Bits Bucket for July 3, 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
Location:Northern Arizona, United States
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Even by standards of condo/HOA horror stories, this is bad:
http://realestate.aol.com/blog/2012/06/27/this-is-crazy-company-snatches-condos-from-owners/
“Her plans — and those of 10 other homeowners who say they’ve had their properties stolen from them — started to unravel when Deer Path Woods, the condo complex where they lived, went into foreclosure last fall. Fusco’s unit was one of 11 that were individually owned; another 97 were rental units. When the owner of the rental units failed to pay his mortgage, a company under the control of local developer Kevin Timochenko snapped all of them up for $7,200 at a foreclosure auction.”
“The purchase gave Timochenko’s company, Water Polo I, LP, control of nearly 90 percent of the units of the complex, arming it with enough votes to dictate condominium association policy. Soon after the purchase, Fusco and her fellow homeowners received a letter informing them that, come January, condo association fees would more than double, to $450 a month. The increase, according to a representative of Water Polo I, was to pay for upgrades to the complex that the tenants had demanded. Anxiety over raised assessment fees paled in comparison to what happened next: The new condo owner called a vote to terminate the condo association altogether.”
“Dissolving a condominium organization isn’t unusual. Termination reduces management costs, and in a depressed market makes it easier for homeowners to sell their units. It’s often easier to find a buyer for an entire condominium, and a bank doesn’t have to approve the sale. After termination, units of the dissolved condominium sell in bulk and are then typically converted into an apartment complex owned by a single developer.”
“Here’s the rub: Under Section 3220 of the Pennsylvania Uniform Condominium Act, when a condominium is dissolved, the condo association can put the entire condominium up for sale, regardless of who owns the individual units. So in acquiring control of the condo association, Water Polo I also gained the right to sell Fusco’s home.”
“It might not have been so bad if Fusco and the other owners got paid what they believed their homes were worth. Pennsylvania law states that in the event of a condominium sale, unit owners have the right to the fair market value of their homes as determined by an appraiser selected by the condominium association. That means that even though Fusco’s unit had been valued at $101,000 by an independent appraiser earlier this year, she would get only the amount determined by the appraiser hired by the condominium association — in this case, Water Polo I.”
“And the difference was shocking. After the sale, the 11 unit owners received letters saying that they or their lenders would each receive between $31,000 and $34,219 for the sale of their units. The owners were still responsible for the remaining balances on their mortgages, though. For Fusco, who took out a $94,025 loan in 2008 to buy her apartment, that means she’s on the hook for about $40,000 even after her lender receives money from the sale.”
Not a single dollar shall be allowed to escape. Snatch it away by any means necessary.
If you feel you don’t have enough people involved in and controlling your life then buy into a condo with an association.
If you feel you don’t have enough people involved in and controlling your life then
buy into a condo with an associationrentI know this attitude gets me flamed, but this is also how I have been feeling as a renter.
It’s funny you feel that way. I pity our landlords, who are at least $100K underwater on their 2004 investment, eight years down the road. And whenever they stop by, it’s to fix something wrong with the property or to check that everything is OK. If there is a downside to having someone else assume responsibility for repairs, maintenance and yardwork, then I am missing it…
If there is a downside to having someone else assume responsibility for repairs, maintenance and yardwork, then I am missing it…
Every time something major needs repair, our rent goes up.
Here is another dimension of rentership which I appreciate: Whenever we move away from the home where we now live, we don’t have to sell it.
By contrast, I noticed that a colleague who has been trying to sell the family home since last summer just lopped another $100,000 off the asking price, for a total of $400,000 in price reductions since first putting the home on the market last summer. The amount they have already knocked off the asking price exceeds the median sale price of a San Diego home these days ($329,500).
I am very happy to be able to avoid the prospect of eventual sale of the family home by Dutch auction.
Every time something major needs repair, our rent goes up.
Back when I was still living out at Dysfunction Junction, my landlady’s boyfriend’s dog attacked someone who was stopping by to pick something up from me. Cue up the mangled arm, animal control coming around to ask me pointed questions, and the landlady, the dog, and the boyfriend making themselves real scarce.
Anyway, I don’t know if the victim threatened to sue. He stopped speaking to me after the dog attack. But I do know that my rent went way up a few months later. I think it was to cover the guy’s medical bills.
The dog attack is what motivated me to start looking for a house to buy. I wanted a place where I could control what was happening.
Here is another dimension of rentership which I appreciate: Whenever we move away from the home where we now live, we don’t have to sell it.
Agreed. If you aren’t planning on staying, then renting is better.
I’ve been here 23 years and don’t really want to live anywhere else. We’ve been priced out of the neighborhood I’ve been renting in for the last 15 years, but hope that the next move I make will be my last.
I have some good friends who live down the block who do some nice house swaps with folks living in great places like south of France, Italy, etc. My parents also do this with their apt. in NYC. The swap thing is awesome for folks who like to travel. Our landlady will not allow it.
Arizona Slim writes: “I wanted a place where I could control what was happening.”
As far as I can see, there is no such place on earth.
Buy a house. Your neighbors or their representatives can vote to raise taxes, thus taking any savings you may have. A loud obnoxious neighbor can move in next door, and if both they and you are borrowing money from a bank to “own” you are both much more stuck than otherwise. A gas pipeline can be running under your house and blow up without warning (see San Bruno, CA, 2010). You can put in a major renovation, only to be told, a month from its completion, that the government is seizing the property for another purpose (e.g., a road) under eminent domain. And on and on and on.
If you are looking for control, then you are in the wrong universe, and you have far deeper problems than whether to buy a house or not.
IAT
I think we all have had different experiences as tenants. Before we bought, we rented the same place for 7 years. The landlord was great, we did the minor repair (fix faucets, etc.) work and didn’t hassle him. He had owned the place for a LONG time (no debt), cleaned the gutters and left us alone. When he raised the rent, he did it with an apology (a couple percent at a time). By the time we left, our rent was 25% below market (as evidenced by him raising the rent that much, and leasing in a day).
If it weren’t for having 2 kids in a small house, a rodent problem that we couldn’t fix, no ability to have family over without my wife and I sleeping on the floor, nearly impossible to host family holidays, etc., we may still be renting there. Bad landlord certainly wasn’t a problem.
Since my wife’s job as a tech attorney isn’t taking her out of the state or Silicon Valley generally, and my job isn’t going anywhere, for us buying the right house was a no-brainer. For others, I can definitely see the continued allure of renting…if you have the right landlord/situation.
Arizona Slim writes: “I wanted a place where I could control what was happening.”
Oops. Perhaps I should have offered a little backgrounder. My bad.
The dog attack happened while the landlady was supposedly watching the boyfriend’s dog. The dog was wandering around the landlady’s yard unleashed — that’s illegal in Tucson unless the dog is inside a fenced yard. It wasn’t.
When my acquaintance showed up, the dog charged and bit him in the forearm. Big bloody mess.
Mind you, I had told the landlady about the acquaintance’s visit earlier in the morning. So, it wasn’t like she didn’t know that someone was coming over.
Nowadays, at the Arizona Slim Ranch, no dogs on the premises. I don’t want them here, and anyone coming over here knows that they should keep their dogs at home. And most of my friends aren’t so attached to their dogs that they can’t bear to leave them.
And, if you think I’m singling out dogs, I’m not. I don’t want cats brought onto this property either. True, there are feral cats galore around here — I’m not happy about that — but until the coyote packs come around again, that’s reality.
If you are looking for control, then you are in the wrong universe, and you have far deeper problems than whether to buy a house or not.
To each her own…
Owning your own business doesn’t mean complete control either (taxes, licenses, etc.) but for some people it is more comfortable than having a boss.
I would never buy a condo or anything with an HOA, but owning a SFH definitely affords more control than renting, especially if you are a tinkerer, DIY kinda person. Most home repair I can and will do myself, and whatever I can’t do I am happy to learn how to do.
I used to write for eHow. My philosophy is that if you can read, you can teach yourself anything. And now with you tube, even literacy isn’t required.
If I had the means and the leisure I would love to build a house from the ground up. But in the meanwhile, reading about hydroponics and wind turbines is occupying me. Pretty sure the landlady doesn’t want me installing a grey water system so I can lower my water bill, but I have recently learned how to do it…
There are lots of good reasons to rent, and there are lots of good reasons to buy. Gaining control over what happens is neither.
Buying may give one the illusion of control. And, if one prefers to live in a world of illusions, fine. But, to those of us who are dis-illusioned and thus see clearly, control does not come in this life. Still, life is beautiful.
That’s all I meant to indicate.
IAT
I dunno, when I bought, I gained pretty good control over what my monthly payment will be in 10 years. You can’t say that as a renter.
If there is a downside to having someone else assume responsibility for repairs, maintenance and yardwork, then I am missing it…
Owning a paid-off house in retirement is key to keeping your expenses low. Can’t say that about renting. In fact, all you can say about renting is that you can move every year (and incur moving expenses) and assume you’re rent will increase every year.
Unless you are renting, and investing the money saved by renting (assuming it is cheaper to rent than own) at a rate of return consistently higher than inflation or mortgage interest, in the long run, you will lose to the owner who buys a house and pays it off.
“If there is a downside to having someone else assume responsibility for repairs, maintenance and yardwork, then I am missing it…”
Depends on the repairs. Essential systems that don’t effect quality of life? I completely agree.
Items where you have a preference? It is nice to have some say. If at worst, you can pick up the additional cost of the quieter dishwasher, better hot water heater, better ceiling fans, better insulation, etc. However, in those cases, you won’t take the improvements with you when you move.
I guess people who retire don’t pay property taxes. My bad.
IAT
Everything ridiculous that can happen if you buy - gas pipe explosion, dog attacks, etc can happen if you rent. And if taxes go up, guess what happens to rents? Just like no corporation ever pays corporation taxes (they’re all passed to the consumer) no landlord ever pays property tax, it’s passed on to the renter.
As for control, here’s a little control I doubt I’d have as a renter. A few weeks ago, I moved my home office into the basement. The room I’m using is directly in front of a tree which blocks the view of the mountains/valley. The next day, I went out and cut the tree down. No more tree, full view available to me. Not only do I have my view, in a few weeks when the wood is dry I will have a ton of firewood available as well for the fireplace and/or firepit.
There are two advantages to renting. You can move whenever you want with out losing any money. You don’t have to fix things. That’s about it. And they are big advantages, no doubt about it. But don’t kid yourself on any others. They don’t exist.
