Bits Bucket for August 30, 2011
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Words of wisdom from someone who predicted end of housing boom
By TOLUSE OLORUNNIPA
MiamiHerald.com
Posted on Sunday, 08.28.11
Seven years ago, while South Florida developers were still staging high-flying condo parties and speculators lined up to put down deposits on new units, housing analyst Jack McCabe saw dangerous signs and began to warn that a downturn was imminent.
Q: When did you know that the housing bubble was going to burst?
A: April 2004.
Q: Why do you think so many people missed the warning signs?
A: Greed blinds people from the truth. No one with a vested interest in real estate wanted to see the gravy train end. Early in the decline, some developers and Realtors publicly blamed my analysis and predictions for causing the housing bust in South Florida.
Q: Has South Florida’s housing market hit the bottom yet? If not, when do you predict it will?
A: The housing markets will not bottom out until foreclosures and short sales are less than 10 percent of total sales and inventory, and the unemployment rate is less than 6 percent. The earliest that will happen is the first quarter of 2013.
Q: You can have a conference call with any three living people. Who do you choose?
A: If the call was today, I would pick Barack Obama, [U.S. Treasury Secretary] Tim Geithner, and [Federal Reserve Chairman] Ben Bernanke. Three brilliant men that are clueless as to how to end the housing depression and begin to repair the foundation of our economy
http://www.miamiherald.com/2011/08/28/2374681/words-of-wisdom-from-someone-who.html - 94k -
“If the call was today, I would pick Barack Obama, [U.S. Treasury Secretary] Tim Geithner, and [Federal Reserve Chairman] Ben Bernanke. Three brilliant men that are clueless as to how to end the housing depression and begin to repair the foundation of our economy”
“Everybody is ignorant, only on different subjects.”
Will Rogers
If stupidity got us into this mess, then why can’t it get us out?
Will Rogers
“Q: You can have a conference call with any three living people. Who do you choose?”
in this hypothetical are they forced to be absolutely truthful?
if not…i got better things to do.
Why do you think the conference call is to listen to them? I interpret it that he wants to tell them something, not listen.
“I interpret it that he wants to tell them something, not listen.”
I think he want`s to tell Barack Obama, Tim Geithner, and Ben Bernanke that they “are clueless as to how to end the housing depression and begin to repair the foundation of our economy”.
“Q: You can have a conference call with any three living people. Who do you choose?”
in this hypothetical are they forced to listen?
if not…i got better things to do.
Good Morning from beautiful Dubai!
Anyways here is the one to digest from the CIO at the CITI.
http://www.cnbc.com/id/44324269
Wow a startling revelation. Cutting capital expenditure and jobs, DOESN”T really add anything! Huh, who would have thunk it?
It’s as though all these CEOs went to the same “stupid” conference. Oh wait they did. It is called HBS, Wharton, Booth…and so on. Oh wait maybe I should shut up.
Once again, we are stuk by the problem that one person’s spending is another person’s revenue. Dang capitalism and its requirement that every transaction have 2 sides, a buyer and a seller.
Again we find, the paradox of thrift. What is good for one person (spending less), is bad for the whole economy (less income for others).
It was nice not having to worry about wages fueling demand for the last 30 years as we could always just lower interest rates and loosen lending standards to get people to borrow whatever money they needed to keep buying even though their wages were shrinking.
What? You mean there is a point where people can’t take on more debt, even at 0% interest, and that lending standards get so lose that fraud becomes the norm instead of the rule and standards have to be tightened???
Now you tell me. Wish we would have know 30 years ago that people couldn’t just keep spending 110% of their income, forever, without ever having to pay on or for any of that debt.
I thought this was a post worth repeating, from yesterday.
Maybe we should just legislate Jubilee years like there were in the Bible: do whatever you want with debt, once year x comes, the lender
won’t be able to collect.
Comment by darrell_in_phoenix
2011-08-29 13:56:51
“The mere fact that a group of private bankers controls the money supply, sets preferred lending rates, manipulates & distorts free markets is enough for me to want to try another alternative. ”
I do not disagree. However, the gold standard decentralized banking that came before was no rose garden either. Nor was the heavily regulated banking system before that. Nor the British Imperial banking system before that….
It all comes down to the same repeated cycles. Debt is fun and feels great, until it gets so large that it collapses, wipes out money and tirggers a recession until enough time passes that people forget the evils of over leveraging debt… repeat.
It doesn’t matter what is the seed for the leverage, gold bars, sacks of wheat, bails of silk, or just government promises of future taxation…. When you let the debt grow too large in relation to wages of those with the debt, it all collapses into depression.
The problem with debt forgiveness is that the money that the debt created also goes away. I can’t imagine every 100 years, all money ceasing to exist and starting over.
The problem with jubilee years is that the business cycle then has to deal with a decade in which no one will lend for more than 10 years, a 5 year period in which no one will lend for more than 5 years, etc.
Car sales would have to be all cash transactions for a year. No home equity loans (even if you need to repair the roof) for a while before the jubilee. Companies can only buy capital equipment that they have the cash on hand for.
Would businesses and people adjust? Yes, but the years before the jubilee would have vastly less economic activity. And then, right after the jubilee, lending explodes and you get bubbles.
No thank you.
“And then, right after the jubilee, lending explodes and you get bubbles. ”
I don’t know if I agree that you would get bubbles. You would definitely get an economic kick-start, but everyone would know the party was of a limited duration. Bubbles seem to require lemmings that believe the party will never end.
If not a bubble, then a debt fueled surge. You are still going to do a lot of very artificial manipulation of prices.
I totally agree, polly.
“The problem with jubilee years is that the business cycle then has to deal with a decade in which no one will lend for more than 10 years, a 5 year period in which no one will lend for more than 5 years, etc.”
… and the lender would probably want to hold collateral up front. That may have worked out okay in biblical times when the collateral was likely a farm animal, but not so much anymore.
How long does a business cycle have to last? If a jubilee year comes every 15 years, what sort of business cannot pay its debts in that time frame? Let’s say in year 1 a business wants to build an office building (and assume that all of the design, planning, permitting etc was performed and paid for at the end of the previous cycle, paid for perhaps with investor-supplied capital, so that on day 1 of the new cycle the labor can start breaking ground.)Depending on the size of the building, can’t the business generate enough cash flow in 15 years to pay off the loan? Perhaps the investors don’t get any dividends for those first 15 years?
This time frame certainly wouldn’t accommodate the 30 year residential mortgage, but that is a recent phenomenon and is antiquated, IMO.
Idle speculation, or as others may refer to it, mental “Onanism,” sure is fun!
What if the business has need of that building that it can reasonably pay for in 15 years 5 years before the next jubilee? It could pay in 15. It can’t pay in 5. It would be benficial to the business to build it. You are restricting this sort of business investment (the kind that needs 15 years to pay off) to ONLY start at the very beginning of a new jubilee cycle. A beneficial investment that reasonably needs 17 years to pay off would never be made. That is an artificial distortion of investment.
A slightly less onerous version would say that all debts are forgiven on the 15th anniversary of when they are incurred. That is still one heck of an imposition on capital formation.
Money doesn’t *have* to be based on debt.
Yes, but pure barter economies where NO debt is allowed, really suck.
Who runs Barter Town?
I agree that a medium of exchange is nice. Ones that are based on work already done rather than on work yet to be done do exist.
Who runs Barter Town?
Master Blaster run Barter Town!
Two loans enter, one FB leaves!
Two loans enter, one FB leaves!
Two loans enter, one FB leaves!
We are so caught up in the fictional reserve system that having an asset based money supply makes absolutle no sense!
The only alternative to bank created money, is NO DEBT.
Our economy would have to look very different if students couldn’t borrow money for college, you couldn’t buy a car or house with a loan…
Or, on the flip side, you couldn’t put your savings in bank accounts or bonds. What would you invest in for retirement? Dividend paying stocks? Canned food? The .7 oz per person of gold that exists? The 3.5 oz of silver per person?
I saw a guy on Colbert report who had a book on debt.
I think it was David Graeber.
