Bits Bucket for March 27, 2011
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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What exactly does the state of the U.S. housing market have to do with monetary policy?
Housing Data Continues to be Terrible, May Lead to QE3
March 26, 2011 3:35 PM EDT
In the backdrop of massive global events in the Middle East and Japan, something else significant is developing: the continued deterioration of the US housing market.
Data has been absolutely horrendous on this front. February new home sales plunged to an annual pace of 250,000, which is the lowest figure on record.
This statistic is alarming. For one, it means new home sales levels are now worse than during the height of the global financial crisis.
Data on housing prices also confirm the double dipping trend; the price rise of the initial recovery peaked around mid-2010 and prices are now steadily declining, according to the Case-Shiller Index.
Things look bleak for the real estate market on many fronts. On the demand side, the jobs market continues to be weak (although improving), people are now more open to renting, and speculative buying is concentrated on the fire sale properties.
On the supply side, banks are still working through a huge shadow inventory – or homes in the process of foreclosure that will eventually be dumped on the market at fire sale prices.
On the cost side, mortgage rates are at historically low levels. If the real estate market is struggling at these rate levels, it will deteriorate under higher rate levels. Mortgage rates have already been steadily pushed up by US Treasury rates.
If the rest of the economy is able to shrug off the poor conditions of the real estate market, mortgage rates will only continue to go up. Moreover, the Federal Reserve and US Treasury Department still need to unload billions of dollars of mortgage securities.
…
‘Jobs and Housing remain the focus for the Fed, and both areas continue to face severe difficulties,” said Borthwick. In the past, Fed Chairmen Bernanke made it clear that he intends to fulfill his mandate of maintaining maximum employment — which more broadly speaking means he has the implicit burden of propping up the US economy.”
A link on the same page:
‘Cher’s former Miami Beach home is now on the market for $10.2 million with a price cut of $4.7 million…Once featured in Architectural Digest, this three-story home features a grand two-story receiving hall with double staircases to the master suite with stone fireplace. There is also a library, formal dining room, gourmet kitchen with island, and the outdoor features include covered terraces, heated pool, cabana with bath and exercise room. The third story has a private living room with terrace overlooking the pool and wide bay views.’
‘The home was put on the market at $14.9 million in 2008, which was dropped to $11.9 million in June 2010 and now is for sale at $10.2 million.’
No mention of peoples ability to afford houses, just “propping up” the economy, etc. If this were things like milk or food, we’d be tearing down the Fed buildings. But houses cost much more than those commodities, and the Fed is “propping up” the prices of houses you might want to buy, along with Cher’s “former Miami Beach home.”
And there is this:
‘Bernanke…has the implicit burden of propping up the US economy’
Wow, what a great guy! He isn’t elected, heads a secretive, quasi-govt organization (what ever that means), which is actually owned by billionaires; yet he is shouldering the “burden” of keeping us all employed. And one of the ways he’s doing that is to “prop up” the price of houses we can’t afford!
If this were things like milk or food, we’d be tearing down the Fed buildings.
Ben,
The vegetables who voted for McCain and Obama also voted to give the Federal Reserve/Wall Street looting syndicate unlimited trillions for speculative gambling, creating the “money” out of thin air, borrowing recklessly, and saddling unborn generations with a lifetime of debt servitude. What kind of retards could possibly believe that a candidate hand-picked and groomed by mega-speculator George Soros, and with Goldman Sachs as his #2 campaign contributor, would bring “change the (productive middle and working classes) can believe in?” Of course the Republicans had to put up somebody equally servile to the Fed and Wall Street, so they gave us the neo-con wet dream team of McCrazy and Even Crazier. God only knows what “choices” the GOP will conjure up to run against Obama Rebranded in 2012 and ensure the seamless continuation of the Republicrat fellatio-thon of Wall Street and the corporate cartels. Michelle Bachman with her high-wattage craziness would seem to be a suitably pliant candidate; now the Establishment GOP has to find a VP candidate that makes her look somewhat respectable - will Charles Manson be up for parole in 2012?
However, I think the political and financial elites, and their media lapdogs, may have seriously underestimated the degree to which IDIOCRACY has overtaken the nation. The same sheeple who voted to bail out the bankers and shaft their own children and grandchildren, and who blithely ignore the Fed’s hyperinflationary printing of trillions of dollars for its Wall Street primary dealers (the TBTF banks) to play the rigged casino market, are going to get a rude awakening when they waddle into the supermarket one fine day and see hamburger at $10 a pound, then $11 the following week. At that point these mutants could instantly transform from stupid, complacent, and docile - the perfect Republicrat voter, in other words - to bug-nuts irrational. This has already started:
http://www.mysanantonio.com/news/local_news/article/The-Beefy-Crunch-Burrito-incident-1226571.php
Does anyone seriously believe that thoughtful, disciplined, constructive choices and actions needed to get the country back on track are going to come from the sheeple who voted us into this mess? I don’t either.
Neither do I.
Unfortunately, the anger will be directed at whoever happens to be in the immediate vicinity, instead of where it truly belongs.
And who on Manhattan, or inside the Beltway gives a crap about a few hundred people a year on Main Street getting whacked by their fellow citizens? Hell, even a few thousand would get lost in the statistical noise.
If not for daily status reports on the Congressman, the Tucson shootings would be old news. Notice that there are no daily status reports on anyone else who was shot.
That’s my concern as well, X-GSFixr. I’m a 2nd Amendment supporter, but with great power comes great responsibility, especially, maximum restraint and self-discipline. The shooter in Tuscon was clearly unhinged, but there are many millions of other gun owners who may go off the deep end if the economy starts crashing down around them.
Have you been to a gun show lately? Most of the attendees don’t strike me as folks I want anywhere near me or mine in a societal breakdown-crisis.
And over in England 500,000 hit the streets. I have read the elite bankers are already moving to Switzerland.
“But you represent a spirit of resistance in every workplace and community that says we are not going to have our way of life killed so that the rich and greedy can live as they please.”
http://www.independent.co.uk/news/uk/home-news/half-a-million-activists-join-anticuts-march-2253791.html
“….been to a gun show lately?”
Not in a while. Not into the collector/hoarder thing. I’ve got my Glock and M-1, and if I ever need any more than that, we’re all fooked anyway.
(Or, I’d just add to my arsenal as I went along. Nobody can be eternally vigilant)
I imagine the guns shows around here are the same as they always been out here in Flyover. And yeah, if push came to shove, I’d be more worried about them, than some pack of inner city youths.
“Have you been to a gun show lately? Most of the attendees don’t strike me as folks I want anywhere near me or mine in a societal breakdown-crisis.”
For sure.
Just the THOUGHT of being anywhere near these fools while they attempt to unload and clear a chambered 45 round from a full cocked vintage model 1911 is enough send me into a full blown social crisis.
“McCrazy and Even Crazier. God only knows what “choices” the GOP will conjure up to run against Obama Rebranded in 2012…Michelle Bachman with her high-wattage craziness would seem to be a suitably pliant candidate”
This is why I doubt Romney has much of a shot. He is far too sane to appeal to the GOP lunatic fringe that grooms candidates for high office.
Somebody who straps their own dog to the roof of their car qualifies as a lunatic, to me.
Nowadays the economy runs on home equity and stock market gains.The avg joe has most of their money tied up in their home.The FED appears to be willing to throw trillions of printed fiat currency at the problem till we get a bounce.It’s not their money so no big deal.They have a tax collector to get the money back.You dont pay you go to slammer with bubba.
“They have a
tax collector to getcentral bank with a technology called the printing press to print the money back.”‘The home was put on the market at $14.9 million in 2008, which was dropped to $11.9 million in June 2010 and now is for sale at $10.2 million.’
My only curiosity is what was the original construction and sale figures?
If only Cher could turn back time.
LOL!
“I got you, babe.” -Cher’s lender
“Gypsies, Tramps, and Thieves” - Cher’s realtor, appraiser, and mortgage broker.
“Bewitched, Bothered, Bewildered”
How she felt when she realized real estate doesn’t always go up.
“And the Beat Goes On”
How it feels to list your multi-million dollar home for a span of years without any offers.
“That house has been on the market for my last three facelifts.”
Sonny & Cher - The Beat Goes On
Watching this old footage suggests she had lotsa talent, and he was destined for a career as a politician. I’m having a flashback to when I had my tonsils out; when I was in the recovery room, my mom showed me a magazine with their photos on the cover.
“…to fulfill his mandate of maintaining maximum employment…”
So how’s that working out in California? Is our maximum really only around 88%?
Friday, Mar. 25, 2011
California job market shows largest 1-month gain in 21 years
By Dale Kasler
California’s job market finally hit stride last month. The state added 96,500 jobs in February, the largest one-month gain in at least 21 years, state officials said today.
Unemployment fell two-tenths of a percent, to 12.2 percent, said the Employment Development Department. The state has now added 196,300 jobs in the past year.
…
“The job growth was spread around too, every catagory but government.”
This is California so it makes sense that job growth was in “every catagory but government” because the state government lately has been sheding jobs.
And such shedding of jobs “releases” government (and other workers) from their jobs and forces them to make up their lost income by getting another job.
But these other jobs they are forced to get (if they are lucky enough to get jobs at all) do not pay nearly as much as the jobs that they lost. And these replacement jobs are likely to be something less than full time jobs.
Which means these folks have to get SEVERAL JOBS and work all of them in order to replace the income they lost when they lost their previous jobs.
So, yeah, the NUMBER OF JOBS may have increased but that doesn’t necessairly mean the good times have returned.
‘The home was put on the market at $14.9 million in 2008, which was dropped to $11.9 million in June 2010 and now is for sale at $10.2 million.’
Good luck to Cher with eventually completing her Dutch auction home sale.
I think I’ll try my hand at flipping that Cher house. Anyone know where I can get a no-down, no-doc, neg-am, teaser-arm jumbo?
“jobs market continues to be weak (although improving)”
Add this to the list of blatant lies. While it may be true that we are paying fewer people UI benefits, we’ve lost some 7 million jobs since 2008 and still counting. Employment is not improving anywhere I can read or see with my own eyes.
I can personally say that a dear friend no longer counts as unemployed for the stats. Her UE ran out a while ago, but that isn’t why she isn’t unemployed for the household survey. That isn’t how they measure it. If she got that phone call, she would honestly tell the survey person that she did work during the last week. She helps out answering legal questions for her husband’s small business. She consults for an hour or two with a friend or former colleague. She has an old client ask for advice every once in a while. Sounds to me like It adds up to 2 to 4 hours paid work a week on average. Of course, it takes up a lot more time than that with commuting for the meetings and the free stuff for her husband’s business. She is working, but she is underemployed.
The family is careful with money, but they aren’t going to be able to maintain on just his income forever.
I “worked” in February, but I haven’t been “paid” yet.
Does that still make me a “contractor”?
I worked this morning and was paid with a delicious loaf of banana bread. Is that income taxable?
http://www.shadowstats.com/alternate_data/unemployment-charts
Real unemployment and underemployment are much higher than faked official statistics that rely on a bogus “birth/death” model and which don’t count the millions of people who have exhausted their unemployment benefits or simply given up looking for jobs that aren’t there in this fictitious “recovery.”
Not to worry. Its all contained. Contained to FANNIE, FREDDIE and the FHA that is. By extension the taxpayer is on the hook. Worst case scenario uncle Ben prints up a cool trillion and all will be good.
Data on housing prices also confirm the double dipping trend; the price rise of the initial recovery peaked around mid-2010 and prices are now steadily declining, according to the Case-Shiller Index.
At what point do we admit that “the initial recovery” wasn’t really a recovery at all?
Yesterday, on a whim, I bought a copy of the BARRON’S How to Prepare for the California Real Estate Exams book. I’m not sure yet exactly why I bought it — maybe it was the 20% ‘going-out-of-business’ discount the local Border’s store offered.
