Bits Bucket for June 10, 2011
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Americans’ home equity near a record low
Average household owes nearly $119,000 on mortgages, credit cards, auto loans and other debt.By DEREK KRAVITZ ~ MSNBC
WASHINGTON — Falling U.S. home prices have shrunk equity so much that the proportion of their homes that Americans actually own is near its lowest point since World War II.
Average home equity plunged from more than 61 percent at the start of 2001 to 38 percent in the January-March quarter this year, the Federal Reserve said in a report Thursday. That drop comes as home prices in big metro areas have reached their lowest level since 2002.
The Fed’s quarterly report shows how much wealth, or net worth, Americans have gained or lost. Net worth is the value of assets such as homes and stocks, minus debts like mortgages and credit cards.
Americans’ overall net worth grew 1.65 percent in the January-March period, to $58.06 trillion, because of stock market gains. Stock values as measured by the Dow Jones U.S. Total Stock Market Index gained $970 billion last quarter. But since then, they’ve lost $651 billion through Wednesday’s stock market closing.
The report showed that corporations are still hoarding cash. Excluding banks and other financial firms, companies held $1.9 trillion in cash at the end of the January-March quarter. That was slightly more than in the previous quarter and set another record.
I got to call BS on this one:
‘Falling U.S. home prices have shrunk equity so much’
This isn’t true. Note this:
‘Average home equity plunged from more than 61 percent at the start of 2001′
I distinctly remember that by 2005 home equity was at its post WWII low. Why was that, since it was near the peak of US prices? Debt, buying houses with little down and cash out refis/Helocs. So yeah, it has fallen even more since as people are unlikely to GAIN equity in a “great” recession. But lets not pretend that this happened because of falling prices.
There was a credit bubble?
The thing I don’t understand is that Bernanke openly admits that this is the worst economic downturn since the great depression (which he claims to be the formost authority on the subject), yet he allowed this event to happen on his watch. And he has the situation under complete control? How is his credibility any greater than that of Congressman Weiner?
“…yet he allowed this event to happen on his watch.”
The beginnings of it arguable occurred long before his watch began. Perhaps he showed up on the scene because he was viewed as well-qualified to shepherd the U.S. through this episode.
Definitely (IMHO).
I do not believe that the Federal Reserve is capable of reversing the depressive effects of offshoring and its attendant currency wars.
They aren’t. Only Congress is and they aren’t going to.
Republicans block ending offshore jobs tax breaks | Reuters
http://www.reuters.com/article/idUSTRE68R40I20100928
‘Falling U.S. home prices have shrunk equity so much’
Remarks by Chairman Alan Greenspan
At the annual convention of the Independent Community Bankers of America, Orlando, Florida
(via satellite)
March 4, 2003
Home Mortgage Market
Last year was surely one of the most memorable years ever experienced by the home mortgage market. Owing largely to the lowest mortgage interest rates in more than three decades and rising home prices, close to 10 million regular home mortgages were refinanced. I use the term regular mortgage to exclude both home equity and construction loans. The outsized dollar volume of these refinancings–by our estimates, $1-3/4 trillion net of cash-outs–was an all-time record and represented almost one-third of the value of all regular home mortgages outstanding at the beginning of last year. Total regular mortgage originations, at $2-1/2 trillion, also proceeded at a record pace.
As part of 2002’s process of refinancing, households “cashed out” almost $200 billion of accumulated home equity, net of fees, taxes, points, and commissions. That represented almost 3 percent of estimated total home equity at the beginning of the year, up slightly from the 2001 share. In no year prior to 2001, as best we can judge, did cash-outs exceed 1-3/4 percent of total home equity. Of last year’s cash-outs, approximately $70 billion was apparently applied to repayment of home-equity loans, and a significant part was employed to reduce higher-cost credit card debt, judging from the slowed pace of growth in installment debt outstanding.
…
I bet the are including the people who own their houses outright and Rhodes appraisals have gone down as “lost equity”.
“The report showed that corportions are still hoarding cash.”
“…hoarding cash …”
Lol. No reporting bias here.
“Americans’ overall net worth grew … because of stock market gains.”
That’s soon to change. For those who are troubled with large corporate cash hoardes and wonder just what these corporations are going to DO with these large cash hoardes, just wait until the next major stock market downturn and you will get your answer.
Cash rules. Those who have the cash get to set the prices. The next stock market downturn will shake out a lot of weak stock owners - the many folks who think that Price Equals Value. These stocks will be dumped enmasse at great discounts compared to present prices, great discounts compared to the historical mean.
And who is it that will be doing the buying? Why, it will be those large corporations who have these large cash hoardes, that’s who.
Think on this point for a moment: Just why would a corporation want to spend scarce money building new plant and equipment at current high retail prices when they can just wait awhile and buy all the plant and equipment they will need at garage sale prices?
Companies can just hoard cash, buy their own stock (or somebody else’s stock) when it’s low. Their stock purchase will increase demand and increase the price of stock. They then sell at the higher price. They can make their money profit without bothering with those pesky goods and services. (is this legal?)
So what is a little guy, sleeping on cash, supposed to do?
“So what is a little guy, sleeping on cash, supposed to do?”
IMHO he needs to seperate himself from the herd and convince himself that Price does not equal Value, that Value is determined by fundmentals, not by price.
Price results from opinions, value results from fundamentals.
Price offers one the opportunity to sell or to buy above or below the fundamental value. All a buyer has to do is determine the fundamental value of whatever it is that he wants to buy and then wait until the price drops below this fundamental value.
IOW, learn what stocks are really worth and then wait for the clearance sales. People do with most everything else they buy but they don’t seem to do this with stocks.
“People do with most everything else they buy but they don’t seem to do this with stocks.”
that’s because it’s gambling.
they need to extend the holding period for favorable capital gains tax treatment from 1 year to 3.
flush all the speculative turds and encourage stable long-term investment…maybe.
OX;
And they violate wage an hour laws too which the big OH doesn’t care much about. Unless you are illegals in a sweatshop.
The explosion of “intern” jobs that require you to have actual job skills.. that used to be paid a few years ago is staggering. Even companies on the NYSE are posting for free help.
It might simply mean that there are not that many good looking investments to be made, not when there is overcapacity everywhere. I don’t hear about companies (other than Chinese) building plants in China. That party seems to be over and the next one hasn’t started yet.
Agreed.
There is no demand to meet the extra supply created by new plants, etc.
“Americans’ overall net worth grew … because of stock market gains.”
The value of stocks is the share of their future earnings that will be paid to investors, rather than to top executives granting each other stock and options and bonuses.
That value is the 1.9% dividend yield, last I checked.
“they can just wait awhile and buy all the plant and equipment they will need at garage sale prices?”
In some industries, owning plants and equipment is the last thing they want… for example in apparel, most work is sourced through other companies that do the actual manufacturing. Makes it easy to switch sources in the ever changing pursuit of lower costs.
“…just wait until the next major stock market downturn…”
There’s ALWAYS going to be a “next major stock market downturn.” That just means you can’t leave your investments on autopilot, or worse, trust them to your broker. If you’re not going to do the work required to intelligently manage your equity investments, you shouldn’t have any equity investments.
Walmart just announced a stock buy back. They have nothing better to do with a few billion.
They have nothing better to do with a few billion.
weren’t a bunch of companies doing this ~5 years ago but with borrowed money?
Most stock buybacks never buy back as many shares as announced. It’s just a way to generate a temporary pop in the stock price. Wal Mart executives must have a lot of shares that are about to vest.
Cash rules
Yes, but cash wears the pants that for the past 10 years, gold has chosen.
“Americans’ overall net worth grew … because of stock market gains.”
There are 72 million Americans, or half the workforce, who prove this wrong.
BUT…
New sign of tough economy: More 401(k) loans
CBS | 06/09/11
A significant increase in the number of people taking loans out on their 401(k) retirement plans is seen by analysts as fresh evidence of hard economic times.
One-in-seven people took out such loans last year — up by double digits from 2009, according to the consulting group AON Hewitt.
Sheri Chaney Jones, of Columbus, Ohio, started a consulting business in October and borrowed from her 401(k) to help pay her bills.
“It was extremely easy,’ she told CBS News, adding that her financial planner told her “she was seeing more and more people” do it, “because the banks were not giving loans out traditionally to small businesses anymore.”
“It’s not right for everyone,” Jones noted, ” but it is your money, you can borrow from it tax-free, you do pay yourself back at interest, but a very low interest, much lower than maybe a traditional bank.”
