Weekend Topic Suggestions
Please post topic ideas here!
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
April 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Now that the blowhard conventions are over, how about a thread on how ugly the next 60 days are going to be?
Maybe we could have a thread on electoral college math and geography. Maps and graphs are always fun.
….is the this the “Political Bubble Blog”????
Often times, yes.
Since we live in a crony capitalism economic system, economics is politics, and the housing bubble is just one of the most obvious manifestations of this.
The PTB created the housing bubble so that the little people would have an asset to borrow against, so that they could borrow money into existence, so the PTB could accumulate that newly borrowed into existence money.
How about we revisit “Inventory”. I know we hash that one out from time to time, but in Sacramento, the inventory is drying up faster than a farm pond in Colorado.
I just looked up the inventory in the markets I tracked and was quite stunned to see available properties drop 35% from last MONTH!
Overall, total available properties is 1/3 of what I typically saw in 2008-9-10. Very curious.
Some people see a conspiracy of government directed accumulations of housing inventory, squeezing down available houses for sale. (Political Bubble Blog….have at it)
Here in Sacramento, I can tell you that is not the case. We have no oversupply of housing. In fact we never HAD AN OVERSUPPLY OF HOUSING….just and oversupply of STUPID FINANCING!
It will be very interesting to see what the spring selling season brings in 2013. Any predictions?
I would like to see “local market” perspective as a topic again…In the past occasionally, in a weekend topic we use to do this…I have not seen it for a long time….As I recall, people use to post by zip codes…
What I see is a bunch of real estate flippers snapping up all-cash deals in another round of get-rich-quick-by-flip investments. This will end badly for the hapless end-users who used federally-guaranteed loans to complete with the flippers. And it will end badly for the U.S. taxpayer.
Next.
An oversupply of stupid financing is an increase in demand. Demand is not the same thing as desire. Demand is desire plus money (either cash or borrowed).
An oversupply of stupid financing is an increase in fly-by-night demand.
stupid financing ??
= Cheep financing….
Starwood Capital CEO interview a few days ago…20-bil in real estate assets….Under construction on a large multi-family project…Construction loan…2.5% interest rate…Thats right folks…Every 1-mil borrowed carries a payment of a grand total of $2,000. per month…
They just closed a transaction on a large Hotel…60% financed…Interest rate….4% fixed….
So, if you are wondering why the big builders continue to build, along with construction costs dropping mostly due to cheaper labor, the interest carry is next to nothing…
scdave said: “the interest carry is next to nothing”
This is why we’re still in the Housing Bubble. Lending merely shifted focus; it didn’t actually stop. Lending shifted to more corporate speculators. Individual flipping gave way to corporate flipping and now the new threat of the rental glut. The risk of debt is still horribly mis-priced; the base interest rate should be up around 10-12%.
I feel truly sad for the HBBers who are still sitting on “the sidelines” in naturally expensive housing markets, like SFrenter is. You’re screwed no matter what. I propose a key compromise: We admit that we’re screwed, in how we ARE screwed. I’m screwed, myself. I’ll never have a career again; I’m too old to undergo the huge effort and expense of getting into one. I live in a particular depressed area of the USA. I accept that. It’s a big problem even though I own my housing outright. Guys like SFrenter and such have to admit the same about their housing markets being perpetually unaffordable; there are jobs, but the price of housing is too high. Deal?
I feel truly sad for the HBBers who are still sitting on “the sidelines” in naturally expensive housing markets, like SFrenter is. You’re screwed no matter what.
I’m sitting on the sidelines in a naturally expensive market, but I’m not screwed. Just annoyed that I don’t have a standard of living befitting a fully employed professional. But it could be a lot worse. I could be screwed.
“Just annoyed that I don’t have a standard of living befitting a fully employed professional.”
Same here. Definitely not screwed, or even seriously disgruntled, despite frequent cantankerous outbursts.
“How about we revisit “Inventory”
Good idea.
With massive inventory held back by lenders and servicers estimated to be in the 25-30 million unit range, what do you think is going to happen to prices as this is released?
I think they will most likely move in a negative or down direction.
Jingle, I take issue with the assertion that we NEVER had an oversupply of housing in Sac. I’ve been here (Sac and HBB) a looong time, and a few years ago, somebody broke down the housing numbers in Sac. It showed that despite the influx of Bay area refugees, there were stil more housing units per person than there had ever been. I wish i could cite my source, but the poster was someone familiar with the area, and their math looked goode to my untrained eye.
I would say the one thing the region has in spades is an undersupply of qualified buyers (20% down/conventional loan) , especially at today’s artifically high prices.
Deezy…..Can you name lets say three area’s of the sacramento region that you would consider the best areas…?? It does not need to be Sacramento specifically it can also be the general area..I suspect Folsom would be one of your picks…Thanks in advance…
Deezy, I think are correct to some degree, but on a statewide basis, we can build housing fast enough to keep up with population growth. Christopher Thornberg has the stats at Beacon Economics. I will find the link and post it on here this eeekend.
I have a theory:
I don’t think there’s some governments ops guy in a cubicle specifically telling everybody to hold the inventory off the market. The supposed “grand conspiracy” is just a Deist-style invisible hand of the same old policy: mark-to-market accounting and backing of Fannie Mae/Freddie Mac which combine to create an environment where holding onto inventory is cheaper than selling at fire sale pricing.
So, an unconnected collective of individual banks and real estate agents are all coming to roughly the same decision at roughly the same time: it makes more financial sense to play various games. If they hold out long enough, either a bidding war or general inflation will raise the offer prices to acceptable losses. The result is a very slow unwinding of shadow inventory as the market forces allow, OR — and this is what I see happening — an unwinding of shadow inventory as the houses physically deteriorate to where upkeep becomes expensive and/or nobody will pay a the desired price. At that point, better to fire sale and eat the losses.
The only way to convince everyone to sell is to change the environment, that is, dismantle mark-to-market accounting and the backing of Fannie/Freddie. But, because the shadow inventory and regular housing were bought under the same environment, the two can’t be separated. They can’t simply “release a flood” of empty inventory without affecting everybody with property, i.e., VOTERS. I don’t think either candidate or party will risk the putting even more voters underwater. They are going to wait for inflation to swallow the losses.
That’s merely your hope to salvage your sinking ship. Reality is something entirely different.
will risk the putting even more voters underwater ??
Generally speaking, I think the two future actions that will have the greatest negative impact on house values will be;
#1. Tax reform
#2. Higher interest rates
Both, will make SFR’s much more expensive…
Nonsense.
How many times do we have to explain to you that higher interest rates results in less demand?
Pimp, that makes no sense at all. Scdave just said that interest rates will have a negative impact on housing values. How do you infer from that statement that he thinks they will increase demand?
How do you infer from that statement that he thinks they will increase demand? ??
