The Housing Bubble

Shake-down, Chicago-style!!

I hope you ‘No-bama’ folks don’t harbor the delusion that it would be any better under a Romney presidency…

Bear…my hope is we can finally get jobs on the books in America….Ohboozo cant do it so maybe Batmitty can?

Nobody from MF Global has even been charged. $1 billion poof!

Agape World Inc was taken down recently.

Several hundred inside traders have been indicted.

Hundreds of RE crooks are being sent to jail almost every month.

There are just TOO many.

Ohboozo cant do it so maybe Batmitty can?

While “Ohboozo” is merely incompetent, “Batmitty” will smile as offshoring accelerates, reminding us that offshoring is good for America.

But have no fear, the scary black man will probably be reelected as Fundies will refuse to vote for the even scarier Mormon.

None of these career politicians have the balls or the desire to help get America out of the ditch. All they are interested in is squeezing the last drops of anything resembling capital out of this damp rag of a country. Watch “Mr. Smith Goes to Washington”.

“…the scary black man will probably be reelected as Fundies will refuse to vote for the even scarier Mormon.”

What is worse for a Fundy: A Kenyan Hawaiian Muslim President or a non-Christian Cultist President? (Sarcasm tags omitted)

And if one person can wipe out your financial future, you are not doing your due diligence.

Better to not get married then?

lol

This story reminds me of a John Stamos Lifetime Television for Women movie I’ve watched more times than I care to admit, (who can possibly resist the Lifetime/Stamos Double Cheese Combo Deluxe?), called, “The Two Mr. Kissels”.

Nice, rms…

+1, rms

Talking about pension. Last year when I quit my previous employer I opted to cash out my pension. Turned out to be a really bad idea for tax purposes. I had to pony up quite a bit to uncle Sam last month.

Turned out to be a really bad idea for tax purposes.

File that under “A bird in hand is worth two in the bush”. As I tell my wife on a regular basis, we can’t count on her city pension for much come retirement as it probably won’t be there by the time she is eligible to collect on it. At least you got something today, even if you had to pay the tax man.

Funny, but cash-flowing real estate seems less risky than pensions these days (for Gen X anyway). Based on some simple calculations, our multifamily would generate the equivalent return, after expenses and with today’s rental rates, of $250,000 invested at 10% return annually, when it’s paid off.

It’s all about hedging bets…

It’s all about hedging bets…

And how do you hedge against the mil-rate going up dramatically, if the city is in sufficiently-dire financial straits for your wife’s pension to be worthless?

And how do you hedge against the mil-rate going up dramatically, if the city is in sufficiently-dire financial straits for your wife’s pension to be worthless?

We don’t live in the city in which she works. However, your question is valid, as the city we live in is probably in the same straits financially.

The answer is we can’t. We can raise our rental rates as our expense go up, but only in so far as the market will bear without risking increasing our vacancy rate. Having said that, I fully expect our property taxes and insurance expenses to go up, and also expect (and have already done so) to raise rents as we can. I guess the real hedge on increasing expenses which could reduce the cash-flow on the rental property is having other means for saving/preparing for retirement. Nothing is risk-free, except maybe Treasuries, and those don’t return anything but principal currently.

I would still rather have a paid-off, cash-flowing multi that I could live in again if I had to reduce my expenses in retirement than be forced to rent in retirement. How can you hedge against increasing housing costs in your retirement if you don’t own a paid-off property? Seems we would both be at the whims of forces we can’t control, but my taxes on the property are currently (and will most likely continue to be) much lower than rents…

Many places (Texas) freeze most of your property taxes when you turn 65.

Right, and prop 2 1/2 follows the same principal, limiting increases without an override vote.

Good answer, Northeastener.

And I agree: you can’t hedge against all risks, but diversification helps reduce the aggregate risk profile.

Can’t you rollover pension funds to avoid the early withdrawal penalties? That would be the prudent move.

“Seems we would both be at the whims of forces we can’t control”

Our common delusion is that we are not at the whim of forces we can’t control. Given our ability to imagine the future, we can only do our best to set something aside for the future and enjoy the day.

Can’t you rollover pension funds to avoid the early withdrawal penalties? That would be the prudent move.

That’s what I did with a former employer with which I had both a 401k and pension.

