The Housing Bubble

I think the boomers, like most folks, expect to live forever.

Many boomers played by the rules. Many post-boomers did not (e.g. Casey Serin).

Please cite the legislation.

I’m not sticking up for him, but I have yet to see anything concrete and would really like to know.

This is just from Wikipedia - do your own research:

“Dodd was involved in issues related to the federal takeover of Fannie Mae and Freddie Mac during the 2008 subprime mortgage crisis. As part of Dodd’s overall mortgage bill the Housing and Economic Recovery Act of 2008 before Congress in the summer of 2008, Treasury Secretary Hank Paulson sought provisions enabling the Treasury to add additional capital and regulatory oversight over these government sponsored enterprises. At the time, it was estimated that the federal government would need to spend $25 billion on a bailout of the firms.[34]

During this period, Dodd denied rumors these firms were in financial crisis. He called the firms “fundamentally strong”,[35] said they were in “sound situation” and “in good shape” and to “suggest they are in major trouble is not accurate”.[36] In early September, after the firms continued to report huge losses,[37] Secretary Paulson announced a federal takeover of both Fannie Mae and Freddie Mac. Dodd expressed skepticism of the action, which the Treasury estimated could cost as much as $200 billion.

Dodd is the number one recipient in Congress of campaign funds from Fannie Mae and Freddie Mac.”

Not to mention Dodd was a “Friend of Angelo” which is in itself yet another blunder by this buffoon.

How does that work for ya?

All those dates are AFTER the beginning of the recession and housing collapse. That’s why I was asking.

How that’s work YOU?

Support Dodd, then if you think he has done a great job. Hell, throw yourself in the middle and make a Dodd/eco/Frank sandwich. I won’t be eating any.

Dodd has been Angelo’s friend since 2003,btw.

That’s why “they” want to do a gigantic do-over now. To get all of those “consumers” doing what they do best.

“…possibly an engineer…”

Close enough to be in the ballpark.

“4 years ago, when I told folks there would be literally millions of foreclosures they just laughed and told me I was making excuses not to buy…”

Awesome call.

These days, I get the occasional acknowledgment from friends and relatives that they wish they had listened to my advice four years ago. Most recently, a young lady who used to live close to where we do (outskirts of San Diego) but moved to Murietta to take advantage of ‘affordable’ outlying housing revealed having lost $200,000 on purchasing a condo at the bubble peak, ignoring my question du juor: “Why buy now?” Now she thinks they will never be able to afford to move out of the condo and into a SFR.

I tried my best to appear as sympathetic.

I can’t even feign sympathy for these FBs. I hold them accountable for driving up housing prices to ludicrous heights and pricing sane and prudent people out of the market. I won’t rub their stupidity in their face, but most know better than to expect me to commiserate with their situation.

It doesn’t matter what I am ready for or not ready for. It is what it is. If the promised money is not there to be doled out then something has to give.

“So I assume you are ready, willing and able to house and support all your elderly relatives?”

I don’t have any elderly relatives.

BTW, I was watching a PBS show on the economic downturn and how formerly middle class folks were being affected by it. One thing that caught my ear was how some younger folks, not too many years out of college and unable to find a job, are turning to the military. Yep. Like China and North Korea. Don’t think that isn’t by design. Starving folks is one way to get a military without re-instituting the draft, eh?

“Don’t think this isn’t by design.”

I don’ think anything is by design anymore. The PTBs are running things by the seat of their pants.

Or maybe the PTBs aren’t running things at all; Maybe things are running themselves.

“I don’ think anything is by design anymore.”

I do. If things are as they are in this country, it is because the 545 or so folks who comprise the elected officials of Congress, the Administration and the appointeds of the SCOTUS want it that way. Period. If this weren’t so, then Arizona, in an effort to protect itself, wouldn’t have to fend off the Injustice Defartment, along with 6 Third World sh*tholes in Latin America.

By “design” I mean some sort of Grand Scheme.

I don’t think there is a Grand Scheme. I think there are those who see exploitation opportunites and take these opportunities, and what results from them taking these opportunities results in what looks like a Grand Scheme.

Sort of like evolution.

I agree Combotechie, lurching drunkely from one temporary patch to another doesn’t speak highly for the PTBs level of planning if this were a grand scheme.

“Starving folks is one way to get a military without re-instituting the draft, eh?”

This scheme actually has a name. It’s called “economic conscription”

The military doesn’t want all that many of them. You will hear individual stories of course, but there is limited room. If you are talking about college grads, traditionally, you are talking about people who expect to become officers, right? That is a very limited number. And if you are talking about college grads willing to go enlisted, then you are going to leave fewer slots for the high school kids. Changes who is out of work, doesn’t change how many are.

“Yep. Like China and North Korea. Don’t think that isn’t by design. Starving folks is one way to get a military without re-instituting the draft, eh?”

You give way too much credit to the govt. It’s so funny to hear all these conspiracy theories. 9/11 was an inside job to get oil from Iraq. The whole so-called financial crash was on purpose to get more people in the military.

This is all done by the same govt that can’t run a monopoly like Amtrak or the post office without losing money.

The money IS there. We just gave Wall St. $1 TRILLION dollars and are about to give it more. We’ve spent about another TRILLION on the 2 wars… but it’s okay to kick grandma to the curb.

And people wonder what’s wrong with this country.

“The PTBs are running things by the seat of their pants.”

