Weekend Topic Suggestions
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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
Location:Northern Arizona, United States
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So I have been looking at foreclosures in my neighborhood. I noticed a lot of flopping going on. This is where a realturd posts a house for sale and supposedly markets the place for the bank they are working for. They don’t take any offers except from their buddies and ultimately low ball the bank since it has not seen any real offers. How can this be exposed? How can Joe schmoe circumvent the realturd and make an offer to the bank without having to be part of their club?
The house I have been looking at has had a for sale sign up for over 6 months. I have called the realturd several times and each time he says the house is “under contract” and still it sits there. The guy doesn’t even bother to take my name down and hangs up.
What they’re doing is bank fraud and it’s happening everywhere.
Any suggestions on how to expose it?
Report the circumstances to the bank itself. It’s being defrauded, right? Aaaaaaaand watch when nothing happens as a result of your reporting. The banks already have their losses covered. They just don’t care about fraud.
You can’t stop fraud when the government itself backs the entire system.
From yesterday:
ahansen: “Everyone” DOES agree on how to prevent obesity. The cause is quite simple: taking in more calories than you burn off. There are no fatties in concentration camps. Limit yourself to 800 calories a day for six months, and I guarantee you’ll dump weight; if you don’t, limit yourself to 500. If that doesn’t work, go to 300. See how it works?
It only sort of works that way. And that’s unfortunate. Calorie deficit sort of works just well enough that people think that that’s all there is to it. Actually metabolism and obesity is far more complex. But as I said, there’s disagreement on this board.
“Actually metabolism and obesity is far more complex. But as I said, there’s disagreement on this board.”
There is always disagreement on this board; luckily it is not the arbiter of the truth.
Nonetheless, ahansen speaks truth on this point. If you want to test the theory, try not eating for 30 days, making sure to otherwise keep up your normal routine, and weigh yourself every day of the month.
Or, as an alternative, double your caloric intake from its current level for a thirty-day period and weigh yourself each day.
If you don’t want to actually carry out the suggested experiments, just take my word for it: The first one will result in significant weight loss trend, and the second one will result in significant weight gain trend.
“…taking in more calories than you burn off.”
Substitute ‘money’ for ‘calories’ and ’spend’ for ‘burnoff,’ and you will realize the same principle applies to maintaining household financial stability.
You’ve got to be careful with how you cut back the calories though. It you go to hard at it, your body could respond by burning off muscle instead of fat. You’ll lose weight, but probably lose control (feeling starved) and bounce back with less calorie burning muscle mass.
Small reductions in calories plus slowly increasing exercise is the trick. You’ll get results, but they could be slow coming depending on your genetics.
If you would like to test a theory, try this one:
Trial 1: Eat the same number of calories that you do now, except cut out all the butter and fat that you can, and fill those calories with bread, pasta, and sugar. Do not exercise.
1. You will be constantly hungry, and trying SO hard to practice “moderation” and feel constantly guilty.
2. You will gain a couple pounds, at least.
Trial 2: Eat the exact same number of calories, except cut out ALL the wheat/pasta, corn, sugar, white potatoes, about half your fruit, and any processed food which has wheat, corn, soy, or corn-derived chemicals in the ingrediant list. Instead, fill those calories with ground beef, butter, eggs, and bacon. Keep the same number of vegetables. Do not exercise. Here is what you will find:
1. You will feel miserable for 7-10 days as your body adjusts. You’ll feel fine after that.
2. You will not be hungry. Actually, you will find it difficult to eat that number of calories because you will be so stuffed that you won’t want to eat that much.
3. You will lose 5-10 pounds.
Yes, this is considered a “low-carb” diet, but don’t worry, you get plenty of carbs from the veggies. The low-calorie starvation diets that everyone espouses are successful because they are automatically low-carb.
I should add that
1. those experiments should be 30 days each.
2. caloric intake is the same.
3. exercise is the same.
4. in addition to measuring weight, measure waist and hip size to determine if you’re losing or gaining fat or muscle.
Your proposed experiment does not address Polly’s point, which was that it is net caloric intake which determines weight gain or loss.
Actually it does. Both of my experiments have the same number of calories, the same amount of exercise (none), but different types of calories (fat vs. carb).
If weight/gain or loss is determined only by net intake, then both my experiments should give the exact same result, no?
If the two experiments give a different result (the result that I predicted), then the difference MUST be due to the one variable that changed: the type of calories taken in, instead of the sheer number of calories.
Straight up scientific experimental design.
“…different types of calories (fat vs. carb).
If weight/gain or loss is determined only by net intake, then both my experiments should give the exact same result, no?”
Perhaps I am misapplying the concept of ‘net intake,’ as my interpretation considers the rate at which the body processes the calories in different kinds of food; hence I would consider the two cases you consider as representative of different ‘net intakes.’
Your experiment seems reasonable for proving your point.
Yesterday’s response to the ruling on the health care bill was that this is the end of America, that this ruling allows government to tax us to buy anything they want. HBB’s example was that gov is now going to force us to buy other people houses because shelter is a basic right.
