Bits Bucket for August 14, 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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Thousands of Fla. mortgage brokers flee industry
By BRENT KALLESTAD
Associated Press
Posted on Saturday, 08.13.11
TALLAHASSEE, Fla. — During the Florida real estate boom of the mid-2000s, one of the most lucrative ways to make a living - or commit fraud - was to be a mortgage broker.
More than 82,000 Floridians were licensed just four years ago, but the collapse of the housing market, stronger licensing requirements and background checks, and tougher loan requirements have cut that number by roughly 90 percent: the state currently licenses about 10,600 loan originators, as the profession is now called.
Most got out of the business or moved elsewhere. Some of the small percentage who committed crimes went to prison.
“Everybody wanted to be a mortgage broker or a Realtor, because it was just being an order taker,” said Mike Ferrie, a Tallahassee real estate agent and district vice president for the Florida Board of Realtors. “It was easy pickings. When the bottom hit, it got a lot more realistic.”
Kristi Endres earned some $250,000 annually for three straight years from 2004 to 2006 writing mortgages in the overheated Fort Myers market. The housing bust not only got her, but her husband, John, who had a profitable excavating business in southwest Florida, the part of the state hardest hit by the housing crisis.
“We pretty much lost everything,” said Endres, who is living this summer in Madison, Wis., where her husband has found work. “Before we lost every dime we ever had we finally decided we had to pack it in.”
They sold their waterfront home for a third of the once-appraised $750,000 price and are buying a 40-foot motorhome so they can travel to places where they find work.
She has returned to school and earned a degree so she can work as a physicians’ assistant. “We all take our hard knocks and learn from it,” said Endres, who lived in Florida for 28 years and still returns for winters and maintains residency in the state.
“Our story is very similar to a lot of other people we know,” she said. “Most of my friends lost pretty much everything they had.”
http://www.miamiherald.com/2011/08/13/2357835/thousands-of-fla-mortgage-brokers.html - -
This is totally expected: When there is not nearly as much work to go around as there was previously, some of the workforce will have to exit in order to make the demand for mortgage brokerage services provide for livelihoods.
It`s easy to walk away from an underwater mortgage and let someone else take the hit.
Homeowners feeling ‘trapped’ in struggling Florida housing market
By Dan Corcoran
WPTV.com
Posted: 2:21 p.m.
Saturday, Aug. 13, 2011
PALM BEACH COUNTY — Gloryann Torres misses her family in the northeast part of the country. She wants to move closer to them but the 65-year-old feels “trapped” in her Florida home.
“It’s like the jail is closing behind me. I’m just not happy here. I want to be away and there is no way I can afford to take this hit,” she said.
Torres paid off her $87,000 West Palm Beach condominium years ago. She feels that she would get less than half of that money back if she sold in today’s market. “That is the great irony. People who bought homes that they couldn’t afford are being helped out,” said Torres.
Housing experts said that there are likely many more people just like Torres in South Florida.
Paul Baltrun believes that Torres did everything right but that there is little help for her situation. He said any federal funding help is often for people having trouble with their mortgages.
http://www.palmbeachpost.com/money/real-estate/homeowners-feeling-trapped-in-struggling-florida-housing-market-1738398.html - -
And despite people making all this money and paying income taxes at teh much lower rates, we were still running half a trillion dollar a year deficits.
Sure, we’re abount to have some amazing economic recovery that will fix our $1.7t a year defeicits with just a couple hundred billion a year in spending cuts…..
$250k a year sounds like a windfall that should have been saved not a trap where every dime was lost. People are just not smart.
Well, if she actually did the credentials necessary to be a physician’s assistant, she can’t be too stupid. That kind of job probably pays pretty well.
“Well, if she actually did the credentials necessary to be a physician’s assistant, she can’t be too stupid.”
Several years ago there was a story posted on this blog about a surgeon from the west coast of Fl. in foreclosure. He and his girlfriend were a couple of hundred thousand $ upside down on their 2005 or 2006 purchase and trying to short sell or something. Anyway, the reason I remember it is because someone posted a response ….
Note to self, never have surgery in Naples.
Or whatever town it was.
Yeah; if I made a six-figure salary it would mostly go to savings (because even though I live in Cali, it’s not an area where six figures are required for a middle-class lifestyle.)
“maintains residency in the state”
So she doesn’t have to pay income taxes in whatever state she actually earns her income.
Well, here’s a spanner in the works. At least the works of those who claim any stimulus money is wasted, as it promptly ends up in the pockets of China. I believe I pointed out the myriad ways money gets spent without going directly to China, but I was told I was engaging in wishful thinking.
Turns out I was right, and they were wrong. Paging combotechie. Come in, combotechie…
Made in China only 2.7 percent of US purchases
Alana Semuels Los Angeles Times
LOS ANGELES - Convinced that everything you buy these days has a Made-in-China label?
Then you aren’t paying attention. Things made in the USA still dominate the American marketplace, according to a new study by economists at the San Francisco Federal Reserve.
Goods and services from China accounted for only 2.7 percent of U.S. personal consumption spending in 2010, according to the report titled “The U.S. Content of ’Made in China.’ ” About 88.5 percent of U.S. spending last year was on American-made products and services.
How can this be, considering that many of the toys, electronics, housewares, shoes and other goods we use daily come from the Middle Kingdom?
One word: services. Services, which account for about two-thirds of spending, are mainly produced locally. Your dry cleaner, accountant, mechanic and manicurist most likely are right in your neighborhood.
Then there’s groceries and gasoline. Most of the food Americans eat is produced domestically. And although the U.S. imports about half of its petroleum, China is not a major supplier. About 90 percent of all gasoline sold in the U.S. is refined in the United States.
“Although globalization is widely recognized these days, the U.S. economy actually remains relatively closed,” economist Galina Hale and researcher Bart Hobijn wrote in the report. “The vast majority of goods and services sold in the United States is produced here.”
Foreign-made products are most prevalent among so-called durable goods, which are big-ticket items such as cars, furniture and appliances. About one-third of all durable goods Americans purchased last year were made abroad; 12 percent came from China.
But even merchandise made in China can contribute to the U.S. economy. Consider a pair of Chinese-made sneakers that retails in the U.S. for $70. Most of what a consumer pays goes to cover trucking costs, rent for the store where the shoes are sold, profits for shareholders of the U.S. retailer, as well as the cost of marketing the brand. Included in these costs are the salaries, wages and benefits paid to the U.S. workers who staff these operations.
“On average, of every dollar spent on an item labeled ’Made in China,’ 55 cents goes for services produced in the United States,” the report said.
When Americans say their jobs are going to “China,” they really mean China, Mexico, Ceylon, India, Central America.
Is the 2.7% end-user purchases, or does it include B-to-B commodities?
Besides, if the US purchases were only 2.7% Chinese, then why do they keep buying our debt? Sounds like they can do without us.
Well then maybe my idea of paying down everyone’s credit card by $3000 will produce jobs in America….whoooda thunk?
Regardless of whether it helps or not, the banksters won’t stand for it. They want CC debt holders to continue paying usurious interest rates. And since they control our lawmakers they will get what they want.
They already have handed a big (2%) payroll tax reduction to all Americans this year, which for at least some working individuals equates to a roughly-$2000 increase in pocket change. How much stimulus is enough?
there are probably 20 million who don’t get that benefit because they don’t get a check every week.
You should see all the Intern or Independent contractor jobs …a real weekly paycheck on the books, that is a pipe dream for most people today.
Your point is taken. Perhaps Alan Greenspan’s $2K stimulus suggestion which W implemented a few years back was better, as it resulted in a helicopter drop of spending money on every American household’s doorstep, not just working households. It also provided a local violin shop with stimulus and my wife with a nice viola bow.
Pbear…From yesterday;
If it came down to a choice of Romney (Mormon) or Obama (allegedly a closet Muslim), whom do you think evangelicals would choose ?
hey won’t choose…A large portion of them will not vote…They will not compromise their faith…Not even a tiny bit…
“If it came down to a choice of Romney (Mormon) or Obama (allegedly a closet Muslim), whom do you think evangelicals would choose ?”
They’ll vote for some 3rd party hard core fundy crank?
“A large portion of them will not vote”
“They’ll vote for some 3rd party hard core fundy crank?”
And the libertarians will vote for Ron Paul.
If this is 5-10% of the voters, then we could see an Obama victory in spite of a bad economy.
As for the SS tax holiday resulting in a $2000 break … you’d have to make 100K for that to be true. For the $500 a week crowd it was only $500 a year, and was offset by the loss of the $400 Making Work Pay Credit. If you make less than $20K you actually ended up paying more taxes.
And before anyone says that the under 20K crowd gets the EIC, you have to have kids to get a non trivial EIC. If you are single and childless you have to have $5950 of income to get the maximum benefit of $457.
If you have 3 kids and earn $16,450 you get the much vaunted $5666 which phases out as your income increases.
“for at least some working individuals” = those making over $100K…
In any case the SS holiday is scheduled to sunset this year, unlike the the tax cuts for the rich which should last longer.
If they make over $100K then they don’t need a paltry 3K for credit card bills. If they do, there’s something wrong.
Unless they used to make even more. Of course those sort of folks will have a lot more than 3K on their CC’s by this point as they try to maintain their former standard of living.
That 2% cut is gutting the SS fund projections. It’s already lopped off over a trillion in projected benefits payouts. Isn’t the SS payroll tax is like an insurance policy premium so I expect the new ‘deductible’ will result in a 4-6% reduced standard of living for all Americans with a net worth less than $100,000 by the time they are forced to retire at 70.
I was under the impression that the 2% SS tax holiday was being covered from the general fund.
Everyone doesn’t have a credit card. And some of those who do carry no balance. Do you really want to reward the “irresponsible”?
well we have been rewarding deadbeat homeowners and not honest renters.
Its not so much I want it…though i can use an apple laptop, i’m still stuck on XP, or 2 new tires even though i drive less then 50 miles a week.
Its because just once can we try a bottoms up approach to a stimulus and see if it works?
Paying down credit card debt does not seem very bottoms up to me. Unless you want to send a prepaid debit card to anyone that doesn’t have a credit card.
agreed if Bernake is going to blow $300 billion again why not some of us get the $$$ this time?
Think about what you are saying. Your AC has a leak. Each cycle through the system, only 12% of the coolant leaks out.
You keep the AC functioning by constanly refilling it, but you have to use your credit card to buy the coolant. Eventualy, you’re going to hit your creidt limit, be unable to put more coolant in the AC, and it is going to stop working.
Each year in the USA, $14.5T of goods and services cycle through the economy, representing $14.5T changing hands. And ONLY $500B of those dollars leak out. That is only 3.5% of the money leaking out each year. We can just borrow that much more money into existance, no problem.
Multiply that $500B by 40 years, and it is $20T in debt that is owed to foreigners, collecting interest on that debt.
It is nt the % that leaks out per year. It is the build up of debt that the slow and steady leak causes.
I agree trade deficits are a bad thing, and can’t go on forever. My point was that people were saying stimulus money was wasted because it very quickly ended up in China’s pocket. This study shows what I was arguing- that most stimulus money will stimulate the local and national economy, even if the money eventually goes to buying a made-in-China widget.
Wow I guess it really is so simple after all.
Who knew?
Thank god the San Francisco Federal Reserve was there to set us straight.
“China accounted for only 2.7 percent of U.S. personal consumption spending in 2010″
This is a very suspect conclusion. Imports of goods from China in 2010 was about $365B. That is approx 3% of GDP. % of GDP is not the same as % of Personal Consumption. Anyway, the important number is trade balance and a few percent compounded can bleed you dry.
BTW, 3% is a ton more than I get on my savings, and it feels significant.
FBI: Mortgage fraud still prevalent, hard to catch
By Nedra Pickler, Associated Press
WASHINGTON — Mortgage fraud remains widespread in the depressed housing market, with perpetrators motivated by high profits and little risk of getting caught, the FBI said Friday.
The FBI’s annual report on mortgage fraud said such schemes are particularly resilient and hard to discover, and their total cost is unknown. Real estate firm CoreLogic says more than $10 billion in loans were made with fraudulent application data in 2010, the report noted.
Fraud last year stayed at levels seen in 2009 as the housing market remained in distress, providing ample opportunity for schemes, the report said. It predicted that perpetrators would “continue to seek new methods to circumvent loopholes and gaps in the mortgage lending market.”
