Bits Bucket For October 17, 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
-
May 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 31
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Along with all the other depressing news….my wine crop this year has been a disappointment. Last year’s winter killed most of my vines off down to the roots. They all came back but you don’t get fruit off of new wood. Only got 22 lbs of clusters for about 2 gallons of must. The grapes stopped maturing at around 17-18 degrees Brix so I’ve had to sugar the heck out of the must. Must is now undergoing sulphur treatment and I should be able to innoculate it with yeast around dinnertime today.
I guess that’s why the French don’t seem too worried about competition from Idaho wines.
Maybe you should try concord grapes. Aren’t they a lot more cold hardy?
Ah but the French are MOST impressed with the potential of Idaho wineries. In the late 1800’s, the Rothschilds - you may have heard of them - send a survey team to America to determine the best place to establish their American winery. Bypassing locations in California and other states, they purchased a large tract in Lewiston, Idaho, and established vineyards and a winery. For many years what was arguably the highest quality wine made in America was produced there in Lewiston. The coming of Prohibition put them out of business, and the Rothschilds, thinking Americans were idiots enough to never repeal Prohibition, abandoned their holdings. The vines were removed to make way for other crops and the site of the winery is now a Potlatch Corp. plywood factory.
Only in the last few decades has interest in Idaho wines revived. Sawtooth Winery, about 20 miles west of me, was named Pacific Northwest winery of the year in 2006. http://www.sawtoothwinery.com/
THE RHONE RANGERS!
Ha!
Tankxs DennisN…
The Rhone Rangers was founded IIRC by California’s wackiest winemaker, Randall Grahm, who sells wine labeled “Big House Red” and “Clos de Gilroy”.
the Rothschilds - you may have heard of them
No offense, Dennis, but almost every state has some similar claim to wine fame (we were the largest producer of x before prohibition, the so-and-sos came here from the old country because our region was perfect for their winemaking, Washington proclaimed our wine the finest in the land, we were the second largest producer east of the mississippi, etc). If the wine was so great, you’d think the Rothschilds would have come back.
Still, I hope you’re right- we need as much good wine as possible. The more, the merrier, I always say.
But if your vines are freezing to the ground in the winter, you’re gonna have some problems.
“But if your vines are freezing to the ground in the winter, you’re gonna have some problems.”
I don’t know the biz, but isn’t this something which technology might overcome, comparable to, say, the challenge of growing crops subject to th dearth of water in Imperial County, California?
Everywhere I turned, over the past decade, massive amounts of land were being cleared for the latest Snobbery, I mean Winery. Subsequently, there is an glut of wineries and wine on the market. The culling of the herd is taking place as we type.
Old joke :
Q: How do you make 1 million dollars in the wine business?
A: Start with 5 million dollars.
with soooo much land available in CA’s central valley or central coast, why grow in Idaho? Ever have a Paso RObles Zin?
Cardinal Zin. Yummerz in a twist-off!
Don’t fret, DN, it was a cruddy year for grapes here too, but anthropogenic climate change will fix THAT for you!
Still, (cough, cough,) I got more apples than the law allows this year.
What brix range were you looking for?Do you use a refractor to measure the brix?I went to a winery in napa ca about 3 weeks ago.They had yet to pick thier crop.They did some pruning late in the year to allow more sun because of the mild summer.A few of the grapes got sunburned on those hot days.
I use a refractometer and target 24 degrees Brix. My minimal instrumentation is just the Brix refractometer and a hydrometer for measuring specific gravity. A friend of mine is one of the winemakers at Beringer and I use him as a consultant. Along with the odd weather this summer, I hit a roadblock about this time of year because the sun gets lower and my house begins to shade the vines. The fruit won’t ripen any further with afternoon shade.
Cool.This is where I went for the wine tour:
http://domainecarneros.ewinerysolutions.com//index.cfm
They have some fine wine.I got some good education on wine there.
Interesting story about Idaho wine above.
Every season I would do the right things (pruning, fertilizing, etc.), but still my grape vines always produced a piss-poor crop. One season I decided to say to hell with it, and didn’t do anything. My vines ended up producing the prettiest crop you ever saw! Now I don’t do anything and let nature take its course.
From what little I have read about Ben Bernanke one person who had a great influence over his thinking was his grandmother who talked to him about how it was during the Great Depression.
His grandmother told him the shoe factories closed up because no one had money to buy shoes. Since nobody had money to buy shoes many people went barefooted.
So there was the problem: There was NO MONEY to employ people to make the things people needed to buy.
The problem wasn’t that there wasn’t the NEED to make things or the FACTORIES to make things, the problem was there wasn’t the MONEY to pay for things.
So his solution to the similar problem that we have today is to somehow get money into the economy so people can buy the things they need to buy so the factories will start hiring people again.
But this time it is different: This time the factories are not located here, this time the factories are located somewhere else. If money is pumped into the economy HERE, the money will soon end up SOMEWHERE ELSE.
Jobs will be created all right, but they won’t be created here.
That’s pretty much the idea. Now that we got it where to go from here?
“Now that we got it where do we go from here?”
I’m not sure that “we got it”. The PTBs solution to fixing our consumer-based economy seems to be to get consumers consuming.
I think the problem in the first place is that our economy is a consumer-based economy.
From what I’ve seen none of this stimulous money has made it to the working class.It has all went to financial companies that give money to congress members.I personally have not seen a dime from anybody.Trickle down is not working here.
I have seen various road repair projects all over the place that were paid for by stimulus spending, so not all of it went to the bankers.
Unless of course they had hired out-of-work bankers to do road repairs.
A friend recently told me that he passed by a road construction site and had to stop to ask a worker how to detour. The “worker” spoke NO English. So even the infrastructure $$ is apparently not going to US citizens.
We’ve got an “American Recovery and Reinvestment Act” sign next to a road and bridge that’s being worked on. There’s a young lady I see each morning directing traffic through a narrow pass. I’ve had to beep the horn every so often to get her attention while she’s texting or on the cell phone.
I personally benefited from the “reinvestment act.” in early 2009 we bought a little house for our sister. In 2009 I had to pay a guy twice to clear the sewer which kept backing up into the basement. Then Grand Rapids got some stimulus funds to remake her street - they dug everything out down to dirt and put new street and curbs. Afterward they had some serious rain - and no backup at all. Saved me some money and my sister some aggravation. And the street looks very nice. I’m surprised because it’s a fairly low income neighborhood.
That’s probably the only way it would get done. Usually in those neighborhoods you have both landlords and elderly owners who don’t want to pay a cent more for assessments.
This time the factories are not located here, this time the factories are located somewhere else. If money is pumped into the economy HERE, the money will soon end up SOMEWHERE ELSE.
The US is still the world’s largest manufacturer.
People also spend a lot of their money on food and services. Both of which are mostly ‘made in America’.
Made in America?
Services? Yes.
Food? Not so much. It’s why there is a big fight about labeling foods country or origin.
We still consume far more than we produce, about 800 billion per year IIRC.
“The US is still the world’s largest manufacturer.”
Well I’ll just run right out and buy a new D8 model from Caterpillar.
But I CAN’T buy shoes, clothes, household goods, furniture, etc. that are made here.
The lack of economic understanding here astounds me.
Manufacturing in the US is economically speaking a bad idea. Comparative advantage says the US should not be making socks or shoes or trinkets. This is taught the first week of econ 101 for crying out loud.
‘This is taught the first week of econ 101′
That’s interesting, because I have a degree in economics and I never heard that. Some professors may have that opinion, but it isn’t taught as some rule of economics. If you were old enough to be in college, you might know that. Or maybe you meant Home Economics?
Manufacturing requires low skilled, low education labor. The comparative advantage of the US is in high skilled, highly educated labor. Developing countries have plenty of cheap labor and not much high skilled labor. Therefore the comparative advatnage of developing countries is manufacturing. The comparative advantage of developped countries, such as the USA, is not manufacturing. I’d like to see an econ professor who doesn’t believe this.
Eddie:
There are not enough high-skilled jobs for all those high-skilled workers you keep talking about. Why, because everyone has to have a customer, see? And at the base of it all, the true “end user” has to be a producer. We can’t all make a true living by just selling services to one another.
Doctor - has a customer. Customer produces software.
Software producer - has a customer. Customer produces socks.
I didn’t even take economics, and I can see that plain as day. It’s simple.
Oh, and Eddie. Have you ever seen Professor Bear?
“Manufacturing requires low skilled, low education labor. ”
Tell that to the Germans. I guess they didn’t get the plantation economy, scorched Earth memo we did in the USA.
Manufacturing requires low skilled, low education labor.
or automation. i still think we need the value added of manufacturing.
———–
The comparative advantage of the US is in high skilled, highly educated labor.
true. and you can add automation.
———–
Developing countries have plenty of cheap labor and not much high skilled labor.
true, and in most cases we can compete in manufacturing with automation and highly skilled and efficient labor.
———
Therefore the comparative advatnage of developing countries is manufacturing.
just because they have low cost, low skill labor doesn’t necessarily mean that we can’t compete. higher skill can still win the day. but there is no doubt we will have to give up making some things.
————
The comparative advantage of developped countries, such as the USA, is not manufacturing. I’d like to see an econ professor who doesn’t believe this.
the advantage we have is higher skill and technology. we have to give up making some things, but we can still compete. we need to. we still need to make things. we have to have something to trade..
We don’t “have to” make anything to trade. We should only make things if it is economically advantageous. Some things are like a 747. The amount of skill required to make one of those things requires developed world employees. Making socks or $1 trinkets sold at the $1 store….not so much.
But why does everyone insist on manufacturing as the only trade-able thing out there? If a lawyer sells 100 hours of service to a German for $20,000, it’s as valuable as if a company that makes trinkets sold $20K worth of trinkets to the German.
It’s 2010 not 1950.
Manufacturing, farming, and mining are the basis of every economy. Those are the activities that actually produce something. Everything else depends on that. There is no such thing as a consumer-based economy. All economies are based on production.
If we were living in 1810 you may have a point. However, we live in 2010. Get with the times man. Manufacturing is a low value add proposition. No need for it when we can have high value add in services.
Or put another way, a lawyer is better allocated selling hours of service to someone than working in an assembly line.
Because there is an “IQ Pyramid” in society. A bell curve in the population. People at the center, the 100 IQs aren’t going to be very good computer programmers, engineers, doctors, lawyers.
It’s the upper IQ segments of this society that are going to be competitive in the world market for those industries. Not the 100 IQs and lower.
So how can we keep that middle and bottom half gainfully employed and adding to the economy? They are still human beings, and still feel human emotions as intensely as the rest. How do we keep them fed, clothed, and not rioting?
We can perhaps aim for a model where a small group of companies creates enough wealth for the entire society, tax the heck out of them, and give everyone else government/government contractor jobs. I’m not saying that’s necessarily a bad model, if it’s possible. In the mid-Atlantic region, it seems to be very common employment.
But is that sustainable for the whole working population of the country? If not, then we need things like manufacturing, in which the middle and lower IQ groups (the vast bulk of the population) can go to everyday and get money to spend on the necessities, and boost the economy and our standard of living.
It may be politically incorrect to talk about IQ, but we need to deal with reality if we are going to come up with policies which actually suit the needs of the population.
Telling a laid off bolt-turner on an assembly line that he should go back and get an electrical engineering degree because there are lots of signal processing jobs out there is not a workable solution. It’s closer to a nasty joke. A “Let them eat cake” solution.
We should only make things if it is economically advantageous.
yes, but we can continue to find things that are economically advantageous to make.
———-
Some things are like a 747. The amount of skill required to make one of those things requires developed world employees.
yes
———-
Making socks or $1 trinkets sold at the $1 store….not so much.
yes, and the items which don’t make economic sense for us to manufacture will continue to grow. but there will also be new things to make.
———–
But why does everyone insist on manufacturing as the only trade-able thing out there?
i do think that manufacturing is one of the best ways to build value in an economy. but you’re right that there are other things to trade. labor itself is one. i shouldn’t have implied that only ‘physical things’ are trade-able.
———–
If a lawyer sells 100 hours of service to a German for $20,000, it’s as valuable as if a company that makes trinkets sold $20K worth of trinkets to the German.
yes, but i don’t see it as having a ripple effect that adds value elsewhere like the manufacturing process does.
Eddie Dear, we can not have a functioning economy where everyone is a lawyer. Where will the $$ to pay the lawyer come from? Will all the lawyers just be each other’s clients and pass the money from lawyer to lawyer until everyone’s rich? No. The lawyer has to has have a client who does something to earn that money. If the lawyer’s client is a doctor, then who is the patient? If the patient is a financier, then what is the financier financing? Where is the financier’s investor getting his money? It has to come ultimately from people who produce actual things. Money, my dear Eddie, is a representation of the stuff that has been produced by an economy. If you do not produce stuff, then your money is worthless.
I think services are legitimate - but they are more of a high skill/high IQ product. Everyone needs doctoring occasionally - setting a broken arm to removing an inflamed appendix. Engineering services - creating blueprints for a bridge or road. Lawyering is absolutely essential. Contracts can’t be created and enforced with them.
But again - these are higher IQ pursuits. In general, I don’t want a high school dropout telling me what is medically wrong with me, designing a bridge or putting together rules that giant corporations are going to use to deliver massive projects.
But - the dropout is a good guy. There are lots of them. He might be dyslexic. Loves animals. Helpful guy, give you the shirt off his back if you needed it. We need a society which provides work for him and those like him. That is good for him, and good for the society in general.
Manufacturing, farming, and mining are the basis of every economy. Those are the activities that actually produce something. Everything else depends on that. There is no such thing as a consumer-based economy. All economies are based on production.
Nailed it, Big V. Wealth is created by making things - turning $10,000 of raw materials into a $20,000 car, for instance. Money, on the other hand, can be created out of thin air. Our consumer economy is based on credit and debt and the pretense that it can all be paid back.
Yes Big V nails it . Every sector of society needs productive labor that contributes to the overall economy . The labor money is spent in the economy and that creates more jobs . The tax base is established and that should go to more needs of the Society .
Wall Street would like everybody to think that short term get rich quick investments are the mainstay of Society .
But you can, you just have to search for it, and be willing to pay.
Remember shop rates when you get your car repaired might be $80-$130, depending. Same thing with everything else…A shop charging a shop rate of $120/hr might be paying the floor managing mechanic $80k a year…
How many countries exited the last Great Depression by reducing government spending?
One. The US. (FDR finally died.)
Truman reduced spending during WW2? (And you do realize that the US had long exited the Great Depression at the time of FDR’s death, right? Or is this one of those historical rewrites?)
The answer is not far to seek, alpha. I typed “Government Spending” into Google and here’s what came up:
www dot econlib dot org/library/Enc1/GovernmentSpending.html#chart%201
Honestly, I don’t know why you’re bothering us with this stuff. If you need help with basic computer skills, maybe you could take a course at a community college or something.
Ramping up manufacturing (U.S. manufacturing!) for the Lend-Lease program brought about the beginning of the end the GD. And the final nail in the GD coffin was pounded in on December 7, 1941.
Ramping up manufacturing (U.S. manufacturing!) for the Lend-Lease program brought about the beginning of the end the GD
So…government spending ended the Great Depression.
The myth of FDR saving the world from GD has long been debunked. In fact FDR’s policies prolonged the depression by several years.
“Two UCLA economists say they have figured out why the Great Depression dragged on for almost 15 years, and they blame a suspect previously thought to be beyond reproach: President Franklin D. Roosevelt.
After scrutinizing Roosevelt’s record for four years, Harold L. Cole and Lee E. Ohanian conclude in a new study that New Deal policies signed into law 71 years ago thwarted economic recovery for seven long years.
“Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump,” said Ohanian, vice chair of UCLA’s Department of Economics. “We found that a relapse isn’t likely unless lawmakers gum up a recovery with ill-conceived stimulus policies.”
Phew good thing Obama’s not going anywhere near that path.
Eddie- Wow! Two UCLA economists say so- that proves it!
And why did the Depression continue for so long in other countries that lacked FDR as a president?
Lehigh- Your link is only allowed for true believers in the libertarian site it leads to. Why don’t you summarize for us. How much did Truman reduce spending during WW2?
Canada’s economy was markedly better during the 1930s than south of the border. Why? Because Canada’s PMs didn’t spend like the drunker sailor FDR. They did that about 30 years later, but that’s a whole other issue.
Unemployment never went below 15% during all of FDR’s tenure in office. It was as high as 25% and when WW2 started it was 17%. Spin as much as you want the stubborn facts clearly show FDR’s policies were a failure.
I find it hard to make the connection with FDR extending the Great Depression for 15 years .
Canada’s economy was markedly better during the 1930s than south of the border….Spin as much as you want the stubborn facts clearly show FDR’s policies were a failure.
Spinning is for those on the other side of the truth. From Wikipedia:
Canada during the Great Depression
Harshly affected by both the global economic downturn and the Dust Bowl, Canadian industrial production had fallen to only 58% of the 1929 level by 1932, the second lowest level in the world after the United States, and well behind nations such as Britain, which saw it fall only to 83% of the 1929 level. Total national income fell to 56% of the 1929 level, again worse than any nation apart from the United States. Unemployment reached 27% at the depth of the Depression in 1933.
It took the outbreak of World War II to pull Canada out of the depression. From 1939, an increased demand in Europe for materials, and increased spending by the Canadian government created a strong boost for the economy. Unemployed men enlisted in the military. By 1939, Canada was in the first prosperity period in the business cycle in a decade. This coincided with the recovery in the American economy, which created a better market for exports and a new inflow of much needed capital.
Compare year to year from 1933 to 1939. Canada had lower unemployment, higher gnp growth.
Why don’t you summarize for us. How much did Truman reduce spending during WW2?
Alpha, quit when you’re more or less ahead. Truman didn’t become President until April 12, 1945, about two and one half weeks before the fall of Berlin. He was not really well situated to make decisions on spending during WW2.