The first substantive chapter (Ch 2) is an extensive glossary called DEFINITIONS OF REAL ESTATE TERMS. However, a number of real estate terms which are familiar to HBBers are conspicuously missing, including:
- ARM RESET
- AUCTION
- DUTCH AUCTION
- FORECLOSURE BUS TOUR
- FB
- GREAT VAMPIRE SQUID
- HOUSING BUBBLE
- JINGLE MAIL
- LIAR LOAN
- MORTGAGE DEFAULT
- MORTGAGE FRAUD
- ROBO-SIGNER
- SHADOW INVENTORY
- SHORT SALE
- SUBPRIME MORTGAGE
- TOXIC MBS
- UNDERWATER MORTGAGE
- WALKAWAY
The book has a 2005 copyright; perhaps it is time for the authors to update their glossary?
-STATEGIC DEFAULT
-CASH-4-KEYS
-SQUAT-TILL-U-DROP
-QE UNTIL WE POP
Dough 4 Dumps
Cash 4 Shacks
Shekels 4 Shanties
Wampum 4 Wigwams
McMansion
Faux Chateau
Garage Mahal
White Castle
Beltway Baronial
Starter Palace
great vampire squid:
one of God’s creatures that has never bothered me:
http://en.wikipedia.org/wiki/Vampire_squid
Goldman Sachs:
http://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405
I know that posts with urls take a while to appear.
“The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
That metaphor is destined for the record books, folks.
Instant Equity
Liberated equity
Home equity wealth
Home equity ATM machine
Ownership Society
Government Sponsored Enterprise
SuzanneResearchedThis
The Bottomless Pit?
Housing’s Double Dip
By MIKE WHITNEY
The housing market is now in full retreat. This week, the Commerce Department reported that sales of new homes plunged nearly 17 percent in February to a 250,000 annual pace. That’s a record low. At the same time, the median price fell 8.9 percent from February of last year. The news comes on the heels of Monday’s equally-dismal report that showed existing home sales dropped 9.6 percent in February. These are Depression era stats and builders know it which is why they’re unloading homes as cheaply as possible. It’s been 5 years since housing prices peaked in July 2006, and the market is still nowhere near the bottom. In fact, the rate of decline is accelerating. This is shaping up to be the worst spring in history.
If you want to know where the housing market is headed, keep an eye on inventory. That’s the whole ball of wax. When inventory balloons, prices go down. At present, inventory is rising (8.9 month’s supply) which means that prices have further to fall. But these figures don’t include the vast shadow inventory that the banks are holding off-market. Many analysts think there could be another 5 to 6 years of inventory stacked up on bank’s balance sheets. The Wall Street Journal’s Mark Whitehouse takes an even grimmer view. He thinks the backlog could be in the vicinity of 9 years. Here’s a clip from his article in the WSJ:
If this glut of homes was suddenly dumped onto the market, prices would go into freefall and the banks would be swallowed up by the red ink. That would force the Fed would to initiate another bailout. (which Bernanke definitely does not want) So the banks are releasing homes in dribs and drabs while concealing the number of non-performing loans they’re holding from shareholders. It’s all a giant coverup.
…
Yeah, they just keep kicking the can down the road. But they kind of have to, don’t they? The banks have to survive (in their own minds) so it seems logical that they would do whatever it takes to do it.
All this government and private intervention, to prop up the housing market, is exactly why it’s a bad time to buy. A rigged market is a sucker’s market. Those people who ran out to get their $8,000 tax credit and low interest mortgage, just got hosed by their own government, sucker’s. They’re the patsy’s, helping to unload housing inventory at inflated prices, mitigating the banks losses. Interest rates will eventually rise and a steady stream of foreclosures will keep prices mired for years to come. These people will find themselves to be the next group of glorified renters, as they pay interest on houses going nowhere in price.
“A rigged market is a sucker’s market”.
Nobody has a problem with the rigged stock market. That’s about as rigged as it gets and everybody knows that it is impossible to lose.
I have a big problem with any rigged market. So would any thinking person. The “Bernanke Put” has levitated this Ponzi market due to massive ($125 billion a month) injections of POMO gambling money, and singularly worthless regulatory and enforcement bodies like the SEC that turn a blind eye to massive, systemic financial fraud.
And guess what? you have to pay that money back they are handing to wall street every month.
Yep. Even though I supported Ron Paul. F**k you very much, Obama and McCain supporters. Make that a double f**k you on behalf of my kids and their generation, for your fecklessness in piling this generation’s debts and deferred crises on their heads.
The consensus seems to be that all the unfairness is acceptable given that “armageddon” was the only alternative. I’d gladly take armageddon anyday. At least there would be some form of justice.
The voters of Iceland, who are orders of magnitude more intelligent than their US counterparts, got to hold a referendum where they overwhelmingly rejected being the bagholders for bankster fraud and bondholder greed. There were all kinds of alarmist predictions from the usual financier-owned propaganda outlets and rating agencies, but now Iceland is rebounding nicely and they can look their children and grandchildren in the eyes, unlike our resident Bush, McCain, and Obama supporters. Oh, and the Icelandic legal system, also unlike ours, has actually put the public interest and rule of law first by investigating, indicting, and in some cases jailing the perps who caused the collapse of Icesave and near-collapse of the entire economy.
“Nobody has a problem with the rigged stock market.”
What about retired folks who are earning approximately 0 percent returns on their savings?
They are clearly fools for staying in fixed-income and not going “all-in” in stocks. That is what TTT has to say about those losers.
Wait until the GOP starts pushing for “privatized” social security to clear the way for the Wall Street kleptomaniacs to engage in a final orgy of unchecked looting before the financial reckoning day brings the whole Ponzi crashing down.
retired folks who are earning approximately 0 percent returns on their savings ??
And, by the time interest rates rise for those same folks, how much of the principal have they burned through trying to maintain their standard of living ?? I have at least one neighbor that has gone the reverse mortgage route on their house due to this…
“And, by the time interest rates rise for those same folks, how much of the principal have they burned through trying to maintain their standard of living ??”
I think you are right onto it. By the time interest rates really head skyward, those who can capitalize on the opportunity will primarily consist of Megabanks with access to below-market loans from the Fed. The retiree households now burning through their cash will already be broke by then, and growing accustomed to the taste of Alpo.
On a related note, I’ve been hearing building anger between the generation (70/80s) who took windfall from their parents who built this nation into its greatest peak and the next generation (50ish) that are just realizing they are watching their parents spend it all.
One story in particular: The older gent’s Dad helped build the Panama Canal. So there was a windfall from that. The gent himself worked for a major US corp post Korean War to retirement about 15-20 years ago but lived in the first humble home he bought when he first married his entire life. So he was at least somewhat of a saver earlier on.
I’ve been listening over several years as the next generation (50 somethings) grow increasingly outraged to realize the yearly cruises and vacations their parents are taking now well into their years of poorer health pretty much translate to they’re on their own financially. It’s viciously ugly. The 50 something offspring is reportedly as hard working and intelligent as their father and grandfather. It’s just that there were, well, expectations that one generation passed it on and the next would do the same. Apparently the 70/80 year old members are not in agreement. I’ve seen a few different instances of this and it’s causing some real problems for families.
You are on to something that needs more discussion.
There are also parents (70’s) who have used their savings to help adult children’s businesses, who struggle to live on social security + EBT. Especially out here in Hawaii, lots in their 60’s have lived off savings which are now running out. All they have is home equity (and no way to get it except to sell) and soc sec and ebt. They could get a job, but where? The first Burger King in this area opened a few months ago and had hundreds of applicants lined up. At least we don’t need a/c or heat, and we are on rainwater catchment. Many are feeling trapped on this rock by high airfares.
Home prices peaked here in July 2005. Nothing sold in 2006 and 2007. A few homes built by homeowners in 2008 and 2009. Two short sales at about 2/3 off peak (peaked in the 600’s and sold in the 200’s), and couple of cash deals in 2010. One cash deal was permitted as a garage (600sqft) and a shed (400sqft), which limits the loan value. But both structures have little kitchens and showers.
I know what you mean east. It’s childish but I just want families to come together to help each other like so many families did in my youth. It’s not a time to turn on each other.
That’s been the plan since “mark to fantasy” became normal ops.
If house prices collapse, poof go the banks, and any government entity that gets most of their revenue from personal property taxes (IOW, most state and local governments).
Not to mention what will happen when it becomes obvious to every homeowner/bagholder that their home “investment” is several hundred thousand dollars upside down, and that it’s going to be tough to pay that back, working for $12/hour at WalMart or BuffaloWildWings.
Here’s the deal. The top 5% have all the cash, and they want to either keep it, or spend/invest it it overseas where the “return” is better. None of it is being spent here, so we wither on the vine. Except of course, for our “power projection” efforts, to make the world safe for overseas investment.
Some people act like capital/money just mindlessly flows to wherever the highest return is. Wrong. It is a tool, that is directed by people making decisions on where it should be used. And the same idiots who have been making these decisions for 30-40 years still have their hands on the wheel.
Community means zero in their calculations. Slavery is okay, as long as they can make a buck off it. Government regulations to reign in the excesses (environmental, monetary, safety, etc.) are now “government taking money out of my pocket”. Unless, of course, you live in Vail, or Jackson Hole.
But what good is money if it can’t inspire terror in your fellow man?
Monty Burns
“…sales of new homes plunged nearly 17 percent in February to a 250,000 annual pace. That’s a record low.”
When I see a number that low, I start to wonder whether we are building at such a low rate whether our net housing unit count might even be dropping now (i.e., more houses burning down, being razed, etc, than being built). If so, that’s a good thing, given our 12,000,000 or so empty houses.
“When I see a number that low,…”
When I see a number that round, I have to wonder if the real number might have been too low to report.
You can bet that a “good” number would have been rounded up.
To the nearest quarter million?
“To the nearest quarter million?”
Don’t know about the ‘good number’ part, but yeah…
“It’s all a giant coverup.”
Is there any prospect for Ron Paul and company to compel the Fed to disclose its housing market intervention program, in the interest of ascertaining whether the Fed has ventured outside the scope of its monetary policy mandate into the Congressional realm of wealth redistribution?
Enquiring minds want to know.
Not likely. Ron Paul only got the support of about 5% of the electorate, whereas 95% of the electorate voted to willingly grab their ankles for Wall Street and to ensure continued corporate control over our political process. The Powers that Be correctly recognize that the great mass of the American public are too brain-dead, ignorant, distracted, and docile to put up any meaningful opposition to the Federal Reserve/Wall Street looting syndicate.
Man, you are on a roll today! Right on, brotha!
Sammy, quite honestly, most people thought Obama would fix the Wall St.
I didn’t vote for him, but did think that some good would come from him in that area and health care. No luck there. On a positive note he hasn’t gotten anything done that I was scared of, either.
most people thought Obama would fix the Wall St.
That’s because “most people” are idiots. All they had to do was take a hard look at who plucked Obama from obscurity (mega-speculator and hedge fund shark George Soros) and where his campaign contributions were coming from (see link).
http://www.opensecrets.org/pres08/contrib.php?cycle=2008&cid=N00009638
Another dead giveaway was the way the MSM performed craven oral endearments on Obama every step of his campaign. Contrast the lovefest for Obama with the shabby treatment and near-blackout for Ron Paul’s upstart campaign, funded overwhelming by small donors and snubbed at every turn by the political and media elites. Anyone who genuinely thought Obama was going to bring anything other than “Change Goldman Sachs can believe in” needs their lobotomy reversed. Anyone who voted for McStain and Palin as the “less bad” alternative should be declared mentally incompetent and recuse themselves from all future elections.
Yeah, I “threw my vote away” on a candidate of integrity and principle, Dr. Ron Paul, who didn’t have a hope in hell of getting elected under our corporate-owned political system. At least I can tell my kids I tried to do the right thing.
“Most people” don’t have insider knowledge. 50% of this country still doesn’t have Internet. Of the ones that do, 70% are still on dial up.
So where should they get their information?
“Sammy, quite honestly, most people thought Obama would fix the Wall St.”
Perhaps. But some of us who voted for him did so for one reason alone- to get the f*** out of those phony wars in the middle east which are bleeding us dry and degrading our reputation across the world. I had high hopes we would bring the troops home, and not sign on for “100 more years” as McCain was gunning for, but Obama has been an abysmal failure on that front, even signing up for another one. In fact, he has been an epic failure on all fronts. He will NOT get my vote again. “Obama, you’re FIRED” pretty much sums up my sentiments.