“These methods will likely remain effective in the near term, as the housing market is anticipated to remain stagnant through 2011,” the FBI said. The bureau’s pending investigations into mortgage fraud increased 12% last year over 2009, officials said.
The most prevalent schemes involve falsifying financial information to qualify buyers who otherwise would be ineligible for a loan. Other crimes involve inflated appraisals, including schemes that use dishonest appraisals to sell homes at elevated prices. Some get-rich-quick schemes persuade investors to buy rental property or land believing the price will appreciate quickly.
The FBI says the crimes are committed by licensed and unlicensed brokers, loan officers, real estate agents, appraisers and other industry insiders who use their expertise to exploit vulnerabilities in the system. Organized crime groups are also behind some of the fraud, the report said.
“Mortgage fraud enables perpetrators to earn high profits through illicit activity that poses a relative low risk for discovery,” the report said.
The top states for mortgage fraud last year were California, Florida, New York, Illinois, Nevada, Arizona, Michigan, Texas, Georgia, Maryland and New Jersey, the FBI reported.
The agency says it is dedicating resources to combat the threat, including an initiative launched in June 2010 called Operation Stolen Dreams that targeted mortgage fraud throughout the country.
“The top states for mortgage fraud last year were California, Florida, New York, Illinois, Nevada, Arizona, Michigan, Texas, Georgia, Maryland and New Jersey, the FBI reported.”
In dollars (as opposed to percents or per capita), California, New York, and Texas should be expected to be among the top states for fraud, even if fraud were evenly distributed.
Faltering Rhode Island City Tests Vows to Pensioners
- NY Times
When the small, beleaguered city of Central Falls, R.I., filed for bankruptcy this month, it sought to cut the pension checks it has been sending its retired police officers, firefighters and other workers by as much as half. All the city promises now is that its retirees, many of whom do not get Social Security, will not have their benefits cut to less than $10,000 a year.
In Central Falls, which filed for bankruptcy this month, some city property is now up for sale.
But investors who bought the city’s bonds could do much better: Rhode Island recently passed a law intended to make sure that they would be paid in full, even in bankruptcy.
Retirees are wondering how the city can cut what they believed was a guaranteed benefit. “We put our time in, we put our money in,” said Walter Trembley, 74, a retired Central Falls police officer. “And the city, through their callousness and everything else, just blew it. They were supposed to put money in and they didn’t.”
Cities and local governments make lots of promises: to their citizens, workers, vendors and investors. But when the money starts to run out, as it has in Central Falls, some promises prove more binding than others. Bond lawyers have known for decades that it is possible, at least in theory, to put bondholders ahead of pensioners, but no one wanted to try it and risk a backlash on Election Day. Now the poor, taxed-out city of Central Falls is mounting a test case, which other struggling governments may follow if it succeeds.
If Central Falls, a city of about 19,000, is able to reduce the benefits its retirees now get — something they will fight — it would not only unsettle the millions of public workers and retirees across the country, but also reshape the compact between governments and their workers. Most public workers now pay a portion of their salaries toward their pensions, but they may balk if they see those pensions can be cut when they retire. And governments that, like Central Falls, have not enrolled all their workers in Social Security as a money-saving measure may have to rethink that strategy.
Would a public pension like this be taken over by the PBGC? Or is that only for bankrupt corporations?
again i ask why don’t they go after abuses first? Did the PO fireman stack up OT to get more each year? well cut that back to base salary…and the rest an IOU.
Since people are living a lot longer and they are NOT smoking no one should get a check until they are at least 65 if they are not fully retired and verified each year by your tax forms.
I just don’t think people get how much the all the non-smoking campaigns did to alter the actuary tables and bring us to this point.
If they’re cutting the pensions down to $10K — for people without SS, then recalculating for no-overtime isn’t going to help. You can’t even live oil city plan for that salary. You’d probably have to move in with the kids.
“You’d probably have to move in with the kids.”
And the kids are still renting, waiting for affordable housing.
As the debt collapses, the people who have a lot of money will find out they no longer have it.
Money does not exist without debt.
Money being defined as a “store of value,” why do you keep parroting this nonsense, Darrell?
Of course money exists without “debt.”
I grow fruits, nuts, vegetables, honey. I can barter all this without incurring any debt whatsoever. I also give a lot of it away. Sometimes people give me stuff, too. No “debts” here, real or implied.
My neighbors pan for gold in the Upper Kern. Where’s the debt in the “money” they find?
Wood cutters chop up deadfall for firewood. A store of value in snowy climes. Debt free, as it turns out.
There are all kinds of thriving “underground” economies that exist without debt. Swap meets, recyclers, church charities, food banks, communes and collectives. Or do you think that altruism and cooperation are just figments of someone’s imagination?
Not sure where you got this spiel, but it’s simply not very well reasoned.
“When the small, beleaguered city of Central Falls, R.I., filed for bankruptcy this month, it sought to cut the pension checks it has been sending its retired police officers, firefighters and other workers by as much as half. All the city promises now is that its retirees, many of whom do not get Social Security, will not have their benefits cut to less than $10,000 a year.”
“And governments that, like Central Falls, have not enrolled all their workers in Social Security as a money-saving measure may have to rethink that strategy.”
I talked with a retired firefighter last week who thinks his pension is safe and Social Security is not. Apparently, his union went to bat for him when there was talk about cutting pensions. He also supports a balanced budget amendment and is a far right conservative. His wife has a 401K. I think he is in for a rude awakening on all fronts. I see no safety in any of his retirement funds.
~ Being a minimalist I spend almost no time anywhere near shopping centers or malls. However yesterday I went to our only West Marine store to pick up some Marine-Tex for a boat repair. The store is located in a shopping mall, the place (the mall) was packed to the max, heavy traffic every where, reminded me of last minute Christmas shopping. So perhaps the great American consumer will save”us” after all!
ITEM: Shoppers lift economy but will they keep spending?
Consumers help ease recession fears, but stock-market gyrations could threaten further gains.
WASHINGTON (AP) — The economy might not be on the brink of another recession after all.
Consumers, who drive most economic growth, spent more on cars, furniture, electronics and other goods in July — and more in May and June than previously thought. That burst of activity is encouraging because it shows many Americans were willing to spend despite high unemployment, scant pay raises, steep gas prices and diminished wealth.
If it keeps up, the economy might rebound after growing at an annual rate of just 0.8 percent in the first half of 2011.
That’s a big if.
Whether Americans remain willing to spend freely despite the stock markets’ wild swings will determine whether the second half of the year is any better than the first. Their 401(k) retirement accounts have shrunk.
A sustained stock-market decline tends to slow consumer spending because it reduces wealth, especially for upper-income Americans. The richest 10 percent of Americans own 80 percent of stocks. And the richest 20 percent drive about 40 percent of consumer spending, analysts say.
That loss of wealth may help explain a report Friday that consumer sentiment hit a 31-year low in August. The Thomson Reuters/University of Michigan’s survey, completed early this week, showed that market turmoil and the political strife over raising the federal debt ceiling rattled consumers.
“The fact that retail sales held up over the last few months … is a positive economic development,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank. “However, the true test will be to see if consumer activity held up in the face of recent financial market gyrations and slumping economic confidence. So the August data will be of much greater significance.”
But how many were carrying shopping bags?
I think that in many places the mall is the new town square… a place to hang out, window shop and have a snack at the food court. Buying is nice but not necessarily required.
Oh and its COLD in most malls, and wmbz Columbia was pretty hot lately. You had 6 days this month at 100 topped out at 104
Not in the department stores in the malls. They are too hot. Even in winter. Even when I lived in New Jersey in the winter I would first leave off my jacket in the car and go through the cold parking lot into a department store. I hate going to department stores all because they are too hot!
I avoid department stores because they are so dang overpriced. I can’t say that I remember them being hot out here, but if I go into one more than once a year, that’s a lot.
It must be a regional thing. Our nearby local indoor malls (in Ft. Collins and Longmont) are ghost towns and I wouldn’t surprised if they are eventually demolished. The outdoor malls (AKA Lifestyle centers) are doing better out here, but I would hardly describe them as “packed”. The ones I have seen are in Loveland and Fort Collins. Both have plenty of unleased stores.
Smoke ‘em while you got ‘em.
Americans tire quickly of personal austerity.
No one is forcing the American consumer into austerity today. In fact, consumption is being encouraged…SS payroll tax holiday, 100% deduction in 2011 for business capital expenses, and extending the Bush tax cuts (which, like it or not, puts more hands into the people who go out dinners and pay the wait staff, go shopping, spend $ on limos for their kids proms, etc.) all contribute to more spending.
When people are afraid of losing their jobs, they cut back. When their credit is cut back, they cut back.
Absent those two, their foot is on the gas pedal. Today people feel less concerned about their jobs, and credit is being cut less…spend away!!!
Deep thoughts by Doug Nolan. His analysis and insight into the global economic collapse are the best I’ve seen. In summary, 2011 is NOT like 2008 but he hints that there are places to hide but he doesn’t reveal them, Grrrr. I guess you have to invest in his Prudent Bear fund to find out. I have been reading him almost as long as I have HBB and you can go back and read any of his articles and you will see he has been spot on identifying the root causes AND accurately predicted the outcomes.
http://www.safehaven.com/article/22151/compare-and-contrast-2011-versus-2008
PS: I have never seen him reveal his political stripes and I can’t quite peg him as right or left but I’m pretty sure he is a capitalist. I would think he and Jim Rodgers would share a lot of ideas.
Real Estate Watch:
August 11 - New York Times (Kirk Semple): “Chinese banks have poured more than $1 billion into real estate loans in New York City in the past year. Investors from China are snapping up luxury apartments and planning to spend hundreds of millions of dollars on commercial and residential projects like Atlantic Yards in Brooklyn. Chinese companies have signed major leases at the Empire State Building and at 1 World Trade Center, which is the centerpiece of the rebuilding at ground zero… The Chinese investments are occurring with little fanfare, in part because Chinese executives tend to shun publicity. But back home, their government is urging them to invest overseas to diversify China’s foreign-exchange holdings, develop business partnerships and improve the country’s leverage in international affairs.”
All that matters to me is that he is a capitalist. I find that the true free marketeers do not give a hoot about how other people live their private lives (in the bedrooms, or what they smoke).
Or whether they die from a preventable disease or suffer in pain for lack of easily available medications, or have to live in destitution because their 401Ks were trashed by some big boyz who got high and then got off on Wall Street, not giving a hoot about playing with other people’s labor (not money, LABOR.)
Cowboy Capitalism sounds good in textbooks.
I tend to think of him as a financial pathologist. If you really look at all the global data there seems to be a cancer at the heart of capitalism called debt. It also seems (to me) this global sovereign debt issue will overwhelm our political systems too. I still think the military will have to take over before we hit bottom.
Long read but nice post…Thanks…
Has Suze Orman visited the HBB in the past ??
From here CNBC Show two weeks ago.
Suze says that RE will breakeven in 14 years from bubble prices. “RE to fall for another year or two.”
She gives advice to a FB…walk away from that condo, girl!
http://video.cnbc.com/gallery/?video=3000037568
Suze used to be pretty on top of things. but now she just spews the usual motivational speaker crap on PBS.
She dwells to much on the Starbucks effect (like I’m going put $3 a day in the bank for 40 years).
She assumes that your money problems are your own fault and that you need to save more ( CAN’T do that on $500 a week. )
“Being laid off doesn’t diminish your self-worth etc” (yes it does). ..job starts at 8, you get there at 7. ( which won’t accomplish squat if Apu in Mumbai is half-price.)
The checklist chapters in her older books are useful — they’re at the library.
which won’t accomplish squat if Apu in Mumbai is half-price
More like 1/3 still, I suppose that someday he might catch up though. When that happens you can be sure that India will do everything it can to keep those jobs in India and will most certainly NOT give Wipro or Infosys tax incentives to offshore those jobs to Vietnam or someplace else.
Perhaps not
“”In India in the past decade, as call centres have grown, real-estate prices have gone up massively, while salaries have also crept up.”
He says: “Salaries in India aren’t that cheap any more. Add to that the costs of us flying out there, hotels and software, and the costs are at an absolute parity.”
“In the UK, we will pay workers the minimum wage. ”
http://twocircles.net/2011jul04/british_call_centre_return_home_costly_mumbai.html
“She assumes that your money problems are your own fault “
This is the American meme - I am well off because I have earned it. I deserve it. I worked hard, got a good education, made good decisions. If you are not well off, it is because you don’t deserve it. You are a slacker, studied the wrong things, made poor choices.
