenback also remains at lows last seen in March 2008 against the Swiss franc, touching 0.9735 franc.
Right now, there are almost no other issues about which investors care besides the possibility of an increasingly cheap dollar. Issues relating to the euro-zone debt crisis have been cast aside for now, said Marc Chandler, global head of foreign exchange at Brown Brothers Harriman in New York.
…
About 1 in 4 Q2 home sales a foreclosure: report
Related News
* Home loan demand down despite record low rates
Wed, Sep 29 2010
* Home prices dip in July, seen hovering near lows
Tue, Sep 28 2010
* Instant View: New home supply at 42-year low; sales flat
Fri, Sep 24 2010
* Instant view: Existing home sales up 7.6 percent in Sept
Thu, Sep 23 2010
* Over half of homeowners dropped out of aid program
Wed, Sep 22 2010
By Lynn Adler
NEW YORK | Thu Sep 30, 2010 12:13am EDT
NEW YORK (Reuters) - Nearly one in every four U.S. homes sold in the second quarter was a deeply discounted foreclosed house, putting the market on pace to work through distressed properties in about three years, RealtyTrac said.
Banks stepped up foreclosures through the summer and will take over a record 1.2 million homes this year, up from around 1 million last year and about 100,000 in 2005 before the housing bust, according to a forecast from the real estate data company.
Foreclosed homes accounted for 24 percent of all second-quarter sales, at an average price discount of more than 26 percent compared with homes not in the foreclosure process.
“This is the kind of volume of activity that we need to see for the market to heal,” RealtyTrac senior vice president Rick Sharga said in an interview.
“Our projections have been that we will get through the distressed inventory largely by the end of 2013, and these kinds of numbers are on target to get us there,” he said.
…
Foreclosure sales pick up speed, drag down home prices
The second quarter of 2010 saw an uptick in the number of foreclosures.
By Stephanie Armour, USA TODAY
Foreclosures accelerated in the second quarter, driving down home prices and accounting for nearly half of all sales in several states.
Nationally, homes sold at foreclosure accounted for 24% of all residential sales in the second quarter of 2010, RealtyTrac reports.
The average price of properties sold while in some stage of foreclosure was more than 26% below the average for properties not in the foreclosure process.
“It’s obvious foreclosures remain a major drag across the U.S.,” says Robert Dye, senior economist at PNC Financial Services Group. “Pioneering buyers with low mortgage rates will continue to take advantage of these properties. It’s going to take quite awhile to work through this inventory. It will take a few years, not months.”
A total of 248,534 U.S. properties in some stage of foreclosure — default, scheduled for auction or bank-owned — were sold to third parties in the second quarter. That’s up almost 5% from the first quarter, but down 20% from second-quarter 2009.
Some states were especially hard hit. Foreclosure sales accounted for nearly 56% of all sales in Nevada in the second quarter, the highest percentage of any state. Ranked second was Arizona, where foreclosure sales accounted for 47% of all sales.
In California, 43% of sales were foreclosure properties. Other states where foreclosures were large shares of all sales were Rhode Island, 37%; Massachusetts, 35%; Florida, 34%; and Michigan, 33%.
The uptick in foreclosures comes despite a federal effort to help homeowners struggling to retain their homes get modified mortgages with more affordable payments, as well as efforts by lenders to reduce payments for some borrowers.
“It’s clear this will be with us for some time,” says Lawrence Yun, chief economist with the National Association of Realtors.
…
* SEPTEMBER 30, 2010, 12:00 A.M. ET
Foreclosure Sales Up But Dip As Percentage Of All Sales - RealtyTrac
…
States with the deepest discounts for foreclosure properties were again Ohio and Kentucky, with California moving up to third. In Ohio, the average price on houses in some stage of foreclosure was 41% beneath the nonforeclosure average. Kentucky had a 41% discount, and California, 39%.
Nationwide, bank-owned sales accounted for 35% of all sales in the U.S. in the second quarter, said RealtyTrac, while preforeclosure sales — those in default or scheduled for auction — represented 13% of all sales.