That is the one benefit of living with Prop 13. It sucks as a new buyer in that it tends to push up home prices (moderate climate/low utility costs+historic basis to determine property tax basis=fewer retirees need to sell to downsize). However, if I live here in retirement, I should also get similar protection.
“I guess people who retire don’t pay property taxes. My bad”
A lot of times they don’t. Or if they do, they don’t pay a lot.
In WA State
“If your household income is $25,000 or less, you are exempt from regular levies on the first $60,000 or 60 percent of your home’s assessed value, whichever is greater. If your annual income for the application year is $35,000 or less,
your home will be exempt from all excess and special levies.”
Quote directly from the state web site. Not a bad deal. Lots of states have this kind of program to attract seniors. For a state, seniors are the best types of residents. They don’t have kids, so no school costs for kids. They don’t drive a lot to work, so no extra road spending needed. And they’re not competing for jobs. They just spend money in the local economy and go to local hospitals that benefit from the business, paid for by Medicare. Perfect.
You guys are salivating at the mouth. MY POINT WAS CONTROL IS AN ILLUSION. If you want to believe the illusion, go ahead. It is still an illusion.
The healthy way to respond to my point was to affirm that, yes, control is an illusion, and no healthy person deludes themself into believing they have or can gain control. Searching for control, and buying a house to get it, is, frankly, stupid. But, there are other good reasons to buy a house, just as there are other good reasons to rent.
I guess good mental health is as scarce on this blog as anywhere else in the world. I had thought otherwise. I now stand corrected.
IAT
Browbeating others by questioning their mental health is not exactly healthy either - or polite.
I’m not questioning their mental health. I am questioning a particular behavior which all human history indicates is unhealthy. If the straitjacket fits, . . ..
IAT
Your argument is semantic only. When a person says “gain control” the context is understood. Everyone understands for instance that you have no control over living or dying. Everyone dies. You only make yourself seem pedantic if you can’t acknowledge the understood and implied conditions of argument. So roll with it. There is a difference between total control, some control, and none. The argument made was that there is more control over something you “own” within the laws as defined and understood in the argument.
Both renting and owning suck. Housing is too expensive either way. Shelter in the USA is a racket.
I’m in control.
Both renting and owning suck. Housing is too expensive either way. Shelter in the USA is a racket.
+1 Exactly right!
“Items where you have a preference? It is nice to have some say. If at worst, you can pick up the additional cost of the quieter dishwasher, better hot water heater, better ceiling fans, better insulation, etc.”
The beautiful thing is, we have very reasonable landlords who are willing to accept our offer to split the costs of major appliance purchases (e.g. energy-efficient washing machine) in exchange for giving us a say. The landlords get a price reduction in their major appliance purchases, and we get product choice and the use of durable goods when they are brand new and depreciation is the highest.
It’s a win-win…
“Just like no corporation ever pays corporation taxes (they’re all passed to the consumer) no landlord ever pays property tax, it’s passed on to the renter.”
The idea that a landlord can pass on all property taxes to the renter is a landlord fantasy. The ability to pass on any costs (taxes or other) depends on the elasticity of demand for rentals. With sufficiently high elasticity of demand, any attempt to raise rents will result in loss of a tenant to another landlord’s rental unit.
I’m in control.
Look, I don’t see what’s the problem here. If you bought into a condo, you automatically shared ownership rights. People liken this to “you own the building, but the association owns the land”. However it’s divided, IT’S DIVIDED.
So you don’t have control over all of the property. You always have a partner in the property– the HOA.
Following the law, property rights are being fully honored here. The condo “owners” are getting bought out by majority rule. Too bad for them that they are getting zapped on the price as well. Maybe they should have thought a bit more about what they were getting into. In fact, maybe they should have questioned their relentless drive to get as far away from Blacks as possible, which is really the only reason somebody does something as INSANE as buy a property that they don’t have full control over.
“…get as far away from Blacks as possible,…”
WTF?
“In fact, maybe they should have questioned their relentless drive to get as far away from Blacks as possible, which is really the only reason somebody does something as INSANE as buy a property that they don’t have full control over.”
http://syracuse.news21.com/2011/blog/hispanic-home-buyers-change-local-housing-market/
The whites are fleeing the incoming brown immigrants who are moving there because of all the now vacant housing that’s gotten cheaper. Nothing about anyone fleeing the scary black people.
Also, one of the owners mentioned in the article, David Wendell, is black. Was he fleeing black people too?
Barclays chief executive Bob Diamond has resigned with immediate effect.
The move comes less than a week after the bank was fined for trying to manipulate inter-bank lending rates, sparking a government inquiry and calls for criminal investigations.
Mr Diamond said he was stepping down because the external pressure on the bank risked “damaging the franchise”.
http://www.bbc.co.uk/news/business-18685040
It’s not a bank it’s a franchise; do they do fries with their loans.
Deploy the golden parachute.
I’d like to give him a golden something…
To me it seems like, the rest of the world at least has some shame left. Not in US….none whatsoever.
By Mark Kleinman, City Editor
I have learned that Barclays directors are to ask Bob Diamond to waive about £20m in bonuses, paving the way for a battle that threatens to revive echoes of the row over Fred Goodwin’s exit from Royal Bank of Scotland (RBS).
http://news.sky.com/story/955650/exclusive-fight-over-18m-diamond-bonuses
Best of luck with that, they need to break his fingers to prise that from his cold dead hands.
Ca wants to hold your hand even more:
http://www.sacbee.com/2012/07/03/4606608/california-lawmakers-approve-homeowner.html
I don’t think the law is as bad as the one in NV (which effectively stopped foreclosures), but this law is a bad idea none-the-less. It will slow the foreclosure process, perhaps by a little, perhaps by a lot.
The law has been talked about for a while, so I’m willing to wager that many servicers have already started to change their practices to reflect what was being talked about…that said, only time will truly show us what this does.
Anyone here from the Chicago area? We used to have a couple of posters that I think are no longer active. I’ve been reading about the suppression of gang related crime reports in Chicago for a while now. Then, last night, the MSM in the form of CBS News blew the lid off. I guess the shooting of a little girl at her candy stand was just too much even for the MSM. Rahm Emmanuel gave a stern speech. “Stop, or I”ll yell STOP again”. Seems Chicago has only deteriorated even more on his watch.
Here’s what I want to know from any Chicago region posters: What’s the future of the area? I ask because I seem to recall some blogger giving the opinion that Chi-town will go the way of Detroit, given that it really (in his opinion) has no major business draw like New York has finance or Silicon Valley has tech, so no reason really for any business to have to be there. Meatpacking a thing of the past, marketing can pretty much locate anywhere, etc. In other words, just like Detroit, Chicago is pretty much hollowing out, with crime filling the vacuum.
Thoughts?
Not from Chicago, but it is a major rail and other transportation hub. Detroit never had that advantage.
Granted, the widening of the Panama Canal may reduce the cross-country transportation required, but then again, the rise in labor costs in China may lead to more rail transport through Chicago.
Chicago does have an advantage over, say, Boston, in that the cost of living is significantly less. Then again, winters I hear are much worse on the lake.
Ah, ok, I missed that one about transport. And I did not know the cost of living there was significantly less than in Boston, always thought they were comparable.
As to weather, except for the brief periods of relief in spring and fall, seems to me (as someone who is familiar with the area only through reading about it) that Chi-town goes from refrigerator to broiler.
I don’t know if Chicago is really any cheaper. Maybe on the whole it is because Chicago has more bad areas than Boston, so that drags averages/means down. If you compare apples to apples - it’s about the same.
I stand corrected, and thanks. I typed the comment about cost of living and hit send without doing any serious reaseach other than the recollections of lists from poorly written and edited magazines. My bad.
On a related note, I recently watched a Bill Moyers interview with Matt Taibbi and another person regarding the Mafia business model adopted by the the financial industry. Very interesting. That’s at the highest levels, with people wearing suits and collecting art and such. At the street level, in Chi-town, seems to be some similarities as well. Omerta and that sort of thing, which is mainly what Rahm was complaining about. Family members shielding other family members.
Who knew the Mafia would become the most successful business model in the US! Boo-yah!
…as I’ve been saying…
Who knew the Mafia would become the most successful business model in the US! Boo-yah!
It’s what you get with weak ineffective government that can be bought off.
It is statistically SAFER to be in combat in Afghanistan than a resident in Chicago. Except that Chicago is a gun control wet dream.
Chicago is run by the public unions. It is bankrupt. It has insane taxes. It has nearly every liberal idea ever thought of enacted into law.
No one (except those that work in government) wants to move there or start a business there. It is fun to hang out there for a weekend in the “safe” areas (for now).
The City of Chicago is grasping at straws to pay the insane public unions. Selling city assets, borrowing out the wazoo, raising income and sales taxes.
Property taxes have and will skyrocket. You can’t move a house so they can tax the crap out of it.
Remember - Detroit, at one time, was the third largest city in America with a booming middle class. 60 years later of total liberal democratic control…
It is statistically SAFER to be in combat in Afghanistan than a resident in Chicago.
Link?
Got Google?
Got Google?
Yeah, and I can’t find any mention of it being “statistically SAFER to be in combat in Afghanistan than a resident in Chicago.”
I can find one that says there were more drug-related murders in Chicago than there were combat deaths in Afghanistan (which is rather amazing) during a certain time period, but that’s not “statistically safer” is it? Seeing as there’s over 2.6 million people in Chicago, and only about 70 to 80,000 US troops in Afghanistan.
You do understand what “statistically safer” means, right? Perhaps you should Google it.
You also need to take into account that people in Chicago are not equally unsafe, definitely not for drug-related murders. If you’re not known in the drug culture your chances are much better. Once you’re on the street in Afghanistan, can you say as much?
You also need to take into account that people in Chicago are not equally unsafe, definitely not for drug-related murders.
Here in Tucson, I’ve heard more than one police department official say that if you’re not involved in the drug trade and/or a street gang, your chances of being involved in violent crime are pretty low.
“It is statistically SAFER to be in combat in Afghanistan than a resident in Chicago.
Link?”
Reminds me of this scene:
http://www.youtube.com/watch?v=HCHV5hPFbs8
“Except that Chicago is a gun control wet dream.”
For an area with such strict gun control laws, it seems rather odd that there are so many, many shootings there, no?