Those who believe it can always point to examples that confirm their belief.
She does not undertand that money is debt.
She keeps spewing the same BS that every person should have low debt and lots of cash in the bank. That is impossible.
Well, we all know that all she really wants to do is sell books, tapes, videos and seminars.
It reminds me of those hucksters that sell stock investment tips. If you really knew where to make a killing in stocks why share that secret?
“She keeps spewing the same BS that every person should have low debt and lots of cash in the bank. That is impossible.”
It’s probably true of a lot of people in her age group. We have been living that description for a while now. Many of us get advanced degrees via their employer while still working full time making a decent salary. No school loans.
On a personal note, people probably assume we’re broke because we have no cable, don’t do a lot of vacations, don’t go out much anymore unless it’s a get together at people’s homes. My husband’s one income is supporting four of us. (If you are broke, do not marry skinny people who eat voraciously. Our food bills are outrageous, the largest monthly bill we have.) I probably do need to go back to work full time to be ready for when that severe hyperinflation hits so we can stay in the black then too.
I truly believe if I wanted to get really tight we could even save vs just treading water. Probably makes more sense though to get barely employed Mom back to work.
“skinny people who eat voraciously”- that sounds like a description of teen age boys.
His cousins are in their 40s, 50s and almost 60. The girls look like size 2s. The guy who is almost 60 is always getting mistaken for much younger although he is obsessively physically active. It is like a family trait. All of us that have married in are in awe. And incredibly jealous. This is the modelling side of the family.
CarrieAnn,
That is the lifestyle our family of six had in the 60s and 70s. We thought it was normal. In fact, in high school the senior trip was a graduation night at Disneyland (a 240 mile busride). So ours was not the only family living austerely. It was normal! We had one car, one color television (our first in 1971) and only one trip by airline from Fresno to San Diego. Restaurants? Once per year at most.
Darrell
I, too, do not understand your treatise that “money is debt”.
Please explain or provide reference materials to support your theory. Are you suggesting velocity, supply, and hang time are in perfect sync which allows for debt supply - commonly called kiting?
Suze was still cheerleading for RE even back in 2008, IIRC. It was only recently that she must have changed. I could detect a little that she was about to change to bearish on RE.
And yes, in most cases it is the individual’s fault for not getting off his butt and making something of himself. If you have no ambition or no goals, you will not accomplish anything. You certainly will not take advantage of opportunities either.
In October of 2007 Suze told her viewers that RE had peaked. Granted, this was later than most of us HBB’ers, but still, she quit recommending RE before most.
Yes she delivered a few left hooks resulting in a knock out to the deluded housing folks last weekend. Mrs. and I were jumping out of our chairs when we hear her say it but I forgot to post it. Even so, I still believe she is optimistic.
From the same page, there’s a link to an article:
Caterpillar CEO to Obama: Get Serious About Job Creation
…Caterpillar has hired 11,000 people since 2010, 300 in just the first 10 days of August, Oberhelman said.
“Every day we’re hiring people because our business is picking up,” he said. “Our export business is strong. In the U.S., as weak as it is, we’ve seen such an inventory depletion [that] we’ve seen some buildback. It’s from low levels, but any buildback flows right through to our factories.”
Oberhelman is still worried about the macro economy. With 80 percent to 90 percent of Caterpillar’s machinery exported, Oberhelman said if President Barack Obama is serious about job creation, he should start with getting free-trade agreements signed with Panama, Colombia, and South Korea.
————
Wait did he say that Catepiller is hiring because business is picking up?!??? But don’t we have some of the higest corporate TAX rates in the world? Aren’t we BOGGED DOWN with regulations? Aren’t we all UNCERTAIN about the debt? I thought you needed tax breaks to stimulate the economy? So it’s customer demand? WHODA THUNKIT.
Anyway, the CEO of Catepillar better be careful what he wishes for. Free trade agreements mean that soon all those jobs will go overseas to the exact countries where he’s selling his backhoes. And all you need is one or two dedicated universities which graduate engineers, and there go another 15000 jobs. (not that he cares, he’ll profit either way).
Found this in my email box this morning:
“Larry Kudlow just said on CNBC that ‘gold is the most ridiculous investment in the history of the Earth!’ He says people should be buying stocks here…not gold.
“Yeah…it’s ridiculous..it’s only gone from $200 something to $1,800 in less than ten years.
“This guy just doesn’t get it. Gold is NOT an investment. It’s a STORE OF VALUE.”
The writer is 100 percent correct. Kudlow touts stocks because it’s his business, and he is one of a growing number of commentators bad-mouthing gold.
Gold has often functioned as money through the ages because, although it is not the perfect medium for measuring exchanges, it’s far better than irredeemable paper IOUs.
Sound money must meet three tests: 1/ Serve as a reliable medium for exchanges, 2/ Provide a store of value over time, 3/ Perform as an acknowledged standard of measure. No irredeemable paper “money” on the face of the earth meets all these tests. Gold does.
Larry Kudlow is smart, except when it comes to understanding the function of money.
Maybe we should explain our terms a little better when discussing “sound money” versus the increasingly worthless paper notes which are gumming up the world economy.
Somehow, society has forgotten that an economy function solely on exchanges. We exchange goods and services for goods and services. The advent of coin and currency as the MEDIUM to facilitate these exchanges has complicated matters to the point we’ve pretty much lost our bearings.
The ancients understood exchanges very well. If you wanted a cow you gave the owner something of equal value and the deal was done. The medium for the exchange could have been bushels of grain, valuable implements, even a spare daughter. But you had to hand over something both parties in the exchange thought was worth one cow.
Early on gold (and silver) were found to be first-rate materials for storing true value…owing to their beauty, rarity, and durability. Bingo! Barter gave way to precious metal as the medium for exchanges.
The metals were carefully measured in ounces and grains. Shekels, drachma, and other money were specific weights guaranteed by whatever government was in place at the time. This is where the “standard of measure” comes in.
Although not always a perfect store of value, gold and silver coins (money) tended to retain purchasing power over long periods of time. In terms of gold a bushel of grain in the Mid-east costs roughly the same today as it did a couple of thousand years ago.
Larry Kudlow complains that gold is not a good “investment.” He’s right in the sense saving up some gold coins is not the same as buying into some corporation in the hope it will prosper and pay dividends. That’s risk taking, while keeping a gold Krugerrand in your sock drawer is nothing more than preserving some purchasing power in case the politicians run the economy completely into the ditch.
When economists speak of “investment,” they refer to expenditures on plants and equipment which can be used to produce goods and services; constructing a new office building or a new manufacturing plant are examples of “investment.”
The layman’s definition of “investment” is more along the lines of “store of value.” Hence gold qualifies, even though it really serves little or no productive role in the economy.
Cocaine Larry is a bought and paid for Federal Reserve hack. And the Fed spend $$ to keep the entire country divided with phony ideologies, BS manufactured issues through Kudlow and other media proxies.
Is anything money unless by concensus or decree?
Larry Kudlow would barbecue live puppies over hot coals if it would yank the S&P up another ten points.
Tomorrow is the 40th anniversary of Nixon dumping the gold standard. How’s that working out?
You be the judge:
Pre-Nixon gold price = $35/oz
Current gold price = $1750/oz
Post-Nixon decline in the gold-denominated value of the dollar =
(35/1750-1)*100 = -98%.
About the same as when we were on the gold standard.
Suppose you never heard of the Great Depression, the Long Depression, or any of the other depression that occured on the gold standard.
Gold bugs seem to forget that there were bank runs even on the gold standard.
It is the debt!
It is not about what backs up the money that is borrowed into existance. Gold, salt, grain, silk, a government promise… when you begin to leverage that wealth so that imbalances can occur, debt builds up. Eventually the debt gets too big to keep growing. The imbalances that created teh debt, prevent them from being paid back. They collapse. There is a run to get out of money and into wealth, but there is not enough wealth for all the money becasue of the leverage. People lose faith in money, depression.
It happend on the gold standard. It happened on the salt standard. It has happened over and over and over again.
People think they are smarter. People should be able to make money as the result of others going into debt…… repeat.
Having a somewhat limited resource backed currency acts as a rev limiter in the production of said currency.
I like gold. Do I think a gold standard will make humans join hands around the globe. No. But it will curtail an out of control political situation where votes are bought and intergenerational dependencies are birthed.
And it is about the debt. A debt that exploded without any commodity restraint.
Until we gain control of OUR own money we are just part of the world’s largest circle jerk in history.
Darrell, it’s past the point of no return. Now looking logically at the current global financial linkage, when it breaks there will likely be a political responses to these external and internal shocks. That’s the next step if human history repeats. Pretty grim future but it won’t lead to global thermonuclear war.
PS: You might like Kevin Kelly’s book “What Technology Want’s”. He is also a founding member of the Long Now Foundation.
Feds to be foreclosure landlords? U.S. seeks ideas; local real estate experts wary
By Kimberly Miller Palm Beach Post Staff Writer
Posted: 12:58 p.m. Saturday, Aug. 13, 2011
Federal mortgage giants Fannie Mae and Freddie Mac may become landlords to nearly 14,000 foreclosed Florida homes as the Obama administration seeks ways to deal with mounting bank repossessions.
A request for ideas this week from top housing officials focused on proposals that would increase private involvement in the housing market while supporting rental and affordable housing needs.
That includes one plan that would allow companies to invest in discounted foreclosures in bulk, rent them out, and share the proceeds with Uncle Sam.
But some Florida investors are wary of morphing Fannie and Freddie from mortgage backers to rent collectors, fearing a government version of the bumbling Ropers from Three’s Company.
And most Realtors argue the South Florida foreclosure market is hotter than happy hour at the Regal Beagle, with homes selling at or above list price. With that kind of demand to buy individual properties, they ask: Why turn to discounted bulk deals to churn out mass rentals?
‘The buyers are there’
Nationwide, Fannie, Freddie and the Federal Housing Administration owned about 250,000 homes at the end of June. Florida’s share of Fannie and Freddie homes is approximately 14,000. FHA numbers were not available Friday.
But as of mid-July, just 92,050 of those homes nationally were on the market for resale as many languish in the twilight between final foreclosure judgment and placement on the Multiple Listing Service or are considered under contract.
In Florida, 6,115 of the 14,000 have for-sale signs out.
“The buyers are there; there are so many buyers,” said Melissa Arno, general manager of Home Run Real Estate in Lake Worth, which handles sales for Freddie Mac and HUD. “Even properties with mold, it’s nonstop calling. The demand is so high
http://www.palmbeachpost.com/money/foreclosures/feds-to-be-foreclosure-landlords-u-s-seeks-1738154.html - -
Here is an idea:
The U.S. federal government, which has tried its best since 1920 or so to make all Americans better off through meddling in the housing market, should evaluate what damage it has done, most recently through its role in precipitating the Great Housing Bubble and its aftermath: Apparently, the Ownership Society push to turn all American households into home-owner households had roughly the opposite its intended effect, as we have millions and millions of homes sitting empty or occupied by debt men walking, while home ownership is declining towards a decades-long low.
Perhaps Uncle Sam will conclude that private good markets, such as the housing market, best operate absent the heavy hand of federal intervention. Given the increasingly dire budget picture, it seems we can hardly afford to continue pouring billions and billions of federal funds down the real estate rat hole.
The 25 COMMENTS are worth reading.
http://www.palmbeachpost.com/money/foreclosures/feds-to-be-foreclosure-landlords-u-s-seeks-1738154.html - -
Source: Federal Housing Finance Agency
About the federal landlord program
•The deadline to submit ideas to federal housing officials is Sept. 15.
•For more information on the guidelines for submission, go to the Federal Housing Finance Agency website at http://www.fhfa.gov or e-mail reo.rfi@fhfa.gov .
The first one is definitely worth reading, though I doubt this is what the command-and-control Masters of the Universe have in mind:
“Keep the government out of it. Everything they touch and get involved with turns into a travesty. Stop trying to magically fix everything in the free markets. If left to its own devices, the free market will correct itself. We have enough of a nanny state in this country. Before long we’ll resemble those unfortunate governments in western Europe.”
Pawlenty quits campaign for Republican presidential nomination. Gee, no one could have seen THAT coming.
They’ll let Bachmann, Romney and Perry spar for a while. Good for entertainment value.