The pants are running the show any more.

“I think there are those who see exploitation opportunites and take these opportunities, and what results from them taking these opportunities results in what looks like a Grand Scheme.”

This is how capitalism is supposed to work, but it doesn’t work properly without a rule of law to rein in criminals. Too bad the appearance of a rule of law in the U.S. banking system is a sham.

This is how capitalism is supposed to work, but it doesn’t work properly without a rule of law to rein in criminals. Too bad the appearance of a rule of law in the U.S. banking system is a sham.

both capitalism and freedom need the rule of law to exist. both need protection, and neither need provision.

“Some how I missed all the seniors on this board whining about ‘fixed income’.”

Sorry, I should have been clearer. I live in a retirement community, although I’m about 10 years away from being considered a “senior”. The “around here” I was referring to is the community where I live, and its environs, and although many of the folks around here are a decent sort, there are a number of whiners driving golf carts and Cadillacs who complain constantly about “fixed income” and their Medicare advantage plans. Sometimes I feel it is my bounden duty to enlighten them on their good fortune.

Well of course SS ISN’T a “fixed income” it is adjusted for inflation. And there’s no need to talk about the imperfections of the CPI upon which the adjustemnt is based. But “fixed incomes” were a problem in the high inflation 70s for those living on defined benefit pensions (remember those) who could see their buying power decreasing by more than 10% a year.

I think the “fixed income” complaint from the “greatest generation” has to do with the fact that when they worked they could get overtime pay at work. So, need some extra cash? Just tell the foreman or the boss that you’re interested in some OT.

It’s a collective thing, salinasron. I don’t know you personally and I don’t blame you for taking what you’re entitled to under SS. But as a generation, the seniors of this country have screwed over the younger folks.

When you have so many young people struggling under huge student loan debts while completely bereft of job opportunities, and on the other hand seniors are living it up from SS and other pensions, and the proceeds of the epic, once-a-century bull market of the 80’s and 90’s– you have a serious imbalance in this country. There are serious structural problems and inequities in this economy, and as a group, those who have been around the longest have the most responsibility for them.

It’s true that as a demographic, seniors are much better off than the young, thanks to the stable jobs they enjoyed, SS and Medicare. It wasn’t always so - the reasons that SS and Medicare were started were to address the problem of poverty in previous generations. But the current crop of seniors vote at a higher rate than any other demographic, and I guarantee that they will never lose their SS and Medicare. Benefits will be gradually cut for the succeeding generations.

And salinasron, you are a very unusual senior. Even though the average benefit is $922/month, two of every three SS beneficiaries are dependent on that money for more than half their income. I believe that proportion will increase in the future, because wages have gone down, making it difficult to save for retirement. We can fix the problem by taxing more than the first $100,000 of income. I also believe that “means testing” would be the death knell for SS - it would turn it into a welfare program.

salinasron, I guess you missed the millions of jobs that went offshore over the last 3 decades, making it impossible for those who lost their jobs to adequately save for retirement.

Or the constant wage cut. Or the constant ending of retirement pensions. Or the non-stop inflation that outstripped raises. Or the 6 year recession cycle.

Glad you did well, but “eff you, I got mine” is not very charming.

What he said.

You and I must be working for the same company. At least, back when I worked for a company.

This is the point I try to get across to the people who say we “spent beyond our means”……Even when you are making all the “right” or “frugal” decisions, there have been all kinds of people that can’t afford luxuries like “paying taxes”, “kids”, “homes”, “doctor bills” or “retirement” because they have been dealing with 20 years of costs going up, while their (inflation-corrected) take-home has stagnated or shrunk. Even in industries that were supposedly doing “good”.

And we’ve been priced out of the market of things like “vacation” and “new cars”.

But all union members live in your head…… rent free.

Please don’t misread fervent anti-conservatism/anti-republicanism with anything other than what it is.

Yep. It’s your opinion.

Why? A little message sending is always a good thing so I encourage you to re-establish and re-affirm *our* sentiment toward the very lying thugs who created this mess.

And I’ll express a shared opinion—– Realtards and their sympathizers won’t be spared any quarter here.

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Realtors are dishonest.

I agree on the engineers. And that’s why engineers employ guys like me.

everybody is selling something …

Hear hear. The Establishment GOP is a wholly owned subsidiary of Wall Street. I have more respect for most food stamp recipients than I do for the GOP’s K Street whores.

You do know that GS gave more money to dems in 2008 than ALL the other financial institutions gave to the republicans combined.

Let that sink in a little…

When Chineese workers are paid money for building infrastructure in China, do they as a mass immediately rush out and spend this money on products made in the U.S.?

i don’t know what the percentages are but they are buying less from us and will continue to buy less as they produce more. eventually they will be buying nearly all their wants and needs right at home, in china.

“… they are buying less from us and will continue to buy less as they produce more.”

There it is. And WE ALSO will continue to buy less from us as they produce more.

As long as what we buy is made somewhere else there will be a constant stream of our wealth leaving our country and ending up somewhere else.

And WE ALSO will continue to buy less from us as they produce more.

as long as their products are cheaper for us to buy, this will be true.

———-

As long as what we buy is made somewhere else there will be a constant stream of our wealth leaving our country and ending up somewhere else.

yes,.. we are on the path to becoming a 3rd world country.

