Bits Bucket for June 16, 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.
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Name:Ben Jones
Location:Northern Arizona, United States
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There are more black people with surname White than white people with surname Black.
I wonder why?
How do you know this to be true? It sounds more like a conjectural statement than a factual one to me.
Did you try googling it?
Nope.
Late comment on yesterday’s NBC valedictorian article:
“That mathematical logjam can leave a pack of seniors in the same class all tied with 4.0 cumulative GPAs when graduation arrives.”
An interesting aspect of grade inflation is ageism. Not knowing how old I am (although you can probably guess) does my 3.5-ish high school GPA make me a genius or a moron?
My son’s future high school offers 5.33 grade points for an A+ in an advanced class (like second year chem or high level math or AP classes in general, etc). I could only earn 4.00 grade points for the same class.
I don’t think any school in my district has graduated a kid with a GPA as low as 4.0 in decades, probably since around when I graduated… I think this pegs the article author as someone older than myself.
I would imagine this grade inflation trend continues into the past, and there are probably “older people” who have GPAs below mine, yet still valedictorians.
Its interesting that much like where you got your degree, no one cares about your GPA after your first couple jobs. We seem to be fixing that by not giving jobs to young people anymore while exploding tuition costs/loans. So that will fix itself, sort of, once kids stop attending higher ed due to lack of financial ability and lack of need, oh and the collapse of the credit market for .edu.
I don’t think any school in my district has graduated a kid with a GPA as low as 4.0 in decades, probably since around when I graduated… I think this pegs the article author as someone older than myself.
Not all school districts do these things. Our district graduates plenty of kids with 2.X GPAs and IIRC the highest grade is a 4.33 (for an A+ in an AP class).
I suppose that its because of this discrepancy that colleges rely so much on ACT and SAT results when making admission decisions.
It really doesn’t matter, IMO. If anything, Edward Snowden has proven that you can be a high school dropout and get an awesome job as a contractor. Heck, you can even live in Hawaii. Provided you’re a techie.
Mr Snowden is an aberration. Yes, there are self taught techies, but when you look at most job reqs on corporate websites, not only do they want a Bachelor, many are now requiring a Masters degree as required. What is interesting about Snowden’s situation is that it is my understanding that most fed contractors want to see credentials, as they will submit those to the Fed Gov when bidding on a contract.
Well, somehow he slipped into the system, it seems he did this as a security guard, which I would imagine doesn’t call for particularly strong credentials. Clearly Booz got their contract on the credentials of people other than Snowden. The question is, how did he transition from security guard to systems admin? THAT is interesting, right there. Someone had to have spotted that he was bright enough to do the job and promoted him.
I have a friend in San Diego who’s a contractor for the navy. She makes close to 100k as a programmer and only has a two year degree, which she got long after she had her first programming job. She’s completely self-taught—for her the degree was just a piece of paper. She was going to finish up at SDSU but is considering not bothering with it. She gets several calls a month from recruiters.
There you have it.
And Bill Gates dropped out of college and he’s a gazillionaire. Yes, there are many examples of exceptions to the rule.
But on average, someone without a college degree will earn significantly less in their lifetime than someone with a college degree.
Look at unemployment rates as well. The rate is in the 4s for those with a degree compared to 8% overall. That is not a coincidence.
My experience is that small companies and start ups are less picky about credentials. Then again, everyplace I’ve worked in the last 15 years or so, some big, some small, required a CS degree. And like I said before, I’m seeing more and more reqs online that say that a Masters is either preferred or required. But I also know a few non degreed “engineers” as well. They tend to complain to me that employers increasingly want them to have a “pedigree”
Your friend in San Diego most likely has a skill that is in short supply and in demand.
She makes close to 100k as a programmer
Which even here in flyover Denver is only an average wage. Star performers out here earn in the low to mid 100′’s. I would expect wages to be higher in San Diego.
I was thinking the same thing…close to 100K isn’t that much in San Diego.
But she’s got a gig! And probably supporting the “stars”.
The point is, can you do the job? Just because someone has a piece of paper or some GPA number doesn’t mean they’re competent, as in high school graduates who come out of the system having difficulty with reading, writing and ‘rithmetic.
RU experienced?
Jose,
In theory you are right. In practice, no degree limits one’s opportunities tremendously. This is especially true for bigger companies that have bureaucratic HR departments and categorize jobs. If the job says degree needed and you as a candidate have no degree, ZAP, your resume goes into the “NEVER CONTACT” folder.
The point is, can you do the job? Just because someone has a piece of paper or some GPA number doesn’t mean they’re competent, as in high school graduates who come out of the system having difficulty with reading, writing and ‘rithmetic.
RU experienced?
I totally agree.
I think we are going to see a transition over the next few decades, swinging away from degrees mattering and swinging towards capabilities mattering. It is becoming more and more reasonable to learn everything you need to know online, via free online universities.
The problem then becomes one of knowing whether a candidate really learned what they needed to learn to be functional in an area, or not.
I foresee a need for testing and certification in a wide variety of new areas. In other words, lending the credibility of a degree to someone based on testing them after the fact, rather than course-by-course as they go. I think there’s a huge business opportunity there…
I’m sure that’s true. In fact, it’s so odd we’re discussing this right now, I just this minute got an email in my inbox from a recruiter regarding my resume. I love it when they say it “loks” as if I’ve got a lot of “experiance”. ROFL!
RU “experianced”?
A degree shows one is capable of learning. That’s what a good employee is all about. Can he learn new things quickly? Does he have the ability to process information. Does he have the ability to produce an output with that information. Can he communicate ideas effectively? Getting a degree means the answer is yes to all those questions.
That’s why employers want a degree.
Smithers, I think that used to be true. These days, not so much.
I have a friend who’s a VP Strategery at a fortune 100 company. He’s been looking to hire a program director and can’t find anyone. He’s been practically begging me and others he knows to help him get someone. Job pays $150Kish plus bonus, stocks, the works. And still there’s nobody out there that they have been able to find. For this a degree is an absolute requirement. An MBA is preferred but not required (although it really means if worse come to worst, we’ll hire someone w/o an MBA).
Jose Canusi: The question is, how did he transition from security guard to systems admin? THAT is interesting, right there. Someone had to have spotted that he was bright enough to do the job and promoted him.
Two factors:
• Big one is high level security clearance. Not everyone can be cleared, and it’s a bit of an expensive gamble whenever you start the clearance process for someone.
• That, plus some demonstration of aptitude, plus the desire of staffing/contracting companies not to take the expensive gamble of pursuing a high level clearance versus taking a known quantity who will fit the requirements.
