Bits Bucket for June 18, 2012
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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
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Underwater owners try to beat the bank
Optimistic homeowners: Janis and Marc Carpiniello are pursuing a plan they hope will allow them to owe just $60,000 instead of $399,000 on their Coral Springs home.
By Kimberly Miller
Palm Beach Post Staff Writer
Posted: 10:22 a.m. Sunday, June 17, 2012
By the time the stranger called that Thursday in March, suburban Boynton Beach homeowner Marcie Lowe was out of options to fix her failed real estate wager.
The savvy 78-year-old played her hand well for years in the home-buying game, picking up properties in California and Key West to rent to kids in college and bartenders serving drinks on Duval Street.
But she got caught with a 10 percent interest-only loan on her gated Valencia Isles home, which is now worth hundreds of thousands of dollars less than the $571,000 she paid in 2003.
“What would you think of this?” Lowe remembers the caller saying.
He proposed a fresh strategy to end-run the banks — a complex legal plan that begins when you deed your home to the Fort Lauderdale-based Fidelity Land Trust Co. for an average fee of $2,500.
Conceived, at least in part, by a man barred by the state from engaging in consumer debt-related services, the trust then sues the bank to cancel your mortgage while offering a new contract with lower payments.
“He said more than 250 people were already set up for this,” Lowe recalls.
Fidelity Land Trust has quietly amassed about 80 Palm Beach County deeds since it registered as a limited liability corporation with the state in December.
The firm is the owner of record for another 76 properties in Broward and Miami-Dade counties, according to clerk of court records.
If the trust is successful in canceling the mortgage through a quiet title action, the homeowner is still responsible for the loan debt, or note, but the trust then tries to buy that debt from the bank for pennies on the dollar.
Because the debt no longer has collateral in the form of the home, the idea is the bank will be more willing to negotiate.
According to a website run by Florida Home Rescue Mission, which markets Fidelity, the trust manages 250 homes in Florida worth a combined $45 million.
Literature sent to potential clients notes there are no guarantees in the legal process, but says that an “unfavorable” outcome “has never happened.”
Within the layers of corporations tied to Fidelity Land Trust is Edward C. Tudor — a registered fictitious name for Edward Cherry, according to the Florida Department of State Division of Corporations.
Cherry was barred in a 2009 consent judgment by Florida’s attorney general from dealing in consumer debt-settlement services after a state investigation concluded companies he was involved with “diverted millions of dollars to themselves and a coterie of families and associates.”
Unlike some foreclosure-rescue plans aimed at unemployed homeowners with few assets, Fidelity’s land trust strategy is for people who can afford to make monthly payments but have been denied such alternatives as a loan modification, Gellenbeck said.
Lowe and her husband, Maynard, met those qualifications. The great-grandparents paid cash for their Valencia Isles home in 2003. It was a furnished builder’s model with one of the three bedrooms converted into a home theater. They cashed out equity to buy more real estate during the boom years.
“Then along came our lovely recession, and, boy, did we get hurt,” Marcie says. With pensions from careers in the airline industry — Marcie was a stewardess; Maynard, a manager overseeing fueling, cleaning and loading— they might afford the soaring payments designed by the defunct Countrywide, now Bank of America.
“That’s for the birds,” Marcie Lowe says about her interest-only mortgage. “We just needed a modification.” So when the man called about Fidelity, she was ready to listen.
FIDELITY LAND TRUST PLAN
BENEFITS: If successful, the homeowner will have a canceled mortgage and owe a lower amount to the trust than the unpaid loan amount from the original mortgage.
RISKS: If unsuccessful, the homeowner has paid a fee to the trust and the lender could still pursue the homeowner for the unpaid loan amount.
http://www.palmbeachpost.com/news/business/real-estate/underwater-owners-try-beat-bank/nPYDF/ -
Once again, no FB dollar shall be allowed to escape.
Set ‘em up then shake ‘em out.
‘They cashed out equity to buy more real estate during the boom years’
http://www.sadtrombone.com/
‘they might afford the soaring payments designed by the defunct Countrywide, now Bank of America. “That’s for the birds,” Marcie Lowe’
‘He proposed a fresh strategy to end-run the banks’
So basically they are trying to cheat. OK, but watch this ’savvy’ investor cry victim if it blows up on her.
“… if it blows up on her.”
Lol. Is there any doubt?
How is it possible to transfer the deed of a property that has a lien registered against it?
You can’t. The whole thing is a scam. The reason the legal process has never failed is that they haven’t gotten to court yet.
“He said more than 250 people were already set up for this,”
Something about that wording would have given me pause…
Exactly Stucco….
It’s reminiscent of getting “locked into this super low rate before rates and prices go up!”
Go for it Marci! I’ll be reading here in 6 months how you got it jammed up your ass once more.
The free sh*t army on the move in Boynton Beach…
I don’t want to be there when the FSA busts a move.
End U.S. Student Loans, Don’t Make Them Cheaper
By Richard Vedder Jun 17, 2012 6:32 PM ET
U.S. employers complain that they can’t find enough skilled employees. Then how do we explain why almost 54 percent of recent college graduates are underemployed or unemployed, even in scientific and technical fields, according to a study conducted for the Associated Press by Northeastern University researchers?
The cause is more fundamental than the cycles of the economy: The country is turning out far more college graduates than jobs exist in the areas traditionally reserved for them: the managerial, technical and professional occupations.
The Bureau of Labor Statistics tells us that we now have 115,000 janitors, 83,000 bartenders, 323,000 restaurant servers, and 80,000 heavy-duty truck drivers with bachelor’s degrees — a number exceeding that of uniformed personnel in the U.S. Army.
http://www.bloomberg.com/news/2012-06-17/end-u-s-student-loans-don-t-make-them-cheaper.html -
U.S. employers complain that they can’t find enough skilled employees.
Because they don’t want to spend a penny on training people anymore. Instead, they expect to find people who are perfect fits for their openings, even if those openings have unusual skill requirements which are not taught at any university (say like magnetic tape drive technology).
What is interesting is that I know two guys in their 50’s who started at IBM straight out of high school. They were hired into white collar positions and went through an extensive training program. Both later earned their Bachelor degrees later, on IBM’s dime.
Contrast this to where I work today (a company famous for its DB SW and UNIX OS). Everyone in my department had a master’s degree when hired. Everyone.
Worse. They want a US Government program that pays the all or a part of the employees wages during their on the job training.
This “no qualified employees” is just another attempt for highly profitable big business to suckle on yet another of the US Government teats.
It’s also a scam to bring in more immigrants for cheaper wages. When I tell people that this country lets in 1 MILLION LEGAL immigrants every year, they are amazed.
Going through customs regularly, just the one time of day, one flight, I see hundreds of immigrants who qualify for the Visa Waiver program for many many countries. Now multiply that one viewing x every airport in the US, and multiple times per day. Every day.
Linda, you got that right.
Exactly. What is left unsaid about the glut of unfilled tech positions is that they all require extensive experience in addition to degrees. There are few entry-level tech positions for newly minted college graduates to use to gain the experience needed for these jobs. We have a glut of labor at the low end and a lack of experienced labor in the middle.
BTW, InCo, I’m guessing you work for the company that provides the DB software I develop for and administer… actually both db platforms, considering they acquired a well-known open-source company a few years ago. If it is who I think it is, they are truly evil, on the scale of MS… but damn they make for a lucrative skill set.
Let’s just say that our CEO did a cameo in Iron Man 2.
Yeah, thought so. They acquired a company I used to work for (based in Cambridge). Stayed in touch with some of my former co-workers post-acquisition: they said it was like being assimilated by the Borg. No one lasted more than 6 months before moving on…
Great products, but too expensive. Also, what in heck is up with their effort to push big iron again? I thought the days of spending millions on a single server/storage implementation to achieve performance were long gone and then ****** comes out with ***data…
If it doesn’t have to be fully ACID compliant, clustered commodity servers running opensource OS and DB software scale much better, at a significantly cheaper price. It’s worth it to avoid the relational model, or parts of it, if you can.
Many, many, many day to day job skills are learned in High School, but the 25% who drop out lack them for the REST of their lives. It is so sad to think of the TREMENDOUS advantages we offer students [yes the USA # 1 legal citizens] who run to MTV instead. Where are the parents?????
I vividly recall the convo I recently had with a friend, head of business development for an oligarchical industry corp. He’d placed an ad in the Boulder area papers for entry-level tech/industrial assembly line type positions; nothing fancy, high school education, but with “chance for advancement”. The man was hugely offended that they’d offered nearly 300 new positions and no one had applied for them. They’d only filled something like 25 slots, and half of those didn’t show up after the first week.
“No one WANTS to work,” he’d complained. “They’d rather sit home and collect welfare and unemployment.”
“So, __,” I asked. “How much is starting pay?” “Eight dollars!” he’d said, as if this was some wholly reasonable sum for a full-time, bread-winner job.
“So that’s $320 a week before taxes. And rent in Boulder is how much?
“They can live outside the city,” he said.
“And how much for gas, car maintenance?
“They can take the bus!”
“So how much is bus fare per week? Plus commute time? Child care? Stuff like food, utilities?”
