Bits Bucket for June 11, 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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Answer: more gambling
“NIAGARA FALLS, N.Y. — The Seneca Indian Nation’s gambling business says a big construction project will soon get under way near its Niagara Falls casino”
http://www.democratandchronicle.com/viewart/20120610/BUSINESS/306100033/Seneca-Nation-casino-casino?odyssey=mod|newswell|text|Home|p
But it’s not gambling, it’s gaming!
The Indians will lose their monopoly on gambling very probably within the next couple years in NY.
Trying to create an oasis within a sea of boarded up houses…
Niagra Falls routine
Stated-income loans became a means for both borrowers and lenders to commit fraud.
Hey you’re catching on.
“stated-income loans became a means for both borrowers and lenders to commit fraud. stated-income loans became a means for both borrowers and lenders to commit fraud. stated-income loans became a means for both borrowers and lenders to commit fraud.”
So,:
1. Control the MegaLender’$ [ dozen$ ] (aka: TrueEnabler$]
2. Control the peon borrower’$ [millions upon millions upon millions ] (aka: “deadbeats”)
3. Control neither & let the ProFEE$$ional Corp.Inc. “Person$” determine x1 of a Nation’s basic fundamental needs [coming next: water, food, housing, energy, ... with NO Gov't Supervision or Regulation WHATSOEVER! [any & all regulation$ are an absolute impediment to "Free Market" efficiencie$ & "innovation$"!!!! + + + + ( = moreover) "they" can be TRU$TED to over$ee themselve$ ... based on their hi$torical track record$ going clean back to the very start of the MegaIndu$trial revolution (x1 example: cotton ginny and it's peon "Long-Term Management" $ocial Implication$) + + + + ( = additionally) at that end of each & every day in America it's about the welfare & fair di$tribution of "The People's" Natural re$ources that they are most concern about and that try their mightiest to protect & promote to the benefit of NOT Them$elves 1$t, but to "the peon people" who $acrifice their blood & treasure to make sure that the "Familie$ of TrueBenevolent's" are allowed to pro$per & endure with graciou$ cascade$ of impunitie'$ & indemnification'$!]
Here read all about the TRILLION DOLLAR$ “after-effect$” of such “Trust” :
Cost of mortgage fraud tops $12 trillion:
June 10th, 2012 / OC Register
Ann Fulmer is a lawyer and a mortgage fraud expert who co-authors the quarterly Interthinx Mortgage Fraud Risk Report.
She’s a past president of the Georgia Real Estate Fraud Prevention and Awareness Coalition and has worked as a private investigator, county tax assessor, civil litigator and assistant district attorney prosecuting white collar crime. She frequently teaches FBI and Secret Service agents about mortgage fraud. We asked her what’s happening with mortgage fraud …
Us: What’s the total cost of U.S. mortgage fraud, and who’s paying the bill?
“Data integrity was a huge problem, whether or not it was fraud. But the lack of data integrity probably cost lenders about $2 trillion so far because of REOs, short sales, foreclosure sales. The federal government has given another $3 trillion in direct aid to banks in trying to stabilize the market with foreclosure prevention and alternative programs. U.S. taxpayers lost about $8 trillion in equity (due to declining property values). That’s all added up about $12 trillion or $13 trillion.”
(really, gone away?)
“On top of that, to make it affordable, you had interest only, payment option loans with teaser rates that adjusted after six months, two years or whatever. Those loan programs have gone away.
The first thing that lenders did starting in the middle of 2007 is they actually started verifying incomes with the Internal Revenue Service. We did a study on loans that Interthinx had reviewed with its Fraud Guard product between July 1 and Dec. 31, 2007. We found like $11 billion worth of loan applications where the borrowers’ income had been misstated by 25 percent or more. Once lenders started verifying income again, clearly it made a huge difference, and then word got out that you can’t do this anymore, and fraud has been going down.”
(but vait, there’s more:)
Us: What types of fraud are prevalent since the housing bust?
Ann: Flopping, (which is) kind of the opposite of flipping. This is predominant in the short sale arena. It’s all targeted getting the banks to agree to a short sale at a price that’s well below the actual market value because that’s how you create profit margins. The lower the price that you can get on the acquisition, the more profit there is on the back end.
Us: You’re trying to get banks to write off as much of the loan as you can?
Ann: Right. Let’s suppose you have a house where the market value is really $100,000. The bank would really like to get $80,000 or $90,000 out of it. But because I’m a real estate agent who’s a bad actor, I’m withholding better offers, I’m listing it in the wrong market so nobody knows that it’s there, so that really cuts down the competition. Or I put a lock box on the door, but there’s no key in it or I don’t put a lock box on it. I list it in the MLS, but then immediately list it as a pending (sale) to keep everybody else off it. There’s a whole variety of techniques.
And then, some friends make a couple of offers at $60,000, and the bank’s going, no. We wanted $80,000. And then, all of a sudden, another offer comes in at $40,000, and the bank goes, gee, maybe the $60,000 is pretty good. So they sell it to me or one of my co-conspirators for $60,000. This made the bank take an excess loss of $20,000 or $30,000. … And then I can turn around and sell it for $125,000 because that’s maybe the real market value. And I just made $65 large really easy. …
Us: What other types of fraud are common?
Ann: There have been a number of federal cases recently where people have been convicted of bid rigging (at foreclosure auctions).
You get a bunch of guys who are the local investors and they’ve got an agreement with each other, I’m going to get this house, you’re going to get that house, let’s not bid each other up too much. Unfortunately, that’s illegal.
There are things we call “buddy bailouts.” Some people call them “bait and switch.” It’s where you get a friend or a family member or maybe a wife who has kept her maiden name. They’ll negotiate a short sale or some kind of reduced amount on a loan in somebody else’s name with the intent that the borrower gets to stay in the property.”
To put that in perspective, the entire gross domestic product in 2011 was $15 trillion. It’s scary. To me, it’s scary.
OK, now eye’ll make some mornin’ joe …
Fraud must be proved by showing that the defendant’s actions involved five separate elements: (1) a false statement of a material fact,(2) knowledge on the part of the defendant that the statement is untrue, (3) intent on the part of the defendant to deceive the alleged victim, (4) justifiable reliance by the alleged victim on the statement, and (5) injury to the alleged victim as a result.
These elements contain nuances that are not all easily proved. First, not all false statements are fraudulent. To be fraudulent, a false statement must relate to a material fact. It should also substantially affect a person’s decision to enter into a contract or pursue a certain course of action. A false statement of fact that does not bear on the disputed transaction will not be considered fraudulent.
Second, the defendant must know that the statement is untrue. A statement of fact that is simply mistaken is not fraudulent. To be fraudulent, a false statement must be made with intent to deceive the victim. This is perhaps the easiest element to prove, once falsity and materiality are proved, because most material false statements are designed to mislead.
Third, the false statement must be made with the intent to deprive the victim of some legal right.
Fourth, the victim’s reliance on the false statement must be reasonable. Reliance on a patently absurd false statement generally will not give rise to fraud; however, people who are especially gullible, superstitious, or ignorant or who are illiterate may recover damages for fraud if the defendant knew and took advantage of their condition.
Finally, the false statement must cause the victim some injury that leaves her or him in a worse position than she or he was in before the fraud.
So, Jeff, if the bank employee was the one who encouraged the mortgage applicant to overstate their income, where is the fraud? Since the bank’s employee knew the statements were false, the bank had no reasonable basis to rely on thoses statements. In those circumstances, there can be NO legal fraud. And then you have the fact that the bank certainly didn’t use those statements to determine to go into the contract. They were going to do it no matter what. The information was collected only to fulfill the requirements of the investment bank for the securitization pool.
” They were going to do it no matter what. The information was collected only to fulfill the requirements of the inve$tment bank for the $ecuritization pool.”
Like eye said: “By De$ign” + “we make monie$ the old fa$hioned way, we earn it!”
“Appetite’$ + Life longevity” = Seldom a photo-finish.
Maybe some are starting to get it?
Did your high school principal ever say something like this?
“Consider for a moment the many leaders in our society, who cannot or will not be truthful. How many stories have you heard about leaders both in the public and private sectors who simply could not resist the urge to cheat, lie, or steal? Leaders who showed one side while in the public eye seeking votes or appointments to powerful positions, but on the inside schemed and plotted approaches to cheating others and serving only their selfishly motivated interests? How many people do you know who are willing to cheat the system to make money or better their position, or cheat on their friends or loved ones to satisfy their own selfish needs, all the while knowing that what they are doing is flat out wrong? …. These are difficult and potentially unpopular questions, as the possibility exists that there are people here today to whom this surely applies. ”
“Sadly, our nation and world faces a crisis of moral conscience, in all realms, but particularly among our leaders. ”
http://www.wickedlocal.com/wellesley/news/x1098658054/Did-your-high-school-principal-ever-say-something-like-this#ixzz1xU8u4P00
I think this fits with the weekend topic.
Do people want to be lied to? No.
They just like the lies because they want the lies to be true.
In short, lies work.
How many people do you know who are willing to cheat the system to make money or better their position, or cheat on their friends or loved ones to satisfy their own selfish needs,
Willing to cheat the system? The system IS cheating. Go against the system and you’ll soon be out of a job. Cheating is the new normal.
Cheating is the new normal ??
Oh, I would say its been the normal for a very long time…
At Milken’s sentencing, Judge Kimba Wood told him:
You were willing to commit only crimes that were unlikely to be detected…. When a man of your power in the financial world… repeatedly conspires to violate, and violates, securities and tax business in order to achieve more power and wealth for himself… a significant prison term is required.[16]
Milken’s sentence was later reduced to two years from ten; he served 22 months.[1]
To his credit, Milken has funded many charities, BUT, who amongst us would not become Philanthropist if we we able to cheat are way into many tens or hundreds of millions ??
I remember in my early twenties, a person that I knew was what was called a dealer…Small time…A number of years went by before I ran into him again…He now had a high end car detail business….He also owned the building that it was in…He told me that he decided to do one big deal and if he did not get caught he was going straight…
So, other than some of the truly greedy and obsessed (see Raj Rajaratnam) I think many that appear very successful and may be piers of the community got there in very questionable ways…
Sc Dave,
There is a large limo company in our area that was created through drug profits. This according to someone who should know.
“To his credit, Milken has funded many charities, BUT, who amongst us would not become Philanthropist if we we able to cheat are way into many tens or hundreds of millions ?”
Michael Vick was the best thing that ever happened to the Humane Society. Wonder how much more money they raised due to the notoriety of his actions.
The ends justifies the means.
Unless you’re the means.
i don’t agree with it.
i’m more of the “Rorschach” type…
“Never compromise. Not even in the face of Armageddon. That’s always been the difference between us, Daniel.”
(geek alert)
Interesting note…in my old dungeons and dragons playing days “the ends justifies the means” philosophy was indicative of the alignment “lawful evil”.
Extraordinary rendition.
Enhanced interrogation
To Big To Fail
HAMP
Beware the law of unintended consequences.
So, other than some of the truly greedy and obsessed (see Raj Rajaratnam) I think many that appear very successful and may be piers of the community got there in very questionable ways…
Many years ago, I was a passenger in a car driven by a very successful local building contractor. He did commercial, rather than residential work.
Any-hoo, he was the third husband of a friend of mine, and let’s just say that we friends were very suspicious when he first showed up in her life. She’d been in two very unhappy marriages, and we didn’t want to see her going oh-for-three.
Suffice it to say that Mr. Contractor won us over. Oh, did he ever. He died of cancer a few years ago, and he is still missed by many people in Tucson.
Anyway, back to the car ride. We’re heading north through the Catalina Foothills. My friend gestures to all the palatial estates around us and said, “Those people, they got rich by screwin’ people.”
“He told me that he decided to do one big deal and if he did not get caught he was going straight”
So people feel the need to cheat — just once — to get slightly ahead, but after that you can maintain your lead on honesty alone. Interesting commentary on today’s society.
Spain told it will be under “troika” supervision
By Sonya Dowsett and Gareth Jones
MADRID/BERLIN | Mon Jun 11, 2012 7:28am EDT
(Reuters) - Spain faces supervision by international lenders after a bailout for its banks agreed at the weekend, EU and German officials said on Monday, contradicting Prime Minister Mariano Rajoy who had insisted the cash came without such strings.
Financial markets responded with relief to Saturday’s euro zone deal to lend Madrid up to 100 billion euros ($125 billion) to recapitalize debt-laden banks, with investors scooping up battered financial shares.
The euro and European stocks jumped, with the Madrid stock exchange opening up 5.3 percent and the euro zone STOXX banking index rising 4.5 percent in early trade.
Spanish and Italian bond yields fell after the deal eased fears of a run on Spanish banks. But previous “bailout bounces” on financial markets have been short-lived, often fizzling within a day or two as investors anticipate the next flare-up in the euro zone’s unresolved debt crisis.
Greece’s general election next Sunday could rapidly change market sentiment if radical leftists hostile to the austerity terms of Athens’ EU/IMF bailout outpoll the mainstream conservative and centre-left parties that signed the deal, or the vote ends in another deadlock.
