Bits Bucket for November 25, 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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Saturday, Nov 24, 2012 05:30 AM PST
Fiscal cliff: How to judge if debt cuts are real
By Alan Fram
FILE - This Nov. 16, 2012 file photo shows President Barack Obama, accompanied by House Speaker John Boehner of Ohio, speaking to reporters in the Roosevelt Room of the White House in Washington, as he hosted a meeting of the bipartisan, bicameral leadership of Congress to discuss the deficit and economy in Washington. President Barack Obama and leaders of the lame-duck Congress may be just weeks away from shaking hands on a deal to avert the dreaded “fiscal cliff. So its natural to wonder: If they announce a bipartisan package promising to curb mushrooming federal deficits, will it be real? (AP Photo/Carolyn Kaster, File)(Credit: AP)
WASHINGTON (AP) — President Barack Obama and leaders of the lame-duck Congress may be just weeks away from shaking hands on a deal to avert the dreaded “fiscal cliff.” So it’s natural to wonder: If they announce a bipartisan package promising to curb mushrooming federal deficits, will it be real?
Both sides have struck cooperative tones since Obama’s re-election. Even so, he and House Speaker John Boehner, R-Ohio, the GOP’s pivotal bargainer, have spent most of the past two years in an acrid political climate in which both sides have fought stubbornly to protect their constituencies.
Obama and top lawmakers could produce an agreement that takes a serious bite out of the government’s growing $16 trillion pile of debt and puts it on a true downward trajectory.
Or they might reach an accord heading off massive tax increases and spending cuts that begin to bite in January — that’s the fiscal cliff — while appearing to be getting tough on deficits through painful savings deferred until years from now, when their successors might revoke or dilute them.
Historically, Congress and presidents have proven themselves capable of either. So before bargainers concoct a product, and assuming they can, here’s a checklist of how to assess their work:
…
IMO the only cuts that are real will be the military (but not their black programs). Everything else will be fluff for the sheeple.
I agree. They will also be much smaller than some people are expecting.
I still have a dream that collecting any entitlements will be dependent on doing some work or in job training to upgrade skills…
The Free s&&& army is over, for some that would be sitting in classes 25 hours a week to learn English and Math, for others would be in a public service job that enhances your resume and keeps it fresh….
Such as being a paralegal and working 20 hours a week for the public defenders office……not moping floors or planting trees
There’s nothing wrong with them mopping floors or picking up trash. Which reminds me schools could save a ton of money by making the kids take care of the building. It’s insane that at a high school with ~ 1500 kids (the size of my high school) that you pay 30 people to care for the building. You might want to replace the janitors and cafeteria ladies via attrition since they really need the jobs. Also it would do the kid a world of good to scrub toilets and cut grass. I went to high school in Fairfax County, VA. In current wages I bet these service workers make $30K - $40K plus benefits possible more. If you kept on 10% of them to supervise the kids you save $1.3 million per year for just one school.
Anon:
Employers want to know what you did during unemployment. getting a survival job is almost as bad as not working……in fact you should get welfare and an intern job in your field…(my idea)
Its not like the old days…let the kids or the HS dropouts mop floors….let college educated people work at jobs that will make them more employable
It also eliminates employers discriminating against the unemployed because well….you have a job
Anon, Newt Gingrich suggested a similar idea: to give poor kids the janitorial jobs. The libs attacked the idea, I think because it robbed adults of jobs and led down to the slippery slope of child labor. And it would single out the poor kids as even poorer.
Now, if they made ALL the kids take a turn at scrubbing the toilets, including the wealthy connected and popular ones, that might be a viable idea.
Now, if they made ALL the kids take a turn at scrubbing the toilets, including the wealthy connected and popular ones, that might be a viable idea. Good idea until the first life-long disability claim lawsuit is filed after a schoolkid slips on a wet floor that he’s just mopped.
Boots on the ground spending has shifted to private security contractors.
What’s a “military black program”?
We can’t tell you.
That’s what I thought, but then my thoughts were clouded over the possibility the reference was to some kind of racial preference program favoring black soldiers…
This whole discussion about “fiscal cliff” and reduction of deficits is a complete charade. There are no real cuts. In the past for years, under the “i will reduce the deficit” President, deficit spending has increased more than 4 TRILLION dollars. That’s OVER the revenues.
The discussions about “cuts” involved reducing spending from current levels by 1 Trillion dollars over 10 YEARS. That’s 200 Billion per year, when they need to cut 1 TRILLION Immediately just to close the gap in revenues.
That doesn’t fix the problem of the 16 TRILLION in debt.
It’s all a Big Lie about fiscal responsibility. AS far as I was concerned the Horrible “Ryan Budget” didn’t go near far enough in making any reductions and the Democrats claimed it was the end of the world in austerity, just to make a Spending line that was anything less than the current trajectory.
But, all this discussion is USELESS until we talk real numbers, not descriptions like “fiscal cliff”.
What Numbers are we talking about in terms of REVENUES less Spending (that’s a negative number). And always remember, the NEGATIVE numbers are going into somebody’s pocket. So, if you get a check from the government, or work for the government, or get services from the government, then YOU are the problem. You need to get less. OH, the horror!
Obama has created an economy which has become increasing dependent on governmental spending. If he makes even major cuts in defense, we are right back into a recession. Of course, if we do not cut soon we will go broke and lose our reserve currency status thus the dilemma. As once said on this board “got popcorn”.
The economy is already in recession. They can’t keep up the spending fast enough. WE are now in the Red Queen Race, to borrow from Lewis Carrol. We need to keep spending more just to keep up with the losses growing. The spending is out of control and a GOOD depression will fix it.
It’s either that, or your “dollar” might buy you pencil and a sheet of paper to write out an i.o.u.
But no matter what happens, the KEYNESIAN Clowns, like Paul Krugman, will claim that “we didn’t do enough”.
We should have printed 20 TRILLION dollars and given it out to the Bankster crowd to speculate with. Yea, that will “Fix” the economy.
We need to keep spending more just to keep up with the losses growing. The spending is out of control and a GOOD depression will fix it.
If the gov’t simply cuts back its outlays to whatever it spent in 2005, a GOOD depression will be precipitated. Just my opinion.
BS.
Obama didn’t create this ecomony. Jack Welch and his merry band of outsourcers created this economy decades ago.
“Obama has created an economy…”
I thought maybe the ‘blame Obama’ propaganda would die down after the election.
Apparently not…
“So, if you get a check from the government, or work for the government, or get services from the government, then YOU are the problem.”
“So, if you get a check from the government, or work for the government, or get services from the government, then YOU are the problem.”
If you get services from the government without paying taxes YOU are the problem. Also most government workers are overpaid. Government workers used to get paid less than the private sector for the job security. Now they want the job security but expect higher than private sector pay. Same in banking so my retired banker friend who can’t believe what has happened in the past 10 years so.
“…most government workers are overpaid.”
Luckily steps have already been taken in an effort to put an end to that problem.
Unions urge Congress to avoid federal-worker cuts
By Erik Wasson - 11/20/12 11:18 AM ET
A coalition of more than 20 federal and postal worker unions and organizations wrote Congress on Tuesday urging members not to cut worker pay and benefits as part of a “fiscal cliff” deal on the deficit.
The Federal-Postal Coalition letter says that federal workers have already contributed $103 billion to deficit reduction: $60 billion from a two-year pay freeze, $28 billion from a delayed 2013 pay increase and $15 billion in increased retirement contributions for new hires.
…
” So, if you get a check from the government, or work for the government, or get services from the government, then YOU are the problem. You need to get less.”
Like cardiologists getting a check from the government?
http://www.sfgate.com/health/article/Private-cardiologists-selling-to-hospitals-4063646.php
We are on the horns of a dilemma. Medicare is one of the biggest expenses of the Federal government. Reducing payments to doctors results in them making a business decision to sell out to hospitals. Hospitals currently are paid more than private practice doctors, so Medicare payments actually increase.
Controlling medical costs means that doctors and hospitals will make less money. I think the ultimate effect will be that there will be fewer doctors and hospitals. Some doctors will choose to retire and small hospitals in rural areas may go out of business. The remaining doctors and hospitals may well increase their prices as competition decreases. This will increase wait times and reduce treatment as the number of people who can afford treatment will decline.
This can simply not be true. ObamaCare “Fixed” the high cost of medical care and deliberately took away money that would have gone to Medicare, thereby reducing costs.
That “saved” money is to put 20 to 30 million people who don’t have “healthcare insurance” into the pool, to save even more money.
ObamaCare saves everyone with less money wasted.
All hail Obama!!
Wow! You mean socialized medicine will lead to shortages / rationing. Who would have thought. No body could see it coming.
Predictable responses. Obamacare is not socialized medicine. Medicare is not even socialized medicine. It is single payer. Britain’s NHS is socialized medicine.
The real trouble is that free markets are leading us in the same direction. Health insurance increases and medical inflation predate Obamacare by at least several decades. It remains to be seen whether Obamacare has accelerated the prevailing trends that eventually lead to less care for the non-wealthy.
Government Mortgage Benefit Card. Its like a food-stamp card but you use it to pay your mortgage. Bernanke pays for them. Problem solved.