I’ll bet there are many college and university grads who can’t get a high level security clearance.
Y’know, I wonder if Obama could have gotten a security clearance.
Two factors:
You forgot a big factor: they likely were able to pay him less than someone who already had the high-level clearance and the desired sys-admin experience. As an ambitious but lowly security guard, he would jump at the chance to do the job for less.
Prime, you’re just nailing it all over the place today.
Drug use eliminates a lot of people from getting a security clearance.
Everyone has a college degree now a days.
In the 50’s/60’s(prior to the Vietnam draft deferments) a college degree was truly a mark of distinction in a candidate.
Prime, you’re just nailing it all over the place today.
Thanks, jose!
No, everyone DOES NOT have a college degree these days. It’s just presented that way by popular myth.
http://articles.washingtonpost.com/2012-02-23/national/35442376_1_college-degrees-college-educated-population-liberal-arts
Representing a historic high, three in 10 adult Americans held bachelor’s degrees in 2011, census officials reported Thursday.
“…Strategery…”
Is that a word? Strategist.
I have a friend who’s a VP Strategery at a fortune 100 company. He’s been looking to hire a program director and can’t find anyone. He’s been practically begging me and others he knows to help him get someone. Job pays $150Kish plus bonus, stocks, the works. And still there’s nobody out there that they have been able to find. For this a degree is an absolute requirement. An MBA is preferred but not required (although it really means if worse come to worst, we’ll hire someone w/o an MBA).
I guarantee they want more than just an MBA. I have an MBA…shall we play the game of figuring out why they wouldn’t hire me for the position? It shouldn’t take long…most likely the also want a certain amount of experience at the job. Everybody wants to poach, nobody wants to grow someone into it.
It’s called “grade inflation” and this was noted as far back as 20 years ago.
Bill in LA:
Has your IQ been over 120 your whole life? I’m wondering because most people cite an IQ number when they were in school and were never tested again. Was your IQ tested again for your work?
I don’t know. I took the test in my early 40s and it was voluntary, not for work but curiosity finally got to me.
My strong point is patterns and it makes sense I love Math!
There was a guy named Terman that started a long term study ( it’s still going on ) back in the 1920’s of high IQ children. I think originally he was a eugenics proponent who wanted to prove that high IQ children would be more successful than lower IQ children. Turns out he was completely wrong.
Wikipedia has a nice write up:
http://en.wikipedia.org/wiki/Genetic_Studies_of_Genius
It is a worthwhile exercise to test one’s beliefs in order to more accurate describe reality.
In the Housing Bubble arena, there is the core belief that housing increases employment. However several studies have indicated that housing actually decreases employment and increases unemployment. The authors aren’t clear on the exact mechanism, but my suspicion is that a great deal of money goes to servicing the house, crowding out other spending. Each house is like a little housing bubble - person going deep into debt, and while deleveraging (paying down the house and paying for maintenance), much less money is spent on other, employment-generating activities. What the nation and several parts of the world are experiencing on a macro scale.
In the IQ arena, this study questions the view of whether high IQ correlates with high achievement. An unquestioned belief, and one study is not going to be the final word, but an interesting data point.
But if “a great deal of money goes into servicing the house” then a great deal of money must end up going into the part of the economy that has to do with this servicing of the house.
Cutting back on the incentive to service the house by cutting back on ownership of the house should result in a decline in home-servicing spending.
As for crowding out other spending, this crowding out would occur if this spending was dependent on incomes.
But house-related spending is not restriced to how much one earns - this spending can be expanded to not only how much ones earns but also how much one can borrow.
In an era of borrowing against a house’s equity the spending is only limited by the “value” of the equity one can borrow against. And the more money one borrows from his house and plows back into the house he borrows from the greater is the amount of house equity he is creating. And this greater amount of created equity is something he can use for furthur borrowing.
And every time he borrows and spends he is putting money into the economy.
One can argue that this type of economy is a “borrowed money economy” which can only be sustained as long as the borrowing can be sustained and, IMHO, you will be absolutely correct.
“The authors aren’t clear on the exact mechanism, …”
Until they are, it’s a bullcrap hypothesis.
Not saying they are wrong, but they can’t PROVE they are right either.
I am not surprised by the study. Social intelligence and emotional intelligence are very important for success. I know some very bright people who cannot seem to make it in the careers.
…true, but I’ve also met hundreds (if not thousands of people) who have the social skills of crocodiles, yet seems to make plenty of money and hold positions of authority without effort.
Dear Seller:
I am writing to tell you why I believe your home is special, and is the perfect place for our family to carry on where yours left off…
Editorial
‘Dear seller’ letters highlight Boston housing shortage
June 16, 2013
Dear seller,
As soon as we saw your home at the open house this morning, we knew it was perfect for us. Well, not perfect: The exterior paint is peeling, the basement is overrun with cave crickets, and making the first floor livable will require the costly removal of two load-bearing walls. But it’s the best we can do in this real estate market. We gather, from a recent Globe article, that multiple offers above asking price are once again common — and that some would-be buyers feel obliged to write gushy letters begging the seller to pick them.
…
In an ideal world, of course, Greater Boston would be adding steadily enough to its housing supply to keep the market from overheating so easily. That way, home buyers would have a day or two to think things over — even in good times — and wouldn’t have to write missives to mysterious owners. Speaking of which, we’re selling our current home right now, and you wouldn’t believe some of the over-the-top letters that we’re receiving. We’ll tell you all about it at the closing.
you cannot lose buying a house with zero down. Get in the casino why there is a shot at some free equity.
If I were a seller I might think of loading up my house with shills - people gushing about how “they just had to have this house” - and maybe I could stir up some emotion-driven bidding wars right there in the living room.
I would also ask for letters describing how much the buyer deserved the house - not because the letter would make a difference but because the buyer would BELIEVE the letter would make a difference; Maybe having the buyer write the letter would act to reinforce the intensity of the buyer’s desire to buy the house.
Plus, if push ever came to shove and the buyer wanted out of the deal because he felt he was duped or overcharged or whatever I would have his testimoney in the form of a letter.
Oh, and about the type of shills I would use: I would want the shills to be as obnoxious as possible.
I would want the mark to want to buy the house not only because he convinced himself that he wanted it (and just had to have it) but also because he did not want the other guy to end up getting it.
That’s cruel, devious, and manipulative.
Sounds like fun!
you will make a great realtor some day.
you will make a great realtor some day.
Ooooo, the ultimate HBB low-blow! 8-\
I thinking of sinking even lower, such as going into politics.
