The Housing Bubble

I don’t have to buy insurance. If this house burns, I’ll just go rent another one. I hope the forest doesn’t burn, is all.

I have a friend whose house burned down in the Rancho Bernardo area a few years ago, and another friend who came close to losing his as well.

“Rancho Bernardo”

Dodged the bullet: Evacuated, but not burned.

“I don’t have to buy insurance”

Well that’s not the issue. It’s the kind of help the government would like to give you.

Is it safe to conclude that Spain is TBTF, Greece is not?

There’s that word again: TRUST. Good thing Wall Street banks have no similar problem with public distrust.

Spain’s biggest hurdle to a bank recovery: public distrust
Key to averting a banking collapse in Spain is persuading the public it’s safe to keep money in the country – but government actions only exacerbated a loss in confidence.
By Andrés Cala, Correspondent / June 8, 2012

Demonstrators shout slogans against bankers during a demonstration outside a Bankia bank branch in Barcelona, Spain, Friday, June 8.
Emilio Morenatti/AP

Madrid

As Spain keeps the world economy on edge while it scrambles to recapitalize its once-mighty financial sector, it’s losing hold of perhaps its most important asset: citizens’ trust.

“Too-big-to-fail” Spain appears to have averted a complete economic meltdown as Europe rushes to give it more time to recover. But rescuing the banks and averting a full-fledged embarrassing bailout is not enough. Central to Spain’s ability to pull out of this crisis is corporate and public willingness to keep money and spending at home, instead of running to foreign banks and markets. And key to that, analysts say, is for the government to explain to Spaniards what went wrong, how the system will be fixed, and how those responsible will be held accountable – instead of stonewalling investigations.

Markets and global governments are concerned about a domino-effect bank run that could severely undermine the European Union financial system, as evidence mounts that Spaniards and investors alike are losing confidence in the country’s institutions, not just its banks.
…

As Focus Shifts to Rescuing Spanish Banks, Worries Grow Over Greece
By JACK EWING
Published: June 10, 2012

FRANKFURT — As European finance ministers labored on a plan to shore up Spanish banks in recent days, the urgency of that mission was driven by events in a country at the other edge of the euro zone: Greece.

The Spanish banking rescue agreed to on Saturday will be expensive — costing up to €100 billion — but well within the means of a European emergency fund already established for just such purposes.

Far harder to calculate are the costs if, after Greek elections Sunday, the new government there reneges on the terms of the bailout Athens negotiated with its European lenders only a few months ago. That could lead to an unprecedented withdrawal from the euro zone, threatening the structural integrity of a currency union that has largely benefited more prosperous members like Germany.

“The stakes are exceptionally high,” Lucas Papademos, former interim prime minister of Greece, told a bankers’ group in Copenhagen on Friday, “because the decisions to be made at, and immediately after, the forthcoming elections will determine the country’s future for at least the next decade.”

Mr. Papademos, who is also a former vice president of the European Central Bank, said Greece’s departure from the euro zone would be catastrophic, pushing inflation in the country as high as 50 percent, putting extreme stress on Greek banks and reducing living standards.

And those problems would not be Greece’s alone. The big fear in Europe is contagion — an infection of financial panic that could spread far beyond Greece. Indeed, Spanish leaders have long said that Greek problems were contributors to the general market uncertainties that helped undermine Spanish banks.

The next task of European leaders is to show the rest of the world that they are making a credible effort to repair the flaws in the edifice of the euro zone that allowed the problems in one small country, Greece, to become a threat to the world economy.

“The way the currency union has been functioning is not sustainable,” Jens Weidmann, the president of the German Bundesbank, told the Welt am Sonntag newspaper. “A breakup of the currency union would bring extremely high costs and risks that no one can really predict,” he said.

Even if Greece does end up with a government willing to try living up to the terms of its €130 billion, or $163 billion, bailout deal by meeting its payments and attempting to narrow its large budget gap, there are strong doubts whether any new leadership in Athens would be able to fulfill those obligations. A lot of private money has already fled Greece, while its deeply depressed economy and dwindling tax revenues threaten to put the country ever deeper in the hole.

“Even in case of a new government, I doubt whether the institutional framework in Greece can guarantee the program,” said Jürgen Stark, a former member of the European Central Bank’s executive board. “Who has the competence to implement the program? That is the key point.”
…

“As Focus Shifts to Rescuing Spanish Banks, Worries Grow Over Greece”

Seriously? I mean, worried about Greece? Again? Still? Huh? Why is this even a headline anymore? For chrissakes this has been going on forever! Nobody is too big or small to bailout. The bailouts keep coming, and coming, a n d C O M I N G! Yet, there’s still worry? HOGWASH!

What next: The United States of Europe?

EUROPE NEWS
June 10, 2012, 6:24 p.m. ET

Greek Election Poses the Next Major Threat
Country’s Decision on Whether to Remain in Euro Zone Could have Huge Impact on U.S. Economy and Presidential Vote
By SUDEEP REDDY

WASHINGTON—Spain’s agreement to recapitalize its troubled banks marked a critical step to calm global financial fears, but another giant threat still looms: Greece’s elections on Sunday. Both events could prove more influential than anything President Barack Obama can do at home in determining whether the U.S. economy perks up ahead of the fall elections.

If Greece stays in the euro zone and the European debt crisis abates, the U.S. economy could conceivably stabilize enough in the coming months to allow Mr. Obama to sustain his argument that the U.S. economy is slowly improving.

If Greece exits, risking a breakup of the currency union, then the applause for the Spanish bailout could quickly give way to widespread fears about another global crisis—just as he is heading into the final stretch of the election.

Mr. Obama himself underscored that reality with his unusual appearance in the White House press briefing room Friday. In remarks clearly designed to influence euro-zone officials ahead of their weekend talks, he devoted much of his attention to Europe’s troubles. He spoke at length about what the Continent needed to do—including injecting capital into Spanish banks—even before he chastised Congress for blocking his domestic policy proposals.