Alpine Squad Task Force in action at elevation 13,800′ near Leadville yesterday:
http://www.picpaste.com/2012-11-24_08-54-18_516-jqLP10oF.jpg
http://www.picpaste.com/2012-11-24_11-42-39_469-2zN5heSN.jpg
Go Squad!
Stunningly beautiful pics — thanks for sharing!
Right up my alley, Goon.
I love that type of stuff.
Nice!
You guys have no snow!
http://www.youtube.com/watch?v=axpS4Z92KZI&feature=autoshare
Here’s how California is doing at 10,500′
You guys have no snow!
We were going to ski this weekend but it’s not worth it with only 5 runs open. Instead we took advantage of Al Gore’s global warming to drive up 4WD National Forest roads to upper trailhead that would normally be buried this time of year. Looking west toward the Maroon Bells near Aspen:
http://www.picpaste.com/2012-11-24_11-42-18_905-Wie4RJob.jpg
Denver Post - House flipping has made a comeback in Colorado, but it’s still risky:
“Thanks to the improved real-estate market, house flipping has made a comeback, both across the nation and, to a degree, in Colorado.
Flipping is the process of purchasing a house — sometimes a foreclosure and usually in need of repairs — fixing it up and then reselling it within a few months for a profit.
RealtyTrac reports that nearly 100,000 U.S. homes were flipped in the first half of 2012, up 25 percent over the same period a year ago.
For the first six months of this year, 4,497 houses were flipped in Colorado, for an average gross profit of $7,522, well below the national average of $29,342. On average, it took 122 days to flip a house in the state, compared with the national average of 106.
Among metro areas across the country, Denver-Aurora ranked eighth in the number of flips over the first half of this year with 2,714. Phoenix was No. 1 at 9,182. The average gross profit in Denver was $7,732.
Flipping isn’t for everyone. In fact, many who do it avoid the name.
“We don’t use the word flipping,” said David Hicks, co-president of Dallas-based HomeVestors, the “We Buy Ugly Houses” people.
“Flipping has a bad connotation, especially here in Dallas. The term we use is professional real estate investor.”
The average gross profit in Denver was $7,732.
That isn’t a lot of profit given the risk and potential downside.
What’s the downside. How can you loose? RE always goes up and it’s different in X. Update on my RE genius (gambler) cousins. Got rid of the investment properties. Not sure how. Filed bankruptcy last year. But kept their own house. Their mortgage alone is $1500 - never mind the taxes, insurance, utilities. They live far out in the country. They each make ~$10 per hour in retail. The husband’s high paying construction employment dried up about 2 years ago. Not sure how they live. Thick as he is which is pretty thick, he’s talking about moving to town to an apartment.
I think I am seeing a pattern here. With all the discussion the past few days about inventory reductions and shadow inventory (sorry I missed them).
I am still trying to find another house to replace my current homestead property and relocate. I have been shopping for more than 5 years. I bought a house nobody wanted because it was in very poor condition and needed lots of work. Not even the contractors wanted to take it on. I bought it after my first contracted sale was taken back by Freddie Mac, after being foreclosed, during the sue the lenders for misrepresentation in foreclosure phase.
It took a year and a half for that house to come back on the market. I got first bid, but already had purchased this other house and was working on it. I passed.
But, it has been repurchased, and the new “owners” are having a garage added, changes to the facade, window improvements, and I don’t know what interior changes. All things I would have done. (the lot was large enough to put a car and 1/2 garage on the side of the existing structure. It all looks like a contractor “rehab”. I suspect that it is.
As for the housing market on both sides of Tampa Bay, there are dozens of houses I have seen that become BOARDED UP just about the time they become vacant (owner occupant gone). They usually don’t make it to the market. In the ensuing months, they are “rehabbed” and sold.
There are very few houses that an individual can buy that are “bargains”, or that are cheap. Whenever they come onto the market, they are usually SOLD before you can even see them. In many cases the brokers have listings that say “UNDER CONTRACT”, but they are accepting backup offers.
I believe the banks are working with investor companies and giving most of the houses, in bulk, to re-hab and re-purpose companies who then upgrade them to make them appealing to new buyers. The PRICE doesn’t matter because the government is sponsoring 3% Loans. It’s the lowest rate in 300 years. It makes $150,000 houses “affordable” to working people. The rate allows sellers to bid up the price, so long as the buyer is FINANCING, which I believe is the key selling feature.
Just like the Bubble-mania with 1% for the first 3 years, the price doesn’t matter.
There’s just one problem. The rate will most likely go UP over the next 5 years. The typical turnaround time is has traditionally been about 5 years. What then? What if rates rise to 6%?
The payment will DOUBLE. You might find the $150,000 purchase price is just too high, so we start this nightmare of foreclosures all over again.
During my lifetime I saw 5% interest-rate loans for housing in the early years, that lasted for years. During that same time, I could get 5% in a passbook savings plan (interest income was possible). I saw rates go up to 7% for a while, then 10%, then all the way up to 16% under Volker that devastated the Real Estate market. I’ve seen a lot of fluctuations. I had never seen a market where savings plans paid 0.5% and mortgages were this low. It’s utter madness.
I don’t know when, but eventually interest rates will climb back up. The Banksters can’t keep this scam going on indefinitely. The BUYERS will have assets that they can’t SELL, and that will bring a new round of hysteria in the markets. Ben Bernanke is an idiot, but he is just what Obama wants, a money-printing fool who can “PAY” for the deficits with a printing press.
“There are very few houses that an individual can buy that are “bargains”, or that are cheap. Whenever they come onto the market, they are usually SOLD before you can even see them. In many cases the brokers have listings that say “UNDER CONTRACT”, but they are accepting backup offers.”
Comment by SV guy
2010-11-14 12:44:18
………………………………………. Does anybody think they are smart enough, or more importantly, connected enough to stroll amongst the ashes picking up assets for pennies on the dollar?……………………………………………………….
No one is looking to find “assets” for “pennies on the dollar”. A $45,000, simple, small 800 sf house on a 50 x 100 lot should not be that difficult. They were in that range, up to 65k for about 2 years when you could find them. Now, 65k is the bottom end. But this is for houses that are built in 1950, have years of poor maintenance and aren’t updated to the latest codes. Some still have the old casement windows from the time they were built.
The house is still “livable”, but needs time and attention, a great “starter home”.
Can’t get them. They get upgraded and relisted at $120,000.
I wasn’t suggesting you were Dio. I was merely restating my belief that that vast majority of the cream will be lapped up by the boyz.
We serfs will be what’s spilled.
…will get what’s spilled.
You were right the first time.
In my area, a “simple, small 800 sf house on a 50 x 100 lot” won’t fetch less than $220K, and that’s for an ex-flophouse fixer-upper. The rehab that I see most often is to add a second floor onto a small rambler and gussie it up with McMansion-ish brick front and windows, and probably the usual pergraniteel inside too. That rehab probably cost almost as much as the house. The rest of the hood is still hood, so I don’t see how they make much profit on the rehab.
Denver Post - Credit unions continue surge in customers leaving banks:
“Credit unions are showing continued increases in new memberships in Colorado and nationwide, a year after consumers who were mostly fed up with fees started a movement away from banks.
The idea was that fees for banking services could be avoided by transferring accounts to local credit unions. It evolved into Bank Transfer Day, whose effects, industry experts say, lingered long after.
Membership enrollments in Colorado-based credit unions have risen by 2.4 percent in the past year — the first increase in three years and the highest since 2001. That increase is nearly identical to the national trend, according to data provided by Mountain West Credit Union Association, which represents those organizations in Colorado, Arizona and Wyoming.
Bank Transfer Day — Nov. 5, 2011 — was the brainchild of a Los Angeles woman fed up with what she saw as excessive fees at her bank, exacerbated by the poor service she said she received with each visit.
It wasn’t long before she had acquired a huge following after a number of Facebook rants that were partly responsible for Bank of America abandoning plans to charge customers a $5 debit-card fee. Wells Fargo and JPMorgan Chase followed suit.”
Chase branches have been popping up like mushrooms here in the Centennial State. Someone must be banking with them.
We used to have a CU in our town called Longs Peak CU, and at one point it had 3 or 4 branches. Then it started shrinking until there was only one branch left, which eventually merged with Boulder based Elevations CU. Elevations had merged/acquired other local CUs.
“Flipping has a bad connotation, especially here in Dallas. The term we use is professional real estate investor.”
In case you all haven’t noticed, the housing PR pimps are everywhere on the net attempting to clean up their corrupt reputation. This quote is a perfect example.
Why the word “professional” before real estate investor? It doesn’t change my perception (and I’m easily fooled). That’s like me putting on my business card “Really Honest Sales Rep”. There, now I’m legit.
The term “professional” has also been used in an attempt to make prostitution seem like a respectable occupation.
“Stripping has a bad connotation, especially here in Dallas. The term we use is adult entertainer.”
I thought that the current euphemism was that stripper joints are now called “Gentlemen’s Clubs”
I just discovered Thomas Sowell. My calculations had predicted the existence of such a being but up until this time, my search has been blocked by clouds of hot gas and radio noise from various gate keepers…
But I kept looking
Here is a 1983 interview of Thomas Sowell by some drunk guy.
http://www.youtube.com/watch?v=M1gT033JytU&feature=relmfu
Now back to my telescope.