And then it’ll be Huntsman. Wait and see.
I thought it was Parry with an “a,” as in “all American” and “apple pie”?
Perry/Palin is my guess….
Although Perry is electable in Texas and Palin is electable in Alaska, I don’t believe either of them, not to mention the combination, is electable on the national front.
Well I would agree Pbear but that does not preclude the nut cases from presenting them as their choice…MaCain/Palin was the last one…
I thought this was a brilliant experiment in the effect of campaign advertising. I would really like to see vote totals split by Perry and Parry.
So two fundies (I think Perry is a phony fundie) and a Mormon who insists that businesses are people. I agree with what others said yesterday: the GOP will bury Ron Paul.
I’m guessing that Bachman is going to win the nomination and will even steal some of the Texas fundy vote from Perry in the primaries as she isn’t low key about her religious beliefs. She will scare the moderate vote to Obama. If the Dems can get the vote out this time Obama should win a second term. If they stay home … hello President Bachmann.
“She will scare the moderate vote to Obama.”
Which is why she’ll never get the nomination, although she’ll get the fawning that Palin did.
Huntsman. Trust me. He’s a globalist.
He came in 2nd to last in the Iowa straw poll. He still has time to market himself though, he’ll be a hard sell to J6P in the primaries with his pro offshoring platform and being a Mormon won’t endear him to the Protestant Fundies.
In a way the GOP has painted itself into a corner, it depends far too much on Protestant Fundies who just might stay home on election day if Romney or Huntsman are the candidates, or vote for a hard right 3rd party candidate.
Even though in my ‘heart of hearts’ I know RP won’t win (he is the only real threat to the PTB) I will still cast my vote for him.
Sometimes the appearance of choice is enough to satiate the herd.
It would be nice if RP can keep his voice in public for as long as possible (without exposing his crackpot side too much). It is important now for there to be more routing of the establishment in Congress.
Government Considers Ways to Rent Foreclosed Homes
BY NICK TIMIRAOS
JULY 22, 2011.
The Obama administration is examining ways to pull foreclosed properties off the market and rent them to help stabilize the housing market, according to people familiar with the matter.
While the plans may not advance beyond the concept phase, they are under serious consideration by senior administration officials because rents are rising even as home prices in many hard-hit markets continue to fall due to high foreclosure levels.
Trimming the glut of unsold foreclosed homes on the market is “worth looking at,” said Federal Reserve Chairman Ben Bernanke in testimony to Congress last week.
http://online.wsj.com/article/SB10001424053111904233404576458300001332210.html - 269k
That house across the street from me that sold at $260K at peak, that the lender had on the market for $77K but couldn’t sell it, so pulled the listing… well, they just rented it out. The new renters told be $800 a month for the 1600 sqft 3/2 with pool, and landscaping service is included. Rents on this street were $1600 a month 4 years ago.
Excess housing as far as the eye can see, so prices are crashing.
Extreme shortage of used cars, so prices are skyrocketing.
That’s bloody insane. Those renters could have BOUGHT that house for $400 a month ($72K 30-year fixed at 5%).
“It’s the down payment, stupid… “
“It’s the down payment, stupid… “
Most Americans can’t afford a $1,000 emergency expense
By Jessica Dickler
August 11, 2011: 11:19 AM ET
NEW YORK (CNNMoney) — When the unexpected strikes, most Americans aren’t prepared to pay for it.
A majority, or 64%, of Americans don’t have enough cash on hand to handle a $1,000 emergency expense, according to a survey by the National Foundation for Credit Counseling, or NFCC, released on Wednesday.
Many respondents, 17%, said they would borrow money from friends or family. Another 17% said they would neglect other financial obligations — like a credit card bill or mortgage payment — in order to free up some funds.
Alternatively, 12% of the respondents said they would have to sell or pawn some assets to come up with $1,000 and 9% said they would need to take out a loan. Another 9% said they would get a cash advance from a credit card, according to the NFCC.
http://money.cnn.com/2011/08/10/pf/emergency_fund/index.htm - 55k -
Which is why $77k will prove to be a low price 5 years from now.
How long does it take someone to save $15k for the down? I’m not talking the average “forced renter”, $500 per week crowd, I’m talking about the top 20 percentile of renters…the potential buyer pool. I’m willing to wager that there are a fair number of them that already have access to the $15k, but don’t want to buy.
Its all in our IRA’s or 401k….let us take it out fully tax free….and we might get somewhere.
———————
a fair number of them that already have access to the $15k, but don’t want to buy.
If you guys have not looked for a used car recently, you simply would not believe how bad it is out there.
Everything that seems to be expensive, but not insanely so, has major mechanical problems. And by expensive, I’m talking $6-7K for a 7+ y/o economy car with 100K+ miles.
I looked at at least 15 cars yesterday. Seriously, not only were the ones I was looking at 2x-3x the price I was seeing a few years ago, they are in FAR worse condition.
It gets to the point where an 8 Y/O Kia Rio with only 130K miles for $5000 starts to seem like a good deal, until you take the test drive, find out the AC blows hot, the transmission makes a clunking sound when you shift, and suspension is shot.
We’ve looked at new cars, but even the VERY low end base version of the cheapest cars are $15K.
The car market is totally nuts.
“If you guys have not looked for a used car recently, you simply would not believe how bad it is out there.”
I have, and I DO believe. Which is why I decided to sink $1500 into the one that I have. It was worth it.
Darrel, I agree, it’s horrendous looking for a used car these days. Both my ex and I went through it. Ex had no choice, the 23 year old Honda just couldn’t make it anymore. I suggested we pay a call on a local mechanic shop that had helped me out of a jam a few months back, they were classy and didn’t rape me in my hour of need. So we just stopped by and asked if they knew of a good place to find a used car. Turned out, the wife of one of the mechanics (the mechanic who saved my azz) just happened to be standing there and wanted to get rid of her 15 year old Honda at a fantastic price. It was in great condition, too, and well maintained. So we snapped it up. But it was one of those lucky breaks.
However, if you know any mechanics that you trust, it wouldn’t be a bad idea to call or stop by and see if anyone they know is looking to sell something. Ex went through the same BS you did for a month, until we lucked into that deal.
Actually, Darrell, I’d advise you to put the word out that you’re looking. To everyone and anyone you know. Friends, business associates, relatives, whoever. Check with your local mechanics, like I mentioned. Post a want ad on Craigslist. If there’s a retirement community near you, see if you can get access to their community bulletin board and post an ad there. And while you’re at it, see if anyone from the retirement community has any ads posted for autos for sale. These come available when someone goes into assisted living or a nursing home, or when they die and the heirs want to settle the estate. If there are any retirement communities in your area that have weekly local newspapers, check those out.
I know how frustrating this hunt is, I’ve been there recently myself. Seems like every private seller I contacted had just sold their car to someone who came by with cash just before I called them.
“And while you’re at it, see if anyone from the retirement community has any ads posted for autos for sale”
Those cars can be very low on the odometer even when 10+ years old. And check with the assisted living places too. Those folks often have cars they rarely drive but keep for years for psychological reasons. Eventually they are too disabled to renew their license and the car might go on sale.
My personal observation is that anything under $7K is iffy: it will have at least 100K miles. Here is a tip: You can find 2000-2005, low mileage (under 50K) Buicks for around 10K.
I think its because of two reasons:
1) New car prices are through the roof. I would say based on observation that comparable cars now cost 25% percent more than 5 years ago. This is in part because the big 3 have settled for lower sales volume at price points that are profitable.
2) New sales are hovering between 11 and 12 million, compared with 16.9 million in 2005. Fewer new sales means fewer trade ins which means fewer used cars available.
Which is why I decided to sink $1500 into the one that I have. It was worth it.
You and a lot of other people.
But when your son wraps your truck around a power pole because he was texting while driving, that isn’t really a possibility.
I’d so put his azz on a bus if he wasn’t doing duel enrollment and has to transfer from high school to jc in less than an hour between classes.
I was going to say get him a scooter, but IMHO anything with two wheels is a deathtrap.
Here’s an idea: Post a want ad on Craigslist specifying what you want (type of car, model year range, etc.) Offer them Blue Book trade in value (or $500 more than the dealer is offering them for the trade in). One thing that I’m certain has not changed in this market is that dealers always try to screw you with the trade in value. It doesn’t matter if you show them what Blue Book or the NADA books say, they always tell you that the trade in is worth much less.
In states with Lemon Laws, it is worth less because the law requires them to warranty the car for however long the law specifies.
Such laws sometimes don’t apply to sales between individuals.
Used car/truck prices were going up last year, at least according to the guy I bought my truck from last August.
Checking prices, I’d have to pay $1000 more, if I had to rebuy my same truck today.
I may have to find some 1970s POS out of a farmers field, and get it running again, if trends continue.
Darrell can you hang on and carpool until the semester is over? Or even rent a car for $2K or so for four months (and take that $2K out of the son’s hide). Then next semester you son can arrange his classes so that he can take the bus.
It just sounds weird that you’re rewarding bad behavior — txting while driving — with a new car.
So have you confiscated his cell phone yet? Seriously, I think this is the time for a serious life lesson. Alternately, see if you can get a hospital visit with someone badly injured in a traffic accident.
(Glad he’s okay, but BAD JUDGEMENT on his part!)
I got a letter recently offering me more for my 2005 Altima than it costs me used in 2008 with 30k miles on it. Trick is I have to buy a new car that will cost me $10k extra. I’m going to get a electric as my next car and keep my 97′ explorer for road trips. If one picks the right model it might be a collectors item like an original Apple Lisa PC.
I drive mine until the wheels fall off.
I love having them sit in the garage while I’m in Europe 4x a year.
People & their overpriced cars… I just don’t get it.
A new car, especially a cool one, can be fun. But at today’s prices the monthly nut can quickly become a monthly burden, even with lease prices.
I also think that for a lot of people an expensive car is a way of advertising that they are “successful” to their peers.
Not everyone likes traveling to Europe, I guess, at least judging from the large number of leased on the road BMWs around San Diego…
My wife totaled our second car last year. I know how bad used car prices are now. Since we only had one income then, we decided to tough it out with only one car. Now my wife has a job and a second car is needed, but the prices are still way out of whack. May end up just leasing something for a few years and hopefully used car prices will level out at some point.
http://www.zillow.com/homedetails/13180-84th-Ter-Seminole-FL-33776/47213409_zpid/
Ridiculous! This should be $140k
According to the Zillow page that cites public records, the house sold in 1992 for $137.7k.
The kitchen looks a bit long in the tooth.
There has never been a better time to buy!
Home Ownership Rates Plummet, But Now May Be the Time to Buy
Jaclyn Berger
CNN Money reports that analysts at Morgan Stanley have calculated true home ownership at a rate of 59.2 percent. This is the lowest rate since the Census Bureau began record keeping in 1965. Morgan Stanley uses the current Census Bureau rate of 65.9 percent and then factors in delinquent mortgage holders to reach the true value of 59.2 percent.
…
It held steady around 63% for many years..Maybe even several decades….
Don’t buy until the current Census Bureau rate matches the true value.
What is interesting is that if you look at historic home ownership rates by age demographic, you would see that as people get older, their propensity to own goes up; 20’s have a lower percentage than 30′, 30’s lower than 40’s, 40’s lower than 50’s, etc.
OK, moving on from “obvious data for the evening”…
If you simply overlaid that data with how the different demographic groups were growing (or not) in the early 2000’s, you would have seen that the propensity for the homeownership rate was for it to rise for the foreseeable future, simply by virtue of more people entering the demographic where they were more likely to be owners, not crazy financing.
Then we got crazy financing, and the propensity to own at every age cohort went up…and now after the crash, I’m assuming that the propensity to own at every age cohort is going down.
I would be very interested to see what the home ownership rate by age cohort is relative to history…to the census…will report back.
OK, the census data is pretty hard to piece together (you need to go quarter by quarter, and I don’t have that kind of time tonight).
But I went back to the earliest quarter where they had the data, and here is the basic conclusion:
1. Under 25 ownership rates have a ways to fall to get back to where they were in 1994…we’re talking 22% today vs. 15% then.
2. All other cohorts are very close to where they were in 1994, but today for the most part, all cohorts from 25 years old to 64 years sold today are BELOW where they were in Q2 2011. From age 65-, the ownership rate is higher today than it was in 1994. Most striking is 75 years and older…was ~74% in 1994, is 79% today.
