Bits Bucket for May 12, 2013
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
April 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Getting ready to go to a Real Estate Sales class this morning in NYC. Majority of the class is Chinese who want to use their combined group welfare payments to buy houses in Brooklyn where they can live 20 at a time and get everyone on benefits. Then they each bring in 5 friends and are paid 20k per head.
Welcome to America. We surrendered.
“…Chinese who want to use their combined group welfare payments to buy houses in Brooklyn where they can live 20 at a time and get everyone on benefits.”
You’re joking, right?
No Joke but I can confirm in Flushing NY where there is a predominantly oriental population multiple family houses are bought in excess of a million dollars and they are rented to young people by the shift. You don’t rent an apartment by the month but share a room by the shift. That is the only way the mortgage payments and profits can be made. Btw most commercial buildings in Queens NY are owned by the church of Korea.
There is a huge Korean community here in SD as well ensconced in expensive (coastal zone) housing. Not sure whether the church of Korea is involved, though now I am interested…
church of Korea
Moonies?
Per wikipedia:
“Christianity is South Korea’s largest religion, accounting for more than half of all South Korean religious adherents. There are approximately 13.7 million Christians in South Korea today, with almost two-thirds of Christians belonging to Protestant churches, while about 37% belong to the Roman Catholic Church. Protestantism has proportionally declined since the 1980s in favour of Roman Catholicism”
Not quite that easy. My American-born niece and her (now-citizen) husband are both graduating from USC’s MBA program this coming weekend and only Willa’s Chinese mother is allowed a visa to attend the ceremonies. His father (a senior official in a Provincial government, yet) must stay in PRC to ensure that mom comes back home.
The parents own a home in California, incidentally, but the hoops they’ll have to jump to get temporary resident visas to be with their only child and his wife - let alone permanent resident status — are daunting. It took Willa three years, three blood tests, and $30,000 just to get a student visa to marry my niece — and she had to stay in PRC while he went through the application process. His parents have probably spent close to a million USD to get him this far.
You don’t know that the people in your real estate class haven’t gone through similarly odious travails to get there. And hurrah for them if they have. Instead of judging what they’re willing to work for, why not ask and report back to us after you go to the trouble to learn Mandarin as well as they have English?
Do they still have welfare payments in NYC? I’m in Florida.
Astounding!
“With fewer than 25% of all American farms earning gross revenues above $50,000 …”
No wonder the suicide rate amoung farmers is out of sight.
http://www.minyanville.com/business-news/editors-pick/articles/For-Farmers-Rise-in-Suicide-Rate/5/8/2013/id/49640?camp=syndication&medium=portals&from=yahoo
Prices of farms rose because the prices of the commodities that farms produced rose and now that the prices of commodities are falling the farm prices should also fall.
The only thing that will remain intact are the debt levels used to finance the buying of the the high-priced farms.
Buy a high-priced farm, work it and worry about it and take all the risks concerning it and then whatever money you happen to make you get to keep AFTER you scrape some off the top and ship it off to the bank.
Sign me up for a thousand acres.
Some irony here …
To get farm prices up production needs to be cut, which means some farm land should remain fallow. But farm land cannot remain fallow because farmers have bills that need to be paid and in order to pay these bills every bit of land needs to be put into production. And if every bit of land is put into production then prices will drop even furthur.
Irony indeed.
Increasingly worthless product from increasingly worthless acres.
Welcome to the ag business.
More irony: Our system supports millions of housing units allowed to go fallow but not a food system that requires it for its health.
Not quite.
USDA Gives Millions to Farmers Who Aren’t Actually Farming
Lachlan Markay
July 9, 2012 at 2:24 pm
The U.S. Department of Agriculture has doled out millions of dollars in subsidies to farms on which farming isn’t actually taking place, according a new report from government watchdogs. Billions more have gone towards supporting farms that don’t grow the crops for which they’re being subsidized.
USDA gave nearly $3 million last year to 2,327 farms that had not grown any crops since 2006, according to the report, released last week by the Government Accountability Office. Of those farms, 622 had not grown any crops since 2001.
…
Good point. I wonder who exactly gets those subsidies and who doesn’t.
“But farm land cannot remain fallow because farmers have bills that need to be paid and in order to pay these bills every bit of land needs to be put into production.”
Wrong.
USDA Gives Millions to Farmers Who Aren’t Actually Farming
Lachlan Markay
July 9, 2012 at 2:24 pm
…
“Prices of farms rose because the prices of the commodities that farms produced rose and now that the prices of commodities are falling the farm prices should also fall.”
Aren’t you forgetting some important factors?
Such as what?
Such as water?
Alfalfa hay is now up to $27/60# bale. Four years ago it was $11/100# bale. Drought in the western states has reached crisis proportions for many, but no one’s talking about it except the farmers and dairy cattlemen.
In my region there is literally no grass this year. Usually grazing lasts until August at the least, and often into October. No one is up here is buying yearling cattle to graze this year, and dairy herds have been thinned to mere sustainability, if that. Short October cattle futures now.
The comment below offers a hint or two about what you missed. Got high fructose corn syrup in your drink and ethanol in your gas tank?
Dave Albin December 23, 2011 at 11:21 am
Subsidies play a role.
Iowa farmland is used almost exclusively to grow corn and soybeans (there are some wheat and forage crops, too), which are subsidized. I think the biggest factor is economic uncertainty (which, of course, is due to intervention by government, as anyone on here, even from time to time, can discover), which has driven up the prices of hard assets, like gold, silver, and farmland, via increased demand for things deemed to be “certain”.
There is a definite bubble. There is an organization called “Farmer Mac”, which (you guessed it, the government backs the loans) is similar to Fannie Mae and Freddie Mac. This is adding fuel (purchasing power) to the land purchases, causing drastically-increased farmland values.
It still comes down to the price of the farmland being connected to the value of what the farmland produces. If the value of what the land produces drops then so does the value of the land.
You can thrown in factors such as subsidies and availability of loans if you want but it still does not change the relationship between the value of the land and the value of what the land produces.
“It still comes down to the price of the farmland being connected to the value of what the farmland produces.”
If you consider government subsidy payments to be part of what the farmland produces, then I agree with you.
Crop insurance a boon to farmers — and insurers, too
Stett Holbrook
June 18, 2012 at 7:41 AM ET
Canny Johnston / AP
When corn fails to grow as high as an elephant’s eye, farmers can rely on federally subsidized crop insurance. This scene was shot in Dumas, Ark., this month.
Here’s a deal few businesses would refuse: Buy an insurance policy to protect against losses – even falling prices — and the government will foot most of the bill.
That’s how crop insurance works.
The program doesn’t just help out farmers, however. The federal government also subsidizes the insurance companies that write the policies. If their losses grow too big, taxpayers will help cover those costs.
In the farm bill now making its way through the Senate, crop insurance will cost taxpayers an estimated $9 billion a year.
…
As the subsidy for what the land produces is increased so is the value of the land increased. This may not make much pricing sense to most people but it doesn’t have to make sense to most people; It only has to make sense to the people who are doing the buying.
Throw in some easy financing and it makes it all the easier for the people who do the buying to buy.
They grow corn and soybeans in Iowa and Eastern Nebraska, because they get a lot more rain there than they do in the High Plains.
Unless you irrigate, by pumping a lot of water out of the Ogallala
USDA gave nearly $3 million last year to 2,327 farms that had not grown any crops since 2006…
In the farm bill now making its way through the Senate, crop insurance will cost taxpayers an estimated $9 billion a year.
But remember, kids, farmers are mostly white conservatives- so it’s not welfare! Never, ever call it welfare.
It’s only welfare when brown or black people get it.
‘farmers are mostly white conservatives’
I’ve got a lot of family in west Texas who are farmers. All of them are life long Democrats.
Dirt farmers? Cotton?
Liberal Democrats?
I don’t know. All they ever talk about is the weather.
My farm community relatives have about three topics of conversation:
1. Weather;
2. Food;
3. Religion.
And that’s about where the conversation ends.
Fed Council Warned of Credit Risk, Asset Price Bubble
By Craig Torres & Joshua Zumbrun - May 7, 2013 9:00 PM PT
A Federal Reserve (TREFTOTL) panel of bankers warned policy makers in February that record stimulus was pushing financial institutions to take on more credit risk and creating a “bubble” in the price of U.S. farmland.
“The margin pressures that the low-rate environment has put on financial institutions, coupled with dramatically increased compliance and other infrastructure costs, have caused many to seek higher returns by accepting greater interest-rate or credit risk,” the bankers said on Feb. 8, following a Federal Open Market Committee meeting on Jan. 29-30.
…
Michael Pollan, in his book, Carnivore’s Dilemma, had much to say about the leveraging and control by big business over modern farming practices. He basically described farmers that were forced to leverage up or die, and he also pointed out that many of them did not seem to understand what was happening to them as they drove their huge piece of expensive megamachinery around their single crop expanses. MP’s conclusion: We do not buy food from farms anymore. We buy food components.
Then there’s the whole GMO foods catastrophe. I don’t know if that news ever hit the blog that our bought and paid for Congress has passed legislation that Monsanto can’t be held liable for any illness their Frankenfoods create in the population. This probably wouldn’t bother me if farms weren’t being strong armed in the courts to use their product and if we had proper labeling as practiced in other countries. Btw, 36 countries have representation engaging in an anti Monsanto protest at the end of the month. 36 countries. Their influence on the global food supply is frightening.