Spook:
Nice guy Oliver Mcgee you can find these people
http://www.olivermcgee.org/index.html
Promoting the Saving, Transforming and Empowering of African American Men and Boys for the Betterment of American Society
Authored by Oliver G. McGee Ph.D.
https://www.createspace.com/3810811
McGee is the former United States (U.S.) Deputy Assistant Secretary of Transportation for Technology Policy (1999-2001) at the U.S. Department of Transportation (DOT) and former Senior Policy Advisor (1997-1999) in The White House Office of Science and Technology Policy. McGee is a 2012-2013 American Council on Education Fellow, and an American Association of State Colleges & Universities’ (AASCU) Millennium Leadership Initiative (MLI) Fellow - educational leadership and management development programs for prospective university chancellors and presidents.
Read and enjoy:
The Housing Boom and Bust: Revised Edition
Thomas Sowell
7 new from $10.85
16 used from $5.58
Thomas Sowell has been a guest and host on Rush Limbaugh a number of times over the years, along with other black “conservative” speakers.
Walter Williams is also given the microphone at times on various of the “hate radio” stations.
If you don’t listen to those types of formats, you won’t hear commentary from Conservative black Americans, because the LEFT side won’t let them talk.
They are “sell outs”, “uncle Toms”, etc.
Thomas Sowell and Walter Williams have been around a LONG time. They won’t be found in the New York Times or other “mainstream” press. There they will feature Maya Angelu, Jesse Jackson, Al Sharpton, for black opinion, and Paul Krugman, so you can get your economic “facts”.
‘They won’t be found in the New York Times or other “mainstream” press.’
Killing the goose that laid the golden egg
By Thomas Sowell
Contra Costa Times syndicated columnist
Posted: 11/22/2012 10:00:00 AM PST
Updated: 11/22/2012 05:13:07 PM PST
Killing the goose that lays the golden egg is one of those old fairy tales for children that has a heavy message adults should listen to. The labor unions, which have driven the makers of Twinkies into bankruptcy, potentially destroying 18,500 jobs, could have learned a lot from that old children’s fairy tale.
Many people think of unions as organizations to benefit workers, and think of employers who are opposed to unions as just people who don’t want to pay their employees more money. But some employers have made it a point to pay their employees more than the union wages, just to keep them from joining a union.
Why would they do that, if it is just a question of not wanting to pay union wages? The Twinkies bankruptcy is a classic example of costs created by labor unions that are not confined to paychecks.
The work rules imposed in union contracts required the company that makes Twinkies, which also makes Wonder Bread, to deliver these two products to stores in separate trucks. Moreover, truck drivers were not allowed to load these products into their trucks. And the people who did load Twinkies into trucks were not allowed to load Wonder Bread, and vice versa.
All of this was obviously intended to create more jobs for the unions’ members. But the needless additional costs that these make-work rules created ended up driving the company into bankruptcy, which can cost 18,500 jobs. The union is killing the goose that laid the golden egg.
…
I like some of what Thomas Sowell has written. However, he is utterly oblivious to the economic mechanism of rent-seeking, which is playing a critical role in the current crisis.
I’d argue that “rent-seeking” is a major theme of The Housing Boom and Bust, though I read it years ago and so can’t recall if he used that exact expression.
San Francisco Chronicle - Push to step up domestic use of drones
“Are unmanned aircraft, known to have difficulty avoiding collisions, safe to use in America’s crowded airspace? And would their widespread use for surveillance result in unconstitutional invasions of privacy?
Experts say neither question has been answered satisfactorily. Yet the federal government is rushing to open America’s skies to tens of thousands of the drones - pushed to do so by a law championed by manufacturers of the unmanned aircraft.
The drone makers have sought congressional help to speed their entry into a domestic market valued in the billions. The 60-member House of Representatives’ “drone caucus” - officially, the House Unmanned Systems Caucus - has helped push that agenda. And over the past four years, caucus members have drawn nearly $8 million in drone-related campaign contributions, an investigation by Hearst Newspapers and the Center for Responsive Politics shows.
House members from California, Texas, Virginia and New York on the bipartisan “drone caucus” received the lion’s share of the funds channeled to lawmakers from dozens of firms that are members of the Association for Unmanned Vehicle Systems International, Hearst and CRP found.
Eleven “drone caucus” lawmakers from California, where many aviation firms are located, received more than $2.4 million from manufacturers during the 2012 and 2010 election cycles, according to CRP tabulation of Federal Election Commission reports.”
New York Times - Election Spurred a Move to Codify U.S. Drone Policy:
“Facing the possibility that President Obama might not win a second term, his administration accelerated work in the weeks before the election to develop explicit rules for the targeted killing of terrorists by unmanned drones, so that a new president would inherit clear standards and procedures, according to two administration officials.
The matter may have lost some urgency after Nov. 6. But with more than 300 drone strikes and some 2,500 people killed by the Central Intelligence Agency and the military since Mr. Obama first took office, the administration is still pushing to make the rules formal and resolve internal uncertainty and disagreement about exactly when lethal action is justified.
Mr. Obama and his advisers are still debating whether remote-control killing should be a measure of last resort against imminent threats to the United States, or a more flexible tool, available to help allied governments attack their enemies or to prevent militants from controlling territory.
Though publicly the administration presents a united front on the use of drones, behind the scenes there is longstanding tension. The Defense Department and the C.I.A. continue to press for greater latitude to carry out strikes; Justice Department and State Department officials, and the president’s counterterrorism adviser, John O. Brennan, have argued for restraint, officials involved in the discussions say.
More broadly, the administration’s legal reasoning has not persuaded many other countries that the strikes are acceptable under international law. For years before the Sept. 11, 2001, attacks, the United States routinely condemned targeted killings of suspected terrorists by Israel, and most countries still object to such measures.
But since the first targeted killing by the United States in 2002, two administrations have taken the position that the United States is at war with Al Qaeda and its allies and can legally defend itself by striking its enemies wherever they are found.”
to develop explicit rules for the targeted killing of terrorists by unmanned drones, so that a new president would inherit clear standards and procedures, according to two administration officials.
Yeah, like that would have tied Romney’s hands from making his own “standards and procedures”.
“Mr. Obama and his advisers are still debating whether remote-control killing should be a measure of last resort against imminent threats to the United States, or a more flexible tool, available to help allied governments attack their enemies or to prevent militants from controlling territory.”
I hope they realize that whatever standards they develop will soon be adopted by other countries around the globe.
Is it legal to shoot down a domestic drone if it invades your privacy?
I’m sure this question will be answered by a court in the coming years once someone gets pissed and shoots down a police drone somewhere in the USSA.
The drones will enjoy the same immunity as traffic camera enforcement.
Anyone who shoots them down (or catches them with butterfly nets) will get sent to Guantanamo as terrorists.
Remember that movie “Day of the Dolphin?”
I predict the CIA will develop genetically engineered smart pigeons which will be armed with small C4 bombs and released to hunt down and land on terrorists and then detonate.
The terrorists will compensate by training falcons to “shoot down” the pigeons.
This era will later be known as “The Bird Wars”.
Is it legal to shoot down a domestic drone if it invades your privacy?
It has already happened.
Whether it’s legal or not is up to the tort lawyers & Eric “Place” Holder.
The only difference between a domestic drone and a UFO is whatever group that claims ownership after the thing crashes. They are not going to be towing a banner with the name of the agency controlling them, until they are brought down and inspected, they are just silvery things flying through the air.
None of these are really drones but UAVs, drones don’t return.
The quadrotor that was shot down in your link is more like a RC model that operates at just a few hundred feet.
Real domestic UAV’s fly with surveillance at least up to 18,000′.
I have had air traffic control point out UAVs for avoidance. I’m way more concerned about a mid-air collision than having my privacy invaded.
I’m sure that if one of these suckers accidentally collides with an airliner and takes it down, we will not be told the truth.
Real domestic UAV’s fly…
Semantic issue. My point stands. As far as we civilians on the ground go, those silvery things (unless they are a common type of aviation) up there are UFOs whether they fly at 100 or 18000 feet, until the controller of the UAV becomes known. I admit it would be rather difficult to shoot one down flying at high altitude.
As the general & commercial aviation industry inevitably shrinks, we may have to start worrying more about UAV’s colliding with each other.
I’m sure that if one of these suckers accidentally collides with an airliner and takes it down, we will not be told the truth.
Of course.
On the first day of Christmas,
Obama gave to me
A phone Do-do-do-do-do-dooo.
On the second day of Christmas,
Obama gave to me
Almost two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo.
On the third day of Christmas,
Obama gave to me
Three Dollar gas,
Two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo.
On the fourth day of Christmas,
Obama gave to me
Four Trillion dollars in new debt,
Three Dollar gas,
Almost two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo.
On the fifth day of Christmas,
Obama gave to me
Five years of SNAP,
Four Trillion dollars in new debt,
Three Dollar gas,
Almost two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo.
On the sixth day of Christmas,
Obama gave to me
Six Drones a-shooting,
Five years of SNAP,
Four Trillion dollars in new debt,
Three Dollar gas,
Almost two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo.