Spain’s decision Saturday to accept as much as €100 billion ($125 billion) from Europe to bail out its banks represented another mixed success in the Obama administration’s two-year campaign for bolder European action to quell the Continent’s debt crisis.

With Spain, the U.S. had pressed behind the scenes in recent months for euro-zone rescue money to be injected directly into Spanish banks, instead of going through a loan to the government as now planned. That goal was pushed publicly by the International Monetary Fund and many nations in Europe—apart from the most powerful, Germany—to avoid adding to Madrid’s already bloated government debt load and risking even higher Spanish borrowing costs in the coming months.

U.S. officials ramped up private pressure over the past two weeks, dispatching a top Treasury official to Europe and arranging numerous calls between Mr. Obama and his European counterparts. They stressed the urgent need for Spain to accept help and announce a large program early—instead of allowing the threat to fester and become even more expensive while waiting for detailed bank evaluations. That guidance springs from the U.S.’s playbook in its 2008-09 bank-rescue program, in which the government sought to restore market confidence with quick bank capital injections.
…

U.S. Treasury investors seem none too happy about the bailout announcement.

UPDATE 1-U.S. Treasury bond futures tumble on Spain relief
Mon Jun 11, 2012 4:24am IST

(Reuters) - U.S. Treasury bond futures tumbled on Sunday as trade opened in the wake of Spain’s deal to get aid for its troubled banks.

The 30-year T-bond future opened down 1-15/32 at 147-24/32. The 10-year T-note future was also down sharply. Investors often seek safety in U.S. government bonds in times of trouble and sell them when conditions improve.

U.S. stock index futures rallied in relief over euro zone finance ministers’ agreement to lend Spain up to 100 billion euros ($125 billion) to help its battered banks.

It remains to be seen, however, whether the reaction will be only short-term, given that the European debt crisis has dogged financial markets for more than two years. Investors are likely to become cautious ahead of Greek elections on June 17.

“I think it is unlikely to last,” said William Larkin, fixed-income portfolio manager at Cabot Money Management in Salem, Massachusetts.

“In the Greek elections, what happens if they overwhelmingly vote against austerity? That’s a possibility and then we have the problem all over again.”
…

Apparently Spain is TBTF, Greece not so much…

Originally published Sunday, June 10, 2012 at 8:14 PM

Spain’s bailout shows all roads lead to Greece

With the Greek election fast approaching, fear is mounting in eurozone nations, spurring the Spanish government to get help for its shaky banks and other leaders to do what they can to protect Europe from whatever happens at the polls June 17.

By Michael Birnbaum
The Washington Post

ATHENS —

Massive Spain was forced to ask for a bailout to keep its banks afloat this weekend. But it was tiny Greece that pushed Spain over the brink.

This Mediterranean nation’s 11 million people head to the polls next Sunday with a stark choice between leaders who accept the harsh terms of the bailouts that have kept their country afloat and those who reject them, potentially at the cost of Greece’s future on the euro.

Fears that a Greek rejection would panic markets about the eurozone’s future pushed Spain to seek the aid ahead of Greece’s election.

But the mere possibility of a victory for anti-bailout forces in Greece helped exacerbate Spain’s problems in the first place, boosting its government’s borrowing costs and causing a slow-motion bank run that weakened its financial system.

That spiraling confidence problem — in which the 17 countries that share the euro currency are united enough to spread their problems to one another but not enough to guarantee an end to them — is what Europe’s leaders are racing to fix with a road map to economic integration that could come at the end of the month.

At the moment, those leaders are working to protect the rest of the eurozone from whatever happens in the Greek election. Greece’s anti-bailout politicians have wagered that the unpredictable consequences of the currency union’s kicking out a member will force Europe to support them even if they reject the bailout terms.

In the United States, President Obama is also worried that bad economic news from Europe could dampen America’s struggling recovery, and with it his re-election chances. He has in recent days expressed unusually direct concerns about Europe’s management of the crisis.

For now, Europe is still playing hardball with Greece, and the Spanish bailout of up to $125 billion may help leaders keep up their stiff resolve against Greece.

Germany’s central bank said last month that Greece’s leaving the eurozone would be difficult but “manageable” for the rest of Europe.

But their balancing act — talking tough with Greece, while taking big steps elsewhere to guard against turmoil spreading if Greece votes for the bailout critics — is a reminder of how much uncertainty Europe still faces.

Even with Spain’s new rescue program, an anti-bailout victory in Greece could push Spain’s and Italy’s borrowing costs even higher, analysts say. The countries are large enough that if Italy needs aid and Spain needs more, Europe’s bailout funds might not be able to come up with the money.

“If Spain got into a catastrophic situation, you could forget French and German banks,” Luxembourg’s finance minister, Luc Frieden, told the RTL broadcaster Sunday.

So European leaders have been sending a conciliatory message to Spain and a very different one to Greece.

On Saturday, just hours before Spain asked for the bailout, which will come with many fewer strings than were attached to Greece’s, eurozone chief Jean-Claude Juncker told Deutschlandradio that “the substance remains” that Greece needs to get its budget under control.
…

IMO, they should have waited a couple more weeks to hand Spain their special deal…Will this give SYRZIA the ammunition necessary to take them over the top ??

“…they should have waited a couple more weeks…”

Waitin’s hard at the height of panic.

June 10, 2012 7:00 PM

Will Europe tip the world into recession?
By Jill Schlesinger
(PHILIPPE HUGUEN/AFP/GettyImages)

(MoneyWatch) “Tio!” is “uncle!” in Spanish and it may be what Spain finally cried over the weekend. The indebted nation became the fourth eurozone country (after Ireland, Greece and Portugal) to accept assistance from EU, IMF, and eurozone financial officials since the debt crisis began. (For more on Europe, see “Europe debt meltdown: How did we get here?”) European officials will provide $125 billion, though there were few details on the conditions of the package.