The biggest threat to genetically modified food is if the new strains become resistant to pest or disease threatening the food supply. Farmers for 1000s of years have “breed” better varieties of crops. The people who go hysterical over Monsanto doing it on the genetic level generally have no idea about science. Same crowd whose afraid of “chemicals” in the food. Disclaimer I have masters in chemistry not biology but I read up a lot about the agriculture advancements. The threat of them is a tempest in a teapot.
Reading his latest, “Cooking” this weekend. A similarly (excellent) poetic essay on authenticity over industrial production.
The only way I can see for “family” farming (thus, quality foodstuffs) to survive economically is for cooperatives to form and start agitating for federal exemption to the regulatory bureaucracy that favors Big Ag.
I’d take this with a grain of salt. I know several farmers who reportedly earn nothing according to tax returns but drive nice new trucks and live in nice houses. New farmers are screwed but those that have paid off the farm are sitting pretty. Large corporate farms make money hand over fist.
Thanks for your assessment, measton. It’s a big country and we all bring different perspectives. I think we on the blog are often looking at different conditions.
There are not yet so many corporate farms in the areas I travel through. Syracuse is surrounded by farms in every direction. There are the farms that appear to be doing very well but many look like they are just barely hanging on. There are quite a few that I wouldn’t be surprised to see their barns collapse in the next high wind storm. The non farm neighbors who live around them often complain about the deteriorating buildings.
Perhaps the struggling ones are owned by older men w/ adult children who don’t wish to take over. I know of farms still being run singlehandedly by widows w/hired hands determined not to have their land sold off as development but they are barely hanging on as far as getting the physical work done. Once I went over to help move stock into the wagon to head to slaughter. But then when she was ready to head out the wagon didn’t start so we loaded the stock back into the barn. They weren’t able to go until she got her vehicle repaired. I remember wondering if it really passed inspection or if she had just called in a favor.
You can’t tell based on the barn
1. Barns aren’t needed much anymore, a lot of things are put in plastic. Bigger and fewer tractors. Some contract out the plowing.
2. Many smaller farms have been purchased for the land and the house and barn are often leased out as rural slums.
Good Morn’in Belly
We surrendered decades ago. Our citizenship is worth toilet paper. Interesting post.
On the brighter side, Happy Mother’s Day to all.
Yes, as I’ve noted before, at least in the days of the Roman Empire, Roman citizens could sell their citizenship for a pretty penny, take the money and emigrate to some distant land if they wanted and start over.
Roman citizens could sell their citizenship for a pretty penny, take the money and emigrate to some distant land if they wanted and start over.
Late in the Empire, IIRC, Roman citizens simply absconded to the other side - the barbarians - when the burdens of Roman citizenship became unbearable. Roman farmers were bound to their land, unable to legally leave. Roman legions ceased being such when their salarium stopped. It wasn’t so much ’starting over’ as simply surviving.
Roman citizens could sell their citizenship for a pretty penny,
Link?
Is that poor b@stard they blamed Benghazi on who made the youtube video nobody saw still in jail?
“Was it because of a protest or was it because of guys out for a walk one night and decided they’d go kill some Americans,” Clinton said. “What difference – at this point, what difference does it make?”
Uh oh, someone’s knocking on the door asking if everything is OK?
May 2, 2013
FL Sheriff: “We Want People To Call Us If The Guy Down The Street Says He Hates The Government”
Palm Beach County sheriff gets $1 million for violence prevention unit amid questions about civil liberties,
“We want people to call us if the guy down the street says he hates the government, hates the mayor and he’s gonna shoot him,” Bradshaw said. “What does it hurt to have somebody knock on a door and ask, ‘Hey, is everything OK?’ ”
He’s not in jail because of the video, but rather parole violations.
stocks are cheap at these valuations. now open an etrade account and make some quick cash.
Why risk it when we’re on the precipice of a major global correction?
go short if your so sure sh@t is going to hit the fan any minute.
If you dont have a margin account simply try ones of these:
QID
SDS
DOG
Quit talkn about it and make some money.
Why subject yourself the the risk of massive losses?
Exit quickly.
oh yes you have to be very prepared to exit fast. the casino gives you opportunity to take profits. dont get too greedy. keep your eyes open for value and signs of piggishness.
Aren’t HFTs and insider trading networks designed to be first out? You must have some good connections to feel you can jump those people.
yeah thats true. just saying be very fast to jump ship.
Its hard to make money against the big boys when they basically know all your positions and are there to get your money one way or another.
oh yes you have to be very prepared to exit fast.
“Exiting fast” from a rapidly depreciating, overleveraged house doesn’t happen. It becomes a millstone around your neck driving you ever deeper underwater.
AzDude is just baiting. He thinks Facebook is the same as Ford or Toyota or Dollar Tree in terms of risk.
good morning bill. Are you buying more ammo and canned goods today?
Why subject yourself, family and those around you to such grave risk?
Ammo next month.
Ammo next month ??
How much do you need to defend yourself ??
I Never have understood the mind set that wants thousands of rounds of Ammo..Do you really think you could win against a foe that you needed a thousand rounds of Ammo to try and defend yourself ?? My goodness….Rambo mentality….
I Never have understood the mind set that wants thousands of rounds of Ammo
Exactly. If you are forced to retreat or move you’ll have to leave most of it behind and will lose it.
It’s a security blanket. Nothing more.
One guy w/a gun and a pile of ammo will be taken out w/in minutes by 5 men w/guns and their own pile of ammo. The gangs and organized crime and even military veterans already have the approach down.
I’ve always wondered if it was possible to hack these blogs to find out where all the people who have been boasting about their stashes live. I fear for their safety.
“It’s a security blanket. Nothing more.”
Security blankets, like physical gold and ammo, provide peace of mind benefits. Those apparently are worth quite a bit these days!
Ammo could be worth a lot some day. Every Californian I met who never ever lived in a red state, social conservative, libertarian, or left wing collectivist always asks why have any gun? Once you are out of the collectivist state for a year or two you will learn that interior states have more liberties. Moreover, you meet people who practice these liberties. I met engineers who had guns, shortly after I moved to Tucson. They openly explained that California would not allow such things, and more responsibility is cool. I started going to ranges with them. Thats how I got into it.
I find it just as shocking these days to find every Republican Californian I meet who never lived out of California, regards guns as unnecessary. So I rationalized it as above. California Republicans are brainwashed by the leftist collectivists. Heck even my low income sister, a staunch bible thumping Republican, is in favor of government “free cheese” deals.
Snowgirl, that was not the case with the rag tag militia during the revolution. They were common men, not soldiers. How about the Afghan rebels who defeated Russia and are still putting up a tough fight against America?
“I Never have understood the mind set that wants thousands of rounds of Ammo..Do you really think you could win against a foe that you needed a thousand rounds of Ammo to try and defend yourself ?? My goodness….Rambo mentality….”
Who do you think the “foe” will attack first? The gun-free zone types or the Rambo types?
All good points. I think that some people simply think that if duty calls it is their responsibility to be prepared. And also that even if the means are temporarily unavailable from normal sources it is still their responsibility to teach and equip if necessary the next generation to defend and feed themselves. It’s Civilization 101 that we are being told is outdated and no longer applies. But I don’t believe that.
How about the Afghan rebels who defeated Russia
The rebels actually weren’t doing that well against the Russians until we gave them Stinger anti-aircraft missiles.
BillinLA
I have to admit I thought you were stockpiling as a guy protecting his homestead more than as part of a multi-person militia. Hearing that’s your mindset I wonder what you think of the 6000 person wave of security that flowed throughout Watertown, MA looking for one 19 year old. If the weapons are all registered, couldn’t similar forces just flood a neighborhood and confiscate? I wonder how it would go if you withheld a weapon on their lists?
This question is hypothetical. I don’t think you should move yourself up higher on any watchlists (reportedly 700k people strong.)
Huh? I said I was in a multi-person militia? I did not know that. As for the swat team crashing door to door in Watertown, I had serious issues on that. Same thing for the swat team crashing into people’s cabins in Big Bear (California) looking for Chris Dorner, although they made sure they fried him before so that he could not embarrass LAPD in trial.
I have at least one firearm “not on their lists.” I will acquire more. Maybe you are not in a CCW state, since you do not seem to understand CCW laws. Basically Arizona’s DPS completed a background investigation on me. I have my CCW card in my wallet. The deal is your subsequent firearms purchases are not recorded (make / model, etc) and not reported to the FBI.
I go through more severe background checks anyway. Water over the bridge. For my job, first of all. As a lighter BG check, the TSA investigated me as well so I have TSA preCheck. Gets me through Phoenix Skyharbor TSA checkpoints faster most of the time (although randomly they force even us to go through the normal checkpoints. My random thing came today).
Amo can be used to trade and buy goods. It’s another diversification method. At least I think that’s why most hoard it. You’ll have enough to protect yourself for a long time. It’s not like they’re planning a massive shootout.
Above all else, avoid all debt. The risk has never been higher.
the central bank is encouraging more debt. people who save cash are getting the shaft. you need to be invested in stocks and homes.
Why fall into the trap when the value of cash grows in this deflationary spiral?
well when this bubble blows its top it will be a deflationary spiral. In the meantime make some quick cash flipping stocks and homes. You have to take advantage of these markets ben has created.
It’s a been a deflationary spiral since 2008 and the scope of which is widening and deepening as are the personal financial risks.
Don’t be taken advantage of. Don’t borrow and continue stockpiling cash. You’re going to need it.