On the seventh day of Christmas,
Obama gave to me
Seven million who’ve dropped out of the labor force,
Six Drones a-shooting,
Five years of SNAP,
Four Trillion dollars in new debt,
Three Dollar gas,
Almost two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo.
On the eighth day of Christmas,
Obama gave to me
Although he calls it Eight,
Seven million who’ve dropped out of the labor force,
Six Drones a-shooting,
Five years of SNAP,
Four Trillion dollars in new debt,
Three Dollar gas,
Almost two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo.
On the ninth day of Christmas,
Obama gave to me
Fourteen % unemployment,
Although he calls it Eight,
Seven million who’ve dropped out of the labor force,
Six Drones a-shooting,
Five years of SNAP,
Four Trillion dollars in new debt,
Three Dollar gas,
Almost two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo.
On the tenth day of Christmas,
Obama gave to me
$10,850 in “transitional” money to leave the home I have lived in rent free since 2007
Fourteen % unemployment,
Although he calls it Eight,
Seven million who’ve dropped out of the labor force,
Six Drones a-shooting,
Five years of SNAP,
Four Trillion dollars in new debt,
Three Dollar gas,
Almost two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo.
On the eleventh day of Christmas,
Obama gave to me
Eleven Bankers laughing,
$10,850 in “transitional” money to leave the home I have lived in rent free since 2007,
Fourteen % unemployment,
Although he calls it Eight,
Seven million who’ve dropped out of the labor force,
Six Drones a-shooting,
Five years of SNAP,
Four Trillion dollars in new debt,
Three Dollar gas,
Almost two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo.
On the twelfth day of Christmas,
Obama gave to me
Twelve Hardest Hit deferred payments,
Eleven Bankers laughing,
$10,850 in “transitional” money to leave the home I have lived in rent free since 2007,
Fourteen % unemployment,
Although he calls it Eight,
Seven million who’ve dropped out of the labor force,
Six Drones a-shooting,
Five years of SNAP,
Four Trillion dollars in new debt,
Three Dollar gas,
Almost two years of unemployment benefits,
And a phone Do-do-do-do-do-dooo!
how much more debt and how many more people will be on food stamps at the end of this 4 year term?
I guess chinese reserve growth has fallen off a cliff. The money to buy treasuries is drying up.
what happens when the FED is the only one at the auctions?
Thats why Rom lost….
He could of said I want 20 million less people on FS at the end of my 1st term because they have well paying jobs and dont need them anymore.
Probably a lot more debt, but food stamps contribution to it will be a small percentage.
I am also certain that Corporate America will offshore more jobs and its profits will continue to rise.
Speaking of rising profits, watch for HP to have a “great quarter” next time, now that they took a $9B big bath.
For those unfamiliar with the term:
“Big Bath in accounting is an earnings management technique whereby a one-time charge is taken against income in order to reduce assets, which results in lower expenses in the future.[1] The write-off removes or reduces the asset from the financial books and results in lower net income for that year. The objective is to ‘take one big bath’ in a single year so future years will show increased net income.” - from wikipedia
Did you catch my QUOTE OF THE DAY from yesterday?
Nobody correctly guessed who said it.
ron paul?
Nope.
That sounds like something Jim Rogers would say, but it could be any number of people.
How is it that the MSM managed to ignore this seemingly-critical story?
The section of Mitt Romney’s “gaffe” tape you haven’t heard
Thursday, Sep 20, 2012 at 1:02 PM PDT
…
“If you want to reason a vote for Mitt Romney here it is,” Glenn told listeners this morning.
Glenn has expressed his concern about whether or not Mitt Romney really “gets it” when it comes to the Federal Reserve, bailouts, and the serious damage that is being done to the dollar. Thanks to the video the media has labeled a “gaffe” he’s not worried anymore.
“I want you to listen carefully to what Mitt Romney said is the biggest problem in our country. A response to a question – listen to what he says about the Federal Reserve.
…
How is it that the MSM managed to ignore this seemingly-critical story?
It wasn’t on this year’s agenda.
Nobody correctly guessed who said it.
I did; I just waited until this AM to give others a chance.
A: Mitt Romney.
According to Mother Jones, it was Mitt Romney.
According to Glenn Beck, it was Mitt Romney.
But where was the MSM? In the dark, as usual…
Yea, you can say all that, but you gotta remember:
IT’s all BUSH’s FAULT. It ’s BUSH’s economy. Obama got handed a horrible situation. Until we get it fixed, it’s ALL Bush’s Fault.
We’re headed into year 5, and doesn’t matter, Obama did what he “had to do” because of BUSH.
Don’t forget that.
Democrats care. Republicans are haters and want to starve your children.
It’s all Bush’s Fault!!!
Now, that is REAL ‘leadership’.
Don’t think that line is gonna work very well going forward…
“Don’t think that line is gonna work very well going forward…”
“Forward, the Debt Brigade!”
Was there a man dismay’d?
Not tho’ the Tax Payer knew
Someone had blunder’d:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to pay and die:
Into the valley of Debt
Rode the 314,809,886
It’s worked so far. Why not? Whenever someone even suggests that Obama’s bubbling may have exacerbated the problem we get the usual:
Well, the problem was SO HUGE, so Horrible, it was like nothing ever experienced before on planet earth. You couldn’t expect it to be “fixed” in just 4 years.
So, why not, like we’ve heard on this blog many times, it was 30 years of Republican programs that got us into this mess……so, it may take 10 years to “fix it”.
Ditech: “People are Smart”.
Diogenes: “People are Stupid.”
http://www.youtube.com/watch?v=tpAOwJvTOio
Big investment firm buys hundreds of houses in Sacramento area
By Hudson Sangree and Phillip Reese
An investment firm that owns the Waldorf Astoria hotel and the Weather Channel has bought more than 500 houses in Sacramento in the past few months, betting upward of $60 million that home prices will rise. - Read More
Trying to post the link….
http://cl.exct.net/?ju=fe4f137772650c7e7c12&ls=fe1b1d777d6c017e741275&m=fefc1172766306&l=fed1157376640678&s=fe35157277640d7d711074&jb=ffcf14&t=
probably in bad neighborhoods. anything cheap around sacramento is cheap for a reason. The big money will hose the little man once again.
All you need to know:
‘House flippers who had to compete against Blackstone’s buyers in auctions on courthouse steps began to grouse. They were regularly being outbid. THR has paid, on average, a roughly 20 percent premium for homes, according to a Bee review of data from Zillow.com. In one case, THR purchased a 1,000-square-foot home in Meadowview for $175,000, or roughly 80 percent more than Zillow estimates the home is worth.’
“They’re betting on appreciation,” said Eric Peterson, managing director of Praxis Capital, a house-flipping and property management firm in midtown Sacramento. Blackstone’s attitude, Peterson said, is “‘I don’t really care what I pay today, because I think it’s going to be double that five years from now. Ten grand’s not going to affect my return that much.’
I’ve been pointing this out though:
‘(Reuters) BLACKSTONE GROUP L.P. has agreed to buy the Huamin Imperial Building in Shanghai, a source with knowledge of the matter said, an office tower media reports say is valued at around RMB7 billion ($1.12 billion).’
‘(Economic Times) Private equity giant Blackstone has made an offer to Vijay Mallya’s investment holding company UB Holdings to buy out the prime office and retail real estate blocks in its flagship UB City, the biggest commercial property project in the heart of Bangalore’
‘SINGAPORE • KKR & Co, the private equity firm, plans to expand its business lending to Asian companies amid a shortage of funding in the region…KKR, like the larger Blackstone Group LP, has expanded into areas such as underwriting stocks and bonds, managing funds of hedge funds, and investing in infrastructure and real estate, as traditional private-equity deals remain subdued’.
‘The value of such deals announced in the third-quarter fell 29% to US$95.1 billion from a year earlier, according to data compiled by Bloomberg.’
When I look at Asian RE markets, Blackstones name comes up a lot in the most over-valued markets. They must be pretty dumb. Plus, a few hundred houses here or there is chicken feed to these guys. Probably just gambling with money they found in the couch.
A bad sign if you are betting on further price drops.
‘A bad sign if you are betting on further price drops.’
‘Wed Oct 17, 2012 (Reuters) - One of the first big hedge funds to try to profit from a rebound in the U.S. housing market by investing in foreclosed homes is looking to cash out, even as other institutional investors are still getting in. Och-Ziff Capital Management Group LLC, the $31 billion hedge fund led by Daniel Och, recently told its investment partner, 643 Capital Management, that it wants to exit from the foreclosed homes business, said several people familiar with the matter.’
‘Earlier this year, proponents of investing in foreclosed homes were projecting a return of at least 8 percent a year from renting them out. ‘Sharga said it was not surprising that an early market entrant like Och-Ziff would look to get out and take advantage of the recent appreciation in home values. He said other early financial investors also may change direction and decide to cash in sooner rather than later.’
“This is a normal winnowing-out process,” Sharga said. “We will see other early entrants depart.’
http://www.reuters.com/article/2012/10/17/us-foreclosed-hedgefunds-idUSBRE89G1TE20121017
As I said, dumb money looking for a greater fool. Let’s take this statement:
‘I don’t really care what I pay today, because I think it’s going to be double that five years from now’
Are incomes going to double in Sacramento in the next five years? Are interest rates going lower in five years? Or are these houses, five years older, just going to magically double? Sounds like bubble talk to me.