He said that in Mesopotamia the king would periodically wave his wand and forgive all debt.
Good to be an insider with this deal. Yes I’ll borrow to by the luxury house and chariot and 1000 slaves, I’ll get you back next week.
Only one house and one chariot? Piker!
“Ones that are based on work already done rather than on work yet to be done do exist.”
Example please.
Precious metals or any other valuable commodity that’s easily portable and divisible. I think we could probably come up with something more modern if we needed to.
Precious stones, like cut diamonds, fit that description.
Diamonds are not really scarce so if the monopoly breaks down they might lose a lot of value but other precious metals do work.
Diamonds do not work. They are not divisable nor fungable. I can’t walk into a store with 3 large diamonds, the receive 2 medium and a small as change.
Besides, there is a fundamental flaw in the use of commodities to represent all goods and services, besides the fact that that loans (kept in balace to peoples’ ability to repay) are VERY useful as both a tool to aquire skills and tools that improve production and as a store of value, and that is that they are themselves goods.
How can something that is a good, represent the value of all goods and services?
Once upon a time there were as many units of money as there were commodities. The gold standard was created to ease the conversion. Oh, you have silk certificates and want to buy wheat certificates? Let’s see… we convert silk to gold, then gold to wheat… Oh, the exchage rate of silk to wheat is…blah.
The problem is that people throught that meant that there was enough gold to represent the sum total of all commodities. Wrong. There was NEVER enough gold for everyone to exchange all their commodites for gold, all at the same time. It was just the standard by which all else was converted.
An example. I was in a restaurant in Rome. The waiter spoke like 4 languages that we witnessed.. Italian, French, English and German. In comes a Japanese couple. Yeah, they ordered in English. Since the British and American empires have held influence around the globe, English is commonly the standard language through which someone from Italy and someone from Japan can communicate. That is what gold was.
If we use commoditiy based currency, what are we going to use to represent the lines of computer code I have written? Lady Gaga’s songs? The brand recognition of Coca Cola? The works of J.K. Rowling….
There are issues. Are they as big as the issues with using debt to represent goods and services? Loans can still take place even if they don’t create money.
“Loans can still take place even if they don’t create money.”
ONLY if, the lender acknowledges that they don’t have any money until and if, the lender pays it back.
THE WHOLE point of banking is to allow you to get your money back even if the borrower hasn’t, won’t pay.
Every time that illusion is broken, people have suddenly lost faith in money and a depression has followed.
We create all kinds of laws, organizations, insurance trying to make it possible that you get paid back even if the borrower doesn’t pay back. Reserves. Federal Reserve Banks that loans banks other banks reserves, and even makes loans not backed by anything. FDIC…
All just mechanisms intended to make you think you always get paid back. And you likely will always get paid back, right up until bank bailouts make it obvious that even the government can’t pay back… Then we will inflate away the value of money before issuing a new currency with ,000 lopped off the end.
As I have said many times. The key to stable money is not what backs it. The key to stable money is to keep total debt to a level where it can and will be paid back.
We’ve blown that.
There are 5 billion ounces of gold and something like 25 billion ounces of silver. With 7 billion people on the planet, that is 0.7oz of gold and 3.5 oz of silver per person.
We would need to come up with something else.
Suggestions?
Some have suggested joules of energy. Seems a bit farfetched to me, but I see the point. I bet we could come up with something, though.
How do you store joules of energy? Walk into the store and whip out a AA and a couple AAAs? Get back a couple watch batteries as change?
Digi-cash.
Realtors Are Liars®
America [AA+] day 25!
Remember kidz, America isn’t a country, it’s a game
You’re thinking of “Americathon!”
Stock market up 255+ because Irene didn’t hit Wall Street as much as they thought.
I give up. When were actual goods and services taken over by ego massages?
“Stock market up 255+ because Irene didn’t hit Wall Street as much as they thought.”
On a similar note, what is with the trigger finger of Wall St. investors? Every article I read analyzing the day’s market numbers says something like, “market up 300 points as investors react positively to the consumer spending report”, or “market dropped 200 as investors react to a negative jobs report”. OK, I get it, economic reports might hold some weight if you’re looking at a long-term picture, and you see patterns emerging, good or bad, in different areas of the economy. But it’s apparent to anyone that numbers for EVERY indicator (except housing) is like a roller coaster ride for the last three years. Bad, then good, then bad and good. Next months manufacturing report, while important, should mean next to nothing as long as it’s just another one-time dip or blip, because I know that the next data to come in will counter it. And then that data will be countered.
I know almost nothing about the workings of the market, but I get the sense that investors are way too fickle. Yes, I’ve heard that big computers are programmed to make automatic trades. If things were relatively stable, that might make some sense, but the data coming in these days is a clusterf@%ck that I wouldn’t trust some machine to analyze.
So set me straight, anyone. Are the computer algorithms that advanced, or is there a huge pool of investors that are as short-sighted/fickle as I see them?
Here’s what I’ve concluded from a few years of watching pretty closely: The headlines are made up. Yes, they just pull something out of their butts to explain why it went up or down that day. Sometimes they’re right. Sometimes they’re not. It doesn’t matter. All that matters is that they submitted a story before the deadline.
What’s really going on? I don’t know any more than anybody else, but that recent story from the market ticker that suggested most of the humans have gone home and it’s all computer generated action made sense to me. Also means I don’t want to get back in anytime soon.
The money is made in a moving market. No moves, no mon.
The Prince of PimpCo speaketh:
Gross, who oversees $1.2 trillion at PIMCO…“When you’re underperforming the index, you go home at night and cry in your beer,”
(Reuters) - Bill Gross, the manager of the world’s largest bond fund, feels like “crying in his beer” for having bet so heavily against U.S. government-related debt earlier this year
When U.S. Treasuries yields fell to 60-year lows earlier this month, Gross said investors were pricing a higher probability of recession in the United States.
“Freezing rates for two years, that was a pretty significant statement in terms of the vulnerability of Treasuries to go down in price and up in yield,” Gross said.
When U.S. Treasuries yields fell to 60-year lows earlier this month it was pricing in a economic contraction. In such a contraction cash increases its buying power because the contraction creates a shortage of cash.
Nominal interest rates are low but actual inflation-adjusted interest rates are not. Take a look around and see for yourself.
If you want high nominal interest rates on your savings then you are hosed because everyone wants high nominal interest rate on their savings and there is a lot of cash that has been taken out of circulation and is sitting on the sidelines.
But if you are in need of cash then you are also hosed because the rent price for cash - the interest rates - are VERY high, and the more desperate you are for cash the higher the interest rates you will have to pay. This is because there is a shortage of cash in circulation.
This “shortage of cash” has not stopped the price of everything I love at Costco from going up. Salmon, cashews etc. have all risen sharply and as the latest Case/Shiller report has shown neither has it caused a collapse in housing prices in nominal terms. No, I think governments only do one thing really well and that is printing money so betting against their ability to create inflation is always a losing bet in the long term, at least since the creation of the Federal Reserve.
J6P doesn’t understand or care about the velocity of money. But J6P understands that the J6P paycheck is stretched ever thinner by higher food, gas, utility, cable TV (J6P can’t live without that one), health insurance/care prices.
The view of deflation from 30,000 feet doesn’t matter to J6P. Down on the ground, on Main Street, directly felt are the inflation in prices of the above items (using non-fake CPI liar numbers), which added to U6 unemployment, equals the Misery Index.
No, I think governments only do one thing really well and that is printing money so betting against their ability to create inflation is always a losing bet in the long term, at least since the creation of the Federal Reserve.”
The FED is creating inflation not here in the US though. We just see the effects of too many dollars in other Countries that also like Salmon, cashews, etc. And Gold. Because they have inflation in China and India and Brazil and can afford to buy Gold.
No, I think governments only do one thing really well and that is printing money so betting against their ability to create inflation is always a losing bet in the long term, at least since the creation of the Federal Reserve.
Results in the past do not predict the future.
Printing money to goose GDP and tax revenue and cause inflation only works when the population as a whole can spend more. ie they have savings, they can bargain for a raise, they can send the wife to work, they can borrow.
