Bits Bucket for January 13, 2013
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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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There is a very simple means available to make America a more democratic country:
It’s Time to End the Electoral College
Katrina vanden Heuvel on November 7, 2012 - 5:19 PM ET
…
Some argued in recent weeks that Obama wouldn’t score a “real” win if he secured the electoral college alone. But the real issue wasn’t the legitimacy of a victory—it was the integrity of our democracy. After all, this election was governed by the archaic rules we still use. Both campaigns knew this, and essentially wrote off efforts to win the popular vote for its own sake. A popular vote election would have been a very different election in all kinds of respects (consider the drop-off in Obama’s support in deep-blue states, which neither side had reason to care about).
…
Good luck getting that, or any amendment, passed in this polarized environment.
“…polarized…”
I have more hope for this type of amendment passing than one which would clearly split the electorate along partisan lines. For instance, think of all the independent voters in California who were effectively ignored in the final days of the 2012 election campaign. Under a more democratic voting rule, it would not have been in Republican interests to waste resources courting electoral votes in Ohio while ignoring California’s much larger voter pool. In whose interest is it (other than, say, Ohio’s) to maintain a system which effectively ignores the interests of vast swaths of the electorate?
As long as one party thinks such an amendment will give an advantage to the other guys, it has a snowball’s chance in hell of passing.
As stated in my response to Combotechie below, I don’t think such an amendment would have much effect on election outcomes; rather the main effect would be on which parts of the electorate the candidates ignored.
If the interests of a majority of the electorate are short-changed by the current system, I don’t see why it would be a politically insurmountable task to improve it. But I suppose somebody would have to do the work of developing and selling the idea.
Uh, nope there, CIBT. You need 38 states. Our strong partisan splits mean that you’d really only get around 25 states. Every time. On virtually any issue when you propose revoking a part of the national constitution.
People seem to forget that you need a supermajority when you’re amending the national constitution.
As my other posts here point out, it is not a partisan issue. So I am missing your point about the 50-50 split…
I respect you and enjoy your posts, but I for one, do not like democracy. Democracies always grow worse with time and at this stage we are suffering from tyranny by the majority.
There are very few people who are both receiving taxpayer money and voting consistently for smaller government, lower taxes, and deep spending cuts. Most Americans are receiving some sort of government check. I read a report a few years ago and have to look for the link again, but nearly 60% of Americans either directly or indirectly receive ax payer money. If one wants to continue his livelihood or way of life, he votes for same. Democracy is how we got this way.
“I for one, do not like democracy.”
I was talking about a more representative system for electing a president, which is far different from pure democracy in governance.
For instance, suppose a substantial minority of California libertarians agree with your point about the tyranny of the majority, and believed presidential candidate R’s policies would best represent their interests. Candidate R is so preoccupied with winning Ohio that he completely ignores the concerns of California libertarians, or any other California voter, as it is clear to anyone with a brain that all of California’s electoral votes are going to candidate O.
There are available changes to the system which could make California libertarian votes count directly in the outcome.
but nearly 60% of Americans either directly or indirectly receive tax payer money.
Including you.
But not me.
“…There are very few people who are both receiving taxpayer money and voting consistently for smaller government, lower taxes, and deep spending cuts…”
LOL. Tell that to your employer.
I know several gun-toting libertarians besides myself working in the DOD. In fact,Ron Paul received more campaign contributions from U.S. troops than any other 2012 presidential candidate. If the Obamarx government orders the troops to round up its own gun owning and gold owning citizens, most won’t do it.
If the Obamarx government orders…
We were talking about the fact that you live off gov $.
Bringing up a weapons/gold ban is just changing the subject, but we can see why you’d like to do that.
I didn’t even read your reply slob. Just to see your name was enough to ignore.
The people who are now in office are there because the system we have worked for them. There is no incentive for them to want to change the system.
Perhaps my inner idealist is showing itself this morning, but I believe your statement is too pessimistic. For one, it seems to presume that a better presidential election system would have resulted in someone else getting elected to their office, which is probably not the case for a substantial majority of current elected officials.
For most possible states of voter preferences, the same election outcome would result, but the interests of a larger swath of the electorate would be of direct concern to the candidates, due to the inability, say, to write off California Republicans and Libertarians in order to court votes in Ohio.
Again, the people who are in office are there because the system worked for them. If the system was a bit different then perhaps they would not be the ones now in office.
There must be an incentive for them to want to change the system. Getting elected and re-elected with the current system nullifies any desire for them to want to change the system.
“There must be an incentive for them to want to change the system. Getting elected and re-elected with the current system nullifies any desire for them to want to change the system.”
Your point is taken. There would need to be widespread understanding and grass roots support for a change to rise to the level of concern for currently elected officials to want to support it.
My brief moment of optimism may have just ended…
There would need to be widespread understanding and grass roots support for a change to rise to the level of concern
You dreamer, you!
It was merely a moment of early morning (pre-coffee) delirium on display…
There would need to be widespread understanding and grass roots support for a change to rise to the level of concern for currently elected officials to want to support it.
Unfortunately the electorate is preoccupied with Katy Perry’s cup size, and our currently elected officials couldn’t be happier.
The people who are now in office are there because the system we have worked for them. There is no incentive for them to want to change the system.
+1
Wouldn’t it be a better idea to completely reform campaign financing first. A electoral college amendment wouldn’t address this much bigger problem. You really want to clean up our politics fix the money problem first. Remember the Occupy movement? It was the #1 or #2 issue on their official list of grievances. There are several organizations that have drafted the language that would stop this madness.
No counterargument here! I simply have more statistical insight to offer on the electoral college reform issue.
Campaign financing doesn’t need reform whatsoever. Americans can clearly see their candidates are bought men. It’s their duty to vote for others than those. On my last ballot, there were SEVEN candidates for President. No shortage of real choices. And you could always write-in.
We have public reporting requirements for campaign financing. That’s appropriate, so that Americans can confirm who bought whom. But Americans need to follow up with action, and it’s not even bold action: Avoid the corporate-owned candidates. How hard is that? It isn’t.
Avoid the corporate-owned candidates. How hard is that? It isn’t.
The real problem in American politics today is that few care enough to do so.
Massive fedgov giveaways to Ownership Society members to continue in face of ‘fiscal cliff’…
Homeowners and sellers escape ‘fiscal cliff’ with key benefits
The ‘fiscal cliff’ legislation, close to a total win for homeowners and sellers, revived 2 key tax benefits for housing that had expired more than a year ago.
By Kenneth R. Harney
January 13, 2013
WASHINGTON — Although it wasn’t a total win for homeowners and sellers, the patchwork legislation that emerged from the “fiscal cliff” fracas on Capitol Hill came pretty close. In fact, it even reached back and resuscitated two key tax benefits for housing that had expired more than a year ago. Now homeowners will be able to take deductions on their 2012 tax returns that they assumed were no longer available.
Here’s a quick tally sheet on what the new legislation could mean for you as a buyer, seller or owner.
…
Homeowners = voters.
If homeowners - or home buyers, or whatever - think they are getting hosed then they will kick out their elected officials and replace them with a fresh batch. And since there are so many homeowners this is something they will be able to do.
Corollary:
Once the transition of the American populace from the Ownership Society to the Rentership Society is complete, elected officials will support policies which favor affordable housing, rather than higher home prices.
This will especially be the case if a preponderance of the landlords in question are foreigner real estate investors.
I suppose given foreign landlords’ “free speech” rights to bribe U.S. politicians with campaign contributions, we might expect plenty of future support for policies which favor the landlord class, whether or not they are American citizens…
I think they will be more likely to support policies that keep rents high, which will favor the landlord class, while making it hard to get a loan to buy a home.
But they forget the higher the rent the higher the level of service is required.
Lots of landlords refuse to get this and they needlessly spend money on lawyers instead of their tenants.
—–I think they will be more likely to support policies that keep rents high,
“But they forget the higher the rent the higher the level of service is required.”
Doesn’t it depend on the reason rents are high? For example, if there is a huge new excess of rental demand, due to a high rate of recent foreclosures, or a shortage of rental supply, due to homes kept off the market in shadow inventory (e.g. indefinite vacancy limbo between when a former owner in non-payment status is evicted and when a lender takes possession), then why would a higher level of service be required?
Let Rentership Society members eat cake, while continuing to force them to share in the high housing costs for Ownership Society members.
Because I would expect a landlord to be totally available if something goes wrong…..some landlords want people to stay a long time and some dont.
—————-
then why would a higher level of service be required?
“due to homes kept off the market in shadow inventory (e.g. indefinite vacancy limbo between when a former owner in non-payment status is evicted and when a lender takes possession)”
In CA, in our experience, 1) most of the time (90%+) the home is occupied at the time of foreclosure and 2) that time of vacancy is relatively short (in some cases 0 days, as the new owner rents back to the prior owner…more typically a month or two). At least here there isn’t much of an indefinite limbo, like there is in judicial foreclosure states, where a property may be abandoned and vacant for years before the property is legally in the hands of the next owner.
It is for this reason, I’m looking forward to see what happens in NJ and IL when they commence much more rapid foreclosing of vacant and abandoned homes…rents and prices should come under pressure.
The biggest trouble in CA is we have low vacancy, are building less than 70,000 homes (single and multi-family) per year, and are adding about 250,000 jobs per year. When you start at a point with little excess (due to chronic underbuilding, which started in the 90’s), it doesn’t take long for the slack to be removed from the system after the crash.
“…it doesn’t take long for the slack to be removed from the system after the crash.”
Your post once again ignores the effect of laws on the books in CA which allow owners to live rent-free after they stop paying their mortgages.
The CA crash will not end until the rent-free former owners are all wrung out of the system.
“The biggest trouble in CA is we have low vacancy, are building less than 70,000 homes (single and multi-family) per year, and are adding about 250,000 jobs per year. When you start at a point with little excess (due to chronic underbuilding, which started in the 90’s), it doesn’t take long for the slack to be removed from the system after the crash.”
California home builders around the SF bay area have focused on the move-up home buyers, so there is a serious lack of first-time buyer homes other than the quick flip stuff.
What I believe is missing from the rather unimaginative discussion of the CA housing situation is just how many CA homeowners will soon move on to empty-nester housing in Geezerville. Whether or not much new building occurs in the foreseeable future, plenty of family-sized inventory will become available over the next couple of decades. Lots of this is currently in possession of people who are either unwilling or unable to make payment on their mortgages.
home builders around the SF bay area have focused on the move-up home buyers, so there is a serious lack of first-time buyer homes ??
Well, when you are paying anywhere between $70-$110 per suare foot for dirt its kind of hard to provide affordable housing hence we have seen a explosion of multi-family projects in the 60 units per acre range…Not that I particularly think these new apartments are “affordable” but I guess they are cheaper than buying a house…
will soon move on to empty-nester housing in Geezerville ??