Rajoy said on Sunday Madrid had scored a victory by securing aid from euro zone partners without having to submit to a full state rescue program, saying Spain’s rescue had “nothing to do” with the procedures imposed on Greece, Ireland and Portugal.
…
A woman covers her mouth with a fake Euro note during a protest against Spain’s bailout at La Constitucion square in Malaga, southern Spain, June 10, 2012. REUTERS-Jon Nazca
Demonstrators hold up signs reading: ‘Everybody Out’, ‘We don’t owe, we don’t pay’ and ‘They rescue the banks and evict people’ in reference to Spain’s bailout, at Puerta del Sol square in Madrid June 9, 2012. REUTERS-Paul Hanna
Spain’s Prime Minister Mariano Rajoy gestures during a news conference at the Moncloa Palace in Madrid, June 10, 2012. REUTERS-Paul Hanna
Spain faces supervision by international lenders after a bailout for its banks agreed at the weekend, EU and German officials said on Monday, contradicting Prime Minister Mariano Rajoy who had insisted the cash came without such strings.
The new world order is beginning to gel.
Along with all these bailouts, I suggest the present-day international banking system needs a serious overhaul. It benefits the 1% to the detriment of everyone else.
See my excerpt from Paul Craig Roberts’ article below.
But the West has nothing on China.
From Krugman’s blog:
Financial Repression, Chinese Style
I have no idea whether this John Hempton piece on China is at all right, but it’s a terrific read, and provides food for thought.
Hempton basically argues that China has turned financial repression — controlled interest rates on deposits, which ensure a negative real rate of return — into a giant engine of kleptocracy. The banks extract rent from depositors, transfer those rents on to state-owned enterprises in the form of cheap loans, and then the Party elite essentially embezzles the money. Underlying the whole system is a high savings rate that Hempton attributes to the one-child policy.
Actually, if he’s right about the demographic underpinnings, there’s a time bomb lurking in the system quite aside from his concerns about inflation running too hot or too cold: eventually, and as I understand it fairly soon, those older Chinese who have been frantically saving because they don’t expect enough grandchildren to support them will become net dissavers, pulling money out of the banks to live on. And then, if his basic story is right, the whole system implodes.
I like this story; I’m curious to know what people who actually know something about China think.
Small wonder China’s upper middle class is doing whatever they can to have a safe haven outside of Dodge, and that includes buying houses on the American and Canadian west coasts.
Small wonder China’s upper middle class is doing whatever they can to have a safe haven outside of Dodge
Exactly. Is it any different with the Europeans looking at either massive inflation (indirectly) from bailouts or the collapse of the Euro?
When I see wealthy Chinese and Europeans diversifying into overseas real estate and continued high demand (per recent zerohedge article) overseas for gold, I think that maybe the “Great Reset” is near.
Canada is $mart, they allow one to “Buy-Yer-Way-to-Citizen$hip”
Talk about developing yer Patriotic adhesion$. Oh, Canada!
http://finance.yahoo.com/news/citizenship-sale-foreign-investors-flock-092400861.html
not just Canada
Tanks!, really IDK … nothing about “type-of-job” so, eye reckon a Chinese version of HustlerInc. is acceptable for this program?
While the EB-5 program has been around since 1990, demand has been surging as of late, fueled in large part by China’s growing elite, who accounted for 70% of the roughly 3,500 investor visas issued last year. State Department officials expect the program’s quota of 10,000 visas per year, which includes visas given to the spouses and children of investors, to be filled for the first time ever within the next year or two.
“Eventually, and as I understand it fairly soon, those older Chinese who have been frantically saving because they don’t expect enough grandchildren to support them will become net dissavers, pulling money out of the banks to live on. And then, if his basic story is right, the whole system implodes.”
Which system is that? China “saved” for its aging population by investing in the U.S.
I can chime in here. From her childhood in Taiwan, my wife has dozens of friends, who later became managers and executives in PRC companies. I know these folks; they are straight shooters, decent, honest, extremely hardworking. Their reports are all the same: financial statements of Chinese businesses are totally unreliable. Do not invest, do not negotiate terms, do not “share” intellectual property, etc. with Chinese firms. Nothing is as it seems. Another thing: do not complain to the authorities. They are in on it. If you are feeling cheated, you probably are.”This is China”.
But regarding the article in question, I think it’s a bit over-wrought. “The greatest financial crime in the history of the world!!!”. I would rephrase: “It’s the latest tragedy in the depressing history of the Chinese people.”
I think they’ll pull out of it. Yes, they are running huge big-money scams, and yes, the peasant and middle classes will suffer in the coming collapse of the RMB. But there are millions of decent, intelligent, people in China, doing good work. That makes it different from lots of places. And you have to be impressed when you visit the gleaming cities of Eastern China, and a bit embarrassed when you get off the plane in your deindustrialized, debt-ridden, US city.
Their reports are all the same: financial statements of Chinese businesses are totally unreliable. Do not invest, do not negotiate terms, do not “share” intellectual property, etc. with Chinese firms. Nothing is as it seems.
When I was a young pup studying economics at the University of Michigan, one of my professors was a world-renowned expert on the Chinese economy. His experience with interpreting official Chinese economic statistics was similar to the italicized copy above.
“Hempton basically argues that China has turned financial repression — controlled interest rates on deposits, which ensure a negative real rate of return — into a giant engine of kleptocracy. The banks extract rent from depositors, transfer those rents on to state-owned enterprises in the form of cheap loans, and then the Party elite essentially embezzles the money.”
That should sound familiar. It’s almost exactly what’s happening in the USA. Interest rates on money deposited by the lesser classes have been held very low for a long time. Easy credit suited the rich class the best. Bailouts, stimuluses and stock crashes (401K hits) function as the embezzlements.
It’s easy to criticize another nation, but it sure looks like hypocrisy when you don’t draw the same inferences with your own nation. Hempton sounds like a Westerner, so he needs to pay attention to what’s going on around him.
“Hempton basically argues that China has turned financial repression — controlled interest rates on deposits, which ensure a negative real rate of return — into a giant engine of kleptocracy.”
Controlled interest rates on deposits ensuring a negative real rate of return?
Good thing it couldn’t ever happen here in Amerika.
Op-Ed Columnist
Another Bank Bailout
By PAUL KRUGMAN
Published: June 10, 2012 137 Comments
Oh, wow — another bank bailout, this time in Spain. Who could have predicted that?
The answer, of course, is everybody. In fact, the whole story is starting to feel like a comedy routine: yet again the economy slides, unemployment soars, banks get into trouble, governments rush to the rescue — but somehow it’s only the banks that get rescued, not the unemployed.
Just to be clear, Spanish banks did indeed need a bailout. Spain was clearly on the edge of a “doom loop” — a well-understood process in which concern about banks’ solvency forces the banks to sell assets, which drives down the prices of those assets, which makes people even more worried about solvency. Governments can stop such doom loops with an infusion of cash; in this case, however, the Spanish government’s own solvency is in question, so the cash had to come from a broader European fund.
So there’s nothing necessarily wrong with this latest bailout (although a lot depends on the details). What’s striking, however, is that even as European leaders were putting together this rescue, they were signaling strongly that they have no intention of changing the policies that have left almost a quarter of Spain’s workers — and more than half its young people — jobless.
…
Yesterday, in Euro 2012, Spain and Italy had a 1-1 draw, while Germany won their first match against Portugal. Ireland also lost. Not sure if the Greeks have played yet. In any case, it doesn’t pay to be a PIIGS in Euro 2012.
“What’s striking, however, is that even as European leaders were putting together this rescue, they were signaling strongly that they have no intention of changing the policies that have left almost a quarter of Spain’s workers — and more than half its young people — jobless.”
Yes by all means. Let’s return to the tax, borrow, spend, spend tax borrow, tax, spend, borrow polices that works so well in the past.
Must it be one or the other? And why must it be austerity? We know it doesn’t work. Are we hell bent on enabling Fascism and/or Communism to rise again?
What’s likely to rise again is slavery. But it will be branded as “freedom.”
“…austerity? We know it doesn’t work.”
Irony. It does work when employed as a way to stay out of debt. It can work as a way of getting out of debt. The thing that it cannot do is make you wealthy when you are not. That’s what “working” seems to mean here; everybody getting what they want but cannot pay for.
I have no problem with “working”, and I agree that it’s the only way to create real wealth.
It’s just kind of hard to do when the jobs are shipped overseas. And I don’t see how “austerity” will fix that.
I meant “it working”, not you working.
In Colorado said: “It’s just kind of hard to do when the jobs are shipped overseas. And I don’t see how “austerity” will fix that.”
Austerity isn’t for fixing the jobs problem. It’s for fixing the most basic problem of all: The government borrows and spends at ruinous levels.
There must be some way I can scare the Keynesians back into the holes they came from. Keynesian ‘thinking’ is one of the most ruinous memes in the public mind today. You can’t just keep borrowing more than you can pay back. It’s insanely stupid.
“You can’t just keep borrowing more than you can pay back. It’s insanely stupid.”
Agreed. $1.3T a year added to the national debt is insanely stupid borrowing, but you can’t have persistent large trade imbalances without insanely stupid borrowing.
There is nothing Keynesian about trying to persist trade imbalances via constant, unsustainable debt expansion. That is Reaganism.
You are wrong that government deficits are the most basic problem The government deficits are a symptom of trade imbalance, and it is those imbalances that are the most basic problem.
Mr. Smithers said: “Let’s return to the tax, borrow, spend, spend tax borrow, tax, spend, borrow polices that works so well in the past.”
It’s worked well for Krugman’s class of person. The rich love that sort of economy.
Why does anyone listen to Krugman anymore? He’s has about as much credibility as Jim Cramer.
Krugman bloviated: “Just to be clear, Spanish banks did indeed need a bailout.”
This is why Krugman has no credibility with thinking men. He thinks the government is an infinite source of recovery. He criticizes the bailouts (to some degree) yet insists that there’s a criticality feature in the banks. You can’t sanely criticize bailouts while insisting (in the same article!) that bailouts are needed. The government won’t pay any attention to the former once you express the fears in the latter.
If Krugman wants to be taken seriously, he needs to now say NO to bailouts. They are never necessary, since they always, ALWAYS encourage the bad behavior they purport to criticize. ‘Moral hazard’, isn’t that the term?
Krugman has no credibility because he believes in Magic. He argues that austerity doesn’t work, because it hasn’t resulted in normal growth yet. There are several problems with this argument. First, how do we know if austerity measures are working or not? Should we expect to snap back from a decade plus of excess, in a few years? I doubt it. Secondly, what makes anyone think printing more money won’t lead to other problems?
Housing / Lifestyle question:
Yesterday we had a quote about a woman living in CA making $64K/yr who lost her job and now lives in a mobile home.
I live in WI, last year wife and I made around twice her income, and our housing in WI is about 1/4 the cost of CA (If you stay away from Madison and the east side of Milwaukee, probably good advice in general). We waste probably about a third our income on housing. Not just mortgage payment, but utilities and endless expensive maintenance, blah blah.
So how does that “work” in CA? So the relationship is half her income and four times the cost of housing means she spends eight times the percentage of income on housing as we do, or a mere 33% * 8 = 266% of her income goes to housing. When she was employed. How did she live anywhere other than a mobile home, even when she was employed?
There is a practical personal question. “Major internet company you’ve heard of” occasionally asks if I want to work there. Offering 50% more pay than I get, but of course wife will be unemployed so its actually a 25% household pay cut for awhile. Even optimistically our household income would only be maybe 50% more than it is here. Housing at an equivalent quality and equivalent school district is at least 4 times more than here. So, they’re asking our family to at least temporarily take a one quarter income cut while spending at least four times as much. Yet they seem offended when I laugh and reply I could never afford to live there. What is up with that, anyway?
vinceinwaukesha
As a So Ca couple, thank you for the AM jolt of reality. Many couples we know make up the difference in credit usage. God-forbid their image and illusion, would match their cash flow and income. It works until it doesn’t.
We’re an anomaly in So Ca. We’re house hunting to pay cash, no debt, FICO’s 825, and live simple.
They don’t call it the land of fruit and nuts for nothing.
They don’t call it the land of fruit and nuts for nothing.
Yeah, and we get more than a few of them moving over here after they wash out in CA. We wish they’d pick on some other state.
That’s what you get for being the neighbor next door.
I just had an image of Slim calling the cops on CA :-).
I just had an image of Slim calling the cops on CA :-).
“911. What is the emergency?”
“Uh, I’d like to report a home invasion!”
“Where?”
“In Arizona! We’re being invaded by Californians! And, even though they’re here, they’re still acting like they’re way cooler than us!”
I had a job offer in CA a few years back (I lived then, and currently live in S. FL) that was a huge bump in pay from my position at the time (over 50% pay increase). They even offered to place my wife in a position earning what she earns here, so, all told, it would have been a big pay jump from where I was at the time.
I was very excited until I started to look at housing costs in the Bay area. I quickly came to the realization that, to have an equivalent home in that area I’d need to be looking at a property that’s somewhere between 3-5X what my house in FL costs. And then the income taxes; just that difference was enough to come close to paying for the house that I live in today.