We’ve worked our way through all of these things. Food inflation will just shift spending from wants and services to needs.
Shelter inflation has been picking up in the U.S. too, the CPI is clearly showing inflation, even the government statistics which under report have been showing increasing rents. You do not need real growth to have inflation. Just study the Zimbabwe example. As this board well knows the most dangerous investing belief is that “it is different this time”. The created money will cause inflation not just in the rest of the world but here. Food inflation is just one example but if you look at Brent crude the world price for oil is above $110 per barrel, WTI cannot stay $80 a barrel. If you blink you will miss any benefit from falling gasoline prices.
zimbabwe printed money and used it to pay gov workers thus more of the money may have ended up circulating. Gov workers had more cash, they purchased bread at a higher price, then baker had more cash and he hired workers paying them more because he had to pay them enough to eat otherwise why show up for work.
Two - inflation was in food and fuel tell us what happened to GDP
This is from wikipedia
Between 2000 and December 2007, the national economy contracted by as much as 40%; inflation vaulted to over 66,000%, and there were persistent shortages of hard currency, fiat currency, fuel, medicine, and food. GDP per capita dropped by 40%, agricultural output dropped by 51% and industrial production dropped by 47%.
So inflation in needs but a collapse in GDP because there was no demand for anything other than food and fuel.
The good news is that rates are very low, if you can get a loan.
The bad news is that most individuals have a hard time qualifying for a loan at this point in the economic cycle, especially one with those low rates the Fed has promised to maintain until 2013.
Even if you could get a loan, what is there to buy worth buying? A house? A car? Both depreciating assets. I’d rather stay debt free, even at low rates until something worth buying comes along.
No need for loans. There are still plenty flush with cash who are happy to pay $400,000 for a 4.23 acre parcel of land on which to build their “dream home.” Unbelievable. Long, loooooooooooooong way to go, still.
http://www.johnlscott.com/propertydetail.aspx?IS=1&ListingID=300949605
Great Depression-era folk music is making a great comeback.
Full Album Stream: Ry Cooder’s “Pull Up Some Dust and Sit Down”
When it comes to musical genres, Ry Cooder can play just about anything — and does. From rock ‘n’ roll to country to Dixieland jazz, Cooder has mastered multiple genres on many albums. He does it again with his latest production, “Pull Up Some Dust and Sit Down.” His songs’ lyrics are a statement on our current economic times, but the music offers a tour of the country’s musical heritage. He starts off with a ’30s banjo tune called “No Banker Left Behind,” channeling the likes of Uncle Dave Macon and Woody Guthrie with his Dust Bowl ballads. Then he takes on blues’ giants with “John Lee Hooker for President” and the best mariachi band you’ve ever heard with “El Corrido de Jesse James.” Take a listen to the entire album, and an interview with Cooder, here:
The entire album, “Pull Up Some Dust and Sit Down”
1. No Banker Left Behind
2. El Corrido de Jesse James
3. Quick Sand
4. Dirty Chateau
5. Humpty Dumpty World
6. Christmas Time This Year
7. Baby Joined the Army
8. Lord Tell Me Why
9. John Lee Hooker for President
10. Dreamer
11. Simple Tools
12. If There’s A God
13. No Hard Feelings
Listen to the interview with Ry Cooder on Marketplace
Thank you sooo much for that, Catankerous. Looking forward to kicking back and giving a listen. Cooder rules, always has.
I just had to give a listen, “No Banker Left Behind”, awesome.
ry cooder’s been writing songs like that for years.
now with lady gaga and justin bieber get on the bandwago…then we’re talkin’.
incidently…i don’t know what it is…but lady gaga and justin bieber irk the crap out of me.
Did The Beatles irk the crap out of your parents?
Speaking for my parents, they actually loved the Beatles. Thought they were awesome and bought me all the albums. And we’re talking two people who got married somewhat later in life. However, they were part of the “Mad Men” phenomenon, both worked in advertising and public relations back in the day.
Gaga and Bieber will not be around 50 years from now. Well Bieber might, if he’s smart enough to set aside for *ahem*oilcityplan*cough.
“Did The Beatles irk the crap out of your parents”
no…neither did U2 or REM.
they didn’t care for the Pixies too much.
my dad really liked pink floyd though.
My parents didn’t care for crazy eccentricities of the 20/30 year old Elton John and my father once yelled to me across the room he’d be forgotten by the end of the decade. (This took place about 1976/7)
My parents did not listen to the Beatles at all. Instead I was treated to years of The Supremes, The Four Seasons and the Letterman. Oh yes and my Mom and her obsession w/the Saturday Night Fever album. Yikes!
carrieann - check out ballet mecanique: http://antheil.org/
http://goo.gl/nANEB
“incidently…i don’t know what it is…but lady gaga and justin bieber irk the crap out of me.”
Sounds like a statement from a closet gaga-bieber fan.
“now with lady gaga and justin bieber get on the bandwago…then we’re talkin’.”
justin bieber is David Cassidy redux, Lady gaga we’ve been there before with Madonna. They’re for mass consumption, fluff, pap, VMAs, etc. Beyonce and her baby bump, sheesh. (she can shake it, but she can’t sing it, just awful)
Marty Balin, Jack Casady and Jorma Kaukonen were interviewed on the radio here over the weekend, they’ve got a tour they’re doing. The interviewer played the Jefferson Airplane version of “Wooden Ships”. What a tune! I drifted back to the good ole days.
But my point, and I do have one, is that while you’ve got the mass consumption “stars” out there, the master musicians are still hard at work.
justin bieber is David Cassidy redux, Lady gaga we’ve been there before with Madonna ??
Spot on Palmy…Just repackaging the same crap that’s all…
Also, The Beatles, U2, REM…??…Those are “real” artists…Creative, ingenious, extremely talented….They have more talent in their little toe than Gaga & Cassidy combined…
Jorma! I play a bunch of his tunes, but I didn’t realize that “Embryonic Journey” is the “Stairway to Heaven” of fingerpicking tunes before I learned it. Oops!
My hat’s off to you, Mr. Bubble. Very few would even attempt to play Jorma.
Now I have to check Jorma out.
Anyone listen to songs like this:
Asphalt Cocktail (crazy orchestral instrumental)
http://www.youtube.com/watch?v=DQNGkDbkzxc
or Serge Tankian/System of a Down (alternative)
That is what my daughter tries to get me to listen to.
She hooked me on the first one. Still working on the luv of Serge although I appreciate his musicianship.
I’m a big fan of Beck (that’s Jeff, not Glenn).
I’m a big fan of Beck (that’s Jeff, not Glenn).
Me too. Have you heard his recent “Live at Ronnie Scott’s” album? It is awesome.
Tal Wilkenfeld rules. That is all.
“Very few would even attempt to play Jorma.”
I didn’t say that I was any good!
Water Song always gives me fits. I only play it when I get stuck in open G though…
Jeff Beck? So good. Beck? Also good. Glenn Beck? Fignut.
CarrieAnn, thanks beaucoup for Asphalt Cocktail. It made my evening!
The Wall Street Journal
HEARD ON THE STREET
AUGUST 30, 2011
For Markets, Did Summer End in July?
By LIAM DENNING
July’s personal-income data, released Monday, left investors elated. Every sector of the S&P 500 posted strong gains. But the underlying story could deflate such hopes.
The market was clearly focused on the 0.8% gain in consumer spending, the strongest since February. In real terms, spending rose 0.5%, the first increase since March. Even allowing for seasonally high energy outlays, spending on services and durable goods was strong. It all indicates a good start to the third quarter.
The question is how sustainable July’s performance will prove. It came just ahead of August’s market rout. Before the weekend, the University of Michigan said its consumer-sentiment index had dived to its lowest point since the dark days of November 2008. Fully two-thirds of respondents felt the economy was deteriorating.
Consumers are being squeezed by persistent unemployment and rising, if still low, inflation. Disposable personal income rose 0.3% in nominal terms in July. That means the big jump in spending was financed using the old American standby of running down savings, with the savings rate hitting its lowest level since March, at 5%.