On average, around 1.5% of our infrastructure investment will end up in China. (14.5 trillion dollar economy, 225 billion dollar trade deficit with China.) Why should we let that influence our decisions about investing in our country? Some of our investments could lessen the trade deficits we run with various countries- especially investment in alternative energy and increased energy efficiency.

You’re being blinded by an extraneous detail.

Correction: China is getting from us over a QUARTER of a trillion dollars a year more that we are getting from them.

Why would any country or anybody want to change things if an enormous stream of wealth is continously shipped to them and ends up in their coffers?

first, they probably don’t want to tie their fortunes to a country that is reckless with their currency.

second, they will learn that they can create their own wealth, which is a faster and more efficient way to raise their prosperity.

it think in 20 to 30 years their country might be as free as we used to be. for most of their history they were a relatively free country. the experiment in communism is only about 100 years old. many are beginning to see what it has brought to their country and are intent on getting rid of it.

“first, they probably don’t want to tie their fortunes to a country that is reckless with their currency.”

This currency recklessness shows up as deflation when its buying power is measured in the confines of the U.S. The U.S. currency the Chineese hold can buy up many things in the U.S. on the cheap.

Note the various items of infrastructure that are being considered being offered for sale by states in the U.S. that are desperate for cash.

China has us where they want us. And there is no incentive for them to alter this fact.

This currency recklessness shows up as deflation when its buying power is measured in the confines of the U.S.

please explain.

———

The U.S. currency the Chineese hold can buy up many things in the U.S. on the cheap.

the US currency will buy the chinese exactly what it will buy americans, no matter where the currency is. are you talking about the exchange rate? if so, you’d have to hold the currency for a long while to see any difference in what it will buy..

———-

Note the various items of infrastructure that are being considered being offered for sale by states in the U.S. that are desperate for cash.

yes, there are bargains, but it has nothing to do with the currency. if they had no dollars they could simply convert yuan to dollars and buy whatever they wanted.

“please explain”

Dollars leaving the U.S. for China causes and abundance of dollars in China and a scarcity of dollars in the U.S.

“the U.S. currency will buy the Chinese exactly what it will buy the Americans, no matter where the currency is.”

The U.S. currency will buy what the HOLDER of the currency chooses to buy. If the buyer has no currency to buy with then he isn’t given the choice of buying; The choice of buying or not buying is given the the holder of the currency, not to those who haven’t the currency.

“yes there are bargains , but it has nothing to do with the currency.”

It has everything to do with the currency. If one has the currency - if one has the MONEY - the he gets to buy. If he doesn’t have the currency - if he DOESN’T have the money - then he doesn’t get to buy.

Dollars leaving the U.S. for China causes and abundance of dollars in China and a scarcity of dollars in the U.S.

true, although i would just say there are less dollars here, rather than say ’scarcity’..

——-

The U.S. currency will buy what the HOLDER of the currency chooses to buy. If the buyer has no currency to buy with then he isn’t given the choice of buying; The choice of buying or not buying is given the the holder of the currency, not to those who haven’t the currency.

yes of course, but what does that have to do with what the currency will buy?

——–

It has everything to do with the currency. If one has the currency - if one has the MONEY - the he gets to buy. If he doesn’t have the currency - if he DOESN’T have the money - then he doesn’t get to buy.

all of that doesn’t change how much a currency will buy. it’s value hasn’t changed, only the holders have changed.

we may have less of the dollars in existence, but the dollars are still there. the fact that we don’t have them DOESN’T make them worth more. if you could get the chinese to burn them, then the dollar we have here would be worth more.

The massive governmental money drops are not finding their way into circulation, are not being made available to the general public to push up prices. But much of the money that IS ALREADY in circulation is leaving the country via purchases of products made somewhere else, mostly products made in China. This adds to a shortage of money - a shortage of cash - in the U.S.

combo, you’re equating proximity with value. the association is false.

is the $100 i have in my pocket worth more than a $100 on an isolated mountain top?

the answer is no. the world values the $100 the same no matter where it is located. that’s why paper currency is so efficient. it’s fungible.

But much of the money that IS ALREADY in circulation is leaving the country via purchases of products made somewhere else, mostly products made in China. This adds to a shortage of money - a shortage of cash - in the U.S.

i’ll say it a little differently..

a local shortage of money doesn’t increase it’s value. it is harder to get locally, that’s true. but it’s local shortage offset by its abundance externally. chinas’s abundance makes up for our shortage, even though for us they are harder to come by. we may value them more, but the world doesn’t.

like i said, if you can get china to burn their dollars, then ours would be worth more.

all that’s changed with respect to the dollars is their location.

The possessor of the hundred dollars is the one who decides what is to be done with them. If the hundred dollars is possessed by the Chineese then it is the Chineese who decides how they will be spent.

If the Chineese have the bucks to buy what WE HAVE TO SELL then the Chineese are given the option of buying or not buying, but we are not given the option of selling or not selling.

In a deflating economy cash rules. If it is the Chineese that have the cash then it is the Chineese who rule.

“a local shortage of money doesn’t increase its value.”

A local shortage of money in Detroit increased the value of the dollar so much that it only takes one of these dollars to buy a house.

The possessor of the hundred dollars is the one who decides what is to be done with them. If the hundred dollars is possessed by the Chineese then it is the Chineese who decides how they will be spent.

again, deciding where to spend cash doesn’t change the value of the cash. it can however, change the value of the product, like tulips or beenie babies.

