Bits Bucket for April 21, 2011
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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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“Tampa Bay’s existing home sales skyrocketed in March to levels not seen in nearly five years. ”
Mark Puente is SPTs new real estate shill, replacing James Thorner. Remember James “I call them life-long renters” Thorner. I like St. Pete Times, but lordy do they pimp for RE.
“http://www.tampabay.com/news/business/realestate/tampa-bay-homes-sales-surge-to-level-not-seen-in-five-years/1164769″
Muggy, much as I hate to admit it, the guy is probably right. My part time gig involves heavy contact with home owners and the past couple of weeks I’ve been dumbstruck by the number of people in this area who have told me they just purchased a house. Everyone from retirees to military personnel at MacDill to regular families who just moved to the area. This is purely anecdotal, as I’m basing this only on people I’ve personally spoken to, but it really has me scratching my, uh, head. Why here, why now? I don’t get it.
Most, if not all of the people I’ve spoken to have gleefully told me about the great deals they’ve gotten. We’re talking $50,000 to $90,000. The guy who paid $50,000 got one of those little concrete block homes that I like and he couldn’t be happier, since he’s re-locating from upstate NY to retire and is just tired of the winters.
Everyone seems to be of the opinion that this is bottom.
All this is making me ornery, too. Back when I first began posting here in 2005, I said I’d pull the trigger on buying when I could get a concrete block shack for $50,000.00. Now that I actually can do it, I don’t wanna. I’m gonna rent for another year or two and explore Western NC this summer. (Provided my boss will let me.) If I decide to stay here, I’m gonna hold out for $30,000. LOL!
If Prof Bear and Ben J are right, those concrete block shacks are going to stay at $50K (or less) for a long time. So you can wait until you wanna.
Duration duration duration. Banks can’t hold the shadow inventory forever. And if the banks unload their shadow inventory into a shadow bottom-feeder flip wholesale market (didn’t we read about them buying houses in bulk?), those bottom feeders can’t hold those houses forever either. There just isn’t anyone to sell to. At some point the shadow inventory itself won’t hold.
Although the banks won’t admit it, housing IS a depreciating asset if it’s not maintained. We’re not accustomed to houses falling apart* because, I guess for the same reason that it’s hard to imagine a tree dying from old age. So far, they’ve outlived us.
————
*Of course as time goes on, houses are more and more poorly built. A well-built house built 200 years ago can last 200 years, a well-built house 100 years ago will last 100 years, a well-built (by today’s standards) Toll Brothers shack built 5 years ago “lasts five years and then it falls apart.” Sometimes I envision that the age/quality equation is so linear that all houses will fall apart on the same day.
Yes. Prices in many areas may well be near bottom. They’re certainly closer to bottom than top. (50% reductions make than an unavoidable conclusion) But I don’t think that we need to worry that the crazy double digit appreciation of the bubble buildup is just around the corner. So people who want to buy should take their time, look around, and if they like a place and the price buy. If not, keep looking around.
There just isn’t anyone to sell to. At some point the shadow inventory itself won’t hold.
Hear, hear!
In Tucson, I recently spoke to a lady who had her house up for sale. And then she took it off the market. It wasn’t in one of the upscale nabes, not by a longshot.
But her comment really bopped me over my slender head: “There aren’t any buyers out there.”
And remember late last year when I sent you a link to that house near me? The one near Fourth Avenue and Speedway Boulevard that’s been on the market once or twice since I’ve moved into this nabe?
It appears that it was taken off the market again. The real estate agent — who’s one of our best-known self-promoters — took the sign away. And, knowing her, if the place had indeed sold, she would have placed clanging bells and blaring trumpets next to her sign.
“since he’s re-locating from upstate NY”
Why did I know you were going to say something like this?
A lot of upstate ex pats still sound off on our local paper’s comment section. They like to rub our noses in the low taxes and extra spending money they have in their pockets after paying their bills.
One of my co-workers just head down there. He’s getting paid about more than 3x more per hour (in West Palm) than here where he had to cobble together several incomes to make things work.
He seemed pretty darn happy when he left…he was planning on renting.
A guy that works for me just put a down payment on a 1700 sq. ft. U/A 1950 total sq. ft. CBS house built in 2006 in Lake Worth he is buying for $54,900 which sold for $290,000 in 06
Problem is the neighborhood, the newer and older stuff in less desirable neighborhoods of Palm Beach County does have some great buys, especially considering you could rent them out section 8 at inflated rental values. The decent middle class neighborhoods are still holding on at prices that are just too high.
Example, If the house I just described is selling for $54,900 then the house I rent in Tequesta should be worth about 3 x $55k = $165k which would be mid 90`s pricing. Problem is even with several empty houses and several “homeowners” not paying the mortgage for a few years these houses are still listed and occasionally selling from $265k to $300k. It`s out of wack.
Some of the working class Palm Beach Gardens neighborhoods represent a good value at the moment. For the most part though you’re right 100%. Prices in Royal Palm Beach and Wellington are still a bit bubbly. Mike Fink would say he never liked it that far west but the neighborhoods are desirable.
If you’re willing to go the condo route you can get in super cheap if you’ve got cash. The only downside is you won’t see prices rise for quite a while. Still, a 2/2 that’s rentable for $850 can go as low as $20,000.
“The guy who paid $50,000 got one of those little concrete block homes that I like and he couldn’t be happier, since he’s re-locating from upstate NY to retire and is just tired of the winters.”
To someone from NY $50,000 seems like an incredible bargain.
If they are retiring - and able to pay substantial cash - the climate, lower tax rates, etc. probably make it an understandable personal decision.
I have a friend who is in the process of buying a similar property for less than half of what it sold for 4 years ago…
He’s aware that the price may go down more, but is making the purchase to be close to an elderly parent (a responsibility that won’t wait for timing the bottom) and establish Florida residence (for tax purposes) as he is retiring himself.
p.s. When he told me of the preference for a concrete block house (not a material most consider aspirational), I was confused until he explained that it is low maintenance in that climate.
It’s a reason to impose either a residency requirement or tax penalty on public pensions. I don’t think it’s fair for New York to pay a pension based on a salary adjusted for New York taxes, when the retiree is going to be paying Florida taxes.
Would you feel the same way if the public employee contributed to that pension based on a percentage of income?
In NY we tax the crap out of them while they are here working. Then we tax them out of the state when they retire. If we wanted them to stay, we’d give them an incentive.
Pension income isn’t taxed in NY. (or FL)
Yes, but that pension income has to be used to pay other taxes such as property taxes. NY property taxes are insane.
I’m not sure Andy. My instinct says there should still be a penalty, especially since the retiree is taking his entire income, not just the tax part, out of the state that was loyal to him. However, it would be pretty easy to correct for employee contributions in calculating this penalty. For the moment i would hold it to state residency. if the person really needs the low-cost living, there are low-cost podunk sections in EVERY state (except DC).
I have to be honest…if I put in my time in a cold weather state and dedicate my service to that state, I should be able to retire to the warm if I want to so long as I’m not double dipping…working in the new state.
We get a lot of New York cops who retire and come down here to work. So now they get a pension from there and start work toward a pension here. It’s maddening!
Interesting thought coming from you, Andy. IMO, if you take advantage of a high-tax corrected income and then retire in a low-tax state, wouldn’t that be considered a “lavish” pension, the type that the union thugs advocate for?
OK, sorry, I misinterpreted how I wrote the other post. When I said “hold to a state residency,” I didn’t mean that people HAD to stay in the state to collect pension. I meant that
1. residency would mean you had to stay in the state, not the county or city. If you worked in, say, Westchester (high-cost), then you could retire in Herkimer (boonies) if you wanted to, without penalty.
2. If you retired out of state, you just collect a little less pension to make up for the fact that 1) you were paid more highly in a high tax state while you worked 2) you’re not returning your pension income to the community, so to speak. 3) if you’re moving to a low-cost state, presumably you can afford the penalty. I guess you could calculate a different penalty for each state…
California state retirees that moved to another state used to be taxed on their retirement income. That was changed in 1996. IIRC it was something to do with taxation without representation. Retirees were unable to vote on issues that they were paying taxes on.
Oxy,
I had no idea you knew NY that well. How so?
I have no problem with employee funded pensions.
Yes, in the land of termites and constant humidity, concrete block is a good building material. It makes a surprisingly solid house, and when covered with stucco as many are, looks good too.
Sarasota-Bradenton market had the most sales since June 2005.
http://www.heraldtribune.com/article/20110420/ARTICLE/110429978/2416/NEWS?Title=Sarasota-Bradenton-home-sales-highest-in-6-years
“We’re talking $50,000 to $90,000. …the bottom.”
Well — how much lower can you get than homes for sale for one year’s pay? I know homes are cheaper in Detroit, but that’s because nobody wants to live there.
I doubt you will see these prices in areas where there are decent jobs, but where there is no or little work (many areas of the US) there are thousands of single family homes listed under $50k, some as low as $15k, presumably in demilitarized neighborhoods, but they are out there.
From Redfin dot com (San Diego County listings):
HOME TYPE ADDRESS CITY STATE ZIP LIST PRICE BEDS BATHS LOCATION SQFT
Single Family Residential 410 S 1st St El Cajon CA 92019 $22,500 2 2 El Cajon 976
Single Family Residential 310 Holtville Ave Jacumba CA 91934 $50,000 3 2 Jacumba 1208
Single Family Residential 44512 Calexico Ave Jacumba CA 91934 $34,900 4 2 Jacumba Hot Springs 1270
Single Family Residential 729 Dover Ct San Diego CA 92109 $27,000 3 2 St Louis 1866
Just tried to post the lower tail of the single-family residence list price distribution for San Diego County, which consists of four homes listed at $50,000 or less (hopefully it will show up here soon). The upshot: Affordability has improved a lot in San Diego County since 2006, when there were literally NO single-family residences listed for under $100,000.
I am amazed to see anything under $100k anywhere near San Diego, but I suspect the Dover listing is in error being only a hundred feet or so from the beach…
“…suspect the Dover listing is in error…”
You never know who might have been killed there or how until you research the question…
In my area, I have the observed sort of the the same thing as palmetto.
Price volatility has been for ~150k+. Anything under has remained fairly stable.
Federal Borrowing on Pace to Hit Debt Limit in Less Than Week
Wednesday, April 20, 2011
(CNSNews.com) - Federal borrowing is on pace to hit the legal limit on the national debt in less than a week.
As set in a law passed by Congress and signed by President Barack Obama on Feb. 12, 2010, the legal limit on the national debt is $14.2940 trillion. As of the close of business Tuesday, according to the Daily Treasury Statement released at 4:00 pm today, the portion of the national debt subject to this legal limit was $ 14.268365 trillion. (The total national debt, including the portion exempted from the legal limit, was $14.3205 trillion.)
This left the U.S. Treasury with the authority to borrow only an additional $25.635 billion before it hits the statutory debt limit.
On April 4, Treasury Secretary Timothy Geithner sent a letter to Senate Majority Leader Harry Reid (D.-Nev.) in order to warn Congress that the Treasury was approaching the legal debt limit. In an appendix to this letter, Geithner pointed to the rapid pace at which new debt was accumulating.
“On average,” Geithner wrote, “the public debt of the United States increases by approximately $125 billion per month (although there are significant variations from month to month).”
In a 31-day month, $125 billion in new debt works out to an average of $4.03 billion in new debt per day. At that pace, the $25.635 billion in legal borrowing authority the Treasury had left at the close of business on Tuesday would be exhausted in less than seven days.
What gets me is the whole attitude of the PTB toward this debt.
There it is, $125 billion of new debt being added EVERY MONTH and the PTB see the problem as maybe not being able to borrow more.
Isn’t this the way most Americans have run their households?
Credit Limit is wealth. Raise the credit limit and you do a good thing, bringing more wealth to the country. Why waste the opportunity to borrow?
“March 20, 2006, via rpc.senate.gov: — The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Increasing America’s debt weakens us domestically and internationally. Leadership means that ‘the buck stops here’. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better.”
Senator Barack Obama
Amen to that!
“Isn’t this the way most Americans have run their households.”
This something else I just don’t get. It’s one thing to run your household and another thing to be run by your household.
How clever it is to go to work every day and then send a big chunk of your hard earned take home pay to somebody you don’t even know.
I do think you have hit on something. If most voters are careless with money then they will elect politicians who are also careless with money. One can be frugal in his own life but nevertheless end up being screwed because of the values and voting behavior of everyone else.
A good friend of mine is the perfect example.
Middle class income at risk with declining middle class.
Last year bought a new truck. This year his wife’s SUV had 130k he told her she should get a new car but she wanted a fancy bike. This weekend she was on a long trip and the truck broke down. Dealer had $$$$ in his eyes. No lady you can’t drive this truck and it will cost 2500. They just put in 3000 so decided to trade it in. Bought another gas guzler that was probably overpriced. All of this done on credit. He also pointed out that his wifes glasses cost 6-800 dollars a year. Mine were 80?
He then starts lamenting that they don’t have a retirement plan and he didn’t know where to put the very small stash of money they had.
He’s a great friend, and a good guy, and actually pretty intelligent about some things but this sort of mind block on debt amazes me. I’ve pointed out a dozen times how much they loose by borrowing and by purchasing two gas guzzlers. I think he gets it but it’s an addiction they are both wedded to image. I think his wife likes to spend. I pointed out that her decision to get a bike over a car initially was no decision because she knows if the car dies they’d buy another. If either one looses their job or sees a salary cut or if inflation in food and fuel gets worse they are toast and it saddens me.
A saving mentality has no place in a hyper-consumer economy. It’s to the point where consumer spending is a hardwired alternate form of wealth transfer. Put another way, we must stop for that latte, we must eat dinner out, we must get the latest iBauble, because if we don’t it will cost someone their job.
Just for fun, ponder the role your own household’s consumer spending plays in this. I have, and it only makes me want to spend/consume less.