HOUSING: Southwest County prices slip on weak sales
Agents optimistic for market improvement
By ERIC WOLFF - ewolff@nctimes.com North County Times - Californian | Posted: Tuesday, September 28, 2010 6:36 pm
* Related: HOUSING: SW Riverside median price falls in June from May
* Related: HOUSING: Case-Shiller shows local streak alive; prices up for 15th month
The median home price slipped in Southwest Riverside County for a second straight month as sales fell sharply in July, according to data from the Riverside County assessor analyzed by The Californian.
As the effects of a federal incentive for homebuyers faded, Southwest County’s housing market slowed: The 1,178 sales in July represented a 17 percent decline from June and a 26 percent fall from July 2009. The median home price fell 2.3 percent from June to $210,000 but was up 6.3 percent from July 2009.
With fewer buyers looking at the same number of houses, prospective purchasers became pickier, real estate agents said.
The drop in sales seemed dramatic in part because June was an unusually busy month. Buyers looking to claim an $8,000 federal tax credit for homebuyers who hadn’t owned a house in the previous three years thought they had to finish their sale by the end of June, though Congress later extended the deadline.
By July, most of those tax-credit buyers were long gone, leaving fewer people looking for homes.
…
HOUSING: Researchers say exotic loans not to blame for foreclosure crisis
Dodd-Frank act rules out useful tools
HOUSING: Researchers say exotic loans not to blame for foreclosure crisis
By ERIC WOLFF - ewolff@nctimes.com North County Times - Californian | Posted: Monday, September 27, 2010 6:39 pm
The housing crisis wasn’t caused by much-maligned exotic loans so much as lending huge sums of money to unworthy borrowers, a report released Monday suggested.
The misdiagnosis of the housing bubble, whose implosion in 2007 knocked out the broader economy, drove Congress to overreact and ban useful tools, according to a report from the Corky McMillin Center for Real Estate at San Diego State University.
The study examined lending practices in 12 countries and found that many make extensive use of loans in which the borrower avoids paying down principal for a fixed period. With the exception of the United Kingdom, none of these countries had a foreclosure problem nearly as bad as what the United States has endured.
The U.S. has had a higher foreclosure rate than any of the other countries studied since 2007, and in 2009, 9 percent of all borrowers were behind on their home loans, the report said. In Canada, only 1 percent were nonperforming that year.
What set the U.S. and U.K. apart was the prevalence of subprime loans, which offered money to borrowers with bad credit, and the practice of lending money without verifying borrowers’ incomes or assets, the report said.
But the crisis cannot be blamed on those borrowers, nor on mortgage brokers or real estate agents, according to a report from the Joint Center for Housing Studies of Harvard University, also released Monday.
Instead, authors Eric Belsky and Nela Richardson said that lenders made the mistake of opening up loans to people who had already proven themselves unable to pay.
Wall Street financiers then took these higher-risk loans and combined them into mortgage-backed securities, which in turn received high grades from ratings agencies. The system created a cycle that built on itself, even as regulators failed to apply the brakes to the system.
“Had the financial system itself contained the risk better —- through effective self-policing or through stronger regulation —- the performance of nonprime loans (and prime loans for that matter) might well have been much better,” the report said.
…
The case against gold
Posted by Colin Barr
September 29, 2010 6:43 am
Gold is trading like it’s lighter than air, but now is not the time to get carried away and load up on the stuff.
Gold futures for December delivery closed at their second straight record Tuesday, hitting $1,308. The gold price has risen more than 30% over the past year, with a third of that in just the past two months — and to listen to the ever-expanding ranks of gold fans, this is only the beginning.
Is this really just the beginning?
They point to an economy choking on debt and increasingly dysfunctional U.S. politics. Investors are embracing gold, they say, because they have given up hope that Washington will answer pressing questions about employment, taxes and deficits.
This leaves central bankers flooding the economy with money, with unhappy — perhaps dire — consequences for the purchasing power of the dollar.
“Low interest rates equal rising gold prices,” said James DiGeorgia, publisher of the Gold and Energy Advisor. He expects gold to rise steadily over coming years to what he calls the “equilbrium price” of around $2,300 — which happens to be in line with gold’s all-time record on an inflation-adjusted basis.
…
A Second Global Wave of Housing Bubble Pain
Justice Litle, Editorial Director, Taipan Publishing Group
Wednesday, September 22, 2010
Though the housing bubble has mostly burst, the aftermath is far from concluded — and the next wave of housing market pain will be global.