He blustered a bit.
This guy has an MBA from MIT and PhD from Georgia Tech, but he hasn’t the slightest clue what it means to be working poor today.
My father’s first real job was as a “supervisor” (I think he was really the gopher - made sure a team of guys had the stuff they needed to keep work moving forward) for a position like that at Honeywell. At the time he had a bachelors degree, masters degree and 3 years work experience as an Air Force officer. He was able to support himself and a wife (later a child - me) in a two bedroom garden apartment in a commuter town and one car on that salary. Mom could walk for all essential activities including shopping downtown, seeing her doctor, and visiting her mother. Schools to serve every age of child and the lake were also walking distance.
This guy has an MBA from MIT and PhD from Georgia Tech, but he hasn’t the slightest clue what it means to be working poor today.
Actually, he shouldn’t need to know what it’s like to live on such little money. An understanding of Economics 101 should be enough. There is a supply curve and a demand curve for the type of labor that he is trying to purchase. Clearly, they intersect at some point above $8 an hour. If he can’t fill his open positions offering $8, he should put an ad in the paper the following week offering $9. If he still can’t get enough workers at $9, buy another ad offering $10. If keeps doing that, he will eventually get to an hourly rate that will fill all 300 positions.
You would think a CEO with all of those degrees, as well as a journalist who write about business for Bloomberg would know about the theory of supply and demand.
+1
There’s always a clearing price. You don’t need to invoke humanitarian ideals to know that he hasn’t a clue what he’s doing.
There’s always a clearing price. He hasn’t hit it. At 275 empty slots (300 - 25), clearly , he hasn’t a clue of what he’s doing.
FPSS said: “There’s always a clearing price.”
Yes, and there’s always a utility price. That means the price of labor beyond which it’s not worth doing the enterprise. Maybe $8/hr entry is that price. Who are we to know? Do we have access to their spreadsheets?
You can’t just keep increasing the price of your labor offer without the possibility of running into the utility price.
ahansen said: “He’d placed an ad in the Boulder area papers for entry-level tech/industrial assembly line type positions[.]“
Well, let me tell you, if he did that here in my Rusty City, his 300 open positions would gather about 1500-3000 applicants. So he’s running his production line in the wrong area of the nation for the income level.
To give you some idea of my circumstances, a local refinery here posted three job openings, the first such in a long time, and even restricted to applicants who knew current workers at the refinery, there were still about 3000 applicants. 1000-to-1.
I posted in HBB page 7213 about this sort of thing. America seems to be dividing into First and Second World areas, permanently. Areas around the Great Lakes with long-lost industries are really in the Second World, not really part of what people commonly assume is the “American economy and lifestyle”. Hence lifestyles and employment there should conform to a much lower level. Those who don’t conform will either suffer or have to otherwise endure circumstances that will destroy their enterprises.
Your Boulder-area guy has to move his production line. He sounds like an over-educated stuffed shirt, and he also sounds like he’s married to the idea of remaining local. So he’s going to have to endure until the company as a whole wises up and moves production to a low-cost area like my own. Of course, if they’re willing to uproot, there’s always the chance of them absconding overseas. The risks of the game, in this globalist world.
It’s not the lack of training that keeps me self-employed. It’s the lack of salary. They wanted an engineer for 50 hours week for 50k a year… in California, where 50k is pretty much poverty level.
Thing about engineers is that they have more than a passing familiarity with mathematics.
They’re also very good at arithmetic.
But none of them have a lick of sense.
They all want something for nothing.
It’s not the lack of training that keeps me self-employed. It’s the lack of salary. They wanted an engineer for 50 hours week for 50k a year… in California, where 50k is pretty much poverty level.That is low. What field of engineering? In mine (electronic engineering) the entry level salary (BS degree) is about $75K.
I saw an interview with a couple of debt slaves on the TV the other day. One was a recent grad who was unemployed. He had a degree in marketing…graduated at the top of his class…blah…blah…blah. When asked about his job prospects he lamented that he had job offers but they were all starting out in sales and that’s not what he wanted to do.
This kid is so spoiled…swimming in a mountain of debt….and he doesn’t think he “deserves” to have to pay his dues.
“This town needs an enema!” – The Joker.
He had a degree in marketing…graduated at the top of his class…blah…blah…blah.
While a degree in Marketing isn’t the toughest one around, he did graduate at the “top of his class”, so I presume he actually studied while at school, as opposed to partying and getting drunk.
As for not wanting to work in sales, can you blame him? Just think of the universal contempt that exists for sales people (especially those who sell used houses and cars). Also, Marketing is not sales (even though many people think it is).
I fail to see how picking a major, studying hard and hoping to land a job in your field of study makes you “spoiled”. People who major in Engineering expect to be Engineers when they graduate, not sales droids. We’re not talking about people who major in Liberal Arts here. People who do land jobs in Marketing at Fortune 500 companies are paid good salaries.
Dude, it’s a marketing degree! Next to entrepreneurship, it’s the biggest joke concentration for a business degree. Graduating at the top of your class in marketing is a little like saying you’re the tallest midget. You really have to try hard not to get good grades in that concentration.
I’m not sure why the kid wouldn’t want to start in sales. That’s where the money always lies. And even if he doesn’t want to be a salesman his entire career, it’s the best place to learn how business works, the good the bad and the ugly.
Yeah, Marketing was a pretty easy major. It enabled me to fully, and I mean fully enjoy my college years and still graduate at the top of my class.
The degree has treated me just fine, but it really wasn’t hard.
Dude, then why does Corporate America pay Marketeers low six figure salaries?
I’m not sure why the kid wouldn’t want to start in sales. That’s where the money always lies
Uh, because not everyone is cut out for it? Just like not everyone is cut out for for being an OR nurse, which also pays big bucks. Being a good sales rep (AKA “Account Executive”) requires soft skills most people lack and cannot develop.
There is virtually no overlap between what a Marketeer does and and what a salesman does. Good salesmen develop “relationships” with their individual customers, so they can learn how to serve them (and hence close the deal). Marketeers study demographic data to decide where they can position a product or if it should even be offered.
“I’m not sure why the kid wouldn’t want to start in sales.”
Maybe they are commission-only positions.
My understanding is that in Corporate America “Account Executives” do get a base salary, plus commissions and bonuses. But if they don’t meet their quotas, they’re toast.
The fact marketing pays well does not mean it’s not an easy major.
Also, most sales jobs are minimum wage at best, or $1000 and commission paid against that. Most people are not cut out for sales, nor get any decent training on how to sell.
Most owners of corps don’t know how to sell, either.
Throw them out into the deep sea and tell them how good it is going to be, won’t pay the bills (unless you find the mermaid).
What a lot of kids don’t realize is that sales/marketing is an audition for a management/directorship career with any given company. It wants to see how you represent the company, how you interact, what your work habits are, where your loyalties lie, and most importantly, what lengths you’ll go to to make them money. (Oh, and who might make a good doubles partner or golf fourth.)
Those who do well get invited to stay– with increasing perks. Those who don’t see the position for what it is, a weeding out process, tend to be miserable and should have gone into accounting or maintenance or “human resources.”
There is a lot of contempt for sales people but it’s not universal. There are a lot of honest hard working sales people and they can earn very good livings. I think a lot of the contempt for sales people come from people who don’t understand business. I don’t mean you Colorado
Sales in the US is definitely held in contempt.
When asked about his job prospects he lamented that he had job offers but they were all starting out in sales and that’s not what he wanted to do.
He’s an idiot.
Yes, I know. Strong language.
But hear me out. Working in sales is some of the best training you’ll ever have. You’ll learn all sorts of things that you won’t learn in any behind-the-scenes jobs. Including how to think on your feet. That in itself is huge.
Pop quiz: When I first decided to go into business, guess what sort of experience did I need the most? If you’re guessing s-a-le-s, you’re right!
I agree he should probably take one of the jobs. Any job is better than no job. It is a foot in the door. Perform well at a Fortune 500 company and you can transfer to the marketing job in a couple of years with an understanding of what is expected of the sales people.
OTOH, if it is a commission-only position at the local Apple store, it may be better to keep looking.
I remember interviewing with EDS just before graduation. They talked about 2 career tracks - the programming track (more $) or the operator track (less $). I was interested in programming and they offerred operations. I felt like they had done a bait-and-switch. This was pre-Affirmative Action. If I were male, would they have offerred me programming? I turned them down and took another job.
Times were not as tough then as they are now, although it was not boom times. I had a math degree with a handful of programming classes looking for entry into a growing field. If I were graduating today, I might take it and keep looking.
I agree he should probably take one of the jobs.
I do too. Most of us in the field (at least at the 3 places I’ve worked) complain that both our product marketing and industry marketing folks would be well served to get out for a few years and understand directly from customers what they want. The sales to marketing path makes a lot of sense and happens quite often in my industry. And it doesn’t require a lot of time to do it. One or two years is pretty common.
I think this guy’s too young to appreciate it. He would probably see it as a two year prison sentence but, in reality, it would open him up to the world he needs to understand as a Marketeer anyway.