But this is why I like to get reports from people who actually LIVE in an area. In the case of Chicago, it seems there’s been a bit of a media blackout on the shootings and other problems, until the CBS report. But is it really that bad? Is it really that unsafe to be a walking tourist in the downtown area?
As to unions, I really don’t think that has anything to do with it. Another major urban area that appears to be going down the poop chute fast is Atlanta. I saw a video report on the net yesterday about an area of that city that is infested with rats and if the camera isn’t lying, it really is. The rats are huge and numerous and literally have dug caverns in the ground. Of course, the garbage in the area is a big draw, but these rats are actually scampering through front doors. This does not bode well for the containment of disease.
And there is a gang problem there as well, but take note this is not a unionized city and not a gun controlled region.
Poverty is poverty, whether it is in neighborhoods in Atlanta or Chicago. Poverty breeds crime and gangs.
try secondcitycop.blogspot.com…the comments are pretty revealing.
Except, in Atlanta, you can buy a very nice house in a very safe neighborhood for $230,000 with property taxes of around $2,000/year.
Do THAT math in Chicago.
And there is a gang problem there as well, but take note this is not a unionized city and not a gun controlled region.
“And there is a gang problem there as well, but take note this is not a unionized city and not a gun controlled region.”
Maybe not a “unionized city”, but unions still call the shots
“Unions figure Atlanta Mayor Kasim Reed owes them a big debt.
“We did a lot of work and we spent a lot of our resources,” said Charlie Flemming, an AFL-CIO leader, referring to organized labor’s campaign for Reed. “He was at 3 percent when we endorsed him. The Chamber of Commerce didn’t come in until the end. They hedged their bets. We were there from the start.”
Unions want Reed to back specific policies that give local companies an edge in landing city contracts and reward companies that have better wages, benefits and history with unions. More importantly, they don’t want to be pushed aside — which is their contention with past mayors — now that Reed is in office. They want a strong say in how the administration tackles labor-related issues, such as runaway pension costs, and appointments to committees and boards, such as the MARTA board of directors, in which labor has a stake.
“We want to have a voice on the front end because so often when labor-related things get done, we end up fighting after the fact,” said Flemming, president of the Atlanta-North Georgia Labor Council, which represents about 90,000 workers in the metro area. “So many times when the city does things, labor is an afterthought but business is always there.”
“Except that Chicago is a gun control wet dream.”
For an area with such strict gun control laws, it seems rather odd that there are so many, many shootings there, no?
If advocates of gun control have dreams about how gun control should work, I imagine that it would include effective enforcement.
MightyMike said: “If advocates of gun control have dreams about how gun control should work, I imagine that it would include effective enforcement.”
Uh, how? It’s about as delusional as expecting police to show up before a crime occurs.
I could take my guns and ammo and drive into Chicago and start a small war all on my own. What would any enforcement officials do about that? Nothing. They can’t stop me from obtaining guns and ammo outside of Chicago; they can’t stop me from just driving into Chicago in my private car; and they can’t stop me from calmly parking, getting out, going to the trunk, opening it and then lifting out my 5.56mm assault rifle. 4 seconds later, I’m killing people. Pop, pop, pop. Law enforcement was never involved, and can never be involved in that.
Gun control in the United States is totally delusional. We have long-honored and nationwide rights to keep and bear arms, to travel freely and without being subject to unreasonable searches and seizures. Any municipality that says “you can’t do that here” is not only violating civil rights, but will always be subject to outside forces that it cannot possibly control. In short, gun controls only expose the law-abiding to more risks, which is what the Second Amendment was designed to stop.
Imagine that. An entire dual banana post without the use of the word “goon.”
They are not goons - just sweet old ladies and loving mothers…
————————————
U.S. munis face $2 trillion in unfunded pension costs
REUTERS | Mon Jul 2, 2012 7:03pm EDT | By Joan Gralla
U.S. states and localities have more than $2 trillion of unfunded pension liabilities, Moody’s Investors Service said on Monday, citing data on plans offered by 8,500 local governments and over 14,000 individual entities.
The total liabilities for fiscal 2010 were more than three times the amount reported by local governments. “Pension liabilities are widely acknowledged to be understated,” Moody’s Managing Director Timothy Blake said. Most state fiscal years end on June 30.
The rising cost of public pensions has strained finances for cities around the country. Stockton, California, which last week became the biggest U.S. city to file for Chapter 9 protection, plans to cut employee compensation and retiree benefits by $11.2 million to help close its deficit.
Public pension benefits have become a flashpoint in elections around the country. Since 2009, at least 43 states have tried to rein in costs. But many states spread the savings out over long periods.
Cities and counties are likely to see downgrades, Blake said.
It’s been a lousy year for killings over here, that’s for sure, but 99.99% of the issues are in the neighborhoods you wouldn’t step foot in. There was a well-publicized late night mugging of a doctor in the area I work in a few weeks ago (Gold Coast area) but those things always make the news.
Interestingly, we’re still way down (as are most major cities) compared to the murder rate 10 years ago.
Chicago is not hollowing out…yet Still a lot of jobs in terms of finance given the Merc exchange, tech isn’t as big as SF but there’s a lot of jobs there as well. Health care is huge employer as well with Northwestern hospital, U of C, etc. Manufacturing has taken a hit as it has everywhere. The city actually gained a teeny bit of population over last few years and the metro area has sprawled and continued to grow.
Big issue is going to be the finances–the pensions are woefully underfunded in the city and the state and that may really affect things in next 5-10 years. Already a bit overtaxed here and I can’t see growth doing well here if the rates keep going up.
Could go on forever, but although it has its issues we’re not turning into Detroit anytime soon.
Thanks. That’s why I appreciate input from people who actually LIVE in an area, as opposed to media (and blogger) mis-statements.
heard a comedian say once that chicago was founded by a bunch of ex-new yorkers because new york just didn’t have enough traffic and it wasn’t quite cold enough for them.
I’ll never forget my first day in San Francisco after moving here from NYC: I made a typical Manhattanite parking maneuver (with my still-NY-state license plates on my car) and someone shouted at me, “Your’e not in New York, a$$hole”.
The a-hole remark gave it away that the guy must have been an ex-New Yorker.
Your’e = You’re, or maybe “yo,ya”
The gift to the UAW that keeps on giving.
I wonder what the ROI for UAW contributions to the obama administrations is - probably near 10,000%.
And yes - bankers are just as evil. And STILL not one of them is in jail.
The corruption of the obama administration is staggering.
—————————————————
Government Motors: As GM shares near record low, taxpayer loss on bailout rises to $35 billion
Investors.com | July 3,2012 | Andrew Malcolm
To quote Lando Calrissian, this deal’s getting worse all the time.
General Motors(GM) shares fell to a fresh 2012 closing low of 19.57 on Monday. The stock hit 19 in mid-December, the lowest since the auto giant came public at $33 in November 2010 following its June 2009 bankruptcy.
Normally you might say, tough luck investors. But this is Government Motors. The Treasury still owns 26.5% of GM, or 500 million shares. Taxpayers are still out $26.4 billion in direct aid. Shares would have to hit $53 for the government to break even.
Those shares were worth about $9.8 billion as of Monday. That would leave taxpayers with a loss of $16.6 billion.
But that’s not the full tally. Obama let GM keep $45 billion in past losses to offset future profits. Those are usually wiped out or slashed, along with debts, in bankruptcy. But the administration essentially gifted $45 billion in write-offs (book value $18 billion) to GM. So when GM earned a $7.6 billion profit in 2011 (more on that below), it paid no taxes.
Include that $18 billion gift, and taxpayers’ true loss climbs to nearly $35 billion.
Dude stop being such a partisan hack. Obama saved the auto industry . Get with the program, Mmmmmkay?
So what if the jobs he “saved” would have simply been created at non-union plants elsewhere in the country? So what if GM was such a piss poor company for decades that it truly did deserve to go away? So what if the jobs “saved” ended up costing tax payers $1M+ per job? So what if GM bond holders were illegally given the shaft in favor of UAW bosses who made out like bandits on the deal?
You’re just racist for even bringing this up.
“Dude stop being such a partisan hack. Obama saved the auto industry . Get with the program, Mmmmmkay?
…
You’re just racist for even bringing this up.”
Have you and tutti-fruity ever considered working together as a comedy team?
Would it help if I showed you a nice simple chart instead to explain all of this?
Comedy, dude…you are missing your calling by posting here.
Have you and tutti-fruity ever considered working together as a comedy team?
And here I sat, thinking they were!
De gustibus non est disputandum.
Slap a COEXIST sticker on it and it’s all good
Where you been, goon? Haven’t seen you post in a while…
Traveling. Telluride, Ouray, Silverton, Durango, anywhere to escape this heat…
We’re heading east to escape the fog and the San Francisco fog. We go every summer; my kids think summer is a destination, not a season.
The other night I went out with a down jacket. Fer reals.
goonsquad some my favorite places. I am in Flagstaff right now which is amother one. Ouray is so great, see any bighorn sheep?
Hey, be sure to post if you coming to DC (not that I recommend it in this heat). I am testing out my “figure out stuff for people with kids to do in DC other than the obvious” skills. Seems that voluteering a service for the fund raising auction at my niece’s new school is OK and that is the only thing I can think to do. I need practice.
My skills related to my job are off limits as I’m not allowed to do it for money, even if the money is going to a public school to pay for teachers aids so that 5 year olds aren’t dealing with a 28 to 1 teacher to student ratio.
“I am in Flagstaff right now which is amother one. Ouray is so great, see any bighorn sheep?”
Don’t forget to buy Ben a beer!
“Telluride, Ouray, Silverton, Durango,…”
Staying clear of smoke / fire? We are heading to CO next week…
“We’re heading east to escape the fog and the San Francisco fog. We go every summer; my kids think summer is a destination, not a season.”
“The other night I went out with a down jacket. Fer reals.”
That fog actually sounds good to me, it’s been pretty hot out here in the desert. I may take a road trip to your fog.
So what if the jobs he “saved” would have simply been created at non-union plants elsewhere in the country?
Funny thing about that. Airbus just made a big splash by opening it’s first assembly plant in Mobile, AL. Of course, when Boeing tried to move a plant down south, the Union sued…
Airbus didn’t have a contract with the American union.
No, Airbus has a contract on the American Union, as in United States. Or, you think it’s okay for Airbus to get government subsidies in Europe to come over and kill American jobs (by paying lousy wages with no security).
