Bits Bucket for September 12, 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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About a year and a half ago I posted a link to a lodge/cabin style house on 5 acres in Pinellas Co. FL. I looked it up again yesterday and it sold for $185k which is about $80 sq. ft. I think it was listed at $299k.
And now that we’re getting into the “affordable housing” phase it appears we will be starting the “hard to get job” phase, too.
thats a good house deal if you made $30hr…. now if only employers would hire smart people maybe we can get this country out of its helllllhole…..
We really should have a lean mean corporations filled with the best and brightest, but I just dont see it…you still get the same air head chickypoos on the phone.
You still don’t get it. The employees who do the heavy lifting are hired overseas for a pittance and the “public facing” employees, who have to be local, are the pretty boyz n girlz.
This “heavy lifting” done overseas was touted as a good and wonderful thing for America not too many years ago.
Ah yes, the touted “knowledge economy.” All the repetitive tasks done by robots, all the heavy lifting and energy done by foreigners, all the menial tasks done by immigrants. That was supposed to leave all the “smart” Americans to sit at computers to “innovate” and write “content.” We see how that worked out.
To clarify, by heavy lifting I meant the work that requires “smarts” and technical degrees.
That was supposed to leave all the “smart” Americans to sit at computers to “innovate” and write “content.”
And a lot of people actually do that, however:
1) There are only so many jobs like that.
2) The majority of the population isn’t smart enough to do it.
And a lot of people actually do that, however:
1) There are only so many jobs like that.
2) The majority of the population isn’t smart enough to do it.
You also have to be aware of the de-jobbing trend. As in, a lot of this kind of work is happening outside of the job world. With more on the way.
Take creating computer software applications, for example. A lot of that work is done by indie contractors who kiss their client goodbye at the end of the project. Unless, of course, there’s another project.
Which means that you’d better be pretty good at hustling your next gig, even if you’re super-busy with your current gig.
Which means that you’d better be pretty good at hustling your next gig, even if you’re super-busy with your current gig.
So true. Works OK when you have a long term gig. Not so much when they’re just a couple of months long.
Saw an article the other day about a smart phone app coding sweat shop in India. Typical setting, programmers are elbow to elbow with each other. Average pay was under $1K USD per month.
How do you compete with that?
I also read an article that described how “good looking” people get better jobs than the “uglies” (on average). Sorry nyDJ, the ‘chicky poos’ aren’t going away anytime soon. But to tell you the truth, I think its been this way for a long time. Back when secretaries were ubiquitous (unlike now) they were usually pretty girls. It’s just the way things are I’m afraid.
“Typical setting, programmers are elbow to elbow with each other. Average pay was under $1K USD per month. How do you compete with that?”
With tarriffs and protectionism. Good luck.
Everything that can be done on a computer will eventually be outsourced.
We really should have a lean mean corporations filled with the best and brightest,”
best and brightest at making millions of quick dollars for corporate officers, little time left for quality control or acually running of the company.
I beleive the stock market will fall to reflect this short sighted con game going on.
I love Amazon. Last night I saw a shoe rack advertised on their wonderful website as a 4-tier in print. However, the photo showed only 3 tiers (racks).
I called customer service and “you still get the same air head chickypoos on the phone.” but in India, very difficult to understand, and with a cutesy American first name or nickname.
Man up, Amazon!! (so to speak -
)
I found the farmette of my dreams while looking in RAL’s general neck of the woods this weekend. Now if only we didn’t mind interaction w/people or modern amenities like a 21st cenury income. By the map, it appears to be deep in the woods of the Catskills.
So I’m jealous of your hot find in the vicinity of modern living.
Mine was $199k on I think about 20 acres….barn, pond, very nice house.
Now I’m off for virtually the entire day. This should be a lively one to come home and read up on. Hang tough everyone!
“So I’m jealous of your hot find in the vicinity of modern living.”
This is the first house that I’ve followed that I’ve said, “Wow, I wish I could have had it at THAT price.”
At the root what is going to be hard to get is money.
It certainly doesn’t appear to be the case now. I could borrow more than I think my house is really worth that (though others continue to pay more) at a stunningly low interest rate tomorrow.
The problem is, what would I do with the money? No one is treating the cash I have as king. They are treating it as zero.
The question is, how long can that go on?
The problem is, what would I do with the money? No one is treating the cash I have as king. They are treating it as zero.
The question is, how long can that go on?
”
At almost zero USA GDP growth it can go on for a long time.
most money is flowing to faster growing economies without massive debt. How long can this go on ? I think Japan helped blow the RE bubble here in America with the yen carry trade. Its happening again ( bubbles forming ) in fast growing countries is my guess. As long as the FED can grow the Worldwide money supply with zero interest rates we will have bubbles.
The 5 acres skews the $80/sqft metric. How much of the $185k do you think is attributable to the land?
Lets lay this bull$hit idea of land being of great value to rest.
Look beyond a 50 mile radii of most major cities and you’ll find land as far as the eye can see, literally. Most of it is unused, untilled, unproductive dirt. How much is is really worth? Not much. When large tracts(100+acres) can be had for under $70k in the hinterlands, an acre isn’t worth much more than a pittance.
Carrie….. The Jewish Alps aka Catskills are a long way from my area. And if you’re insistent upon paying for unused land, subdivide the house and a 3/4 lot from the rest. Otherwise the taxes will crush you. The sum of the tax bill for the lot and the house and lot will be less than if it were one large parcel with a house. At least in VT and NY.
I’ve done the land thing and my family owns a bunch in VT and NY and it’s a loser in a very big way. Now, the only way they can afford to keep it is to peel off a lot and sell it to a dumb outsider every few years. My brothers should have dumped it all when they had a chance but of course they thought they were sitting on a million dollar lottery ticket. Just a few weeks ago one brother stated, “I couldn’t get $500/acre for it”. That’s what he paid for it 30 years ago when he bought the parcel from my father(after my dad logged all the good timber off it). The ONLY way I’d buy anything more than 2-5 acres is if it is tillable *and* there is an interested party in leasing it for hay value. Otherwise, no thanks.
It is true - taxes in NY and VT (with many others) on houses/land even in the boonies/sticks are insane. You are basically renting from the state.
However - get in the boonies of PA (and west) - taxes are very low.
Basically - find a state where the public unions do not control every facet of government.
Whatever Banana but the point is that high taxes on non-productive dirt are sunk costs given the fact that land prices are the same today as they were 30 years ago. The longer you hold onto it it hoping and praying for the value to go up, the greater your losses. Lose today. Lose more later. Unless you hay it or sell the timber, whichever the case.
Texas has no public unions and sky high property taxes.
Basically - find a state where the public unions do not control every facet of government.
What? A sentence that refers to public unions without the use of the word “goon”? What’s this world coming to?
We noticed that as well.
Well there is one thing of value w/a big land purchase. We get away from barking dogs, hiked up bass at 2 am, watching the neighbors’ dogs pee on my mailbox post, teen parties next door, drug dealers next door, and if I want to do any or all of the above: No one cares!!!!! Ok, probably prudent to skip the dd thingie.
But I agree w/you, in this state you will pay for the priveledge.
By your area, I meant your 1/3 of upstate. Ha ha.
Texas has no income tax, hence high property tax.
PS- Hay is selling at an insane price. I paid $7.50/small bale last winter to insulate an newly cast slab on my old project back in NY. Not that long ago it was $2/bale.
Good to see that those deflationary forces are still at work.
Maybe the problem is you were buying hay and not straw. Hay is always a couple bucks more per bale than straw.
Don’t they offer tax breaks for farming or livestock? 20 acres is more than enough for a few cows or some chickens. That’s how the majority of ranches in the US are affordable. If ranchers had to pay the same taxes as homesteaders, there would be no ranches or farms in the US.
Yes you can get an ag exemption if you have livestock. Years ago they didn’t verify but now they want to see hooves and other 4 legged beasts. The ag exemption is definitely worth it.
PS. I’d have bought straw if it were available.
–The Jewish Alps aka Catskills—
Ah, I have such fond memories of Grossingers and the Concorde. Perhaps you could join me for lunch at Kutschers?
I’d welcome it but I’d prefer Katz deli. You buy.
Oh man, that’s one thing I miss…no good delis in Montana, despite the liberal use of the name…no kishka, no knish, no kippers & eggs..
Heh…. the *real* deli and pizza zone extends to north Jersey, southwest CT and southern Westchester county. Beyond that proceed at your own risk.
Pinellas County is one of the most densely populated counties in Florida and for the most part you’ll see homes on lots of a quarter to a third of an acre.
The land may not have “great value” but a 5 acre lot in Pinellas certainly has more value that a quarter acre lot.
And so does Manhattan. Your point is?
The 5 acres skews the $80/sqft metric.
“The 5 acres skews the $80/sqft metric.”