Or banking.
Bidding wars are quite amusing. “Winning” is simply taking on the obligation to pay more than the other rational actors wanted to pay.
More like a suckers war, and who wins, loses.
Bidding wars are for suckers.
Auctions are the same. It used to be auctions were a great way to find deals on almost anything, but that hasn’t been the case in at least 25 years in my experience.
“‘Winning’ is simply taking on the obligations to pay more than the other rational actors wanted to pay.”
The most optimistic, the most hopefull, the most deluded wins because he is the guy who is willing to become the highest bidder.
He doesn’t necessairly win because he is the smartest bidder, only the highest bidder. All he needs to accompany his win as the highest bidder is money.
So, really, winning in such a highest bid situation comes down to coupling delusion with money. There rarely is a shortage of delusion but there are times when there is a shortage of money. And this shortage of money is what causes a boom to finally come to an end.
Rationally the market should be running out of delusion, but rationality doesn’t work her because rationality does not do a good enough job in countering delusion. So that leaves the scarcity of money as the only thing left that will counter the delusion.
And it works the other way as well: Pump enough money into a once deluded market and the delusion will again take hold and rationality will again be left in the dust.
Is the bubble back, or at least reflated?
If so, how long until Housing Bubble 2.0 pops?
Is Bay Area housing bubble back?
By Pete Carey
Posted: 06/15/2013 01:00:00 PM PDT
Updated: 06/15/2013 10:57:54 PM PDT
It seems absurd, but a few short years after the biggest home price crash in memory, soaring prices are stoking fears — or at least stirring talk — that another housing bubble is forming in the Bay Area.
That has some buyers skittish and others dropping out of a market that favors cash offers and whopping over-asking-price bids.
“It’s back to the bubble,” said Janine Epstein, a San Jose schoolteacher who is having trouble finding a condominium or townhouse she can afford.
“I don’t want to jump in and watch all the prices go down, and at the same time, I don’t want to not jump in and watch the prices keep going up,” she said.
Not everyone is convinced, and bubbles are devilishly difficult to spot when in the middle of one. But there are warning signs, housing experts say.
…
California home prices jump 26 percent in May
Published: June 13, 2013
By ELLIOT SPAGAT — Associated Press
SAN DIEGO — California home prices surged to their highest level in more than five years last month as demand outpaced a thin supply of properties, a research firm reported Thursday.
The median price for new and existing houses and condominiums reached $340,000 in May, up 25.9 percent from $270,000 the same period last year. The median price rose by $16,000 during the month to its highest level since April 2008, when it was $354,000.
Prices posted a 15th straight annual increase in May as investors and cash-buyers competed for homes, keeping a lid on sales.
Sales increased 1.2 percent from last year to 42,293 homes, the strongest May sales tally since 2006. Still, sales weakened in many parts of the state, including a 14 percent decline in San Francisco.
The numbers provide the latest evidence that California housing prices are soaring amid low inventories. The median price for new and existing houses and condominiums in the San Francisco Bay Area hit $519,000, up 29.8 percent from $400,000 the same period last year to mark the 12th straight month of double-digit annual increases and seventh straight month of increases above 20 percent.
…
Economic Intelligence
Thinking Outside the Housing Bubble
By John Vogel
June 14, 2013
We did not have a housing bubble, according to Charles Laven, President of Forsyth Street Advisors. We had a credit bubble. Five years after the Great Recession, we have gained some perspective on what happened. What can we do to make sure it does not happen again?
…
“We did not have a housing bubble…”
That would make it hard to explain those 20 million extra houses we built, and the size of them.
Tampa BizCurrents
Jun 14, 2013, 2:40pm EDT
Searching for the next housing bubble
Jo-Lynn Brown
Editorial Assistant
Tampa Bay Business Journal
“House Hunters” makes it look easy, but anyone who has been there knows that buying a home is more often than not, a long, complicated process.
My experience is unique, because I had been living in my home before me and the boyfriend decided to buy it. We figured the mortgage payment would easily be lower than what we were paying in rent, and we were right. It was about 50 percent lower.
But don’t pop the champagne yet.
…
Stockman: Fed Created a Bubble Machine
Former Reagan White House budget director David Stockman sounds off on the Federal Reserve.
Duration 4:22
Date Jun 14, 2013
BizTalk Birmingham
Jun 14, 2013, 11:10am CDT
Is Birmingham headed for a housing bubble?
Ty Dodge, CEO and president of RealtySouth, said that if interest rates rise soon, the higher rates will help prevent the formation of another housing bubble.
Ryan Poe
Reporter- Birmingham Business Journal
The housing market, in Birmingham and the U.S. as a whole, is in a better place than it has been for the past several years. And that has people worried.
Don’t be. That’s what experts told me for a subscribers’ content story this week, and they backed up the admonition with hard data.
…
Canadian Housing Bubble?
Overvalued Housing Market
By Joseph Cafariello
Friday, June 14th, 2013
While the American housing market is recovering from its flu, Canada’s may be showing symptoms of its own.
The Organization for Economic Co-operation and Development – an international economic forum where 34 member countries compare and consider free market policies and practices – has this week rated Canada’s housing market the third most overvalued in the world, just behind Belgium and Norway. More alarming still, the organization has put the Canadian housing market on its watch-list as one of those most vulnerable to correct.
It has been 5 years since the American housing market sneezed. Has Canada finally caught its cold?
…
According to those Camadian home improvement shows, things are still going great in the Great White North.
It ain’t bubbles, it’s just little hiccups.
Economists temper housing bubble worries
Interest rates, lower investor interest, higher inventory may slow home price appreciation
Andrea V. Brambila Associate Editor
Jun 10, 2013
ATLANTA — Although home prices are likely to continue to rise in the next few years, the national market is not in danger of a bubble, according to prominent economists.
“Four of the next five years are likely to be improving years in the housing market. I don’t say five because there’s always the possibility of little hiccups in the housing market,” said Lawrence Yun, chief economist for the National Association of Realtors.
“But we will still be shy of the bubble years of 2005.”
…
Dean Baker
Jun. 13, 2013
The Reemergence of Housing Bubbles: Should We Be Worried?
Since the economic collapse of 2008 there has been considerable effort devoted to redrawing regulatory rules to protect the financial system from future instability. The extent to which the new regulations implemented to date enhance stability is debatable, but if the purpose was to prevent asset bubbles of the sort that gave us the current downturn, arguably they have already failed.
There is a fundamental issue here that is not sufficiently appreciated. While the public’s attention was focused on the financial crises that brought most major banks to the edge of insolvency, and pushed quite a few over, the primary reason for the prolonged stagnation of the last five years was the deflation of housing bubbles in much of the world.