Well, the war didn’t end with the fall of Berlin. I seem to remember Japan still fighting.
But I agree spending fell after the war ended- it would, wouldn’t it? But the Depression had been over for years by that point anyway, which was my main point. It ended while FDR was still alive- let’s at least get that fact straight.
And I still haven’t heard of a country that exited the Great Depression by reducing government spending.
shoes are throw-away items now , as are fridges ,garden tillers , and about everything else . also the Cobbler’s jobs.
From what i’ve seen most everyting is tossed away without much thought.The landfills are making bank these days.It costs 35.00 to take a pickup load of gargage to a tranfer station in lamesa, san diego county.They then sort those materials and sell them and make more money.A big reason you are seeing trash everywhere on the roads is the high cost of disposal.I think a lot of people are burying things in thier back yards.
My grandparents talked to me about their experience of the Great Depression, and the main lesson I learned from it is that money is not necessary for happiness. (Food certainly can come in handy, though!)
P.S. My grandparents also learned to save, and passed that lesson on to me. So far as I am aware, Keynes’ lessons about how you can spend your way to prosperity did not resonate with them.
Keynes recognized the paradox of thrift (in fact he invented the phrase), and didn’t seek to fight against it by forcing people to spend.
His recommendation was for the government to spend during the period when people were rationally saving their own money. When things are booming, the government doesn’t need to perform stimulus spending, but should instead use its increasing revenue to pay off the previous stimulus spending.
You see, it’s counter-cyclical, like good investing. And it worked, until a pied-piper told us that deficits don’t matter, and monetarism (stimulus for the rich) became the economic law of the land.
My state govt went wacky during the boom, increased the ongoing budget 40% in one biennial session alone. Apparently the thinking was, if we don’t get these extra goodies into the budget now while things are good, we’ll never get them….seemed to work for the cities too.
Keynes recognized the paradox of thrift (in fact he invented the phrase)
Well, I realize I’m talking to alpha-sloth here, aka Mr. “Every website that disagrees with me is evil and I’m not even going to look at it”, but the so-called paradox of thrift has been thoroughly debunked by Austrian school economists:
www dot econlib dot org/library/Columns/y2009/Murphythrift.html
Executive summary: More savings means less present consumption, but more capital available for longer-term projects. This is in no way harmful and is actually a needed counter-balance to periods of excess consumption.
Yeah, but it’s too late for that now. The government already got itself into too much debt, back when things were booming. It is not possible to reverse that and start off with a Keyne plan.
Lehigh- the links to Libertarian sites don’t mean much, except to True Believers. They’re not exactly objective sources.
Big V- Deficit spending is still occurring. We just need to direct more of it away from Wall Street and towards Main Street. Monetarism has failed at pushing the string forward. Welfare for the rich was always a bad idea. Let’s try investing in needed infrastructure, better transportation, a more efficient and reliable electrical grid, etc. The little guys will actually get some of the money, and we’ll all be better off for it. There’s really no other way out of a deflationary death spiral for an economy as large as ours, as we shall see.
Let’s try investing in needed infrastructure, better transportation, a more efficient and reliable electrical grid, etc.
________
Great. But why does it have to be the govt? If these “reliable” electrical grids are efficient, private money will be all over it.
Same with all the “green” nonsense. If there is money to be made in being “green”, companies will rush into it. The fact he govt has to subsidize it means it is wasteful and an inefficient investment.
Why didn’t private enterprise create the internet?
“Why didn’t private enterprise create the internet ?”
Great point alpha-sloth . Why didn’t private industry finance all
those tax funded road projects during the Great Depression ?
Wasn’t Hoover Dam a tax funded project ? Would be interesting knowing how much good medicine was discovered by public grant that private industry didn’t delve into .I’m sure the Space projects created a lot of innovations that otherwise wouldn’t of come about .
Both the great recession and the great depression were caused by the bursting of a big credit bubble, many bad loans that were never going to be repaid. Which points out another great difference, in the 20s the US was a net creditor and in the 00s the US is a net debtor.
“… many bad loans that were never going to be repaid …”
These “bad loans” are somebody’s money. If someone is owed money and is counting on getting paid this money but ends up not getting paid then that person is out some money.
If the millions of people who are owed the tens of trillions of dollars of promised money do not get paid then that means they will be out of that money.
If people are not paid the money they are owed then they will not have that money to spend. If the tens of trillions of dollars that are promised to millions of people are not paid out then that means the economy will end up being short tens of trillions of dollars.
These “bad loans” are somebody’s money.
Like China, India, Japan and all those other countries that have stacked “free trade” in their favor?
With the full co-operation of the US Government.
See, we needed “allies” in the Global War on Communism/Terrorism/Whatever Reason They Pull Out of their Azz Next. So we shipped off a little bit of our economy/industrial base, a piece at a time, to show them the benefits of becoming capitalist/free-enterprise/a member of the global economy. Then, the PTB found out how profitable it was to have stuff done overseas, vs. paying all those “lazy, overpaid US workers”.
The strategy worked, until the middle class ran out of money.
“The strategy worked, until the middle class ran out of money.”
Fat cat #1: Why the hell aren’t the unwashed spending?
Fat cat #2: Beats me! Let’s lower their pay again, that should motivate them to spend more, right?
Both the great recession and the great depression were caused by…
National Great Expectations.
Personal & professional mal-investment help things along…
I have, as most marrieds do, four Depression narratives I know well. In every story people had work or the support of old money. One was even a single Mom keeping her kids fed by working in a shoe factory. Her Dad was of a background that should have been helpful in those years. I never was told why he didn’t play a part. Perhaps he died early.
The side with old money didn’t live isolated from other income groups. They lived in the city. It was the schooling that set the young boy apart. JFK Jr was a year ahead of him in his private school and there was an Arab prince and a Singer heir in his class. I would say there is nothing about his adult choices that reflect this experience in his youth. He seemed to want to belong with his co-workers not above them. He preferred to work with his hands. There’s a difference between doing it because you have to and doing it because you can afford to and there are no financial repurcussions. Lots of lessons to be learned comparing choices made w/in both groups.
It’s interesting to meet these old money people, get an understanding of their world-view, and then realize that the people running this country have no understanding of the lives that most folks have led in the past few generations. All four of my grandparents grew up poor and had stories of tough times from the Depression. There are families in this country that have no such stories in their backgrounds. They came through the Depression just fine. They are out of touch with 95% of the population at such a profound level that it is breathtaking to think about, and they’re running the country.
I think it’s so funny when the self-righteous rich proclaim that a person who “works for fun” is above a person who works for money. The person who works for money is going to do a better job.
My children and grandchildren will be talking about a truly evil and misguided man named Ben Bernanke and his Federal Reserve, run by and for the financial oligarchs, who destroyed the US dollar and the moral fabric of this once-great country by bailing out reckless lenders and speculators at the expense of future generations.
Ben Bernanke is an idiot and a puppet. I believe the evil that will be talked about for generations is Greenspan. There was an apparently intelligent person doing it would seem just about everything in his power to do wrong.
“This time the factories are not located here, this time the factories are located somewhere else. If money is pumped into the economy HERE, the money will soon end up SOMEWHERE ELSE.”
QE1, QE2, QE3, … = right solution, wrong problem
Paging Pbear & DennisN……..
Hey..I am looking for you both…Are you guys still on the board ??
Huh?
Wha?
Don’t forget that the blog software is overworked enough that posts may be delayed for up to an hour.
I got to run out for a bit…I will check back in around 11:00 PCT….
Okay guys…Just got back in…Here you go;
Excerpts from posts from a few days ago;
Pbear: Why should he be allowed to walk away?
scdave: Non-recourse
Pbear: I thought it was more complicated than that in CA — for the really big fish, there was a remedy in the courtroom… DennisN — could you back me up on this?
DennisN: That concept of “non-recourse mortgage” is an oversimplification of a complex legal issue. ALL mortgages are intrinsically “recourse”… Saying CA is a “non-recourse” state is like saying you can’t get AIDS from a virgin…
Guys….Owner occupied 1-4 unit purchase money loan(s) are 100% non-recourse in the state of California. The lenders sole remedy is the property…Any subsequent financing “after” the original acquisition could be subject to the judicial foreclosure process and a deficiency judgment…So, “assuming” that Martin’s house was the original purchase money financing there is no deficiency judgment alternative for the lender…The only remedy is to take the property back through the deed of trust…The fact that Martin makes 10-mil per year and can afford it is irrelevant…
Just trying to clarify our discussion and the question….
I’ve posted the flowchart on several occasions. You have to check several facets of the loans to determine whether a suit for deficiency may be brought. One is judicial vs.non-judicial foreclosure. One is original loan vs. refi.
Maybe I’m splitting hairs here, but there is no such thing as a “non-recourse mortgage”. The term “non-recourse mortgage” would IMHO never be used by a lawyer, but sounds like some journalist’s short-hand expression. ALL mortgages are recourse in that the borrower is contractually obligated to pay back the loan. It’s just that in many situations the courts will not allow a lawsuit to be brought to recover any deficiency resulting from a post-foreclosure sale of the collateral. Saying California is a “non-recourse state” is an oversimplification which may trip up certain FBs.
One of the problems with FBs in today’s world is that many of them did a serial refi. If they are “deep pockets” defendants, the banks can go after them for the deficiency.
The story about that jock didn’t ever get to the issue of whether it was the original loan or a refi or a HELOC.
Let me add another thought which perhaps explains my dislike of the term “non-recourse mortgage”.
ALL mortgages are intrinsically recourse: the borrower is contractually required to pay off the loan amount.
What makes the mortgage “non-recourse” is NOT the mortgage instrument itself, but rather a STATUTE passed by the state legislature forbidding a suit for the deficiency in many (but not all) circumstances. In California, it’s in the Code of Civil Procedure section 580.
What’s to prevent the CA legislature from REPEALING section 580 next week? They have the power to do so. And as more people get mad at FB’s who abuse the system, perhaps they have a political reason to support repeal.
If section 580 were repealed, ALL mortgages in CA would immediately revert to being “fully recourse”.
Dave there’s one more issue. You mentioned “owner occupied” above.
Martin moved out of state and no longer occupies the house in question.
Does his mortgage qualify as “owner occupied” anymore? I don’t know how the case law comes down on this issue but it could be a real problem for the “jingle mail” set.
Let me add that if you drink beer with DennisN, come prepared with your best listening ear. The man is quite generous with his bounteous wealth of knowledge and experience.
I’d think that having enough money available out of current income to pay off the full loan balance over a couple of months could also be a problem for certain members of the “jingle mail” set. Why should the lender get stuck holding the bag if the borrower is good for the money?
Ex-Kings star Martin gets default notice on Rocklin home
By Phillip Reese
preese@sacbee.com
Published: Friday, Oct. 15, 2010 - 12:00 am | Page 1B
Last Modified: Saturday, Oct. 16, 2010 - 11:53 am
The housing bust has claimed another King.
A bank has issued a notice of default to former Kings basketball star Kevin Martin – the first step in foreclosing on his million-dollar Rocklin home. The notice comes just a few months after former Kings basketball star Ron Artest finalized a short sale on his Loomis property.
Martin’s attorney, Michael Hackard, said a foreclosure probably won’t happen. Like a lot of homeowners, Hackard said, Martin has been tangling with his bank as he pursues a short sale on the home.
“He always wants to do the right thing,” Hackard said. “He’s a stand-up guy.
“There’s a legal dispute that he is right in the process of solving. … He’s not walking away. We’ve got a certain dispute with the lender.”
Martin, who will earn $10 million this year playing for the Houston Rockets, first missed a payment on his $1.5 million home loan in June, according to Foreclosures.com. His lender filed the notice of default last month.
Martin’s Rocklin home is listed for $1.1 million as an “active short sale,” meaning that if someone buys at that price, his bank could take a loss.
Martin is currently in Guangzhou with the Rockets as part of the NBA’s China Series.
His roughly 5,000-square-foot home has four bedrooms and four bathrooms, property records show. Martin paid about $1.9 million for the home in the gated Whitney Oaks subdivision in July 2007. The Kings traded Martin last February.
Martin owes $44,000 in late payments on the home, according to Foreclosures.com. He could pay off the entire loan with about two month’s salary.
Martin’s home is on Clubhouse Drive, which has been a hub of high-end foreclosure activity since housing prices started plummeting.
About one-fifth of the roughly 100 homes on the road have gotten a notice of default in the last four years, Foreclosures.com data show.
…
“Martin’s home is on Clubhouse Drive, which has been a hub of high-end foreclosure activity since housing prices started plummeting.
About one-fifth of the roughly 100 homes on the road have gotten a notice of default in the last four years, Foreclosures.com data show.”
Is one home out of five in default a fairly typical figure for high-end areas?
I will discuss this tomorrow with you two..I am too tied right now…See ya..
QE is the “right solution” for a government trying inflate away its debt and obligations with printing press money. For anyone else it is debasing the currency and setting the stage for hyperinflation. So some research on the Weimar Republic and what followed.
I have been saying for a while now, our currency was debased back when loans were made that could not be repaid. This made the money a “gift”. At the same time, incomes are rapidly declining, reducing tax revenues and making debts even harder to repay.
From my observation, the current strategy does not appear to be to print our way out at all, but rather to allow the debts to go bad, then mop up the mess.
Somewhere in the region of 20% of all credit card debt has been charged off in the last 3 years, along with a similar amount of mortgage debt. Way more to go!!! The trillions which had already been given away in the form of “loans” and have been spent are in effect covered by the Treasury and Fed, then later ultimately ALL of us.
So it is my position that closing the stable gates now will not help. Either way SOMEONE is going to have to lose. The question is WHO?
I can see the future…
Japan, Once Dynamic, Is Disheartened by Decline
The New York Times | October 16, 2010 | Martin Fackler
OSAKA, Japan — Like many members of Japan’s middle class, Masato Y. enjoyed a level of affluence two decades ago that was the envy of the world. Masato, a small-business owner, bought a $500,000 condominium, vacationed in Hawaii and drove a late-model Mercedes.
But his living standards slowly crumbled along with Japan’s overall economy. First, he was forced to reduce trips abroad and then eliminate them. Then he traded the Mercedes for a cheaper domestic model. Last year, he sold his condo — for a third of what he paid for it, and for less than what he still owed on the mortgage he took out 17 years ago.
“Japan used to be so flashy and upbeat, but now everyone must live in a dark and subdued way,” said Masato, 49, who asked that his full name not be used because he still cannot repay the $110,000 that he owes on the mortgage.
Few nations in recent history have seen such a striking reversal of economic fortune as Japan. The original Asian success story, Japan rode one of the great speculative stock and property bubbles of all time in the 1980s to become the first Asian country to challenge the long dominance of the West.
But the bubbles popped in the late 1980s and early 1990s, and Japan fell into a slow but relentless decline that neither enormous budget deficits nor a flood of easy money has reversed. For nearly a generation now, the nation has been trapped in low growth and a corrosive downward spiral of prices, known as deflation, in the process shriveling from an economic Godzilla to little more than an afterthought in the global economy.
Aren’t 40% of all Japanese workers underemployed temps?
I saw a documentary where unused office space was converted into low cost housing. The tenants, all singles, lived in what were basically converted cubicle farms (with partitions high enough to afford a modicum of privacy.
We have the same thing here. They are called “lofts”, but they are trendy, so you get to pay a 50% premium sq/foot vs. the boring, non-hip, non-urban suburban rancher.
In a consumer driven economy, blaming the consumer for not supporting the economy because they don’t have a job is the very definition of absurd.
If you ever want to get depressed go to a landfill and watch for a bit.Thats were all this stuff the throw away society is ending up.
“If money is pumped into the economy HERE, the money will soon end up SOMEWHERE ELSE. ”
Thats how it works in the ghetto.
“Government programs” pump money into the ghetto,
ghetto residents spend the money.
The money leaves the ghetto.
Why do you think that happens, Spook?
“Why do you think that happens”
One dynamic I noticed is that the ghetto is maintained by people that are NOT ghetto residents. Both the “governmet programs” and real estate “investors’ loot the value of the money a working class person would use to buy a house there and improve it and the neighborhood.
For example; when a janitor or taxi driver shows up to buy a house in the ghetto with money earned by slaving away at their job, they hafta compete to buy real estate with “stupid money” from government programs and “investors” who buy property for speculation and just let it sit and decay.
The property investors want things to get bad so other property investors will “give up’ and sell their property to them for cheap.
Then once they get a large parcel, they sell it to the city for a giant building to house the administrators for the government programs.
Go drive through Baltimore.
The ghetto is in “mint condition”
meant to be that way.
I don’t think most slum lords are thinking about selling large plots of land to the government. Most are just happy that they can buy a house for 10,000$ and charge someone 400$ a month to live there. That’s a great ROI, if you don’t mind getting your money by pounding on the door of often scary people and demanding payment, and fixing up your property after it gets regularly trashed.
I’ve seen a lot more ghettos cease being ghettos as they become populated by people with different mindsets. First, the bohemians, artists, gays, and the like move in, attracted by cheap rent, cool architecture, proximity to more expensive downtown areas, etc. The cheap rents allow them to open little galleries, stores, restaurants, bars, etc, that eventually start attracting more normal people to come and shop. Then the Trumps take notice, buy up everything, put in condos and fudruckers, raise the rents, and ruin the place.
That’s the cycle I see repeated everywhere. The slumlords are actually the better landlords. They just want their rent money. It’s the Trumps who level the place to put in high-rise condos and malls (which fail), pushing the bohos on to their next ghetto renewal project.
The fact that all the money flows out of a true ghetto quickly is indicative of the mindset of the people who live there, more than anything else. But that’s the thing about ghettos- the smarter people tend to ‘ghett out’. (Until the bohos show.)