Because he keeps hitting the key-board after brain function has ceased…That is, assuming, there was any brain function to begin with….
Read his post. “both will make SFR’s much more expensive”
Still pretending to know the contract bidding process and construction management?
You’re on the Pimp List my friend.
High interest rates will make SFR more expensvie and DEcrease demand? This is true, IF actual prices stay the same.
But if principal (prices) drop to offset the higher interest payments, then terestmake actual prices go down, then demand will INcrease, especially from cash buyers.
“Negative impact:” From whose perspective? Owner or renter?
SCdave, I am betting that tax reform and higher interest rates are NOT going to happen, not any time soon. Get rid of MID… on principal residence? No way, Congress would raise the ire of votes. Increase interest rates? No way, the Fed would raise the ire of the rest of the business sector.
Get rid of MID… on principal residence? No way, Congress would raise the ire of votes ??
Don’t need to “Get rid of”….Only need to severely curtail it…I have read that a $200,000. cap would cover 95% of the homeowners in the country…So, the reduction from 1-mil to $200,000. is not going to have the negative impact with votes that you suggest…Also, you could see it in the form of a one time offer, thereby giving the deduction to those who most need it…First time buyers…
Increase interest rates? No way ??
IMO, Yes way….The federal reserve cannot print it forever…Unless we want to become Argentina…
Read his post. “both will make SFR’s much more expensive” ??
You read the post you fricken moron…Thats assuming you can read….
“I think the two future actions that will have the greatest negative impact on house values will be”….
My goodness….What a pain in the ass you are…
Higher interest rates make houses LESS expensive, because it increases the amount of purchasing power a potential loanowner can piss away, reducing overall demand. The fact that it costs this howmuchamonth group more per month doesn’t make it more expensive just as a $500 TV is still costs $500 whether I pay cash or put it onto a high interest credit card.
increases, should be decreases.
Higher interest rates make houses LESS expensive ??
Higher interest rates on the same value make property more expensive thereby reducing its intrinsic value to the potential buyer…
So, higher interest rates and tax reform will have a “negative” impact on values just like my original post stated…
Look at the pimp backpedal.
scdave said: “the reduction from 1-mil to $200,000. is not going to have the negative impact with votes that you suggest”
I disagree. 75% of the dollars taken in the MID are taken in the top 4 metropolitan areas of the USA. That’s a lot of political influence.
In addition, capping the MID sends a signal to the ever-delusional US voter that suggests their house won’t increase in value. That’s a third rail in politics, which I posit we can all generally agree on.
“That’s a third rail in politics, which I posit we can all generally agree on.”
I have a colleague at work, who plans to retire in about ten years to take over his dad’s Texas ranch, who seriously disagrees with this idea that everywhere else in the country, taxpayers should pony up to keep housing prices in New York State and California forever unaffordably priced. (For the record, so do I.)
“Higher interest rates make houses LESS expensive ??”
The price of the house will decline, not sure why that would be in question.
I disagree. 75% of the dollars taken in the MID are taken in the top 4 metropolitan areas of the USA. That’s a lot of political influence.
+1
But it’s not just the metro areas — it’s that those MID dollars are taken by RICH people, ie “friends of” the Congresscritters who contribute all the campaign cash. And it won’t matter with voters anyway, since getting rid of the MID has almost zero chance of being grandfathered in to exisiting housing. It would only affect new purchases, which — also — would affect the rich people who seem to like multiple houses.
“I don’t think there’s some governments ops guy in a cubicle specifically telling everybody to hold the inventory off the market.
…
So, an unconnected collective of individual banks and real estate agents are all coming to roughly the same decision at roughly the same time:
…
If they hold out long enough, either a bidding war or general inflation will raise the offer prices to acceptable losses.”
I don’t know how one could test the grand conspiracy theory unless, say, there were some way to audit both the Treasury and the Fed to see what the PPT members cover in their meetings.
I’m certainly hoping your conjecture is right, for if it is, there is a great chance going forward for a massive panic-driven inventory dump and big leg down in prices for market formerly referred to as ‘a bit frothy,’ when the realization that no amount of holding out will ever result in either a bidding war or general inflation sufficient to raise the offer prices to acceptable loss levels.
I sure hope not. If I wanted a political blog I’d go there. Big waste of time from real everyday issues. Let’s keep focused on housing and financial issues and preservation of capital!
I agree. I’m glad that Mr. Smithers, JoeyinCA, Eddie, 2banana and other political hacks have taken their business elsewhere.
Oh wait…
Labor unions and food stamps are bankrupting this country!
“how about a thread on how ugly the next 60 days are going to be”
I prefer to talk about how ugly the next 4 years are going to be, since the bankers and Wall Street already won in the election-to-come. Both major Presidential candidates are 100% aligned with the FIRE economy. 2013 should be horribly interesting since a lot of things are just being held in abeyance for which “side” wins. Lots more layoffs are coming. And massive profiteering. And more bailouts. They know American memories are either short or delusional. Tons more corporate welfare are coming, to abate temporarily for the 2014 mid-terms.
Are Happy Days Here Again, now that QECB and Chinese stimulus measures are official?
Sept. 7, 2012, 8:20 a.m. EDT
Bank stocks rally on back of ECB, China
By Sara Sjolin, MarketWatch
LONDON (MarketWatch)—Bank stocks led a rally on European stock markets on Friday, adding to the prior day’s steep gains following the European Central Bank’s bond-buying plan, while news of major infrastructure investments in China further lifted sentiment.
The Stoxx Europe 600 indexrose 0.5% to 273.07. On Thursday the index closed 2.3% higher.
“It’s [the move higher] an extension from yesterday’s rally coupled with news that the Chinese are working on a big infrastructure spree, which boosted Asia markets overnight,” said Victoria Clarke, economist at Investec Securities.
“The seeds are there for the rally to continue, but we have to see what the conditions tied to the bond-buying program are going to be. The main question is whether the conditions are too tough for Spain and Italy to come forward and ask for support,” she added.
…
Is QE4 really already on the table, or is this writer just some kind of wild-eyed, tinfoil-hat wearing conspiracy theorist?
I challenge anyone to find a similar MSM article from circa 2006, describing coordinated action between the U.S.’s and Red China’s central banks. So far as I am aware, this approach is outside the Fed’s mandate, but I would love to see contrary evidence.
Sept. 5, 2012, 1:44 p.m. EDT
Utilities deja-vu signals new kind of fear
By Michael A. Gayed
Since June 4, I have continuously made the case here on MarketWatch and in various media interviews that 1) intermarket trends have behaved as if a Lehman event already occurred without an actual event having taken place ( as I discussed on Bloomberg ), and that 2) another stock melt-up similar to the Fall Melt-Up of 2011 I am known for having called Oct. 3 last year (From Summer Crash to Fall Melt-Up) was likely to take place once again.