Yet real disposable income actually fell 0.1%, its first drop since September (2010?), as inflation accelerated. Core inflation’s annualized rate rose from 1.4% in June to 1.6% in July.
This could provide the sucker punch for markets.
…
All the talk in the MSM is still focused on housing prices coming back. Few if any MSM financial journalists just yet seem brave enough to even contemplate the possibility that the U.S. is headed down the same path as Japan, where home prices fell for two straight decades so far and never recovered.
It’s worth noting that only five years ago, top officials at the Fed were offering assurances that housing prices in the U.S. were not in a bubble.
AHEAD OF THE TAPE
AUGUST 30, 2011
Appreciation in Home Prices to Be Fleeting
By PAUL VIGNA
Falling home prices have been the norm for some time. Now, a momentary respite is at hand.
Home prices on a monthly basis rose in both April and May, according to the Case-Shiller Index, a widely followed measure of housing prices. Tuesday’s release of the index for June is expected to extend that run to a third gain. This should provide the battered housing sector with some hope.
Still, investors shouldn’t get too giddy.
For one thing, the yearly change in the index is a better measure of where prices are going.
Things aren’t as rosy on that front. According to a Federal Housing Finance Agency report last week, prices dropped 0.6% in the second quarter from the first quarter and fell 5.9% from last year’s second quarter. On a monthly basis, prices were up 0.9% in June.
The Case-Shiller index is expected to mirror those numbers. On a yearly basis, prices are still falling; a Dow Jones survey pegs the fall at 4.6%. The monthly gain is nice, but typical: The same pattern occurred last year, when prices rose into the summer, only to fall back later in the year.
The June Case-Shiller indexes should show “their largest month-over-month increases in a year, perhaps longer,” Quinn Eddins, director of research at Radar Logic, writes, “but they will remain well below their June 2010 levels. We expect them to begin to decline again in two or three months.”
Mr. Eddins notes that the firm’s own Residential Property Index tends to increase on seasonal factors and reach a peak in midsummer.
“As such, we are not likely to observe additional appreciation this year,” Mr. Eddins says.
Any continued increase in Case-Shiller’s 10-city and 20-city indexes would still be only minor improvements. Home prices are down about 33% from their peak. It will be a long, slow climb back out of that hole.
That is especially the case since, even with falling prices and low interest rates, buyers remain scarce in many areas. Or their numbers can’t match the supply of unsold homes still on the market.
This may prompt the Obama administration to propose fresh support measures for the market. The trouble is, these may only transfer more housing losses to taxpayers and may fail to resuscitate prices.
With housing, there is no easy, or quick, fix.
And the Used House Scuzzballs better known as NAR are busily scheming and selecting their bought and paid for whores in DC to pay off this election cycle.
Debt cat drop time?
Stocks: Investors step back
By CNNMoney staff
August 30, 2011: 8:42 AM ET
NEW YORK (CNNMoney) — Investors were taking a step back early Tuesday, with stocks headed for a modestly lower open, ahead of a report on consumer confidence and minutes from the latest Federal Reserve meeting.
Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures fell between 0.6% and 0.8% ahead of the opening bell. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.
On Monday, U.S. stocks rallied following a trifecta of positive news: a Greek bank deal, a solid U.S. consumer spending report, and relief that Hurricane Irene caused less damage than expected.
The Dow gained 2.2%, the S&P 500 added 2.8% and the Nasdaq rose 3.3% Monday. Despite the recent strength, the major indexes are still in the red for the year — with August on track to be worst month for stocks since May 2010.
Much of the weakness has be fueled by fears that the U.S. economy could tip back into a recession.
Since consumer spending accounts for 70% of U.S. economic activity, investors will play close attention to the August reading on consumer confidence due shortly after the market opens.
While the consumer confidence reading is backward looking, any weak number could cause a knee-jerk reaction to the downside. But there have been signs that consumers are starting to reopen their wallets, so any sell-off could be short-lived.
Surprising six-figure salaries
Later in the afternoon investors will comb through the minutes from the Fed’s meeting earlier this month, when a divided Fed announced it would keep interest rates exceptionally low until at least the middle of 2013.
The minutes are expected to provide more insight into the Fed’s decision, and give investors the opportunity to look for clues on the possibility of further monetary stimulus measures from the central bank’s September meeting.
Last week, Fed Chairman Ben Bernanke said he will take a closer look next month on what steps the Fed can take to jumpstart stalled growth, but he stopped short of committing to any specific measures.
Economy: The Case-Shiller 20-city home price index for June is due ahead of the opening bell. The index is expected to have fallen 4.7%, following a 4.51% drop in May.
After the opening bell, a report from the Conference Board is expected to show a drop in consumer confidence. Economists expect the index to slip to 52 from 59.6 in July.
…
“But there have been signs that consumers are starting to reopen their wallets,…”
Aren’t those statistics also backward looking? Economists, always driving using the rearview mirror. For years they’ve pinned their prognostications on every blip in the data, and to what avail?
Priceless…
File under why the US Government and economy are broke.
—————————–
President Obama’s uncle had Social Security ID
Boston Herald | August 30, 2011 | Dave Wedge and Laurel J. Sweet
President Obama’s accused drunken-driving uncle — who was busted after a near collision with a Framingham cop — has had a valid Social Security number for at least 19 years, despite being an illegal immigrant ordered to be deported back to Kenya, the Herald has learned.
The president’s 67-year-old uncle, Obama Onyango, has had a valid Massachusetts driver’s license and Social Security number since at least 1992, said Registry of Motor Vehicles spokesman Michael Verseckes.
Onyango, whose sister, Zeituni Onyango, made headlines when it was revealed she was an illegal immigrant living in public housing in South Boston, was wobbly legged, “slurring” and had “red and glassy eyes” when he was pulled over at 7 p.m. Wednesday on Waverly Street in Framingham
He’ll get asylum just like Auntie Zeituni, who lived off the taxpayer teat as an illegal immigrant. Why do you think Obama’s extended family resides in Massachusetts? So his buddy Deval Patrick can shelter them.
It’s good to be the King.
So his buddy Deval Patrick can shelter them.
I will lay 100:1 odds of which way they vote too.
I am sure glad their vote counts the same as a US Army wounded vet or small business owner.
Who cares if he is illegal and votes for the party the will give him more cheese.
It is the American way (just like wall street)…
“I will lay 100:1 odds of which way they vote too.”
And people who vote the opposite way motivated by gays/guns/God or just hate/fear of the African Muslim communist boogeyman inadvertantly support the Chamber of Commerce, ‘free-market’ importation of millions of illegals to do the ‘jobs Americans won’t do’ (at wages Americans won’t work for) each of whom’s children at birth receive a Social Security number with which their parents can use to get them on food stamps, Medicaid, et cetera.
See also the “Texas Miracle”
Exactly. The Repubs are probably more responsible for the illegal immigration problem.
How do you know that they vote? Having a Social Security number does not enable a person to vote.
Stop with the facts Mike, it gets in the way of thier rants.
SSN is not required. Registering to vote is as easy as getting a driver’s license and we all know how difficult that is in most states.
That’s nacho cheese man!
Market Pulse Archives
Aug. 30, 2011, 9:05 a.m. EDT
U.S. home prices up 1.1% in June: Case-Shiller
By Steve Goldstein
WASHINGTON (MarketWatch) — U.S. home prices rose 1.1% in June compared to May but fell 4.5% from the last year, according to the latest S&P/Case-Shiller 20-city composite released Tuesday. Compared to the first quarter, prices rose 3.6%. None of the 20 cities made new lows in June.
Aug. 30, 2011, 8:42 a.m. EDT
Sorry, Warren: Bank of America still stinks
Commentary: Investors won’t get Buffett-sized returns on B. of A.
By David Weidner, MarketWatch
NEW YORK (MarketWatch) — When it comes to Warren Buffett, an old axiom comes to mind: “It takes money to make money.”