I dunno. Government already forces us to buy other people’s housing, don’t they? Who do you think pays for rental assistance, Section 8, homeless shelters, state-sponsored mental institutions, project housing, and those USDA housing complexes in FL that palmetto talks about? Our tax money — including property taxes which are included in the renter’s rent. Government already forces me to buy firearms and bombs for the Department of Defense. I’m already paying to educate children that aren’t mine. I’m already paying health care dollars for the Indian Health Service, Medicare, Medicaid, and the VA. It’s quite likely that the rest of my county is going to help me to pay to plant a rain garden in my back yard. Now they’re going to make me buy a version of a bare bones public option to fund emergency rooms? Rail against the government if you want, but I don’t see this as anything new or groundbreaking or game changing. I’ts just another tax. And at least it will heal people instead of killing them.
‘HBB’s example was…’
Oh, did we have a vote? Or did you decide? Well, anyway, send me an email and let me know what I think.
‘Its just another tax. And at least it will heal people instead of killing them’
Any govt can only act by force. Of course, they can take money (tax) by force and then use it to kill other people. Or maybe they will only use it to gas protestors or spy on blogs like this one.
It’s kinda funny that people who like this ruling are all warm and fuzzy about a president who has regular kill list meetings, starts wars with the UN’s OK, but not our congress. What about those people in GITMO? What about Bradley Manning? You know he’s sitting in a cell right now, while you read this.
‘And just like many people throughout the world did not survive Bush, many others have not survived or will not survive Barack Obama. It is known that President Obama has a secretive kill list. Those on this list will not survive Obama. The drone program directed by Obama shows virtually no concern for civilian casualties. Obama’s drones bomb funerals and rescuers. Thus, many funeral goers and rescuers will not survive Obama. In Yemen, the administration used cluster bombs, which many countries have agreed never to use, in a strike that killed 35 women and children. Those women and children did not survive Obama. The Obama administration has also redefined the word “militant”, such that any adult male killed by a US bomb is assumed to be a “militant.” These supposed “militants” will not survive Obama. Obama has presided over bombings in six countries: Yemen, Somalia, Libya, Pakistan, Afghanistan, and Iraq. The victims of those bombings will not survive Obama. Furthermore, Obama has escalated the war in Afghanistan, resulting in increased US casualties. Many Americans and Afghans will not survive Obama.’
http://dissentingleftist.blogspot.com/2012/06/in-memory-of-presidents-victims.html
Very well: “one of the examples cited on HBB was.” Hope that helps.
Oh, did we have a vote?
Vote? Surely you jest? Since when do the little people have a voice in these matters. Our role is to work and consume.
I meant an HBB vote.
I’m sorry Ben, I said it was an “HBB example” because it was mentioned a couple times on HBB, and well, this IS a housing blog…
If we end up talking about the Affordable Care Act (and there are plenty of things in the law that could impact housing, especially in the area of job mobility since there will be less downside in people taking jobs in small companies, starting their own business, becoming independent contractors, etc.), this is the best link I’ve found for the text. It isn’t a PDF file and I find PDFs are often hard to page through.
http://www2.bloomberglaw.com/public/document/Natl_Federation_of_Independent_Business_v_Sebelius_No_11393_US_Ju
There is an interesting topic about limits on the ability for the Madoff victims to sue at the bottom of this article. And it has implications for other securities law suits.
Suspense Is Over in Madoff Case
http://www.nytimes.com/2012/06/26/opinion/nocera-suspense-is-over-in-madoff-case.html?_r=1&scp=3&sq=nocera&st=Search
Tease:
The crux of the problem is a longstanding legal doctrine called in pari delicto. What it essentially means is that “thieves can’t sue thieves,” says Peter Henning, a law professor at Wayne State University who writes about white-collar crime for DealBook in The Times.
That’s all well and good, I suppose, except that in the view of the law, Irving Picard is a thief. Even though he is trying to get money back for victims, the fact that he is representing the Madoff estate in bankruptcy court means that, in the eyes of the law, he is standing in the shoes of a very bad man. So when he alleges that the big banks played a role in the fraud, he has no legal standing to do so, the courts have ruled. A thief can’t sue a thief.
Nor is Madoff the only time in pari dilecto has been trotted out in recent years. According to Frederick Feldkamp, a retired lawyer who has dug into its implications, it has become a common tactic to shield lawyers, accountants, banks and other enablers of fraud that winds up in bankruptcy court. “It’s being used everywhere,” he told me. Bankruptcy trustees can’t overcome the hurdle it poses, and thus are stuck with clawing back money from victims.
If Picard can’t sue the big banks for wrongdoing in the Madoff case, then who can? You might think the answer would be the Madoff victims themselves. When Colleen McMahon, a federal judge, threw out Picard’s lawsuit against JPMorgan last year, she suggested that, indeed, only the victims had the standing to sue.
Sure enough, a group of Madoff victims decided to file a class-action lawsuit against the bank. Guess what. It’s probably not going anywhere either — thanks to a law, passed in the mid-1990s, that drastically limits the ability to sue companies for securities fraud.