Except it’s an awesome house, too. However bought it killed it. It’s the kind of deal the average HBB’er is holding out for.
WRT inflation/deflation, I just noticed yesterday that Ben & Jerry’s carton lids are prominently labeled “still 16 ounces” so as to distinguish themselves from the other 14 ounce “pints” of ice cream.
Perhaps obesity isn’t going to be as much as a problem as the media make out. Food prices up, quantity down and less money to spend.
The problem is that good, nutritious food that doesn’t make you fat is expensive. Fattening crap is dirt cheap. Ergo, people with less money tend to put on more weight, not less.
people with less money also tend to have more stress.
Where did you come up with that factoid?
nat geo documentary on stress.
Mike
We had to cut our food bill in half (tight finances). So, we buy chicken breasts and eggs (toss the yolks) as our lean protein, and shop where produce is reasonable, and here’s the clincher, we eat less. OK, I have 2 lbs that needs to come off, but if you think about the addiction to sugar, and the cost to fuel it, eating right isn’t that much more. It’s about choices, volume, and drinking water to fill you up. Most people (I know) don’t have any disipline or desire to change.
$.99 frozen Mexican dinners are hard to beat.
And the ones at Trader Joe’s aren’t even loaded with unhealthy cr*p.
We had to cut our food bill in half (tight finances). ”
I’m going to try that too, we never eat out but my Costco bills are too big. My kids, two boys, eat like crazy though.
Good points, guys. I don’t think about processed foods. I beat Diabetes with no drugs, and quite frankly, those really cheap meals can lead to high medical bills. I watch my carbs like a hawk.
What the heck are you getting at Trade Joe’s for $0.99?
I think the roasted seaweed snack thing is that cheap. Also a small bag ofshallots. Individual apples are less. Nothing else that I can think of. (The seaweed stuff is actually pretty good.)
cactus
Isn’t it amazing how much boys eat. OMG, where the hell do they put it! (Growing, I know, but holy cr*p.)
Here’s a tip: snacks are cheaper at the Dollar Tree & 99C Only Stores (Dlr Tree & 99C Only in Simi, btw). Mrs. Freshley’s stuff is good (baked fun), apples, other fruits and veggies at the 99C Only is decent quality and talk about reasonable.
Costco has a lot of overpriced foods, and a lot of pretend healthy stuff. My husband thinks it is way too expensive. Lean proteins is what we use it for.
Sprout’s in WLV and TO is great for produce and excellent quality at major discounted prices. Costco isn’t a bargain anymore in our opinion. Big Roll (paper towels) are just as good at the 99C Only Store in Simi.
Ok, nuff said. Sorry for ranting.
Just looked up the Big Mac Index
Big Mac Price in Dollars
2004 $2.90
2005 $3.06
2006 $3.10
2007 $3.22
2008 $3.57
2009 $3.54
2010 $3.73
2011 $4.07
So I’d beg to differ, even junk food isn’t as cheap as it used to be. Still could be worse a Big Mac is $8.06 in Switzerland.
frankie
Gotta love your post.
It’s weird, I can’t stand burgers, but love a good meatloaf treat once a year. Maybe it’s the nostalgia.
You’re forgetting Frankie, that food doesn’t count in the CPI.
Sarcasm off…
Bureau of Labor Statistics (BLS) Inflation adjusted price calculator:
http://www.bls.gov/data/inflation_calculator.htm
From the BLS Calculator:
2.90 USD in 2004 equals 3.47 USD today.
Your forgetting the $.99 value menu.
Also that the .99 double cheeseburger is now the McDouble with only 1 slice of cheese.
“.99 double cheeseburger”
My husband likes those damn things. He buys 2, tosses one set of buns, and makes one sandwich out of them. Men must have stomachs made of steel. Yuck.
Some of you have heard this argument from me before…but at the risk of repeating myself: If you want to make your head spin, read how the CPI measure has changed over the years.
Now consider how it has changed and give some thought to the Case Shiller 1890-present, inflation adjusted home price graph, which floats around here often, and generally shows that: 1) home prices keep up with inflation (the inflation-adjusted trendline is flat for home prices); and 2) we have not yet reached the trendline (we have farther to fall to “correct” vis-a-vis the long term trend).
However, I ask: Which measure was used to adjust for inflation? My understanding is that the CPI was used, which had different methodologies through the years, most notably pre- and post 1981.
If you used the same CPI methods today as you did in 1890, what you would see is that inflation has been running at much higher levels than reported in the official CPI measure since 1981, and, if that consistent method of measuring price levels was applied to nominal home prices from 1890 to today, the Case Shiller graph would show that we have overshot the bottom in terms of home prices.
If you used today’s methods in 1890, you would find inflation was overstated from 1890 to 1981, and that the propensity was for homes values to rise faster than inflation over long periods of time, meaning that the trendline is not flat for home prices, but slowly rising over long periods of time. And, if you applied THAT CPI measure from 1890 to today…again, we have overshot that (rising) trendline.
I expect flames, but I would appreciate a critical mind’s critique of the above logic.
This is a key graph that people point to in support of continuing falling home prices, and I see it as a conclusion drawn from a fatally flawed graph.
If you are smart you can eat dirt cheap! .99 cent tacos on Tuesday all over CA, and I mean CARNITAS!! Bulk rice, beans, eggs, veggies…. eat like a Mexican!!
Realtors Are Liars®
America [AA+] Day: #37
This was posted by Blue Skye yesterday:
but I going to say that you are flirting with one of those once-in-a-lifetime financial disater decisions. If you buy one of these sirens, hang a shingle out front with the word Lorelei.
I know you are simply looking at today’s rent vs today’s mortgage payment. The debt will linger after the correction. Reality is but a distant rumbling in the DC area, for now.
I’m not sure DC is in for such a huge correction. For example, here is
Today’s Crapshack: Good for an empty nester.
http://www.zillow.com/homedetails/2417-Darrow-St-Silver-Spring-MD-20902/37287572_zpid/#{scid=hdp-site-map-bubble-address}
1950 2/1 cutie on 0.16 acre.
May 1996: Sold $130K
Aug 2006: Zestimate $364K
Feb 2002: Zestimate $172K
Aug 2011: Listed $255K
This house will never sell for $255K. I predict that it will sit there until the somebody accepts an offer for the 2002 Zestimate. Even in 1996 houses were selling for quite a bit. I DO expect DC to correct to 2001 prices, but I don’t expect them to fall much more than that; the jobs premium for this area is just too high. Even then, if I buy in the 2002 price range, it will be well within my means.
By the way… the link to the circa 1960 house you posted yesterday. NICE house architecturally. Nearly perfect in all ways….. sq footage, style, materials. It’s too bad there was just one photo and I wondered what shape the interior is. If I could find that house at the right price in the right location I’d buy today.
http://www.zillow.com/homedetails/2630-Norbeck-Rd-Silver-Spring-MD-20906/37277829_zpid/#
I know I know. The street view on googlemap looks nice. The location is pretty good too, but the street is a little busy. My reservations were that it was on septic system (do-able, esp. with city water) and oil heating (gives me the creeps). The price is about $40K over what I want, but I could afford this if it didn’t need much fix-up. If it’s still available in six months…I’d want to see the inside. Unfortunately it’s a short sale, which means lowballing is probably out.
That’s the one~ Way overpriced but the lines and size is what I’m looking for.
“If it’s still available in six months…I’d want to see the inside. Unfortunately it’s a short sale, which means lowballing is probably out.”
And, because it is a short sale, it probably WILL still be available in six months!
And, because it is a short sale, it probably WILL still be available in six months!
Situated along my bicycle route to the library is a house that was sportin’ a short sale rider beneath its “for sale” sign. And thus it was for many months.
A few weeks ago, I noticed that the signage had disappeared. Hmmm, I thought. Perhaps that short sale had gone through and the house will soon have a new owner. Looking forward to that. I think I’ll stop and introduce myself.
Well, no one moved in. And this past Saturday, I noticed something tucked into the driveway gate. A pizza delivery flyer? An ad for cable TV installation? A yardwork guy looking for jobs in the neighborhood?
Turned out to be a Notice of Trustee Sale. Which means that the short sale attempt came up short, and that the house will soon be sold at auction on the courthouse steps.
I liked the photo with the open refridgerator and the two beers inside.
They must be targeting a certain demographic.
oxide - You’re right, it is a cutie. Cute little cottage priced to sit. I liked the fireplace, but the kitchen is boring. I’ll say one thing, very nice yard, but it needs some imagination on the curb appeal. Thanks for another great share.
An explosion at a Nuclear Plant in France is being reported on GMA.
I hope this is a minor incident as there was not much detail w/the report. Markets already down hard in Europe before the news.
Palmy I’m keeping you in my thoughts this week. We’ll get through it.
It’s a reprocessing plant, not a power plant.
In other words, can’t happen in America.