“That’s a great ROI, if you don’t mind getting your money by pounding on the door of often scary people and demanding payment,”
Thats why they came up with section 8; the gov mails the check to you. You don’t even need to vist the property to get paid.
“I’ve seen a lot more ghettos cease being ghettos as they become populated by people with different mindsets. First, the bohemians, artists, gays, and the like move in,”
You mean white people right?
But they key is moving the nonwhite people OUT.
“that eventually start attracting more normal people to come and shop.”
You mean white people.
“The fact that all the money flows out of a true ghetto quickly is indicative of the mindset of the people who live there, more than anything else.”
Exactly,
people with “mindsets” confused by people like you that used words and terms designed to “hide” the dynamics of what is really occuring from them.
alpha-sloth,
are you a white person?
You mean white people, right?
No, By bohos etc I mean people who are looking for an area of cheap rent so they do their own thing and not have to be cogs in the machine. They come in all colors.
The people in the ghettos they move into tend to be more mono-cultural, although that culture may be white, black, whatever. The ghetto residents also tend to be non-entrepreneurial, and I think that explains both their residence in a ghetto, and the opportunities that exist there for more adventurous types.
Surely you’re not equating black with ghetto?
Surely you’re not equating black with ghetto?
Correct,
Instead Im equating black PEOPLE with ghetto. The ghetto is a PERSON, not a place; specifically, its a PERSON with as you described it: a “mindset”
And BTW, since you didn’t answer my question (are you a white person)
perhaps you can answer this one?
do you know what a white person is?
The ghetto is the place where people with that mindset tend to live- because it’s cheap and they’ve got no money.
And, no, I do not know what a white person is. Enlighten me.
“And, no, I do not know what a white person is. Enlighten me.”
Then logically that means you are a nonwhite person.
Am I correct?
Spook is right about ghetto economics. There are several reasons ghetto even exist and one is the under-the-radar RE fraud, grifting and manipulation for reasons that make no sense outside of the ghetto.
Spook: I can’t help you with Alpha’s race, but I think I know yours. Few persons other than blacks attempt to intimidate opposing views by fiercely brandishing the race card the way you do.
And if I’m right, you give a lot of blacks a bad name. Your defensiveness speaks volumes about the weakness of your argument. Thanks for playing, but come back when you’ve grown up. Spook.
“Spook: I can’t help you with Alpha’s race,”
First, did anyone ask YOU for help?
2nd,
is a person who does not know if they are a white person QUALIFIED to make statements about race?
Would you trust a person who does not know if they are a doctor to do heart surgery on you?
2nd,
is a person who does not know if they are a white person QUALIFIED to make statements about race?
___
Alpha knows whether s/he is white or not. I believe that s/he was leaving the matter in your hands to define, for the moment, because you were being a race-baiting dumbazz and s/he wanted to see what you’d do with it. Surprisingly, you didn’t swallow the bait, but I suspect strongly that had less to do with intelligence or shrewdness than dumb luck.
“Alpha knows whether s/he is white or not. I believe that s/he was leaving the matter in your hands to define,”
Look,
both of you are white people.
Ive got a copy of the racists playbook and you both took a page right out of it.
Rookie.
One of the functions of a white person in a system of white supremacy is to help another white person confuse/decieve a nonwhite person by making excuses for said white persons deceptive behavior.
“ghetto residents spend the money.”
“The money leaves the ghetto.”
That’s because the store owners who sell in the ghetto do not live in the ghetto; They live somewhere else. And the place that lies somewhere else is where they spend the money that they take out of the ghetto.
The somewhere else places prospers due to the money that flows in, and the ghetto stagnates due to the money that flows out.
In South Central L.A. most of the store owners are Koreans. The Koreans sell to the residents of South Central then they take the money to Koreatown where the money circulates around and around and doesn’t leave Koreatown until it has been passed around many, many times.
“Government programs” pump money into the ghetto,…”
“Government programs” pump money into the
ghettoKoreatown / lil’ Saigon / Chinatown / Peoria IL / Manhattan NY / Martha’s Vineyard MA / MIT / Stanford / Cal-Tech / Princeton / Yale / Smithsonian / South Carolina waste water treatment plants…can you think of any others?“… can you think of any others?”
China? Vietnam? The Philipines? Malasia? Mexico?
Afghanistan / Iraq
Think about what was going on during the debt boom 2000-2007 ,(and still is going on ).
Money was coming in from all over the World and locally to the financials markets where Middlemen of Wall Street
ended up mis-allocating it into debt dollars which mostly went to real estate/ equity loans. At the same time out-sourced jobs and manufacturing job money was going all over the World outside America .So, America imported debt dollar and products and exported jobs and income from jobs and out-shored manufacturing (also , the trade balances suck ).
This wealth creation didn’t come from wages ,it came from
debt .
The construction ,real estate ,financial ,escrow jobs ,and the
house debt ATM jobs that were created here were created by debt dollars that a certain huge percentage are becoming non-performing now and the jobs from that flow have left.
For a brief period of time the wealth creation from debt dollars was a stimulus ,but now its a black hole of lost money
and lost jobs .
So far the Government has stepped in to bail out the unpaid debt ,which you can’t really call a stimulus because the only thing we have to show for it is excess housing in weird places
for the fraction of the prior value and unneeded jobs from that sector .You could say that the Bail Outs prevented a total
loss of funds to the investment class ,but overall there was massive loss of wealth by the artificial prices of real estate crashing as well as the non-performance on the debt .
So, we have to get back to wealth creation by jobs that allocate production proper which Corporate America and Wall Street isn’t going to go along with because they like the current system that screws Main Street .
Can Congress get $250.00 checks into the hands of Social Security recipients in time for Christmas? Having not given COLA increases for two years, 2010 and 2011, Congress feels some remorse. A bill is expected to be introduced in the House of Representatives in November to send $250.00 to each person on the Social Security rolls. The bill may be shot down in the Senate, however, as it was last year.
Does Congress have the money for such a generous gift? No. It would be borrowed - the effect being a nice gift for senior citizens paid for by future generations. “Like Christmas in reverse,” said former Colorado Governor Lamm. “The adults get the gifts and the kids pay the bill.”
$250 will buy a senior a couple months of medicine, or a month of food.
Ridiculous bribe.
Obama is banking that $250 will buy a vote. Given Boomer greed and fecklessness, he’s probably right.
I’m still waiting to hear someone in my mostly retiree community complain about no COLA and that he/she is on a fixed income. My answer: Be glad you’re not on a declining income like so many who have been laid off or seen their hours reduced or their benefits cut.
Seniors are the third most well-off people in the country, after 1) Wall Street banksters and 2) federal civilian employees.
BTW, has anyone heard whether those federal slugs will be getting a COLA this time around?
I sure wish I was on a “fixed income”. My income, from interest and dividends, has been cut about 70% as a direct result of government ZIRP policy.
Same here DennisN. I don’t know ,all the retired people I know are complaining about a much lower income scream while
the cost of medical care keep going up ,while they are also
bitching about loss of stock values and real estate value .
I’m sure there are certain groups of retired folk that are sitting
pretty ,but I think its a smaller percentage than the ones that
are eating it .
Read the cola for Congress will be 2.8%. My goof-off federal employee brother-in-law says the cola for fed employees will be 1.8% and he is bitching like crazy.
http://www.latimes.com/news/la-me-elderly-poverty-20101017,0,3280189.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fnews+%28L.A.+Times+-+Top+News%29&utm_content=My+Yahoo
The other side of retired folk!
They rented a run-down house in Westlake. But since his death six years ago, Divinagracia has struggled to pay the $1,800-a-month rent.
That’s her problem. She needs to relocate where it’s cheaper to live. There’s no good reason for permanently “poor” people to live in super-high cost of living areas.
Heck I live on around $1,800 a month, and that’s all expenses.
…”goof-off federal employee…”
In future posts, try to avoid such redundancies.
Worked for Bush.
Boomers didn’t start collecting SS, until a few years ago. The first boomers don’t turn 65 until next year. Throw your, misdirected, anger at the correct targets.
The Silent Generation (1925-42)! They didn’t have to fight in WW2. And they’re mostly too young to remember the Depression- heck they thought it was normal! And once again, they’re slipping by under the radar, trying to blend in with the Greatest Generation. (Of course, a lot of them had to fight in Korea, but they didn’t even win.)
As usual, it’s my parents’ fault.
Men born in 1925 were certainly drafted into WW2, alpha. My dad was born in 1932 but he joined the army during the Korean war. His other option was to be a coal miner like his father, so he decided to take advantage of the GI bill. His beginnings were very difficult, but both his and the “greatest generation” enjoyed their ascent into the middle class, worked for companies for years, enjoyed early retirement/golf, and lived to a ripe old age after years of robust health. By contrast, the current 20-somethings started off in McMansions, but will encounter economic adversity into their old age.
Somebody predicted that life expectancy will decrease in the near future. I agree with that prediction. Stress can kill.
The self-absorbtion of the boomers, compounded by their decades of cumulative poor choices and moral relativity, has played a disporportionate role in America’s continuing decline into dystopia. The boomers probably thought they’d be long gone by the time the bills came due - guess what, the chickens came home to roost early.
Yeah, I know the Silent Gen aren’t so bad, REHobbyist. I was raised by two of ‘em. I just like picking on them because everyone forgets they even exist. It’s my little way of paying them homage.
Never said ALL of them were bad. Most were just incredibly self-absorbed and materialistic. But there were, and are, lots of exceptions.
My hubby will no doubt buy a tool with it.
One month. One month of food OR medicine, but not both.
$250 = couple of months’ prescriptions for a senior? In what socialistic country? Norway? Now that Ive hit the doughnut hole, if I want to get my three prescriptions this month I’d have to cough up about 600 bucks… FOR ONE MONTH! Check out the cost of Actos for 30 days. Time to get out the pill splitter.
Diabetes is a tough row to hoe, Carlos4. You have my sympathy.
I’m on Actos, too. Expensive and it is in the same class as Avandia, which I was on before and is now being linked to heart disease and cancer -
Payments average 18 months past due on Palm Beach County’s foreclosed homes
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 10:10 p.m. Saturday, Oct. 16, 2010
WEST PALM BEACH — The average Palm Beach County homeowner in foreclosure hasn’t made a mortgage payment in more than a year and a half, the longest delinquency of South Florida’s large counties and fourth longest in the state.
According to data collected at the end of August by LPS Applied Analytics, Palm Beach County has 45,829 homes in foreclosure with late loan bills dating back 623 days on average.
St. Lucie County, with 11,529 homes in foreclosure, has the fifth longest delinquency on payments in Florida at 613 days.
Statewide, the average delinquent house payment for homes in foreclosure is 573 days.
Payments average 18 months past due on Palm Beach County’s foreclosed homes
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 10:10 p.m. Saturday, Oct. 16, 2010
It’s also further inflaming the uncomfortable debate between neighbors who are still working to fulfill their mortgages and those who are living payment-free.
Mario Kenny, 55, unabashedly touts the four years he has lived in his Miami home without paying a mortgage after he got sick and went into foreclosure. Kenny, a costume and clothing designer, says he feels no obligation to pay.
“The people suing me are not the ones who loaned me the money,” said Kenny, who attended a recent homeowner advocacy group meeting in West Palm Beach. “I’m probably able to pay now, but I know the original lender is gone.”
But don’t worry. The MSM and the bankster CEOs have assured us that this is just a temporary blip that should be cleared up once a couple of bad-apple robo-signers get re-trained and re-certified.
Wow. He has no concept of how his loan is an asset that can be bought and sold. Someone should tell the clothing designer that when Ralph Lauren gets bought by Dulce and Gabana that he can continue to wear his old RL shirts.
Kenny needs to learn about the concept of “accounts receiveable”.
Actually it makes me sick that this guy is now using the title problem as a excuse to live free in some joint . This is really a case of forced welfare . Renters have to pay their rent but borrowers get this
free ride ?
Why would the Courts give the borrowers title to property for free
just because the paperwork on the transaction is messed up ? The party that should benefit is the party that came up with the money to begin with .The banks want free money ,the borrowers want free money .
IMHO ,from day one the true victims of the real estate Ponzi-
scheme were the actual parties that put up the funds for this faulty lending and maybe borrowers who didn’t lie on their loan applications and put life savings into a big down payment .
that crashed in value . These no/low down borrowers or ATM extractors have spent the money and don’t intent to pay the debt or never could .The ATM equity extractors got cars ,boats, vacations ,other houses and you name it with loan dollars that they want for free now .
You can’t say that a person that was betting on real estate going up who simply leveraged debt on that bet is a victim, but rather they were a gambler .I see the entity that came up with the funds/loan money for that gamble under false pretenses as the true victim .
Actually our entire Society was a victim of this Real Estate Ponzi-scheme because there isn’t any group that hasn’t been affected
by the aftermath of this crash .Actually some groups benefited
from this crash and came out ahead of the game ,but the majority
has suffered in some way .Now you have the displaced unemployed
that are really suffering .
Actually our entire Society was a victim of this Real Estate Ponzi-scheme because there isn’t any group that hasn’t been affected by the aftermath of this crash .
It would have been bad enough if the Plunge Protection Team had not summarily slapped all kinds of federal guarantees on GSE-issued MBS in the wake of the Fall 2008 financial meltdown, thereby sticking what should have been private losses on the back of the overall U.S. financial system. Without the moral hazard created by the expectation for government bailouts, it is hard to explain how the brightest financial minds on the planet could have made some of the poorest lending decisions in the history of modern finance.
‘Private profits, socialize losses.’
‘Privatize…’
It is folly to attempt to post while your sons are tearing the house apart. (Luckily we rent!)
Many of those NINJA loans were altered by the lender. There were examples given on this very website.
“I’m probably able to pay now, but I know the original lender is gone.”
Seems as though Kenny has stumbled upon a really important legal question, which is, ‘If a loan is sliced, diced, repackaged, and sold to MBS investors all over the world, does anyone actually retain the legal right to claim ownership of the collateral, including associated privileges to hold on to sell it or hold on to it, if the borrower stops making payments?’
Related question: Were those MBS investors buying a payment stream that was only good so long as borrowers kept up on the payments, or did the MBS investors additionally acquire the right to foreclose and take ownership of the underlying?
You won’t detect one bit of shock or awe on my behalf if it turns out that Wall Street investment banks who played the mortgage securitization game generally hold title to these properties, thereby retaining the rights to foreclose and keep the value of the repossessed property for themselves, while leaving MBS investors holding the bag on the worthless stacks of signed promises to make good on loan repayments.
You pose really good questions Professor .I think the Investors of
MBS’s were under the illusion that they had foreclosure rights .Why would any real estate investor buy into a unsecured note at the lower real estate interest rates for just a potential income stream? People invest in real estate loans because there is a asset of value that can be sold if the borrower doesn’t perform .
Remember for a while the loan investors were making big money on pre=pay loan penalty when real estate loans were turning over constantly by the flippers and refinance loan equity extractors .
For the longest time these foreclosures were sold before the issue came up or the industry just gave the borrower a new loan so they
could extend and pretend they could afford the house .
Lets face it, the whole loan scheme was based on real estate
continuing to go up and the industry made a big effort to keep it going when the cracks started to appear .
The fact that those Markit ABX indexes of subprime MBS dropped from levels of 100 in late 2006 down to 5 or so by late 2007 suggests that any investor who thought foreclosure rights came with their mortgage securities may have been sadly mistaken.
As I see it, there’s no question of whether a mortgage exists. The question rather is WHO owns the mortgage.
What’s really bad for the FBs is that they can’t determine who owns it, and even worse who is on the hook to record a “reconveyance” after the note is paid off.
Even for those thrifty FBs who end up paying off the note, how can they prove true ownership if there’s no reconveyance recorded on their property?
Maybe I repeat myself, but my lender never recorded a reconveyance for our place, and they never even sold the loan before we paid it off.
Deregulation has worked its usual wonders. Turns out those ridiculous rules don’t get in the way of capitalism- they’re what allow capitalism to exist! Surprise, surprise.
Do you care to cite which regulation would have prevented this mess, if it hadn’t been repealed? Glass-Steagall? At most that would have required different corp’s to do the securitizing.
Do you care to cite which regulation would have prevented this mess, if it hadn’t been repealed?
The requirement that information about who owns and who services a loan be deposited at the county land office has clearly been ignored, and we wouldn’t be in this particular mess if it hadn’t been.
Saying you don’t need to do what has been done for centuries, and being allowed to do so (which is what happened with the MERS crap), is a form of deregulation, even (especially) if no such law has been repealed. It’s de facto deregulation.
Would it be reasonably accurate to suggest that the flesh hanging from the carcass of the U.S. mortgage securitization system has come into plain view, but that it is too early to tell whether the hyenas or the jackals will get to eat the lion’s share? It is also possible a fair amount of the flesh will rot before it gets eaten (but then I suppose some bacteria will get fed…).
The Circle of Life is a beautiful thing to behold!
Isn’t it curious how this article title discussions how mortgage securitization “affected” the economy, as though the practice was merely a historical curiosity?
How mortgage securitization affected the economy
Phillip Swagel, a former assistant secretary for economic policy at the Treasury Department, teaches a class called the “The Financial Crisis” to undergraduates as a visiting professor of finance at Georgetown University.
One of the biggest challenges for homeowners facing foreclosure is finding out what happened to their loan after they signed the closing papers. In many cases, the loans were sliced and diced and sold off as investments to buyer after buyer in a process called securitization.
At a Wednesday hearing on Capitol Hill before the House Financial Services Committee, witnesses gave differing views about securitization’s role in the crisis and the recovery.
Susan Wachter, a finance professor at the the Wharton School at the University of Pennsylvania, blamed securitization for the collapse of the housing sector.
“The housing bubble was exacerbated by, but did not result from, greater demand for homes in the face of inelastic supply… Instead, it was securitizers’ appetite for mortgage-backed securities that drove a ‘race to the bottom.’”