In the topics of recent weeks, we have talked about the housing bubble as something that has already burst. This might have encouraged a misconception that needs correcting.
To clarify, the fallout from the housing bubble is not done. There is more pain to come. And that pain will be global.
The U.S. housing market has another major leg down to endure. The fallout could be crushing.
Frighteningly too, there is new evidence that U.S. consumers have hardly begun to deleverage. According to The Wall Street Journal, the majority of U.S. consumer debt reduction thus far has come “the hard way” — by outright default.
U.S. consumers have NOT wised up and started saving, in other words. Their spending habits have remained largely intact, right up to the point of hitting the wall. The next wave down for the U.S. housing market will be the wall that hits them first.
There is also more pain to come amid the housing burst bubbles of Europe, as we shall explore. And in China, Canada, Hong Kong and Australia, there are still-inflated housing bubbles that have not yet popped. Before all is said and done, these unpopped housing bubbles are virtually certain to bust.
This second wave of housing bubble pain will be deflationary. The crushing grip of debt and evaporated wealth will squeeze the world ever tighter in the coming quarters. Those who deny this are not paying attention.
…
Bloomberg
Distressed Homes Sell at 26% Discount in U.S. as Supply Swells
September 30, 2010, 1:10 AM EDT
By Dan Levy
Sept. 30 (Bloomberg) — Homes in the foreclosure process sold at an average 26 percent discount in the second quarter as almost one-fourth of all U.S. transactions involved properties in some stage of mortgage distress, according to RealtyTrac Inc.
A total of 248,534 homes that sold in the period had received a default or auction notice or been seized by banks, RealtyTrac said in a report today. The number was up 5 percent from the first quarter and down 20 percent from a year earlier, according to the Irvine, California-based data seller.
“We’re still clearly building up more distressed inventory,” Rick Sharga, RealtyTrac’s senior vice president, said in a telephone interview. “That will either put downward pressure on prices or keep them from going up.”
The discount reflects the average sales price of homes in the foreclosure process compared with properties not in distress, according to RealtyTrac. About 24 percent of all homes sold were in some stage of foreclosure, down from 31 percent in the first quarter. The average price of a distressed property was $174,198, up from $171,971, the company said.
…
Pace of housing price increases continues to slow
Financial Post September 29, 2010
Photograph by: TYLER BROWNBRIDGE, The Windsor Star
OTTAWA — Housing prices rose for the 15th straight month in July, but by the smallest margin in four months, according to a national index released Wednesday.
And for the first time in four months, prices failed to rise above the previous month’s in all of the six metropolitan areas measured in the Teranet-National Bank house price index.
The price of resale homes in July was up 12.4 per cent from the previous year, according to the index, which showed the pace of price increases declining even though the year-over-year increases in Toronto and Vancouver were more than 14 per cent, and in Ottawa the increase 10.9 per cent.
The month-over-month change was also the smallest in four months, with the composite index as a whole in July rising just 0.5 per cent over June.
“For the first time in four months, prices did not rise from the month before in all six markets,” said Marc Pinsonneault, senior economist at National Bank Financial Group. “The Vancouver index was down 0.3 per cent from June.” The biggest monthly increases were to be found in Toronto, up 1.2 per cent, and Ottawa, where prices advanced by 1.5 per cent, which Pinsonneault attributes at least in part to the manoeuvring to avoid the harmonized sales tax, introduced in Ontario on July 1.
“According to the Canadian Real Estate Association, from March to August of this year, more existing homes came on the market than were sold. Therefore, the resale market has been slackening across Canada,” said Pinsonneault.
…
Oh, goody. Even though they can’t figure out how to create jobs, Congress seems to believe they have figured out how to keep housing prices propped up on a permanently high plateau.
Congress OKs higher mortgage loan limit extension
By Corbett B. Daly
WASHINGTON | Thu Sep 30, 2010 12:29am EDT
WASHINGTON (Reuters) - The U.S. Congress on Thursday voted to extend higher loan limits for government-backed mortgages, a move that should help keep borrowing costs low and support the shaky housing sector.
At the height of the financial crisis in 2008, the government raised the ceiling on the size of loans Fannie Mae and Freddie Mac could buy. At the time, the private market for so-called jumbo loans had all but dried up.