Net result; “thanks but no thanks”. They asked what they’d have to do to change my mind; let’s just say “quadruple my current salary” was not going to go over well.
I know why people want to live in CA, it’s a great place to live (very likely the best in the country for climate), but… I’m sure Rolls and Bentley make a very nice car, I just can’t come close to affording one; much like living in CA, it’s something only for the filthy rich.
I know at least two dozen guys who turned down transfers/promotions that required a transfer to California. The raise in pay from the “promotion” didn’t come close to coverning the differential in the cost of living.
I was once offered a heft pay increase to return to SoCal. I turned it down and when asked why I told them because housing was too expensive. They actually told me that was a BS answer.
main reason I like working in CA less competition esp for sub 100K per year jobs like I have in engineering.
In AZ I was CONTINUALLY told I was overpaid ( even though I took a 10K per year pay cut to move there ) and the other test guys were always scared of getting laid off. Crappy way to live.
main reason I like working in CA less competition esp for sub 100K per year jobs like I have in engineering.
So how do you live on your salary there? Did you buy before the bubble, or do you live like you’re poor?
So how do you live on your salary there? Did you buy before the bubble, or do you live like you’re poor?”
Bought before the bubble and sold right at the peak. Saved the profit all tax free and use it to make extra money from dividend paying stocks like AEP. Mutual funds like vanguard wellington and corporate bond.
Buy modest cars cash, have no credit card debt and live lower middle class which is what my pay would put me at here anyway.
Plan to buy a house to protect against future inflation if and when it shows up. Renting around here is risky as there is a housing shortage for working class people. here on the coast we don’t fight over middle income technical jobs like in Phoenix but over housing. State workers are my main competition for housing at my income level, Professionals esp. two income no kids make far more unless they are younger starting out and privite sector lucky duckies far less.
I’m 51 last of the boomers and its always been about RE around here, always.
just to clarify I make over a little over 100K when other income is factored in so I’m not low income but I do have to earn every penny and if I blow it in the market then I’m out.
so no I didn’t buy FB
So how do you live on your salary there? Did you buy before the bubble, or do you live like you’re poor?
So that would be yes and yes :-). Just checking to see if you’d found a trick that somebody could do starting today.
Hi Carl,
I acually bought right at the top of the 1990 bubble
Bought Townhome for 165K and it went down to 100K somtime in the mid 1990’s and then after 16 years it went up to 400K!! So having learned a lesson I sold it and rented.
But yes the short answer is yes and yes
I acually bought right at the top of the 1990 bubble
Sounds like you bought as the Berlin Wall was being chipped away?
“…lower middle class which is what my pay would put me at here anyway.”
$100K+ a year in CA is not lower middle class; it just feels that way, due to the insanely high housing prices (and rents).
But unless you live in La Jolla, Rancho Santa Fe, Rancho Palos Verdes, Newport Beach, or a similar wealthy enclave, you most likely are well above the median household income for your area.
Household income falls in county
By Morgan Lee and Karen Kucher
10:49 a.m., Sept. 28, 2010
Updated 11:06 a.m.
A steep decline in household income for San Diego County in 2009 wiped away any benefits from the boom years of the past decade, according to census data released Tuesday that showed the far-reaching repercussions of the U.S. recession and its aftermath.
Median household income for the region between 2008 and 2009 fell by $2,508, or 4 percent, outpacing state and national declines, according to an analysis of census data by The San Diego Union-Tribune. The new county median, $60,231, was a 5.9 percent decline from the start of the recession in 2007 and comparable to what households were bringing in a decade ago.
“The decrease in income is not just the middle class shrinking but across the board,” said Murtaza Baxamusa, a demographer and deputy director of the Center on Policy Initiatives in San Diego. “We are still struggling. We will continue to struggle over the period of this year.”
The annual socioeconomic survey, released a few months before the first results from the census that’s taken every 10 years, showed the lingering effects of a recession that technically ended in June 2009.
Nationwide, household income fell 2.9 percent to $50,221 in 2009 from the previous year. The number of households receiving food stamps surged by 2 million to include more than one in 10 families, and the population living in poverty increased by 3.5 million to 42.9 million.
The latest American Community Survey, which polls 3 million people, reflects a year when the national unemployment rate skyrocketed to 10 percent. Nine months later, the jobless rate stayed stubbornly high at 9.6 percent.
“There are so many people out of work nobody really knows the true picture,” said Chuck Crabb, a self-employed 58-year-old in the San Marcos area.
Since 2005, the median household income in San Marcos has fallen by 29 percent — from about $73,700 to $52,000.
…
Why don’t you asks for 100% more money? Seriously.
“Housing at an equivalent quality and equivalent school district is at least 4 times more than here. So, they’re asking our family to at least temporarily take a one quarter income cut while spending at least four times as much.”
One other thing…while house prices 4 times as expensive, everything else doesn’t scale. If you pay $100 a month for lawn service now, it won’t be $400 in CA for the same sized lawn. It may be more than $100, but it won’t be $400. Same for utilities. Probably more expensive but not 4X as much. And the same goes for pretty much everything else you will need to buy.
As for school district, look into private schools. If you can pay $15K less a year in housing in an undesirable school district and send the kid to a decent private school for $10K, you’re better off than chasing the school district. And it’s SoCal, is there really any “good” school district to begin with?
“and send the kid to a decent private school for $10K”
Oh, you have to be kidding, right? I think my brother and sister-in-law paid over $10K for the pre-school program that the kids started when they were two years old. 5 hours a week (two 2 1/2 hour sessions). And it isn’t a particularly high end pre-school - not considered a feeder school for the good private schools.
I was using $10K and $15K to illustrate a point. Maybe it’s more like $20K and $25K. Whatever it is, if you can get a house you like in a bad school district for less than the additional cost of private school, it’s worth a look.
Even if it’s 10K, that’s $100K over 10 years of schooling. Per kid. That’s a fairly hefty house discount you’re looking for.
I sent my kid to the crappiest school in the crappiest district in the second crappiest state in the country. Yet he placed top ten in national debate, did two Congressional internships, and went to a first tier college.
My point being, Diversity can work both ways. He got special attention from his teachers because he was smart and tractable (lots of state and federal funding for GATE and IB programs at “underserved” school but they’re reserved for the top <5% of the students). Those who qualify get one-on-one attention, and if you’re in an underachieving district, that cuts way down on your competition.
Excel where you’re not expected to excel and the world will beat a path to your door. There are worse things than sending your kid to a (shudder) public school. And believe me, the heroin use and general slackership in private schools and “good” districts is just as bad if not worse than in the city ones. Just ask any kid who went to Pali, Peninsula, or Santa Barbara high.
Which kid do you think will be more successful out in the next decade’s “real” world? The coddled mama’s girl or the one who’s figured out how to talk to (and get along with) everyone?
Ahansen,
just curious cause we have a similar situation, how much time did your kid spend studying at home with adult supervision, i.e with you or your spouse?
thanks.
zee-
In grade and middle school, approximately zero. I had a personal vendetta against homework from the get-go figuring they had my kid for six hours a day and that was plenty. I wanted him to have an actual life, so for his first nine years we home schooled– which is to say we traveled a lot and he basically went everywhere I did.
High school was 68 miles away, so he spent a lot of his “free” time commuting, conversing, cogitating and when he got home there were ranch chores. He did most of his class work in independent study at school in a couple of rooms they kept for the AP/IB students, and after school in the forensics room.
The only time I saw him really working on school stuff at home was during his senior year when he was writing his IB thesis and doing college applications.
Feel free to write to me offsite if you’d like more detail. Dee vee ess en tea tea at bee enn eye ess dot net.
IB
“And it’s SoCal, is there really any “good” school district to begin with?”
The Poway school district comes to mind.
My point being, Diversity can work both ways. He got special attention from his teachers because he was smart and tractable
Our son has benefited a lot from that in his school (that the upper middle class abandoned a few years ago). We have no regrets about him going there…now he’s off to middle school this year. I’m kind of curious what will happen socially, whether he’ll stick with his old friends from the wrong side of town or whether he’ll migrate over to the yuppie kids. My hope is that he’ll be able to easily mix with both groups eventually.
“Poway school district”
We witnessed 550+ seniors graduate from RBHS last week (my daughter’s graduating class). They had over 50 merit scholars, and some very capable (professional-caliber) musicians in the class. Six students formed a backup band to accompany the principle in a farewell song to PUSD (he is moving to the Bay Area this summer).
My hope for the future of America was literally lifted by this event.
Quality of life != quality of house.
Some make the decision to live there based on things like weather, access to the ocean, access to cultural events in SF, opportunities in the the high tech job market, etc. But, in so doing, they may live in a (sometimes much) smaller house: it’s a trade-off to make or not make, depending on your priorities. With my first kid getting ready to enter school, we made the opposite choice, and bugged out of the Bay Area for somewhere cheaper where I could afford a real yard, in a nice school district. That was quite a few years ago now… But, I do understand how/why you might make the opposite choice.
Is Romney’s plan to just keep blaming Obama without ever articulating what he would do differently if he were in the driver’s seat? Perhaps a slick Wall Street-funded advertising campaign will be enough to hoodwink the brain-dead American electorate into voting for him.
Jun 11, 2012
Romney again attacks Obama over “fine” economy
By Paul Singer, USA TODAY
Updated 49m ago
For the second day in a row, Mitt Romney’s presidential campaign has released a web video attacking President Obama for his Friday comment that the nation’s “private sector is doing fine.”
Sunday’s video, called “Fine?,” contrasted Obama’s comment with people telling their stories of going bankrupt or stuggling to find work. Today’s video, called “Jolt,” contrasts the same Obama comment with news coverage of the federal jobs report a week earlier that showed the weakest one-month job growth in a year.
…
MY GOD!! You mean a presidential candidate is campaigning by attacking the other guy or other party?!!!?
This is unprecedented. In 2008, Obama didn’t even mention the words Bush or “past 8 years” during the campaign. The nerve of that crazy Mormon.
Shhh - only democrats and “the one” can criticize others.
And they have such good intentions, how can we criticize their results no matter how badly they turn out.
That should be capitalized: “The One”
Remember this? http://blog.masslive.com/thefray/2008/08/mile-high-stadium-crowd-denver-obama.jpg
And here’s my photo set from when he spoke in Tucson last year. Mind you, the stadium crowd almost equaled the crowd in McKale Center, where the President spoke.
I haven’t heard anything from Romney, other than the standard “lower taxes, cut government, let free markets roam free” BS we’ve been hearing from Republicans for thirty years.
This tells me that he isn’t planning on doing anything different than Reagan, Bush One, or the Shrub.
And yeah, I’m selfish and can only assume that these policies will lead to less money in my pocket, higher taxes and user fees, and more money in the pockets of the banksters and 1%ers.
Oh he’ll cut government alright, by pushing federal workers into early retirement and replacing them with more private contractors. Invisible hand of the free market baby!
+1
I am so voting for someone else, not that it will matter, the next prez will either be Tweedle-Dee or Tweedle-Dum, and we will continue to swirl down the drain.
Don’t forget to vote for “none of the above” for Congress.
I guess die-hard Republicans must be more easily impressed with “that other guy ruined the country” type campaigning than I am.
I personally interpret vitriolic criticism of the incumbent by his contender as a lack of independent vision. But that is just me…
This election will be decided by the debates. Unless there’s total side-stepping of direct questions concerning the future direction the country/economy should take, the answers should reveal who’s got a viable plan.
who’s got a viable plan
Neither.
We already know neither candidate has a “viable plan”. The debates will be won on soundbites (”There you go again”) and charisma and to a certain degree what the people want to believe.
I agree. Another negative campaign coming up.
Got mud?
Debates aren’t debates at all. They’re 90 minute of someone asking a question and someone else giving a 30 second soundbite answer. That’s not a debate. That’s a join press conference.
A true debate would be Lincoln-Douglas type affairs where candidates actually debated each other. I’d love to see something like that. Every 2 weeks, the candidates debate for for 2 hours 1 topic each time. Economy. Foreign Policy. Health care. Energy. Social issues. And within each topic, 3 or 4 sub-topics. 30 minutes on taxes. 30 minutes on PEUs. 30 minutes on govt regulations. And so on.
That would be a true debate. Back and forth. The candidates would be forced to actually articulate ideas that go beyond empty slogans and sound bytes.
“……forced to actually articulate ideas….”
Explaining their program, then defending it. What a concept.
“The candidates would be forced to actually articulate ideas that go beyond empty slogans and sound bytes.”
There’s nothing keeping them from doing that outside of debates. But they stick to sound bites and charisma anyway.
Was kinda hoping for a real Gingrich- Obama debate, just for the virtuosic fun of it. Newt’s style is mean and rapid-fire, Obama’s is whip-smart and deadly, and they’re both seasoned debaters. There would have been bloodying.
Was hoping the Huntsman- Gingrich match up would emerge as advertised, but it turned into a mutual stroke-fest instead.