For Buffett’s legion of copycats, there is an addendum: “… and unless your name is Warren Buffett, even if you have money, you might not make money at all.”
…
I read that article.
What’s really bopping me over the head about BAC is that the price of its CDS is going to the moon. Not good.
I’ve also been following the ratio of its book value to its market value. A few weeks ago, the market value was just under half the book value. Now it’s down to about a third.
Methinks that BAC will soon have a new Friday Friend named FDIC.
I heard on the radio Sunday night from an “Esquire” in the modification biz, that the Treasury Dept lent or gave BOA $100B, or at least that was the rumor floating around legal offices in the know. When question about the lack of MSM coverage, he said it was a quiet back room deal. Sounds plausible.
There are a LOT of “qthe MSM doesn’t cover.
Reality for starters.
Dammit!
There are lot of “quiet deals” the MSM doesn’t cover.
Aug. 30, 2011, 12:01 a.m. EDT
Looking at a scary September
Commentary: The stock market’s worst month lies ahead
By John Nyaradi
BEND, Ore. (MarketWatch) — The much ballyhooed Jackson Hole Federal Reserve conclave has come to a close, and now exchange-traded fund investors face a treacherous September.
This September is likely to be particularly volatile as Federal Reserve Chairman Ben Bernanke deferred any new simulative action until the now two-day Fed meeting on Sept. 20 and 21.
Also, International Monetary Fund leader Christine Lagarde said the global economy was in a dangerous phase while Kansas City Fed President Thomas Hoenig, said last week that the Fed, “can’t do it all,” adding further to the uncertainty facing us as we leave the dog days of summer behind.
Beyond the gloom from the Tetons, a continuing stream of economic reports indicates that the economy continues to slow towards “stall speed.” Manufacturing has dropped to contraction levels and the revision to second-quarter GDP to 1% brought the economy perilously close to negative growth.
This week will bring a slew of economic reports that could make the September Fed meeting seem far, far away, among them home sales, (just in at -1.3% for July Pending Home Sales,) housing prices, consumer confidence, factory orders and the all important non-farm payrolls report on Friday.
Seasonality also points to a rocky ride ahead as Septembers are historically the worst performing month for the stock market. Since 1928, September has recorded more down months than any other month and also holds the record for the worst monthly drop in history which came in September, 1931, when the Dow lost -30%. Septembers can be an “up” month, but the percentage of positive Septembers is the lowest of any month on the calendar.
Beyond September, of course, comes the notorious month of October which is known for major stock market crashes including Black Monday on Oct. 19, 1987, and Black Monday on Oct. 28, 1929. Based on historical performance for September and October, it’s easy to conclude that the next couple of months could be a wild ride, indeed.
With troubling seasonal factors, negative economic reports and a schizophrenically volatile stock market, it’s no wonder that little guys like us feel dazed and confused.
…
The Greek bailout seems to be working out well for gold traders:
9:30a
BREAKING
Gold rises 2% to trade at $1,826.30 an ounce
As far as countries are concerned Greece is the guy standing at the interstate exit with a cardboard sign in their hand begging for money. Kind of pathetic, no shame, no integrity and no clue. Of course the entire charade is just a bank bailout in disguise.
The Greek (Irish, Portugese,…) government(s) should have the balls to stand up and default on all of their debts and deal with the consequences of havig to live within their means. That worked pretty well for Iceland which by now is well on the road to recovery. Of course several financial claims would be extinguished as well, 401Ks, IRAs, pensions, saving accounts, insurance policies and various “financial products”.
Gold will continue to rise unless this “situation” is resolved permanently, ie. reset button.
+1, Mike. Spot on. And the US should be doing the same.
There’s an insightful documentary on youtube. Search for
“bill still the secret of oz”, it is the 1st hit. Takes about 2 hours to watch.
I highly recommend it.
I’ve actually watched that video twice through and recommended it here on the blog myself. Great minds think alike!
As the video points out, beware the push for a global gold standard.
Once the banksters get their hands on most of the gold you have a similar situation to what we have today, in that they sequeeze every Penny from the productive economy. They only way to seperate the parasite from the host is to issue debt free money by the government. Now the idea of politicians having free access to the printing press is not very appealing. There must be some hard rules and regulations and plenty of oversight. In an inflationary environment saving is accomplished by the accumulation of goods rather than money. Money is only a medium of exchange and not intended for accumulating wealth.
Exactly, Mike. I get it, you get, and the guy who emailed me the link to the documentary gets it. But how many people would probably sit still long enough to watch that documentary? How many would even understand it? On the other hand, it has always been small groups of determined people who have managed to make a difference for the better down through the ages.
That video made a huge difference in my outlook, however. And for this reason, and this reason only, I might actually hold my nose and vote for a Rick Perry. There is much I intensely and viscerally dislike about the guy, but his attitude toward the Fed is correct and, if you knock out the central bankers, many other problems fall by the wayside.
Palmetto, we get it and the parasites are getting it as well. That’s why they will do everything in their power to keep the current system alive. You have people like Trichet, Junker and Ackermann in Europe and Bernanke, Geithner and Blankfein in the US. Those people are the parasite.
It worked for Iceland becasue they were tiny and everyone else was pumping liquidity.
Greece is a lot bigger, and the neighbors are no longer as free spending.
Italy is both too big to let fail, and at the same time, too big to bail. This will be the real “rock and a hard place” for Euro.
Not to count the fact that Iceland is not in the Eurozone so is free to make its financial choices. PIGS are being heavily pressured to stay Euro.
Meanwhile, the British have been crowing like roosters over the fact that they stayed out of the Eurozone.
Today’s House:
http://www.zillow.com/homedetails/13603-Parkland-Dr-Rockville-MD-20853/37303834_zpid/#9
3/1.5 1954 re-done Rambler. Has all the trappings, including new plumbing and bathrooms, and nice flooring, but I don’t understand the floor plan. It looks like they divided the living room to make another bedroom. Nice yard, though.
Jul 1987: Sold $95K
Aug 2011: Listed $240K (2004-era pricing)
I’d guess they put $40K at least into the house to fix it up, so I’m sure they wouldn’t entertain a lowball.
If they redid the kitchen, I wonder why they put the fridge on the wall with the windows rather than the sink? You would lose one upper cabinet, but while doing the dishes, at least you’d be able to look out the window rather than stare at a backsplash.
As it is, you have 2 windows you’d never look out of, and unused space beside the fridge. Dumb.
And my house has parquet floors. I hate them. So many gaps that dirt and stuff gets caught in.
Exactly what I was thinking about the kitchen, Overdog.
Looks like they sacrificed the garage to enlarge the indoor space.
Basically a bad flip by someone who doesn’t understand the market.
while doing the dishes, at least you’d be able to look out the window
No window over the sink is a dealbreaker!
Almost a quarter of a million dollars for that?
Frightening.
Oxide, I’ve really enjoyed this series of MLS listings you’ve provided for us. It helps to understand exactly what each area is looking at along with quality/price.
I still favor the Two Boob house.
Spring buying boosts home prices in US cities
19 cities post home price increases in June, but prices are down from the same month in 2010
WASHINGTON (AP) — Spring buying pushed home prices up for a third straight month in most major U.S. cities in June. But the housing market remains shaky, and further price declines are expected this year.
The Standard & Poor’s/Case-Shiller home-price index showed Tuesday that prices increased in June from May in 19 of the 20 cities tracked. Prices rose 3.6 percent in the April-June quarter from the previous quarter. Neither of those numbers is adjusted for seasonal factors.
Over the past 12 months, home prices have declined in all 20 cities.
Chicago, Minneapolis, Washington and Boston posted the biggest monthly increases. Metro areas hit hardest by the housing crisis, including Las Vegas and Phoenix, reported small seasonal increases.
Housing has been a drag on the economy and is a key reason it has struggled to recover two years after the recession officially ended. Home sales are on pace this year to be the worst in 14 years.
High unemployment, larger down payment requirements and tighter credit are preventing many buyers from entering the market. Many who can afford to buy are waiting because they are worried prices have yet to hit bottom.