“What I feel optimistic about,” Jones says, “is that I will be able to grow this business to not only pay myself back at the current interest, but continue to contribute more toward the 401K than I would have if I would have stayed where I was.”
Sheer the sheep.
When you can’t sheer the sheep anymore then that is the time to skin them.
“When you can’t sheer the sheep anymore then that is the time to skin them.”
Baaaah Baaah Baaaah
Sheri Chaney Jones, of Columbus, Ohio, started a consulting business in October and borrowed from her 401(k) to help pay her bills.
Ummm, Sheri, excuse me, but what kind of consulting business did you start? Reason for my question: Consulting is largely based on what you have upstairs in your head.
Which means that, unless you’re doing consulting that requires the purchase of expensive gear like laboratory equipment, your startup costs should consist of nothing more than the purchase of a telephone (a smartphone would work wonderfully), a calling plan, and a computer. That’s it.
As for the phone, honey, you’ll need it. Because when you’re getting your practice off the ground, you’re going to be spending days, weeks and months on it, prospecting your butt off. That’s how business works. If you don’t prospect your butt off, no one will even know that you exist, much less pay you some of their hard-earned money for your expertise.
Your office, so to speak, could be in a corner of a bedroom or in a nook in the kitchen. Really. Many successful consulting practices have started this way.
And you can get inexpensive stationery packages (letterhead, business cards, and envelopes) at any quick printer. They usually display a selection of options near the checkout counter.
So, I call BS on this borrowing against the 401K to pay the bills.
Maybe business cards, too.
More likely Shari used her 401K to pay the mortgage and food, since she had no other job income. I guess they think it’ll only be a few months before the consulting money rolls in.
I have never heard of a 401(k) plan that lets you borrow when you aren’t currently employed by the corporation that runs the plan. Leaving employment means you generally have to pay it back, pronto.
There may have been a fairly recent “innovation” in this area that allows it (maybe secured by an asset?), but I don’t think so.
Well Slim, as you should know, the failure rate for news business is about 90%.
Contrary to common folklore, the days of tripping over your own feet and being successful are long gone and it gets harder each year as our economy has been contracting for 30 years.
For that matter, the days of hustling your butt off and being successful are gone as well. If you aren’t lucky or extremely well capitalized, you should forget about throwing your savings away on a business.
For that matter, the days of hustling your butt off and being successful are gone as well. If you aren’t lucky or extremely well capitalized, you should forget about throwing your savings away on a business.
You’d better not throw your savings away on a business, even in the best of times. If anything you should be so tight with your money that Ebenezer Scrooge will be seeking you ought for a refresher course.
“…you do pay yourself back at interest.”
?
Math can be fun.
The interest paid on 401K loans accrues to the account, thus you pay your own account the interest. The rule is a measure to mitigate against altering the compounding of gains in the 401K long term.
So is she doing this consulting gig very, very part time? Because you have to pay back 401(k) loans as soon as you leave the company. Is her employer OK with her side business? Is it interfering with her regular work? Because if the employer who has the 401(k) set up decides that she is not such a great employee anymore, she had better be able to pay back the loan or pay the tax and penalties on an early withdrawal PDQ.
“Right now we have 30 percent of people who have 401(k)s have loans against their 401(k)s, which is a historic high. And the problem is, it’s growing like crazy: By 2014, we’re expecting to see 30 million people take loans against their 401(k)s.”
This is interesting info. But I hate writing such as this. Why don’t they stay in percentages or go with numbers for both examples? Or at least list how many people have 401(k)s. Then we can properly compare the two and understand the growth in question.
China warns U.S. debt-default idea is “playing with fire”
(Reuters) - U.S. Republican lawmakers are “playing with fire” by contemplating even a brief debt default as a means to force deeper government spending cuts, an adviser to China’s central bank said on Wednesday.
The idea of a technical default — essentially delaying interest payments for a few days — has gained backing from a growing number of mainstream Republicans who see it as a price worth paying if it forces the White House to slash spending, Reuters reported on Tuesday.
But any form of default could destabilize the global economy and sour already tense relations with big U.S. creditors such as China, government officials and investors warn.
Li Daokui, an adviser to the People’s Bank of China, said a default could undermine the U.S. dollar, and Beijing needed to dissuade Washington from pursuing this course of action.
“I think there is a risk that the U.S. debt default may happen,” Li told reporters on the sidelines of a forum in Beijing. “The result will be very serious and I really hope that they would stop playing with fire.”
China is the largest foreign creditor to the United States, holding more than $1 trillion in Treasury debt as of March, U.S. data shows, so its concerns carry considerable weight in Washington.
“I really worry about the risks of a U.S. debt default, which I think may lead to a decline in the dollar’s value,” Li said.
“China is the largest foreign creditor to the United States, holding more than $1 trillion in Treasury debt as of March, U.S. data shows, so its concerns carry considerable weight in Washington.”
Don’t worry, China, just print out those Treasuries and make toilet paper out of them, sell it to WalMart and Voila! You’re in the money!
“… a default could undermine the U.S. dollar…”
Lol. A DEFAULT could undermine the U.S. dollar? Does any of these guys think that maybe because we are endlessly BORROWING MORE MONEY THAN CAN EVER BE REPAID might somehow have a hand in undermining the U.S. dollar?
The tail so wants to wag the dog.
Money is fungible.
A man makes a paycheck. He diverts part of his paycheck to a fund where he takes his buddies out for drinks. When the man arrives home, his wife asks for money for food for the kids. The man tells her she needs to cut the food budget because his paycheck is too small to to pay the bills. The wife mentions the parties, and that perhaps his buddies could drink three bottles of wine instead of four. The man tells her she’s too flagrant with her budget and that she should eat cake.
Money is fungible.
The man tells her she’s too flagrant with her budget and that she should eat cake.
Or at least drink more.
Manly men drinking wine?
‘“I really worry about the risks of a U.S. debt default, which I think may lead to a decline in the dollar’s value,” Li said.’
The dollar is already down relative to gold by what, 97% or so, since the late 1960s? I think Li may have a point.
ANYBODY who is going long USD needs to look at the jacket they are wearing. There is a very strong chance it’s made of wool. Yes you are a sheep whether you know it or not.
To anyone on the fence about investments be very careful about fables regarding the long term strength of the USD. Study history. Look at the history of EVERY fiat currency. They all have a similar ending. Exactly similar.
Inflation is the only PC way out of our debt problem.
The only way. Don’t be distracted by the day to day BS.
OK, look at what just happened. You prefaced an argument with dismissal, zested it with insult, proceeded on to a slogan and climaxed with a declared Truth.
I’m suspecting that your mind is not prepared for discovery of the unexpected. The resulting strategies may have an element of brittleness.
So you can point out a fiat currency that has not eventually been devalued?
“Look at the history of EVERY fiat currency. They all have a similar ending. Exactly similar.”
What is it?
Devaluation, normally through departure from PM backing to paper, then printing.
I know you knew that answer already, so I question the reason for asking the question in the first place.
Would you care to name a fiat paper currency that hasn’t steadily been devalued against a basket of goods?
I was curious about their ‘ending’:
“They all have a similar ending.”
They end with replacement by something else, a gold standard or another more trusted fiat replacement (e.g. Panama); but most often they are used as fuel for the heating stove.
Realtors Are Liars
Good point.
beautiful!
Auto Dealears are liars
exeter
I don`t know when your birthday is but here`s my present.
“charming man and talented liar”
Irvine real estate broker admits $4.3 million Ponzi scam
June 08, 2011|By BRIAN MARTINEZIRVINE – Beware of false profits.
David R. Sparks – a veteran real estate broker, former Irvine Planning Commissioner and active church member – defrauded 34 friends, relatives and clients of $4.265 million with an elaborate Ponzi-style investing scheme starting in 2007.
The 50-year-old Irvine family man cooperated with the FBI, confessed his crimes and agreed to plea guilty to felony interstate wire fraud, according to documents filed this week in federal court in Santa Ana by the local U.S. Attorney’s Office.
Details from his signed plea agreement, two uncontested civil lawsuits and victim statements to the Register paint a picture of Sparks as a charming man and talented liar who claimed to be buying, rehabbing and selling foreclosed or pre-foreclosure homes that he never actually purchased.