You can’t blame the judges for making these rulings. They are doing what the law plainly tells them to do. But it does make you wonder who the law is supposed to serve: huge institutions that can hide behind legal niceties, or victims of fraud.
Sadly, these days, the answer seems obvious.
Here is a link to information about the law mentioned in the article:
http://library.findlaw.com/1999/Sep/1/129878.html
Tease on just a little of the analysis provided in the link:
Under the bill, a written or oral statement that predicts the future prospects of a company is immune from civil liability (although not from actions brought by the SEC) if either (1) the statement is identified as a forward-looking statement and also identifies “important” factors that may cause actual results to differ materially from those predicted or (2) the statement was not made with actual knowledge of its falsity.
Just a question, and don’t take this the wrong way.
Has anyone in the legal community stepped back, and given any though to the proposition that the law is giving the guilty way too many “outs” for behavior that is destructive to society?
MF Global is Exhibit “A”. $1.6 billion dollars of customer money disappears in October, and yet nobody in the legal community seems to be able to say whether a crime has been committed, and if so, whether the case is so “complex” that it may be impossible to get a conviction.
Or that corporations can break the law, and pay penalties that are small enough to be considered “the cost of doing business”.
Or the “cull” of 45-55 year old middle managers at my former employer, and just about every large company you can name. Couldn’t get enough people to take early buyouts, so now suddenly all of these guys who have worked there for 20-25 years suddenly have “performance issues” and “attitude problems”, get kicked out the door, and have to find new jobs in the worst job market in 50-60 years?
Try filing a complaint. If you are lucky, you might get it resolved in 2-3 years. Lots of ways to go broke in 2-3 years in this economy.
Even on a personal level, the outcome depends less upon the facts, and what is “right” or “fair”, than it does on who runs out of money to pay the lawyers first?
Has anyone in the legal community stepped back, and given any though to the proposition that the law is giving the guilty way too many “outs” for behavior that is destructive to society?
It seems that they are saying, “hey, that’s the law, if you don’t like it change it”. Kind of like the cop that says “I don’t write it, I just enforce it”.
Well, I’m sure plenty of people with law degrees have considered those questions. It is sort of a misnomer to talk about “the legal community.” There are a few groups that would consider themselves that. Various groups within the ABA committees on different areas of law, for example. However, all of these people have clients. They are OBLIGATED to represent the best interests of their client. It is hard to separate that obligation from your thoughts. Really, it is. You spend almost all your waking time trying to figure out how to do the best for your client, then when going to the working group meeting, you just dump those priorities and advocate for law changes and definitions that are against their interests? Doesn’t happen. If you did it too much, your clients might sue you and they definitely would fire you.
Government attorneys have a little more leeway since in some positions we are allowed to think a bit about what the good answer would be as well as the correct one. But mostly no matter how much you would like to bend a little for a sympathetic person, the rules are the rules. I can look at a list of 4 qualities that get you a more gentle treatment and say that someone fulfills enough of them because they meet 3 of 4 and there is no case out there where anyone says all 4 are required and they only miss out on all 4 because state law requires a less cut and dried answer on the last one. That I can do. But if they don’t meet even the requirements of the more gentle rule? I can’t do anything about that. If I were in litigation, not an administrative position, I would argue that they are missing one of 4 and don’t qualify as well as arguing they don’t qualify under the easier rule, just for completeness. That would be my job.
Basically, you are conflating lawyers with policy makers/recommenders. It isn’t the same thing at all. As a mechanic you are very well aware that putting something that has to be maintained all the time in the middle of the engine where it is nearly impossible to access without taking the whole thing apart is a bad idea. Do you get to change that? No, of course not. That isn’t your job. You don’t get to redesign the engine. You have to make sure that what you have runs as well as you can make it run. If it can’t be made to run safely, you can try to say so to someone. Will they listen to you? Maybe. Maybe not. But you can’t change the engine design. It isn’t your job.
That is what most lawyers are dealing with. Changing the laws to be better policy isn’t their job. They people who have those jobs are often lawyers, but they aren’t acting as attorneys when they do those jobs. They are politicians and their aids. They make the rules. And a few wonks at the think tanks and the universities sometimes get to help a bit, but not as many as you think.
“You don’t get to redesign the engine”.
Not the current engine, but we do have some input on the next generation when they are designing and planning for it. So the next generation of engine is better than the last.
Or the company that is stupid enough to design and build an engine too expensive/difficult to fix doesn’t stay in business long.
Evidently, the same mechanism doesn’t exist at the Federal policy making level.
The “We don’t come up with the policy, we just enforce it.” meme is what the jackbooted thugs have been telling everyone for thousands of years. It would be nice if once in a while one of the thugs turned on his master, and stood on principle.
Of course, having 20% of the workforce on the unemployment line make it a lot harder to stand for “principle”. A whole bunch of stupid policies are easier to implement when everyone is scared of being out of work.
The mechanism at the Federal policy making level is people getting voted in and out of office which means that something that sounds good, like it ought to work, to a lot of people but doesn’t actually work can get implemented. And stuff that people don’t like but would actually work has a very, very hard time getting implemented.