“Just for fun, ponder the role your own household’s consumer spending plays in this.”
OK:
Food, energy, food, energy, food, energy, food, energy…
Disney.
Rent, utilities, taxes, insurance, etc.
Food, energy, food, energy, food, energy, food, energy…
Disney.
Etc etc etc.
Good thing food and energy prices are contained, or this expenditure pattern might be worriesome.
Just for fun, ponder the role your own household’s consumer spending plays in this. I have, and it only makes me want to spend/consume less.
In the past year, I’ve become an extreme saver.
Reason: I wanted to dig myself out of a “sluggish cash flow/had to buy a new camera to cover a two-day event” hole that I dug last spring.
And I did it! Woo! Just put the last hole-filling check into the credit union on Tuesday.
Now that the hole is filled, I plan to keep this extreme saving thing going. In its own way, it’s a lot of fun. Figuring out how to make things instead of buying them. Fixing things so they last longer. Doing without something because it isn’t so important to buy and own as I thought.
Conspicuous, debt-fueled consumption? That’s for the birds.
“In its own way, it’s a lot of fun.”
Also sustainable, provided systemic theft does not get too out of hand.
What can’t be paid back, won’t be paid back. This can’t be paid back, so the political hyperbole at this point is meaningless, just said for the cameras.
Exactly! But for some reason unknown to me, people worship at the feet of government. Low self worth I guess, who knows.
Why do you say it can’t be paid back? Is the value of the dollar fixed in your universe? Or do you mean it can’t be paid back without further monetary expansion?
A little clarification would go a long way towards making your point.
“Is the value of the dollar fixed in your universe? Or do you mean it can’t be paid back without further monetary expansion?”
They’re repeating the same arguments verbatim that were used to frighten people about the debt during GD1 (government debt always increases during downturns, due to decreasing tax revenue- to cut spending while the economy contracts is to chase it down the deflationary rabbit hole). Of course, we went from GD1 straight into WW2, in which our debt exploded past the supposedly unpayable debt of GD1. It did not lead to our demise, but was instead being repaid (through expanding GDP and its inherent inflation) by every ensuing president- until Reagan.
I remember an interesting article by one of the debt rating agencies (sorry, forget where) looking at defaults by governments on soverign debt. Since countries can print an unlimited amount of their own currency one might expect that they would always just print more rather than choosing to default. In fact this was not the case, governments often chose to default rather than inflate. It was speculated that some point the pain caused in the domestic population by high inflation exceeded that caused by non-payment of debt ant at that point governments decided to default.
Or put more directly, when the mob was in the streets calling for the president’s blood he decided that it was time to do what the masses wanted not what the rich wanted.
“Why do you say it can’t be paid back?”
PB, I read an article by one of the debt rating agencies a while back looking at defaults on soverign debt. One might expect that governments would always take the easy way out if they could and just print more of their own currencies rather than default.
However this is not what happened, at some point, when inflation had driven the mob into the streets calling for the Presidents head, they decided to do what the masses wanted not the rich, and defaulted rather than inflate.
Ah, I thought my first reply was lost, and now we have reply inflation.
Of course in many cases, governments borrow in currencies that are not their own, which means that they CAN’T effectively inflate away the value of their debt payments. Arguably this is the situation that Greece is in. It can’t unilatteraly inflate the Euro, so it’s stuck servicing it’s debt or defaulting on it. Stealth default through inflation/davaluation is not a choice that they can make.
That’s true. But that’s not the case with the US which is what we are talking about, and its not the case with the governments in the article I was referring to.
Comment by alpha-sloth
2011-04-21 06:56:28
” . . . It did not lead to our demise, but was instead being repaid (through expanding GDP and its inherent inflation) by every ensuing president- until Reagan. ”
The debt was not being paid back before Reagan. It was growing even back then. It had not quite reached $ 1 trillion when Reagan came into office. It did accelerate under his presidency, but at the time the Democrats had a lock on congress, so they are just as much to blame for this as Reagan.
http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4.htm
However this is not what happened, at some point, when inflation had driven the mob into the streets calling for the Presidents head, they decided to do what the masses wanted not the rich, and defaulted rather than inflate.
A default would mean massive unemployment. I seriously doubt the masses want this. I think they’d like a little better distribution of the wealth. Bailing out the elite and then handing them massive tax breaks, allowing CEO’s to control their compensation and to have massive golden parachutes, to corporate welfare, and no bid contracts and war, and the FED giving banks cheap credit while banks charge credit card users double digits.
The masses would be much better off with some trade restrictions and infrastructure building vs bailing out the elite in this country and providing them with tax brakes and cheap risk free credit. The masses are just too dumb to understand this.
Why do you say it can’t be paid back? Is the value of the dollar fixed in your universe? Or do you mean it can’t be paid back without further monetary expansion?”
If the dollar goes down interest rates should go up to compensate for risk and in the end it might be impossible to pay back the debt plus interest ?
As far as the FED buying debt to keep rates low I predict this could end in Hyperinflation and the end of the FED
pdmseatac- What matters is debt in relation to GDP, not nominal debt:
http://zfacts.com/p/1195.html
Do a search for myth of GDP, lots on that.
And of course, we owe it to ourselves…
As things stand right now, the debt is being increased very quickly through wage deflation which in turn is leading to tax revenue deflation which in turn is leading to more debt…
Remember that the national debt is one thing, but there is also another 4 times more in other debt which will be nationalized if it defaults (credit card debt, mortgages, business loans, commercial real estate, municipal debt, state debt and so on). While the national debt could be handled alone, it is my understanding the total US debt load is some $60 trillion, which is 4 years GNP. I cannot see how this debt can be serviced without massive inflation and by inflation I do mean WAGE inflation. Wage inflation is totally off the table so…
“I cannot see how this debt can be serviced without massive inflation and by inflation I do mean WAGE inflation. Wage inflation is totally off the table so…”
If it can’t be serviced, it will be written off. The government isn’t on the hook for everyone’s credit card bills and bar tabs.
“the total US debt load is some $60 trillion, which is 4 years GNP.”
4x income. Not ideal, but not worth starving grandma over. How about we just let the Bush tax-cuts expire, as a first step. Then maybe national health care? Sure seems to save everyone else a lot of money.
Like they say- it’s time to Get Real.
“One might expect that governments would always take the easy way out if they could and just print more of their own currencies rather than default.”
Are you one of those people who assumes Charlie Brown would always try to kick the football again, no matter how often Lucy tricked him by pulling it away at the last moment before contact?
“the supposedly unpayable debt of GD1″
Well it was repaid. With more borrowed money. Maybe they were onto something there.
“Maybe they were onto something there.”
As long as it’s a continually lessening share of your GDP- no worries, mate.
“As long as it’s a continually lessening share of your GDP- no worries, mate.”
That’s where QE can come in handy, as it is far easier to run an electronic printing press than to increase real production.
If it can’t be serviced, it will be written off. The government isn’t on the hook for everyone’s credit card bills and bar tabs.
Governments in Greece, Iceland, Ireland, Spain and Portugal all appear to be on the hook for their banks bad behavior. The same appears true here. Thus private debt that cannot be serviced ends up putting too much strain on too big to fail banks and the government steps in and assumes the debt. We are already on the hook for many many bar tabs in the form of HELOC’s which were never repaid.
Our 401k’s have all be thoroughly raided, so much for leaving grannies money untouched.
“The same appears true here. ”
I agree the gov will end up paying for a share of it, but they won’t pay every dollar of our personal and business debt.
@wmbz
“people worship at the feet of government”
I think it is really a matter of which do you trust less - the private sector whose primary mission is to make money for shareholders or the government whose primary mission is to provide a fair framework for all citizens.
I favor a balance. Our government is designed to change slowly, by people who were suspicious of government power. The private sector is more nimble, more adaptable, but if left uncontrolled will trash our planet and our people at a rapid rate. I would expect we are out of balance in either direction in different parts of the economy at all times.
Yes indeed. Out of interest, how much was the federal debt when he said that?
Senator Obama didn’t specify what the “leadership failure” was. Perhaps the leadership at the time was failing to let tax cuts expire.
Does that explain why he’s now saying he was wrong when he voted against it?
Guess he was against it before he was for it.
The leadership failure has been failure to bring spending to sustainable levels. This spans across party lines, political beliefs, and affiliation.
It was a failure to keep jobs in this country, a failure to tax all forms of income equally, a failure to cut out the health insurance middleman, a failure to nip banking monopolies in the bud, and yes, a failure to cut some fat in the budget (DOD and DOE, anyone?)
Nationalized health care does not save the government money regardless of where you stand on the issue.
You may be right, Andy, at least not in the case of Medicare. But it WILL save money for the working middle class who bear the brunt of health insurance costs now. The end of job lock alone will be a huge relief to some of them. And any money they save on health care they will spend on something else.
The end of job lock alone will be a huge relief to some of them.
There are other solutions to this problem. Namely gov’t stopping subsidizing employer-provided healthcare.
Perhaps more gov’t is the solution to the problem. But it’d be nice if people would admit that gov’t created the problem in the first place.
“Nationalized health care does not save the government money regardless of where you stand on the issue.”
Please explain.
You may be right, Andy, at least not in the case of Medicare. But it WILL save money for the working middle class who bear the brunt of health insurance costs now. The end of job lock alone will be a huge relief to some of them. And any money they save on health care they will spend on something else.
And, for a brief time, our National Anthem will become “Take This Job and Shove It!” I’m especially fond of the Johnny Paycheck version.
It’s very simple. The majority of health care is picked up by private companies through employers. If the government takes over, who pays for it?
“If the government takes over, who pays for it?”
But isn’t the gov just acting as a health insurance company, already, through medicare and medicaid? Except they only take on the worst customers- the elderly and infirm and the poor, who can’t afford to pay free market health care rates. The free market is jealously guarding its share of the healthy who can afford to pay their exorbitant rates. I wonder why?
Because they’re so profitable, maybe?
If these same people were to pay into a national plan, this profit would go towards _reducing_ the government expense of paying for the sickos and codgers that nobody wants.
The bottom line on nationalized health care if implemented as in Europe or Canada is workers will pay more in taxes and in Canada’s case, corporations will pay less.
“The bottom line on nationalized health care if implemented as in Europe or Canada is workers will pay more in taxes and in Canada’s case, corporations will pay less.”
No duh. They’ll pay more in taxes, but they won’t be paying for private health care insurance- it’s cheaper for them overall.
Corporations will pay no health care, which will make them more competitive in the world, and allow for more entrepreneurship and start-ups.
“…it’s cheaper for them overall.”
I beg to differ. In my past life in Corporate America my benefits were free to me. You think suddenly people will get pay raises?
“my benefits were free to me.”
No they weren’t, they were part of your pay package.
You didn’t answer my question. Do you think suddenly people will get raises and corporations will go on hiring sprees?
“Do you think suddenly people will get raises and corporations will go on hiring sprees?”
Yes, because it will be much easier for start-ups to, uh, start up, which will lower unemployment, and put upward pressure on everyone’s wages.
If the government takes over, who pays for it?
Uh, I do. At least with a public option. I simply check the “Uncle Sam” box instead of the “Blue Cross” box and send a check to a different company.
And bad andy, I’m not sure if companies would try to take off the health benefits without giving employees that premium money back. Not a good way to “retain talent.”
Plenty of high paying jobs out there, tug on those boot straps:
BankRI execs’ pay soared ahead of sale to Brookline
That jump in the stock price is good news for BankRI’s top executives, three of whose compensation jumped last year thanks to big awards of company shares: Chief Financial Officer Linda Simmons, Chief Lending Officer Mark Meiklejohn and Chief Information Officer Robert Wischnowsky.
The biggest beneficiary from the sale, though, may be Malcolm G. Chace III, BankRI’s 76-year-old co-founder and chairman, who is also a former board member at Warren Buffett’s famed Berkshire Hathaway and a well-known Rhode Island philanthropist.
Chace owned 12.5% of BankRI’s common stock as of Dec. 31. The value of his 588,281 shares has soared from $18.1 million Tuesday afternoon to $26.2 million at midday today – an $8.1 million gain in less than 24 hours.
After Chace, the next biggest beneficiary will be fellow current CEO Merrill Sherman. The 62-year-old co-founder’s 289,398 shares – 6% of the company’s stock – rose in value from $8.9 million Tuesday afternoon to $12.9 million today, a cool $4 million gain overnight.
The chief lending officer’s compensation package doubled from $350,027 in 2009 to $695,366 in 2010 after he received stock and options awards worth $351,520. Meiklejohn’s salary was $281,308 and he also got a cash bonus (technically, “non-equity incentive plan compensation”) of $119,751.
CIO Wischnowsky’s pay package rose 82% last year, from $376,205 in 2009 to $682,933 in 2010. His $250,000 salary was boosted by $305,471 in stock and options awards and $127,662 in cash bonuses.
CFO Simmons’ package totaled $776,224 in 2010, up 63% from the $474,996 she received in 2009, and included her $281,308 salary; $351,520 in stock and options awards; and a $135,875 cash bonus.
CEO Sherman’s pay grew 10% to $929,080 in 2010, while its Macrolease division’s president, Daniel West, saw his rise 7% to $265,990.
http://blogs.wpri.com/2011/04/20/bankri-execs-pay-soared-ahead-of-sale-to-brookline/
Malcolm’s rags to riches story:
PBN: Aside from Bank Rhode Island, where you serve as chairman, do you have any other business activities in Rhode Island?
CHACE: I’m pretty much out of it. For years, I ran something called Mossberg Industries, which had plants in Providence, the old New England Butt Co. in South Providence, but those were liquidated back in the late ’80s.
PBN: A few years ago, you also stepped down from the board of Berkshire Hathaway Inc. How did you come to be on the board in the first place?