————-

If the Chineese have the bucks to buy what WE HAVE TO SELL then the Chineese are given the option of buying or not buying, but we are not given the option of selling or not selling.

they don’t have to buy from us because they have dollars. they can exchange the dollars for another currency and buy anything in the whole world they choose.

———

In a deflating economy cash rules. If it is the Chineese that have the cash then it is the Chineese who rule.

yes, that’s true. however, they won’t be able to buy more with their dollars than we do with ours or visa versa. we will each be able to buy the same amount with our dollars.

A local shortage of money in Detroit increased the value of the dollar so much that it only takes one of these dollars to buy a house.

the value of the house decreased. the value of the dollar didn’t increase. a bottle of soda probably costs about the same as it always did.

Okay, then let’s take a look at wages: Just yesterday the UAW decided to agree to a fifty-percent cut in the wages of 40% of it’s work force in one of its auto manufacturing plants in Michigan. Would you agree that the dollar will now buy more in these wages because of this cut? If you do agree then you then must agree that the buying power of the dollar has been increased - you must agree that the VALUE of the dollar has increased.

I you do not agree then I don’t know what else to say to you about this matter.

“… deciding where to spend the cash doesn’t change the value of the cash. It can, however, change the value of the product…”

If the same amount of cash will buy more of a given product then the value of the cash has increased and the value of the product has decreased.

Okay, then let’s take a look at wages: Just yesterday the UAW decided to agree to a fifty-percent cut in the wages of 40% of it’s work force in one of its auto manufacturing plants in Michigan. Would you agree that the dollar will now buy more in these wages because of this cut?

no, it will buy the same. but the employees will be able to buy less because they will have less dollars.

————-

If you do agree then you then must agree that the buying power of the dollar has been increased - you must agree that the VALUE of the dollar has increased.

the buying power of the dollar has remained the same.

“no, it will buy the same.”

How can you say it will buy the same? If employees are going to get half of what they used to get for their labor then the same amount of dollars is going to buy double the amount of labor.

Combo said:

If the same amount of cash will buy more of a given product then the value of the cash has increased and the value of the product has decreased.

the value of ‘things’ are not dependent on each other, at least not to any great degree. the value of a bottle of soda is not dependent on the value of a house in detroit or anywhere else.

if the price of a soda falls i can buy more with my cash. if it rises i can buy less with my cash. but the value of my cash hasn’t changed in either case. the value of my cash can be said to change when it will buy less or more of everything, not just one or two products.

counterfeiting will also lower the value of my dollars. and of course, loss of confidence will lower the value of dollars. but confidence is needed to hold the value of anything.

How can you say it will buy the same? If employees are going to get half of what they used to get for their labor then the same amount of dollars is going to buy double the amount of labor.

if the value of the dollar has increased, ask them if they can buy more with a hundred dollars than they could before the pay cut. (the answer will be no)

they will have fewer dollars, so they will spend them more carefully. and their dollars will be more valuable to THEM. but those dollars won’t be more valuable rest of the world.

“the value of ‘things’ are not dependent on each other…”

The value of EVERY THING is dependent on each other.

Things are valued by how it is they relate to something else. The value of a wage is measured by what it can buy. If wages are high then the wage earner can buy lots of things. If wages are being cut - as many of them now are - then the wage earner can buy less of these things.

If enough wages are cut then the price of the things that are bought with these wages will have to decline.

If wages are cut far enough then no matter how much the price of an item declines, the item will not be sold.

That’s why there are one-dollar houses for sale in Detroit.

“they will have fewer dollars, so they will have to spend them more carefully.”

Ah, breakthrough!

“and their dollars will be more valuable to THEM. but these dollars won’t be more valuable to rest of the world.”

But if deflation reigns in the U.S. and prices in general decline then the dollars held in the rest of the world WILL be more valuable because each dollar will be able to buy up more of the things that are for sale here in the U.S. due to the low prices.

The value of EVERY THING is dependent on each other.

a ridiculous statement on its face that cannot be made rigorous.

————–

Things are valued by how it is they relate to something else.

false

———–

The value of a wage is measured by what it can buy.

the value of a wage is measured by what you get. what it will buy is determined at a later date when you actually buy something.

———–

If wages are high then the wage earner can buy lots of things. If wages are being cut - as many of them now are - then the wage earner can buy less of these things.

trivially true.

———-

If enough wages are cut then the price of the things that are bought with these wages will have to decline.

absolutely false

———-

If wages are cut far enough then no matter how much the price of an item declines, the item will not be sold.

yes, and if they are cut far enough no one will work for them either.

———–

That’s why there are one-dollar houses for sale in Detroit.

false

And …if the Fed lets loose on the world a whole lot of dollars then the global buying power of the dollar will radically decline, thus it will require EVEN MORE dollars to buy the same amount of goods from outside the country and hence the dollar transfer of wealth out of the U.S. will INCREASE.

And since China is the receiver of most of these dollars then it is China that will benifit most from this increase of the transfer of wealth.

As I said, the Chineese have us just where they want us.

“they will have fewer dollars, so they will have to spend them more carefully.”

Ah, breakthrough!

no breathrough, you still don’t understand what i’m saying.

———

But if deflation reigns in the U.S. and prices in general decline then the dollars held in the rest of the world WILL be more valuable

true. deflation would enhance the dollar’s value for all holders of the dollar, foreign and domestic.