RBS chief executive Stephen Hester has announced that he will forgo his bonus this year on the same day it emerged his bank is facing a £150m fine over the inter-bank lending rate scandal.
Mr Hester said his decision was a result of last week’s cataclysmic IT failures that hit thousands of customers and prevented money transfers.
Today it was reported that RBS will admit similar money market rigging offences to those of Barclays, in which misleading submissions were made to the London inter-bank offer, affecting mortgage and loans costs of its customers.
Read more: http://www.dailymail.co.uk/news/article-2166379/Libor-scandal-Sacked-RBS-trader-accuses-bank-chiefs-colluding-staff-rig-rates.html#ixzz1zBrlUDwW
Jane talked about the population explosion in the DC area. Sleepless said the same about Portland, OR. It appears to be the case for the greater Seattle area, and seemingly everywhere in this country. My question: what is really going on? Do we have that many immigrants coming into this country? Or, are other areas of the country, namely flyover country, dying? I’m curious, so that is my weekend topic suggestion.
People will go where the jobs are.
Case in point. My wife works at the local public library. They had to expand the computer lab because there is huge demand for internet access. The overwhelming majority of users are people passing through our town who look through Craigslist for job openings. Most don’t find anything and move on. The number of defunct library accounts (you need one to reserve a PC) dwarfs the active list. Hundreds of people sign up each month and most simply disappear after a couple of weeks.
So anywho, the number of people wandering the country like nomads, looking for a job is non trivial. I wouldn’t be surprised if they were refugees from flyover country.
Here in Tucson, ISTR hearing that the #1 use of library computers is for job-hunting. It’s gotten to the point that my favorite library branch has a table with laptops that are specifically for people filling out employment applications.
The shuttering of storefronts in our neck of the woods goes unabated.
I could start a business around here, but won’t. Having my own shop, and a single location to work from would simplify my life, but it isn’t going to happen for one reason. Not enough customers. The only places in the country with enough customers to justify a stand alone shop are, you guessed it, the Northeast Corridor, SoCal, San Francisco, DC, Chicago.
My experience is not unique.
“The shuttering of storefronts in our neck of the woods goes unabated.”
Have said it a few times before, but I see the same thing happening in Phoenix Metro, especially with restaurants.
“The overwhelming majority of users are people passing through our town who look through Craigslist for job openings.”
It almost sound great depressionish. Except the Craigslist part. If anyone gets a chance to strike up a conversation with some of those folks, I bet their stories would be interesting.
Speaking of which, I have a new job at church, which is trying to help job seekers. What I think I’m seeing so far is that lots of job seekers don’t need my help, but the ones who do are difficult to help. I’m used to a professional environment where you give people the next step or two that they should pursue, and then they get back to you when they’re ready for more instructions or they need help. Instead when I follow up a few days later nothing has happened. And somehow I’m supposed to change that.
I recognize that I’m working within a mindset that may need to be adjusted for the situation. But it’s confusing for me. I suspect I may need to make personal visits instead of emailing, and do some hand-holding and talk therapy and maybe some computer instruction. I’ve been assuming a certain level of computer literacy from anyone who emails me.
Take it from someone who’s had more than a little difficulty lately: The personal touch goes a long way. You guys have certainly done it for me the past few months.
Be kind. Any kindness shown these days goes 10 miles further than it usually does.
Be kind.
I’m trying. I’m just confused by people who think totally differently than me :-).
Hey, Carl. Me again.
You might be dealing with people who are dealing with depression. Unemployment will do that to you.
One of the things to do is prod them to do the exercises. You don’t have to be a nag. But a phone call or two about how they’re coming along with the step you’ve asked them to do.
Or you might want to invite them out for something that’s free and quite helpful for those who are down in the dumps. I’m talking about going for a walk. It’s a great way to brainstorm how to approach that step you’ve assigned them.
And you’re very right about the hand-holding. Unemployed and depressed people need quite a bit of that.
The word “Sheeple” wasn’t just pulled out of thin air.
There is a percentage of the population who literally won’t/can’t think for themselves.
Another percentage just can’t lay off the booze/drugs for any meaningful length of time. Any job that pays a decent amount of money has drug screening attached to it.
Another subset has grown up in chaos…..constantly bouncing around between relatives (who themselves are bouncing around), with transportation troubles, money troubles, troubles with the law.
Among others……and these groups overlap. The end result is that a high percentage of the population is personally “upside down”……with their issues, they can’t earn enough to cover their costs.
Business, of course, doesn’t want government to solve the problem……but they don’t want to take responsible for solving it either. Its cheaper/easier to hire illegals and H-1Bs, lobby to transfer the tax burden and social consequences to their workers (deteriorating schools, rising crime, “partnerships” with government), or to pick up shop and move to China, than it is to actually help fix things.
You might be dealing with people who are dealing with depression. Unemployment will do that to you.
I understand that and I am trying to take that into account. I’m also trying to account for people saying yes and going silent when they actually aren’t sure what I’m talking about.