If people genuinely desire knowledge, there is a wonderful local institution called the public library. They could turn off their tee vees and try to approximate growing a brain and engaging in elementary critical thinking and analysis. Ignorance may be bliss, but it’s a damn poor excuse.
The 50% that don’t have the Internet don’t have libraries either and if they do, the hours are not accessible to working people or they may only have one or 2 computers with Internet if at all.
Not everyone lives in the nicer parts of the big cities.
Again, where should they get their information? And how would they even know what they are missing?
If they’re that ignorant & clueless, maybe they shouldn’t be voting in the first place. I suspect this was the demographic that gave G.W. Bush a second term despite his epic incompetence being on display for all to see.
“If people genuinely desire knowledge, there is a wonderful local institution called the public library.”
Hopefully they won’t soon go broke.
‘Schoobrary’ funding still $29 million short
San Diego Government - City of San Diego
Wednesday, 23 March 2011 10:15
Artist’s rendering of the downtown Central Library and charter school, scheduled to open summer of 2013.
The downtown Central Library construction project is still in need of $29 million of private donations, according to a report to be delivered to some City Council members today.
…
Nope.
And it’s not really a coverup, in that the answer is obvious for anyone who has a functional Mark I eyeball, and can do math.
The majority in this country want to believe the fantasy. As long as they can “pretend” a typical house is “worth” more than it actually is, their “investment” is okay. Some people still think they are going to put their kids thru college on their “Beenie Baby” investment.
“Don’t look for it Taylor!!!……..you might not like what you will find.”
This is shaping up to be the worst spring in history.
I remember reading on this blog that spring would be bad. I forget the year. Anyways here it is.
Since when is insurance “free”?
Since we don’t own a home, how about some free auto insurance for us?
Builders, banks offer free job-loss insurance to home buyers
The insurance programs would make borrowers’ mortgage payments for up to six months if they become unemployed during the coverage period.
By Kenneth R. Harney
March 27, 2011
Reporting from Washington —
Insurance programs that make borrowers’ mortgage payments for up to six months if they lose their jobs during an initial one- to two-year coverage period are gaining popularity. Home builders are offering it to new buyers, and some of the country’s largest banks and mortgage lenders think it’s a win-win idea for shaky economic times.
Better yet, the bank, builder or other sponsor of the plan typically provides it free — no direct, out-of-pocket cost to the consumer — as part of its marketing package. Most programs come with specific dollar ceilings on coverage, often ranging from $2,000 to $2,500 a month. Some limit the amount they’ll pay to principal and interest only. Others cover principal, interest, property taxes and homeowners insurance up to a specific amount.
…
The local car dealers have been giving away “free” insurance on new cars sales for a while now.
Of course, anyone with a brain who thinks they might actually need this insurance isn’t going to be buying a car to begin with.
(There I go…..assuming that everyone has “brains”).i
Ben, you often say “if there is a bubble, it will burst”. I would like to ask, can you identify bubbles before they burst and if so how? For example, the Hong Kong property market is the most expensive in the world. Luxury property sells for several thousand $ per sq ft. Median price to median wage is in double digits, but prices have been expensive and rising for 20 years. Is this a bubble?
Or what about gold? It costs $1,440/oz and costs about a third of that to produce, is that a bubble?
What i’m asking is, how do you identify a bubble before its burst? Because only being able to identify it after its burst is clearly not very difficult.
IMO you get a bubble if:
1. There is a strong mass psychological reason that entices buyers to pay endlessly higher and higher prices, and
2. There is money made available to finance these endlessly higher and higher prices.
Beanie Baby prices went through the roof because of a very clever marketing campaign that enticed mothers to pay higher and higher prices for the things in a time when money was readily available, easy to get.
It would be tough to get mothers to do the same today, not because they could not be enticed but because they don’t have the money to pay the higher and higher prices.
As to the question about gold, ask yourself this question: “Do people have the money to keep on pushing the price of gold higher and higher?”
The enticement for higher gold prices is there, but is the money there?
markets can stay irrational a lot longer than you can remain solvent.
“The enticement for higher gold prices is there, but is the money there?”
On the way home from work on Friday I saw a new sign twirler: “We Buy Gold”
Apparently someone has the money. It isn’t J6P who is buying gold. It’s the top 1%.
“On the way home from work on Friday I saw a new sign twirler: ‘We Buy Gold’.”
This sign was directed to whom? To people who have a lot of money or to people who don’t?
Was there perhaps another sign twirler close by with a sign that said: “Payday Loans”?
I see such signs all the time, both the “Buy Gold” signs and “Payday Loans” signs; Usually both signs are located in the same areas.
I was at the mall yesterday and they have a kiosk in there that is buying gold.I think cash 4 gold.They had a little bag of painted gold rocks they were showing everyone.
I think the business model relies on them buying your gold very cheap and then reselling to people who can melt it and get pure gold. It takes some work to get pure gold.
Its a lot like these places that are buying silver coins.they want your silver but a a heavy discount.
“This sign was directed to whom? To people who have a lot of money or to people who don’t? ”
I made it clear that its not J6P who is buying gold. But it’s interesting that those who DO have money are indeed buying the precious. A few years ago we used to have “We buy ugly houses” billboards in our town. Those are long gone, as the 1%’ers are uninterested in catching falling knives.
“Its a lot like these places that are buying silver coins.they want your silver but a a heavy discount.”
Of course. You don’t make money by paying desperate people a fair price.
“Of course. You don’t make money by paying desperate people a fair price.”
Isn’t a fair price whatever a motivated buyer and seller agree upon?
If there are more motivated sellers than buyers, paying a lower price would appear to be both sensible and fair—regardless of whether the item being sold is gold or houses.
“Isn’t a fair price whatever a motivated buyer and seller agree upon?”
Then I suppose those bubble prices people paid for houses were also “fair”.
““Do people have the money to keep on pushing the price of gold higher and higher?””
Probably not, but governments sure do, especially the ones that stuck with trillions of US dollars, which they know will soon vaporize. They would love to park that wealth elsewhere.
If you hear the words, “It’s different this time. It’s the new paradigm where the party lasts forever”, RUN!
Prices were no longer tied to classic fundamentals. IE An estimate of housing affordability was 2.5-3x yearly income. People were paying way beyond that.
In the tech bubble, share price was skyrocketing on businesses that weren’t making any profit and weren’t penciling out to ever make a profit.
Beanie Baby prices didn’t go through the roof because of people buying them for their kids to play with (what you implied by saying “mothers”) They went through the roof because they made very limited runs of some of the early ones and then stopped making them. Those are the only ones that were ever worth much above the retail price of about $7 or $8. I’m sure they had a few other announced versions where they said they would limit the runs that were sold for more at retail, but as a general thing, the only bubble was in the secondary market. I still have a few. I liked some of the birds and sea creatures. Buying one for a few bucks was healthier than buying candy or “coffee drinks,” cheaper than going to the MOMA design strore, and they made me smile. Perfect objective for a lunch time walk when the impulse hit me. Only a few people ever participated in it as a bubble activity.
The Beanie Baby mania was the product of some oh, so very clever marketing.
First the marketers advertised heavily on children’s programs to promote the Beanie Babies and create demand, but at the same time they made sure there was a shortage of the dolls in the stores. This was shortly before Christmas.
The demand was created but the supply was held back. This drove mothers into hysteria because some mothers got Beanie Babys for their kids and other mothers did not.
The message was implied but clear: “If you love your child then you will get her a Beanie Baby. Other mothers get their children Beanie Babys so they must love their children more than you love your children.”
When the frenzy reached its peak, shortly before Christmas, then stores magically became flooded with thousands of Beanie Babys and every child - at a steep price paid for by their parents - was able to open up a present a find waiting for them a much desired Beanie Baby (and the implied message was “My mother loves me after all”).
Initially the promoters spent boatloads of money on ads directed toward children to create demand, but it was the MSM that drove mothers into hysteria.
In effect the MSM that reported on and fed the hysteria was supplying the Beanie Baby promoters with some very effective FREE advertising - not directed to the children (who don’t spend money) but to the mothers (who do spend money).
Marketing genius at its best.
I remember seem to remember Beanie Babies being only $2.99-$4.99 retail.
I think the key to success was the idea of not discontinuing Beanie Babies, but “retiring” them.
A bubble always has a “mania” vibe associated with it. The hairdresser bragging about how rich she is getting off her investments, etc. Those stupid internet ads with the dancing guy offering $600k loans for $1200/mo. That type of hype can only be felt by applying common sense. If Hong Kong elite can easily afford the high end housing, then there is probably not a bubble.
Stocks and commodities are currently in a FED-driven bubble and you and I are the sucka’s. Uncle Bernanke is “investing” all your money (including the money you haven’t made yet) in his bubble on your behalf.
do you know of a good ETF that goes short a basket of commodities?
“do you know of a good ETF that goes short a basket of commodities?”
There is one. The ticker is CASH.
“do you know of a good ETF that goes short a basket of commodities?”
There was a good article posted here a few days ago about commodity ETFs and how they get ripped up by the professional commodity traders each time the ETFs have to roll forward their positions into the future months.
Something to look into before putting your money down on a commodity ETF, IMHO.
Just bought my first $4/gal+ gasoline last night. $5/gal, here we come…
“There was a good article posted here a few days ago about commodity ETFs and how they get ripped up by the professional commodity traders each time the ETFs have to roll forward their positions into the future months.”
Yea, it’s called cantango. The commodity-based ETFs have to roll over (rather than take delivery)…and that causes a serious drop in value. To put it another way, if you’re long, you’re betting against future prices…you’re betting that the prices rise faster than others think it will. Bottom line is that you need to get in and get out quickly…or you’ll lose something like 1% per month, even if the price doesn’t move.
“Just bought my first $4/gal+ gasoline last night. $5/gal, here we come”
Not for another couple of years. Got to convince people that $4/gal gas is the normal price, first.
A civil war in Bahrain may bring that about rather quickly.
I keep telling everyone I know…….when gas prices start getting jacked, QUIT FILLING UP!!!!!!
Yeah, it’s inconvenient for a couple of weeks, but eventually, all those Goldman Sucks and JPMorganChase storage tanks get filled up. And here comes a bunch of tankers that they are contracted to take delivery from, and they have nowhere to put it.
Wrong! You have to buy gasoline now or be priced-out forever. Ask any realtor.
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Thank you . Great information, u awesome.
RE: awesome
nicest thing I’ve heard in ages (not counting warm greetings from my dog)
Rain & thoughts of google as a data magnet upon which personal organization is subject to bias specificity,… caused an interruption to my normal sleep. Corn & sunflower seeds sprouting. Today, two-mate-os, lots of to-mot-toes. Soil preparation completed. “back” to bed, x2 hours.
Cheers Lucy
bubble bubble, toil & trouble:
Monaco 4th Most Expensive Property Market
August 16, 2010 by alistairmilne
A lot of people (including so-called ‘experts’) believe that Monaco’s property prices are the highest in the world. I’ve said for a long time that this simply isn’t true – something now confirmed by Financial News who conducted a survey of the top real estate agencies worldwide. In first place is Severn Road in Hong Kong with an average price of $70,000 per m2. Joint second place is shared by Kensington Palace Gardens in London ($65,000 per m2) and Fifth Avenue in New York.
After a massive 45% slide, prices on the most prestigious road in Monaco have slipped to fourth place worldwide. Anyone familiar with Monaco knew that things were getting wildly out of hand in the Principality, causing prices to drop nearly as much as speculative markets like Dubai and Dublin. Prices in other parts of Monaco are even cheaper.
4th: Avenue Princesse Grace, Monaco
$64,000 per m2
Change in value: -45%
The iconic Avenue Princesse Grace has tumbled to fourth place from first last year, as lacklustre demand hit the marina-front avenue. Local agent Pieter van Naeltwijck said: “The market has stopped in its tracks and there is nothing new. I foresee a rather quiet year trying to sell the existing real estate.” He said buyers could expect discounts of as much as 25% for apartments with some of the most spectacular views in the world.