He forged bank documents, used non-existent escrow companies, provided bogus status updates and falsely reported significant profits, victims said. If they did not want to reinvest their money with him, Sparks made up excuses for why he could not give it back.
http://www.ocregister.com/news/sparks-303684-irvine-choi.html - 169k -
David R. Sparks – a veteran real estate broker, former Irvine Planning Commissioner and active church member – defrauded 34 friends, relatives and clients of $4.265 million with an elaborate Ponzi-style investing scheme starting in 2007.
I’d venture to guess that this guy is a psychopath.
And a realtor….. and a liar.
Don’t you mean, “….. and THEREFORE a liar”?
Yes but either works considering “realtor” and “liar” are synonymous.
Realiartor? Unfortunately it doesn’t easily roll off the tongue.
Realiar, maybe?
Realiar…… yeah I like that Bill. Accurately stated. Real-Liar…. or realiar. Smooth.
“I’d venture to guess that this guy is a psychopath.”
+1 Favorite hobby — gently grooming their victims.
I no longer feel sorry for people who get conned. There are thousands of honest people trying their hardest to make a living and struggling to do so, yet people will dismiss them in favor the smooth talking con man every damn time.
I see it every day.
The last two weeks have been a roller coaster at work. The result: I have been promoted. So you can see how I was stressin’: you may not have a job, you have a job, hey, here’s a better job. And not only that, but I had a choice of two, maybe even three. I’m thrilled, but WTF!
Hey, the great news: more money to buy a house… NOT.
Yay, Muggy!
Seconded. Yay, Muggy!
Congratulations!
But I still think you need to buy that bogus co-worker who stabbed you in the back a deer hat and take him on a camping trip.
Here is a model.
http://www.texashuntfish.com/app/forum/26860/First-Time-Deer-Huntress-and-My-Lucky-Hat - 50k -
“bogus co-worker who stabbed you in the back”
I am not a vindictive person, so no deer hat for her, but I certainly won’t be going out of my way to help her if she ever needs it.
Become her newest best friend, and as her newest best friend convince her she should buy a house.
“Become her newest best friend, and as her newest best friend convince her she should buy a house.”
Now that`s cold. The deer hat idea was much more compassionate.
Combo, you are truely evil.
“Combo, you are truely evil.”
Lol. Thank you. I had to work hard to get this way.
I had great teachers. Some of the greatest lessons I ever learned in life were from my enemies.
(Most of the above is done tounge-in-cheek, but not all of it. I’ll leave you to decide which is which.)
“There are only two people who can tell you the truth about yourself - an enemy who has lost his temper and a friend who loves you dearly.” - Antisthenes
And the friend is probably still fudging.
I am not a vindictive person, so no deer hat for her, but I certainly won’t be going out of my way to help her if she ever needs it.
And if she asks you for help, take your time when:
1. Getting back to her.
2. Actually helping her.
Chances are she good that she didn’t just stab you in the back. And, over time, the stab-ees have a way of uniting. Which doesn’t end well for the stabber.
Mugz,
You want to turn the world upside down? Be there to help her in her darkest moment.
Be there to help her in her darkest moment.
I’m not sure that Muggy’s the sort that would help a gal through a case of mega-cramps. Especially when he’s not married to said gal.
“Be there to help her in her darkest moment.”
You mean call her up and let her know that I may be able to work out a loan modification?
Ya know, I thought I had an original idea here. After reading the caption above the picture of the deer hat, I guess not.
My sweet husband invited me to go hunting with him this year. I Couldn’t believe it…the first time ever! I never thought he’d be willing to share his ‘guy time’ with me. And being the thoughtful man that he is, he even gave me an opening day present.
He calls it ‘The First Timers Lucky Hat’. I’m so fortunate to be married to him. See the attached picture of me in my lucky hat.
Congratulations Muggy. I hope the promotion came with a significant pay raise, ‘cuz now you’ll be doing your old job plus you’ll have a bunch of new tasks/responsibilities as well.
Of course it’s still better than no job.
Man congrats on the windfall and not only surviving but being noticed as valuable in the tough environment. Does the route you got there make you afraid to spend a penny of it?
I’ve been beseigned and I mean beseiged w/people telling me I’m too conservative. Went a few rounds w/a well meaning friend recently who basically told me my whole premise is completely wrong. I stood my ground but will breath a slight sigh of relief when the government largesse can’t flow anymore and the truth is revealed.
I stood my ground but will breath a slight sigh of relief when the government largesse can’t flow anymore and the truth is revealed.
I’ve felt the same way at times, but I fear for what it will really mean when this time comes.
Awesome news, Muggy!!!
Congratulations on your new promotion!
Squatter Nation: 5 Years With No Mortgage
4.2 Million Borrowers Not Paying Mortgages
By Les Christie
POSTED: 9:16 am EDT June 9, 2011
NEW YORK (CNNMoney) — Charles and Jill Segal have not made a mortgage payment in nearly five years — but they continue to live in their five-bedroom West Palm Beach, Fla. home.
The Segals have been doing that — in court. They bought their home in 2003 with an adjustable rate mortgage. After a few years, their monthly payments tripled to $3,000, just as their home-inspection business was cratering.
The Segals want the bank to modify the mortgage so payments are affordable, and they think the court will agree that their lender put them into a toxic loan.
“The evidence will show that we were defrauded,” said Jill Segal.
If they lose, of course, they’ll finally have to leave. And, unfortunately, more than 50 months of missed mortgage payments hasn’t translated into big savings.
“It’s very hard to save,” said Jill Segal. “Our company’s billing is 90% off and my husband is only working about four days a week.”
Lynn, who didn’t want her last name used, purchased a two-bedroom on Tampa Bay in 1998 for $135,000.
As the waterfront property’s value skyrocketed, eventually reaching $750,000, she refinanced twice (once to expand a business), and took out a second mortgage. She now owes more than $600,000 on the home, which is worth only $235,000.
Living in this foreclosure limbo is “Hell,” Lynn said. “I feel like I’m locked in a box. I work for a financial organization and if this came out, it could cost me my job.”
http://www.thebostonchannel.com/money/28180992/detail.html - -
The Segals have been doing that — in court. They bought their home in 2003 with an adjustable rate mortgage. After a few years, their monthly payments tripled to $3,000, just as their home-inspection business was cratering.
Ride the bubble up, ride the bubble down.
Isn’t amazing that people refi-ed their houses to expand their businesses?
Uh, check your business plan.
One of my photography mentors is named Leslie Burns. (For a fun time, check out her Burns Auto Parts site. It’s a real hoot.)
She’s of the mind that refinancing the house to fund a photography business is a bad idea. Make that a very bad idea.
Now, I’ll admit that photo gear is expensive, but here’s an idea that will tickle the fancy of a lot of you: It’s quite easy to rent photo gear at very reasonable prices.
So, if you’ve got a hankering to get your hands on a top of the line Nikon or Canon, go to sites like BorrowLenses.com and rent to your heart’s content.
Even worse is borrowing for a home inspection business which requires less than $1000 worth of equipment.
Even worse is borrowing for a home inspection business which requires less than $1000 worth of equipment.
I had a buddy plan to become a home inspector after being laid off from a job. Good guy, very handy, and it suited him. He got a good severance, so it made sense.
There were costs involved in taking the course/test for certification. Of course he never actually took the test, so he just wasted the money for the course…
But you have to show up on site in a new big rig, don’t you?
I have less contempt for those people, and for those who HELOCed themselves to poverty to pay medical bills or to cope with unemployment and other emergencies, than I do for those who lived large.
Taking out a loan to grow a business is a risk, but it is a socially useful risk. You need 20 people to take it for everyone who succeeds.
I have a bipolar friend that gets wild ideas when he is in a mood swing and is absolutely sure, absolutely sure, that he can not make a mistake. A few years ago he mortgaged his house, sold two rentals he owned outright, and drained his 401K (without holding any aside for taxes), all to invest in a really stupid business. Business failed. He couldn’t come up with the tax money. He’s lost everything and the IRS is treating him harshly.
That old saw about all your eggs in one basket is pretty useful. BTW, where did all the PM maniac posters go?
where did all the PM maniac posters go?
Maybe they’re out buying stuff.
LOL
Not a PM maniac, but I do own Ag. Bought at $15; peak was $48; it’s at $36.50. BFD. Not selling.
BFD. Not selling.
Same boat, tho kinda wish I had done something to not have such a large draw-down. Either some PUT options or selling CEF when it was up at $25. Oh well, hindsight and all that..