Maybe we should leave out the “nuke” part until we find out exactly what exploded. There are a thousand things that can explode in any industrial facility.
“A furnace exploded at the Marcoule nuclear waste treatment site in southern France on Monday, killing one person, but there was no leak of radioactive material outside the furnace, France’s ASN nuclear safety watchdog said.
The furnace that exploded is used to melt waste with levels of radioactivity ranging from low to very high, ASN said.
It did not immediately give a reason for the blast but said it was completely contained within the furnace. Staff at the plant reacted to the accident according to planned procedures, the watchdog said.”
m s n b c
“Palmy I’m keeping you in my thoughts this week. We’ll get through it.”
Aww, yer a sweetheart. I’m feeling less tense today, glad all the 9/11 anniverscary bloviating is over (for the most part)
Aww, yer a sweetheart. I’m feeling less tense today, glad all the 9/11 anniverscary bloviating is over (for the most part)
TTYTT, I blew off all forms of 9/11 observance yesterday. Reason: I had more than enough terror in my life on Saturday night.
It all started out quite innocently. Pedaled the bicycle to Downtown for a night of chatting with friends, visiting open houses and art exhibits, and watching street performers. Yes, it was time for Tucson’s monthly 2nd Saturdays Downtown.
Well, at about 6 p.m., Mother Nature decided that she was not at all amused with all of this merry-making in the heart of our city.
So, she sent us a huge, noisy thunderstorm. So much for sitting at a local organization’s booth to chat up passersby. I told the guy running the booth that I was heading home.
I walked the bike two blocks east, and could go no further because heaven opened up. The streets flooded. And I was forced to take refuge under a leaky store awning.
After the rain slowed down, I continued north toward home. I took back streets, hoping there would be less traffic, and that was a good guess. But the flooding was horrendous. Ended up taking refuge on a porch just a few blocks away from that aforementioned booth.
I finally decided to brave the waters rushing down the street in front of the porch and they really weren’t that strong. I was lucky. People have drowned in the streets here.
An hour after I left the booth, I got home. Damn glad to be here. Haven’t left since Saturday night.
Don’t you be doing anything foolish young lady, be a tragedy to lose you; not got over losing Oli yet.
(Frmrly Seattle Renter) What happened to OlyGal? I really miss the intelligent and fun banter we had on here back around ‘06 or ‘07 when I used to post more.
Her being gone is part of the reason I don’t post much anymore….
A very sad car accident I believe.
OlyGal was taken by an accident, but I don’t think the type was disclosed.
I’m pretty sure it involved a ladder somewhere between her house and the shore…no car.
It’s nice to see her legacy lives on.
According to Laurence, the project was originally championed by local resident and south Sound conservationist Gayle Broadbent-Ferris who died in an accident in 2009
http://griffinneighbors.blogspot.com/2011/07/conservation-of-pocket-estuary.html
http://www.funeralalternatives.org/Obit_Results.asp?ObitKey=1642
That is nice to see. She was definitely the highlight of the blog when she was here. I propose we all honor her by trying our best to make fun of crackpot realtwhores and the like from the REIC as often and as thoroughly as possible. I think she would have liked that.
Oly’s picture is giving me a serious case of garlic envy. I wish I could grow ‘em like that.
And I can just see her, kayaking into that estuary whilst wearing her tiara and singing. Nice to see that it’s now under protection.
RIP, Oly.
Oly is dearly missed.
“Oly”
It’s amazing how so many who only knew her through interacting with her on this blog so cherish her memory. I feel like I knew her personally, and can’t overstate how sad I was to learn of her tragic death.
Az Slim-
Glad to hear you’re alright. Mother Nature vs. Humans. She wins every time.
You are one tough chick, AZ. But I’m glad to hear that nature didn’t test you too harshly that night.
You are one tough chick, AZ. But I’m glad to hear that nature didn’t test you too harshly that night.
The amazing thing was how calm I felt. It was as if my mind was on scenario-running mode: Okay, I can’t go north on 6th Avenue. How about 7th? Nope. Can’t do that either.
And look at the water running along 5th Street. Could I cross that? Nice high and dry street on the other side. Okay, let’s just dip a foot in and see what happens. I dip a foot in. Strong flowing water, but not impossible. So, run and push that bike — go!
Made it across. Now, just ride the 6th Avenue sidewalk (which was higher than the flooded street) and go up to University Boulevard. How’s it look? Pretty good. Cross it and keep going north.
I had to do quite a bit of sidewalk riding to avoid the flooded streets, but on a rainy night, who was out for a stroll? No one.
Oh, the last mile was on flood-free streets. Lots of lightning to the north, but nothing close by. That’s good.
Then, finally! My house! The big tree out front, looking bigger and happier than ever! I’m home!
Consumer Confidential: BofA layoffs, wiener war cease-fire
September 9, 2011 | 10:24 am
…
–And the Bad Timing Award goes to Bank of America, which, a day after President Obama called for more job creation, is reportedly on the verge of laying off about 40,000 workers. The Wall Street Journal says officials at the bank have discussed cutting as much as 14% of the company’s workforce. BofA has already cut at least 6,000 jobs this year as part of its reorganization under CEO Brian Moynihan, who has been in the top spot since last year. Moynihan earlier this week unveiled a shakeup in the bank’s management ranks. BofA, still struggling under the weight of toxic mortgage loans, says the moves are part of “delayering and simplifying” operations. It has more employees than most of its major competitors, and top executives have stressed the need to eliminate redundancies resulting from past acquisitions.
…
The Great Contraction rolls on and the financials are leading the way.
“…..reorganization….”, “…..delayering and simplifying…..”
Ahhh, for the good old days when they used words like “layoff”, “fired”, and “termination”.
New paradigm =
“right-size”,
“reduction in force”,
“streamline”…..
…….help me out here people…..
work for reduction - wfr. Usage example: “Did you hear that Bob was woofered?”
An English term would be layed off, we also use layoff
but my personal favourite is he’s been sacked
The probable derivation of this phrase is an allusion to tradesmen, who owned their own tools and took them with them in a bag or sack when they were dismissed from employment.
which has now morphed into he’s been bin bagged (Management can’t afford to give them a proper sack any more)
being made redundant is one of my favorites from the UK.
when did “laid” off morph into “layed” off? I didn’t think there was such a word.
I stand corrected there isn’t. Always amazed me how I passed by English O level; never could spell.
I had a boss around 1994 who thought the term “right-size” was really clever. He told us (his underlings) about it with a moronic glint in his eye. What was really stupid about it was that he was layed off from Motorola just a few years before that after about 20 years of service. He was such a jerk.
Overseas markets melted down last night
Greek 1 Year Bond Yield at a stunning 111.7%
Some play the Door’s “This is the end…”
What will happen if Greece defaults? I mean, really, what will happen. Lay off the rest of the employees? No more gov dole and people starve in the streets? No electricity? No olive oil? Hospitals shut down? Public transport grinds to a halt? What?
Somebody gets stiffed?
Similar to what happend when Lehman went belly up. A bunch of banksters sitting on worthless paper crying for taxpayer funded bailouts. Yeah, the taxpayer, the same guy whose job was outsourced to Chinadia….remember that guy?
The banksters were able to link (or at least make everyone believe it) the savings of the public with their casinos and bad loans.
So, that’s why banks need to be heavily regulated. If they are going to be treated as the cornerstone of the economy, they need to be heavily regulated, like a utility. So they can’t credibly take the economy hostage.
Now, I do appreciate that the people who control the regulators are politicians. There are few more feckless and venal breeds than politicians. But, at least we can vote politicians out. We can’t vote out corporate CEOs.
What will happen if Greece defaults? I mean, really, what will happen. Lay off the rest of the employees? No more gov dole and people starve in the streets? No electricity? No olive oil? Hospitals shut down? Public transport grinds to a halt? What?
1. No one will buy their bonds.
2. They immediately run out of money
3. They must live within their means (ie - they can only spend what tax money is coming in).
4. The big question is - do they stiff the banks? Or do they stiff their massive welfare system.
5. If they do stiff the euro banks - these banks implode along with every other economy in the eurozone.
6. Think a Lehman for every country
7. Of they stiff their massive welfare system - think massive riots and a change in FORM of government
Think coming to a street near you a Greek. An exaggeration I know, but poor people move in search of a better life. I suspect the Greeks will migrate to Western Europe and Australia. The Portuguese are migrating to counties like Brazil and other former Portuguese colonies.
“LISBON, Aug 22, 2011 (IPS) - Thousands of young people from Portugal are joining an emigration flow that never trickled to a stop but is turning into an exodus now due to the severe economic crisis plaguing this southern European country. And the main destinations of those looking for a better future abroad are former colonies, especially Brazil”
http://www.ipsnews.net/news.asp?idnews=104852
With no currency they cannot buy oil/gasoline. The economy will collapse in the short term.