CNN tends to avoid the truth:
http://www.youtube.com/results?search_query=cnn+fake+news+gulf+war&aq=1&oq=cnn+fake
CLICK!
No double-dip recession for housing
By Jim Woodard Creators Syndicate Inc. | Posted: Saturday, August 13, 2011 12:00 am
The housing market, buffeted by a recovering rental sector, is unlikely to experience a double-dip, and will likely follow the performance of the overall economy for the remainder of 2011. Additionally, this year’s home sales are still projected to be up over 2010’s pace by three-to five-percent, according to a report from Freddie Mac.
However, despite record levels of home buyer affordability and historically low mortgage rates, many households remain concerned about their financial futures and are holding off on major purchases, particularly homes. The rental housing market continued to show the clearest signs of a turnaround, with the Apartment Property Price Index showing a 15.2 percent gain last year through the first quarter of 2011, Freddie Mac reported.
Stability in the housing market will lead to a quicker and greater economic recovery, according to the National Association of Realtors. In a letter to Secretary of Housing and Urban Development, Shaun Donovan, Secretary of the Treasury, Timothy Geithner and Director of the National Economic Council Gene Sperling, NAR offered its recommendations for helping stabilize and revitalize the housing industry and economy.
“A strong housing market recovery is essential to the nation’s economic strength,” said NAR president Ron Phipps. “The housing market is in a fragile recovery, and our goal is to ensure that regulatory or legislative changes help lead the way out of today’s economic struggles and not jeopardize the recovery.”
…
“…will likely follow the performance of the overall economy for the remainder of 2011.”
True dat.
Reich: GOP strategy misses critical need - jobs
Sunday, August 14, 2011
Republicans repeatedly assured the nation that once the debt-limit deal was done - capping spending, cutting the budget deficit and getting “98 percent” of what they wanted, according to House Speaker John Boehner - the economy would bounce back.
Guess what? Just the opposite seems to be happening. The stock market has plunged, Standard & Poor’s has downgraded the nation’s debt, and America seems closer than ever to falling into another recession.
Wall Street investors aren’t ideologues. They don’t obsess about budget deficits 10 years from now or the size of the government. Their worries are based on cold, hard facts.
The first fact is that the economy is almost at a standstill. The Commerce Department reports almost no growth in the first half of the year.
The second fact is that the job situation is growing worse. Although the latest report showed 117,000 jobs added in July, that’s nothing to celebrate. At least 125,000 new jobs are needed every month just to keep up with population growth. This means even more people have stopped looking for work.
The real news from the recent jobs report is the stunning drop in the percentage of working-age Americans now in the labor force. The labor participation rate is only 63.9 percent. That’s lower than it was at the bottom of the Great Recession - lower than it has been in almost three decades. Millions of American families that depend on two incomes to pay their bills now have only one. They’re not going to spend more to keep the economy going.
The third fact is that the recent budget deal makes it much harder for the president and Democrats to enact a jobs bill that counteracts these trends and boosts the economy. Because the deal sharply reduces spending, Congress can’t get close to the size of a stimulus necessary to bridge the gap between what increasingly scared consumers are willing to spend and what the economy can produce at or near full employment.
Meanwhile, the original stimulus is over. The market is on its own - without enough rocket power to get out of the gravitational pull of the Great Recession.
…
“Reich: GOP strategy misses critical need - jobs”
I respectfully submit that the former U.S. Labor Secretary may be missing the point of the GOP strategy, which appears to be a cynical ploy to crash the economy just before the 2012 presidential election, then blame Obama in the hopes the American voter will not connect the dots.
Judging from last week’s stock market action, the first part of the plan is working out beautifully. Now if the GOP can just convince the median American voter that it is all due to Obama’s economic policies.
Expect this kind of whining to get louder as more individuals wake up to the realization that the predator class is enslaving them with its debt ponzi economy. The end of life as we know it! Buckle up!
That’s exactly what’s happening. The wealthy, with the explicit help and blessing of politicians, are methodically transferring the entire financial burden of their bad bets onto the backs of the working class, while making themselves whole. Yacht sales are brisk.
Obama turned out to be just another Wall St. whore. The end.
Remember when the Case-Shiller was showing house prices falling in 2006-2007, but medain house price sold was still increasing? It was becuase the quality of the unit being sold as the bottom of the market froze before the top.
I am 100% convinced that this “increasing rent” BS is the same. When any decent apartment was being condo-conversion’ed, back in 2003 rents were falling. Yeah, because the units still for rent were the dog doo, bottom of the market. My cruddy place increased rent 20% despite “falling rents”.
When the bubble burst and the condos re-partmented, and all the high end condos went rental, rents were increasing. BULL. Rents of specific untis were falling, but the mix of dog crud to really nice was improving.
For 2 years, Phoenix was reporting increasing average rent, but anyone that had a place they were trying to rent kept saying htey were having trouble finding tenants despit lowering their prices, becasue nicer units kept coming on the market.
So, $800 used to get you a 2 br apartment with no reserved parking, and now $900 gets you a 3/2 SFH with a 2 car garrage and a pool. Sure rents are increasing. Sure.
And house prices were increasing back in 2007 when the bottom end of the market was totally frozen.
Excellent post on rents. I’m still very skeptical of “rising rents” considering the rental vacancy rate is still at multi decade highs.
I moved out of my rental a few months ago…the new tenant is paying 30% more than I was.
Read through the quarterly reports of the publicly traded apartment owners in the US. The picture that they paint is one of same property rising rents (apples to apples comparisons). I’m finding no evidence of what you are hypothesizing, that the increase in rents is solely due to higher quality properties being rented.
That effect may be happening, but I believe it to be in addition to rents going up due to vacancies falling.
Anecdotally, I know a family that owns rental property in Southern California (apartments). They’ve owned many of the properties for 10+ years, and they are seeing strong rent growth on an apples to apples basis. So Cal is a bit unique due to it’s generally low vacancy rates, but I take the national apartment REITs as a better proxy for what is happening nationally in big markets (most REITs don’t own apartments in smaller markets).
And RAL, vacancy rates are high in some places, relatively low in others. I’m sure you’ll see rents rising in low vacancy markets, and either falling or flat in high vacancy markets.
U.S. News
Cracking the housing bust conspiracy
Published: Aug. 14, 2011 at 3:30 AM
By MICHAEL KIRKLAND
WASHINGTON, Aug. 14 (UPI) — Conspiracy theorists ran into a brick wall earlier this month in efforts to connect the collapse of the mortgage industry to politicians — a controversial quest because most agree the housing bust was one of the first indicators, and one of the first causes, of the lagging U.S. economy.
Judicial Watch, the capital’s conservative and sometimes quixotic legal watchdog organization, started the whole thing in May 2009 by asking the newly created Federal Housing Finance Agency to disclose “[a]ny and all Freddie Mac … or Fannie Mae records concerning political campaign contributions.”
No can do, the agency responded.
Judicial Watch went to court, filing a Freedom of Information Act suit to acquire the relevant documents. Understanding why the suit failed, at least short of the U.S. Supreme Court, requires an understanding of the background.
The Federal National Mortgage Association — Fannie Mae — and the Federal Home Loan Mortgage Corp — Freddie Mac — buy residential mortgages from banks, then repackage them for sale as mortgage-backed securities. Fannie Mae and Freddie Mac guarantee the securities, pledging to reimburse investors if borrowers default.
The federal appeals court in Washington nicely captures what went wrong with the two lenders.
Fannie Mae and Freddie Mac “are structured as private corporations, but they are federally chartered and play an important role in the national housing market by making it easier for home buyers to obtain loans. … In 2009, the two companies guaranteed three-quarters of new residential mortgages in the United States.”
But things had begun to go south.
“National housing prices began a sustained decline in 2006 that by mid-2008 had substantially eroded the value of Fannie- and Freddie-held mortgages,” the court said. “Worried that either or both Fannie and Freddie might become insolvent, Congress passed the Housing and Economic Recovery Act of 2008 … which created the (Federal Housing Finance Agency, or FHFA) and authorized this new agency to place the two companies into conservatorship under specified circumstances,” such as when Fannie’s or Freddie’s assets are insufficient to meet its obligations and where the management in the relevant agency consents to a conservatorship.
“On Sept. 7, 2008, with the consent of management at Fannie and Freddie, the FHFA placed both into conservatorship,” the appeals court said. “As conservator, the FHFA has power to exercise ‘all rights, titles, powers and privileges of the regulated entity, and of any stockholder, officer or director of such regulated entity with respect to the regulated entity and the assets of the regulated identity.’”
…
I thought it was Republicans who wanted to increase the U.S. unemployment rate through hasty, immediate action to cut federal spending at a fragile point in the recovery? This blame game is very confusing.
Republicans Demanding Geithner’s Head Following S&P Downgrade
August 6, 2011 2:32 PM EDT
Some leading Republicans are demanding the head of Treasury Secretary Timothy Geithner following the unprecedented decision by credit agency Standard & Poor’s to downgrade the U.S. government’s long-term credit rating.
Jim DeMint, a GOP Senator from South Carolina, said President Barack Obama should “demand” Geithner’s resignation “and immediately replace him with someone who will help Washington [to] focus on balancing our budget and allowing the private sector to create jobs.”
DeMint added: “For months [Geithner] opposed all efforts to reduce the debt in return for a debt ceiling increase. His opposition to serious spending and debt reforms has been reckless and now the American people will pay the price.”
…
Newsflash, Jim D. CONGRESS does the budgeting, not Tim Geithner. Do I have to post the vote for S.3816 — cut tax breaks for offshoring — AGAIN?
By the way, DeMint voted against it.
So let’s say they fire Geithner and bring back Hanky Panky Paulson. The debt is NOT going to go away.
Becasue they want the media circus that would be a confirmation hearing of a replacement.
We’re heading for a cliff at sull speed.
Yeah, but we’re making good time.
Just more politics as usual.
Create the giant Charlie-Foxtrot, then demand Obama fire everyone.
Such a deal, if you can sell it.
Talk about an “entitlement” mentality. Republicans believe that they are the only people qualified to run the government…..like a business, of course.
Because of this, they think any kind of lying and deception they throw out there is justified, if it gets them back in the White House. Ends justifying the means, and all that.
Politics as usual = Fiddling, while Rome burns
I’m highly encouraged by the entry of Rick Parry into the race, as his fundamental religious orientation has the potential to throw a major wrench into the Republican efforts to regain the White House. Many Americans would rather not vote for somebody who wears their religion on their sleeve, as Separation of Church and State is a fundamental principle of governance which goes back to the founding of this country. Enough hard-core religious right Republicans are likely to find Parry’s style sufficiently appealing that it has the potential to morph into a divisive issue.
Hopefully Obama’s handlers will take a hint and pour many gallons of gasoline onto this spark of contention.
Got popcorn?
1. If the religious right had really come out in 2008 for McCain he might have won. Some of them did respond to the red meat that Palin brought to the ticket but not enough. It was the center-right than moved slightly to the left (thanks GWB) that let Obama win.
2. Obama is not a Christian or at a minimum not a traditional American Christian according to most of those on the right and center right, over 50% of voters think that according to recent polls. Actually it’s worse now than when he took office.
3. Republicans have spent decades building this ‘base’. It’s a army at their command. It crosses generations and it’s nearly unbreakable.
Place your bets on Red this time.
A LOT of the voters responded to the red meat that Palin brought to the ticket, but I don’t think it was her religion.
If the Republicans win the white house next election, it will not be because they deserve it. It will not be becasue they outlie the Democrats. It will not be over religious beliefs or screaming atheism. It will be over frustration about the economy.
“A LOT of the voters responded to the red meat that Palin brought to the ticket, but I don’t think it was her religion.”
Exactly. It was the Viagra crowd who responded, no doubt dreaming of liaisons so far-fetched it could bring laughter to even the most ill-tempered soul.
“Jim DeMint, a GOP Senator from South Carolina, said President Barack Obama should “demand” Geithner’s resignation “and immediately replace him with someone who will help Washington [to] focus on balancing our budget and allowing the private sector to create jobs.””
No one’s stopping the private sector from creating jobs except the private sector.
Why should Obama be in a hurry to fire anyone since Senate Republicans aren’t in a hurry to confirm anyone? (though I wouldn’t mind seeing Geithner replaced)
Can anyone explain how short sellers can drive down prices? Because it seems to me that unless the market has a shortage of buyers, prices cannot go down. Short sellers can only make money if bulls lose their balls. Yet like the messenger who gets killed, they get the blame when prices decline.