And …if the Fed lets loose on the world a whole lot of dollars then the global buying power of the dollar will radically decline, thus it will require EVEN MORE dollars to buy the same amount of goods from outside the country and hence the dollar transfer of wealth out of the U.S. will INCREASE.

it depends on how those dollars get created. if they are created with little or no value, then you will be right. if they are created with value then there won’t be a difference. i suspect that the FED is, or is going to create dollars with no or little value.

———–

And since China is the receiver of most of these dollars then it is China that will benifit most from this increase of the transfer of wealth.

if the dollars have no value there will be no benefit.

“true. deflation would enhance the dollar’s value for all holders of the dollar, foreign and domestic.”

Ah, ANOTHER breakthrough!

Then if you are saying the value of the dollar is increased you are in effect saying the BUYING POWER of the dollar is increased. And if the buying power of the dollar is increased then that must mean the holder of dollars can BUY MORE with his dollars than he used to be able to buy.

And since we are currently sending to China more than a quarter of a trillion dollars a year more than they are sending to us then that must mean we are sending to China a boatload of claims - of which each claim is INCREASING IN VALUE - on what are now American possessions - but may not be American possessions for very much longer if these possessions are thrown up for sale by we American possessors who desperately need the money.

We need money. And China has the money we need.

“it depends on how those dollars get created.”

As long as a dollar remains as claims on assets then it doesn’t matter how they are created. It matters how many are created but not how they are created.

A borrowed dollar will buy just as much as an earned dollar.

A borrowed dollar will buy just as much as an earned dollar, which is very unfortunate when trillions of dollars were borrowed and distorted the hell out of the economy which led to such things as $700,000 McMansions in Fresno.

A borrowed dollar will buy just as much as an earned dollar, which is very unfortunate when trillions of dollars were borrowed and distorted the hell out of the economy which led to such things as $700,000 McMansions in Fresno.

combo,

from your posts above, all we are doing is going around in circles.

you’re a smart guy. but you don’t know that money and currency aren’t the same thing. if you did know, i think it would help you to naturally bring in more money.

it would help to know what money is and what currency is.. exactly. and wiki won’t tell you because they don’t know either.

after you find out exactly what money and currency are, look for their fundamental difference. it will help to understand a lot.

Link?

I have nver heard that one. Not that I pay all that much attention to campaign stuff, but that would have been odd to miss.

I thought it was Joe Biden that said that.

I was wrong he said 57 states… Clipped from the LA Times- 2008

“At a later stop Obama was talking with reporters and expressed concern he’d also mis-stated the number of potential cyclone victims in Burma. He said, “”I hope I said 100,000 people the first time instead of 100 million. I understand I said there were 57 states today. It’s a sign that my numeracy is getting a little, uh.” At that point, an aide cut him off and ushered journalists out. Before he could mis-speak again?)

Obama wasn’t wrong on the number 57, he was just confused United States with Islam states.

The Organisation of the Islamic Conference (OIC) is an international organisation with a permanent delegation to the United Nations, with 57 member states.

Gee it was Barry. From snopes, with a video clip and an American flag pin with 57 stars!

http://www.snopes.com/politics/obama/57states.asp

Barry also pronounced corpsman as “corps” man. Not once but twice. It’s hard reading a teleprompter when there are words on it you’ve never heard of.

My favorite Barryism was when he was talking about the P/E ratio and described it as the profit to earnings ratio. Not surprising really. I wouldn’t expect a community organizer to know what a p/e ratio is.

Is it Nov 2 yet?

He will never top the all time champeen and grand master.

Bushisms.

http://politicalhumor.about.com/library/blbushisms.htm?rd=1

…to promote diversion and distraction away from those who caused this mess.

Seriously. These kind of “gotcha” ambush politics disgust me. Who hasn’t made a similar misstatement or slip of the tongue at some point?

You are falling for it! There is no “incomplete paperwork”. The bank (with specific direction from the government) does NOT WANT THE HOUSES BACK. The whole thing is a ploy to stall the flood of foreclosures that will kill the banks and show everybody they are insolvent. The ruse has the additional benefit of stimulating the economy by allowing FBs to spend all of their meager cash on stuff instead of living expenses. Further benefit is keeping cheap homes off the market to maintain higher comps/property taxes. It is a giant scam and everybody is taking it at face value. You cannot afford to take anything the government feeds you at face value.

I’ve heard that argument but it doesn’t explain how the banks are going to get rid of the houses they already own. This “crisis” is stopping banks from getting rid of REO properties as title insurers are refusing to get involved in foreclosures.

No, it isn’t. It is just messed up paperwork and this paperwork could cause perfectly legitimate legal problems for a long time. The ownership of the mortgages was not properly tranferred. That means that the banks who service the loans for the trusts that issued the bonds don’t have the legal right to bring a foreclosure action - because the people they are working for don’t own the loan. Well, that is the real problem. We actually haven’t even gotten to that level yet. Right now we are just dealing with a complete lack of a paper trail because not documenting things is CHEAPER than doing all the paperwork. This is where all the “productivity gains” came from. Fewer workers could do the same amount of work because they never bothered to do the work in the first place.