…
Reports Show No Phoenix Housing Bubble
Published on: Wednesday, June 12, 2013
Written by: Shanthi Bharatwaj
The U.S. housing market’s ever-increasing strength and momentum has many real estate experts worried that bubbles may start forming in areas that are performing particularly well, but one report from Arizona State University claims that, at least in the Phoenix’s case, the worries are overblown. Analysts say home prices are unlikely to drop in the Phoenix area and instead will probably continue to rise for some time to come because demand is now outstripping supply. The area’s population is now growing faster than available home inventory, largely because many people still can’t afford to sell and construction has not caught up with the recovery. For more on this continue reading the following article from TheStreet.
The sharp recovery in housing amid still-high unemployment, tight credit and flat incomes has sparked concerns that prices might be rising too fast.
Skeptics believe the housing recovery is investor driven and question the sustainability of home prices, given that first-time home buyers largely remain on the sidelines.
Blackstone (BX), which has pumped billions into single-family homes through its subsidiary Invitation Homes over the past year, disputes critics who argue that investors are influencing home prices. “Blackstone is not buying houses in sufficient numbers to make overall difference in house prices,” the private equity company said in a blog post Monday. The firm has bought 29,000 homes over the past year, a tiny fraction of the total housing stock of 115 million units.
Another report makes a similar argument, though it focuses on the housing market in Greater Phoenix where home prices have been rising at a scorching pace.
…
Prices are rising because so many people are underwater and can’t sell their houses thus constricting supply!
Sounds sustainable
Prices are rising because so many people are underwater and can’t sell their houses thus constricting supply!
It is an interesting dynamic. It reminds me a little of a hedge-fund with a lockup period, where you can’t sell when the market has tanked, and you’re less motivated to do so when the market has recovered.
Hmmm…
Hedge funds are people with too much money and not enough brains.
“…are for…”
If the “too much money” part of the money/brains relationship is in the form of OPM then it’s not the hedge funds who are short of brains, it’s the owners of the OPM.
The hedge fund guys get their two-and-twenty taken from the OPM guys right off the top, and the OPM guys get what’s left. hence the rewards - and the incentives are associated with the hedge funds guys while the risks remain with the owners of OPM.
Yolo County home prices jump 32.4% in May
By ELLIOT SPAGAT/Associated Press and Democrat staff
Created: 06/15/2013 12:34:32 AM PDT
California home prices surged to their highest level in more than five years last month as demand outpaced a thin supply of properties, a research firm reported Thursday.
The median price for new and existing houses and condominiums reached $340,000 in May, up 25.9 percent from $270,000 the same period last year. The median price rose by $16,000 during the month to its highest level since April 2008, when it was $354,000.
Prices posted a 15th straight annual increase in May as investors and cash-buyers competed for homes, keeping a lid on sales.
Sales increased 1.2 percent from last year to 42,293 homes, the strongest May sales tally since 2006. Still, sales weakened in many parts of the state, including a 14 percent decline in San Francisco.
In Yolo County, the numbers were equally positive. For existing homes, there were 87 which sold in May, which was 3.5 percent higher than a year earlier. The media price paid for those homes, however, was $290,000, which was 32.4 percent higher.
For newly built homes, the change was equally dramatic. In Yolo County, there were 29 new homes sold, a 107.1 percent increase over the previous year. The median price paid for those new homes was $380,000, which was 28.6 percent higher than a year earlier.
The numbers provide the latest evidence that California housing prices are soaring amid low inventories. The median price for new and existing houses and condominiums in the San Francisco Bay Area hit $519,000, up 29.8 percent from $400,000 the same period last year to mark the 12th straight month of double-digit annual increases and seventh straight month of increases above 20 percent.
Yet some of the Bay Area’s most populous counties posted flat or declining sales, with Alameda down 10.5 percent from last year, Santa Clara off 3.7 percent and Contra Costa up 0.1 percent. Overall there were 8,541 homes sold in the nine-county Bay Area, down 4 percent from last year.
Michael Lea, director of San Diego State University’s Corky McMillin Center for Real Estate, said prices will stabilize as fewer people owe more than their homes are worth, positioning them to put their homes up for sale.
“I don’t think we’re in a bubble by any means because it’s mostly the lack of inventory,” Lea said. “Lending standards haven’t loosened up.”
…
All (Chinese) real estate is local, or at least very diverse.
China Vanke chair Wang Shi again warns of China housing bubble
Firm’s chairman reiterates alarm as housing prices keep rising despite government measures
Friday, 07 June, 2013, 3:46am
Bloomberg in Shanghai
China Vanke has 98 per cent of its investments in the mainland but plans to have some 20 per cent overseas. Photo: Bloomberg
China Vanke chairman Wang Shi said the mainland’s property market faces the risk of a “bubble”, reiterating concerns the developer raised three months ago.
The bubble is not “light”, Wang said at a conference in Shanghai yesterday. “If the bubble lasts, it will be dangerous.”
Home prices have been increasing even as the government in March stepped up a three-year campaign to cool the market.
The measures have included raising down-payment and mortgage requirements, imposing a property tax for the first time in Shanghai and Chongqing, and enacting purchase restrictions in about 40 cities. New home prices jumped 6.9 per cent in May, the most since they reversed declines in December, SouFun Holdings, the mainland’s biggest real estate website owner, said.
Wang said in a March CBS broadcast of the 60 Minutes news programme that the housing bubble could spell “disaster” for China’s real estate market and that debt held by developers is a serious problem.
He said yesterday he disagreed with the news programme’s conclusion that the bubble would burst immediately, as the housing market in the country was very diverse.
…
Real Estate Bubbles In The U.S. And China - Difference And Implications
May 22 2013, 08:21 | includes: TAO
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…)
There is no doubt that there is a real estate bubble in China. I will give some charts to underscore this point in my article. However, the real focus of the article is on the difference in the real estate bubble in China and the United States and its implications for investing in China’s real estate market for the long term.
At the onset, I would like to talk about the existing real estate bubble in China and it is verified by the record high ratio of house prices to annual household income for several cities in China as indicated by the chart.
…
as long as there are no real jobs than asset classes will continue to recruit new money.
service jobs do not provide a livable wage.
Which asset classes?
I’d have to guess that if interest rates keep rising at their rate of ascent since early May, the answer will increasingly be “bonds, not stocks, housing or commodities.”
stocks and homes will make u wealthy beyond your wildest dreams.
if you buy a bond today be prepared to hold it to maturity?