IAT
If anything, they fled to the US to get away from European Unions. And of course, they picked a nice “right to work” state, where they can pay skilled workers $14/hr.
You apparently haven’t been following anything but Union Busting News. The U.S. and Boeing have repeatedly protested the unfair practices of Airbus. Airbus is subsided by European governments, giving it unfair advantage. And you celebrate their opening a plant in the US, just a day before the 4th of July no less. Shame on you.
Read more of the news than just what makes you feel good about poor people getting the shaft.
IAT
The people of Alabama seem pretty happy about it. I say good for them.
In regards to Airbus’s unfair subsidies, so what. Maybe the US should try and protect more of it’s industries instead of allowing companies to ship jobs overseas.
As far as unions go, they are obsolete and corrupt. They deserve to die… And they are, ever so slowly.
You apparently haven’t been following anything but Union Busting News. The U.S. and Boeing have repeatedly protested the unfair practices of Airbus. Airbus is subsided by European governments, giving it unfair advantage.
Of course, Boeing has been subsidized by the U.S. taxpayer for decades through DOD spending on research and development, not to mention government contracts that essentially guarantee a profit.
OMG, NO. we should let the US be the benefit OF the foreign subsidies for a change. It’s only PUBLIC unions that deserve to die by force(law), private sector unions will die on their own if they don’t maintain symbiosis. Let airbus bring extra jobs to the US… It will just drive up wages due to a tighter labor pool…
http://content.usatoday.com/communities/driveon/post/2012/05/gm-1-billion-profit-2012-first-quarter-europe-loss/1
Updated 11:03 ET with comment, early trading.
General Motors reported a first-quarter profit of $1 billion — down from more than $1.6 billion a year ago — on strong results in North America and continuing losses in Europe.
“This management team is not getting ahead of ourselves,” CEO Dan Akerson told financial analysts today on a conference call. “We’re not immune to the industry issues like recession or overcapacity in Europe or competition that’s intensifying everywhere we do business. Every day we keep our teams focused on these cold, hard facts.”
The results were 60 cents per share (about a fourth of which are still owned by taxpayers). The profit, before being reduced by 33 cents per share in mostly Europe-related special charges, beat Wall Street analysts expectations by 8 cents per share.
GM was strong in North America, with an operating profit of $1.7 billion, up 35% from a year ago, but the skunk at the party was GM Europe, which lost $256 million and also was responsible for a special charges of nearly $600 million for a goodwill writedown and pensions. The unit’s annual loss last year was its 12th consecutive year of losses.
It will not end well. Ally financial is back to its old GMAC tricks….everybody gets a loan.
Stock price is down to a point that taxpayers will lose 35 billion. GM just needed to go through a bankruptcy without federal involvement, which saved the union more than it saved jobs.
GM link: http://news.investors.com/article/616849/201207030826/gm-bailout-taxpayer-loss-rises-as-shares-fall.htm
Too bad stock prices never rise and that GM didn’t have a record year in 2011 an this year is over.
Oh wait…
“Ally financial is back to its old GMAC tricks….everybody gets a loan.”
You got that right. People with credit scores in the 400’s can buy new cars. Subprime city.
U.K. Mortgage Lending Declines, Construction Shrinks: Economy
By Svenja O’Donnell - Jul 3, 2012 3:41 AM PT
U.K. mortgage approvals fell in May and construction shrank at the fastest rate in 2 1/2 years in June, adding to signs the housing market is slowing amid growing concern over the economic outlook.
Lenders granted 51,098 loans to buy homes, compared with 51,627 the previous month, the Bank of England said today in London. A gauge of building output based on a survey fell to 48.2 from 54.4 in May, a separate report by Markit and the Chartered Institute of Purchasing and Supply showed.
The figures add to the case for Bank of England policy makers to increase stimulus when they meet this week. An index yesterday showed factory output shrank for a second month in June, suggesting the economy remains mired in recession. Demand for homes has fallen as Europe’s debt turmoil casts a shadow over Britain’s economic prospects and banks curb credit, with Nationwide Building Society reporting last week that house prices fell 0.6 percent between May and June.
“Household lending has been depressed for quite a long time and there’s no evidence of improvement on the corporate side,” said David Tinsley, an economist at BNP Paribas SA in London and a former central bank official. Economic growth in the second quarter “could well be negative. It would be very strange if the Bank of England did nothing this week.”
…
Ex-JPMorgan Trader Feldstein Wins in Betting Against Bank
By Shannon D. Harrington, Mary Childs and Stephanie Ruhle - Jul 3, 2012 6:06 AM PT
Andrew Feldstein, who bet against JPMorgan Chase & Co. (JPM) before helping the bank unwind more than $20 billion of trades, has emerged as one of the biggest winners among hedge-fund managers profiting from a flawed strategy.
The $4.3 billion flagship fund of Feldstein’s BlueMountain Capital Management LLC returned 9.5 percent this year through June 22, according to a person familiar with the data. That’s up from the 5.4 percent return before JPMorgan announced a $2 billion loss by one of its traders known as the London Whale. BlueMountain, which was on the other side of those wagers, stands to make as much as $300 million, said market participants familiar with the trades.
Feldstein, a former JPMorgan executive who helped the company create the credit-derivatives market, profited by exploiting price distortions caused by the outsized bets and then aiding the bank in unwinding the trades as it sought to cap the loss, according to four people with knowledge of the strategy who asked not to be identified because the matter is private. BlueMountain enabled JPMorgan to unload more than $20 billion of bets on a credit-swaps index, two of the people said.
“Andrew Feldstein is one of the most creative and sophisticated investors in fixed income,” said Sarah Quinlan, founder of hedge-fund advisory firm QAM in New York and a former BlueMountain investor. “It is not surprising that JPMorgan would reach out to him to assist in the unraveling of this complicated and very public situation.”
…
Morgan Stanley Got S&P to Inflate Ratings, Investors Say
By John Lippert, Zeke Faux and Jef Feeley - Jul 2, 2012 9:00 PM PT
Morgan Stanley (MS) successfully pushed Standard & Poor’s and Moody’s Investors Service Inc. to give unwarranted investment-grade ratings in 2006 to $23 billion worth of notes backed by subprime mortgages, investors claimed in a lawsuit, citing documents unsealed in federal court.
Executives at the ratings firms failed to warn investors about the risks associated with subprime-backed notes that were issued by a unit of London-based hedge fund Cheyne Capital Management Ltd. because they wanted to reap financial rewards from doing business with Morgan Stanley, the sixth-largest U.S. bank by assets and designer of the notes, the investors allege, citing the material made public yesterday in Manhattan.
The unsealing of the internal documents from Moody’s and Standard & Poor’s came in one of the largest ratings lawsuits to emerge from the 2008 financial crisis. The lawsuit was filed in 2008 by Abu Dhabi Commercial Bank, based in the United Arab Emirates, and Washington’s King County, which includes Seattle.
The lawsuit focuses on notes issued by Cheyne Finance Plc, a so-called structured-investment vehicle that collapsed in 2007. SIVs issued short-term debt to fund purchases of higher- yielding long-term notes and failed when credit dried up amid the financial crisis, sparked by investments in mortgage-backed securities.
As Morgan Stanley bankers were designing the Cheyne notes, they asked Moody’s to use the same volatility assumptions for subprime-backed mortgage securities as for those that had prime home loans as collateral, the investors allege in yesterday’s filing. The ratings company agreed, the investors claim.
…
…and the hits just keep on coming!
The Chinese appear to be the world’s best ghost town builders.
Angola’s Chinese-built ghost town
BBCNews
http://www.bbc.co.uk/news/world-africa-18646243
The ghost towns of China, Ireland and Spain - full of large empty house estates - may be a phenomenon that is on its way to Africa.
Built for people who never move in, they leave those who did with a worthless property they cannot sell.
Perched in an isolated spot some 30km (18 miles) outside Angola’s capital, Luanda, Nova Cidade de Kilamba is a brand-new mixed residential development of 750 eight-storey apartment buildings, a dozen schools and more than 100 retail units.
Designed to house up to half a million people when complete, Kilamba has been built by the state-owned China International Trust and Investment Corporation (CITIC) in under three years at a reported cost of $3.5bn (£2.2bn).
Spanning 5,000 hectares (12,355 acres), the development is the largest of several new “satellite cities” being constructed by Chinese firms around Angola, and it is believed to be one of the largest new-build projects on the continent.
The jewel in Angola’s post-war reconstruction crown, Kilamba is the star of glossy government promotional videos which show smiling families enjoying a new style of living away from the dust and confusion of central Luanda where millions live in sprawling slums.
But the people in these films are only actors, and despite all the hype, nearly a year since the first batch of 2,800 apartments went on sale, only 220 have been sold.
“There is no middle class in Angola, just the very poor and the very rich, and so there is no-one to buy these sorts of houses.”
Govt housing central planning doesn’t work?
The devil you say!!
Remind us again who needed a $16 TRILLION bailout due to bad mortgages?
Govt housing central planning doesn’t work?
Nor does trickle-down economics, apparently.
Statis Alpha will buy a house if it makes government look good.
Most of the folks you consider leftists don’t want central planning either.
“There is no middle class in Angola, just the very poor and the very rich, and so there is no-one to buy these sorts of houses.”
And we’re not going to just give them away.
“There is no middle class in America, just the very poor and the very rich, and so there is no-one to buy these sorts of houses.”
Also true.
Also from the article:
“However, Paulo Cascao, general Manager at Delta Imobiliaria, the real estate agency handling the sales, told the BBC that the problem was not the price, but difficulty in accessing bank credit.”
Thought that would go over well here.
“Apartments at Kilamba are being advertised online costing between $120,000 and $200,000 - well out of reach of the estimated two-thirds of Angolans who live on less than $2 a day.
However, Paulo Cascao, general Manager at Delta Imobiliaria, the real estate agency handling the sales, told the BBC that the problem was not the price, but difficulty in accessing bank credit.
“The prices are correct for the quality of the apartments and for all the conditions that the city can offer,” he said.
“The sales are going slowly due to the difficulty in obtaining mortgages.”
Has anyone asked this chowderhead to explain how somebody making less than $2 per day can afford a $200k home? What an a$$hole.
Since the BRICs are decoupled (at least according to O’Neill), isn’t now the time to buy?
You’ve gotta love a Wall Street analyst who claims he can outsmart the global stock market.