It’s almost five years since the early days of the financial crisis. In the summer of 2007, Countrywide Mortgage warned of “difficult conditions”; Bear Stearns liquidated two hedge funds that were making risky sub-prime bets; and the FOMC said “downside risks to growth have increased appreciably.”

Although few could see it, those events were the warning signs that a crisis was brewing, despite surging stock markets that would reach all-time highs in the autumn of 2007. The European sovereign debt debacle - the globe’s second financial crisis in five years - is occurring in plain sight, for all to see. It’s hard to believe that it has been three years since Greece owned up to just how big a mountain of debt the country had amassed. Three years and the eurozone leaders are still debating how to contain the crisis from spreading to the much larger economy of Spain. The downside of Europe’s three years of dithering is clear: Inaction could cause contagion and ultimately, could tip the globe into recession.

The only upside to the slow-motion crisis is that U.S. banks have reduced exposure to European sovereign and bank debt. Still, if the EU and European banks melt down, the U.S. will not be immune. U.S. banks will feel tremendous pain, because the global financial system is interconnected. Additionally, a eurozone implosion would hit U.S. manufacturing, as exports to Europe would dry up and the cost of those exports would rise with a stronger dollar. Finally, if Europe plunges into a deep recession as a result of the sovereign debt crisis, U.S. growth and job creation could stall and the odds of another recession would increase dramatically.

Sounds pretty bad, but optimists note that since every eurozone nation has so much to lose if the eurozone implodes, a solution is on the horizon. Pessimists remind us that we are dealing with 17 distinct nations, each with its own domestic issues that can color what might be seen as the best possible outcome for the world’s second largest economy.

All eyes will be on Europe this week and the second Greek election on Sunday, June 17. Additionally, there will be reports on U.S. inflation, which is expected to have slowed as oil and gas prices retreated from recent highs. Muted inflation may provide the Federal Reserve ample cover to act, just in case things get dicey in Europe. After all, does anyone really think that the Fed is going to stand pat if the world unravels?

For those who seek theater, J.P. Morgan Chase’s CEO will be on the hot seat, as he testifies before the Senate Banking Committee about the company’s massive trading losses. Lawmakers will grill Jamie Dimon about internal controls, but will likely use the testimony as a forum to debate regulatory reform and the virtues and vices of the Volcker Rule.

The European optimists won the battle for the week, at least in terms of stocks. All three indexes enjoyed their best weekly gains of the year.

– DJIA: 12,554, up 3.6% on week, up 2.8% on year

– S&P 500: 1,325, up 3.7% on week, up 5.4% on year

– NASDAQ: 2,858, up 4%, up 9.7% on year

– July Crude Oil: $84.10, up 1% on week

– August Gold: $1,622.10 down 2% on the week

– AAA National Average Price for Gallon of Regular Gas: $3.54

Wall Street stock market outlook for week of June 11, 2012:

Question for the HBB brain trust: Is the volatility likely to move stocks up, down, or both?

FOREIGN EXCHANGE
June 10, 2012, 1:02 p.m. ET

Reaction to Spain Aid Will Set Euro’s Path
By ANUSHA SHRIVASTAVA

Currency markets will be driven Monday by the potentially game-changing news over the weekend that the European Union is willing to lend as much as €100 billion ($125 billion) to help Spain shore up its banking sector.

Whether the euro gets a boost from this latest attempt to contain the euro zone’s sprawling debt crisis will depend, however, on whether investors believe that even such a hefty amount is enough to keep Spain’s banks afloat.

“Markets should react favorably to this deal,” said Douglas Borthwick, head of trading at Faros Trading in Stamford, Conn. But he added, “There will be healthy discussion over the coming days as to whether €100 billion is enough to recapitalize Spanish banks.”

The market will also question whether this means a restructuring of Irish and Portuguese bailouts is in the offing and whether Italy may also approach the EU for help with its banks, he said.

After a lengthy conference call among European finance ministers on Saturday, the Spanish government said it had agreed to make a formal request for the funds, which will be dedicated solely toward the bank sector. Prime Minister Mariano Rajoy on Sunday tried to convince the Spanish public that an EU bailout for the country’s banks will help shore up the ailing economy and dispel doubts about the common European currency. Spain’s banks have been hit by bad loans as property prices have tumbled.

Even if there is a short-term gain for the euro, Dan Katzive, currency strategist at Credit Suisse in New York, thinks the common currency is in for more of its recent weakness. He expects the euro to fall toward $1.20 as global central banks and European institutions continue to wrestle with the consequences of the region’s sovereign-debt crisis.

On Friday, the euro traded weaker across the board. Late Friday in New York, the euro was at $1.2517, down from $1.2561 late Thursday. The common currency also fell to ¥99.48 from ¥100.02. Just a month ago, the currency traded at $1.30. The dollar was at ¥79.48 late Friday from ¥79.63.

Also on traders’ radar this week will be Greek parliamentary elections, scheduled for June 17. While there will be a blackout in terms of polls this week, market participants will be keeping close watch to get some sense of how the voters may be moving.

At issue is whether the parties willing to enforce austerity measures will win a sufficient majority to enable the country to receive the next instalment of aid from European agencies. If they can’t take enough seats to form an effective government, many fear that Greece may be forced to exit the euro zone, an event that would reverberate through world markets.
…

Debt crisis: €100bn bailout could backfire on Spain

Spain’s €100bn bank bailout could backfire on Madrid by destabilising public finances and hampering the country’s access to capital markets, experts have warned.
…

June 10, 2012, 8:01 a.m. EDT

Europe’s impact on U.S. hangs like cloud
Consumers, businesses cast anxious eye overseas
By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — The U.S. is unlikely to escape a strait-jacket of mediocre growth if the economies in the rest of the world continue to slow down.