I know the question is for Ben but I think that bubbles can be identified when an asset appreciates much more than normal such as housing in this chart. Then, you will see it revert to the mean. http://www.ritholtz.com/blog/2011/03/comparing-housing-prices-real-vs-nominal-1890-2011/
As far as gold and silver, people are quoting the costs of production but not the cost of development. The cost of producing new deposits will be very close to the present prices. IMHO, we will have to reach $2500 on gold and $150 on silver to be talking about bubble prices.
I think one must factor in the expected rate of inflation when determining whether or not gold is bubbly.
I have been playing landlord since 1995. Tenants always helped pay the mortgage even if it meant I had to live in a granny flat. Buying a house at a small premium for extra rentable space seems like the best way to get a rental to pencil out. It was the only way for me to buy the extended dip in Southern California in 1995; But 275k must have been more than 3x median income. (Speaking of well educated union members, I saw a protesting teacher’s sign on the news that read “Where is the happy median?”)
I had no idea about real estate but wanted a cheaper place to live. My granny flat cost me $500/ month and got a roomie who paid $300 of it. It took awhile, finding a home for 275k that had a granny flat for my single self to live, in while students paid most the mortgage in the 3/2 downstairs. After having 2 kids, the flat got too small so I did the the same thing when we came to Bend; bought a starter with a converted garage; rented out this garage studio for help with the mortgage.
I think prices have come close to bottoming here in deschutes county; too much inventory could hurt this “health” found in the bottom end of the market.
If the median income in our county is 41k, and I recently paid 118k for a (new) home, that rents out for 10k per year, does that sound like a bubble price or a rip off price? Paying just under 3x median seems good, but the rental price we are getting is lowish. $825/month rental price compared to purchase price is closer to 150X multiplier than the 100X “good rental income” metric; but it is rented out with no vacancy anticipated over the next couple years. tenant’s green thumb and pride of having a nice home means the place always looks sharp. We could raise the rent, but we like our tenant. She is a realtor after all; what’s not to like? She is not even pressuring my parents to buy in this uncertain market, but she sends us listings to peruse as we await true price discovery in this era of bank owned-pre-foreclosure-short sale- market.
And she is a meticulous gardener, brought her own w/d, and fridge, things we will be bringing when we move in; after my wife’s home is lost to foreclosure (these rent out for $1200 max, and are selling for 220k, if they sell).
The wishing prices here are still over 350k, (our neighbors listed theirs for $365k, even though units in our building and street have been transacting for 200k) The price discovery when talking about one or two tiers up is nowhere near taking place.
Everyone seems to have a home that they owe 300k on; are not paying; and are in pre-foreclosure.
But as a tenant, she does not nickle and dime us given she knows she could be paying more, and even with repairs and insurance and taxes, we still make over 5% on the investment.
Should I “leverage” it? by borrowing money against it (I say that tongue in cheeck, cuz a loan is prolly not a good idea)
Lucy, what you’re asking can have a very long answer, and we’ve covered it here many times. Here’s a short version: Yes, (for example) people that post here prove you can identify a bubble before it bursts. Yes, Hong Kong and much a Asia is currently experiencing a property mania.
I’ve also said that people often describe too many events as bubbles. Oil bubble, gold bubble, commodities, etc. I still maintain that true financial manias are very rare. That there have only been a handful in history, usually associated with real estate or stocks. A short answer about how to identify one is to recognize a financial event as a popular delusion, that a growing number, and eventually the vast majority believes and acts on. A true mania sweeps up most of the population and the belief becomes so great that people act irrationally to the point of insanity. Bubbles are a physiological construct, and the divergence of reality and the mania become ever wider, and meanwhile prices typically reach a parabolic spike, which is evidence of a mania running it’s course. That is to say, as the population gripped by the delusion reaches critical mass. When the event runs out of “greater fools”, it must collapse by definition, because that is all that is fueling it.
My favorite example of how one comes to see something like this was when I visited California a few years ago. I met a lot of HBBers, and the conversation usually drifted to each persons “ah-ha” bubble moment. Sometimes it was something they saw in others, or maybe it was observations based on prices, or some combination of things. But almost every one of them ended it by saying, “then I knew something was wrong.”
So Ben, are gold and silver in a bubble? By your definition they wouldn’t be, I would suppose. What do you think?
BTW thanks for the great blog, which Ive been reading on a daily basis for almost six years now!
I don’t think these types of price movements are manias; they aren’t widely participated in, for one. It has to last longer and characteristics of mania behavior aren’t there to the degree we see with housing and dotcom stocks, for example. Were beanie babies a bubble? Or cabbage patch dolls? I don’t think so. They were speculative episodes, with bizarre aspects. But I don’t think you can compare them to Japan in the 80’s, or Florida in the 1920’s.
Look at the tulip mania; it lasted many years, and was on such a scale that it brought down the economy when it crashed. Will the current economy suffer greatly if gold goes down?
Bubbles last a lot longer than you think.That is what I learned from all this. I also learned that the downside in the stock market can be more fast and furious than you can imagine.
“A true mania sweeps up most of the population and the belief becomes so great that people act irrationally to the point of insanity.”
Great article by Mark Steyn that talks about how the US politicians have used the military over the last couple of decades. Preposterous that we would continue to allow it to happen
http://m.ocregister.com/opinion/military-293677-gadhafi-way.html
The “all volunteer” U.S. military was an important step in being able to play empire around the world.
The mercenary one (contractors getting paid large multiples of what the actual soldiers get) was more important.
Polly –
That can’t be right. Don’t you know by now that the private sector does everything more efficiently (e.g. cost-effectively) than the gubmint does?
Having contractors that can operate outside of US laws and the Geneva convention proved more important.
Also, having our allies in Egypt and Syria torture and kill civilians on our behalf proved very beneficial and cost effective.
Yeah, but their torturers were government employees.
Which gets back to my point. Government provides services that private enterprise has decided is either too risky, or not profitable.
And would Blackwater, etc. be operating in Iraq or Afghanistan, if they didn’t know that they had the USAF, USMC, US Army, US State Department ultimately backing them up, if the SHTF?
Nobody has ever explained to me why it makes sense for us to have the US Navy protecting Panamanian registered ships bringing over products made by serf-labor from Communist countries, that undercut prices of US made products.
Basically, another government subsidized industry. But one that the Republicans don’t seem to have a problem subsidizing.
If we had a draft, the American middle class would have their sons and daughters’ lives and limbs on the line. That means a potent voting bloc would pay much closer attention to American foreign policy, and be far less heedless of schemes by neo-con chickenhawks to engage in open-ended military adventurism and imposing sham “democracies” at bayonet-point on societies that are manifestly unsuited for such forms of governance. By using the children as immigrants, minorities, and lower-class whites as our primary warfighters, the U.S. middle class can ignore our wars abroad and go on with their mindless consumerism and watching DWTS.
A very good point, which is why most people don’t give a hoot about the wars. The upper middle class can actually benefit from them if they work for a defense contractor and they don’t have to worry about their kids being drafted.
It would be nice if there was a Wall Street draft…
I keep hearing the screed “Only taxpayers should be allowed to vote”.
Okay, but how about we add to that “…..and be required serve in the US armed forces. Isn’t that the whole Second Amendment argument, they have the right to protect their stuff?”
I vote for the most dangerous jobs (bomb disposal, HUMVEE/truck drivers, infantry) be reserved for those of us who have the most to lose, if the US goes down the tubes.
Sammy, whoa there.
Please accept my apology, if the following comments are anachronistic, and don’t apply to anybody else.
I’m in an area of the country that has jobz, and that has a high military presence. To a great degree, that military presence feeds a virtuous cycle of aspiration for the kids around here. Get a degree in engineering, you have a reasonable hope of being hired by Lockheed or one of the others. Everybody pretty much takes on faith that an engineer can do a lot of things, not so much with other disciplines. If by chance you can’t find a jobbe, you will do very well in the military. With a degree, esp in engineering, you will be ranked very high. For kids who can’t afford to go to college, or are just too plumb immature, as long as they’re in shape, reasonably socialized, and have a DIPLOMA, the military is a better option by far than simultaneous micro-jobbes, or the alternative of hanging out in your parent’s house stewing.
Even here, the degree’d middle class kids can’t find jobz. The military is a safety valve that draws off a bunch of young people who would otherwise be wracked with anxiety and discontent. They go in, they work hard (you know it’s not a 9 to 5 environment), they become civilized, they either stay in or rejoin civilian life after six years. If you keep your nose clean and eyes open you learn a lot. Particularly about survival life skills.
You come out, you develop a network through the National Guard weekends and duty. You’ll get good advice on what to study (if you go the GI Bill route) or you’ll get a helping hand into somebody’s company. I’m tellin’ ya, what I see here, the military option is far from limiting, and there are PLENTY of middle class kids going in.
The network of former military is sort of like the network of TPTB, for the rest of us, at least that is what I observe watching the kids of my colleagues. If anybody else has observed the same facts and drawn different conclusions, I would welcome a different lens from which to view what I have witnessed.
I kind of agree, but in the high tech that I participate in I find military experience to be viewed skeptically. People are afraid you’ll be a loudmouthed meat-head. Therefore there’s not much of a veteran network. I’m sure working in defense tech is much different.
I would have to agree that’s very true of your area, jane. I grew in the military and I’m familiar with the localized effects.
But… the military is not meeting it’s recruitment needs (not goals, “needs” because they can’t afford their needs right now). I know a few vets who are on their 3rd tour of combat duty because of that. I’ve also met a few who “tipped over” because of too many combat tours and ended up with court marshals, some with DD, some with prison time.
The military is also not for everyone. While vastly improved in all areas since my father retired, it still has its moments of FUBAR, which can cause trouble for the avg. soldier. And while NCO-to-college is a real opportunity, they don’t make it easy. The least little thing, including something minor on your fit-rep because of bad chemistry with your CO or between your CO and your chief sergeant/MCPO, can take it away faster than you can blink.
And last but not least, not everyone lives near those pockets of DOD contractors. And even then, you have to be tops in your class to get hired. So it’s a lot like trying to play pro sports, many are good to great, but there are only a limited number of slots available.
So overall, the opportunities are actually limited.
“grew up…” …as in little kid.
Eco and Carl, thank you for your thoughtful replies. I hereby accept that this is a ‘military bubble’ area, and regret that the benefits of military association are not universal.
I agree that it’s not for everyone. Personally, I question premises and am therefore considered rather contrary, and would likely be a magnet for annoyance if I were in the military. I am grateful to have found a source of income in the quasi-private sector here, even though I’m not a techie by background.
(Sigh. Not everybody is wired to be an engineer.)
Thank you again.
And thank you again for your reporting of your area.
Fed’s Plosser: Funds rate should hit 2.5% in year
http://www.marketwatch.com/story/feds-plosser-funds-rate-should-hit-25-in-year-2011-03-25
Is this the start of the Fed’s lame attempt to talk down inflation? Their talk is cheap. I wouldn’t believe anything they say, without action.
The fact that the Fed funds rate is still at .25%, which they called an emergency situation, shows a total lack of confidence in the economy, despite their proclamations of a recovery. Their lack of action, on the funds rate is the real tell.
As the effectiveness of the low interest rates wain, they’ll have incentive to keep them low.
“Is this the start of the Fed’s lame attempt to talk down inflation?”
My guess: It will prove in retrospect to be a head fake, to provide extra psychological impact of the next round of QE.
OT,
is there any existing written international law against bombing nuclear power plants?
If so, that may be the best reason for a country to try to get one because it would be the safest place when “use of force” gets authorized against you.
The safest place would be close to the Man In Charge, but not too close.
His security is your security if you are close enough, but being too close means perhaps you get taken out if he gets taken out.
The second safest place would be located out in the boondocks somewhere.
Seriously, how do these ” These F*ckin’ Guys” keep landing on their feet.