Are you SURE you want real debates between Obama and Romney, Mr. Smithers?
“Was hoping the Huntsman- Gingrich match up would emerge as advertised, but it turned into a mutual stroke-fest instead.”
You mean the Cain-Gingrich match that nobody watched because it was at the same time as the first LSU-’Bama game?
Are you SURE you want real debates between Obama and Romney, Mr. Smithers?
I want to see an Obama-Romney one-on-one basketball game. Obama says that he’s no longer able to dunk — aging legs and all that. But I’ll bet when he’s up against Romney, look out. Slam dunk time.
Now THAT would be worth watching.
OTOH, if Romney can defend against Obama’s three-pointer, all bets are off. The Prez has a sweet outside shot.
No, Smithers. I mean the Huntsman -Gingrich LD debate that wasn’t one. 12.12.11
Like him or not, O can turn on the sweet smoothness of a gospel 16 year old gospel singer or slice, dice and whipsaw the snot out of his opponent. The debates are already over but it’s going to be great entertainment.
…the answers should reveal who’s got a viable plan.
LOL. Yeah, “should” being the operative word here…If the answers reveal the plan I think that would be a first in presidential campaign history.
Romney already has the votes of those who would chose anything offered rather than Obama. The only strategy he needs is to sway some of those who swallowed the hook when Obama used the tactic in 2008. Those are the brain-dead Americans he needs to win over.
” Perhaps a slick Wall Street-funded advertising campaign will be enough to hoodwink the brain-dead American electorate into voting for him.”
So ironic. I suppose you ignore Wall Streets largess of historic proportions to your guy Obama. If we all keep voting for guys who take bribes from Big Money, we are going to keep getting the same results.
What inning is the eurozone crisis in today? How many more years of rolling bailouts, forced-austerity and foot-dragging will be needed to finally resolve it?
Relief for Spain’s banks doesn’t end the eurozone crisis
By Peter Svensson, Associated Press
Updated 2m ago
WASHINGTON – A $125 billion plan to rescue Spain’s banks won’t solve Europe’s debt crisis or ease the pain of double-digit unemployment across the continent.
But it is likely to calm financial markets and buy time for European policymakers to work with other weak economies threatening the stability of the 17 countries that use the euro.
The weekend agreement gave stocks around the world a lift Monday. But Europe still has plenty of troubles to address in the three other countries that have already received financial help: Greece, Portugal and Ireland.
In Greece, voters could elect a government next week that will refuse to live up to the terms of the country’s $170 billion rescue package. Portugal is combating a toxic combination of high debt and 15% unemployment. Ireland is cleaning up a banking mess a lot like Spain’s. And in Italy, the eurozone’s third-largest economy, government debt is piling up as the economy stagnates.
“We still have some pretty fundamental problems to solve,” says Nicolas Veron, senior fellow at the Bruegel think tank in Brusssels. “We need more radical solutions than this one.”
…
“You can look forward to a curtailment of vital government services from some of America’s most dedicated and upstanding citizens (firemen, police and school teachers) if 2banana’s candidate gets elected. But at least the 1% will get to keep more to themselves.”
Doesn’t matter who’s making the decisions the money’s not there…
“Monday night at Town Meeting, Pat Clewley, vice-chair of the Finance Committee, told Town Meeting members that the town is facing a $110 million unfunded liability. But Clewley did say that healthcare benefits for retired employees are under funded throughout many municipalities. According, to Clewley, Winchester has less than ONE PERCENT of that account funded.
“Failing to fund this is a significant risk to the town,” Clewley said. “We have a $2 million gap this year and we’re trying to close it with $25,000 appropriations.”
http://winchester.patch.com/articles/town-meeting-focuses-on-health-care-concerns
‘you can look forward to a curtailment of vital government services…if 2banana’s candidate gets elected…’
‘Doesn’t matter who’s making the decisions the money’s not there’
So which is it?
Ya know…. if everyone stopped setting up the conversation with the false dualism, we could actually have a rational, logic conversation about this $hit. I’m not singling out Tooby or HardRain.
Our government is subsidizing $750k shitboxes as realt-whores skim $45k, we get to gaurantee payment when the loser-a$$hole defaults and then they do it all over again. I want to know why…. we need to demand an fawkin’ answer to this bull$hit.
Shhhhh! I’m working on a landscape design I can use as a down payment for my government subsidized house!
It’s all about the wealth effect, I can see it in peoples eyes already as I move about town in the 107 degree heat. Good thing I have a couple of vacations coming up soon, I’ve got to get out of here for a while. Serenity now.
planned curtailment now or forced curtailment soon.
Or, how about we end globalism and the race to the bottom on wages. Raise wages of Americans so that they can afford to pay taxes to be able to take care of the elderly?
Wait? Does that make the rich richer and the powerful more powerful? No? Oh, they never mind.
Once upon a time we thought the purpose of the economy was to ensure people were productively employed, and the result of that productive employment were efficiently and equitably distributed.
Now we believe the purpose of the economy is to generate debt, creating fiat money, so that fiat money can fund trade imbalances, because trade imbalances make the rich and powerful, more rich and more powerful… and that is the goal after all.
Why do we use government money to guarantee debt but not to provide healthcare to people that vote Democrat? Ummm duh. One makes the rich and powerful more rich and more powerful, which the other does the opposite.
Come on people, it isn’t that complicated.
Raise wages of Americans so that they can afford to pay taxes to be able to take care of the elderly?
A) Wages triple to meet inflated housing costs
B) Housing craters to meet wages
We all know the answer to this question. Therefore, why buy a house today when you can buy later for 75% less?
“Or, how about we end globalism”
And how about we end the laws of gravity while we’re at it?
Exactly how do you propose we end globalism?
No more international travel?
No more international trade?
No more immigration?
Should we get rid of the State Dept, since we won’t need embassies anymore?
No more foreign channels on DirecTV?
And I guess we’ll need some serious new filtering on the internet otherwise someone might stumble across a foreign web site. And we can’t have that.
Then you get to the tricky items. Like is Chinese food made with American ingredients OK in a post global world? Or do we just ban any sort of “global” food as well? No more Hamburgers (damn Krauts!). No more hot dogs. No more pizza. No more tacos or burritos.
‘And how about we end the laws of gravity while we’re at it?’
Yeah, we know, globalism is inevitable. Resistance is useless, the world will end, etc.
Kinda like how burgers would cost $10 each if we restricted illegal immigration.
Yes resistance if futile. We’ve had a global economy for thousands of years and it’s not going to change any time soon.
We all know the answer to this question. Therefore, why buy a house today when you can buy later for 75% less?
Not that simple.
Wages are rising in some cases, tech for example. Additionally, rents are rising in some locations. Boston is a good example: rents up 9.8% annually. That combination of rising incomes and rising rents makes the housing affordability question more complicated than just saying “housing will crater 75% from here”.
A dependent populace is a compliant populace.
Start connecting the dots and the fog begins to lift.
Wages are rising in some cases, tech for example. Additionally, rents are rising in some locations. Boston is a good example: rents up 9.8% annually.
Nonsense.
Wages are not rising generally speaking. What you’re doing is cherrypicking.
And Boston is just entering its’ price decline phase.
“Exactly how do you propose we end globalism? ”
A tariff on money leaving the country sufficient to balance trade.
Globalism per se is not a horrid thing. Imbalances in international balance of payments can only persist if the nation on the negative side of the imbalance is borrowing into existence the fiat money needed to fund the imbalance, and that is unsustainable.
Balance international trade, (and limit the pooling of too much money into too few hand domestically) and you create an economic environment where the millions of people are currently unemployed can be put to work providing retirement and healthcare to the millions of elderly that need it.
Continue to embrace trade imbalances, both international and domestic, so that the rich and powerful can get ever more rich and powerful, as the only goal of the economy, and you will see more people sitting around un and under employed, and more people lacking basic services, simply because those services can not be provided by the under employed, in a way that increases the wealth and power of the rich and powerful.
“We’ve had a global economy for thousands of years”
That’s a laugh. I suppose Medieval Europe was flooded with Chinese goods.
Just because we are stupid enough to open our markets wide to imports doesn’t mean everyone else is. Unlike us, they have industrial and trade policies, with the goal of import nothing they can make themselves and selling us everything they can.
Colorado,
You’re right Medieval Europe didn’t have much trade. Which is also why it was a horrible period of time in Europe, economically speaking. Thanks for making my point.
‘Medieval Europe didn’t have much trade. Which is also why it was a horrible period of time in Europe’
Yeah, right again. Those who favor getting out of the WTO and NAFTA really want pestilence, big warts on every ones faces.
You didn’t really bring much to the table on this one, did you?
Wages are not rising generally speaking
Rumors are that there will be no raises (again) this year where I work, even though my employer makes 8 billion profit on 35 billion in sales. And we are a “tech” company.
Why do we use government money to guarantee debt but not to provide healthcare…
Thanks for this line, Darrell. And not so much just for use in the healthcare debate. Instead, a great reminder to those haters of government spending and handouts that I know that they need to acknowledge who made that home loan of theirs possible, and their own suckling of the government teat.
Some of us don’t hate “government spending”; rather waste, corruption and stupidity.
Some of us don’t have government guaranteed mortgages. We have to pay the insurance premium anyway.
So what percentage of gov’t spending is wasteful, corrupt, and stupid? I’d claim GSEs, (and gov’t being the in housing business to begin with) fit that very definition. And what percentage of buyers don’t have gov’t guarantees?
I’m speaking of friends/acquaintances of mine and that’s typically the response they give as well once they realize they’re trapped in the discussion. Almost always it goes from “cut hard, cut now” to, and I paraphrase, “well wait, only the wasteful stuff that I can’t take advantage of…” They quite literally have no idea where the paper came from. Just sign it and they have a house. I’m sure they think it’s all due to their hard work.
Are we cutting or not?
“Yeah, right again. Those who favor getting out of the WTO and NAFTA really want pestilence, big warts on every ones faces.
You didn’t really bring much to the table on this one, did you?”
Nice strawman.
If you want out of WTO and NAFTA you by definition want less trade. Less trade leads to less prosperity. You don’t need to go back to the dark ages. Just go back to the 1930s and see evidence of how crippling protectionist policies can be. There are very few things most economists agree on. That protectionism is about the worst thing in the world you can do to an economy is one of those things.
“There are very few things most economists agree on. That protectionism is about the worst thing in the world you can do to an economy is one of those things.”
Protectionism is clearly bad policy when you’re a net exporter. That’s what we were the last time it was tried. Now we are a massive net importer. Please explain (at a macro level) how protectionism hurts us in our current situation. Funding massive trade imbalances by creating ever increasing debt is not a viable plan so something has to change. If you’re against correcting trade imbalances through some form of protectionism, how do you propose we correct them?
“Protectionism is clearly bad policy when you’re a net exporter. That’s what we were the last time it was tried. Now we are a massive net importer. Please explain (at a macro level) how protectionism hurts us in our current situation. Funding massive trade imbalances by creating ever increasing debt is not a viable plan so something has to change. If you’re against correcting trade imbalances through some form of protectionism, how do you propose we correct them?”
If I can buy something made in China or $1 or buy a US made version for $10, that’s $9 I am spending inefficiently with protectionism. Multiply me by 320 million Americans buying thousands of items every year and you have your answer.
Or put another way, without trade we’d still be limited to junk from the Big 3 that if lucky, gave you 50K miles before heading to the junkyard. And at a twice the price.
“If I can buy something made in China or $1 or buy a US made version for $10, that’s $9 I am spending inefficiently with protectionism. Multiply me by 320 million Americans buying thousands of items every year and you have your answer.”
Yes, it’s clearly better for an individual consumer to purchase an item from China for $1 than the same item made in the US for $10. Of course what’s better for a individual consumer at the micro level is not necessarily better for the country as a whole at the macro level. So are you proposing that we can continue purchasing items from China for $1 that cost $10 to make here? If so, please explain how that is possible? How will we pay for those $1 items if we continue as a massive net importer? And please answer at the macro level, not the household (”If I can buy something made in China or $1 or buy a US made version for $10, that’s $9 I am spending inefficiently with protectionism”) level.
You can keep it at the micro level. The people who don’t have jobs don’t have a $1 and can’t buy it at all.
Will they find another job eventually? Maybe. If not them, then their children might. I can think of all sorts of stuff for them to do. But all of it requires the kind of collective action that has to start with at least government seed money or planning or both. Without that, you just get a lot of poor people who may or may not stay complacent with the status quo for ever. Not that many of them are going to go out and start social media companies.
“Wages are rising in some cases, tech for example.”
Link? I would like to ask for a raise.
‘If you want out of WTO and NAFTA you by definition want less trade. Less trade leads to less prosperity.’
If it’s a bad arrangement, the sooner out the better. Like I said, even for a proponent of this globalist crap, you don’t have much going on.
“So which is it?”
I’ll go with “the money’s not there.”
(what a surprise)
I will go with, the money is somewhere, but we lack the political will to go after it, because the people with it, own the politicians.
Oh it’s there, just not for we serfs.