The ongoing financial crisis in Europe, which has waxed and waned for more than a year, is just one of the problems. The downturn in Europe has been matched by decelerating growth in rising economic powers such as China, India and Brazil.

“We are seeing a global slowdown,” said Scott Anderson, senior economist at Wells Fargo & Co. in Minneapolis

The effects are already evident in relationships with key trading partners. U.S. exports to the European Union, for example, fell 11.1% in April. And exports to China dropped 14%.

The latest batch of U.S. economic data this week is likely to reflect the growing impact of events overseas. Indexes measuring the outlook of manufacturing executives and consumers are both expected to fall. And the wave of negative headlines — and sinking stock prices — might have partly discouraged Americans from spending as much in May.

The biggest report is Tuesday’s release of retail sales for May. Consumer spending likely fell 0.3% last month, largely because of lower auto sales, according to economists surveyed by MarketWatch. If the forecast is on target, that would mark the biggest decline in almost two years.

Any decline in consumer spending is a bad omen since it accounts for as much as 70% of U.S. economic growth.
…

Noticed reported car sale in China were way up in April-May with some manufactures posting +20% gains: http://in.reuters.com/article/2012/06/09/china-autos-idINB9E8FA01A20120609.

But I poked around and found another story from the middle east that paints a completely different picture:
http://gulfnews.com/business/automotives/china-carmakers-worsen-glut-as-dealers-struggle-1.1033160

Note the growth of Chinese dealers YOY.
“In the showrooms, surging inventory will lead to intense price competition, forcing out weaker dealerships that can’t absorb losses, Luo said. There were about 21,000 dealership outlets in China as of the end of 2011, compared with 16,000 the year before.”

Real estate frenzy of the ’90s has come back to haunt Spain’s banks
Robert Tornabell
June 11, 2012

Opinion

“Spain is a country with a million unsold properties and an unemployment rate of 24.5 per cent.”

“The referendum and general elections in Greece this weekend may be highly contagious to Spain’s Banking system.”

Spain’s banking crisis did not come out of the blue.

In the 1990s, the Spanish suffered a bout of collective madness. Interest rates fell from 14 per cent (with the peseta) to 4 per cent (with the euro) in a matter of weeks.

In 1998, the centre-right government passed a law that increased the amount of land for development. Developers got rich, selling the idea that property would always go up in value. You could buy a flat on the Mediterranean for $156,000 and sell it the next day for $234,000; by the end of the month it would be worth $390,000. And the flat, purchased off-plan, was still being built.
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German banks financed Spain’s banks, which needed funds for high-risk mortgages. Greed made the people rich for a while - but then it made them poor, and jeopardised their future.

Spain is a country with a million unsold properties and an unemployment rate of 24.5 per cent.

The situation of ”extreme difficulty” described last week by the Prime Minister, Mariano Rajoy, has at its root the flats that banks accumulated when people started defaulting on mortgages.

The total assets of Spain’s banking system amount to about €3 trillion ($3.78 trillion). Net toxic assets - unsold real estate - are not known for certain. We do know that, bar the country’s three largest banks (BBVA, Santander and CaixaBank) and a handful of medium-sized commercial banks, the system needs to be recapitalised.

Delinquency rates are increasing, to 9.5 per cent on average and as high as 19 per cent at some banks.

The banks need to increase their tangible capital to €100 billion, and the government does not have enough funds for a tough restructuring or a bailout (of the kind applied swiftly by Gordon Brown in Britain four years ago).

At a recent press conference, the European Central Bank chief, Mario Draghi, insisted the ECB would not force any country - a reference to Spain, no doubt - to request a bailout or a full intervention.

He also pointed out - in an oblique reference to calls for the ECB to intervene in the sovereign debt market by buying Spanish government bonds to drive up prices and bring down the risk premium relative to 10-year German bonds - that it was not the ECB’s place to take on roles best played by others.

A less drastic 11th-hour proposal now appears feasible: the European Stability Mechanism could support Spanish banks that require recapitalisation, but the Spanish Treasury would be responsible for measures to guarantee these bailout funds. As this would be only a partial bailout, Spain would not have to meet the stringent obligations imposed on the three countries bailed out to date: Ireland, Greece and Portugal.

Just days after the Spanish finance minister declared that the markets were closed to Spain, he managed to raise more than €2 billion from the bond markets - though at a higher interest rate, not a good sign.
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Ah, so you were in JC when I lived in the ‘Boken. I sometimes wonder if I’d be an A-list composer in L.A. if all of that hadn’t happened. I lost a little bit of mind that day and it never came back.

A buddy of mine, that now lives in BK, lived at 23rd/6 and was on his roof for the second plane. He has two kids now; I have no idea how he managed to stay put…

Occasionally when the sky is clear and the weather is just right it hits me…I know what soldiers endure when they have flashbacks.

You can’t shake it.

Damn, I am bawling. I don’t know why your post hit me so hard today — I’ve gone over 9/11 a million times with my closest buds… I guess it’s because we never talk about the smell of the smoke.

And I was here in queens on the greenpoint ave ramp taking pictures as it collapsed. It was an incredibly clear day….max zoom…

“Can’t an$wer the The MegaCorp.Inc.’$ Q. A. program/protocol question it seems$”

Crooks, criminals, politically connected Golden parachute thieves. That should “an$wer” it but I still don`t think that is a reason for millions of “victims” to cry about the loans they themselves signed for thinking they were going to be rich from their brilliance in world of realestate investing.

But it is a good diversion for the Deadbeat apologist crowd. But not to worry still more govt. bailouts coming down the pike for the Banks and the Beats.