Norwood named First Niagara CFO
First Niagara Financial Group Inc., preparing to merge with New Haven’s NewAlliance Bancorp., has hired veteran bank finance executive Gregory W. Norwood as its new chief financial officer, a regulatory filing shows.
Previously, he was president and chief risk officer of Ally Bank, formerly GMAC Financial Inc. Prior to joining Ally in 2009, Norwood was treasurer at Wachovia Corp., now Wells Fargo Corp. From 2001 to 2005, he was corporate controller for Bank of America.
How does this differ from hiring a priest let go from the archdioceses of Boston, New York and Chicago?
More on the merger:
The former CEO of New Alliance Bank could get a package totaling almost $24 million, if she leaves once the merger with First Niagara Financial is complete. Peyton Patterson hasn’t yet detailed her future plans after last week’s merger announcement. WNPR’s Harriet Jones reports.
Buffalo, New York-based First Niagara Financial is set to complete its takeover of New Haven’s New Alliance sometime in the first half of next year. At that point, First Niagara CEO John Koelmel will head up the merged entity.
New Alliance CEO Peyton Patterson said at the time of the announcement that she hadn’t yet decided whether to take on a role within the new bank, and would make her plans public soon. According to a filing with the Securities and Exchange Commission, Patterson’s contract stipulates that she qualifies for retirement benefits, bonuses, severance pay and stock-based awards that will total more than $20 million.
http://www.youtube.com/watch?v=wGtwr4Wrgsc
Is this a trick question? The incompetent can do one thing really well, cover each others… backs.
Remember, it’s merciless meritocracy for us, but the good ol boy country club for them.
Wrong
He was extremely competent.
He did very well for the people that put him in this new position.
These are not idiots, the duffuss defense is their only cover and you lend to it. They are criminals.
A friend of mine forwarded this to me, with no attribution to a report, but I imagine it would be easy enough to verify:
“Ever wonder why Congress never intends to truly regulate banks? For a concise answer, look at what the kids of Senators and Congressmen do. Here’s Paul Pelosi, Jr:
His LinkedIn profile is a bit incomplete. It discusses his investment-banking work for Bank of America and JPMorgan Chase. And it mentions his job at Countrywide, for example, where he worked as a loan officer — at one of the mortgage companies most scrutinized for its role in the housing bubble and ensuing collapse of Wall Street.
But it pointedly omits his $180,000 a year job as a senior vice president at InfoUSA, a marketer of consumer databases, which he started less than one month after his mother became House Speaker, while simultaneously holding his job at Countrywide. InfoUSA CEO Vinod Gupta also paid Bill Clinton millions of dollars as a consultant, so many suspected Pelosi’s job was an attempt to win influence with Nancy Pelosi. Paul Pelosi’s explanation: He got to know Gupta as a client for whom he refinanced a house, and his experience as an investment banker was useful in evaluating acquisitions.
InfoUSA is best known for peddling lists of seniors with gambling addictions and serious diseases like Alzheimer’s or cancer to opportunistic telemarketers. Gupta resigned as InfoUSA’s CEO in July 2008. Pelosi is not listed on the company’s investor-relations website as an officer of the company.
Which raises the question: What was a former investment banker doing working as a mortgage loan officer, anyway?”
Personally, I never take anything my friends send in a email as a truth, but if there was truth in this my first assumption would be that these “jobs” were transfer payments rather than work opportunities. Friends of Mozillo and all that.
When Chelsea Clinton married I noticed it was reported she worked for a Wall St. Bank.
In this era you either work for a Wall St bank or you are “out”. the Have-nots are everyody else.
Pretty much.
Did she follow her mom’s early success in commodities speculation?
By definition, anybody who belongs to the Establishment Democrat and Republican Parties, or who supports them or votes for their bankster-selected, Tweedle-Dee/Tweedle-Dum candidates, works for the Wall Street banks. “Serves” them would be a more apt description.
People who forward chain e-mails are mindless morons who are also providing scammers and spammers with a wealth of new e-mail addresses to harvest & exploit.
2011 - - The Year of the Mass Demonstration
The urge to merge into great crowds is infectious.
Brits are in a snit because the national government is in a financial bind and is having to cut spending. But will it do any good if no one is willing to offer a solution?
“Protest against everything, and you protest against nothing at all. March against something specific, and you’ll still be ignored, but at least you’ve thought things through. Protest against something specific in a systematic, targeted, imaginative way and things might, just might, begin to change.” ~ Tim Lott in Britain’s Sunday Independent - commenting on the big demonstration in London yesterday against government budget cuts.
Several members of the crowd set off fireworks, threw paint and attacked shops in Oxford Street, Regent Street and Piccadilly. “Topshop and HSBC had their windows smashed, while paint and glass bottles were thrown at a Royal Bank of Scotland branch. Covering their faces with scarves, they fought with police and disrupted traffic, throwing light bulbs filled with ammonia at officers and lighting a fire. Nine arrests were made and some police officers were injured.”
Story: Thousands Protest in London
- Rumblings among unhappy Americans could break out this summer into a series of mass demonstrations. Madison, Wisconsin was just a preview. But before we take to the streets we ought to follow Mr. Lott’s advice and think things through. It’s easy to be against government budget cuts, but when money runs out what practical solution can we offer?
(A heavy federal tax on toilet paper is not a practical suggestion.)
Practical solution; A return to a sound money policy.
Bankers and politicians hate the idea. ~ A note from my father who will turn 83 in two months.
- I was lucky enough, many years ago, to meet and interview several economists who strongly believed that constantly inflating the currency supply would lead to extreme danger. Among them were Henry Hazlitt, author of the popular 1940s book “Economics in One Lesson,” Hanz Sennholz, who experienced hyperinflation as a German youth, and Dr. Ed Vieira, a brilliant attorney whose book “Pieces of Eight” examined the solution the Founding Fathers laid out to deal with the scourge of irredeemable paper currency.
Their predictions have unfolded very much like they described, and the United States finds itself flooding the world with paper promises it can never redeem.
Even at this late date there’s still some hope we can recover from our love affair with debt-based currency. On February 16th Seth Lipsky of the New York Sun spoke in Phoenix about the floating U.S. dollar and property rights. He believes we are in a dangerous situation in our country with respect of the dollar, and that property rights are very much bound up in the question of money. He is well aware the Founders established a dollar of specific substance, not a paper IOU. It was a thing whose weight and quality would be closely supervised and guaranteed by Congress. It was a coin containing 371.25 grains of pure silver.
“Today, members of the Federal Reserve Board don’t worry about how many grains of silver or gold are behind the dollar. They couldn’t care less. And this is what I believe is the most worrisome threat to property rights today. When the value of a dollar plunges at a dizzying rate—at one point in recent months it collapsed to less than 1/1,400 of an ounce of gold—Fed Chairman Ben Bernanke goes up to Capitol Hill and declares merely that he is ‘puzzled.’ No ‘new urgency’ to redefine the dollar for him. The fact is that we’ve long since ceased to define the dollar.”
Fortunately, the Lipsky transcript is posted on the Internet. We recommend it highly. The Floating Dollar/ Property Rights
I think the people should have the right to exchange their federal reserve note, or IOU, for a hard asset at the federal reserve.It could be gold, silver, corn or something that has value that can be an exchange of value to someone else. Wasnt the whole idea of a currency to make commerce quicker and easier. for instance if you wanted some corn but your neighbor didnt want your cows then you had no deal.You had to go out and find what your neighbor wanted in trade.A currency made it possible to make trades flow faster. If there is something backing the currency you always know you could exchange your paper money for a hard asset that you could trade.If sh@ts hits the fan and you need gasoline good luck trading the paper money to a guy who needs food on the table.
G. Edward Griffin, author of “The Creature from Jeckyl Island” on Glenn Beck. I don’t like to listen to Beck too much but Griffin is a very sober guest and the show gets interesting espeially past the 20 minute mark where he says that the elites needs have moved beyond another mansion,or another yacht but has morphed into a need for political power, aka New World Order.
http://www.youtube.com/watch?v=a2roews2_1c
Reading “The Creature from Jeckyl Island” should be a prerequisite for voting rights. No other book has done as much to lay bare the true role of the privately-held Federal Reserve in promoting crony capitalism, perpetuating economic warfare and asset-stripping by the top tenth of one percent against the productive economy, and debasing the currency. 95% of the dollar’s value has eroded since the Fed’s founding by a secretive cabal of the ultra-rich and powerful in 1913. Ending the Fed would be the single greatest step the U.S. could take to restore our economic health and well-being.
Some idiot a few years ago was trying to get me involved in a ponzi-scheme he had gotten involved in hook-line-sinker. He carried around “the Creature…” as his bible, pure written proof of how wealth can be created from thin air. Poor fellow lost every dime…
Is this the same guy who believes apricot seeds cure cancer and this information is being suppressed by the US govt. and big pharma?
Beck or Griffin? Beck is a self described rodeo clown but as the interviewee himself even seemed to suffer through Beck I thought it might be worth sitting through some of Beck’s hyperactivity to hear what Griffin and another commenter had to say. They expressed themselves quite clearly. There were a few nuances I didn’t formerly understand and enjoyed the additional clarity.
I was referring to Griffin. Beck is more openly nutty.
HOWARD DAVIDOWITZ: Obama Doesn’t Have a Clue — Here’s How I Would Fix The Country. ~ Daily Ticker – Mar 25, 2011
When companies get into financial trouble, they usually fire current management, analyze and streamline their operations, and restructure their debts.
America is currently in financial trouble, but the only step in the turnaround process that we seem to be capable of taking is firing current management (see the recent midterm elections). After that, it’s just finger-pointing and bloviating and business as usual.
Howard Davidowitz, chairman of Davidowitz & Associates and a long-time critic of our government, is positively appalled by the turnaround approach taken by the current administration, which is to spend more money.
Davidowitz thinks President Obama is a “moron” and worries about a looming dollar crisis that will take the market down at least 6,000 points (50%).
I asked Davidowitz what he would do if he were president.
How would he fix our financial problems without crushing our economy? How would he create jobs? How would he avoid the current fate of the UK, which pursued an “austerity” plan only to see its economy plunge back into recession?
President Davidowitz says, he would immediately eliminate the Bush tax cuts. (He thinks Bush was an idiot, too, by the way). He would then address the real cause of our financial problems: Entitlement spending, specifically, Medicare and Medicaid. He would avert a dollar crisis. He would also cut military spending.
Would these moves hurt the economy? Yes, Davidowitz says, in the short-term, they might. But in the long-term, they’d be a huge step in the right direction. Our international trading partners and investors would see immediately that we had finally gotten serious about addressing our problems, and this would lead to a surge in the dollar and direct investment. And the investment, in turn, would produce the jobs that we so desperately need. And they would avert a dollar crisis that Davidowitz views as looming catastrophe.
Davidowitz for President.
Davidowitz for Supreme Ruler. This guy has a clue, but the corporate-owned Republicrats would undermine him at every step.
How’s the UK’s austerity led recession is different than Davidowitz’s “short-term pain” in the economy?
The UK is much like our economy. Little is actually made there and there is no real economy to fall back on. Austerity measures will later require Austerity measures and the whole thing will swirl around a large black hole for a while before completely collapsing under its own weight.
This seems to be a key problem with western economies in general (except maybe Germany). Of course if Germany can no longer sell its cars in the US, and the Asians can no longer sell their wares in the US, then the Asians can no longer buy German cars and so it all goes.
The black hole at the center of our economic mess? Trillions of dollars worth of debt which appears impossible to ever repay.
The REAL lesson? DEBT IS BAD - DEBT IS BAD - DEBT… Sorry I found myself repeating myself
There would be plenty of money for “entitlement” spending (note he specifically mentions spending that helps J6P) if weren’t for entitlement tax breaks for the rich.
Davidowitz is just another tool.
Don’t the “rich” pay almost all the tax?
I think when Dems refer to the “rich” they are not really talking about some rarity like Bill Gates, but rather a handful of multinational corporations which run everything and very likely pay little real tax in return for favors to our honest lawmakers…
And isn’t the J6P you refer to “specifically” a government employee?