BRICs Priced for Economic Meltdown
By Michael Patterson - Jul 3, 2012 1:24 AM PT
The biggest emerging markets are contributing more than ever to the global economy as their proportion of the world stock market shrinks, leaving investors with the widest valuation gap in seven years.
Brazil, Russia, India and China, known as the BRICs, will comprise 20 percent of the world economy this year after growing more than four-fold in the past decade, International Monetary Fund data show. At the same time, their combined stock-market value has dropped to a three-year low of 16 percent of the total invested in equities, according to data compiled by Bloomberg.
To Jim O’Neill, the chairman of Goldman Sachs Asset Management who coined the term BRIC in a 2001 research report, the 4 percentage point difference makes stocks in these markets irresistible. The last time the gap was this wide, in 2005, the MSCI BRIC Index (MXBRIC) jumped 53 percent in 12 months, more than double the gain in the MSCI All-Country World Index.
“Unless we are seeing a major collapse of those economies, it’s a huge opportunity for investors,” O’Neill, who helps oversee $824 billion, said in a June 28 phone interview. The BRIC stock markets may double by 2020 as their share of world gross domestic product increases to about 27 percent, he said.
…
Alot of blue chip BRIC companies are paying 3%+ in dividends.
Paying you well to wait.
I like this opportunity. Investigating the right ETFs, mutual funds and individual companies right now to dip my foot into…
“Unless we are seeing a major collapse of those economies, it’s a huge opportunity for investors,
There is the rub. We’ve already seen a big slowdown in China and India. Russia has a number of domestic issues, and I can’t speak to Brazil with any sense of confidence. I’m of the mind that there is still significant risk with BRIC investing. That next step down is a doozy…
Wow! Mom and Pop have been throwing in the towel on U.S. equity ownership since 1945 or so…
The Changing Face of U.S. Equity Ownership
July 3 (Bloomberg) — In today’s “Single Best Chart,” Bloomberg’s Scarlet Fu breaks down ownership of U.S. equities and how it has swung from households to institutions since 1945. She speaks on Bloomberg Television’s “Bloomberg Surveillance.” (Source: Bloomberg)
Did you notice the huge increase in pension fund ownership since 1945? Those pension funds invest household money.
Did you notice the 0% to 9% increase by govt? To me that’s the salient point. Why does the govt own any equities in the first place.
Did you think for a second that 90% of a very small number as was the case of equities in 1945 is smaller than 37% of a very big number as is the case in 2012? This is the same type of small minded analysis that says it’s unfair for an eeeevil billionaire to only pay 15% income tax because he doesn’t pay his fair share compared to someone who pays 20% income tax and makes $100K a year.
This is the USA Today mindset of the American population today. Simple charts for simple people.
“Simple charts for simple people.”
Thanks for enlightening us on your understanding thereof.
You’re quite welcome. Any other pretty colorful bar graphs from USA Today I can help you interpret today?
No. I wouldn’t want to disrupt you and 2banana from creating the Republican answer to Stewart and Colbert, right here on the HBB.
This is the same type of small minded analysis that says it’s unfair for an eeeevil billionaire to only pay 15% income tax because he doesn’t pay his fair share compared to someone who pays 20% income tax and makes $100K a year.
Seriously this is the point your going to stand on, the support of a regressive tax system favoring billionaires. Progressive tax system is OK up to 100k but after that we need to cut taxes on the job creators. You guys are amazing.
Other than the exemption for the wall st guys collecting income commissions for the money they invest, how is the 15% capital gains rate not an overall 50% effective tax rate when including corporate income tax??? Aren’t dividends non-deductible and therefore subject to direct corporate profit tax before they are distributed? Please help me understand this, because as a small investor I’d like to see my dividend income taxes remain low, and I’d like to see my personal *income* tax rate lowered for all income under the median.
STATE MOVES TO CURB LENDERS
California to adopt tougher regulations on foreclosures
By DON THOMPSON Associated Press
12:01 a.m., July 3, 2012
Updated 10:04 p.m. , July 2, 2012
DeAun Tollefson holds the notice of trustee sale outside her home in Sacramento. The state is expected to increase homeowner protections. associated press
SACRAMENTO
California would become the first state to write into law much of the national mortgage settlement negotiated this year with the nation’s top five banks, and expand it to all lenders, under wide-ranging legislation state lawmakers approved Monday.
Majority Democrats sent the homeowner protection package to Gov. Jerry Brown despite opposition from business and lending organizations and most Republican legislators.
The Assembly approved the legislation on a 53-25 vote, and the Senate followed by voting 25-13.
The legislation would require large lenders to provide a single point of contact for homeowners who want to discuss loan modifications. It would prohibit lenders from foreclosing while the lenders consider homeowners’ request for alternatives to foreclosure. And it would let California homeowners sue lenders to stop foreclosures or seek monetary damages if the lender violates state law.
“The bank lobby is really powerful,” said David Lagstein, the San Diego leader of grass-roots group Alliance of Californians for Community Empowerment. “This is a case of the voice of thousands of people actually paving the way to victory.”
…
A “victory” to what?
For the ability to hang out in “your” home for years without making a mortgage payment?
Or for the bankers to raise that standards of mortgages so most people will not qualify (which they need to do anyways)?
“Or for the bankers to raise that standards of mortgages so most people will not qualify (which they need to do anyways)?”
So long as the FHA, Fannie Mae and Freddie Mac are in the securitization business, why do the bankers need to tighten qualifications?
Poor Cantankerous One. Always voting Democrat, always disappointed by their actions. Didn’t Einstein once say something about insanity and doing the same things over and over while expecting different results?
I never vote straight Democrat, but go ahead and put words into my mouth, because that’s what Repugnican sock puppets do best.
You use the term Republican but you never vote straight Democrat. Uh-huh.
Stupid auto correct…. Repugnican is what I meant to type.
Careful. Your neurosis is showing.
“Repugnican is what I meant to type.”
Thanks for the spelling correction.
CIBT-
After looking this over, it appears to be primarily enacting the provisions of the mortgage settlement, but also extending them to other lenders. What am I missing?
http://www.sacbee.com/2012/07/03/4606608/california-lawmakers-approve-homeowner.html
“The legislation sent to Gov. Jerry Brown’s desk would make California the first state in the nation to put into law the key terms of an $18 billion national mortgage settlement reached with five major banks, extending them to additional lenders.”
If this is true (that the law makes smaller lenders play by the same rules as the large lenders who were part of the settlement), then the impact on the processing of foreclosures should be relatively small.
We can all hope…
More info:
California Passes New Foreclosure “Protections” - Harming Those That It Means To Help
Confounded Interest | 07/03/2012 | Anthony B. Sanders
Future of Lending
The California foreclosure laws are misguided and damaging. Essentially, would you lend money to someone in California if you knew that it is more difficult to enforce a foreclosure if the borrower defaults? Or if you knew that lawmakers will make feel-good and non-economic laws handcuffing lenders and note holders?
Of course, lenders will still make loans in California. But between the Dodd-Frank banking legislation, the San Bernardino County consideration of using eminent domain to seize mortgage loans from note holders, the new anti-lender/investor legislature, and the new Consumer Financial Protection Bureau, the result will be fewer mortgages originated and fewer “risky” mortgages to householders with less than perfect credit and down payments less than 20% (or even 30%).
The more the Federal and State governments regulate mortgage lending, the less loans will be originated and only to the wealthiest households, like Brad Pitt, Stephen Spielberg and George Clooney. Furthermore, it acts to have the opposite effect of “affordable lending” goals of the Federal and State governments. Lenders will avoid households with a greater probability of default simply to avoid foreclosure. Thus the people that are most harmed are the ones that are standing outside with signs asking not to be foreclosed upon. How soon they forget – THEY defaulted on their loan in the first place.
“Furthermore, it acts to have the opposite effect of “affordable lending” goals of the Federal and State governments.”
I thought the goal was affordable housing, not affordable lending.
There could be advantages for Romney to pick a running mate with a relatively low net worth. Not sure picking an underwater FB is the best choice, though…
Romney’s V.P. candidates among wealthiest, poorest lawmakers
July 3, 2012, 10:09 AM
Mitt Romney’s short list of vice-presidential picks includes one of the wealthiest members of Congress, and one of the poorest, according to a report published Tuesday.
Of the four GOP lawmakers that Romney is said to be considering, Sen. Rob Portman of Ohio is the wealthiest, while Sen. Marco Rubio of Florida is likely among the least wealthy, Capitol Hill newspaper Roll Call reported.
Portman — whose state President Barack Obama will campaign in later this week — had a minimum net worth of $6.72 million at the end of 2011, up $1.4 million from the previous year, Roll Call reported, citing recently filed personal financial disclosure forms.
Rubio, meanwhile, has a net worth of negative $400,000, thanks to student loans and mortgages on two properties.
The others on the list, according to Roll Call, are Rep. Paul Ryan of Wisconsin (with a minimum net worth of $1.9 million) and Sen. John Thune of South Dakota (with a minimum net worth of $57,000).
Of all the considerations that go into picking a running mate, net worth may not be chief among them. Roll Call notes that former senator and now Vice President Joe Biden in 2008 reported a net worth of negative $106,000.
…
LOL. Romney’s too rich, therefore he can’t be president. Btut Rubio’s poor, and he too cannot be president. If nothing else liberals are consistent in their inconsistencies.
BTW, what’s Obammy’s net worth? About $10-12M. But he’s a man of the people, a common man, as are all Democrats. Well except the ones worth $75M+ like John Kerry, Herb Kohl, Jay Rockeffeler, Diane Feinstein.
“If nothing else liberals are consistent in their inconsistencies.”
If nothing else, your strawman lies are consistently annoying.
What lies are these? Do you dispute the fact Obama is worth $10M+?
Can we set up an HBB amateur boxing ring and have you two go at it?
That is an article from The Wall Street Journal’s Market Watch.
Exactly how is it a liberal anything?
“Exactly how is it a liberal anything?”
My thoughts as well. Someone on the board posts an article from the WSJ, and Smithers immediately labels it as liberal inconsistency. WTF?
ICBT’s comment that “There could be advantages for Romney to pick a running mate with a relatively low net worth. Not sure picking an underwater FB is the best choice, though” does not equal “Romney’s too rich but Rubio’s too poor”.
I suggest that Smithers should step away from the computer, and go to a happy place. Fantasize about Mr. Burns, naked, singing “happy birthday” or something.