CHACE: Well, my father [Malcolm Chace Jr.] back in the ’30s and ’40s ran the old Berkshire Fine Spinning Co. They had mills in Fall River, New Bedford, North Adams, Massachusetts, outside of Providence, etc. Then they merged with the Hathaway Manufacturing Co., and dad became nonexecutive chairman. Then when Warren Buffett started to buy the stock in the ’60s, Warren made an approach to my father. A lot of the members of my family sold Warren the stock, but dad kept holding his stock and stayed on the board. Then when dad got older, in 1991 or ’92, he got off the board, and I guess I inherited my seat. I was on the board for 15 years after that, until I retired from it in ’07.
http://www.pbn.com/detail.html?sub_id=0c06fba45c9e
See? Hard work and determination is all you need!
Oh wait…
Realtors Are Liars
London bubblemania:
Buy now or be priced-out forever:
They are not making any more land in London:
The rich boomers are on their way:
Blah, Blah, Blah:
http://finance.yahoo.com/banking-budgeting/article/112579/worlds-hottest-real-estate-market-marketwatch?mod=bb-budgeting
Yes, they are Liars. In response to their HURRY! Buy Now because Rents Will Only Go Up campaign of Lies, I just agreed to a 6 month renewal of my Lease at the same monthly rate, opting to go month-to-month would have been an increase of 3.4%, this is in the Denver metro area.
It never ceases to amaze me that people express surprise that salesmen act like salesmen and do their level best to…sell you something. It isn’t the case that every salesman is a lying sack of sh*t. But that is a VERY useful working assumption.
Agreed…..when I worked at a commercial printing film house we referred to them as the sales weasels. And of course they’d laugh back knowingly.
Well now I can rest easy, for a moment I thought they’d have to pay taxes on the excessive payouts…
Under their employment agreements, the Company is obligated to reimburse Mmes. Sherman and Simmons for any taxes imposed as a result of “excess parachute” payments as defined under Internal Revenue Code Section 280G. This “tax gross up” benefit has been included in Ms. Sherman’s agreement since 1999 and in Ms. Simmons’ agreement since her initial employment in 2004. Based upon the advice of the Compensation Committee’s independent compensation consultant, we believe that providing such “tax gross-up” payments is consistent with benefits offered by our peer group for executives in the positions of Mmes. Sherman and Simmons. The Company has not provided “tax gross-up” benefits to any employee hired since 2005 and it is the Compensation Committee’s policy not to do so. For other officers entitled to a change in control benefit, we cap their change in control benefits so that no excise taxes arising as a result of Section 280G will be imposed .
I was also concerned how Merrill would squeak by on 12.9 million tax free dollars. Thankfully she has a top hat plan retirement plan which guarantees at minimum 425K tax free for life.
In the event of a Change in Control, the SERP participants become fully vested in the greater of (i) the retirement benefit calculated in accordance with the formula described above or (ii) a specific annual Change in Control Benefit Amount, which is intended to approximate the formula amount under the 2000 SERP assuming continued employment of the executive until age 65. The current Change in Control Benefit Amount (excluding any tax gross-up) payable annually to the executive is: $425,000 for Ms. Sherman, $289,351 for Ms. Simmons, $100,000 for Mr. Meiklejohn and $25,000 for Mr.Wischnowsky.
http://www.sec.gov/Archives/edgar/data/1109525/000095012311035908/c15582def14a.htm#C15582011
About “Top Hat Plans”
http://www.aflcio.org/corporatewatch/paywatch/tophat.cfm
Before you socialists start the whining about the rank and file, they did get lunch (chips were extra):
http://www.golocalprov.com/business/15-years-and-going-strong/
I love the photo, sheep readied for sheer….
Does Angelides read here? Perhaps someone in a position of power really cares; who’d've thunk?
April 18th, 2011
01:52 PM ET
Phil Angelides: People see little correlation between those who drove financial crisis and who is paying the price
Posted by:
Jay Kernis - Senior Producer
…
Background: The Financial Crisis Inquiry Commission was charged in 2009 to examine “the causes of the financial and economic crisis in the United States,” to probe the collapse of the major financial institutions that were ultimately rescued with taxpayer money, and report its findings to Congress and the American people. Angelides and his staff reviewed millions of pages of documents, interviewed more than 700 witnesses, examined the findings of other investigative bodies, and held 19 days of public hearings across the country.
In March 3, 2011 remarks to the Commonwealth Club in San Francisco, Angelides listed six conclusions his commission reached:
- The financial crisis was avoidable; it was the result of human action, inaction and misjudgments.
- There were widespread failures in financial regulation.
- There were dramatic breakdowns in corporate governance and risk management at many systematically important financial institutions.
- Excessive borrowing, risky investments, and lack of transparency combined to put the financial system on a collision course toward catastrophe.
- Key policymakers at the Department of Treasury, the Federal Reserve and the Federal Reserve Bank of New York were ill-prepared when this crisis hit.
- There were systemic breaches in accountability and ethics at all levels in the run-up to the crisis, on the part of lenders, mortgage brokers, financial institutions, and to some degree, borrowers.
…
Q. In your report, you outline specific firms and individuals who acted irresponsibly. You were not appointed to be prosecutors. So who is pursuing the potential illegal activities that you uncovered?
A. It now falls to the regulators and prosecutors to take the facts that we, along with others, have put on the table and to follow up by vigorously investigating and prosecuting any person or firm who has violated the law. We were directed to refer any potential violations of law to the Attorney General or any appropriate state attorney general. Where we found potential violations, we referred those matters to the appropriate authorities.
We need to see an active pursuit of justice for two reasons. First, the American people need to know that there’s not a dual system of justice in this country – one for those of wealth and power and one for everyone else. There is much anger in the country because people see very little correlation between who drove this crisis and who is paying the price. There’s a lot of anger, and justifiably so – I’m angry at what I saw and learned. However, it is not vengeance we should seek, but rather fair and full application of the law.
Secondly, we need vigorous legal enforcement as a deterrent to future wrongdoing. When you look at some of the settlements in the civil cases that have been brought, it’s quite troubling. People or firms who made tens or hundreds of millions of dollars – or even billions of dollars – have been able to settle for pennies on the dollar with no admission of wrongdoing. That’s not real deterrence – in many cases, the penalties look like they’re just the cost of doing business. I guarantee you that if someone robbed a 7-11 and took $500 and was able to settle the next day for $50 and no admission of wrongdoing, they’d be knocking over another store the next night.
…
Headline: “Wall Street banksters indicted”
Sub-headline: “Hell freezes over”
Apparently Angelides is too stupid to realize this is all the fault of the government housing programs (which have been around for over 70 years). Wall street was forced against its will to go along, poor guys.
Real estate investing leads to alcoholism and arrest.
Nicolas Cage arrested for alcohol-related domestic abuse needs help
April 17th, 2011 11:52 pm ET
Another marriage in Hollywood is going through the trauma of domestic abuse. It looks as if Nic Gage should be heading for rehab. Once again, alcohol is at the root of the issue.
…
Cage had been having financial problems and lost homes to foreclosure. The incident that led to his arrest took place when the couple left the tatoo parlor and he apparently grabbed his wife Alice Kim and tried to pull her to the house he thought was theirs. The “Drive Angry 3D” star was observed hitting parked cars and while trying to get into a cab, was apprehended by police. His wife is not pressing charges.
…
Maybe he should go back to making good movies for a change? That might help.
Did he ever make “good” movies? I’ve kind of always associated him with flicks where cars flip over and explode.
He’s like Michael Caine. He’s been in so many movies, some of them have to be good.
I thought Raising Arizona was decent.
Didn’t he star in “Leaving Las Vegas”?
Yes, but he went the summer blockbuster route afterwards. LLV = great flick.
He married Michael Jackson’s ex-wife, maybe that sent him over the edge.
The kids do like his National Treasure movies. But even my 14 year old will tell you his other movies stunk. I did enjoy him in Raising Arizona.
Nicholas Coppola is in a Cage of his own construction.
Realtor, Broker Charged In Fraud Scheme
Son Of Politically Influential Jacksonville Couple Among 2 Men Indicted
POSTED: Tuesday, April 19, 2011
UPDATED: 6:46 pm EDT April 19, 2011
JACKSONVILLE, Fla. — A Jacksonville Realtor and a mortgage broker have each been indicted on 15 counts of mail fraud, 15 counts of wire fraud and one count of conspiracy to commit mail and wire fraud.
According to the indictments, Gruszecki, Holzendorf, Joseph Cirlot, Winslow Wheeler, Timothy Miller and Christopher Reid conspired together to defraud lenders and received kickbacks out of the purchase of 15 residential properties, including some in the Bartram Park area in southern Duval County.
The indictments allege that the conspirators inflated the purchase prices of the homes, claiming that they were installing pools or conducting home improvements through a company owned by Holzendorf or another conspirator. Instead of installing pools or conducting home improvements, Holzendorf or the other conspirator caused the money to be kicked back to companies established by the buyers to conceal the payments from the lenders.
In connection with this scheme, the indictments allege that the conspirators made false statements in purchase and sale agreements, loan applications and HUD-1 settlement statements to cause the lenders to make the loans. During the time frame of the scheme, on or about August 2006 through July 2007, the indictments allege that Gruszecki was a licensed real estate agent and Holzendorf worked for a mortgage brokerage company.
http://www.news4jax.com/news/27598031/detail.html - 59k -
“GE beats earnings forecasts, raises dividend”
Impressive. If I’d to pay 0% income tax I would beat my very own earnings forcast too.
Now, now. We all know that Corporations are the only “real people”. The flesh and blood are mkerely serfs.
Why do I feel like I’m living in “Colossus: The Forbin Project”?
Think more like “Bladerunner.”
Or “Count Zero” or “Neuromancer.”
The Baltimore Sun
U. S. Asks 60-Day Moratorium On Mortgage Foreclosures
Appeals To States To Give Small Home Buyers Chance To Preserve Equities Until Loan System Can Start Functioning October 15
DEWEY L FLEMING
Aug 27, 1932
The Government moved through two agencies today to bring about a sixty-day moratorium on home-mortgage foreclosures. The object was to give smallhome buyers a chance to preserve equities in their properties until the new Home Loan Bank System starts…
Exercises in foreclosure moratorium futility are nothing new.
Keeping hope alive.
Author: DEWEY L FLEMING
Date: Aug 27, 1932
Start Page: 2
Pages: 1
Text Word Count: 479
August 27th 1932 is the article date. Wow.
KC confronts a staggering number of vacant houses
By MICHAEL MANSUR
The Kansas City Star
Posted on Tue, Apr. 19, 2011 11:03 PM
Kansas City knew it had a bad problem with vacant homes, but not this bad.
The number of vacant homes in Kansas City has jumped to as high as 12,000 — leaving some urban-core neighborhoods a quarter empty.
Since 2007, vacancies have jumped nearly 20 percent.
“It’s like an ocean, and we’re trying various sizes and types of teaspoons to bail it out.”
Nonetheless, the city is embarking on new efforts and hopes soon that the state legislature will help.
It’s difficult to know the exact number of vacant homes.
Kelly Edmiston, a senior economist at the Federal Reserve Bank in Kansas City estimated that the number of vacant residential properties climbed to nearly 10,894 in 2010
http://www.kansascity.com/2011/04/19/2812610/new-estimates-raise-problem-of.html - 80k -
KC = housing bubble ground zero, rife with vacant homes?! Who’d've thunk that possible? I feel the urge to break into song on that news:
Well, we got trouble
Right here in Kansas City.
Trouble with a capital T,
That rhymes with P,
And that stands for *Poof*.
“leaving some urban-core neighborhoods a quarter empty.”
I gess there are only so many yuppies to gentrify those neighborhoods.
“But in some neighborhoods, especially in the 64125 and 64127 ZIP codes, the home-vacancy rate may be 25 percent or greater.”
I grew up next to those in zips mentioned in the article, they were not “good” neighborhoods 50 years ago. There are still empty lots in that area from buildings that were destroyed during the riots in the late 1960’s and never rebuilt. This is just a worsening for an existing problem in these areas.
KC also has very strong neighborhood dividing lines between economic and ethnic groups.
Same problems here as everywhere else. Overpriced real estate, but not as bad as the “Sand states”. Unemployment rising. Real incomes falling.
People were able to hang on a little longer, because prices (and the monthly payments) were lower. But when you run out of money, you are out.
Which is why I say the whole “house prices are at 40 year lows” is BS. They are taking 1970’s prices, adjusting them for inflation, plus using the low interest rates to further skew the prices.
Problem is: wages are in free fall. The bottom 50% (the under $500 a week crowd) can’t afford a 100K house, so the whole “most affordable in 40 years” hype is meaningless to most Americans.
And as others have pointed out, in many locales prices remain stubbornly high. Not every place has Cleveland, Detroit or Tampa prices.
Spot on. They forgot to adjust the denominator of their home price to income ratio for (1) falling raises; (2) zero wages (aka unemployment).
Using the right measure of average income (which averages in zeros for unemployed households, rather than systematically ignoring them) would generally show home prices are very expensive at the moment relative to average local incomes.
Except the “inflation adjustment” is bunk given that they have changed how inflation is measured.
And 75% of the bottom 50% aren’t expected to be buyers anyway (~35-40% of people out there rent…).
I saw a stat recently that noted that home prices relative to incomes (interest rate independent) was at a pretty low number historically (a 30 year low).
There was an article that recently showed the best places to buy (rent vs. own analysis), and the bottom of the list showed renting cost 120% of buying (there were other numbers that were higher). And rents are now rising.
Everyone has an opinion of whether these analyses make any sense (is it factoring in the cost of maintenance, etc.?). However, historically, it has typically cost more to own than rent, with periods like now being the exception rather than the rule.
With the lack of construction activity out there, you can expect rents to rise further, somewhat offsetting the impeding interest rate increases in the mathematical comparison. All-in-all, if you are starting out with rents at 120% of your mortgage payment, and interest on a 30-year is 5%, then interest rates can rise to 6.5% and you are at about parity with rents. Historic norms is that is costs ~15% more to own than rent. That means the 30-year hits 8%, with home prices and rents being stagnant.