I bought at $5. Not selling either. It’s insurance.
I thought about that hedge, but I was too lazy to set up my account to allow me to do it.
$5? Nice work. After it dipped from $15 to $9, I wanted to buy more but had run out of cash. No home to re-fi either. Ha!
This PM nut isn’t selling either. I did by some SLV July 36 calls today.
“Uh, check your business plan.”
Prostitute = House Seller - something they want to sell
john = House Buyer - something they want to buy
Pimp = Realtor - % of sale
It checks out.
“The evidence will show that we were defrauded,” said Jill Segal.
They bought a house in 03
Apr-2003 15201/0900 $302,933 WARRANTY DEED SEGAL CHARLES F &
and for good measure and more refi room a condo in 05
Oct-2005 19538/1102 $175,900 WARRANTY DEED SEGAL JILL P &
Document Detail
Type: MTG
Date/Time: 4/6/2004 08:23:31
CFN: 20040184499
Book Type: O
Book/Page: 16762/662
Pages: 7
Consideration: $100,000.00
Party 1: SEGAL CHARLES F
SEGAL JILL P
Party 2: SOUTHTRUST BANK
Legal: HAMILTON BY 1A & 1B L71 L
Document Detail
Type: MTG
Date/Time: 5/11/2005 12:49:43
CFN: 20050284566
Book Type: O
Book/Page: 18557/189
Pages: 25
Consideration: $382,500.00
Party 1: SEGAL CHARLES F
SEGAL JILL P
Party 2: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC
AMERICAN HOME MORTGAGE ACCEPTANCE INC
Legal: HAMILTON BY 1A & 1B L71 L
Document Detail
Type: MTG
Date/Time: 6/3/2005 13:47:53
CFN: 20050341011
Book Type: O
Book/Page: 18685/1269
Pages: 7
Consideration: $99,000.00
Party 1: SEGAL JILL P
SEGAL CHARLES F
Party 2: CITIBANK FEDERAL SAVINGS BANK
Legal: HAMILTON BY 1A & 1B L71 L
Document Detail
Type: MTG
Date/Time: 2/10/2006 09:12:05
CFN: 20060084263
Book Type: O
Book/Page: 19916/915
Pages: 33
Consideration: $134,320.00
Party 1: SEGAL JILL PATTI
SEGAL CHARLES FEDERIC
Party 2: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC
FIRST MAGNUS FINANCIAL CORPORATION
Legal: PARK VIEW AT PALM BEACH CONDO U311 U
How can you be defrauded if you’re a serial refinancer?
I mean, come on. You make the choice to borrow against the house, you sign the papers, and uh-oh, there’s a second (or third) mortgage on the place. None of this stuff just happens.
“How can you be defrauded if you’re a serial refinancer?”
Didn’t you see the memo, RE always goes up?
“MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC”
Does Ben still hold that the robo-signing crisis is no big deal? In the long run I agree, but for the short run, I would guess many of the 4+m U.S. homes in default but not foreclosure are in robo-signing purgatory.
“…in robo-signing purgatory.”
I’m in the moderator’s purgatory. They say it’s crowded here, but I can’t see anyone; Big V? Been looking for the exit, but I haven’t found any walls yet either. Maybe the RE bubble will pop, the exit will appear within arm’s reach, and stepping through I’ll see blue skies again…like Logan’s Run.
journalism is dead.
It died back in the 1980s when regulations were repealed that prevented consolidations of newspapers, radio and TV.
Now only 6 corporation own 90% of American MSM. And contrary to wingnuts beliefs, corporation are by definition, not liberal.
Lynn, who didn’t want her last name used
purchased a two-bedroom on Tampa Bay in 1998 for $135,000.
she refinanced twice
She now owes more than $600,000
if this came out, it could cost me
Oh no Lynn, I wouldn`t want anything to cost you. That would be terrible! You deserve that $400k+ you got out of that condo. Now you have to live in this foreclosure limbo in a $600,000 box for free.
Lose your job with a financial organization, that`s a start. My name isn`t Muggy and I`m thinking tar and feathers.
i really do not like this person…jill.
Is that a Seinfeld quote? Sounds like something George’s mother would say.
Dr. Suess.
nah…i watched the remake of “true grit” the other night and have a temporary fascination with contractionless speaking…and writing.
From yesterday:
“Comment by Eggman
2011-06-09 15:41:01
What I don’t get is that she says she doesn’t have enough money to pay rent. If not, then how does she expect to make any mortgage payment?”
Likely because this lady was paying the minimum payment on an option neg-am. And I suspect that those mods that they want are a modification to make that same low payment permanent. Maybe she thought about walking on the house, only to find rent on an apartment is more expensive than staying in the house and defaulting. No wonder FB’s are staying put until the sherriff arrives.
Or maybe it’s just that she doesn’t make enough to pay rent on a comparable property to the one they now live in for free? She could always move into a shared room.. even on minimum wage.
Big banks penalized for lack of homeowner help
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 11:31 a.m. Thursday, June 9, 2011
Three of the nation’s largest home loan servicers are losing government financial incentives for their failures in helping struggling homeowners modify their mortgages.
It’s the first time the Treasury Department has imposed a fiscal punishment on servicers since the federal Making Home Affordable program was announced in 2009.
Bank of America, J.P. Morgan Chase and Wells Fargo Bank, will all have money withheld after a report released Thursday found they were in need of “substantial improvement” in the handling of the multi-billion dollar foreclosure prevention program. The three servicers received about $24 million in May from incentive payments.
“While we continue to get tens of thousands of new homeowners into mortgage modifications each month, we need servicers to step up their performance to meet the needs of those still struggling,” said acting Treasury Assistant Secretary for Financial Stability Tim Massad.
http://www.palmbeachpost.com/money/foreclosures/big-banks-penalized-for-lack-of-homeowner-help-1528909.html - -
“we need servicers to step up their performance to meet the needs of those still struggling,”
What can the servicers do, really? If they don’t own the paper, what are they going to do, track down all the members of any pension fund that holds the toxic mortgage, or Joe Doakes or whoever and ask them if it is OK to modify the mortgage? I mean, assuming they can even find out who owns the paper.
I really think this whole thing is such a sham and just another reason to give banks some moolah.
ABOLISH THE FED.
If the servicers don’t have the authority to alter the mortgage agreement without consulting the note owners, do they have the authority to initiate foreclosure proceedings without consulting them?
Yes. That was contemplated (even in a great economy, some people will stop paying and have to be foreclosed on), but simply forgiving a large portion of the principle was not contemplated as a right that the servicers would need. No one thought that doing that sort of modification would turn out to be a better deal for the bond holders than foreclosing. Given the rate of defaults on the modifications, it is still questionable that it is better for the bond holders to do a modification in most cases, but there is little chance it was included as an option in the servicing agreements.
You give them a reduction and you have to give everyone a reduction. Then they want another one.
I’m not so sure servicers don’t have the ability to modify loans. Sounds like the MBS holders are pissed off at the piss poor job they’re doing at it:
timesnewsdotnet
By Karen Weise ProPublica
“Servicers handle the day-to-day of working with homeowners on behalf of the investors, who bought bundled mortgages from Wall Street. But investors are now threatening servicers with legal action. Just like homeowners, investors are frustrated by the poor job in modifying loans that servicers have been doing. They also say servicers are looking out for themselves, not investors’ interests as their contracts typically require.”
“do they have the authority to initiate foreclosure proceedings without consulting them?”
Probably, since that’s the accepted legal procedure in the event of a default. It’s what’s usually done, whereas mortgage modifications, not so much. Again:
“this whole thing is such a sham and just another reason to give banks some moolah.”
“ABOLISH THE FED.”
Bang that drum Palmy!
Great! How does one go about that? The folks in CON-gress can do it, but who do you think owns them?
What will our new currency be? The Euro?
“How does one go about that? The folks in CON-gress can do it, but who do you think owns them?”
The bankers only own them because the folks in CONgress agreed to it, long ago. We can get CONgress to disagree to it, and assert our ownership of them. It’s nothing more than agreements, if you read the history of bankers, going back to Rome.
And don’t buy the canard that CONgress can’t issue the money, they can. And should. They’re driven half-mad by the bankers, the original con artists. Constant contact with d*cks like that will drive a body insane. We have to disconnect our representatives from the bankers. The courses of action they take are urges by the banskters.
Whatever it takes.
“What will our new currency be? The Euro?”