I don’t know Pbear…Speaking for my area only, I just do not see much of it…They prefer to make their current home their last resting place is my observation…
“Your post once again ignores the effect of laws on the books in CA which allow owners to live rent-free after they stop paying their mortgages.
The CA crash will not end until the rent-free former owners are all wrung out of the system.”
I’m not ignoring it…those people still occupy space (ie. NOT an empty home). Once they leave, they go to another space (ie. rent an apartment ,rent a home, etc.). Those “laws” are an extension of the foreclosure process…once someone stops paying their mortgage, NO ONE has the ability to get them out of the house, until it has a different owner. In places like Florida, they can live rent free for over 2 years (800+ days). In California, it has been about 9-10 months (280ish days).
Once they are foreclosed and the house is owned by someone else, the eviction process doesn’t take that long.
You referred to shadow inventory (homes being held off the market), presumably that could otherwise be added to the rental pool.
If the “owner” stopped paying their mortgage, then yes, they are living rent free, and it takes some time until that house enters the rental pool. HOWEVER, while the rental pool is one house short, it is also one renter short. The only time that there is some addition to the off-market vacant homes in the market is between the time the former owner is evicted (post foreclosure), and when the next tenant moves in. In Southern CA, our experience is that the time the home is actually unoccupied can range from as little as a week, to as long as a couple of months.
Since there aren’t a lot of empty homes going through the foreclosure process, this “shadow inventory” of vacant homes problem is not in CA.
And to expand on scdave’s comment, Prop 13 is a natural impediment to moving down, especially if the owner has lived in the house for a long time.
Again, your post ignores NUMBERS of prospective future sellers versus buyers at current CA price levels.
Perhaps FHA lending subject to a high conforming loan limit, rock bottom interest rates, low downpayment requirements and federally-subsidized principle guarantees can mask a lack of fundamental-based demand at CA price levels for an indefinite future period; only time will tell.
The biggest trouble in CA is we have low vacancy
The biggest problem CA has is liars and distortionists like you who misrepresent the truth about housing.
“Again, your post ignores NUMBERS of prospective future sellers versus buyers at current CA price levels.”
No. I’m not.
How many “prospective future sellers” are there based on the data?
Total non-current loans are approximately 7.9%. This is approximately 3% more than the usual level of 5%. This 3% represents only approximately 140,000 homes.
That is it.
Many of these homes are still filled with families.
CA is building approximately 60k housing units per year, and in the past 12 months created approximately 250,000 jobs.
This amount of excess distress has little chance of swamping demand, even if it were dumped on the market all at once, especially when starting from such a low vacancy rate.
The other side of the equation is “buyers at current CA price levels”. If there aren’t enough buyers today, would you be hearing about multiple offers? Prices rising? How would you quantify that?
‘The other side of the equation is “buyers at current CA price levels”. If there aren’t enough buyers today, would you be hearing about multiple offers? Prices rising? How would you quantify that?’
I haven’t recently paid much attention to numbers of used homes offered for sale in CA overall or San Diego in particular, as I am not in the market and doubt I ever will be, barring some radical change in financial circumstances.
That said, I have paid close enough attention to the San Diego market in recent years to know that the number of used homes for sale has been as high as the low 20Ks within the past half-decade. By contrast, slightly over 4K currently on the market is abysmally low, and indicative of a market still in the deep freeze with a trickle of sales transactions compared to the 2005-2006 period. Given an unprecedented inventory drought coupled with a torrential influx of Fed-funded mortgage lending, the return of bid wars and prices over asking are no surprise whatever.
Some might suggest the very low number of homes currently for sale is indicative of top-down manipulation of inventory by lenders with REO on their books trying to fix prices at a higher level than where the unfettered free market would set them. But I tend to believe other factors are in play, especially given the massive overhang of homes for sale in San Diego on the $1m+ price range (23% according to Redfin).
For starters, given how low home prices currently are relative to peak bubble levels, owners will be reluctant to sell if they believe that prices are destined to increase in the foreseeable future. This is the normal supply response to a market correction.
Now enter the Fed, which has loudly signaled its intent to reflate housing, and backed up its words with actions to suppress interest rates and to inject $40 bn a month in QE-funded MBS purchases.
Prospective sellers who believe in the Fed’s ability to reflate housing prices will naturally opt to withhold their homes from the market until said price appreciation materializes. Hence what would have already been relatively low inventory levels by historic terms, due to sellers trying to avoid a sale at a lower price than what they believed their home was worth circa 2006, is dessicated to a severe drought of homes for sale, due to Fed-fueled expectations for higher sale prices later to sellers who are able to wait out this period of economic weakness.
But life goes on for Ownership Society members, including retirements and emptying of nests among the bulging demographic slice of Baby Boomers. Hence we most likely are currently experiencing a sizable buildup of shadow inventory which is very hard for bean counters to observe, among aging owners who would prefer to sell now but instead are responding to the Fed’s tacit assurance of higher sale prices for those who wait out this period of economic weakness.
It could get very interesting at the point when this unmeasured shadow inventory constipation is ultimately dumped on the market, for whatever reason. Meanwhile, the thick layer of high-end homes priced on the $1m-$5m range will keep a lid on near-term price appreciation, especially after the Fed exits its hyper-stimulative positions.
The graphic at the top of this article pretty much undermines all the happy talk in the body. For instance, in what universe is a decline from 4,185 single-family home permits in 2005 to 122 in 2012 (-97%!!!) a green shoot of housing market recovery?
Hernando News
Real estate gains ground
By MICHAEL D. BATES | Hernando Today
Published: January 13, 2013
The housing picture brightened considerably last year, thanks to one of the lowest home inventories in years for single-family homes and increased investor activity.
The number of existing single-family home sales for 2012 was 2,787, up from 2,582 a year ago, according to statistics from the Hernando County Association of Realtors’ multi-listing service.
The average sales price was $96,000, up slightly from $95,000. Average days on the market remained the same at 108.
“We’re taking a turn in the right direction,” said Marisa Brewer, broker with Preferred Property Associates.
Brewer said she would like to see the average sales price go up more. Home prices peaked in 2006 when the average single-family home sold for $204,000. Prices have declined every year since.
“Hopefully we have hit bottom and started to stabilize,” Brewer said. “Depending on the economy, we can start to see some appreciation again. There are still buyers out there — cash buyers.”
If a home is priced correctly in this market, it should sell, she said.
“It’s affordable to live in Hernando County again,” Brewer said.
…
“If a home is priced correctly in this market, it should sell, she said.”
In what market doesn’t this simple tautology hold?
Low inventory == rising prices. This is what it’s all about. The PTB around the world are NOT interested in affordable housing. They want everyone to be up to their eyeballs in mortgage debt, paying interest to them, month after month, year after year. Which is why we are constantly being brainwashed into believing that housing is supposed to be unaffordable.
The brainwashing has to do with using readily-available low interest, low downpayment, federally-guaranteed mortgages to convince new entrants to the Ownership Society members that the unaffordable homes they bought were actually affordable.
Ownership Society members that the unaffordable homes they bought were actually affordable.
Maybe doable would be a better description.
Banking feudalism.
Feudalism.
It’s just feudalism.
Who are our lords now? The banks. But who will be our lords in the future?
This housing ponzi bubble gig cannot go on forever. Eventually we will all run out out of future earnings to tap. So what then? What are we left with?
What will the next lord demand in fealty once the banks have all that they have demanded and left the field?
At what point was propping up the housing market added to the Fed’s mandate?
Did the Fed decide that the best way for the U.S. economy to recover was through housing bubble reflation?
Real Estate
The Great Housing Rebound of 2012: How the Fed Helped Sellers Beat the Odds
By Christopher Matthews
Dec. 27, 201212 Comments
Construction crews work at the site of the Arista at the Crosby development in Rancho Santa Fe, Calif., on Dec. 21, 2012
Without a doubt, the U.S. housing market has been the most successful sector of the economy this year, and Wednesday’s Case-Shiller home-price index report — which showed a fifth consecutive month of year-over-year increases in home prices nationwide — was a late Christmas present for homeowners across the country.
The housing-market “bottom” was one of the biggest business stories of 2012. After years of falling home values, the data clearly showed that the bleeding stopped somewhere in the first part of 2012 and that home prices have actually begun to slowly rise since then. In addition, other indicators like housing starts, new home sales and foreclosure statistics all point toward a healing housing sector.
These dynamics have gotten some economists and market analysts excited about the growth prospects for the U.S. economy in 2013. Robert Johnson, director of economic analysis for Morningstar, called housing “the big change factor in 2013″ and believes that “direct housing investment will be a meaningful contributor” to economic growth in 2013. He also sees industries related to housing — like furniture manufacturing and sales — adding to economic growth in 2013 as the housing market begins to pick up.
…
It CANNOT work. House prices were grotesquely inflated during the bubble due to liar loans. Unless liar loans come back, high prices CANNOT return. The whole thing melted down due to unsustainable debt loads. People literally had no money to service the loan. I have still not seen how this supposed reflation can skirt this fact. I’m all ears.
It CANNOT work.
It appears from recent experience that it can work short-term.
I bought my first house back when rates were 7%. Today, with 3.5% rates, I could afford to pay roughly twice as much for a house as I could back then, all other things being equal.
In other words, the Fed has deferred the last 2X factor of price-declines that needed to happen.
In the long-term, I believe natural equilibrium will prevail. In the short term, insanity can apparently continue for quite some time.
Next stop 1.75% rates?
FOMC Members Split on How Long to Continue Asset Purchases
Daily Forex Fundamentals | Written by TD Bank Financial Group | Jan 04 13 01:38 GMT
Minutes of the Federal Open Market Committee (FOMC) meeting of December 11 and 12 revealed a general consensus among participants on moving towards specific economic thresholds to guide future federal funds rate decisions.
Members were in less agreement on how long to continue the current asset purchase program. While some members noted that purchases would likely be warranted until late 2013, others expressed a view that purchases should end well before the end of the year. “One member viewed any additional purchases as unwarranted.”
FOMC participants’ economic outlooks were relatively unchanged from the previous meeting. Labor market conditions were noted to have improved but the unemployment rate remain elevated. Several members expressed concern that fiscal uncertainty was weighing on consumer and business confidence and leading firms to hold off hiring and investment.
Most members agreed that the housing market had shown clear signs of recovery and noted that “capacity constraints on the processing of new home-mortgage applications appeared to be easing, and gradually rising home prices had reduced the proportion of households with underwater mortgages.”
…
gradually rising home prices had reduced the proportion of households with underwater mortgages.”
…
That’s why they’re trying to reflate.