I think one reason Mormons do well in business is their experience on their 2 year mission. It requires many of the same people skills as sales.
The time they spend studying seems to help, too. I missed out on that by joining the army instead.
To bad Mormons don’t also enlist.
People skills are one thing, most jobs do not have good trainers in sales. Given a pamphlet for sales and arm floaties won’t be good enough to make you a sales star.
“U.S. employers complain that they can’t find enough skilled employees. Then how do we explain why almost 54 percent of recent college graduates are underemployed or unemployed, even in scientific and technical fields,”
BS. There is a shortage of people in scientific and technical fields. Granted, there are many baristas with graduate degrees in Ethno-Women Studies.
This is my point let them turn in their degree in exchange for cancelling the debt..and if employers want a valid degree to get hired…well you don’t have one, and you can make starbucks your new career debt free.
Granted, there are many baristas with graduate degrees in Ethno-Women Studies.
Your dumbest idea ever. And that is saying something.
If you could get essentially unlimited student loans for tuition and living expenses as many times as you wanted (including access to health care) and then could get the loans cancelled just by turning in the degree, what would you do with your life?
I would start a school, but a few million people would just become permanent students who immediately turned in their degrees once they graduated. Rinse. Repeat.
And besides, if you have the knowledge and experience, many employers don’t care if you have a degree.
“And besides, if you have the knowledge and experience, many employers don’t care if you have a degree.”
Yes and no.
For entry level, there is no experience, so a degree is more or less a prerequisite. And even for more advanced positions, while a degree isn’t a must, it certainly helps. All else being equal the job will go to the person with a degree in most cases.
Agreed, but let’s say you land your first gig. Now you turn in your degree and your 100K student loans go poof. The next job will be easier to get, as you are now experienced. Plus if everyone is turning in their degrees for debt forgiveness, employers will understand and just focus on the experience.
People who do this will just say I earned a degree but gave it back for $100K. As long as you can prove you were there fro 4 years, the fact that officially you don’t have a degree won’t mean anything to an employer. Everyone’s got a copy of their transcripts already and you can always take a picture of your diploma ahead of time and have something like a notary public verify its authenticity. So there’s no real penalty to someone for giving up their diploma. It’s a bailout at a very low cost. If someone offered me $100K for my diploma today I’d take it without a second thought. Anyone who knows me, knows I have the degrees I have.
I really didn’t think the government would be that seriously stupid to hand over anymore money to someone who didn’t pay off the first loans…
But again some places like government have UNION rules that require a valid 4 year degree….ya think the UNION will change its rules?
Or “white shoe” law firms?
Focus on the experience…well that would be Great for America if we could achieve that goal..
Your dumbest idea ever. And that is saying something.
Plus if everyone is turning in their degrees for debt forgiveness, employers will understand and just focus on the experience.
There are no union rules about having a 4 year degree at the federal level. The government decides what the prereqs for a position are. My bet is the fed government would be pretty much the only place left where a degree was required. Everyone else would find some alternate way to confirm that you got the degree without being able to contact the school currently and confirm it.
If what you are really proposing is current forgiveness of all outstanding student loans and the elimination of all the government backed rules related to student loans (elimination of government guarantee for subsidized loans and elimination of not being able to bankrupt out of private loans) then just say so. That is a very different proposal.
I really didn’t think the government would be that seriously stupid to hand over anymore money to someone who didn’t pay off the first loans…
People with BKs and/or foreclosures can get FHA loans once they get their credit score back up to the 600’s, which isn’t that hard if you pay all your bills on time for a few years.
True but a college degree is a piece of paper you get to keep in a foreclosure or personal BK, but I think to write off the student debt and keep the degree would be so wrong.
NYCdj,
Their degree is worthless. They owe $100K in debt. What you are proposing is they exchange something with no value for $100K. Screw that. They were stupid enough to take out $100K loans to study for a useless degree, make them pay it back. I don’t care if it takes them 40 years to do it. Enough of the bailouts.
“Enough of the bailouts.”
LMAO….. you’re not snowing anyone.
Then it would be up to the employers to decide whether you must have a valid college degree to be hired….I think that is a pretty severe penalty for bailing them out.
Agreed, and if they had an ounce of common sense they would have gone to State and not accumulated so much debt. It floors me that so many kids incur so much debt just because they chose to attend an overpriced private school.
My whole point in this argument is How do you foreclose on a college degree..because it IS a tangible item.
I think the worst we can do is allow it to be discharged in BK…that would be an incredible moral hazard.
Your proposal is to allow it to be discharged without a bankruptcy. A degree is an intangible. People would have no problem finding ways to confirm that they earned a degree and returned it for the money. Why would any employer (except one that had to pay for the defaulted on loans) prefer an employee that would choose to pay back a $100K of loans for no other reason than to keep a poster for the wall (if that, my degrees are in the linen closet next to the toilet paper) and the ability to be able to move to government employment?
Your idea is ridiculous.
You can’t foreclose on a degree, which is why Student Loans are not dischargeable in BKs.
“Your idea is ridiculous.”
lmao.
Hey, at least his written English is showing improvement. Kudos on that, dj.
“You can’t foreclose on a degree, which is why Student Loans are not dischargeable in BKs.”
You can’t foreclose on credit card debt, either. But it is dischargeable in bankruptcy.
“Repossess” is a more accurate word than “foreclose.”
I think the word you’re looking for is lobotomy.
“Repossess” is a more accurate word than “foreclose.”
OK Ill use that ….how do you repossess the debt incurred in getting a degree, certificate or license?
You’re wrong on this Polly it is a tangible item that is needed to get a job. Would you have be accepted to law school with a High School Diploma?
Exactly Polly then the employer has the right to discriminate against those who flaked out of their financial responsibilities
A degree is an intangible.
People would have no problem finding ways to confirm that they earned a degree and returned it for the money.
No. I’m not. When you get a new job, you don’t have to bring the piece of paper in with you. You provide a copy of your final transcript. I have 20 of them somewhere around the house. Occasionally, you have to someone in the company call the school to get confirmation. But the company wants to know that you completed the work needed to get the degree. In most circumstances the don’t care how you paid for it. I can imagine plenty of companies that would prefer to have employees who figured out how to not pay for it at all - Enron comes to mind.
Like I said, except for an employer who has to pay for the default (the federal government), why would they care as long as you can prove to their satisfaction that you did the work.
Polly but you still had to pay for the courses so they can be listed on the transcript.
That degree has a cost, lots of people took on lots of debt to acquire it. It is a tangible item required by many employers to get an interview let alone a job.
So for it to be discharged in BK or forgiven, makes being a professional student a real moral hazard unless the government will not give any more loans, pell grants to those who wiped the slate clean forever.
I think what I am proposing is Fair….there has to be some serious penalty for discharging the debt.. your degree vs being debt free. Now if employers still want to hire you without the valid degree they can, but they can also say no.
You provide a copy of your final transcript
There would be NO penalty for turning in your degree except for not being able to work for the federal government. Maybe the feds would intimidate a few other entities into doing it as well, like defense contractors. Your idea is tragically stupid.
lol
There’s no shortage of people with technical degrees. And those jobs are still being offshored at a furious pace. I have seen entire departments at HP that were offshored and the US based staff was laid off.
Seems like STEM jobs are far more prone to outsourcing than, say, a job requiring proficiency in English.
Maybe liberal arts majors will have the last laugh, like the philosophy major who harpooned the London Whale and JPMorgan for a few billion$ and counting.
Q What did the liberal arts major say to the engineering major?
A This is how you work the fryer, and I want you to be on time for your shifts.
Seems like STEM jobs are far more prone to outsourcing than, say, a job requiring proficiency in English.
This has been my observation as well, and once STEM people enter their 40’s they are likely to be put out to pasture.
As someone in my 40s I’ve definitely been on the lookout for that. It appears to me that storage is friendlier to older workers, though. Since it’s not glamorous and it takes a while to understand the details, there seems to be more 40s and 50s people in it than 20s and 30s people.
BS. There is a shortage of people in scientific and technical fields.
BS. There is only a shortage of people with exact skillsets willing to work for 3rd world wages. If you pay enough you can get exactly what you need, or if you’re willing to train you can get all the people you need cheap. Or perhaps you’re looking for people with 5 years experience with a technology that has only existed for 3 years. Those ads are always good for a laugh.
Or perhaps you’re looking for people with 5 years experience with a technology that has only existed for 3 years. Those ads are always good for a laugh.
Those are my favorites. I recall a Dilbert cartoon that poked fun at those. The job candidate invented a time machine so he could go back in time and get the extra experience. He also discovered a cure for aging.
Catbert disqualified him as “too old”.
“BS. There is only a shortage of people with exact skillsets willing to work for 3rd world wages”
Do you work for 3rd world wages?
They certainly are converging. Tech wages have been stagnant for the past 10 years. My super profitable employer is rumored to be freezing wages again this year.
It used to be that the Chindian techies were paid 1/6 of what were. Now its getting close to 1/2, and that’s in large part because our real wages (adjusted for real inflation) are shrinking.
Do you work for 3rd world wages?