I’m also trying to account for people saying yes and going silent when they actually aren’t sure what I’m talking about.
Check their understanding of what you said. You might have to go over it with them a time or two.
Remember, you’re dealing with someone who’s not functioning the way you are. That’s why all of the repetition with checking understanding and keeping in touch is so important.
They are scared. You can’t “send them off” to do something. You have to at least help them get started doing it. Don’t tell them to describe their last three jobs. Do it socratically. What did you do in that last job? What were you proud of? How would that help a new employer understand that you could do the next job? Positive feedback when appropriate. Help with the polishing of the words. Sounds like you are dealing with a kid? Maybe when it comes to professional experience you are.
Example. I was a math tutor in high school and I did it again at the Children’s Aid Society in NYC (actually it was general homework help, but I mostly helped with math). The upper middle class suburban kids treated me like an employee. I was there to help them. Some embraced the situation and wanted help understanding the stuff the teacher didn’t communicate well over the past week. Some were lazy and tried to get me to do their homework for them once a week. But they all understood that I was there for them to use in some capacity.
The NYC kids had a whole different attitude. They saw me as an authority figure despite the fact that I had no authority over them at all. There was an employee who kept order in the room and could have kicked me (or any of them) out. There was a director of the center who occasionally brought a kid to see me in particular. But they were mostly scared of me at first. They sure didn’t see me as someone to exploit for their own benefit. Took me weeks to get a few of them to open up and one wrong word on my part and they backed off again. By the end of the school year, a few had gotten a lot better, but it was struggle. I had to ask them over and over and over again what I could do to help them.
So do that. You can tell them what the next step is. That is fine. You are the one who knows what the next step is. But you have to ask them what they need from you to be able to do it. And make sure you emphsize that you are there to help them. It might take a while for people to get that. They may not be used to getting a lot of help from people who talk and dress and act like you.
Look it was easier for me. At least I was dealing with kids. It is going to be even harder with adults. But with time and the right attitude, you can do it. Expect it to take a while.
Thanks…
Seconded. Thank you, polly.
Welcome. It is hard. Most people don’t want to “get it wrong” in front of authority figures. One of the hardest things to convince people to do at all. I have to convince myself to do it every day.
Carl — Are you LDS?
I can report the stake to which my wife belongs (Poway) never had a position similar to the one you describe until very recently, as it was only recently that a significant enough number of members were jobless to justify the effort.
Sometimes it seems like people have trouble formulating the questions in the first place.
“They don’t know the answers. They don’t even know the questions.”
Carl — Are you LDS?
I can report the stake to which my wife belongs (Poway) never had a position similar to the one you describe until very recently, as it was only recently that a significant enough number of members were jobless to justify the effort.
Yes. Sorry I didn’t see this message until now. We’ve had Ward employment specialists in our ward for quite a while (at least a few years), first time I’ve ever tried to do the job, though.
Other than buying residential properties in anticipation of the housing bottom that will happen ‘by the end of next year,’ how are people investing their hard-earned dollars these days? Or are they just spending them, based on the observation that there really are no good investment choices these days, anyway?
INVESTOR ALERT EU leaders ignite global rally
June 29, 2012, 12:02 a.m. EDT
It’s ‘duck’ season for U.S. stock fund investors
Global financial, political woes shoot down quarterly returns
By Jonathan Burton, MarketWatch
SAN FRANCISCO (MarketWatch) — It’s déjà vu all over again for stock investors.
The jarring economic and political concerns that derailed the U.S. stock market between April and June 2010 and in 2011’s third quarter tormented investors in this latest quarter — with little relief in sight heading into the second half of 2012. The Standard & Poor’s 500-stock index (SPX +1.87%) lost 5.6% in the period through June 28, reflecting concerns that fixes to critical issues — Europe’s political and economic mess, China’s slowing growth, U.S. economic health, deflationary pressures and a world awash in debt — could drag on much longer than expected.
Uncertainty over the euro-zone debt crisis and the global slowdown has led to greater market volatility. Andrew Milligan, head of global strategy at Standard Life Investments, a leading U.K. fund manager, explains where he is investing. Photo: Reuters
“It’s an unfortunate replay of 2010 and 2011,” said Brad Sorenson, director of market and sector analysis at the Schwab Center for Financial Research. “Eventually we’re going to have to quit kicking the can down the road.”
Indeed, investors must feel like extras in a financial-market remake of “Groundhog Day,” where self-centered Bill Murray is forced to repeat 24 hours of his life until he learns, essentially, to play well with others.
Policy makers, call your agents. Investors, meanwhile, called their brokers. The old Wall Street adage to “Sell in May and go away” was a sound survival strategy in an unforgiving second quarter — even better if you’d sold in April, as many investors did. Mutual-fund investors pulled an estimated $38 billion from U.S. stock funds between April and June 20, according to the Investment Company Institute, a fund-industry trade group — continuing an exodus that has been unrelenting since the 2008 market meltdown.