Last paragraph from an excellent article by Paul Craig Roberts:
“Everyone wants a solution, so I will provide one. The US government should simply cancel the $230 trillion in derivative bets, declaring them null and void. As no real assets are involved, merely gambling on notional values, the only major effect of closing out or netting all the swaps (mostly over-the-counter contracts between counter-parties) would be to take $230 trillion of leveraged risk out of the financial system. The financial gangsters who want to continue enjoying betting gains while the public underwrites their losses would scream and yell about the sanctity of contracts. However, a government that can murder its own citizens or throw them into dungeons without due process can abolish all the contracts it wants in the name of national security. And most certainly, unlike the war on terror, purging the financial system of the gambling derivatives would vastly improve national security.”
http://www.paulcraigroberts.org/
He does not seem very educated. The vast majority of derivatives are interest rate swaps that hedge variable rate risk. Fixing your variable rate debt exposure is gambling? Actually it is the opposite. It is so annoying when people like this point fingers without understanding the issues. If you want to really eliminate gambling, why don’t we eliminate the variable rate loan option and require some real skin in the game. It may be harsh but at least it would make sense.
You miss the point. You are still gambling. Instead of the gamble being changing interest rates, the gamble is on your counter party being able to pay.
Oh, right.
There is not counter-party risk because the counter-parties are TBTF and the government will make you whole.
And, that is the point. These derivatives are the equivalent of insurance policies without reserves, creating systemic risk that they could break the counter-parties (AIG anyone), forcing the US Government to chose between bailout or depression.
How can that be good for anyone other than those that will again be on the side of the bailout? Oh, right. That is your point, isn’t it.
Ummmm. Who would enter into a ISDA Master Agreement without a Credit Support Annex or ratings triggers? Certainly not anyone represented by me. Counterparty risk should be a nonissue unless you dont know what you doing. Even without those devices, assignability is relatively fluid right now.
Counterparty risk should be a nonissue unless you dont know what you doing.
I’ll be the first to say that I don’t know what a ISDA Master or Credit Support Annex is. However, it certainly sounds to me like you’re discussing “textbook” vs. reality. The statement you made that I quoted above says it all: does AIG ring a bell? And to answer your question, yes, in the real world, greed often trumps competence.
BTW, this is the problem with Wall St. in general: arcane terminology to obfuscate and confuse those not on the “inside”.
Brings to mind a quote from a well-known movie…
“You will never find a more wretched hive of scum and villainy”. Applies equally to Mos Eisley or New York City (feel free to replace with London/Zurich/Hong Kong).
or ratings triggers
What good do ratings triggers do when a company goes straight from investment-grade to BK, essentially overnight?
I think the real issue is the same mistake so many others make. There is a major difference between a credit default swap and an interest rate swap. If you dont know the differences you shouldnt express an opinion on the subject.
The vast majority of derivatives are interest rate swaps that hedge variable rate risk.
Lol. And why exactly do companies need to “hedge variable rate risk”? They can borrow money at fixed rates if they are risk averse. Or if they are the lender, lend at a fixed rate instead of risking lower interest payments in the future.
Another alternative would be to ensure the borrowers have the capital on hand to pay down/pay off the loan if interest rates rise to the point of impacting cash flow/profitability. Ah, sorry, would that be an inefficient use of capital?
It seems like most of Wall St., the whole Swap industry is a solution looking for a problem while skimming more money for bankers… How deep down the rabbit hole of finance do we need to go before we realize it’s all crap and theft?
here is a major difference between a credit default swap and an interest rate swap.
Sure. They are both gambling on an outcome: one on a credit default, the other on a movement in rates. Beyond that, what is the difference? Is one any more useful than another? They are financial instruments designed by Wall St. bankers and traders to create markets and financial vehicles to increase their Vig. Period. Neither need to exist for the function of borrowing and lending to exist and neither makes borrowing/lending more efficient in the long term, though I’m sure some MBA Wall St. finance type could say, in the short term, that these swaps “save corporations money” and “reduce risk”… again, all crap.
Right. Just pay up when it blows up.
All your high-falutin’ terminology can be summed up by this: As no real assets are involved.
I see Martha is getting gray, do you think she’ll go to the salon or try it at home?
I saw Jack and Jill glancing at each other last Tuesday, I wonder if he hit a homer or if he was tagged at second.
I heard Joe took out a loan the other day, do you think he’ll pay it back?
Valerie got skinny envelope in today’s mail… bet she didn’t get into Harvard.
You probably see these scenarios as an opportunity to quantify a derivative, complete with analyses of Martha’s hair type, uncertainty associated with envelope measurment from a hundred yards, or the sparkle in Jill’s eyes. I see it as gossiping over the back fence, about things that don’t matter a whit. You produce no goods or services. You’re a parasite on society.
Why can’t you geniuses put your energies toward solving real problems?
“Why can’t you geniuses put your energies toward solving real problems?”
That’s a job for low paid Engineers.
Right. Just pay up when it blows up.
+1 Cut through the flak!
I am pretty sure I could clean up craps strategies and horse race handicapping to make it seem like I was not gambling, but I would still be gambling.
I’m tryng to think of an everyday analog to this suggestion that is easy to understand. Not sure I can think of one. Maybe like forbidding a theater company from offering subscribers the ability to change the date on their tickets if they pick one date and it turns out that when that date rolls around 6 months later the person has a conflict. Do you see something a little overly intrusive about that?
What could be done is to regulate the “insurance” side of the transactions (for the transactions that are really like insurance) and require they hold reasonable reserves. Unfortunately, insurance regulation is largely a state issue and I doubt the states can handle it. Or, you could, you know, separate the derivitives business from the commercial banking side so that the commercial banks with their FDIC guaranteed deposits aren’t involved in this stuff.
“Or, you could, you know, separate the derivitives business from the commercial banking side so that the commercial banks with their FDIC guaranteed deposits aren’t involved in this stuff.”
It’s ALL ba$ed on the Value of x1 $ingle bond$mans 236 year old a$$et: America-The-Nation
It’s an A$$et, with an un$tated value, used by “$ome” to create $elf-adhe$ive wealth ba$ed on their genui$ “$mart” bet$. They have quite the winning $treak going, just like in the game crap$: keep rolling the dice
Northeastener: “it’s all crap$ and theft!”
Bull$eye!
Wow, this article opened my eyes to the sick world of arms dealing and government contracting. Of course, I’m sure there’s a movie in the works.
The Stoner Arms Dealers: How Two American Kids Became Big-Time Weapons Traders
Read more: http://www.rollingstone.com/politics/news/the-stoner-arms-dealers-20110316#ixzz1xULJi200
http://www.rollingstone.com/politics/news/the-stoner-arms-dealers-20110316
Wonder what Ollie North is thinking these days?
Wonder what Ollie North is thinking these days?
He doesn’t think. He follows orders.
!touche’
Hwy plays Neil Young “Living with War” …
“It’s Linda-the-Lunch-Lady-Lives-Lavishly!”
vs
“Audit-the-Pentagon!”
heeheheeeheehhehee, “He has yellow-cake!”
Reassured by the e-mail, Packouz got into his brand-new blue Audi A4 and headed home for the evening, windows open, the stereo blasting. At 25, he wasn’t exactly used to the pressures of being an international arms dealer. Only months earlier, he had been making his living as a massage therapist; his studies at the Educating Hands School of Massage had not included classes in military contracting or geopolitical brinkmanship. But Packouz hadn’t been able to resist the temptation when Diveroli, his 21-year-old friend from high school, had offered to cut him in on his burgeoning arms business. Working with nothing but an Internet connection, a couple of cellphones and a steady supply of weed, the two friends — one with a few college credits, the other a high school dropout — had beaten out Fortune 500 giants like General Dynamics to score the huge arms contract. With a single deal, two stoners from Miami Beach had turned themselves into the least likely merchants of death in history.
Packouz was baffled, stoned and way out of his league. “It was surreal,” he recalls. “Here I was dealing with matters of international security, and I was half-baked. I didn’t know anything about the situation in that part of the world. But I was a central player in the Afghan war — and if our delivery didn’t make it to Kabul, the entire strategy of building up the Afghanistan army was going to fail. It was totally killing my buzz. There were all these shadowy forces, and I didn’t know what their motives were. But I had to get my shit together and put my best arms-dealer face on.”
Sitting in the restaurant, Packouz tried to clear his head, cupping a hand over his cellphone to shut out the noise. “Tell the Kyrgyz KGB that ammo needs to get to Afghanistan!” he shouted into the phone. “This contract is part of a vital mission in the global war on terrorism. Tell them that if they fuck with us, they are fucking with the government of the United States of America!”
A few years ago he would have been selling mortgages out of the trunk of his car.
At least he found a way to make a more honest living for a while.
Slashed to the bone I tell ya. Maybe someday retirees will not make more in retirement than on the job.
“Though the numbers are on the high side, especially for a distressed city, Hartford’s new police contract at least begins to move the city toward sustainable budgeting.
But most of the gains for the city don’t kick in for many years, until newly hired officers are well into their careers or at retirement. Without putting too fine a point on it, the city may need help sooner than that.
On the other hand, overtime is still in the pension formula, so officers who pile it up in their last years can retire at or above their working salaries. Someday, somehow, pensions must be capped; people shouldn’t retire at more than they made on the job. Benefits such as cashing out sick and comp days are an expensive throwback to another era.”
http://articles.courant.com/2012-06-08/news/hc-ed-hartford-police-contract-20120608_1_pension-formula-pension-funds-overtime-budget
How dare you question public unions bankrupting cities and states across the nations.
How dare you point out their insane benefits and pensions.
Why - this means you HATE policemen, fireman and teachers.
You are just part of the evil 1%ers…
How dare I consider that perhaps the ability to provide these services is based on peoples’ ability to pay taxes, and out embracing of trade imbalances has destroyed that ability.
I know you hate the public unions because the funnel money into the evil Democrat party, and therefor must be destroyed at all costs.
I look at how much better the retirement is for public employees and realize how most people had that… and no longer do. I think, perhaps we should work to restore hope to everyone else, rather than tearing down the last few pillars of the old system that remain.
Unions in theory are there to protect workers from the evil capitalists who would abuse the workers without a union. In the case of PEUs, there is no evil capitalist since the employer is the govt. Put aside the graft and corruption of PEUs and the money laundering to the Democrat party.
Where is the abuse of the govt towards its employees that warrants a union in the first place?
You don’t see the Evil because the unions are doing their job?
Put down the kool-aid and walk away…
You don’t see the Evil because the unions are doing their job?
Why - this means you HATE policemen, fireman and teachers.”
only after they retire
Come on man. Are you suggesting that a policeman who enters the force at 21 shouldn’t be allowed to retire in his 40s with full pension and benefits totaling more than what he earned while working, who then gets to work another 20-30 years in a new career while “retired”?
What are you some kind of right wing Republican radical? Sheesh.
Right wing Republicans would never question those deals for policemen.
Democrats are in favor of them for teachers.
Both agree that younger generations should get screwed to pay for the excesses of older generations, because younger generations “have time to adjust.”
“because younger generations ‘have time to adjust.’”
Ignoring the fact that it is mathematically impossible, sure, there is plenty of time for us all to save.
Does anyone question what the politician’s pension are? What does a U.S. Senator get after serving one term in office?
A lot more than you or I will ever see. But that’s probably peanuts compared to the “reward” job waiting in the “private sector”
“What does a U.S. Senator get after serving one term in office?”
Might depend mightily on WHO he had drink$ & giggle$ with while in office. :-/
I think (emphasis on think) they are on the federal pension system that I am on, or at least that their system parallels ours. So, after 6 years? 6% of the average of his last three years in office. Salary only. And you have to be over 55 to get a penny. You vest in the pension after 5 years, so the one term senator is fine, but a rep would have to have three terms to get anything. So $174,000 x 0.06 = $10,440 or $870 a month.
I don’t know if this is their system, but I think it is. They are in the same medical insurance system that we are.
Polly, I don’t know for sure either but, I think you’re way off. I wish I could find out. The MSM has been completely silent on this. I do know know that NYS senator Trunzo retired with a pension of $156,000/yr.
That isn’t federal. State pension systems are not even close to the federal system.
What happens to their campaign finance money if they choose not to run for office?
It seems to me that the politicians are always looking to raise money for their next election campaign. Does that mean they have to spend it, or can they divert it elsewhere when they “retire”?
Rescue loans for Spain’s banks buy Europe time
Published June 10, 2012
Associated Press
Spain and Ireland, like the United States, were crushed by a collapse in the housing market, which left their banks with huge losses on housing loans. The Irish government was forced to slash government spending to pay for a bank rescue. The austerity has pinched the economy; Irish unemployment exceeds 14 percent.
http://www.foxnews.com/us/2012/06/10/bailout-for-spain-banks-buys-time-for-europe/ - 47k -
Shortage of homes for sale creates fierce competition
With housing inventory at a low, would-be buyers are scrambling to bid on homes before they’re even listed, and real estate agents are vying to represent the few sellers that do exist.
http://www.latimes.com/business/la-fi-inventory-20120610,0,730173,full.story
Lawrence Yun is Chief Economist for NAR, Redfin’s CEO, etc… are masters of building urgency, and the sheeples follow.