Nope, not yet anyway. But my point is that even though I’ve proven to be capable of my particular job, odds are pretty good that if I applied for one of yours either it wouldn’t pay squat, or you’d decide I wasn’t qualified because I hadn’t already done that exact job. If you pay enough or provide enough training, you can fill it, guaranteed.
“Do you work for 3rd world wages?
Nope, not yet anyway. ”
So why do you assume everyone else does?
So why do you assume everyone else does?
Nice deflection. Do you insist that there are positions you can’t fill no matter how much you pay or how much training you provide?
I’m not deflecting anything. I’m questioning why you think there is this great pool of 3rd world wage slaves out there, but somehow you’re paid well, while everyone else is starving. What makes you so special?
Answer my question and I’ll answer yours. You started this by insisting there was a shortage of people available to fill your position. I say there’s not.
“odds are pretty good that if I applied for one of yours either it wouldn’t pay squat, or you’d decide I wasn’t qualified because I hadn’t already done that exact job. If you pay enough or provide enough training, you can fill it, guaranteed.”
Mr. Smithers, so what are the skillsets you are looking for that you can’t find? And how much are you willing to pay? If someone is missing one criteria, are you willing to train or to let them acquire the skill on the job?
How about second-world wages?
Companies are crying out for H1-B’s because Americans are supposedly not trained for these jobs. BS. Start hiring people with the skills, and colleges and certification programs will be stuffed with people who want to be trained. This is precisely what happened in the 90’s.
How about second-world wages?
Companies are crying out for H1-B’s because Americans are supposedly not trained for these jobs. BS. Start hiring people with the skills, and colleges and certification programs will be stuffed with people who want to be trained. This is precisely what happened in the 90’s.
Bingo
in high tech you need to find the few people who you can make big money with, people who give you an edge over your competition.
then you can back and fill with staff engineers, etc.
So it sounds like you are saying that qualified workers aren’t enough at least at first…first you need to find people who are capable of doing this without you but don’t have access to the capital, and then ride them to success? Or are you actually going to add some value yourself besides the capital needed?
That model is already going away in the video game industry, and I suspect other tech industries will follow. The people you try to underpay will become your competitors.
Or are you actually going to add some value yourself besides the capital needed? ”
you would have to or none would join your start-up
Not easy to recruit people at start-ups once you go public it is much easier but rewards risk is lower.
Why do we as ‘Mericans hate so much public education, educating all our citizens?
I don’t get that. All the top nations have education and higher education for their citizens. Higher education as well as health care is part of the fabric of their countries, and yet we, as a nation and a people are act so pissed off that people go into debt for an education.
How about making education part of the fabric of our country. What it used to be, affordable.
If it weren’t for the GI bill after WWII, our middle class would not have grown and our nation gotten stronger. We afforded our returning solders a “”free” education (cost=limbs mental health etc=so not so free). Because of that, our soldiers got educated, smarter and a greater nation.
‘Why do we as ‘Mericans hate so much public education, educating all our citizens’
It drives prices up.
“Apr 6, 2012 … A federal judge approved the $26 billion settlement deal reached between the nation’s five largest mortgage lenders and the attorneys general …”
“More than three-quarters of homeowners here owe more than their homes are worth – the highest underwater rate in a capital region drowning in nearly $21 billion in negative equity,”
Let me see we have a $26 billion settlement with the nation’s five largest mortgage lenders for the whole country and the Rancho Del Scuba region has $21 billion in negative equity. What was that Neil used to say about popcorn?
Rancho Cordova subdivision has high rate of underwater loans
Published: Sunday, Jun. 17, 2012 - 12:00 am
The Sacramento Bee.
Judging by numbers alone, the situation in the new Sunrise Douglas development, built at the height of the housing boom on the far edge of Rancho Cordova, could only be described as grim.
More than three-quarters of homeowners here owe more than their homes are worth – the highest underwater rate in a capital region drowning in nearly $21 billion in negative equity, according to realty tracking firm Zillow.
Residents have left Sunrise Douglas in droves. More than one-quarter of homes in the area have changed hands due to foreclosures or short sales since 2008, roughly twice the average for Sacramento County.
In this case, however, numbers don’t tell the whole story.
Anatolia, the largest neighborhood in Sunrise Douglas with about 1,900 homes, is a vibrant and well-kept community that many residents, including some who are deeply underwater, say they have no intention of leaving.
With its trim lawns, joggers and central clubhouse filled with activity, it looks nothing like some other half-built developments around the region: places blighted by weed-choked vacant lots, abandoned construction trailers and utility cables sprouting from the dirt.
“I’m happy with the neighborhood. The kids are safe. The neighbors are nice,” said Leah Magpily, a nurse who with her husband bought a 4,000-square-foot home in 2007 for more than $600,000 and watched its value drop by nearly half. “We’re going to stick it out.”
About 76 percent of homeowners in Sunrise Douglas owe more than their homes are worth, the largest percentage of any ZIP code within 100 miles of Sacramento, Zillow said.
A third of those are in deep trouble, owing at least 60 percent more than their homes are worth. These are the people who, for example, paid $525,000 for homes now worth $200,000.
In the face of such staggering losses, many have given up. About 12 percent of homeowners in Sunrise Douglas are at least 90 days delinquent on their loan payments. Only six ZIP codes in the region have a higher delinquency rate, according to Zillow.
The median household income is roughly $93,000, much higher than the Sacramento County median of about $56,000, census figures show. The poverty rate in the community is less than 2 percent.
About 85 percent of residents live in homes they own.
Many are professionals, including state workers, engineers, teachers, nurses, police officers and managers at high-tech firms. About 46 percent of adults in Sunrise Douglas have a bachelor’s degree, compared to 28 percent of adults countywide, census figures show.
It’s a diverse community, with whites making up about 43 percent of the population, Asians 32 percent and Latinos 12 percent.
And it’s a place where families go to raise children: The median age in the area is 31 compared to a county average of 35. About 28 percent of Sunrise Douglas residents are children under 15, compared to 21 percent of residents countywide.
“We love it,” said Yolanda Antoni, who swam in the pool with her three children on a recent afternoon. The family goes swimming nearly every day, she said. “This is the time to relax.”
Sandra Gonzales, a teacher, also brings her children to the pool regularly. She and her husband, a federal employee, bought their house new in 2006 for $492,000 and have been able to make payments with the help of a loan modification. They saw most of their neighbors leave via short sales and foreclosures and the houses reoccupied by new owners or renters.
Gonzales said the newcomers have mostly fit in and appreciate the neighborhood’s qualities, including what she described as its stability and sense of security.
“I feel the people who come here are mostly good people,” she said. “They’re looking for the same thing we’re looking for.”
http://www.sacbee.com/2012/06/17/4567614/rancho-cordova-subdivision-has.html -
Have you all figured out who the used house pimps and liars are that are posting here?
No eye deer.
“Rents fell across the United States last year”
http://www.huffingtonpost.com/2012/02/08/rental-rates_n_1263987.html
When you read “rents are skyrocketing” here on this blog, know that they are long established liars.
Has anyone here had their rent reduced (without having to move)?
Still no eye deer.
Early 2000’s in Jersey City. Not by much, but I got offered a rent reduction at least one year. Didn’t even have to ask for it. But the complex was run by a giant corporation and they had a computer program that predicted what the rent had to be to keep the building at their level of “full.” Seemed to assume that we had no cost to leave. And there was zero emotion involved in the process. The people in the rental office had NO discretion. All they did was show the apartments and do the paperwork.
My rent was reduced by $200 a few years ago and it has not changed. I have been renting a condo. This is in South OC.
Yes, we went down $50/mo when we went month to month from a lease. Usually it’s the other way around, but we are clean and take care of the place.
Has anyone here had their rent reduced (without having to move)?
7 and 5 yrs ago. Now? Going to find out in a few months. I doubt it as this area is easily leased.
I’ll see your Huff’N'Puff article and raise you a Time article that says the exact opposite…
“And yet, demand for rentals has remained high—and rent prices reflect it. In the latest report from real estate site Trulia, while average home prices remain mostly flat, rents in May rose 6% compared to May 2011. Renters in some cities face monthly bills that are rising far more than average: Rents have increase more than 10% in San Francisco, Oakland, Miami, and Denver, and between 9% and 10% in Boston, Seattle, and Houston. Of the 25 largest U.S. markets, only one—overbuilt Las Vegas—experienced a decline in rent prices.”
Are incomes in those areas rising at the same pace? If this is to be believed, then it will come down just as fast as it’s rising when people begin to either move or consolidate families. The sign spinners will be back by the end of the year.
No, in some areas, rents have gone up.
In fact, the rent went up on my apt this year, but I was able to offset it by dropping the apt cable hookup and going with the big 3 thanks to a one time special they had.
Could I have moved? Unfortunately, no, not at this time.
http://www.businessinsider.com/nyc-landlords-hit-by-rent-decline-worse-than-911-2010-1
Dated but demonstrates the rent down draft…..In Manhattan.
I agree that rents are going down in many areas and that’s good news.
When you read “rents are skyrocketing” here on this blog, know that they are long established liars.
