Bits Bucket for April 4, 2012
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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My comments must be stacking-up in the moderator’s queue.
Try posting the comments, and then a follow-up comment with the link… I believe links get moderated…
I think it’s because a a realtor troll posted links to goatse a few years back.
Try posting the comments, and then a follow-up comment with the link… I believe links get moderated…
+1 My username has a URL too.
FWIW, I’ve been naughty, so it’s purgatory for me.
Dude, where’s my inventory?
Been a while, I have seen the inventory in my suburban Phoenix burg take a huge nose dive in the last 3-6 months. We had two years of nothing but destroyed, broken down crap on the market…for a long while only the bank owned homes would go under contract, the short sales would just sit there. Now, one by one, the short sales have all gone under contract with no replacement inventory.
Not too worried about it, pretty sure it’s just temporary. Will be interesting to see how the UHS’s feed themselves with no sales, not to mention the inevitable talk of bidding wars and “happy days are here again” cheers by the industry. Most in the middle class around here are taking in the a$$ via high energy and food prices, I am guessing most of the sales activity involves “investors”.
Stay cool.
Nickpapageorgio
I am guessing most of the sales activity involves “investors”.
You read my mind. That’s exactly what I think is going on here, and a lot of those investors are the realtor community themselves.
Down here in Tucson, there have been quite a number of real estate agents who also became in-VEST-ors.
For many of them, this adventure didn’t end well. They learned all sorts of things about the joys of landlording. And more than a few of them walked away from their in-VEST-ment houses.
Expect this, the latest chapter in a long and sad story, to end badly. Why? Because there are only so many tenants in any given market. And, within that population of tenants, there are quite a few problem children (and adults).
The other problem is out of town investors who don’t really care who’s in the place as long as they believe they’ve set up their income stream. I’ve seen beautifully cared for multi family Victorians go downhill quickly after being purchased from out of staters. They drag down not only the value of that particular property but everyone around them.
Another rampant problem in good ole Syracuse: I’ve heard it’s hard to hire a reliable property super. A lot of them have realized there’s no real supervision of what they do and they take the money and don’t really care for the property. I’ve mentioned about the putz my rental owners had hired. Our personal electrician that came in to to fix some of the serious problems like no electricity in a major section of the home said we’re really lucky there hasn’t been a fire.
A friend of mine’s building went condo during the bubble (Cambridge, MA). The building had been lovingly cared for by a couple who were now in their 80s and had inherited it from their parents. The condo buyers were mainly infestors who didn’t care a rap about the community. One of the out-of-towners rented his condo to drug dealers. The so-called management crew they hired were people who didn’t speak English and didn’t know anything about yard work. The first thing they did was dig up hollyhocks that had been there for decades, thinking they were weeds. Next, they cut down a tree that was the only source of shade for the building. It was really sad to see how downhill it went. I hear that many of the owners are now underwater. I hope they drown in their debt.
“I am guessing most of the sales activity involves “investors”.”
I saw some headline, I think it was from CNN, on the Google aggregator news page yesterday about infestors “snapping up” blocks (or baskets) of housing. And, being something of a Craigslist junkie (fascinating site on so many levels), I’ve taken note of all these property management “jobs” popping up. I guess it creates jobs for UHS. Except it seems to have some sort of BS commission component.
There is also the flipper group in our area that is also holding the morgages. They’re advertising balloon payment mortgages w/that huge payment at the end. So they’re planning on making money on the credit perhaps even more than the flip itself.
They’re listings seem to sit and sit so I’m guessing they’re not luring in as many people as they’d imagined.
I guess it wasn’t CNN, it was the NYT. Investors looking to buy homes by the thousands. LOL, I smell trouble here.
http://www.nytimes.com/2012/04/03/business/investors-are-looking-to-buy-homes-by-the-thousands.html
“I smell trouble here.”
I smell OPM looking for a return.
The mantra of “Real estate always goes up” is still firmly stuck in many people’s minds and this is probably what is being tapped into.
“I smell OPM looking for a return.”
And management fees! Management fees!
As in OPM becomes magically transformed into management fees.
I saw this yesterday; it was a big headline on yahoo finance. Last week it was ’smart money buying houses’ or something like that. They do know how to beat a drum.
Let’s look at some of the details and tone:
‘The blistering pace is necessary to keep up with Waypoint’s appetite: the company, which has bought about 1,200 homes since 2008 — and is now buying five to seven a day — is an early entrant in a business that some deep-pocketed investors are betting is poised to explode.’
Deep pocketed, poised to explode. Are these rich investors gonna live in these houses? They are buying rent houses; where is the explosion?
‘large investors are salivating at the opportunity to buy perhaps thousands of homes at deep discounts and fill them with tenants’
Salivating? Poised to explode? Too much HBO for this writer.
OK, now for some details: ‘Alan Hladik, inspecting a home in California, uses an iPad…Waypoint executives say they can handle large volumes because they have developed computer systems that help them make quick buying decisions and manage renovations and rentals.’
Dang, these guys have iPads and computers! I bet they have smart phones too.
‘Until now, Waypoint, which focuses on the Bay Area and Southern California, has been buying foreclosed properties one by one in courthouse auctions or through traditional real estate agents. Because the inspectors are not allowed inside these homes, they are driving by 40 of them a day, estimating renovation costs by looking at eaves, windows and the conditions of lawns.’
They don’t need to see inside the house; they’ve got iPads!
‘right now the company averages about 8 percent per property on rental income alone’
Ah ha! Rent ALONE! They are gonna make a lot more when these prices go back up! I knew these deep pockets had a plan.
And the punch line for the whole thing: ‘Economists say that these investors could help stabilize home prices.’
So, prices are ’stabilizing’: this means of course, they can’t possibly go any lower (this is the NYT, after all). And these deep pockets are snapping up all the deals! Hurry honey, we’ve got to get out there before there’s no houses left!
Yet the public responds to the false sense of urgency. I suppose it’s easy to do. The natural reaction of the casual observer is fear and the only thing that tempers the fear is truth. And the truth is housing sales are at 14 year lows and falling, prices are cratering and defaults are rising.
Now who should own the fear? The sell side or buy side?
And the truth is housing sales are at 14 year lows
What gets me is how the media talks about sales at a 14-yr low as if that means it must be LOW.
But I don’t recall anyone thinking that the rates of sale back in 1998 was low at all.
In fact, it was up quite a bit from 1993, when I bought my first house.
“Dang, these guys have iPads and computers! I bet they have smart phones too.”
With apps — don’t forget about the killer apps!
so where’ s the beef?
For the curious, do a little google search on ‘Waypoint revenue’ and you come across this jewel in a Bloomburg article:
“it recorded $324327 in operating expenses on $23920 in rental revenue”
So basically they got $23k in rent over four months. Assuming a average rent of $1500/mo., thats like getting rent on 3.8 houses.. so pretty much they are gobbling up houses and then for whatever reason no rent is coming in… i don’t see this a viable business and don’t see the 8% return- am i missing someting.
I do have a theory about this whole fiasco - the big money may not make a killing but the ‘management company’ is sure gonna make out like a bandit.
But I don’t recall anyone thinking that the rates of sale back in 1998 was low at all.
We almost bought out here (while we lived in MA) in 1998. The house I pined for but my husband hadn’t yet secured a Syracuse area job was on the market for $139k. Homes in that neighborhood are currently selling for about $250k. A home w/an updated kitchen a bit more land went for $280k. This town has a long way to go and as I’ve mentioned before hasn’t even started to correct unless you’re looking in the McMansion range.
Well, the good news is that these large investment firms have no emotional attachment whatsoever to the houses they own, and on the next leg down would let them go without too much huggling.
I do have a theory about this whole fiasco - the big money may not make a killing but the ‘management company’ is sure gonna make out like a bandit.
That’s a huge problem with the SFR rental biz. If you hire a management company, you’ll be lucky if you find a good one. Lots of incompetents in the property management arena.
“it recorded $324,327 in operating expenses on $23,920 in rental revenue”
Wow, $13 in operating expenses for every $1 they collect in rent. Where can I sign up for this excellent investment opportunity?
“so pretty much they are gobbling up houses and then for whatever reason no rent is coming in…”
Maybe there is a bug in their ipad.
My first reaction is they were counting capital expense but clearly it says operating expense.
It caused me to go look at my old tax returns and realized it was 9 years before I turned a profit! Of course depreciation was more of a write off back then but I also recall pouring a lot into the houses. I wouldn’t have done it if I didn’t love houses.
I think you’ll see waypoint’s inventory re-enter the market in a year or 2.
Maybe they’re our pension funds looking to make up their losses. D’uh.
I smell OPM looking for a return.
It’s probably the smart money. Like these guys from the article posted yesterday:
‘Later that year, the property went into foreclosure once again after the Orange County, Calif.-based Kondaur Capital purchased the note. The Ritters initially agreed to a short sale. But even with the listed price discounted to $1 million and then to $799,000, they could not find any takers. The couple said they offered to make payments, but that Kondaur had turned them down…Kondaur bought it for a mere $552,500, less than half the 2006 purchase price.’
‘Keith and Janet Ritter weren’t done. Immediately, they went to court to challenge the sale. Judge Smith upheld it. But the couple had another legal ace up their sleeves: a tenant now was living with them. And recently-enacted federal and state laws prohibited tenants from being forcibly removed in the event of foreclosure action against their landlord. Kondaur Capital’s ownership of the property thus would have been rendered meaningless. Kondaur stood firm, insisting it was the true owner.’
‘The Ritters showed up this time. The tenant, who had just moved out, didn’t. The Ritters had to use a different line of defense. Fortunately for them, they had one: Kondaur Capital had no right to foreclose, argued Mrs. Ritter…Kondaur’s attorney held up an original copy of the note with Keith Ritter’s signature in blue ink. Judge Smith awarded the home to Kondaur, which two days later filed for eviction of the Ritters. Even now, the couple insists on staying put. The husband is trying to persuade an investor to buy the house from Kondaur and sell it back’
Smart money?
‘Kondaur has snapped up more than $1 billion of banged-up home loans so far this year. ‘The vast majority of these people knew the risk they were taking,’ Mr. Daurio says. ‘Like so many of the borrowers I dealt with when I was originating loans, they thought housing prices were going up.’
http://online.wsj.com/article/SB10001424052748704258604575360860682756080.html
When he was originating loans?
‘I wrote about the debt buyer, Kondaur Capital, back in May. Remember those guys, the company that’s headed by former Ameriquest executive Jon Daurio?’
http://handlingdebt.org/mortgages_home_loans/kondaur-capital-and-jon-daurio-in-foreclosure-news-again/
‘Kondaur Capital Corporation Cuts 39% of Work Force
Feb 16 11. Kondaur Capital Corporation has slashed its staff by 39%, saying it is having a hard time finding enough available product to purchase. The company said that before the layoff of 155 workers, privately held Kondaur had negative cash flow, but after the cuts it will be cash flow positive.’
Heads I win, tails you lose.
This nation has the government it deserves.
So the big money’s fear of inflation has them hoarding just about every hard asset you can buy which includes the materials used to make items they are not hoarding…The rest of us don’t stand much of a chance. Not sure what the answer is, but I find it a bit worrisome. Deflation could drop a severe a$$ kicking on some of them.
Yesterday’s Firedoglake had an article about problems associated with this scheme. I don’t think I can link to the Lake from this-here blog, but go over there and look for David Dayen’s stories with yesterday’s date.
It seems bubblier than ever now! Back during Housing Bubble Round One, it seems like wannabe Trumps were snapping up homes by the tens; now, with the prospect of QE3 looming on the horizon, infestors are snapping them up by the thousands!
they fear inflation
Then the Fed must have succeeded in its reflation efforts.
Realtors Are Liars®
Federal Reserve Governors are Liars®
No they’re not. NY Fed banksta William Dudley says there is no inflation cuz ipads are cheaper now. Enough with the class warfare and politics of envy already…
Ben Bernanke is goatse.