Posted: 5:45 p.m. Friday, June 8, 2012

Feds to sell off delinquent loans, aiding South Florida borrowers in foreclosure

It’s still there, … right in front of your closed eyes! :

How’d the peon ever get that by the MegaBank$ Corp. Inc.$ weapon$ of verification$ [WOV] & Due Diligence$? [D&D'$]

How?

What exactly is it you want me to say? Do you want me to say all the people that I know who bragged about the price of their houses having gone from $150k in 1999 to $500k in 2005 and extracted the equity while telling me their houses would be worth a $1,000,000 in a few years were not driven by greed? Well I don`t buy it. They were all (banksters and Beats) greedy b@stards and they all got caught with their pant$ down and they are all standing there with their hand$ out.

If you want me to say that the people who came up with the Liar loans are to blame for all of it and the people who filled in the lies on the applications are not, don`t hold your breath cause I`m not down with that . They were all greedy and are now living in a heads I win tails you lose world.

Historically, there have always been cons and irresponsible people. Banks historically ran borrowers through a ringer before they gave them a loan. But now not only did they lower the bar, they aided and abetted the con men.

Muchos gracias for re-posting this essential “blast-from-our-past”. New readers should tattoo its premise on their brain, though in all fairness it should be noted that the $720,000 loan was sold to two strawberry pickers AND a mushroom picker.

I was mushroom picker a couple of times.

Thanks for the acknowledgment and the reminder, ahansen.

Based on the stated facts of the article, my accounting of the “household income” is that one of the two couples who pooled resources to buy the home made $600/week during strawberry picking season, and the other made around $1000/week picking mushrooms (assuming a year-around season). This would add up to 4 X $1600 = $6400/month to pay for the mortgage of $4800, for a total of 75% of the combined incomes of the two households, versus the traditional underwriting guideline for mortgages to not exceed 30% of household income. This would have left $1600/month to pay for all other living expenses of a household with 10 members (2 families X (2 adults + 3 children) ). That comes out to $160/month or $40/week per family member.

Note the above scenario assumed strawberries were ripe for picking, and that the mortgage did not unexpectedly increase to $5,378. And I suppose the reason I am writing this grade school arithmetic post-mortem of a failed subprime loan five years after the fact is that the SF Chronicle writer was too lazy to bother connecting the dots.

Here’s the better article:

‘The Hollister Free Lance reports from California. “Despite making only $14,000 a year, strawberry picker Alberto Ramirez managed to buy his own slice of the American Dream. But his Hollister home came with a hefty price tag, $720,000. A year and a half later, Ramirez has defaulted on his loan, and he’s hoping to sell the house before it’s repossessed.”

“So how did Ramirez, with an annual income of just $14,000, purchase a $720,000 home without any money down? He had help, for one thing. Although Alberto Ramirez was the only one to sign the purchase agreement and the only one named on the loan documents, he actually bought the house with his wife Rosa Ramirez, as well as their friends Jesus Martinez and his wife.”

“However, even in a good month, the Ramirezes and Martinezes together don’t earn much more than a combined $6,500, and their official monthly payments were around $5,200.”

“The Ramirezes said Rancho Grande real estate agent Maria Avila promised they could refinance their home in three to six months to an affordable rate; until then, Rosa Ramirez said, Avila said she would pay for whatever they couldn’t afford.”

“Ramirez did supplement the mortgage payments on the Hollister home, paying about $2,200 per month for nine months. But the refinance never happened, and Martinez said Avila stopped helping with the payments at the end of 2006.”

“Rafael Cebrero, whose company Rancho Grande Real Estate sold Ramirez his home and arranged his mortgage, said subprime loans are getting a bad rap. Those loans, he said, have made it easier for many people to purchase a home.”

“Cebrero said the Ramirezes’ and Martinezes’ situation is an unfortunate one, but he said Rancho Grande was only trying to help the two families buy the home they wanted. ‘We feel we have done as much or more than we can do for these clients,’ he said.”

“Pamela Simmons, whose Soquel law firm is representing the Ramirezes, said the loan should never have been made. Simmons and Purdy attorney Alison Lawton said the firm sent a letter of demand to Rancho Grande in February alleging that Avila knew Alberto Ramirez could never afford the house and that she made the deal only for personal profit.”

“‘The real estate boom covered a multitude of sins,’ Simmons said. ‘Once the market started depreciating, the rug was pulled back to show the rot underneath.’”

http://thehousingbubbleblog.com/?p=2739

“Although Alberto Ramirez was the only one to sign the purchase agreement and the only one named on the loan documents,…”

That addresses a question which I had, which was whether it was possible for two families to pool resources and jointly take out a mortgage. Since only Ramirez’s name was on the mortgage, I guess it was perfectly legal.

The thing is, CIBT, I’m old enough to remember how well society and the economy got along BEFORE all the new laws, regulations, agencies, and Executive Orders of the past 50 years came along.

“The more prohibitions you have,
the less virtuous people will be.
The more weapons you have,
the less secure people will be.
The more subsidies you have,
the less self-reliant people will be.”

From the Tao Te Ching by Lao Tzu

Who disagrees?

Bills (in LA and Carolina),

I see it both ways. I can definitely see examples all around me where regulatory excess has shut down commerce. But I also stand by my earlier point: No law enforcement agency, no law enforcement.

Getting the right balance between sufficient governance to establish a rule of law and an excess that stifles commerce is a never-ending challenge.

My point is, that chalking up everything to they ‘both suck’ misses how far out on the limb we are going. What police or military power would be too much for the citizens to accept now?

Many of you will still happily lie on bed with one of the evil parties.

My point is, that chalking up everything to they ‘both suck’ misses how far out on the limb we are going. What police or military power would be too much for the citizens to accept now?