I’m a small-time landlord with 4 rental units in 1 building. I raised rents this year 9% over last year. My vacancy rate is running about 8% annually. My property is closer to Providence than Boston, so the horrible RI economy tends to impact my rentals more than the Boston-centric MA economy.
From what I hear and see in and around Boston, rents are rising there even faster. Tight supply, lot’s of demand from college students flush with student loans, and still-expensive housing stock will do that…
…. which simply means that Boston has a long way to fall.
It does. The only problem I see is that I’ve been waiting for Boston real estate to fall to more affordable levels since 2000.
We are traveling the same road as Japan…
Give it time. Boston was inflating in 98 when I was working there.
Give it time? How much time, RAL?
“Why should we spend $75K in rent to wait for a house price to fall $75K?”
I have asked HBB this question several times and I have yet to see a good answer.
‘Why should we spend $75K in rent to wait for a house price to fall $75K’
For one, you just got 75k in free rent.
This housing bubble is very extraordinary. For instance, if house prices are overvalued by 75k, there are all sorts of things wrong. Any particular job could go away in the process of things settling out. Heck, governments are failing right now. Plus, how do you know how much it might fall? It could be 50k or 150k.
To me, the overall economic situation is more of the issue than to buy or not to buy.
“Why should we spend $75K in rent to wait for a house price to fall $75K?”
I have asked HBB this question several times and I have yet to see a good answer.
If you’re paying cash and can’t make any interest on your cash during that time, then you’re right.
But if you’re like most people and would be mostly paying interest during that time if you buy sooner then you’ll be much better off financially waiting. You will eventually own the house with a significantly lower balance if you buy later at 75k off than if you buy now and 90+% of your payments go toward interest during that time.
“Why should we spend $75K in rent to wait for a house price to fall $75K?”
Why should you spend $50k in rent to wait for a house price to fall $160k?
“Why should we spend $75K in rent to wait for a house price to fall $75K?”
1) If you bought the house instead of paying $75K in rent while waiting for the price to drop another $75K, you would actually ‘pay’ more than $75K in ownership costs over the period of comparison. Not only would you incur the $75K capital loss (the basis of comparison you suggested), but you would also pay closing costs on the sales transaction plus PITI and any other ownership expenses (repairs and maintenance, Mello Roos, association dues, etc). Thus the cost of buying now and incurring a $75K capital loss exceeds $75K by a wide margin, and it would be cheaper to rent.
2) Your tax basis and interest basis locks in when you finance the purchase price. Thus not only would you pay more over the assumed comparison period, but you would pay loan interest and property taxes forever on a basis that would be $75K higher if you bought now rather than waiting.
Actually the article’s headline doesn’t exactly jibe with its contents.
from the article:
[D]ata showed that major cities, including New York, San Francisco and Denver actually had substantial increases in the past year, underscoring how lopsided the economic recovery has been across the nation.
Other measures indicate that higher quality apartments in the most desirable locations had rent hikes of 5 to 10 percent, while lower-end properties did not raise prices, according to fourth quarter data from REIS…Its data, which represents only investment-grade properties with more amenities, showed an average rent increase of 2 percent last year across the United States to $1,064 per month.
In New York City the average cost of rent was almost $3,000 at the end of 2011–a 3 percent increase from the fourth quarter of 2010, according to REIS. San Francisco and San Jose… both had rent increases of more than 4.5 percent in 2011. TransUnion reported that rent in Denver increased more than 10 percent from 2010 to 2011, with landlords charging $857 per month on average.
Depends on where you live. Rents HAVE skyrocketed in San Francisco. I have 3 different friends who lost their long-term rentals in the last year due to units being sold and then owner-occupied, and they all had a really hard time - looking for 3-6 months -finding a new place, and all are paying a lot more than they had been.
I’m hoping the facebook flop calms things down a little.
hmmm… It says here that rental asking prices are down 4% in SF.
http://zillow.com/local-info/CA-South-San-Francisco-home-value/r_13929/#metric=mt%3D46%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D13929%26el%3D0
Are you talking about another SF?
Check the borders of the area considered by “SF” in the stats. It could easily be much bigger than what a real person would consider San Fransisco.
Actually, you are the one talking about the wrong San Francisco: your link is for South San Francisco, which is a crappy little suburb south of here, not part of San Francisco at all. I’m sure rents there are cheap enough, if you like living next to industrial parks or cookie cutter houses all in a row.
Why fret? You’ve stated repeatedly that prices are grossly inflated. Sit tight. What goes up comes down.
Greece - the turd that just will not flush.
Get the snake.
If you can’t give it the swirly twirl, break out the big guns and give it the royal flush.
http://www.mcorpservices.com.au/content-images/royal-flush-toilet-paper.jpg
Just be sure it’s a closet auger.
If Greece is the turd that won’t flush, just wait for Spain — the septic tank that will overflow.
I thought there might be a relief rally on news the Grexit was averted. Apparently potential euphoria was overshadowed by the realization that central banks lack anticipated impetus to flood the global stock market with liquidity today. Further reasons include diminished prospects for a flight-to-quality move into U.S. assets, and a widespread perception that the eurozone is not yet out of the woods.
June 18, 2012, 8:45 a.m. EDT
U.S. stock futures fall as Spain’s yields rise
By Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) — U.S. stock-market futures declined Monday as cheer over the likely victory for the top pro-austerity party in Greece was overcome by anxiety as Spanish bond yields topped 7%.
Futures for the Dow Jones Industrial Average (DJU2 -0.59%_ lost 67 points, or 0.5%, to 12,643, giving up an 38-point gain.
Futures for the Standard & Poor’s 500 index (SPU2 -0.52%) were off 7 points to 1,330.50. Futures for the Nasdaq 100 index (NDU2 -0.30%) fell 8.25 points to 2,555.75.
“The market knows this is about buying time, and as the main story is now Spain, and with Greek elections moving to Page 5 and 6, we need more details on [Spanish] banking reports and Germany’s intention,” said Jakobsen in emailed comments.
…
I thought there might be a relief rally on news the Grexit was averted.
I’m think that at best it’s been delayed, and that’s assuming the pro bankster party, with it’s paltry 30% share of votes will be able to form a working coalition. If they fail, another election could be called.
Europe’s establishment is delighted by the victory of New Democracy and pro-asphyxiation bloc. This relief is unlikely to last much beyond today, if that.
Greece’s new leaders have a mandate from Hell. Almost 52pc of the popular vote went to parties that opposed the bail-out Memorandum in one way or another. There is no national acceptance of the Troika’s austerity policies whatsoever.
http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100017978/greek-agony-drags-on-as-asphyxiation-bloc-wins/
Interesting view point and he’s probably right.
From the article:
“Their original forecasts massively understated the level of GDP contraction because they falsely assumed that the Greek private sector would take the baton from the shrinking government.
All that happened is that the state stopped paying its bills to private subcontractors, pushing thousands of firms into bankruptcy. The economy spiralled downwards with an entirely predictable ferocity.”
Greece had other systemic problems that contributed to their woes, but it seems like the private sector has been hurt by the government austerity programs. How long will the “short term” pain of austerity last?
when are they going to quit blaming greece for our problems? Be hearing this BS for two years now. all a smokescreen.
Azdude, they certainly aren’t going to be blaming the lenders and borrowers. All news outlets are packed with propaganda when it comes to “reporting” on the basic condition of our consuming economies. They all use bread, and all know who butters it.
Er, wasn’t it just last weekend Spain’s banks were bailed out? I must be losing track…
EUROPE MARKETS
Updated June 18, 2012, 9:28 a.m. ET
Spanish Yields Surge; Greek Relief Wanes
By MICHELE MAATOUK And ANDREA TRYPHONIDES
Spain’s 10-year government bond yield soared above 7% and equities lost early gains as investors struggled to find much to cheer about in the slim victory for the New Democracy party in the Greek election.
The benchmark Stoxx 600 Index was recently just 0.1% higher at 244.42. The U.K.’s FTSE 100 fell 0.1% to 5475.13, having opened up over 1%. Germany’s DAX was 0.7% higher at 6273.12 and France’s CAC-40 was up 0.2% at 3094.13. Spain’s IBEX 35 index was off 1.1% at 6642.50 and Italy’s FTSE MIB was down 1.2% at 13233.89.
Although the Greek election has saved Greece from a prompt and unruly exit from the European monetary union for now, market participants were already expressing concerns about whether New Democracy will convince the socialist party Pasok to create a viable coalition. Also, the market is braced for further protracted renegotiations on the country’s bailout agreement, despite New Democracy’s commitment to austerity for Greece.
“Greek election results are unlikely to resolve euro-zone uncertainty,” said Barclays. “Instead, the focus should shift to the June 28-29 EC summit, the likely renegotiation of the Greek austerity package, and to Spanish yields.”
Spain’s 10-year yield was recently 0.21 percentage point higher at 7.07%, while the corresponding Italian yield was up 0.1 percentage point at 6.03%, according to Tradeweb. Greece, Portugal and Ireland succumbed to bailouts when their government bond yields hit the 7% level. The September German bund contract was up 0.13 at 142.42.