That said, yes we need to rein in our biggest corporations and get them on board paying a lot more tax for the pleasure not of making things here, but if they want to sell them here. That does not mean taxing the daylights out of small business owners which are generally the Dems favorite cash cow when it comes to tax increases since the real biggies are off the table.
You’re partly right and I agree with those parts.
But the rich do NOT pay all the taxes. The poor and the middle class pay more income tax.
The rich have all kinds of tax loopholes by personally incorporating and often pay an effective tax rate of only 15%. I’ll bet you pay more than 15%. (not much though, I can’t afford it :lol:)
As for small business, it’s usually your local government that is the tax burden. Repub or Dem, local govs are hard on small and really small businesses.
But the huge tax breaks to the large corporations are killing us. In any given year, half pay NO income tax and very little in local taxes because they provide jobs. Never mind the fact that small businesses are the largest employers in this country. And those tax breaks add up to millions locally and billions statewide.
Per state.
Damn union janitors.
Why don’t we just remove the income cap on social security taxes? That would immediately solve any future insolvency problem SS might have, and it would be far less jarring to our economy than reducing benefits. Those very important foreign investors will see that we’re even more serious- and rational!- about solving our financial problems, yada ,yada.
Except the rich would pay the same rate as everyone else.
Is that why this option never even gets brought up by the Howard Davidowitzes of the world?
Remember CEO’s and Wall Street Elite are paid in stock options and dividends and other perks.
Yeah, if we applied SS taxes to capital gains- and really, why shouldn’t we?- then the fund would be solvent for centuries.
But the rich would pay! So it won’t happen.
Governor approves millions to speed up foreclosure cases
Palm Beach County, Fla. - Governor Rick Scott has approved millions of dollars in emergency funding to help clear some of the hundreds of thousand of foreclosure cases currently making their way through Florida courts.
The governor was warned by the Florida Supreme Court that the massive backlog of foreclosure cases could get much bigger without this $14 million.
Floridians faced with losing a home to foreclosure could see an end to their troubles sooner than expected thanks to the financial boost.
The money is intended to help wrap up more than 322 thousand foreclosure cases statewide. More than 29 thousand of those cases are in Palm Beach County.
“It’s going to speed up the foreclosure process”, said bankruptcy attorney Norman Schroeder. Schroeder said foreclosure cases take more time for judges, clerks and case managers than most other lawsuits.
Governor Scott’s approval of emergency funding for courts on Tuesday is intended to help wipe out the foreclosure backlog quicker.
Like many Palm Beach County neighborhoods, Suzanne Morrow’s street is on the front lines of foreclosure.
“The grass is overgrown. It’s not being taken care of. If somebody came in and took care of it and cleaned it all up it would be a lot better for all of us in this neighborhood”, said Morrow.
The Palm Beach County clerk says foreclosure filings were down seventy percent this February compared to the same month in 2010. However, Clerk Sharon Bock believes this is just a lull and that a new wave of filings - and possibly a bigger backlog - could soon be on the way.
http://www.wptv.com/dpp/news/region_c_palm_beach_county/governor-approves-millions-to-speed-up-foreclosure-cases
The article does not specifically say how the $14m is going to help “speed up” the foreclosures. A vauge mention is made how there are not enough clerks and judges but that is all that is said.
http://www.rollingstone.com/politics/news/matt-taibbi-courts-helping-banks-screw-over-homeowners-20101110
Florida judges and courts are in the pockets of the banks and their legal accomplices. Matt Taibbi of Rolling Stone - one of a tiny handful of honest, uncorrupted journalists left in this country - shows how FBs don’t stand a chance against the “rocket docket” that puts speed and ruthless efficiency over due process.
the FB’s should not have ever been in or near one of these homes to begin with. I doubt any credible attorney with a real case of wrongful foreclosure could not get a fair hearing.
GH,
I absolutely agree that the single greatest causitive factor of the housing bubble were the millions of stupid and/or irresponsible borrowers, many fated to become FBs, who got themselves into mortgages they couln’t afford. Yes, there were many other villains of the piece - the industry of dissemblers known as the NAR, the crooked appraisors, the sleazy mortgage brokers, and mendacious politicians like Chris “Countrywide” Dodd and Barney “Freddie Mac” Frank, who should’ve gone to prison for their role in the Ponzi scheme. And, of course, no one can forgive or forget the central role played by the Fed, especially Greenspan. So, while I’m all for chucking FBs out onto the street in the most expeditious manner possible WITHIN THE LAW, thereby ensuring that the huge shadow inventory gets priced to move, I am NOT in favor of giving the banksters a free pass on either their original mortgage frauds and irregularities, or on subsequent misdeeds like robo-signing foreclosure documents and not giving FBs due process.
Plenty of good news coming…
Gains in Payrolls Probably Accelerated, Showing U.S. Job Market Improving.
~Bloomberg
Employment probably picked up in March and factory assembly lines kept humming, showing that the jump in fuel costs has yet to hamper the U.S. expansion, economists said before reports this week.
That’s great news. Now I suppose we can do away with ZIRP and the FED can start selling all of their worthless crap they bought. And I thought this was going to end bady.
“Probably” is bullcrap. “Probably” doesn’t even qualify as op-ed. This article is a waste of space and pure propaganda.
Unpaid jobs: The new normal? ~ Fortune Mag.
While businesses are generally wary of the risks of using unpaid labor, companies that have used free workers say it can pay off when done right.
FORTUNE — With nearly 14 million unemployed workers in America, many have gotten so desperate that they’re willing to work for free. While some businesses are wary of the legal risks and supervision such an arrangement might require, companies that have used free workers say it can pay off when done right.
“People who work for free are far hungrier than anybody who has a salary, so they’re going to outperform, they’re going to try to please, they’re going to be creative,” says Kelly Fallis, chief executive of Remote Stylist, a Toronto and New York-based startup that provides Web-based interior design services. “From a cost savings perspective, to get something off the ground, it’s huge. Especially if you’re a small business.”
In the last three years, Fallis has used about 50 unpaid interns for duties in marketing, editorial, advertising, sales, account management and public relations. She’s convinced it’s the wave of the future in human resources. “Ten years from now, this is going to be the norm,” she says.
Why do people work for free?
The benefit unpaid labor offers to a business is pretty clear, but it can also give employees needed experience, a reference letter or even a self-esteem boost in a depressing economy.
Cassie Johnson, a 27-year old in San Marcos, Calif., lost her job as an enrollment adviser for an online university in 2009 and was receiving unemployment benefits for a year before finding an assistant manager position at a Starbucks (SBUX) that’s so far from her home she spends most of her pay on gas. Since starting a public relations internship in February, she feels a renewed sense of purpose.
“I’m learning a lot and I feel really good about it. I’m happy. I feel relevant. I’m not making any money, so it’s tough, but I feel it’s setting me up for a career,” Johnson says. “I only have $1.50 left in my checking account right now but I’m living with my boyfriend and he’s been really good about supporting me.”
Sometimes, gratis work can even lead directly to a paid opportunity. Theresa Potter had been a marketing executive for 30 years when, during a career lull, she agreed to work on a few marketing initiatives for free at Coalescence, a Columbus, Ohio-based custom spice blending firm.
In the last three years, Fallis has used about 50 unpaid interns for duties in marketing, editorial, advertising, sales, account management and public relations. She’s convinced it’s the wave of the future in human resources. “Ten years from now, this is going to be the norm,” she says.
So how are people supposed to put food on the table? At least slaves were fed and provided living qaurters by their owners.
It seems to me with so many unpaid “interns” this company is taking advantage and could have some exposure under labor laws - specifically minimum wage laws.
This is why corporations hate regulation.
Unpaid laborer now? The outlandishness of this is mind numbing yet it is a GOP/Conservative Corporatist utopia.
They aren’t the only ones, GH.
Internships actually used to pay pretty well and were the way many students paid for college. The trend is definitely toward stealing labor. But Fallis is behind the times. This started back the 1990s.
Many companies use cheap, and naive college students. And I do mean “use.” But many states allow labor law exemptions for this type of relationship, so legally, they can operate this scam.
“Internships actually used to pay pretty well ”
At HP we used to hire tons of interns (SEEDS) each summer. IIRC they were paid over $2000 a month.
Yup, I worked for Eastman Kodak and JNJ in the early 90s at $11.75/hr as an engineering “co-op.”
$11.75/hr -> $2035/mo
Paid for my sophomore through senior years, which meant no debt on graduation day.
At least slaves were fed and provided living qaurters by their owners.
Perhaps the company can buy a big block of repo’d housing cheap before it makes it to market in order to provide some housing once that becomes necessary? Or maybe the relationship between the company and the banks is such that the people can just stay right where they are?
Company script for the company store and the company housing and your kids can go to the company school.
Welcome back to the 19th century!
“Unpaid jobs:”
My household has several (and I am not just talking about raising kids…).
Only an idiot works for free.
If you work for free you are being played for a chump. If you think this is normal, you are part of the problem.
“Only an idiot works for free.”
I do quite a bit of volunteer work, and so does my wife, so I guess we qualify as idiots in your world view. That said, I have no regrets about our volunteer involvement, aside from the occasional schedule craziness. Work has its own intrinsic reward, aside from whether you are compensated with money. And the volunteer work tends to eventually pay various forms of dividend; people find ways to pay you back with barter if they cannot afford to pay cash. So I guess I don’t really agree with you.
Your mileage may vary. I wasn’t talking about volunteering.
As for work having it’s own intrinsic rewards, what utter bull. Work is what you do to get paid. Anything else is a hobby or charity. And if you can afford and have the time to do those things, you are better off than half the working population of this country.
“Work is what you do to get paid.”
Not my work. In fact, I have worked quite hard over the course of my life to obtain the opportunity to do work that I enjoy. I’m not going to lie and say that I enjoy every aspect of my (paid) work, but there are enough aspects of it that I do enjoy to make it worth slogging through the other parts.
Too-big-to-fail banks keep biggering and BIGGERING AND BIGGERING!
‘Too big to fail’ banks keep getting bigger
Top 10 banks maintain 60% of U.S. banking assets, with multimillion dollar pay packages for CEOs
By Dean Calbreath, UNION-TRIBUNE
Saturday, March 26, 2011 at 6 a.m.
Judging from the compensation of Goldman Sachs chief executive Lloyd Blankfein, which rose from $9 million in 2009 to $13.6 million in 2010, happy days are here again for the nation’s biggest banking firms.
Bankers aren’t known for being particularly demonstrative, but when the head of the Independent Community Banks of America addressed its convention in San Diego last week, he sounded more like a fire-and-brimstone preacher than a buttoned-down financier.
But the evil that ICBA President Cam Fine sermonized about was not demon rum or the corrupting influence of billiard parlors.
Instead, he railed against the excesses at the nation’s biggest banks, which are emerging from the Great Recession larger than ever, with gold-plated pay packages and — so far at least — little threat of prosecution over actions that contributed to the global financial shutdown. And he especially targeted the idea that the big banks have been preserved and strengthened because they are deemed to be “too big to fail” — so big that if one collapsed it could threaten the entire financial system.
“The same people that plunged this nation and the world into the worst economic and financial depression since the 1930s are still running Wall Street …” Fine complained. “It is up to us to force the government to stamp out the unbridled concentration (of banking power)… We will never rest until something is really done about the ‘too big to fail’ disease that has infected the banking system of this nation.”
…
the corrupting influence of billiard parlors.
Required reading for all MegaBank Inc. CEO’s:
Minnesota Fats
“Never Behind The Eight Ball” by Fred Walther
Example # 2:
[Outmaneuvering Rommel]
Patton: [referring to Rommel's book, 'Infantry Attacks' or 'Infanterie greift an'] Rommel… you magnificent bastard, *I read your book*!
Example # 3:
Field Marshal Erwin Rommel: What is this activity near Coulances?
General Alfred Jodl: Enemy armored forces driving through our defenses at Lessay.
[reading telegram]
General Alfred Jodl: “American tanks moving rapidly, slicing through to the rear areas.”
Capt. Oskar Steiger: This sounds like Patton, Field Marshall.