Draw your own conclusions. Homes seem cheap to me.
The way that I’m wrong is if it’s different this time, and people by and large no longer prefer owning to renting, and there is a long-term trend for it to cost more to rent than own. I’m willing to bet that it’s not different this time.
Wages did NOT keep up with inflation over the last 30 years.
Nowhere even close.
http://www.halfhill.com/inflation.html
It must be all those KC vacation rentals!
LOL! Had a consulting gig in KC for almost a year several decades ago. Truly the middle of nowhere.
Sure loved the barbecue though.
KC isn’t the middle of nowhere; not even within visual range of the middle of nowhere.
Amarillo Texas or Goodland, Kansas…….now that’s the middle of nowhere.
Correct, KC is a real city. I’ve been to Amarillo, and it ain’t no KC.
Actually it surprises me that Mormons aren’t snapping up KC real estate. The one Mormon I knew told me that Mormons believe that Kansas City was the site of the original Garden of Eden. They are buying up the land around KC so that when the Second Coming (or whatever they call it) comes, they and their expanding families can move there (living on their year’s supply of food on the way, I guess) and live in the Garden of Eden that they own.
http://www.utlm.org/onlineresources/gardenofeden.htm
“The one Mormon I knew told me that Mormons believe that Kansas City was the site of the original Garden of Eden”
They have good bar-b-que, but I wouldn’t go that far.
I’ve heard of KC described as “Denver without the backdrop” (the Rockies).
“Actually it surprises me that Mormons aren’t snapping up KC real estate. ”
I guess they figure they can get houses for free a few months after everyone else runs out of their two-day supply of cheetos and cokes.
Already been snapped up:
Adam-ondi-Ahman
‘Adam-ondi-Ahman’
I never realized how flat and prairie-like the Garden of Eden was.
If Kansas City is anything like Syracuse a good portion of those vacant homes are probably tear down quality. Our cities have put off this problem for decades and now economic tightening is pushing this reality back to the surface.
Yawn…
P.S. I’ve suggested from time to time that China’s bubble is shading the U.S. bubble, but with a five-year time lag. So far, this timing appears to be right on schedule.
China Housing Bubble: The Next Big Crash
By Ben Jacobs | April 18, 2011 4:04 PM EDT
On Thursday, Moody’s Investors Service downgraded China’s property sector from “stable” to negative.”
This may have something to do with the significant property construction in China despite the large number of vacant and under-performing commercial and residential properties.
According to Chinesecrash dot com, there are approximately 64 million vacant apartments in China, essentially creating “Ghost Cities.” These vacancies are due in large part to the increasing divide between China’s rich and poor leaving many without adequate housing.
Residential housing investment as a share of China’s GDP has tripled from 2% in 2000 to 6% in 2011 - the same mark the U.S. housing market hit before imploding. Additionally, over the past eight years, housing prices in China have gone up 140 percent nationwide and as much as 800 percent in Beijing. As a result, home purchases have fallen 50.9% year over year and 41.5% month over month for the month of March.
In response, China’s central government has launched several rounds of regulations in order to cool down the over-heating market. Of the most notable measures are the fundraising restrictions for real estate developers which have made it virtually impossible for developers to fundraise within China. Developers and government critics alike believe that this is merely a ploy to take over development in the country since people with connections within the government are still able to get funding for their projects.
Despite all of this, former U.S. Treasury Secretary Henry Paulson remains optimistic and has lauded the Chinese government’s handling of the potential housing bubble.
“I’ve had a little bit of experience with housing bubbles,” he said, chuckling, in a recent Wall Street Journal interview. “And let me tell you that the good news here is that this is recognized and the government cares a lot and they’re focused on it. And they’re taking, I think, some pretty draconian steps.”
…
China is probably more of a paper tiger than anyone will admit, most of all the Chinese PTB. My old boss in the advertising business back in the late 1970s used to say “It’s all done with mirrors” and I think that describes China.
When this is all over and done with, I’ve got a feeling we’re going to find that China’s affluence was far more deceptive than anyone dreamed of.
Everyone’s gonna take a dump. By “everyone”, I mean all the global nation-states. Globalization will eventually be recognized for the hell that it is. Nationalism will be in vogue.
BTW, I watched a bit of that documentary “The Environmentalists” on PBS last night. At the risk of being called a tree hugger, there were some very good points made. The next bubble to burst I HOPE will be the population bubble. And much as I rather disliked Jimmy Carter, he was exactly right about energy independence and the unsustainability of the current system. Screw Reagan, he should have adopted the best parts of Carter’s policy. Instead, he started the shamnasty trend.
I am a federal contractor working in renewable energy. Investing in clean and renewable energy technologies does not fit into the short-sighted, corporate-capitalist, free-market model, which can not see anything beyond the next fiscal quarter.
The same people who whine and moan about how unsustainable deficit spending to invest in these technologies is and how it threatens the lives of their children and grandchildren, mostly see no conflict of interest with leaving them a world that is polluted and uninhabitable.
See AMSC for details
I have never seen “renewable energy” as once energy is used, it has converted . “renewable energy” is the new perpetual motion machine in disguise.
You really mean energy sources, don’t you?
But renewable energy is so much more attractive to the buyers of your equipment.
It would be perpetual motion if not for the fusion reactor conveniently placed 93 million miles away.
“When this is all over and done with, I’ve got a feeling we’re going to find that China’s affluence was far more deceptive than anyone dreamed of.”
There are apparent similarities between the current views on China versus parallel views on Japan in the late 1980s; typical MSM bubble-top nonsense.
In 1989, I had the pleasure of seeing an old friend. He’d gone to Japan to teach English shortly after he graduated from Arizona State.
While in Japan, he wrote me letters that really touched my heart. His ironic, razor-sharp sense of humor was on full display.
During our 1989 visit, he told me about the reality of being a teacher in Japan. The teenaged kids he taught were a bunch of spoiled brats who’d hurl themselves onto the floor and throw tantrums. Why? Because they didn’t like my friend’s homework assignments.
My friend was appalled. He’d gone through the public schools in Phoenix and had never experienced such a classroom scene. Ever. Ditto for his college years at ASU.
My friend’s summary of late 1980s Japan: He had great admiration for the adults who rebuilt the country after WWII. Their children? Not so much. He said that they didn’t want to work as hard as their parents did, and that we in the United States could just sit here and watch Japan fall.
Which it has.
“During our 1989 visit, he told me about the reality of being a teacher in Japan. The teenaged kids he taught were a bunch of spoiled brats who’d hurl themselves onto the floor and throw tantrums. Why? Because they didn’t like my friend’s homework assignments.”
Did your friend teach English? I ask because the Japanese do seem to stand out as being even more monolingual than Americans.
The Japanese do believe in their scholastic determination and prowess. Witness the unwavering resolution of a certain Keitaro Urashima (a fictional manga character and lovable loser) who keeps studying and cramming until he passes the Tokyo U entrance exam.
Did your friend teach English? I ask because the Japanese do seem to stand out as being even more monolingual than Americans.
Yes, my friend did teach English.
In all fairness, he didn’t just teach teenagers (with the emotional maturity of small children). He also taught adults (of the chronological sort) and thought that they were quite respectful and eager to learn.
Yeah, Hank would know all about taking draconian steps, wouldn’t he?
Still think our pols and technocrats are secretly jealous of Beijing.
According to Chinesecrash dot com, there are approximately 64 million vacant apartments in China, essentially creating “Ghost Cities.” These vacancies are due in large part to the increasing divide between China’s rich and poor leaving many without adequate housing.
So we have more in common with China than we thought. Who woulda thought that poor people can’t buy houses?
‘“I’ve had a little bit of experience with housing bubbles,” he said, chuckling,…’
It’s great that the former Goldman Sachs CEO and Treasury Secretary can see the humor in millions of ordinary households losing their shirts, financially speaking.
Chinese housing price inflation is at stall speed. Do you know what typically happens after a plane goes into a stall?
BUSINESS
APRIL 18, 2011, 12:29 A.M. ET
China New Home Price Rises Slow
Dow Jones Newswires
SHANGHAI — Prices of newly built homes in 49 of the 70 large and medium-sized Chinese cities covered by a government survey rose in March from the previous month, down from 56 cities in February and 60 in January, indicating the central government’s tightening efforts are gradually beginning to show results.
China is worried about a bubble in the private property market and the government has taken a series of steps to curb rising prices. In late January, the State Council, or cabinet, told local governments to implement home-purchase limits that bar residents who own two homes in given a city, and non-residents who own one home, from purchasing additional homes.
The latest data, released Monday by the National Bureau of Statistics, showed prices of newly built homes in 67 of the 70 cities covered by the survey rose in March from a year earlier, down from 68 in both January and February.
Among the major cities, Beijing’s newly built home prices were unchanged in March from February, when the prices rose 0.4% from the previous month. Meanwhile, newly built home prices in Shanghai rose 0.2% in March from a month earlier, slower than February’s 0.9% month-on-month increase, the statistics bureau said.
“There are likely to be fewer Chinese cities reporting a monthly rise in newly built home prices in the coming months due to the government’s stringent policy on the sector,” said Gao Jian, a property analyst at Northeast Securities.
…
Do you know what typically happens after a plane goes into a stall?
The government props it up and does a mid-air refueling with borrowed oil?
The government props it up and does a mid-air refueling with borrowed oil?
I thought they had the middle class empty their wallets and create a stack of money all the way up to the plane to cushion it’s landing?
“Do you know what typically happens after a plane goes into a stall?”
Yes it recovers. Depends on the aircraft, mine will drop its nose and start flying again.
Its the pilots job to execute a stall recovery and then fly at a safe angle of attack.
Another typical result is contact with the runway, if you do full stall landings.
“Another typical result is contact with the runway, if you do full stall landings.”
But sometimes contact isn’t made with a runway.
Or “contact” is an understatement.
true but we are talking about what typically happens, stalls do not typically lead to crashes, that would be the rare event.
You experienced pilots should have offered advice to the Fed & Treasury Department back in 2006; perhaps the housing crash could have been successfully avoided.
Do you know what typically happens after a plane goes into a stall?
Ohhh, OHHHH I DO !!! PICK ME!!!!
You need to lower the nose to reduce the angle of attack, re-establishing airflow over the wing. The separation point will then move from the leading edge to the trailing edge.
Unless you’re Colgan Air pilots. Then you pull further back on the yoke while your co-pilot retracts (yes, retracts) the flaps.
Auger in.
Is the logic that you trade altitude for recovery?
If so, you should avoid flying low and slow right?
low and slow is where its at
me, low and slow around mono county
Tasty tone on that lead guitar, is it the ax or the amp?
dunno, the local tv station did the video, i uploaded it to utube and the music was rejected due to copyright violation.
i changed the music to a song that sounded good and had a length that matched the video
all i can say is ’sounded good to me’
Yes, indeed, never ever stall on takeoff!
http://www.reuters.com/article/2011/04/14/us-china-property-policy-idUSTRE73D48820110414
This is interesting…one difference between the Chinese housing market and the US is the level of down payment required. It looks like 20%+ over the last couple of years.
Not that this will help in a 50% collapse environment (or if people didn’t follow the rules), but buyers certainly had more skin in the game than here.
I did see an interesting article the other day where they expected Chinese growth to slow to 5% per year within the decade. I think there are some big problems brewing there…
Upward revision to previous new claims number = larger downward revision to current new claims number
market pulse
April 21, 2011, 8:30 a.m. EDT
Jobless claims fall 13,000 to 403,000
By Greg Robb
WASHINGTON (MarketWatch) - First-time claims for state unemployment benefits fell in the latest week but remained above 400,000 for the second straight week, the Labor Department reported Thursday. The number of initial claims in the week ending April 16 fell 13,000 to 403,000. This is the first time that claims have remained above 400,000 for two weeks since late January. The consensus forecast of Wall Street economists surveyed by MarketWatch was for claims to fall to 390,000. The average of new claims over the past four weeks, meanwhile, rose by 2,250 to 399,000. This is the highest level since the week ended Feb. 19. Claims in the previous week were revised to an increase of 31,000 to 416,000 compared with the initial estimate of an increase of 27,000 to 412,000.
…
400K is the new normal.
Not that the stock markets cares, also, anyone notice how quickly it bounced back after S&P’s downgrade threat?
The Economist
Economics
Free Exchange
…
American debt is not out of control, in other words, and it’s fundamentally affordable, and there are good reasons to expect that its creditors are prepared to give America a lot of room to get its spending under control before giving up on dollars and Treasuries. The only question is: can America’s political system use this room to make the necessary policy changes?
This, of course, is precisely the problem S&P identified in its Monday announcement. And it’s a common thing to fret over. On Monday, Buttonwood wrote:
…
from the article:
“American debt is not out of control, in other words, and it’s fundamentally affordable, and there are good reasons to expect that its creditors are prepared to give America a lot of room to get its spending under control before giving up on dollars and Treasuries. The only question is: can America’s political system use this room to make the necessary policy changes?”
As the author points out, the S&P downgrade threat was over the fear that politics would make economically rational (letting Bush tax cuts expire, instituting some sort of universal health care, etc) decisions too difficult, not that our economy was inherently doomed, as many seem to think (hope?).
“The S&P downgrade threat was over the fear that politics would make economically rational decisions too difficult.”
OK, too many negatives in that sentence for me. Could you rephrase that?
“…too many negatives in that sentence for me. Could you rephrase that?”
Well, there’s nothing I’d not rather do less.
The S&P downgrade warning was over the fear that politics will make the (actually rather easy) decisions we need to make, in order to restore our balance sheet, impossible.
That is, they worry the TeaKoch party would rather run us into the ditch than change the oil and put on new tires.