“With housing inventory at a low,”
Monday, January 2, 2012
Michael Olenick: Is Shadow Housing Inventory Vastly Larger Than Widely Believed?
By Michael Olenick
Here’s the excerpt that should send a chill down the spine of any housing analyst … and everybody else too.
Jaffe: .. you’re reading reports. You’re seeing volume. You’re seeing new file intakes. You’re seeing how fast they’re closing. And you’re seeing cash flow in and out of the company.
Stern: Okay.
Jaffe: And so, you have — in 2010, you have a handle on what’s happening with the business?
Stern: As the numbers are reported in the quarterly earning calls and the investors or the world, whoever elects to participate in that call is made aware of the day-to-day happenings.
Jaffe: Right. But you have that information, that institutional knowledge of your own business far in advance of those calls and reports for that matter.
Stern: When Fannie Mae comes in and sits down and says, “David, we have 600,000 shadow inventory loans,” we say “You mean, 60,000″? And they go, “No. We mean, 600,000.” And I say, “Oh, that’s nationwide”? And they go, “No 600,000 shadow inventory in the State of Florida”. Sure, I know. Yeah, it’s exciting. [Note: transcribed verbatim from the transcript.]
Let’s repeat that. In the spring or summer of 2010, before the robosigning scandal caused a massive slowdown in the number of foreclosures filed, Fannie Mae apparently had 600,000 loans they expected to foreclose upon. Not Fannie Mae, Freddie Mac, FHA, VHA, and private label mortgages, Fannie Mae alone.
Granted, Stern has a credibility gap; he’s clearly one of the lawyers whom FHFA Director Edward DeMarco was clearly referring to when he expressed to Congress that he was “puzzled” why state Bar associations have taken no disciplinary action. The Federal Housing Finance Agency (FHFA) is the government agency which oversees the GSE’s.
FHFA reports that Fannie Mae’s share of total US mortgage debt, at the end of 2010, is 27.7%. If Fannie Mae really does have 600,000 homes they expect to foreclose upon we’d expect to see about 2,165,000 shadow inventory homes total .. in Florida.
It’s impossible to believe this figure is accurate. Let’s look at some data. First, the Census Bureau reports there are just under nine million housing units in the entire state at the end of 2010, 8,989,580, to be exact. According to court records between July, 2010 through December, 2011, inclusive, there were 1,044 foreclosure filings per month in Stern’s home county, Broward County, FL; 22,144 filings total. However, from January, 2009, through June, 2010, inclusive, there 2,544 monthly filings in the same county; 48,144 filings total.
If the number Stern relayed is accurate, that would put a theoretical backlog of filings, for that one county, at 26,000. If we extrapolate to the rest of this high foreclosure state it’s safe to say shadow inventory estimates for the US have been dramatically underestimated, in much the same
——————————————————————————-
Posted: 5:45 p.m. Friday, June 8, 2012
Feds to sell off delinquent loans, aiding South Florida borrowers in foreclosure
By Kimberly Miller
Palm Beach Post Staff Writer
Thousands of South Florida borrowers in foreclosure and ineligible for a loan modification may get another chance to save their home in an expanded Federal Housing Administration program announced Friday.
Beginning in September, defaulted loans insured by the FHA will be sold in discounted pools to private investors who have more flexibility in negotiating lower mortgage payments, reducing loan amounts or offering other options such as rent-to-own.
The investors, which can include non-profit community agencies, must delay foreclosure proceedings for at least six months while working with the homeowner.
Florida has about 366,650 loans insured by FHA, according to a first quarter report from the Mortgage Bankers Association. Of those, 15 percent are in foreclosure or 90 days or more late on payments.
Nationwide, FHA insures about 6.7 million loans, 9 percent of which are in foreclosure or seriously delinquent.
“This will be another chance, another lifeline that they weren’t expecting,” said Shaun Donovan, U.S. Housing and Urban Development secretary. “There might be a set of options that arrives on their doorstep that is the best news they’ve ever heard.”
The program, called the Distressed Asset Stabilization Program, was announced during the two-day Clinton Global Initiative America Meeting in Chicago.
The FHA began a test of the program in 2010 and has since sold more than 2,100 single-family loans to new servicers.
About 5,000 defaulted mortgages are expected to be sold every quarter under the expanded program, which also makes buyers agree not to resell for three years at least half of the homes they buy.
Forget about the nominal number, look at the percentages:
21% of all mortgages are either delinquent, or in the foreclosure process in the state of Florida.
21%. This is about 16 points above normal (4x “normal”).
This is crazy high. If their courts ever let this mess to flow through the system at any reasonable pace, FL prices will crash.
Florida is the worst in the country though…to assume that the data in Florida is applicable to the rest of the country would be incorrect.
Looking on Trulia right now, 20% of the houses for sale in Austin are foreclosures.
I don’t know about the numbers for all mortgages, but doesn’t 20% seem high for a market that is supposed to be invincible like Austin?
Per Trulia, that is either bank owned, or at auction.
I’d take a look at it compared to, say Denver, where the number is 43%. Or Phoenix, with the number at 73%. Stockton, CA, is at 82%.
20% seems high until you compare to other places.
BTW, thanks for making me aware of that feature on Trulia…great stuff. Imagine how little inventory there would be in Phoenix or Stockton if the foreclosures were excluded…wow.
I wonder what used to be a “normal” number of foreclosures for a market, in the pre-bubble days?
Ah, I see what you mean. Check out the numbers in Miami for an interesting comparison…
I’m guessing a small number.
Zillow’s data on sales that were homes foreclosed within the prior 12 months goes back a decade.
In California, this number was at <1% during the bubble times, and only about 3% in 2003. Today, that number is about 30% as reported by Zillow.
Let’s say that “normal” is between those two historical levels (between 1% and 3%)
Assuming the level of listings to sales is comparable, since sales are 10-30x “normal”, I’d be willing to wager that listings are also somewhere between 10 and 30x “normal”.
Therefore, I’m guessing “normal” is 5% or less (I’m guessing 1-5%, depending on the market).
I continue to watch the non-current loan rates and REO in the state of CA…inventories will dry up as those two numbers go down (and both have been trending down for over 12 months).
Wow, 66% in Miami…I expected a lower number given the judicial nature of the state…the number should be much higher, regardless, IMHO. Imagine what it would be if lenders were able to foreclose…
By the way, Trulia allows you to drill down on the foreclosure front, to see whether foreclosures are auctions, or REO.
If you make them only REO, presumably, you could compare to the amount of REO on the books (per Foreclosure Radar) at banks to determine whether banks are holding back, or not.
I just looked at one city, and found the numbers to be within 10% of each other (purported REO supply nearly equal to the number of REO Trulia lists as being on the market).
I found this curious, and wonder what exactly Foreclosure Radar is reporting…are they reporting REO inventories on the books of the banks? Or the number of REO homes for sale? These are very different concepts.
My impression from reading the website it that its the former, not the latter. I’ve e-mailed them for clarity.
If Foreclosure Radar numbers are, as they note, “the number of properties that have been sold Back to the Bank at the trustee sale, and which the bank has not yet resold to another party.”, then it would appear that in this particular city, the bank is not holding back inventory.
I want clarification from Foreclosure Radar, and look through other cities to see where banks are withholding inventory.
FYI-
After a couple of back and forths via e-mail with Foreclosure Radar, I got the following:
“We actually take the number of bank owned properties and the number of bank owned resales to determine the total number of properties that are currently owned by the bank in that area.”
In other words, no relation to currently listed homes, just total homes that went back to the bank, less total number of homes that had gone back to the bank and were resold.
OK then, in theory, if banks are NOT holding back REO, the Foreclosure Radar estimate of REO inventory should be pretty close to the number of bank-owned properties on the market per Trulia…
So, if I look at San Diego (this is for you CIBT), the total number of homes noted as REO Inventory at the end of April was 1,508. This is Foreclosure Radar.
Trulia notes that today, there are 1,883 bank owned properties for sale in the City of San Diego.
Some difference is expected…this is bigger than I would have thought, but certainly not in a direction that indicates massive inventory being held off the market.
Stockton is at 1,273 via Trulia (REO listed for sale), and 1,107 estimate of REO inventory (Foreclosure Radar).
So, in both cases, it would be hard to make the argument that banks are holding REO off the market.
Assuming of course that both numbers are close to accurate…
Curious, the comparison between Trulia and Foreclosure Radar for Phoenix offers goofy results…many more homes listed on Trulia than show up as what would be expected as inventory by Foreclosure Radar.
The search for Phoenix as a whole shows like 3x the number of homes listed for sale than the entire inventory of homes noted by Foreclosure Radar as REO. So I tried to dig into zip codes only (under the theory that perhaps they were looking at different market areas).
Zip code 85032
Trulia lists 310 bank owned homes for sale.
Foreclosure Radar estimates a total of 123 bank-owned homes in total.
Same magnitude of issue, same direction of discrepancy.
Any ideas as to what is happening here?
My gut reaction is “bad data”, or homes are becoming bank owned without going through the foreclosure process (and thus don’t show up as REO inventory via Foreclosure Radar).
Any other thoughts?
They know that most families make their move between Memorial Day and Labor Day when the kids are out of school. Too bad that so many professionals are gaming the system.
But where did the inventory go?
I think its slowing down around here ..
Coming soon to America. Funny how the new “green economy” will have more people freezing in the dark.
Germany’s Green Energy Policy Hit Households Hard
Canada Free Press | June 10, 2012 | Jack Dini
Many people in Germany are no longer able to pay their electricity bills. Skyrocketing electricity prices are making electricity unaffordable for a large number of Germans. The past year over 600,000 households had their power switched off in Germany because they can’t afford the skyrocketing electric bills.
According to a recent study, the green energy transition could cost German consumers up to 60 percent more by 2020 compared to 2011. Overall, the renewables costs may total 175 billion euros by 2020. So farm Germany has committed over 100 billion euros to renewable energy, all to be paid for by the consumer. Little wonder that today almost a seventh of Germany’s population is now living in ‘energy poverty’.
FWIW, we generate 10% of our energy from wind here in the Centennial State. In my little burg our rates are low (7 cents a kilowatt hour). So it can be done. We do get a lot of wind here in the Centennial State, so that probably helps.
http://en.wikipedia.org/wiki/Wind_power_in_Colorado
Also, from what I have read, Wind Power is working quite well in Texas too, supplying 7% of their power.
http://en.wikipedia.org/wiki/Wind_power_in_Texas
I suspect that something else is behind the German problem.
“We do get a lot of wind here in the Centennial State, so that probably helps.”
Federal and state subsidies and tax breaks blow harder than the wind.
Maybe federal. What with TABOR, subsidies for anything here in the Centennial State are hard to come by.
Still, our electricity is way cheaper than say California’s and they have access to the same Federal Subsidies and Tax Breaks. I mean, here we pay about half what we paid when we lived in SoCal.
Just out of curiosity, do you have a link that documents these subsidies?
No link other than this from Wikipedia:
California gets 0.7% of it’s electricity from coal
Colorado gets 70% of it’s electricity from coal
i.e. coal is far and away the least expensive source at this time.
“Federal and state subsidies and tax breaks blow harder than the wind.”
FWIW, don’t coal fired plants get tax breaks and subsidies too?
“Funny how the new “green economy” will have more people freezing in the dark.”
It’s even funnier how the “brown economy” externalizes most of the costs of the absurdly cheap energy that most people over-consume now.
Bidding wars are back…
Not due to more jobs or more people moving to the area.
Just to the banks withholding inventory and the insanity of government programs spending trillions of dollars.
All to keep houses unaffordable…
———————————————-
Shortage of homes for sale creates fierce competition
http://www.latimes.com | 6/10/2012 | Alejandro Lazo
The newest problem for the slowly improving housing market isn’t a shortage of serious buyers, it’s a shortage of good homes.
Would-be buyers are packing open houses and scrambling to make offers on properties before they are even listed. Bidding wars are erupting.
David Dennick, who lives in Echo Park, has been searching for a home with his wife, Denise, for about two months. The couple have already bid on three properties. They are hoping to find a home for less than $525,000, which is $25,000 more than they originally had hoped to spend.
“It is much more competitive than we thought,” said Dennick, standing in the entrance of an Eagle Rock open house
The much-predicted foreclosure wave that was expected to dump more homes onto the market has not materialized.
In Southern California, inventories have plunged over the last year.
The number of days a home sits on the market has also decreased, meaning properties are selling faster… number of days a home sat on the market fell to 33 last April from 43 the same month a year earlier.
Eddie David and his wife were sure they would buy a house this year.. tripped into the perplexing new housing reality. After being outbid on three different properties in neighborhoods from the Westside to Atwater Village, there is just a lot more competition,” David said. “There were multiple offers. We tried to get in on a couple other homes, and even though it had been just a week or two weeks, it was just too late.”
Alex Gruenberg and his wife, Kristina, both 27, lost out on a home that ended up going for $30,000 more than they offered.