…
Separating lenders from repayment risk (through securitization) was the core issue which precipitated this debt crisis. And the separation of lenders from repayment risk will precipitate debt crises in the future.
Ask yourself the most basic question of the whole mortgage/debt crisis: “Why would a lender not care whether or not he was paid back?”
The business model of creating loans, and then selling them off is flawed at its core. The central incentive is to create as much product as possible, in order to reap as much profit as possible.
The core flaw in this business model is that the lender has a perverse incentive to make the loans look better than they are, in order to entice buyers to purchase them.
This is the pivotal flaw in the current financial system.
We watched this system melt down. Perhaps there are work arounds. But the core perverse incentive will always remain, eventually burning through the work-arounds.
The answer to this financial crisis (and to prevent them in the future) is to inextricably tie lenders to repayment risk.
neuromance……,+1000
the flesh hanging from the carcass of the U.S. mortgage securitization system
‘Tis but a scratch.
Now that the Financial Crisis Inquiry Commission hearings are over, is it safe to assume the financial crisis is over as well? I suppose this Foreclosure Fiasco is but a mere flesh wound.
Legal/Regulatory
Another View: Lessons From Pecora Were Ignored
October 14, 2010, 11:05 am
Ferdinand I. Pecora
The New York Times
Michael Perino, a professor of law at St. John’s University School of Law, is the author of “The Hellhound of Wall Street: How Ferdinand Pecora’s Investigation of the Great Crash Forever Changed American Finance” (Penguin Press), which is out Thursday.
For 16 months in the depths of the Great Depression, Ferdinand Pecora, a former New York prosecutor turned Senate inquisitor, captivated the country. He chronicled how, in the run up to the 1929 crash, Wall Street’s elite financiers manipulated stocks, dodged taxes and collected enormous bonuses for peddling shoddy securities to unsuspecting Americans. The sensational headlines galvanized public opinion for reform, giving Congress the political cover it needed to pass the first federal securities laws and the Glass-Steagall Act. “We built completely on his work,” one of the drafters of those laws acknowledged.
In May 2009, Congress evoked the Pecora hearings when it created the Financial Crisis Inquiry Commission, a panel chaired by Phil Angelides. A former California treasurer, Mr. Angelides said that he kept Pecora’s memoirs near his bed and that his goal, like Pecora’s, was to “deepen the national dialogue about the need and the shape of reform.” Last month, the commission held its last hearing. Few will notice its absence. The panel’s investigation has generated nowhere near the attention of the Pecora hearings and had no discernible influence over the financial reforms passed this year.
How did the Financial Crisis Inquiry Commission fail so badly when Pecora succeeded so spectacularly?
The explanation lies in the way these two investigations were organized and in how they used their bully pulpit.
The Pecora hearings were a juggernaut. The honest and ferociously independent Pecora dominated the investigation, going wherever the evidence took him. He used his subpoena power liberally to pry documents out of recalcitrant banks. Pecora could act aggressively because he had the backing of two committee chairmen and President Roosevelt, all of whom wanted a full-throated investigation.
Uncovering Wall Street’s sins, they knew, would ease passage of the kind of reform legislation that normally succumbs to special interest wrangling.
The Financial Crisis Inquiry Commission, by contrast, was made to founder. Rather than selecting a single experienced investigator to run the inquiry, Congress created an independent commission stocked with members carefully selected for their political connections, gravitas and competing viewpoints. The need to build consensus would necessarily bog down the commission’s efforts. Making the Financial Crisis Inquiry Commission an independent commission was meant to shield it from political influence, but it also made the commission a political orphan, lacking any overt backing by either Congress or the president. Predictably, the investigation was delayed for months as Mr. Angelides and the vice chairman, Bill Thomas, a Republican, negotiated staffing issues.
…
At some level the lesson is that the great depression was SO BAD that the lessons learned stuck for ~50 years rather than the more typical 20 years.
Wall Street’s elite financiers manipulated stocks, dodged taxes and collected enormous bonuses for peddling shoddy securities to unsuspecting Americans.
See what happens when your “unsuspecting Americans” are surrounded by a gang of “non-certified” PROFESSIONALS.
“Honest and ferociously independent.” Such men are almost extinct on the American landscape, and are completely absent from the corridors of power.
If we reintroduced soup kitchens and garbage can fires you might see more public interest in Wall street reforms.
“Wall Street’s elite financiers manipulated stocks, dodged taxes and collected enormous bonuses for peddling shoddy securities to unsuspecting Americans. “
This looks awfully familiar. Where have I seen this before? Hmmm…
October 17. 2010 6:59AM
Uncovering truth
ANOTHER OPINION
From the Milwaukee Journal Sentinel
New testimony has cast even more doubt - if that’s possible - on the actions of ratings agencies that were supposed to be analyzing risk as the mortgage securities market bubble was inflating.
The new information came in testimony last month before the Financial Crisis Inquiry Commission, which Congress created last year to investigate the financial meltdown that triggered the worst recession in decades in the United States.
D. Keith Johnson, the former president of Clayton Holdings, told investigators that about half the mortgages the firm sampled did not meet the very benchmarks that Wall Street banks had promised investors, The New York Times reports. Clayton, a Connecticut-based firm, assessed the riskiness of mortgage pools for the banks.
Johnson said that 28 percent of the loans sampled were complete failures, but about 40 percent of even these poorest of the poor were included in mortgage pools that eventually were sold to investors.
…
It’s hard to know whom to believe. But we know this much: Suspect practices in the mortgage securities market led to a broad financial crisis two years ago and an economic trough in which the nation still languishes.
Financial reform legislation signed into law by President Barack Obama in July addressed some of the problems; investors now have the right to sue credit ratings agencies if those agencies “recklessly” failed to do their jobs.
But even after passage of that bill, it is vital that the American public learn as much as possible about the events leading up to the September 2008 meltdown of financial markets.
The bipartisan commission has completed testimony and will report on what it has learned by mid-December. Amid all the political rancor of a mid-term election, now is not the best time to have a reasonable debate over the causes of the crisis.
…
Financial reform legislation signed into law by President Barack Obama in July addressed some of the problems; investors now have the right to sue credit ratings agencies if those agencies “recklessly” failed to do their jobs.
BWAHAHHAHAHAHHAHAHHAHHAHAHAHHHHHHHHHHHHH!!! (fpss™)
(Hwy hopes the 1st lawsuit is a class action case filed by Joe-the-Plumber & Donald sTrump)
If there was any justice in the system, the heads of the rating agencies would be making new BFFs in the prison showers, along with all their bankster and political accomplices.
Justice delayed is justice denied, or in this case, forgotten about.
Buffet owns a Rating Agency ,so I wonder sometimes who is being protected or influencing .
I am not a violent man and I sometimes make mistakes but there is something to be said for sandbags, posts dotted around the Washington Mall and hurried 3 man firing squads.
Okay, I am a somewhat violent man and who cares about a FEW mistakes. Drag them down and pass out the ammunition !!
Sadly, the fix is simply:
“Stop lying to the mark you are trying to fleece.”
Good luck with that.
Oh ,now harmed parties have the right to sue for fraud or misrepresentation or breach of duty to do a job by a party .Somehow I can’t help but think that somewhere on the books that right to sue is
there and de-regulation didn’t take away all the laws of commerce and good faith dealings in business . That’s like saying now they will put a law on the books that Toyota can’t sell cars with faulty breaks after the discovery of the faulty breaks recently .
I guess it is still impossible to make a silk purse from a sow’s ear?
October 14, 2010, 7:30 pm
How Wall Street Hid Its Mortgage Mess
By WILLIAM D. COHAN
William D. Cohan on Wall Street and Main Street.
…
According to Vicki Beal, a senior vice president at Clayton who testified at the Sacramento hearing, one of the main services Wall Street paid Clayton for was a detailed examination of the loans that deviate “from seller underwriting guidelines and client tolerances.”
This is where things got interesting. Clayton provided the inquiry commission with documents that summarized its findings for the six quarters between January 2006 and June 2007, when mortgage-underwriting standards were arguably at their worst and the housing bubble was inflating rapidly. Of the 911,039 mortgages Clayton examined for its Wall Street clients — a sample of about 10 percent of the total mortgages that the banks intended to package into securities — only 54 percent were found to meet the underwriting guidelines. Standards deteriorated over time, with only 47 percent of the mortgages Clayton examined meeting the guidelines by the second quarter of 2007.
So, did Wall Street throw all those mortgages back into the pond as being too risky for securities they were going to sell to clients? Of course not — many were packaged right into their product. There were degrees of nefariousness: Some Wall Street firms were better about including higher-quality mortgages in their mortgage-backed securities than others. For instance, at Goldman Sachs, 77 percent of the nearly 112,000 mortgages reviewed met the guidelines, while at Citigroup only 58 percent did. At Lehman Brothers, which later filed for bankruptcy, 74 percent of the mortgages sampled and then packaged up as securities met underwriting guidelines.
In fact, the banks probably weren’t disappointed at all by the shaky status of many of these loans: in part because they could use the information that some of the mortgages were rotten to get a discount from the mortgage originators on the price paid for the entire portfolio. The people who should have been concerned were the investors who bought the securities from the Wall Street firms. But the amazing revelation of the Sacramento hearing was that the investment banks did not pass this very valuable information on to their customers.
“Investors were not given sufficient information to make the decisions that they needed to make to see if they were going to buy these securities,” testified Kurt Eggert, a professor at Chapman University School of Law in Orange, Calif. “They should have been given loan-level detail for every pool for which securities were issued. Current loan-level detail, not what was true weeks ago or a month ago. Instead, they got vague, boilerplate language about ‘underwriting,’ and that there were ‘substantial exceptions,’ whatever that means. They should have gotten the due diligence reports that we just heard described. Those reports existed. The exceptions were described and defined. Why weren’t investors given that information which was in the hands of the people that were selling the securities? Why weren’t they given the underwriting reports by the originators who knew what exceptions were given and why?”
…
I may have to try that on my next tax return: “The income is complete with substantial exceptions.”
This above article is proof positive that the Middlemen loan peddlers knew the loans were junk ,(because they got a discount for a higher % of junk ),yet they sold the junk as AAA grade for the entire bundle .Is it acceptable business practice to act like “catch us if you can” with securities that were offered to pension funds and other deposits of the Nation?
This BS that the greedy pig middlemen didn’t see it coming and didn’t
commit fraud ( or deliberate lack of disclosure ) is coming out .
In the latter years of the boom Wall Street was increasing their acceptance of junk loans and fraud ,while they were coming up with more faulty loan product to keep the scheme going .Anybody could get a loan for any amount . Did the Wall Street market makers ever say that a large part of these loans are simply based on real estate going up because the Borrowers can’t really afford this loan amount but we gave them a teaser rate to make it look like they qualify ?
Wall Street and investment houses can’t be Lenders because there is a conflict of interest there to begin with . This conflict of interest between investment and lending was perceived after the 1929 crash and Glass Stegall was enacted . The required prudence of lending is different from the speculation of investment .
Exactly. It’s why the Glass-Steagall Act created and signed into law by that dang socialeest/commie FDR.
Glass-Steagall related to the separation of DEPOSITORY institutions and investment banks. The Wall Street firms that securitized mortgages didn’t take retail deposits, so they were unaffected either way.
Investors should not have purchased securities for which sufficient information was not given. It takes two to tango.
Link between mortgages and Wall Street securities rewarded risky loans, panel told
An expert on predatory lending tells a federal commission examining the financial crisis that the process rewarded investment houses by creating the riskiest loan pool that could be given high ratings.
September 24, 2010|By Marc Lifsher, Los Angeles Times
Reporting From Sacramento — The rush to profit from turning subprime mortgages into top-rated Wall Street securities encouraged loan originators, investment bankers and speculators “to push risk tolerance to its limits,” a Chapman University law professor told a federal panel Thursday.
The profit motive also discouraged due-diligence experts from blowing the whistle on faulty underwriting, Kurt Eggert, an expert on predatory lending, testified at the final field hearing of the Financial Crisis Inquiry Commission.
…
My impression is that Angelides did a credible job in his role with the FCIC, especially given that he was tasked with tackling the financial crisis before it had even ended.
The ‘Dry Rot’ Eating Away at the Financial System
By Michael Hudson | September 23, 2010, 3:51 pm
Updated: 9/23/2010, 5:20 pm
President Obama has been talking a bit tougher about Wall Street these days — prompting complaints from some quarters that he’s being mean to investment bankers.
Meanwhile, the chairman of the federal Financial Crisis Inquiry Commission, Phil Angelides, also has some strong words for Wall Street — and Washington as well.
“We’ve seen a stunning disconnect between Wall Street and Washington and the rest of the country,” Angelides declared as the FCIC held a hearing today in Sacramento.
“Many in authority in New York and the nation’s capital claimed they ‘did not see it coming.’ But if they had paid a visit to Bakersfield, Las Vegas, Miami or Sacramento, they would have seen how dry rot was eating away at our financial system,” said the former California state treasurer.
…
“But if they had paid a visit to Bakersfield, Las Vegas, Miami or Sacramento, they would have seen how dry rot was eating away at our financial system,” said the former California state treasurer.”
Much like the rot in our political system and the M$M? So far they haven’t seen any of the rot surrounding them daily, or pretend not to notice or care.
Before reading this, I thought I was the only commentator who (jokingly) talked about asset market “bungee jumping.”
The Fed
Oct. 16, 2010, 6:18 p.m. EDT
Get ready for daredevil central bankers
Reporter’s notebook: Policy conference looking like the X Games
By Greg Robb, MarketWatch
BOSTON (MarketWatch) — We have come to expect our central bankers and policy experts to be gray, predictable and eager to take away the punch bowl once the party gets going.
So when they showed up at the Boston Fed conference on monetary policy in sandals talking about bungee jumping, you know that something profoundly different is happening.
For decades, Fed officials and economists have been saying that monetary policy could be governed by a few rules. Plug in a few numbers and you get a good sense about where interest rates should be.
But the Fed already has lowered short-term interest rates to zero and the economy looks like it is sliding back into a ditch.
The grim outlook is causing central bankers to shed their typical conservatism in favor of a new daredevil, “try-anything” approach — asset purchases, giving the blessing to higher rates of inflation for the short-term at least. These were some of the ideas discussed in earnest.
…
QE won’t provide economic boost: Economist
(imbedded video link)
Peter Hooper, chief economist at Deutsche Bank Securities, tells Greg Robb that a second round of quantitative easing won’t spur the economy but could help stabilize it.
The grim outlook is causing central bankers to shed their typical conservatism in favor of a new daredevil, “try-anything” approach
Bungee-cord Theory = 1
Rope-around-the-Throat = 0
That’s just the way it’s still gonna be Mr. Bear…
Their previous attempt to stimulate the economy was called “Junk-shot”. They pumped tons of junk bonds into the economy, in the hopes that some of it would plug the holes in the economy and stop the financial deleveraging that was going on. Sadly this failed - the financial bleeding was just too great.
I’m not sure you can say anything meaningful about just how bad a state the U.S. housing market is in without addressing the potential future impact of the robosigner foreclosure fiasco on the future viability of U.S. mortgage finance. This situation just may keep turning out “worse than expected” for “longer than expected.”
Economic Preview
Oct. 17, 2010, 9:00 a.m. EDT
Housing, industrial production data on tap
By Ruth Mantell and Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — Traders this week will get a further idea of just how “depressed,” in the words of Federal Reserve Chairman Ben Bernanke, the housing market really is.
Bernanke on Friday said the central bank was weighing additional measures to bolster an economy where there’s a “painfully slow” labor market recovery and where low mortgage rates and prices have done little to boost the housing market. See story on Bernanke’s speech at Boston Fed conference.
“The overhang of foreclosed properties and vacant homes remains a significant drag on house prices and residential investment,” Bernanke said.
On Tuesday, the Commerce Department will release data on housing starts in September, which economists polled by MarketWatch expect to tick higher to an annualized 600,000 from 598,000 in August. Even should starts increase, they are still weak relative to where they stood before the expiration of a homebuyer tax credit.
“Homebuilders continue to struggle with tepid demand. While starts have increased in each of the past two months, much of the increase has been due to the volatile multi-family component,” said economists at Wells Fargo.
…
“Homebuilders continue to struggle with tepid demand. While starts have increased in each of the past two months, much of the increase has been due to the volatile multi-family component,
Bugs: “eh, Daffy, let’s lend them a hand, go ring that bell”
Daffy: “Ya mean the one that says: “National Family Income”
Bugs: “eh, that right Daffy, ring it once if it’s going down, ring it x10 if it’s going up”
Daffy: “Ding!”
Bugs: “That’s was kinda a weak ring Daffy…”
Daffy: “DING!DING!DING!DING!DING!DING!DING!DING!DING!DING!DING!DING!DING!DING!DING!DING!” …is that better Bugsy?”
I don’t think the robosigner thing will even make a difference. So they declare a 90-day moratorium, during which time the courts get 3 months to make a dent in their 6-month backlog of foreclosure cases. In the end, it turns out that a person who signs a document doesn’t really have to read it if they don’t want to. It’s just that they (or their employer) become responsible for whatever they signed is all.
It may create temporary fear by laymen who might have otherwise considered buying a foreclosure, but that’s about all.
“In the end, it turns out that a person who signs a document doesn’t really have to read it if they don’t want to. ”
Of course they don’t have to read it, never did. But the evidence that this was common practice does not look good in a class action suit by MBS holders.
From today’s WSJ online: Make the Most of a Starter Job
This article summarizes the experiences of countless people my age and younger that will become the Lost Generation…
“A lower starting salary also is something many recent graduates are having to contend with. Some 29% of recent college grads reported a starting salary greater than $36,000 this year, down from 51% in 2009, according to the Monster.com report.”