“service jobs do not provide a livable wage.”
Service Jobs:
Doctor
Nurse
Pharmacist
Lawyer
Engineer
Architect
Accountant
Programmer
Chemist
Physicist
Electrician
Service Jobs:
BS.
Those are mostly considered professions, not services.
Service jobs:
nail salon
burger flipper
dog walker
housecleaner
etc.
Exactly.
ft dot com
Markets Insight
June 3, 2013 9:25 am
Markets Insight: Weaker yen could burst China’s asset bubbles
By Charles Dumas
Overvaluation of China’s real exchange rate has now reached an estimated 33%
Japan’s policy trajectory threatens to burst China’s asset bubbles. Japan has devalued the yen competitively: US and European real exchange rates are down some 10 per cent since 2009, courtesy of quantitative easing and the euro crises. Surprise interest rate cuts in a number of countries hint at dangerous imitation. China is the most exposed: following Japan’s devaluation (echoed in Korea and elsewhere), China’s overvaluation has now reached an estimated 33 per cent.
At just over Y100 to the dollar the yen is cheap enough to get Japan’s economy back to its trend level from 2.5 per cent below it, with growth of 3 per cent this year and perhaps 1 per cent in 2014, and to eliminate deflation. Sharp increases in import costs could raise CPI inflation to 2 per cent (the new long-run target) by year-end or early 2014, but domestic costs are now still falling. That may stop by the end of next year, but CPI inflation could also fall back to zero unless there is a further yen devaluation, perhaps to Y120 versus the dollar. Inflation of 2 per cent is unlikely to last with the measures adopted so far.
…
The biggest external risk concerns China. Its real exchange rate has become overvalued. It is heavily exposed to developed world countries ratcheting down their real exchange rates. Since abandoning the fixed 8.28 yuan/dollar rate in 2005, China’s unit labour costs have been rising at 7 per cent a year, and its currency by 4 per cent, for a combined annual 11 per cent in dollars.
Overvaluation became a serious problem in 2011. Producer price inflation (PPI) of 7 per cent then matched unit labour costs (in yuan), but crumpled into 2-3 per cent producer price deflation over the past couple of years. April’s 2.6 per cent deflation has intensified from 1.6 per cent in February. Chinese businesses have to slash prices to keep a grip on their export markets. But unit labour costs are still rising at a 5 per cent rate, squeezing profit margins, and are up 20 per cent relative to the export competition since 2011.
Adding to this problem is the sudden, related, swing into high real interest rates. In mid-2011, the one-year lending rate from state-owned banks was 6.6 per cent, which combined with 7 per cent PPI to give a slightly negative real rate. But a flight of depositors from China’s banks has kept nominal interest rates high. The nominal interest rate is only down to 6 per cent now, but combined with PPI deflation, the real interest rate is close to 9 per cent. Such high real interest rates combined with squeezed profit margins have pushed China into a prolonged “investment-led” slowdown.
China’s extravagant post-crisis recovery splurge, with capital spending raised to 48 per cent of GDP, much of it debt-financed, has left it with high prices for real estate and industrial commodities. These assets with low-to-negative yield are also the most sensitive to interest and exchange rate changes. Whether or not Chinese real estate is in a bubble, high nominal and real interest rates make these asset prices vulnerable.
Premier Li Keqiang spoke recently of plans to remove controls on capital outflows. Any such action could release a wave of savings seeking real foreign assets. This would devalue the yuan and cushion the rebalancing of the economy away from excessive capital spending. But it would also drain away bank deposits, threatening a major domestic asset sell-off as well as bank insolvency.
…
the prices in Vienna VA are higher than they were at the hight of the bubble.
i am pretty much priced out…well…i guess there is always ashburn.
June 16, 2013, 8:00 a.m. EDT
Homing in on housing, Fed’s latest moves
Effect of higher mortgage rates, bank’s bond buying in spotlight
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The housing market has been one of the rising stars in the U.S. economy lately. With mortgage rates marching higher, are sales about to stumble?
Most economists say no, but we’ll get fresh clues after the latest looks at home construction and existing home sales. Other reports this week are likely to confirm inflation remains low and manufacturers are stuck in a rut.
Then there’s the elephant in the room: Ben Bernanke. What is the Federal Reserve chairman going to say in a press conference on Wednesday after another gathering of central bank bigwigs?
Investors are dying to know. The Fed’s ham-handed efforts to convey its intentions about its low-interest rate strategy have confounded Wall Street and fueled a two-week slump in stock and bond markets. Bernanke is expected to clarify the Fed’s goals in attempt to bring calm to the markets.
The overwhelming consensus: Sluggish U.S. growth doesn’t justify talk that the Fed might scale back its monthly purchases of $85 billion in bonds. The buying is expected to continue at least until September.
“The economic data simply haven’t been strong enough,” wrote analysts at Capital Economics.
…
its real sad our economic prospects hinge on a printing press.
Isnt that a bad sign? Who is wall street trying to fool here?
I somehow think the type of people who will carry on when this whole thing crashes are the Amish. They are low tech and would not shed any tears for a stock market crash.
Interesting you should mention that, Bill. I’ve been thinking along those lines myself. Like what low tech skills would be valuable in the event of a crash. Producing food, for one thing. Maybe hansen’s right. Maybe I should be learning spanish so I can barter with the food producers.
Among the people I do know from Mexico, having a farm of their own is something they aspire to. Something to be said for that.
LOL, a system crash sure would empty out large parts of Florida, that’s for sure. Most people couldn’t survive the long hot summers, in their current living situations. And all those houses would be rottin’ in the heat.
Why do we assume that the lights will go out during an economic crash? They didn’t go out south of the border when the economy crashed in Mexico in the 90’s. They didn’t go out during the great depression.
I make the assumption based on the interconnectedness or interdependencies brought about by globalization. I think it would magnify the difficulties and make it harder to implement solutions. Electronics plays into this, too.
I’m old enough to remember when banks were transitioning to computers. It was not unheard of, back in the day, to go into a bank to cash a check and have the teller stand there and throw up their hands and say they couldn’t transact any business because the “computers are down”. A lot of things can be made more difficult if “the computers are down”.
And I remember thinking, at the time, why don’t these banks back up everything with paper, in the event of an outage of some sort? The worst was when the “computers were down” on a Friday afternoon, when you wanted to deposit a paycheck and take out some cash for the weekend. I always had a suspicion that the “computers were down” so the banks could hold onto your money longer.
(the lights) didn’t go out south of the border when the economy crashed in Mexico in the 90’s.