Markets have indeed rallied strongly off of the June 4 low, as the Summer Surprise and end-to-the-end-of-the-world trade have taken place. Stocks are near multi-year highs, and bond prices are falling despite the potential for further monetary easing by the Fed in a sign of money coming out of risk-free investments into risk.
SuperBen and the League of Extraordinary Bankers have made their intentions clear — they want to force reflation because of their paranoia over a 2008 repeat. For now (at least), inflation expectations are showing signs of life, which as I have noted numerous times, is a good environment for equities to perform. QE3 in many ways already took place as I argued live last week, with the fear trade sending bond yields to all-time historic lows driven by scared money.
And remember — those low yields act with a lag. A surprise pick up in economic activity could take place in the coming months as a lagged response to the fear trade sending bond yields to post-Lehman all time lows. Rather, what we may be on the verge of a global coordinated “QE4″ led by the European Central Bank, which likely will then be followed by both the Federal Reserve and the People’s Bank of China.
…
Is serious inflation risk on the table? And if so, how are you protecting yourself, aside from buying houses in San Francisco or condos in Phoenix?
Aug. 27, 2012, 12:03 p.m. EDT
Preparing for QE4
By Michael A. Gayed
Yes - the headline is correct. And yes — if you think the above quote through in terms of each round of quantitative easing, you will be amazed at just how ironic those questions are.
Long-time readers of my columns know that I have brought up the role of central bank paranoia numerous times as a key theme in the trend of inflation expectations. SuperBen and the League of Extraordinary Bankers are no different than everyone else in remembering the devastation that occurred following Lehman Brothers, and the deflationary shock that came as a result. With Federal Reserve minutes indicating more stimulus is likely to come (probably because of paranoia over the “fiscal cliff”), it seems money will likely be forced yet again to continue to take risk.
Of course, Fed policy overreactions are not new, as I stated last week on CNBC. Watch video here. The economy has indeed been improving, as stocks near multi-year highs and as housing itself recovers. I have long argued that rising asset prices through markets are more stimulative than central bank action, and that QE3 was you and me. The fear trade and negative narrative pushed bond yields to historic lows, with those rates likely to be felt with a lag on the overall domestic economy. More stimulus to me is NOT QE3 but rather a fourth round of attempting to force reflation upon us.
…
SuperBen and the League of Extraordinary Bankers are no different than everyone else in remembering the devastation that occurred following Lehman Brothers……………
Ben and his band of thieves is the reason for the meltdown of Lehman.
Lehman’s problem, along with all the other “traders” was one of leverage. Leverage works great on the way up, but wipes you out quickly on the way down. It was not a problem of “liquidity” it was a problem of insolvency. All the leveraged trades should have been WIPED OUT, not saved, but then Hank Paulsen would have lost his nestegg at Goldman, too.
You see, all that Money that rich people have skimmed is most often “invested” to make more money. If the accounts go south, then all the graft is gone.
The CENTRAL BANK “plan” of 2% inflation guarantees you DON’T have ’sound money’. It is a slow drain of your savings, keeping you poor. If forces you to try and ‘invest’ in some asset or security game.
If the Bank pushes 2% inflation, then you need at least 3% interest income to keep from losing money.
The Banksters have rigged the game so you can’t save money without losing money.
It is a game of Slave Labor. Inflation robs you of your wealth, so you can’t have any savings in old age. It forces you to play the markets and speculate against the bankster/traders.
Your money is ALWAYS worth less than when you earned it.
GAming the stock markets does NOTHING for the average person who has to Work for a living.
If his IRA/Retirement fund lost 50% of it’s value, then gaming the markets with “inflation” may restore the dollar amount, but the account has still lost Half it’s value.
What do I mean?
If you had “saved” 100k and the market crashed from bankster leverage games, you now have 50k in market value.
Creating Inflation pushes the “value” back up to 100k so you don’t think you lost. But you are wrong. The price of everything you buy also doubles. You LOST half you money by “inflation”. You did not have your accounts “restored”, you have the same dollar figure, but must pay $8 a gallon for gas and $6 for a bottle of beer.
What good did the “inflation” do you? NONE. It hurts you……UNLESS, you are a DEBTOR.
Target “inflation” is targeted stealing to keep the Wallstreet Casino running. BReak UP THE BANKS. STOP THE LEVERAGED TRADES.
I guess the Fed’s hair-of-the-dog treatments must be working well; otherwise wouldn’t they try something else?
It depends on what you mean by “working”. If you mean it is keeping BaNKSTERS in cash, then it is absolutely working.
The ROLE of the FED is to help the Banks, not the People.
Think of the movie Braveheart.
Robert the Bruce is the FED. When the King is retreating from the battle an the “braveheart” goes to slay him, the kings men tell the Bruce to “PROTECT THE KING”. He follows orders.
He strikes out against the people’s hero and “saves the king (Big Banks/Traders)”.
So, yes, their plan is working. They will continue to line their pockets with NEW money that is supposed to represent the productive wealth of the American people.
In impolite society we would call is stealing.
I remember an old saying. He who steals a hen from the King’s glen will go to prison. He who steals the glen will be King.
“If you mean it is keeping BaNKSTERS in cash, then it is absolutely working. The ROLE of the FED is to help the Banks, not the People.”
My comment could have benefited from sarcasm tags, but I agree with you.
Diogenes, there are variants on that saying, in rhyme, to wit:
http://www.wealthandwant.com/docs/Goose_commons.htm
Example:
The law demands that we atone
When we take things we do not own
But leaves the lords and ladies fine
Who take things that are yours and mine.
Is serious inflation risk on the table? And if so, how are you protecting yourself, aside from buying houses in San Francisco or condos in Phoenix?
Precious metals though I know you haven’t been a big fan of them.
Sustained inflation would require we put money in the hands of the people that would spend it.
QE may lower rates and get speculators to borrow money and push up commodity prices. The immediate result of higher commodity prices is increased supply and falling demand. The speculators can buy up futures, but can’t actually provide the end user demand for all the goods.
If money isn’t getting into the hands of people that will provide the real end user demand, then eventually the excess supply will undo the price increases, dropping prices until demand comes back and the excess supply goes away.
BTW: As I’ve stated many times, the townhouse in Phoenix is not an investment or meant to hedge inflation. If that was my goal, I’d be buying something more expensive than 28% of my annual household gross, and I wouldn’t be buying with a 15 year mortgage and 38% down.
The townhouse is an expense. It is a place to house my kids cheaply.
“Sustained inflation would require we put money in the hands of the people that would spend it.”