When the Fed realized that AIG would go under if they didn’t and Cheney World would lose 5 billion bucks in Dubai? And a whole lot of Wall Street, London, German, and Swiss banking exec’s private CHF stashes would go poof because the quants were wrong?
“…Cheney World would lose 5 billion bucks in Dubai?”
I’m missing that connection. Please elaborate or post to clarify, if you are willing and able…
There is all kinds of great material on Darth Cheney out on the WWW, but I can’t find any stories connecting Dubai and U.S. housing with him in the middle.
Philippine White House spy ring linked to Cheney, Abramoff, and mysterious Dubai slave wage firm
Aragoncillo passed Cheney’s reports on Macapagal-Arroyo, some of which were obtained from National Security Agency intercepts, to Estrada, a political opponent of Macapagal-Arroyo and an ally of former Philippine First Lady Imelda Marcos. Estrada was planning a coup against Macapagal-Arroyo with U.S. support. Aragoncillo was linked to another U.S.-based Filipino spy — former Philippine National Police officer Michael Ray Aquino — who was also involved in passing Cheney’s classified documents to Estrada. Aquino, who is wanted in the Philippines for involvement in murder, kidnapping, and drug trafficking, was also arrested by the FBI.
More importantly, Aquino’s close friend, Estrada, is also a business associate of indicted GOP lobbyist/reputed gangster Jack Abramoff. Another high-level Filipino-American in the White House, Karl Rove’s Assistant and Assistant to the President, Susan Bonzon Ralston, also served as Abramoff’s personal assistant at the law firms Preston Gates & Ellis and Greenberg Traurig. Ralston has been called to testify before the grand jury and special prosecutor Patrick Fitzgerald, who is investigating Karl Rove’s involvement in leaking the name of CIA covert agent Valerie Plame Wilson to the media.
Haliburton moved its world HQ to Dubai and is heavily invested in that region.
Most people don’t know this, but Dubai is a sort of under the radar world wide financial center.
I wrote a guest blog on this sometime back, but am too lazy to try to find it in my archives. AIG gave direct payment to Dubai Ports World to bail them out of counter party risk on construction bonds. Cheney and Bandar Bush were the major backers of the project with Cheney even moving Halliburton’s world headquarters to its flagship towers.
http://abcnews.go.com/GMA/Politics/story?id=2943017&page=1
You can get started here:
Wiki: AIG
“Schedule A – List of Derivative Transactions” was released to the public, against the wishes of the New York Fed. It listed many of the insurance deals that AIG had with various other parties, such as Goldman Sachs, Société Générale, Deutsche Bank, and Merrill Lynch.[59][60]
The fact that Dick Cheney got a donor heart because his black one died is repulsive. He is scum of the highest order.
Yes. Yes he is.
It was often speculated that Cheney was the REAL president.
Given that we have shadow banking and shadow housing market inventory, why not a shadow presidency?
There was nothing shadow about it. Georgie was a drunk and a puppet from the get-go. That’s why Cheney and Rummy/Rove ran him in the first place.
“Georgie was a drunk…”
While in the WH?
Sources, please. (This gets better and better…)
I think she was using the term in the AA sense, where you’re considered to be a drunk for the rest of your life even after you stop drinking. Because your brain no longer works like a normal person’s.
Nope, I was using to term literally. Listen to any of his speeches (or the few unscripted press conferences he gave;) man slurred his words, skewered his syntax, went blind in the headlights for seconds at a time, walked into walls, drooled, slurped,licked his lips in the middle of his sentences…. Doesn’t take a genius to recognize a common drunk, the official fiction to the contrary.
Then there was the “pretzel” incident.
http://www.prisonplanet.com/bush-reported-to-be-drinking-heavily.html
Hmmm….OK.
“Doesn’t take a genius to recognize a common drunk, the official fiction to the contrary.”
Agreed. Like detecting real estate lies, it is primarily a matter of focusing one’s attention.
Here’s my take (but it’s basically what Allena said). While the rest of us still had $20 bills in our pocket, housing became the new $300,000 bill, and a lot of people used it for their currency and investments.
The thing is, it’s a house backing this here $300,000 bill.
I’d put this a bit differently, though I think you are on the right track:
- Back in the 1960s, America was near or at the peak of its post-WWII world economic dominance, and the normal arrangement of one (male) breadwinner providing for a family of four with a stay-at-home mom worked out just fine.
- By the early-1970s, America’s dominant economic position had begun to erode, but the effects were masked at the household level by women entering the workforce and by a growing army of Asian manufacturers willing to accept our fiat money in exchange for goods no longer produced in America.
- When American economic decline reached the point where two incomes didn’t cut it, home price appreciation was added as a third income source (1997-2006) for members of the Ownership Society, which all Americans were openly encouraged to join.
- The Fed is currently engaged in an active effort to restore that dynamic, and hedge funds, investment banks and foreign investors who are cued into the effort are siphoning off vast profits as a result.
Them retrying the last strategy is kind of an admission that there’s no next step to continue masking, right? So now we start burning the furniture…
“Them retrying the last strategy is kind of an admission that there’s no next step to continue masking, right?”
We’ve entered the bubble-recycling era…
Here’s my take (but it’s basically what Allena said). While the rest of us still had $20 bills in our pocket, housing became the new $300,000 bill, and a lot of people used it for their currency and investments.
So you’re saying that the platinum trillion dollar coin was going to be like a house for the nation?
when our economy became dependent on asset appreciation cause all most of the real work is gone.
stocks and homes b@tchez!!!!!!!!!!!!
If propping up house prices props up mortgage values and banks hold a lot of these mortgages then propping up housing prices props up the banks.
And because the Fed is the Central Banker propping up banks is part of the Fed’s mandate.
“…propping up banks is part of the Fed’s mandate.”
Sources, please? (Or is this just your personal opinion?)
Look at it this way.
Who owns the FedRes?
A: The banks.
So, whose back do you think the FedRes is covering?
A: Not yours nor mine. As George Carlin said: We aren’t members of that club.
Sure, that role might not be in their official charter, but since when do the Big Boys follow rules? Those are for the little people.
I wouldn’t mind so much if the Fed weren’t always pretending to look out for the interests of all Americans.
If they would just come right out and say they are protecting the banking industry’s rights to scam Main Street American families, I would take no issue with their policies.
If they would just come right out and say they are protecting the banking industry’s rights to scam Main Street American families, I would take no issue with their policies.
What incentive do they have to do that? Heck, they’re content with J6P thinking that they are a branch of the FedGov?
“What incentive do they have to do that?”
None whatever.
Thank God for blogs that take on the task!
Wiki-up “The Federal Reserve Act”.
Also Wiki-up “Lender of Last Resort”.
At what point was propping up the housing market added to the Fed’s mandate ??
In September of 2008……
Exit housing while you still can.
And go where? Live out of our car? Or go live in the bushes by the Cherry Creek bike path downtown with all the heroin junkies and meth freaks?
Rent for a fraction of the cost of buying.
We already do. In addition to the moneys saving, we appreciate the opportunity cost of time not spent mowing lawns, raking leaves, shoveling snow, wasting time at HD and Lowes.
You answered your own question.
Maybe what you should say is “Exit Homeownership”?
Why buy when you can rent for half the monthly cost of buying ?
Rent for a fraction of the cost of buying.
Fraction? What fraction? Where? Show me the numbers. Where do you get your numbers? NAR has the USA median home price at about 184K and back to 2003 levels.
With 10% down, it’s about the same cost to buy that USA median priced home for the same PITI as renting the average apartment as reported by the Wall Street journal. About $1050 per month. A single family home vs an apartment. Show me your numbers.
Apartment Rents Continue to Rise As Vacancies Fall January 7, 2013,
http://online.wsj.com/article/SB10001424127887323706704578228051186952518.html
Apartment landlords continued to impose hefty rent increases as 2012 drew to a close, although there are some early indications they could be losing their leverage with tenants.
The average nationwide monthly apartment rent was $1,048 in the fourth quarter, up 0.6% from the third quarter and up 3.8% from a year earlier, according to a report set to be released Tuesday by real-estate research firm Reis Inc. The year-over-year increase was the largest since 2007 and a sign that landlords still have the upper hand they regained in 2010.
The nation’s apartment vacancy rate, which has declined since hitting 8%in the aftermath of the financial crisis, fell to 4.5% from 4.7% in the third quarter. The rate is the lowest since 2001’s third quarter.
High rates aren’t deterring “people from renting,” said Jeff Donnelly, a real-estate analyst with Wells Fargo Securities LLC.
Fraction? What fraction? Where? Show me the numbers. Where do you get your numbers? NAR has the USA median home price at about 184K and back to 2003 levels.
Indeed, in my little burg, it costs much more to rent a nice, non ghetto apartment than to make monthly payments on a 200K house. I’m seeing rents on 3 bedroom apartments hovering around $1400, while the P&I on a 200K mortgage is about $850. Taxes here a low (about $1000 a year on that house).
The downside with the house of course, is that you could get stucco.
“The downside with the house of course, is that you could get stucco.”
I don’t see how this would be a problem in a non-recourse state. Pay your mortgage for a few decades at less then rent, then dump your property on the bank if you can’t sell for a profit. The bank’s loan has a principle guarantee, and the losses are dumped on the U.S. taxpayer. So it’s all good, for the owner and the banker!
Where do you get your numbers ??
He gets them out of his back-side…
4/3s is also a fraction. So is 3/2s. So is 2/1.
You liars are quoting NAR? lmao
But now our Real Estate Professional Polly weighs in, it’s all settled.
Fifteen below zero Fahrenheit here in California
Stop global warring!
Minus 3F here in Dumver. The forecast high today for Loveland Pass is minus 3F so too cold to ski Loveland or Arapahoe Basin. Damn you Al Gore and your global warming!
Yeah. Denver typically falls into a deep freeze the day after Orange gets crushed in the playoffs.
We’re not from Colorado. We don’t really care about football. Yesterday was the first game we watched all season. Our level of emotional investment in the Broncos is zero.
That’s cool. Nothing personal.
Am sure we have co-workers who were weeping yesterday.
There’s only one word for that and that’s LOOSERS!
The best part is they won’t wear those stupid, overpriced jerseys, the ones with the mercenaries’ names and numbers printed on the back (the guys who might be playing for another team next season), to work anymore, at least not until next season.
LOL! There is no joy in Mudville today! The children’s dreams of souper bowls have been dashed.
And the biggest irony of all, it’s being said that the Broncos lost because St. Peyton Manning doesn’t play well in the cold! Meanwhile Tim Tebow’s brother, who happens to live in Denver, gloated over the donkey’s loss. I’m sure Timmy shed no tears either.
Boy, am I relieved that it’s over. Now things can get back to normal here.