Those who lightened up on positions sidestepped losses that plagued every major category of U.S. stock funds and exchange-traded funds. The average U.S. diversified stock fund shed 7.2% in the quarter through June 27, while its ETF counterpart lost 6%, according to preliminary data from investment researcher Morningstar Inc. Returns slid 8% for some midcap and small-cap vehicles, though the best of the bunch, the large-cap value category, was still down 6%.
…
If consumers are saving more yet withdrawing money from the stock market, where are they putting it?
June 29, 2012, 10:36 a.m. EDT
U.S. consumer spending falls in May
Slight drop is first since November; incomes, savings rate increase
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — Consumers cut back on spending in May and increased their savings, another sign that the U.S. economy has cooled off, government data showed Friday.
Personal spending fell less than 0.1% in May, the first decline since last November, the Commerce Department said. And spending for April and March were revised lower.
Consumer spending is the biggest source of U.S. growth, accounting for more than two-thirds of economic activity. Yet spending has barely changed over the past four months, indicating consumers have grown more cautious and they are trying to rebuild their savings.
A sharp decline in U.S. hiring and the growing threat of a financial crisis in Europe largely explain why consumers are less confident now than they were just a few months ago. Read latest report on consumer confidence.
Businesses, for their part, have less reason to hire and boost production if consumer demand slackens, especially as exports weaken amid a global slowdown. And without more hiring, consumer spending is likely to remain subdued even though gas prices have fallen sharply from 2012 highs.
The “recent fall in gasoline prices will soon boost real consumption,” said economist Paul Dales of Capital Economics, “ but a sustained and significant acceleration in consumption growth cannot take place without faster jobs growth too.”
As is usually the case, worries about the economy tend to spur consumers to sock away more cash. The savings rate, which fell to a four-year low in February, climbed to 3.9% last month from 3.7% in April. It stood as high as 5% less than one year ago, however.
Americans were able to save more money partly because incomes rose 0.2% in May. And inflation-adjusted disposable income — money left over after taxes — climbed 0.3%, largely reflecting the drop in gasoline prices.
…
Make way for higher gasoline prices, just in time for summer vacation driving season.
June 29, 2012, 9:49 a.m. EDT
Oil futures rally more than 5% after EU bank plan
By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures jumped Friday after European leaders unveiled a plan to address the region’s distressed banking sector.
Crude for August delivery (CLQ2 +5.91%) climbed $4.16, or 5.4%, to $81.88 a barrel on the New York Mercantile Exchange, putting the contract on pace for weekly gains of around 2%.
The advance came after oil hit an eight-month low in Thursday’s session, weighed by jitters ahead of a two-day European Union summit.
Few investors had faith that the summit, aimed at tackling the region’s swelling financial crisis, would do much to solve to Europe’s troubles.
But in the early hours of Friday morning, EU leaders announced a plan for a single financial supervisor for the region, as part of short-term measures to help stabilize markets.
The oil boom in North Dakota is causing a labor shortage in the service sector of local economies. Recently, businesses have found a solution: hire foreign workers.
European Commission President Herman van Rompuy said that the mechanism will involve the European Central Bank and that there will be the possibility of direct recapitalization for European banks. Read more on European announcement.
Risk-oriented crude and equity markets shot up following the announcement, and the euro rallied as the U.S. dollar fell.
Prices also found support from a strike in Norway’s oil industry, which has resulted in production outages of around 290,000 barrels a day — nearly 20% of Norwegian oil production, analysts at Commerzbank said in a note to clients Friday.
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Crude ROCKETS up $7.15 per barrel. It’s a massive short squeeze.
I really lucked out this morning — bought gas at well under $4/gal despite being fully aware that oil was skyrocketing today, based on a tectonic shift in the Eurozone financial picture.
I told the checkout clerk at the service station that he wasn’t charging me enough for the gasoline. With a puzzled look on his face, he earnestly explained that most people have recently complained that prices are too high.
Refresh my memory…for the purposes of these statistics and reports, paying off debts is the same as saving, right?
+1 Carl.
It’s that old saying “I got my paycheck today but it’s already spent.” We’re going to be that way for a while.
Eat, drink and be merry today, for tomorrow we die.
Investor Alert
EU leaders ignite global rally
June 29, 2012, 2:07 p.m. EDT
Q2 earnings outlook the most negative since 2001
By Regina Hing, MarketWatch
NEW YORK (MarketWatch) – Companies are wrapping up their most negative earnings outlooks for a single quarter in more than a decade, led by Ford, Procter & Gamble and others that took a beating in moribund international markets.
As of June 29, the second quarter’s last trading day, 94 companies in the S&P 500 Index have issued negative guidance versus 26 positives – the most negative period since the third quarter of 2001, when there were 180 negatives and 30 positives, according to Thomson Reuters I/B/E/S.
That means for every company that issued a positive outlook for the second quarter, 3.6 have brought down their numbers. The long-term ratio is 2.3.
A positive guidance means the company is projecting earnings per share higher than current consensus estimates, and a negative indicates EPS is lower.
“The most common explanation we’ve seen is the situation in Europe,” said Greg Harrison, corporate earnings research analyst at Thomson Reuters. “A lot of these companies have been depending on international growth, so there’s definitely concern for any company selling in other countries.”