And, by the way, the fact that the person that signed off on stuff didn’t review it, is the tiniest little piece of the problem. I used to review big document packages. As seldom as I could get away with, but I did it a few times. The paralegals put a list of things that have to be checked. The list is stuck to the top of each item that has to be reviewed (it was usually a lease). Then another paralegal went and reviewed the stuff that didn’t require legal knowledge like checking dates and stuff. Then that paralegal checked off the right box on the list. Another paralegal figured out where the clauses that needed to be reviewed by a lawyer were and put the page numbers in another box on the list. When I finally got the package, I read the pages that were specified by the paralegal and flipped through the others to see if the paralegal had missed anything else I needed to read. If it was all OK (and it was about 97 times out of 100), I put it in the OK pile. When we (my colleagues and I) finished, we told the partner how many of the leases didn’t conform completely and he decided whether to sign off on the whole package (a few non-conforming ones were OK). The partner signed the opinion and he never read a single page. All he ever got was a report about the work that other people had done.

Now, our partners had no incentive to skimp on the work. After all, the firm got paid by the hour so the more hours we worked, the more associate hours he got credited with for when the compensation committee got together. But these bankers got their bonuses for putting together lots of loan packages, not for the hours spent making sure they were done properly. Hence, lots of them were done and they were not done properly.

Incentives matter.

‘everybody is taking it at face value’

While I don’t agree with all of your conclusions, I do think this is a non-story, largely driven by a lazy media and publicity-hound politicians. These declared moratoriums have been going on for years; what did that change? And where’s the hub-bub about simple inaction, where lenders just do nothing for years? About Bank of America; these guys have so many properties in some stage of foreclosure, a ‘moratorium’ may not have any meaning at all, as they can focus on the thousands of vacant houses on their plate. (That’s exactly what went on during the much larger GSE moratorium way back, which I saw first hand and posted about.)

But wow! ‘Free houses for everybody’ makes such a great story. Like this guy:

‘Michael Grady settles in after working 55 hours this week as a Metro bus driver. For the last year, he’s been working crazy hours, even taking up a weekend job as a swing dance instructor Grady’s whole life is wrapped around paying for his house in Edmonds, which he bought with a friend nine years ago. That friend went bankrupt and stopped paying. Grady kept paying, making arrangements for lower payments with Bank of America. But after a mix up in paperwork, Grady says Bank of America threatened foreclosure even though Grady says he continued making payments.’

“They’re calling me. I’m calling them. They won’t return my calls. They say ‘Oh you can’t talk to them. Talk to this person. Oh, this person is no longer here.’ That’s when I came up with the call center vortex. It’s a call center vortex,” said Grady.’

‘Since then he’s been drowning in paperwork. Grady is now living in the basement of his own home. He rents out the rest of the house for extra money. This is not the life he envisioned…Two months ago, Grady says he signed an agreement for a new loan payment plan with Bank of America, but he has yet to receive the paperwork with details on the modification. He continues to make payments, though he’s hoping this will keep him from foreclosure.’

http://www.king5.com/news/consumer/Edmonds-Man-Talks-About-Struggle-With-Bank-of-America-104618379.html

As I’ve mentioned, most FBs leave. So, why don’t some HBBers move into these vacant houses, demand to see the paperwork, and wait for the bank to kick you out? Probably you don’t want to live with the uncertainty, which is the point.

What’s important about the current situation? That foreclosures are still rising, and the shadow inventory looks to dwarf any previous counts. Just a few days ago, I spent a few minutes with the Fannie Mae 10-k, and posted what I think is a significant number of REOs headed our way. With the GSEs backing most of the lending these days, and the publics disgust with helping these corporations out, how will this mountain of GSE foreclosures change the landscape in the near future? How about picking up on that mainstream media?

“You cannot afford to take anything the government feeds you at face value.”

Sad but true. The government has taken sides, they chose the banks.

“You cannot afford to take anything the government feeds you at face value.”

Sad but true. The government has taken sides, they chose the banks.

Politicians are representatives of the highest bidder, not representatives of the people.

Wondering how my wife and our family home fits into this “non-story”. Originally granted a NINJA loan by a now defunct company, the loan was bought by Countrywide then Bofa. She called a Bofa bank supervisor looking for the original “note”, but the banker answered “I have your loan documents right here in front of me” (not directly answering where the note or its paper trail is), also saying Bofa are merely the servicers of your loan, not the owners, what “note” are you inquiring about? All very confusing doublespeak to the layman who assumes that Bofa owns the loan (cuz that is who the checks are written out to), when really they are just the servicers, and the note is held by some nebulous investor(s). I guess looking to Bofa for the note is futile. Finding the investors possibly more so. Not that we understand, but we did recognize a deflection of a question and a politician’s answer given by the bankster.

Recontrust, BofA’s foreclosure arm, has my wife’s trustee’s sale date set for 11/22/10. Does this give her more time to squat, or should we be packing our bags like it’s business as usual, as in a sale will be taking place on the same date or is it safe to assume we will be granted more time to stay?

Being a non-story and all, the semanics of which we really don’t understand, cuz when a foreclosure goes back to the bank, what they really mean is it goes to the beneficiaries, who supposedly have been folowing the trail of the note, which will give them ownership of the house after the sale. unless some private party wishes to pay 304k for something going for 200k, it will be going to the beneficiary. Does Bofa’s role end there? Recontrust’s? Whoever produces the note gets the house or does it go to the servicer? So we are confused, even though we have tried to keep our head in the game, we dont really undertand the whole scheme. Who owns the house after Trustee sale? Bofa, Recontrust, Countrywide, or the original issuer american home mort?