The housing market won’t bottom out after this year’s Souper Bowl, as it already bottomed out last year!
P.S. I love everything about the post below except for the sentence structure. I am often taken to task for writing long sentences. But I don’t hold a candle to this guy!
U.S. Housing Real Estate Market House Prices Trend Forecast 2013 to 2016
Housing-Market / US Housing Jan 12, 2013 - 12:36 AM
By: Nadeem_Walayat
Housing-Market
Following the peak of the over leveraged US housing market bubble late 2006, the real estate market literally crashed during 2007 triggering the financial crisis that has acted to subsequently feed a multi-year bear market as a consequence of the subprime mortgage debacle that was magnified globally via toxic CDO packages that literally risked the bankruptcy of the whole global financial system starting in June 2007 when Bear Sterns bailed out one of its hedge funds, within a year Bear Sterns would effectively go bust as JPM picked it up for about 5% of its peak value that acted as a prelude to what was yet to come during 2008 for the likes of Lehman’s that prompted tax payer bailouts right across the globe to prevent financial Armageddon as the too-big-to-fail banks only slowly revealed the extent to their exposure to the toxic mortgage backed securities in what amounted to the greatest fraud in history as investors had been duped into buying junk that the credit rating agencies typically rated as Triple A for a fee.
Since which time the bear market in US housing has continued to act as a drag on the US economy, holding it back from recovery, in response to which the US government and central bank have sought to escalate their response in an attempt at engineering an economic bounce so as to induce an sustainable economic recovery of which the QE-4-Ever of Sept 2012 is just one recent response towards which amounts to printing an estimated $85 billion a month to inflate the US economy which is predominately aimed at the US housing market and secondary drivers.
…
Christ, there are only two periods in that whole bit!
And, quite coincidentally I’m sure, two paragraphs…a bit unconventional, though fine form for a rant.
80 here is Florida. Took the kids out on the gulf with the kayak yesterday.
Yep, we’re living the dream here.
So Ca -Our lawn is ice the past few days upon waking up. When our pool freezes up, I’m going ice skating. lol
Some of our “green shoots” of new plant growth literally froze and fell to the ground in today’s freezing temperatures.
Need…more…liquidity!
Oof! If global warming were any worse, all of California would freeze over…
I was feeling sorry for myself noticing the frost on our plants this morning and the thermometer reading in the 30’s. Now that the heat has been on for a while and my coffee is brewed, I mainly pity the tourists who came here to escape the frozen tundra to the north-east of us, only to discover that it isn’t much warmer at the moment on San Diego beaches.
My San Diego friends are whining and where they live I don’t think it has gotten lower than 37 F. But when you are use to what I think is perfect weather year around, you soon become a weather wimp.
And it’s all relative. We left the frozen tundra of my Utah in-laws’ domain a couple of weeks back and somehow survived the trip from SLC to St. George, despite ice buildup on the passenger compartment side of our van’s windows.
Now that we are comfortably settled in back here in SD, we freak out if the thermometer reads lower than 40F…
Are you talking to me? Yes it is ironic I picked the one cold week to visit your fair state. At least the plane ticket was cheap. It’s been raining every day back in localand so that’s some consolation.
Shoulda vacationed in Florida I suppose, but you all have mountains to go with your beaches and that’s a nice feature.
Next time try Kauai. You won’t regret it…
Let us know what the highs are next summer and how much bigger your SDG&E bill is. Of course, your SDG&E bill could rise even if your consumption doesn’t, one of the prices to pay for living in America’s Finest City, I guess.
Fifteen below zero Fahrenheit here in California
At what elevation?
BTW, 13-degrees F at 10:00:00 up here in eastern Washington, and we have a clear blue skies too, so it’s real pretty today.
That would be down at 7,100. Our night time lows tend to be in the lower basins.
Update for Real Estate Market Conditions in the Foothills East of Sacramento:
Inventory on MLS: Down 62% from 2010
Foreclosure Listings: Down 72% from 2010
Pricing: Up 34% from 2010
Builders are out looking for more lots because demand is strong for new houses.
The vacancy rate for my single family rental portfolio is less than 3/100ths of 1% over the last 3 years (3 days over 3 years in 8 houses.)
I keep telling HBB’rs that the housing market is correcting and I take a lot of flack for my reports. I take all the heat as just a compliment for this contrarian. In the meantime, the portfolio of houses I purchased in 08, 09, & 10 keeps pumping out $12,000 a year in cash flow and we are reducing over $30,000/year in debt principal.
The pendulum always swings both ways and when the economy tanks and the cost of buying a house is below reproduction cost, as it was in 2008-9-10, it is likely a great time to buy. That seems to be holding true today.
Truth Update:
Inventory on MLS has shifted off the books dues to demand falling to 1997 levels. And sinking.
Foreclosure Listings are backlogged due to moratoriums.
Pricing is still falling measured in price per square foot.
Contractors continue to eviscerate resale comps by building and pricing a double digit percentages lower than resale. Falling demand accelerates this trend.
We have almost no MLS inventory showing up here in San Diego. For instance, it was above 20K a few short years ago; now only around 4K, at least according to Redfin.
Specifically, here are the current numbers:
Number of SFRs, townhomes & condos, including FSBO’s and MLS listings = 4,400
Number of the above listed at prices of $1 million or more = 1,012 (23%)
Number listed at $5 million or more = 127 (2.9%)
Given the huge number of listings (20% of the total) on the $1m-$5m price range, there has never been a better time for multi-millionaires to shop for a home in San Diego!
The graphic accompanying this article shows $2m+ home sales in San Diego County went from 20 in 1995 all the way up to 748 in 2005. They dropped back to 269 in 2009, at the onset of Quantitative Easing, after which they have steadily climbed each subsequent year to 398 in 2012. The San Diego multi-million dollar home sale bubble is back — booyah!
LUXURY HEATS UP
Sales of homes topping $2 million pushed by steep price cuts, tax hikes on wealthy and good old bargain hunters
By Lily Leung
12:01 a.m.Jan. 13, 2013
$16.25 million
2928 Camino del Mar Del Mar
(Poster’s Note: This Dutch auction sale started with an eye-popping initial asking price of $39 million on 5/27/2010.)
Did 2012 mark the return of the seven-figure house?
Sales of homes that sold for $2 million or more rose 13 percent in San Diego County from a year ago. While that bump sounds like promising news for the anemic luxury market, real estate and financial insiders say steep price cuts and an expected tax hike on the wealthy helped drive sales. Another factor that continued to influence transactions: shoppers seeking bargains.
“It’s been slow and selective,” said Judy Elsberry, who sold the second priciest property in San Diego County last year. “People who buy luxury homes … still do not want to buy at the highest price.”
The county logged almost 400 homes that sold for $2 million or more from January to November, based on the most current numbers from housing tracker DataQuick.
We’ve seen steady increases in those types of transactions over the past three years. Still, the seven-figure price tag market is about 47 percent off from its peak in 2005, which indicates that that price range was, like others, crushed by the housing crash.
The local million-dollar home submarket also lags when compared with the overall housing market in San Diego County, where total sales are 22 percent higher than a year ago, DataQuick numbers show. The year-ago increase of million-dollar homes sales nationally was 52 percent and nearly 58 percent in the West, says the National Association of Realtors.
Prices in the luxury market looked a bit more promising in 2012, compared with previous years. The median price paid for a $2 million-dollar-plus home in the county was $333 per square foot, rising 2 percent from the previous year.
Potential buyers may be able to afford the properties at the original listing price levels — and even pay cash in some cases — but many aren’t willing to, agents say. The listing prices for all 10 most expensive homes sold last year were cut anywhere between 2.2 percent to 44 percent.
Among those who negotiated a better price were Chipotle CEO Montgomery F. Moran and his wife, Kathryn. They paid $8.5 million for an oceanfront home in the Barber Tract. That’s about 32 percent less than the original listing price of $12.5 million. The home had been listed for more than 250 days, based on the Multiple Listing Service.
Elsberry, the real estate agent, attributes the slowness of the high-end market to the sluggishness of the economy and financial uncertainty from fiscal-cliff discussions at the nation’s capital.
“Buyers have to be confident that real estate is going to hold its own or continue to rise … when buying high-end or premium homes,” she said. “If the economy doesn’t stabilize, then there’s not going to be any buying.”
…
“$16.25 million
2928 Camino del Mar Del Mar”
Interesting, isn’t it, how the housing pimps at UT-San Diego use the example of a sale on June 14, 2012 that took over two full years to complete as current evidence that the $2m+ segment of the San Diego market is ‘heating up.
The article states that ‘the listing prices for all 10 most expensive homes sold last year were cut anywhere between 2.2 percent to 44 percent.’ Maybe my calculator is broken, but the figure I get for a drop from $39 million down to $16.25 million is 100*(16.25-39)/39 = -58%. This was for the most expensive home that sold in San Diego County for all of 2012. I didn’t bother to check whether the markdowns on the other top-ten most expensive homes sold were outside the reported range.
It took me all of two minutes to look up that $39 million figure on Zillow. Are UT-San Diego reporters too inept to operate a calculator, or too lazy to look up the price histories for the homes they use as examples in their stories?
Curiosity compelled me to research No. 6 on the list of highest 2012 sale prices, 7348 Vista Del Mar Ave, La Jolla. It originally went on the market for $12.5 million on 7/18/2011, so its ultimate sale price of $8.5 million over a year later (11/09/2012) was $4 million (32%) less than the owner’s wishing price.
And for good measure, I checked out number 10 on the list, at 303 Vista de la Playa, La Jolla. It first listed at $9.7 million on 4/06/2011, and finally sold over a year later at $7.425 million on 12/21/2012 — only $2,275,000 (23%) below what the seller initially hoped to get.
Dutch auctions are all the rage at the high-end of the San Diego housing market!
So after checking a few of these San Diego “top ten most expensive homes sold in 2012″ and finding much larger price reductions than the reporter disclosed, I decided to restate the entire table with corrections which are readily found on Zillow’s web site. Pardon the camel back notation:
Rank Address OriginalPrice Date SalePrice Date Haircut PctReduction
1 2928 Camino Del Mar $39m 5/27/10 $16.25m 6/14/12 -$22.75m -58%
2 6292 Camino de la Costa $26m 4/04/08 $15m 10/01/12 -$11m -43%
3 17576 Rancho la Noria $18.5m 9/16/07 $7,759,383 NA* -$10.7m -58%
4 1844 Ocean Front $21m 9/17/09 $9m 10/19/12 -$12m -57%
5 6343 Camino de la Costa $11.5m 11/10/10 $8.55 11/02/12 -$2.95m -26%
6 7348 Vista del Mar $12.5m 7/18/11 $8.5m 11/09/12 -$4m -32%
7 6314 El Apajo $19.999m 11/13/07 $8.0685m 8/31/12 -$11.9305 -60%
8 5019 Tierra del Oro $12.8m 11/11/07 $8m 4/20/12 -$4.8m -40%
9 5090 Rancho del Mar Trail $8.5m 7/07/11 $7.5m 8/1/12 -$1m -12%
10 303 Vista de la Playa $9.7m 4/26/11 $7.425m 12/21/12 -$2.275m -23%
* The UT-San Diego table shows a sale price of $9.2m, but Zillow shows no 2012 sale and indicates the home is not on the market. The current Zestimate™ is the value of $7,759,383 shown above, used to compute the price reduction off the initial list price.