“Last year when I quit my previous employer I opted to cash out my pension. Turned out to be a really bad idea for tax purposes.”

Next time run your idea past the HBB consulting team. We are here for you, pal!

P.S. I can sympathize. The last time I owned gold, back in the early 2000s, I ended up selling it when it was at the lowest level of the past three decades. I suspect the problem was that like our household, many other cash-poor households were selling gold at the same time to raise cash.

Don’t think that this can’t or won’t happen again; rather, you should expect it and wait for it.

It was closely watched. Plus TABOR makes it REAL hard to raid to spend on something else.

(wasn’t) Barny Frank and Chris Dodd behind the subprime debacle?

Mostly no:
Private sector loans, not Fannie or Freddie, triggered crisis “the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis….More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.”
http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html

Wasn’t William Jefferson Clinton the one that pushed through NAFTA?

He was the last of many. And Clinton pushed many far-right economic theories too. He signed the Repub pushed de-regulation of the banks too.

“NAFTA was initially pursued by politicians in the United States and Canada supportive of free trade, led by Canadian Prime Minister Brian Mulroney, U.S. President George H. W. Bush, and the Mexican President Carlos Salinas de Gortari. The three countries signed NAFTA in December 1992, subject to ratification by the legislatures of the three countries. There was considerable opposition in all three countries. In the United States, NAFTA was able to secure passage after Bill Clinton made its passage a major legislative priority in 1993.” wiki

but blaming our dire situation on a single political party, the sell-out puppets, takes the limelight off the men who are really pulling strings.

Sometimes you just have to tell it like it is. Most blame for our economic woes falls on the far-right, trickle-down, supply-side “free-marketers” IMO. There are many in both parties yes but FAR more on the Republican side. That’s just the way it breaks.

Is proving you’ve been right all these years really more important than lifting the curtain back for all to see?

How do you know I or they’ve been “right” all these years? How do you know they didn’t vote for Reagan once and listen to all his supply-side BS and believe it when they were young and dumb? How do you know that after 32 years of evidence, many minds have changed to this trickle-down farce of an economic theory. And how do you know it was not those things that have lifted the curtain back for them to see?

I may actually buy this book to see if the authors address that. They probably do.

Weren’t the efforts of Barny Frank and Chris Dodd behind the subprime debacle ??

Sorry Carrieann…You can have your own opinion but not your own facts;

Some economists state that the 1999 legislation spearheaded by Gramm and signed into law by President Clinton — the Gramm-Leach-Bliley Act — was significantly to blame for the 2007 subprime mortgage crisis and 2008 global economic crisis.[11][12] The Act is most widely known for repealing portions of the Glass–Steagall Act, which had regulated the financial services industry.[13] The Act passed the House and Senate by an overwhelming majority on 4 November 1999.[14][15]

the Gramm-Leach-Bliley Act

I lost all respect for Gramm when he pushed this act. Previous to that, I used to respect him as a fiscal conservative.

Here’s the “Official Version” of the causes behind the Great Recession:

http://fcic.law.stanford.edu/report/conclusions

Nothing new, but FYI.

I believe that only 6 months written notice is required to get out of NAFTA. If Obama didn’t like NAFTA he could have easily left.

only 6 months written notice is required to get out of NAFTA ??

6 months notice from whom ?? Are you suggesting that President Obama can get out of a treaty through an executive order ??

I believe Rio stated that in his last paragraph Carl…

My point, though, is that they pursue policies during D administrations that drive many people into the arms of the Rs. Things they may have pursued 20 years ago and been quiet about since. Some voters have long memories. The Ds don’t want to own that, but it’s just as important as today’s bamboozle from the Rs. I think Rio was just talking about today’s mistakes.

they pursue policies during D administrations that drive many people into the arms of the Rs. Things they may have pursued 20 years ago and been quiet about since.

Like what?

Things they may have pursued 20 years ago and been quiet about since. Some voters have long memories. The Ds don’t want to own that, but it’s just as important as today’s bamboozle from the Rs.

It is not as important in reality because:
The Dems stopped pursuing many of those polarizing things 30 years ago but the destructive trickle-down, taxcutsfortheRich mantra of the Repubs has been continuously pursued for 32 years and is being ramped up today to where they want to double-down on those failed policies.