For example, saying ‘any new taxes are a non-starter’, when simply letting the Bush tax-cuts end would bring in much needed revenue, without any major economic upheaval or benefit cutting. Or opposing universal health care, when the rest of the developed world has it, enjoys it, and in doing so spend much less on health care than we do.
Simple solutions opposed by simple minds- it can get you downgraded!
Why let the tax cuts expire when you could simply end BS deductions and credits? MUCH more revenue to be had there.
“Why let the tax cuts expire when you could simply end BS deductions and credits? MUCH more revenue to be had there.”
Why not do both?
“Why not do both?”
Because without BS deductions and tax credits, like the first time home buyer, mortgage interest deduction, hybrid car, solar panels, etc. would be more than sufficient to balance the budget.
“That is, they worry the TeaKoch party would rather run us into the ditch than change the oil and put on new tires.”
And this has changed how? We’re still barrelling into the ditch, yet the market yawned and then rallied.
“And this has changed how?”
They blinked once, in their first major showdown. Maybe the market thinks they’ll do it again.
“without BS deductions and tax credits, like the first time home buyer, mortgage interest deduction, hybrid car, solar panels, etc. would be more than sufficient to balance the budget.”
link?
I don’t need a link. Some things are just common sense. But if you want to see the mortgage interest deduction alone costing the treasury $130 billion yearly, here you go:
http://www.fool.com/investing/general/2010/11/23/2-huge-misconceptions-about-killing-the-mortgage-i.aspx
Higher taxes would take even more money out of circulation and further doom our economy, by increasing personal and business debt defaults. These would then have to be nationalized increasing the US debt faster than taking the approach of getting more money into the hands of regular people.
Some times you need to hit the gas not the brakes to get out of a bad situation!
Higher taxes would take even more money out of circulation
How? Money that goes in in the form of taxes will go right back out in the form of Social Security payments to seniors, Medicare payments to doctors, contractor jobs to DOD, etc.
Now, tax-Tarp money that goes into some bits and bytes labeled as “CDO losses” or “covering a mortgage default: that’s the money that disappears. It’s unfair to Main Street to use labor-dollars to fill a hole dug by poof-dollars.
“I don’t need a link. Some things are just common sense”
Never let the facts stand in the way of your beliefs.
“Some times you need to hit the gas not the brakes to get out of a bad situation!”
I agree with your Keynesian sentiment, but we have a problem of too much money accumulating at the top of society, where what little velocity it has seems to go towards blowing various financial bubbles.
Marginally higher taxes on the wealthy, which would enable more government spending on job creation, unemployment relief, investment in infrastructure, reduction in payroll taxes, etc, can get this money back into useful circulation.
I gave you a link alpha-sloth. $130 billion in a single BS deduction.
“I gave you a link alpha-sloth. $130 billion in a single BS deduction.”
It’s probably also the single biggest deduction for middle to upper middle class. Once that’s gone, most will just take the standard deduction, the loss of other itemizable deductions won’t matter.
That don’t balance no budget, Bad A.
Not that I’m against repealing the MID, or capping it. I’m just pointing out that the list of right-wing bogeymen programs, in which you included the MID, were of minor economic importance. Nothing near the level of the Bush tax-cuts.
“…the loss of other itemizable deductions won’t matter.”
To the middle class you’re probably right. For the wealthy, you’re probably not right. When I talk about BS deductions though I’m including corporate tax loopholes and BS credits as well.
“That don’t balance no budget, Bad A.”
That single BS deduction, no. All BS deductions, tax credits, and loopholes, YES.
“To the middle class you’re probably right. For the wealthy, you’re probably not right. When I talk about BS deductions though I’m including corporate tax loopholes and BS credits as well.”
Do you really think that 1%ers will let their oxen get gored?
Let there be no doubt, all attempts to reduce the deficit will fall on the backs of the middle class and the poor.
How is eliminating deductions and credits putting the burden on the backs of the middle class and the poor?
“It’s unfair to Main Street to use labor-dollars to fill a hole dug by poof-dollars.”
Labor-dollars and poof-dollars. Most descriptive Oxide, I am going to have borrow it…..
“”How is eliminating deductions and credits putting the burden on the backs of the middle class and the poor?”
Because they will target deductions and credits that benefit the middle class and poor. The very rich will get to keep their loopholes.
Because they will target deductions and credits that benefit the middle class and poor. The very rich will get to keep their loopholes.
I guess this is what I pretty much think will happen too with the whole “tax the rich” movement. Increasing tax rates will do nothing when an exempted profit will be taxed at whatever percent you want of zero anyway. I think what we will end up with is tax increases that severlely impact earners over $100k and even down to lower incomes depending on how it is done.
“Why let the tax cuts expire when you could simply end BS deductions and credits? MUCH more revenue to be had there.”
Letting the tax cuts expire requires no action. It is politically easier than the long discussions that would ensue about which deductions and credits to end.
I think letting the tax cuts expire is a good start. Eliminating deductinos and credits is the next step.
No matter how you slice it, paying down the debt will take money out of circulation - at least temporarily.
And why is anyone paying attention to S&P? They missed the housing bubble, the mortgage bubble, the finance bubble etc.. Now all the sudden they are to be taken at their word. Ha!
Yeah, they should be laughed out of the room. But they’re Untouchable- really one of the PTB’s most powerful tools.
(Hey, SFBAGal!)
I notice old uncle buck is getting punked hard lately, wonder why that’s happening? Print, baby print!
“A bond market crash may occur within the next few days.”
~Prof. Laurence Kotlikoff
Good thing I may win the lottery.
And the sun may begin expanding into a red giant in the next few days.
In that case the borrowers win, as they won’t have to pay anything back.
The red giant stage is win-win. I’m all in.
Yawn… the sun is still rising and setting where I live.
P.S. Don’t own any long-term Treasurys…
Can the GOP deliver. . . anything?
Remember the “Pledge to America” to cut a $100 billion off the government’s 2011 fiscal budget? After all the posturing on the nightly news it got just $38.5 billion in spending cuts. And most of that piddling amount has been offset by increases already in the pipeline among several agencies.
The GOP hasn’t even apologized for its remarkable inability to slow down the suicidal spending spree.
← Neither Democrats nor Republicans (with the exception of one member of the House of Representatives) recognize the hopelessness of the present borrow-and-spend method of financial management. The entire system is deteriorating right before their eyes, and they have no solution except to keep on doing it.
The U.S. is on the brink of losing its exalted position as provider of the world’s reserve currency, owing to its inept money management. It didn’t have to happen, but clever politicians of both Democrat and Republican persuasion led voters to believe government is a charity. We voted for that…and got it, good and hard.
The U.S. is on the brink of losing its exalted position as provider of the world’s reserve currency, owing to its inept money management
This may be the goal of the elite in order to get a one world currency that they of course can control and can use to smash governments into giving them everything they want. Controlling the money has worked well for US banking elite and Wall Street.
Who’s the one member? Ron Paul? The lefties would die if he got his way. We would though be in much better shape.
If he got us out of the wars overseas and let wall street fail it might overcome some of his other views with the left. I may actually register GOP for the primary and vote for him if he runs again. Big money of course will win so he stands no chance if he is really willing to let them fail.
They don’t call him Dr. No for nothing. If a bill isn’t 100% constitutional, and we all know that most are not, he won’t vote for it. Have a look at the guy’s voting record.
And they don’t call him a nutjob for nothing too.
“The real danger of democracy is the ability of the majority to arbitrarily redefine individual rights…. It would have been better if we had stayed a loose-knit confederation and not allowed the failed principles of democracy and slavery to infect the Constitution…. How can we ‘spread our goodness’ around the world through occupation and violence when here at home we have squandered our liberties and wealth?”
~Rep. Ron Paul
He does read “Democracy in America”.
By the way, slipping down the slope in Libya:
http://www.washingtontimes.com/news/2011/apr/19/libya-rebels-will-receive-25-million-from-us/
P.S. “Non-lethal aid”, is that because the shoot all the bullets into the air? Have to go, everyone have a good day.
If this was occurring pre-2001 one might understand the passive response this is getting from the public as memories would have been of a 4-day ground war in 1991.
But this is happening in 2011, after we eclisped the Soviet stay in Afghanistan (not to mention the concurrent occupation of the world’s third largest oi…er, Iraq). Simply amazing.
“not allowed the failed principles of democracy… to infect the Constitution…”
Ron Paul opposes democracy?
Ron Paul does not oppose constitutional democracy…which isn’t exactly democracy. He does oppose most of what’s become of our government.
FWIW the Constitution isn’t holy writ, as some seem to think it is. That said, there is no way our divided nation could aver agree on how to ammend it.
Once the Republic fails it will be time to write a new one.
The constitution was designed to be amended, but not amended to ignore the document entirely.
“constitutional democracy…which isn’t exactly democracy. ”
What is it?
Representative republic perhaps…
Remember the Electoral College was put into place because us lowly folks couldn’t make up our own minds.
Is a representative republic not a democracy?
No, in a democracy you actually elect your leader.
“No, in a democracy you actually elect your leader.”
What does that mean? Which leader?
Are you saying the key difference is the Electoral College?
Representatives appointed to the Electorial College can and some times do vote for whoever they want irregardless of how voters in their state voted.
“Representatives appointed to the Electorial College can and some times do vote for whoever they want irregardless of how voters in their state voted.”
When’s the last time that changed an election result?
check out the following:
http://www.senatoronline.org.au/
http://demoex.com/
The idea is to ditch representative democracy in favor of “direct” democracy (a la early Athenian society) using the internet as the solution.
“When’s the last time that changed an election result?”
None other than your boy, Al Gore, would have won if it was based on popular vote(!)
Lesser Fool- But that’s exactly the ‘direct democracy’ that seems to be the bette noire of the right, all of a sudden. (Although none of them seem able to explain its dangers.)
Bronco- I agree that the winner-take-all aspect of the Electoral College can make a winner out of someone who loses the popular vote- and I think that’s a major problem with it.
But that’s not what Steve J was talking about. He was referring to the Electors’ ability to vote for whomever they chose, regardless of the vote count- a very different thing. That is very undemocratic, but it’s never been done in modern history in order to overturn an election.
alpha, I get what you area saying, but my example points out that this is not a true democracy.
“this is not a true democracy.”
It’s a representative democracy, not a direct democracy.
No mention of the median price for an existing home being $421,000 in 2006 dropping to $186,500 now or a huge Shadow Inventory, just…
“The good news is the buyers are here.”
Kinda like… “The new phone books are here”
http://www.youtube.com/watch?v=kOTDn2A7hcY - 116k -
March home sales rise in Florida, Palm Beach County; prices off 2010 levels
Price Plunge Buoys Sales
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 5:30 a.m. Wednesday, April 20, 2011
March was “hot as a pistol” for home sales in Florida, topping even last year’s volume, which was buoyed by the federal tax credit.
In Palm Beach County, the median price for an existing home dropped 24 percent to $186,500, a price not seen since 2002. It was the largest decline of the state’s 19 metropolitan areas.
Bill Richardson, president of the Realtors Association of the Palm Beaches, used the pistol metaphor to describe March sales. He knows the median price doesn’t look good but cautioned against using it to negatively gauge the health of the market.
With the number of distressed homes on the market, such as foreclosures and short sales, Richardson wasn’t surprised by the lower price.
“We are selling things left and right, but they are under that $200,000 mark,” Richardson said. “The good news is the buyers are here.”
http://www.palmbeachpost.com/money/real-estate/march-home-sales-rise-in-florida-palm-beach-1418477.html - -
Yeah I read that. This is one month after they were calling a bottom on prices once again.
Keep the pedal to the metal, print, baby, print! This will end well.
Government Cash Handouts Now Top Tax Revenues
By Elizabeth MacDonald | FOXBusiness
U.S. households are now getting more in cash handouts from the government than they are paying in taxes for the first time since the Great Depression.
Households received $2.3 trillion in some kind of government support in 2010. That includes expanded unemployment benefits, as well as payments for Social Security, Medicare, Medicaid, and stimulus spending, among other things.
But that’s more than the $2.2 trillion households paid in taxes, an amount that has slumped largely due to the recession, according to an analysis by the Fiscal Times.
Also, an estimated 59% of the 308.7 million Americans in this country get at least one federal benefit, according to the Census Bureau, based on 2009 data. An estimated 46.5 million get Social Security; 42.6 million get Medicare; 42.4 million get Medicaid; 36.1 million get food stamps; 12.4 million get housing subsidies; and 3.2 million get Veterans’ benefits.
And the handouts from the government have been growing. Government cash handouts account for a whopping 79% of household growth since 2007, even as household tax payments–for things like the income and payroll tax, among other taxes–have fallen by $312 billion.
“U.S. households are now getting more in cash handouts from the government than they are paying in taxes for the first time since the Great Depression.”
Gee, what a coincidence. I guess that’s what happens during depressions.
And of course it’s Unsustainable- just like we could never recover from those bills we ran up in the last Great Depression.
Correction the top 0.1% and the bottom 20+% are getting more in handouts the rest are getting taxed and seeing the value of their wages collapse.
They pay off the bottom to keep them from rioting and telling the middle class that they are next on the chopping block.
What’s the middle class to do? Trapped more than ever before - and much of it of their own doing.
In GD1 your typical working class family had no where near the expectations for house, career, education, etc. Memories of hard lives on the farm were the norm, loss of house, job, family members were frequent events.
It’s radical to say this, but the “middle class” has an out - the voluntary repudiation of the consumer economy. Willingly withdraw to a lower standard of living* and rebuild. OR, they could just keep playing along and be surprised to learn when eventually find out the PTB really doesn’t care after all.
* lower standard of living as viewed in the context of bogus Madison Ave./pop culture
The trick is to keep the balance of you owning items instead of the items owning you. Americans have lost of their ability to read where that line is. They have also let the principles of Edward Benays whip them into neurotic needy fools vs strong individuals that know how to take of themselves and their families.