I recently read that Drachmas were being circulated in limited supply. Sorry I cannot offer a link.
Arab Spring comes to Greece.
It’s been hopping all summer in…
…Israel.
Seems that the Israelis aren’t happy about being unemployed. So, they’re taking to the streets like their Arab neighbors did this past spring.
From Chuck Butler at the Daily Pfennig Newsletter:
“The reason I say that a Greek default will have an adverse effect on the U.S. markets is something I told you a couple of months ago, regarding the credit default swaps that were sold. Guess who wrote those insurance swaps? U.S. institutions. In fact. On June 17th, I wrote in the Pfennig: “Apparently, Eurozone banks own 70% of the Greek debt (bonds). Which would be very damaging to the Eurozone, and euro for that matter. But. 50% of that exposure is insured against default? And who issued that insurance? US institutions. So, for everyone here in the US that’s rooting for Greece to fail, so you can then pound your chest and say, “See. I told you the Eurozone would collapse” you had better put that insurance news in your pipe and smoke it.”
Likely Greek Default Breeds Uncertainty
9/12/2011 7:44:42 AM
Euroview: A Greek default is now a near certainty. But this, in turn, is breeding uncertainty across Europe as governments try to figure out what the second and third-round effects will be on their banking sectors.
Uncertainty is certain.
alpha- well said. I like that.
I’m pretty sure it’s true.
LOL
A Greek default has been a certainty for a long time. It’s only the timing that’s become less uncertain.
The uncertainty could be lifted by a declaration that the bondholders will be taking a bath.
How about the insurance companies refusing to pay based on the paper being mis-rated ,or maybe let the insurance companies default when they don’t have enough money to pay .
A Greek default could trigger some nasty ripple effects through the international banking sector, followed by the customary choice between sovereign bailouts or systemic collapse.
BUSINESS
SEPTEMBER 12, 2011
Woes at French Banks Signal a Broader Crisis
BY DAVID GAUTHIER-VILLARS AND NATHALIE BOSCHAT
PARIS—France’s largest private-sector banks will likely suffer further credit-rating downgrades this week, people familiar with the matter said, the latest sign that the debt crisis on the euro zone’s periphery is slowly infecting the core of the region’s financial system.
Moody’s Investors Service Inc. is expected to cut the ratings of BNP Paribas SA, Société Générale SA and Crédit Agricole SA because of the banks’ holdings of Greek government debt, these people said.
…
Noticed that Greece will start collecting a new property tax by putting it on your electric bill. Pretty slick way to collect from the tax dodgers eh? Using the electric system is brilliant! In today’s modern electronic world this is the next best thing to taxing the air you breathe. I wonder if it includes a way to go after off-grid users with their own power (solar/wind)?
The ROI on Solar power becomes even shorter.
Germany and Greece flirt with mutual assured destruction
Telegraph.co.uk
Germany’s EU commissioner Günther Oettinger said Europe should send blue helmets to take control of Greek tax collection and liquidate state assets. They had better be well armed. The headlines in the Greek press have been “Unconditional Capitulation”, and “Terrorization of Greeks”, and even “Fourth Reich”.
Mr Schauble said there would be no more money for Athens under the EU-IMF rescue package until the Greeks “do what they agreed to do” and comply with every demand of `Troika’ inspectors.
Yet to push Greece over the edge risks instant contagion to Portugal, which has higher levels of total debt, and an equally bad current account deficit near 9pc of GDP, and is just as unable to comply with Germany’s austerity dictates in the long run. From there the chain-reaction into EMU’s soft-core would be fast and furious.
Let us be clear, the chief reason why Greece cannot meet its deficit targets is because the EU has imposed the most violent fiscal deflation ever inflicted on a modern developed economy - 16pc of GDP of net tightening in three years - without offsetting monetary stimulus, debt relief, or devaluation.
This has sent the economy into a self-feeding downward spiral, crushing tax revenues. The policy is obscurantist, a replay of the Gold Standard in 1931. It has self-evidently failed. As the Greek parliament said, the debt dynamic is “out of control”.
The inherent corruption, bloated public sector, absence of industry and complete inability to collect most taxes doesn’t help. Greece had massiv financial aid flowing from the EU for the past 20 years, they chose to finance a bloated public sector and corruption instead of moderninzing their economy. Now they reached the end of the line. Same goes for other PIIGS countries. The US is not far behind, don’t fool yourself.
But wait, there is more! Of course various financial institutions across EURO-land that financed this insanity (France, Germany, UK) will blow up as well.
As a special bonus I throw in some CDS by AIG and BoA that will come due. Take a wild guess who has the priviledge of paying for those? I give you a hint, it ain’t the bond holders of AIG or BoA.
As you can see, there’s something it for everybody. The feces is about to hit the fan. Position your private investments accordingly!
” It is no measure of health to be well adjusted to a profoundly sick society .” Jiddu Krichmanurti
I haven’t been posting lately because i have been studying
medicine and the health care system .
Heh! I could tell by reading the article that it was our old friend Ambrose. He’s always been a bit of an alarmist, but his (Keynesian) economic views are spot on.
But German officials really shouldn’t be talking about sending troops to other European nations to seize assets and tax revenue. It leads to unpleasant historical allusions.
It explains the helicopters in the opening scene of “Apocalypse Now”….the ones where you hear the rotor blades as “The End” is playing.
Those weren’t AirCav helicopters. They were Bernanke’s helicopters.
“Bailouts………..$##t, were still doing bailouts……..”
“Every minute I stay in this room, I get weaker, and every minute Blankfein squats in the bush, he gets stronger. Each time I looked around the walls moved in a little closer…”
Who knew a credit card was the heart of darkenss?
Live well on less: 6 ways to save in retirement
http://money.cnn.com/2011/09/12/retirement/retirement_savings_strategies.moneymag/index.htm
“Bob and his wife, Betty, then 47 and a preschool teacher in their hometown of Scottsdale, took a hard look at their finances. With $850,000 saved, they were short of their $1.2 million target. To retire a decade earlier than planned, they calculated that they needed to live on $45,000 a year, less than a third of their $150,000 income. ” [cue the tiny violins]
Six ways:
1. Fine tune your budget (you’re not paying kid tuition anymore!)
2. Turn time into money (do your own repairs, fly midweek, cook your own meals)
3. Downsize your home (”John, now 63, and Mary, 61, were both laid off in 2009, three years before they had planned to stop working. By selling their home in Washington, D.C., the Gobees were able to pay off their mortgage and credit card debts and have enough left over to buy a home in central Pennsylvania with cash. ” Sounds suspiciously like Oil City Plan)
4. Move to a lower cost area (oil city plan AGAIN)
5. Work part-time
6. Become debt free. (pay off your mortgage.)
In conclusion, No Sh!t Sherlock. Did these geniuses at CNN Money figure out how all these retirees in their mid-50’s are going to pay for health insurance?
“Did these geniuses at CNN Money figure out how all these retirees in their mid-50’s are going to pay for health insurance?”
Nope.
I know a number of 50 somethings who would be glad to slow down (work part time, etc.) and get out of the way of the bright young things, but are trapped by the need for their job benefits.
And this is where a Medicare buy-in and/or Public Option would jump start the economy far quicker and better than any plan put forth by any Congresscritter.
I realize that there will be Exchanges in 2014, but I fear that the private health insurance companies will simply sort-of-collude and try to out-do each in offering the junkiest insurance for the highest price for this age group. Free-market competition does not work for a “needs” industry.
Free-market competition does not work for a “needs” industry.
Seems to work great for:
Food
Gasoline
Transportation
Over the counter medicines
etc.
Or every sector that has not been completely taken over by the government…
Food, gasoline, and transportation have never been anywhere close to “free market”.
My in ability to buy Sudafed makes me doubt over the counter meds.
Food = Worldwide agricultural subsidies/protectionism
Gasoline = OPEC oil cartel….before that, the Texas Railroad Commission……(OPEC soon to be displaced by commodities speculators/investment banks)
Transportation = Government subsidized infrastructure
Over the Counter meds = Maybe
There are also famines that erupt every so often in Ethiopia, Banglagesh, etc. These places have very free markets in food.
Food = Subsidized
Gasoline = Subsidized
Transportation = Subsidized
I don’t know about OTC meds, but I wouldn’t be surprised if it were somehow subsidized. “Free” market works even better when it’s riding on the back of “dee gubmint”. I’m not slanging you; it took me a few years to figure out the con that you’re falling for too.
Oxide
They will offer crap insurance ,I have already seen those policies ,they are junk policies at high prices .
As we proceed with this meltdown ,the American Citizens are offered less value for the dollar by Monopoly America .
I realize that there will be Exchanges in 2014, but I fear that the private health insurance companies will simply sort-of-collude and try to out-do each in offering the junkiest insurance for the highest price for this age group. Free-market competition does not work for a “needs” industry.