Battle lines drawn in Europe over short selling
Grant Robertson
From Saturday’s Globe and Mail
Published Friday, Aug. 12, 2011 6:54PM EDT
Last updated Friday, Aug. 12, 2011 7:08PM EDT
A temporary ban on short selling financial stocks in several European countries is helping to calm global markets after a week of unprecedented share price swings. But a fight by regulators to stamp out what they consider reckless trading in the shares of some of Europe’s largest banks is only getting started.
…
Short selling is borrowing someone else’s stock and selling it, coupled with the promise you will buy it back on the market (hopefuly at a lower price) and return it to the person you borrowed it from with interest later. It temporarily floods the market with somewhat artifical sell orders driving prices down. The goal is to create fear and panic to spur additional sales from other holders, or trip black box trading programs. True, you get screwed if no one falls for it and you dont buy it back before prices stablize, but some ppl stay away if they see prices drop 10% or more per day. The governments do not want short selling to magnify the price drops, creating more fear and additional selling.
“It temporarily floods the market with somewhat artifical sell orders driving prices down.”
A sell order cannot drive down prices unless there are no higher offers for the stock. If there were higher-priced offers for the stock, the low-bid offer would not be filled. Only a dearth of high-bid offers which can drive down the price; don’t blame short sellers for realizing there will be no bids above their offer prices.
The logic of blaming short sellers for stock price declines is about as sound as blaming today’s prospective home buyers for not offering 2006 prices on homes they are trying to buy. In a free market, anyone can offer whatever they want to buy an asset, and the seller can say yes or no.
“The governments do not want short selling to magnify the price drops, creating more fear and additional selling.”
I just don’t buy the notion that bovines are that easily manipulated into stampeding over the nearest cliff, unless perhaps fundamental factors dictate that the stock market should steeply decline. In that case, why shouldn’t the stampede be allowed to occur. Nobody put a gun to the bovines’ heads and forced them to buy overvalued shares.
“overvalued shares” - note that short selling temporarily drives prices down on fairly valued shares which is the actual concern.
“…note that short selling temporarily drives prices down on fairly valued shares which is the actual concern.”
I guess I just can’t get my point across on this, but will try again, even if it seems like I am beating my head against the wall.
Someone offering a lower bid price (which is what a short seller is doing) cannot, I repeat, cannot drive down the price. Only sellers can drive down the price, through accepting a lower bid than yesterday’s close. And cowed bulls who are reluctant to offer yesterday’s price are also to blame; if they were making higher offers than the short sellers’ lowball offers, no transactions could take place at the lowball price.
Is this clear yet, or are you still confused?
P.S. I also note that lots of Wall Street CEOs groused about short sellers driving down their companies’ share prices. The shorts made a convenient scapegoat for the consequences of their management failures.
“Can anyone explain how short sellers can drive down prices?”
Short sellers acquire the shares by borrowing them. That transaction does not show up as a trade. Then the sell the shares, which does show up as a trade. If there’s a lot of selling happening at the same time, prices go down.
When shorts bet the wrong way they have to buy shares to give back to the lending entity. Lots of buying raises prices, making the shorts’ loss even greater.
“When shorts bet the wrong way they have to buy shares to give back to the lending entity. Lots of buying raises prices, making the shorts’ loss even greater.”
This happens when short sellers are wrong about the value of stocks declining, in which case they lose money. When short sellers predict lower values and are right in these predictions, the price goes down, rewarding the short seller’s judgment.
This is part of the normal operation of a free market. Not allowing short sales makes the market less efficient, hiding information which might help investors make better decisions about whether to own a particular stock — and perhaps that is Wall Street’s interest, as they make routinely money by duping others.
Naked shorts may be another matter altogether…
“This is part of the normal operation of a free market.”
That is not actually true. The concept was created by banksters to make money by giving people enough leverage to hang themselves. How does people being allowed to sell before they have to buy create efficient free markets in your mind? I thought you were against leverage games, but now you profess to be for them. I can never really tell when you are serious.
I have nothing against the use of leverage, short selling, or any other form of people (potentially) hanging themselves financially, provided a rule of law is enforced against those who commit fraud, and that I am not forced to pay for Wall Street’s bad gambling debt.
“How does people being allowed to sell before they have to buy create efficient free markets…”
I already said naked shorts are another matter; why these are not considered fraud and prosecuted as such is quite a puzzlement.
I don’t know who Max Keiser is, but he says the is the new way of war. Kinda like Robot Jox (great movie), but with banks and currency and hedge funds.
http://www.youtube.com/watch?v=umJ6co__lz8&
Which is another reason why Wall Street (and it’s business partners) are buying every politician in sight, on every continent.
What better way to insure your overseas investments, than to control the go/no-go decision on whether cruise missiles will be launched.
Soon, the only people being bombed will be those fighting the bankster cartel.
“Soon, the only people being bombed will be those fighting the bankster cartel.”
X I’m afraid you’re right.
I was just reflecting on the upcoming 10 year anniversary of 9/11. A lot has changed since then:
- gold
- housing
- apple stock price
- death of CD (music kind)
- near death of newspapers
- blogging, twitter, facebook, etc.
- TSA airport stuff
- Middle East wars
- Hydro-fracking/tar sands
Feel free to add. I think it’s been an interesting decade. Maybe it’s just because I have been paying attention, or now I am of adult age, but I don’t recall the nineties being this nutty.
The universe is 20% older than we thought. Also that gives DNA an extra billion years to develop somewhere else in the cosmos.
Also that gives DNA an extra billion years to develop somewhere else in the cosmos
Good luck finding it. Like we’ll ever be able to travel beyond the solar system. It just doesn’t fit into meeting next quarters numbers.
Did you forget the worst recession since the ’30s and the massive unmployment?
Here are some things that haven’t changed.
Alternative energy is still priced out of sight.
Righties and lefties still talk past each other.
The older generation still fears the younger generation, disguising it as loathing of their lifestyle, music, clothing, body art, etc.
People are still killed in the name of god.
Feel free to add to this list.
“- death of CD (music kind)
- near death of newspapers
- blogging, twitter, facebook, etc..”
Back in the early ’90s, I saw a stand-up bit on MTV. It was actually the guy who played “Skippy” on family ties. He was comparing the 70s to the ’90s. The punchline always stuck with me:
“Sex, drugs and rock and roll, sex drugs and rock and roll, that’s great.
Masturbation, crack and Madonna, try chanting that in the rain!”
I am wondering about two things:
1) Is G-7 central banker intervention underway to prop up developed-economy stock markets?
2) Have developed country governments deliberately pursued economic policies to scare investors away from stock markets and into the relative safety of gold, or was this an unintended consequence of failed economic governance?
Interest in gold shows fear of markets, government
9:46 PM, Aug. 13, 2011
Safety — it’s why investors buy into gold.
When the market looks shaky and there’s little faith in government, gold prices skyrocket. That was the case last week when a sudden stock market dive drove prices to an all-time high, then saw them taper slightly with a market rebound.
The Dow Jones Industrial Average plummeted 634 points Monday, the first day of trading since Standard & Poor’s downgraded the U.S. credit rating. By Thursday, gold surpassed $1,800 for the first time. It settled at $1,747 on Friday, thanks in part to several 400-point days, new regulations on deposit amounts required to trade gold and a report indicating the U.S. retail sector had grown by 0.5 percent — the most in four months.
“Gold moves opposite the market,” Centenary College Economics Professor David Hoaas said. “It’s an obvious fallback investment for the nervous.”
Gold is a traditional safe haven from U.S. government bonds, themselves safe havens from an unstable and unpredictable stock market, said Diana DeCharles of the Ark-La-Tex Chapter of the Financial Planning Association. More interest in gold shows aversion to the market and government, she said.
She said speculators and a nationwide herd mentality have also contributed to rising gold interest and prices.
While investors can feel safe with something they can hold in their hands, she said at some point gold prices will drop, and because the newest investors are getting in at the highest price, they probably won’t make much money.
“If you’ve got the gold fever, at least keep it minimized,” DeCharles said. “People are just mad, and they’re taking money out of the stock market and putting it into gold.”
…
“While investors can feel safe with something they can hold in their hands, …”
For some reason, that argument rings a bell.
Oh yeah — remember how people felt safe buying houses because they were physical assets and everyone has to live somewhere?
True, but there’s no shortage of land or construction materials.
There may be a shortage of gold, but given that central banks are among the key buyers these days and their pockets are deep to an unlimited degree, the shortage could be eliminated tomorrow if central bankers decided to dump their holdings.
What’s worse, if they wanted to accumulate lots of gold, they could easily play a pump-and-dump strategy, where they drove down the price, bought low, drove up the price, sold to drive down the price, bought low, drove up the price, sold to drive down the price, bought low, drove up the price, sold to drive down the price, bought low, drove up the price, sold to drive down the price…
Do you get the picture? We are talking about a (potential) perpetual money machine here, based on gold price manipulation. I’m not suggesting this is actually occurring; just pointing out that central banks’ “worthless paper” is really about the monopoly power to print more and use it to buy tangible assets, rather than any notion of “intrinsic value” of paper versus metal.
Call the cops, I just robbed some guy.
I’m sitting here lamenting the crud condition of cars people are trying to sell for $7000…. I’m refreshing craig’s list every 3-5 mins.
A car pops up. 2007 Ford Taurus, 75K miles. $3995. Runs perfect, new tires, etc. etc. etc.
Immediatly call, ask address, he want’s to go into all the condition… I’m thinking “Dude, give me the f’n address!”. I say, “we can talk later, I need to come see the car first”.
I get there, he says he’s had 7 other calls. While were test driving a few miles he gets 2 more calls. I pull into a bank and pull out $500 deposit.
Back at his apartment, while typing up bill of sale, 3 more calls.
Here is the full story. He needed money in Feb, so took the title to auto title loan place. They said low KBB was $4K so they could loan him up to $3K. Owns his own business and was expecting payment from customer, so took the…
wait for it…..
80% interst rate loan.
As you may guess, the customer didn’t pay. He’s missed payments, they’ve added more than $300 in late fees and interest. He will be missing another payment and getting hit with another fee by Wednesday. He goes to them and asks how to get out from under this. They tell him, sell it, have the buyer bring cash here. We thrasfer the lien to the buyer when they pay us. Then you take the title to the DMV and transfer title.
He is selling it for the low-end KBB the auto title loan quoted him 7 months ago, without having done ANY research as to what the car is worth. FOOOOOL.
This isn’t the best $4000 car I’ve lookied at in the last month. This is the best $8000 car I’ve looked at in the last month.
Anyway, he has the $500 down. I have the bill of sale. We go pay it off and transfer title to me tomorrow morning when the auto title loan place opens.
Here is a clue dude. You put a car for sale and get a dozen calls in the first half-hour from very eager buyers trying to elbow each other out of the way to buy it, the price may be a tad low….
I feel a tad bad for him, but WAY happy for me.
Even if a mechanic says it needs $4K work, I’m way ahead.
For anyone not working in the “bubble” industries, the past 25 years has been round after round of leveraged buyouts, cutbacks, layoffs, paying more for medical insurance, paying higher insurance deductibles, no pay raises, and 3% a year COLAs when the actual inflation rate is 6%.
Now we are being told that this period was “the good times”, and it’s going to suck for the next 10-15 years.
Spoke w/ a coworker last week about the outlook for the American economy. It made me feel like I am not as bad a pessimist as I thought.
Her main comment: “It’s bad now and it’s never going to get better.”
I know a lot of people who now feel that way.
I also keep hearing questions from intimate acquaintances about whether they should sell off all their stock holdings, a question I dislike, as I don’t have an honest answer for them. I myself did this back last May, but I have little idea yet whether the move was lucky, smart or neither.
It’s even worse if you consider the way things were 40 years ago. Back then, in the typical suburban, middle-income family, Dad went out to work while Mom stayed and took care of the kids, house, pets, etc. Now, both Mom and Dad have to go out and earn money. So now there are two paychecks coming in, and yet that typical family is not doing any better than it was with one paycheck. Almost everyone knows this, and yet very few recognize how we’ve all abused and sold a bill of goods by the PTB.