“Are incomes going to double in Sacramento in the next five years? Are interest rates going lower in five years? Or are these houses, five years older, just going to magically double? Sounds like bubble talk to me.”
How about will the greenback be worth 50% less in 5 years? If so it makes sense.
I know some liken the linen to royalty. Not I.
‘will the greenback be worth 50% less in 5 years?’
What would that mean for their much larger bets on Asian RE? And if you really believed that why not buy gold mine stocks? Those would go up thousands of %’s.
“Are incomes going to double in Sacramento in the next five years? Are interest rates going lower in five years? Or are these houses, five years older, just going to magically double?”
No.
(Sacramento native, living in the area now.)
P.S. “Meadowview” is a marginal area, right next to some areas with bad crime rates. There are a lot of very nice people living there and some not very nice people; it’s the sort of place where you’ll probably have police copters overhead once a month or so, and bad things happening a few blocks away, but your own street might be perfectly fine.
Ben, all I know, or believe, is that this financial game is rigged. And not in “our” favor. There is one group that always seems to come out on top. This is the same group that controls the printing press.
Hard work, intelligence, plain luck?
Yeah, right.
‘one group that always seems to come out on top’
Hasn’t it been that way for decades? It shouldn’t stop others from pursuing goals, financial and otherwise.
Besides this speculation being a sign of a mania, IMO it shows us other things. If you had a billion dollars, think of all the things you could attempt. In technology, energy extraction, health care. But some guys sit around in fancy chairs and decide, let’s buy a bunch of shacks in Phoenix or Las Vegas. I’ve been inside many of these houses; I’ve fixed them up. It’s not a business for people with hand made Italian shoes. They’re either really stupid, out of ideas, or both.
Look, the lenders are in this business too. They already own the foreclosures, and they are losing their ass. If this is some gold mine, why doesn’t Bank of America just fix them up and rent them out? They’ve got hand made Italian shoes too, but they know better.
Are incomes going to double in Sacramento in the next five years? Are interest rates going lower in five years? Or are these houses, five years older, just going to magically double? Sounds like bubble talk to me.
It’s the same old Inventory Avoidance talk we hear every day. Inventory is inventory whether it’s rental, for sale, held off market. It’s the 800lb gorilla in the room and there is no ignoring it irrespective of all the desperate measures to do so.
Excess inventory is the primary fundamental.
If you had a billion dollars, think of all the things you could attempt. In technology, energy extraction, health care ??
Bingo Ben….Spot on….I have said it before….Misplaced priorities are a huge problem in our country…
It’s not a business for people with hand made Italian shoes. They’re either really stupid, out of ideas, or both.
Maybe it’s neither Jonesy. The reality could be that these outfits act on behalf of the Fed using Fed e-dollars to keep the charade going.
“…pretty dumb.”
They seem to know how to sniff out a government subsidy.
Investment of the quarter: US housing
22 November, 2012 10:11 AM | By Mike Foster
Two swallows do not necessarily make a summer, but US banks JP Morgan and Wells Fargo are chirpy over prospects for the US housing market. Both reported a surge in mortgage lending in the quarter to September. JP Morgan’s Jamie Dimon said: “We believe the housing market has turned a corner.”
This follows the Federal Reserve’s decision to print new dollar bills worth $40 billion (€30.5 billion), once a month, and use them to buy mortgage debt from the banks. In theory, this will encourage them to make new loans and juice the US economy.
In practice, the US housing market will be the biggest beneficiary. And there is already a feeling of optimism in the sector following five years of pain inflected by rash lending decisions and an average fall in price of 33%. In the second quarter, builders took out permits at a rate 5% higher than in the first and 24% higher than a year ago, according to the US Department of Housing and Urban Development.
Yves Bonzon, chief investment officer at Pictet Wealth Management, is cautiously optimistic, pointing to a gentle rise in house prices across the US this year. The unemployment rate has fallen a little and the rate of US household formation has started to rise. Bonzon believes the Fed’s latest action to reflate asset prices is a game changer, saying it is time to reduce positions in US defensive stocks and back those with potential to grow their dividends.
Private equity firms are already banking on an improved housing trend. Analysts say they have been mopping up US homes in foreclosure to renovate, rent and wrap them into structured products. Sound familiar? Steve Schwarzman, chairman of Blackstone, isn’t worried. He told investors: “I think we are more or less picking another market bottom.”
…
and wrap them into structured products. Sound familiar ??
IMO, thats exactly their intent…Their payday will come when they sell those houses, likely with their own loans, bundle them and sell them….Get-in Get-out…
“I think we are more or less picking another market bottom.”
Probably just gambling with money they found in the couch ??
I would agree with this….They are awash in cash and it comes in the door faster than they can find places to place it…They are searching for yield and are moving down the food chain to find it…
From a housing standpoint, there is no clearer example then watching the Big builders (Pulte) around here…They are doing these tiny projects (by their standards) because they are turning over every rock to make a buck and keep their critical staff employed…
Small developer/Builder is done around here…Big boys have taken that market share previously occupied by them…
‘They are searching for yield’
Here’s my question; is the world so devoid of practical investments that hedge funds are buying old stinky houses and renting them out? No fancy tech stocks or new technologies to fund? Some recovery. Why don’t they buy builder stocks or home repair companies?
What about those builders?
‘Sept. 21, 2012. Homebuilding across metro Phoenix is slowing slightly but still is up more than 50 percent from last year’s sluggish pace. In July, there were 1,062 homebuilding permits issued across the region…The number of new houses built has topped 1,000 each month since March.’
‘New census data show almost 18 percent of all the houses in the city of Phoenix were empty in 2011. But 13.2 percent of those are rental homes, and the rest are homes that are likely for sale. The information comes from the federal government’s one-year estimate after the 2010 American Community Survey. The report tracked a total of 601,370 housing units in Phoenix.’
http://www.azcentral.com/business/realestate/articles/2012/09/20/20120920reagor-real-estate-arizona-building-homes-slows-bit.html?nclick_check=1
‘Spencer Kamps, with the Home Builders Association of Central Arizona, says after an 80% drop in housing starts since 2005, any improvement is a good thing. ‘People don’t have a lot of cash obviously, so you’re not looking at the high end housing, but more the moderately priced $150,000 to $200,000, the entry level type homes,’ Kamps said.’
‘Kamps pointed out that after the market collapse his region had some 50,000 empty, but improved, lots waiting for houses.’
http://www.knau.org/post/housing-starts-az
People don’t have a lot of cash, in Phoenix? How can that be; haven’t you heard hedge funds are buying foreclosures there? Why surely, money must be flowing like wine! The builders are building on spec again. Doesn’t every house generate 3 jobs (at least for a couple of months)? When that house is finished, just build another one and…oh never mind.
is the world so devoid of practical investments that hedge funds are buying old stinky houses and renting them out? I’m beginning to wonder if the world IS running out of practical & useful investment opportunities. More likely the opportunities that do exist are not being pimped the way RE is.
‘Spencer Kamps, with the Home Builders Association of Central Arizona, says after an 80% drop in housing starts since 2005, any improvement is a good thing. ‘People don’t have a lot of cash obviously, so you’re not looking at the high end housing, but more the moderately priced $150,000 to $200,000, the entry level type homes,’ Kamps said.
Hey jackassed liar…… $200k is high end.
Don’t let these clowns slip this garbage under the door and run.
It does seem like a tough way to make money, compared to paper commodities trading and currency arbitrage.
“More likely the opportunities that do exist are not being pimped the way RE is.”
Sounds like a great time to seek these out and leave the RE investments for the professionals.
The average annual earnings of full-time workers in the UK rose by 1.4% to £26,500 in the year to April 2012.
The figures have been published by the Office for National Statistics (ONS) in its annual survey of hours and earnings.
There was a cut in the real value of pay, however, as inflation was higher during the same period, at 3.5%.
And the ONS data also reveals that inflation has outstripped the rise in average pay for the past 12 years.
http://www.bbc.co.uk/news/business-20442666
Nice to know I’m wasn’t the only one getting poorer over the last twelve years.
Nice to know I’m wasn’t the only one getting poorer over the last twelve years.
Indeed. In my own case:
Eating out has dropped substantially
No more new car every 3-4 years.
No out of town vacation since 2008
And I’m supposed to be one of the well off crowd.
we have basically stopped eating out. I am the cook around here by default. I whipped up some bacon and eggs this morning, our dollar each meal.
The cost of drinks has gotten out of control at eateries. 3 bucks for a soda? I feel cheap not ordering a drink but water has been ok lately.
30 bucks can go along way for groceries. Actually we can survive a week on 30 bucks in groceries.
“Actually we can survive a week on 30 bucks in groceries.”
Two growing teenagers under my roof means $30 every other day it seems. We’ve cut back in other areas, but our grocery spending has steadily increased.
Yes, but the “cost of living” has not increased, and there is no inflation. It’s a good thing the government doesn’t count FOOD and FUEL as part of its basket of goods and that hedonics and substitution are used to calculate the “cost” of living.