Not only that, but unlike the Dems, the Republican party has been taken over by bat s%$t crazy haters who refuse to cooperate. You do not see this? There are no legit studies showing the Dems have become much more liberal and obstructive the past 30 years BUT:

Washington Post, 01/30/2012: quoting Professor Keith Poole: (since the 70’s) “The Republicans have moved about three times the speed to the right as the Democrats have moved to the left.”

In a forthcoming book about Washington dysfunction, “It’s Even Worse Than It Looks,” they write: “One of our two major parties, the Republicans, has become an insurgent outlier—ideologically extreme, contemptuous of the inherited social and economic policy regime, scornful of compromise, unpersuaded by conventional understanding of facts, evidence and science, and dismissive of the legitimacy of its political opposition.”

Sometimes you just have to call it like you see it.

Spot on Rio…+1 again…I totally agree with the last paragraph…

Like what?

Gun control, wolf reintroduction, setting aside more wilderness areas which prevents locals from doing what they’ve traditionally done on public lands…that sort of thing. Probably all sounds like silly complaints to you, but it’s the kind of things that prevent generations of people from even considering voting for them. And they ARE legitimate complaints if you live there. Even the hard core wolf activists are starting to admit that they’ve shot themselves in the foot long-term by ramming things down the throats of the locals whenever they get the chance.

But don’t get me wrong, I’m not saying that Rs are the answer. I’m just saying that’s how they end up almost owning the Rocky Mountain West. The Ds helped by being tone deaf to rural issues.

Gun control, wolf reintroduction, setting aside more wilderness areas

Holy cow! I didn’t realize the extent of their extremism! How will they ever live it down?

Gun control ??

How…Where… ?? I have a whole safe full of guns…There are more assalt rifles than you can count…The R’s playing the “fear card” is getting more than old…

wolf reintroduction ??

Why did they need to be re-introduced…Did they all run away ? They were exterminated…Exterminated I might add probably mostly on government owned land…

There were good reasons for why they were exterminated. You can argue whether they were good enough or not, but when you refuse to listen to the other side’s reasons don’t expect them to listen to yours.

Nobody has any sympathy for the locals that actually have to deal with them…but they want to make fun of them for voting the “wrong” way. Like it or not, stuff like this is why large chunks of the country won’t vote D even when the Rs deserve to lose. I say again, the Ds are tone deaf to rural issues.

Gun control ??

How…Where… ?? I have a whole safe full of guns…There are more assalt rifles than you can count…The R’s playing the “fear card” is getting more than old…

The Ds did their best to get rid of them in 1994. They own it until the Rs do something even stupider.

Until any of you have spent a great deal of time in new wolf country, and I have in Montana, you have no idea what you’re talking about.
Wolves don’t need protection they need lead therapy. These progressive policies rammed down the throats of the local people, people actually affected by these ivy league type policies, are very unpopular in wolf country.
Wolves are very efficient, very destructive predators. There is a reason why our forefathers eradicated them.
SSS

Wolves are very efficient, very destructive predators.

Apparently they can pull-down livestock in seconds too:
http://www.huntandtell.com/2009/06/18/huge-wolf/

There is no good argument in this world for “eradicating” wolves. What a despicable, narcissistic, bloodlusting perversion.

While I think there remains a place for them in the ecosystem (keeping deer in check, if nothing else), I can certainly understand someone who owns livestock seeing the issue from a different perspective than mine.

If I lived in wolf country, I would worry about them taking down family members and not just livestock. If wolves are a priority, then we the people should compensate livestock losses.

There are bears and cougars in rural east King County, Washington - less than 10 miles from suburban Seattle. Bears have recently made it into the city limits of Seattle.

“…the Ds are tone deaf to rural issues.”

I hate to say it, but so are the R’s. But I hear you on the reintroduction thing. We got three pairs of breeding grizzly’s “reintroduced” up here and it didn’t turn out so well….

On the other hand, I’ve owned and raised (and loved) a timberwolf, and while quite sympathetic to them, completely understand why ranchers would shoot them (and roving German Shepherds, for that matter) on sight. Until you’ve watched a large predator predate, you cannot appreciate quite how nasty they can be in herds of helpless meat animals.