Spain has of late been a target for jittery investors, with many concerned that its ailing bank sector may make the country the next on the euro zone’s country bailout list. Its banking sector has already been offered a bailout from European partners, amounting to around €100 billion ($126.4 billion).
…
Visiting family in Colorado this week. Saw lots of construction in Colorado springs, and in Centennial my nephew owns in a half-built subdivision that didn’t have any new houses built last year, but has a dozen under construction now. 3 signs from builders advertising houses from $250K, from $250K and from $300K near his place. Construction cranes in place in tech center.
Seems Denver failed to get the notice that the foreigners are the only ones buying, and they are only buying on the coasts and in places where properties are off 50% from peak.
And what do these spec houses consist of for the grossly inflated price of $250-300k?
I can’t speak for Colo Springs, but in my neck of the woods 300K buys you a 3000+ sq foot McMansion. But where I live nothing is selling in that price range, however 200K house sales have picked up. I know a few people who put their 200K house on the market and had multiple offers within a week. I have heard that up north in Fort Collins 300K houses are starting to sell.
The Coming Muni-bond Crisis
The scandal isn’t simply that most public officials are misleading the public about the enormity of the problem and what steps must be taken to address the matter. As the Morgan report notes, many of the real liabilities are located “off balance sheet,” hidden from the public’s eye, and lax accounting standards let cities and states minimize their enormity.
http://www.nypost.com/p/news/opinion/opedcolumnists/morgan_big_secret_DSB0O9VFZwDih1ZrjkeaAN#ixzz1y9ZZdRTS
That’s right, the bank sees a $3.9 trillion hole; to plug that, states and cities will need large tax hikes, massive budget cuts or both. Plus, public-sector unions will have to accept smaller retirement packages, and later retirement ages, to keep the pension systems going.
There is so much “good news” in this article. When is the bill for all of these debts, unfunded mandates and other off balance sheet debts going to come due???
Shhh….
Public union angels just have our best interest at heart. They do it for the children. Why, some are just sweet old ladies.
We need to pay them everything promised. Cause a promise is a promise - no matter that public unions are the largest campaign contributors out there, run their candidates, force people to the public unions as a condition of employment and give nearly 100% of their money to democrats.
We can just keep raising taxes to pay them.
n New York, for example, JP Morgan said state officials would have to immediately cut spending by 12.3 percent or raise taxes on everyone by 7.4 percent. And they’d need to make these tax hikes and budget cuts permanent for the next two decades to fully fund public-employee pensions.
New Jersey faces an even bigger hole. Even after Christie’s reforms, it would still have to cut spending 30.8 percent or raise taxes another 17.2 percent, keeping them in place for two decades, to solve the problem.
You do know that the reason that all those union pensions are unfunded is because the states spent all that money instead of funding the pension.
It’s like you sent your money into the 401k, but the mortgage broker bought a yacht instead. And then when you were ready to retired, he moaned about your golden pension benefits that were suddenly unfunded.
but the mortgage broker bought a yacht instead.
bingo
Also, the Total number of union jobs is less than 11% total in the USA. 8% are public sector jobs, cops, firemen, teachers etc.
The high number in Reagan’s time was around 39% or more, now it is less than 11%.
The PACS are being inundated by foreign funds (adelson-macau casinos etc). The total is way off your charts in comparison.
You are so incorrect on your numbers.
Only 11% or jobs in this country are union. 3% of that number are private. The high was in the upper 30% bracket during Reagan’s dominion.
If 8% of the public jobs are union, trust me, they are only a minor fraction of the donations to PACS.
Dust off your excel to do the real numbers. The CitizensUnited is the worst thing to our democracy bar none.
The pacs are getting foreign money.
Adelson, Macau Casinos. for one.
The 3rd 4th and 5th rail (union work rules)….its the only thing left to salvage the system. How much can you raise property and sales taxes?
Plus, public-sector unions will have to accept smaller retirement packages, and later retirement ages, to keep the pension systems going
Investing in munis doesn’t look very safe.
Good question, Lip. Sadly, Americans aren’t very smart, by which I mean they are fairly dumb, and when it comes to economics, well a standard piece of lawn furniture is really smarter.
I keep telling people that borrowing is only hiding the need for greater income. On the government level, that means higher taxes. If the system is still functioning, then that $1.5 trillion we now borrow each year (40% of the federal budget) MUST translate into massive tax increases later. And the later it takes, the more massive the increases, or the harder the system collapses in lieu.
I don’t get invited to many parties over these issues (none anymore, really), but it’s still true. Dumb or ignorant people don’t like being informed directly or otherwise that they’re dumb or ignorant, nor that their society has severe structural problems.
It is their future is at stake whether they like it or not…
Why the young should welcome austerity
BBC | 06/18/2012 | Prof Niall Ferguson
Governments should be more honest about the size of their debts and young voters would be wise to get politicians to pay them off as soon as possible.
The critics of Western democracy are right to discern that something is amiss with our political institutions. The most obvious symptom of the malaise is the huge debts we have managed to accumulate in recent decades, which - unlike in the past - cannot largely be blamed on wars.
According to the International Monetary Fund, the gross government debt of Greece this year will reach 153% of GDP. For Italy the figure is 123%, for Ireland 113%, for Portugal 112% and for the United States 107%.
Britain’s debt is approaching 88%. Japan is the world leader, with a mountain of government debt approaching 236% of GDP - more than triple what it was 20 years ago.
Now, often these debts get discussed as if they themselves are the problem, and the result is a rather sterile argument between proponents of “austerity” and “stimulus”.
I want to suggest that they are a consequence of a more profound malfunction.
The heart of the matter is the way public debt allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn.
“Society,” says Burke, “is indeed a contract. The state is a partnership not only between those who are living, but between those who are living, those who are dead, and those who are to be born.”
A second problem is that today’s Western democracies now play such a large part in redistributing income that politicians who argue for cutting expenditures nearly always run into the well-organised opposition of one or both of two groups: recipients of public sector pay and recipients of government benefits.
Western democracies are going to carry on in their current feckless fashion until, one after another, they follow Greece and the other Mediterranean economies into the fiscal death spiral that begins with a loss of credibility, continues with a rise in borrowing costs, and ends as governments are forced to impose spending cuts and higher taxes at the worst possible moment.
In this scenario, the endgame involves some combination of default and inflation. We all end up as Argentina.
Here’s what i’m thinking Its not so much austerity, it’s you don’t need a lot of psychical stuff to live anymore…people will spend money on items that will enhance their lives or produce income…witness the total sell out of the new mac pro with retina display at $2100+
No need for McMansions unless you make it into a rooming/ group home type arraignment..
No need for big cars if all you need for work is a laptop and a hard drive.
I know I am behind the curve in space downsizing because i still like the feel of records and cd’s and a great sounding large stereo speakers. Ick Bose ipod speakers
but I do have most of my music on HD’s and back up dvd’s.
Why the young should welcome austerity
No need for big cars if all you need for work is a laptop and a hard drive.
Don’t forget, we don’t all live in cities with good public transportation.
Can you go oil city in this country and work for 3rd world wages? If so, then you have a fighting chance in the global market.
Nor does everyone work with laptops.
“Don’t forget, we don’t all live in cities with good public transportation.”
When you’re 23 and single and living in a studio apartment, taking the subway is fine. When you’re 33 with 2 kids and need to make a weekly Costco run or take the kids to school or soccer or dance, etc…the subway doesn’t work so nicely.
These are all choices.
I take the subway everywhere. I like to grocery shop at the ethnic stores. I head everywhere on the subway with a backpack.
I could effortlessly afford to take cabs back and forth. It wouldn’t even be a rounding error either in my budget or my net worth.
But I don’t.
I could effortlessly afford a car and parking in New York. However, I’d have to put up with the garbage of actually maintaining the car, and all the sundry problems associated with a car.
So I don’t.
In different parts of the US, I understand that you don’t really have these choices.
However, they are still choices.
PS :- Costco delivers online. You don’t have to “go” there.
Why the young should welcome austerity…
I am consciously raising my kids to understand the value of money, know how to take care of yourself (DIY all the way), and not expect “stuff” to just come your way.
Not just because I believe in those values, but because I know that their future will look nothing like my past.
We have chickens for eggs, grow veggies, run an under-the-table side business, buy almost everything used, shop for all clothes (other than undergarments) at thrift and consignment shops, brew our own beer, return cans and bottles for deposit, etc.
I think it’s going to get rough out there (a la Greece) and unless you are either wealthy or resourceful, it may be difficult to stay afloat.
I am consciously raising my kids to understand the value of money, know how to take care of yourself (DIY all the way), and not expect “stuff” to just come your way.
The value of productivity, yes. Is it misleading to teach them the “value of money” when someone else has a printing press?
And you are teaching your children to avoid taxes. Nice
Here’s the thing about austerity: the folks who are just barely getting by now will get shoved into poverty.
Half of the workforce is already just barely getting by. For them, austerity is and has been for years, an everyday reality.
Embrace the cloud, DJ!
the huge debts we have managed to accumulate in recent decades, which - unlike in the past - cannot largely be blamed on wars.
Oh really? I seem to recall a couple of very expensive recent wars. One still ongoing.