Here are the price reductions off initial list in rank order:
-12%,-23%,-26%,-32%,-40%,-43%,-58%,-57%,-58%,-60%
The range of haircuts off initial list price is from -12% to -60%, with a median reduction of -41.5%.
I have no idea how the reporter came up with her range of reductions from -2.2% to -44%, but it is clearly wrong.
“-58%,-57%,-58%,-60%”
Oops — should be -57%,-58%,-58%,-60%.
Ranking data and drinking don’t mix…
Are owners of multi-million dollar San Diego homes truly dumb enough to believe they can sell for whatever price they list?
That range of crewcuts documented above certainly suggests it.
“LUXURY HEATS UP”
Just imagine how differently the headline on that story might have turned out if the reporter had her facts straight.
How about:
LUXURY HOME SELLERS ACCEPT MULTI-MILLION DOLLAR HAIRCUTS OFF INSANELY OVERVALUED WISHING PRICES
Here is something I have always wondered about, but have no idea how to check: Do sellers who start off at insanely high wishing prices eventually sell for more than those who initially price their homes to sell at current market value?
There are lots of fascinating details in that story. Another fairly interesting one is haircut size and time on the market.
Rank ListDate SaleDate TimeOnMarket Haircut PctReductionRank Address OriginalPrice Date SalePrice Date Haircut PctReduction
1 5/27/10 6/14/12 2 years 1 month -$22.75m -58%
2 4/04/08 10/01/12 4 years 6 months -$11m -43%
3 9/16/07 1/13/13 5 years 4 months -$10.7m -58%
4 9/17/09 10/19/12 3 years 1 month -$12m -57%
5 11/10/10 11/02/12 2 years -$2.95m -26%
6 7/18/11 11/09/12 1 year 2 months -$4m -32%
7 11/13/07 8/31/12 4 years 9 months -$11.9305 -60%
8 11/11/07 4/20/12 4 years 5 months -$4.8m -40%
9 7/07/11 8/1/12 1 year 1 month -$1m -12%
10 4/26/11 12/21/12 1 year 8 months -$2.275m -23%
No surprises here: The more outlandish the initial list price, the longer it takes the seller to face reality and reduce the price to a level the market will bear.
I did a little analysis of the times it took to sell those homes versus the percentages they were overvalued, defined as 100*(PriceReductionPct)/(100 - PriceReductionPct) [note this assumes the final price represents market value].
Turns out there is a highly significant 63.6% correlation between the percentage by which the wishing prices were overvalued and the times the homes were on the market. I suspect the linkage between overpricing and time-to-sell is even stronger than suggested by this correlation, due to heavy dependence of time-to-sell on sellers’ whimsical decisions about when to reduce their asking prices to levels the market will bear. Taking the exact timing of price reductions into direct consideration would doubtless result in a far stronger connection between wishing price and time-to-sell.
“Pricing is still falling measured in price per square foot.”
Jingle Male is talking about a specific area. The price/sf is not falling, nor is it in my area (west of Sacramento). It’s been going up for a while now. Not that it can continue unless the Ca jobs picture improves, but pricing per square foot hasn’t been going down here for almost a year. Maybe it has on higher-end homes.
“Not that it can continue unless the Ca jobs picture improves,…”
Can’t you guys rely on sales to all-cash Chinese and Canadian investors?
I think you will soon be able to rule out Canadian cash buyers wanting a cheap (under $100,000) USA cottage as our tax rules are being enforced more actively. We must report any foreign purchase of 100 m or more. As well, Heloc’s will soon be much tougher to get as our economy is slowing.
As well, those who wanted to buy generally have, and been bitten.
Surprisingly, there is a move afoot to increase interest rates because they say that even if we moved our rates up by 2% they would still be cheap.
Wonder what that will do to the stock and housing markets.
“…even if we moved our rates up by 2% they would still be cheap.
Wonder what that will do to the stock and housing markets.”
Are you talking about 2% higher in relative terms (e.g. 1.02*3.5% = 3.7%) or in absolute terms (3.5% + 2% = 5.5%)?
The former would have a negligible effect, and the latter would have a devastating one, leading the Fed to avoid it at all costs.
true dat bro
the desirable areas of placer county are doing quite well. lincoln got hammered but is making comeback. roseville, rocklin , loomis holding value.
and we are reducing over $30,000/year in debt principal ??
A often overlooked and a significant benefit of investment real estate….Someone else paying down your debt…
Misrepresentations from you too? Try some simple math my friend.
Have to corroborate Jingle’s observations (at least anecdotally). Over the last four or five years, five of the nine total houses on my parent’s quiet little country lane (in Somerset) have been standing empty. It seemed that every time I visited, Madre would tell me about another longtime neighbor moving out.
When I came up for the holidays, the lane had been newly paved and she mentioned that all five of the homes were now occupied with new (more affluent) families. The parcel across the river from them is being graded for construction.
They are new, more affluent families because everybody knows wages are up as well as disposable income.
Corroborate what? Housing demand is at 1997 levels and falling. This is reality no matter how one attempts to distort it.
3 more Toronto bubble articles from the Globe and Mail:
http://www.theglobeandmail.com/life/home-and-garden/real-estate/toronto-row-house-priced-to-sell-gets-61500-over-asking/article7171994/
http://www.theglobeandmail.com/life/home-and-garden/real-estate/rival-bids-add-71000-to-sale-price-of-mid-toronto-home/article7169788/
http://www.theglobeandmail.com/life/home-and-garden/real-estate/vintage-sunnylea-home-goes-70018-over-asking/article7168996/
Good heavens, those places wouldn’t fetch 200K in my little burg. Maybe not even 150K.
I visited Toronto on a biz trip 20+ years ago. I noticed back then that it was pricey, pricier than San Diego. When I mentioned this to local biz colleagues, and asked how could it be as there was no shortage of land, I was told that everybody wants to live near the city center, that the burbs, especially the distant ones, were not desirable, especially because of the winter commutes.
But these current prices, 700k for a dump, who pays that kind of money, and who can afford the monthly nut, especially since they don’t even have MID in Canada.
That 700k isn’t the 700k you remember it being. It’s a new 700k created by 0.25% money.
You, on the other hand, like me and most here, are the same old folks thinking in terms of what 700k looked like when we were first started paying attention. That 700k looked much much grander. Really, I remember when 700k was a number to be respected. It was a very big number! Now, not so much.
Gunz in the newz
Politico - Breitbart editor: Piers Morgan a ‘bully’ ’standing on the graves’ of dead children
“Breitbart.com editor-at-large Ben Shapiro last night accused CNN’s Piers Morgan of “standing on the graves of the children of Sandy Hook” to “bully” and “demonize” pro-gun advocates.
“You have been a bully on this issue… I watch your show, and I’ve seen it repeatedly, what you tend to do is you tend to demonize people who differ from you politically by standing on the graves of the children of Sandy Hook, saying they don’t seem to care enough about the dead kids,” Shapiro said.
Shapiro called instead for “a rational, political conversation about balancing rights and risks and rewards of all of these different policies,” without “demonizing people on the other side as being unfeeling about what happened at Sandy Hook.”
Shapiro’s appearance on Piers Morgan Tonight was part of the British CNN host’s ongoing effort to address gun violence in America and advocate for a ban on AR-15s and similar assault weapons.
Morgan rebutted the suggestion that he was “standing on the graves” of dead children.
“How dare you,” he said.
http://www.politico.com/blogs/media/2013/01/breitbart-editor-piers-morgan-a-bully-standing-on-153928.html?hp=r10
“How dare you,” he said.
Well, rumor has it he stood on the grave of dead child Milly Dowler. But somehow he managed to slide out of that phone hacking scandal.
Haven’t we already got enough of these types in the US? I agree with Adam Carolla’s take on the issue:
http://www.youtube.com/watch?v=chDDJ2EolC0
Yep, the US has become a receptacle for asswipes from around the world. As if we didn’t have enough of our own.
Washington DC’s first homicide for 2013 was a stabbing. No doubt it must quite a relief among the “gun control” freaks and “anti gun violence” freaks that the murder was gun free.
UK Guardian piece - Detroit: after decades of urban blight, technology boom gives Motor City hope
As hi-tech firms spring up in areas better known for destitution and drugs, Detroit has found something new: optimism
“It appears as though a wacky slice of California’s Silicon Valley has landed smack in the middle of a city now just as famous for catastrophic urban blight as for being the spiritual home of America’s car industry.
Two youthful tech engineers play table tennis in the middle of a busy open-plan office, while bubble chairs hang from the ceiling. Around a table three people are having an intense discussion and a snatch of their conversation drifts across the room. “Having an eye patch would be kind of cool,” insists one, earnestly.
This is no mirage. Increasingly it is a common sight in the Motor City as over the last few years a flood of hi-tech firms have sprung up in downtown Detroit, sparking talk of an urban renaissance in an area laid waste by poverty and abandonment.”
Further down the article:
“But in Detroit optimism should always be tempered by the brutal realities of half a century of terrifying decline. On “Webward”, dilapidated storefronts and cheap liquor stores still far outnumber swanky new firms. The homeless and drug-addicted mingle on the same streets as the new entrepreneurs. And as you travel out along the famous old boulevards, with the evocative names of Grand River and Gratiot, you enter the horror show of much of the rest of the city. Vast tracts are marked by burned-out homes and empty lots on which prairie grasses and trees grow. Abandoned factories and schools loom in empty shattered hulks over the sort of landscape that is usually the product of war or pestilence.”
How many of these geeks and pretty young things will stay in Detroit past age 30 or after breeding? Or after they get a friendly dose of COEXIST breaking into their car or assaulting them on the street?
http://www.guardian.co.uk/world/2013/jan/12/detroit-technology-fresh-hope
Hey, maybe Berry Gordy will come back, lol.
Ever watch the documentary “Standing in the Shadows of Motown”? It’s all about the Funk Brothers, the studio guys who really created the sound. Great music. Gordy really pulled out the rug from under them. That’s how much he cared about the cohmewnitay.