Fiat goatse is an illusion, only physical goatse, that you can see and feel and taste, will suffice.
got goatse?
Peanut butter
Book review - Michael Savage: It’s ‘do or die’ for America
“Savage’s “Trickle Down Tyranny: Crushing Obama’s Dream Of The Socialist States Of America” is scheduled for release Tuesday by Harper Collins. The author of six New York Times bestsellers, his third-ranked national talk show, “The Savage Nation,” has more than 10 million listeners.
Supported by nearly 300 pages of footnoted documentation of Obama’s radical ideas and actions, Savage makes a bold declaration in “Trickle Down Tyranny”: “If Barack Obama is elected for another four-year term, he’ll be president for life. He’ll be the new Hugo Chavez. He’ll do away with the two-term limit and win the 2016 election with 90 percent of the vote.”
In his book, Savage helps make sense of some of Obama’s policies by documenting the influence of 1960s radical thinker Saul Alinsky, whose “Rules for Radicals” is used by the left today as a playbook.
It’s entirely possible, he said, that Obama would try to eliminate the Second Amendment and seize citizens’ privately owned guns.
It’s a given, he said that “he’s going to wipe out the Defense of Marriage Act,” which establishes marriage as a union of one man and one woman.
And it’s a given, he warned, that Obama will grant amnesty to illegal aliens.
“Now take the rest of the shopping list that you fear,” Savage said. “How about monitoring the Internet? They’re doing it already. How about monitoring everybody’s emails, through a supercomputer? They’re probably doing it already under the guise of security and anti-terrorism.”
www DOT wnd DOT com/2012/04/michael-savage-its-do-or-die-for-america/
How is Bammy gonna do all that with a GOP controlled congress? He couldn’t get anything done when the Dems controlled the house.
I don’t think for a minute that “Michael Savage” believes any of the crap he spews on his radio show. He’s a right wing shock jock and is laughing all the way to the bank. If there was money to be made warning of the imminent invasion from Mars, he would be frothing at the mouth over that.
How’s he gonna do it? With kenyan/indonesian/muslim sorcery and voodoo of course
On a related note, Dave Mustaine of Megadeth and formerly of Metallica has come out as a birther.
He got kicked outta Metallica 28 years ago.
At least reference Megadeth his current band.
Whoa…just a minute…
Nobody trashes Dave Mustaine on my watch
You ever see him play the guitar? One of the best metal guitarists out there, so what if he’s a birther.
not much of a metalhead, but man can he play.
I don’t think for a minute that “Michael Savage” believes any of the crap he spews on his radio show. He’s a right wing shock jock and is laughing all the way to the bank.
Trust me, it’s all about the ratings. Just like Glenn Beck — did you know that he used to be a foul-mouthed shock jock? Then he realized that the right wing rhetoric was a better ratings-getter.
warning of the imminent invasion from Mars
You know, 12/21/2012 is coming and there have been a number of shows on Nat Geo and History Channel with titles like “When Aliens Attack”, “First Contact”, and “Ancient Aliens”…
/sarc
Supported by nearly 300 pages of footnoted documentation of Obama’s radical ideas and actions,… “If Barack Obama is elected for another four-year term:
All Aboard Amtrak!
Create the fear, sell the solution, laugh all the way to the bank.
“To those who scare peace-loving people with phantoms of lost liberty, my message is this: Your tactics only aid terrorists for they erode our national unity and diminish our resolve. They give ammunition to America’s enemies and pause to America’s friends. They encourage people of good will to remain silent in the face of evil.” - John Ashcroft, 2001
They don’t encourage people of goodwill to remain silent, they PUNISH people of goodwill for speaking up.
And they sell guns like crazy.
“The Savage Nation,” has more than 10 million listeners ??
Yeah…The same 10 mil that listen to Limpy….
Create the fear, sell the solution, laugh all the way to the bank ??
Its what the neocons do best….
Oh, for pete’s sake. It’s Michael Savage, what do you expect? An Obama love-fest?
Yeesh.
Michael Wiener wrote a pretty scholarly herbal compendium, “Wiener’s Herbal”, which in addition to the detailed taxonomy told us how to use mugwort to counteract poison oak and where to find sweet mellissa.
But after he hooked up with the crackpot Rodale Press, he changed his name to “Savage,” started writing about things he didn’t understand particularly well, and alas, went to seed. Another Rodale alumni from the same era was the person who authored the infamous Ron Paul Newsletter. Hate sells.
Check those footnotes and see just how legit his citations are– and how contextually-skewered.
He holds master’s degrees from the University of Hawaii in medical botany and medical anthropology and a Ph.D. from the University of California, Berkeley, in nutritional ethnomedicine. As Michael Weiner, he has written books on herbal medicine and homeopathy. As Michael Savage, he has written four New York Times-bestselling political books.[4][5][6][7]
werid a botanist would become so angry
ahansen — Is that the Rodale of the Rodale Book of Composting? I’ve found it to be a pretty good resource. Didn’t realize that they were crazies. Now the bio-dynamic people on the other hand…
BTW - thanks for good egg-laying info. The older one started laying the other day!
BTW - thanks for good egg-laying info. The older one started laying the other day!
I have a couple of neighbors with four chickens. When the last of the four started laying, they toasted the event with champagne.
MrBubble, here’s a virtual toast to your older, now-laying hen.
Yep, one and the same Bub. They should stick to what they know.
As for the yeegs, why do you think they celebrate yeaster when they do? Renewed life and all that…. (Man, like yeast, shall rise again?)
Sounds like Ted Nugent on steroids! -
Ben Jones said yesterday: “One thing I noticed about the DC area is something I’ve seen elsewhere; the houses are just regular houses, for the most part. You might think at $400-500k it would be mansions.”
Ben, DC buyers don’t pay for the house. They are paying for the job, and for the not-rent.
Exactly. You should take a trip to the New York area. The $400K houses are just houses. There are plenty of buildings you won’t see in Phoneix, with “you couldn’t get it today” details, but they go for a lot more.
Even discounting the real value of my house by 33 to 40 percent, you’d still have the location account for more than half the value of the property and perhaps two thirds, based on replacement cost less depreciation.
Out there in normal America, I believe the “rule of four” holds that the land value is 25 percent, and that includes any value the land holds other than as a development site.
And for the slightly less hellish commute (than the house that costs jut a bit less 5 miles further out).
Oh, so it really does come down to “location, location, location”.
Or, rather, it really comes down to money flow. If money flows into a location then RE prices boom. If the money flow stops then the boom turns into a bust.
Attention needs to be paid to money flow in that it is money flow that drives everything else.
Well, during the Texas bubble there were people that had a lot of money. And when you drove by their half-million $ house, it would knock your socks off. I don’t remember anyone at the time saying, ‘they paid 400k for that little thing?’
http://www.realtor.com/realestateandhomes-detail/4839-Harris-Rd_Onondaga_NY_13215_M34844-43286
Like this one? At 2200 sq feet it’s not tiny per se, but by CNY standards it’s pretty overpriced. They’re preying on the medical staff that wants to be close to the nearby hospitals. The town of Onondaga has a pretty diverse income range. There are parts of that area really struggling. The homes are deteriorating badly. Then you find a cluster of these homes in the middle of an area where you pray your car doesn’t break down. They’re priced like the surrounding area is homogenous.
We have something similar in our town. A small cul de sac of $400k+ homes surrounded by aging apt buildings and tiny (1000 sq foot or less) sometimes deteriorating SFHs. The only road in and out is off a very busy 4 lane highway. Have fun making a left out of there! This when SFHs in much better surroundings go for $100k less just a mile or two away. Don’t forget that new construction carries the higher taxes w/them for the new infrastructure. Yeah, sign me up for that bubble of fun. (snark)
Good grief…. there is $180k worth of new house there…. with profit no less. $383k? Huh? Stack the oppressive NY property taxes on it and you have recipe for default in a big hurry.
Like this one? At 2200 sq feet it’s not tiny…
Too small to farm, but large enough to require a barn and a personal tractor/mower. FWIW, $383k is a lot of money to borrow especially if you have to pay it back.
Good god, $383K and $0 worth of style. You can buy gorgeous renovated homes near downtown for that kind of money.
Fugly!
Wasn’t Brett or someone named like that whining about how expensive condos are in downtown Austin?
Don’t get me wrong Ben, I agree with what yo are saying, houses in Texas do tend to be less expensive (and built better too). It’s just that the current bubble is even crazier than the previous one was in Texas.
Not only did Brett complain about the high condo price in Autin, he related the stories of 20% jumps in rent.
Here’s the deal with DC: Tons of lawyers and lobbyists, all working insane hours. They make quality scratch, the top 1% in DC makes over 617K annually. Whereas it’s merely 387K nationwide.
To them, the commute is a huge deal, because DC traffic is hellish. There’s a brief end to rush hour between 11AM and 1:45PM, then it’s back. Stop and go on the beltway and all around the city.
So, houses near metro stops or close to work are prized. I’ve seen houses where the entire living room is smaller than the kitchen in my relatively modest apartment. Kitchens that barely fit two people. That go for significantly over 500K because it’s near a (close-to-work) metro stop.
It’s about people working very long hours, making a lot of money, who want to avoid wasting time (and billable hours) in the ubiquitous, hellish, DC traffic. I think there’s a ring around DC (and Northern Virginia which is filled with government contractors, and the same kind of dynamic), beyond which the prices drop precipitously. McMansions can be had for the low 200’s in Prince William county, thirty miles away. Deep within the “commute ring”, a house like that would easily go for well over a million.
Two things support house prices: 1) Wages and 2) the ability to borrow money. I suspect that prices in Prince William were very high during the bubble, close to commute ring prices, but dropped farther and faster because the ability to borrow money has become moderately harder (fewer NINJA loans). I’d like to research some sample homes to validate that hypothesis.
If any you out there in the Districts don’t know that the peasants are up against in Capitol, how about this listing.
http://www.brownstoner.com/blog/2012/04/co-op-of-the-day-415-9th-street-31/?stream=true
That’s nearly $600 K for a two-bedroom apartment in a building that looks like a tenament in a now-prime neighborhood that was redlined 35 years ago.
And it’s not even a real 2 bdrm, looks like a jr BR you should be able to fit 2 twins in a real bdrm not bunk beds…and those columns add to wasted space
“That’s nearly $600 K for a two-bedroom apartment in a building that looks like a tenament in a now-prime neighborhood that was redlined 35 years ago.”
Friends of mine sold their townhouse in Washington, DC during the bubble for about $825,000. I remember the area as a bring-your-own-gun neighborhood with potholes the size of moon craters. The main income was food stamps and drug deals. Polly, is U Street as bad as it was 10 years ago?
U street is so up and coming that the older folks are going there now. Up and coming is H street in Northeast. U street is clubs and retail and expensive condos.
/…during the Texas bubble…
Wasn’t that more than 20 years ago?
I should have said during the last bubble. Yes, I’m referring to the oil/RE mania of the late 70s/early 80’s.
“Ben, DC buyers don’t pay for the house. They are paying for the job, and for the not-rent.”
That right there, that’s an interesting statement, full of implications!
Let’s assume that people also rent for the job. Then everybody pays into the housing market “for the job”. What’s the pay premium to work in DC? Does a $35K job pay $50K (because of the cost of housing)? Does that worker with the $35K house afford a $100K house in the rest of America and the $50K worker in DC afford a $500K house in DC?
I’m suspecting that it’s-different-here isn’t sustainable with those multipliers.
“$35K house” = $35K job.
Agreed, wages might be higher, but house prices and rents are even more insane.
And then one crosses the border to go north, where houses in cowtowns not too far from the tundra line go for Bay Area prices.
“They are paying for the job, and for the not-rent.”
Don’t know about DC, but in San Diego it’s still cheaper in many locales to pay the not-mortgage.
I’m suspecting that it’s-different-here isn’t sustainable with those multipliers.