I can’t tell you how many times I try to make that point to Americans, but over 90% of them refuse to believe it. They honestly believe that producers (manufacturers, distributors, retailers) can simply increase prices all they want, and the end user simply has to pay it. Most Americans can’t wrap their tiny, propagandized minds around the idea that most of the supply chain is still subject to market forces; many parts of the supply chain has to endure cash flow problems and expense management, just like you do. So they CAN’T just increase prices and then endure the concomitant drop in demand down the line. Profit margins are always squeezed; the more mature the industry, generally the more competition there is, and the easier time the competitors have to supply, distribute or sell, since they’ve already sunk investment into infrastructure to get one or more of those done.
Without buyers, generally you can’t just have high prices. Inventory sits, and most inventory has an expiration date, and warehousing costs place pressure on inventory of the remaining type. That’s why milk prices just can’t keep going up; lots of people use milk, so the volume is acceptable, but if people reduce consumption then a lot of milk simple rots in its containers. The producers know this is reality… but when will Americans admit it?
Excellent post BetterRenter.
The resident Liars Club here on this blog hate the truth you just posted.
I agree with your post, but why are you limiting this just to Americans?
Are the candidates going to cooperatively punt on housing until after the election?
September 6, 2012, 3:49 PM
Why the Candidates Aren’t Talking About Housing
By Nick Timiraos
Few events have reshaped the nation over the last half-decade as much as the housing crisis—particularly in key battleground states such as Florida, Ohio, and Nevada. But neither the Obama nor the Romney campaign has had very much to say about it.
Housing’s absence from the campaign debate has led to lots of head-scratching among pundits, though there is an obvious explanation for why it has taken a back seat: housing is a political loser.
All potential fixes are messy. Some are very expensive and reward irresponsible behavior. None will be a cure-all. And each will leave someone feeling left out.
That was the view articulated two years ago by Richard Berner, then the chief U.S. economist at Morgan Stanley, shortly before he joined Obama’s Treasury Department. “Many policy options are available to fix America’s dysfunctional housing and mortgage markets,” he wrote. “But the political will to deploy them is scarce.”
…
Until after the election? More like, for a long as possible, even after the election.
I think it safe to assume that no matter who wins, the policy will be more of the same.
Will the weak jobs numbers “force” the Fed’s hand to invoke QE3? Or would such action nonetheless be construed as a vote for Obama?
Jobs growth cools in August, seen forcing Fed’s hand
By Lucia Mutikani
WASHINGTON | Fri Sep 7, 2012 9:07am EDT
(Reuters) - Jobs growth slowed sharply in August, setting the stage for the Federal Reserve to pump additional money into the sluggish economy next week and dealing a blow to President Obama as he seeks reelection in November.
Nonfarm payrolls increased only 96,000 last month, the Labor Department said on Friday. While the unemployment rate dropped to 8.1 percent from 8.3 percent in July, that was because so many Americans gave up the hunt for work.
The survey of households from which the jobless rate is derived showed a drop in employment. The lackluster report keeps the pressure on Obama ahead of the November vote in which the health of the economy looms large.
“This weak employment report, in jobs, wages, hours worked and participation is probably the last piece the Fed needs before launching another round of quantitative easing next week,” said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey.
…
Is it time for those who believe housing has not yet hit a bottom to throw in the towel? (Where’s FPSS when you need his opinion?)
September 4, 2012, 12:50 PM
Here’s More Evidence That Home Prices Have Hit Bottom
By Nick Timiraos
In each of the last three years, home prices have increased in the spring and summer, when more people are buying homes, before giving back all of those gains and then some in the fall and winter, when activity cools.
But it is beginning to look like that might not happen this year, absent a major stumble for the economy.
Home prices in July were up by 3.8% from one year ago, the largest year-over-year jump in six years. Moreover, prices have shot up by 9.6% from February, when they registered their lowest levels of the housing downturn, according to CoreLogic (CLGX +2.44%) data released Tuesday.
This adds evidence to the case that U.S. home prices may have hit bottom earlier this year. Even though prices will soften in the autumn, “we have a much better supply and demand dynamic” than in previous years, said Mark Fleming, chief economist at CoreLogic.
So when people say they believe home prices haven’t reached a bottom—that this year’s seasonal gains will be wiped away by January or February of next year—here’s the relevant question: Will home prices fall by 9.6% in the next six months?
…
When Mark Fleming can show me he was leading the charge back in 2004 that something was wrong in the housing arena then I might believe his opinion now. Any bottom at this time on a national level is pure fanticy.
I suspect today’s serial bottom callers are the same people who said “real estate always goes up” back in 2004. They are still saying “real estate always goes up,” but just using different language.
I sat next to an interesting guy on my flight to the Midwest last weekend; come to think of it, I almost always get into interesting in-flight conversations, unless I don’t like the looks of my neighbors!
Turns out the guy was an Indian computer engineer, recently hired at a major survivor of the dot com era, and flying back to the Midwest to spend time with his family. His wife is a finance professor at a reputable institution; her specialty is HFT. So I figured this guy would be a good bet for a rollicking discussion of everything from politics to finance to U.S. culture. He didn’t disappoint.
On the housing finance front, I baited him a bit with a question about whether housing had bottomed out, and all the underwater borrowers around the U.S. should expect to soon recover their lost home equity. He basically dismissed the notion out of hand, and suggested these people are in for collective disappointment.
So I guess I’m not the only doubter of the serial bottom caller brigade’s opinion.
Several years ago, I got into a real estate bubble pontification on the Arizona Shuttle. It’s a van service that runs between Tucson and Sky Harbor Airport.
My fellow passengers thought I sounded quite knowledgeable. One even asked me if I was in real estate. I denied any such association. And ISTR saying that I was an HBB-er.
I’ve learned so much on this board. Thanks, Ben, for creating it.
Within a decade, I’ll no longer be upside down on my primary residence. (10.5 years left on my 15 year mortgage)
We’re 5 years into delay and pray. 5-10 more years, and a lot of those upside down people won’t be upside down any more.
The truth is housing prices are up a meager 0.5% year over year….. and negative when inflation adjusted.
PS- That doesn’t include defaulted inventory pricing.
“That doesn’t include defaulted inventory pricing.”
Is there any way to obtain all the data in order to construct an unbiased index of prices?
Let’s talk about the Wallstreet/Bankster corruption machine that led to all the problems we have seen in this country and around the world since 1998. The stock bubble and the housing bubble were the result of FEDERAL RESERVE and Wallstreet collusion. The major problem was the repeal of Glass-Steagle, allowing Wallstreet to turn the markets into a casino, mostly for themselves, with BORROWED and LEVERAGED money.
I saw the comments late yesterday about “capitalism” needing growth to survive and that Wallstreet should be shut down. I disagree strongly. Capitalism, at is base, is supposed to be about the FREE exchange of products and materials. Money is supposed to help with the exchange.