Hey, MissmouseAZ, where are you in our great state? I’m down in Tucson.
I’m in Tucson too - near 29th and 4th Ave. Been lurking around HBB for years, though.
Aren’t you loving the weather today? I can actually brag to my friends back east that it’s cooler down here!
I’m in Tucson too - near 29th and 4th Ave. Been lurking around HBB for years, though.
I’m near 4th Avenue too. Matter of fact, I’m typing this just a mile away from the Streetcar Named Desire construction/local business destruction project.
Rubio, meanwhile, has a net worth of negative $400,000, thanks to student loans and mortgages on two properties.
I will guarantee that by the time Rubio is done with senate, he’s going to be a multimillionaire.
I can gurauntee that he too will write a book and that regardless of how good or bad it is it will sell a million copies.
Sounds almost like the life story of obama…
He already did.
http://townhall.com/columnists/townhallcomstaff/2012/07/03/marco_rubios_mustread_autobiography
Why massive investor purchases of SFRs aren’t good for neighborhoods. Story:
The Great Investor Purchase of Foreclosed Properties
I can see this playing out around here. And it isn’t as if we don’t have enough problem landlords to deal with now.
Lines like this are pretty surprising…”one example in the piece shows a foreclosed borrower willing to pay $300,000 for a house than an investor took for $150,000″
Once there are fewer distressed sellers (and more sellers willing to wait for someone to get a loan), does this mean prices will end up being substantially higher than the prices at which foreclosures are trading currently?
No, it means that someone has a bag of money and a box of stupid.
Or a lender with a bag of money and a box of stupid.
I have been hearing story after story of people who want to purchase, but cannot because banks are only selling to people who have all-cash and will close quickly. Are you seeing this too?
My sole observation on this:
This is consistent with sellers who care primarily about speed and certainty, not price. Again, what am I missing?
I have been hearing story after story of people who want to purchase, but cannot because banks are only selling to people who have all-cash and will close quickly. Are you seeing this too?
Happened to us personally, twice, in the last 6 months. But it wasn’t the banks selling, both times it was a regular sale.
Weird…do you sense these folks are backfilling with debt? Or simply deciding to pay cash?
Do you sense that folks here are onto your charade and lies or are you going to keep lying until you can’t live with yourself anymore?
Once you Used House Pimps are exposed for the liars you are, will the public finally wake up to your corruption?
Flippers and investors are partying in San Francisco. Here’s a house in my nabe:
Sold in Oct. 2011 for $362K
Fixed up and listed for $899K
It needed work (more than we were able to even consider), but WTF? It has a view of the freeway.
http://www.zillow.com/homedetails/637-Peralta-Ave-San-Francisco-CA-94110/15161582_zpid/
Someone put crack in our water system.
I could build that new for 120k and make money doing it.
You should move to SF and do it then…we are in desperate need of some affordable housing here.
I could build that new for 120k and make money doing it.
What’s the land worth?
Dunno and don’t care about the land.
“Dunno and don’t care about the land.”
——–
If you ask anyone who makes money by building and selling homes, they’ll tell you that they made their money not by building cheaply, but by buying the land right.
The land price is EVERYTHING when it comes to housing…you should care.
The land price is EVERYTHING
Exactly. Disney paid over $1,000,000 per acre for the infamous “strawberry field” a few blocks away from Disneyland, (30M for 23 acres) which will be used for parking.
I just did some quick numbers. It’s gonna cost Disney about $10,000 per parking spot.
“The land price is EVERYTHING”
Rental Pimp,
You’re demonstrating your house pimp roots again.
There’s a globe full of land. And 95% goes undeveloped.
And here’s another clue for you: Nobody is “in the business of building and selling ‘homes’.” We do this thing called contracting, and we ‘construct’ whatever it is in the contract documents.
You’ll stop lying to blog readers one of these days.
Hopefully that will be around the time you stop being so snotty to the other blog posters.
I’m just saying…
“There’s a globe full of land.”
There sure is.
“And 95% goes undeveloped. \”
And for good reason. Disney could have bought 30 acres in Barstow instead of Anaheim, and for a song. Unfortunately that land wouldn’t have been very useful for them.
Disney has had its eye on the strawberry field for decades, and were finally able to buy it when the owner kicked the bucket and his heirs were more than happy to sell it.
Either you really don’t get it, or you’re putting on a show, or both.
For the benefit of those who care about how this really works:
Home values and land prices go hand in hand. If people want to live somewhere, home values are high. If home values are high, the land on which those homes are built is valuable (obvious, right?).
What a homebuilder can afford to pay for the land (as the first step to building a home to sell) is a relatively simple calculation:
Home value MINUS profit margin MINUS all costs necessary to go from land to finished product = Residual land value
Barking about how cheaply one can build the home is irrelevant without knowing:
a) What people are willing to pay for the house, and
b) Whether there is land available in the market such that,
c) The resultant profit margin is acceptable to the builder/developer.
Often times a seller of land will NOT price their land, and let the builders compete for the property. So, the builders will back into the residual land value based on their estimate of costs (hard and soft), and what they feel is an acceptable profit margin.
To my original point: Land value is everything, and you make the money on the land purchase.
A builder cannot control the market value of homes, and they can do a damn good job of controlling costs. If they get a good deal on the land, they can get a bigger profit margin…if they pay too much for the land, they lose money, or have a thin profit margin.
And once again, you’ve demonstrated you haven’t a single notion about the construction business, estimating, bidding, procurement, project closeout or substantial completion. Time and time again you’ve been ask to give an example of any project you’ve personally executed. We’re still waiting. You offer misrepresentations, falsehoods and are plain lying.
You know you’re lying to folks here. I know you’re lying yet you continue to lie. That’s cool with us. We’ll continue to expose your lies.
Who are you working for liar?
I’ve never claimed to be in construction. We invest in real estate. The projects in which we invest hire contractors. In the case where we are funding a subdivision, our partner serves as the GC.
Construction is just one part of the real estate business, and candidly in places like coastal CA, has less to do with the cost of a home than the land on which the home is built.
I’m talking about the WHOLE process, not just the construction part. You either don’t get that, or are choosing to ignore it.
It sold for $500K in bubbly 2005, how is it going to sell for $899K now?
According to SF Renter, it needed lots of work, so at best, the $500k vs. $900k is not an apples/apples comparison.
That said, all I am hearing (confirm SFRenter) is that the market has very little supply and strong demand…as such, prices are rising–bubble 2.0?
Remember, prices are not set by the average income in the area, they are set by the incomes of the people in the area who are buying. When there is little to sell, prices are set by the higher income house shoppers.
That said, all I am hearing (confirm SFRenter) is that the market has very little supply and strong demand…as such, prices are rising–bubble 2.0?
Indeedy. And it turned on a dime, literally in about 2-3 months.
In a place like SF, when a neighborhood becomes trendy, there are boatloads of folks with mega bucks ready to jump in. The Mission, where I lived when I first came here, has gone from being an inner-city barrio with a smattering of artists and lesbians to 500K studios apts. over the local tacqeria.
There is no recession in San Francisco, as far as I can tell. Restaurants are full, lots of tourists, many new buildings going up. It’s boom town.
The money flows easy here. But then again, it has since 1849.
That said, in some neighborhoods, prices are back at 2003 levels. Just not in my (now extremely trendy) ‘hood.
news.yahoo.com/blogs/power-players-abc-news/millions-being-wasted-vacant-government-buildings-101443559.html
US gov owns 14,000 vacant buildings and I don’t believe this includes GSE’s.
BJ,
I support your effort, heavy handed or otherwise, to shut down political party pimps and the pandering.
The focus should be maintained on the disastrous mess the US Govt has created and those who entities who paid off our congress with bribes.
Drug Addict Realtor Filmed Rifling Through Medicine Cabinet Of Sellers House To Steal Drugs
http://www.nbcchicago.com/news/local/Home-Securty-Cam-Catches-Realtor-Behaving-Oddly-160343195.html
To think that isn’t my cousin. (Yes, he’s a real estate agent.)
The World’s Tallest Building…
is a complete financial disaster.
————————
Dubai’s Magnificent Burj Khalifa A Complete Flop With Buyers
Business Insider | 07/03/2012 | Julie Zeveloff
The Burj Khalifa—currently the tallest building in the world and a landmark on the Dubai skyline—was lauded for its luxury apartments and deluxe amenities when it opened in 2010.
But the building has been a huge flop with investors, and real estate prices there have plummeted from highs of $2,450 per-square-foot to around $721 per-square foot, the Wall Street Journal’s Tahani Karrar-Lewsley reports today.
Investors called the building “distressed” back in February, bringing to mind other super-ambitious real estate projects that have failed in the emirate in recent years.
The Burj, which has 903 residential apartments, opened at a tough time, as other luxury high-rises were launching in Dubai and as the global economy went into a tailspin. The building’s heavy security, long elevator trips and high service fees have also been a turn-off for prospective buyers, Karrar-Lewsley writes.
Even so, the developer told the Journal that the building is more than 80 percent occupied. And an investment-sales consultant interviewed by the Journal said he was confident that prices at the Burj would eventually climb, “but no one can say when.”
“The World’s Tallest Building…”
Not for long.
‘Highest’ building defies China bubble
By Brendan O’Reilly
China’s Broad Sustainable Building (BSB), a construction company based in Changsha, provincial capital of Hunan, has announced its intention to construct the world’s tallest man-made structure. The company’s proposed 220-story “Sky City One” in Changsha would be 828 meters high - ten meters taller than Dubai’s Burj Khalifa. What is more, BSB claims the entire structure could be assembled in 90 days - between November 2012 and January 2013.
Sky City One exemplifies both the positive and the negative aspects of China’s current economic situation. China’s economy relies on an impressive ability to construct massive projects quickly, and with relatively low costs. On the other hand, the singular obsession with construction and real estate reveals the weak side of China’s economic engine, especially as the housing market continues to show signs of a slowdown.
BSB claims that the actual construction of Sky City One may take only three months. This is not necessarily an overenthusiastic boast. BSB has already built a 30-story hotel in 15 days. The key to BSB’s ability to construct buildings at such impressive speed is the use of prefabricated materials. According to a company spokesperson, 95% of Sky City One will be manufactured offsite before ground is broken at Sky City’s location. [1]
Not only is Sky City One scheduled to be built at breakneck speed; it is also going to be built on a low budget. The estimated cost of the world’s newest tallest building, with 1.61 million square meters in total floor space, is only $628 million - less than half of the Burj Khalifa’s US$1.5 billion price tag.