It’s different in many places… The People’s Republic of Cambridge, MA for example. You have highly compensated professors from Harvard and MIT, foreign students from wealthy families, Entrepreneurs and Venture Fund types, and the typical urban professionals who work in Boston all competing for limited housing.
I wouldn’t buy there, nor could I afford it if I wanted to… but at least I understand why prices are ridiculous: the flow of money related to Harvard and MIT and it’s very close proximity to Boston.
What about towns like Weston: median family income $197,000 or Wellesley: median income $169,000. The median home price is close to $1,000,000. These towns are all 10-20 miles outside of Boston as the crow files: still a 30 minute commute in Boston traffic, and nothing very special about them other than the amount of money the average family makes. What makes these towns “special”, perpetuating the “it’s different here” attitudes (and they definitely have that attitude).
You need to look at the median income of the people moving into the town, not the median income of the people already there. Or, at least, you need to filter out the people who bought 20 years ago and didn’t use their house as a cash-out-refi piggy bank. It is probably still over priced, but not nearly as bad as it looks if you count the comfortable couple with only 5 to 10 years left on their mortgage and below median income as if they are buying a million dollar house today.
I know people from both Weston and Wellesley. It’s not just the income. They make that income because they are very well educated. They are very well educated because they are from an “old money” family. That old money family means more of their income can be spent because they don’t worry about retirement the way we do. The person I know from Weston owns 30 acres there. They were originally his fathers. He also owns waterfront in ME next to a lighthouse. That too has been in his family for years. Between his wife (very high up in medical field) and him they easily surpass $500k/year income but they could retire today if they wanted to. They just don’t want to. Their income really doesn’t have that much to do w/their net worth. That’s where some of our measurements here at the hbb go offbase.
And they aren’t even remotely typical, even for Weston and Wellesley. Houses are based on current sales, so if you want to know if the current purchasers can afford the current prices you have to look at the incomes of who is buying there now, not the incomes of the people who inherited or bought 20 or 30 or 40 years ago. Median income numbers include everyone, not just the people buying now.
The analysis will lead to higher prices being a little more affordable in very high end suburbs that are mostly destinations for doctors/lawyers/business people who have hit the high income part of their careers. But since every town can’t be a high end suburb for people who have hit the high earning arc of their careers, it isn’t necessary when looking at the whole country or even a whole region. Larger areas need a mix.
Senior citizens continue to bear burden of student loans
By Ylan Q. Mui,
Published: April 1The Washington Post
The burden of paying for college is wreaking havoc on the finances of an unexpected demographic: senior citizens.
New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old.
http://www.washingtonpost.com/business/economy/senior-citizens-continue-to-bear-burden-of-student-loans/2012/04/01/gIQAs47lpS_story.html -
They at least have life expectancy in their favor if they die soon and get their student loan debt forgiven. Would be nice to see a breakdown by age of who holds the other $960+ billion of student loans.
The newly minted BA baristas and retail drones won’t be contibuting to much “household formation” any time soon.
The future belongs to Lucky Ducky
My daughter has a P/T job in retail while she goes to school. All of her $10/hr shift managers have BAs.
The squad did its time in the trenches of pizza delivery with BA degree during the first George W. Bush recession.
The new BAs may be Lucky Ducky for years or decades
Exactly Colorado…Ditto here…
Trust me when I tell you the lenders will go after the heirs, legal or not.
Student loan debt is dischargeable upon death, FYI.
Since when is debt inherited? Sure, they could go after the estate, but if the estate can’t pay it, how could they possibly go after the “heirs”.
Plus as goon squad already mentioned, student loans are discharged upon death.
they could go after the estate ??
Maybe not if its transfered through a trust…
Not so much “discharged” as the fees include a life insurance component so that the remaining balance gets paid off on the death of the borrower. At least, that is the way it used to be. I remember proudly telling my parents that when I actually read through all the paperwork - that they weren’t going to have to try to liquidate my limited assets to take care of that. I don’t know if the parent loans include that.
…as I said, legal, OR NOT.
Yes Turkey the Vulture debt collectors are in force in NYC….lots of complaints lately about CC debt being dismissed, but without prejudice so a few years later before the SOL runs out they try to sue again…
Personally, I’m glad to see this. I just think it’s a shame that the lender (uncle sam) couldn’t have gotten ALL their money back BEFORE they reached retirement. Garnishments sound like a GREAT idea.
People who make gambles with DEBT should have to pay for their losses.
I took out small amounts of student loans to finish school. I worked most of the first 3 years. I PAID all of the debt off within 3 years by making this a PRIORITY. Pay OFF Debt!. Then, i began to save and purchase things I didn’t really need.
People who are DEADBEATS have all kinds of excuses why they can’t pay their bills. Usually they have spent much more than they owe on things they just wanted to buy.
Leave it to the press to present this as a “burden” on the retired.
OH, and if your degree was in “women’s studies” or “Multi-culturalism” or some other stupid waste of time, Too BAd. Learn something useful.
It’s entirely possible that some of the geezers loans were taken out to finance their grandkids college.
We talk about the student loans flowing like water, but I know a couple who went through a BK a few years ago and they can’t get student loans for their kids. In cases like that I could see the grand parents taking out those “Parent Plus” loans.
The lender was NOT the federal government. They merely underwrote/guaranteed the loans.
Almost ALL the student loans were private/commercial.
Today’s seniors are the best off generations in U.S. history.
Can you imagine what things will be like in 40 years of so, when today’s 25 year-olds are 65? For one thing, there won’t be any Social Security to garnish.
The numbers say you’re wrong.
Your perpetuation of boomers as being privileged is disingenuous. The numbers of the middle class now being a minority has nothing to do with age. There are MILLIONS of dirt poor retirees and soon to be retirees.
As for SS not being around, that will be the fault of the people who voted for Congressmen who deliberately dismantled it to give to Wall St, as Gen X & Y far outnumber the boomers and their children outnumber them and can easily support SS for almost the rest this century.
Where ARE you getting your propaganda?
For one thing, there won’t be any Social Security to garnish.
I doubt it.
Lots of social philosophy adherents these days, but also demands for low taxes; can’t have both ways. Eventually you’ll be coddled (controlled) and taxed accordingly.
Children of 25-35 year olds aren’t being taught social etiquettes, like talking low, having respect for adults, and screaming is for emergencies. I notice this child-centric thing going on.When I ask children to be quieter in our complex, I am told by parents “They are just children.” My reply is to teach them self control now, or the little brat will be disrupting their class, or worse, jail later.
The seniors of today were generally brought up with some time tested values. For the most part I learn from seniors, and enjoy their company.
Our 24/7 psycho warfare info-tainment system, doesn’t help either.
Back when I worked in the bike shop, I was lamenting to the boss about my struggles in my own little biz. I mumbled something about going back to school and the boss laid into me.
Why? Because he was of the mind that I need to *do* business, not study it. Just make the mistakes, learn from them, and continue gaining experience.
Let’s just say that I listened to my boss. And I’m glad I did. When he gave me the aforementioned tongue-lashing, I was in my early forties. If I’d gone back to school, I’d still be dealing with the debt today.
Our niece did one of those “dream job” low demand degrees (parents paid for). No job offers (no chit).We coached her into a quick medical technology education at an adult school. Her cost out of pocket $800. She’s making $40K. Not much, but no debt either.
What - something’s not right. When I read the headline I thought - yes, the seniors are suffering because the young people can’t buy their homes.
But they still owe on the loans - yikes!
Higher ed news from the credit bubble…
On the way to work I see a new billboard for a local high priced womens college with the text something like “College, is it worth it?”. Its a school well known for flaky attention grabbing advertising campaigns, tv commercials with a dryer tumbling clothes supposedly being a metaphor for… something… I recalled the old Ghandi story, something about first they ignore you (well past that), then they make fun of you (remember that tech guy paying kids to drop out and become entrepreneurs?), then they fight you directly, then you win. Well just one more step to go and the .edu bubble is “poof”.
In related news, we now, I kid you not, seem to have more diploma mill campii than payday loan stores. Kind of like how we were tripping over mortgage broker offices on every street corner back in ‘05 or so. I count four new diploma mills just on my way to work just in the last couple years. Only one new payday loan store, I don’t really understand their business model because its always empty… my educated guess is most payday loan joints are actually primarily money laundering fronts.
The general public seems unable to discern the difference between:
1) Diploma mill where all they want is the commission on you taking out student loans, and, of course, the loan money itself. Massive growth in this sector.
2) Training, like the vo tech schools, or doctor/nurse/pharm, engineer, or lawyer, basically exactly what they do overseas except you’ll cost too much. Not much growth locally in either number or size of facility.
3) Education, give you something interesting to think about the rest of your life, assuming you can find a way to feed yourself. No growth in number of facilities, massive increase in on campus spending.
I know its early, but I’m never around end of week… my suggestion for weekend discussion topic is whats the next bubble and why? My suggestion is food… we “need” it (well, I’m talking about fancy stuff not a lifetime of beans and rice), we foolishly “trust” our providers, big money is already involved, easy to game market, tangential tie in with farm real estate …
old Ghandi first ignore story is actually :
All truth passes through 3 stages.
First, it is ridiculed.
Second, it is violently opposed.
Third, it is accepted as being self-evident.
- Arthur Schopenhauer
The truth that requiring a photo ID reduces voter fraud is now in phase 2.
There’s still plenty of opportunity for people who can learn and become at least competent in the trades. The problem is, you’re stuck with the NASCAR crowd.
No problem if that’s your thing. But not the sort of people I’d take life advice from.
Lesson learned for Banks, don’t let lawsuits reach a jury.
The city of St. Petersburg won a $10.4 million lawsuit over Wachovia Global Securities on Tuesday. A federal jury found Wachovia to be in breach of contract with the city by failing to notify the municipality about a failing investment.
The case against Wachovia, which has since been bought by Wells Fargo, came back to losses the city took when Lehman Brothers went bankrupt, according to the Tampa Bay Times.
Jurors told the Times they agreed with the defense’s claims that St. Petersburg should have done a better job overseeing such a large portfolio - $400 million - but they still thought the investments were the responsibility of Wachovia.
http://www.bizjournals.com/tampabay/blog/morning-edition/2012/04/st-petersburg-wins-104m-verdict.html?ana=yfcpc
“Lesson learned for Banks, don’t let lawsuits reach a jury.”
Lesson learned for people suing banks: Don’t jump on the first lowball offer they make. Figure out how good your claim is first. It may take some time.
How did the city avoid arbitration?
How ’bout lower prices.
Blue Cross and Blue Shield of Florida rebrands
While the legal name will remain intact, changing the name the company does business as is part of a long-term repositioning for the company, said Mark Lee, vice president, brand development and marketing communications.
“Changing our name will help us strengthen our position as we enter new markets and solidify ourselves as a health solutions company,” he said.
The company believes there will be another 3.1 million Floridians coming into the individual health insurance market by 2014, in addition to the existing 6.5 million people in the individual market. “If we don’t change how we deal with consumers and members in light of the changing marketplace and competition, we think we will be somewhat challenged,” Lee said. “We’re trying to stay ahead of the curve.”
http://www.bizjournals.com/tampabay/blog/morning-edition/2012/03/blue-cross-and-blue-shield-of-florida.html
How ’bout lower prices.
Don’t be silly. How does that help “shareholder value”, not to mention bonus levels for top execs?
Or do you think that they actually care about providing access to healthcare?
Remember your meme:
Obamacare death panels = gov bureaucrats kill granny
InsuranceCo death panels = invisible hand of free market
ObamaRomneycare = making the insurane business more profitable.
The insurance is too damned expensive.
Obama did not want the required purchased clause. That came from the Repubs. who would NOT approve the bill without it just so people would blame Obama.
Because the Repubs truly do understand just how stupid people are.
Because the Repubs truly do understand just how stupid people are.
Especially the “social conservatives”.