And the lights didn’t go out when Brazil crashed 3 times within 15 years.
And life went on as would life in America when it crashes again.
Hint: America has already crashed. You all are living it. Brazil has crashed many times. I am living it.
“America has already crashed”
On this we agree. But it can get worse.
“America has already crashed”
Not sure I agree.
Massive intervention prevented the system from cleansing itself of all of the mal-investment. A cleansed system goes on to do good things, improving lives and standard of living; a non-cleansed does not.
The real crash was averted, unfortunately. We will bear the consequences of that for decades.
My ancestors who survived the Great Depression in the 1930s were near-Amish. What I mean is that although they embraced modern technology, they lived in cloistered, self-sufficient ethnic German farming communities in the Midwest. During the worst days of GD1, they had no cash, but plenty of economy, thanks to local food and housing production that did not depend on Wall Street for funding.
A cleansed system goes on to do good things,
Like having a world war?
Same with mine. German. In the midwest. My great grandfather had a big farm. My dad worked on his farm and did not go hungry.
How are the Amish going to keep all their food when the people with guns show up?
Non violence has its downsides too.
“Who is wall street trying to fool here?”
They no longer have to fool anybody.
http://www.nytimes.com/interactive/2009/02/04/business/20090205-bailout-totals-graphic.html?_r=1&
Dumb questions of the day (century):
Why is it the Fed “must” exit from QE3? If they wanted to maintain QE3 forever, what would possibly stop them?
I hate to be such a stickler for accurate reporting, but doesn’t the long-term Treasury bond correction date from May 2nd, well in advance of Ben Bernanke’s May 22nd delphic utterance?
With QE3-to-infinity-and-beyond, investors need never worry about margin calls.
PERSONAL FINANCE
June 16, 2013
Will the Stock Market Party On? It’s All Up to the Fed.
By BRETT ARENDS
It was a week of turmoil and red ink on Wall Street, as fears continued to grow about the risk of rising interest rates.
The Dow Jones Industrial Average fell 1.2% last week—including a 106-point selloff on Friday. The Dow is now down 2.2% from its all-time high, set on May 28.
The broader Standard & Poor’s 500-stock index also fell 1% for the week. The Nasdaq Composite Index made it a seller’s trifecta—falling 1.3%.
Abroad, Asian markets also fell, led by further turmoil in Tokyo and in emerging markets.
…
The market turn began on May 22, when Federal Reserve Chairman Ben Bernanke hinted during congressional testimony that the Fed was sufficiently hopeful about the economic recovery that it was starting to think about the day when it would wind down its policy of “quantitative easing.”
Last week’s market performance will raise the pressure on Mr. Bernanke to give a clearer picture of the direction of interest rates and bond purchases at his news conference scheduled for Wednesday. (A report in The Wall Street Journal said Mr. Bernanke will try to calm fears that he is poised to start tightening monetary policy sooner than previously feared.)
The Fed has been buying about $85 billion worth of U.S. Treasury bonds every month in order to boost the liquidity in the financial system and keep interest rates low.
Meanwhile in Japan central bankers last week disappointed investors by declining to expand their country’s own stimulus measures.
Financial reaction has been swift and dramatic. The interest rate on 10-year U.S. Treasury notes, the benchmark rate for U.S. borrowing, has jumped from 1.6% in May, to as high as 2.2% last week. It closed at 2.13% on Friday.
Mortgage rates, which depended on the Fed’s cheap-money policy, rocketed above 4% for the first time since 2011, according to Bankrate.com, further raising fears for the reinvigorated housing market.
And the dollar has tumbled on international markets. The Japanese yen has risen sharply, while the Tokyo stock market has plummeted by 20%, entering a bear market after a huge runup over the past year.
Markets, as ever, are caught in a tug of war between investors with different opinions of what will happen next. Optimists argue the U.S. economy is recovering—gathering momentum as home prices continue to rise and companies ramp up capital spending after years of underinvestment.
Many pessimists, however, argue that stock and bond markets have been living off an artificial “sugar rush” from central-bank stimulus. When that ends, they say, stocks and bonds will fall.
Some think Wall Street could tumble in due course as Tokyo has done. “May was only an appetizer” of the turmoil to come, argued strategists at investment bank SG Securities in a recent report. Holders of Treasury bonds are “justifiably” terrified of rising interest rates, the strategists added: “Never before has global exposure to interest-rate risk been so large.”
(While income-starved savers may welcome rising interest rates, existing bonds lose value as rates rise.)
Camilla Sutton, chief currency strategist at Scotiabank in Toronto, summed up the situation in an interview with Reuters. “Increasingly, monetary policy appears to have reached its limit in terms of stimulus.”
The danger for investors is that both stock and bond markets have been driven to record highs on the back of central-bank “financial engineering,” which must, inevitably, come to an end.
Many market commentators argue that bonds are in a “bubble”: Interest rates are now so low that, in most cases, they are below the forecast rate of inflation—meaning bondholders are likely to lose purchasing power, and earn no real return on their money.
The stock market had been on a tear until the middle of May and sentiment had become dangerously complacent. Margin debt at the New York Stock Exchange—the amount of money lent to investors to buy stocks—had hit a record high, surpassing the previous peaks seen at the last two stock-market tops, in 2000 and 2007.
Likewise, the S&P 500 is trading in lofty territory—at price/earnings multiples not seen since 2010.
Happy Father’s Day to all the dads.
Someone didn’t think my original post was very witty.
Father’s Day: The most confusing day of the year.
“Happy Father’s Day to all the dads.”
According to Melissa Harris-Perry kids don’t belong to the fathers anyway, kids “Belong to Whole Communities”. If this is true, the community owes me big time because I have been paying for three of the communities kids for going on 22 years.
But thanks for the Happy Father’s Day anyway.
America’s Kids Belong To Communities, Not Parents … - YouTube
http://www.youtube.com/watch?v=XrxTeM9r9ak - 118k - Cached - Similar pages
Apr 10, 2013 …
We’ve got some real sick whacks out there, for sure. She needs to stop sniffing her panties.
“It takes a village”…
“It takes a village”
So do the kids belong to the village, the community or the parents?
I believe it depends on the community. If sufficiently destitute, the kids belong to less destitute community members. If sufficiently wealthy, the kids are the parents’ problem.
Strictly from the “you can’t make this stuff up” department:
http://www.huffingtonpost.com/2013/06/12/sesame-street-incarceration-kit-helps-families-cope_n_3430512.html
We’ve come a long way from Heather Has Two Mommies to Baby Daddy’s a Jailbird.