That’s nice, but a few thousand hipster, techie jobs won’t make up for the tens, if not hundreds of thousands of automotive jobs lost. Still, it’s better than nothing, I suppose.
Building tangible sh*t is for loosers. We can all just tweet our way to prosperity!
…and then post on Facebook about our new-found prosperity.
“We can all just tweet our way to prosperity!”
And those who can’t, teat.
Get rid of the drug trade, crime and other forms of urban blight left over from Motor City’s auto-manufacturing heyday, and the city will naturally reinvent itself economically.
Another Section 8 housing riot up in Michigan:
http://www.myfoxdetroit.com/story/20572088/chaos-in-taylor-as-thousands-gather-for-housing-help
What would happen if Section 8 was eliminated entirely? Maybe rents would be more realistic in some areas.
Saw that one yesterday. We love love love articles like this!
Nightmare scenario we like to imagine is what would happen if the EBT card system crashed nationwide at midnight on the first of the month when all the Lucky Duck poors are at Walmart with full carts waiting to bum rush the checkout
Section 8 and Sneakers. There’s a song in there somewhere.
“We love love love articles like this!”
Well, here’s some more love for ya. The Atlanta Section 8 housing riot of 2010.
http://www.youtube.com/watch?v=CODBj9eEfOo
Sing along with ole’ palmetto now:
“Oh, beautiful for spacious skies
For amber waves of grain
For purple mountain majesties
Above the fruited plain….”
Lolz.
“Section 8 and Sneakers. There’s a song in there somewhere.”
Take this job and shove it
Section 8 and Sneakers
I ain’t payin you no more
My equitys gone
And took all the reasons
I was payin for
You better not try to stand in my way
As I’m walking out the door
Section 8 and Sneakers
I ain’t payin you no more
I’ve been payin this mortgage
Nigh on fifteen years
As I wathched my equity grow
I took cash out and I spent it on
Well I don`t know
And I’ve seen a lot of good folks cry
They had a lot of bills to pay
Well they didn`t cash out and that`s their fault
So here is what I say
Section 8 and Sneakers
I ain’t payin you no more
My equitys gone
And took all the reasons
I was payin for
Cry if you want
And say what you will
Sure it hurts me to the core, but
Section 8 and Sneakers
I ain’t payin you no more
ROTFLMAO! Thanks, jeff. Awesome job! On demand, too!
Sir, you are a social satirist extraordinaire.
Rats!
I`ll take Section 8 and Sneakers
I ain’t payin you no more
My equitys gone
And took all the reasons
I was payin for
“Sir, you are a social satirist extraordinaire.”
Ditto. In a just world, that talent would earn you buckets of money!
What would happen if Section 8 was eliminated entirely?
We would look like the third world nation that we have become. Think Mexico: kidnappings galore, car jackings become routine, with everybody shooting at each other.
Or from a more American perspective: We become one great big Detroit.
What’s not to like?
“We become one great big Detroit.”
Right now, we got a bunch of Detroits. Roll call, please:
Baltimore
Philly
East St. Louis
Camden
Newark
Hartford
Oakland
Birmingham
Atlanta
Miami
Orlando (included because it’s considered one of the top ten most dangerous cities in the US, on some magazine’s list or another)
New Orleans
Chicago
Rochester
Memphis
Some are more deteriorated than others. Wha’ hoppen?
Richmond, CA
Compton, CA
“Wha’ hoppen?”
Not enough members in the Ownership Society?
I think Richmond, VA belongs in there, too. Cleveland, Cincinnati, OH. Lawrence, MA.
You know it’s bad when an Irish film crew comes to the US to do a documentary on housing here and is completely dumbfounded by the state of dilapidation of some of the cities in the US.
Clearly, we should demolish the slums and replace with livable housing. Or fix up what’s there, for those poor people.
How could you forget Cleveland, our former city of residence and home of the Obama Phone woman?
I just added it, along with Cincy, but the post hasn’t shown up yet.
Feel free to add, folks. Anyone can play.
Orlando (included because it’s considered one of the top ten most dangerous cities in the US, on some magazine’s list or another)
You should see the security they have at the Disney owned hotels in Orlando. You have to get past a gated guard station to get onto hotel grounds.
As for the other cities on the list, other than perhaps East St. Louis and New Orleans, I would say that the other cities aren’t quite as bad as Detroit … yet.
I moved to the Orlando area for about 2 months at the height of the bubble, just before it turned south. (Still can’t believe what we sold the house for, lol). After those two months (which were a complete and utter nightmare) I ran screaming out of there back to the Tampa Bay area. What a complete sh*thole.
Camden and Newark are supposedly as bad as Detroit.
Mmmm … maybe … Newark is pretty rough.
But my point was that the “nicer” places would start to look scary once the welfare checks stop. What are those people supposed to do? No one would consider hiring them, and even if they would, there aren’t any jobs for them. Heck, you need to be clean shaven and have a median IQ just to get a lucky ducky job these days.
More mindless violence (American exceptionalism at its best)
Police: Deaf Man Stabbed After His Sign Language Was Mistaken For Gang Signs
“Police in Burlington say a deaf man was stabbed several times after his sign language was mistaken for gang signs by another man.
Sgt. Mark Yancey said 45-year-old Terrance Ervin Daniels was using sign language with another deaf man. A third person saw them, thought they were flashing gang signs and stabbed Daniels several times with a kitchen knife. A neighbor saw the victim and called emergency personnel.”
http://charlotte.cbslocal.com/2013/01/11/police-deaf-man-stabbed-after-his-sign-language-was-mistake-for-gang-signs/
Stockton, Ca
If Section 8 were eliminated, the rental market would collapse
“If Section 8 were eliminated, the rental market would collapse”
+1 And the “rent v. buy” decision would exert a negative drag on home values, so Section 8 will be around ’til the asteroid impact.
Definitely. And the quality of neighbors in rentals would go up significantly and remove one reason some people pay the big bucks for a neighborhood.
NYCdj
In responce to my brother paying 2 months rent at the LLs request on his place in Long Beach while not living there after Sandy you wrote.
MZ:
“thats what happens when you have no idea how to use the internet..”
“Its staggering how many people today are so freakin clueless…. and wont even try to find answers….”
Well, allow me to retort. …
He is pretty far from clueless. He rents a place 1 block from the beach for $1,700 a month which leaves him a reasonable commute to his job in the city. He stayed at my sisters house in Greenwich for 7 weeks and is back in his place after the utilities were restored with no first last security plus moving expenses out of his pocket. He has a lot of money in the bank after having been through a divorse from a long term marriage where his ex-wife was left very well off after having raised 2 kids and put them through college (he paid, no student loans for the kids) with the jobs he had that started in the east and ended in fly over country. He owned 3 homes from the 80s through the early 2000s each of which he sold when he had to move as he climbed the ladder in his industry selling the last when he divorced and renting since.
He has just been cleared as cancer free after going through surgery, radiation and chemotherapy this past year all the while keeping his job and paying his rent. If he is “clueless” this country could use a lot more clueless people like him.
Jethro For President
Ahhhhh yess cheap rent at the beach….i was going to add that ….but my cat wanted to go outside and catch some birds…..
so for him it was worth it….but most people get scammed by landlords ….sorry…
Sending good thoughts to your bro, and to you for being a good bro to him. (Also a damned good parodist.)
What I have learned about the economy so far? That it is completely unpredictable. There is no pattern of recesion across the world. How can we conceptualize anything if we have many cases that just don´t fit.
For example:
This infographic from Vancouver shows a price increase. How is it possible the prices of housing are still increasing when there were such a huge drops in sales? How long will it take to moderate the prices on the level,when they will be affordable for a middle income family?
“What I have learned about the economy so far?”
The fix is in.
That’s it in a nutshell.
What I have learned about the economy so far?
That it’s rigged, and not in your favor. The Global PTB are not interested in you having an affordable home, they are interested in siphoning away every dollar you earn, either via high rents or high mortgage payments. And the taxes you pay, they eventually wind up in their coffers too.
Colorado
Way OT but I felt bad for Peyton yesterday. The pick he threw in over time wasn`t good but it never should have gotten that far. I have never seen a safety make a play on a ball that bad at any level as the one made on the touchdown that tied the game at the end of regulation. It probably wouldn`t have hurt if Champ Bailey retired last year either.
I don’t feel bad for him. He’s being paid a CEO’s salary to do his job. So he isn’t gonna win another Souper Bowl and be crowned greatest QB of all time. Boo hoo.
I didn’t watch the game, though I expect to see a lot of sad faces at the office tomorrow.
I feel bad for Peyton simply because of the loser he had to replace. Yeah… Tebow sucked so bad so it’s presumed a rookie QB could make the Broncos shine.
Well…Tebow has won more playoff games for Denver than Manning.
Foreclosure Relief: How Enduring Will It Be?
Alton Drew
Monday’s announcement that the Office of the Comptroller of the Currency and the Federal Reserve Bank had entered into a $8.5 billion settlement of alleged deficiencies in the foreclosure activities of ten banks may have addressed abuses of the foreclosure process, but does the agreement address the overall goal of maintaining a stable financial system? Probably not.
The Federal Reserve said yesterday that ten mortgage servicers: Aurora, Bank of America, Citibank, JP Morgan Chase, MetLife Bank, PNC, Sovereign, Sun Trust, U.S. Bank, and Wells Fargo, have entered into an agreement in principle to make $3.3 billion in direct payments to eligible borrowers and $5.2 billion in other aid such as loan modifications and forgiveness of deficiency judgments in exchange for terminating any additional action related to inappropriate foreclosure actions taken by these banks against 3.8 million homeowners subject to foreclosure in 2009 and 2010.
Maxine Waters, Democrat of California and the ranking member of the House Committee on Financial Services, said that, “The settlement announced today between the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board and ten major mortgage servicers appears to mark an end to what was a deeply problematic Independent Foreclosure Review (IFR) process.”
Ms. Waters went on to say that she still had concerns about how the settlement amount was determined, how eligible households will be identified and contacted, and how aid will be distributed to these households. “I fear that if the public and policymakers lack that information, it will constrain our ability to reform the mortgage servicing industry prospectively, something the Consumer Financial Protection Bureau is currently undertaking”, Ms. Waters added.
…
“Maxine Waters, Democrat of California and the ranking member of the House Committee on Financial Services, said that, “The settlement announced today between the Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board and ten major mortgage servicers appears to mark an end to what was a deeply problematic Independent Foreclosure Review (IFR) process.”
Why was the review process problematic Maxine?
Finding Little Evidence Of Foreclosure Fraud, Feds Give Up
Daniel Fisher, Forbes Staff
1/08/2013 @ 9:16AM
With a pair of terse notices yesterday, the Office of the Comptroller of the Currency basically admitted that its elaborate process for turning up evidence of fraud in hundreds of thousands of loan files was a waste of money.