When money was gold and silver, and before it was discovered by Banksters that you could hold a “portion” of capital in banks and lend out more than you had available, you couldn’t produce massive “bubbles”.
CENTRAL BANKS, starting with the Bank OF England, cause bubbles by creating massive amounts of “loans”, with no collateral.
This is how some people get fabulously wealthy. The use “money” that is newly minted by the CENTRAL BANK to gamble and speculate in Markets. Only the Big Banks, including Goldman Sachs, which was NOT a commercial bank when all this crap started, but was made a Commercial Bank so it could garner lots of free hand-outs from the FED, in the form of bankster salvation programs, can gamble in the casinos with made up money, and call it “investments”.
The problem is not so much Wallstreet; it is the Gambling houses trading with “LEVERAGE”, i.e. making bets with money they don’t have.
The other problem is STATE protection of their Fiefdoms.
Larry Summers, Rahm Emmanuel, and all the crooks in government became MILLIONAires and BILLIIONAIRES via Goldman SACHS and their time spent in the trading decks before getting into the Whitehouse.
You may recall that all these GOLDMAN boyz were in Clinton, Bush, and OBAMA’s cabinet. So when Obama talks about taking money from Millionaires and Billionaires, he’s talking about Business INCOME. He wants to take from people who are EARNING money. Rahm Emmanuel and his friends, like Robert Rubin, and all the stooges who strip-mined America, already GOT THEIRS. While Obama has railed about unfairness, he never points to the guys in his own administration. He points to legitimate companies making money that he hopes to fleece.
And even then, companies like GE, who is one of those “multinational” companies who OUTSOURCE around the world paid NO TAXES, and it’s corporate head is an advisor to Obama.
The problem we have is the Banks and the FEDERAL RESERVE. Ron Paul is the only one who has been honest about it and seeks to have this game reformed. That is why the “mainstream” media portrays him has a “kook”. They are part of the Corporate system of entrenched political patronage. They don’t want the money flows to the Banksters to be stopped. They are friends and best buddies.
The BIG BANKS should have been broken up, not “rescued” to rob again.
Goldman Sachs, Bank of America, JP Morgan and the lot should have been dissolved, their CEO’s thrown out on the street and then ANTI_trust legislation should have been written to restore sound banking. The FRANK-DODD bill was a payout to the Banksters.
The problem is not “capitalism” or “wall street”. The problem is the FEDERAL RESERVE, in collusion with Wallstreet and it’s Bankster Associates, has been able to “LEVERAGE” it’s gang of crooks massive amounts of money, with NO COLLATERAL, i.e., no real savings. It has been a massive fraud and the reason we have 1% super-rich society.
Also they have special rules for themselves, besides the LEVERAGE aspect. High-Frequency trading can only work if you don’t pay trading fees.
The brokerage houses do all the trades they want. If you or I want to do any trading, we must go through one of them. WE pay a FEE.
It limits our trading, since we get fleeced, just like a Casino. Small traders can’t compete, and we can’t roll our accounts daily and hourly.
This is another problem, that has morphed into the Big Casino environment for the Brokerage houses. WE can’t compete. It’s a total MONOPOLY and should be broken up.
What has Obama, the “CHANGE” candidate done about this relationship?
NOTHING.
Now he wants 4 more years to continue the “healing” of the bankster game. It’s a sham.
Unfortunately, I am not hearing from the Republican Party, that they will start any clawbacks or investigations into the robbery of the American people.
But, at the heart of the collapse, lies the corruption of Traders and Banksters, trading on markets with money they don’t have. The FED is there, to provide the money whether they win or lose.
What we have is CRONY CAPITALISM at it’s worse, and neither party wants to break up the money-skimming operations because a portion of that money goes to them. It is the very definition of corruption.
NO PROSECUTIONS. NONE.
President Clinton’s National Homeownership Strategy
http://www.globalurban.org/National_Homeownership_Strategy.pdf - -
Wow…I wonder how much the Clintons got back from the NAR for publishing that screed?
You have identified the problems very eloquently, so what can be done about it?
I had a CEO who was fond of saying, “Don’t put a monkey on my back without giving me a gun or banana.” In this day and age with nut-jobs making it easy for the anti gun lobby, I guess we need an extraordinary banana. Not an easy fruit to find. Not many folks can step away from the game, but that seems to be the optimal solution to me. I am structuring an exit strategy now.
Who is John Galt?
“What we have is CRONY CAPITALISM at it’s worse, and neither party wants to break up the money-skimming operations because a portion of that money goes to them. It is the very definition of corruption.”
It would take statesmanship, ethics and balls to clean up the system. Fat chance any of the current occupants of Washington will display any of those characteristics, they go there to become wealthy.
I think it would take much more than that.
My experience is that regardless of how carefully you explain how money is created or how trade imbalances are unsustainable, people violently reject these ideas. So deeply are ingrained the lies of the last 40 years, that people react violently to the truth.
Truth? You wouldn’t know truth.
Topic suggestion:
QE is purported to enrich the wealthy. What is the mechanism by which it does this, if this is understood? And why don’t other classes invest the same way that they are (for those sufficiently non-poor to have funds to invest)?
“What is the mechanism by which it does this, if this is understood?”
I’ll start the list, but don’t have time to give the exhaustive version; gotta go to work!
1. It hammers the returns on safe investments like U.S. Treasurys and CDs.
2. It encourages and rewards reckless speculative financing in stupid investments like subprime mortgages, a form of gambling which favors investing by too-big-to-fail financial institutions which follow the “privatize profits / socialize losses” business model.
3. Abysmally low returns on CDs and Treasurys are an effective way to socialize losses.
Abysmally low returns on CDs and Treasurys are an effective way to socialize losses.”
Also it exports inflation to growing economies. Money flows around to the best return. And free money flows even faster becomming “hot money” in the hands of “Whales” or whatever they call rouge traders these days.
nice way to run a economy not
I see free money as careless and stupid money I guess the FED sees it differently
“I see free money as careless and stupid money I guess the FED sees it differently”
They never own up to the economic costs of the malinvestments their policies inspire.
I’ll do my best to explain the mechanism as briefly as possible.
QE is a euphemism for MONEY PRINTING. Let’s call it what it is.
Who gets the new money? Answer: privileged Bankster “primary dealers”.
Where does the money go? They “invest” it in things like new ventures or commodities. It’s “new” money. It didn’t exist before.
IF you, as a bankster and trader, want to “invest” and you don’t have any “new” money, you must SELL some assets to make the trade.
With NEW MONEY, you can go invest, using leverage, in new GOLD mining companies.
What happens with the price of those companies? or commodities?
that’s right, the price starts to go up, showing a “market increase” (stocks are going up).
The small investor and traders who don’t have NEW MONEY, see this and begin to SELL their investments or use their savings or earnings to buy the new winners. When the price gets high enough in the new investments, the traders sell out and do a SECTOR ROTATION.