The middle class is on its way to a lower standard of living, as millions fall off the middle class wagon and find that the only wagon that will stop and pick them up is the “under $500/wk” wagon).
No houses, new cars or iToys for you! Or as the contemporary Marie Antoinettes would say: “let them eat mac n cheese and bologna sandwiches.”
So why not be proactive, front run it on one’s own terms?
The hope being that those sending in “jingle mail” are promptly downshifting to gain max advantage of their move and not falling for the siren song of “best affordability in 40 years”.
The middle class is on its way to a lower standard of living, as millions fall off the middle class wagon and find that the only wagon that will stop and pick them up is the “under $500/wk” wagon).
What will surprise more people however is that a lot of the top 2% will fall because of this collapse in the middle class. You can’t have your cake and eat it too, ie slave labor and a healthy consumer.
“And of course it’s Unsustainable- just like we could never recover from those bills we ran up in the last Great Depression”.
~ Not even comparable but keep thinking that way.
“Not even comparable”
How so?
You can not be serious, understanding the difference between then and now. On the other hand perhaps you are, if so there is absolutely no point in going into it.
“if so there is absolutely no point in going into it.”
Never let the facts get in the way of your beliefs.
““Not even comparable”
How so?
“
Asking for you to explain your views is not unreasonable. alpha-sloth may have his own ideas of what the similarities and differences are. Until you explain yours, nobody can know precisely what you mean.
“Most, if not all of the people I’ve spoken to have gleefully told me about the great deals they’ve gotten. We’re talking $50,000 to $90,000. The guy who paid $50,000 got one of those little concrete block homes that I like and he couldn’t be happier, since he’s re-locating from upstate NY to retire and is just tired of the winters.”
Well, I’m not as anti-homeownership as some on this blog…as long as the price is right. The problem is, bubble prices ruin homeownership.
Depending on the neighborhood, a $50,000 box might be just the ticket for a downsizing retiree who pays in cash after selling somewhere else. The equivalent of downsizing to an apartment, but without the condo association and with more separation from the neighbors. Plus, you can have a little garden.
After the dropoff we’ve seen, there may be parts of the country where the price is decent. Not that it might not go lower, but decent. I wouldn’t say that for stocks or bonds.
Unfortuantely, New York is still overpriced. I think it’s eventually going to hurt our economy.
I agree. $50K in a perfect price for a downsizing, especially if they don’t anticipate long visits from grandkids.
Remember HBB’s ByeFL poster? She wanted to pack up her beanie babies and move to Oil City PA, where houses at the time were $50K. Maybe didn’t say Bye to FL at all — she could have her $50K house right now!
All this time I thought Bye Fla was a guy.
We don’t know for sure. But I’m don’t think even an “ahem* “metro” guy would collect beanie babies.
Somehow I missed the beanie babies.
Are these 50K houses in “safe” neighborhoods? Or in Florida does that require gated communities with armed guards?
Eventually?
Tax Cut on Multiple Home Purchases May Spark Investment in U.K.
~ Bloomberg
Britain’s homebuilders would benefit most from the tax change because institutional investors such as pension funds and insurers tend to prefer new properties, which can be purchased in blocks in a single location, according to Lacey. Photographer: Chris Ratcliffe/Bloomberg
Tax changes planned by the U.K. government may encourage investment funds to become residential landlords, promoting development and alleviating a housing shortage, CB Richard Ellis Group Inc. (CBG) said.
Chancellor of the Exchequer George Osborne last month announced plans to lower the stamp duty tax on for buyers of multiple residential properties by basing the rate on the average price of the properties rather than the total value of the purchase. The government’s aim is to remove a barrier to large-scale investment, a Treasury spokesman said.
“That would add more fat to the bone and allow investors to take property off developers hands more easily and get the returns they require,” said Chris Lacey, director of residential development planning at CBRE, the world’s biggest real-estate adviser. Lacey is advising Aviva Plc, Britain’s largest insurer, on a 1 billion-pound ($1.63 billion) fund focused on the private rental market.
Institutional investors own about 3.76 million apartments in the U.S., according to CBRE, compared with virtually none in the 500 billion-pound U.K. residential rental market. The financial crisis prompted British banks to curtail mortgage lending, reducing the number of individual buyers, slowing development and prompting more people to rent.
Tax changes planned by the U.K. government may encourage investment funds to become residential landlords, promoting development and alleviating a housing shortage, CB Richard Ellis Group Inc. (CBG) said.
Step 1. Create a bubble
Step 2. Cut dividend tax for holding period and capital gains for cash out period.
Step 3. Crash the bubble and bail out any positions still held.
Step 4. Easy cheap credit for select Hedge Funds and Wall Street
Step 5. Step 5 tax cuts for purchasing the deflated assets and for holding them until the next credit bubble.
Nice way to make a living.
Exactly my thought: The Fed’s near-zero-percent loans to Wall Street in the amounts of hundreds of billions if not trillions of dollars will provide great opportunities to pick up devalued assets at fire-sale prices, once the dust has settled on the housing bubble collapse.
Step 6. Cleanup paid by taxpayers.
Step 7. Blame it all on the little guys.
“Gold is a possession and not a promise. A government that owns an ounce of gold does not have to ask the United States or anyone for permission to cash it. The gold supply is finite; that is its monetary significance.”
-Lord William Rees-Mogg
Gold has a very high E-corr. That is, it doesn’t rust in typical ambient environments. That is its monetary significance.
“That is its monetary significance”.
Wow! Will wonders never cease to amaze me.
What good is gold if it’s dull and disintigrates?
Having someone who will kill or die for you is a form of money too; possibly the most valuable.
The fact that China has 64 million extra units and there was about 17 million extra housing units built in the United States are examples of how money flows these days .
This whole concept of building for investors and investing just to invest
without regard to need has taken over the world . For a short time it spawns activity and jobs ,only to have the useless unneeded housing units left vacant for no true long term demand . Than the banking and investment Entities want bail outs as well as the speculators wanting it .
If the responsibility of investment firms and Banks are to allocate money
in a sane manner ,than this sector has failed . It’s all about money flows and making money on the pumped up expectations ,aside from needs.
The “Greater Fool ” investment model is what took over because this is the quickest and most profitable way to make money short term ,regardless of true needs . The Money changers /Marker Makers needed to crash and burn and become less powerful and put back in their place ,
but instead they are alive and powerful and live on to reek more damage with their mis-allocation of funds and cheer-leading for pumped up
unneeded investments .
We would of been shocked if the Government bailed out Enron and than
gave more power to the corrupted and criminal CEO’s of that Company .but basically thats what occurred on a larger scale with the RE bail out .
The Politicians shored up a faulty system and a faulty model and the Casinos are still alive and kicking with the Middle class and the worker bee being the whipping boy .Nothing can be solved if corrupted institutions and systems are
shored up .Throw all the bums out of the Capital in Washington DC and start all over again . And the next time a Investment Banker makes the statement in essence that we must have the current casinos because we won’t be competitive with England ,throw that person overboard .
“The fact that China has 64 million extra units and there was about 17 million extra housing units built in the United States are examples of how money flows these days.”
It appears that both countries have in place systems where those who choose to overbuild do not directly bear the losses due to their folly. This is the typical problem with command-and-control systems of governance, as opposed to free-market capitalism, wherein those who make foolish investment blunders get to eat their losses without bailouts, funded by other people’s money, to make them whole again.
Remember the outrage over lavish Wall Street bonuses doled out in the wake of the financial crisis? The brouhaha supposedly put an end to the outrageous pay packages enjoyed by many American CEOs — and not just in the financial sector.
But over two years later, very little has changed. A new website launched by the AFL-CIO, aimed at focusing public attention on excessive executive compensation, touts some shocking numbers. Among them:
Last year, total compensation for CEOs averaged $11.4 million, up 23 percent from the previous year, according to data for 299 major companies.
CEOs at those 299 companies raked in a total of $3.4 billion. That’s enough to support over 100,000 jobs that paying the median wage of just over $33,000.
Average CEO compensation is 343 times that median wage.
Ray Irani (pictured), the outgoing CEO of Occidental Petroleum Corp., took in $76.1 million in compensation last year. Over the last decade, he received $857 million. “We’re not in the business to employ people. We’re in the business to make a profit,” Irani has said, according to the AP.
Evan at large financial services companies — where the furor over bonuses was focused — total compensation rose 5.7 percent in 2010, to a record $149 billion.
With increased wealth comes increased political control which of course leads to increased wealth at the expense of the rest of us.
news.yahoo.com/s/yblog_thelookout/20110420/ts_yblog_thelookout/labor-lavish-ceo-pay-still-rising
I thought the outrage was only for CEO at companies who took TARP money.
How can the markets be on a practically permanent upswing when the 5yr Baltic Dry Index looks like this:
http://www.bloomberg.com/apps/quote?ticker=BDIY:IND
(Click 5 year tab on chart after loading site)
Crashing Baltic Dry,
Unlike typical Realtors™,
Almost never lies.
Hmm. I never knew this- I thought it was a measure of how much tonnage was shipped.
wikipedia
“Most directly, the [Baltic Dry] index measures the demand for shipping capacity versus the supply of dry bulk carriers”
Arguably, after a huge, lengthy, world-wide boom, there may be more over-capacity in cargo ships, which could skew the index’s ability to reveal an early upswing in the world economy. Maybe.
A couple of railroads reported yesterday. Shipping volume up. Revenue up even more (price increases) and profits up as well. One RR was going to hire several hundred additional employees and re-commission a few hundred mothballed locomotives.
Here in Tucson, I live less than two miles from the Union Pacific tracks. As compared to a couple years ago, I’m hearing many more trains.
$6 gas… Bring it on!
$6 Gas? Could Happen if Dollar Keeps Getting Weaker
20 Apr 2011 | CNBC
A dollar plumbing three-year lows is hitting Americans squarely in the gas tank, and one economist thinks it could drive prices as high as $6 a gallon or more by summertime under the right conditions.
With the greenback coming under increased pressure from Federal Reserve policies and investor appetite for more risk, there seems little direction but up for commodity prices, in particular energy and metals.
Weakness in the US currency feeds upward pressure on commodities, which are priced in dollars and thus come at a discount on the foreign markets.
One result has been a surge higher in gasoline prices to nearly $4 a gallon before the summer driving season even starts, a trend that economists say will be aggravated as demand increases and the summer storm season threatens to disrupt oil supplies.
“All we have to have is a couple badly placed hurricanes which could constrain some of the refinery output capacity in some key locations,” says Richard Hastings, strategist at Global Hunter Securities in Charlotte, N.C. “If you get weakness in the dollar concurrent with the strong driving season concurrent with the impact of one or two hurricanes in the wrong place, prices could go up in a quasi-exponential manner.”
As I filled my thrifty car’s tank yesterday I saw a lot of frowns from the pickup truck crowd. I guess buying a 6000 lb, 400 hp truck to use as a commuter vehicle wasn’t such a great idea.
And gas is still $3.50 out here. If it reaches $6 I’ll be frowning (and telecommuting more)
NEW YORK (AP) — The rate on the 30-year mortgage fell last week, staying below 5 percent. But low rates have done little to lift the struggling housing market.
The Only True Standard Of Value
http://www.321gold.com/editorials/russell/russell042111.html
First the Philadelphia Symphony Orchestra declares bankruptcy, and now this:
Economic Report
April 21, 2011, 10:47 a.m. EDT
Philly Fed manufacturing index slumps in April
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — An index of manufacturing sentiment in the Philadelphia area slumped in April to a five-month low, showing growth at a much slower pace, according to a survey released Thursday.
The Philadelphia Fed’s index of current activity tumbled to 18.5 in April after a March reading of 43.4, which was its highest level since January 1984. Economists polled by MarketWatch had expected the gauge to fall to 35.5 in April.
…
So despite a collapsing dollar manufacturing is not improving. ie the we will export our way out of this mess story is a lie.
Of course. Everyone else jealously protects their markets, while giving “Free Trade” lip service.
The dollar has to collapse and remain at low levels over the mid to long-term for US manufacturing to pick up.
We have seen nothing but dollar decline in last 10 yrs. So how many manufacturing jobs were created as a result?
News at Noon: “Positive signs for the local economy as the housing market heats up.” The news anchor has touted this line all morning. The story just aired and the interviewee says nicer houses under $150k sell immediately because there is little quality inventory at that price point. So at that niche it’s a seller’s market.
I’m hearing from people I know looking that some open houses need traffic control. Interestingly enough though I was also told most attendees appeared to be empty nester boomers meaning the entry level buyer is MIA. (Maybe they all bought last year)
Couldn’t help but notice that RE “expert” didn’t comment on the mid and higher market price points or the number of homes in the under $150k price range that are not in good shape.
IN my neck of the woods there isn’t anything 400 and up that is moving. I’d say 300 and up is the worst place to be in my area. Wait until MID goes away the price in this range will collapse.
Sliver near $47.00 getting closer to the crash JP Morgan price every day. Those bastards are so short this will be fun to watch! Hang the banksters.
Is it really true? I knew Max Keiser talked about it a lot few months ago.
It is true, JP Morgue is massively short, some 3.2 billion ounces in paper contracts, as the calls come in down they go! Unless of course the taxpayer comes to the rescue and bails them out!
The good news for JP is the public is clueless. Now who’s on dancing with the stars this week
I doubt they are that dumb. Still, worst case scenario for them, taxpayer to the rescue. That’s standard procedure by now. Wouldn’t want that bonus pool to take a hit now, would we?
Yeah, before Goldman Sachs took over its status, JPMorgan was considered the Wall Street arm of the Fed.
The idea of the United States being a “democracy” didn’t surface until the 20th century. As Arnold Toynbee pointed out a true democracy is the road to suicide. He may have picked up the notion from Professor Alexander Tytler who wrote on the subject in 1776. Tytler concluded that under a democracy people discover they can vote themselves largess out of the public treasury and do so, bankrupting the government.
they can vote themselves largess out of the public treasury and do so, bankrupting the government.