In this scenario, the endgame involves some combination of default and inflation. We all end up as Argentina.”
agree
The whole borrowing/printing money approach (Keynesian, monetarist, however you wish to describe it) reminds me of this video of a scary airplane takeoff:
(Adult language, duration: 2:21 minutes)
“Close call!” - http://www.youtube.com/watch?v=aWtdtuspnoM
They’re relentlessly racking up debt, printing money and hoping growth is going to take off, like it did at the end of World War II, and the economies finally lift off. If they’re wrong, a spectacular fireball a bit past the end of the runway.
The problem is that today is not 1945. Germany and the UK are in tremendously better shape than back then. The third world is slowly industrializing, the BRICs in particular. The US got away with never paying off the WWII debt. And it took a lesson from that - “Don’t worry about debt, just grow your way out of it.”
The problem is… much of the growth of the 30 years has been a debt-fueled binge. There should be some measure of GDP which subtracts debt from government spending. And I don’t see growth outstripping debt growth anytime in the near future.
Counting on GDP growth to dig you out of the debt hole for a country is like counting on income growth to dig you out of a big monthly mortgage payment.
Yep, you need to make sure the money from the GDP growth goes to all sectors of society, not just the 1%. Like Keynes said.
The BRICS are not, and have not been for some time, “3rd world”.
In fact, they aren’t even 2nd world any more.
BTW, there is an article in the WSJ today entitled “What Home Builders Need: Locations, Locations, Locations”, about the problem builders will have with respect to land inventory if there is any sustained uptick in demand.
I’m not sure if the link will come through (anyone else want to try), but here are a few applicable quotes:
“That means the recovery in both home construction and new-home sales could be held back until developers replenish their supply of land, especially in areas where buyers want to live. According to data analyzed by Capital Economics, the 12 biggest publicly traded home builders controlled 632,864 land lots at the end of the first quarter of 2012, compared with 1.8 million six years ago.”
“Two recent surveys from housing-research firms John Burns Real Estate Consultants and Zelman & Associates suggest that until these land inventories rise, new-home sales and construction will be constrained. As builders run out of “finished lots”—land that has been developed and is ready to be built on—in good locations, land prices in these areas are rising.”
This is in line with my thinking…that new construction will actually decline before it increases, even with strong demand. The increase in construction won’t happen until there is a tick up in values (that then will justify the development of new finished lots).
Builders won’t build unless there is demand.
Builders won’t build unless they can buy all the inputs (land, improvements, construction) at a cost that allows then to turn a profit.
You’re so full of yourself it’s laughable.
Everyday contracts are signed at levels under asking prices of resale housing.
I actually hope the builders start cranking up the presses, build build build, I say. Every time they do that out here in Sunny 114 degree Phoenix Metro, the market collapses in short order. The run up out here between 2003 and 2005 was very sneaky on both ends. The majority of the activity was really just in the late spring and early summer of 2005, a very short window, it was amazing to watch. When the music stopped around August/September of 2005 it was crazy how fast people ran for the exits.
I would say that if you own a house that you want to sell, now is the time…like right now. You have to be either sitting on some property by now or you have to have impeccable timing skills to make money in this market. If you do not absolutely have to buy a house right now…don’t
…and for God sakes, don’t listen to lying Realtors® or lying Seminar Graduates©
I would say that if you own a house that you want to sell, now is the time…like right now.
PRECISELY
I need a “that a gal”.
A nice home came on the market in move-in condition, but I know the area did poorly in the 1994 earthquake. We previewed a home down the street from this new lsiting, and got the scoop on the EQ damage of the tract. We love the area, the floor plan, the neighbors, but the EQ damage is a deal break.
It’s a $25K slab retro job, and this home is a redo already (new wood flooring). I would love to make an offer, but in the heart vs head war, the head is winning.
So make an offer that deducts all the EQ damage/retro work that needs to be done
Yay for the head! Keep on winning, head!
The 1994 earthquake was nearly 20 years ago. If it hasn’t fallen down, then it’s irrelevant. I’m not saying you should buy or not, just saying that knowing it did poorly in an earthquake a long time ago is not terribly relevant to anything you could reasonably describe as ‘move-in ready’, which I think you mean by ‘move-in condition’.
You may consider getting a structural inspection. What the layman considers “doing poorly in a seismic event” is often considered “performing exactly as intended” by a structural engineer.
One of the many benefits of wood frame construction during a seismic event is the large amount of deformation that wood can absorb prior to ultimate failure; and when that movement level is exceeded, the extreme redundancy in framing leading to a redistribution of the load.
Chile,
I think any advantages of wood framing depends on the the connections in the load path. The disadvantage of lumber framed structures is the imperfect connections made using nails and the hinge action that results from those imperfect connections, especially in seismic zones 2B and above.
Overdog
We had our general contractor friend with us when we interviewed 1994 earthquake homeowner neighbors, and they told us about filled lots, no rebar in the slabs, and how badly
they all got hit due to soil conditions of the area. It is certainly a data point. Granted, the next quake might have different variables, but it is a solid reference point.
Our former residence in 1994 was newer construction, we lived on a cut lot (no fill at all), and we were up in the hills. No damage to the neighborhood, other than one home got reg-tagged.(I don’t why it happened) No block walls came down either.
“reg-tagged” s/b “red-tagged”
That a gal! Let someone else take those risks.
Our home is on notoriously poor soils (expansive, etc.). Older homes in the area have issues with foundations. These issues were generally known before our house was built, so heavy engineering went into the foundation.
Before we bought, I reviewed the Geotech report on our house (built just before Loma Prieta in 1989). Geo engineer was on-site when foundation work was being done to confirm soils, depth of pilings, moisture levels, etc.–those letters were part of the City file.
My inspection 20 years later didn’t bring up any issues. By all appearances, the geotech engineer did their work well and the home was built well.
After the closing, our neighbor told me that they bought just after Loma Prieta (house was already built when the earthquake hit), and their engineer expected to find damage. Didn’t find anything.
I would be very nervous buying a house that has known potential foundation issues, unless my intention was to tear it down and start again.
Rental Watch
Thank you for that post. Not only did I learn from you, it put my decision to pass at ease. A neighbor shared he had a collapsed room in ’94’s EQ, When this beauty showed up, my heart fluttered, and my head said “are you out of your f**king mind.” heart/head back and forth. The head one. Thank you for your story.
http://www.redfin.com/CA/Simi-Valley/617-Sandy-Ave-93065/home/4628506
Rental Watch - We’re all cash. We have no where to hide…can’t walk away. So, your post/story really sunk in.Can’t thank you enough.
The mind must rule, the heart forgets quickly.
A troubling trend from my nabe: Let’s call it the Invasion of the Stupid Investors.
House that was bought out of foreclosure now has new owners. From California. So far, they have:
1. Painted over perfectly good exterior brick.
2. Installed cheap replacement windows.
3. Laid grass-like carpeting in the front yard. And two sections of it do not match. It’s not even close.
4. Put a plastic fence along the sidewalk. It’s supposed to look like a white board fence, but no way does it come even close to that.
5. Laid saltillo tile in the driveway. First big pickup truck to park there will kill it.
The above is providing quite a bit of gossip fodder. The neighbor who’s especially horrified isn’t me. And that-th the truth. It’s the commercial (as opposed to residential) interior designer from down the street.
We can’t wait to see how much this one will be flipped for. Or, put more realistically, how much the wishing price will be.
Then there’s the concrete chain link fence. Another neighborhood house that appears to have been a foreclosure. It was abandoned for a while.
New owners ordered a bunch of concrete mix from Home Cheapo last week. Flatbed showed up to deliver it.
After the Cheapo flatbed left, the worker bees got busy. The wrapped some sort of paper and chicken wire material around the chain link fence — it’s a six-footer — then started applying wet concrete to it.
Talk about building a wall on the cheap. And not a very sturdy one. If you’ve ever stood near a chain link fence, you know that they flex like crazy.
I don’t predict a long life for this wall.
Gawd this next leg down is going to be breathtaking.
That’s got Mexican construction written all over it and is nowhere near to code.
The fence-wall is being built by, ahem, how to say this nicely, white bumpkins.
I know. Not very polite. But they’re the sort for whom turnip trucks are made. Especially the models with the built-in “fall off of” feature.
What’s especially amusing is that they seem to think that they’re doing a great thing, cladding a chain-link fence, then applying cement to the cladding. And you mark my words — any sort of settling of the ground or even a high wind, and that fence-wall is going to show its true strength.
As for the not-to-code thing, the husband of the aforementioned interior designer is very good at reporting things like violations. Especially since he didn’t see a permit posted at the work site. And I sure as heck didn’t either.
The fence-wall is being built by, ahem, how to say this nicely, white bumpkins.
I know. Not very polite. But they’re the sort for whom turnip trucks are made. Especially the models with the built-in “fall off of” feature.
eh heh…. dying laughing here Martha. And I love the pre=selected phrasing. This is HBB hall of fame material.
“Painted over perfectly good exterior brick”
This is awful. When I was a youngin, I painted
our fireplace brick white. The decision haunted
me until we sold. Brick looks like sh*t painted,
and painted exterior brick is even worse.