How many people making $36K and less will be buying houses, new cars, getting married, having kids, or helping support their own parents who at age 50+ were laid off and now making 40% of their former salaries?
One more sign of deflation.
I’ll let you know when I see deflation at the gas pump, the grocery store, the electric bill, the gas bill, the water and sewer bill, my phone bill, my mechanic, the auto parts store, the fast food place, appliances, tires, brakes, oil changes, garbage pick-up, school supplies, fees, fees and more fees, etc…
Come on, don’t be so negative! House prices and rents are coming down. At least something is moving in the right direction.
None of those prices are going up, eco. They haven’t in years.
also going up are cable TV bills and dry cleaners…
Is this a sign of deflation, or is it simply the after effects of the end of the easy money decade for college education?
Does the lower percentage of college graduates earning above $36k a year represent a decline in raw numbers over 10 years ago? Or are some of these “college graduates” really nothing more than deeply indebted souls that enjoyed an easy money/110% financing spending binge that sure seemed fun and sustainable and repayable in the future; yet in reality had no business being either in college or $100k in debt? Lots of these kids would have been much better off both financially and career wise getting a union card and learning a trade; and possibly much happier with their day-to-day lives than the average cube slave. Just like the foreclosed homeowner stuck in an underwater McMansion who can’t move to follow work…
(Says the college educated cube slave).
“Is this a sign of deflation, or is it simply the after effects of the end of the easy money decade for college education?”
It’s the after effects of the end of the easy money decade for EVERYTHING, not just for college education.
Over the past decade or two trillions of dollars were borrowed into existence. These dollars pumped up the prices of houses - it INFLATED the value of houses - and pumped up the housing-based chunk of our consumer-based economy. “Wealth” was created out of thin air in step with the dollars that were borrowed out of thin air.
Now these trillions of borrowed dollars are vanishing right before our eyes as the value of the houses that backed the borrowing of these trillions of dollars is vanishing right before our eyes.
When dollars vanish into thin air somebody gets left without some dollars. When a LOT of dollars vanish into thin air a LOT of sombodies get left without dollars.
Deflation.
“When dollars vanish into thin air somebody gets left without some dollars.”
Isn’t this where QE2, QE3, …, QEn enter the picture?
What’s wrong with DEFLATION ? It means my money buys MORE !!!
What’s wrong with DEFLATION ? It means my money buys MORE !!!
nothing is wrong with it. but those that run the government believe they’ll get less with deflation. but it’s not true for the very same reason you stated. they won’t bring in as much money, but they’ll be able to buy more with it. those in government can’t figure that out..
My comment is not about specific college majors but about the big picture of what the New Normal means for people in the US born after 1980. It’s the overall erosion of civility, the social isolation, the cultural coarsening, and the “I got mine, everyone I know in my social circle got theirs, so F* you” attitude exhibited daily on this blog by certain posters.
I myself have a large balance of student loans to repay but am fortunately now in a stable job making (what I would consider) a decent salary. Many people around my age are not doing as well, and will be psychologically and financially scarred for a long time by the current deflationary Depression (big D) the US is in.
The future for many will be like the article in yesterday’s NYT: Japan Goes From Dynamic to Disheartened, some quotes from which could just as easily apply to the US in 2010-2020. “Now, as the United States and other Western nations struggle to recover from a debt and property bubble of their own, a growing number of economists are pointing to Japan as a dark vision of the future … Just as inflation scarred a generation of Americans, deflation has left a deep imprint on the Japanese, breeding generational tensions and a culture of pessimism, fatalism and reduced expectations. While Japan remains in many ways a prosperous society, it faces an increasingly grim situation, particularly outside the relative economic vibrancy of Tokyo, and its situation provides a possible glimpse into the future for the United States and Europe, should the most dire forecasts come to pass … And the future looks even bleaker, as Japan faces the world’s largest government debt — around 200 percent of gross domestic product — a shrinking population and rising rates of poverty and suicide … As living standards in this still wealthy nation slowly erode, a new frugality is apparent among a generation of young Japanese, who have known nothing but economic stagnation and deflation. They refuse to buy big-ticket items like cars or televisions … Yukari Higaki, 24, said the only economic conditions she had ever known were ones in which prices and salaries seemed to be in permanent decline. She saves as much money as she can by buying her clothes at discount stores, making her own lunches and forgoing travel abroad. She said that while her generation still lived comfortably, she and her peers were always in a defensive crouch, ready for the worst. “We are the survival generation,” said Ms. Higaki, who works part time at a furniture store.
Amen to that!
It’s also a sign of too many kids going to college for degrees that are not very (if at all) marketable but are easy to get.
I can say with pretty good certainty that there’s not much difficulty right now for a recent college graduate in EE/ME/Comp Sci/Biology/Accounting/Finance etc to find a job that pays >50K a year (assuming they did well in school) within 1 year of graduation. Problem is, the vast majority of folks go to college for the “soft” degrees (poly sci, psychology, English, etc). These degrees are, in many areas that are hiring, worthless.
If you don’t aspire to be (or do) something that really requires a degree to enter (or exceed) in the profession than, in many cases, you may be wasting time/money by pursing a college degree. Particularly if you’re going to a mid-lower tier school for a degree in something like Psychology. A degree from a 3rd tier school in Psych? That’s gonna be pretty much without market value (may have personal value, but your employer isn’t going to be encouraged to hire you/pay you more because of it).
If you’re going to go to college, make sure you go for something “hard”!
‘…go for something “hard”…’
and useful!
Hard + useful = pay the bills…
I had always thought that a college education was for learning and expanding your mind, and not necessarily for getting a job. My “soft” major (sociology) has helped me more in understanding what is going on in the economy that an MBA would have done.
Same here, but people like us did not expect to make big bucks coming out, right?
In many ways these stats lumping all majors in together really are not useful. People getting lib arts and soft science degrees have to know they’re not training for any particular career path. So why would there be any expectation of great salaries?
My “soft” major (sociology) has helped me more in understanding what is going on in the economy that an MBA would have done.
Same with my history degree. I well remember arguing with some engineer friends of mine who thought real estate was on a new paradigm, and by golly they had the numbers to back it up! And numbers don’t lie, right? My business major friends were just as certain. It was too bad if I couldn’t understand them.
And don’t most Wall Streeters have ‘hard’ majors? Weren’t the mighty Quants wonder-boy mathematicians?
I think ‘hard’ majors may give some people the hubristic idea that because they know one thing very well, they have a deeper understanding of totally unrelated things. I find many people with ‘hard’ majors to have a very limited understanding of how the world really works, since they have so focused their studies on one aspect of it. They also tend to approach things with very mechanical reasoning- they don’t understand nuance, or perceive shades of gray. That’s what drew them to the ‘hard’ major in the first place. It offered a nice set of rules, not all that fuzzy thinking stuff.
No. When I graduated summa cum laude with my degree in molecular biology, from a university that has been ranked “best small research institution in the US” for several years running, I was lucky to land a temporary job (in my field) paying $15/hour, no benes. Then I got a regular job paying $32k, then got a raise to $36k. That’s the highest dollar I ever made as a scientist. I had to transition into a related field in order to earn enough money to even support myself.
Yes, and not everybody would want to be an engineer. Ten years ago a lot of top students started enrolling in engineering schools because their parents told them it would give them the highest paying job possible with a 4-year degree. Most of them transferred out.
Mr. Fink, your point is well taken.. however your list of >50K majors is much too optimistic by my experience. Over a decade spent in various laboratories has proved to me that BS Biologists, Geologists, and even BS Chemistry graduates from a Big 10 school often can only find jobs as poorly paid technicians, *especially* their first or second jobs upon graduation. The experience Big V relates below matches quite well with my personal observations. And for those considering a BS in Computer Science… the specter of offshoring should be hovering over their shoulder as they sign their student loan papers. As for Finance.. just last week the media was filled with stories of another huge wave of layoffs on Wall Street. We have become a hollow nation and there should be no expectation for return on investment, capital or educational. Risk reduction is the only defense in this environment. Taking on debt hoping for a future return is perhaps unwise regardless of your chosen “hard” major.
Is this a sign of deflation, or is it simply the after effects of the end of the easy money decade for college education?
No, it’s just a sign of a very bad recession.
A recent poll said that 85% of new graduates have already moved back in with Mom & Dad. Hey zombies, how’s that Hope & Change working out for you?
This might actually be a reason for parents whose kids will soon leave for college to consider renting or buying a McMansion with enough bedrooms to house the new graduate as well as granny and grandpa.
Boomerang kids: 85% of college grads move home
Mallory Jaroski gradauted from Penn State University in May and is living at home until she finds a job.
By Jessica Dickler, staff writerOctober 14, 2010: 12:18 PM ET
NEW YORK (CNNMoney.com) — Getting a degree used to be a stepping stone to limitless career opportunities. Now it’s more of a hiatus from living under your parents’ roof.
Stubbornly high unemployment — nearly 15% for those ages 20-24 — has made finding a job nearly impossible. And without a job, there’s nowhere for these young adults to go but back to their old bedrooms, curfews and chore charts. Meet the boomerangers.
“This recession has hit young adults particularly hard,” according to Rich Morin, senior editor at the Pew Research Center in DC.
So hard that a whopping 85% of college seniors planned to move back home with their parents after graduation last May, according to a poll by Twentysomething Inc., a marketing and research firm based in Philadelphia. That rate has steadily risen from 67% in 2006.
“It’s peaking at levels we have not seen before,” said David Morrison, managing director and founder of Twentysomething.
…
What I want to know is who would name their child after a company that made batteries?
Decline in recent rate of new U.S. household formation from 2002-2007 period:
(357,000/1,300,000-1)*100 = -72.5 percent
Drop in new households fuel glut of homes for sale
Many concerned about jobs; fewer getting married
Alan J. Heavens • MCT News Service • October 17, 2010 •
From Lansing State Journal
U.S. household formations are at their lowest since 1947, data from the Census Bureau show. And that’s helping to keep the supply of unsold homes at near-record levels nationwide, even though relatively few houses are being added to the inventory.
Advertisement
Between March 2009 and March 2010, the number of households rose just 357,000, according to the census data. In the previous 12 months, the number increased only 398,000, the third-smallest increase on record since World War II.
Fear factor
Between 2002 and 2007, before the economy started on its downward trajectory, household formations averaged 1.3 million a year, U.S. census data show.
…
Another four or five years of this and the pundits will start to notice the birth dearth.
The Christian Right has been waging a culture war against middle class adult singles and trying to pressure them to marry and start families. I can see that government would have a big interest in this too for trying to keep the Madoff scheme (Social Security) alive a bit longer.
On the other side, the divorce court rulings have turned a lot of divorced people from middle class to subsistence living. Many singles in working environments talking with divorced people hear the same thing over again: “Don’t marry.” http://dontmarry.wordpress.com/
Dude, are you black?
Yea, guys, don’t get married. Your life will be much easier if you just “inseminate an ovary” and then take off. Being a dead-beat dad is sooooooo much better than being a husband and father, and your family will be much better off when both parents have to work like slaves to support two separate households, and there is no affection or love involved in the “marriage contract”.
Jimminy cricket. Can anyone say “selfish, immature male”?
Who is saying that a single man wants to get a woman pregnant and take off? You obviously haven’t heard of Tom Leykis. He preaches condoms.
You know nothing about the marriage strike, but it’s very widespread.
As for “selfishness,” there is nothing wrong with being selfish. Selfishness is concern for your interests and values. If you mean living at the expense of others, then yes I agree with you, that is wrong.
Bill, if everyone were to go in for the “no kids” approach, then there wouldn’t be any more humans. But that wasn’t really the point of the article, was it? The point of the article was to provide a lot of unfounded excuses for men who don’t want to support their families.
“Oh, being a mom isn’t really that hard. She should be expected to be a mom and a dad because it’s easy. However, the men shouldn’t be expected to do either job.”
That is immature, selfish, and bad for society.
Can’t argue with stupid.
Now, I know you did not just call me stupid.
Grow up Bill. Become a man. Stop complaining because women don’t want to marry a loser. If you would prefer to be alone and childless, then that is your decision. The decision is based on your own selfishness and immaturity. It is not a result of mothers needing financial support from their spouses. That is just a fact of life.
You don’t know me. You are making assumptions and statements bordering on slander. Bug off.
I don’t think you can sue Big V for slander, Bill, because the blog is anonymous (usually.) She was just name-calling, which is very common on the HBB (unfortunately.) But often entertaining.
Bill, you are the one who just posted a link to explain that men are not getting married because women just suck. Why can’t you admit to yourself that you’re a miser? You don’t want kids because you’re too cheap for them. It has nothing to do with women being lazy and trying to live off your labor. It has everything to do with a guy who makes plenty of $$, but does not want to spend it on anything, including a family. Your choice, your fault. No one else to blame it on. Just you.
Now truth is called slander?
You know no bounds Bile….. you know no bounds.
Given the distortionary effect of the $8K first-time homebuyer tax credit on U.S. home sales and prices, how long will it take for “lower starting salaries” to trickle down into lower starter home sales prices — or no starter home sales?
Nothing new for the HBB crowd, but Japan’s new reality is displayed on the front page of today’s NYT.
http://www.nytimes.com/2010/10/17/world/asia/17japan.html?hp=&pagewanted=all
“Yoshinori Kaiami was a real estate agent in Osaka, where, like the rest of Japan, land prices have been falling for most of the past 19 years. Mr. Kaiami said business was tough. There were few buyers in a market that was virtually guaranteed to produce losses, and few sellers, because most homeowners were saddled with loans that were worth more than their homes.”
Of course, it will be different here.
hey, all you people with money but no good place to invest it wanna lend me some money for my new business?
Check it out:
I haven’t seen these sold anywhere so Im thinking about doing it.
Heres my plan:
You know how the young “urban” youths like to wear their jeans “saggin?”
I want to produce a line of large size jeans with the underwear cut and sown to the top so the youths can “sag” without doing the adjustment work of getting the correct underwear/jean ratio with two separate units (its a lot of work getting it to stay on and look like they will fall down any minute)
In addition, the underwear waistband can be reinforced with drawstrings or something to hold the weight of the jeans which would allow for an even greater ’saggin look”.
Children in 3rd world countries would make them for $20.00 a pair and I would sell them for $179.00 after I provide some to famous thug rappers who would wear them on their music videos…
The brand would be called “saggiN”; and you know what that spells backwards?
How bout it?
I wanna be a auntramanure
Thanks in advance.
Great idea! One that’s worth stealing.
Anybody can have it cause its not productive enough for me to market to blk people (and then try to blame “thawhiteman” for keepin brothas down).
Have at it.
“thawhiteman”
What does “nametihwaht” spell?
And why do you always come on here preaching the politics of race (”white man trying to keep the black man down,” etc)? Do you find the HBB posters to be a particularly racist group (Eddie and friends excepted)? Just curious…especially since this is (supposedly) a blog about housing and economics, not the politics of race.
I admit there are huge current racial issues in housing — check out what share of the worst subprime time bomb home loans ever made in the history of American banking went to blacks and Hispanics and what share of folks currently having their homes foreclosed and resold to “investors” are black or Hispanic if you want to check this out. Also of interest: How many of these loans came about due to government policies to try to turn all American households into homeowner households? I recently read a very good book on the subject, written by a prominent black economist, which I recommend you check out if you are interested.
“And why do you always come on here preaching the politics of race ”
*snip*
“I admit there are huge current racial issues in housing”
Professor, do you realize you answered your own question?
Incase you don’t, please allow me to *retort* (did I use that word correctly? Ive been trying to use it ever since Pulp Fiction)
I come here to get help so I can help others; specififically, the people who need the most help.
Many nonwhite people had housing problems BEFORE this crash, now its gonna get worse.
Look,
This is where all the smart people are (and a few ignorant people like me) you guys called this crash and the mechanics of it when everybody else said you were crazy.
Ya’ll weren’t fooled?
So this must be the place to learn how NOT to get tricked (harmed and abused)
So thats why Im here.
Here to do what?
Here to learn.
Learn to do what?
Learn how to help other people.
Help other people do what?
Help keep them from being harmed.
Now,
One last question Professor:
Why are YOU here?
“Spook” represents a faction of the hard-rightwing that is always mulling around the edges wherever conservatives and libertarians mingle, and is always trying to glom onto them. The fact that people like “Spook” can freely mingle in conservative and libertarian circles is quite telling.
quite telling?
What’s it tell you, George?
Does it tell you that conservatives/libertarians allows free speech while you (presumably of the leftist persuasion) believe spook shouldn’t be allowed to comment?
If I’m mistaken, tell us what it tells you..
“Why are YOU here?”
1. I feel a moral obligation to do what I can to help my Country leave this period of rapacious Wall Street financial corruption behind us.
2. I am a teacher at heart, and I enjoy sharing what I know with others.
3. I learn from sharing what I know and reading what others share (you included!).
It tells us that replublicans/conservatives/libertarians publicly and stupidly reveal their blatant racist sentiment as if it’s acceptable to the other 90% of us who aren’t angry bigots.
Well there certainly is bigotry in the world, but like you said it’s not most of us. And there is drivel, which is in it’s own way also grating.
Don’t leave, Spook. I enjoy your posts - a different outlook, since I’m sure we have little black input on this blog.
ROFL!!! The funniest post I’ve read this month!
You should at least trademark that brand.
I’d like to patent a TASER system affixed to urban lamp poles that automatically shoots a near-fatal jolt into these saggy-pants wearers.
Distribute free handguns and those saggy-pants wearers will rub each other out with no further government interference.
Distribute free handguns and those saggy-pants wearers will rub each other out with no further government interference.
Uh,
this is not wise because unlike you whom probably was taught guns and shooting by your father/grandfather… the nonwhite saggers learn poor technique from Tee-Vee (holding the gun sideways…) and although they fire a lot of bullets, don’t hit their intended target.