…
What is more, BSB claims the entire structure could be assembled in 90 days -
Anyone else wondering whether there might be some safety issues with this approach?
Soon to be followed by London Olympics infrastructure and Brazil’s World Cup and Olympics infrastructures.
“…$2,450 per-square-foot to around $721 per-square foot…)
70% loss anyone?
People have forgotten WHY you build skyscrapers: To reduce the cost per square foot. Building one to INCREASE the cost psf, is economically demented.
The future of America as we go down this socialist yellow brick road…
——————-
Greek labor institute warns of 30% jobless and lack of unemployment benefits
ekathimerini.com | Tuesday Jul 3, 2012
By next month, only 165,000 of more than 1 million jobless Greeks will receive unemployment benefits, according to the labor institute of the country’s two largest unions, ADEDY and GSEE.
Speaking on Skai TV on Tuesday morning, the institutes research adviser Giorgos Romanias said that the one-year unemployment benefit will expire next month for thousands more workers who have lost their jobs, leaving just 165,000 people still eligible for benefits.
Romanias also predicted that the actual number of unemployed Greeks, including the long-term jobless, will reach 1.6 million, or close to 30 percent by the end of the year, rather than the 1.48 million originally forecast by the labor institute.
Answer of course is higher taxes on the eeeeevil rich Greeks. That’ll solve all their problems.
Yawn… another series of comments about something completely unrelated to housing, with extra partisans eeeeevil thrown in.
You guys need new material.
Don’t stop them! They’re on a roll! They are truly destined to be the next neocon comedy team! I know that’s an oxymoron, but was it over when the Germans bombed Pearl Harbor?!!
Neoconedy — has a nice ring to it, no?
Apparently, Californians were aware as early as 1978 that real estate doesn’t always go up.
Those Californians whose homes have lost value should rest assured that your state government has determined that “decline in value is typically temporary and may be the result of changes in the real estate market, the neighborhood, or the property itself.” Soon enough your homes will again be worth what they would have sold for at the bubble peak in 2005.
What is Proposition 8?
In 1978, California voters passed Proposition 8, a constitutional amendment to Article XIII A that allows a temporary reduction in assessed value when real property suffers a decline in value. A decline in value occurs when the current market value of real property is less than the current assessed (taxable) factored base year value as of the lien date, January 1. Proposition 8 is codified by section 51(a)(2) of the Revenue and Taxation Code.
Real property may decline in market value from one lien date to the next lien date; however, it will not benefit from a lower assessment unless its market value falls below the current factored base year value. For example, if you purchase your property during a time when the real estate market falls dramatically, such as during the years 2005 through 2008, or if your property is substantially damaged due to a storm or fire that causes a reduction in your property’s value, it is likely that your property will benefit from a Proposition 8 reassessment. The decline in value is typically temporary and may be the result of changes in the real estate market, the neighborhood, or the property itself.
How does the proposition work?
When the market value of a property on the January 1 lien date falls below the factored base year value (assessed value), the assessor is obligated to review the property and enroll the lesser of the factored base year value or market value. The factored base year value of real property is the market value as established in 1975 or as established when the property last changed ownership or when the property was newly constructed.
A property that has been reassessed under Proposition 8 is then reviewed annually to determine its lien date value. The assessed value of a property with a Proposition 8 value in place may increase each lien date (January 1) by more than the standard two percent maximum allowed for properties assessed under Proposition 13; however, unless there is a change in ownership or new construction, a property’s assessed value can never increase above its factored Proposition 13 base year value after adjusting for the annual increase.
Example: A property previously assessed at $500,000 received a Proposition 8 reduction in value to $450,000 as of the lien date. By the next lien date, the property’s market value had increased five percent, or $22,500, and, thus, the assessor enrolled a value of $472,500 for that year. Because the current market value is less than its current factored base year value of $510,000 ($500,000 + 2% annual increase), increasing the assessed value by five percent is legal since the two percent limitation of Proposition 13 applies only to increases in the base year value. Here, since the current market value continues to be less than the factored base year value, an increase beyond the two percent limitation is appropriate. As the year progresses, property values rebound dramatically and the market value of the property is now $525,000. Because the current factored base year value for this year is $520,200 ($510,000 + 2%), which is lower than the current market value, the adjusted factored base year value would be reinstated and enrolled, and the annual increase will again be limited to two percent.
…
CA’s Prop 8 means that our landlady pays $750 year in property taxes on a paid off house (while collecting 35K a year in rent) while our neighbor with an identical house pays $7K a year.
And my daughter’s classes have 34 kids in them.
Watch this when you have time: http://www.youtube.com/watch?v=oTtAdJi1AjQ
Excellent documentary about CA public schools and Prop 8
And my daughter’s classes have 34 kids in them.
So who do you want to screw for the money? Is it the school system that should get short-changed so seniors can continue to own and pay low property taxes? Is it the senior who should get short-changed by having to pay much higher property taxes so schools can hire more teachers?
I asked this yesterday regarding MBTA fair increases: The money has to come from somewhere… who get’s screwed.
My idea is quite simple actually. Prop 13 should only apply to primary residences.
End of story.
If you live out of state (and thus don’t pay state income taxes), but have a second home in CA? Not a primary residence…your taxes rise with property value.
If you live in state, but have a second home? Your primary residence has capped increase on property taxes, but your second home’s property taxes go up with property value.
If you own commercial property? Taxes go up with property values (just like most other states in the US).
I’d certainly prefer that to further taxation via sales or income tax increases, which are either regressive, or tax labor.
How about everyone’s taxes remain low and we do this crazy thing called cut spending? I know, I know, that’s right wing loon talk. The idea that a cop doesn’t get a $150K a year pension or that a teacher has to pay for her own health benefits…never mind.
This is always the debate…which taxes do we increase? The debate is never, why do we need so much tax revenue to begin with?
Once upon a time taxes were low in CA and in the rest of the country. And education was just fine. And police patrolled the streets. And firefighters put out fires. And water was safe to drink. And every other scare tactic the left uses to justify higher taxes didn’t happen.
At about that same time the population was half of what it is now.
Typical neocon, always wants something for nothing while blaming the victims.
Ok - now let us talk about the elephant in the room
————————-
The CTA’s most important resource, however, isn’t a pool of workers ready to strike; it’s a fat bank account fed by mandatory dues that can run to more than $1,000 per member. In 2009, the union’s income was more than $186 million, all of it tax exempt.
All this money has helped the union rack up an imposing number of victories. The first major win came in 1988, with the passage of Proposition 98. That initiative required California to spend more than 40% of its annual budget on education in grades K-12 and community college. The spending quota eliminated schools’ incentive to get value out of every dollar: Because funding was locked in — unless state revenues dipped — there was no need to make things run cost-effectively. Thanks to union influence on local school boards, much of the extra money — about $450 million a year — went straight into teachers’ salaries.
Meanwhile, California’s teachers are the most highly paid in the nation, with an average annual salary of $68,000. That’s for an average annual workload of 180 days, only two-thirds the average total of days worked in the private sector. And don’t forget retirement benefits: After 30 years, a California teacher may retire with a pension equal to about 75% of his working salary. California teacher pensions average more than $51,000 a year — more than working teachers earn in more than half the states in the nation.
http://www.latimes.com/news/opinion/commentary/la-oe-senik-california-teachers-association-20120518,0,1296451.story
Have you ever tried to live in California on 68K. It’s not pretty.
IAT
2banana, you should also move to Florida — you can hang out with all of the people here that are obsessed with taking apart society, instead of building it up.
They’re cool people, just a little scary.
…just a little scary.
The way it is supposed to work is older people living on fixed incomes sell (cash-in) and move away, leaving younger people who are working and can afford the higher taxes. Taxes for new purchasers are outrageously high because lots of people are paying virtually nothing.
Prop 13 was poorly-written, so in court it was applied to commercial properties, too. It now allows 2 companies who own two separate identical properties to pay vastly different taxes just because the McDonald’s opened in 1978 and the Burger King opened in 2008.
Prop 13 now means that if someone dies and bequeaths a property to someone else, the new owner pays the same property taxes as the former one. So, basically, if you did not live in the state in 1978 or have a relative who did, you are screwed.
Prop 13 is bad economics and bad social policy. And, it is the ultimate in boomer selfishness.
IAT
So who do you want to screw for the money?
We will all be screwed when more than half the population is functionally illiterate, doesn’t vote, or ends up in jail.
Oh wait, that’s sort of already happening. Never mind, forget about it, WE DON’T NEED NO EDUCATION.
WE DON’T NEED NO THOUGHT CONTROL.
Sorry, I thought you were looking for the next line.
Hey! No dark sarcasm in the classroom.
IAT
NO DARK SARCASM IN THE CLASSROOM
TEACHERS LEAVE THE KIDS ALONE
As a parent, the whole thing makes by blood boil and skin crawl, but apparently when Sandusky was in prison last, the prisoners were signing “Hey Teacher! Leave those kids alone!” to him all night…
…and I write this as I just finished listening to Meddle…one of the most under-appreciated albums of all time…
I’m no parent, but I feel the same. As a human being, the whole Sandusky thing makes my skin crawl. I’m against capital punishment and torture. People like Sandusky really make me struggle with my own views. I guess if there were no heinous crimes, it’d be easy. That realization is no help, though.
And those who enabled it. Just totally disgusting shells of humanity. They should be in the prison cell with him.
IAT
My friend recounted a tweet that I think sums it up (and I’m paraphrasing): “When are they going to announce the sentence for the guy who kills Sandusky in jail?” I don’t think he’ll last very long in prison.
Regardless of whether you feel it appropriate to kill someone where guilt is 100% certain, the problem with capital punishment as an institution is not with the Sandusky’s of the world, it’s that:
1. The poor have little access to quality legal assistance;
2. “Success” for DAs is getting conviction;
3. DAs inherently will have more access to information than the defense; AND
4. You can’t unkill someone.
1-3 sets up a system that is ripe for bad actors at the expense of poor defendants. When the bad actors are found out, it’s too late.
Oh, and capital punishment isn’t a deterrent…no one commits a pre-meditated capital crime without thinking they’re going to get away with it…
Is that a Prop 8 problem? Or Prop 13?
$7k for property taxes? What’s the appraisal? 600k?