Back when I was working at a bookstore, I read The Two-Income Trap. The key insight I picked up from that book is that the “trap” is in considering two incomes as equivalent to a single larger income. The problem there is that if you base your budget on both incomes, *any* uncertainty in one of them throws your whole life into disorder and you don’t have a fallback plan. The authors even stated that taking one income and using it entirely on frivolous things was far better than using it for mandatory expenses, because the latter is what happens with planning for two continuing incomes.
I’m currently a mostly stay-at-home mom (working one day a week when my husband can watch the kids and sporadically* when my parents are available.) If my husband were to suddenly have health problems, for example, I would get a particular certification that I’m eligible for (and which is pretty cheap) and start pounding the job market hard. Obviously, that would be harder in this market, but it’s still part of the fallback plan.
If we’d counted on the income we had when we were both working full-time… well, we still wouldn’t have it, because childcare would eat my income right up. So it’s much better to have the single income and my tiny contribution chipping away at debt.
*seasonal job, family company, totally flexible.
The so-called ‘experts’ continue reassuring individual investors to hang on and keep the faith, but I have my serious doubts. Everyone I talk to about finance has recently asked whether they should pull all their money out of the stock market, and they are frustrated with my refusal to offer any definite advice.
All I know is that the Fall 2008 financial meltdown started out similarly to the recent week’s stock market action, and the DJIA subsequently dropped by over 50% over the period from its all time high above 14K down to the mid-6K level over by spring of 2009. If I had a crystal ball which predicted a similar decline by next spring, it would be quite easy to advise friends and family to pull out, but my crystal ball is cloudy and may even be broken.
Has anyone else noticed the similarity between last week’s stock market action and what played out from Fall 2008 through Spring 2009? The main difference I can detect is that the market has started dropping far more quickly this time around; otherwise it looks like we are headed down the same trajectory.
Try not to catch yourself a falling knife.
A one-week Dow loss of 11% occurs at an annualized rate of ((1-0.11)^52-1)*100 = -99.8%.
Are you guys in or out?
A week of wild rides on Wall Street
Executive Editor Frank Pine
Posted: 08/13/2011 06:40:43 PM PDT
I can’t help but think of the stock market this past week as something like a rodeo, where the main attraction is a big, angry, bucking bronco with a wide-eyed Congress clinging to its back.
And the crowd, a bloodthirsty lot if ever there was, seems to be rooting for the bull.
Or should that be a bear?
Hard to say, as the market has alternated daily between deep dives and desperate leaps.
At market close on Friday, the Dow was up by 125, but still down 11 percent for the week.
…
“…but still down 11 percent for the week.”
It sounds dramatic, but I believe that is an overstatement…
Is the political pendulum swinging at a similar rate to the stock market’s gyrations?
Pollster: Democrats look primed to take back the U.S. House in 2012 after debt ceiling fight (comments)
Published: Sunday, August 14, 2011, 11:00 AM
Susan J. Demas
Gallup shows the Democrats with a 7-point advantage on the congressional ballot after the debt ceiling showdown — prompting some analysts to predict they’ll take back the U.S. House in 2012.
North Carolina-based Public Policy Polling pollster Tom Jensen writes, “I think most national pundits continue to be missing the boat on how possible it is that Democrats will retake control of the House next year. ”
And Conservative columnist Andrew Sullivan writes that’s because of the “staggering recklessness of the GOP in recent months.”
…
This wild swings in government is exactly what happend to Germany after WWI.
Not saying we are heading to Nazi-ism at some point, but I do fear the possibility.
What I’m saying is that economy in turmoil causes wild swings in political power as people vote for change because “anything has to be better than this.”, which of course, is not true.
“…but I do fear the possibility.”
Ditto — especially whenever the likes of Palin, Bachmann or Limbaugh open their yaps.
It appears Obama’s poll numbers are much better than Congress’s.
Posted at 06:36 PM ET, 08/10/2011
USA Today/Gallup poll: 47 percent would reelect Obama. Not bad.
By Jonathan Capehart
President Obama sure has been catching hell this past week. The devastating loss of 30 American service members in Afghanistan. The unprecedented S&P downgrade. And the subsequent market gyrations that have Americans thinking the country is going in the wrong direction and demanding that Obama do something. From the deluge of criticism raining on him, you’d think Obama was well on his way to private citizenship in 15 months. You’d be wrong, of course.
A poll from USA Today/Gallup is another bit of evidence that the president is not doing nearly as poorly as you’d expect. He’s not doing great. But he’s not politically dead. Asked if Obama deserved reelection, 47 percent said yes. That mirrors the 48 percent job approval rating he received in last week’s New York Times/CBS News poll. The two surveys also hold the lowest ratings for Congress in either poll’s history. In the Gallup poll, 24 percent said most of Congress should be reelected. That’s the lowest since it first asked the question in 1991. Meanwhile, Congress got its highest disapproval rating since the New York Times began tracking such ratings in 1977.
…
It’s only 2011 folks.
Right. The Republicans have over 12 months to self destruct through mutually-destructive battles among religious fundamentalist candidates.
The FundyNuts are getting nuttier by the day. And the public will be reminded of it(by strategy) until the day after election day. Parry is running for local pastor instead of a public servant.
Go Fundies go!
Don’t forget that while the LDS candidates (Romney and Huntsman) look more polished that they too embrace their own form of non-Protestant fundamentalism. It’s just one that most Americans aren’t really familiar with as the LDS tend to be somewhat insular beyond the teen aged “elders” they send around knocking on doors.
“…they too embrace their own form of non-Protestant fundamentalism.”
At least they have the common decency and sense to keep it out of stump speeches.
While that sounds entertaining, how many days after the next election will your debt junkie pals need another credit limit increase?
Are you talking about my Republican debt junkie pals, or my Democrat debt junkie pals, or both?
I thought that Dems were “tax and spend” while GOP’ers are “borrow and spend.”
The Dems have resorted to borrowing because the GOP won’t alllow them to raise taxes.
The fact that the debt junkies are in fact the GOP tends to shut down M.eng.;)
The bottom line is, only poll numbers in a Congressional representative’s home district matter on election day.
August 9, 2011 10:57 AM
Poll: Congress, You Stink
BY Celeste Katz
Just 24% of Americans say most members of Congress deserve re-election, according to a new Gallup/USA Today poll.
congress members.jpgOur Aliyah Shahid reports:
The dismal percentage is the lowest ever since Gallup began asking the question 20 years ago, increasing the possibility that there could be another “wave election.”
Americans have a slightly more favorable view about lawmakers in their own district with 56% saying their member deserves re-election.
…
These “wave elections” are becoming more and more frequent. Remember when the Dems controlled Congress for 40 years? Or when the GOP was in charge for 12 years? Now it seems it will change hands every election cycle.
Foreclosure reforms may be coming to a head
Getting banks, investors and borrowers together to work out a solution that benefits them all is the most promising idea to emerge since the housing market first crashed.
A for-sale sign hangs outside a home that was in foreclosure in Phoenix. More than 3 million Americans have lost their homes to foreclosure, with millions more still at risk, since the housing crisis began five years ago. (Joshua Lott, Bloomberg / June 29, 2011)
By Michael Hiltzik
August 14, 2011
We are now in the fifth year of a housing crisis in which more than 3 million Americans have lost their homes to foreclosure, with millions more still at risk.
Every initiative — government or private — to stem the tide of misery has fallen leagues short in the face of continued economic gloom and the intransigence of lenders.
So it’s an odd moment to be identifying glimmers of optimism that solutions to the crisis might finally be emerging. Yet that may be the case.
…
Write off the $5T bad debt as uncollectable. Problem solved.
Oh, then $5T in money goes away, cascade default causes more tillions of dollars to go away, people lose faith in money, and we’re in global depression not seen sinve 1873-1896….
OH.
I just “extend and pretend” is a better option. People getting their house taken now haven’t made a payment in 2 years. If we can exteand that to 5 or maybe 10 years, everything will be great.
Somebody besides me is now using the “F” word to describe robo-signing.
House of cards
Post probe finds problems in bank foreclosure filings
By CATHERINE CURAN
Last Updated: 4:00 AM, August 14, 2011
Posted: 10:04 PM, August 13, 2011
The banks still just don’t get it.
In a staggering 92 percent of the claims brought by creditors asserting the right to foreclose against bankrupt families in New York City and the close-in suburbs, banks and mortgage servicers couldn’t prove they had the right to kick the families out on the street, a three-month probe by The Post has shown.
But that didn’t stop the banks from trying.
By robosigning documents and pressing foreclosures without the proper paperwork, banks have attempted to steamroll their way over sometimes-outgunned homeowners, The Post has uncovered.
But homeowners and the courts are starting to fight back.
Forced to finally face the mess, banks find themselves driven to the bargaining table, where they now hope to win a global settlement with all 50 states and the federal government. The tangled, complex mess in New York shows how tough — and expensive — such a settlement could be for the banks.
The Post dug through more than 150 Chapter 13 bankruptcy filings from June 2010 in New York’s Eastern and Southern federal court districts — covering the five boroughs, Long Island and nearby northern counties including Westchester–in search of local foreclosure or pre-foreclosure cases. We then put together a random sample of 40 cases where creditors such as banks — but more often loan servicers — filed proofs of claim for first mortgage debt.
The research unearthed claims riddled with robosigners, suspiciousdocuments and outrageous fees. And in a stunning 37 out of 40 cases, The Post discovered a broken chain of title from the original lender to the company now making claim against a local family for its home and thousands of dollars in questionable fees.
In other words, the bank or mortgage servicer filing the claim failed to prove it has any right at all to make a claim it was owed the debt or that it could seize the home in question.
The Post looked at Chapter 13 filings because the banks or mortgage servicers file proofs of claim for the debt and must, under penalty of perjury, include accurate information about the mortgage, note and fees. In New York, filing public records with “intent to deceive” is a felony.
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Debt ceiling accord could particularly hurt graduate students by raising costs
August 13, 2011|By Candice Choi, Associated Press
NEW YORK - College is already expensive. Now the government’s agreement to raise the debt ceiling is set to push costs higher.
That’s particularly true for those pursuing advanced degrees, with the government eliminating subsidies to graduate and professional students. The upside is that the savings will be used to help preserve the Pell grant program, which provides critical funding for low-income students.
Here’s at how the debt deal could impact aspects of paying for college:
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Is it safe yet to buy stocks again?
8/12/2011 @ 04:29PM
Taking Stock Of Wall Street’s Wild Week
The major U.S. stock averages gave up some of Friday’s advance by the closing bell, but the higher finish locked in a modest loss in a week marked by massive daily moves.
Over five days the Dow Jones industrial average lost 1.5%, the S&P 500 1.7% and the Nasdaq just 0.9%. Friday’s rally was driven by an early report on retail sales that were up 0.5% in July and overcame a challenge from August’s weak preliminary reading from the University of Michigan’s consumer sentiment survey, which dropped to its worst level since 1980.
The day was a relatively calm one to close a week full of dizzying moves that were anything but docile. Here’s a look back at one of the most intense five-day stretches since the 2008 crisis.
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In nearly forgot today
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Realtors Are Liars®
Those damned lying knaves!
http://www.freep.com/article/20110814/NEWS06/108140503/Fannie-Mae-promises-keep-families-homes-instead-pressures-banks-foreclose?odyssey=tab|topnews|text|FRONTPAGE
Fannie Mae promises to keep families in homes, but instead pressures banks to foreclose
In early December, a senior executive at Fannie Mae assured members of the Senate Banking Committee in Washington that the mortgage giant was doing everything possible to address the foreclosure crisis.
“Preventing foreclosures is a top priority for Fannie Mae,” Terence Edwards, an executive vice president, told the panel. “Foreclosures hurt families and destabilize communities.”
But confidential documents obtained by the Free Press show that Fannie Mae has pushed an agenda at odds with those public assurances.
The records cover Fannie Mae’s foreclosure decisions on more than 2,300 properties, a snapshot from among the millions of mortgages Fannie handles nationally. The documents show Fannie Mae has told banks to foreclose on some delinquent homeowners — those more than a year behind — even as the banks were trying to help borrowers save their houses, a violation of Fannie’s own policy.
The SD Union-Tribune ran a reader poll in today’s paper. The reader respondents voted “Yes” by 2:1; the economists they talk to voted “No” by 1:3.
CLICK!
Is the U.S. headed back toward recession?
Thanks for your vote.