Greenbacks. Eff Europe. It’s already effing itself.
Banks promised to do something, they were paid, they didn’t do the thing, they have to give the money back. How is this being “penalized?” This is right in the contract.
Question to government: why did the banks get their money up front, while the Cash-4-Clunkers dealers had to buy the clunker first and only then collect the incentive after filling out a 34-page form?
Question to banks: how much interest did you earn on $24 mil for a month — maybe using the discount window scam? It wouldn’t surprise me if you ba*tards signed up for HAMP just to play the float.
Keep hope alive among the FBs. Keep the “F” firmly attached to the “B”.
Do not allow the F to be come detached from the B because then hope will die and the FB will pack up and leave and the bank will be stuck with an empty house.
Better to superglue the F to the B by making a bunch of empty promises and suggestions to the FB that it is he, and not the bank, that is the true owner of the house and that the FB should stay and keep pouring his time and money into maintaining the house so it will be in good shape on the day that the bank decides to drop the hammer on the FB and throw his dumb ass out into the street.
Do not allow the F to be come detached from the B because then hope will die and the FB will pack up and leave and the bank will be stuck with an empty house.
In mine own nabe, I think I’ve just spotted the third case of that. The other two have been foreclosed on.
As for this latest case, it was one of those properties that apparently was bought by out-of-town parents wishing to stash their kids in a residence that’s close to the University of Arizona. The kiddies moved out a few weeks ago.
They left a beat-up piece of…
…furniture on the public sidewalk. Blocking the sidewalk, in fact.
They also left a yard full of trash and tall weeds.
So, I used the city’s handy-dandy online code violation report form and turned in the address.
As has happened before, this empty property got cleaned up in a jiffy. Weeds have been cut to USMC boot camp haircut height. Trash is gone. Junk furniture also.
But what’s most notable is the interior of the house. Whoever cleaned it left the living room curtains wide open. And, man, you should see the hole that got punched in the drywall. It’s much, much bigger than a bread box.
Methinks that this trashed “investment” has been discarded by its out-of-town owners.
Penalized? All they are doing is not receiving what was free money in the first place!
Patrick grants managers 3% raise
“While we acknowledge that our economy is not fully recovered, this wage adjustment is the right thing to do to help the Commonwealth retain and recruit a talented and competitive workforce that can continue to work hard for the people of Massachusetts,’’ Patrick said in a statement that chronicled sacrifices by state employees during the recession, such as furlough days and high health care payments.
Bonnie Keefe-Layden — chief executive officer of Rehabilitative Resources Inc., a Sturbridge-based nonprofit organization that contracts with the state to house people with disabilities — called the management raises shocking. For three years, she said, the state has resisted giving raises to 30,000 contract employees who make about $12 an hour to work with elderly and disabled residents, helping them shower, get dressed, and accomplish other basic tasks.
“Nothing’s wrong with anyone getting a raise,’’ Keefe-Layden said. “But if you’re keeping an entire sector of the lowest-paid people from getting a raise while giving management a raise, that’s just mind-boggling.’’
http://www.boston.com/news/local/massachusetts/articles/2011/06/10/patrick_gives_3_percent_raise_to_state_managers/
“While we acknowledge that our economy is not fully recovered, this wage adjustment is the right thing to do to help the Commonwealth retain and recruit a talented and competitive workforce that can continue to work hard for the people of Massachusetts,’’ Patrick said in a statement that chronicled sacrifices by state employees during the recession, such as furlough days and high health care payments.
Here we go with that talent retention argument. Again.
“Nothing’s wrong with anyone getting a raise,’’ Keefe-Layden said. “But if you’re keeping an entire sector of the lowest-paid people from getting a raise while giving management a raise, that’s just mind-boggling.’’
No, that’s just business as usual.
Marie Antoinette didn’t get it either.
Especially when you consider that 3% of a higher number comes out to more money.
Many of us won’t be able to retire until our 80s
BOSTON (MarketWatch) — We all think it’s a panacea. If you don’t have enough money saved for retirement, you’ve got a few ways to close the gap between what you have and what you need in your nest egg: Save more, invest more aggressively, and/or work longer.
Well, it turns out that working longer is indeed an option, according to the Employee Benefit Research Institute latest study. The only problem is that the latest research shows that you’ll have to work much longer than you anticipated. In fact, many Americans will have to keep on working well into their 70s and 80s to afford retirement, according to the study, titled “The Impact of Deferring Retirement Age on Retirement Income Adequacy.”
What’s more, it’s even worse for low-income workers, according Jack VanDerhei, one of the co-authors of the study. Those who earned (on average over the course of their careers) less than $11,700 per year, the lowest income quartile, would need to defer retirement till age 84 before 90% of those households would have just a 50% chance of affording retirement.
Those who earned between $11,700 and $31,200 will need to work till age 76 to have a 50% chance of covering basic expenses in retirement. Those who earned between $31,200 and $72,500 will need to work to age 72 to have a 50% chance and those who earned more than $72,500, those in the highest income quartile, catch a break; they get stop working at age 65 to have a 50/50 chance of funding their retirement.
So what can be done to make sure you have enough income in retirement? Well, the sad truth is that not working is no longer an option and working past age 65 is fast becoming a fact of life, at least for those in the lowest three income quartiles.
One bright spot, according to John Nelson, co-author of ‘What Color is Your Parachute? For Retirement’ is that working works: “For those in the lower half of the income spectrum, delaying retirement from 65 to 69 has a profound effect,” he said. “It increases retirement income adequacy by 25% to 50%! That’s a powerful incentive.”
The new normal
Now the reality about EBRI’s findings is that many Americans — who are able to continue working and whose skills are still in demand — are already working past age 65. In 2009, 17.2% of Americans age 65 and older were in the labor force, according to recent AARP Public Policy Institute report, “Family Income Sources for Older People, 2009.”
What life expectancy are they basing this on? I guess if you’re penniless, you need to work until you’re 85 so you can enjoy your one-week retirement.
Indeed. American land whales won’t make to 70, much less to 85.
They will demand a free body transplant from their employer-paid health insurance and live to a thousand.
Unless you are a public union goon.
Retire at 55 with 90% salary (after stuffing your OT for the last 3 years).
Life is good.
For the rest of you - keep working until you are 85 and keep paying those property taxes…
Relax tuity-fruity. Those pensions funds are all insolvent, and there will be taxpayer revolts before property taxes can be raised to bail them out. I predict that a lot of states will adopt Colorado’s TABOR as taxpayers become frustrated.
A lot of state employees who thought they had it made are in for a rude awakening.
tuity-fruity?
Ha, michael stole that from ME! I love it when people pick stuff up from me like that.
Pensions are a form of compensation. Workers took less per hour in order to get a good pension and benefits. These rates were negotiated with management and agreed upon. Much like white collar folks negoitaite their compensation package, workers do the same thing - So why is it bad when Unions negotiate a pension but good when Mr. Senior Regional Vice President of Midwest Technical Operations negotiates a few million as a golden parachute in HIS compensation package?
So why is it bad when Unions negotiate a pension but good when Mr. Senior Regional Vice President of Midwest Technical Operations negotiates a few million as a golden parachute in HIS compensation package?
It’s not necessarily bad. Here’s where the distinction between public and private becomes important. WRT to a public union, there’s no “free market” and the company granting the pension does not go bankrupt if it gave compensation it couldn’t support. Instead, the taxpayers just get bent over.
In a private company, if a company gives unsupportable/lavish compensation, the company goes broke, leaving companies that have sustainable compensation packages. The downside to the union pension vs the individual is that the union pension is much more likely to kill the company, as the total dollar amount/liability is greater. Look at GM, for example.
People (just talking private sector here) are welcome to negotiate whatever terms they wish. However, just because you’re able to get good terms doesn’t mean that it’s sustainable or in your best interest in the long term.
People (just talking private sector here) are welcome to negotiate whatever terms they wish.
Except the private sector is ripe with cronyism and boards vote each other huge raises while shareholders are told to put up and shut up.
Except the private sector is ripe with cronyism and boards vote each other huge raises while shareholders are told to put up and shut up.
Yep, and there’s nepotism at all levels of employment, as well as in government. And friends getting preferred treatment. And people getting better/worse treatment based on age, sex, attractiveness, race, what school they went to, etc…
What’s your point? I was simply stating my position that folks can negotiate for what they want, but it doesn’t always benefit them in the long term.