Oh sure, that’s why it passed by such a slim margin, cause we all just wanted some misery to blame on Obama. JMO, but it didn’t seem like the Dems cared much what was in the bill….laws that nobody ever read. Marvy.
Blue Skye, that’s EXACTLY why it passed AT ALL.
???
The left sure has short memories when it comes to their insane laws.
Not one republican voted for obamacare in the house.
A few RINOs in the senate (Alen Specter) voted for obamacare and were needed to overcome a republican filibuster.
The dems own obamacare - lock, stock and barrel.
Obama did not want the required purchased clause. That came from the Repubs. who would NOT approve the bill without it just so people would blame Obama.
Dems also own SS and Medicare.
Wrong as usual, cabana boy:
“The concept of the individual health insurance mandate is considered to have originated in 1989 at the conservative Heritage Foundation. In 1993, Republicans twice introduced health care bills that contained an individual health insurance mandate. Advocates for those bills included prominent Republicans who today oppose the mandate including Orrin Hatch (R-UT), Charles Grassley (R-IA), Robert Bennett (R-UT), and Christopher Bond (R-MO). In 2007, Democrats and Republicans introduced a bi-partisan bill containing the mandate.”
Now fetch my towel.
Doctors Urge Their Colleagues To Quit Doing Worthless Tests
http://www.npr.org/blogs/health/2012/04/04/149978690/doctors-urge-their-colleagues-to-quit-doing-worthless-tests
I glow in the dark. After way too many radiation based tests, I finally had enough of the quakery, and found a really good doctor. One blood test, and he found my food allergies. I’m cured of my symptoms (providing I stay away from my triggers).
The company believes there will be another 3.1 million Floridians coming into the individual health insurance market by 2014, in addition to the existing 6.5 million people in the individual market.
Oh, goodie! They can join all the rest of us, who are already getting shafted in the individual market!
There is a guy I met who used to be an HR VP for a Fortune 50 firm. He told me that Corporate America is definitely planning on getting out of providing Health Insurance as a bennie.
It’ll be interesting to see how people react when that happens. I suspect that a lot of “rugged individualists” will blow a fuse when they find how much it will cost in the open market, especially if you have any pre-existing conditions. I suspect that they will change their tune and start screaming for single payer.
But dying young like a rugged individualist cowboy is infinitely preferable to taking socialist handouts from the african witch doctor communist boogeyman
goon LOL
Just to add my 2C
I was recently reading Kaiser’s 990 Filing (Non-Profit-I think all health insurance firms are, btw) as a former individual “member” (more like victim) and it floors me what their bottom line can be tax free, when everything was such a fight with them. Decline care was their bag. iirc, some years ago, their CEO was making $10M/yr.
“Non-Profit-I think all health insurance firms are, btw”
This is not true.
Thanks for the one up, Polly. I feel better now. Kaiser has a unique history.
There is a guy I met who used to be an HR VP for a Fortune 50 firm. He told me that Corporate America is definitely planning on getting out of providing Health Insurance as a bennie.
I can understand his point of view.
Why? Because health insurance, as a cost, is very hard to control. Darn thing keeps going up. That’s not what companies like in a cost.
Watch for the corporate world’s effort to offload the cost of health insurance onto the government.
Didn’t they take it on originally as a way to get around Nixon’s price/salary controls in the 70’s? I have to say that national economic policy wasn’t my first priority during the Nixon administration. Getting promoted from turtle to frog in swimming lessons was higher on my agenda.
Interesting angle/connection, there polly. I’ll look into that.
I do know that unions where a major force in securing health care for their members.
Didn’t they take it on originally as a way to get around Nixon’s price/salary controls in the 70’s?
Actually, it was originally done to get around wage controls during WWII as enacted by FDR.
VERY interesting.
Starrett Bros. & Eken had on site doctors and nurses to treat worker while constructing the Empire State building.
They finished a head of schedule.
I think I worded that incorrectly: the wage and price controls were enacted by FDR as part of the war effort during WWII to attempt to contain inflation. Corporations started offering paid health care as a way around those wage controls, in order to attract and retain talent in the severely restricted labor pool of the time.
I didn’t mean to imply that FDR enacted employer-paid health benefits…
Corporations started offering paid health care as a way around those wage controls, in order to attract and retain talent in the severely restricted labor pool of the time.
Uh-oh. There’s that word again.
Here’s a thought. If the Supremes uphold the insurance mandate then would it be reasonable under the commerce clause for a Republican congress and a Republican president to pass a bill mandating that all citizens and legal residents 18 and older who are not convicted felons, to own a firearm or pay an annual penalty, err tax, err whatever?
What would be the argument against such a law?
Let me clarify that. What would be the legal argument that opponents would use in the courts in their push to overturn it?
The squad just upgraded the squad arsenal without any mandate. We could fully support such mandate if it also mandated the availability of cheaper ammo
+ 1000
Thanks to global warming (which was just a hoax Al Gore made up to sell more movie tickets), the bears in the mountains are waking up early. And they are waking up hungry and p*ssed off that much of their natural food source is not yet available despite the warmer weather.
Also, the zombie hordes are stirring earlier than usual this year, making for what the squad correctly predicts will be a LONG HOT SUMMER
And Eric Holder is going to ban all gun sales effective 1/20/2013.
Hence the upgrade. Got CCW?
the zombie hordes are stirring earlier than usual this year
You need one of these.
The “right to bear arms” includes an implied right to choose the arms you bear. As long as you have a baseball bat, you don’t need a firearm.
You don’t even need a baseball bat. If my tweezers are dangerous enough to hijack a plane, then they’re adequate to defend my household.
I just got an image in my head of a formed up militia unit presenting their nail clippers for inspection.
It depends entirely on what argument they use to uphold the mandate in your hypothetical situation. RR’s solicitor general says it is Constitutional because it is a regulation of interstate commerce (people cross state lines to get health care all the time) and the Constitution gives the federal government the right to regulate interstate commerce.
I don’t know that a law requiring people to buy guns is all that different, except that there is no Congress ever elected that would do it. If our country required all adults to arm themselves to be able to participate in a well-regulated militia, it would be hard to argue with it on Constitutional grounds given the actual text of the 2nd amendment.
However assuming they get more deeply into the economic arguements about the market for health care in general and health insurance in particular being very different than the markets for goods such as guns, you have two really big ways to distinguish it.
Not having a gun when you are 18, does not mean that other people are forced to buy you a gun when you end up in an emergency situation where you would like/need one. In health care, if you are 18 and get sick without insurance the rest of us have to pay for at least your emergency care through hospital emergency rooms.
Not having a gun when you are 18 through 65 does not make it much more likely that you will need an expensive gun when you turn 65 that will have to be paid for by the rest of us. In health care, if you have no health insurance and therefore avoid going to doctors until you are 65 you are much more likely to get to 65 sick and needing a lot of care that will be paid for through Medicare.
I actually think these points are pretty vulnerable though I haven’t really heard them discussed in the media coverage. The only reason hospitals have to treat all comers to the emergency room is because if they don’t, they can’t participate in Medicare/Medicaid. EMTALA I think the law was called. And their tax exemptions are partially connected to it, but not as strictly as the Medicare connection and there are plenty of for-profit hospitals. And the only reason we are stuck paying for the health care of seniors who make it to 65 with a lot of health problems is because of Medicare. If you lean on these reasons, you are saying that the government can make a law to require “X” be provided by private entities and then go back and say because of the cost of X, everyone has to pay for insurance to pay for X.
A single payer system is not Constitutionally vulnerable at all.
I seem to recall the government providing free guns to young men and sending the to Southeast Asia.
I believe that was all Constituitional.
It was the Repubs who insisted on the purchase requirement.
If it’s good enough for the Swiss, it’s good enough for the US…
per Wikipedia: The Swiss army has long been a militia trained and structured to rapidly respond against foreign aggression. Swiss males grow up expecting to undergo basic military training, usually at age 20 in the Rekrutenschule (German for “recruit school”), the initial boot camp, after which Swiss men remain part of the “militia” in reserve capacity until age 30 (age 34 for officers). Each such individual is required to keep his army-issued personal weapon (the 5.56×45mm Sig 550 rifle for enlisted personnel and/or the 9mm SIG-Sauer P220 semi-automatic pistol for officers, medical and postal personnel) at home.
Those would be free guns. Does Socialism know no bounds?
Those would be free guns. Does Socialism know no bounds?
Now there’s a form of socialism I could get behind…
From each, according to his ability. To each, a Colt 5.56 AR-15 Tactical Carbine.
Wind Turbines: Worst green energy scam ever explained.
http://www.lasvegassun.com/news/2012/mar/30/nv-energy-windmill-program-generates-rebates-littl/
“Overall, $416,000 worth of turbines have netted the city $2,800 in energy savings.”
I expect the death of these eco-politic green energy subsidy programs to significantly reduce our energy consumption over the next few years. Sounds ironic, but it is not if you consider the inputs.
But just think of all the jobs created by the scam?
Scams are viable business in “The Recovery”
(this message/scam has been approved by Obama/Romney Liars Coalition)
The squad sincerely appreciates your tax dollars
oh, the tales we could tell were it not for confidentiality agreements…
“A year ago, a Reno clean energy businessman warned the Public Utilities Commission that if it didn’t set a few standards for NV Energy’s wind rebate program, its customers could end up footing the bill for turbines that rarely produce electricity.
One reason behind his concern: To be eligible for rebates, customers didn’t need to prove that the wind actually blows enough to justify installing a turbine on their property.”
FWIW, wind energy has been successful in Colorado. Of course, we only set ours up where it’s actually windy most of the time. I’ve read that the Texas program has also been successful.
The Nevada program sounds like it’s mismanaged. Being that it’s Nevada, I’m not too surprised.
On recent flights over west Texas, I’ve seen huge fields of wind turbines. And those blades are spinning. Oh, are they ever!
It was encouraging in my trip through Pennsylvania to see a new industry (ie, wind) sprouting up. Wind turbines shiny new prisons were about the only new sign of life in these small rural communities. A bit more aesthetically pleasing (and sustainable) than the moutaintop removal to the south.
I was recently in PA too. So weird to see the strip mining, minutes later the lit up fracking towers and then the turbines. PA really does rely on the energy industry doesn’t it? The Route 81 area south of Scranton looks really trashed from the highway. Things were a little nicer in the southern part of the state away from all the energy extrapolation industry.
On recent flights over west Texas, I’ve seen huge fields of wind turbines. And those blades are spinning. Oh, are they ever!
Ours on the Columbia river now turn slower to prevent bird strikes.
They weren’t whirling around like Dutch windmills. But those blades were indeed spinning.
They have them in south Texas by the Gulf Coast as well.
I have a good friend who installed a large number of turbines on the King Ranch.
“The Nevada program sounds like it’s mismanaged.”
Must be. Knowing where to build a profitable wind farm isn’t rocket science.
http://www.windpoweringamerica.gov/wind_maps_none.asp
“Areas with annual average wind speeds around 6.5 m/s and greater at 80-m height are generally considered to have suitable wind resource for wind development.”
The wind farms we have here in California are very strategically placed. We know where the average wind speed will meet the viability criteria. Nevada folks know as well, so I’m not sure what their deal is.
Green energy systems is the ONLY way forward.
Even better is self powering your own home and telling the power companies to get stuffed.
And better still, buying an electric car, powering it from your house and telling the oil companies to get stuffed!
The icing on the cake is buying a Makerbot, powering it from your house and telling retailer of overpriced Chinese crap to get stuffed.
(you’ve just seen the future the PTB are afraid of. A future you can have RIGHT NOW)
LOL!
Yeah but American Exceptionalism demands you burn *more* oil and get *less* mpg. Electric or plugin hybrid vehicles are only for communists and homosexuals, which as above post about Michael Savage’s new book notes, is who will be running this country after The One gets reelected this November
As bad as the present idiots-in-charge are doing, I’m about ready to give the Communist-Homosexuals a chance.
If nothing else, the inauguration parade will be pretty entertaining.