The legislation approved by the House of Representatives and Senate, which President Barack Obama is expected to sign into law, would keep in place until October 2011 the higher $729,750 ceiling for single-family home mortgages in high cost areas other than Hawaii and Alaska.
The cap was scheduled to shrink to $625,500 at the start of 2011. The move to extend the higher limit will effectively keep interest rates super-low for a large swath of home buyers.
Analysts had warned that the housing market could have taken a fresh hit had Congress let the limits reset.
The loan limits measure, which was inserted into a larger government funding bill, also includes an extension of the caps for loans backed by the Federal Housing Administration.
…
More Proof Federal Mortgage Guarantees Are Inevitable
Sep 29 2010, 11:43 AM ET |
Despite the overwhelming evidence provided by Fannie Mae and Freddie Mac that mortgage guarantees can be a very dangerous business, they continue to remain the “solution” to the future of housing finance Congress leans towards. In a House Financial Services Committee hearing today, of the nine witnesses testifying only one explicitly speaks out against some form of federal guarantees. Meanwhile, seven say they’re the best answer and one remains agnostic.
Who are these witnesses? They include
* A mortgage banker (Mr. Michael J. Heid, Co-President of Wells Fargo Home Mortgage and Chairman of the Housing Policy Council of The Financial Services Roundtable)
* 2 financial services lobbyist (The Honorable Kenneth E. Bentsen, Jr., Executive Vice President, Public Policy and Advocacy, Securities Industry and Financial Markets Association, Mr. Tom Deutsch, Executive Director, American Securitization Forum)
* 2 business school professors (Phillip L. Swagel, McDonough School of Business, Georgetown University; Susan Wachter, The Wharton School, University of Pennsylvania)
* An affordable housing advocate (Mr. Michael Bodaken, President, National Housing Trust)
* An economist think-taker (Mr. Christopher Papagianis, Managing Director, Economics21)
* An real estate investor (Mr. Michael A.J. Farrell, Chairman, Chief Executive Officer and President, Annaly Capital Management, Inc.)
* A former Fannie Mae credit officer (Mr. Ed Pinto, Real Estate Financial Services Consultant)
Can you guess which one is against government guarantees? The only one with actual experience with them: former Fannie Mae credit officer Ed Pinto. The economist doesn’t take a stand, but outlines the pros and cons. The banker, investor, lobbyists, academics, and affordable housing advocate all favor the government guarantees. The only witness who speaks against guarantees also happens to be the only one who has seen them in action first-hand.
…
WSJ Blogs
Developments
Real estate news and analysis from The Wall Street Journal
* Should Treasury Help Investors Become Landlords?
* Real Estate News: If Mortgage Rates Hit Zero
* September 28, 2010, 10:09 AM ET
Fannie and Freddie’s Bargains
By Jennifer Merritt
While the latest Case Shiller numbers show that home prices rose again in July, the end of the tax credit and the large shadow inventory of foreclosed homes is likely to keep downward pressure on real estate prices for some time.
How? Take a look at this story on SmartMoney.com today. AnnaMaria Andriotis reports that as Fannie Mae and Freddie Mac try to unload the 150,000 or so foreclosed homes in their portfolios, the government-sponsored entities are sweetening the deal for would-be buyers, offering low down-payments, no PMI–even up to $30,000 tacked on to the mortgage amount for renovations.
Oh, and these homes are priced about $100,000 lower compared to similar properties just a few blocks away, according to SmartMoney’s search of Fannie Mae’s HomePath.com and Freddie Mac’s Homesteps.com.
While many of Fannie and Freddie’s homes are at the lower end of the market and in less-desirable areas, a SmartMoney.com search of Fannie Mae and Freddie Mac listings revealed that buyers could find properties in good neighborhoods. For example, a five-bedroom, three-bath with a backyard, deck and two-car garage in tony Alexandria, Va., was listed for $445,000, $100,000 less than the average listing price in the area, according to Trulia.com. Four blocks away, a similar non-foreclosed colonial is listed for $639,900.
A three-bedroom, two-bath in Bergen County’s leafy River Edge, N.J. is going for $359,900 — $85,000 less than the average listing in the area. One avenue over, a non-foreclosed similar home is listed for $474,888.
Most sellers, many of whom are already underwater or near underwater on their mortgages, would hard-pressed to compete with Fannie and Freddie’s deals.
…