We got three pairs of breeding grizzly’s “reintroduced” up here and it didn’t turn out so well….

There is talk of reintroducing grizzlies in WA state. I’m in favor of having a place for wildlife, and I really really don’t want to run into a grizzly on the trail.

“…the Ds are tone deaf to rural issues.”

I hate to say it, but so are the R’s.

If you see this ahansen, I’d be curious to hear more. I don’t doubt you’re right, but I never get to hear any examples of tone deaf stuff the Rs do in rural areas.

Tell us why equal justice is not “fair”. Tell us that your intent is to grant more “justice” to favored groups and less “justice” to the “white oppressors”.

I truly believe that I lost at least $100k in income due to discriminatory hiring practices by the federal government.

After serving as a Field Operations Supervisor in the 1990 Decennial Census, the government graciously gave us an opportunity to continue to serve.

While I feel there is some merit in promoting social agendas,
it was over the top. I scored a perfect 100% on the management exam I took. Hallelujah!

Or not. Women and minorities and veterans got bonus points.
I have an MBA and great credentials, but was only offered to interview for a managerial job in a substance abuse facility in DC. I did feel that each category were owed some due.

Being white in another lost generation cost me a better future. And retirement. Absolutely. I never discriminated against minorities. I was actually a paying member of the National Organization for Women (because I have a mother and sister that deserve equality) until their (NOW’s) vitriol toward men got so caustic I had to cut the relationship off. It had seemed promisingly positive but stepped on its own (or my) dick. Sad.

Tell me why “equal justice” is not fair. If you can.

My only experience with this: Not as many women apply to business schools as men do, so to boost female enrollment, the bar for admission is quite different for women. Of course, no school will come out and admit this. I noticed that of the relatively few women in my MBA class, at least 90pc weren’t qualified to be there. It was obvious. As an alum, I sometimes do panels at various events the school puts together. At the last event I attended, I gave the Asst Dean an earful. If you want more women to apply, the last thing you want to do is devalue the degree by training the business world to assume female MBAs are second-rate compared to male MBAs. No one wants to go to an Ivy League school only to end up with a second-rate degree. Why should this upset me still, since I already gained admission and have graduated? Because I am a woman, of course.

Anonymous Coward, it’s not even just a gender thing. I was a accounting tutor at Austin Community College while I was studying for the CPA. One student in Advanced Accounting (who happened to be a lady) was having trouble, so I met with the professor. Among other things I asked how many students would fail/drop out of a typical AA class. He said ‘none, it would be bad for their self esteem.’

Advanced Accounting is one of the highest level undergrad courses. Imagine how an employer would feel about community college when one of these ‘graduates’ shows up for work?

He said ‘none, it would be bad for their self esteem.’

I’m beginning to wonder if we are in the middle of a self-esteem bubble.

“Among other things I asked how many students would fail/drop out of a typical AA class. He said ‘none, it would be bad for their self esteem.’”

I’ve taught a few CC math classes over the years to supplement my income while providing useful service. My worst ever memory from this part of my experience was the time I took over an intermediate algebra class late in the semester for a teacher who became ill. There was one fellow in the class who had a habit of seldom showing up except for exams, which he repeatedly failed. I was going to give him the ‘F’ grade that he earned, but he somehow leveled a sufficiently convincing threat of a lawsuit at the department chair that she pulled rank on me and changed the student’s grade to a ‘C’. Since I was a contractor at the time, complaining would have been a good way to torpedo my future work opportunities, but the lingering sense of disgust has remained with me to this day.

but he somehow leveled a sufficiently convincing threat of a lawsuit at the department chair that she pulled rank on me and changed the student’s grade to a ‘C’.

Ugh. Disgusting indeed…

You know, Nick, I could sit here for an hour and answer your questions in simple sentences and high school-level concepts so you might see them in a different light, but I’m too damned tired tonight. So if you read this, ask yourself if the Ivy League MBA’s programs you’re referencing have helped drive a society that’s on course to survive through the next century?

No?

Hmmm. Didn’t think so. Maybe, just maybe the fact that females are generally more successful in our educational system now might indicate that women (and maybe even the “minorities” you’re always disparaging) offer something to the mix that isn’t quantified by the system as it currently struggles to adapt. That maybe the changes they will bring may help redefine our society so it better adapts to the needs of a technologically advanced (and globally-oriented) economic system?