Analysts say home prices have stabilized in coastal cities over the past six months. Seasonally adjusted prices have fallen a modest 1 percent over the past six months, according to the index. That’s less than a third of the decline from the previous six months.
But this year, home prices in many cities have reached their lowest points since the housing market went bust more than four years ago. Prices in Cleveland, Detroit, Las Vegas, Phoenix and Tampa are at 2000 levels.
“These shifts suggest that we are back to regional housing markets, rather than a national housing market where everything rose and fell together,” said David M. Blitzer, chairman of the S&P’s index committee.
The index measures prices compared with those in January 2000 and creates a three-month moving average. The June data is the latest available.
Sales cut in half. Only wealthier still buying larger homes. Doesn’t take much of a stretch of the imagination to see how prices can go up even in an unhealthy market.
It is mostly seasonal. Look at YoY to remove seasonal factors.
Not to mention temporarily reduced inventory due to robo-signing crud.
And, as you say, changing the mix of houses sold moves indexes.
I was looking at houses in the better areas of Tampa, 2 weeks ago. The prices are still at 2003/04 levels. Some are still asking for 2005 prices.The difference between 2003 and 2000, in FL, is about 30%. However, mediocre areas and not so mediocre areas are down to 1998/1999 prices. Tons of short sales/foreclosures in those areas. Buying RE, in FL, is always a risky proposition.
The article almost makes sense until you read the last line:
http://finance.yahoo.com/news/Spring-buying-boosts-home-apf-28530223.html?x=0&sec=topStories&pos=main&asset=&ccode=
Hope and change?
Yes we can?
Four more years?
Ah - it is all Bush’s fault…
—————————
Consumer Confidence Collapses
WSJ
August 30, 2011
By Mark Gongloff
We knew consumer confidence was bad in August, but this is ridiculous.
The Conference Board said its consumer confidence index plunged to 44.5 from 59.2 in July, the lowest since April 2009 and not far above record lows set earlier in 2009. It was expected to come in at about 50.
The US downgrade, turbulent financial markets and more have ground consumer confidence into a fine powder this month. It remains to be seen whether that translates into lower spending — consumers have been known to go shopping despite their gloom — but this isn’t a good sign.
You sir are correct. Scary Barry the African/Indonesian witch-doctor communist monster-under-the-bed and his evil goons Joey Plugs, Botox Nancy, and Harry Earmark are 110% responsible for all that ails the Great Amerikan Konsumer.
The months fly by and still all these guys can think of is to resuscitate the hyper-consumer economy of the past few decades. How many more years will they fritter away waiting for some magical data point? People bought three or four decades of crap in about twenty years - and yet they find this puzzling?
Ah - it is all Bush’s fault… ??
+1…Spot on…
Consumer confidence no longer has an effect on consumer spending. Americans know they have no future, and no longer care, so they spend every dime they can get ahold of whether they are confident or not. So the only issue is how many dimes they get.
Default — the only ammunition for the bottom 80 percent in the class war. Or the only ammunition they are willing to use.
Consumer confidence no longer has an effect on consumer spending. Americans know they have no future, and no longer care, so they spend every dime they can get ahold of whether they are confident or not.
No this is not because they don’t care it’s because a bigger and bigger portion of their take home pay is going to food,fuel, healthcare, and they are locked in debt. They have also seen their pay drop and all kinds of fees at the state level levied on them. They are spending all they have to survive. This is why printing more dollars is not going to increase GDP like it has in the past.
wonder what the savers confidence index says?
Not a whole lot better, based on the rock bottom rates savers get these days.
a penny saved is a penny earned.
A penny saved is 2 pennies earned pre-tax.
You don’t need to convince people that Obama sucks. You need to convince people that an alternative would be better.
Obama is fail because he is trying to do more of the same that dug us into the hole.
The alternatives are worse becuase they want to do more, more, more of the same that dug us into the hole.
You don’t need to convince people that [insert candidate here] sucks. You need to convince [their base] that an alternative would be better.
True on all sides. *Everybody* gets so focused on trying to convince their opponents of why somebody sucks, and it’s totally wasted effort. It would be way more useful to put yourself in their shoes and try to understand why they don’t trust your favorite candidate.
Or, judging by what looks to be the majority of the current potential alternatives, PRAY that the hole gets filled by divine intervention.
My personal opinion is that this credit expansion can easily be seen to go back to JFK. Maybe the history books will look further back. Arguing about who’s “fault” it is that the unsustainable expansion ended is futile. None of the clowns parading across the stage in DC have what it takes to lead a real recovery. They all seem to be still in denial. The time will come for sure, but it isn’t now. I suspect that first, lots of individuals need to find their way through the end of the Age of Credit in order to even recognize potential leaders for a desireable future.
You are correct. People can’t imagine a world with truely balanced trade. They reject this concept that one person’s income is someone elses spending. They reject the very basic economic reality that one person’s money is another person’s debt.
Debt based money isn’t bad, if total debt is kept to a reasonible size that that it is likely to be paid back. But, that puts a SERIOUS limit on money making… Can’t have that. So, to push money profits to the sky, we expect debt trees to grow to the sky.
It is all most people have known for their entire lives. My grams was just a child at the start of the GD, then got marreid right at teh end. Now she’s in her 90s. That makes for a tiny sliver of the population that has lived in an economy with limited access to debt.
I was listening to the Chicago Fed guy on CNBC this morning. Liesman trots out the old saying… Inflation is good for those in debt, but not so good for those with savings earning low rates.
ARG!!!! WAGE inflation may be good for those in debt. PRICE inflation on flat wages crushes those with debt as they have less and less money after necessities to pay down thier debt.
The Fed can print money, hand it to Wall Street, and casue inflation in Oil, food, otehr commodities, and those can feed through the system to higher prices for consumers.
Once it hits the consumers, there are two possibilites. It is is a necessity, people pay more, leaving less money for other stuff. Or, for non-necessities, retailers eat the cost inflation by cutting wages and laying off more workers.
I don’t see us getting much wage inflation anytime soon. ESPECIALLY if we’re going to start cutting back on government spending.
Single Payer and/or public option healthcare would help. If the young and healthy and working paid $400 into Medicare-for-all each month instead of paying $600 into private insurance, that alone puts $200 in consumers pocket without messing with the tax code or the money supply.
The flaw with your argument is that currently, a lot of those young and healthy are putting nothing into healthcare. If they get really sick, they go to the ER where they have to be treated, and when they do not pay, the cost is transferred to me and my insurance company.
The funding isn’t nearly as big of a problem as the cost. We pay twice as much per person, as any other country in the world. We need universal coverage just to force us to finally deal with cost/benefit analysis of services, bulk negotiation of drug prices, and, yes… some real death panels.
Ford pink slips expected September 15
Layoffs tied to shutdown of Ontario Ford plant
Tuesday, 30 Aug 2011
HAMBURG, NY - Ford workers in Hamburg are bracing for a round of layoffs. The job action had previously been announced when details became known about the shutdown of a Ford Motor Co. factory in Southern Ontario.
The Canadian plant is scheduled to close in about two weeks. The Ford Stamping Plant on Route 5 in Hamburg supplies the St. Thomas facility with materials. Pink slips affecting 150 workers are set to start taking effect September 12.
The UAW workers who are laid-off will be eligible for state unemployment and supplemental benefits from the company.
The Ford St. Thomas plant produces Ford Crown Victoria and Lincoln Town cars. Production of the Town Car is scheduled to end Monday.
Obama May Back Hiring Credit, Construction
- Bloomberg
The ideas President Barack Obama is considering for his new jobs agenda could put hundreds of thousands of people back to work, and still have a limited impact in an economy that remains 6.8 million jobs behind its pre-recession peak, economists said.
Among the options Obama is considering is a version of a tax credit for new hires that could spur the creation of 900,000 additional jobs at a cost of $30 billion, according to an estimate by Michael Greenstone, an economics professor at the Massachusetts Institute of Technology and former chief economist for Obama’s Council of Economic Advisers.
“It allows the private sector to lead the economy toward the areas where the payoffs are greatest,” Greenstone said.