If we’re lucky, maybe the Confederacy will threaten to secede again.
Don’t let the door hit you on the azz on the way out, and make sure you take Bank of America and Wachovia with you. And NASCAR. And the South East Conference. And “Country” music.
And they typical hillbilly pickup truck. We’ll keep the California/Nevada “Trophy Trucks” (like “Big Oly”)
As bad as the present idiots-in-charge are doing, I’m about ready to give the Communist-Homosexuals a chance.
If nothing else, the inauguration parade will be pretty entertaining.
More entertaining than the Precision Lawn Chair Drill Team? Or the World Famous Lawn Rangers from Amazing Arcola, Illinois?
BTW, the Lawn Rangers marched in Obama’s 2009 Inaugural Parade. And, previously, Obama marched with them.
“If we’re lucky, maybe the Confederacy will threaten to secede again.”
DON’T TEASE ME LIKE THIS! (it’s one of my favorite fantasies of all times. The nation’s collective IQ will jump 20 points right off the bat.)
“If we’re lucky, maybe the Confederacy will threaten to secede again.”
What if the rest of the country says, “Go ahead. Don’t let the door hit ya where the Good Lord split ya!”
Wind Turbines: Worst green energy scam ever explained.
A company in town, Katana, manufactures the huge tapered steel towers for these wind mills, but their newish facilities are shuttered despite a growing number of wind generators along the Columbia river. You see, it’s cheaper to make the towers in Vietnam and ship them here rather than “right here” forty miles away.
But rms….nobody gives exact cost differences..is it 5% 10 20 50%.
How much will the ipod cost if made in kansas?
That depends. Would the suicide nets also be made in Kansas?
Is there any question now that the prospect of QE3 is the primary reason gold, stocks and oil prices have recently been climbing?
Dow 13,053 -147 -1.11%
Nasdaq 3,061 -52 -1.68%
S&P 500 1,398 -16 -1.12%
GlobalDow 1,958 -41 -2.05%
Gold 1,620 -52 -3.10%
Oil 101.86 -2.15 -2.07%
Gold undercut after Fed talk
Weak Spanish auction adds to woe from Fed minutes
Gold futures slump by around $50 an ounce after minutes from the last Fed meeting indicated a smaller likelihood of bond buying.
MarketWatch First Take
April 3, 2012, 5:24 p.m. EDT
‘Bernanke put’ still exists — but not at any price
Commentary: It’s the strike price for action which is in doubt
By MarketWatch
WASHINGTON (MarketWatch) — The “Bernanke put” — the idea that the Ben Bernanke–led Federal Reserve will step in and buy more bonds if the stock market drops swiftly — is still very much in existence.
But after the minutes from the March Federal Reserve meeting were released, traders are right to question just how much pain the central bank is willing to tolerate before the Fed comes riding to the rescue.
At the meeting, only a couple of members suggested that more “quantitative easing” as the policy is commonly known could become necessary if the economy lost momentum. At the previous policy meeting in January, a “few” Fed members thought the central bank could start adding more long-term securities before long and “a number of participants” indicated they were open to the idea if the economic outlook deteriorated. See full story on Fed minutes.
Traders were clearly caught off guard, judging by the reaction in gold (GLD -1.61%), bonds (10_YEAR -2.47%), stocks (SPX -1.13%) and the U.S. dollar (DXY +0.57%). Read Market Snapshot.
And that’s not surprising, seeing as how last week Bernanke told everyone in sight — everyone in this case equaling business economists, George Washington University students and Diane Sawyer — about how he just isn’t convinced by the U.S. economy.
…
Is the Fed’s cargo cult alive and well?
Cargo Cult Economics
Uploaded by springheeljack666 on Dec 14, 2010
The revolution in modern economics explained by the Fed
Market tantrums continue over Fed’s threat to take away the punchbowl
April 4, 2012, 9:04 AM
U.S. markets are looking sour Wednesday morning as the latest jobs data suggest the U.S. economy isn’t speeding up.
Dow futures (YMM2 -0.92%) are pointing to a 108 point slide, while the S&P 500 (ESM2 -1.05%) looks set to fall below 1,400.
Gold (GCM2 -3.12%) is also taking it on the chin Wednesday, slumping nearly $50 an ounce.
Andrew Wilkinson, chief economic strategist, Miller Tabak & Co., said in a note that he release of the minutes of the FOMC’s meeting in March continue to reverberate.
…
Upward wage pressure in Germany, downward wage pressure in other Euro-zone countries, and how to balance it all when printing money and liquidity injections seem to be the only way to save the Euro.
“History repeats itself, first as tragedy, then as farce.” - Marx
“Wage moderation in Germany may be coming to an end at precisely the wrong time for European Central Bank President Mario Draghi.
As nations from Greece to Spain battle recessions and record unemployment, workers in Germany are winning some of the biggest pay increases in two decades, with public service staff set to gain 6.3 percent more by the end of next year. That’s widening the gaps between Europe’s largest economy and its euro- area peers, making the ECB’s one-size-fits-all monetary policy less effective.
Draghi is facing the possibility of price pressures building in Germany just as they wane in nations that have been pushed into austerity drives by the sovereign debt crisis. Only months after the ECB cut its benchmark interest rate to a record low and pumped more than 1 trillion euros ($1.3 trillion) of cheap cash into Europe’s banking system to stem the crisis, Draghi warned of “upside risks” to inflation and started talking about how to withdraw the emergency measures. ”
http://www.bloomberg.com/news/2012-04-03/draghi-tested-as-german-pay-deals-add-to-euro-divergence-threat.html
Those wage increases are coming from recent record profits by German companies.
No love lost here.
Is FPSS reading today? I’m wondering if you and your Wall Street buddies are still betting long on QE3?
April 3, 2012, 4:24 p.m. EDT
No QE3: Gold, silver, bonds get creamed
By Nigam Arora
At 11:26 a.m. today, I received an email from a well-known market guru who is an expert at technical analysis. The email declared that the pattern in gold was like a coil ready to start a new rally.
At 2:00 p.m. the Federal Reserve Board and the Federal Open Market Committee (FOMC) released the minutes of the Committee meeting held on March 13, 2012. In response to the minutes, gold fell about $35, with silver, oil, bonds and stocks all falling as well. As of this writing, the SPDR Gold Trust (ETF GLD -1.70%) is down $3.25, iShares Silver Trust (ETF SLV -3.54%) is down $0.40, the United States Oil Fund (ETF USO -2.42%) is down $0.38, and the iShares Trust Barclays 20+ Year Treasury Bond Fund (ETF TLT +0.95%) is down $1.61, S&P 500 (ETF SPY -1.11%) is down $0.96. The PowerShares QQQ Trust Series 1 (ETF QQQ -1.61%) is down $0.26 also. The U.S. dollar rose; PowerShares DB US Dollar Index Bullish Fund (ETF UUP +0.53%) is up $0.17.
The market reaction indicates that a large number of market participants were expecting QE3. Their hopes were dashed by hawkish minutes from the Fed.
To anyone who has been paying attention to the economic data as it is being released over the last few months, the Fed minutes should have not been a surprise.
…
FPSS said over the weekend that if QE3 happens it will probably be sanitized (I think that is the word - means it doesn’t actually increase the money supply). How is that betting long on QE3?
Bob McTeer, Contributor
A former Dallas Fed president, I cover the economy.
Washington | 3/09/2012 @ 12:56PM
Sterilizing QE3
I find bizarre reports that Federal Reserve policymakers are considering sterilizing a new round of bond purchases in order to “subdue worries” about potential inflation.
Here’s how the WSJ put it in the first two paragraphs of its story on March 8:
The odd thing is that unintended sterilization is exactly what happened during the so-called QE1 and QE2. The Fed purchased bonds, which created an equal amount of bank reserves and deposits (money). Normally, because of fractional reserve banking, this would lead to a further multiple expansion of bank deposits and the money supply. That mostly didn’t happen because the banks held onto the excess reserves created rather than lend or invest them. Multiple money expansion did not happen and expectations of accelerating inflation were not met.
Banks now get a 25 basis point interest rate return on their reserve deposits with Federal Reserve Banks, including their excess reserves. So, in effect, the Fed has already been borrowing them. Those reserves are assets to the owning banks but are liabilities of the owing Fed. In other words, these reserves created by QE1 and QE2 have already been largely sterilized by the Fed borrowing them back at low rates. This is why the Fed’s operations haven’t been as effective as hoped in stimulating the economy nor as inflationary as the critics feared.
In addition to the unintended sterilization of bond purchases under QE1 and QE2, the more recent “operation twist” is on its face a sterilization effort—that is purchases of longer dated debt is matched by sales of shorter dated debt. That doesn’t just sterilize new reserves; it avoids creating new reserves.
By the way, I believe the word “sterilization” got the meaning we are using for it in this context in foreign exchange intervention. If a central bank buys foreign currency to hold down the exchange rate of the domestic currency, it creates more domestic money. Central bank net purchases of any asset, or services for that matter, tend to create money. If more money creation is considered not desirable then the purchases of foreign exchange are matched by sales of some other asset, usually bonds, hence offsetting or “sterilizing” the purchases.
The WSJ report said that the Fed hoped to “subdue worries” about future inflation, not prevent future inflation. In other words, it would sterilize in some different way just to give a greater appearance of sterilization. I know it must be frustrating for the Fed to have it’s critics continue to charge that it is stoking inflation while inflation falls instead, but I would think Mr. Bernanke could find a way to explain the sterilization that is already taking place and not have to create a new program simply for the optics that has the same effect.
…
Jamie Dimon’s invincibility is eroding
New regulatory actions against J.P. Morgan show that the bank isn’t living up to the standards claimed by its CEO. (First Take)
• J.P. Morgan, other financials dip
• CFTC fines J.P. Morgan $20 million
• J.P. Morgan banker quits after market fine
It was Blankfein who said they were doing god’s work, right?
I think he failed to specify which god.
By the way, as far as I know $20 million is peanuts to them, though with the cost of peanut butter going through the roof, maybe that isn’t as cheap as I thought. BO/GO on Skippy this week at Harris Teeter.
He probably thought we would all understand it was Mammon. Who else?
Steven Colbert had a good commentary on that… Goldman Sachs doing God’s work… in this case Shiva, God of Desctruction.
Europe Markets Archives
April 4, 2012, 11:14 a.m. EDT
Europe stocks off 1.7%; Spain, Italy yields surge
Banks, miners and autos sharply lower amid renewed investor jitters
By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — European stock markets tumbled as banks and miners weighed on sentiment Wednesday, while Spanish and Italian government yields surged after a lackluster debt auction in Spain and as the European Central Bank left its key lending rate unchanged.
…
This game is getting tireless. In few days Bernanke will say Fed is willing to do whatever it takes. Stocks up 5%.
This game is getting tireless. In few days Bernanke will say Fed is willing to do whatever it takes. Stocks up 5%.
Sounds like you need a “recall” visit, firmware upgrade.
Rajoy Says Spain in ‘Extreme Difficulty’ as Bond Demand Drops
By Emma Ross-Thomas - Apr 4, 2012 9:25 AM ET
Bloomberg
“Prime Minister Mariano Rajoy said Spain’s situation is one of “extreme difficulty” and signaled that his budget cuts are less painful than a bailout would be, as demand for the nation’s debt slumped at an auction.
“Spain is facing an economic situation of extreme difficulty, I repeat, of extreme difficulty, and anyone who doesn’t understand that is fooling themselves,” Rajoy told a meeting of his People’s Party today in the southern coastal city of Malaga.”
http://www.bloomberg.com/news/2012-04-04/rajoy-says-spain-in-extreme-difficulty-as-bond-demand-drops.html
April 4, 2012, 3:51 a.m. EDT
Asia stocks drop as Australia posts trade deficit
By Sarah Turner and Nick Godt, MarketWatch
MUMBAI (MarketWatch) — Asian stocks fell Wednesday, with markets reacting to a surprise Australian trade deficit and its implications for the wider region, including China.