What’s your point?
That as an individual worker bee you pretty much have ZERO bargaining power. Like when super profitable HP cut everyone’s pay 5%. I sure wouldn’t have minded having a collective bargaining agreement in place when they tried that. But that would have made me a “union goon” I suppose.
That as an individual worker bee you pretty much have ZERO bargaining power.
I disagree. You have the freedom to negotiate, and leave to a different job if you so choose.
Does it suck if they cut your pay? Sure. If they’re cheap compared to market, you can seek out a higher-paying job, or negotiate other compensation. If that’s what market rate is, well, then you’re getting paid market rate.
I really don’t get the “I’m held hostage by my employer” thing. Save some money so you have some leverage and can actually leave your job. Then ask for more money if you think you deserve it. Or go find a job that will pay you what you’re worth if you’re really worth more.
I’ve gotten raises every year I’ve worked. Sometimes I’ve had to change jobs to do that. Sometimes I’ve taken pay cuts when taking a job to end up in a better position. But the thing is I don’t play a victim when it comes to compensation. We all have bargaining power relative to our actual value. If you’re paid market rate, well then you really can’t expect to negotiate for more…
It only becomes a bad idea when the promises are not realistic. I have never accepted a job at a company that offeres a pension, since I would then be relying on that company to continue supporting me for a long, long time. Better to get the money up front and save/invest as you see fit.
The people, each in their own little way, will respond to this and their response will not include higher house prices. Those that bet their retirement on their house’s price will be amongst the first to find out what it’s like to work into their 80s.
Obamacare “death panels” = gov bureaucrats kill granny
For-profit InsuranceCo “death panels” = invisible hand of free market
And we all know that the “invisble hand” can do no wrong. Except when it does.
How about a study looking at how younger people are getting screwed by the older folks staying on? For every old person working into their 70s or 80s there is a younger person waiting to start a family, pay off student loans, buy a house, etc. Not saving or poorly saving for retirement = screwing the next generation over……again! Enjoy your HELOCed BMW Mr. Old Fart, I have to find a McJob and wait until your done!
Not saving or poorly saving for retirement = screwing the next generation over……again!
Are you saying that the younger folks are owed a job? Does the age really matter here? What if it was simply that this generation was huge and there are more people than jobs available. Is it the fault of those with jobs that there are just too many people?
I’m not a defender of the boomers by any stretch - especially when it comes to the governments and policies they’ve voted for - but I fail to see how you can fault someone for working - whether they choose to or “have to”.
Unless you’re making an argument that old people retiring is part of the “social contract”? That’s an interesting position to consider…
“Are you saying that the younger folks are owed a job?”
If we want a “consumer” society … then yes.
… then yes.
There’s a big difference between being “owed” a job, and saying that it’d be good if they had one.
You seem to be arguing that it’s bad if they don’t have one. That’s a very different animal from being “owed” one, and that it’s selfish of the currently working folks to not “give” them their job.
Marie Antoinette didn’t get it either.
Just saying, if Corps want the young ones to buy cars and houses, they need non menial jobs.
I don’t blame anyone for hanging onto their job, especially since so many have lost their pensions and can’t retire when they were originally planning.
My beef is with a jobless and low wage “consumer” economy. There’s no such thing. You can borrow for a while or rely on bubbles, but eventually that ends.
No, I don’t think anyone is “owed” a job. My argument is that the older generation today wants me to feel bad for them, because they dont have money to retire. At 23 I was lucky enough to start my career, and I was fortunate enough to have a father with some common sense to tell me “Save for retirement NOW!”, and I took his advice. I skipped buying the Breitling watch or the Corvette and now I am much better off than people 30 years older than me. (Side note: My grandfather died without a cent to his name, so when it came to savings and retirement my father was very pressing on the issue. He still bought all of his toys and whatnot, but always saved. He retired at 56, now spends his days golfing and volunteering for a Vietnam Vets organization - so baby boomers aren’t ALL bad!)
The fact is most people today will leave college and be in a holding pattern for years, waiting for a shot at their career. With older people holding onto jobs longer it will be a while.
And when they do get their shot at their “career” it probably won’t be nearly what they thought it would be back when they got in line.
“The fact is most people today will leave college and be in a holding pattern for years, waiting for a shot at their career. With older people holding onto jobs longer it will be a while.”
This is not some new phenomenon. This started back in the 1980s when deregulation and outsourcing surged ahead.
No, I don’t think anyone is “owed” a job. My argument is that the older generation today wants me to feel bad for them, because they dont have money to retire.
We’re in agreement then.
“No, I don’t think anyone is “owed” a job. My argument is that the older generation today wants me to feel bad for them, because they dont have money to retire.
We’re in agreement then.”
I am not asking anyone to feel bad for me. But if you want me to get out of the way, then your generation will have to support me. If your generation is not willing to support me, then don’t complain when I continue to work until I can’t.
Some of the blame for my situation lies with decisions I have made. Some of it is pure bad luck. I take responsibility for supporting myself and my family and will continue to do so as long as I am able without complaint.
I realize the bind this puts young people in. It worries me. I see its effects on my children and their friends.
But I have no confidence in the future. Even if I had “suffucient” savings to retire on, I lack confidence that they would sustain me for the next 30 years. Medical costs, inflation, changes in Medicare and Social Security could quickly eat them up. So I will continue to work.
“especially when it comes to the governments and policies they’ve voted for”
So boomers are the only ones that have voted for the last 40 years?
So boomers are the only ones that have voted for the last 40 years?
No. I wasn’t implying that. The context of my comment was specifically boomers. I’m not saying it’s all/only their doing.
One of my good friends bought out early into a “defined benefit” from CALPERS. Seems like an extraordinarily good deal. Who defies “defined benefit” and who is on the hook to pay it? Me??
I have no pension, nor does my wife -
“How about a study looking at how younger people are getting screwed by the older folks staying on?”
The study has been done. Several times. Believe me, the older folks don’t like it either.
Most people wont’ be able to work in their 80s. At my inlaws older community I see bad vision, hearing, backs, memory, immune systems, hips/knees, bladder control. Many are in chronic fear of falling. Or in some form of chronic pain. There are some professions that could accomodate these limitations but not most of them.
Exactly. Anyone who thinks people can continue to work productively full time beyond 60 are idiots.
There is a reason the retirement age is what it is. A very real, non-negotiable, physical reason. As anyone lucky enough to make it that far will out. Some, the hard way.
You don’t retire in your 80s.
You die.
The word “unexpectedly” is all over Bloomberg News today. One of them was U.S. import prices “unexpectedly” rose.
It is consistent with my theory that the government will try to (though perhaps not succeed in) inflation away rather than defaulting away our excess debts. At which point we will have more jobs, but at a much lower standard of living (except for the rich who beat the inflation increase and retirees with automatic inflation adjustments).
Corn prices hit a record yesterday, and the 2011 crop estimates were scaled back some 22%. Very wet spring, particualry east of the Mississippi and more rain on the way.
Anyone who thinks that the inflation route is painless for the little guy best think again.
Was in Western Ohio at the end of May. In the southwest of the state where the hobby farms are (Bulter County ish), no one had sweet corn in at all. The fields were soaked. It was dry for a week when I was there (the fields needed a couple of weeks, they were really really wet), then it rained again. In the northwest of the state there was standing water in fields which have never had standing water before. Corn really should be in before June. The rain keeps coming. This fall is going to be really really bad. Expect food riots all over the world, don’t discount their possibility here either, there just isn’t going to be enough food.
Most inflation adjustments for retirees don’t reflect the basket of good that retirees actually buy, so they suffer in an inflationary environment too or at least they have in the past years when inflation in medical care/drugs and energy have outpaced the index that is used to calculate their increases.
The basket of goods hasn’t reflected reality for anyone since the 1980s.
the basket of good that retirees actually buy,”
like medical ? your right about that
It really is a Great Recession now.
You have to be around 90 to even remember an economy like this. The United States has not experienced two straight years of 9% unemployment since before the Second World War.
As Amity Shales wrote in The Forgotten Man, it was the duration of the economic collapse which began in 1929, not its severity, which created the Great Depression. According to the Bureau of Labor Statistics, the United States has now had unemployment of 9%, give or take a couple tenths of a point, since May, 2009.
The most recent figure, for May, 2011, is 9.1%.