7k for property taxes? What’s the appraisal? 600k?
Property taxes = 1.25% cost of house
A longtime friend and mentor is calling out the slumlords in her neighborhood. More than a few of them are of the out-of-state in-VEST-or variety. Here’s her blog post, with slumlord names and addresses included.
are these really “slumlords” or just more hapless FB’s?
We think they’re those people who buy houses to rent out, and the houses are supposed to appreciated to the sky while being cash-flow positive.
are these really “slumlords” or just more hapless FB’s?
Doesn’t matter, either way. If you’re the renter or even just the neighbor, a slumlord is a slumlord.
Although I want to start calling out the banks who are acting as landlords…
Another offer-one of many today.
We want the home, but will not pay extortion.
We bid over list “bottom up” list price, but we already have a cap in our heads. If we don’t get it,
oh well. It needs cosmetics, and that “ain’t” cheap, even w/ diy.
We want the home, but will not pay extortion.
My question of the month:
Have the PTB successfully inflated the bubble, or is this just another Spring bump? Inquiring minds want to know.
I think the answer to your question lies somewhere in the answer to this question:
What is likely to cause supply to increase or demand to decrease in the market?
If the answer is “plenty of stuff in both cases”, then I think the madness is temporary.
If the answer is “not much in either case”, then I think reflation has begun (and will only avoid the prior epic madness if lenders actually underwrite borrowers like the lender’s very existence depended on the borrower making payments).
You liars make for some good comedy.
“Have the PTB successfully inflated the bubble, or is this just another Spring bump? Inquiring minds want to know.”
It’s a bump, housing is fuked long term. Just my opinion.
“one of many” as in multiple offers on one property.
We’re cash and our broker said all FHA’s and 10%-20% will be shredded. The rest will be reviewed.
“10%-20% will be shredded”
Sure sign of lack of supply.
I’ve frequently heard on this board that fair prices means that people in a market don’t need “funny money” loans to buy a house. Question…is the prevalence of cash buyers a sign of:
1. Fair prices;
2. Panic;
3. Easy money from the Fed (no one cares to keep cash at 0%);
4. Distain for debt;
5. Frustration in waiting; or
6. Speculation by institutions?
For you Awaiting, I’m sure it’s a combination of 3, 4 and perhaps 5…how are prices relative to the real rent on the homes? 100-120x of monthly rent? Or higher?
“We’re cash and our broker said all FHA’s and 10%-20% will be shredded.”
What a mess.
Rental Watch
We have 5 rents going, a decrease in income,and Glaucoma going on. We need to get settled again, and reduced our overhead. We are bleeding money bigtime.
And yeah, we made $3.69 interest on our house dough last month. It would be $30K annually in a real cost of money free market.
Rock meet hard place.
In 2002 the neighborhood we made the offer in had sales at $275K. What we offered to play ball (posssibly) makes us want to puke.
I think housing isn’t in a seasonal micro bubble, I think this is an effect of the lack of inventory. The bastardos won, imho.
Give it time. This NAR driven, media hype will be over before you know it.
Word.
I think housing isn’t in a seasonal micro bubble, I think this is an effect of the lack of inventory. The bastardos won, imho.”
seems like it, suprising how it turned so fast. We’ll know by this time next year if this was the bottom or just a bounce
Good luck with your offer it should get slow about now ?
ft dot com
Last updated: July 3, 2012 6:48 pm
JPMorgan in US power market probe
By Gregory Meyer in New York
JP Morgan Chase
The US electricity regulator has subpoenaed JPMorgan Chase twice in the past three months as it investigates whether the bank manipulated power markets in California and the Midwest region, court filings showed.
The Federal Energy Regulatory Commission revealed the probe in court papers filed on Monday that said the bank’s bidding practices may have inflated electricity costs by at least $73m.
Wholesale electricity has attracted heightened regulatory attention since the California energy crisis of 2000-01, when Enron and other traders were accused of rigging supplies and causing blackouts.
FERC has in the past year alleged Barclays and Deutsche Bank manipulated electricity markets and has compelled Constellation Energy to pay $245m to settle another case. Barclays and Deutsche declined to comment.
The disclosure comes as JPMorgan is already under intense scrutiny by authorities since its shock disclosure in May of more than $2bn in trading losses related to credit derivatives positions.
The electricity investigation involves whether JPMorgan’s bidding strategies extracted “inflated” or “excessive” payments from two wholesale power markets serving California and several Midwest states. The bank’s commodities business owns or has rights to output from several electric generators.
“Any such improper payments to generators are ultimately borne by the households, businesses and government entities that are the end consumers of electricity,” FERC attorney Thomas Olson wrote in papers filed on Monday in a US federal court. FERC declined to comment further.
JPMorgan mentioned the investigation in its latest quarterly financial report but provided few details. In a statement JPMorgan said that as noted in the report, “we have been responding to an FERC investigation into certain activities in our federally approved power business”.
“We believe we have complied in all respects with the law, as well as FERC rules and applicable tariffs, governing this market.”
The bank added: “We stress that this investigation is ongoing and that no conclusions have been reached or findings adjudicated. “
…
ft dot com
April 12, 2012 1:47 am
Barclays probed over California electricity
By Tom Braithwaite and Kara Scannell in New York
Barclays and four former traders are being investigated for allegedly manipulating Californian electricity markets, according to US regulators.
The bank is alleged to have bought and sold electricity in enough volume to move exchange prices up or down to benefit parallel swap positions, the Federal Energy Regulatory Commission said in a notice published last week.
Ferc, which last month agreed a $245m settlement with Constellation Energy for alleged manipulation of power markets, is seen as taking a more forceful approach to possible trading violations.
Lawyers at Winston & Strawn said in a blog that the notices “indicate that the agency is taking a more aggressive position on activities that some would view as ordinary hedging”.
They said Ferc’s enforcement attorneys were “examining the interplay between physical energy trades and futures markets in search of uneconomic trades in one market that may be designed to boost profits in the other market” and “demonstrate the commission’s expanded view of its jurisdiction, as the commission has traditionally been limited to jurisdiction over physical sales rather than financial swaps”.
The allegations, which are denied by Barclays, date back to 2006-08.
Ferc said that “Barclays assembled substantial physical positions in the opposite direction of Barclays’ fixed-for-floating financial swap positions and that Barclays flattened those physical positions in the next-day fixed-price physical markets to move the ICE daily index settlement up if buying and down if selling”.
…
July 3, 2012, 4:59 p.m. ET
2nd UPDATE:IMF Cuts U.S. Growth Outlook,Warns of Potential Recession
–IMF says the euro crisis and a weak housing market weighing on a tepid U.S. economic recovery
–The U.S. risks a recession next year without a deficit-reduction deal by lawmakers, the fund warns
–Deficit cutting should be measured at around 1% of GDP next year to avoid crimping growth, the IMF says
(Adds IMF comment and background throughout, starting in the first paragraph)
By Ian Talley
WASHINGTON–The International Monetary Fund pared its forecast for U.S. economic growth this year, citing concerns about the euro-zone debt crisis, the ailing U.S. housing market and uncertainty over the government’s budget policies.
The fund also warned the U.S. economy could fall into recession next year and hurt the global economy if the White House and Congress don’t reach a deal to prevent large spending cuts and tax increases scheduled to take effect in the new year, a package of measures known to some as the “fiscal cliff.”
The IMF statements, included in its annual report on the U.S. economy, echoed similar warnings about the fiscal cliff from the nonpartisan Congressional Budget Office in May.
The IMF also noted the federal government is on track to hit its $16.4 trillion borrowing limit late this year. Without legislative action to raise this debt ceiling, the government would default on some of its financial obligations, though the Treasury Department has said it could employ extraordinary cash-management measures to postpone that until early 2013.
IMF Managing Director Christine Lagarde said merely the threat of the fiscal cliff and of delay in raising the debt ceiling could weaken U.S. economic growth later this year. If the threats were to “materialize because no agreements are reached, the domestic effects would be severe with negative spillovers to the rest of the world,” she said.
The IMF forecasts the U.S. economy to grow 2% this year and 2.3% next year, lowering both projections by 0.1 percentage point from its previous forecast in April. Many other government and private forecasters have lowered their projections as well in recent weeks, following a slew of disappointing data on job growth, manufacturing activity and consumer confidence. The IMF estimates assume some action by Congress, including a temporary extension of several tax breaks set to expire at the end of the year and some cuts in government spending.
The IMF report comes as election-year political gridlock appears likely to block any agreement before the November elections to raise the debt ceiling or prevent the fiscal cliff measures from taking effect.
Still, Ms. Lagarde called for a “sensible,” and “not excessive,” mix of revenue and spending policies that would cut the federal deficit next year by an amount roughly equivalent to one percentage point of U.S. gross domestic product, the value of the economy’s total output of goods and services in one year. Such deficit reduction wouldn’t crimp growth further, she said.
The U.S. Treasury declined to comment on the IMF’s assessment. Fund economists said medium-term deficit-reduction plans should include both raising taxes and curbing the growth of entitlement spending.
…
Big Banks’ ‘Living Wills’ Promise Bankruptcy Instead of Bailouts
By Jesse Hamilton on July 03, 2012
U.S. regulators, seeking to prevent a repeat of taxpayer-funded bailouts of the financial system, released summaries of plans for breaking up nine of the world’s largest banks in the event of an emergency.
The Federal Deposit Insurance Corp. and Federal Reserve posted the public portions of so-called living wills on websites today as required by the 2010 Dodd-Frank Act. The documents outline more detailed proposals submitted privately describing how regulators could dismantle the companies if they fail.
The banks required to file were JPMorgan Chase & Co. (JPM) (JPM), Bank of America Corp. (BAC) (BAC), Citigroup Inc. (C) (C), Goldman Sachs Group Inc. (GS) (GS), Morgan Stanley, Barclays PLC (BCS) (BCS), Deutsche Bank AG (DB) (DB), Credit Suisse Group AG (CS) (CS) and UBS AG. (UBSN)
The aim of the living wills is to give regulators a plan for shutting down complex financial firms without taxpayer bailouts or the turmoil that followed the 2008 collapse of Lehman Brothers Holdings Inc.
Banks with more than $250 billion in nonbank assets were the first of an eventual 125 firms required to produce liquidation plans, which are expected to run into thousands of pages. Nonbank companies declared by U.S. regulators to be systemically important will also have to submit living wills.
…