Choppy trade for most Asian equities turned to solid losses after Australia said it ran a 480 million Australian dollar ($493 million) trade gap in February, compared to expectations for a A$1.1 billion surplus, according to a Dow Jones Newswires survey.
…
The real estate business reeks of corruption and fraud.
always has.
Rick Perry and the Agri-Belt governors are whining about the “pink slime” disinformation campaign.
“Dude, it’s beef….. (byproducts)”
Yeah, and those big round cow patties drying out in the field can be considered a “beef byproduct” too.
Pasture Pastries.
Realtor elements!
And don’t forget to wipe your realtor!!!
Meadow muffins. (That’s a 1960’s VT euphemism.)
“Car prices at record highs - and rising”
http://money.cnn.com/2012/04/04/autos/car-prices/index.htm?iid=HP_LN
“Cars are more expensive than ever, and experts say even higher prices are on the way.”
“The days of big cash-back offers and other incentives that automakers depended on to sell excess cars and trucks have gone the way of manual transmissions and roll-down windows.”
“The deep cuts in production capacity during the restructuring of recent years, coupled with the recent rebound in demand for new cars from consumers, means that shoppers can’t find the deals they once did.”
“There’s no downward pressure on prices,” she said.
Something is wrong here. I live in a city that wasn’t hit THAT hard by the recession and is notorious for being car status conscience, yet I’m not seeing a whole lot of new cars out there.
This is either fluff or isolated.
I AM seeing a lot of newly bought used cars.
Newly bought used cars represent a reduction in used car inventory, which puts upward pressure on new car prices.
The article did mention that volumes are still down. But the key point is that supply is also down and manufacturers are not offering huge rebates anymore, except on some obsolete models. Even the dreaded Suburban only has a $1000 rebate.
There is a lof of fluff talk in the press about sales rising back to peak levels, but the manufacturers actions (closing plants) indicates they don’t believe that. Thus they have retooled themselves to the “new normal” and without having millions of excess cars to sell anymore the deals are gone.
With “fog a mirror” financing, sales were around 16 million/year.
Financing has gotten tighter, but not much tighter. Sales until recently have dropped to around 12 million/year.
Looks like the automakers think that 25% of their former customers have disappeared.
“Looks like the automakers think that 25% of their former customers have disappeared.”
One would think so. My daughter’s “shift manager” at the apparel store where she works isn’t a potential customer. Not at $10/hr.
This is either fluff or isolated.
All about the flow of money… in my town (a hard-hit post-industrial town), almost everyone is driving used beaters or newer inexpensive small cars like Hyundai Elantra.
In the well-heeled town my parents live in (they bought 20+ years ago and couldn’t afford to buy there now), I see many brand-new large SUV’s, full-size pickups, and entry-level luxury vehicles like BMW 3 series, Audi A4’s, and Lexus ES’s.
On my commute into Boston, I regularly see brand new BMW 7 series, Porsche Panamera and 911’s, Cadillac Escalade, Land Rover Range Rovers, and more exotic Maserati, Aston Martin, and the occasional Lambo.
Almost forgot to add, during my commute into and out of Boston, I’ve seen lighter traffic overall. Mondays and Fridays have been very light, and even mid-week, traffic has been “bearable”.
My guess is more telecommuting, more flextime and more public transportation usage with the rise in gasoline prices.
I’ve got a friend in the Boston area who just picked up a Lambo last year. He sold his software company to the big boys.
He sold his software company to the big boys.
Living the dream
I’ve got to get my startup further along before this next tech bubble bursts and I miss my 2nd tech bubble/opportunity at riches.
I’ve got a friend in the Boston area who just picked up a Lambo last year. He sold his software company to the big boys.
Hmmm, one of my parents’ neighbors did that about a decade ago. Poor guy should have held onto it a little longer. He could have sold it for $100M instead of the $16.7M that the buyer paid him.
Your observations match what is happening: Only upper middle class and up can afford the new cars so fewer are selling. I guess the automakers assume that:
Lucky duckies will drive beaters
Middle class will drive used cars or entry level new cars.
I’ve been noticing new cars here. They’re probably all leases though. The reason I’ve noticed is because I’ve decided that I’ll be keeping my vehicle to 200k, a first. I usually only keep my vehicles to 100k. Meanwhile I’ve been noticing all the new designs on the road that grab my attention. I’ll just be dreamin’ though. Even my soon to drive teenagers are only going to get used.
I
With high resale values for used cars the automakers can offer better leases, but with lots of very ordinary and non-exotic cars pushing the 40K MSRP line, even a lease can be pricey. But with a 5 year loan a 40K car can easily cost $800 a month.
I too plan on buying used next time. Probably a used, low mileage Buick driven by an old lady.
lots of very ordinary and non-exotic cars pushing the 40K MSRP
I priced out a Ford Mustang GT coupe with a few options. MSRP topped $43k. We’re not talking a convertible or BOSS special edition, just a run-of-the-mill GT V8 with electronics upgrades and Brembro brakes. Then I looked at a Ford Taurus SHO AWD. MSRP $45k. I couldn’t believe it…
Needless to say, Ford’s performance-minded cars are not for the feint-of-heart when it comes to price or performance.
Saw a Subaru BRZ at the New Car show at the convention center a few weeks ago.
Thought….. “There’s what we need…..a small, good looking, 4 cylinder powered coupe, that gets decent gas mileage, but isn’t an economy car……”
If it MSRP’d for $19K, it would sell like gangbusters. Silly me for thinking that, when Civic Si’s are selling for $22K.
Went to see the Subaru guys ……..limited production (6000 cars, they said the regional sales guys told them they might see two a year)…..
MSRP? $25K plus for the “base” car.
There will be a Toyota Scion version of the BRZ as well. That model should be a lot cheaper.
/no AWD on a Subby???
Saw a Subaru BRZ… MSRP? $25K plus for the “base” car.
That sounds like used WRX territory to me… and the WRX is a MONSTER of a compact car.
“I priced out a Ford Mustang GT coupe with a few options. MSRP topped $43k.”
Ditto on the Camaro.
Chevy Impala? 30K. For a carso vanilla and boring that only a rental fleet manager could love it.
20K buys an econobox.
Chevy Impala? 30K. For a carso vanilla and boring that only a rental fleet manager could love it.
My Honda Accord MSRP was $32k. It’s a good-looking car, but it’s still just a V6 Japanese mid-size.
20K buys an econobox.
I think what we’re seeing with new car prices is a combination of inflation (raw materials, energy), leaner auto manufacturers that don’t need high volumes of sales to survive, and a marketing shift to the more “profitable” customer demographics at higher income levels.
I’ve been noticing new cars here.
Used car lots and their high-interest financiers are now competing with government guaranteed EZ credit.
If this price trend continues, I may soon be able to once again afford to drive to work.
Market Pulse Archives
April 4, 2012, 10:44 a.m. EDT
Oil lower after larger-than-expected supply rise
By Claudia Assis
SAN FRANCISCO (MarketWatch) — Crude-oil futures added sharply to their losses Wednesday following an inventories increase nearly five times larger than expectations. Crude for May delivery (CLK2 -2.29%) retreated $1.83, or 1.8%, to $102.18 a barrel on the New York Mercantile Exchange. It had traded around $102.80 moments before the data. The Energy Information Administration reported an increase in crude stockpiles by 9 million barrels in the week ended March 30. That contrasts with expectations of an increase by 1.9 million barrels, according to analysts polled by Platts. Gasoline inventories declined 1.5 million barrels, while supplies of distillates were unchanged. The analysts surveyed by Platts had expected gasoline supplies down 1.6 million barrels, while supplies of distillates had been seen down 600,000 barrels.
If this price trend continues, I may soon be able to once again afford to drive to work.
Extrapolating.
USA demand has fallen off a cliff.
April 4, 2012, 1:31 p.m. EDT
DeMarco defends not cutting Fannie Mae principal
By Ronald D. Orol, MarketWatch
WASHINGTON (MarketWatch) — Under pressure from Democratic members of Congress, the chief of a key housing regulator on Wednesday defended his policy of not cutting the amount underwater borrowers owe for mortgages owned by government-seized housing giants Fannie Mae and Freddie Mac.
Ed DeMarco, the acting chief of the Federal Housing Finance Agency, the regulator for Fannie and Freddie, said his approach helps troubled homeowners and protects taxpayers at the same time.
In a speech before the Boston Security Analysts Society, he pointed out that the agency allows some borrowers who owe more than their homes are worth to defer payments on some principal they owe, thereby lowering their monthly payments to affordable levels.
However, the White House and some Democratic lawmakers have been pushing DeMarco to cut the amount underwater borrowers owe for mortgages owned by the two firms, a process known as principal reduction. A group of Democratic House members called for DeMarco to step aside if he wasn’t going to cut principal.
Democrats contend that principal reduction would drive the economic recovery because it would give borrowers more money to spend and make it easier for those who have no home equity to sell their homes and move to another city to take a job without taking a hit to their credit rating.
However, DeMarco argued that his approach, known as forbearing on principal, which defers repayment of some principal until later, achieves the same monthly lower payments as with principal reduction.
In the FHFA’s approach, if the borrower is successful, the taxpayer retains the opportunity to benefit from the upside, he said.
“If the borrower remains successful in this modified loan, this approach preserves for taxpayers an ultimate recovery on the debt,” DeMarco said.
…
Gold is cratering….
Housing is cratering….
S&P is cratering….
Dow is cratering….
It’s looking like a moon walk.
Don’t worry, be happy — it’s all contained.
Whether it’s QE by the US Fed at home,
or in Germany
http:/tinyurl.com/7vwu2pr
or demand in China,
http:/tinyurl.com/82o5n7l
or Brazilian inflation
http:tinyurl.com/7nam220
there will always be an excuse to gouge/price fix the cost of gasoline.
A butterfly farted, causing gas prices to rise on fears of…
…a bad smell filling the room?
Among Lydian’s woes: 68% of its loans were in Florida and California
by Jeff Ostrowski
Former Lydian Private Bank Chairman and CEO Rory Brown
A Treasury Department audit report and an investor lawsuit filed in federal court reveal new details about the collapse of Lydian Private Bank, which failed in August.
Among the reasons for Lydian’s demise:
Too many toxic loans. Lydian’s mortgage portfolio was full of option ARM, negative amortization and stated-income loans made in the frothiest markets. In a 2009 stock offering, Lydian said, “35.5% and 32.8% of our total single family residential loans by principal balance were secured by properties located in Florida and California, respectively.”
A one-man show as CEO. Lydian founder, Chairman and CEO Rory Brown called the shots with little oversight from directors or other executives, the Treasury says. “According to OTS examiners, Lydian’s CEO/chairman of the board had a dominating influence over the operations of the thrift,” the Treasury Department Office of Inspector General
And there’s one glimmer of good news here: The failure won’t cost quite as much as expected. In August, the FDIC said the failure would cost its Deposit Insurance Fund $293.2 million. That estimate has been downsized to $292.1 million.
http://blogs.palmbeachpost.com/realtime/2012/03/28/among-lydians-woes-68-of-its-loans-were-in-florida-and-california/ - 45k -
Lydian founder sells North Palm Beach manse for $475,000 loss
by Jeff Ostrowski
Lydian Private Bank founder Rory Brown this month sold his Palm Beach County house for a loss and has moved to South Carolina, according to property records.
Brown paid $5 million in 2007 for an 11,000-square-foot manse in an unincorporated area near North Palm Beach. He sold the house for $4.525 million this month — the same month that two investors in failed Lydian Private Bank sued him in federal court and the Treasury Department’s Office of Inspector General faulted his leadership of the bank.
According to the deed, Brown has moved to a house near Charleston, S.C., that Zillow values at $2.1 million. Brown made a salary of $400,000 and a bonus of $585,836 in 2003, the only year that Lydian reported executive compensation. He owned 7.2 percent of the bank then.
http://blogs.palmbeachpost.com/realtime/2012/03/30/lydian-founder-sells-north-palm-beach-manse-for-475000-loss/ - 41k -
Well color me shocked.