Your stock price goes down. The NEW money trades out at a profit.
The advantage of NEW MONEY is that it creates a fake market, without having to make the difficult decision of liquidating other assets or investments.
NEW money is EARLY money. You get in before the price goes up.
Everyone else has to chase the new money to stay ahead of the coming inflation in overall prices.
Unless you have this same advantage, you can’t win. It’s a rigged game that favors the BROKERAGES and their inside traders.
Don’t get lost in the euphemisms of the Crooks in this NON-governmental PRIVATE industry called the FEDERAL RESERVE Bankster system.
And remember, when Lloyd Blankfein says he is doing “god’s work”, it’s because his religion teaches him that he and his fellow’s are supposed to be rich. They are after all, “chosen” by god to be rich, so whatever device they use to provide more money to themselves, is all “god’s plan”……and they fully believe it.
the traders sell out and do a SECTOR ROTATION.”
Probably why index investing is best for most people
‘They “invest” it in things like new ventures or commodities.’
Like FB? (If you don’t understand what FB stands for, we offered several definitions in the Bits Bucket a couple of days back.)
“And remember, when Lloyd Blankfein says he is doing “god’s work”, it’s because his religion teaches him that he and his fellow’s are supposed to be rich. They are after all, “chosen” by god to be rich, so whatever device they use to provide more money to themselves, is all “god’s plan”……and they fully believe it.”
Blankenfein is a Calvinist?
Money is not created when the Fed buys debt from the markets as it is doing with QE.
The money is printed when the loans are originated.
QE creates demand for the debt on markets, pushing up prices, which pushes down interest rates on the debt.
Lower interest rates in the secondary markets allows lenders to issue new loans with lower rates.
QE is having diminishing returns because of a lack of qualified borrowers coming in and looking to borrow.
QE can lower rates, but it can’t make more qualified borrowers walk into a bank looking to take on more debt.
Origin of the Housing Bubble: “The National Homeownership Strategy”
[Printer Friendly PDF File]
More than 4 years into the collapse of the Housing Bubble much has been written and spoken on the subject. A Google search for “housing bubble” yields 1,110,000 results. Economists have debated why the event occurred. The media has covered its aftermath exhaustively. Politicians and bureaucrats have implemented the most aggressive public policy response since The Great Depression.
Genuine economic understanding has proven to be elusive.
A Google search for the term “national homeownership strategy” yields 9,040 results. Only a tiny percentage of these references are from recognizable media sources written in the past decade (estimated to be less than 5%). The overwhelming majority of listings are Government sources, library archives, catalogued books or dated materials.
A Historical Introduction
“In the Spring and Summer of 1994, Secretary Henry Cisneros met with leaders of major national organizations from the housing industry to solicit their views about establishing a national homeownership partnership.”
- HUD, “Partners in the American Dream”, May 1995
“In 1994, at the President’s request, the U.S. Department of Housing and Urban Development (HUD) began work to develop a National Homeownership Strategy with the goal of lifting the overall homeownership rate to 67.5 percent by the end of the year 2000. While the most tangible goal of the National Homeownership Strategy was to raise the overall homeownership rate, in presenting the strategy HUD pointed explicitly to declines in homeownership rates among low-income, young, and minority households as motivation for these efforts.” - U.S. Department of Housing and Urban Development Office of Policy Development and Research website
“At the request of President Clinton, HUD is working with dozens of national leaders in government and the housing industry to implement the National Homeownership Strategy, an unprecedented public-private partnership to increase homeownership to a record-high level over the next 6 years.” - Urban Policy Brief Number 2, August 1995
“Federal institutions, policies, and programs alone cannot meet President Clinton’s goal of record-high levels of homeownership within the next 6 years. HUD has forged a nationwide partnership that will draw on the resources and creativity of lenders, builders, real estate professionals, community-based nonprofit organizations, consumer groups, State and local governments and housing finance agencies, and many others in a cooperative, multifaceted campaign to create ownership opportunities” - The National Homeownership Strategy
The Housing Bubble’s Rosetta Stone
The National Homeownership Strategy (NHS) may have been the most comprehensive, pervasive, impactful and transformational public policy initiative in U.S. history. Yet only a small percentage of Americans have ever heard of it. Even fewer understand the NHS’ stated goal of record homeownership or are able to confirm whether those objectives were met.
Results from a recent AMD.com survey confirm this unfamiliarity: Link to Survey Results
The NHS was a massive, complex, coordinated undertaking.
The public policy initiative consisted of 100 distinct action items detailed within “The National Homeownership Strategy: Partners in the American Dream” released by HUD in May 1995. Specific examples of these action items include the following subject titles:
Action 11: Removing Barriers to Mortgage Financing for Starter Homes
Action 29: Alternative Approaches to Homebuying Transactions
Action 35: Home Mortgage Loan-to-Value Flexibility
Action 36: Subsidies to Reduce Downpayment and Mortgage Costs
Action 44: Flexible Mortgage Underwriting Criteria
Action 45: Public-Private Leveraging for Affordable Home Financing
The NHS’ integrated effort included alliances with influential public, private and non-profit entities. At the time of publication in 1995 there were 56 “National Partnerships” including the American Bankers Association, Appraisal Institute, Fannie Mae, Federal Home Loan Bank System, Freddie Mac, Mortgage Bankers Association of America, Mortgage Insurance Companies of America, National Association of Home Builders, National Association of Real Estate Brokers, National Foundation of Consumer Credit, National Urban League and HUD.
More broadly The National Homeownership Strategy encompassed parallel regulatory and legislative reforms during 1994 and 1995. Examples include:
The Community Reinvestment Act (CRA) was revised to force lenders to make loans to uncreditworthy borrowers as a cost of doing business
The Riegle-Neal Act was passed making compliance with The Community Reinvestment Act a prerequisite for banks to expand, make acquisitions or operate in more than one state
These initiatives transformed the purpose of bank regulators. Since The Great Depression the goal of bank regulation had been to ensure the solvency of lending institutions. After 1994 regulators were tasked also with implementing and enforcing the NHS’ social agenda. Extending loan access to the uncreditworthy was in direct opposition to bank solvency.
Under the NHS the considerable resources of the Federal Government were brought to bear on expanding homeownership. In 1994 HUD directed Fannie Mae and Freddie Mac to proliferate subprime lending. These combined Government Sponsored Entities (GSEs) act as a functional monopoly within the mortgage market. As such, they enjoyed substantial influence over lending standards, credit availability and the private-sector mortgage industry which was directly dependent upon the GSE’s for profitability. By 1996, HUD was directing Freddie and Fannie to provide at least 42% of their mortgage financing to low-income borrowers and 12% of their portfolios to “special affordable” loans.