One of their “strays” could hit you?
“Mind of Mencia” once covered this problem and suggested teaching gang bangers how to shoot straight.
“saggiN”
If you thought of that yourself, keep thinking, but be sure to patent your ideas before bragging about them on blogs. There are some patent attorneys who post here who might even have some suggestions for you.
I think you’re just a little late, spook. My younger son started sagging at the age of 14. He was such a determined sagger that he took to tightly cinching a belt around his thighs to support 8-sizes-too-big pants that I called “below the equator”, because his hips were too narrow to prevent them from hitting the floor. He just turned 22 and suddenly he is wearing fairly normal jeans. I haven’t asked him about it (it’s too far down on the list of things I nag him about) but I suspect that the sagging pants craze is petering out. We’ll see. He has a rapper friend who had to start a 3-month jail sentence for selling pot who also stopped sagging recently.
At what age do boys graduate to long pants now? Oh wait, it’s not 1910 is it.
Didn’t Johnny Cash sing a song about Saginaw Michigan?
skinny jeans! shaggy do! Soon to hit the hood, but since you were just kidding about your idea, you may know that already. Supermorphous Wangler Wannabees (potential patent pending)
“Yo Tom Brady, leave the hair-do to the guy who sings Baby!(Justin Bieber)
Doubts Grow Over California’s Drought
The numbers tell the tale.
Year-to-date snowpack totals for all of California are 143 percent of normal, and for Northern California 188 percent of normal, with Donner Pass showing a dramatic 47 feet compared to a normal depth at this time of year of almost 30 feet. And the state’s biggest reservoir, Shasta is more than 110 percent above normal.
The quote above is from May 2010.
LA’s DWP has had to re-water Mono Lake, the upper Owens river, the lower Owens river and now partially re-water the Massive Owens dry lake bed.
Southern California is forced to conserve and the spin remains “due to drought”
One year off above average precipitation does not make up for several years of drought.
There are too many people in California for even normal, nondrought years to cover it. It’s also a huge problem that the best farmland has been converted to residential neighborhoods, forcing farmers to move out to the desert and pump water in.
This needs to be forwarded to:
C/O: aladinsane, tiki bar harbor, NZ
The higher powers want to build two massive siphons beneath the Delta near Stockton to transfer fresh Shasta - Trinity water to the South. A decade of drought should turn turn the public’s opinion in favor of the project.
I looked at the Almanac to help me decide whether to buy flood insurance. Looks like California weather will be similar to last years, where most of the rain/snow will fall in the Pacific Northwest, with storms sneaking low enough to increase the snowpack in the Sierras and Cascades. Little rain will fall in southern California, but it doesn’t matter because they don’t bank their precipitation. So I’m hoping for another good year. Because drought will cycle back again and I hate not being able to flush the damn toilet.
“Doubts Grow Over California’s Drought”
Drought Doubt
Could this be our future for a long time?
The Great Deflation
Coping With Decline
Like many members of Japan’s middle class, Masato Y. enjoyed a level of affluence two decades ago that was the envy of the world. Masato, a small-business owner, bought a $500,000 condominium, vacationed in Hawaii and drove a late-model Mercedes.
But his living standards slowly crumbled along with Japan’s overall economy. First, he was forced to reduce trips abroad and then eliminate them. Then he traded the Mercedes for a cheaper domestic model. Last year, he sold his condo — for a third of what he paid for it, and for less than what he still owed on the mortgage he took out 17 years ago.
“Japan used to be so flashy and upbeat, but now everyone must live in a dark and subdued way,” said Masato, 49, who asked that his full name not be used because he still cannot repay the $110,000 that he owes on the mortgage.
http://www.nytimes.com/2010/10/17/world/asia/17japan.html?_r=1&ref=todayspaper
The Simi Valley family of 9 that broke into and reoccupied the home they were evicted from, and are staging media circuses wailing about what victims they are, have drawn a rebuttal from the “investors” who purchased the property at foreclosure auction. If this isn’t the writing on the wall, I don’t know what is.
OFFICIAL STATEMENT FROM CONEJO CAPITAL PARTNERS LLC REGARDING THE PROPERTY LOCATED AT 5893 MUSTANG DRIVE, SIMI VALLEY CA:
October 15, 2010
Given the extraordinary and illegal events orchestrated by the former homeowners and their attorney, we now feel compelled to share the facts regarding 5893 Mustang Drive.
On January 28, 2010 the property was sold thru a public auction at the trustee sale held at the Ventura County Court House. Each month this same process occurs thousands of times across the nation as a method for banks to take back or dispose of the property that is not being paid for. Conejo Capital was the “successful” bidder. Shortly thereafter the former bank issued the title and it was legally recorded with Conejo Capital Partners LLC as the new owner of the property. At the time all we knew about the property was that the former homeowners purchased it in 2001 for $539,000, and that they later refinanced it, pulling equity out, resulting in debt of roughly $1,000,000. No “lis pendens” had been recorded indicating any disagreement or legal action pending regarding the property. Had they done so before the auction, we would not have purchased this property.
After purchasing the property we found it to be occupied by the former home owners, Jim & Danielle Earl. We were able to make contact with them and tried to understand their situation. They expressed their opinion that they had been unlawfully foreclosed on by the bank. Yet to our knowledge, the Earls had not initiated a lawsuit against any bank at that time, and as far as we know even today there is no pending lawsuit against any bank. Any grievance they had would have been with their bank, not Conejo Capital Partners. We tried to amicably discuss terms of a possible agreement which would have helped them make a comfortable transition but they were unwilling. They gave us no choice other than having to start an action against them to gain physical possession of the property.
The unlawful detainer action (eviction trial) is something that normally takes roughly a month to complete, but they stretched it out to almost 6 months by filing two bankruptcies. The first one was dismissed due to their failure to file the proper paper work and the second was probably dismissed as well. At the unlawful detainer trial, the judge thoroughly reviewed all of the facts of the case and ruled in favor of Conejo Capital Partners LLC and ordered the Earl’s to vacate the property. We were also awarded a monetary judgment in the amount of just over $27,000 (fair market rental value for the time they illegally occupied the property). The Earls appealed the decision but their appeal was dismissed by the court because they failed to pay the court its required appellate costs. The Earls’ attorney sent us threatening correspondence and amazingly described his plan to a federal court judge in San Francisco that he planned to undertake “self help” to retake possession of the Mustang property illegally. The federal judge denied their motion for an injunction and ruled that the “Plaintiffs have offered no authority in support of this extraordinary concept (of “self help” seizure of the Mustang property).
On July 2, 2010 the Ventura County Sheriff and an agent of ours went to the property to complete the court-ordered eviction. There, they found that the Earls had departed but (based upon their attorney’s advice), the Earls left all of the personal belongings, in the Mustang house including all of their furniture, cars and the family dog. This extraordinary tactic caused us another 2 week delay because we were forced to follow the legal guidelines in dealing with the situation. The Earls contacted us at the very last minute before we would have had legal right to dispose of the property and we allowed them to retrieve it at no additional cost to them.
Once we had gained possession of the Mustang Property, we spent a considerable amount of money remodeling it. When the remodeling was complete, we put it on the market for sale. We secured a buyer and were scheduled to close escrow on Monday October 11th. On Saturday October 9th the Earls and their attorney followed thru with their previous threats and took the law into their own hands. They hired a locksmith to break into the Mustang home. They had arranged to have t.v. news cameras filming their actions, and then proceeded to hold a press conference stating that they were within their rights and that we (Conejo Capital Partners) had somehow violated the law. All along the Simi Valley Police Department sat idle and refused to get involved no matter how much proof was offered supporting our legal rights and position. We were told that we needed to resolve it in front of a judge even though it had already been decided. In the days immediately following, the same attorney has done this again in Escondido and Newport Beach (the latter time both the attorney and his clients were arrested). It is amazing that this can happen in a nation founded on and based upon law. It is truly sad that all across America so many people claim to be the “victim” rather than taking personal responsibility for their actions.
It needs to be noted that Conejo Capital Partners LLC did not take the home from the Earls, their bank did. We simply purchased the home from the bank in a legal manner and then had to deal with the situation that had been created. Conejo Capital Parnters LLC is not a large Wall Street bank, we represent a group of regular people who are hard working citizens that pay their bills and abide by the law. We have approached the Earls on many occasions in an attempt to see if we could find an amicable resolution but in each case have been denied. We offered to waive our monetary judgment in simple exchange for confidence that we wouldn’t find ourselves wrapped up in litigation that ultimately results in everyone losing. Although the former homeowner had roughly $1,000,000 in debt against the home, both they and their attorney have said in recent interviews that they feel like they don’t owe anything and in fact are owed damages as well.
The Earls’ attorney announced proudly that he “chose” the Earls because he needed to protect the new buyers from being defrauded by us. It is extremely unfortunate that he is putting others in jeopardy as a way to create notoriety for himself. The facts about Mr. Pines life are well documented and we urge you to do your homework on him and decide about his motives for yourself.
The most innocent of all victims in this situation are the new buyers who had signed a contract to purchase the Mustang property. They are a family of 4 who are adopting their first child this month. They had already funded their loan, spent money on appraisals, given notice at their current residence and were scheduled to take possession of 5893 Mustang Drive on Tuesday the 12th. They have now cancelled the transaction and are scrambling to find a place to live as they will be homeless at the end of the month. They are scared.
This is a terribly unfortunate situation to be involved in, one that we wouldn’t wish for anyone to experience. We especially feel for the children who are being subjected to this, and the new buyers who will be temporarily homeless as a result of these events. In all likelihood, there is no way for us to recover the damages we have suffered, this is no longer about winning; it is about what is right. We didn’t ask for a fight; it was brought to us. Now with no other options, we feel compelled to do everything in our power without regard to cost or time to protect ourselves and insure this does not happen to others.
Conejo Capital Partners LLC
Interesting……. Especially the comment “The Simi Valley Police sat idle and refused to get involved…….we needed to resolve it in front of a judge, even though it had already been decided.”
Sounds like the cops in Simi Valley are like the cops/courts around here. When it involves property disputes, they are MIA. They will pass all kinds of judgements/rulings, but good luck getting any of them actually enforced. As they say, possesion is 9/10s…….
This could get ugly. The campaign to shame FBers into continue making the payments, is blowing up, since now nobody know if your payment is going to the right place or not. Local cops are loathe to enforce questionable court judgements, because of the bad press, possibility of lawsuits, and the fact that many of them are probably FBers too. So, what happens if this becomes an epidemic? Governors calling in the National Guard. Doubt it. Banksters find they can’t get rid of foreclosed properties at any price, because nobody wants to deal with the possibility of squatters? So, do they hire the Blackwater guys to start kicking in doors?
The good news is that they won’t let all that experience dealing with insurgencies go to waste.
Proud to be an American. Nothing in the world like our efficient markets. Really, a team of PHDs and Nobel Prize winners couldn’t have spent 10 years designing a plan to make things as FUBAR as they are right now.
“The Simi Valley Police sat idle and refused to get involved…….we needed to resolve it in front of a judge, even though it had already been decided.”
This is maybe the most telling and disturbing aspect of this case. I don’t doubt that a lot of local law enforcement types have been “victims” who signed mortgages at the peak of the bubble and then lost their homes to foreclosure, or are hanging on but now hate the banksters. Their failure to enforce the law tells other deadbeats they can pull the same tactic with impunity.
It seems like the rule of law itself is becoming another casualty of the housing bubble collapse. First the lenders and mortgage brokers aided and abetted massive fraud in putting FBs into overpriced houses, then they lied to “investors” who bought the shit securitized loans, and then they “skirted” the law with robo-signing and other legally dubious tactics to evict FBs. So now the deadbeats are taking a page out of the banksters’ playbook and engaging in their own lawlessness and moral hazard.
We’re long on “law”, and very short of “enforcement”.
Everybody in the country who has gotten a mortgage has got one of those letters in the mail, telling them their mortgage has been bought/reassigned to some company they’ve never heard of, and they get a new payment book, usually some 5 digit PO box somewhere in Texas or South Dakota. I’m betting everyone who is upside down on their mortgage, and got a letter like that is wondering if their mortgage is “lost”.
Add to this the rapidly increasing number of stories of people who have squatted for 2,3,4 years, and haven’t made a payment…….hell, I could be dead in 4 years.
Banksters/Captains of Industry/Corporate Leadership has been playing this game for years, and dumazz J6P was told that it was the price we had to pay. Now that J6P is running the same playbook, it’s the end of the world as we know it.
I had hoped that because I avoided this debacle, and managed to my finances in order, even while being out of work six months in 2009-2010, that I would eventually come out “ahead”.
Yeah, that will happen; about the same time as that herd of candy-crapping unicorns showing up.
Hmmm… breakdown in private property rights. Check. Breakdown in rule of law. Check. Extreme inequality and stratification in distribution of wealth. Check. Corrupt government. Check. What were the other qualifications for a banana republic again? Do we need to actually grow bananas?
As far as the police not getting involved, it cuts both ways. We’ve heard the story of the lady in Florida who called 911 from her bathroom because she thought someone was breaking into her home and it turned out to be a contractor for the bank who showed up to change the locks. When the police arrived they did not take the contractor into custody, even though there was no court order that authorized his actions or his presence on the property. In fact, the house wasn’t even in foreclosure, although the lady was behind on payments. The cops simply let him go. This struck me as a pretty clear case of criminal trespass, and the cops did nothing.
As for what the banks will do, they will simply hire their own “police” to forcibly evict people. It will get interesting when some evictee resorts to a “second amendment remedy” to the situation.
I can see it now……..an illegal alien, squatting in a house illegally, gets into a shootout with an above-the-law bankster’s “Independent Contractor”, who is trying to enforce an fraudulently obtained eviction notice.
Thanks for writing a movie script for me.
If the contractor had a work order, then he was not trespassing. There is a stipulation in your mortgage that says they will change one of your locks if you stop paying.
Debt is slavery.
Do you know the attorney “Mr. Pines” full name? There are 15 members of the CA bar with last name Pines.
http://www.youtube.com/watch?v=OrxSViQ7pIg
More on the Simi Valley squatters and their lawyer on the Dylan Ratigan show. They pulled out over $1 million in equity from their house, which may help explain why they ended up losing it.
There are two Michael Pines listed as members of the CA bar.
I presume it’s this guy judging from his website.
http://www.pinesandassociates.com/content/about-us
Gawd offered this land to the Earls, and those equity extractions were nothing more than the land’s bounty. They can’t return the land to the bank because it belongs to Gawd. Mankind’s law doesn’t apply here.
I’m waiting for some Indian tribal members to turn up and tomahawk the Earls for stealing their land.
All you had to tell me is those people took out all that money in equity loans and I view them as opportunists thinking they can live in the property for free .
“CONEJO Capital?”
They need to grow some COJONEs and kick the freeloaders out.
Totally. Homedebtors are always “victims”, everyone else can take their lumps.
Income Inequality: Too Big to Ignore
PEOPLE often remember the past with exaggerated fondness. Sometimes, however, important aspects of life really were better in the old days.
During the three decades after World War II, for example, incomes in the United States rose rapidly and at about the same rate — almost 3 percent a year — for people at all income levels. America had an economically vibrant middle class. Roads and bridges were well maintained, and impressive new infrastructure was being built. People were optimistic.
By contrast, during the last three decades the economy has grown much more slowly, and our infrastructure has fallen into grave disrepair. Most troubling, all significant income growth has been concentrated at the top of the scale. The share of total income going to the top 1 percent of earners, which stood at 8.9 percent in 1976, rose to 23.5 percent by 2007, but during the same period, the average inflation-adjusted hourly wage declined by more than 7 percent
http://www.nytimes.com/2010/10/17/business/17view.html?src=me&ref=general
By contrast, during the last three decades the economy has grown much more slowly, and our infrastructure has fallen into grave disrepair. Most troubling, all significant income growth has been concentrated at the top of the scale.
What a strange coincidence.
The Reagan Revolution at work.
Whereas it grew by leaps and bounds in the 1970s ??
I thought that this was a good editorial, SUGuy. Wouldn’t it be nice if the guys at the top of Wall Street read it and took it to heart?
Yeah, that’s really gonna happen!
I have family working in Wall Street. What I have concluded on my conversations with them is that they have to be a permanent bull in order to survive the Wall Street atmosphere. Behind the scenes they sure know perhaps ahead of Main Street what is coming down the pike. My Wall Street family members were the first to warn me to go all cash back in August of 07. I quickly acted and my decision was also reinforced as I was reading this blog back then. Thank you Ben
The total Tax bite incured by the top 1% of earners is 40.1%. It went UP from 39% under the Shrub !
God drives a Plymouth. And has road rage.
Ezekiel V,13……”Thus shall my anger be accomplished, and I will cause my Fury to rest upon them.”
Where were you when they were trying to indoctrinate me??? Now this is “Bible Study” that I could relate to! I always knew he was a god of wrath!!!!
“Ezekiel V,13……”Thus shall my anger be accomplished, and I will cause my Fury to rest upon them.”
God, you must be cruising along in your 1960’s slant 6 Fury, a slower yet strong and dependable old engine, because I just don’t see You catching and squishing all THEM bad guys yet.
For Insurance Purposes: Not knocking your chosen mode of transportation Boss and please note that your old friend mikey is one of the Good Guys on Lifes highways and byways.
News from “The OC!”
Louis Vuitton v. Wal-mart: Which bags vanish at JWA?
October 15th, 2010, by Andrew Galvin
Airport spokeswoman Jenny Wedge says no.
“We have a robust security plan in place to handle situations with employees who would be moving prohibited items in or out of the airport,” she said.
Lindby flew out of John Wayne again this week. This time, though, he wasn’t lugging Louis Vuitton.
“I went to Wal-Mart and bought a suitcase for $30,” he said.