“Flipping stocks and homes” - I cannot determine if you are serious or facetious. Houses are not investments. As for flipping stocks, in the short term it requires luck, not skill. It mostly fattens the wallets of wall streeters. In the long term, owning stock index funds is a smart approach and pays off more than any other asset class.
And the time to make money was getting in a year or two ago before the cheap inventory was bought up and before the recent runup in stocks. Now it’s a race to find bagholders.
“Houses are not investments.”
What’s an investment?
As for flipping stocks, in the short term it requires luck, not skill.
Or inside knowledge.
Why fall into the trap when the value of cash grows in this deflationary spiral?
I’ve been primarily in cash for the past 5yrs, and so far, there is no sign that the purchasing-power of this cash is growing, and plenty of evidence that it has been shrinking.
With a central bank that has sworn to avoid it, and which has an unlimited ability to manipulate, print, and devalue, is betting on deflation really a smart move?
has anyone else noticed they are ratcheting up the frenzy around stocks? They are giving the impression that stocks will not fall again, a safe haven.
Prime, at the very least, laddered five year T-bills for half your assets and Vanduard 500 index Admiral fund for the other half would have been better. Rebalance yearly and you would be getting at least 2% annual gain at the worst of it, and 7% at the best of it.
Newspaper columnist Scott Burns came up with that investment approach. Say that you have a $4,000,000 portfolio. You could skim the annual gain and live an independently middle class lifestyle.
Say that you have a $4,000,000 portfolio ??
LOL…How many people have that Bill ??
“I’ve been primarily in cash for the past 5yrs, and so far, there is no sign that the purchasing-power of this cash is growing, and plenty of evidence that it has been shrinking.”
I’ve stayed out and missed the runup and worry about the lack of return and shrinking buying power of what’s being saved. But I just can’t see walking into the casino and plunking my stake down just cause they are trying to make it seem like the only game in town. I’d prefer to avoid the risks of seeing 2008 (which I avoided) happen to my money. If it loses out to inflation, I think that’s going to happen a lot slower and with a lot more warning than what could happen to stocks or real estate if the psychology changes to recognize reality.
As I worry, I also think back to 2004-2006 when I resisted all the pressures to buy. Doing that was the best financial decision of my life. All those I know who did otherwise are severely screwed. Remembering that, I have no problem waiting it out a bit longer.
bill is an old school investor. he hasnt figure out the stock market is technically gambling and everyday thousands of traders try and skim profits via HFT. Buy and hold is dead. Its all about making short term profits trading off of computer algorithms. No different than a casino to a lot of people.
when people get left holding the bag they become long term investors cause there stuck for the long term.
IMHO, being in cash is better with cash flow (via a job) coming in. This cash flow pays the bills and if one is prudent one can go about adding to the original pile-o cash!
Someone forgot to tell me that buying stock mutual funds is a gamble. Been doing so since 1989 and dollar cost averaging. My tax deferred portion of my portfolio is now over $700,000. I saved more than that outside my tax deferred plan. Since January 1 2009 when my 401k switched to a different investment firm, my total percent gain is 90% with an ARR of 16%. That does not include the principle I added, but includes gains off the principle.
Scdave, IMO, to afford to be independently middle class in California and live in an ocean view area, you’d need over $4,000,000. I think actually $5,000,000.
I know a technician with a net worth above $3,000,000, but he cannot touch it yet. Must have inherited it.
casino royale mr bill. your preachn to the wrong crowd. Get on cnbc and tell the couple viewers how great stocks are for mom and pop.
I frittered away my youth (beach bum / ski bum / travel bum. I would earn some money for a month or so. Take off for a month. Lived in share a room situations, etc…) and I did not start really working until my mid 30s - 20 years ago. I have just over $1M. I have never earned more than $100K but live very below my means. Imagine if I started right out of high school or had the double incomes that married / partnered people enjoy. Several million is certainly easily achieved. BUT yes few people have $4M.
Bill in LA,
I’m in the same boat. I’ve been steadily contributing to IRAs, 401Ks and SEPs since the late 1998 when I started working full time. Slow and steady through the ups and downs. I’m under 40 and I have close to $550,000 in those accounts. Another $125,000 in non-retirement accounts. And my wife has $75,000 in her IRA. Another 10 years or so of working/saving and we should have enough to retire by 50 which is what my goal has been all along. House will be paid off by then as well. I think I can realistically have $2M in 10 years. With a paid off house I think that should be enough to retire.
I think I can realistically have $2M in 10 years. With a paid off house I think that should be enough to retire.
In normal times, it would be considered safe to take out 4%/yr, or $80K per annum from your $2M.
Of course, these are not normal times…
Mr. Smithers, I think you will reach that goal. Very reasonable.
Slithers…. another gov loving gov employee.
House will be paid off by then as well
Your incalculable losses will destroy all hope for your early retirement.
“In normal times, it would be considered safe to take out 4%/yr, or $80K per annum from your $2M.
Of course, these are not normal times…”
Every generation is convinced the end is near. Just like everyone things the generation behind them will ruin everything. It’s been happening forever. And yet somehow the world goes on normally.
I started saving back in 1988 right out of college. I opened a joint account with my mother as my father was dying. I would send her $5000 to sometimes $12000 per month. I was doing this to help them financially as my dad was put into hospice care. My mother had to take time off from work to take care of my dad. I also had my younger brother in his final year at Columbia University. So I became the bread winner of the family. I was never expecting the money back and did this for about 2.5 years. My dad did not take a penny but invested it and after he died a year or so latter my mother told me there was $480,000 left in my account. True story.
Since the late 80’s I have lived a good life style. I buy what my heart desires within reason. However I personally give myself an assessment or a report card at the end of the year. This self report card is based on the amount of money saved cash in any given year. The only year I did not save as much as other years was the year my father passed away. Btw he was only 62 years old when he died.
On another note I wanted to be a millionaire by the time I was 40. I accomplished it well before that by saving my own nickels and dimes and have never depended on any investments. Btw I have never taken back any of the money I gave my family. I have 3 young nephews and have asked that it be used towards their education. I am a good uncle.
The best! And a good son as well. My congratulations to your mum.
Bill in LA wrote:
I’ve had terrible luck with the stock market. My ten years in an S&P 500, from 2001 to 2011 resulted in just about a 1% a year interest rate (10,000 initial, 11,000 final value). Most of the time less worth less than 10K. Less interest than a simple banks savings account.
As far as dollar cost averaging, I was hoping the share price would increase, as that’s what was advertised back then.
Here’s a link to the S&P 500 index over the past 15 years:
http://finance.yahoo.com/echarts?s=^GSPC+Interactive#symbol=^gspc;range=19981116,20130510;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;
I suppose if someone liquidated right now, they could turn a profit.
So if you bought monthly the same amount of vanguard 500 index fund, perhaps $100 for the last 15 years you would have put $18,000 in (on top of the initial investment of perhaps $3,000). Assuming you reinvested your dividends, your average cost would probably have been at the 1100 to 1200 index level. Maybe lower. By the chart you are aware you bought more shares in 2003 and 2009 and far less shares at the years 2000, 2007, and now, 2013.
Also note many fund companies do not add reinvested dividends into the accumulated gains. This is the way it is with my VWESX (high yield corporate bond) fund.
If you basically put your money in the fund in 1998, you would be at least seeing reinvested dividends.
I wrote a few times before that the US stock market has been in its own “Great Depression” since the year 2000. If you follow the graph of the Dow from 1929 to 1952 you would see what I mean. A few troughs, a few years of upswings, and so on.
i am applying to gold the system that I am also applying to stocks…Using my government securities and cash to buy over time in this volatility. For stocks, they appear to be all time highs. So I’m buying fewer shares at these lofty heights. Gold is very attractive. Platinum too. My favorite coin shop has over 30 ounces of 1/2 oz Platinum Eagles that just came in stock. But I have to wait for my buying week, early June.
“Since the late 80’s I have lived a good life style.”
Any “flat-tummy” squeeze for a tickle now and then?
I thought one of the main reasons for QE1, QE2 and QE3 was to prevent the value of cash from growing to the point of triggering a deflationary spiral?
Maybe I am missing it…
I thought one of the main reasons for QE1, QE2 and QE3 was to prevent the value of cash from growing to the point of triggering a deflationary spiral?
That’s a great way to summarize it, PB. I like it.
The other part of the equation is encouraging big runups in stock prices (such as the one early this year) followed by a period of stock market meltdown to provide “fundamental” long-term bond yield suppression, which takes some of the burden away from the Fed’s QE program.
Wait for it…
the central bank is encouraging more debt ??
Not really although some of that is happening…They are forcing investments farther out on the risk curve with the implied promise that once your out there they will not change their minds and you then get your A$$ handed to you….
loans on homes, margin debt , credit cards, student loans. It’s a debt feeding frenzy.
loans on homes, margin debt , credit cards, student loans ??
What, did they just invent these types of loans or have they been around for awhile ??
It’s a debt feeding frenzy ??
Sure is for those that have the financial strength to borrow it…
get in on the debt orgy dave.
The risk of loss from borrowing money in this environment has never been greater.
implied promise that once your out there they will not change their minds and you then get your A$$ handed to you
Reminds me of Charlie Brown trying to kick the ball while Lucy promises that she won’t pull it away this time.
By John Kozy
Global Research, February 06, 2013
Sometime after 1950 (because of secrecy, the exact date is unknown) the Bilderbergers, realizing that the old world ancient régime and all of these new old world orders were founded on nation states that kept going to war with each other, began an attempt to create a truly new world order. David Rockefeller writes,
“We are grateful to the Washington Post, the New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. . . . It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.”