That we are sliding into the Fascist Abyss is a painful reality. As in the story of the frog in the pot we will continue down the path until the water is boiling. The middle class remnant will keep its mouth shut, afraid of losing even more economic ground.

I suppose that someday we will accept the old Soviet “nighttime knock on the door” as something that happens, preferably to other people, and we will keep our opinions to ourselves (like we already do at work), lest they get us into trouble. It will be done of course to protect our “freedom”.

I’m with you, Ben.

I find the drone list appalling.

To give you an idea of the complacency, my FIL (who, if you haven’t figured out by now, is the source of my contempt for Boomers) was a True Pot Smoking Nudie Hippie back in the day is now a Hannity fan and *LOVES* the military-industrial complex.

His answer: they’re losers, we’re winners. Hell, God gave us this power. It’s in the bible somewhere.

Yeah, freedom, man. Anything to keep my iPods cheap. I cannot believe they freaking hit bystanders with drone strikes. That makes them ineffective.

Let’s make it fair, even Robot Jox would be better than drone strikes. We’d still win.

http://en.wikipedia.org/wiki/Robot_Jox

“To give you an idea of the complacency, my FIL (who, if you haven’t figured out by now, is the source of my contempt for Boomers) was a True Pot Smoking Nudie Hippie back in the day is now a Hannity fan and *LOVES* the military-industrial complex.”

Which is why I always laugh when liberals to point to the “yuuts” voting 75/25 for Obama/Democrats as proof that Republicans are doomed due to demographics. Sure, they vote 75/25…until they get a job, start paying taxes and realize the world doesn’t run on unicorn fats.

Everyone bitched about “carpet bombing” and killing innocent civilians.

So we spent hundreds of billions to trillions developing the technology needed to (literally) target individuals. Now people are bitching about that.

Lets just give everyone their own Predators. Ive already got a target list in mind. Could be a win-win proposition.

‘billions to trillions developing the technology needed to (literally) target individuals. Now people are bitching about that’

It’s an act of war. Most of these killings are occurring in countries we are not at war with.

Ben, we’re not at war with ANY nation. Only congress has the authority to declare war, and they have not done so since Dec 1941.

We are in military conflict with groups that do not recognize national boundaries.

Oh, UN authorization? Where is that in the US Constitution?

“the world doesn’t run on unicorn fats.”

Sure, but it doesn’t run on guided missiles and hatred of gays, either.

“…countries we are not at war with.”

Is there a War on Terror list of enemy combatant countries?

The reason we are zapping people in Pakistan, is because the bad guys shooting guns at our guys are trying to hide in Pakistan. Aint our fault that they chose to have us conduct a “bug hunt”, instead of a “stand up fight”

Otoh, this should have been totally predictable by anyone who can read a map. Too bad nobody bothered to listen to our forefalthers advice about staying out of land wars in Asia.

The awful beauty of these new war technologies is that one good solar pulse (as inevitable as the CA earthquake) will fry their satellite overlords into oblivion, rendering the whole earth-linked apparatus inoperable.

And as an added bonus!
The Herald Sun reports that Australia is now recruiting American mercenaries, paying up to $200,000AUD per soldier. So not only has Oz imported America’s crappy school system, student loan scam, and allowed vast amounts of unregulated US loan money into the country (hyper-inflating its housing market and imposing an unsustainable debt burden), now it’s employing our unemployed military veterans, too!

Oh, and turned the Cocos Islands over to the US as a drone base. So at least we’re finally outsourcing our military as WELL as our civilian jobs.

Pakistan has never been a reliable Western ally. Never. Not even when a Harvard educated woman was allegedly in charge. If the people who are planning future attacks on US soil are in Pakistan, the only way to interrupt their plans is to handle it ourselves.

Whether they are actually planning future attacks on US soil, is another question, but there is no way to prevent a person actually working toward that goal in Pakistan through the government of Pakistan. The government of Pakistan won’t (not can’t, won’t) do it. If we have to handle it ourselves, then a bunch of operations killing 5 or 6 people in a single building or car is vastly preferable to sending 300,000 troops in to take care of it (killing or maiming half a million civilians along the way and then finding out they had more than enough time to bug out to [fill in the blank country] while we were getting ready.

As for the kill list? The Constitution puts the president in charge of the military. I’d rather he decide the targets than a committee of generals.

As for the kill list? The Constitution puts the president in charge of the military. I’d rather he decide the targets than a committee of generals.

What about neither? That’s an option, too. I am certain that if it was Bush/Cheney, you would be crying bloody murder. There’s no difference between you and the neocons. Shame on you and your lame excuses.

Disappointed on you too, XGS-fixr.

because the bad guys shooting guns at our guys are trying to hide in Pakistan. Aint our fault that they chose to have us conduct a “bug hunt”, instead of a “stand up fight”

They shoot at our guys with rocks to be honest about it. They throw rocks at our guys and go home and have dinner. There’s nothing about not standing up to fight. The bigger question though, why they shoot us or are planning to shoot at us? It must be the freedom we enjoy, right? Please say yes.

then a bunch of operations killing 5 or 6 people in a single building or car is vastly preferable to sending 300,000 troops in to take care of it

A smaller smaller foot print argument. I think I heard that some 10 yrs ago. Is it still around? You must have read the news last couple of days coming out of Afghanistan. The smart bombs aren’t that smart at all.
Even if the bombs are smart, the intelligence isn’t. Isn’t it the same intelligence that got us in Iraq? How can you say that Iraq was wrong and this is right?

“What police or military power would be too much for the citizens to accept now?”

Most will grant their party of choice as much police power as they wish as long as it’s not their ox being gored.

“Sure, they vote 75/25…until they get a job, start paying taxes and realize the world doesn’t run on unicorn fats.”

BTW, I disagree with this. Youth is fearless. The one thing that all hippies-cum-hannitys have in common is they let fear drive their imagination.