Since my oops-I-shouldn’t-have-done-that dalliance with the life insurance industry, I’ve been paying more than a little bit of attention to insurance.
From my reading, I’ve concluded that insurance works best when it is seldom needed. Like car insurance. You’ll probably be fortunate enough not to need it. Same for your homeowner’s policy. Good to have in case the house burns down, but it probably won’t.
Then comes health insurance. Here’s where the insurance model breaks down: Everybody gets sick. Which means that, at some point, we all will need to make a claim on the policy. Which the company will fight tooth and nail. And the resulting exposure to high costs will leave us even less protected.
I seem a similar scenario playing out in the long-term care insurance market. The policy issuers are finding out (the hard way) that the number and amount of claims are way higher than they expected.
So, they’re really cranking up the rates. And customers are dropping the policies. It’s the start of an insurance death spiral, and I predict that the same thing will happen in the private health insurance market.
Since few HD policholders will meet their deductibles I suppose that many people will simply drop out and hope they don’t land in the hospital.
Since few HD policholders will meet their deductibles I suppose that many people will simply drop out and hope they don’t land in the hospital.
I think I came face to face with that scenario on Saturday afternoon. I was on my way to 2nd Saturdays Downtown when I came across a fellow bicyclist who was sprawled on the sidewalk.
Apparently, he’d just wiped out on the trolley tracks and had managed to drag himself and his bike off the street. He was bruised up and somewhat dazed.
He was trying to figure out how to get himself to the hospital and he wasn’t sure he’d be able to ride. He told me that he was having trouble standing.
Well, be that as it may, he pulled himself to his feet and asked me to steady his bike so he could use it as a crutch as he walked to the nearest hospital. That would be University Medical Center, which was about one mile away.
He started hobbling away, thanked me for my help, and I continued on down 4th Avenue. Further down the street, I saw a couple of guys from the 4th Avenue Merchants Association.
They were driving a cart and were out patrolling the avenue for litter, graffiti, etc. I flagged ‘em down and told them about the hobbling bicyclist. They could fit both the injured rider and the bike in the back of their cart. They drove off to find him.
I can’t help thinking that the guy didn’t have health insurance. So, I wonder how he was treated over at UMC.
My nurse friend told me that hospitals are required to treat you, and it’s very common for someone to black out and wake up one day older and $100,000 deeper in debt.
I once read a blog comment like this: “Have you ever seen a bloody and screaming person try to jump out of an ambulance? I have.”
Best health care in the world…. NOT!!!
I still say the US has arguably the “best available” healthcare to those who can afford it. However it doesn’t have the “best availability” to the general consumer.
Why wait to you retire to move hundreds to thousands of miles from friends and family? I have never understood this. If I wanted to retire in an area I’d find a way of moving there years before I planned to retire to establish a life style.
I guess I’m different but retirement to me never meant cruises and yearly trips to France.
They do it because it makes them appear to be rich. They have “arrived”. They can come back and show pictures of their new house and the golfing, and such.
Vanity. Everything is vanity.
Or they were forced to live their working lives somewhere they didn’t like because that was where their job or business was.
When they retired, they could finally GTFO.
Eliminate or reduce your transporation costs. If you don’t HAVE to go to work, you don’t HAVE to get somewhere. Even in a small town, you can probably get by with a bicycle or walking, particularly if you have bus service or rental cars available for occasional use.
No rent if you own and have paid off. Limited housing operating costs if you downsize. Limited transportation costs. Limited food costs though home cooking.
How much money do people really need, and how much more are they pushed to spend.
“…..bus service or rental cars……”
Maybe in “small towns” in your neck of the woods. Out here in BFE? Suburbs with 150K people don’t have bus service/mass transit/cabs. Ditto rental cars.
There’s always motorized scooters/wheelchairs. Or riding lawnmovers.
For me it was a trade-off of buying a smaller home closer to town (a city of 80,000), or double the square footage and move further out. I chose the former and fortunately can bike everywhere. When I put it all on paper, I figured I could rent a car for five days per month and it would still be less cost than owning, maintaining, insuring a vehicle. And that was with no car payment.
Problem is, most newer cities, suburbs, exurbs, are horribly designed for pedestrian and cyclist. So a car is necessary, along with the thousands of dollars in annual earnings needed to support it - not to mention the physical and mental impact of ever increasing commuting times. But that all went into my calculation: a four minute bike ride to the office versus a half hour commute via car. What is my free time really worth?
Which group will obama be bombing?
——————–
‘12 die’ in fight between rival anti-Kadhafi groups
AFP - September 11, 2011
TRIPOLI — At least 12 people were killed and 16 wounded when two groups of fighters opposed to Moamer Kadhafi turned on each other in Libya’s west, two officials said on Sunday.
The fighting, which has its roots in ancient rivalries and pitted combatants from the towns of Gharyan and Kikla on the one side and from Asabah on the other, broke out on Saturday, according to the chief of the Gharyan council and confirmed by the head of the military council of Asabah.
The towns are on the eastern edge of the Nafusa mountains and were important centres of resistance to Kadhafi’s forces in months of fighting to oust the strongman.
Which group will
obamaNATO be bombing?“two groups of fighters opposed to Moamer Kadhafi turned on each other”
Gee, no one could have seen THAT coming.
No because there are no tribal divisions in Libya and Islam is a religion of peace.
Humans are tribal by nature.
Ikea Cuts Price of U.S. Shelves as Outlook Dims
By Scott Hamilton and Kristian Siedenburg - Sep 11, 2011 7:01 PM ET (bloomibergi)
“Ikea, the world’s biggest home- furnishings retailer, has slashed the price of its Billy bookshelves in the U.S. by 17 percent…
With unemployment above 9 percent and housing starts about 73 percent below a 2006 peak, confidence among American consumers is at the lowest in more than two years.
An index compiled by Bloomberg News showed the price of Billy shelves fell from a year earlier in 21 countries served by Ikea relative to a global average. The biggest decline on the index was recorded by China, with a 27 percent drop. “
Impact of e-readers?
I got two bottles of glen livet scotch yesterday at costco for about $20 each.. used to be $40 a pop. Hamburger meat was $3/lb. used to be $1- $1.50 *maybe* $2 . Deflation in wants inflation in needs.
worst single-malt on the planet.
Sept. 12, 2011, 8:26 a.m. EDT
Bank of America, Citi sell off in preopen trade
NEW YORK (MarketWatch) — Shares of Bank of America Corp. (BAC -3.73%) and Citigroup Inc (C -3.89%) each fell almost 4% in preopen trading on Monday, leading a broad decline in the financial sector after growing fears of continuing financial crisis in Europe hit the U.S. Shares of J.P. Morgan Chase & Co. (JPM -2.68%) and Wells Fargo and Co. (WFC -2.72%) also dropped. French stocks fell sharply on Monday and the banks there bore the brunt of it. France’s CAC 40 index (FR:PX1 -4.97%) fell 4.5%. The losses included a 13% drop for BNP Paribas SA [FR: BNP] amid reports that Moody’s Investors Service is preparing to downgrade France’s biggest banks because of their exposure to Greece.
Witnessing the return of risk premiums is about as fun as undergoing a root canal: Not much.
Risk Premium Worthless, Convoluted
By: Eric Falkenstein | Aug 23, 2011 |
One of the most obvious failings of modern finance is that the risk premium that is so central to its core appears fleetingly and parochially. Much of what distinguishes a PhD in finance or economics from a PhD in physics is that the former know a lot more about utility functions. Yet anyone working in finance sees this is hardly an intellectual asset that makes them more valuable, precisely because any risk premium derived via Stochastic Discount Functions and the like aren’t very convincing to someone wanting to invest real money. The failure of this approach is best reflected by the absence of any value to finance/econ-specific quantitative rigor, which is mainly built around pricing kernals and utility functions. I know a lot about these, and know they are a waste of time.
…
http://market-ticker.org/
Global economies built on rigged casino markets starting to look shaky.
SEPTEMBER 9, 2011, 3:43 P.M. ET
Canadian Bonds Higher On Weak Domestic Data, Greek Debt Fears
By Karen Johnson
Of DOW JONES NEWSWIRES
TORONTO (Dow Jones)–Canadian government bond prices extended their gains for a second day Friday amid intensifying worries about a Greek default scenario and growing pessimism about Canada’s economy.
Canada’s two-year bond yields fell to 0.777% from 0.873% Thursday. The 10-year bond yield fell to 2.102% from 2.216%. Bond yields, which move inversely to bond prices, fell across the curve.
Discouraging monthly jobs data in Canada showed a net loss of 5,500 in August from the previous month. The market was expecting a net 21,500 new jobs. The country’s jobless rate also ticked slightly higher to 7.3%, from 7.2%.