Fed’s Lacker Says Volcker Rule May Be ‘Impossible’ to Implement
By Craig Torres and Cheyenne Hopkins - Apr 4, 2012 1:56 PM ET
Bloomberg
The Volcker rule is “fairly difficult if not impossible to implement in a way that is at all reasonable,” Lacker said today in an interview with Bloomberg Television’s Trish Regan.
http://www.bloomberg.com/news/2012-04-04/fed-s-lacker-says-volcker-rule-may-be-impossible-to-implement.html
Reasonable = In a manner allowing the banksters to skate when caught.
REDFIN April 2012 Roundup
…
Now Entering the Twilight Zone
But what’s going on in the market? Prices went down, but we believe they’re now going up in lots of places. Sales volume slipped, but we think that’s because there’s nothing to buy. Every 300,000 years, the earth’s magnetic field flips, and lots of weird stuff happens then too. You want examples of weirdness in the housing market? You got it:
* Multiple offers: 74% of Redfin’s March offers in Orange County, California faced competition. 51% in DC. Our clients are sending baby photos to sellers. We just published a six-step guide to winning a deal. Nationwide, Redfin’s offers increased 50% but its closings only increased 17%, so the competition has made us work a lot harder. Deals are getting stuck at the appraisal, because the price got bid up above the comparable properties used by the appraiser when trying to figure out if the home is worth loaning money for.
* A tale of two markets: prices are mostly softer for condos and townhomes, and homes in the boonies and at the high-end. But entry-level and mid-range houses are getting devoured like cupcakes at a five-year-old’s birthday party. Builders are shifting toward small-lot, in-city developments with vintage materials — and big waiting lists.
* Strange seasonality: one reason we saw lots of action early in the year was because this winter was so much warmer than last year’s. This made for better year-over-year comparisons: “It’s a dead-cat bounce!” exclaimed real estate freakazoid Nick Timiraos when I saw him Thursday. It also might mean demand came earlier in the year, like the cherry blossoms already lining the gutters, rather than actually increasing. Meanwhile, the number of homes for sale is down 27% from this time last year. At this rate, the summer-shopping season will be like a Soviet supermarket.
* Canaries are coming back to the coal mine: the annoyingly smart people who sold homes in 2007 and rented for five years are now buying again. When we surveyed 1,000+ Redfin customers buying a home this year, a whopping 14% were people who had owned, rented and were now buying again. First-time investors are coming out of the woodwork, with Redfin’s classes on how to evaluate income-generating properties filling up fast. We’re recruiting Tom Vu and his posse to speak.
Case-Shiller Down for the 5th Straight Month. What Me Worry?
…
The rich are moving back into town, and the wretched refuse will be renters in the burbs.
Takes a lot less concrete and barbed wire to put up a security fence that way.
Builders are shifting toward small-lot, in-city developments with vintage materials — and big waiting lists.
I think notion that real estate is asuch a good investmet is finally being tossed out the window. Add to this the price of gas, the fact that living in the burbs isn’t all it was envisioned to be, the pain of maintaining a starter castle, people downshifting (ie, reduced consumerism), empty nesters, declining real (and nominal) wages…the list goes on. I can see why this trend is evolving.
When I bought my 1,000sf home, my agent referred to it a ’starter’ home. I had to correct her and told her to call it my ‘ender’ home.
WTF is “vintage materials”? Salvaged rotting lumber from teardowns?
…… vintage materials…. fawkin’ idiots.
the annoyingly smart people who sold homes in 2007 and rented for five years are now buying again. When we surveyed 1,000+ Redfin customers buying a home this year, a whopping 14% were people who had owned, rented and were now buying again.”
maybe because interest rates are very low making the mortgage plus taxes cheaper than renting ?
Canaries are coming back to the coal mine: don’t canaries somtimes die in coalmines
I think that the implication was that the canary is no longer dead.
But yeah, it could die again.
“…the canary is no longer dead.”
Is it perhaps a zombie?
Dead cat bounce… wow, haven’t heard that in a while. Weren’t there 4 legs down in the GD?
So:
2006 pop
2008 first bounce
2010 second bounce
2012 third bounce
2014 fourth bounce
2016 bottom?
Shots fired after 2 teens kicked off Palm Tran bus on Southern; no one injured
By Cynthia Roldan
Palm Beach Post Staff Writer
Posted: 2:47 p.m. Wednesday, April 4, 2012
An argument between two teenagers who were kicked off a Palm Tran bus ended this afternoon with shots being fired from one vehicle to another in suburban West Palm Beach.
Palm Beach County Sheriff’s deputies were dispatched shortly after 12:30 p.m. to Australian Avenue, near the northbound entrance ramp from Southern Boulevard to reports of shots being fired. When they arrived, they learned that no car was struck and no one was injured.
Detectives were then told that a 17-year-old boy from Mavericks Charter High School in Palm Springs got into an argument with a classmate while on board a Palm Tran bus sometime this afternoon. After at least one warning, the Palm Tran bus driver ordered the two off the bus near the entrance of the Hilton Palm Beach Airport Hotel, said sheriff’s spokesman Deputy Eric Davis.
Both teens called for someone to come pick them up. As the 17-year-old was driven away by his family, the other teenager allegedly drove by in a vehicle with an undetermined number of friends and shot at the car the 17-year-old was in, Davis said.
No additional information concerning the investigation was immediately available, since the 17-year-old and his family said that they did not want to prosecute, Davis added. In the meantime, deputies are continuing their investigation and taped off an area near the entrance ramp to search for bullet casings.
Traffic was not severely affected by the incident. Deputies closed the Australian Avenue westbound exit ramp and the northbound entrance ramp for their investigation.
The more this happens the better for zimmerman to get off….
what is it with Sanford Fla?
http://articles.orlandosentinel.com/2012-04-02/news/os-two-arrested-seminole-beating-20120402_1_victim-arrest-affidavits-crimeline
Sanford police investigating 2 drive-by shooting
Last Update: 9:08 am
SANFORD, Fla. (AP) — Police in central Florida say three people were injured in a drive-by shooting, including a pregnant woman.
Sanford police spokesman David Morgenstern says at least 30 shots were fired at a crowd of people in front of a home early Wednesday.
The Orlando Sentinel reports the pregnant woman was grazed in the ear by a bullet. She was taken to a hospital, along with two other victims. The newspaper says the injuries were not life-threatening.
Police are looking for a silver or grey vehicle and believe the suspects are armed with automatic weapons.
Detectives say they haven’t determined whether a similar shooting about a block away on Monday is linked to the latest drive-by shooting. A 17-year-old is still recovering from gunshot wounds from the Monday shooting.
Information from: Orlando Sentinel, http://www.orlandosentinel.com
http://www.mysuncoast.com/news/state/story/Sanford-police-investigating-2-drive-by-shooting/3DQCnPmjqE-UKrrCHYJ8rA.cspx -
“Old School” = Kentucky University Wildcats
“New School” = Kentucky University CouchBurners
Old name = Rupp Arena
New name = Zippo Stadium
I got so excited after the game, I set my couch on fire while it was still in the living room. Go Cats!
Time for a Wall Street version of the GWB “moment of victory” speech on the bow of a ship?
April 4, 2012, 12:01 a.m. EDT
2007-09 bear market now totally erased
Commentary: Wilshire 5000 now higher than on Oct. 9, 2007
By Mark Hulbert, MarketWatch
CHAPEL HILL, N.C. (MarketWatch) — It’s now official: The 2007-2009 bear market has been completely overcome.
Erased.
Yes, you read that right. The dividend-adjusted version of the Wilshire 5000 index is now higher than it was at the bull market high on Oct. 9, 2007.
To understand what this means, consider an investor who was unlucky enough to invest a lump sum in the stock market on the exact day of that October 2007 high. Provided he or she had the intestinal fortitude to stay with the investment through thick and thin, and reinvest all dividends along the way, the investor would now be in the black.
How long did it take?
This unlucky investor was under water for just four and one-half years. I don’t know about you, but that strikes me as remarkably little time to completely recover from what some investors have referred to as one of the worst bear markets of all time.
…
When you have trillions of dollars to make the gamblers whole, it’s not THAT remarkable.
printing does wonders for bankers.
Europe’s Economic Woes: That Sound You Hear Is the Euro Cracking
By Rana Foroohar | April 4, 2012
A breakup in the euro zone just got more real with the announcement of the short list for the Wolfson Economics Prize, a prestigious economics award that has the biggest payout (£250,000, or about $400,000) after the Nobel Prize. This year’s Wolfson-challenge question was: “If member states leave the Economic and Monetary Union, what is the best way for the economic process to be managed to provide the soundest foundation for the future growth and prosperity of the current membership?” The fact that we now have several published answers to that question written by serious economists makes the breakup issue all the more pressing.
…
I know some folks very close the Eurozone system and this article is bullcrap.
There are many people out there who DREAM of the Eurozone collapsing and have hated it since day one, but, short of all out nuclear war, it isn’t going to happen.
It is THE largest market, at ALL levels and sectors, in the world.
The Euro was in no small part, conceived as a way to bring Europe more closely together and to hopefully limit the nationalism which has caused so many devastating wars over the centuries. Right now, Lithuania and Poland are having a deteriorating relationship:
Outsiders (including America), neighbours (chiefly Sweden), NATO and the European Commission are worried. They are backing mediation started last year by the Organisation for Security and Co-operation in Europe (OSCE). In a coded reference to the Balkan wars in the 1990s, the OSCE’s commissioner for national minorities, Knut Vollebaek, says, “history in Europe shows that inter-ethnic tensions can spill over into problems between countries and even regions”.
But Europe consists of ethno-states. Germany to this day is very conscious and protective of ethnic German-ness. It’s unclear if the Euro will reduce or exacerbate inter-country/inter-ethnic tensions.
Even very smart people can have ill-conceived ideas.
But Europe consists of ethno-states. Germany to this day is very conscious and protective of ethnic German-ness.
That’s one thing that sets countries like the United States, Canada, and Australia apart. In short, we come from all over the world.
And, once we’re here, we fall in love with each other, get married, and have kids. Well, there are some people who skip the “get married” step, but that’s another story.
Any-hoo, the three countries above are multi-ethnic, multi-cultural, and for the most part, it works. We’re not into the ethnic purity thing because we just plumb can’t pull it off. We’re too hybridized!
I dunno Slim.
There are lots of Turks and others in Germany these days adding to the genetic punch bowl. Heck, I’ve got a blue-eyed, long femur’d blond right here in the next room; the master race is finished!
My little hood paper says property value are up 2%.
This while I am still flanked by three abandoned properties.
Baltic index turns negative for 1st time since late Feb
Tue Apr 3, 2012 12:25pm EDT
By Soma Das
April 3 (Reuters) - The Baltic Exchange’s main sea freight
index, which tracks rates to ship dry commodities,
turned negative on Tuesday after holding firm for 28 straight
sessions, as falling rates for smaller vessels countered
strength in capesizes.
The overall index, which gauges the cost of shipping
commodities such as iron ore, cement, grain, coal and
fertilizer, fell 3 points or 0.32 percent to 931 points.
The index, which reflects the daily freight market rates of
capesize, panamax, supramax and handysize dry bulk transport
vessels, has fallen more than 46 percent this year.
“The dry bulk market has weakened significantly in 2012
year-to-date due to the Chinese New Year (holiday), continued
robust fleet growth, and a softening in demand growth for
imported commodities in China and Europe,” Jefferies analyst
Douglas Mavrinac said in a note.