I nearly busted a gut when the lady infotainment reporter opined at the end that she missed the good old days of Sesame Street and showed one of the original clips from the early days of the show.
But don’t you dare suggest we cut even a dime of PBS funding.
Hah! When I worked in So Flo back in the ’80s, some friends of mine built a media production business from the ground up, scraping together money from family and acquaintances to invest in equipment, facilities, etc. The local PBS station started their own facility with taxpayer funds to compete with them and others in the private sector.
I remember the guy who put up most of the seed money was beside himself. He spent weeks talking to attorneys and researching to see if there was something he could do, on the assumption that it must somehow be illegal for an entity that survived on taxpayer funding to form a business to compete with a private enterprise, often by undercutting the prices. He found a lot of sympathetic ears, but was told over and over there was nothing he could do about it.
It reminded me of something I had read in that book How I Found Freedom in an Unfree World (I think Harry Browne was the author? I read it years ago) comparing the government to the Mafia.
He needs lobbyist.
That’s why Post Offices can’t sell pencils or have copy machines any more.
Have you been in a post office lately? They may or may not have pencils or copiers. But they sell greeting cards, envelopes, packing supplies (including bubble wrap and other stuff for inside the box, not just the box itself), and gift wrap that I can remember from a few months ago.
The local PBS station started their own facility with taxpayer funds to compete with them and others in the private sector.
Compete with them by doing what?
Why providing commercial free, fairly high quality television, of course.
/sarc off/
Compete with them by doing what?
Sounded more like they started a business providing video production services to the public.
Sounded more like they started a business providing video production services to the public.
I’ve never heard of such a thing. An education channel competing with private firms for commercial video production and whatnot? Hmmph. I agree, it would be outrageous IF such thing occurred. I am dubious. It would surely be against their charter.
Hmmph. I agree, it would be outrageous IF such thing occurred. I am dubious.
I concur…
I concur…
jose, is there anything in the public record that documents this?
I’m really curious now…
We need to cut PBS funding in order to provide more pay for NSA contractors to wire tap the communications of all U.S. citizens.
Leave it to Beaver was in the 50’s.
The United States incarcerates more of its citizens than any other country in the world. Sesame Street is merely indoctrinating today’s youth to expect to go to jail.
What do you think the NSA will be doing with all of the phone calls they are listening to any how?
If you are going to be a Police State, you must have lots of prisons to put those who will not toe the corporate line.
I’m tellin’ ya. And that’s just so wrong on so many levels.
Anyway the US is not Washington. Or as I like to call it, the People’s Republic of DeeCee, the entity that currently rules the country known as the US.
DC is now just a front for Wall St.
Remember WHO was giving the NSA all that information.
In addition, there are a lot of federal government employees who want small government. Just as there are those who want big government.
Government employees are not one class of people. They laugh, they suffer, they have kids, spouses, they worry about their next paycheck.
To me it was just a job. I was once a federal employee.
So I think we can relax a bit and know that there is no collective force with more power than main street. We got the power.
“If you are going to be a Police State, you must have lots of prisons to put those who will not toe the corporate line.”
All that talk of FEMA camps, billions of rounds of hollow points purchased by the DHS, veterans and gun owners being put on a terrorist watch list, the IRS harassing conservatives and asking them what their prayers are, not to metion No More Hesitation targets being sold by a DHS contractor to Law enforcement agencies around the country is pure nonsense.
DHS Contractor Apologizes For Selling Shooting Targets of Children …
http://www.infowars.com/dhs-contractor-apologizes-for-selling-shooting-targets-of-children/ - 71k - Cached - Similar pages
Feb 22, 2013
http://www.usatoday.com/story/news/politics/2013/06/04/irs-tea-party-harassment/2388203/ - 171k - Cached - Similar pages
Jun 4, 2013 … Tea Party, anti-abortion and other conservative groups told Congress … “The questioning included requests for…the content of prayers
DHS Under Investigation For Purchasing Billions Of Rounds Of Ammo
http://beforeitsnews.com/scandals/2013/04/dhs-under-investigation-for-purchasing-billions-of-rounds-of-ammo-2431218.html - 45k - Cached - Similar pages
Apr 30, 2013
Napolitano stands by controversial report
By Eli Lake and Audrey Hudson
-
The Washington Times
Thursday, April 16, 2009
Homeland Security Secretary Janet Napolitano said Wednesday that she was briefed before the release of a controversial intelligence assessment and that she stands by the report, which lists returning veterans among terrorist risks to the U.S.
But the top House Democrat with oversight of the Department of Homeland Security said in a letter to Ms. Napolitano that he was “dumbfounded” that such a report would be issued.
“This report appears to raise significant issues involving the privacy and civil liberties of many Americans - including war veterans,” said Rep. Bennie Thompson of Mississippi, chairman of the House Homeland Security Committee, in his letter sent Tuesday night.
“It may include groups and individuals that are dedicated to a single issue, such as opposition to abortion or immigration,” said the report, which also listed gun owners and veterans of the Iraq and Afghanistan wars as potential risks.
http://www.washingtontimes.com/news/2009/apr/16/napolitano-stands-rightwing-extremism/?page=all - 98k -
You have problem with Corporate Communist Capitalism©®™, comrade?
“You have problem with Corporate Communist Capitalism©®™, comrade?”
That seems to be the gig too. Whoever owns the central banks, is owned by or owns the big banks who owns everthing else while they tell the people who are elected but they selected what to do.
Meanwhile back at the ranch, they manage to keep the 99.9999% of the people fighting over gay rights, abortion, welfare etc. while they rape and pillage the world. Cause if they didn’t have everybody fighting each other they might notice what they were doing, which I have to assume doesn’t fit well into their plans at all.
But on the bright side, the Bilderberg coverage by the major networks was truly non exisitent again this year. I do get a kick out of that Youtube video that shows Charley Rose running from the “tell me what you discussed at Bilderberg” question like a GD vampire from a crucifix.
PBS’s Charlie Rose Runs Away From Bilderberg Questions - YouTube
http://www.youtube.com/watch?v=jP6l39I47QA - 235k - Cached - Similar pages
May 31, 2012 …
“If you are going to be a Police State, you must have lots of prisons to put those who will not toe the corporate line.”
June 12, 2013 | 0 Comments
Leaked Document: Military Internment Camps in US to be Used for Political Dissidents
The following video details the contents of a Department of Defense document entitled “INTERNMENT AND RESETTLEMENT OPERATIONS” or FM 3-39.40. The document is 325 pages long and is signed by JOYCE E. MORROW Administrative Assistant to the Secretary of the Army. It was created in 2010 however it has just recently been leaked to the public via the internet and can now be downloaded from multiple sources. In the description below you will find a download link for the document. I encourage you to download it yourself and verify everything that is being said here.