But the bottom line for us is we really want to know is when to plan on leaving? Should we assume the trustee’s sale will occur on the date Recontrust still says on its website(11/22/10), or will we have more time to wallow (we got a pot bellied pig; they are not nearly as messy as you would think!)

‘Who owns the house after Trustee sale? ‘

The ‘bottom line’ is, it ain’t you. So these corporations have a mess on their hands? What else is new? It isn’t gonna change much in the grand scheme of things, so IMO it’s a non-story. Meanwhile important things are happening elsewhere and the media isn’t paying attention.

What news is being overlooked for instance??
Of course you are right, when all is said and done non-payers of mortgages will have to vacate, makes perfect sense.

But it is the consumers right to try and ferret out just who they owe; writing checks to Bofa; for a loan owned by Fannie; being foreclosed upon by Recontrust–this is darned confusing. When Bofa declares a moratorium, no matter the brevity, soon to be ex homeowners have a right to be informed as to whom they owe money if that party has changed, and if the moratorium applies to them.

That way we can keep the pipes from freezing, damage from neglect (potty training pigs the exception obviously)from occuring rather than just moving out. Although Ben, your job security likely depends somewhat on folks abandoning ship so as to give you billable time securing and protecting these inevitably neglected assets. If the banks/servicers/whoever it is that is owed at this point are dragging their heels on giving some nonpayers the boot while others a certain reprieve we should know for how long our ex properties will be ignored by their rightful owners in the interest of asset preservation. Not to mention how long, we, the stewards of the property, will be able to or needed to stay on. Why not pay delinquent homeowners to secure and preserve the property so as not to let it fall into disrepair. Sure would temper all that misguided anger towards the banks and make folks feel useful.

Another ignorant question regarding real estate and the recent Bofa “news”. Will this moratorium apply to loans that Bofa owns or services or both. Because the regional Bofa manager told my wife that Fannie Mae owns the loan; will Fannie be proceeding with foreclosures or not. After all Bofa is just the servicer…its circular logic. “We are just the servicer, but have hired our own wholly owned subsidiary to foreclose on you, Recontrust, on a loan that we had somehow purchased from Countrywide, but that we really dont own because it has been sold to Fannie Mae” Too much convoluted game playing going on to not be newsworthy…on a housing site of all places!

‘your job security likely depends somewhat on folks abandoning ship’

That’s not true for a lot of reasons, including the one I made earlier; that there are so many abandoned houses in the pipeline that much larger moratoriums didn’t stop houses from being repossessed. I ask you, do you even remember the moratoriums from 2008? Probably not and in a few months no one will remember this one. (Anyway, I just do this work to keep food on the table until it’s time to do something else. Being self employed, the only thing that secures a job is working my tail off. That and the fact that people paid way too much for houses and walk away. ‘Abandoning hope’ doesn’t have anything to do with that.)

‘What news is being overlooked’

I already said, I spent 15 minutes looking at some SEC filings, and can see Fannie Mae has hundreds of thousands of REOs headed our way. That impacts every single person in this country, and given that they are backing the great majority of the current lending, this could shake up the housing market more than anything on the horizon. But the media is awol on serious stuff like that, maybe because they are so concentrated on convincing everyone we’re in a recovery, that all is well, and we should get out there and buy a house, damn it. I’ll say it again; we’ll heal this economy when we figure out what we do as a nation besides buying and selling each other houses (or stocks), in other words, learn to function in a post-bubble reality. Oh yeah, the media and govt could be talking about that too.

Ben, in all seriousness thank you for this blog. Enlightening even if I came late, too late. Moratoriums are part of the story to be sure, but for you evidently you have seen it before. Maybe this one is a little more substantial??

Heck in 2008, we were paying $2200 for a home that could have been rented for $1100. Still know many paying the double, so you could find yourself gainfully working your tail off for the forseeable future! I guess you can thank me for buying into the housing hysteria, and encouraging my wife, who is a checker, to buy a 400k home, now trading for 200k, for providing you with something to do!

BTW Bank of America’s nationwide halt will apply to homes that the bank is taking back itself and those for which it has transferred the papers to mortgage buyers Fannie Mae and Freddie Mac. Link=bofa +fannie mae on the Google.

Rather than moving on the 22nd of November, we get to have a Christmas party in our “free for now” home! On the menu will be roast suckling pig (getting tired of Piggy and her potty issues)! Yes its but a month or two but that does translate into thousands of dollars.

As for doing what you are doing, I meant it mainly tongue in cheek. I respect what you do and the efforts involved. I was a vegetable broker, and my boss told me the same “This is what you are doing now”. Later, indeed, I am a substitute teacher…until I am not…

“…we’ll heal this economy when we figure out what we do as a nation besides buying and selling each other houses (or stocks), in other words, learn to function in a post-bubble reality. Oh yeah, the media and govt could be talking about that too.”

And they will be — give ‘em three or more years to catch on.

But the media is awol on serious stuff like that, maybe because they are so concentrated on convincing everyone we’re in a recovery,

The media makes its money from advertisers. No advertisers, no media.

The advertisers don’t want their vehicle - the media - to be bashing the advertisers. That would be utterly counterproductive. Both advertisers and media know it.

So - few if any stories bashing advertisers.

This issue was most obvious when it comes to car magazines.