With the $8.5 billion settlement with Bank of America, Citi and other lenders, the government abandoned the Independent Foreclosure Review and switched to a system of direct grants to foreclosed borrowers, details to come. In a statement, Comptroller of the Currency Thomas J. Curry said “it has become clear that carrying the process through to its conclusion would divert money away from the impacted homeowners and also needlessly delay the dispensation of compensation to affected borrowers.”
The New York Times reported today concerns grew “in the upper echelons of the comptroller’s office” at the cost of the loan reviews, which consumed up to 20 hours per file at $250 an hour. Banks spent $1.5 billion on this snipe hunt without turning up meaningful examples of fraud, the Times reports. That money could have been handed out to borrowers in the form of a $5,000 check for each file.
The outcome shouldn’t come as a surprise. After I wrote a piece critical of the parallel mortgage settlement with state attorneys general last year, comparing it to the deeply flawed tobacco settlement, I was barraged with comments from critics accusing me of downplaying foreclosure fraud. I responded with one simple question: Has there been a single case in the past five years of a homeowner who was current on his mortgage being foreclosed through fraud?
http://www.forbes.com/sites/danielfisher/2013/01/08/finding-little-evidence-of-foreclosure-fraud-feds-give-up/ -
I don`t remember seeing this.
Spanish prostitutes tell bankers, ‘No loans, no love’
3/28/2012
First prostitutes in Spain had to fend off “bar code pimps” imprinting ownership tattoos on them. Now top-shelf sex workers are organizing their own “Occupy CTBA,” Madrid’s version of Wall Street, and denying sex to the nation’s bankers until they start offering loans to financially burdened families. Financial professionals have tried to circumvent the sexy-time stonewalling by posing as architects and engineers, but the ladies are onto them, claiming they’ll continue their indefinite fiscal version of “Lysistrata” until bankers “fulfill their responsibility to society.” @AlexDunnin tweets, “This is how to fight for financial sector reform and win.” The ladies think they’re on the right track, at any rate, with one worker stating, “We don’t think they can withstand much more.”
http://now.msn.com/spanish-prostitutes-tell-bankers-no-loans-no-love - 156k
I believe I posted on that story when it broke…
Sorry I never saw it. Do you know if the strike is still on?
Apparently the hookers aimed lower than at Spanish banksters’ hearts.
Spanish prostitutes: striking at the heart of the banking industry. What about an SPS?
April 10, 2012
Back on deck after the Easter break – many thanks to Richard Wells for this piece from The Week magazine.
High-class prostitutes in Spain have gone on strike over the financial sector’s reluctance to extend credit to families and small businesses. The women say they will not have sex with bankers until the situation changes. “We have been on strike for three days,” said one woman in Madrid. “We don’t think they can withstand much more.” It is claimed that bankers have been trying to get around the strike by posing as architects and engineers – but the sex workers have not been fooled. “It’s been many years since these professionals could afford rates that start at £250 an hour,” said one. .
With the issue Collateral Debt Obligation (CDO) and Credit Default Swaps (CDS) leading up to the financial crisis of 2008 I am surprised that the Spanish banking fraternity haven’t developed a SPS – Spanish Prostitute Security. I am sure the SPS would be rated AAA by Standard & Whores.
…
“High-class prostitutes”
Lol. Expensive = class in some circles I suppose.
“We don’t think they can withstand much more.”
Lol. After only three days?
I love this blog.
A crossed legs strike?
More murders in the land of fruits and nuts
Just slap a COEXIST sticker on it and it’s all good bro
SF Gate - Bay Area homicide rate rises in 2012
“The region’s 15 biggest cities saw 310 homicides last year, according to interviews with city officials. That was up from the 275 homicides in 2011 and 248 in 2010 that the cities reported to the state Department of Justice and the FBI.
The increase, however, was driven almost entirely by the region’s three largest cities, San Jose, San Francisco and Oakland, where killings rose 52 percent in two years.
Taken together, the other dozen cities had 24 percent fewer homicides over the same period.
The Bay Area’s homicide rate fluctuates for reasons that are difficult to measure, and it remains well below historic highs.
But the uptick is fueling concern, including over cuts in law enforcement. Owing to attrition and budget battles, San Jose has lost about 350 officers in the past few years, San Francisco about 300 and Oakland more than 200. Each city is now trying to hire and train replacements.”
http://www.sfgate.com/crime/article/Bay-Area-homicide-rate-rises-in-2012-4189892.php
That’s life in a communist utopia with gun control, coming soon to rest of USA. Where’s nanny-state hypocrite gun-grabber Dianne Feinstein (who has a concealed carry permit and her own armed guard detail) on this?
homicide rate fluctuates for reasons that are difficult to measure, and it remains well below historic highs.
That is true nationwide.
Homicide rates FLUCTUATE. Every news article mentioning homicide should also print a graph of the rate going back to the beginnings of whatever locality they are part of.
This ‘concern’ is misplaced, and serves other agendas, such as always increasing government expenditures, to infinity and beyond.
Coincidentally, my wife was quoting parts of this article to me as I read your post:
Murder rises second year in row
By Kristina Davis1:13 p.m.Jan. 12, 2013
Police investigate the scene where three people were shot and killed by a suicidal Navy pilot in Coronado on New Year’s Day 2012. Police investigate the scene where three people were shot and killed by a suicidal Navy pilot in Coronado on New Year’s Day 2012. — Howard Lipin
Murder is on the rise for the second straight year in San Diego County, a trend that has left law enforcement officials grappling to find solutions to everything from gang warfare and domestic violence to budget cuts that they say have reduced crime-fighting capabilities.
The county logged 110 murders in 2012, according to data compiled by U-T San Diego. That is a 34 percent increase over the previous year, and a 59 percent rise over 2010, when a decades-low tally of 69 slayings was recorded.
Even so, the city of San Diego, with 48 killings last year, continues to have the lowest murder rate among the nation’s 10 largest cities. San Diego’s increase was small compared with the deadly violence gripping metropolitan areas such as Chicago, which topped 500 murders for the first time since 2008, and Detroit, which hit its highest murder rate in nearly two decades.
Despite San Diego having the best murder rate in the U.S., it doesn’t soften the heartbreak of the families who lost loved ones last year.
“The day my son was killed was the day that I died,” Bevelyn Bravo said.
…
“The day my son was killed was the day that I died,” Bevelyn Bravo said.
Hopefully it was a kinder, gentler gun that did him in (with apologies to Neal Young)
Perhaps the murder was happily carried out with a warm gun (with apologies to The Beatles)?
If the last month is any indication, we are going to be living in the Republican-NRA wet dream instead.
-A shutdown of the Federal government, followed soon thereafter by a collapse of state and local government, including local law enforcement agencies
-”Do it Yourself” justice, with everybody armed to the teeth.
The good news……the -fixr will be okay in this environment. Daughters married into large, extended families a long way from big cities (of course, there is a future risk of a little inbreeding, but that’s a long term issue). Lots of uncles, cousins, and in-laws out in BFE, with farms/livestock/property in need of extra help to protect.
Have Garand/M-14/FN-FAL, will travel.
You have something against 5.56mm?
Sounds like he might be like me and prefer calibers big enough to be legal to hunt big game with :-). I’d love a 5.56 for a toy, but I haven’t budgeted for a toy yet. Next will probably be lever action in .44mag. Makes people feel warm and fuzzy when they see it instead of scared.
Thought triggered by Neuromance’s post of a few days back:
If all of the carbon-based oil that we’re unleashing from beneath the earth’s surface is really the remains of plants and animals, then at some point far enough back in the earth’s history, all of that carbon was above the earth’s surface.
And yet the planet didn’t self-destruct and turn into Mars.
Hm…
I think we have an existence-proof that the planet can not only survive, but do so while supporting life, with significantly-higher carbon levels in circulation in the biosphere than we have today.
Comment by Neuromance
2013-01-10 10:08:18
[...]
We’re unsequestering vast amounts of carbon dioxide every year, as the world burns one cubic mile of oil a year.
As we change into a Zombieland/Mad Max world, the Global Warming problem will take care of itself
The oil refining/distribution system in the US will collapse, when it comes under attack by the 47%
A collapse in fuel distribution will create falling dominos in transportation, food production, etc., putting even more people out of work. Including a bunch of technically savvy people, a few of who may decide that screwing up what’s left of our first world systems architecture may be profitable/emotionally satisfying.
The Pentagon has probably “war-gamed” all of this.
Do you guys think it’s an accident that all of the National Guard M-35 6×6 trucks are being replaced by new mine/IED resistant trucks out here in flyover?
In the meantime, our Masters will sit safely in DC and Manhattan, protected by contractors/private mercaneries.
The fact that this scenario is even remotely possible should show people how bad things are getting.
Welcome to Mega City One…
Most of those deposits were algaec and microbial (which are anerobic). The first life on earth was methane-dependent and extinguished itself when it multiplied unchecked and polluted itself to death — with oxygen.
How long from now until when the CO2-dependent life forms (aka “plants”) take over from the doomed, oxygen-dependent, non-producing, parasitic 47%ers known as the animal kingdom?
“The first life on earth was methane-dependent”
It all goes back to farts. It really does.
But what came first…the methane-dependent or the fart?
Where is alpha-sloth, I found a house for him.
Ronald Reagan’s former Calif. home for sale
1669 San Onofre Dr, Pacific Palisades ,Calif.
For sale: $4.999 million
Ronald Reagan was in the shower when he heard the news that he had become the 40th president of the United States. Standing in the living room of his Pacific Palisades home, he took the call from Washington, D.C., and accepted Jimmy Carter’s concession, Nancy Reagan later told Architectural Digest.
The ranch-style home measures 4,764 square feet with an open floor plan and large windows that capture views of Santa Monica Bay. At the time, Pacific Palisades was not the popular celebrity neighborhood it is today, and the Reagan home was one of the first star homes in the area.
Today, the neighborhood is far more coveted, and the Reagan home is in an “unbelievable location,” says Los Angeles real estate agent Sally Forster Jones of Coldwell Banker.
“It’s in the best part of Pacific Palisades with sweeping vistas that extend from the city to the ocean,” she said.
Hidden behind gates and a private drive, the home remains pretty true to its original mid-century design. But what sets it apart, of course, is the home’s “rich history.”