“For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that’s the charge, I stand guilty, and I am proud of it”
The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.”
Power corrupts and absolute power corrupts absolutely.
The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.
Utter nonsense. The ‘best and the brightest’ - ain’t.
Housing Market Predictions: Recovery is a Total Myth
http://www.policymic.com/articles/12494/housing-market-predictions-recovery-is-a-total-myth
only you can prevent a housing boom!!!
A “housing boom”?
Housing demand has fallen to 1997 levels and slipping lower.
Was reading up on the historical Hatch family House, of marshfield Ma. That stayed in the same family for over 300 years , then was sold for $$$$ in 1965.I believe there is a book about the house , though I have not read it.
It is odd that here in this country we have very little of this ,very old buildings being cared for by the same family for generations , like in Europe.
Our buildings are not generally built to last that long .
“Give me control of a nation’s money and I care not who makes it’s laws.”
- Mayer Amschel Bauer Rothschild
more and more people are entering poverty because of inflation. Wages are not keeping up. more and more service jobs.
“more and more service jobs.”
Some service jobs:
- lawyer
- engineer
- teacher
- chemist
- physicist
- software developer
- accountant
- pharmacist
- doctor
- dentist
- writer
Average and median wages since 1990, from the Social Security Administration: http://www.ssa.gov/oact/cola/central.html
Lawmakers have their price.
Liars have their price.
Did you means lawyers or liars?
Why are there so many lawyers lurking, posing and posting on this blog?
Because they are unemployed?
As I mentioned to my friends going to part -time law school, unless you are exceptionally good, without connections no private law firm will hire. Why? it is cheaper to get the briefs done in India/ Philippines on almost anything expect criminal law!
Because they can still bill their clients for times spent here?
Government lawyers are monitoring this web site for “hateful” languages?
No. Just for libertarian atheists. Oops.
“Government lawyers”
Yes i forgot to preface with the word government.
Realtor™ to mark: “How shall I scam thee; let me count the ways.”
OFF-MARKET ‘POCKET LISTINGS’ GAINING FAVOR IN HOT MARKETS
By U-T San Diego
12:01 a.m. May 12, 2013 Updated
2:54 p.m. May 10, 2013
How hot is hot when it comes to housing markets across the country right now? Crazy hot: Some houses sell within days, sometimes within hours, of listing. Then there are the growing numbers that sell even before they formally hit the market — sold through a controversial technique known as “pocket listings.”
What’s a pocket listing? Essentially it’s a private, “off-market” listing, often of short duration. Instead of putting the house on the local multiple listing service — which exposes it to a vast number of shoppers and agents via real estate websites — agents restrict access to information about the house to their own buyer clients or colleagues in the same brokerage, hoping for a quick, full-price sale.
Pocket listings are surging, real estate experts say, because of historically low inventories of homes for sale in major metropolitan areas, along with strong buyer demand and low mortgage rates. This combination has made control of upcoming new listings a powerful, highly profitable asset for agents in the most competitive sellers’ markets.
If agents can sell their off-market listing to a buyer-client they bring in on their own, they can collect both sides of the commission rather than splitting it with another agent. If they can sell it through colleagues in their own firm — even at a slight discount to regular commission rates — the full commission remains inside the brokerage.
Though no organization or research firm publishes statistics on the subject, top brokers in some highly competitive markets say pocket listings are becoming a significant factor in the business. Bill Podley, broker-owner of Podley Properties, a Pasadena-based firm that specializes in middle- and high-end communities, says he has heard estimates that as high as one-third of luxury and upper-cost homes selling in northeast Los Angeles County now involve pocket listings. David Howell, executive vice president of McEnearney Associates, a large brokerage in the Washington, D.C., area, says he heard a recent estimate that such listings may now run as high as 20 percent nationally. Glenn Kelman, CEO of Redfin, an online real estate firm, said “we are seeing more pocket listings across the U.S. In Boston and Los Angeles, we also see listing agents refuse to allow any showings of the home until the weekend open house.”
…
If agents can sell their off-market listing to a buyer-client they bring in on their own, they can collect both sides of the commission rather than splitting it with another agent. If they can sell it through colleagues in their own firm — even at a slight discount to regular commission rates — the full commission remains inside the brokerage.
Pocket listings are a clear violation of the agent’s agent-duty to the seller—which the listing agent _should_ be respecting. They are supposedly honor-bound to represent the interests of their client, in this case the seller.
How can it ever be in the seller’s interest to not receive and review every offer that might be forthcoming if the listing were posted publicly? Fewer offers means fewer likely bidders in a bidding war.
Pocket listings are an open-and-shut case of the agent lining their own pockets at the seller’s expense. There is no possible justification for this behavior—it is clearly unjust enrichment.
A house adjacent to mine recently sold within a week of a realtor’s sign going up in the yard. It had been unoccupied for over a year, but visited regularly (presumably by the deceased former owner’s heirs), and the yard was maintained. No listing of this house even appeared on the web site of the realtor. The realtor’s posted listings were nearly all old decrepit re-poed houses in Akron. The buyer told me his full time job is renovating old homes and he is working nearly every day renovating this one. Makes me wonder if he’s a flipper, too.
‘Pocket Listings’ Become Growing Concern In Real Estate
Off-market listings—also referred to as “pocket listings”—are hurting the housing market by depriving home buyers of a full perspective of what’s actually for sale, some real estate agents say. They argue homes that aren’t ever listed on the MLS are then not available to be used as comparable properties for appraisals, other sales, or mortgage refinancing—leaving a skewed picture of the housing market, according to a recent article in The Cleveland Plain Dealer.
A growth in homes unlisted on the MLS in Northeast Ohio is prompting real estate leaders there to speak out, concerned it’s a growing trend. The MLS is a way to share property information and compensation between real estate companies but “pocket listings” are a way for some agents to “keep a bigger piece of the pie” for themselves, says Jeff Russell of Russell Real Estate Services in North Ridgeville, Ohio.
“We see this as a tremendous disservice to our clients,” Russell says. “In my opinion, it’s limiting the exposure of listings to the market …. While it might be good for the broker, it’s not good for the consumer.”
“Pocket listings” are only permitted if the seller agrees to it. If so, agents can withhold the listing from the MLS and just reserve promoting the home among close associates, on the company’s web site, or through word of mouth. Some agents may be tempted to keep the listing internal because they then may be able to keep nearly every aspect of the sale internal and collect full commission, critics say.
…
Seller beware of the pocket listing!!! your home is not being exposed to the market!!
All about the double commission baby!!!!
It’s all about Realtors™ screwing their customers for personal gain.
Seriously, what are sellers thinking? Expose it to the market, and bar your broker for representing both sides.
and bar your broker for representing both sides.
I’d be fine with my broker representing both sides—as long as s/he rebated a portion of the commission to ME in that case.
Their agency is clear regardless: they have a vested interest in closing a sale in order to generate a commission, not to getting the seller a good price.
MOVING TARGETS
May 10, 2013, 9:00 p.m. ET
America, Rescue Your Cupcakes!
By JOE QUEENAN
Alarming news has drifted in: The cupcake craze may be coming to an end. Sales have slowed dramatically at many gourmet cupcake emporiums across the country, and Wall Street has pummeled the stock of the premier publicly traded cupcake chain. Shares of Crumbs Bake Shop, (CRMB -2.25%) now with 67 locations, traded two summers ago on the Nasdaq exchange at $13. They closed Friday at $1.35.
The lines of ravenous cupcake devotees that once wrapped around the block in the nation’s trendiest neighborhoods, the spread of cupcake mania to foreign climes, the national fascination with the rise of the cupcakeistas—it all now seems to be ebbing. The days when viewers sat glued to cable TV programs chronicling the improbable exploits of gourmet cupcake entrepreneurs may also be approaching the last roundup.
I myself always felt that the cupcake craze—like similar fads involving Tofutti, water beds and lingerie football—would eventually fade. The public would come to its senses and realize that no cupcake known to man was worth $4.50 a pop, even if it was featured on “Sex and the City,” “Cupcake Wars” or “Ice Trucker Cupcakes.” I was particularly incensed when cupcakes began replacing traditional wedding cakes, introducing a level of pre-emptive frivolity into an institution that desperately needs to be taken seriously. A marriage that begins with a tray filled with cupcakes can only end with a cabinet full of liquor.
…
Cupcakes may be silly, but they’re not evil. And the fact that so many coarse, hardened Americans—state troopers, repo men, bartenders, Ram Tough guys all—would give their hearts so freely and unequivocally to the pint-size delicacies demonstrated, once again, that Americans have never truly lost their innocence.
What’s troubling here is that no one seems to be coming to the aid of the imperiled little treat, much less to those who bake it, deliver it, market it, blog about it. Where, one asks, is the federal bailout for the cupcake industry? The bridge loans, the seed capital, the bottomless rescue fund?
Why, in a country that always seems to have oodles of bailout money for the solar-power industry, the wind-turbine industry and Amtrak, is there no bailout for the beleaguered upscale-cupcake producers? Why would the Fed bail out insolvent, poorly run banks—that never, ever do anything nice for the average American—but turn a blind eye to cupcakes?
…
more over priced hype.
would you rather have a gallon of gasoline or a big mac?
Stop deliberately missing the point, or we will suspect you are a bankster.
Depends if I’m hungry, or my car is empty.