As it stands currently, women are still being excluded from redefining that system, but not so much as they were in recent generations.

Change is difficult, but we must evolve if we are to survive. Sorry it’s such a drag on your ideology, but that’s just the way it is. We’ll talk later….

Nick?

Nick didn’t write anything about MBAs. I was sharing my thoughts from my personal experience. Reasonable people can disagree. I don’t like that women clearly have a lower bar for admission to supposedly elite programs. It makes me feel second class. This doesn’t happen in law, accounting, or medicine, because application rates to those programs are relatively equal between men and women. But in business school, due to personal choices, fewer women apply. My view is the schools should not lower the bar to massage the numbers because of the longer-term implications. Women don’t need or deserve affirmative action, just a fair shot. That’s my view. The event I was referencing was the Columbia Women in Business Conference in NYC. (Saying this makes me a little less anonymous, but whatever–Ben can already tell who I am for my email address.) This was the prevailing view amongst the panelists there. Special treatment ends up hurting rather than helping you because it makes people percieve women as second-rate. You have your opinions, some of which have been interesting to me. This is mine.

Who says it’s a “lower bar”? I contend it’s simply different and as such is nudging the field along a move diversely-oriented pathway. Not saying it’s better or worse, just that it’s an evolution. Even the “lesser qualified” have something to teach us by-the-book “experts”, no? Everything makes soup.

And I was responding to nick’s opening thread, AC. And you’re most definitely not a coward, though your anonymity is safe with me.

So you support discrimination?

“in the end the net change in a family’s budget percentages hasn’t changed much”

Not true. Not true at all. Maybe so for most of the HBB posters who seem to earn well more than area median wages and are better educated than most. But for what remains of the middle class, with only thin ice between themselves and Lucky Ducky status, the increase in food and energy costs are not negligible.

if laddie had said that in 2006, then he would have been referring to gold at it’s $500 to $700 per ounce range back in 2006. And he would have been right that it was a screaming buy at the time.

That’s the point. He was saying that when gold was around that price.

I bought at around 800 and thought it was crazy then, but doubled my money when I sold a couple years later.

That’s the point. He was saying that when gold was around that price.

Right. But if he had said the same thing at $1900/oz, he wouldn’t have been so correct…

Gold = $1600/oz or bust!

May 8, 2012, 11:34 a.m. EDT
Gold drops more than $40 as dollar climbs
Futures prices on track for lowest close of the year
By Myra P. Saefong and Barbara Kollmeyer, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold futures dropped by more than $40 an ounce Tuesday, on track to mark their lowest closing level of the year, as the dollar held onto gains amid continued concern about political upheaval in Europe.

Gold for June delivery (GCM2 -2.35%) fell $41.80, or 2.6%, to $1,597.30 an ounce on the Comex division of the New York Mercantile Exchange, after tapping a low of $1,595.50.

A close below $1,600 would be the lowest close of the year for a most-active gold futures contract. Prices had lost $6.10, or 0.4%, on Monday.
…

A close below $1,600 would be the lowest close of the year for a most-active gold futures contract

That’s funny. Gold is close to its yearly high in Brazilian Reals. I can’t figure out if I’m losing or making money.

That’s why owning some gold is important. It’s a complicated, globalized, big world type thing going on here.

From my very subjective perspective, the amount of dollars in circulation is once again at risk of drying up relative to funding needs. Part of this is due to ultra-low interest rates; bank earnings depend on the interest rate, and when the rate is near zero, banks have no incentive to put their capital at risk by loaning it out.

The upshot is that barring unforeseen developments (e.g. a shock-and-awe campaign QE3 announcement early this summer), the current fundamentals for gold look as bad as the fundamentals for dollars look good.

About one third of its peak.

Why should it’s previous pattern (low as a percentage of peak) have any bearing at all on today’s pricing? The world seems rather different that it was 30 yrs ago.

“but around 1980 gold rose to around $800. It dropped to its low of $270 about 21 years later.”

Yeah, high interest rates will do that, as opposed to serial QE’s. IIRC you could get 15% on a CD in the early 80’s.