The data Friday delivered another blow to the already battered market confidence, as the Canadian jobs engine has been an economic stalwart, outshining most of its global peers. Some 164,000 more people are now employed in Canada’s labor force than were at its peak before the recession.
Adding to the Canadian economy’s worries were weak productivity data, which showed that output per hour worked in the second quarter dropped by the biggest amount in five years.
“Weak jobs and weak productivity are a depressing combination,” said Douglas Porter, deputy chief economist at BMO Capital Markets.
…
So people are willing to pay more for Canadian bonds and get lower yields because the economy is weak? I think the author is trying to find a correlation or causation where none exists.
BUSINESS
SEPTEMBER 12, 2011
Volcker Rule Delay Is Likely
By VICTORIA MCGRANE And AARON LUCCHETTI
U.S. financial regulators are likely to miss an October deadline for the Volcker rule, a hotly contested part of last year’s financial-overhaul law that limits financial firms from trading with their own money.
According to the Dodd-Frank law, regulators have until Oct. 18 to “adopt rules to carry out” the provision. But regulators haven’t agreed yet on even a draft proposal of the rule, which is named for former Federal Reserve Chairman Paul Volcker, who first proposed the trading curbs.
A proposed rule might be released as soon as this week, according to people familiar with the situation. After that initial step, the draft version of the Volcker rule will go out for public comment, most likely for 60 days.
Regulators can make changes based on comments before issuing a final rule. That means the rule likely won’t take effect for months.
The slip is a sign of the Volcker rule’s complexity and controversy.
…
As I’ve said before, the public’s savings must be unlinked from the Wall Street casino operations.
The Wall Streeters and politicians write abstruse and highly obfuscated rules. In programming, it’s like writing code, then running through an obfuscator so no one else can understand. But you know what it’s doing.
The problem is, the rest of us have to pay for this rule writing. Politicians don’t care as long as they get paid. The Wall Street execs make sure they get a healthy cut of the arbitrage profits. And the wealth is ultimately sucked out of the citizenry.
Or you can just use a real compiler that generates machine code as opposed to P-Code or Byte Code.
http://www.bloomberg.com/apps/quote?ticker=GGGB1YR:IND
Greek one-year bond yield 111%. Coming soon to a Keynesian economy near you.
Good thing there aren’t any Keynesian economies near us.
Just the one Greenspan, Paulson, Bernanke, et al. have been running for the past several administrations.
In all fairness, the extent to which they indulge in anything resembling Keynesian economics is directly proportional to their desire to save their skins (preserve the status quo).
None of the listed clowns understand Keynesian economics. They just mention his name to try to legitamize their actions.
I doubt any of those guys listed would use Keynes’s name to justify or explain their actions. They’re all monetarists, and would likely refer to Friedman for theoretical justification. It’s all about keeping the money flowing to the Big Boyz:
Ben Bernanke Federal Reserve Board Speech
On the occasion of Milton Friedman’s 90th birthday
“As a personal aside, I note that I first read A Monetary History of the United States early in my graduate school years at M.I.T. I was hooked, and I have been a student of monetary economics and economic history ever since…
“As everyone here knows, in their Monetary History Friedman and Schwartz made the case that the economic collapse of 1929-33 was the product of the nation’s monetary mechanism gone wrong. Contradicting the received wisdom at the time that they wrote, which held that money was a passive player in the events of the 1930s, Friedman and Schwartz argued that “the contraction is in fact a tragic testimonial to the importance of monetary forces…
“Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.”
Sounds like a game over number to me.
Sept. 11, 2011, 7:22 p.m. EDT
When Will Pessimism Bottom Out?
By 24/7 Wall St.
There has to be a bottom to the current pessimism about the economy. US citizens have a pervasive sense of doom that affects the evaluation of the present and the immediate future. Businesses act as if their profits are in as much danger as they were three years ago.
Even during The Great Depression, some businesses began to hire and some investors bought stocks. There are historians who argue that WWII was the cause of some of the resurgence of the US economy, but the mobilization did not occur until 1942. A modest amount of GDP recovery began in 1939.
Most recent research from the widely regarded opinion poll firms which includes reports from The University of Michigan, The Conference Board, and Gallup show that confidence and consumer concerns are down to lows near where they were at the depth of the 2007-2009 recession.
The latest results from a carefully followed poll-the Discover U.S. Spending Monitor done by Rasmussen Reports-shows that “Consumer confidence fell in August for the third straight month,” as the measurement “dropped to its lowest level since March 2009. Since January, the results of the Monitor poll have been in a free fall, dropping nearly 13 points over the last eight months.” Sixty-four percent of those asked for the latest Monitor poll rated the American economy as poor. But, this means that when people who have no opinion or don’t know what they think are taken out, nearly a third of Americans see the economy in at least relatively good shape.
…
“There has to be a bottom to the current pessimism about the economy.”
the “ruby slipper” theory of economics.
LOL! As we head beyond the postwar comfort zone.
“If it didn’t happen in my lifetime, it just can’t happen.”
One man’s “pessimism”, is another’s “seeing reality, and dealing with it”.
Very few people have any cash to spend. Those that do, aren’t spending it in the US. And they recognize they are in a buyer’s market, so any they do spend is buying stuff/labor at razor-thin profit margins for the seller.
All the trend lines indicate that you will be doing good to keep your current income. Making 20% less in two years is a distinct possibility that everyone has to consider. But nobody is talking about making the banksters take a 20% discount on what people owe them. The 5%ers are threatening to take their balls and go home, if anyone dare raise taxes on them. So the turnips will continue to be squeezed.
Government has pissed too much money away on fighting wars, frisking passengers, and baling out banksters. Now, it’s gridlocked.
I see nothing coming down the pike to change this reality anytime soon. Except maybe 40 million people dying off prematurely. Except that will screw the housing market.
The pessimism will bottom when people actually FIX something. The time to be optomisic is NOT when the last elevator cable is making twanging noises as the strands snap and the other passengers are doing jumping jacks because they weigh less when theyre not touching the floor.
The time to be optomisic is NOT when the last elevator cable is making twanging noises as the strands snap and the other passengers are doing jumping jacks because they weigh less when theyre not touching the floor.
Nice :-).
From the Denver Post:
“The number of homes listed for sale in Denver is down by about half since the frenzy surrounding the April 2010 deadline for a homebuyer tax credit, Ackerman said.
The inventory of homes available for sale in metro Denver in August was down 23 percent from August 2010, and down 5 percent from July, according to statistics compiled by independent real-estate analyst Gary Bauer.
There were 18,164 homes and condos listed for sale in metro Denver, compared with 23,615 in August 2010.
The median home price in metro Denver fell to $235,000 in August from $239,000 a year earlier.”
Per city-data DOT com, Denver median household income is $46,410, Colorado median household income is $55,430. Price to income ratio is at least 4.2 using the statewide number. Guess I’ll have to keep throwing money away on rent while my debt slave co-workers barely keep afloat despite their free cheese tax credit last year.
The number of homes listed for sale in Denver is down by about half since the frenzy surrounding the April 2010 deadline for a homebuyer tax credit, Ackerman said.
Here in Tucson, I noticed quite a flurry of listings in late 2009/early 2010. And it was like the proverbial sock hop, when only the prettiest girls got asked to dance.
In the summer of 2010, I still saw a few of the “didn’t get picked” houses on the market. Most of them are no longer listed. Methinks that the owners are waiting for the banks to take ‘em back. There’s a lot of that going around town.
Slim,
It could be that they aren’t making a payment at this point, socking away the money. I assume AZ is non-recourse state (on the 1st).
Many homeowners I chat with (Ca), decided to stay free and then walk.
This past summer I saw very few “For Sale” signs in my neighborhood. I guess that those who can still pay are staying put, waiting for things to “bounce back”.
They might be waiting for a long time.
hmmm…it appears the coallpse of the Eurozone has already been “priced in”.
They’ve used up their quota of “Stocks fall on European debt concerns” (or was it “debt jitters” I don’t remember) headlines.
Global corps reporting world data are masking their disposable higher than normal cash stocks and profitability which WS is buying, albeit at 40% less volume. Foreign cash repatriation is not easily done so this WS buying premium will be recognized soon as margin calls accelerate. Another major contributant to a weakening stock market.
A Greek default - then Portugal - then -
With housing not yet down to it’s real level -
I cannot believe how prices have remained so high compared to real life.
If you’d like to understand why the government - aka politicians - does what it does, take a look at the money flows:
http://www.opensecrets.org/orgs/index.php
#4 on above linked list National Assn of Realtors
The National Association of Realtors represents the nation’s real estate industry. While the bulk of its issues tend to deal with property management and control, the group also lobbies members of Congress and the administration on virtually every issue facing business, including health care reform, bankruptcy legislation and tax cuts. One of its biggest issues in recent years has been a move toward deregulating the financial services industry. For years, real estate agents have successfully warded off attempts by banking interests to delve into the sale and management of property. One of the keys to the group’s success: It supports Democrats and Republicans almost equally.