Lindby and his Wal-Mart suitcase arrived without problems in Daytona Beach on Wednesday
http://taxdollars.ocregister.com/2010/10/15/louis-vuitton-vs-wal-mart-which-luggage-disappears-at-jwa/66028/
I love this article. It took $14,000 worth of stolen designer luggage for this guy to figure out that $30 luggage from Walmart serves just as well and won’t be stolen.
I get a lot of compliments on my pretty teal 9-West luggage set purchased for $60 at Marshall’s.
Right? What a maroon. The designer luggage is for the private jet, yacht and lodge.
*sigh* The nouveau riche these days
I’ve seen the luggage that goes on private jets. Unloaded a bunch this afternoon, as a matter of fact.
Guy that owns the a/c is worth somewhere north of $500 mil. His carry-ons are high dollar stuff. The big stuff is Travelpro, or something similar.
Which raises another question. Let’s say you got a “deal” on some slightly used LV luggage. Now the shoe is on the other foot - if you check the thing at an airport, it could again be stolen. So what would you do with the thing? Where would you use it? What’s the point?
I suppose it comes down to the (IMO) warped values that lots of people seem to have - that they think this kind of stuff is important in the first place.
LoJack for Vuitton suitcases!
Saw a great bumper sticker yesterday: “Voters Remorse”
I’ve got a better one on my car: “Don’t Blame Me - I Supported Ron Paul.”
That is the one I would put on my car, but I am not a bumper sticker guy.
Mine says: Bush Sucks and is quite faded.
Nightmare on Every Street
By Alex J. Pollock | Reason Magazine
Friday, October 15, 2010
This article originally appeared in the November 2010 issue of Reason Magazine.
Fannie Mae and Freddie Mac are broke. The two government-sponsored enterprises (GSEs) that togetherfinance more than $5 trillion in mortgages are insolvent, if you don’t count the $150 billion already injected into them by the federal government. The common shares of these state-corporate hybrids have lost more than 99 percent of their value, both have been delisted from the New York Stock Exchange, and since September 2008 they have been official wards of the state. The largest owner of their obligations is now the United States Federal Reserve.
Housing finance inflation was at the center of the financial crisis, and the GSEs were at the center of housing finance inflation. Any meaningful reform of the mortgage system, and therefore the financial problems underlying the recession, must deal directly with Fannie and Freddie. But last summer our elected representatives instead passed a 2,300-page financial “reform” act that purposefully avoided addressing this central issue.
Discussions of how to reform Fannie and Freddie have now belatedly begun on Capitol Hill and in the Obama administration. The process will be complicated and controversial. But if we are to avoid future distortions and government-inflated bubbles in the housing market, Fannie and Freddie can and should be dismantled.
…
(GSEs) = Government Supported Entropy
For isolated systems, entropy never decreases. This fact has several important consequences in eCONomics: first, it prohibits Federal Reserve “perpetual motion” machines; and second, it suggests an arrow of time (that has 30 years as a “mortgage constant” model). Increases in entropy correspond to irreversible changes in a system, because some energy must be expended as waste heat, limiting the amount of work a system can do
Wall Street Whispers: A GSE by Any Other Name
By Lauren Tara LaCapra 09/29/10 - 04:48 PM EDT
WASHINGTON (TheStreet) — Despite rhetoric on Capitol Hill regarding housing-finance reform, there’s little chance Congress will implement the kind of sweeping change needed to “change the status quo,” as one leading Democrat put it on Wednesday.
Republicans don’t necessarily want to replace the system with “nothing,” though many would like to limit the U.S. government’s role in mortgage-finance to a regulatory capacity. Currently, the government is the tail wagging the dog of the private mortgage market - through both regulation and taxpayer funds.
The U.S. now owns or guarantees $5.5 trillion worth of mortgage debt via Fannie Mae and Freddie Mac - roughly 70% of the mortgage-backed securities market. Those two GSE giants cost taxpayers nearly $300 billion last fiscal year, and government estimates total losses will climb to $400 billion when all is said and done.
That’s a big, explicit hit for a system whose federal guarantees were merely “implied.”
…
Going Cold Turkey
Three Ways to End Fannie and Freddie without Slicing Up the Taxpayers
By Peter J. Wallison | AEI Online
(September 2010)
…
The key question about the future of Fannie and Freddie–or, more properly, of government involvement in the mortgage market–is not whether the government guarantee should be explicit or implicit, or whether it should apply to the firm that issues mortgage-backed securities (MBS) or to the securities themselves. The key question is whether any government support for the secondary mortgage market makes sense as a matter of policy. If we look at the recent history of government involvement in the housing field, the picture is not pretty. Just within the last twenty years, the savings and loan (S&L) industry collapsed, with a loss to taxpayers of approximately $150 billion. Now Fannie Mae and Freddie Mac are operating under government conservatorships, with estimates of losses running from $400 billion to $1 trillion. Is it possible that Congress simply cannot learn from its mistakes?
…
$150B here, $400B-$1 Trillion there……..too bad we’re not talking about real money……..
“Is it possible that Congress simply cannot learn from its mistakes?”
Many in Congress would not admit that this was a mistake.
Never forget that some people would sooner kill you than admit they made a mistake.
My husband.
Failures In Money Control Becoming More Obvious
By Bob Chapman Saturday, September 25, 2010
A weekly excerpt from the subscription issue of The International Forecaster, taken from Bob Chapman’s weekly publication.
As quantitative easing again gets underway the failure of QE1 becomes more obvious. The crisis worsens and the illusion of any recovery is light years away. Over the past three years almost $13 trillion that we know about has been thrown down a rat hole to bail out banking, Wall Street, insurance and selected elitist entities. The dollar figure is probably much higher. We will never know, because the privately owned Federal Reserve makes its own rules. Everything they do is a state secret. The five successful quarters were only a mirage. The funds have been vaporized among lending and financial institutions worldwide. There has been no accounting and there never will be as long as the Fed is not audited and investigated. We are in an inflationary depression and have been since February 2009. Massive injections of liquidity do not work, nor have they worked for centuries under these conditions. You cannot resurrect an insolvent country in a system that is corrupt. The controllers of the US economy are about to lead the American economy and financial structure into a great dark pit. The US and the world is soon to face a global breakdown deliberately engineered by the forces of darkness.
…
“The temple of the Federal Reserve and Wall Street could very well be doomed to destruction. The public now understands that Wall Street and banking own the Fed and they really make all the decisions and are the creators of all inside information. they profit on almost every trade. They cannot lose. They own the game. That is why for the last 18 months there has been an exodus of funds from the stock market to bonds, gold and silver and commodities. Naked shorting is rampant and the SEC and CFTC do nothing about it. Front running, known as flash trading, rigs every trade. More than 70% of trades are computer, black box driven by pros. Is it any wonder gold and silver hit new highs every day, Weiner & Waxman bring legislation to regulate coin dealers, when in fact they want to collect data on coin and bullion buyers. America has turned into a cesspool.”
Well said. But voting in Republicans isn’t going to change any of this.
minor correction: “But voting
in Republicansisn’t going to change any of this.Sad, but true.
So what will change and maybe that is where we should concentrate. We all know the problem lets find the solution.
Simplistic but would work. Earn a net worth of at least $5,000,000 in today’s dollars. Send half of it overseas to Singapore, New Zealand, Belize, or whatever. Start an international corporation and invest as a corporation in mutual funds or ETFs as a “foreigner.” International bonds/stocks/commodities whatever.
When I go to http://www.vanguard.com and see the Non-U.S. investors link I start to daydream.
If half your wealth is overseas, you wouldn’t care about voting. You’d be a world sovereign, and you would not think of yourself as a citizen, which is “beneath.”
Thanks Bill for the suggestion. We do business in Canada and I was actually thinking about having a subsidiary formed in Canada and investing (moving money to Canada). The easy part is Canada is about 2 hours away and showing up in person is easy to meet the banking requirements. We will eventually move and live part of the year in Queenstown NZ but that is at least 15 years away. Moving money overseas is easy but ending up with dormant accounts and dealing with the BS get tough.
Remember, don’t vote for anyone who makes a commission or who is an incumbant !
…global breakdown deliberately engineered by the forces of darkness…
Is that an appeal to the Trekies? or maybe Star War fanatics?
i gotta look that up.. lets see..
Forces of Darkness
The fictional villains of the Power Rangers universe that appeared in the television series Power Rangers Mystic Force are magical beings that dwell underground, known as the Forces of Darkness; wiki
is that it?
Thank you, Joey, for yet another fine straw man caricature.
Crash Course
Mortgage Fraud Foreclosure Fraud, Part III
October 15, 2010
By Edward Ericson Jr.
The New York Times’ David Streitfeld visits the woman whose foreclosure allegedly started what some are calling “foreclosure-gate.” While I’m not sure how anyone can say for certain that this is the Alpha case, it is a very good story.
Streitfeld quotes and describes the borrower, Nicolle Bradbury, who hasn’t paid in two years. We get a little hint of what her life is like, and how it got that way:
The piece shines with the description of Thomas Cox, the volunteer lawyer who noticed how fucked up Bradbury’s foreclosure documents were, particular the signatures by a man named Jeffrey Stephan whose title was “limited signing officer.”
Cox deposed Stephan, who acknowledged that he hadn’t read the documents he signed, swearing to the court that GMAC had all its paperwork ducks in a row. This is not kosher. As Cox wrote in his motion following that deposition:
GMAC (which, as the story helpfully reminds us, got $17 billion of taxpayer support last year) has been flailing ever since. The Times says the company has spent more than Bradbury’s house is worth trying to take it from her. And:
(This was denied.)
…
hehe.. Yeah.. good story.
The best part is her brother-in-law originally owned it, and talked her into buying that house.
No doubt he is in league with the forces of darkness.
“If you want government to intervene domestically, you’re a liberal. If you want government to intervene overseas, you’re a conservative. If you want government to intervene everywhere, you’re a moderate. If you don’t want government to intervene anywhere, you’re an extremist.”
~Joe Sobran
Errors, possible fraud put housing industry on shaky foundation
KNOWLEDGE@WHARTON • October 17, 2010
After suspending foreclosures in order to review cases that may be flawed by procedural errors or fraud, major mortgage companies have injected new uncertainty into the already weak housing market. Few of the homeowners under scrutiny are likely to avoid foreclosure, but the freeze adds confusion and delays recovery of the housing sector, according to Wharton faculty and real estate analysts.
The foreclosure flap is the most recent of many setbacks for the troubled industry, even as a new generation of potential buyers is rethinking the traditional dream of homeownership.
“Buying a home doesn’t make sense for a large proportion of the population,” says Wharton real estate professor Fernando Ferreira, noting that ownership reduces the flexibility to pursue work in other regions and ties up cash in a down payment that might be used for other investments. “We forgot these lessons in the housing boom. But I think the new generation is learning them — at least for the next five to 10 years.”
…
Central ohio
Housing mess just got messier
Foreclosure investigation likely will delay recovery
Sunday, October 17, 2010 08:49 AM
By Jim Weiker
THE COLUMBUS DISPATCH
Michael Fox is trying to save his home from foreclosure.
Marya Kurpita is trying to buy a home in foreclosure.
They are on opposite ends of the real-estate spectrum.
But they have one thing in common: They are among thousands of owners and buyers now ensnared in the growing tangle of home-foreclosure documents.
It’s a mess that threatens to further gum up the already sticky process of clearing the nation of foreclosed homes.
On the front end, lawsuits against lenders likely will delay homes entering foreclosure.
On the back end, buyers will find it far more difficult to purchase foreclosed homes, at least in the short term.
“Basically, this is slowing down and clogging up a housing market and foreclosure situation that was already messed up to begin with,” said Guy Cecala, the chief executive and publisher of Inside Mortgage Finance, a Maryland-based trade publication. “It’s just making a messy situation worse.”
Last week, the topic exploded beyond the courtroom into the political arena when all 50 state attorneys general announced an investigation into allegedly fraudulent foreclosure filings by mortgage companies.
The investigation will focus on the four companies that have announced reviews of their foreclosure procedures: JPMorgan Chase, GMAC Mortgage, Bank of America and PNC Financial Services.
But experts say the effect is already being felt far beyond those four, especially since the federal mortgage arms Fannie Mae and Freddie Mac also announced reviews of their procedures.
Within days of the announcements, foreclosed homes were pulled from listings throughout central Ohio and the rest of the nation as lenders sought to double-check paperwork before trying to sell the properties.
“I had 50 properties pulled off the market last week,” said Kelli Beckett, owner of Realty Executives Decision, one of central Ohio’s largest dealers in bank-owned properties. “I’ve got another 20 in contract that can’t close and 15 that were pulled from the sheriff sale. … It’s a nightmare.”
…
I love how they’re trying to spin this as “a bad thing”.
Yeah, I want to buy a house that nobody knows who holds the mortgage and deed and has been foreclosed illegally.
Once again, “interfering in the market” is shown to actually mean “fleece the mark.”
“…to mean ‘being prevented from fleecing the mark’…”
While the foreclosure-gate mess snowballs, the NAR will be reminding one and all that there’s never been a better time to buy.
And up until the snowballing, and for years thereafter, the NAR will be reminding everyone, “There’s never been a better time to buy.”
‘While the foreclosure-gate mess snowballs, the NAR will be reminding one and all that there’s never been a better time to buy.”
They already are. This little gem appeared in the local paper today…
http://www.calgaryherald.com/business/Strong+loonie+sending+Albertans+south/3681513/story.html
How Countrywide Covered the Cracks
By GRETCHEN MORGENSON
Published: October 16, 2010
ON June 27, 2006, Countrywide Financial, the nation’s largest mortgage lender, was about to close its books on a record-breaking six-month run. The housing market was on fire and Countrywide’s earnings were soaring. Despite all the euphoria inside the company, some executives noticed that Angelo R. Mozilo, the company’s brash and imperious chief executive, seemed subdued.
At a town hall meeting that day with 110 of the company’s highest-ranking executives in Calabasas, Calif., Mr. Mozilo sat alone on a stage, fielding questions and offering rosy predictions about his company’s prospects. But then he struck a sober note in response to a question from one of his colleagues.
The questioner wanted to know what, if anything, worried Mr. Mozilo, according to a participant.
“I wake up every day frightened that something is going to happen to Countrywide,” Mr. Mozilo said.
A year and a half later, that day arrived. In January 2008, Countrywide, the company he had built from a two-man mortgage operation into a lending behemoth, had to sell itself to Bank of America at a bargain price because it was being smothered by losses tied to a mountain of sketchy loans.
…
Countrywide was one of Chris Dodd’s biggest political contributors.
Check out this online poll; are only “yes” votes considered “valid”?
What do you think? Should all foreclosures be stopped until banks and servicing companies clear up paperwork questions?
We didn’t record your vote, because it wasn’t valid.
EconoMeter: Do we need a moratorium on foreclosures?
By Roger Showley
Saturday, October 16, 2010 at 8:31 p.m.
The verdicts from our experts:
Yes: 1
No: 6
Ask the economists: Each week the Business section will ask its panel of economists to weigh in on an economic issue of concern to San Diegans. They’ll answer yes or no, up or down or give a neutral response. Sometimes they might be unavailable to participate. If you have a question you’d like them to address, send it to roger.showley at uniontrib dot com.
Bank of America and other lenders and mortgage-servicing companies have suspended some foreclosures while they sort out legal paperwork that may not have been processed properly. There have been some calls for a national moratorium of foreclosures until these processing questions have been answered. We asked our U-T EconoMeter panelists if they favored a nationwide moratorium on new foreclosures until banks and servicing companies clear up questions about the processes they have followed in foreclosing on homeowners. Marney Cox, chief economist for the San Diego Association of Governments, was unavailable for comment.
…
The Easiest Financial Lesson You’ll Ever Learn
by Daniel Indiviglio
Sunday, October 17, 2010
Saving and investing wisely is not an easy achievement. How much do you need to save for retirement? Where should you put your money? There are thousands of financial advisors who offer differing opinions on these matters. But if there is one utterly clear maxim of saving for retirement it’s this: contribute at least enough money to your 401(k) to maximize your employer’s contribution.
Much to my shock and dismay, 39% of 401(k) participants don’t follow this totally noncontroversial advice, according to a new study by Financial Engines, via the NY Times Bucks blog. That’s crazy. Here’s why maxing out your 401(k) is the biggest financial no-brainer you’ll ever encounter.
When your company promises to match some contribution to a 401(k), it’s like giving you a raise. Refusing the match is like telling your company that you don’t want extra money. Imagine an example where you make $1,000 per paycheck. Now imagine if your company agrees to match 50 cents per dollar up to 6% of your 401(k) contribution per paycheck. That means you can put up to $60 per paycheck into your 401(k) and your company will also contribute $30.
Did you see what just happened? You got a 3% raise. Sure, you had to contribute $60 of your gross income as well, but this money just becomes savings — something you will surely need some day anyway. Unless you are one of the few people who believe Social Security alone will be sufficient to allow for a pleasant, comfortable retirement at a reasonable age.
Moreover, that $60 you contribute doesn’t reduce your take home pay by 6%, because it’s taken pre-tax. For example, let’s say after all taxes are taken, your income would normally have been 30% lower. If you didn’t contribute to your 401(k), your after-tax income would be $700. If you contribute $60 pre-tax, however, your after-tax income is $658 — only $42 less, instead of $60. This is the second reason why it’s so great to contribute to a 401(k): you can delay taxes on that money, so you won’t feel like you’re saving as much as you actually are.
Let’s reflect on this scenario where you contribute to your 401(k) as described above. Your after-tax income declines by $42, but you save $90. This is one of the best deals you’ll ever get, and it’s virtually impossible to beat.
…
“People are smart.”