The price of Steak hasn’t gone up, because you can substitute Hamburger.
There. The government has taken care of all these issues for you. Thank them for their caring about you.
fillet mignon in Mammoth Lakes in $20.49/lb
fillet mignon in Mammoth Lakes in $20.49/lb
Our local Sam’s Club sells it for just under $12/lb.
I feel cheap not ordering a drink but water has been ok lately. I have done this my entire life. If I want to live large, I order a cup of boiling water & turn it into tea using my own tea bag. Why should you care that much what other people think?
not sure why. guess i feel guilty about not making the place as much money as they expect.
Sometimes if the two of us go out and split an entree and no drinks the bill can be often < 20.00. Saves money and you dont overeat.
The percentile cutoff for membership in the “well off crowd” has shrunk in the wake of the Great Recession. E.g. yesteryear’s 1% is today’s 0.1%…
Yep…And the question is will they ever recover in their lifetime…My experience watching the 1981 recession fall-out is that most will not…And it was self inflicted for what ever reasons we could choose…
Stop your complaining and pay your “fair share” of taxes. The government union pensioners, illegal aliens, prisoners needing enrichment classes, “single” mothers with multiple kids, not to mention regular old folks (and there are many) who did not prepare for their old age (no one could see it was coming) need your help. Come on do “the right thing” and “put people first.”
I knew a guy who was a military lawyer, retired at 20 years and who now has a lawyer job with the fed gov (no doubt he’s looking forward to another pension). When I asked him if he was worried that the Fed Gov might end up stiffing him on his pensions, he laughed and said that would never happen, and that the trillion dollar deficits didn’t worry him one bit.
he laughed and said that would never happen Did he predict the bursting of the housing bubble too? If not, don’t believe any of his future predictions.
Oh, I think he’s in for an unpleasant jolt. It was his hubris that surprised me.
It was his hubris that surprised me.
My uncle Cas was an enlisted man at Pearl Harbor & may have actually seen the first bomb drop on 12/7/41. He taught me the consequences of official hubris, one of the most valuable lessons I ever learned.
not to mention regular old folks (and there are many) who did not prepare for their old age
Now, now, we can’t all work for the government, can we?
“getting poorer”
That’s because you’re not “living within your means.”
I know someone this happened to but…..
“Homeowners can avoid force-placed premiums by being careful not to let insurance policies lapse”
But all is well because…..
“Proposed federal rules to be finalized in January would provide new consumer protections when banks arrange the policies for borrowers.”
Why is it that I have a funny feeling these new consumer protections are going to cost me and anyone who doesn`t let their insurance policy lapse money?
Posted: 6:35 p.m. Saturday, Nov. 24, 2012
Banks under fire for prices, terms of forced insurance
By Charles Elmore
Palm Beach Post Staff Writer
An insurance controversy affecting hundreds of thousands of people in Florida and other states never touched Laura Digan’s world — until a $23,287.54 bill rocked it.
The “force placed” homeowners insurance imposed by her mortgage company after a policy lapsed was more than four times as expensive as prior coverage. The single mother of two in Palm Beach County said she was shopping for an alternative to last-resort insurer Citizens when the charge hit.
“I was absolutely appalled, horrified, shocked,” Digan said.
She questioned and contested it for months. Mortgage servicer Capital One agreed to reduce the charges days after The Palm Beach Post inquired, Digan said.
But regulatory and legal battles are only beginning to come to a head for a once-obscure part of the insurance business that is attracting increasing scrutiny around the country. It has become a big moneymaker for the financial interests that benefit from it, producing $5.5 billion in premiums annually.
Homeowners can avoid force-placed premiums by being careful not to let insurance policies lapse, but consumer advocates blast what they see as unnecessary or even predatory practices against people struggling to climb out of the worst economic turmoil since the Great Depression. Many have wrestled with job loss or reduced income and the force-placed premiums themselves can tip people into foreclosure, advocates say.
Proposed federal rules to be finalized in January would provide new consumer protections when banks arrange the policies for borrowers.
http://www.palmbeachpost.com/news/business/costly-insurance-under-firebanks-under-fire-for-pr/nTD9G/ -
“…FHA’s traditional borrowers — who are primarily moderate-income, first-time purchasers, people with limited cash for down payments and less-than-perfect credit histories…”
Does this group really need mortgages in excess of $500K?
WHY?!
NATION’S HOUSING
FHA RULES JUST GOT A LITTLE BIT TIGHTER
By U-T San Diego
12:01 a.m., Nov. 25, 2012
Updated 5:22 p.m. , Nov. 23, 2012
You may have seen recent headlines about the Federal Housing Administration needing a taxpayer “bailout” by the Treasury and wondered: Is the FHA heading down the fiscal drain like Fannie Mae and Freddie Mac, which have required billions in federal assistance just to stay in business?
The good news answer for FHA’s traditional borrowers — who are primarily moderate-income, first-time purchasers, people with limited cash for down payments and less-than-perfect credit histories — is no. There is a strong possibility that FHA will not require any money transfer from the Treasury, which in any event would not occur until next September.
Meanwhile, FHA is making tweaks to its program rules that could affect some loan applicants in the months ahead, and which are designed to improve revenue flows to the agency and cut back on losses.
…
There has never been a better time for group-thinking idjots to cheerlead a housing bottom.
“Jump in now, or get priced out forever!”
PERSONAL FINANCE
Updated November 24, 2012, 8:39 p.m. ET
Will 2013 Be the Time for Home Buyers to Jump?
Home prices are recovering, yet still low enough to lure buyers
By RACHEL LOUISE ENSIGN
This New Year’s, you may want to make a resolution to go house hunting.
Home prices are finally starting to recover, but they’re still low enough to get a great deal. Add to that interest rates that are at historic lows, and 2013 may be the time for first-time home buyers to finally get in the game.
“We think the answer, definitively, is that home prices have bottomed,” says Stan Humphries, chief economist of real-estate firm Zillow. “Right now, buying looks very attractive, even for short-term time horizons.”
While the timing may be right, the tougher standards lenders imposed after the housing crash are still very much in place. So buyers with good credit and a hefty down payment may benefit the most.
“Now it’s all about the rules,” says Jeff Conn, a mortgage banker in the Atlanta area.
Window of Opportunity
A bevy of data suggest housing prices have finally begun to climb back. So there’s a window of opportunity before prices start a faster upward march.
The median price of an existing single-family home was $178,700 in October, up 11% from a year earlier, according to the National Association of Realtors. But that’s still down 13% from $204,800 in October 2007.
Buyers can find particularly good deals in the Phoenix area, where home values are rising steadily, but are still more than 40% below the peak, says Mr. Humphries. Home values have also started rebounding from their bottoms in the Dallas, Miami and Denver metropolitan areas, but are still below their peaks—meaning there are potential deals to be had, he says.
Prices are on the way up, but mortgage rates remain in the bargain bin. The average rate on a standard 30-year fixed-rate mortgage hit a record low 3.46% for the week ended Nov. 16, according to data provider HSH.com. The average rate on a standard 15-year, fixed-rate mortgage hit a low of 2.84%. And rates are expected to stay low next year and further out, thanks, in part, to the Federal Reserve’s moves to keep interest rates low until mid-2015.
…
“We think the answer, definitively, is that home prices have bottomed,” says Stan Humphries, chief economist of real-estate firm Zillow. “Right now, buying looks very attractive, even for short-term time horizons.”
I think it really means last year or the year before was the time to buy. “Right Now” is usually a day late and a dollar short.
‘Right Now’ is usually a day late and a dollar short’
Yeah, yeah. You want to know what I think? That there will come a day, again, when people don’t talk about buying houses like it’s day trading shares of stock.
No end to the bubble until talking about housing investments is so embarrassing that nobody does it any more…
what asset will wall street turn into a casino next?
I know it’s not a durable asset, but how about food?
they have pretty much turned every other commodity into a casino so why not food too.
Eat now before you’re priced out forever.
Land used to produce food is durable, but there is already an farmland bubble in play…
“I think it really means last year or the year before was the time to buy.”
And you’ll be stunned 18 months from now when prices are 30% lower.
We had an amazing vacation in Atlanta. Georgia is a lovely place.
How many Waffle Houses did you count?
How many car title loan shops did you see?
Why do middle class households in flyover country owe wealthy California households a mortgage interest deduction north of $15K?
Where is the downside to eliminating wasteful tax deductions while reducing the fiscal deficit without raising taxes?
wsj dot com
PERSONAL FINANCE
November 24, 2012, 8:44 p.m. ET
The Uneven Bite of Limiting Tax Deductions
Limiting personal income-tax deductions and other federal tax breaks, an idea gaining momentum as part of a fix for America’s budget crisis, would hit some parts of the country harder than others.
California taxpayers took the highest itemized deductions on average compared with the 49 other states and District of Columbia, according to a Wall Street Journal analysis of 2010 Internal Revenue Service data. That means the 36% of California filers who itemized have the most to lose. They averaged $33,901 in deductions, in part because they claimed the U.S.’s highest average mortgage break, $15,755.
After California, the highest average itemized deductions—all above $28,000—were claimed by taxpayers in New York, the District of Columbia, Connecticut, New Jersey, Maryland and Massachusetts. All have high state, local and property taxes, which may be deducted from income on federal returns, although other tax provisions already limit some deductions.