Well, we really don’t have a “public treasury” as we have a huge national debt. Perhaps it’s more fair to say that they’ll bankrupt the productive/taxpaying members of the country?
Interesting anti-democracy meme developing on the Right. What might that signify? (Hint, it won’t involve your vote.)
Perhaps a Randian Hero to save us? (With commensurate powers, of course.
)
Didn’t Woody Allen wish that Obama could be our dictator a few months back?
Probably. He really needs to retire (Woody, that is). But I loved his early stuff!
Obama wishes everyday he was a dictator. So did Nancy
“Elections should not matter this much” Pelosi.
Well, you should know.
Yeah, the banksters and the top 5%er figured this out, and now look where we are.
American Banker/Pipeline
A roundup of credit market news and views
By Kate Berry and Sara Lepro
Lock Mess
Numerous mortgage brokers and loan officers apparently rushed to get as many loans as possible into the pipeline before their compensation plans changed this month.
But they rushed the wrong part of the process. On March 31, the day before the Federal Reserve’s compensation rule was originally scheduled to take effect, several firms saw an abnormally high volume of interest rate locks.
“Everybody was trying to get in whatever they could under the old plans,” said Marc Savitt, president of the National Association of Independent Housing Professionals, a trade group for brokers.
A secondary marketing executive, who did not want to be identified, interpreted the spike in locks less charitably: “They talked borrowers into locking on a specific day, which is proof that loan officers work in their own interests.”
If so, the joke’s on them, for two reasons.
First, the rule applies to loans for which borrowers submitted applications on or after the effective date.
So rather than scrambling to get rates locked on the eve of the effective date, loan officers might have done better to take more applications.
Moreover, the rule did not actually take effect until April 5, because at the eleventh hour Savitt’s group and the National Association of Mortgage Brokers — which had sued to block implementation of the rule — obtained a short-lived restraining order. That means brokers and loan officers had a few additional business days to take applications under their old payment plans.
The Federal Reserve rule bans any compensation tied to the interest rate or any other term or condition of the loan.
It also forbids brokers to “steer” a consumer to a lender offering less-favorable terms in order to increase the broker’s pay.
The rule allows a mortgage broker or loan officer to be paid by the borrower or the lender but not both.
Employers like Matthew Pineda, president of Castle & Cooke Mortgage LLC in Salt Lake City, have repeatedly told loan officers they could get paid the same based on other factors such as volume. Yet his firm recorded $11 million in interest rate locks on March 31 — the highest one-day volume in nearly a year.
“I would like to believe that loan officers were ignorant instead of that they didn’t believe management,” Pineda said.
I’ve mentioned numerous times that the debt crisis in Europe was a problem too easily forgotten; unfortunately, sweeping it under the rug only means a potentially bigger problem down the road. Last week, China’s first quarterly trade deficit in seven years caught the market off guard and stymied any immediate hope that China would float its artificially low-priced currency, the yuan. Now India, a country that boasts the 10th highest nominal GDP in the world, warns us that rising oil prices and crippling inflation may hamper its growth.
You might be rolling your eyes at that last one or take it with a grain of salt, but the health of India has now become paramount to the U.S., which is one of its largest trading partners.
As reported this weekend, India’s March inflation rate skyrocketed to 8.98% while core inflation — a measure that excludes volatile food and energy prices — jumped to a staggering 7.1%. If that wasn’t bad enough, January’s inflation figures were revised up from a previous report of 8.23% to 9.35%. It seems an almost foregone conclusion that the Reserve Bank of India will soon attempt to control inflationary pressures by raising interest rates by 25 or perhaps even 50 basis points.
With the cost of borrowing money rising, some of India’s largest sectors could feel an almost immediate pinch. India’s information technology sector, which accounts for more than 7% of India’s GDP, could see rapidly dwindling growth expectations. Infosys Technologies (Nasdaq: INFY - News) dove last week after reporting weaker-than-anticipated growth. This earnings report now casts a cloud over the entire IT sector, which also includes powerhouses Wipro (NYSE: WIT - News) and Cognizant Technology Solutions (Nasdaq: CTSH - News).
But don’t think just the IT sector could be in line for a slowdown. India’s automotive sector could be crippled by a double-edged sword. India’s auto giant Tata Motors (NYSE: TTM - News) is battling rapidly rising oil prices and a swift march higher in India’s interest rates. Both have the potential to put a major dent in Tata’s sales figures.
Even India’s banks face the significant reality of a slowdown in growth
http://news.yahoo.com/s/fool/20110418/bs_fool_fool/rx121032
Global event
Kohler’s $6,390 Toilet | FoxNews.com
Last week, I went to a party for a toilet. But not just any old John — I was out celebrating Numi, Kohler’s new top-of-the-line toilet. Between the champagne, gourmet hors d’oeurves and well-dressed crowd, Numi’s release might have been just about the most glamour a toilet has ever seen. But it only makes sense: This toilet isn’t just new, it’s super high-tech. It’s got bells and whistles you’ve never dreamed of having in the bathroom. Like…
- Custom Bidet: User can control pressure, temperature and angle.
- Tankless Design: Read: No chains to jiggle!
- Motion Sensor Lid: After 90 seconds of no movement, the toilet will close.
- Seat Warmer: Why should your bottom suffer from a chilly toilet seat?
- Foot Warmer: A vent beneath the bowl blows hot air to warm your feet and the cold tile beneath them.
- Automatic Seat: For male users, a motion sensor is activated by foot and causes the seat to rise and then lower when you’re away.
- LED lit back panel: Frosted glass is lit in an energy-efficient way.
- MP3 Hook-up: So you never have to be without your music.
- Remote Control: This touch-screen pad lets the user control all of these features from a wireless control. Should you want to activate the foot warmer in advance.
- A flat white surface designed for easy cleaning: Though we doubt anyone who spends over $6,400 on a toilet is planning to clean it themselves!
Pretty impressive, right? Wait, it gets better. This new toilet uses the smallest amount of water. It flushes on two settings, 0.6 gallons and 1.2 gallons. And yes, the Numi knows which one to use when. The Numi knows everything.
And where does Kohler build this fancy toilet?
Ummm, every major hotel in Tokyo has had those hi-tech heads for years. Encouraging though that someone thinks there’s now a market for them here.
But they are Toto, not Kohler. We recently got a .6/1.2 option Kohler for under $400. In Tokyo in the winter, however, the warmed seat option was wierd butt welcomed -
I’d be impressed if it was one of those greywater recycling toilets that “runs” via used bathroom sink water. ISTR that such toilets are already in use. In Japan.
Clipped from the 5Min. Forecast
“The fundamentals of the U.S. economy do not support an AAA rating,” Guan Jianzhong, chairman of Dagong Global Credit Rating Co., responded yesterday to S&P’s reticence.
Dagong Global is the Chinese firm that raised a jaundiced eyebrow last November by being the first to cut Uncle Sam’s credit rating.
Guan says he’s not impressed by Standard & Poor’s move on Monday to move its outlook for the United States from “stable” to “negative” — while keeping its AAA rating intact.
“The sovereign credit rating is a core interest of the U.S.,” says Mr. Guan, “the ratings have been nonobjective and unequal. [Congress] won’t ever make real cuts. We will consider a further downgrade in the U.S. rating, as the economy hasn’t shown any sign of improvement in its fundamentals.”
If history is any guide, we can expect many more of these kind of proclamations, from China, India, South Korea… Bangladesh… before anyone in Washington even begins to pay attention.
Dates back to Plato , where it is described in The Republic.
Voter vote in politicans ,who give money to get votes. economy collapses, and dictator takes over to save the wealthy.
what was that, 50BC
Yes, a middle class is indeed a historic rarity. Usually found only after a military development renders power unto the artisan/professional class- eg the development of the hoplite phalanx, the longbow, WW2.
Is Donald Trump bankrupting the GOP?
By Gloria Borger, CNN Senior Political Analyst
April 21, 2011 1:55 p.m. EDT
Editor’s note: Gloria Borger is a senior political analyst for CNN, appearing regularly on CNN’s “The Situation Room,” “AC360°,” “John King, USA” and “State of the Union.” Watch her Thursday on “CNN Newsroom” at 3 p.m. ET and “John King, USA” at 7 p.m.
Washington (CNN) — At this stage in a presidential campaign, there’s always someone — and sometimes it’s more than one — who flirts with running and thinks a few things, as in: Why not me? (I’m smarter than the rest of those clowns!) What’s the worst that could happen? (I’ll be in demand on the lecture circuit!)
My fill-in-the-blank (book, TV show) will be assured of take-your-pick (readers, ratings) and I will be rich.
Or, in Donald Trump’s case, richer.
…
The GOP has been bankrupt for 30 years now. Don Tramp merely cements that fact.
Yup, the new rich are all democrats; Buffet, Dimon, Blankenstein…….
Those three are registered retardicans. Sorry for crushing your delusion.
Man, you still drinking those kool-aids?
You got caught again.
Just found out the guy who shat at cars on the freeway in San Diego was caught. Doing a quick google search on his name, it turns out he was foreclosed on by Chase in 2001.. 10 years ago, but still. They claim he is currently a transient.
http://www.fox5sandiego.com/news/kswb-freeway-shooting-chp-expected-to-announce-arrest-freeway-shooting-20110421,0,6867825.story
http://users.ixpres.com/~gtriphan/def2001.txt
Jan 26, 2001 045240 Dragasits Stephen J Chase Manhattan Mortgage $167,400 1999-324412
Just found out the guy who shat at cars on the freeway in San Diego was caught.
Shat at cars? What was he, an angry bicyclist? A pissed off pedestrian who’d been splashed one too many times on a rainy day?
LOL! For a moment there I though the guy was throwing his feces at cars from an overpass.
I imagined him hanging his butt off the overpass, sh!tting on cars underneath. Disgusting, but it did have some symbolic value.
lol, what a great typo..!
I guess I’d rather get dumped on than shot at.
unless you have a convertable….
I’ll take a turd over a bullet any day.
Is terminal velocity for a turd 16ft. per second?
Go Fed… Print, baby, print!
Gold hits record for fifth session, dollar slides
Gold turtles and toads are displayed at a jewellery shop in Seoul April 21, 2011.
Credit: Reuters/Jo Yong-Hak
By Frank Tang
NEW YORK | Thu Apr 21, 2011 1:32pm EDT
NEW YORK (Reuters) - Gold prices rallied to record highs on Thursday for a fifth straight session and silver soared, as the dollar index tumbled for a third day, prompting investors to buy bullion as a currency hedge.
Gold, which jumped above $1,500 an ounce for the first time on Wednesday, once again rose in tandem with riskier assets such as equities on inflation fears.
“The driving factor is currency uncertainty. The dollar index is down again, so the inflation factor is creeping into the market,” said Bill O’Neill, partner of commodity firm LOGIC Advisers.
A weaker dollar means Americans will have to pay more for imports, which can feed inflation.
Spot gold rose 0.5 percent to $1,505.34 an ounce by 12:21 p.m. ET, after hitting a record $1,508.75 an ounce. U.S. gold futures for June delivery rose $7 an ounce to $1,505.90.
Silver gained 1.6 percent to $45.93 an ounce. U.S. silver futures trade was active, with volume approaching 150,000 lots, set to be one of the busiest sessions in 2011.
The gold/silver ratio — which shows how much silver an ounce of gold can buy — is set to fall for a ninth consecutive session to below 33, a 28-year low.
“Silver continues to attract huge speculative interest. Even though silver is outperforming gold, the genesis of this rally is still related to the flight-to-safety factors supporting gold,” O’Neill said.
…
A weaker dollar also means higher energy prices and inflation. On the positive spin, a weaker dollar over time brings outsourced jobs back.
Now I know you’re just repeating ideological mantra. We had a falling dollar from 2000- current while outsourcing skyrocketed during that period.
Picked-up my mail at lunch…three pieces from BofA VISA. Okay, more changes to the credit card agreement. Hmm, they can now change your interest rate up to 29.99% based on your credit worthiness? WOW!!
Gotta wonder how many peeps circling the drain will swirl down into the hole?
Hmm, they can now change your interest rate up to 29.99% based on your credit worthiness? WOW!!
All the more reason to pay cash.
You can cancel the card and pay the remaining balance at the previous rate.
But J6P needs his CC! How else can he (or she) finance junk he doesn’t need?
I figure the way the banks see it is that if you don’t close your account at 29.99% you really are as risky as they think you are.
“You can cancel the card…”
It’s tough to travel without a credit card. We buy almost all of our shopping needs on-line. We like our cards. However, I pay our cards to zero every two weeks, sometimes every weekend. Only debt we carry now is the mortgage, and that is down to $8,873 - zero by this August if our cars cooperate. Fingers crossed!
Early congratulations rms.
rms
Whoever the other person in “we” is along with yourself have done a GREAT job. I hope your cars cooperate. Congratulations to you both.
“We” is my stay at home wife and I, so it’s just me pulling on both of the economic oars.
Good for you, brother. And your wonderful wife for taking on the most important role ever: full-time mom.
The kids are in their growing years too; a pair of jeans becomes knickers in a few months! Orthodontic braces, Buffet clarinet, shoes, sporting goods, etc., makes me wonder how anyone raising family survives the economic gauntlet in this corrupt country.
http://vigilantcitizen.com/latestnews/michigan-police-search-drivers-cell-phones-durring-traffic-stops/
Michigan police are sucking data from the cell phones of motorists they pull over - WITHOUT a warrant, and without a peep from the so-called Tea Party conversatives.
This is why I joined the ACLU, even though I despise many of their positions.
And the sheeple continue their oblivious grazing. When and where will this stop?
It seems they have to plug your phone in to the device in order to scan it.
I guess the thing to do is refuse to turn your phone over- and see what that gets ya. If you’re arrested for that, I think you’ve got a good defense.