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Paging FPSS…
ft dot com
Global Market Overview from MARKETS 9:39pm
Shares retreat after Fed dashes QE hopes
Poor Spanish bond sale adds to pressure
Fed steps back from further easing
Gavyn Davies Why QE3 is off Fed agenda
Take a look at this 45 year old beauty:
http://articles.orlandosentinel.com/2012-04-04/news/os-lake-meth-bust-20120404_1_meth-lab-bust-trafficking-charges-pseudoephedrine
Investor Warning
Stocks were down today and I was happy. I’ve had a significant bear bet for a long time now. I also bought an oil stock today that has been beaten down in the last week
A closely-watched pot never boils over.
Student debt grows to alarming levels
The hundreds of billions owed have potentially crippling ramifications for the U.S. economy
Consumer Reports magazine: May 2012
How to avoid borrowing
Illustration by: Sebastien Thibault
Mortgage foreclosures and credit-card debt have drawn the spotlight since the financial collapse of 2008. But there’s another type of debt that could have potentially crippling ramifications for the U.S. economy: student debt.
How bad is it? The amount of student debt owed by Americans exceeded outstanding credit-card debt for the first time in 2010. Two-thirds of college graduates carried some debt at commencement, and the Class of 2010 had an average of $25,250 in student debt, up 5 percent from the previous year, according to The Institute for College Access & Success (TICAS), a nonprofit policy research group in Oakland, Calif. All in all, it’s estimated that Americans owe more than $900 billion in federal and private loans.
At the same time, the depressed job market makes repaying those loans harder than it has been in decades. Two-year default rates on all student loans hit 8.8 percent for those starting repayment in 2009, with 15 percent defaulting at for-profit institutions, according to the Department of Education. Unlike most consumer loans, student debt generally can’t be discharged by declaring bankruptcy. Lenders can recover the funds by garnisheeing wages, tax refunds, even part of Social Security checks.
All of this has consequences not just for graduates but also for the larger society. Some economists fear that lingering student debt will force many young adults to delay or defer important milestones, such as marriage and starting a family, which can impede a full economic recovery. Young workers with wrecked credit from unaffordable student loans, for example, won’t be able to get mortgages to purchase homes, which could make it even tougher for retirees and others to sell theirs.
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Global house prices
Downdraft
European house prices are finding it harder to defy gravity
Mar 31st 2012 | WASHINGTON, DC | from the print edition
FROM the late 1990s home prices across the rich world soared relentlessly upward, borne aloft on a gale of cheap capital. In 2006 some overvalued markets began crashing to earth. Until recently, however, the correction seemed remarkably contained. American and Irish home prices plunged, giving up all the gains of the previous decade, but others have fallen far less steeply. Some markets faltered and then stabilised. The latest update of The Economist’s global house-price indicators hints that this period of post-crisis calm may be coming to an end.
Europe’s gravity-defying act has been the most striking. Most of its largest housing markets—Germany is the big exception—boomed in the early 2000s and stumbled during the crisis. But fortunes have diverged since then. Irish prices plunged and continue to sink. House prices in most other markets are still well above “fair value”, which we define as the long-run average of two measures: the price-to-income ratio, a gauge of affordability, and the price-to-rents ratio, an analogue of the price-to-earnings ratio used to judge the equity value of listed firms. Spanish markets are still overvalued by a quarter on these measures, although prices are falling. In Belgium and France, prices are well above fair value and they continue to rise.
Such buoyancy can largely be attributed to a combination of low interest rates and a preponderance of variable-rate mortgages. But from the third quarter of 2011 to the fourth, as recession bit and bond markets wobbled, European house prices came under downward pressure. The pace of depreciation quickened around the periphery of the euro zone. Appreciation slowed in Germany and France. The euro area’s downturn probably continued into the first quarter of 2012 and may persist beyond that. Unemployment is rising across the continent and banks are under pressure to shore up balance-sheets (see article). Prices will struggle to rise in such conditions, in over- and undervalued markets alike.
Housing markets have also cooled in far healthier economies. China’s government spent much of 2011 reining in its scorching housing sector by limiting multiple home purchases, raising interest rates and hiking banks’ reserve requirements. Soaring prices now look a thing of the past: values were essentially flat in the year to the fourth quarter of 2011. A fragile Europe and a cooling China have taken the wind out of other Asian housing markets. Values continue to rise in Singapore but more slowly than in the third quarter of last year. Australian home values fell faster in the fourth quarter than in the third.
America’s housing-market correction has gone further than most. On our gauge, prices nationally are 19% below fair value. Economic conditions are improving, and the unemployment rate is down sharply from a year ago. Home sales and construction are depressed relative to normal levels but rose substantially in early 2012 from the prior year. Prices keep falling, however. According to the latest release of the S&P/Case-Shiller index of home prices, home values in large markets were down by 3.8% in the year to January. That was better than a 4.1% drop in December but still horribly disappointing.
Explore and compare global housing data over time with our interactive house-price tool
Better times are in sight. Buying a house looks like an increasingly good bet compared with renting, according to The Economist’s calculations. Indeed, rising rents are helping to cut into a backlog of unsold homes; in February, 23% of home sales were to investors, many of whom will switch the properties into rentals.
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Take a look at this 45 year old beauty…
Yeah…definitely not a Maybelline girl.
IMHO
Phoenix, Georgia, and many rural areas of the midwest are now bottoming with their prices. The biggest downward pressure in the market is in expensive Suburbia. That still has further pressure on the downside.
The leader of which major economy is undertaking steps to increase competition in the banking sector by ending monopoly power?
1. The U.S.A.;
2. The eurozone;
3. Red China;
4. None of the above.
ASIA NEWS
Updated April 4, 2012, 11:35 a.m. ET
Chinese Premier Blasts Banks
By DINNY MCMAHON, LINGLING WEI and ANDREW GALBRAITH
Chinese Premier Wen Jiabao told a national audience on Tuesday that China’s state-controlled banks are a “monopoly” that must be broken up, in a blunt appeal for a shake-up of the creaky financial system of the world’s No. 2 economy.
In a blunt appeal, Chinese Premier Wen Jiabao told a national audience that China’s state-controlled banks are a ‘monopoly’ that must be broken up. Lingling Wei has the story. Photo: Feng Li/Getty Images
In an evening broadcast on state-run China National Radio, Mr. Wen told an audience of business leaders that China’s tightly controlled banking system needs to change.
“Let me be frank. Our banks earn profit too easily. Why? Because a small number of large banks have a monopoly,” said Mr. Wen, according to the transcript of the program on the broadcaster’s website. “To break the monopoly, we must allow private capital to flow into the finance sector.”
Mr. Wen’s comments tap into a rich vein of popular anger against China’s biggest banks that has been building in recent months online and in the media.
The backlash was initially prompted by frustration at what has been perceived as banks’ payments of low interest rates on deposits and indiscriminate levying of fees. It has worsened in recent weeks as lenders posted record profits, even as the economy slows and some companies struggle to access credit.
Mr. Wen’s push is part of a broader set of issues over China’s growth, and came on the same day that Beijing unveiled programs intended to support the development of the country’s capital markets and to spread international use of the yuan.
Among them, China’s security regulator said it would more than triple the amount that foreigners would be allowed to invest in China’s heavily restricted financial markets to $80 billion.
…
I can’t believe investors would give up their precious gold and silver for worthless pieces of green paper in ever-decreasing denominations.
April 4, 2012, 2:42 p.m. EDT
Gold at 12-week low as Fed dampens risk appetite
U.S. dollar rallies against rivals; silver at lowest since Jan. 19
By Claudia Assis and Polya Lesova, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures on Wednesday sank to their lowest in 12 weeks, joining the selloff in stocks and other commodities after minutes from the U.S. Federal Reserve’s latest policy meeting undercut expectations for further monetary stimulus.
Gold for June delivery (GCM2 +0.69%) declined $57.90, or 3.5%, to end at $1,614.10 an ounce on the Comex division of the New York Mercantile Exchange. That was gold’s lowest settlement since Jan. 9.
Silver futures also posted sharp losses, with the May contract (SIK2 +1.29%) falling $2.22, or 6.7%, to $31.04 an ounce. That was silver’s lowest finish since Jan. 19.
“Dramatic selling in gold as good news for the economy became bad news” for the metal as the minutes dashed hopes of more easing, said in a note George Gero, a vice president with RBC Wealth Management in New York.
After the steep losses and ahead of the long weekend, gold’s next level of support is $1,600 an ounce, said Charles Nedoss, a senior market strategist with Olympus Futures in Chicago. Commodities and other markets will be closed Friday in observance of Good Friday.
…
Commodities are going to get trashed in the near future. A great entry point eventually. Ah, for a crystal ball.
If we have stability or perceived stability, gold could go down to 1100. On the contrary, a fiat meltdown in credibility could blast it to 3000 an ounce, but who knows how the chips will fall?
These numbers were pulled from my arse free of charge.
No wonder food is so expensive!
Market Pulse Archives
April 4, 2012, 3:11 a.m. EDT
China’s food spending passes U.S. as world No.1
By Chris Oliver
HONG KONG (MarketWatch) — In the last sign of how Chinese consumers are changing the world, new research out of the U.K. showed China is the largest food and grocery market, having overtaken the U.S. in terms of sales in 2011. China’s supermarket sector was worth 607 billion pounds ($970 billion) at the end of 2011, nudging ahead of the U.S. market, which came in at $913.5 billion, according to food industry analysts IGD. The rapid expansion is being driven by China’s growing economy, the rising wealth of its population, and inflationary food prices, the report said. China’s grocery market is forecast to expand to nearly $1.46 trillion by the end of 2014, representing a tripling in value from 2006. The nation’s growing food appetite will also put it further ahead of the U.S., which is forecast to expand to $1.07 trillion by the end of 2014.
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Market Reveals Resistance to Fed’s Latest View of QE3: Mortgages
By Jody Shenn and Kathleen M. Howley - Apr 4, 2012 9:00 PM PT
Ben S. Bernanke’s Federal Reserve signaled this week it isn’t ready to buy more bonds to stimulate the economy. Mortgage investors aren’t convinced.
Trading in the market for government-backed mortgage bonds is showing a 37 percent chance of a third round of so-called quantitative easing, or QE3, according to Credit Suisse Group AG calculations. While that’s declined from 40 percent last week, it’s up from 25 percent after the April 3 release of the minutes of the Fed’s monetary-policy panel meeting last month.
Stocks, commodities and bonds declined after the statement, which showed certain members support easing only “if the economy lost momentum.” Treasuries and mortgage securities pared losses yesterday with some investors speculating the Fed will eventually acquire more home-loan debt to bolster consumer spending and support a housing market the minutes described as “depressed.”
“Mortgages didn’t underperform in a truly meaningful fashion,” said Jason Callan, head of structured products at Columbia Management Investment Advisers LLC in Minneapolis, which oversees about $180 billion in fixed income. “The likelihood of QE was modestly diminished, particularly in terms of the April meeting, but that doesn’t take it off the table for later.”
After Fannie Mae’s 3.5 percent, 30-year mortgage securities underperformed similar-duration interest-rate swaps by 0.34 cent on the dollar on April 3, the most since October, the home-loan notes outperformed by 0.25 cent yesterday, according to data compiled by Bloomberg.
Bellwether to Buying
Trading in the $5.4 trillion market for so-called agency mortgage securities relative to fixed-income benchmarks such as Treasuries and interest-rate swaps is serving as a QE3 bellwether because any program may focus on home-loan bonds after Fed Chairman Bernanke sent a study to Congress in January that highlighted how housing is restraining the economic recovery.
The central bank acquired $2.3 trillion of bonds in two rounds of quantitative easing from December 2008 until June 2011, including $1.25 trillion of agency mortgage securities. In September it announced it would buy $400 billion of longer-term U.S. securities through June while selling an equal amount of shorter-term debt in its holdings, and start reinvesting proceeds from its housing debt back into the mortgage market.
The probability being assigned to QE3 is now “too high,” Credit Suisse analyst Mahesh Swaminathan in New York, said in an e-mail. After the Fed’s statement, his team recommended bets that mortgage bonds will underperform, based on the central bank’s “incrementally hawkish sentiment.”
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