“One of the keys to the group’s success: It supports Democrats and Republicans almost equally.”
And here we all thought they were stupid. BUT… they’re still liars.
“For years, real estate agents have successfully warded off attempts by banking interests to delve into the sale and management of property.”
So the burgeoning shadow inventory must make them nervous for reasons beyond the potential for price deflation.
From the UK Guardian:
Lehman Brothers: three years of denial
Lehmans crashed for a simple reason: an ignored $8tn housing bubble. But don’t expect the Greenspan sycophants to admit it
“As we prepare to celebrate the third anniversary of the Lehman Brothers bankruptcy and the ensuing financial crisis, it’s a good time to assess the situation and ask what has changed. The answer is not encouraging.
Very little has changed about either the realities on the ground or the intellectual debate on economic issues in the last three years. The “too-big-to-fail” banks are bigger than ever as a result of crisis induced mergers. Financial industry profits now exceed their pre-crisis share of corporate profits, and executive pay and bonuses are again at their bubble peaks.
None of the executives who pushed and packaged fraudulent mortgages has gone to jail. Even those who have faced civil actions, like Countrywide’s Angelo Mozilo, have almost certainly still come out ahead after making large payments to settle suits.
And all the top policy people who guided us to this economic disaster are still doing just fine. When former Fed Chairman Alan Greenspan isn’t collecting his seven-figure salary from Pimco, the country’s largest bond fund, he is sharing his wisdom with the world on the Sunday morning talk shows.”
Hey polly, what was that brand of furniture that you liked so well? I remember liking it as well but can’t recall the name… Thanks!
Pompanoosuc
You can find them at pompy.com.
Thanks!
Yup. That is it. I had a party a little while ago and my friends liked the new stuff too.
Funny, when I bought it, I thought it was going to be a year of being a “one woman stimulus package.” A year later I have fixed my car so I can hold out to buy my parents’ current car when they replace it (over two years from now, at least), and I still haven’t replaced the computer (though I did get an external hard drive which has greatly eased my storage issues). But I don’t regret buying the furniture - it is beautiful and just getting nicer as the wood ages. I expect to have it for decades.
How does Japan maintain its gargantuan debt load?
If you google “debt by country”, you get three very interesting Wikipedia links.
One of them is “List of sovereign states by public debt.” Look at Japan:
http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt
Japan’s public debt is 225% of GDP, at the top of the list. Greece is farther down, at 130% of GDP.
Why did Greece break and why is Japan not breaking? I understand only a small portion of their debt is external. Perhaps their population is willing to reach indefinitely into the future to pay for their current consumption? It’s fascinating.
By paying interest rates close to zero, like we do?
Japan owes most its debt to its own people. Greece like us has been borrowing heavily from the outside. Also Japan issues it’s own currency. Not so with little baby Euro.
You nailed it when you said that they lend to themselves. No outsider would lend to them at 2% for 10 years.
Now, according to John Mauldin in his book Endgame, this is about to change. Due to demographics, lots of the aging Japanese are going to be cashing out their Japanese bonds to live on, and in order to continue to fund the government, Japan is going to need to go to the outside world for the first time in a long time to borrow. The Japanese population is shrinking and aging…real problem for them.
Mauldin calls Japan a bug looking for a windshield.
Needing to borrow from the outside world will precipitate a Japanese crisis, that, according to Mauldin, will either result in a Japanese depression (as they cut government spending so they don’t have to borrow from the outside world), or hyperinflation/devaluation of the Yen.
Either way, it’s not pretty.
For quite awhile now, Japan was the 2nd largest purchaser of our debt behind China. As Americans search for a return to “normal” which what they really will mean is a return to the credit fueled days of old this is one support of that old lifestyle that will no longer be on the table.
HOLLYWOOD, FL.
Hollywood officials considering 23 percent tax increase
Hollywood officials are already developing a back-up plan in case Tuesday’s referendum to slash pensions fails. On the table: Increasing the tax rate up to 23 percent.
If Tuesday’s vote to slash the pensions of police, fire and city employees fails, Hollywood commissioners say they’ll be forced to consider raising taxes and fees even higher.
Already, city leaders have proposed raising taxes and fees for the upcoming fiscal year, which starts Oct. 1, by 11 percent. But if voters fail to pass the referendum, the city says, it may have to raise taxes by as much as 23 percent.
That’s just one of the three options the commissioners will discuss Monday night, on the eve of the pension referendum. Other options would be cutting employee salaries or laying off employees.
“I am not a fan of laying off employees,” said Mayor Peter Bober. “I’m more likely to consider tax increases or salary cuts.”
But city leaders are counting on Tuesday’s pension referendum passing in order to avoid more cuts. If passed, the city says it would save $8.5 million; it currently faces a $38 million gap.
A “yes” vote Tuesday means many of the city’s more than 1,200 employees will see drastic changes to their retirement plans, including having to work longer in order to retire and receiving less for their years of service.
A “no” vote means the city will be left scrambling to make up the deficit another way. City leaders have said that their options include raising taxes and fees higher, cutting salaries by as much as 18 percent, eliminating at least 75 jobs, trimming funding to the Arts and Culture Center of Hollywood, and cutting back on after school programs and summer camp offerings.
“No one wants to do this,” said Bober, adding with a $38 million gap there is no way to avoid drastic cuts. “This is a no-win situation.”
But the city isn’t waiting to learn the outcome of Tuesday’s election. At a budget hearing scheduled for 5:30 p.m. Monday at City Hall, the commission will discuss what it will do if the referendum fails. (A second budget hearing will be held Sept. 19.)
Although the city in July set the 2011-2012 tax rate at $7.45 per $1,000 of assessed property — an increase over this year’s $6.71 — that wouldn’t raise the $8.5 million needed.
Now the city is considering setting the rate at $8.53 — a 23 percent increase.
The choice between funding insane public union pensions
or
cutting funding for programs/services that cities used to do
or
raising taxes 23%
Hmmmmmm - this is a tough one
It’s a positive that they’re voting on it, and doing this all on weekdays - unlike those Greek pols that instituted a new property tax on a Sunday in another effort to placate their creditors.
Already, city leaders have proposed raising taxes and fees for the upcoming fiscal year, which starts Oct. 1, by 11 percent. But if voters fail to pass the referendum, the city says, it may have to raise taxes by as much as 23 percent.
=======
This makes no sense…if voters fail to approve an increase in taxes, the city will have to raise taxes even higher? Who is going to not vote to raise taxes and then vote to raise taxes even higher?
The vote isn’t for tax hikes, it’s for pay/pension cuts. Even with cuts, (if the vote passes) they will need to raise taxes 11%. If it doesn’t pass, they will have to fully fund the pensions at current levels. This will require a 23% tax hike (or bankruptcy).
Wiki says Hollywood has a population of about 123k. If 1.2k of that population works for the city I’m guessing their pensions are in deep doo-doo, as they will be vastly outnumbered come voting time.
Incidentally, I note that Wiki also says the median household income (as of 1999) was $33k, which would be somewhere in the mid $40ks today. Again, it’s not looking good for the pensioned crowd.
Whoops, that was for CA not FL. Population of Hollywood, FL is 140k. Median income about $45k. So…same difference.
Kepper: “The US is technically bankrupt, and is falling back into recession. There is no economic force in America to carry the country into the next boom. Standard & Poor’s downgrading of the US credit rating is just the beginning. The government is over-extended. There is no money left to bail the US out during the next recession. The Federal Reserve has kept the economy alive the past two years by printing dollars. The Fed cannot lower short-term interest rates below zero and the more money the Fed prints, the greater the risk of inflation and the higher long-term interest rates move. I believe we are now facing a new up-cycle in interest rates that will cripple the government and the economy and ultimately send stock prices much lower than they are today. We have about six months left before the next phase of this bear market gets underway, ultimately bringing stock prices below their March 2009 lows. The aftereffects of the next leg of the bear market could be much worse than the Great Depression”.
Ernest Kepper: President of Asia Strategic Investment Associates, Japan
“recession. There is no economic force in America to carry the country into the next boom.”
So, no new, junk bond bubble, dotcom bubble, consumer debt bubble, housing bubble?
All we’ve had for the last 30 years is exploding debt and unsustainable bubbles.
Wait until the floor falls out of higher education. Think of how many towns around the country base their economy on smaller private and public colleges/universities. Many of these shouldn’t even be around, including my local school (WWU).
Consumers cut pay-TV service for Web-based programming
By Mike Snider, USA TODAY
After watching their monthly bill steadily increase to $90, the family dropped their pay-TV subscription. But they didn’t totally cut the cord.