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June 29, 2012, 3:11 p.m. EDT
Bond funds could be on borrowed time
Managers look to opportunities in emerging-market debt
By Rachel Koning Beals
CHICAGO (MarketWatch) — In a world where financial rescues dominate headlines, U.S. government bond funds played hero yet again, rescuing portfolios in a tough second quarter.
Sound familiar? Analysts have been pegging the end of the decades-long (and surely stretched?) Treasury rally ad nauseam. But Europe’s festering credit crisis, weakening Chinese economic growth, and a bumpy U.S. recovery combine to pressure the Federal Reserve and its counterparts to hold interest rates at extraordinarily low levels.
At least, that’s what the central banks tell us. Those banks are proving to be steady Treasury customers, sticking to longer-term debt purchases to depress longer-term interest rates.
Central bank demand, and that of investors looking for shelter at any cost from global volatility, has plumped up bond fund returns. Long-term bond funds rose 3.6% for the three months through June 27, according to preliminary data from investment researcher Morningstar, Inc. They’re up some 13% over the past year.
Long government funds clobbered all fixed-income categories in the period, up 12% and 35% over the past year. The gain compares to quarterly losses of some 6%-9% for midcap and large-cap stock funds of varying styles. Meanwhile, short- and intermediate-dated government bond funds rose 0.4% and 1.5%, respectively. Read more: It’s ‘duck’ season for U.S. stock fund investors.
For much of the world, Treasurys are a lifeline that’s filling an “insurance” role in portfolios, but it’s an expensive policy. And it’s too rich as a pure investment play just now, said Steve Walsh, chief investment officer of Western Asset Management Co. Walsh spoke during a Morningstar Investment Conference panel in late June.
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The White House wants us to share this.
Key point: We’ve been talking to you about President Obama’s plan to cut through the red tape keeping millions of responsible homeowners from refinancing their mortgages, but we want to make sure your friends get the message, too.
To which I say: Here in good ole Tucson, a lot of the responsible homeowners are also underwater on their mortgages. If they’re deeply underwater, they’re channeling their inner Nancy Sinatra and singing “These boots are made for walking, and that’s what they’re gonna do…”
In previous posts, I’ve noted the prevalence of “we’ll pay you a few thousand bucks to vacate” notices on local houses that have been vacant for several months. In other words, day late, dollar short. Or, to use an agricultural analogy, barn door closed, horse gone.
Has the Eurozone breakup threat been successfully averted? And how will the continued unwinding of the Eurozone debt crisis affect U.S. asset prices, particularly housing?
06/26/2012
George Soros on the Euro Crisis ‘A Tragic, Historical Mistake by the Germans’
Billionaire investor George Soros: “We are down to three days” to save the euro.
REUTERS
With the EU summit set to start on Thursday, pressure is on European leaders to find a way out of the euro crisis. Investor George Soros is pessimistic that a solution will be found and says time is extremely short. In an interview with SPIEGEL ONLINE, he warns that Germany could develop into a hated, imperial power.
SPIEGEL ONLINE: In Germany, once the motor of European integration, people are openly discussing the possibility of leaving the euro zone. Many Germans believe that a return to the deutschmark would be cheaper than to remain stuck in a flawed currency union. Are they right?
Soros: There is no question that a breakup of the euro would be very damaging, very costly, both financially and politically. And the biggest loss would be incurred by Germany. Germans have to bear in mind that, effectively, they have suffered practically no losses so far. Transfers have all been in the form of loans, and it is only when the loans are not repaid that real losses will be incurred.
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Spanish stocks’ best day in two-plus years has familiar ring
June 29, 2012, 1:06 PM
Spain’s benchmark (IBEX 35 XX:IBEX +5.66%) on Friday enjoyed its best single session since May 10, 2010, as investors cheered the predawn progress made at a summit of European Union leaders in Brussels. The index surged 5.7%. It was, based on FactSet Research data covering the past 20 years, the gauge’s 13th-biggest one-day advance. The index’s best day ever, on that same May date two years ago, produced a gain of 14.4%. That run-up was, perhaps by something other than coincidence, also precipitated by a decision among European leaders to take action to stem the debt crisis. The IBEX had its worst day on record Oct. 10, 2008, when near-panic selling gripped a market rapidly losing confidence in central banks’ and governments’ capacities to contain financial-sector turmoil. That October session in 2008 saw the the Madrid benchmark fall more than 9.1%.
– Tim Rostan
Posted: 5:12 p.m. Thursday, June 28, 2012
Florida can now apply to $1 billion mortgage assistance program
By Kimberly Miller
Palm Beach Post Staff Writer
Florida homeowners can now apply to a $1 billion mortgage assistance program under new eligibility guidelines created to allow more people to benefit from the federal plan.
The Florida Housing Finance Corp. approved a revamp of the Hardest Hit Fund in April and the Treasury Department signed off on the changes in May.