The Homeownership Bubble
The effect of the NHS’ coordinated effort was to dramatically increase access to credit and demand for houses. Upon implementation homeownership accelerated in historic fashion. This record pace of gains would continue almost linearly through the entirety of the Housing Bubble.
The speed and abruptness of these concocted homeownership gains was extraordinary in the context of an enormous, national housing market defined by glacial trends. The market reaction to the NHS was even more spectacular given the relative stability of homeownership rates over the prior 35 years.
The National Homeownership Strategy achieved its stated goal of lifting homeownership rates from 63.8% in 1994 to 67.5% by the end of 2000. In six years the NHS accomplished the most extraordinary expansion of homeownership in U.S. history eclipsing the previous record of 65.8%.
Link to a graphical analysis of The Homeownership Bubble.
Prelude to a Housing Price Bubble
Loosened lending standards, increased access to credit and a massive reallocation of capital dramatically expanded demand for houses. As would be expected anytime demand grows faster than supply creating relative scarcity, prices started to rise.
Housing appreciation began to steadily accelerate in 1997, two years after the NHS originated a Homeownership Bubble, and continued at an unsustainable pace through the entirety of the Housing Price Bubble.
http://theaffordablemortgagedepression.com/2010/03/11/origin-of-the-housing-bubble-the-national-homeownership-strategy.aspx - 110k
“Economists have debated why the event occurred.”
What housing bubble? There was no housing bubble.
If you disagree, then show me where anyone employed at the Fed has ever used the term ‘housing bubble.’
If you disagree, then show me where anyone employed at the Fed has ever used the term ‘housing bubble.’
I’ll show you the video, PB:
http://www.youtube.com/watch?v=E5hucxOzZJw
Check at 45-seconds in… BB himself said “housing bubble” twice in two sentences. I was shocked when I first heard it:
“The best response to the housing bubble would have been regulatory rather than monetary. Stronger regulation and supervision, aimed at problems with underwriting practices and lenders’ risk management, would have been a more effective and surgical approach for constraining the housing bubble than a general increase in interest rates.”
Good to know he understands what is going down. I had my doubts back in August 2007, when he said, “Subprime will be contained to $200bn,” shortly before the near-end of the global financial system as we know it.
Of course, what he said there was in the context of denying that the Fed was to blame—e.g. that those darn _regulators_ should have been doing their job.
He conveniently ignored, and hoped his audience was ignorant of the fact that the Fed had, and continues to have a _regulatory_ role with the large banks. So yes, it was their fault.
I wonder if the progressive interests behind such schemes had any idea how wide the road to hell would become as a result of their good intentions? What was to be gained by creating this machine other than a destruction of the middle class and enrichment of the elite?
Can we have inflation in a stalled economy? can we have a HB2 ? Did you read the Norway story about realtors against lower interest rates because they have a housing bubble but too much money is pouring into their currency so they lower interest rates to fight this. They are getting inflation from extreme low interest rates from stalled economies from the EURO zone, like Brazil from the USA.
Shortage of construction workers turns out to be shortgage of low paid constuction workers
Possible answer modular homes built in factories and assembled on site ? No more stick and stucco homes except for the rich ?
“Builders will argue that the rising cost of construction materials is making it harder for them to raise wages, not to mention that they are still competing with large supplies of cheaper, distressed properties, many of which are relatively new construction.
“Here locally, we’ve measured that the average price of a house has gone up 1.7 percent from last year, which is not nearly enough to cover the 9 percent increase in costs that has occurred since 1st of the year, so it’s coming right out of the margin,” says Stephen Brooks, CEO of Dallas-based Grand Homes. “
Oh well, I guess this means that the Mexodus will soon resume.
Took a brief trip across the border a couple of weeks ago. It was a total blast. Can’t wait to go back.
Any-hoo, I saw quite a bit of building going on there. And, psst, Mexico, if you’re looking for a good project that will employ a lot of paisanos, here it is. One word: Infrastructure.
Hmmm, same word applies on this side of the border.
“Here locally, we’ve measured that the average price of a house has gone up 1.7 percent from last year, which is not nearly enough to cover the 9 percent increase in costs that has occurred since 1st of the year, so it’s coming right out of the margin,” says Stephen Brooks, CEO of Dallas-based Grand Homes. “
And you guys actually believe this glorious line of BS?
Don’t be so gullible.
“not to mention that they are still competing with large supplies of cheaper, distressed properties, many of which are relatively new construction.”
Exactly why they should not be building!
How about we comment on unemployment benefits being paid Back by benefit takers, in paycheck installments or through state tax return?
I’m fairly certain that’s the way unemployment benefits worked when initially set up….
The problem is that you can’t squeeze blood out of a turnip.
Why not change the tax law to shut down those Caymen Island tax havens, then fund payments to the long-term unemployed out of increased taxes on those U.S. citizens who currently hide money off shore?
why not force the unemployed into job restraining or at minimum work as an Intern in your last job field.
This is not a hard question, do you want to hire a person who has been surviving on McD for 2 years….or someone getting 2 years of unemployment with recent jobs skills in the same field he got laid off in 2 years ago…
Job train into what field?
My son looked for a job full time for 4 months. When he did get some jobs, one job was as a burger flipper and the place closed within two weeks of opening, another job was at the foot ball stadium and will be a total of about 40 hours over 6 months, and his third job was at the college book store for the 3 week back-to-school rush.
After another month of looking, he got yet another minimum wage job, this on at the Cookie/pretzel shop at the mall. They work him 3-4 hours at a time, 3-4 days a week. They say it will pick up in Nov-Dec, but then he may be out of that job in Jan.
So, he’s still out looking for yet another job, trying to patch together enough minimum wages jobs to make 30-40 hours a week.
Darrell….its about continuing education…..we should be extending unemployment for 99 weeks, but in exchange people have to work….
This my not help your kid, but mostly for older folks like you….for example you are a paralegal, why not work at the DA or public defenders office for those 99 weeks until you can get a better paying job? They hire non paid interns all the time.
Its the FLSA which keeps older workers from being interns…and keeping that recent job at the top of the resume.
Or i could work for a public radio station…25-30 hours a week, then NO employer can say we dont hire the long term unemployed, because you would be working.
People are going to be lazy anyway, so why not spend the same amount money and get some benefits for everyone involved?
Man do I feel for today’s twenty-somethings. My kids will be there within a few years…
The employer pays the insurance before the person they fired collects.
ft dot com
September 6, 2012 9:01 pm
The trend that cooled America’s plastic passion
By Gillian Tett
As the Democratic National Convention has unfolded this week in Charlotte, North Carolina, White House officials have been scouring the economic data for something – anything – that might count as good news.