The national average deduction in 2010 for those who itemize was $26,112.
The idea of limiting deductions has gained currency, especially among Republicans, as a way to raise government revenue without raising tax rates. Curbing their value would make more income subject to taxation.
—Alan Zibel and John D. McKinnon
The Wall Street Journal
…
Because our Realtor-owned government wants it that way.
If the Fed truly has unlimited buying power, as this writer asserts, why are they making discriminatory purchases in favor of the housing market? Why can’t they simply invest in all sectors of the U.S. economy, and make everyone equally rich? What is so special about real estate industry workers, that they qualify for special favors from the Fed?
QE3 is Ben Bernanke’s masterstroke of market manipulation
By Matt Phillips — a month ago
Ben Bernanke Getty Images / Alex Wong
It’s never been so profitable for US banks to give mortgages.
Yet they’ve almost never been so reluctant to do it.
So now, the Fed is forcing them.
Much has been written about the Fed’s announcement of its latest effort to support the US economy with a new round of money creation and mortgage-bond buying—QE3—on Sep. 13. But few have recognized that it amounted to a shot across the bow of some of the biggest financial institutions in the country.
Here’s why. The Fed is aiming its unlimited buying power (since it can literally create money) at the market for mortgage-backed securities (MBS), the pools of mortgages where nearly all American home loans eventually end up. And the one of the largest holders of these MBS are the banks.
MBS Holdings
Banks have loaded up on MBS over the last couple years, for two very good reasons. First, MBS (certain kinds of them, at least) are very safe. The mortgage bonds of the giant housing-finance agencies Fannie Mae and Freddie Mac are considered as safe as US Treasurys, since these agencies are effectively under the wing of the US government, which bailed them out during the financial crisis. Better still, MBS pay a higher return than Treasurys do. Super-safe and higher-yield is an irresistible deal.
The result? The MBS holdings of large commercial banks are up 32% since the end of 2009—that’s the red line in the chart below. That’s outpaced the growth in other bank investments, especially that saw-toothed blue line at the bottom, which are real estate loans.
Bank have been gobbling up government guaranteed MBS. But they’ve been less likely to actually lend.
This is where QE3 comes in. The Fed says it will buy mortgage bonds. It has massive buying power. That pushes up the prices of the bonds. And at a certain point, the idea is that the banks won’t be able to resist. They’ll bite, selling their bonds, and collecting a big pile of cash.
But after a few high-fives around the boardroom table, the bankers realize they now have another problem. They’ve got a pile of cash they’ve got to invest profitably. And there aren’t a lot of good places to go. Why don’t they just go buy more MBS?
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Why can’t they simply invest in all sectors of the U.S. economy, and make everyone equally rich?
They’re trying to be discrete about it?
(I almost said that with a straight face. Almost.)
Bond bubble bust
Ben’s debt binge to detonate retirement funds
By JONATHON TRUGMAN
Last Updated: 12:18 PM, November 25, 2012
Posted: 10:34 PM, November 24, 2012
There goes the nest egg.
There’s a record $16.3 trillion of US debt and a good portion of that is sitting in baby boomers’ portfolios like a ticking time bomb ready to explode, and most investors know little about it.
“It’s my worst nightmare,” says a long-only bond fund manager. “There’s nothing I can do — the checks come in [from clients] every day, and I have to invest it.”
With Ben Bernanke’s debt paper floating through the market and the Fed chief vowing to keep rates low until 2015, some bond managers are hoping to get out before the bubble bursts and Armageddon hits.
And rates would not have to go through the roof to take out billions in principal for investors, most of whom are in bonds because they are nearing retirement.
“If the 10-year [bond] goes up 100 basis points, that could mean more than $35 billion is lost,” says one bond trader.
One hundred basis points is just a 1 percent increase, which would put the 10-year at about 2.6 percent. The average rate of return over the last decade is roughly 4 percent, which, if we return to that yield, could put principal losses close to $500 billion, says a bond manager.
Bond prices (your principal) and interest rates (yield) move in opposite directions. When rates rise, bond prices fall. The inverse is, of course, true as well. When rates fall, the price (your principal) of the bond rises.
The problem today is that short-term Federal Reserve funds rates are pegged at zero percent. In addition, the Fed’s irresponsible bond-buying spree, dubbed QE, has driven even long-term rates insanely low, to 1.5 or 1.6 percent on the 10-year Treasury.
Without rewriting arithmetic, rates have nowhere to go but up — and, eventually, up quite a bit. And the principal invested in bonds will fall substantially.
Most older Americans have done their part, putting away a little bit each month towards their retirement, cutting back on household budgets and selling their riskier equity investments in favor of “safer” US Treasury bonds.
Well, that’s where they may have gone wrong. While most financial advisers still steer their near-retirement clients into bond funds, these are extraordinary times where the latest bubble — bonds — is about to explode, just like the two previous bubbles.
The Fed’s bizarre move “forward” into a massive multitrillion-dollar bond-buying binge has left all investors more vulnerable today than they were in 2000 after the Internet bubble, or the housing-bubble bust in 2008.
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“There’s nothing I can do — the checks come in [from clients] every day, and I have to invest it.”
Whaaaaaat?! Many funds become “closed to new investments” when they have exceeded a certain size. Why can’t they close due to concern for investing at the top of the bubble?
AMERICA THE GUTTED
For millions, the American Dream is fading. The middle class – the core of the world’s largest economy – is being gutted as incomes fall and once-reliable jobs disappear. But that’s not the entire story. GlobalPost traveled from the shuttered factory towns of the United States to the emerging boomtowns of the developing world, where something very different is at work.
Italian students protest austerity education cuts in Rome
Italian students are rallying against Prime Minister Mario Monti’s austerity measures that have cut into education spending.
Talia Ralph
November 24, 2012 12:51
Demonstrators march during a protest on a day of mobilisation against austerity measures by workers in southern Europe on November 14, 2012 in Rome. Riot police and anti-austerity protesters clashed in Italy on Wednesday as anger boiled over on a Europe-wide day of strikes and mass demonstrations. (Filippo Monteforte/AFP/Getty Images)
Italian students took to the streets in Rome on Saturday to protest austerity measures that have cut into education funding.
Several thousand students and teachers marched through the Italian capital to protest Prime Minister Mario Monti’s sharp spending cuts and tax hikes, Reuters reported.
Other protests were planned for Rome later on Saturday, including a rally by a far-right Monti-opposition group and a march by an anti-fascist organization.
The protests went on without authorization from police, who had a high security alert on in Rome in case the protests turned violent, as happened during protests earlier this month, Euronews reported.
“We need to fight for our rights,” student protester Tommaso Bernardi told Al Jazeera. This government doesn’t represent us and these austerity measures and all the cuts they’ve introduced are totally anti-democratic.”
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Did you buy stocks on the post-election fiscal cliff dip?
For how much longer can demand for U.S. stocks continue to slide before collapsing demand finally shows up in prices?
Demand for U.S. stock and bond funds falters: Lipper
By Sam Forgione
NEW YORK | Thu Nov 15, 2012 9:59pm EST
(Reuters) - U.S.-based stock and bond funds saw a dramatic pullback in the latest week as worries over the “fiscal cliff,” a combination of tax hikes and spending cuts in the U.S., eroded sentiment, data from Thomson Reuters’ Lipper service showed on Thursday.
Stock mutual funds and exchange-traded funds combined had outflows of $3.25 billion in the week ended November 14, a major pullback from inflows of $4.92 billion the previous week.
Bond funds showed similar weakness as both mutual funds and exchange-traded funds combined had just $287.3 million in inflows after huge inflows of $6.14 billion the prior week.
The S&P 500 fell 2.8 percent over the reporting period as worries surrounding the “fiscal cliff” of automatic tax increases and spending cuts set to occur at the start of next year weighed on investor confidence.
The anticipation of higher taxes on capital gains and dividends also led investors to sell stocks.
With regard to stock funds, investors took $1.6 billion out of stock mutual funds and $1.66 billion out of exchange-traded funds. Funds that hold U.S. stocks had outflows of $4.8 billion, while funds that hold foreign stocks were a bright spot with inflows of $1.54 billion.
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How can anyone argue with a straight face that the Fed’s massive asset purchases don’t affect prices (presumably a determinant of “values”)? Unbelievable…
ft dot com
November 25, 2012 9:39 pm
Banks face more regulation over scandals
By Brooke Masters in London
Several high-profile scandals for banks, ranging from JPMorgan ’s hefty trading loss to UBS ’s rogue trader, have sparked a new regulatory drive to force lenders to spend more time and probably hold more capital guarding against such operational risks.
The Financial Stability Board, the global banking regulator, and the Basel Committee on Banking Supervision, which sets global capital rules, have recently announced plans to tackle the issue next year as part of efforts to make the world’s biggest banks safer.
Operational risk covers almost any problem – bar trading losses, bad loans and legal cases – that could damage a bank, such as the weeks of computer problems at Royal Bank of Scotland.
The “London whale” trading scandal at JPMorgan cost the bank more than $6bn in losses and unauthorised trading by Kweku Adoboli led to losses of $2.3bn at UBS.