In a speech on Tuesday, Fed chairman Ben Bernanke essentially threw up his hands. He’s right. The Keynesian economic toolbox is empty. So is monetary policy — unless you want to radically inflate the economy and depreciate the dollar.
http://www.americanthinker.com/2011/06/is_permanent_recession_the_new_normal.html
The Keynesian economic toolbox is empty.
I call BS. Kenyes called for raising taxes during boom times. Government never did that; rather, they CUT taxes in 2001. You can’t blame Keynes if you don’t follow ALL of his formula.
And Keynes is no longer applicable anyway — show me where Keynes addresses globalization.
Globalizaton changes everything. It creates weird states of codependence, where China has to continue lending us money or we won’t be able to buy their crap.
I think Globalization played a big part in the housing bubble. For many, flipping houses or using the house as an ATM was the only way to make a living as the real jobs were offshored.
The day I realized that something was really, really wrong was when a relative tried to get me into house flipping. She said that working a “job” was for losers, as you’d work your ass off, get a paltry paycheck and eventually be laid off.
I wonder how many house flippers actually made it big enough to walk away and live comfortably for the rest of their lives? I wonder of those, how many walked away at the right time?
I did, if I moved to Thailand.
“…as you’d work your ass off, get a paltry paycheck and eventually be laid off.”
Well, she had that part right.
“I think Globalization played a big part in the housing bubble.”
I think the globalization of investment is the biggest part of that. The credit bubble would never have grown so big if the risk of holding these mortgages wasn’t scuttled off to unsuspecting foreign funds and investment groups.
“…it was the duration of the economic collapse which began in 1929, not its severity, which created the Great Depression.”
Time, time tickin’, tickin’ away…
Time keeps on slippin’
slippin’
slippin’
Into the future…
“You have to be around 90 to even remember an economy like this.”
I saw it coming 20+ years ago. I told people back then that we were heading to where we are now and they laughed at me. A lot of them are now underemployed in an underwater house. Some are BK and have walked away.
Imagine if you have wrote some articles, done some radio and TV and wrote a book or two, you would have been a multi millionaire cult hero by now.
Larry Burkett did just that!
No worries, in the New New Economy we can just tweet our way to prosperity and measure our wealth denominated in facebook friends.
Nice to know that folks think the purpose of the “fed” is to prop up the stock market…It is one of it’s main concerns of course, just nice to see that fact out in the open.
No More Fed Easing Unless Stocks Drop More: Tepper
Friday, 10 Jun 2011 |CNBC
Noted hedge fund manager David Tepper doubts the Federal Reserve will continue its intervention in the markets unless things get considerably worse.
The head of Appaloosa Management and source of the “Tepper Rally” that generated a huge run in the market last September said in an email to CNBC that stocks would have to fall considerably more before the Fed would start another round of quantitative easing, or QE.
“If (the S&P 500 falls) a couple hundred points and financial conditions tightened maybe they would reconsider,” Tepper wrote. “But there is no logic to QE3 now and the only result might be more food and energy inflation.”
Tepper made his influential call in a September CNBC appearance in which he said stocks were in a win-win situation: Either the economy would improve and drive a rally, or the economy would drop and the Fed would undertake another round of easing.
No More Fed Easing Unless Stocks Drop More
One flash crash, coming up!
So how low will the DOW go before they fire up the printing presses? 11,000? 10,000? 8,000?
Where was it the last time? 6600 in March of 2009 wasn’t it?
I assume we’re just being polite and waiting for QE2 to officially be over before starting QE3. QE2 ends, THEN we have a little crash to motivate everybody, and THEN we start QE3.
You may very well be right.
DOW 20,000 here we come! Needs mo pumping & pimping tho!
Nevermind the housing crisis, the average U.S. Houshold is over $500k “upside down” in their government!
China ratings house says US defaulting: report
I couldn’t agree more.
Washington had already defaulted on its loans by allowing the dollar to weaken against other currencies — eroding the wealth of creditors including China, Guan said.
Suckers!
Plenty of folks here predicted this would happen. But the Chinese leadership didn’t see it coming? Or was it because they understand that unless we keep buying their crap their economy will collapse?
But the Chinese leadership didn’t see it coming?
There’s a reason they’re buying up commodities from all over the globe like the world is going to end.
But what will they do with those mountains of copper if no one is buying?
Make pipes.
“Make pipes.” of exceedingly poor quality.
But what will they do with those mountains of copper if no one is buying?
How about Defense?
“Copper is a metal that maintains an absolute standing in the modern defense industry because of its processing and recycling capabilities.
A wide range of cartridge cases from sporting ammunitions used for hunting and sports and cartridge cases used in small arms to ammunition for field guns are made with copper alloys. Copper alloys are reusable at all times after collecting and recycling.”
http://www.sampotube.com/copper/copper4.html
“Make pipes.”
I suppose they can use them for plumbing in all those ghost cities they love to build.
The average household also only makes $500 week or less.
This statement can’t be repeated often enough until the clueless dumba**es in NYC (wall street, media) Cambridge MA (NBER liars and harvard ivory towerites) DC (gov cheese) Silly Valley CA (I-pad price drop = no inflation) or LA (BIG media) start to get it. Flyover is p*ssed, and with good reason. F* the coastal elites.
P.S. keep posting the Marie Antoinette comments too, lovin’ it
In NJ it is illegal for a motorist to pump their own gas at a gas station (fire hazard) a station employee has to do it. I see when they hire it is for $9/10 an hour….how the heck does someone live on that in all places frickin Jersey!?
You don’t live on $9 hr. any more than you live on minimum wage. But that job supplements other household income
$220,000 for undergrad ?
Williams edges BC as Bay State’s priciest college
Even a tepid economy can’t prevent college costs from rising well above the rate of inflation, and now some colleges and universities nationwide are charging over $55,000 a year. Last year, tuition and fees rose an average of 4.5 percent at private colleges, according to the College Board.
Williams College edged out Boston College as the most expensive college to attend in Massachusetts, according to our research, with both having total costs just over $54,500.
On the other end of scale, schools in the UMass system had the lowest all-in costs for the coming academic year at slightly over $20,000.
http://www.bizjournals.com/boston/news/2011/06/08/the-top-3-priciest-colleges-in-boston.html
Tuition can’t inflate like that forever. It will stop sooner or later and there will be “crisis” that will require a government solution.
A $220K degree for a $50K job?
Probably makes sense if one’s parents pay for the tuition. Probably using extracted house equity or unrealized market gains. Which, they probably don’t have anymore.
Student loans are what is used nowa days.
Can an undergrad borrow that much? I thought there were caps.
4.5 %? Bogus. College cost have been historically rising an average of 22% a year for at least the last 20 years.
Google “college education costs charts”
22% a year? You’re saying college costs are 53 times what they were 20 years ago? I don’t think so. Tuition was a lot more than $1,050 per year in 1991 at places like Williams College.
22% a year also means that total costs in one’s fifth year of college is almost twice what it was when he or she was a freshman. At what colleges has that occurred?
Math is hard.
Math is hard? Apparently so is reading comprehension.
Google. Charts. How does it work?
Total costs usually includes room and board.
That’s right. So tuition at Williams was even less than $1,050 in 1991 if the 22% number is to be believed.
Dow 12,000 has been breached. Do I hear Dow 11,000?
Dow 11 in 2011. Boo-YAH!
Yes, we’re below the Eddie line by both measures now.
But give him credit — we’re closer to the Eddie line than we are to fair value.
Send your Dow 10,000 hat to the cleaners and have it ready.
I was just going to comment that I’m going to have to dig that one out of storage…
Ah yes, DOW 10,000!
I wonder if we’ll end up passing that line as many times as we passed DOW 1,000! over 20 years in the previous secular bear market.
Aim high…I bet we pass it more times.
Let today be the day Dow falls below 12000…..
It has fallen, but will it stay below? Film at 11.
Money for Nothin and ch!cks for free
I want my QE III….
+1 I used to love that song.
Looks like the PPT is going all out on Dow 12,000, having dropped the ball on S&P 1,300.
They dropped the ball again? Must feel like it’s made out of lead.
Dow ends below 12,000 at 11,951.21
(Aww, dat’s beautiful) ht jeff saturday.
“Let today be the day Dow falls below 12000…..”
Was that the 11th commandment?
Thy will be done on earth as it is on Wall Street.
Got an Ark?
Riiiight. What’s a cubit?
From our friends at wikipedia:
A cubit is the first recorded unit of lengthand was one of many different standards of measurement used through history. It was originally based on measuring by comparing to one’s forearm length.