I’m sure the Chinese will quietly continue to hoard the precious, especially after QE3 is announced, probably at the same time the financial cliff legislation is repealed, which will be later this year, most likely after the elections. So yeah, Au, will probably continue to dip during the year.

“…high interest rates will do that…”

Not to worry, as the Fed has assured the markets that they will keep interest rates at abysmally low levels through 2014. So there is no need to sell your Precious™ until 2014, at the earliest!

“The local stats show I’m living in two worlds”

The pace of stratification of US society is picking up quickly, as Americans continue to be sorted into the “Middle Class” and “Lucky Ducky” bins. Once sorted, the possibility of being “resorted” out of the middle class bin always looms as white collar, middle class jobs continue to be offshored as the rounds of layoffs in Corporate America show no sign of relenting. But it’s OK, as it keeps the price of iPads from rising.

Yeah, the “middle class” bin is leaky.

Yeah, the “middle class” bin is leaky.

No the middle class bin is really a press.

Do the 1% tread it with their bare feet?

“The local stats show I’m living in two worlds”

Where do you find these local stats? Is it in a city or state website somewhere?

The BLS website and Wiki both offer explanations.

Google it!

A wiseacre once helpfully directed me to this site, in response to a question. Thank goodness there are no wiseacres on this site

“Let Me Google That For You”: http://lmgtfy.com/

Go google yourself, LOOSERS. The question was about how underemployment is a subjective, non-quantifiable concept.

And yes, “losers” is always spelled “loosers” on the internet.

And yes, “losers” is always spelled “loosers” on the internet.

How about lösers?

I like “lugers”, but I don’t like the idea of another man’s legs cradling my butt.

The percentage of civilians in the labor force is trending down from its early-2000s level with no end in sight. Add that trend to the inevitable high rate of labor force shrinkage in the coming years as the Baby Boomers retire, and you have massive labor force shrinkage underway. Once this adjustment process is finished playing out, one can reasonably expect at least a temporary labor shortage.

With the incoming workforce each month and the current unemployed we could cover the existing baby boomer population for at least 4 years without any reduction in the workforce number. So any reduction in the workforce number is not currently related to a shrinking workforce because of baby boomer retirement.

You’ve just described the real problem with privatization of ANY government service.

They are accountable to no one and do not equally serve all citizens and do so for PROFIT.

“Are you ready to ditch that?”

Yeah, sure. I want Jon Corzine in jail, even if that means no more Race to the Top.

So be it.

I have no pension, btw.

I was dumb enough to sign up for the “investment plan,” which is about $3k/yr. So I’ll have about $35k when I am 65.

So be it.

But you won’t move to upstate NY, which you say you’d love to do, because you can’t trust the job prospects. But now you say you’re ready to throw your job away. Seems inconsistent.

“But you won’t move to upstate NY”

I will if I get an admin. offer. A teaching offer would be worthless as every year of contraction devours newhires.

“Seems inconsistent.”

It’s not.

I will still be employed in Florida if fed dollars (RTTT) go away. I will simply be demoted back to teacher and force a crappy new-hire out (hey NYS, this is how it should work).

Why are you so into “saving the system.” Isn’t the system what got us here?

Do you honestly think Obama is a good president? This guy could have easily been a great president, all he had to do was let a few TBTF banks fail and have Holder arrest some bad guys, and blammo! Awesome dude stuff right there.

But no, he has to throw teachers under the bus, and get in bed with TBTF Vampire Squids.

I’ve posted this before. This video was created during the Bush era, and yet it feels even more appropriate now. What do you think?

http://www.youtube.com/watch?v=HLUX0y4EptA&ob=av2n

Why are you so into “saving the system.”

I’m curious about people who work for the system (I don’t) or depend upon (SS, medicare) the system (I don’t), but who think things would be better (even for them) if we destroyed the system.

Do you honestly think Obama is a good president?

I honestly think he’s done a far better job than the previous president did, and- more importantly- a far better job than his opponent would have done. And I think he’ll do a far better job than his current opponent would do. That’s how I vote, but I’m a realist, not an idealist.

Are the good guys in your video the democrats opposing the fascist, war-mongering republicans? Or godly republicans opposing the socialist, godless democrats? Or pure and noble libertarians opposing the evil repubs and dems, or anarchists opposing them all?

I did enjoy the song.