So here is one little statistic that has hitherto received surprisingly little attention: according to calculations from the Federal Reserve Bank of New York, American credit card debt has tumbled to its lowest level since the second quarter of 2002. More striking still, the outstanding balance – of $672bn – is 22.7 per cent below its 2008 peak.
Yes, you read that right. Although Americans are (in)famous for their addiction to credit card debt, that love affair is cooling, or being forcibly cooled. By the middle of this year, the number of credit card accounts in circulation had tumbled to 383m, 23 per cent below its 2008 peak, and fresh applications for credit were declining too. Put another way, while cards are still being flogged to consumers (and even sometimes marketed, via direct mail, to pets), not all Americans are saying “yes”.
Now, this trend needs to be seen in a bigger context. Most notably, it follows a massive – and massively dangerous – long spell of expansion. Thus the declines have only brought credit card borrowing back to levels seen a decade ago; by international standards, credit card debt in the US remains large.
Yet the trend highlights a point politicians and investors often ignore: that while public sector debt has exploded in the past five years, in some parts of the private sector, deleveraging is under way. True, it has not produced a feelgood factor yet; on the contrary, as consumers cut their use of plastic, that is crimping retail spending. But in the longer term, this adjustment is necessary. An America with a mere 383m credit cards floating about, rather than almost 500m, may be a country that is slowly healing itself from a crazy credit boom.
By any standards, the data are striking. Taken as a whole, total consumer borrowing was $11.4tn in June this year, $1.3tn below its 2008 peak. Some of that decline reflected lower card usage. But most of it was triggered by a fall in mortgage debt. Back in the days of the credit bubble, for example, net mortgage borrowing grew about $200bn each year, as Americans treated their homes like ATMs. However, in 2009 there were net repayments of $134bn, followed by repayments of $213bn and $241bn in 2010 and 2011. This year net repayments have accelerated further.
Some of this decline in borrowing occurred in tragic, forced circumstances. Millions of Americans have been tossed out of their homes. Thus in 2010 and 2011 defaults and delinquencies removed $660bn worth of mortgage debt. But “voluntary” factors have been increasingly important too. Households are now choosing to assume less mortgage debt – and banks are becoming more wary about lending.
More interesting still, a split has emerged between different types of debt. The one place where debt has steadily risen since 2007 is student loans. This might be because education costs have been rising. It might also be that consumers consider education expenditure to be less discretionary. And what is particularly intriguing about the trend with credit card usage is that consumers appear to be using less of their plastic even though delinquency rates have declined; so too with mortgage debt.
So what should investors make of this? There are at least two important points to ponder. First, the data are a timely reminder of the limits of monetary policy. After all, this decline in lending has occurred when interest rates have been falling. But consumers (and banks) have not responded to those declining rates because they have been scurrying to repair their balance sheets. In some senses, this is entirely unsurprising; indeed, it is desirable. Yet it also shows how broken the classic transmission mechanism has become – and is likely to remain for some time.
…
But consumers (and banks) have not responded to those declining rates because they have been scurrying to repair their balance sheets.
Isn’t a lot of credit card debt being walked away from? Or being discharged in bankruptcy?
Yeah. These articles never bother to mention what % of the debt was wiped out as uncollectable.
Also, how much of this is based on Dodd Frank and their inability to jack rates up to 30+% if you are one day late on a payment? When that passed Chase cranked up payments from 3% of balance to 5%, and the number of low interest CC offers I was being sent dried up.
I was getting 3% until paid off, 5% until paid off, etc. That is way cheaper than signature loan. Now the CCs may be 3% for a year, but then jump above 15%, much higher than taken a loan with a car as collateral, or even uncollateralized signature loan.
Repeal Dodd Frank and the consumer protections it offers, I wonder how much of the CC debt will come back.
“An America with a mere 383m credit cards floating about, rather than almost 500m, may be a country that is slowly healing itself from a crazy credit boom.”
The same douchebags that sucked Americans into peak debt with easy credit and then lobbied successfully for BK reform are seeing a small backfire. They can’t be happy about people paying down their debt…serves them right. I hope the trend continues…CC’s are a huge source of revenue for the banks.
yeah they never figure people would pay down the CC and quit paying the mortgage…..
Lorain Ohio using search warrants to move nuisance properties to demolition It’s a growing problem the city of Lorain has been dealing with for three decades — hundreds of vacant and abandoned homes.
But now the city is fighting back, using search warrants in a unique way, allowing it to gain access to dozens of nuisance properties, in an effort to move them to demolition.
Community Development Director Rey Carrion told NewsChannel5 Lorain has developed a task force, banding together its municipal court, its prosecutor’s office and building department.
The task force legally allows the city to issue search warrants on properties that are deemed a hazard, when the homeowner can’t be located.
“A lot of these properties have absentee landlords, people we have not been in contact with for many years,” said Carrion. “We felt that it is appropriate for us to take the necessary action to get into these homes, determine their condition, declare these properties a public nuisance, and demolish them.”
Coming up next: Urban agriculture in Lorain.
Excellent.
Some of my farmer cousins in the lower mid-west have just done what most farmers used to do all the time,innovate to address a need.
They have sunk their own private Natural Gas well to heat all those chicken barns that was costing them 20K per winter in LP Gas to keep warm.
They hired a locally knowledgeable Geologist, got the proper state permits, and contracted a reputable drilling company.
They admitted they ”Got lucky ” by hitting and capping a 700 lb. pressure natural Gas well at 1700 feet deep. With exactly $0 from the US government subsidy machine.
The total cost to them ,including addressing some complications,was about 120K .(All the involved drilling service companies, were so impressed by the private effort they gave extra measures for the money).
Many food farmers today are so firmly fastened to the government money teats ,that a real food shortage could be dead ahead when they all discover they can make more $$$ with the crop insurance schemes …
I was going to say $100 per foot drilled, and I was close. Apparently there’s economy of scale that I missed.
I’m amazed they got that done, just in the sense of starting it. I had thought that it was next to impossible to drill your own hydrocarbon well or dig your own mine, since essentially nowhere in the USA do you own what’s under your property. Mineral and other rights tend to be either retained by the state or already bought up en masse by some filthy capitalist. Your cousins sound lucky twice over.
I’m now thinking they’re thrice lucky, since you’d think that sinking a new gas or oil well would trigger monstrously expensive “environmental studies” that only established companies can afford. How did they get around that?
Are they re-selling their excess? Or does that take another expensive permit?
Actually ,it was within spitting distance of an old well long given out for commercial uses,that the family had bought the rights to continue using privately from the oil company . That was in 1970, and it gave out for good in 2007. Something about too much water in the pool or something.
They note that the key to the new one going in successfully was the Geologist involved , who took a personal , on-site interest in every phase and foot of the drilling of it. He was worried about going too deep into water ,or something of that sort of thing……..(Southern Indiana )