So many times I said I wished there was way to short the cupcake market. Never dreamed there were publically trading CC stocks! Talk about easy money. Until I tried a $3 CC thought they were expensive. But they are GOOD!. The ones I by have about 1/4 of frosting on them. And it chock full of real butter and the cake part is equally high quality.
The majority consensus agrees that members of the Bilderberg Group and the Global Elite knew of the pending economic crash of 2008. There was information revealed after the Groups meeting in 2006 which clarifies that the Bilderberg Group not only knew of the housing bubble but was also precariously part of the formation of said bubble. In other words, the Group knew there would be a burst in the housing bubble, for the simple reason that they had created the bubble itself!
The Bilderberg Group knew of the looming Economic Crisis?
One of the investigative journalists that has covered the actions of the Bilderberg Group for many years had stated in 2006 that:
“Bilderberg expects interest rates to rise and many Americans to lose their homes in the months ahead.”
Overheard at the Bilderberg Conference in Ottawa, Canada in June 2006 was future United States Treasury Secretary Tim Geithner. Timothy Geithner, who was at the time of the meeting the President of the New York Branch of the Federal Reserve, envisioned a rise in interest rates and much misfortune for those families that had secured loans with an adjustable interest rate. This prediction also stated that many of these families would lose their home to foreclosures due to a rise in the rate of interest. The families which would keep their homes would see their mortgage payments rise by hundreds of dollars per month. Timothy Geithner said that most listened calmly while others seemed concerned, yet one was overheard saying that:
“stupid Americans deserve their fate.”
http://reality-bytes.hubpages.com/hub/What-is-the-Bilderberg-Group-And-What-Are-They-Doing - 135k
The Bilderberg Group is only trying to organize the resistance to the space aliens that showed up in Roswell in the 50s. How can we fight them without a single united world front?
David Rockefeller writes,
“We are grateful to the Washington Post, the New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years. . . . It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.”
“For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicized incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that’s the charge, I stand guilty, and I am proud of it”
“…….knew of the pending economic crash…….”
Yeah, so did most of the people on this blog. If the Whattaburgers didn’t figure it out until 2008, sounds to me like they aren’t exactly clued in.
“the Group knew there would be a burst in the housing bubble, for the simple reason that they had created the bubble itself!”
Well we’re forewarned by those in the know…
http://m.nypost.com/p/news/business/next_home_crisis_lJoi2HNNojY2NGeDei8MsL
Many people knew of the bubble, far fewer knew when it would be deflated. Hank Paulson was one of those who knew. Move to treasury secretary, dumping all his GS stock tax free and then moving all to bonds just before the collapse.
“Hank Paulson was one of those who knew.”
Yes he was.
Official 2008 Bilderberg Participant List
(a few on the 08 list)
USA Paulson, Jr., Henry M. Secretary of the Treasury
USA Bernanke, Ben S. Chairman, Board of Governors, Federal Reserve System
USA Geithner, Timothy F. President and CEO, Federal Reserve Bank of New York
DEU Ackermann, Josef Chairman of the Management Board and the Group Executive Committee, Deutsche Bank AG
CAN Clark, Edmund President and CEO, TD Bank Financial Group
GBR McKillop, Tom Chairman, The Royal Bank of Scotland Group
USA Rockefeller, David Former Chairman, Chase Manhattan Bank
INT Trichet, Jean-Claude President, European Central Bank
INT Zoellick, Robert B. President, The World Bank Group
Official 2008 Bilderberg Participant List Alex Jones’ Infowars: There’s …
http://www.infowars.com/official-2008-bilderberg-participant-list/ - 72k -
I thought the evil Koch Brothers ran the world. Now you’re telling me it’s The Bildernberg Brothers?
List of Bilderberg participants - Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/List_of_Bilderberg_participants - 332k - Cached - Similar pages
Józef Retinger (1954 to 1960), Founder and secretary of Bilderberg Group …… Queen Sofia, Spain; George Soros, President, Soros Fund Management, U.S.; …
A short guide to government economic policy:
1. If it is profitable, regulate it to the point where it isn’t.
2. If it moves, tax it.
3. If it stops moving, subsidize it.
4. If it dies, bail it out and resurrect it as a government-sponsored zombie enterprise.
Regulator mulls setting rules for digital currency Bitcoin
By Douwe Miedema
WASHINGTON | Mon May 6, 2013 6:32pm EDT
(Reuters) - The top U.S. derivatives regulator is considering whether the Bitcoin virtual currency should be subject to its rules, a top official at the agency said.
Bart Chilton, one of five commissioners at the Commodity Futures Trading Commission, said he had asked staff to explore whether consumers needed more protection from any mishaps with Bitcoin, whose value collapsed last month.
“Here’s what I know for sure: we could regulate it if we wanted. That is very clear,” Chilton told Reuters in an interview on Monday. The Financial Times was first to report on Chilton’s plans.
Bitcoin, a digital currency that can be moved via computer or smartphone without a financial intermediary, has gained in prominence as people start to question the safety of holding their cash in the bank. It shot up in value in March, when investors took fright at the next turn of the euro zone debt crisis.
But the price of one “coin” plunged to $130 from a record high of $260 on April 10.
The CFTC’s remit has been vastly expanded after the 2007-09 financial crisis when it was tasked with writing rules for the $650 trillion swaps market.
“There is potentially a federal role here, and we have to make sure that we’re on guard that whatever is traded is appropriately regulated,” Chilton said.
…
2. If it moves, tax it.
In the military: If it moves, salute it.
Austerity at work:
Greek finance minister sees economic recovery
Elena Becatoros, Associated Press 10:15 a.m. EDT May 9, 2013
(Photo: LOUISA GOULIAMAKI AFP/Getty Images)
Story Highlights
Greek Finance Minister Yannis Stournaras predicts recovery in 2014
He says unemployment should start to fall by the end of that year
Unemployment for those age 15-24 is now around 64%
ATHENS, Greece (AP) — Greece’s recession-wracked economy should start recovering next year and its sky-high unemployment rate should edge lower by the end of 2014, the finance minister said in an interview broadcast Thursday.
Speaking on state-run NET television, Yannis Stournaras said Greece could be in a position to return to the international bond markets at the end of 2014.
…
Currently, the yield on Greece’s 10-year bonds is just below 10% — far lower than the 30% last June, but still too high for a return to markets now.
“I see recovery from 2014 onwards,” Stournaras said. “The climate has already turned. At the moment the international community sees that Greece is being saved, that it remains in the euro.”
At its height last year, the financial crisis led to fears Greece would be forced out of the euro currency used by 17 European Union countries. That in could have caused mayhem in financial markets and exacerbated the eurozone debt crisis.
In return for its international bailout, Greece imposed several rounds of stringent austerity measures, including deep spending cuts and a series of tax hikes, to reform its economy. While the measures have reduced Greece’s budget deficit, they have left the country mired in a deep recession, now in its sixth year, and sent unemployment soaring.
The minister said improvements in unemployment should be visible by the end of next year. “The reduction of unemployment doesn’t immediately follow recovery,” he said.
The Statistical Authority on Thursday showed unemployment in February at 27% of the workforce in seasonally adjusted terms. That’s up from 21.9% in the same month last year and slightly higher than 26.7% in January 2013.
The unemployment rate for people age 15-24 stood at a staggering 64.2%, highest in the European Union.
…
That’s probably the last thing the gold bugs want to hear.
How about this?
Gold Bears Pull $20.8 Billion as BlackRock Says Buy: Commodities
By Elizabeth Campbell - May 12, 2013 1:00 PM PT
Hedge funds increased bets on lower gold prices after investors pulled a record $20.8 billion from bullion funds this year while BlackRock Inc. (BLK), the world’s biggest money manager, said it’s still bullish.
Speculators held 67,374 so-called short contracts on May 7, 6.4 percent more than a week earlier, U.S. Commodity Futures Trading Commission data show. The net-long position dropped 10 percent to 49,260 futures and options. Net-bullish wagers across 18 U.S.-traded raw materials climbed 5.8 percent to 582,265, with gains for cocoa, cotton and hogs.
Gold is having its worst start to a year since 1982 after dropping 14 percent and sliding into a bear market in April. Holdings in exchange-traded funds backed by bullion tumbled to the lowest since July 2011 even as central banks print money on an unprecedented scale to boost growth. BlackRock’s President Robert Kapito said May 9 he would still buy the metal, echoing billionaire John Paulson, who’s sticking with a bullish view even after losing 27 percent in his Gold Fund last month.
“People have been told the world is going to end for five years, and it hasn’t, so they’re finally moving on,” said James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees $325 billion of assets. “So even when crisis flashes now, you don’t get the same upside, and then in good times, you get more downside, and that’s what you’re getting in gold as the Armageddon premium is coming out.”
…
Germans Splurge on Italian Homes Locals Can’t Afford
By Alessandra Migliaccio, Chiara Vasarri & Dalia Fahmy - May 7, 2013 5:54 AM PT
Chris Warde-Jones/Bloomberg
Boats sit in the bay in front of town of Positano along the on the Amalfi coast, Italy. Europe’s fiscal woes are one of the primary reasons for real estate investments.
Yasemin Rosenmaier has been selling homes in northern Italy since 2005 and she’s finding that there’s never been a better time to work for a German broker.
“I’d say 60 percent of our closings are with Germans, which is much higher than in previous years,” Rosenmaier said by telephone from her Engel & Voelkers office in Cernobbio on Lake Como. “Why? Fear of inflation, the uncertainty on the financial markets, fear of what happened in Cyprus,” the latest European country to get an international bailout.