They are now trying to find homes before they are listed.
Better buy now or be priced out forever.
(Do I hear an echo?)
Same thing is happening in Denver. I was looking at some properties and thinking about lowballing on some that looked habitable but were way over priced. Anything halfway decent was “snatched up” in bidding wars over asking price. I was hoping this whole mess would teach people a couple of lessons, but it really hasnt taught them anything. Inventory is very low right now. I found it interesting that one Realtor even said there are lot of homes underwater, but the banks are not dumb enough to flood the market again.
I found it interesting that one Realtor even said there are lot of homes underwater, but the banks are not dumb enough to flood the market again.
They are carefully working on reinflating the bubble and the banks won’t begin to release the shadow inventory until the feeding frenzy is frantic.
My “house free” coworkers here in Denver are wringing their hands over the bidding wars.
They are carefully working on reinflating the bubble and the banks won’t begin to release the shadow inventory until the feeding frenzy is frantic.
And, in the meantime, those houses just sit there, rotting away.
Or are they being lived in by the people that haven’t made a payment in 3 years?
Or are they being lived in by the people that haven’t made a payment in 3 years?
Who will perform basic maintenance in the deluded hope they will get to keep it.
I’m trying to match up “a lot of homes are underwater” and “the banks are not dumb enough to flood the market”.
Aren’t these two different concepts?
Underwater homes=in the hands of the “owners”/debtors, and
REO=in the hands of lenders
Are they suggesting that the underwater homes are in some way in line to be short sold? And that banks are slowing that process in some way?
Don’t homes to be short sold show up as non-current?
CO non-current loan rates are actually quite low according to LPS at 6.2%. For perspective (again), North Dakota is at 3.8% (oil shale boom), and Florida is at 21%+ (judicial state).
Where is the shadow inventory in Colorado? Where does it show up in the data? From the (albeit little) data that I’ve seen on Colordado, they don’t seem to have a lot of shadow inventory. Is there some other data out there that I’m missing?
They are different concepts, until you throw in non or late payment. In that case, the bank has decide whether to foreclose or not. The point being was that they were deciding not to foreclose when they have the contractual right to do so. The intown prices have held up. The further out suburbs are down about 25% (e.g., the worst hit are Parker, Castle Rock, Highlands Ranch).
That’s what I thought. Per LPS for their last report, 4.5% of all mortgages in CO were non-current, and 1.6% in the foreclosure process. This actually compares favorably to other states (meaning that other states have higher levels of both numbers)
There are only 5 states that have lower non-current rates than Colorado. This doesn’t seem to support a view that the predominant problem in Colorado inventory levels is banks being slow in their foreclosure process.
A fair number of the non-current loans are people who miss just one payment (normal course of business), and won’t be foreclosed. Typical is a non-current rate of 4-5%, with about 0.5% of those getting foreclosed.
Said another way, based on the non-current loan rates, even if there was an increase in the speed at which banks were dealing with non-current loans, the impact to local inventories wouldn’t be nearly as high as in other states (New York, Florida, for instance).
Here is a link the the LPS report…the applicable page is page 4.
http://www.lpsvcs.com/LPSCorporateInformation/CommunicationCenter/DataReports/MortgageMonitor/201204MortgageMonitor/MortgageMonitorApril2012.pdf
Make sure I’m clear above…4-5% non-current, with half a point of those 4-5 points in the foreclosure process, not 0.5% of the 4-5% (a much smaller number).
Why sell today when you can sell it tomorrow for 75% more?
Why buy today or tomorrow when you can rent on less than 20% of net income?
All to keep houses unaffordable…
Or to be more precise, to save the banker’s butts. Unaffordable houses and bidding wars means they won’t lose their shirts on the millions of foreclosures on their books.
Of course the real question is will they be able to spin this into another bubble? Judging by the insane prices in the frozen north (Canada) I fear they might pull it off. If they do, we’ll dump our place, put the money in the bank, and rent. The bidding wars have yet to arrive in our little burg. The smoke from the far was even worse this morning and the fire appears to remain out of control:
http://www.denverpost.com/breakingnews/ci_20831039/high-park-fire-colorado_wildfire
http://www.coloradoan.com/article/20120611/NEWS01/306110003/High-Park-Fire-surpasses-36-000-acres?odyssey=mod|breaking|text|FRONTPAGE&nclick_check=1
“…If they do, we’ll dump our place, put the money in the bank, and rent.”
Renter’s [due to "recent" pa$t event$] are folks who eye admire. Cheers!
NONE of these government housing problems are intended to help out the wretched refuse as priority #1. Any help the WreRef gets from them is just a side effect.
It’s all about mark to fantasy/kicking cans/keeping the banksters solvent, at least on paper.
Common sense - but finally someone is addressing leverage, albeit government. Next will be the banks.
——
MONTREAL, June 11 (Reuters) - Research shows that highly indebted countries should reduce their leverage and cautious countries should avoid becoming highly indebted to safeguard their ability to grow economically, Bank of Portugal Governor Carlos Costa said on Monday.
“Otherwise, governments might seriously compromise economic growth, both current and potential,” he told a financial conference.
He added that Europe needs a banking union, as well as a common set of fiscal rules and institutions “to safeguard the stability of the monetary union.”
————————-
TBTF banks really should be nationalized if they get into trouble - not given carrots.
.
I’ve seen the lights go out on Broadway,
I saw the Empire State laid low.
And life went on beyond the Palisades,
They all bought Cadillacs, and left there long ago.
We held a concert out in Brooklyn,
To watch the Island Bridges blow.
They turned our power down,
And drove us underground,
But we went right with the show!
…
I saw the rats lie down on Broadway.
Oh and I watched the mighty skyline fall!
The boats were waiting at the Battery,
The Union went on strike, they never sailed at all!
…
There are not many who remember,
They say a handful still survive.
To tell the world about,
The way the lights went out!
And to keep the memory alive!
———————————————————
Greek power companies’ lack of cash risks blackouts
ekathimerini.com | By Ladka Bauerova and Natalie Weeks
Greece faces the threat of rolling power blackouts as the economic crisis leaves utilities without cash to pay for natural gas imports and operate power stations.
Regulators will meet with Greece’s power market operator as early as today to discuss an emergency loan of 300 million euros ($375 million) to cover payments for gas imports from Russia’s OAO Gazprom (GAZP), Turkey’s Botas AS and Italy’s Eni SpA. (ENI) The country’s largest power producer is almost out of money and likely to default after unpaid accounts jumped more than 50 percent in a year, according to Standard & Poor’s.
As Greece prepares for a second national election in six weeks, a vote that may determine whether it remains in the euro, the collapse of the energy sector has emerged as a risk for a country that imports most of its oil and gas. At the start of the main vacation season, power cuts that leave tourists trapped in dark hotels without air conditioning would be a further blow to an economy in its fifth year of recession.
PPC, 51 percent owned by the state, is struggling to manage its 4.85 billion-euro debt as it faces “extremely limited liquidity” and must refinance 525 million euros by June 29, Chief Executive Officer Arthouros Zervos said on a conference call with analysts on May 29.
“Greece’s energy sector could collapse,” S&P said. “Repeated blackouts likely to ensue might discourage users from paying their electricity bills.”
It is interesting how no one wants to actually live in socialist-democrat cesspools of cities. Destroyed by years of liberal control and bankrupted by their public unions - people just vote with their feet and leave.
What will they cities like this do? Reform themselves? See that policies of the past didn’t work and change them? No, they will push for tax increase upon tax increase and eventually demand a bailout.
But eventually Chicago will end up like Detroit, where they can’t even keep the streets light on.
Good luck if you own a house in Chicago.
————————-
The Second-Rate City?
City Journal | Spring 2012 | AARON M. RENN
In the 1990s, Chicago enthusiastically joined the urban renaissance that swept through many of America’s major cities. Emerging from the squalor and decay of the seventies and eighties, Chicago grew for the first time since 1950—by more than 100,000 people over the decade. The unemployment rate in the nation’s third-biggest city was lower than in its two larger rivals, and per-capita income growth was higher
Begin with Chicago’s population decline during the 2000s, an exodus of more than 200,000 people that wiped out the previous decade’s gains. Of the 15 largest cities in the United States in 2010, Chicago was the only one that lost population; indeed, it suffered the second-highest total loss of any city, sandwiched between first-place Detroit and third-place, hurricane-wrecked New Orleans.
The demographic disaster extends beyond city limits. Cook County as a whole lost population during the 2000s; among America’s 15 largest counties, the only other one to lose population was Detroit’s Wayne County.
Fiscal problems are commonplace these days among local governments, but Chicago’s are particularly grim and far predate the Great Recession. Cook County treasurer Maria Pappas estimates that within the city of Chicago, there’s a stunning $63,525 in total local government liabilities per household
As dire as Chicago’s finances are, those of Illinois are in even worse shape. The primary cause, once again, is pensions, which are underfunded to the tune of $83 billion.
What accounts for Chicago’s miserable performance in the 2000s? The fiscal mess is the easiest part to account for: it is the result of poor leadership and powerful interest groups that benefit from the status quo. Public-union clout is literally written into the state constitution, which prohibits the diminution of state employees’ retirement benefits. Tales of abuse abound, such as the recent story of two lobbyists for a local teachers’ union who, though they had never held government jobs, obtained full government pensions by doing a single day of substitute teaching apiece.
Another reason for Chicago’s troubles is that its business climate is terrible, especially for small firms. When the state pushed through the recent tax increases, certain big businesses had the clout to negotiate better deals for themselves. For example, the financial exchanges threatened to leave town until the state legislature gave them a special tax break, with an extension of a tax break for Sears thrown in for good measure. And so the deck seems to be stacked against the little guys, who get stuck with the bill while the big boys are plied with favors and subsidies.
“…It is interesting how no one wants to actually live in socialist-democrat cesspools of cities….”
Yeah, I hear Berkeley and San Francisco are nearly deserted these days.
Boulder too, no one wants to live there.
The only people who can afford to live in Boulder are trustafarians and California equity locusts. All “keeping it real” of course with the requisite COEXIST sticker on their ten year old Subarus…
The only people who can afford to live in Boulder are trustafarians and California equity locusts.
And trailer trash :-P.
“All “keeping it real” of course with the requisite COEXIST sticker on their ten year old Subaru”
I literally LOLed on that one. It’s so true. 1/2 the cars where I live are exactly that. In addition to the COEXIST, most also have some an abortion, Obama 2008 AND 2012, and a version of Whirled Peas sticker as well. My favorite I’ve seen this season “LEFT LANE IS FOR PASSING, RIGHT LANE IS FOR SLOW TRAFFIC” with the Right colored red and the Left colored blue. Get it, get it? Conservatives are slow. High-Leh-Rious.
I was too slow to get it.
The crickets are sounding pretty lonley in NYC and Washington too. As a matter of fact, Montogmery County, MD is looking like an apocalyptic wasteland assuming that means a lot of cars driving around to farmers markets on weekends.
Just reserved tickets to 3 free lectures at the Folger Shakespeare Library over the next month and a half. There are concerts by military bands on the West steps of the Capitol building nearly every weekday over the summer. Washington Early Music Festival has started. There is a choral festival starting soon and the Capital Fringe Festival (theater) too. This year’s Smithsonian Folklife Festival is brought to you by the letter “C” (themes are Campus and Community, Citified and Creativity and Crisis). Yeah, it is hot, but the real problem is there is nothing to do!
Not to mention the fact that DC has a very happening indie music scene. It’s the sort of thing that Deejay Slim wants to check out someday.
Nobody at the blueberry fields either.
Seriously, on the way back to the farm I listened to traffic report on the radio. They reported the usual accidents with one lane getting by, on all the usual routes like the Beltway.
And this was a SATURDAY.
Of course part of that decline is the murder rate. Why, just last weekend there were 50 shootings in Chicago, resulting in 8 deaths. At that rate, the ‘bad’ neighborhoods will slowly empty out, leaving more gentrification opportunities.
Illinois has huge problems, not least among them an entrenched political machine that controls who gets into the state legislature. The power of the teachers’, electrical workers and other unions is legendary. If it wasn’t for job security, culture, the nearby Lake and a paid-for house, I might consider moving. To where, though? That is the question.
Eventually all of that will take a toll on the economy of the area. I would never live in Illinois due to it being one of the few states that will not allow law abiding citizens to carry a firearm for protection.
My comments seem to be vanishing into the ether today.
Bananas, have you ever been to Chicago? It isn’t exactly deserted, or down-at-the-heels. For the young and for a lot of empty nesters, it is the place to be. Detroit was a one-industry town, and when that industry left for cheaper pastures, Detroit was doomed. Chicago’s poorer, crime-ridden neighborhoods may resemble Detroit’s, and both cities have water frontage, but the similarities end there.
Several years ago, my college alumni publications started running stories about young grads heading east from Ann Arbor to…
…Detroit.
And, guess what? They’re staying. Putting down roots. Ever so slowly bringing that city back.
If they can pull it off, more power to them.