In discussions with the president, Obama’s economic team has strongly backed a tax incentive for new hires, said a person familiar with the deliberations.
Even so, the president’s capacity to dramatically improve the economy is limited after an $830 billion fiscal stimulus and almost three years of accommodative monetary policy from the Federal Reserve. Obama also confronts political constraints from Republicans in Congress opposed to further federal spending.
“The broad honest answer is that there’s a limited amount that he can do that I know of,” said Martin Neil Baily, a former chairman of the Council of Economic Advisers under President Bill Clinton. “We’ve kind of done a lot of the things we know how to do.”
I don’t care what you say, Chavez, stick a fork in it, you’re done.
And until the economic imbalance in Venezuela is fixed you can bet that another Chavez will rise. Remember he was voted into office. When things get bad enough here you’ll see the same thing. The elite will do one of several things.
1. Rig the electoral process - This has already been done but it will get worse.
2. Take over the gov in a coup after allowing massive riots to scare the crap out of people.
3. Leave - only if forced.
I like Door #3.
And, btw, what I meant by stick a fork in Chavez was his comment that the cancer is gone and will not return.
He’ll be going the Steve Jobs route shortly.
Why does every South American “man-of-the-people” have to be such a douche bag?
Why does every South American “man-of-the-people” have to be such a douche bag?
Because they are all socialists who care more of remaining in power than helping the man in the street?
Because if they weren’t a douch bag, they would not have been able to get the power in the first place.
This is like asking, why does every USA politician have to be owned by Wall Street? Because, without Wall Street money, they would have lost the election.
My nomination for worst article ever…
http://www.azcentral.com/business/consumer/articles/2011/08/29/20110829more-saying-no-to-credit-cards.html
“Since the third quarter of 2008, overall U.S. household debt, which includes credit cards, mortgages, student loans and car loans, has declined by more than $1 trillion, according to the Federal Reserve Bank of New York. While the rate of the decline has slowed somewhat in recent months, total consumer debt is still down 8.6(PERCENT) from the third quarter of 2008.”
Let’s examine these 2 sentance.
First, factually incorrect. From the Federal Reserve Z1:
3Q2008: total: 13916.9 mortgage: 10547.7 Other: 2609.2
1Q2011: total: 13318.5 mortgage: 9970.0 Other: 2449.3
Total was down $600B as of 5 months ago. So, either were not really down more than $1T, or we haven’t slowed in recent months since it took 2.5 years to drop $600B and we would have needed $400B in the last 5 months to hit their “more than $1T” number.
Second, this article makes it seem as if theat $1T is mostly Credit Card. The entire “other” segment that includes credit cards was off a whole $150B over 2.5 years. Big whoop.
Third, the article claims the entire $1T…. or closer to $600B… of household debt reduction is coming from people paying down their debt. There are 2 ways out of debt, payoff or foreclsoure/bankruptcy.
There have been something like 3 million forecslorues and 4.5 million bankruptcies in the last 3 years. If each of those wiped out only $30K in debt, that would be in excess of $2T in debt gone.
Banks alone have written off more than $500B in losses over the last 3 years, and that ignores the sold off and securitized loans. Freddie and Fannie have eaten another, what is it, $400B? Then you have to add on all the non-GSE securitized debt that is really among the hardest hit.
America is paying off its debt my hind end. All we have is a slight imbalance that the debt being wiped out through default is only slightly larger than the new debt being added by everyone else.
Fourth, the article goes on to talk about how people aren’t carrying balances. Credit card usage is up, and total balance is up, just not as much as the rate of usage… HELLO, that means that the rate or write off isn’t even keeping up with new usage.
People are paying off their credit cards? My hind end.
People are still using credit cards, just not adding debt to them as fast as they are getting out of other debt through default.
Bingo bango. This is exactly right. In my little world, we still see balances shrinking, but the majority of that has been caused by charge offs. But a not insignificant number of people are also paying down debt. And as you mention, plenty of others taking on additional debt.
“While the rate of the decline has slowed somewhat in recent months,”
Would that have anything to do with the Robo signing hault in forecslorues in recent months? I know my last LL reduced his debt by $300k in 2010 when they short sold the house I had been renting for $150k.
As far as the credit cards go the banks have been cutting the available credit down to just above current balances for a lot of people so they can`t run them up.
“America is paying off its debt my hind end. All we have is a slight imbalance that the debt being wiped out through default is only slightly larger than the new debt being added by everyone else.”
+1 Just rearranging the deck chairs on the Titanic.
New JoshuaTree Extension out which supports Firefox 6.0. In addition, Frontier has finally taken over web hosting from Verizon and it turns out they have their shit together. So you don’t have to right-click the link and save, but can simply click on it and it will install correctly (well, at least in FF6. I didn’t test this in 5.X).
Note that the link has changed - the old URL will simply redirect to this one:
http://myplace.frontier.com/~drumminj_tx/joshuatree.html
Excellent work, but I don’t see a link to the version that supports FF6
go to the ‘download’ page and you’ll see it there. Current version: 1.5.3
Apparently I had to hit “refresh” since I had already looked this morning and I guess kept getting a cached page somehow? At any rate, I see it now.
Thanks! Been wondering if one was in the works after accidentally installing 6.0 and being told JT wouldn’t work. Enough of this paging down for new posts nonsense.
(I was a late adopter but, many unsupported objections later, I’m ‘entitled’ to not search for new posts.
)
After More Weak Data, Market Awaits Fed Minutes for Clarity- Breakout
Once again, Wall Street’s attention turns to the Federal Reserve, awaiting minutes from the most recent FOMC meeting and hints on how the divided Fed will proceed.
Here’s an article worth reading: “real” inventory is scarce and buyers can’t buy — because most of the houses are on the market at unsupportable prices.
http://www.theatlantic.com/business/archive/2011/08/the-two-tier-housing-market/244331/
Assuming the author’s anecdotal evidence is correct (she only looks at places with strong underlying demand at real prices, such as California and metro DC), this supports the idea that by slowing foreclosures and sales the federal government is really screwing young buyers.
“In the neighborhoods we wanted to buy in here, there was a lot of inventory–homes that were wildly overpriced. Those homes sat on the market for months, even years. Meanwhile, anything that came on at a reasonable price went to contract within a week, and usually within a couple of days–we made an offer on the house we now own the day it came on the market, and this was far from unusual. Bidding wars on these properties were frequent–universal, in the months before the first-time homebuyer tax credit expired.”
“…this supports the idea that by slowing foreclosures and sales the federal government is really screwing young buyers.”
Do you mean the guys and gals who are living at home with their parents because they can’t find jobs? Yup — they are getting the short end in both the housing and labor markets.
Legal aid programs for poor deal with deep cuts
By Elizabeth Crisp, USA TODAY
JACKSON, Miss. – Programs that provide free legal aid to the poor are laying off employees, cutting services and increasingly turning away people who need assistance, as slashed budgets face deeper cuts.
“It’s a really dire situation,” says Rebekah Diller, deputy director of the justice program at the Brennan Center for Justice at New York University School of Law. “Courts around the country are struggling right now with massive amounts of people who have no legal representation.”
Legal aid programs provide representation in civil cases related to domestic violence, foreclosures, child custody issues and similar matters. The Constitution guarantees legal representation if a person cannot afford to hire a lawyer in criminal cases, but in civil cases people are on their own.
Congress cut funding for the Legal Services Corp. (LSC), an umbrella non-profit group that distributes grants to 136 programs on the state level, by $15.8 million, about 4% of the program’s most recent budget, in the spring. The House Appropriations Committee has proposed slashing an additional $104 million for fiscal 2012, rolling back funding to $300 million — a level not seen since 1999.
“What we really need is an increase in funding,” LSC President James Sandman says.
The number of people eligible, based on income levels, for LSC programs across the country has gone up 27% since 2007. About 64 million people qualify, Sandman says.
State directors of legal aid organizations say they face difficult choices in light of the cuts.
Idaho Legal Aid Services has started unpaid monthly furloughs, and offices are closed one day each month. Several employees have been downgraded from full-time to part-time status.