In Britain, the payment protection insurance debacle has so far cost the UK banking industry more than £10bn.
Regulators are particularly concerned that banks may not have enough capital to cover losses from operational risk and may not be doing enough to tackle potential problems when many are slashing back-office staff and technology expenditure.
“Banks are trying to do more with less, so you can see that the risk is very much growing,” said Julie Dickson, the senior Canadian regulator who has helped lead the charge at the FSB.
“This is about a lot more than capital. It is about what your operational risk group does on a day-to-day basis.”
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ft dot com
November 25, 2012 5:54 pm
Republicans bargain hard over fiscal cliff
By James Politi in New York and Alan Rappeport in Washington
Republicans in Congress are demanding structural changes to popular government pension and healthcare schemes, including higher eligibility ages, in any deal to avert the fiscal cliff.
The conditions will be tough for President Barack Obama and his Democratic party to accept as negotiations gather urgency over the next few weeks.
Republican leaders, and even some rank-and-file conservatives, have recently softened their opposition to higher taxes and embraced Mr Obama’s request for greater revenue in any agreement. The moves have offered hope that the political gridlock on fiscal policy that has gripped the US capital for the past two years can be broken.
But they remain adamant that they will not make any concessions on taxes without a commitment to spending restraint in the largest safety net programmes – which the Democratic base will find extremely unpalatable, raising pressure on Mr Obama.
“Republicans’ willingness to support additional revenue via tax reform is conditional on it being accompanied by significant entitlement reforms that begin to address the problem of the debt,” one aide to John Boehner, the Republican speaker of the House of Representatives and a key figure in the negotiations, told the Financial Times on Sunday. “Without such spending controls, any plan to avert the fiscal cliff is not a balanced approach.”
Congress and the White House have until the end of the year to strike a new budget agreement. If they fail the US economy will be hit by a $600bn combination of automatic tax increases and spending cuts in 2013 – a scenario known as the fiscal cliff which is likely to trigger a new recession.
Mr Obama met congressional leaders 10 days ago to discuss a deal but there have been no further top-level meetings since, given the president’s trip to southeast Asia, and the congressional Thanksgiving holiday recess.
There have been discussions among staff behind the scenes. Although there has been some apparent progress on taxes, a big divide remains. Republicans are accepting the need for more revenue, but insist that it should come from limiting deductions and tax breaks, rather than higher income tax rates on the wealthy, which Mr Obama and Democrats want.
Meanwhile, Republican calls for large-scale spending reform create a further complication en route to a deal.
Mr Boehner has not laid out precisely which kinds of changes to “entitlement” programmes such as Social Security and Medicare he is seeking, and the aide said there were a “variety of ways in which this can be accomplished”.
But other senior Republicans have been more specific. Lindsey Graham, the senior Republican senator from South Carolina, said he was willing to break his pledge never to vote for higher taxes as long as higher age eligibility for these spending programmes – as well as means testing to trim benefits for the wealthy – was part of any deal.
“I do expect them to adjust these entitlement programmes before they bankrupt the country and run out of money themselves. So age adjustment and means testing for both Social Security and Medicare is eminently reasonable,” Mr Graham said on ABC‘s This Week. “I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform,” he said.
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The thing I protest about “means testing” is this: Suppose someone has been contributing to social security for more than 20 years. On the side he’s been investing and has done very well. His investment portfolio grows to $5,000,000. He contributes to social security another 15 years and then at 67 is ready to retire. His contributions he put in, according to Lindsey Graham, are not his in the first place? This is unacceptable.
I have a former associate who is very conservative and says social security is insurance. My argument is it’s forced insurance at gunpoint. You have no choice but to pay. If I had a choice and knew that I was not going to get my money out, I’m not going to be a sacrificial animal for someone who “needs” it. This is the collectivism that is unamerican.
“His contributions he put in, according to Lindsey Graham, are not his in the first place?”
Watch out for the Fiscal Cliff negotiators to put the return of these contributions on the table as bargaining chips in coming up with a ‘compromise’ on reducing the deficit.
By contrast, massive Fed injections of $40 bn in MBS purchases are ‘off budget’ and hence not subject to fiscal cliff negotiation. Imagine how loudly politicians would scream if the Fed so heavily subsidized any other sector of the economy besides housing…
‘I do expect them to adjust these entitlement programmes before they bankrupt the country and run out of money themselves. So age adjustment and means testing for both Social Security and Medicare is eminently reasonable,” Mr Graham said’
So much for the third rail of politics. (It’s been discredited for a long time, but still). I wonder how long seniors will support housing subsidies when their cash cows are being sacrificed?
‘I will violate the pledge, long story short, for the good of the country’
Graham is a warmongering neo-con who would sell his family to keep bombing brown people.
“I wonder how long seniors will support housing subsidies when their cash cows are being sacrificed?”
Probably depends on how much of the housing subsidies said seniors expect to capture for themselves. But obviously, housing subsidies will prove to be far less targeted at the typical senior’s permanent income than will be social security benefits or interest payments on CDs, for that matter.
How many folks still have yet to connect the dots regarding the Fed’s scheme to transfer future wealth from people who depend on fixed income investments for subsistence income to underwater homeowners?
Lots of top economists have jumped on the “housing price control” bandwagon. So far as I am aware, none of them has bothered to explain why they believe such market intervention is either beneficial or legal.
November 1, 2011
Stabilization of Housing Is Nothing More Than Price Supports
By Steve Selinger
There is consensus among economists that tampering with prices is not an efficient way to run an economy. Price controls that keep the price below what individuals are voluntarily agreeable to contract for, eg., rent control, are widely recognized to be inefficient in that such price controls encourage too much consumption of the subject product, and discourage too little production of the subject commodity. On the flip side, price controls that keep the price above what individuals are willing to pay, eg, price supports for sugar, are widely thought to be an inefficient subsidy through which consumers subsidize producers of sugar.
Economists as ideologically different as Milton Friedman and Paul Samuelson could agree on the mistake of tinkering with the price of wages via the minimum wage. Although Friedman was of course against the minimum wage laws, Samuelson also remarked that there is nothing positive about minimum wage laws as they merely keep someone who wanted to work for two dollars per hour from being able to legally perform such work.
It is thus surprising to find such an accomplished, and normally sensible, economist as Martin Feldstein consistently arguing for the “stabilization” of real estate prices. In a series of articles, “The Problem is Still Falling House Prices”, “How to Shore Up America’s Housing Market”, “How to Save an ‘Underwater’ Mortgage”, and most recently in the New York Times (October 12) “How to Stop the Drop in Home Values”, Feldstein has argued for stabilizing, ie, subsidizing, housing prices to help the economy.
It is surprising that President Reagan’s former chief economist would advocate such a large government intervention in the form of price supports. Perhaps not as surprising, his fellow Harvard professor and former Obama Administration official, Lawrence Summers also wrote about “How to stabilize the housing market” (Washington Post, October 24). Unfortunately, neither Feldstein nor Summers has focused on the question of whether basic economic analysis supports this stabilization/subsidy of the housing market.
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Are you prepared to share in the costs of the Greek debt jubilee?
Nov. 23, 2012, 4:01 a.m. EST
Your tax money is about to be blown in Greece
Commentary: Debt forgiveness is the only way out of this mess
By Matthew Lynn
LONDON (MarketWatch) — How much has the Greek crisis cost taxpayers in the rest of the world so far? A billion? Fifty billion? A trillion? Actually, the answer is nothing.
For all the drama, panics in the markets, and late night crisis summits, the whole saga has yet to cost a bean. Indeed some countries — such as Germany — have actually made a profit out of it.
Greece and the rest of the bankrupt peripheral countries have been propped up with loans, guarantees and all kinds of fancy sounding schemes. But not much in the way of hard cash has been spent.
The International Monetary Fund and euro-zone governments have stepped in with support programs. But although private bond-holders had a ‘haircut’ imposed on them in the last bail-out, the fiction has been maintained that all the taxpayer support for Greece will be re-paid.
That is about to change.
The euro-crisis is about to cost cold, hard cash for taxpayers throughout the world. And you don’t exactly need to be Nate Silver to predict they are not going to be very happy about it.
The situation in Greece goes from bad to worse (or rather from catastrophic to apocalyptic). The economy, which was forecast to be ‘recovering’ by now when the rescue package was launched back in 2010, will shrink by another 7% this year, and probably by as much next year. Debt ratios are still soaring out of control. Greece’s debt to GDP is now forecast to hit 180%, according to the latest report of the European Union, the IMF, and the European Central Bank.
Greece is in danger of running out of cash any day now. Another bailout is being negotiated. It was held up while the Greek Prime Minister Antonis Samaras struggled to get the latest austerity package through a reluctant Parliament. And yet, even though that has been delivered, the next $44 billion of aid money still hasn’t been paid out.
Why? Because the IMF is quite rightly insisting on realistic debt targets. The Greek economy can’t support a debt ratio of 180%. Very few economies can, and certainly not one going through a 1930s –style depression. Greece needs to get the ratio down to 120% or less to survive. But there is no way it can do that simply by cutting spending. As we now know, that simply worsens the depression.
There is only one way out. Debt forgiveness.
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