According to Zillow’s mortgage calculator, a monthly payment on the home would be $17,599, assuming a 20 percent down payment on a 30-year mortgage.
http://www.nbcnews.com/business/ronald-reagans-former-calif-home-sale-1B7915778 - 28k -
Somewhat surprisingly, the list price of $4.999 million is not wildly out of line with the Zestimate™ of $4.667 million — only $332,000 too high (unlike crazily overpriced San Diego listings shown above)…
Grandma’s CD income isn’t the only loser under the Fed’s interminable ultra-low rate policy.
ft dot com
January 13, 2013 6:20 pm
Big banks on thin ground with rate margins
By Tom Braithwaite and Tracy Alloway in New York
Big US banks are set to report the thinnest margins between the rates at which they borrow and lend since the 1950s, as profits are squeezed by the Federal Reserve’s policy of ultra-low interest rates.
Wells Fargo sparked a sell-off in bank stocks on Friday when it revealed its net interest margin had fallen more than anticipated as the bank could not find safe and profitable avenues to invest tens of billions of dollars of customer deposits.
JPMorgan Chase, Bank of America and Citigroup are all expected to suffer from the same phenomenon in their fourth-quarter earnings this week. The average of analysts’ estimates for the four biggest banks’ net interest margin is 2.8 per cent, down from about 4 per cent 10 years ago. Longer-term industry data from the Federal Deposit Insurance Corporation shows the current low level was last reached more than 50 years ago.
By endeavouring to reduce both short-term and long-term rates, the Fed has helped flatten the yield curve, restricting banks’ ability to make money by borrowing short-term – such as by taking deposits from individuals – and lending long. The idea is to stimulate the economy by giving banks more incentive to offer shorter-term loans.
In this climate JPMorgan’s traders attempted to generate profits by investing excess deposits in a disastrous credit derivatives arbitrage, which ultimately racked up more than $6bn in losses. An internal report into this incident is expected to be published this week. Some bank investors and analysts worry that others may opt for similarly risky strategies to compensate for the lower rates.
“Ultimately you have this double whammy. The Fed’s action is flattening the yield curve, which is pushing down interest margins, and the [balance-sheet managers] at the banks are saying they don’t want to go too far out on the curve,” said Brad Hintz, banking analyst at AllianceBernstein. “The banks face a really interesting problem.”
…
I was just thinking of the good ol’ days - housing was crashing and I was getting 5% interest rate on the cash in the bank from selling the house at the beginning of the crash in 2006. It was such a great spot to be in - making more in interest than I was paying in rent and having housing crashing hard.
Then when interest went to 0 per cent, I lost all leverage with my wife and was forced to buy a house. Buying a house hasn’t been a complete disaster - yet. Feds have propped up the housing so far. I paid $365,000 in 2010 for a house that sold for $505,000 in 2006. Other houses have been selling for $400,000 lately. I am paying 2.5% interest on my mortgage which I will pay off if things adjust in 5 years, I just couldn’t resist the tax-payer subsidized mortgage. (I have it on a 7 year ARM for the cheap rate.) I was hoping that CD rates would go up a bit so that I could at least break even with the money I am paying out for mortgage, but am about to lose hope.
Well…at least somebody is doing OK. My 401(k) hates me for being conservative. But I’m making a killing on the 40k I spent in the trailer park. Throws off more than a thousand a month in money I don’t have to spend on house or townhome rent. When I see current asking rents I may be pretty low in that estimate. The asking rents appear to be about $500 higher than they were three years ago in Boulder. But perhaps there are deals there that I don’t see because I’m not looking.
The Treasury Secretary nominee looks like Garrison Keillor.
http://www.huffingtonpost.com/2013/01/13/python-challenge-800-hunt_n_2466900.html
For all you who live in FL
NARScum is winding up it’s propaganda machine on TV once again.
Their lies and misrepresentations are stunning.
The Gunownership Society continues to expand by leaps and bounds.
January 13, 2013 9:23 PM
Amid record sales, a call for restraint at gun shops
By Jan Crawford
(CBS News) With the gun control debate raging in Washington, people are buying more guns than ever, prompting one senator on Sunday to make a direct appeal to the stores selling the guns.
Less than a month after the mass shooting in a Newtown, Conn., elementary school, gun shows across the country are drawing record numbers.
“We were expecting a large crowd, but we had no anticipation we’d have a crowd like this,” said Bob Templeton with the Crossroads of the West Gun Shows.
Sales are soaring, triggered by concerns Congress soon will ban or limit assault weapons and some forms of ammunition.
On Sunday, New York Senator Chuck Schumer asked retailers to take action before Congress.
“Today, I’m urging our country’s major gun retailers like Walmart and Sports Authority to suspend sales of modern assault-style weapons until Congress is able to fully consider and vote on legislation to curb gun violence,” Schumer said.
…
Well that would be convenient if you didn’t even have to strike down the 2nd Amendment to reduce availability to zero. Just “ask” everyone to stop selling them.
Very convenient.
Speaking of which, I’d been considering expanding my personal armory a bit in the past month or so. Of course, then the recent shootings happened, and prices have gone up and it’s hard to buy even a hunting rifle.
I had one shop in town, from whom I’ve purchased multiple firearms, actually turn down my business. They told me to come back in 3 weeks or so when things may have died down.
All I want is a deer rifle…sigh…
“All I want is a deer rifle…sigh…”
God bless and protect the deer hunters and anyone else who buys firearms for peaceful purposes.
On the other hand, if anything can be done to keep guns away from malicious, unstable men bent on killing innocents, please do what You can…
““Today, I’m urging our country’s major gun retailers like Walmart and Sports Authority to suspend sales of modern assault-style weapons until Congress is able to fully consider and vote on legislation to curb gun violence,” Schumer said.”
Schumer owns and AR15 rifle, he was outed back in the mid 90’s. I’ll bet he won’t be turning his gun in any time soon.
s/owns and AR15/owns an AR15/
“We need more government to pay for all of the additional government.”
- Anonymous Progressive
“Is there any activity, food, service, habit or thought that the progressives will not attack and try to eliminate?”
- Concerned citizen of the world
“Chaos - When you absolutely positively have to fundamentally change a perfectly good country in just under two terms.”
- Nickpapageorgio
I have yet another global progressive fun fact:
Global Progressives support a woman’s right to choose, unless the woman chooses to smoke cigarettes or eat “unhealthy” foods, but it’s ok if the woman chooses to smoke marijuana.
Wrap your brain around that kind of twisted logic.
The Stat of the Week in today’s WSJ Sunday edition shows a graph with three curves representing Fannie Mae survey respondents’ beliefs about U.S. home prices over the next 12 months.
As of a year ago, the respective percentages of respondents who believed home prices would go up, go down, or remain the same in the next 12 months were roughly 27%, 19% and 53%. At the present, the corresponding percentages appear to be about 44%, 14% and 41%, after slight fudging of the numbers to make them sum to 99%.
Conclusion: The Fed’s efforts to psychologically engineer heightened home price inflation expectations are working!
AL’S EMPORIUM
January 13, 2013
Dead by 50? Thank You!
By AL LEWIS
In our free-market economy, you are free to die.
America is the land of the free, and its citizens live the shortest and sickest lives of anybody in the world’s most-developed nations, according to an extensive analysis released last week.
If you want to live past age 50, your odds are better in 16 other developed nations, according to the 378-page study by the Institute of Medicine and the National Research Council, titled “U.S. Health in International Perspective: Shorter Lives, Poorer Health.”
In 2011, babies were born in 27 other countries with higher life expectancies.
The study calls this “the U.S. health disadvantage.” It lists cars, drugs and guns among the leading causes of death for those under 50.
Firearm homicides are 20 times higher in the U.S. than in the other wealthy countries studied, the report said.
We don’t just sell guns. We sell assault rifles with 30-round clips. Nuts who go on rampages only send gun sales shooting higher. The solution is always more guns. Just ask the National Rifle Association.
The solution for every problem is always more. This is why we kill ourselves trying to get more of everything.
We are the land of plenty, which means an average intake of 3,770 calories a day, obesity, diabetes and heart disease, according to the report.
We have a higher infant-mortality rate and lower birth weights. We have more teenage sex, more HIV/AIDS, more chronic lung disease and more disability.
We are not the land of plenty when it comes to health care. “Compared with people in other countries, Americans are more likely to find care inaccessible or unaffordable,” the study said. Yet the U.S. spends more on health care per person than any other nation.
…
A closely-watched pot never boils over.
No matter how many MSM financial articles I read that suggest otherwise, I remain steadfastly unconvinced that the Fed exercises unlimited control over long-term interest rates for the indefinite future.
Bond investors: Heed warnings about rise in rates
By MARK JEWELL, The Associated Press
Friday, January 11, 2013
BOSTON (AP) — Super-low interest rates will eventually rise, and when they do, bond investors could be stuck with losses.
It’s a warning that’s been heard frequently in recent years. Often, it’s coupled with a reminder of the huge amount of cash — more than $1 trillion — that bond mutual funds have attracted in the past five years.
Warnings about rising interest rates have become louder in 2013, partly due to a spike in rates during the first couple weeks of the year. Consider this one: The prospect of higher rates “is looming ever-closer” says Art Steinmetz, chief investment officer at OppenheimerFunds, who describes a rate increase as “a dust storm that we’re going to run into one of these days.”
Although Steinmetz isn’t predicting when a sustained rise will occur, he expects many investors will be surprised at how quickly bond funds can begin posting losses, especially if they hold plenty of lower-yielding Treasurys. Initial signs of a steady rise in interest rates could lead bond investors to sell. That would cause yields to suddenly climb and prices to drop.
Plenty of renowned investors have incorrectly predicted rates would be much higher by now. Yet there are some troubling signs. The yield on the 10-year Treasury note climbed to 1.90 percent on Thursday. That’s the highest in eight months, and up from 1.70 percent at the start of the year. Mortgage rates also ticked up this week.
Interest rates remain historically low, but even a small increase like this year’s climb in Treasury yields can have a big impact on fund returns. In fact, five of the 14 taxable bond fund categories that Morningstar tracks are down this year, with losses of as much as 2 percent.
A mutual fund’s returns will vary because the manager must continually reinvest as bonds mature. This year’s small rise in Treasury yields means previously issued bonds, which pay a lower interest rate, are now worth less. A fund with too much invested in those older bonds can end up with losses. That’s because a fund’s return is a function of bond price changes as well as the yield, or interest payments, that bonds generate.
It’s important to keep perspective. While investors should be mindful of rate risks, the Federal Reserve has committed to keep borrowing costs low as long as unemployment remains high. That means a sharp rate increase is unlikely in the short term. However, the Fed could begin to push rates higher if the pace of economic recovery picks up, and inflation rises above its current 2 percent.
With inflation risks in mind, last week star bond trader Bill Gross, manager of the world’s largest mutual fund, Pimco Total Return, offered advice in a commentary to investors: “You should avoid (long-term bonds), and confine your maturities and bond durations to short/intermediate targets supported by Fed policies.”
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