Obama may have gift wrapped the election for Romney with that remark. It bought him absolutely nothing, the pro gay marriage crowd is already his. But a lot of fence sitters will have no doubt been pushed into the Romney camp by the remark, including more than a few Fundies who might have been considering voting 3rd party in protest.

There’s no war right now so no need for anti war movements ??

No ?? How about the war on your freedom & civil liberties post 9/11….

Obama may have gift wrapped the election for Romney with that remark ??

I don’t know…I really think its not much of a issue…The fundies are already in Romney camp by default although I have some reservations what the turn out will be like…Will they come out in force for a devout Mormon ??

The two keys IMO, are Woman & Hispanics…I predict that the fear card that will be played late in the process with regard to Women and the potential setback for them under a Romney & Right wing republican Congress will win the day for Obama…

There is also the Hilary factor…If she even hints late in the game that she is eyeing 2016 and that she needs Obama to win for that to happen I think its game over assuming no big event that would change it…

“The fundies are already in Romney camp by default”

I know a few who decided to vote for Romney in spite of being LDS because of Obama’s remark. They weren’t going to vote for Obama, but now because of what he said they are willing to hold their nose and vote for the Mormon, just to get Obama out. So in a sense they aren’t voting for Romney, they’re voting against Obama.

The current Rasmussen poll shows them neck to neck. A smattering of Fundies, afraid that Obama will make Gay Marriage the law of the land, could make the difference.

“The two keys IMO, are Woman & Hispanics…I predict that the fear card that will be played late in the process with regard to Women and the potential setback for them under a Romney & Right wing republican Congress will win the day for Obama…”

That strategy went nowhere. Sane women realize that not giving 30 year old Georgetown Law students free birth control pills does not equate with a WAR ON WOMEN. Insane women who think free abortion on demand at 9 months is a constitutional right were never going to vote for Romney in the first place.

Here is how badly the WAR ON WOMEN meme is failing for Onama…

“Female voters have boosted Mitt Romney to his highest favorability rating to date, according to an ABC News-Washington Post poll released on Wednesday.

While still negative, Romney’s favorability among women is on the upswing, with 40 percent saying they have a favorable view of the presumptive GOP nominee, compared to 44 negative. That’s a 21-point swing from the same poll in April, when Romney was at 27 favorable and 52 unfavorable among women.”

Sane women realize ??

You really mean “southern” women don’t you…You know, the Stepford Wives who are told how to vote ??

meme is failing for Obama ??

It isn’t about Obama my friend….Its about Women and what they see as their civil rights…Like I suggested yesterday, Romney is going to get outed big time late in this campaign…He is going to need to come up with clear answers to to a number of questions facing women and also with hispanics…

Romney’s favorability among women is on the upswing ??

I will get back to you the morning of November 7th with the numbers….

“I predict that the fear card that will be played late in the process…”

More generally, my sense is that the Romney camp is currently on the offensive, trying to draw first blood from Obama. By contrast, it seems as though the Obama camp might be keeping its biggest guns silent for the moment. I predict this race will heat up a lot before it is over, and the Romney camp may be shocked and awed by the lengths to which an incumbent is willing and able to take the gloves off to retain his office.

Just my predictions here…I really don’t have a dog in the fight.

Smithers, I always chuckle when repubs such as yourself are so clueless that they absolutely have NO IDEA what the War on Women( which is indeed exists) is all about. Smithers, your arguments are a constant commerical for why we women need to vote Obama. Thank you!!!! You are somewhat as good at addressing women’s issues as Trump is when talking about “the blacks”. But please keep it up. Limbaugh tactics of bullying, name calling, and staying hypocritical and out of the facts and reason of it, help women to see what types of male privilege and desire for control and dominance we don’t want to encourage. Sorry old white dudes — its not 1950 anymore.

So glad to have someone out there to speak for me, Smithers. Underestimate the outrage of women voters at sexist drivel like that at your own peril.

What’s this war against women stuff?

Have you seen TV commercials lately? It’s always the women who are smart & funny and the men, just plain idiots. As a male, I am all for stopping this nonsense war against men in TV commercials.

So in a sense they aren’t voting for Romney, they’re voting against Obama.

I’ve voted R several times, and it was always a vote against the D. I don’t think there are very many people in the world who actually get excited to vote R.

So what I’m saying is that I think your statement is almost always true for almost all R voters.

They can oppose now, can’t they?

“why do you go there if you don’t follow that line of thinking?”

- He has a the occasional interesting science story
- He has a lot of Florida stories
- His design and layout is brilliant, making it easy to scan a lot of information quickly
- I am just bright enough to sort the noise
- I like zombie/tazer/sex scandal/weird death stories

Has nothing to do with “dogma” Hi, and everything to do with subtext. Who’s pushing what, where is the spin coming from and heading to, what diversionary tactics will be sold and flogged. Drudge is as critical to deciphering the the national dialog and the money behind it as any of the legitimate news sources.

Of course, it caters to a slightly less analytical demographic than all that….

Learning .Net and c#. Wasted months of my life I will never get back.

I’m rooting for Linux/UNIX.

It has been like that since the 80’s.

I’m not saying your description is inaccurate.

He didn’t provide a description. He provided a recommendation of how everyone should live. It can’t work for an entire society. There have been nomadic peoples before, but they moved together (with extended families and their livelihoods), not as individual adults with no ties to anyone that last longer than a few months.

Polly, yes I did recommend that everyone do this. It does not mean you have to hop from city to city. In Los Angeles and the NYC area, for instance, there are plenty of contractors who stay in the area and reap the tax benefits but do not get paid any benefits (they are self-incorporated), although they have to have long commutes at times. And yes many of them have stable families. The other side of contracting (which is the side I’m on) has a different type of tax benefit that makes it lucrative to be a long distance from home for long periods of time.