Sux that you have to deal with that type of nonsense. Most out of state/country “investor” types have no clue how to design and build for this environment.
If you have to borrow money for 15, 20 to 30 years to buy a house, it’s overpriced. Massively overpriced.
“If you have to borrow money for 15, 20 to 30 years to buy a house, it’s overpriced. Massively overpriced.”
I agree, and I feel that mortgage terms longer than 15-yrs are not realistic for the typical family since other expenses tend to increase as your children become teenagers. Ideally 10-yrs should be the longest, IMHO.
So you don’t believe in any credit, and Darrell believes in all credit.
I’ll take the middle position and say I believe in some credit.
No. You’re misrepresenting my statement.
No I am not.
“If you have to borrow money 15, 20 to 30 years to buy a house, it’s overpriced”
People have to borrow money for about half of 15 years to buy a car that costs $30k. How much could a house cost if you can only pay for it less than 15 years?
What value is that providing to the customer?
I don’t disagree that houses are overpriced; however, for how long you can theoretically get a mortagage or whether you need one at all is irrelevant to that.
YES you are.
I did NOT say one shouldn’t borrow for shelter.
You know what I said….. and so does everyone else.
Stop misrepresenting it.
“If you have to borrow money for 15, 20 to 30 years to buy a house, it’s overpriced. I did NOT say one shouldn’t borrow for shelter. ”
So a 14 year mortagage is ok? What’s one more year for 15 year mortgage? What’s the difference? One year turns it from cool to a terrible idea? What is wrong with you?
The difference is 7% less. And 13 years is 14% less.
Catching on yet or are you going to continue to misrepresent my words and housing?
The difference is 7% less. And 13 years is 14% less.
————————————————————–
Those are irrelevant numbers without an interest rate. For example, at 4% and $100k, the difference between 14-15 years is $30 a month. Again, I’m not sure half a tank of gas is the difference between “shouldn’t” and “a good idea”, but ok.
Maybe I’m a borderline lucky ducky and I could use that $30 bucks less payment on a depreciating asset that I’m going to own for 32 years for a nice meal to bring me some fleeting happiness before I get back to work on the late shift at the box factory, but hey whatever.
————————-
Catching on yet or are you going to continue to misrepresent my words and housing?
————————–
For someone who calls themselves Truth you sure don’t communicate very clearly.
You can duck, weave and reframe the conversation all you want. The truth is that if you have to borrow for decades to buy a house, it’s overpriced. All your opinions and numbers cherrypicked to support some diversion won’t ever change it.
The_Overdog said: “I’ll take the middle position and say I believe in some credit.”
Oh sure, say 50%? Makes sense, doesn’t it? Except that you’d have to look hard for a borrower with 50% of the purchase price, and even a lender that even wants to do such a deal.
I’m surrounded by fairly cheap housing. $50/sf and less. And yet bankers don’t want to loan on it, regardless of how much down payment you put up. Go out slightly into the burbs, and they’ll fall all over you to get that $150K mortgage done, max 20% down, more often less down. Our housing market was eventually destroyed by lending… and I can hardly find anyone who even understands the problem, except perhaps on the HBB. But even here… people are still trained to think that lending is necessary for housing. Yes, it’s necessary: When housing is too uniformly expensive. Uniformly expensive housing is all I knew in my adult life, until about age 40 when the crash of the housing bubble FINALLY brought housing down to the level of my savings. Then I sprang into action with some help, and paid cash.
Too bad I’m still very much unlike my peers. I’ve been really starting to suspect my peers don’t view me as a peer. But that’s a whole other kettle of fish.
Oh shut up.
Not gonna happen.
Az Slim
Thanks for the ecouragement. The heart/head war raged for a few hours, and then went silent this morning. EQ insurance has a 15% of price paid/home (iirc) deductible.That’s a big hit, plus all the stuff EQ ins. doesn’t cover. I always look at the macro details. No wonder the REIC and I don’t mesh.
HBBer’s
One of the mortgage industry periodicals has an article about calming the buyer’s concerns about 203K rehab loans, and selling them. It’s low interest rate advantage means the cost of money is cheap. To hell with the fact it’s still debt, and the neighborhood doesn’t warrant it. Evidently, the 203K loan business is slow.Are buyers waking up?
As bad or worse than strawberry pickers signing up for 600K mortgages?
http://finance.yahoo.com/news/californias-bad-bet-makes-jpmorgans-223000180.html
overpriced-pinball-houses-bounce-buyers-over-to-cheaper-properties
http://www.washingtonpost.com/realestate/overpriced-pinball-houses-bounce-buyers-over-to-cheaper-properties/2012/06/14/gJQAFKhLdV_story.html
Everyone have a great day!
Bread and circuses will keep the plebs quite.
Damn politics has even started to infect football, better up the bread ration
Spain, Italy play in shadow of euro crisis
Greek players said they had spent more time watching election results on Sunday than they did studying Germany’s win over Denmark, but insisted they wanted to keep politics out of the clash later this week.
“They (the Germans) have in their mind that the whole situation is about politics,” Greek team spokesman Panos Korkodilos said. “It is not. It is just football. This is their character, not ours, we are not saying anything about this.”
http://uk.reuters.com/article/2012/06/18/uk-soccer-euro-idUKBRE85H1AV20120618
Russia in 15 seconds
http://www.youtube.com/watch?v=jBqtQjJqSQw
And I’ll raise you:
http://www.youtube.com/watch?feature=fvwp&v=achRM7SnAe8&NR=1
Slim, that dog at 5:53 has the biggest head I’ve ever seen in proportion to body size. Wow!
Phone call from the same number. Came in twice in less than five minutes.
I let the first call go to voice mail. Second one, I picked up:
Me: My Business Name.
Caller: I wanna know how to get a loan.
Me: This is a graphic design studio, not a bank.
CLICK!
get a loan= get a JOB and well talk.
Apparently, my business name is very close to that of a loan outfit that does a lot of advertising. That’s why I get more than a few of these calls.
What never ceases to amaze me is how gullible and slow the people sound. It’s as if this company is targeting its advertising at poor people who aren’t very bright. And, sad to say, there are financial companies whose business model is based on doing just that.
Az Slim
Absolutely a true statement. I use to moonlight on the weekend for a broker selling loans. He loved targeting his own (Hispanic w/ no education per se-his wife had the licenses). He used his brown skin to take advantage of gullible poor people. He made me sick. If I am not mistaken, he went back to being a produce mgr at the market.
Oy Vey!
Arizona Slime?
It just dawned on me: why we paying so much attention to Greece?
Is it really a diversion? Or are we in FAR deeper than anyone is letting on?
distraction imo.
Spain and Italy.
If you really want to delve into the details, it’s France.
The monetary union is doomed. You can run the math through almost any scenario including printing money and it’s doomed.
The real baffler for me is why the Eurozone was/is primarily a monetary union. If you really want these things to work, they also have to be political unions. Y’know, like the United States.
Slim, I think you would enjoy reading John Mauldin’s “Endgame”. He goes through what makes a good currency area (from a Nobel Prize Winner, Mundell):
Mobility of capital and labor;
Flexibility of wages and prices;
Similar business cycles;
Fiscal transfer to cushion the blows of recession in any region.
And then he goes on to say that the EU has almost none of these.
One of my neighbs is demolishing their 6,000 sq. ft. gulf front house. Holy frick, there is enough tile on that roof to cover 4 homes on my street.
Just… crushing it all.
Squad, I hope you don’t mind. It’s a Drudge link
“Number of stay-at-home dads has DOUBLED in past decade as ‘man-cession’ bites”
Read more: http://www.dailymail.co.uk/news/article-2160638/Mr-Mom-generation-Number-stay-home-dad-DOUBLED-past-decade-amid-changing-attitudes-ongoing-man-cession.html#ixzz1yBZwp8se
I see this at playgrounds in Florida all the time.
In a way it appears women are having an easier time finding work than men. especially men who worked in construction.
Because the pay disparity is still alive and well. Much easier to get a minimum wage job as a woman.
Realtors and appraisers are the Gerry Sanduskys of the business world.
TAMPA — State Sen. Ronda Storms, seeking to unseat Hillsborough County Property Appraiser Rob Turner and run the $11 million agency in the wake of his porn-sending scandal, has had some property challenges of her own.
Storms was part owner of a $685,000 Longboat Key waterfront condominium that faced a foreclosure action in 2009. The senator, her husband, a brother-in-law and his wife managed to unload the condo in a short sale six months later for less than half the original purchase price — or $320,000
http://www.tampabay.com/news/politics/storms-seeking-to-run-hillsborough-property-appraiser-office-faced/1236071
“Realtors and appraisers are the Gerry Sanduskys of the business world.”
OK, but you have to stop at “Realtors are Jerry Sandusky on bath salts”.
Wouldn’t surprise me if other states are and have been using funds for one thing and using them ‘illegally’ or at least unethically (now that is another post) for another thing.
Go Georgia!
http://thinkprogress.org/economy/2012/06/18/501186/georgia-foreclosure-settlement-corporate/