You had me wondering too, Bill.
You may have missed another layer to the statement…it’s a quote from a Bill Cosby routine, where he was playing the part of Noah.
I did miss that additional angle on Bill’s quote…Thanks Carl
Meanwhile, across the pond…
Up to 20 million Britons cutting back on spending as confidence slumps
Poll shows 40% of consumers choosing to go out less
25% dipping into savings for everyday spending
http://m.guardian.co.uk/ms/p/gnm/op/sHZMMNYyEOPKSYGI4JmCL0A/view.m?id=15&gid=business/2011/jun/10/20-million-britons-cutting-back-on-spending&cat=business
How’s that Hope and Change working out for you now, limey wankers?
FWIW, the UK elected a “conservative” government that campaigned on similar issues as the GOP does in the US. Hope and Change wasn’t in the menu. Of course, they wound up with Despair and Unexpected Change.
We’re better off for now, with dissappointment and lack of change. We’ll get to the worse stuff soon, but best not to be first at the table.
I thought that Royal Wedding was suppose to be an economic bonaza? The way the press and government were talking it would create another boom and reboot the inept and scandal plagued monarchy.
Flopping: realtors are liars-
http://www.marketwatch.com/story/real-estate-scam-thats-devastating-prices-2011-06-10
“Some real-estate agents are “clever, even more so than criminals,” says Michael Richardson of BrokerPriceOpinion.com, a firm which assists lenders in obtaining accurate valuations. “I’ve seen them change [comparables] to fit the scenarios they are trying to get away with. I’ve seen it where they enter fictitious listings and then remove them later. And I’ve seen it where they’ve recruited other agents” to participate in their schemes.”
Doesn’t seem like anyone from Wall Street to Realtors to FBs living in there homes for free for years is afraid of any kind of punishment.Tar and feather a couple of these “clever” real-estate agents and that would cut way back on this sort of thing.
Real-estate scam that’s devastating prices
WASHINGTON (MarketWatch) — Question: My neighbor in Palm Springs, Calif., who claims to have millions or more in the bank, let his home with a $1 million mortgage go into foreclosure. A real-estate friend of his bought it from the bank and is renting it back to him. After one year, my neighbor plans to buy it back. It affects me as a homeowner because now we have a home in our community that shows a sale price for $600,000, instead of the current market of $725,000. How do I report such activities? —J. McK.
Answer: This type of thing is more prevalent than most people realize. According to CoreLogic, a real-estate and mortgage data firm headquartered in Santa Ana, Calif., lenders will lose more than $375 million this year alone when they sell undervalued houses based on the price opinions funneled to them by unscrupulous real-estate agents.
The scam is called “flopping,” and you are correct, it can have a devastating impact on property values because now, the “sale” becomes a comparable for all future appraisals of matching neighborhood properties.
Like flipping, flopping is the intentional misrepresentation of house prices. But whereas flipping usually takes place when housing prices are rising, flopping occurs when values are depressed.
When a house is flipped illegally, it is “sold” for a greatly inflated value in order to obtain a mortgage that is far greater than the place is really worth. When the seller, who is often in on the scheme, is paid at closing, the difference between the actual selling price and the loan amount is split between the perps, who are usually industry insiders who know how to scam the system.
When a house is flopped, it is usually owned by a underwater borrower who has asked the lender to approve a short-sale at a price that’s less what is owed. Unbeknownst to the owner or the lender, the real-estate agent supplies one or more opinions of valuation that show the house to be worth one amount when it is really worth much more on the open market.
When the lender agrees to take the lower price, the agent purchases the property in his name or that of a straw buyer and immediately flips the property to an honest-to-goodness buyer-in-waiting at a higher price than the one negotiated with the lender, with the difference split between the participants.
LOL. Isn’t this what they call an arm’s length deal, meaning it’s fraudulent? And the questioner is worried not about that, but about his home’s value. Must…keep…home…prices…from…falling…
The destruction of the middle class will not be televised – 56 percent of American workers have less than $25,000 saved. Even worse 60 percent of retirees have less than $50,000 saved. 45 million on food stamps and the consequences of peak debt.
The disappearance of the middle class will not be televised. Don’t expect your favorite talking head to relay this information to you. At the core of our economy we have become a consumption nation. This necessarily isn’t negative if we were to balance out the opposite side of the equation with adequate savings. It would be one thing if the working and middle class were consuming with money that they had earned. Instead for over a decade many Americans have used massive amounts of debt in mortgages, credit cards, and student loans to finance things they simply could not afford. Unfortunately this game is up and many are now feeling the financial pangs of a country where the working and middle class are marginalized and government policy is geared to exaggerating the inequality especially in the financial sector. Recent data shows that of current retirees, 60 percent have $49,999 or less saved up in retirement plans. This coincides with other data showing that the average per capita worker makes $25,000. You have those that can save and those that will rely purely on Social Security when they retire.
Debt built economy
http://www.mybudget360.com/destruction-middle-class-will-not-be-televised-56-percent-of-american-workers-have-less-than-25000-saved-middle-class-savings-gone-social-security-funds/
Im always curious, they never seem to say if this is stra
ight savings, or 401k, or investments or what? I assume its everything, but still.
Good question as it’s typically not clearly stated in these surveys.
In this case though, it seems to be “…savings among those providing a response, not including value of primary residence or defined benefit plans (pensions)” based on Figures 18 & 19.
Based on that statement, savings, investments, and 401-k contributions would be counted.
“This necessarily isn’t negative if we were to balance out the opposite side of the equation with adequate savings.”
Its kind of hard to save when you make less than $500 a week.
More like bloody impossible.
“You have those that can save and those that will rely purely on Social Security when they retire.”
And that’s if they contributed to the program. If not then they better start working on that disability limb or twitch.
“Life’s tough, Pilgrim, it’s tougher when you’re stupid.” The Duke –
Unless you’re a politician or rich. Then you’re feted.
“I can’t believe I ate the whole thing!”
Alka-Seltzer commercial 1972
“Please don’t squeeze the Charmin!” Mr. Whipple
Fed Will Buy $50 Billion of Treasurys in Final QE2 Push
Friday, 10 Jun 2011 | By: Reuters
The flood of Federal Reserve money that has supported Wall Street and the rest of the U.S. economy for two and a half years will shrink to a trickle with the conclusion of the Fed’s bond purchases announced Friday.
The Fed said it will buy $50 billion of Treasurys, the final series of government bond purchases that marks the last phase of the $600 billion program it launched in November 2010 to prevent another recession.
As a result, once the purchases are concluded June 30, the financial sector will receive only a fraction of the roughly $100 billion a month in easy money it has been getting from the Fed.
The conclusion of the Fed’s bond-buying program, known as “Quantitative Easing 2,” does not mean the stimulus will come to a complete stop. The Fed will reinvest maturing securities, mainly mortgage-related debt, which analysts predict will run at $12 billion to $16 billion per month.
While still a lot of money, it is a huge step down from stimulus levels at the height of the buying campaign, dubbed by markets as QE2 because it was the second round of Fed asset-buying in the wake of the 2008 financial crisis.
‘As a result, once the purchases are concluded June 30′
Will there be closing ceremonies, like in the Olympics?
http://realestate.yahoo.com/promo/lakefront-mansion-price-cut-by-25-million.html
Take a peek at a home reduced just for you by 25 million!
Wonder how many grounds keepers get paid to live there?
Mexican drug gangs build their own armored tanks
By Tim Johnson
Published: Tuesday, Jun. 7, 2011 - 12:00 am
MEXICO CITY – Mexico’s rival crime gangs are in an arms race, and the latest sign of that are the homemade “Mad Max”-type heavily armored vehicles they deploy to withstand fierce clashes with each other.
The army found two more “narco tanks” over the weekend in Ciudad Camargo in Tamaulipas state along the border with Texas.
In earlier discoveries in April and May, armored vehicles found by authorities contained swiveling turrets, snipers’ peepholes and gadgets to dump oil and scatter tire-puncturing nails on roadways.
In recent years, cartels have built homemade submarines to bring cocaine north from the Andean region.
Some of these submarines are over 100 feet long and can travel as deep as 25 feet below the ocean’s surface.
http://www.sacbee.com/2011/06/07/3681808/mexican-drug-gangs-build-their.html - 84k -
http://market-ticker.org/akcs-www?post=187887
Ten things update: 2011