More recently, a formerly local acquaintance gave me a lift out to one of Tucson’s plant nurseries. He’s a music fan, I’m a music fan, so he just had to play me a mix of really cool music from this place called…
…Michigan.
Michigan? I couldn’t believe it. Here was a guy who so loved music from the Great Lake State that he wanted to leave Tucson and go there.
And that’s what he did.
When I was his age, I couldn’t get out of Michigan fast enough.
“It is interesting how no one wants to actually live in socialist-democrat cesspools of cities. Destroyed by years of liberal control.”
Redistributing resources from those who have less to those who have more is not socialist or liberal or progressive. Any more than bailing out companies to help the rich is conservative and pro-business.
Interesting if true - I don’t think it is true.
——————————-
40 percent of the U.S. workforce to retire over the next five years.
Atlantic Journal Constitution Blog | 6/8/2012 | Ed Rust Jr. CEO State Farm
We need you in America’s workforce. Some of our aging baby boomers may be delaying their retirement because of current economic conditions, but eventually they’ll step away. In fact, we expect 40 percent of the U.S. workforce to retire over the next five years. What kind of workers will replace them? Where will the U.S. stand in the global economy if we don’t have skilled and knowledgeable people to take their place?
I can remember similar stories when my generation was coming of age in the 1970s. Yet our civilization managed to survive.
Just because people are eligible to collect SS doesn’t mean they will retire. Many will try to defer their retirement so they can save more money and maximize the SS benefit. I say “try”, because many will be put out to pasture and no one will hire them.
“Just because people are eligible to collect SS doesn’t mean they will retire.”
Yep. I see too much of this nowadays. People just calculate it out, and usually find that they can collect SS while working. So there just won’t be any relief for the unemployed; those who have jobs will keep them as long as they can into retirement years.
It all comes down to making payments. Too many Americans in the retirement age group are deep in debt, which really pressures them to keep earning money. And if it’s not direct debt, it’s the indirect debt of being the “bank of mom and dad”, as their Gen-X (i.e. loser) children keep needing support. Gen-X debts tend to produce pressure on Boomers to pay them via this mechanism. I’d say there’s a $2000 yearly support pillar erected beneath the average Gen-X family, put there by their Boomer parents.
You do know that the front end of gen-X is rapidly approaching 50, right? The new young adults are called millenials.
I meant what I said. The Boomers are still supporting too many of their Gen-X children, even though the latter are adults and should have long ago become independent. This has all gone too far. Lifestyle inflation persists.
“Where will the U.S. stand in the global economy if we don’t have skilled and knowledgeable people to take their place?”
Sounds like a shill for open borders and more H1-B visas.
The 40 percent figure is way too high. Although those in the first half of the baby boom might be the richest generation in history, and thus will be able to retire sooner than those coming after, they are not that numerous. And many will choose to keep working.
Aside from the increase in obesity, younger generations of workers are no worse than older generations. They might even be more honest, though that remains to be seen.
But up until the first half of the boomers, each generation was better educated than the one before. I don’t think there has been much improvement since, particularly in the work skills department. In addition, many jobs that used to be held by teenagers are now held by immigrants, slashing on the job training.
As we all know, they aren’t making any more land. The solution for oil-rich Middle Eastern nations is to buy all the farmland they can in somebody else’s yard:
http://www.salon.com/2012/06/10/will_the_middle_east_starve/
More than land, the issues is with the “blue gold”, AKA fresh water. Living on the east coast or the PNW it’s easy to think that it’s plentiful, but in most of the world it’s a scarce resource.
… issue is with the “blue gold”, AKA fresh water.
I think Michigan is counting on this. Quite an inland coast it has…
With the natural resources it possesses, Michigan should be rolling in money. Too bad its politics are hopeless.
Thank Odin that the Great Lakes are part of an international border, therefore under treaty, because otherwise the U.S. western states would have long ago built huge pipelines and drained Lake Superior entirely. Current treaty with Canada forbids such monstrous withdrawals from the GL watershed, and there’s no way that will ever change, since Canada has no stake whatsoever in the growing and thirsty cities and ag industries of the American West.
“there’s no way that will ever change”
Never say (n)ever.
Military spending:
US: $711B
Canada: $25B
As percentage of GDP:
US: 4.7%
Canada: 1.4%
As percentage of world share:
US: 41%
Canada: 1.4%
I fully expect some future war to be fought over water rights.
Ah, Financial Innovation, is there anything you can’t do?
I recently posted a link showing Fannie and Freddie lost more in 2008 than they made in the 37 previous years.
Now, from the New York Times, a report showing the median American family with no more wealth than they had in the early 1990s.
Eventually, the illusion of prosperity goes away, leaving the bag holders paying the price and the financial elite vastly wealthier.
THIS is the chickens coming home to roost. Illusory prosperity is illusory. Well. Depending on whether you’re the scammer or the scamee.
Family Net Worth Drops to Level of Early ’90s, Fed Says
By BINYAMIN APPELBAUM
Published: June 11, 2012
WASHINGTON — The recent financial crisis left the median American family in 2010 with no more wealth than they had in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said Monday.
The median family, richer than half of the nation’s families and poorer than the other half, had a net worth of $77,300 in 2010, down from $126,400 in 2007, the Fed said. The crash of housing prices explained three-quarters of the loss.
This vast loss of wealth was compounded by a loss of income, as the earnings of the median family fell by 7.7 percent over the same period.
http://www.nytimes.com/2012/06/12/business/economy/family-net-worth-drops-to-level-of-early-90s-fed-says.html
Recall that, during the 1990s, American net asset value went steadily downward. It went negative during the early part of the previous decade.
Clarification: I should have said that the net asset value of American households when steadily downward during the 1990s. My bad.
Oh, brother. Do I have a case of Monday morning typing fingers or what?
I should have said “went steadily downward.”
Typing fingers, you’re fired.
Now, let’s say we happen to be a government of, for and by the people… meaning government net worth is actually owned by the people.
-$11T government net worth / 120 million households means -$91,667 is each household share of the the government net worth.
These stats affirm the squad’s correct conclusion that the future belongs to Lucky Ducky
Ask anyone who got laid off after age 50 how the “Recovery®” is working out for them…
THIS is the chickens coming home to roost. Illusory prosperity is illusory. Well. Depending on whether you’re the scammer or the scamee.
You are on to something here. Any available money or real capital were spent on broker fees, transaction fees, salary, bonuses, taxes and so on. All we are left with is illusory wealth.
“The median family, richer than half of the nation’s families and poorer than the other half, had a net worth of $77,300 in 2010, down from $126,400 in 2007, the Fed said. The crash of housing prices explained three-quarters of the loss.
“
At this rate, in a few years I may have a better than median net worth.
Seems my wife and I will not be buying a condo.
We started by limiting ourselves to looking in areas with good school. Nah. Nothing on the market near what we want to pay.
So, what the heck, it will be years if not forever before anyone we’d put into it would be in shcool… so we start looking in less desirable areas with more low end units listed in MLS.
Well heck, they are all short-sale under contract, waiting for lender approval.
Even condos that were put on sale within the last week are already under contract. Places listed at $38K are under contract at $45K. Stuff like that.
We are just not going to step into a market like this.
We are just not going to step into a market like this.
It’s the kind of market that leaves a sticky, smelly mess on one’s shoes.
Sorry to hear. Keep looking at least part time.
You never what may show up. And this temporary “upswing” in housing activity/prices is going to end very shortly.
It is based on nothing except a fake shortage of “inventory” and the final gasps of government bailouts and stimulus. With the election coming in a few months, I don’t see any more helicopters with money bailing out of them.
“We started by limiting ourselves to looking in areas with good school. Nah. Nothing on the market near what we want to pay.”
I look at Phoenix on Redfin at least weekly. I’ve noticed that prices are rising in the hard-hit outer periphery communities while prices around Scottsdale and Tempe haven’t really fallen much.
I hate to say, but middle-class Californians likely saw much larger average declines in net worth than $50K, as a 30% drop in the value of a $500K “starter home” = $150K.
So much for housing “wealth effects.”
June 11, 2012, 2:36 p.m. EDT
Recession crushed middle-class wealth: Fed survey
Median net worth fell by $49,100, erasing 18 years of gains
By Steve Goldstein, MarketWatch
WASHINGTON (MarketWatch) — The recession crushed the net worth of middle-class families as real estate values tumbled, according to a survey released by the Federal Reserve on Monday.
The Fed’s survey of consumer finances between 2007 and 2010, which is adjusted for inflation, showed median income fell 7.7% from $49,600 in 2007 to $45,800 in 2010 and that median net worth fell 38.8% from $126,400 in 2007 to $77,300 in 2010, approximately the level recorded in 1992.
…
More financial bombshells for baby boomers: Don’t count on that inheritance
Hotair | 06/11/2012 | Erika Johnsen
Is no age group safe from the fiscal woes of economic near-recession and pending entitlement crises? (Hint: No.) While we often focus on the troubles of young people unable to find employment and just chillin’ on the parents’ couches, and we’re already well aware of the upcoming squeeze on Social Security as baby boomers begin to reach retirement age, here’s a fun and exciting reminder from the Wall Street Journal.
For years now, there’s been a lot of talk about boomers getting tremendous windfalls as their parents pass on. Many boomers, in fact, have been lagging behind in their savings, betting on—hoping for—big bequests, especially since many of them suffered big losses in 2008.
But for a growing number of boomers, things aren’t going according to plan. The postwar generation is living longer—and many are spending their savings along the way. And, of course, many of them also took a hit in 2008.
The result is that, as a group, boomers likely won’t be getting as much of an inheritance as they hoped. Even worse, far from receiving a bequest, a growing number are tapping some of their own savings to help their cash-strapped parents make ends meet.
“There are way too many adult children I see who are looking at Mom and Dad’s estate as their ticket to a secure retirement,” says M. Holly Isdale, an estate planner in Bryn Mawr, Pa. “But with people living longer, much of the money is likely to be spent.”
True story from the Slim family: Yesterday, I was calling my aunt in VT so I could check on her. Aunt recently had congestive heart failure and is now quite fragile.
So said my cousin, who answered the phone.
Cousin has two kids. Son is a chef in Oakland, CA. Daughter is currently living in Albuquerque.
Mom describes daughter as being very volatile. As in, something ticked her off in CA, so off to New Mexico she stomped.
Well, wouldn’t you know it. Mom gets a phone call. Daughter only has 75 cents in her pocket! And she’s in Albuquerque! Help!
Mom said, in a very calm tone of voice, “Well, you’d better take that job that you went there for.”
And that’s what daughter did.
For those who are not “at or over 55,” we’ll be lucky if they don’t do another bankruptcy “reform” and make the children responsible for the debts of their parents. You know, to get the lending and spending going again.
My parents had hoped to pass on some $ themselves. Back in 2000. I told them to forget it, there was no way it would work out. That was another bubble idea.
“But with people living longer, much of the money is likely to be spent”
It is not just living longer. It is the ravaging effects of that final illness on the financial health of the remaining spouse or estate.
$70 to send a smallish (2″x10″x8″),1lb package overnight for morning delivery to Los Angeles from Portland.
Deflation.
And here I thought my 35-or-so dollars for an April Fedex was quite the bite.
Every misunderstanding/conflict, IMO, is about expectations. I expected a bill in the $30s. I nearly hit the floor when he said $70s.
I send stuff often for work and know I’ve sent bigger packages the same method recently for a lot less. Fedex’s online calculator confirmed the steep price. I’m not even paying for it and I’m torqued about it…Expectations? Not met.
On the other hand, I’ll be getting a bike fitting this week using my money. Expectation? $150-200 for the fitting. Reality? $80. Of course, after the fitting my expectation is adjustments that make my shoulder/upper back pain go away. We’ll see.
If it’s a good bike fitting, you’ll be amazed at the difference in your comfort.
Case in point: A bike fitting kept me off the operating table. I was *that* close to needing knee surgery.
Have you considered the US postal service?
The New Mexico and Colorado wildfires are on the news here in DC Metro. I hope you guys are still OK, and remain OK.
Sell in June or Ride the Swoon.
June 12, 2012, 12:02 a.m. EDT
Our fate is in others’ hands
Commentary: What happens in Europe doesn’t stay in Europe
By Irwin Kellner, MarketWatch
PORT WASHINGTON, N.Y. (MarketWatch) — No matter what the politicians in Washington may wind up doing to try to boost economic growth, it could all be for naught if other countries should take a swan dive at the same time.
It is no secret that the United States is not the only country that is grappling with problems related to its economy. Gazing across both the Atlantic and the Pacific ponds, you will have no difficulty finding other countries in similar trouble as well.
Many countries in Europe are in or heading into a recession. And on the other side of the globe, the biggest emerging markets seem to have hit a wall, according to the Economist magazine. Besides Brazil in this hemisphere, we’re talking about India and even China.
The stock market is reflecting these concerns. On Monday, after starting on the upside in a relief rally over Europe’s rescue plan for Spanish banks, the Dow Jones Industrial Average (DJIA -1.14%) did a 180 and finished with a loss of 143 points.
…