Instead, they kept their Internet service from Cox Communications and use it to connect to Netflix for movies and TV shows such as Grey’s Anatomy. “We decided to start trimming where we could, and the cable bill was low-hanging fruit,” says Baldur Benediktsson, 44, a website content manager.
He and his wife, Kristin, also use a Roku set-top box to stream programs to their living room TV. A pair of rabbit-ear antennas receive local over-the-air digital TV signals displayed on 23-inch and 27-inch computer monitors that double as HDTVs.
Cable TV, he says, “gave us too much service for too much money, and we really didn’t need it at all.”
Lots of other viewers out there feel the same way. Nearly every pay-TV provider is leaking subscribers.
The nation’s largest cable company, Comcast, lost 238,000 TV subscribers in the second quarter of this year; and No. 2 Time Warner Cable lost 130,000. Satellite TV provider Dish Network lost 135,000 subscribers. Its larger competitor, DirecTV, added 26,000, but that’s down from the 100,000 it added in the second quarter last year.
Obviously, one of the primary drivers of cord cutting is the nation’s economic woes. The unemployment rate is stuck at 9.1%, and U.S. economic growth slowed to 1% in the most recent quarter. “People that are unemployed or underemployed … have to cut their expenses,” says Norm Bogen, analyst at market research firm In-Stat, “and one of the things they can cut is their pay TV.”
But there’s also tumultuous change going on in the TV business. The number of U.S. homes with traditional TVs has dropped slightly, from 115.9 million to 114.7 million, says research firm Nielsen. Yet, total TV viewing is on the rise, because more viewers are watching Internet-delivered video on a PC, tablet computer or smartphone, Nielsen says.
As Internet video options evolve, an increasing number of pay-TV customers are dropping their service or sliding to a lower tier of service — and using the Web to get their entertainment content. Some, like the Benediktssons, are adding antennas to watch local channels live via free, over-the-air digital TV signals. “The lock over the consumer that the cable companies once enjoyed … has been blown to pieces,” says Michael Greeson of market strategy firm The Diffusion Group.
And $1 per night DVDs at Redbox…
Don’t you have Blue Ray? $1.50 !
Used to be that I could set my watch by the weekly mail promo from Cox Communications. Usually, the thing would show up on Tuesday afternoon. And, even though I only use Cox for my high-speed Internet, their promo has always been about some sort of teevee service.
These days, the weekly Cox promo has dropped back to biweekly. And sometimes, it’s not even that frequent.
But I still fail to understand why they’re charging me almost 50 bucks a month just for high-speed Internet. It can’t be that complicated, now can it?
I am cutting Time Warner Road Runner this month, my internet service bill went from $39.95 a month to $67.00. Switching to AT&T for $24.95 for one year then it goes to $43.00.
Ain’t no way I am paying $67.00 bucks a month for simple internet service. I don’t play games or movies so I can do with a slower speed.
We cut our cable TV around 3 years ago. Also cut our land line phone service, cell only. I don’t fax.
But I still fail to understand why they’re charging me almost 50 bucks a month just for high-speed Internet. It can’t be that complicated, now can it?
Other than the cost of replacing/updating switches once in a while, no, I don’t think it is that complicated. It costs that much because enough people are willing to pay that much and the barrier to entry is pretty high. WiMax could have changed all that and I’ve noticed how they’ve made sure that hasn’t happened.
I would pay $25 per mo for clear local channels plus my choice of 5 cable network stations. For example - ESPN, History Channel, Discovery…..okay make that $15 for clear local channels plus my choice of 3 cable stations. Basically, a la carte cable. Wouldn’t entertain it any other way.
$90 per month for 3 interesting channels and 397 channels of dreck? No way.
i would add AMC and the science channel to that list.
Oh - good point. Add ‘a la cart’ channels to my list of demands.
I wouldn’t take History and Discovery for free, since they morphed into the “Hillbillies Picking through Junk and Operating Dangerous Machinery Network”.
I’d pay for the ESPN family, Turner Classic Movies, Comedy Channel and USA Network, that’s about it.
Gee Comcast (and the Satellite companies),
Do you think it might be time to consider lowering your prices? How about not charging for each separate tv, or at least including service to 3 tv’s as part of my basic service?
Until you do that, you get none of my business.
Wow, the markets sure rocketed up in the last hour of trading…
Yep, they did a fast 180. Must be some better than expected news coming out soon.
A reverse flash crash.
Italy turns to China for help in debt crisis
By Guy Dinmore in Rome (FT)
Italy’s centre-right government is turning to cash-rich China in the hope that Beijing will help rescue it from financial crisis by making “significant” purchases of Italian bonds and investments in strategic companies.
According to Italian officials, Lou Jiwei, chairman of China Investment Corp, one of the world’s largest sovereign wealth funds, led a delegation to Rome last week for talks with Giulio Tremonti, finance minister, and Italy’s Cassa Depositi e Prestiti, a state-controlled entity that has established an Italian Strategic Fund open to foreign investors.
Italian officials were in Beijing two weeks ago to meet CIC and China’s State Administration of Foreign Exchange (Safe), which manages the bulk of China’s $3,200bn foreign exchange reserves. Vittorio Grilli, head of treasury, met Chinese investors in Beijing in August. Italian officials said further negotiations were expected to take place soon.
The possibility of Chinese investment comes at a critical moment for Italy, as markets demand increasingly high yields to buy Italian public sector debt, projected to reach 120 per cent of GDP this year, a ratio second only to Greece in the eurozone.
Mr Tremonti has written extensively in the past about his fears of China’s “reverse colonisation” of Europe. But he has been driven to seek new alternatives as Europe prevaricates over strengthening its bail-out fund and the European Central Bank warns that its month-old bond-buying programme cannot go on indefinitely. In a reflection of Italy’s refinancing problems, the treasury on Monday sold €11.5bn of short-term notes at higher yields.
European analysts were cautious over the outcome of talks. Despite Beijing’s numerous expressions of confidence in the creditworthiness of countries such as Greece and Portugal analysts say Chinese purchases of peripheral European debt have been relatively small.
How much of Italy’s €1,900bn of debt is already held by China is unclear, though one Italian official told the FT that Beijing held about 4 per cent.
What, no Greek debt for China?
Luminant sues EPA, says it will shut two coal units, cut 500 jobs
Posted on September 12, 2011 by Tom Fowler in Coal, Electricity, Energy demand, Environment, Environmental Protection Agency
The largest power plant operator in Texas says it is closing two large coal-fired power units in order to meet pending environmental rules and plans to file suit against the Environmental Protection Agency in an effort to block the rules.
Dallas-based Luminant said today it will close Units 1 and 2 at the Monticello Power Plant in Northeast Texas, taking about 1,200 megawatts of capacity offline, in order to comply with the Cross-State Air Pollution rules that go into effect on Jan. 1.
Unit 3 at Monticello will switch over to using only coal from Wyoming’s Powder River Basin, meaning operations at two nearby lignite mines will stop.
At the Big Brown power plant in Freestone County, Units 1 and 2 will switch over to Powder River Basin coal and the nearby lignite mines will close.
The moves will lead to about 500 job cuts, the company said.
“While Luminant is making preparations to meet the rule’s compliance deadline, this morning it also filed a legal challenge in an effort to protect facilities and employees, and to minimize the harm this rule will cause to electric reliability in Texas,” the company said in a statement.
I wish the EPA would just let them burn all the dirty coal they can shove in their furnaces. The entire area is infested with tea party loyalist so they won’t complain about it. The wind mostly blows the stuff up in to Arkansas, Louisiana and Oklahoma anyway.
Make it stop.
CNNMoney.com
Obama’s housing scorecard
Friday September 9, 12:24 pm ET
By Les Christie
During his speech before Congress Thursday night, President Obama briefly referenced an initiative to help rescue the troubled housing market.
“To help responsible homeowners we’re going to work with Federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4% - a step that can put more than $2,000 a year in a family’s pocket, and give a lift to an economy still burdened by the drop in housing prices,” he said.
Like dropping the interest rate on an underwater mortgage is really going to help.
Bzzzzt. Epic fail.
How would Reagan deal with this perfect storm now that the cheap labor card has been dealt? Make it stop, mommy!
In an attempt to keep the North American economy vibrant, I purchased my first new car in 30 years tonite (had to pay four kids university / professional schooling costs). A CTS to be manufactured with a sun roof. I am like a kid in a candy store right now.
Couldn’t believe the freight costs - $1595, plus administration, plus, plus !
Along the way I remember my friends paying huge monthly lease costs - but I had to pay my kids schooling instead. Now we have four accountants, one with a law degree as well, one with a PhD as well, and one with an MBA as well! All paid for. And my new car paid for too !
Saving for the future doesn’t hurt anyone.
Wegman’s $6 meals to be changed. They’ll now be $8 meals.
Yes, we have no inflation. We have no inflation today…..oh wait.