My employer never gave a match
This all assumes, of course, that your employer actually matches in something other than their BS inflated stock, and that the Feds don’t decide to retroactively change the rules at some later date.
the companies I have worked for have also stopped matching. I see no use giving the government control of my money by being enrolled in a 401k. Also, unless the govt changes things one is better off having nothing in old age. If you have anything the govt will get that before you are eligible for any govt bennies.
I agree with the article.
But my company did not give me a match this year or the previous year.
The problem with an employer “match” to a 401(k) plan is that you must work for 5 years after the “match” is made or you don’t vest in the program.
I’ve worked for several companies who pushed me out the door before I ever vested in their match.
The people who write these articles seem to assume all 401Ks have a comprehensive smorgasbord of investment options available… because of course that’s what the 401K was supposed to be all about! Allowing all Americans to become two fisted swaggering capitalists taking control of their own financial destiny through participation in the ownership society! In fact, many 401Ks actually are designed by their managers to herd the hapless employees down a very narrow slaughter chute on behalf of their Wall Street masters. The last two 401K plans I was offered did not offer a money market or even US Treasuries as investment options. After an exasperating conference call with the first plan manager, where I asked him where he thought an employee near retirement age should have their investment allocated since they lacked the obvious choices, he stated: “we recommend staying in stocks for everyone”. I didn’t take the articles “no brainer” advice and thus avoided the slaughter that my fellow employees lined up for. I think the DOW was just under 14K the day of that conference call. Just call me a mad cow I guess.
I can make soup out of anything.
$900,000 for a 3-bedroom … in Haiti?
PORT-AU-PRINCE, Haiti (AP) — It’s just two miles from where Dominique Tombeau lives today to the house he dreams about at night, but the road runs straight uphill.
Nine months after the schoolteacher’s concrete home collapsed in front of his wife and 4-year-old son, the family and three in-laws are stuck under a plastic tarp that pours down water when it rains. All he wants is to move up, to a working man’s apartment in the tree-lined suburb of Petionville. But every place he can even consider costs double or triple the $43 a month he used to pay in rent, even though he and everyone he knows has less money than ever.
Haiti’s brittle housing supply was shattered by the Jan. 12 earthquake, which destroyed an estimated 110,000 homes and apartment buildings. Since then demand has soared, as the more than 1.5 million people who lost their homes compete for new ones at the bottom end of the market, and a rising tide of foreigners from the U.N. and aid groups flood in from the top.
The result: There are not enough houses, and not enough money for people to rent the ones still standing. More than 1.3 million Haitians live in squatter camps, facing disgruntled landowners and violent evictions, with no international or government plan to move or house them. The prices have everyone stuck.
“The type of house most people rented before was not built well. Those houses were destroyed, and the ones that are left are too expensive,” Tombeau explained with the patience of a man used to walking teenagers through French grammar. “When they find a decent camp to live in, they decide they’d rather stay.”
Before the quake, visitors to Haiti who only knew of its poverty and desperation were shocked to see the homes available to those who could afford them. Glass and concrete palaces in pink, peach, yellow and white hang off the mountains above Port-au-Prince like oversized candies on a green fruitcake.
Some fell. The prices on those that survived defy belief. One senator put up his three-bedroom with panoramic views for $15,000 a month. (Its nine Rottweiler guard dogs are free.) Finding anything similar for less than $5,000 is a steal. Want to buy? A three-bedroom with guest apartment lists for $900,000.
With his education and entrepreneurial attitude, Tombeau would be a prime candidate to enter a Haitian middle class. But as things are, he could not afford such a house in a hundred lifetimes. All his income disappeared in a crash of concrete when his school crumbled on top of him and hundreds of students. Some 35 people were killed, and he spent six hours under the rubble with his left arm smashed and pinned to his side.
Hardly anyone has credit for a mortgage or construction loan. Building materials are more expensive than ever. And land title is governed by a broken system ripe for exploitation by speculators looking to cash in on reconstruction — whenever that happens.
Not to worry. With QE 3 we’ll bail out Haiti, too.
I’d have to argue that it has been a mathematician’s world at least since Newton and Gauss invented (discovered?) the calculus, if not before then. Most economists are failed (or lazy) mathematicians, when you get down to it.
Leading article: A beautiful mind
Monday, 18 October 2010
Scientific and mathematical geniuses are distinguished by a particular elegance of mind. Fiendish complexity becomes something the non-specialist can comprehend. Rarer still is the scientist whose mental elegance creates, or reveals, something of physical beauty. Watson and Crick might have staked a claim for the double helix that is the molecular structure of DNA.
Benoit Mandelbrot, whose death has just been announced, was a mathematician who made it his life’s work to find beautiful shapes in nature and decode their secrets. In minute ways, he saw perfect order in apparent chaos, and enabled others to see it, too. He devised, and developed the study of, fractals – seemingly random shapes that conformed to patterns when broken down into one repeating form.
His fractals were invariably things of beauty – seen in phenomena as different as snowflakes and cauliflowers. But his methods also had practical applications that included generating graphics and producing actual works of art. He turned his mind also to economics, declaring the global financial system too complex to function properly. How right he turned out to be. If yesterday belonged to the economists, perhaps tomorrow will be the mathematician’s world.
Hey, I’m no wizard at math but I occasssionally ponder if Bertrand Russell ever figured out where God was.
Oh well…
Somebody saw it coming!
Visionary who warned on banking crises
By Phil Davison
Published: October 13 2010 23:43 | Last updated: October 13 2010 23:43
Maurice Allais, who has died in his native Paris at the age of 99, won the Nobel Prize for Economic Sciences in 1988 and was considered one of the most visionary economists of the latter half of the 20th century.
He once described Wall Street as “a veritable casino” and had long warned against the kind of banking and stock market practices that would lead to the financial crises of 1998 and 2008.
In his later years, Allais warned of what he considered the dangers of globalisation and was highly critical of the World Trade Organisation, writing that “globalisation profits only the multinationals” and arguing that a degree of national protectionism was often justified.
Just before the 1987 stock market crash, Allais compared the global economy with the days before the crash of 1929: “promises to pay, frenetic speculation, and a resulting potential instability in credit mechanisms, that is, financing long-term investments with short-term deposits”.
Shortly before the latest financial crisis, already in his nineties, he wrote: “The world economy rests entirely on gigantic pyramids of debt, all supporting themselves on one another in a fragile equilibrium. Never has such potential instability appeared with such a threat of general meltdown.”
In the words of Yvon Gattaz, a fellow member of the French Academy of Moral and Political Sciences, “one can say that Maurice Allais predicted everything that is going on now, everything”.
…
Posted on Sun, Oct. 17, 2010
Foreclosure freeze gets cold shoulder from experts
By Alan J. Heavens
Inquirer Real Estate Writer
Outrage over improperly examined, potentially inaccurate foreclosure documents - and the announcement last week that the attorneys general of all 50 states and the District of Columbia would mount investigations into them - seems to make one a real possibility.
Indeed, on Friday, Americans for Financial Reform, a coalition of 250 state and national groups ranging from AARP to the World Privacy Forum, called for a temporary moratorium, saying it would be wrong to “trust those who created them to self-certify correction” of the problems.
A freeze on foreclosures would certainly offer breathing room to individual borrowers battling to hold on to their homes.
But the consensus among economists and industry observers is that a state-by-state moratorium would merely prolong the current housing downturn - if not worsen it.
In September 2008, just days before Lehman Bros. Holdings Inc. filed for bankruptcy, in part because of its subprime-mortgage exposure, Edward V. Murphy, an analyst for the Congressional Research Service, studied the pros and cons of a freeze on foreclosures.
On the plus side, Murphy said, a freeze would give struggling homeowners time to get their financial affairs in order or modify their mortgages. Sellers who were not in financial trouble would not have to compete against lower-price foreclosed properties. Neighborhoods, too, would not have as many vacant homes to deal with.
The minus, in Murphy’s view: A freeze would thwart consumers’ efforts to buy houses made affordable through foreclosure.
…
On the minus side, a freeze might encourage FBs to stop paying their mortgages, on the assumption they might be able to earn themselves free houses by squatting.
Congressional Budget Office -Annual budget - $44.1 million
Government Accountability Office- Annual budget- $489 million (2007)
Congressional Research Service:
“Its staff of approximately 900 employees includes lawyers, economists, reference librarians, and social, natural, and physical scientists.[3] In fiscal year 2007, CRS was appropriated a budget of roughly $100,786,000…
100 million bucks.. 900 employees..
Edward V. Murphy, an analyst for the Congressional Research Service…
On the plus (!?!) side, Murphy said, a freeze would give struggling homeowners time to get their financial affairs in order or modify their mortgages. Sellers who were not in financial trouble would not have to compete against lower-price foreclosed properties. Neighborhoods, too, would not have as many vacant homes to deal with.
——–
A line is drawn in the sand..
You either support continued bubble-price support by way of these frivolous, meaningless stalling tactics, or you don’t.
HBBers who “hate banks” have a difficult choice to make. Playing both sides is not a choice.
Bungee theory time for The Precious now?
Don’t be a hater.
US mortgage expenses under scrutiny
By Suzanne Kapner in New York
Published: October 17 2010 22:15 | Last updated: October 17 2010 22:15
US banks are coming under increasing pressure to set aside extra money for mortgage-related expenses as questions surrounding their foreclosure practices spark broader concerns over how these loans are sold.
As banks, including Bank of America, Wells Fargo and Citigroup, report earnings this week, mortgage-related expenses are expected to be a hot topic on investor conference calls. JPMorgan Chase last week increased its reserves for mortgage repurchases by $1bn to $3bn. The bank also set aside an additional $1.3bn to cover mortgage-related litigation.
Shaun Donovan, US housing secretary, said on Sunday it was “shameful” that financial institutions might have made the housing crisis worse by improperly processing foreclosures, reported Reuters.
Mr Donovan wrote in a column on the Huffington Post website that a comprehensive review of the foreclosure crisis was under way and that the Obama administration would respond with “the full force of law where problems are found”.
Fannie Mae and Freddie Mac have demanded that banks repurchase loans that failed to meet certain underwriting guidelines. According to Goldman Sachs analyst Richard Ramsden, such demands could total as much as $44bn. In a note published Friday, Mr Ramsden said banks have so far set aside about half that amount.
Separately, investors in private label securities have sued the large banks in an effort to recoup losses on mortgages they say were not underwritten properly. Among the investors that have filed suit are the Federal Home Loan Banks of Pittsburgh, Seattle and San Francisco, which are demanding a combined $25.6bn, according to a report published in August by Compass Point, a US research firm.
These concerns took on a fresh urgency last week after the attorneys-general of all 50 US states launched a joint investigation into the foreclosure practices of major lenders. At issue is whether bank employees rubber-stamped thousands of foreclosure documents without checking their accuracy as required by law. In some cases, judges have ruled against banks when they try to foreclose without the relevant paperwork, including the note and the mortgage that prove they own the loan.
BofA, JPMorgan and GMAC have temporarily suspended foreclosures while they examine their procedures.
…
Bankers are liars and thieves.
Mortgage foreclosure uproar sweeps up Northeast Ohioans
Published: Sunday, October 17, 2010, 6:00 AM
Updated: Sunday, October 17, 2010, 11:10 AM
Michael and Pamella Negrea have battled GMAC for most of the past decade over two payments that weren’t credited to them properly years ago. They have been foreclosed on three times, even though they’ve never been late with a payment.
CLEVELAND, Ohio — Michael and Pamella Negrea have never been late on a mortgage payment in the 15 years they’ve owned their home in Eastlake. But they’ve been foreclosed on three times.
Martin and Kirsten Davis, meanwhile, lost their home in Cleveland to foreclosure two years ago. The reason: a mess that started when they accidentally paid 14 cents too little on their monthly payment.
And Michael Rendes of Berea had his mortgage sold last year to Bank of America. The bank foreclosed on him in November, after insisting for months that it didn’t hold his loan and wouldn’t accept his payments.
Tales like these portray the ugly side of the world of mortgage finance, a world embroiled in controversy amid claims of fraudulently signed foreclosure documents. As a result, many major banks have suspended foreclosures; state and federal officials are launching investigations; and experts everywhere fear this could wallop the limping economy again.
Indeed, the possibility that bank employees illegally “robo-signed” thousands of foreclosures without even reading the information shows the production-line mentality not just of foreclosures, but of the entire mortgage process. It’s as simple as this: Many banks during the last decade or so have approved, closed, bought, sold and traded mortgages like baseball cards at a pace so dizzying that they couldn’t keep up with their customers, payments or foreclosures.
Now, it’s possible that thousands or even millions could have lost their homes in error.
Martin Davis wonders whether anyone truly read his case file before his foreclosure was approved. He refinanced his home on the Cleveland-Garfield Heights border in 2003 with People’s Choice Mortgage, and the loan soon was sold to Ocwen Financial. The second month, he accidentally paid $595 instead of $595.14.
Ocwen imposed $2,200 worth of fees and penalties, which Davis couldn’t afford to pay and couldn’t get wiped out despite countless phone calls. The home remodeler soon received a foreclosure notice and filed for bankruptcy to stall the action. He lost his home in February 2008 and is now renting a home in Parma.
“I’ve wondered myself whether they actually went through the paperwork,” said Davis, 44. “Why should I have lost my home over 14 cents?”
“We went through so much,” Davis said. “Every night we prayed that they wouldn’t take our house. It was all we had.”
…
It is crap like this that makes people want to stick it to the banks.
If by “crap” you mean utterly fantastic, one-sided stories of how “innocent” little people were victimized by Big _______, then yes, that does get the sheeple all excited.
Journalism 101
Megbank, Inc is a cartel of thieves with friends in Congress.
Posted on Sunday, 10.17.10
Two tales show bank’s role in prolonging mortgage crisis
By KEVIN G. HALL
McClatchy Newspapers
WASHINGTON — Maria Perez and Donald Reece live on opposite ends of the country and are nearly as far apart on the income ladder. Yet they both face foreclosure and serve as telling examples of how lenders are taking actions that harm the economy and prolong the nation’s housing crisis.
The motivations for the lenders’ actions may be understandable - they’re trying at all costs to avoid losing money, and, in Reece’s case, perhaps make some. How they choose to do that, however, is compounding existing problems with bad mortgages and helps explain why, mortgage experts say, a four-year-old housing crisis has grown worse.
One of the key issues, advocates say, is that unless lenders are willing to write down the principal on so-called underwater mortgages - where the amount owed is much larger than what the property is worth - the mortgage mess will linger for years.
Others, however, say lenders just emerging from the Great Recession hardly are in a financial position to write down mortgages whose underwater portions might total as much as $1 trillion.
“It’s politically popular to say, ‘Let’s have the banks write down the balance on everything,’ but I don’t think there’s enough balance sheet out there to do it,” said Rick Shagra, a senior vice president of RealtyTrac, an Irvine, Calif., specialist in foreclosure research.
Perez’s and Reece’s problems aren’t directly connected to the recent foreclosure moratorium that many lenders have imposed because of questions about the accuracy of foreclosure documents, including falsified signatures and inaccurate statements on who owns the mortgages.
However, the issues Perez and Reece face will remain, even if, as lenders insist, those document problems can be cleaned up in a matter of weeks. More than 1.2 million homes nationwide are currently in the foreclosure process, (another 900,000 already have been repossessed by banks) and roughly 5 million mortgages are now delinquent but not yet in foreclosure, according to RealtyTrac data.
…
Was helping one of my sons w/ his homework tonight when we came across this beautiful passage:
My question is, what are the prospects for getting the bankers out of the government, in order to re-establish a more perfect union?
Geez, where’d you find that load of commie bull? Who wrote it - Marx or Engles? Sounds downright un-American.
The banksters are saying “No free houses for dead beats.” But unless they can prove that they hold a clean title, what gives them the legal right to foreclose? Otherwise, what stands in the way of some entrepreneur who wishes to hire a repossession firm and start claiming ownership of other people’s houses?
* REAL ESTATE
* OCTOBER 18, 2010
Homeowners in Limbo
Mortgage Mess Means Delays for Those Facing Foreclosure
By ROBIN SIDEL
David Stiles was minutes away Tuesday from seeing his house sold in a foreclosure auction when he got a surprise phone call from his lawyer.
“I’ve got good news,” said his lawyer, Pamela Simmons. GMAC Mortgage, which loaned him $333,700, had called off the sale. The reason: The lender decided to review its foreclosure cases because of mounting industrywide concerns about shoddy procedures used in document preparation.
Across the U.S., the mortgage mess is deepening the anxiety and uncertainty swirling around homeowners who are facing foreclosure. Foreclosure is already a slow process, but the decision by lenders such as Bank of America Corp. and J.P. Morgan Chase & Co. to halt most or all foreclosure sales and internal scrutiny by other financial institutions likely will keep many troubled borrowers in their homes for weeks or even months longer.
The decision by GMAC, a unit of Ally Financial Inc., means that Mr. Stiles and his two teenage sons can stay in their three-bedroom home, surrounded by redwood trees in California’s Santa Cruz Mountains. Still, the foreclosure sale is set to proceed Nov. 18.
“I’m grateful that I have some extra time so I can make a decision of what to do,” says Mr. Stiles, 50 years old, who hasn’t paid his $2,700-a-month mortgage since February. He left his job as a project manager for a construction company because he has Parkinson’s disease.
A GMAC spokeswoman wouldn’t comment on Mr. Stiles’s case. She says the lender is conducting additional reviews before proceeding with any foreclosure sales.
So far, there are few signs lenders and servicers will undo substantial numbers of the foreclosure proceedings being reviewed across the U.S. No one has been “evicted out of a home who shouldn’t have been,” James Dimon, J.P. Morgan Chase’s chairman and chief executive, said in a conference call last week.
Wall Street analysts generally are taking a similar view, saying the halts in foreclosure sales are likely to cause little financial impact on banks in the long run. “Sorry, no free houses,” wrote Glenn Schorr, an analyst with Nomura Securities International, in a research report to clients Friday.
…