But before the new guidelines could go into effect, counselors from 90 agencies statewide who deal directly with homeowners and their Hardest Hit applications needed training in the standards, which increase the amount of money homeowners can receive while eliminating some eligibility roadblocks.
The corporation announced that the new rules were in place as of Thursday.
“We know that the public is anxious for these changes to take effect,” said Florida Housing Finance Corp. communications director Cecka Green earlier this month.
Homeowners who previously applied for the Hardest Hit program, but were not eligible at that time, may request their application to be reconsidered by contacting the advising agency they initially worked with. They do not need to fill out a new application.
The Hardest Hit Fund is meant as a bridge for homeowners looking for work or higher-paying jobs. Those who are eligible can receive up to a year of mortgage assistance with a cap of $24,000, and up to $18,000 to bring a mortgage current on payments. Homeowners seeking only to have their mortgage arrearage paid can get up to $25,000.
The program was announced nationally in 2010 and began statewide in Florida in April 2011.
As of last month, 28,556 Floridians had completed applications for Hardest Hit money. Statewide, 5,747 homeowners have been approved.
Thousands of applications were ruled ineligible for reasons that don’t exist under the new guidelines, such as the mortgage payment was more than 180 days past due or the loan was obtained after a cutoff date of Jan. 1, 2009.
For information and applications, visit flhardesthithelp.org or call (877) 863-5244.
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Two programs are available under the Hardest Hit program
• Unemployment Mortgage Assistance provides up to a year of loan payments with a cap of $24,000 and up to $18,000 that can be paid up-front to bring a delinquent loan current.
• Mortgage Loan Reinstatement Payment provides up to $25,000 as a one-time payment to bring a delinquent mortgage current.
Why are there so many clueless experts on the loose these days, freely dispensing bad advice and charging for it?
Loosers!
Buttonwood
Not so expert
The need for financial advice may be more psychological than practical
Jun 9th 2012 | from the print edition
ASK enough people for advice, they say, and you will eventually find someone who will tell you what you want to hear. But the need for advice burns so strongly that people become blind to its quality. There is a remarkable tendency to trust experts, even when there is little evidence of their forecasting powers. In his book “Expert Political Judgment”, Philip Tetlock shows that political forecasters are worse than crude algorithms at predicting events. The more prominent the expert (ie, the more they were quoted by the news media), the worse their records tended to be. There is also an inverse relationship between the confidence of the individual forecaster and the accuracy of their predictions.
The remarkable tendency for individuals to rely on expert advice, even when the advice clearly has no useful component, was neatly illustrated in a recent academic paper* about an Asian experiment. Undergraduates in Thailand and Singapore were asked to place bets on five rounds of coin flips. The participants were told that the coins came from fellow students; that these would be changed during the process; that the coin-flipper would be changed every round; and that the flippers would be participants, not experimenters. Thus there was a high likelihood that the results would be random.
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How many more years of serial housing bottom calling do we have to endure before this is finally over?
Fed’s Fisher Says Housing Market Has `Bottomed Out’
By Aki Ito - Jun 28, 2012 5:42 PM PT
Federal Reserve Bank of Dallas President Richard Fisher said he believes low mortgage rates have helped bring an end to the slump in U.S. housing.
“I do think the housing market has bottomed out,” Fisher said to reporters today in Aspen, Colorado. The improvement has been “assisted by these low mortgage rates that we’ve had.”
More Americans than forecast signed contracts to purchase previously owned homes in May, indicating the real estate industry is firming three years after the start of the economic recovery. The index of pending home resales climbed 5.9 percent to 101.1, matching a two-year high reached in March, after a 5.5 percent decline in April, according to figures from the National Association released yesterday.
Record-low mortgage rates and cheaper properties may keep sparking buyer interest, even as cooling employment and limited access to credit remain hurdles for the market. The Fed’s decision last week to extend a program aimed at holding down borrowing costs may sustain the progress in residential real estate.
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If the Fed is audited, will the exercise uncover more housing market manipulation than what has ever been officially announced?
Of course, if the Fed has done nothing wrong, then they have nothing to hide, and they should welcome the opportunity for an audit to enhance their reputation.
‘Audit the Fed’ bill advances in House
By Stephen Dinan
The Washington Times
Wednesday, June 27, 2012
Rep. Ron Paul, Texas Republican, speaks at the University of California at Berkeley on Thursday, April 5, 2012. (AP Photo/Ben Margot)
The House oversight committee voted Wednesday to demand a broad audit of the Federal Reserve system by congressional investigators - a major move lawmakers said is designed to bring accountability to the murky workings of the independent board.
The bill was sponsored by Rep. Ron Paul, the Texas Republican who turned the push for an audit into a powerful campaign slogan and whose criticism of the Fed’s monetary policy drew hundreds of thousands of voters into the political process.
It passed by voice vote, signaling the growing sense among lawmakers that the time has come for a full review. Committee members said they hope for a vote in the full House next month, and the legislation has been sponsored by 263 members, virtually assuring its passage.
“Clearly the Fed must be made too big to fail, and too big to fail requires a considerable amount of oversight,” said Rep. Darrell E. Issa, California Republican and chairman of the committee.
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