…
Expats leaving Spain cause first population fall since 1857
by Ray Clancy on April 30, 2013
As the unemployment rate has soared to 26% in Spain many expats are leaving at a time when the country’s population has fallen for the first time since records began in 1857. Figures from the National Statistics Institutes show that the number of residents fell by 206,000 to 47.1 million and this drop is entirely down to foreign residents leaving the country.
The biggest fall in registered foreign residents was among South Americans, especially Ecuadoreans and Colombians, the statistics agency said. It is a stark contrast to previous years when between 2000 and 2010 the immigrant population grew substantially from 924,000 to 5.7 million. This was fuelled by Spanish speaking expats from Ecuador, Colombia and Bolivia working in the construction industry. However, now the bottom has fallen out of the housing market they are returning to South America where there are more jobs.
‘There was extraordinary growth in immigrants from 2000 to 2009, which is reversing quickly due to the economic crisis. Spain is less attractive because there are no jobs,’ said Albert Esteve of the Barcelona Centre for Demographic Studies. There are also reports of many British expats leaving the country but many who want to do so are finding it hard to sell their properties because of the downturn. However, British expats from other parts of the world are buying more property back in the UK, especially London which is regarded as one of the best property investment markets at present.
…
Where are they going? I hope not the US.
Buy a home today: Financial suicide now, actual suicide later.
Does Spain’s housing crisis offer us a glimpse of the future?
Though Spanish law is more sympathetic to tenants than the UK judiciary, it offers creative ideas for coping with housing pressures
Ben Reeve-Lewis
Guardian Professional, Friday 26 April 2013 03.45 EDT
Apartments in Barcelona
Barcelona, Spain: Unemployed Spaniards are struggling to meet their housing needs, with many resorting to occupying empty properties. Photograph: Martin Godwin
A recent trip to Spain and a perusal of a selection of English ex-pat newspapers offered some interesting insights into the nature of the country’s housing crisis, and the way the Spanish people and their government are responding to it.
Admittedly the Spanish situation is heavily underpinned by critical levels of unemployment, with some areas seeing 40% of the workforce out of work. Yet the toxic combination of an economy based on cuts, rising rent, mortgage repossessions and direct action by squatters provide parallels that may provide a glimpse into Britain’s near future.
Spain responded to recession by implementing cuts in welfare benefits, leading to an exponential rise in the number of tenant evictions and mortgage repossessions.
The Spanish mortgage system is different from the UK in several respects: a home owner can find their property reposessed easily, if they fall into just one month’s arrears, and a bank is entitled to be repaid the full loan amount at that point – even if the borrower has already paid back 50% of the original loan. If a bank repossesses and sells a property on, it is allowed to keep the entire sum raised at sale even if the loan is cleared and there is an excess.
Spanish judges have been protesting, thinking up creative ways to block evictions. So many Spanish citizens have committed suicide after being repossessed that a new movement has been established, the Mortgage Victims Platform, which has been busy picketing the houses of politicians to raise awareness of the crisis.
…
and a bank is entitled to be repaid the full loan amount at that point – even if the borrower has already paid back 50% of the original loan
It’s good to be the bankster!
I didn’t spot anything in the description that is different from the system here.
Banks can demand payment-in-full if you are in default on your mortgage, regardless of what portion of the mortgage has been paid off—check.
Banks can repossess when you are in default—check.
Banks can keep the entire sum when they later sell your house—check. The only time they get their mortgage satisfied and the previous owner gets anything is if the property sells for more than the mortgage amount on the courthouse steps. If it sells for the mortgage amount or less (assuming the bank does the typical bid of the mortgage amount), the property then belongs to the bank, and they have no obligation to share any proceeds of a future sale with the previous owner.
It said the full amount of the loan, not the balance.
Spanish economy shrinks as housing market continues to fall
GDP fell by 0.5% in first quarter, in line with forecasts that recovery will be delayed until end of the year
Phillip Inman, economics correspondent
The Guardian, Tuesday 30 April 2013 14.42 EDT
Luis de Guindos
Spain’s economy minister, Luis de Guindos. Photograph: Sergio Perez/Reuters
Spain is heading for another year of recession after figures showed GDP contracted in the first three months of 2013 amid a widespread slowdown in consumer spending, rising unemployment and predictions of further declines in house prices.
The economy shrank by 0.5% in the first quarter, according to Spain’s national statistics office, in line with government predictions that a recovery will be delayed until the end of the year.
One analyst said the economy, which started to decline in the summer of 2011, was on course to repeat last year’s 1.9% contraction before stabilising in 2014.
The gloomy outlook followed a raft of weak figures showing that Spain remains in the grip of a deep recession. A report by the credit ratings agency Standard & Poor’s showed that the housing market continued to be a drag on growth. House prices have already fallen by more than 40% in some areas, sparking a wave of repossessions. Tens of thousands of families are unable to sell their homes while they remain in negative equity.
“Spanish households are feeling the pain most severely,” said the S&P economist Sophie Tahiri. “We predict prices will fall by 8% this year and by another 5% in 2014, as precarious economic conditions deter buyers and as swathes of unsold housing stock drag on prices.”
…
Austerity at work.
Any thoughts on how ordinary investors can a piece of the great South Europe housing market fire sale?
I would not bother, with tax rates the way they are there. VAT is a scourge across all Europe.
There is a 99% chance I won’t bother; was just curious if anyone (other than investment bankers and hedge funds) knew how to do this.
Buy a condo on a Greek isle.
Portugal Home Appraisals Drop to Lowest in More Than Four Years
By Henrique Almeida - Apr 30, 2013 4:07 AM PT
Home valuations by Portuguese banks may continue to drop as lenders require more collateral and make getting a mortgage more difficult, according to Ricardo Reis, Cushman & Wakefield Inc.’s head of valuations in Portugal.
Appraisals of houses and apartments fell 6.9 percent in March from a year earlier to an average of 981 euros ($1,283) a square meter, the lowest since September 2008, according to data compiled by Portugal’s National Statistics Institute.
“Lenders are now asking for more collateral from clients, making it more difficult for the borrowers to obtain mortgages,” Reis said by e-mail. “A lower bank valuation reflects the overall drop in property prices and may require potential home buyers to come up with more money to purchase the property due to a lower loan-to-value required by the banks in order to reduce their risk.”
The value of a property typically determines the amount a bank would have to lend for a purchase. Lower appraisals protect lenders from getting stuck with an asset that’s worth less than the mortgage. Home appraisals are usually carried out by independent companies hired by banks, according to Reis.
The drop in home values in Portugal and most of Europe looks set to continue amid declining household earnings and diminished bank lending, Standard & Poor’s said in a report yesterday. In the Netherlands, Italy and Portugal “we expect that falling household incomes in addition to mortgage lending constraints will continue to depress home prices,” S&P said. The ratings company looked at nine countries and found housing markets are only strengthening in in Germany and the U.K.
…
Happy mothers day to all you mothers out there!
Debt-crippled Holland falls victim to EMU blunders as property slump deepens
By Ambrose Evans-Pritchard
6:49PM BST 01 May 2013
Two men wearing orange, the royal color, wait for Queen Beatrix’s abdication ceremony in Amsterdam
Average net household wealth in Holland is just €170,000, compared with Germany (€195,000), France (€233,000), Italy (€275,000), Spain (€291,000) and Cyprus (€670,000) Photo: Reuters
The eurozone’s slow suffocation is going Dutch. Each extra month of slump caused by Europe’s negligent authorities is pushing Holland closer to a debt-deflation trap.
The coalition of Mark Rutte has belatedly woken up to the danger. Last month it retreated from pro-cyclical tightening, delaying €4.3bn in budget austerity. By then Mr Rutte’s totemic worship of EU deficit targets had invited the ridicule of the official Bureau for Economic Policy Analysis (CPB), which said Dutch leaders did not seem to understand how private credit busts interact with fiscal cuts to create havoc.
“The Dutch government’s inability to acknowledge the damage done by austerity despite mounting evidence is a case of ‘cognitive dissonance’,” it told the Financial Times.
Yet this is not at root a case of botched fiscal policy. It is a case of misaligned monetary policy. The Netherlands offers a salutary lesson of what can happen to a rich sophisticated economy caught in a post-bubble crunch once it has lost control of its currency, central bank and monetary levers. This would have happened to Britain without the Bank of England, and the US without the Fed.
The Dutch crisis has crept up quietly, though hedge funds have been nibbling for months. Most people lump the Netherlands together with Germany, Finland and Austria, the hardline AAA fist-thumpers who dictate terms to others.
Unemployment was very low until the dam broke. It is now soaring as fast as in Cyprus. The rate has doubled over the past two years, jumping from 7.7pc to 8.1pc in the single month of March. The economy has been in recession since early 2011.
…
S&P sees deepening house slump in Spain, France and Holland
By Ambrose Evans-Pritchard
5:06PM BST 29 Apr 2013
Estate agents’ signs advertise apartments for sale in Madrid. Spanish property prices have already dropped by 28pc from their peak in March 2008 and face a fall of 8pc this year and 5pc next year
Photo: Bloomberg News
Spanish house prices are to fall a further 13pc by the end of next year as the authorities flood the market with a backlog of repossessed properties, Standard and Poor’s has warned.
The agency said the housing slump is deepening across large swathes of the eurozone. French declines are “gaining momentum”, with prices likely to fall 5pc this year and a further 5pc in 2014.
