The Housing Bubble

Judging from the Zestimate and what my inlaws paid for a close comp a few years ago (over $200K less than current list price), these folks may have to reduce their price a few more times before selling.

“But our views are _worth_ $200K!”

How can an outsider to the global central banking cartel tell whether closely-timed policy actions are coordinated or not?

Three Central Banks Act to Stimulate More Borrowing
By BINYAMIN APPELBAUM
Published: July 5, 2012

WASHINGTON — Concerned about waning economic growth, central banks in Europe and China announced measures Thursday to increase borrowing and spending by businesses and consumers, a response that was all the more striking because it was uncoordinated.

Three major central banks announced policy changes in the space of an hour. China’s central bank unexpectedly cut regulated bank lending rates for the second time in four weeks. The European Central Bank cut its benchmark interest rate to 0.75 percent, the lowest level in its 14-year history. And the Bank of England announced it would expand its holdings of government bonds by about 15 percent.

The Federal Reserve announced two weeks ago that it would extend its own bond-buying program until the end of the year.

The actions once again cast central bankers in the role of primary responders to the global economic malaise, aiming at the same basic goal that they have tried to hit repeatedly over the last six years: encouraging people and businesses to borrow and spend and take greater risks with their investments.

But Europe is mired in an economic recession and a political crisis. The United States is faring somewhat better in both respects, but hardly booming. China is suffering what its government has begun to describe as a sharp economic slowdown. And policy makers have not yet succeeded in restoring public confidence that better days are coming.

The latest round of modest measures — a nibble at interest rates, a few forkfuls of bonds — are unlikely to change that record, instead stoking the debate between those demanding stronger action and those convinced that central banks have done all they should.

Reaction to the new measures was subdued. Analysts used phrases like “helpful at the margins” and “it doesn’t hurt.” European stock markets rose in an initial burst of pleasure, then receded. American stock indexes fell early, then recovered their losses.

“These are not big steps; I would not expect them to have a huge effect, but I think they move in the right direction,” said Donald Kohn, a senior fellow at the Brookings Institution who served as the Fed’s vice chairman from 2006 to 2010. “I think it’s certainly the case that monetary policy can’t cure all the world’s ills, but I think it can do some good, and the central banks of the world are doing what they can.”
…

I don’t think we have many professional economists on the blog.

Does central bank intervention still work at this point in the cycle?

I’m sure we’ll find out.

What are the implications for investors of a downgrade to the global economic outlook?

WORLD NEWS
July 6, 2012, 7:01 a.m. ET

IMF to Cut Global Growth Forecasts
By ELEANOR WARNOCK

TOKYO—International Monetary Fund head Christine Lagarde said Friday that the IMF will cut its global growth forecasts in the next month, adding that a weaker global economy will bring more trouble for Japan in the form of a stronger yen.

The world economic outlook will be “tilted to the downside,” Ms. Lagarde said at a news conference in Tokyo. “Tilted means there’s not an enormous variation, but it’s a negative variation,” she said, without providing any figures or details of which regions would be affected.

IMF Managing Director Christine Lagarde addresses a forum ahead the 2012 annual meetings of the IMF and World Bank Group in Tokyo on Friday. Ms. Lagarde said the IMF will downgrade its outlook of the world economy.

The IMF’s world economic outlook is revised quarterly. In the latest update in April, the fund predicted global growth of 3.5% in 2012, revised upwards from a 3.3% forecast in January, and forecast 4.1% growth in 2013, up from 3.9%. The updated report will be released July 16.

The fund leader expressed concern about the outlook for the global economy as the euro-zone debt crisis rumbles on, and urged more concerted action on the part of U.S. and European leaders.

Fears that the global slowdown may be worsening prompted policy responses from central banks on Thursday, as the ECB cut its key interest rate to a historical low of 0.75% and the People’s Bank of China cut a one-year yuan lending rate to 6%. The Bank of England also decided to increase the size of its bond-buying program.

Ms. Lagarde said she didn’t know if the moves were coordinated, but said the global action shows that “central banks are facing similar issues.”
…

“Whatever became of those green shoots?”

I think there is still a big push to make them legal.

good one!

Anybody seen CarrieAnn lately, and her archnemesis Big V?
And mikeinbend, he who thought that blowing money on a masters in education would get him a stable teaching job.

Formerly frequent poster “wmbz” has been AWOL for almost a year.

Who was the poster who disappeared right when that bridge collapsed in Minnesota I think it was?

Let’s be sure to remember the late, great Olympiagal.

Kayak (with your tiara) in peace, Oly.

This fall, pay off all your debt and Sigourney Weaver.

Here’s hoping the US can avoid the Eurozone melt down, some how, someway.

what actress is destined to play the role of this most amazing national leader in a future movie about her time as chancellor of Germany?

Gerard Depardieu?

“What is good debt anyway?”

1. Funds an investment with lasting value (e.g. a college education or law degree).

2. The investment which was funded generates an income stream which is sufficient to repay the debt.

3. The loan is underwritten to contain the risk the investment will fail and the debt will not be repaid.

“What is good debt anyway?”

Good debt is what you don`t pay back and get $18 million for because the people you borrowed the money from can`t prove who owns the loan.

Whistleblowers win $46.5 million in foreclosure settlement

By James O’Toole @CNNMoney July 2, 2012: 8:33 AM ET

NEW YORK (CNNMoney) — Getting served with foreclosure papers made Lynn Szymoniak rich.

While she couldn’t have known it at the time, that day in 2008 led to her uncovering widespread fraud on the part of some of the country’s biggest banks, and ultimately taking home $18 million as a result of her lawsuits against them.