Philly Fed: Collapse in progress
http://market-ticker.org/akcs-www?post=184683
Despite the April reading, the business owners seem to have a pretty positive view of what their business world will look like six months from now.
After going through the Great Recession, and the headwinds of high energy prices, etc., and continued housing troubles, are they foolishly optimistic in the face of impending doom?
Or are they seeing positive signs about their business and the economy over the medium term that can’t be expressed in an 11 question survey?
I’d be more concerned about the Business Owner’s view of 6-months from now. These guys’ psyches have been hammered, and they will turn bearish on the first sign of trouble. They have not yet turned bearish.
RENO (Reuters) – President Barack Obama said on Thursday the U.S. attorney general was assembling a team to root out any fraud and manipulation in the oil markets that might be contributing to higher U.S. gasoline prices.
“The truth is, there’s no silver bullet that can bring down gas prices right away,” Obama said in prepared remarks for his opening statement at a townhall-style meeting in Nevada.
“The Attorney General’s putting together a team whose job it will be to root out any cases of fraud or manipulation in the oil markets that might affect gas prices - and that includes the role of traders and speculators. We are going to make sure that no one is taking advantage of the American people for their own short-term gain,” Obama said.
(Reporting by Jeff Mason, writing by Matt Spetalnick, editing by Alister Bull)
Naturally, no mention of hyperinflationary impact of the Fed’s limitless dollar printing.
http://market-ticker.org/akcs-www?post=184722
Obama Directs Holder to Indict Obama and Bernanke.
So basically he’s admitting that his presidency is over if the gas hovers around $4 a gallon?
When WTI oil hits $120 a bbl, it’s game for the Fed-Wall Street Ponzi market.
Perhaps sixty percent of today’s oil price is pure speculation
http://tinyurl.com/3sltdtf
Obama is a one term president; too many people have been hit in the pocket book. It’s a done deal, IMHO.
Who beats him?
Comment by Neuromance
2011-04-20 20:29:18
Hmmm… interesting angles.
There was a fellow on local radio the other day who had written a book on predicting the future. He noted the difficulty that experts had in doing so.
It’s like being in traffic and trying to figure out which lane is going to move faster. Recently I saw three lanes of traffic. The right lane was ending. The middle lane was more packed with traffic and there were a couple of larger trailer-towing vehicles. So I got in the left lane. But it turned out the lane with fewer cars and no large vehicles turned out to be the slowest. Why? A few slow drivers.
Don’t forget that everyone else nearby you had the same vantage point, with many others possibly deciding simultaneously to move over when you did.
That’s why it’s good to buy when everyone else is selling and sell when everyone else is buying; also good to buy a house when everyone says you would be crazy to do so, and to sell a house (or whatever) when everyone else thinks the price will never stop going up. Let the congestion effects due to bovine herd movements, which drive prices up or down, work in your favor when you can.
I could not have predicted that from my snapshot.
Another prediction problem is to figure out when, how and how much the government will intervene to dampen the effects of a fundamentals-based asset price movement. I knew real estate was going to crash after 2006, but I could not foresee the myriad government-sponsored efforts to dampen (slow down) the price move.
P.S. Based on the above discussion, I am pretty sure you would enjoy these books:
The Wisdom of Crowds
James Surowiecki
Micromotives and Macro Behavior
Thomas Schelling
Interesting observations.
Regarding the traffic incident… I couldn’t see movement from one lane to the other from my snapshot - going into a small valley… but yes, one needs to take into account what others see and how they would react. My lane still seemed less dense as I went up the other side of the valley. But it’s important to try and understand how many others have the information I have and how they will respond to it. I’m not doing “insider trading” when I am looking at the same thing that scores of others are looking at.
I spend a lot of time in traffic so this topic fascinates me, which lane moves faster. I’ve actually found that in general, over enough miles, it evens out. The speed of the lanes goes up and down. If someone could surf the back and forth effectively - and it’s difficult because you can’t always get over smoothly - one could gain a few minute advantage.
Thanks for the links. Regarding the wisdom of crowds, I’m reminded of this Demotivator:
“None of us is as dumb as all of us”
http://www.despair.com/meetings.html
“Back when I first began posting here in 2005, I said I’d pull the trigger on buying when I could get a concrete block shack for $50,000.00. Now that I actually can do it, I don’t wanna.”
Mine was/is a modest 3/2 1500sq ft in a good ‘hood/schools for $150k, and now I don’t want it either!
“Now that I actually can do it, I don’t wanna.”
Once the masses collectively adopt this attitude, and prices have finished adjusting downwards to reflect it, we will finally see a buyer’s market.
Realtors in Nor-Cal vacation community toured a neighbors house and could not agree on a reasonable asking price. All agreed that housing prices to drop here for 2 more years.
What I noticed on zillow. Most mid to upper-end houses on market for several years and do not sell. Unless a really special house: great lot and/or super clean. Those sell for about 2003-4 prices. Low end houses selling. Price circa 2000.
Noticed also there is a trend recently to up the selling price for those upper-end-not-selling houses. F.ex. listed 800K in 2008 then 700 K in 2009 then 600 K (or 599K ) in 2010, and NOW back on the market at 800 K. Are they (realtors) pre-empting a low-ball offer. It does not sound like they think that prices actually went up to peak level.
Americans hold dim view of U.S. economic outlook: poll
WASHINGTON | Thu Apr 21, 2011 10:54pm EDT
WASHINGTON (Reuters) - Americans are more pessimistic about the U.S. economic outlook than they have been since the start of the Obama administration and most believe the United States is on the wrong track, according to a New York Times/CBS News poll released on Thursday.
The number of Americans who think the economy is getting worse jumped 13 percentage points in just one month, to 39 percent, the poll suggested.
Just 23 percent said they thought the economy was improving, down 3 percentage points from the previous month.
Seventy percent of respondents said the country was heading in the wrong direction and most think neither President Barack Obama nor Congressional Republicans share their priorities for the country, the poll showed.
The dour mood is dragging down performance ratings for President Barack Obama and both parties in Congress with the 2012 election season already underway, the poll found.
Fifty-seven percent of respondents said they disapprove of Obama’s handling of the economy, while 75 percent said they disapprove of the way Congress is handling its job.
While Washington is consumed with debate over deficit-reduction proposals, Americans seemed uncertain about the impact of cutting the deficit on the U.S. economy.
Some 29 percent of those polled said cutting the deficit would create more jobs, while 29 percent said deficit-cutting would cost jobs and 27 percent said it would have no effect on the employment outlook.
The poll found considerable support for Obama’s proposal to raise taxes on the wealthy — 72 percent of respondents approved of that idea as a way to address the deficit.
…
GLOBAL FINANCIAL STABILITY REPORT
Reform and Strengthen Housing Finance, Says IMF
IMF Survey online
April 6, 2011
The severity of housing market booms and busts depends in part on the role played by government in mortgage lending, according to the latest research from the IMF.
The biggest crisis to rock the global economy in over 80 years was related to a crash in subprime mortgage lending in the United States, and the new IMF research sheds light on how housing finance can roil financial markets and hurt a country’s economy.
In the years before the crisis, lax lending standards and an overabundance of money led to an increase in mortgage credit growth, which in turn spurred the house price boom and bust of the 2000s.
“No matter which way housing is financed—covered bonds, securitized products, or just old-fashioned on-balance sheet bank loans - the depth of the bust is related to the underlying quality of the loans,” said Laura Kodres, chief of global stability analysis in the IMF’s Monetary and Capital Markets Department, in a press conference to launch the study.
The research looked at housing finance systems in some advanced countries, including the United States, Spain, Ireland, and the United Kingdom, and how they contributed to financial instability in the recent crisis.
The IMF found that government intervention in housing finance, such as subsidies to first-time homebuyers and capital gains tax deductibility, exacerbated house price swings, and amplified mortgage credit growth in the years before the recent crisis in advanced economies. The study also concluded that countries with more government involvement experienced deeper house price declines in the bust.
A common way to limit the destructive leverage associated with mortgage loans is a limit on the loan-to-value ratio. For advanced economies, limits on these ratios do seem to play a role in attenuating housing price booms and busts, but when emerging economies are added to the sample, the effectiveness is not apparent. This may be because some mortgages are not in the data as they are originated outside the official sector or that more people make large down payments, making a tightening of the ratio irrelevant.
…
Euro plunges, market finally cares about euro zone debt crisis?
April 21, 2011 10:13 AM EDT
After ignoring the worsening euro zone peripheral debt crisis for the last month, participants in the currency markets may finally be paying attention to it.
The yields on Portuguese, Greek, and Irish sovereign bonds surged on Thursday on fears that Greece will soon restructure its debt, which is a form of partial default that forces investors to accept some losses.
The current value of peripheral bonds, therefore, has declined in anticipation of the restructuring.
The market has long expected Greek debt to be eventually restructured. However, the surprise is that the time may come so soon.
Whereas the market tolerated and largely ignored the bailout process of Portugal – which in some ways was a repeat of what happened in Greece and Ireland – the prospect of debt restructuring brings in a new dimension to the European sovereign debt crisis.
This is likely the reason that the currency markets all of a sudden care now.
…
Bloomberg
Papaconstantinou Says Restructuring Holds ‘Huge Dangers’
April 20, 2011, 11:29 AM EDT
By Natalie Weeks
(Updates with minister’s comments starting in second paragraph, Portugal bailout in fourth.)
April 20 (Bloomberg) — Greek Finance Minister George Papaconstantinou said a debt restructuring held “huge dangers” and the country still wants to enter bond markets by early 2012.
“Our position is that a restructuring holds huge dangers for Greece’s economy, Greek banks, households and businesses,” he told reporters in Athens today. “I leave out the issue of what will happen in the rest of the European Union.”
Concern that Greece may need to restructure its debt has caused bonds to tumble across peripheral Europe. The slide reversed the gains of the previous week triggered by optimism that Portugal’s bailout request would stop contagion from the region’s debt crisis.
Greek, Irish and Portuguese bonds fell as a German government advisor said Greece will probably have to restructure its debt as its financing costs rise. The Greek 10-year yield increased 13 basis points to 14.61 percent, bringing its spread over German debt to almost 11.3 percentage points. The yield yesterday reached 14.66 percent, a euro-era record.
While Portugal will reach a rescue deal, markets will see it “as a danger” until details are released, Papaconstantinou said. Officials from the International Monetary Fund, the European Commission and the European Central Bank have been in Lisbon preparing to make available an estimated 80 billion euros ($116.2 billion) in funding.
…
More From Businessweek
* Greeks Gird for Losses as Debt-Cutting Odyssey Enters Year Two
* Greece Default Hit on Banks Cushioned by ECB, Goldman Says
* Merkel Faces Coalition Rebellion Over Future Euro-Area Bailouts
* Greece Default Push Risks Reviving Contagion as Bonds Plunge
* Greece Sells Bills as Two-Year Yield Tops 20%: Euro Credit
Around 1995 or 1996 the federal government prevented states from taxing federal pensions of federal retirees who moved out of the states in which they had worked and earned these pensions. This did not prevent these states from taxing the pensions of those receiving state pensions who retired from their state jobs. CA, for example can no longer tax pensions of federal retirees who worked in and retired in CA but who leave CA. CA can tax the CA state pensions of CA state employees who retire and leave CA.
I maintain that if the Fed and the Treasury had sat on their hands and let the housing crash take its course, we would already be in recovery mode by now. As it stands, the housing market is stuck in a financially-engineered liquidity trap.
April 21, 2011, 11:49 AM ET
Obama: Housing ‘Probably the Biggest Drag on the Economy’
By Nick Timiraos
President Obama said he’s concerned that housing is “probably the biggest drag on the economy right now” after being asked yesterday about the intractability of the housing crisis that is now entering its fifth year.
Obama was responding to question during Wednesday’s Facebook town hall from a homeowner in Williamsburg, Va.:
Obama put on his professor cap and provided a sanguine diagnosis of the crisis. Underwater borrowers aren’t spending much because they’ve lost wealth and job mobility is hindered because people can’t easily sell their homes and move, he said. His administration had made “significant progress,” he added, in working with mortgage lenders to renegotiate loans, despite the fact that these programs have been widely criticized by Republicans and Democrats for falling short of lofty goals.
But he also said that it would be hard for some buyers today because credit had become too easy during the bubble, when many investors took advantage of easy money and rising prices to flip homes for a quick profit. “We’ve got to strike a balance,” he said. “Frankly, there’s some folks who are probably better off renting.”
…
Who gives a flying fork about Madoff; I wanna see banksters from Megabank, Inc wear orange jump suits.
It’s not so much about no prison time, though, as that the banksters seem to have become richer and more powerful than ever as the rest of the U.S. suffers. It seems that crime really does pay, after all. In fact, it pays very, very well.
After Financial Crisis, Wheels Of Justice Turn Slowly
by Carrie Johnson
Yellow tape hangs on a fence during a protest outside the New York Stock Exchange last December. Almost three years after the financial crisis, most top Wall Street executives haven’t faced any criminal reckoning.
Spencer Platt/Getty Images
April 20, 2011
This week, a federal jury in Virginia convicted mortgage executive Lee Farkas of fraud and conspiracy charges that could send him to prison for life.
Authorities say Farkas tried to defraud banks out of almost $3 billion, in one of the biggest cases to come out of the mortgage crisis. And that, critics say, is the problem.
Almost three years after the economy nearly collapsed, most top Wall Street banks and their executives have emerged with no criminal trouble. And that’s making people angry.
Madoff And More
The argument that prosecutors have gone light on the nation’s largest banks for their role in the financial meltdown has become really popular — so popular that Charles Ferguson, the winner of this year’s Oscar for Best Documentary for his scathing Wall Street film, Inside Job, brought down the house at the awards ceremony with this line:
“I must start by pointing out that three years after a horrific financial crisis caused by massive fraud, not a single financial executive has gone to jail, and that’s wrong.”
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