General Alfred Jodl: Patton is in England.
Field Marshal Erwin Rommel: Do we know this?
General Alfred Jodl: The landing in Normandy is merely a diversionary maneuver. The real invasion will come at Calais and Patton will lead it. The Fuehrer says that the Fifteenth Army is not to be moved to Normandy.
Field Marshal Erwin Rommel: Those men are sitting on the beach at Calais throwing rocks at each other while our men are being slaughtered in Normandy.
General Alfred Jodl: [firmly] The Fifteenth Army is waiting for Patton at Calais and he will land there.
Field Marshal Erwin Rommel: You seem perfectly willing to accept this nonsense, Jodl. Why?
General Alfred Jodl: [chuckles] Because I am not prepared to dispute the Fuehrer.
To make this relevant for Megabank CEOs, the scenaro would have to include a provision for calling their puppets on Capital Hill, the Fed, and the Treasury, and ensuring that millions of troops, tanks, and other equipment were conjured up out of thin air, with all costs to be borne by taxpayers, borrowed from the Chinese, or put on the tab of future generations. In other words, no matter how reckless the banksters are or how badly they misread the situation, they will never be allowed to lose, thanks to the taxpayers.
Well if course. The Banking Clan expects “free sh#t”. And unlike the unwashed, they actually get a lot of it.
That’s because the unwashed, in their abject stupidity, vote for Republicrat politicians like Obama and McCain who will give the Banking Clan anything it demands, along with impunity for their criminal conduct.
Fears rise that Japan could sell off U.S. debt
Some analysts say that risk to U.S. economy unlikely
~ The Washington Times
Some lawmakers and market analysts are expressing rising concerns that a demand for capital by earthquake-ravaged Japan could lead it to sell off some of its huge holdings of U.S.-issued debt, leaving the federal government in an even tighter financial pinch.
Others say a major debt sell-off by Tokyo is unlikely, but noted that the mere fact that questions are being raised speaks volumes about the risks involved in relying so heavily on foreign investors to fund U.S. debt.
“This natural disaster in Japan concerns me that it could speed up what’s coming, because they are the second leading buyer of our debt,” Sen. Rand Paul, Kentucky Republican, told The Washington Times. “Small degrees of differences in how much they buy of our debt, I think, can make a big difference in interest rates that we have to pay people to buy our debt.”
With the federal government having piled up $14.2 trillion in debt, budget experts are warning that the country is on an unsustainable fiscal path. Congress, they say, must find cuts in all areas of the budget, while reforming the entitlement programs — Social Security, Medicare and Medicaid — that are the biggest drivers of national spending.
Congress has passed short-term spending bills this year that nibble on the edges of government spending, and President Obama has offered a 2012 spending plan that also saw spending rise.
“Fears rise that Japan could sell off U.S. debt”
A watched pot never boils.
What if it contains radioactive water?
We just raise the level of “acceptable” contamination. Problem solved!
It worked for inflation and unemployment!
“A watched pot never boils”.
Actually a watched pot always boils, it just seems like forever to the impatient.
Likewise with housing prices bottoming out after a housing bubble collapses; it can take decades. Just ask a Japanese citizen who bought around 1990.
Ah now I understand why Plosser of the Fed said rates would go up to 2.5% shortly. That’s to encourage other bond buyers to step up in place of Japan.
Sunday ritual of checking the coming week’s foreclosure docket in the local paper shows an all-time low of less than thirty for the whole county (Volusia, FL). Three months ago there would be over three hundred. The robo-signing log-jam pressure continues to rise. The squatters are lovin’ it. iPad sales must be huge as a result of the mortage/rent money being pocketed.
“iPad sales must be huge as a result of the mortage/rent money being pocketed.”
But don’t banks take a massive balance sheet hit on unpaid mortgages?
Um…not in this universe. Got Fed-endorsed Enron accounting?
Wow, NPR news just ran a housing story that extolled the virtues of renting, not just for the citizen but for the greater economy. It mentioned most of the points mentioned frequently on this here blog regarding work flexibility, energy consumption, etc. The fat lady may not be singing yet, but she is definitely clearing her throat…
http://www.npr.org/2011/03/27/134623259/pursuing-the-american-dream-by-renting
As you say, this could be the beginning of something. Once this beomes prevalent on the news and you also hear lots of people - friends, neighbors, coworkers - stating the same opinion, that renting is more sensible than buying, then it might be a good time to buy a house.
When the voices of authority tell the crowd that owning a house is the single most stupid thing a person can do in life, then it might be close to time to buy a house.
“Pursuing The American Dream, By Renting”
New Era version of The American Dream:
Rent a home, to avoid going broke along with all your homeowner neighbors.
Some of us have spent a fair amount of spare time here over the past six years warning people about the risks of losing large amounts of net worth through owning a home during a period of deflating market values. Do you think anyone is paying attention yet?
And regarding this “definition” of net worth:
“the value of their homes, stocks and all other assets”
In order to properly calculate net worth, isn’t it necessary to also subtract all the debt households owe? $481,000 sounds to me like an implausibly high average, if debt is properly “netted” out of the “worth.”
Family wealth and recession: Californians’ wealth took one of the biggest hits in the recession
In California and other Western states, 67.5% of households saw their net worth fall, compared with 62.5% in the U.S. overall. The median decline in the West was 27%, well above the 18.1% national median.
March 24, 2011|By Jim Puzzanghera, Los Angeles Times
The federal government has for the first time detailed the sharp drop in wealth that the Great Recession caused American households — and it shows that families in California and other Western states took the biggest and broadest hits by far.
The average net worth of U.S. households — the value of their homes, stocks and all other assets — fell 20% to $481,000 by mid-2009 from $598,000 in mid-2007, according to a Federal Reserve survey released Thursday.
…
It was 6 years to the bottom of the Savings & Loan disaster.
The current mess is even bigger.
Good catch Fisher!
Getting away from the mantra of homeownership is the best thing that could happen.
” In fact, landlords haven’t seen rental vacancy rates this low since the winter of 2003.”
There are 2 houses sitting empty and listed as pre forclosure in a neighborhood that has a comp at $162,900 and I would buy either of these houses IF they were for sale. They are not. So I continue to pay rent.
This has everything to do with the huge percentage of homes sitting empty. Banks aren’t renting them.
It’s also possible the FED has figured a way to increase rent by taking blocks of apartments off the market. I read an article a year ago that suggested they do just that.
http://finance.yahoo.com/banking-budgeting/article/112423/housing-is-dead-it-cant-hurt-the-economy?mod=bb-budgeting
As tragic as those outcomes would be to individuals, they wouldn’t push the economy into a recession, as they did in 2007. In terms of housing’s impact on the economy, we just don’t have that much left to lose. We’ve already lost $8.3 trillion in wealth.
When I see this on ABC/NBC/CBS/CNN/NYT etc. I will believe we are close to the bottom…
———————-
Housing is dead. There is no doubt about that. Housing is as dead as a door nail.
Some people will tell you that housing isn’t quite dead, that it’s a zombie that has the power to destroy the economy yet again. For example, here’s what economist Beth Ann Bovino of Standard & Poor’s says about the big drop in new-home sales in February: “If we see this extended into basically the spring season, then we’re going to see a real hit to the economy.”
Don’t believe it.
Housing is just too small to do any real damage to the economy any more. How small is it?
Residential investment has fallen to a 2.2% of gross domestic product, compared with the long-run average of nearly 5%. The record low was reached in 1933 at 1.1%. Residential construction employment has fallen from 2.5% of all jobs to 1.6%. Housing has little direct impact on the economy.
Did the $8.3 trillion in lost wealth ever really exist, or was this lost gain of paper wealth?
This phenomenon was common after the dot com crash in 2000, where coworkers would tell me they had lost “millions”…
“Did the $8.3 trillion in lost wealth ever really exist, or was this lost gain of paper wealth?’
“Paper wealth” is real wealth if one can cash in the paper for something of value, which is what paper money is all about, isn’t it?
If paper wealth is yanked away then the option of trading the no-longer-held paper for something of value is also yanked away. (Which is what we are seeing a lot of with all the job losses and wage cuts, and something we are about to see in a big way - a VERY big way - when the trillions of dollars of promised money will not be forthcoming, IMO.)
Not quite what I mean. If you invest $100 and the $100 later becomes $1000 and then shortly after crashes and is worth $50 you have “lost” $50, not $950.
The housing bubble ONLY existed courtesy of liar loans and overly EZ credit. Gains which should never have existed to begin with…
“If you invest $100 and the $100 later becomes $1000 and then shortly after crashes and is worth $50 you have lost $50, not $950.”
True on a micro level.
But on a macro level if the economy is pumped up by $8.3 trillion and the economy adjusts to this $8.3 trillion - meaning there is $8.3 trillion of distortion that works its way into the economy and causes $8.3 trillion of capital disallocation - then when this $8.3 trillion is yanked away those who had incomes that depended on this $8.3 trillion of distortion are left high-and-dry. And that seems to be where we are now at.
So far. But there is more to come.
I don’t think the article takes into account the importance that equity extraction had to economy and that without rising housing prices that cannot come back. Right now the federal government is making up for the lack of extraction but it cannot run the large deficits much longer. So without a new source of spending we will go back into recession. The Japanese situation for the last 20 years. Obama will not cut government spending before 2012 because he knows it means a renewed recession, his stimulus spending just kicked the can down the road and made the adjustments we need to make harder.
The nerve of these teachers. Where do they think they are - Wisconsin?
—————————-
Honduran president threatens striking teachers
Mar 27, 12:04 PM EDT
TEGUCIGALPA, Honduras (AP) — Honduran President Porfirio Lobo on Sunday threatened to fire teachers if they continue a three-week-old strike that has aggravated divisions caused by a 2009 coup.
Teachers who fail to show up in classrooms Monday will be suspended without pay, according to the president’s decree, which was read on radio and television stations. If teachers don’t appear by April 4, they will be fired.
Lobo said he has the power to dissolve the teachers’ unions for backing the strike.
I’ll bet the Hondurn teachers are paid less that $200 a month.
Yep with food inflation there time is probably better spent growing a garden or mugging someone on the street or selling drugs.
This is our future America
Two words - “work ethic”
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The Upside-Down Job Market. Today, Grandpa is twice as likely to be working as Junior
Wall Street Journal | 03/25/2011 | Sue Shellenbarger
The biggest changes in family life sometimes happen gradually. New employment data suggest one such seismic change is upon us: Job-holding patterns between the generations have turned upside down.
In the past, Grandma and Grandpa tended to retire to a life of leisure in their sixties, while teenagers were expected to work. As recently as 2000, boys ages 16 and 17 were far more likely to hold paying jobs than their grandparents ages 65 to 69.
But just a decade later, that picture has turned upside down: Grandpa is twice as likely to be working as Junior. Based on new research by the Center for Labor Market Studies at Northeastern University, Boston, 34% of senior men ages 60 to 69 hold paying jobs, compared with fewer than 15% of teenage males age 16 and 17. In the year 2000, the comparable employment numbers were 29% for senior men, and 34% for boys in their mid-teens.
Today many jobseeking teens are being told, “Don’t even bother to apply,” because some employers have hundreds of applications for the hourly jobs once dominated by teen workers, Dr. Sum says. Many adolescents have become discouraged and dropped out of the workforce. The problem is most pronounced in areas where kids are most in need of a paycheck, among lower-income families in big cities. In New York, Los Angeles, Chicago and Washington, D.C., fewer than 10% of high school students age 16 to 19 hold jobs.
‘work ethic’
That made me laugh. Sure, the reason grandpa is working at walmart is he doing the job teenagers won’t do. Didn’t we hear something like that about illegal aliens a few years back?
‘employers have hundreds of applications for the hourly jobs once dominated by teen workers’
I’ve told this story before here; A moment that stood out to me as the Texas economy went bust was when it got around that something like 100 adult men had applied for 5 newspaper delivery routes where I lived. I was still in my late teens and this shocked me because just a few years before, every single paper route in town was done by a teenager like me; often 14 YO or so. These routes were certainly sub-minimum wage deals, where you rode your bike, worked crazy hours in the wee hours of the morning, etc. In just a few years, every paper delivered in town was done by an adult.