French property faces a “protracted correction” as the economy buckles, hit by fiscal tightening, higher taxes and a surge in unemployment to post-war highs.
France’s price-to-income ratio rose to a record 180pc of historic levels during the bubble, one of the most stretched levels seen anywhere in the OECD bloc.
The property market began to roll over last year, prompting warnings by the French consultants PrimeView that values could tumble by as much as 40pc before excesses are purged.
S&P said the deep crisis in the Netherlands would grind on despite the government’s partial retreat from austerity and its decision to delay €4.3bn in spending cuts.
…
Hong Kong has a 15% flat tax. How are Hong Kong condos / lofts / flats doing, compared to those in equalitarian Euro high tax nanny states, such as in France?
How are central banker efforts to revive the Eurozone economies working out these days?
Eurozone unemployment climbs to record high of 12.1pc
By Szu Ping Chan, and Fiona Govan
11:16AM BST 30 Apr 2013
Pressure is mounting on the European Central Bank to cut interest rates on Thursday after data showed that unemployment hit another record high in March while inflation fell to a three-year low.
More than 19m people were unemployed in the eurozone in March, according to Eurostat, which said jobless rates had “risen markedly” since last year. The unemployment rate crept up to 12.1pc in March, from 12pc in February, while the wider European Union jobless rate held steady at 10.9pc.
The biggest rise in unemployment was in Greece, where the jobless rate jumped by almost a percentage point in one month to 27.2pc. Youth unemployment in the bailed-out nation crept closer to 60pc, with 59.1pc of 16 to 24-year-olds out of work in January, compared with 58.4pc in December.
Many economists now expect the ECB to cut its benchmark interest rate from an all-time-low of 0.75pc to 0.5pc to help ease funding conditions.
President Mario Draghi raised the spectre of a rate cut when he revealed that there had been an “extensive” discussion at last month’s policy meeting.
…
One man’s view:
Command-and-control global economic governance by a cartel of central banks has been an abysmal failure which no amount of propaganda or money printing can hide.
Command-and-control global economic governance by a cartel of central banks has been an abysmal failure which no amount of propaganda or money printing can hide.
+infinity.
And it will be an even bigger failure in the future, as their manipulations lead to further mal-investment. There is always a price to be paid for mal-investment.
Failure for who?
The people who are responsible for the failure have an agenda.
They want economic failure in Europe. Like I said when they get what they want a wall of money will be printed and distributed to the masses and Austerity will fade away.
I really think they want to force political union in Europe and are willing to drive the economy into the toilet to get people to accept it. A Wall of money will be printed and distributed when they get what they want. Austerity will fade away.
Fannie and Freddie in Good Hands with Mel Watt
by Stephen Lendman
Wednesday May 8th, 2013 12:03 AM
On May 1, Obama nominated Watt to head the Federal Housing Finance Agency (FHFA).
It replaced the Federal Housing Finance Board (FHFB), the Office of Federal Housing Enterprise Oversight (OFHEO), and the Department of Housing and Urban Development (DHUD).
It did so following their statutory merger. FHFB regulates Fannie Mae, Freddie Mac, and 12 Federal Home Loan Banks.
If approved, Watt will replace Edward DeMarco. Since August 2009, he’s been acting director. Change.org called him the “single biggest obstacle to meaningful economic recovery.”
He blocked reducing the burden of underwater homeowners. Fire DeMarco, urged Change.org.
…
“The Japanese currency fell to 101.98 yen per dollar, the lowest since October 2008.”
I’m sure the timing is purely coincidental with the onset of a 50% slide in the headline U.S. stock market indexes. For one thing, QE1 didn’t even begin until the bottom of the slide, in March 2009, while now we have QE-to-infinity-and-beyond in place.
Yen hits 4-1/2-year low versus dollar, oil and gold tumble
By Herbert Lash
NEW YORK | Fri May 10, 2013 4:48pm EDT
Men walk past logos at the Tokyo Stock Exchange in Tokyo February 6, 2013. REUTERS-Toru Hanai
Visitors watch an electronic board showing Japan’s Nikkei prices and related indexes at Tokyo Stock Exchange (TSE) in Tokyo April 24, 2013. REUTERS-Yuya Shino
(Reuters) - The yen slid to a 4-1/2-year low against the dollar on Friday, triggering a sell-off in oil and gold as well as safe-haven U.S. and German debt, after recent signs of strength in the U.S. labor market added to bullish sentiment on the dollar.
Wall Street surged at day’s end, pushing both the Dow and the S&P 500 to record closing highs.
Data on bond holdings in Japan showed the Japanese were buying more foreign assets, and the yen’s collapse reverberated throughout financial markets. Conflicting signals about how investors view the economic outlook added to the yen’s wide impact.
The greenback rallied broadly as recent data indicating an improving U.S. jobs market sparked speculation the Federal Reserve may scale back monetary easing. The policy was designed to bolster the economy, and it also has lifted the stock market.
The firmer dollar pressured oil, as the strength of the dollar makes commodities more expensive for holders of other currencies. The fall in oil was intensified by rising supplies and doubts over the strength of China’s economy.
“There are two fundamental themes. The first is that despite signs of slower U.S. growth here in the second quarter, the U.S. labor market continues to improve,” said Marc Chandler, head of global currency strategy and Brown Brothers Harriman in New York.
“The second is the news reported in Tokyo … that Japanese investors turned buyers of foreign bonds,” he said, calling it an important signal for the “yen bears.”
The bearish investors were already selling the yen on expectations that Japanese investors would sell as the Bank of Japan’s stimulus measures displaced them from the local bond market, Chandler said.
The Japanese currency fell to 101.98 yen per dollar, the lowest since October 2008. The dollar was last at 101.56 yen, up 0.97 percent on the day.
With the Japanese currency breaching the 100 level, analysts expect the yen to fall further. Some see the dollar rising to 105 yen this summer and to 110 by the end of the year.
…
Despite this being smack in the middle of the red hot spring sales season, the number of San Diego MLS listings remains abysmally low. Redfin shows a current total of 4,300 single-family homes, condos and townhouses on the market for all of San Diego County. Of these, 1,349 (31.4%) are listed for $1 million or higher.
Good thing there is an army of wealthy all-cash Chinese and Canadian investors out there snapping up investment properties right and left, as I am pretty sure that a lot less than 31.4% of prospective San Diego owner-occupant buyers are going to be able to absorb a sticker price north of $1 million.
Further observation: There are almost no For Sale signs posted around our area of North County, and absolutely no Realtors™ to be seen driving around in pink Cadillacs.
We know a real estate investor who just paid $1.4 million for an owner-occupied place after renting since before the bubble popped. This price is higher than at the pre-bubble-collapse peak. His wife is a Realtor™. I guess a little birdie must have told them that the bottom is in, and prices can only go up from here?
If some rich person gave me an anonymous gift of real estate worth between $1 million and $5 million, first…thanks! Second, I would like it to be at Siesta Key with gulf view and white sand beach just steps away.
In their case, family money is likely involved. Come to think of it, the majority of families we know who bought a place since 2005 had major help from mom and dad.
This low inventory has to be putting quite a few Realtors and related “professionals”out of business. The real estate complex lobbied congress for measures to mitigate declining prices…and they got it. Your average dues paying Realtor, Escrow officer and mortgage broker is getting the shaft by their parent organizations. Be careful what you wish for.
That being said, a brief windfall opportunity could come about if price pressure continues to a level where the stuck can liquidate.
‘This low inventory has to be putting quite a few Realtors and related “professionals”out of business.’
Yep…this is another group of Fed housing price support policy ‘victims’ who get nary a mention in the MSM.
I so hope that Nancy Grace and Ashleigh Banfield are seeing these stories completely making fun of them, and that they are sufficiently mortified, because WOW.
http://chicksontheright.com/posts/item/24196-if-you-missed-cnn-s-epic-display-of-stupidity-who-better-to-catch-you-up-than-jon-stewart
In Demon we trust.
ft dot com
May 12, 2013 4:48 am
Pressure mounts on JPMorgan’s Jamie Dimon
By Chris Newlands
Jamie Dimon’s future as chairman of JPMorgan Chase suffered a further knock after Australian superannuation fund First Super expressed “strong” concerns over his joint role as CEO and chairman. It is to take action at JPMorgan’s annual general meeting in Tampa on May 21.
The $1.7bn industry fund said it would contact its international equity managers, including BlackRock Capital and Global Thematic Partners, within the next few days to determine its voting position.
“We think there is a very strong argument for splitting the roles of CEO and chairman. Failing to do so constitutes a serious inadequacy in the bank’s governance, and the risks that poses for investors are gratuitous and unacceptable,” said First Super investment committee chair Michael O’Connor.
…
May 11, 2013, 10:51 a.m. EDT
Dimon could quit if J.P. Morgan roles are split
Shareholder poll’s results to be known May 21
By Erik Holm
In a meeting with investors this week, James Dimon raised the possibility that he might leave J.P. Morgan Chase & Co. if shareholders vote to separate his roles of chief executive and chairman, according to people who attended the private meeting at the bank’s headquarters.
…
High & Low Finance
Challenge to Dogma on Owning a Home
By FLOYD NORRIS
Published: May 9, 2013
Paul Sancya/Associated Press
Home buyers in Grand Rapids, Mich. Economists see a downside to high homeownership levels.
Homeownership is a good thing, for the individual and for society. Or so American governments, whether Republican or Democrat, have long believed. The benefits have been cited repeatedly in justifying the existence and expansion of the tax breaks given to home buyers.