I tried to get my foot in the door of dividing my time between Phoenix and Tucson and be able to profit from hopping between both places 12 years ago, but I missed the window of being able to do it. There were micro economic downturns in both areas that forced me to go national. And I had to give up married life.

I acknowledge portability cannot work for an entire society. We need a basis of stable families with children to have a future. If everyone of us was extremely mobile like me there would not be families and no future. But the extreme mobile people should not be punished for their lifestyle due to not being stable community participants.

“But the extreme mobile people should not be punished for their lifestyle due to not being stable community participants.”

I don’t think you are being punished. I’d say all of the off-shoring and whatnot is punishing families that wish they could stay put.

I was you ten years ago. In fact, I did spend some time in L.A. and my outfit was bi-coastal, I had no health insurance, no promise of anything, and the highest savings I’d ever had… wild west stuff. I was one of the first to be totally mobile. I did several spot on a laptop with headphones and a tiny keyboard.

“If everyone of us was extremely mobile like me there would not be families and no future.”

It looks like the future depends on minority births and immigration.

Census: Minorities now surpass whites in US births
By HOPE YEN Associated Press
Posted: 05/16/2012 09:02:34 PM PDT
Updated: 05/16/2012 09:18:16 PM PDT

(Chart shows racial breakdown of births in the U.S. from July 2010 to July)
WASHINGTON—For the first time, racial and ethnic minorities make up more than half the children born in the U.S., capping decades of heady immigration growth that is now slowing.

New 2011 census estimates highlight sweeping changes in the nation’s racial makeup and the prolonged impact of a weak economy, which is now resulting in fewer Hispanics entering the U.S.

“This is an important landmark,” said Roderick Harrison, a former chief of racial statistics at the Census Bureau who is now a sociologist at Howard University. “This generation is growing up much more accustomed to diversity than its elders.”

The report comes as the Supreme Court prepares to rule on the legality of Arizona’s strict immigration law, with many states weighing similar get-tough measures.

“We remain in a dangerous period where those appealing to anti-immigration elements are fueling a divisiveness and hostility that might take decades to overcome,” Harrison said.

As a whole, the nation’s minority population continues to rise, following a higher-than-expected Hispanic count in the 2010 census. Minorities increased 1.9 percent to 114.1 million, or 36.6 percent of the total U.S. population, lifted by prior waves of immigration that brought in young families and boosted the number of Hispanic women in their prime childbearing years.

But a recent slowdown in the growth of the Hispanic and Asian populations is shifting notions on when the tipping point in U.S.
diversity will come—the time when non-Hispanic whites become a minority. After 2010 census results suggested a crossover as early as 2040, demographers now believe the pivotal moment may be pushed back several years when new projections are released in December.

The annual growth rates for Hispanics and Asians fell sharply last year to just over 2 percent, roughly half the rates in 2000 and the lowest in more than a decade. The black growth rate stayed flat at 1 percent.

The immigrants staying put in the U.S. for now include Narcisa Marcelino, 34, a single mother who lives with her two daughters, ages 10 and 5, in Martinsburg, W.Va. After crossing into the U.S. from Mexico in 2000, she followed her brother to the eastern part of the state just outside the Baltimore-Washington region. The Martinsburg area is known for hiring hundreds of migrants annually to work in fruit orchards. Its Hispanic growth climbed from 14 percent to 18 percent between 2000 and 2005 before shrinking last year to 3.3 percent, still above the national average.
…

Your success, by the way, has had very little to do with your portability. It has a lot to do with your security clearance. Back when you were starting out, a lot of young people wanted nothing to do with the military industrial complex. Presumably you didn’t have the brains and/or qualifications to go to Apple or Microsoft or the other systems programming jobs that were the desired positions back then. You can delude yourself all you want, but getting a security clearance - and then having the value of that clearance go through the roof over 20 years or so is all that stands between you and the outsourcing that all the other programmers are dealing with. Your people skills aren’t good enough to have protected you without the clearance.

I think you are actually wishing for this “silly little 3mm.” I’m sure Rio, Measton, Oxide, Colorado, and Slob are wishing for that.

“silly little 3mm” — I mean “massive coronary.

I do have a cardiologist and I see my docs regularly. The cardiologist endorses my 2 mile swims.

Not wishing for it at all, Bila. In fact, if you’ll re-read my post you’ll see I was wishing for precisely the opposite. I worry about you, you see.

If you’ll recall, I once invited you to Thanksgiving dinner here at the ranch. That offer still stands and you would be more than welcomed if you ever hit 1-5 way.

Pax

“I’ve read about how buying stocks regularly during the GD have been very profitable - to those who were fortunate to have jobs.”

That’s how my mom’s dad managed to provide for his wife’s financial security for the forty years over which she outlived him.

I’ve read about how buying stocks regularly during the GD have been very profitable - to those who were fortunate to have jobs.

Pretty sure there was no PPT back then. I don’t think the opportunities we’ve seen so far have been nearly as good as those. I keep waiting…

I don’t think the opportunities we’ve seen so far have been nearly as good as those. I keep waiting…

+1, Carl.

Opportunity avoided, thus far.

I don’t know about state bonds, they could default. Maybe for the short term they’d be OK, especially if you diversified. I’d feel safer with US treasuries.

Then of course is the matter of saving a million. Not obtainable for the average Lucky Ducky American. And even if you can, there is always the matter of getting a stock market wedgie as retirement approaches. Happened to a few old ladies at the library, who found themselves forced into deferring their retirements as their 403b’s got clobbered.

Your carma runs over your dogma.

Great bumper sticker I saw the other day:
“Jesus loves you, but I’m his favorite”

How about; Obummer…I thought that was pretty funny…

I just hate seeing dogmas get run over by carmas.