They probably didn’t have such an extensive, comprehensive, comprehensible UE plan back then or those older guys would have been content to sit on their asses and play video games, freeing up the workforce for enterprising youngsters such as yourself.
If that’s so, then why are virtually all newspapers delivered by adults these days?
Simple. That’s because today’s kids are even lazier than today’s adults. Video games abound.
As I’ve related a couple of times, a kid working a minimum wage job, that has to pay for his own transportation (gas, insurance) is essentially working for free.
What really happens is the Bank of Mom and Dad, in an effort to instill a “work ethic”, pay for some/all of the car expenses. Essentially, a subsidy for any business that employs high school kids.
You’ve got a good point, there. Not only does most of the kid’s income go to paying for the gas, etc., but most of the miles put on the car occur driving back and forth to the job. Then all of the time spent working the lousy job and driving around cuts into the time that the kid should be studying and the result is falling grades.
Some parents have no clue.
I think Ben was talking about kids on bikes delivering papers. God forbid a kid having to break into a sweat.
I think it is good to have a job sometime in your life that really sucks. Then later on, after you finally land a good job, you’ll have something to compare it to.
I think it is good to have a job sometime in your life that really sucks. Then later on, after you finally land a good job, you’ll have something to compare it to.
And that’s the REAL value of doing a military enlistment even when you’re smart enough to do something else :-).
I suppose by that logic that I am really lucky to have had a sucky marriage?
That’s what dating is supposed to be all about, kissing a lot of toads and all.
You’re supposed to find out if he/she is a toad BEFORE you get married, not afterwards.
(A lot cheaper that way. And less stressfull.)
My mother always drove us to our menial high school jobs. But that was when the second adult didn’t have to work herself. At that point in time, teenagers worked in droves often more to resume and contact build than for the measly check. So you could grab a ride w/lots of other people going your way.
My father did me a great service by encouraging a work ethic combined with entrepreneurship. When I was about 10 YO, I came upon the idea of painting street addresses on curbs, as most houses had those. The paint would fade over time, so I could knock on the door of those needing a new paint job and the acceptance rate was high. My dad showed us how to draw and cut a stencil. Gave us the tools, and the start up money for the spray paint. It wasn’t long before we discovered that if we already had the number 1600 cut out, we could go to every street with the same number and be sure to ask that owner if he/she wanted a new address painted. Things like that instilled basic business sense, understanding of profit, etc. We didn’t make a lot of money, but I wouldn’t trade what I learned for anything. It was so satisfying to be able to buy stuff I wanted using the money I had earned.
Much the same here. My father thought it more fitting for me to discover ways to earn money than to get an allowance. My best business was potting myrtle shoots from the woods behind the house to sell to the local landscaper. I made more pocket money than my friend who worked for the guy as a laborer.
Ben, are you still securing/preserving abandoned homes?
I appreciate what my dad taught me about work ethic by all he did for our family, both at home, in the yard as well as in the house, and by going to work every day of the week and staying late as needed. He did it all out of a spirit of dedicated service without ever uttering a single complaint, though I later found out about some of the daunting struggles he faced at various points in his career.
Even more than from my dad, I learned about work from his mother, who ran a home gardening operation well into her 80s in a small southern Illinois town, with the help of my dad and his troupe of child laborers, who regularly visited her on weekends. My grandma would work tirelessly to plant, weed, fertilize and harvest her crops, and we would share in the bounty of fresh and canned produce year-round. I would hang out with her in the kitchen, fascinated by the sight of her arthritically-gnarled fingers deftly wielding a paring knife with which she hand-processed 80 or so quarts of strawberries in the course of an afternoon (with the help of those child-laborer assistants, of course!).
Grandma worked for the love of it, sans bitterness, sans resentment. When she visited us in the city, away from her work, she got all fidgety for the lack of anything to do.
Nowadays, every time I attack a pineapple or a clove of garlic with a kitchen knife, I think fondly of Grandma’s training in kitchen work. And I also envision the placard on her kitchen wall, which stated, “A watched pot never boils.”
Thank you, Dad and Grandma, for teaching me how to work!
You have to be 18 to work at Walmart in some states.
Sue is wrong. There is HUGE age discrimination among teenagers and over-50.
So it’s not “grandpa” taking the jobs, it’s post college, pre-middle aged who are taking them…. because they have to.
I think the point of the story is, why hire a kid when you can have an adult work for low wages.
simple Supply and demand, baby. Went out of style along with democracy. Everything is now fixed for your conveinience.
Go Sammy S!
You’re on it today. Big time.
Reuters coverage of the London demonstrations.
http://www.reuters.com/news/video/story?videoId=198577893&videoChannel=5
I watched the Telegraph’s video earlier which was of a group trying to deface and break windows at the Ritz. The “anarchists” as they were referred to in the voiceover were all very young although they did not appear to come from struggling families. According to the story they only moved to the Ritz after trying first to deface a bank but finding the glass unbreakable.
Their perception: Very young = nothing yet to lose, also an entire adult life of debt slavery. My 7th grade middle schooler told me one of her know it all classmates hates central banks. I don’t think cloistered government types understand what they’re in for.
OK, I like the house and it fits all of our needs but I can only offer $165K
NO HOUSE FOR YOU!
NEXT!
Alright, I`ll go get some soup.
“Alright, I`ll go get some soup.”
That’s right, lentil soup is for renters.
LOL. I’m a renter and lentil soups and stews, and rice, are stables of my family diet.
http://www.bloomberg.com/news/2011-03-25/tsunami-risk-well-known-to-nuclear-engineers-regulators-who-failed-to-act.html
Japan’s nuclear regulators and the operator of the crippled Fukushima reactors were warned that a tsunami could overwhelm the plant’s defenses and failed to recognize the threat.
In the same way, Ron Paul and a vocal handful of independent observers have warned Americans that Zimbabwe Ben Bernanke’s tsunami of printing-press money and “stimulus” spending is going to usher in hyperinflation and fiscal ruin, but the sheeple and their Republicrat leaders slumber on in blissful ignorance.
Thank god both of those dangerous situations are now fully contained.
Huge miscalculation on probability the FED has no Idea what they are doing: Originally stated to be ten million to one now is realized to be more like 100,000 to one. Stay tuned for more less-worse than expected good news.
“…more like 100,000 to one”
Sounds fascinating, but I’m missing the context… please elaborate.
Bernanke’s “100% confident” that Fed can…
Nobody following the meltdown in Japan?
Unfinished Downtown Albuquerque Condos are Crime Magnet:
http://www.kob.com/article/stories/S2037527.shtml?cat=500
Census: Atlanta population plummets by 100,000
9:42 AM, Mar 26, 2011
The city of Atlanta wants to know: where did a hundred thousand of its residents go? The 2010 Census has controversial new numbers, significantly down-sizing the city. And that could lead to an official challenge of the results.
ATLANTA — The city of Atlanta wants to know: where did 100,000 of its residents go?
The 2010 Census has controversial new numbers, significantly down-sizing the city. And that could lead to an official challenge of the results.
The turn of events is made all the more bizarre by the fact that just a few years ago, the Census itself was among the data-crunchers that calculated Atlanta’s population at well over a half-million people.
But the 2010 figures have put the new figure closer to 420,000, roughly a 20 percent decrease that some consider statistically impossible, especially given the explosive growth Intown.
“Since I live in the neighborhood and I want people to move here and I want Atlanta to be strong, I’m very pleased,” said one Midtown resident who was out enjoying the new lake in the Old Fourth Ward.
…
That’s the ticket. Sue ‘em!
Observation three months into 2010: The housing market is in a state of extreme flux.
And for the record, reducing the balances on 100,000 or so home loans when millions of FB’s are underwater is a drop in the bucket, which is destined to have little effect.
HOMES
MARCH 28, 2011
Mortgage Servicers Resist But Cut Debts
By RUTH SIMON And NICK TIMIRAOS
U.S. banks are resisting efforts by state attorneys general to force them to cut the amounts owed by some borrowers facing foreclosure. Yet mortgage companies already have reduced home-loan balances for more than 100,000 borrowers.
How much larger the number will grow is likely to be at the center of negotiations this week aimed at reaching a settlement to the nationwide investigation of mortgage-servicing practices.
Officials from Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.’s GMAC unit have been summoned to Washington for a Wednesday meeting with state attorneys general and at least three U.S. agencies, according to people familiar with the situation.
It will be the first faceoff since the five companies, the largest home-loan servicers in the U.S., got a 27-page “term sheet” earlier this month from state attorneys general that would require the servicers to consider more borrowers for principal write-downs.
In addition, some of the financial penalties resulting from any settlement are “very likely” to be used for reductions in loan balances for certain borrowers, said Iowa Attorney General Tom Miller, who is spearheading the 50-state investigation. Even among state officials, there are disagreements as to whether shrinking loan balances is a good idea.
The “term sheet’s principal reduction proposals may actually foster an unintended ‘moral hazard’ that rewards those who simply choose not to pay their mortgage,” the Florida, South Carolina, Texas and Virginia attorney generals wrote in a March 22 letter to Mr. Miller.
The chief executives of Bank of America and Wells Fargo have questioned the fairness of writing down loans, while claiming the costs could be enormous if widespread principal reductions are triggered by a settlement.
Speculation that “we want everybody ‘underwater’ to receive a principal reduction is not true,” Mr. Miller said in an interview, though lopping off thousands of dollars from what a borrower owes on a mortgage “has been underutilized as a tool.” An underwater borrower is one who owes more on a property than it is worth.
…
Given how many MILLIONS (not thousands!) of American households have underwater mortgages, it is entirely unclear to me how an underwater borrower rescue program could be enacted to make it fair, and to avoid the moral hazard problem of tempting struggling borrowers to undertake hidden actions which qualify them for mortgage writedowns.
At the end of the day, I expect this recurrent discussion of principle writedowns to turn out to have mainly provided politicians with a chance to bloviate, rather than to offer a viable policy prescription. I see no easy solutions to the fairness problem or to the moral hazard problem.
Austerity hits California. Isn’t it curious how the really tough budget cuts fall on the hapless Democratic governor, after so many years of the former Republican governor kicking the can down the road?
Governor Brown signs bill slashing billions in California social services
March 25th, 2011 10:08 am PT
David McCaine
In a spectacular turnaround of the democratically controlled legislature, Governor Brown signed a bill cutting $8.2 billion dollars to state services, $5.5 billion in cuts impacting social services with an inclusive $1.7 billion slash in health care for the elderly and low-income participants.
One billion dollars was slashed from California’s university system which would put an already strained budgetary structure in more serious jeopardy of meeting projected short and long term goals.
But don’t be too quick to put away those erasers yet, there is still some heavy lifting to be done since California needs an additional $12.6 billion to close the budget deficit for 2011. As Brown put it, “we are only halfway to the goal line”.
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Your political commentary is really lame at it shows your bias.
I heard in a radio that the democratic legislators passed the same budget that they would not under Ahnold.
The true question of bias will be answered IMO if, after cuts such as these are made, Brown is given credit by his opponents for doing so.
What if cuts such as these lead to an even more severe economic downturn, at least in the short term? Will they still praise him, or blame him?
As I’ve told many of my friends, be careful what you wish for. (The context being, them wanting debt/deficit to be slashed and me asking how that changes once it impacts THEIR income).
Has anyone in a leadership position at the Fed ever acknowledged how their extremely loose, hyperstimulative monetary policy of the early 2000s, coupled with open encouragement for American households to extract home equity wealth and spend it on consumption, directly fed the final parabolic price blowout of the housing bubble and its subsequent collapse? Related problems included millions of American households borrowing themselves into the hopelessly underwater position in which they currently find themselves, and a homebuilding industry constructing millions upon millions of homes, many of which now sit vacant, to the point where the extant glut drove down prices to levels where new construction does not pencil out.
If anyone at the Fed has owned up to their role in creating the financial disaster zone in which the American economy currently resides, I am curious to hear what they had to say. Please share if you have any evidence on this.