Careful, you may offend Oxide, Eco, Measton, Grizzly, Mr. Bubble, and their ilk.

Oh? How so? I’m pretty sure we have written many, MANY posts opposing the Fed’s polices and opposing giving the FIRE sector a free regain.

You should have that knee looked at.

The lefties in here may be lefties, but they’re not mindless tools like most lib-dems. Give them credit for original and independent thought, even if we may not always see eye to eye.

Especially risky when the Fed is overtly planning to financially engineer inflation to stave off deflation risk.

arizonadude - Do you know anyone that professes to put most of his/her investable wealth in precious metals/miners?

When the coin shops have lines outside their door and wealth managers start making big investments in gold then get worried. When your neighbor or brother in law starts telling you where is the best place to buy gold then sell.

TV ads and fly by night operators trying to take advantage of people selling gold for 50 cents on the dollar is just evidence that people don’t get it yet. Try running an ad buying your Apple Stock at 50 cents on the dollar….

The Dow was first 11,000 in April 1999? Gold was $300 at the time. Oil was $18 at the time. Are gold and oil 4 x more valuable now, or are federal reserve notes worth less?

Food for thought…

I agree with you Mariner, but I have considerably slowed down my buying of any precious metals. The appreciation of that asset class has been such that it’s been sitting at 12% of my net worth for over a year. I’ve been dollar cost averaging into other asset classes alongside. So it’s still too high of a percentage of my asset classes to buy more.

As for people I know - only one has admitted to buying precious metals, but recently. He also owns stocks and real estate, but he’s not a gold bull. He’s very skittish. I told others about gold over the years but they kept chickening out.

Gold at $2,300 per ounce will cause the fools to rush it. That’s when gold will finally hit its inflated 1980 price - if it gets there within a year.

I never sold precious metals. But that does not mean I won’t sell in the future. I just sold some stock a couple days ago with a 50% gain in a year. Good to get a long term capital gain on that. About $2350 purchase price for a little under $3500.

I spend less than 10 percent of my income to live lavishly. Perhaps I have missed some increases.

Can you give a few examples of 50 percent inflation? That sounds like hyperinflation. Also why be snarky in a discussion.

why pose questions in the form of a statement? Reverse Jeopardy? Why live lavishly for 10% when you could live frugally for 5%? That’s how the rich get rich; at least the ones I have known really get off on pinchin’ pennies.
Snarkasm off/

But if inflation heats up ,you may be encouraged to go ahead and make those equipment purchases and/or business takeovers-

That’s like saying to buy a house before you get priced out or before somebody else buys it. There is so much commercial property and hordes of equipment coming on the market. I think it will be more like a kid in a candy store with a thousand dollars. But I agree anything is possible in life but not likely in the next year or two. We are waiting for some liquidation in end of October this month. If we don’t find some bargains this year there is always next year. A lot of businesses are hanging by their finger nails. I speak to many business owners and get the impression they are worried. Many will tell me they can not sleep properly at night. Another one mentioned that he wakes up in the middle of night and starts taking notes. This recession is taking an emotional toll on America but hey we at least have HBB.

That’s like saying to buy a house before you get priced out or before somebody else buys it.

That’s essentially how it works. Just as house price inflation caused many to go ahead and buy, so does general inflation encourage people and businesses with cash (or credit) to go ahead and buy.

Water would come from hmmm I dunno rivers?

The point is 80% of the land is unusable for development. Therefore saying ” I flew over Idaho and saw a lot of land therefore land must be cheap” is an incorrect observation.

And do you really believe the federal govt should own that much land? Water or no water, the feds own just too damned much land out west.

I see that you’re unfamiliar with the issue of water rights. Just because a river runs through it doesn’t mean you can take water from it. That water already belongs to someone downstream. There’s a saying out here: Whiskey is for drinking and water is for fighting.

The fact is, water is a scarce and precious resource in the western US. So much so that not a single drop of the Colorado river makes it to the ocean. Every acre foot is accounted for and has an ower.

This probably comes as a surprise to you east coasters who are used to huge rivers and frequent rainfall. Out here we are dependent on snowpacks in the mountains. What we call “rivers” out here, you folks call “creeks”. We don’t have what you would recognize as a “river”.

As to whether the feds own to much or too little land, I made no comment. All I said was that 20% of Idaho is a lot of land.

So what you’re saying is that the Columbia, Yellowstone, Clark Fork, Snake are little creeks?

Idaho, like other Pacific Northwest states, isn’t hurting for water. It pretty much “owns” the water rights to the Snake River, the 8th largest river in the lower 48. The Snake flows twice the water of the Colorado, which supports SoCal, NV, AZ, and other Southwestern states.

The Boise metro area doesn’t even make much use of the Snake as the Snake lies in a canyon about 800 feet down from the average land in the valley, and it costs money to pump water uphill. Instead Boise metro gets its water from the Boise River, which flows down into town from the Rockies above. This placement permits a 100% gravity-fed irrigation system throughout Ada and Canyon counties.

http://www.usbr.gov/pn/hydromet/boipaytea.cfm

Idaho uses the “senior rights” water law theory. Since my subdivision was built on a farm that had 100+ year old water rights, I’ve inherited such rights as they “run with the land”. Upon payment of a $13 annual “tax” to the irrigation district, I get rights to approx. 1 acre-foot for my 1/6 acre lot.