“I recognize that mine’s a very, very happy ending,” she said. “I know there are plenty of people who have tried as hard as I have and won’t see these kinds of results.”

Szymoniak’s case was only partially resolved by the foreclosure settlement, and she could be in line for an even larger payout when all is said and done.

Speaking of debt, I wonder if our benevolent Federal Government will drop the hammer on new FHA borrowers by adding in a no BK type of rule where the borrower can never escape the debt even if they walk from the house? Kind of like an FHA version of the Federal Student Loan rule, you will be looking over your shoulder the rest of you life. Like others have said, no dollar shall be allowed to escape.

I think a lot of the empty dentists offices had to do with people cutting back on cosmetic stuff. I’m sure there were also people who skipped their regular appointments, but the dentists had been going nuts with high cost/charge it/purely voluntary whitening and veneers and stuff like that.

I switched dentists from a man with his office across the street from the World Bank who had lots and lots of capital intensive toys to a woman with rather dingy offices and more restrained recommendations. He wanted to charge me $700 for two tiny fillings. I kept putting it off. I went to see her 6 months later and she couldn’t find any cavities to fill.

Some health care is discretionary. When money is tight, people postpone checkups, screenings, blood tests and only go to the doctor when they are acutely sick. Detecting cancers early is lifesaving, but if you can’t afford cancer treatment, what good does it do you to know that you have it? So people go to the emergency room when they fear death more than the bill.

Family history plays into it, too. If you know that your family has a history of skin cancer, you are more attuned to the need for screening.

If they are unemployed or uninsured, people also want to avoid a diagnosis that will become a pre-existing condition. This may change as that piece of healthcare reform gets implemented.

Dental insurance is expensive, so many people don’t have it. Those who pay for their own would definitely cut back in tough times.

Healthcare is consumed and in many cases acts like other consumables. The main point here is that if you tend not to see the full cost of healthcare, you will tend to overconsume it.

It’s like eating at an all you can eat bar for a small fixed price seen by the consumer, with the rest picked up by a third party, and the person serving the food makes more money the more you eat. No one will claim that you shouldn’t eat (it is a necessity), but the way the system is set up, there is bound to be waste and overconsumption.

No one will claim that an appendectomy is distrectionary (you get the surgery, or you likely die). However, many other things are not necessary, but driven by the system.

One anecdote for you:

My wife was pregnant with our first child. We went in for our first ultrasound, and the technician measured the distance between two heartbeats on the screen. The human measured result? Seemed like one of the heartbeats was at the low end of being rapid. It was the active time for the fetus, so my wife thought nothing of it.

Test #1. Attach a low-tech heart monitor to machine measure the fetal heartrate. For 20-30 minutes, the fetus’s heartrate was measured. No rapid heartrate detected.

At this point, we had a single rapid heartbeat measured by human unable to be replicated by machine that measured for 20-30 minutes.

At this point, the doctor said that there was one other test that we could do, but it was expensive…new machine bought by the hospital. He went to see if our insurance covered the test…GOOD NEWS, the test was covered by insurance. So he suggested that we do the test…neonatal EKG. Approximately $1,000, all covered by insurance.

Painful for my wife, and according to our OB after the fact, completely unnecessary based on the results of test #1, but since we paid $0 of the $1,000, and we didn’t know better (and were first time parents, and they could do the test then and there), we went along with the recommendation by the doctor.

The more we would have needed to pay as a co-pay, the more likely we would have consulted our OB. $10? Still go for it. $100? Maybe go for it. $250? Definitely ask a second doctor.

One of my former professors at school was a former head of the FDA–the class was the economics of health and medical care. The one line that I remember from the whole class is the following:

“One tends to overconsume things that they don’t pay for”

We would on average be heavier if food were subsidized, and the price of food would higher than it would be otherwise.

Lender Appraisers are told to inflate or get fired ??

By whom ?? Because, the law is pretty clear now…Any interface with the appraiser is not allowed…Loss of license…Jail time both possible…

Price ranges on a single house are absurd. The seller will never want to take less than the high end of the range and no sane buyer would want to pay more than the low end, if that much.

People do the same thing on Craigs List - put in a range of prices they will consider. Why do they even bother putting in the high end of the range? Maybe some people are psychologically influence into thinking it might be worth more if there is a higher number there, but do really trust someone that stupid to be able to find the place where you will meet to exchange the item for money?

Rich, it’s spelled “team player.”

“with experience working in a high volume manufacturing environment”

Which are all in Asia, so only an Asian engineer would have this experience.

I work with this slightly younger first generation Vietnamese-American engineer, very sharp, also he knows subtle ways of covering for his mistakes to keep himself looking sharp. Anyhow he lives in Thousand Oaks. Very traditional. In fact, he’s a conservative Republican. Listens to KFI-Talk radio. Cannot speak English very well. Has five kids. Kept at it until he got a son in his late 40s. Commutes 60 miles each way. His cousins all work for the firm. His brother in law manipulated his way into a high position he is not qualified for. But that same BIL likes my work and keeps me coming back to L.A. for contracts. I should not be complaining.

He has been asking me for years if I got a girlfriend yet. He teases me about getting a wife and that I will be lonely without kids. Lately he has been fretting that smart people are not having kids and dumb people are. He even brought up “Idiocracy.”

Why do we have to have kids? I did not have the money or time for them when I was young anyway. Too low an income.

Light saute (10 minutes max) in olive oil with minced ginger, garlic and salt. Turmeric is optional.