“It’s not a good situation for us,” says Jim Cook, deputy director of Idaho Legal Aid Services.
Legal Services of New Jersey plans to lay off 100 employees by the end of the year.
“The funding cuts are having a significant impact on the services we can offer to the nearly 2 million New Jersey residents in or on the brink of poverty,” says Melville “De” Miller, president of Legal Services of New Jersey.
Aug. 30, 2011, 11:31 a.m. EDT
Consumer confidence plunges as hope dims
Expectations at the lowest level in two years
By Ruth Mantell, MarketWatch
WASHINGTON (MarketWatch) — Consumer confidence plunged in August as expectations dived, with worsening views on future business conditions, jobs and income, the Conference Board reported Tuesday.
The nonprofit organization said its consumer-confidence index fell to 44.5 in August, the lowest level since April 2009, from a slightly downwardly revised 59.2 in July. It was the sixth-largest one-month decline in the past 21 years. Economists surveyed by MarketWatch had expected an August reading of 51.9.
“A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade,” said Lynn Franco, director of the Conference Board’s consumer research center, in a statement.
Standard & Poor’s downgraded the U.S. credit rating from AAA on Aug. 5.
U.S. stocks reacted negatively to the report, with the Dow Jones Industrial Average (DJIA +0.13%) down about 90 points in mid-morning trade.
…
More phony economy — coming up!
Lenders making more subprime car loans
http://tinyurl.com/3o66mtp
Car loans are often securitized and sold as bonds.
+1 And the fed the bond purchaser the last few years.
No wonder I can’t find an affordable automobile.
A lot of places that give these sub-prime loans require a large enough down payment that they hope the borrower will default. Then they take back the car and sell it to someone else that they hope will default.
ATLANTA (WLS) - Forget robbing the bank. These days, the big money is in beauty salons and their stash of human hair extensions.
The most recent heist occurred Tuesday when thieves crashed a Jeep into Angie’s Beauty Supplies in Atlanta. Video showed the culprits head straight for the shop’s most expensive fake tresses.
“The suspects took an undetermined amount of hair extensions and other items prior to leaving the store,” said Atlanta Police Officer Kim Jones. The thieves left the Jeep in the store.
“The suspects left the scene in a dark colored minivan,” Jones said.
This is the second time in four months that Angie’s has been the victim of a smash and grab for hair extensions.
Atlanta police say they’ve seen a rise in robberies at hair salons and beauty supply shops. The Atlanta Journal-Constitution reported that last week that thieves stole $50,000 in hair extensions from another beauty supply store.
“The thieves left the Jeep in the store.”
They’ll get nailed by the VINs just like that stupid WTC bomber did when he tried to get the Ryder truck deposit back.
Unless they stole the Jeep just before crashing it into the store.
If they stole it, they probably left their fingerprints all over it. And I’ll betcha money that those prints are already in some law enforcement database.
CHINA: BYD slashing sales staff after profits slump
Author: Graeme Roberts | 30 August 2011
BYD plans to cut its sales force by about 70%, a Chinese website and other news sources said, after the company reported a nearly 90% drop in first-half profits.
About 1,000 people in BYD’s sales arm would be asked to resign initially, with the ultimate goal of cutting the headcount to 800, from 2,600, eeo.com.cn said on Tuesday, citing unnamed BYD employees, according to Reuters.
A mid-level executive at BYD told Reuters the initial layoff target was as much as 1,600 people, but the timing of the planned cuts was not clear.
Further layoffs in other departments were possible, the website said.
Several BYD executives contacted by Reuters either declined to comment or could not be reached.
BYD, 10% owned by US investor Warren Buffett’s Berkshire Hathaway, reported an 89% plunge in net income in the first half, lagging domestic rivals.
State auto group SAIC Motor Corp Ltd reported a 46% jump in earnings during the period, while Geely Automobile Holdings said net income rose 17%.
Xia Zhibin, head of the BYD’s sales unit, resigned earlier in the month citing personal reasons. Analysts said slumping sales were likely to have played a part in the move.
BYD sold 259,915 vehicles in the first seven months, down 19.3% year on year.
The silliness continues here in Tucson. From today’s fishwrap:
Pima County announces financial-help for first-time homebuyers, veterans
There’s a map that shows the areas targeted by this program. Take it from me, someone who lives here: I wouldn’t buy or rent in those neighborhoods on a bet. In a word, they’re lousy.
The fishwrap’s online commentariat is pouncing all over this story. Samples:
Jeffrey H. asks, “Isn’t this the sort of thing that caused the housing bubble to burst in the first place? Or is this somehow different? A follow-up story in a couple of years is certainly in order to see how this program fared. While the financial incentive to write a mortgage to an unqualified buyer by a private mortgage broker is removed, the county still has its own incentive to write mortgages in order to activate this program.”
Kirk H. weighs in with: “[T]here is no reason that this will work any better than HUD, FMHA, Sub prime or any other scheme that gives mortgages to people who do not qualify for a mortgage.
As all the other schemes the loan failure rate will be 50% will the taxpayer footing the bill.”
And Ken R. wonders, “Why is it a function of the county taxpayer to help people get in to their own home? Why isn’t renting good enough for them?
“When will we learn from our past mistakes. Remember the Savings & Loan crises in the 80’s? The VA held an auction in Tucson to rid themselves of all the homes they had to forclose on.
“Then there was the 2006 bubble in housing with an even more severe result.
“When will the next one be, 2021?”
This elevates gerrymandering to new heights — putting your voting bloc into a home. I wish someone would pinprick me from this nightmare.
“Why is it a function of the county taxpayer…….?”
It’s an investment dadgummit!
1 homemoaner = 1FBer = 1 stuck property tax payer/parasitical host
Part of Obama’s job plan includes tax credits for hiring. Hope it works better than New York’s Empire Zone jobs plan where companies gained pretty decent sized credits but when audited couldn’t produce the numbers. It was basically a give away.
Someone used an example a few days ago here.
Imagine a tax credit for brushing your teeth. Sure, maybe a few people that didn’t bruch thier teeth will start, however, most of the credit will go to those that were going to brush their teeth anyway.
“…most of the credit will go to those that were going to brush their teeth anyway.”
Tax credits should be targeted to those who pay taxes.
Minn. dad who abandoned son arrested in California
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By AMY FORLITI
Associated Press
Published: Tuesday, Aug. 30, 2011
MINNEAPOLIS — A Minnesota father accused of abandoning his 11-year-old son after their home went into foreclosure seemed depressed and desperate for work when he applied for a job, so the owners of a coastal California deli hired him to make sandwiches.
Steven Alexander Cross said he’d lost his job and home in Minnesota and was staying with relatives, but he never mentioned the son he left behind, said Doug Lindsay, a co-owner of the Cambria deli, Soto’s Market.
“He just seemed like someone who had lost everything in this economy and was down on his luck,” Lindsay said by phone Tuesday.
Cross, a 60-year-old architect from Lakeville, Minn., is charged with a gross misdemeanor count of neglect of a child for allegedly abandoning his son while the boy was sleeping, explaining his reasons for leaving in a letter to the boy and instructing him to take another letter to a neighbor’s home.
According to police, that neighbor said the boy rode his bike three blocks to her house on July 18 and arrived in tears, handing her the letters. The letter to the boy said: “If this paper is wet it’s because I am crying so bad. You know your dad loves you more than anything.” It went on to say that there are no jobs for architects and that sheriff’s officials were taking the house.
“There are many many great years ahead of you. Not so for me,” Cross allegedly wrote, telling his son to take his PlayStation to the neighbor’s house. In the other letter, Cross asked his neighbor and her husband to care for his son, police said.
http://www.sacbee.com/2011/08/30/3871433/minn-dad-who-abandoned-son-arrested.html - -
http://www.tampabay.com/news/business/realestate/case-shiller-index-tampa-bay-home-prices-rose-a-bit-in-june/1188759
Awesome comments. Pretty soon the shoe shine boy will be trashtalking real estate.