Yes 67% 299 votes
No 32% 145 votes
As a big fan and patron of independent eateries, I don’t find this news uplifting:
San Diego County losing restaurants
Written by Lori Weisberg
6 a.m., Aug. 13, 2011
Mirroring national trends, San Diego County saw its number of restaurants decline over the last year, the second such decrease in two years, according to The NPD Group, a national market research firm.
While it may seem like new eateries are popping up around town every month, NPD reports that there was a net loss of restaurants, which fell to 6,301 in the spring of this year, down from 6,428 a year earlier. Taking the biggest hit were independents, which saw a decline of 3 percent. By comparison, the decline for all restaurants, including fast-food and family-style chains, was 2 percent.
Those drops were identical to what occurred in the nation as a whole, NPD reported. The continuing loss of restaurants comes despite reports from operators that traffic is picking up as consumers are more willing to spend money on eating out. “What we found is that the independents nationally tended to be younger restaurants, in operation for under five years, and they were disproportionately the ones that closed,” said Greg Starzynski, NPD’s director of product development for food service. “With the independents, they’ve got nothing to fall back on if business slows. A chain can close their worst performing units but they still have others doing something.”
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There’s a greasy spoon near my office, and I’ve noticed that the parking lot has been rather empty lately; a couple of years ago the place had waiting lines on Sat mornings.
Former La Jolla home of famed scientist back on market for $12.5M
Written by Lily Leung
1:27 p.m., Aug. 12, 2011
An oceanfront home once occupied by the late famed scientist Dr. Roger Revelle is back on the market for $12.5 million.
Revelle, who died in 1991, was key to the founding of the University of California, San Diego in 1960. One of the institution’s first colleges was named after him.
The two-story home, still owned by the Revelle family, was unlisted to make “minor cosmetic changes for staging,” said Jeff Nunn, a branch manager of Coldwell Bank Residential Brokerage La Jolla, the agency listing the home. It was put back on the market two weeks ago.
The residence, 7348 Vista Del Mar Ave., has five bedrooms, four baths and has been in the family for 90 years. Revelle passed down the property to four siblings who are spread out across the country, said the listing’s agent Linda Marrone.
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I just posted the SD Union-Tribune article explaining how the owners of this home are asking $12.5m.
US Real Estate California La Jolla Vista Del Mar Ave 7348 Vista Del Mar Ave
7348 Vista Del Mar Ave La Jolla CA 92037
Single Family Residence, 5 Bed, 4.50 Bath, 4162 Sq. Ft
Property Features Financial History
Single Family Residence
Year Built: 1928
5 Bedrooms
4.50 Bathrooms
Approximately 4,162 Sq Ft
Lot size: 18,861 Sq Ft
County: San Diego
Parking: Garage 2 spaces
Source: Public Records Last assessed at $493,802 on 2010
Previous assessments
$493,802 on 2010
$494,976 on 2009
$485,271 on 2008
$12.5m / 4,162 sq ft = $3000/sq ft — most expensive home in all of San Diego County, if it sells for this much? Redfin shows the average recent comp sold for $669/sq ft, compared to an average list price of $1,192/Sq. Ft. The average list price is already delusional, but $12.5m is beyond hallucinatory.
Redfin indicates the following about this home:
“Sites Linking to 7348 Vista Del Mar Ave
The seller has requested that all public comments be removed from this listing. Per MLS rules, we are not allowed to link to blog posts about this home. ”
What do these people have to hide? Is there a body buried on the premises or something of similar concern to a prospective buyer?
Ocean front and about 1 mile from the Cove. That’s some of San Diego’s most prime real estate
No idea what it’s realistically worth though.
I have, thanks to Redfin. Nothing comparable has sold for over $4.2m this year, or at a price anywhere near $3,000 / sq ft.
Nearby Similar Sales
Range: $1,900,000 - $4,226,000
Average: $669/Sq. Ft.
This home at $669/Sq. Ft.: $2,785,960
Got Hopium?
7348 Vista Del Mar Ave
La Jolla, CA 92037
For Sale: $12,500,000
Zestimate®: $2,186,400
Mortgage payment:
$47,782/mo
See current rates on Zillow
Bedrooms: 6
Bathrooms: 5
Sqft: 4,162
Lot size: 18,861 sq ft / 0.43 acres
Property type: Single Family
Year built: 1922
Parking type: –
Cooling system: –
Heating system: –
Fireplace: –
Days on Zillow: 28
MLS number: 110041133
I mentioned to my wife over Sunday family dinner conversation that Revelle’s home was on the market for $12.5m, even though its Zestimate® came in at less than a tenth of that amount and its 2010 tax assessment came in under $500K. Before my wife could respond, one of my kids asked without prompting why anyone would list a home for so much more than it is worth. I’ve trained them well…
“one of my kids asked without prompting why anyone would list a home for so much more than it is worth”
Because they’re hoping some Chinese zillionaire will snap it up?
I don’t get the impression that many Chinese zillionaires are less knowledgable about money than my 11-year-old son.
But just in case there are still a horde of Chinese zillionaires looking for high-end San Diego properties to snap up as investments, there is no need for them to overpay on the Revelle home, as there are 368 other homes on the San Diego County MLS currently listed at $3m on up. There has never been a better time for a zillionaire to make all-cash investments in high-end San Diego County McMansions!
The 2008-9 meltdown worried about several bank liquidity meltdowns.
Today’s meltdown is worried about several country liquidity meltdowns.
Talking heads - - your right — this is not like 2008.
It might be worse.
Apparently they’ve found a new use for foreclosed properties: police stings.
http://www.kob.com/article/stories/S2239324.shtml?cat=504
Nice Bits.
Good Night.
Even as MSM-quoted financial ‘experts’ encourage Main Street investors to ’stay the course,’ the top 1%-ers are getting a severe case of cold feet over the stock market. If this trend gains traction, pretty soon only po’ folks will own stocks.
ECONOMY
AUGUST 15, 2011
Once Bit, Rich Shy From Risk of Stocks
By ROBERT FRANK
When stock markets swooned in 2008, Alan Mantell lost about 15% on his investments.
Now, the multimillionaire real-estate investor and business consultant is more insulated from market quakes, after putting more money into cash and private businesses and less into U.S. stocks.
“Today, my first principle of investing is do no harm, don’t make major mistakes,” said Mr. Mantell, president of New York-based Mantell Advisory LLC. “It’s not about chasing returns anymore. For me, it’s about real diversification and not being so dependent on traditional equities.”
After taking big risks and big losses in 2008, wealthy investors have become the Cassandras of the financial world, hunkering down with cash, gold, farmland and other haven investments. Their “fear portfolios” largely protected them from last week’s market gyrations, when the Standard & Poor’s 500-stock index spiked up and down more than four percent a day for four days straight.
Yet they are also imposing a national price. Recoveries are often led by the investing and risk-taking of the wealthy, and the rich have traditionally been more optimistic about the economy than everyday investors. Yet current surveys show the rich are among the most pessimistic about the economy. Rather than investing in stocks or companies that can create jobs, they are betting on continued volatility and slow growth by hoarding cash, gold and other safety assets.
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Is Mr. Toad’s wild Wall Street ride over already, or has it only just begun?
I guess time will tell, soon enough…
ECONOMY
AUGUST 13, 2011
Global Crisis of Confidence
World Policy Makers’ Inability to Agree on Fixes Led Markets on Wild Ride
BY MARCUS WALKER, DAMIAN PALETTA AND BRIAN BLACKSTONE
Last week, as storm clouds gathered yet again over the world financial system, a who’s who of government leaders assembled by phone.
The flurry of calls brought to mind the emergency meetings during the 2008 financial meltdown. Presidents, finance ministers and central bankers dialed in, including German Chancellor Angela Merkel, on vacation in the Italian Alps and French President Nicolas Sarkozy from the Riviera. They were all eager to thwart what promised to be a calamitous day’s trading when markets opened Monday, as Europe’s worsening debt crisis combined with a first-ever downgrade of U.S. debt by Standard & Poor’s.
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I guess the myth that short sellers can somehow drive down share prices is very pervasive. The only thing that banning shorts can do is to somewhat hide the loss of share value; the losses are still there, but if there is no short interest, the transactions to reveal the losses don’t take place.
GLOBAL MARKETS-Short-selling ban spurs tentative recovery
Fri Aug 12, 2011 8:24am EDT
By Naomi Tajitsu
LONDON, Aug 12 (Reuters) - European stock markets rallied on Friday as a ban on the short-selling of financial shares tempted investors back into the battered banking sector, although concerns over the health of French banks kept the mood edgy and trading remained volatile.
Bank shares, which have fallen sharply in recent days, led the move higher after the ban imposed by France, Italy, Spain and Belgium.
World shares edged up, and the stocks rally boosted the euro against the dollar and the safe-haven Swiss franc, but jitters about the euro zone debt crisis were reflected in tense money markets, where dollar funding costs rose.
Despite Friday’s gains stock prices were still poised to end another week in the red with investors unconvinced the selective short-selling ban on its own would do much to ease broader concerns that the euro zone debt crisis is spreading to stronger economies.
The four countries banned short selling — borrowing shares and selling them in expectation the price will fall — of a group of banks and financial institutions, after a flurry of rumours helped knock a third of the value off some European bank shares this month.
Traders said the measure would provide temporary relief to jittery investors, but concerns about euro zone debt problems and a deteriorating outlook for the global economy were set to keep trading erratic.
“Something needed to be done, the rumours were silly and the market was full of emotion and fear. So this provides a break in that, so not bad,” a London-based fund manager said.
“I don’t think it works long term but should buy some time.”
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Europe short-selling ban reveals divisions
By James Regan and Ian Simpson
PARIS/MILAN | Fri Aug 12, 2011 2:23pm EDT
(Reuters) - A piecemeal ban on short-selling of financial stocks in Europe sparked a rush of alternative proposals from countries and regulators Friday, while stronger bank shares pulled Europe’s stocks higher.
After a week of wild swings on European markets on rumors about the health and funding needs of indebted governments and some of their major banks, France, Italy, Spain and Belgium imposed short-selling bans, which varied according to country.
Britain, the Netherlands and Austria said they saw no need for action, while Germany said it would instead push for a Europe-wide ban on so-called naked short-selling.
The European Commission said a European framework would be more effective, and the chairman of the European Securities and Markets Authority urged policy makers to adopt a plan for bloc-wide rules on short selling “as quickly as possible.”
Short-selling is the process through which an investor borrows shares and sells them on the expectation their price will fall and they can be bought back at a lower price.
In a naked short sale, the investor has not borrowed the share, but still bets on a drop in the share price.
Market players said the ban did not tackle the root causes of investors’ concerns — joined-up, long-term fiscal policy in the euro zone - and pointed out that nervous mutual funds were currently behind the sell-off.
“If at the core of this whole rout is disappointment with certain irresponsible behaviors of policymakers — note the game of chicken in the U.S. — they really need to get their act together and prove they aren’t all on holiday,” said Lothar Mental, chief investment officer at Octopus Investments.
A crackdown on speculative short-selling is unlikely to arrest moves from institutional investors who now have little stomach for big holdings in banks and indebted governments who might call on them again for emergency capital.
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Japan investor index falls as yen pressures shares: Reuters poll
By Chikafumi Hodo and Mari Terawaki
TOKYO | Mon Aug 15, 2011 1:41am EDT
(Reuters) - Japanese retail investor sentiment on domestic equities fell in August from a seven-month high, as a strong yen and debt problems in Europe and the United States hammered Tokyo shares, pushing them close to lows reached after the March 11 earthquake.
Investors expect the yen to climb above its all time peak of 76.25 against the dollar, with 29 percent of respondents saying it would rise as high as 75 yen this year, while 22 percent said the greenback’s decline would be limited to 76 yen, the monthly Reuters survey showed.
Almost 80 percent of respondents said there is a danger that the yen’s strength could drive domestic industries to shift their businesses overseas.
“There are plenty of problems in the United States, Europe, China, Japan and so on, which can’t be resolved easily,” said an investor in his 50s.
“The psychological mood is tending toward pessimism at the moment with the yen’s rise expected to hurt profits for manufacturers. We are also worried about rising raw material prices and radiation problems,” he said.
Tokyo’s Nikkei share average .N225 fell about 7 percent from the previous survey conducted about a month earlier.
The Reuters sentiment index, calculated by subtracting the percentage of investors who say they are bearish from those who are bullish, fell 22 points to minus 50, down from a seven-month peak of minus 28 in July.
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