But maybe it isn’t nearly as good as had been thought.
A new study by two economists concludes that rising levels of homeownership in a state “are a precursor to eventual sharp rises in unemployment in that state.” As more homes are owned, in other words, fewer people have jobs.
The study, by David G. Blanchflower of Dartmouth and Andrew J. Oswald of the University of Warwick in England, does not argue that homeowners are more likely to lose jobs than are renters. But it does argue that areas with high and rising levels of homeownership are more likely to be inhospitable to innovation and job creation and to have less labor mobility and longer commutes to work.
“We find that a high rate of homeownership slowly decimates the labor market,” Professor Oswald said.
…
May 12, 2013, 12:19 p.m. EDT
Stock shorts get hurt, but don’t call it a squeeze
By William L. Watts, MarketWatch
NEW YORK (MarketWatch) — It was an undeniably ugly week for short sellers, but don’t pin too much credit for the broad equity rally on a squeeze.
U.S. stock indexes steamed through to record closes on Friday, keeping up with rallies in Europe and Asia, and shaking off an initial wobble that followed Federal Reserve Chairman Ben Bernanke’s comments that he was on the lookout for excessive risk taking.
…
Tough call…not!
Bond Market Crash Will Strike By 2016, Expert Predicts
By David Zeiler, Associate Editor, Money Morning
May 3, 2013
Not only is a bond market crash inevitable, but it will hit sooner than many think - by 2015 or 2016 at the latest, according to Michael Pento, president of Pento Portfolio Strategies.
“It’s the most overpriced, over-owned, oversupplied market in the history of American economics,” Pento said of the bond market in an interview with The Street.
Pento compared the current bond market, with its historically low interest rates and flood of U.S. Treasuries, to two of the most recent bubbles - the dot-com bubble of the late 1990s and the housing bubble that burst in 2007.
A sudden bond market collapse isn’t likely, Pento said, but his models tell him it will happen, one way or another, within the next three years. And investors will need to be prepared.
…
Sounds about right. Fall 2016, O will have less than 4 months before he leaves office. The MO is to do the same as was done under Bush. O and Chicken $hit politicians will do a massive bailout in trillions of dollars.
Those very same experts better predict wage inflation. Without wages going up there will be no interest rate hikes driving bond prices lower. Three years from now we will have low unemployment?
Homey Claus don’t think so.
If the FED ever quits buying treasuries interest rates will go to the moon.
Who do you think has been keeping rates artificially low?
there is simply not enough real demand without the FED to keep prices high and thus yields this low.
The recovery depends on low rates.
Question is not “who” but “why” they are keeping rates low:
Answer: stagnant wages.
they are keep rates low to get home prices back up and they also financing the deficit.
What does it matter? Like I said… housing demand collapsed to 1997 levels, and falling. There is no housing demand at currrent massively inflated prices.
Housing demand will continue to collapse until prices fall to dramatically lower and more affordable levels.
IMO, wage increases will come far before substantial house price increases. Also Kb>you gotta have several years of wage increases to fool the people into thinking they are permanent and your job is permanent. I foresee a generation of housing depression, at least on high end and upscale models. Starter homes? Maybe not. But those are boring cookie cutter homes like in the year 1949.
real estate would fall apart and another depression would start. Would the next guy just print more money again?
Real estate is already falling apart.
prices are going up dude. your data is seriously flawed.
What does it matter when housing demand is cratering?
You can put a million dollar price tag on your 5 year old Honda…… but there are no buyers for it.
This is why real estate is falling apart.
the lemmings are lining up in s. cal . they want a home at any price. just stating the facts.
Are your “facts” always contrary to the truth?
The truth is, housing demand in California is collapsing…. see for yourself.
http://picpaste.com/pics/5a803a452451e5718ff391e15053980d.1368404466.png
Treasurys get hit in second week of losses
Bond Report
May 10, 2013|Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — Treasurys fell in four out of five sessions this week,…
Yen fall snowballs
Treasury yields climbed Friday as banks sold the U.S. government debt tied to a hedge involving the yen, called power-reverse dual-currency notes, said Ian Lyngen, senior government bond strategist at CRT Capital Group LLC.
A PRDC is a structured financial product that aims to take advantage of the interest-rate differential between the dollar and the yen. Banks hedge against these products by buying long-dated Treasurys, and rushed to sell them as the yen weakened, Lyngen said.
“There is a notion that as the yen depreciates, there is hedge-related selling in long-dated Treasurys. It tends to occur in overnight sessions,” said Lyngen.
Large institutional investors were expected to buy into the market once the 10-year note hit 1.85%, but those purchases failed to occur, accelerating the selloff, said Jake Lowery, global rates portfolio manager at ING U.S.
“Many had expected a lot of demand at 1.85%. When that demand failed to materialize in Europe around the close, those levels fell,” Lowery said.
The yen weakening also impacted the yield for 10-year German government bonds, known as bunds, which were up 2.5 basis points on the day to 1.387%.
“The selloff in the yen accelerated in Europe, driving Treasuries lower still,” said John Canavan, fixed-income analyst at Stone & McCarthy Research Associates, in a note. “Bunds also broke through key technical levels, and the ensuing breakdown in Bunds weighed on Treasurys, although power-reverse-dual-currency-related selling reportedly dried up.”
How many more times will Gross declare the Treasury bond bull market over before it is? (Not that each time he does this in the MSM, he opens up a buying opportunity, provided he successfully convinces many others to sell.)
May 10, 2013, 4:20 p.m. ET
U.S. Treasurys Sell Off; Bond Yields Hit Seven-Week Highs
–Bond prices fall as Pimco’s Gross sees end to bond market’s 30-year bull run
–Weaker yen boosts Japanese stocks, sapping demand for safe-harbor bonds
–Anxiety over Fed to taper off bond-buying adds to selling in Treasurys
–Some bond bulls take advantage of the selloff to buy
By Min Zeng
U.S. Treasurys sold off Friday, sending bond yields to their highest levels in seven weeks and wrapping up a second-straight weekly price loss.
Bond prices took a beating from renewed concerns that the U.S. Federal Reserve could cut back on Treasury bond purchases during the second half of this year.
A weakening yen, which hit a multiyear low versus the dollar Friday, lifted Japan’s economic outlook, sapping demand for assets perceived to be safe such as Treasury bonds, German government bonds and British sovereign debt.
Adding to the selling were comments from Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co., who said he believes the 30-year bull run in the U.S. bond market likely ended last week.
“You have to care, because his comments have the ability to move the market, and certainly did today,” said Jason Rogan, managing director of U.S. government bond trading at Guggenheim Partners LLC in New York.
But Mr. Rogan added that Mr. Gross has made this comment before, “so it will be interesting to see if this time he is right.”
The benchmark 10-year Treasury note’s price fell by 22/32, pushing up the yield to 1.893%, according to Tradeweb. The 30-year bond’s price fell by 1 12/32, yielding 3.090%. Bond prices and yields move inversely.
The 10-year note’s yield rose about 16 basis points this week, the most on a weekly basis in two months.
Bond bears have regained ground since May 3 after losing to bond bulls for the previous few weeks.
After dropping to 1.612% on May 1, the low of this year, the 10-year note’s yield has since climbed and now trades above the 1.76% yield at the end of last year.
The shifting fortunes came as some improving U.S. labor-market reports over the past week have reduced fears about the U.S. economic outlook. Signs of continued recovery in the labor market dent bond bulls’ case that the Fed would raise the size of its Treasury bond-buying program to support the economy.
In fact, further improvement in employment could shift the discourse in financial markets back toward a possible cutback on bond purchases by the central bank during the second half of the year–a case that would send bond yields higher still.
…
Improving labor market
Jobs created but
Hours worked and after taxes and mandatory expenses income is down.
Obama care will push more people into the underemployed ranks as companies hire 30 hour work weeks.
These same people working 30 hours a week will see their take home pay cut as they have to pay for insurance, many in these low wage industries went without insurance so even if Uncle Sam pitches in they will have less take home pay.
Why the dollar is getting stronger
http://www.businessweek.com/stories/2008-11-25/why-the-dollar-is-getting-stronger
(article above is November 25, 2008…Gold spot price was $820 that week, today it’s around $1430)
November 26, 2008:
“Gas prices fall below $1.87″
http://www.money.cnn.com/2008/11/26/news/economy/gas_prices_sink/
no inflation since then?
That’s not inflation. Price fixing? Yep.
Umm if evil oil companies fix prices and gouge us, what explains the times when gas prices dip?
Don’t confuse price stabilization to avoid deflationary spiral into greater depression with inflation.
P.S. Another way to think about it is a deliberate repegging of the dollar to hard assets (gold, stocks, houses). Absent the repegging effort, facilitated by QE3, the prices of these assets would revert back to fundamental levels (i.e., lower).
I don’t buy that. Some prices have fallen while others keep going up. Labor prices fell while education, rents in L.A. and Phoenix (in my experience), gas, and medical prices have leapfrogged.
The birth dearth and boomer downsizing is supposed to be deflationary. Well I think the boomers have yet to downsize. I don’t see wage inflation for at least another five years. So the Fed will continue ZIRP well past 2016.
The monetary inflation it’s policies will continue for years. We should be on autopilot, keep dollar cost averaging primarily in equities, enjoy bonds, and accumulate precious metals.
Expect gas to stay above $4 and perhaps go higher, while the Fed keeps rates zero.