The document outlines military procedures for internment and resettlement of civilians and it describes the layout and administration of interment camps. It clearly states on page 38 that it applies within U.S. territory and specifically addresses the detainment of U.S. citizens as is indicated by the identification procedures for new prisoners on page 146 which states that social security numbers are to be recorded along side their photograph and fingerprints. Included in the list of organizations which may be involved in these internment operations are the Department of Homeland Security, the FEMA, the Department of Defense and the United Nations.
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On page 56 the document outlines the responsibilities of Psychological Operations officers within the camps among which it states that a Psyop officer “Develops and executes indoctrination programs to reduce or remove antagonistic attitudes. and Identifies political activists.” On page 281 the document goes into more detail regarding the role Psychological Operations within the camps specifically in regards to pacifying the population and insuring cooperation.
On page 238 it gives the conditions for the use of deadly force in such camps, among the justifications for lethal force it includes to “terminate an active escape attempt”. That point right there should make it clear that these camps are not benevolent disaster relief type facilities.
On page 244 the document calls for the use of snipers during riots to quote “scan a crowd and identify agitators and riot leaders for apprehension and fire lethal rounds if warranted”.
On page 260 it shows the basic layout for a facility focusing on detainment. It is depicted with interrogation areas, tribunal areas and mortuaries. Each detainment facility is designed to hold 4000 prisoners and they are depicted with multiple levels of barbed wire separating compartments within the facilities with a double barbed wire fence enclosing them and 24 guard towers.
On page 261 it depicts the layout for what they call civilian resettlement facilities, which are designed to house 8,000 people. And though it uses the word resettlement the plans show multiple levels of barbed wire dividing the sections of the facility and double barbed wire fencing on the outside as well as 16 guard towers.
On page 262 the layout for facilities designed for what they call non-compliant prisoners is shown. These camps are designed to hold up to 300 prisoners, they have 3 interrogation centers and are guarded by 13 guard towers.
Now if there is any question whether these plans are active or are just theoretical this should settled by the fact that the U.S. army has been running ads for job positions in these camps since 2009 and apparently they are still hiring.
http://www.goarmy.com/careers-and-jobs/browse-career-and-job-categories/…
Internment/Resettlement Specialist (31E)
Job Duties
Supervision of confinement and detention operations
External security to facilities
Counseling/guidance to individual prisoners within a rehabilitative program
Records of prisoners/internees and their programs
Requirements
Those who want to serve must first take the Armed Services Vocational Aptitude Battery, a series of tests that helps you better understand your strengths and identify which Army jobs are best for you.
Training
Job training for an internment/resettlement specialist requires 10 weeks of Basic Combat Training and eight weeks of Advanced Individual Training with on-the-job instruction. Part of this time is spent in the classroom and in the field.
Some of the skills you’ll learn are:
Military laws and jurisdictions
Self-defense and use of firearms
Interpersonal communications skills
Search/restraint and custody/control procedures
Helpful Skills
Interest in law enforcement
Physically and mentally fit
Ability to make quick decisions
Remain calm under heavy duress
Required ASVAB Score(s)
Skilled Technical (ST) : 95
Learn more about the ASVAB and see what jobs you could qualify for.
Compensation
Total compensation includes housing, medical, food, special pay, and vacation time. Learn more about total compensation.
Education Benefits
In the Army, qualified students can earn full-tuition, merit-based scholarships, allowances for books and fees, plus an annual stipend for living expenses. Learn more about education benefits.
Future Civilian Careers
The skills you learn will help prepare you for a career with federal, state and local law enforcement.
PARTNERSHIP FOR YOUTH SUCCESSS (PaYS) Program
Those interested in this job may be eligible for civilian employment, after the Army, by enrolling in the Army PaYS program. The PaYS program is a recruitment option that guarantees a job interview with military friendly employers that are looking for experience and trained Veterans to join their organization. Find out more about the Army PaYS Program at http://www.armypays.com.
LAPD
New York City Police Dept.
Louisville Metro Police
Clearwater PD
Alabama Department of Corrections
Las Vegas Metro Police Department
Kansas Highway Patrol
City of Chicago
Baltimore Police Department
Corpus Christi Police Department
http://www.usaprepares.com/government-corruption-2/6878 - 65k
Now that the housing market recovery seems to be in full swing…
…do you think we could get some of that Hardest Hit money back from the states?
Obviously they didn’t need it after all…
How about a Hardest Hit Renters fund?
I’m obviously not an attorney, but isn’t there something unconstitutional about showering money on homeowners while leaving renters out in the cold? I’m thinking there might be an “Equal Protections” clause that makes discrimination in favor of wealthy homeowners illegal…
“How about a Hardest Hit Renters fund?”
Would you settle for a gift card from Target or Bed, Bath and Beyond?
“Employees who placed 10 or more accounts into foreclosure in a month could get gift cards to Target and Bed, Bath and Beyond or $500 bonuses, Gordon said.”
Yup not a dime for us lowly scummy Renters nada….not even a gift card
that’s okay. It is fun to be a renter. Carefree living!
I’m going to rent a place in coastal Cali four months out of the year at some point in my 60s while spending 8 months in Phoenix. Not sure if I will buy. No good reason to except to empty my storage units.
I kind of don’t care, though I do expect the political tables to turn at the point when the masses recognize how idiotic it is to encourage everyone to buy houses they cannot afford.
Prices are going up?
Where are the buyers?
Where are the sales?
Housing demand is at 1997 levels and falling.
Homeownership rate is at 1996 levels…. and falling.
Bank of America lied to distressed homeowners, former employees say
Posted: 5:38 p.m. Thursday, June 13, 2013
By Kimberly Miller - Palm Beach Post Staff Writer
Bank of America systematically worked to deny thousands of loan modifications with specific delay tactics that included lying to homeowners and repeatedly requesting documents employees knew were already in the system, according to statements added last week to a multi-district lawsuit filed in federal court.
The suit, which is seeking class-action status and includes a Boynton Beach homeowner, claims the lender purposefully hindered modifications requested by borrowers through the federal Home Affordable Modification Program.
According to former employees of the Charlotte, North Carolina-based bank, loan modification agents handled up to 400 cases at a time and eligible borrowers were pushed into foreclosure during periodic “blitzes” where any file with documents 50 days old or older was automatically denied.
“This included files in which the homeowner had provided all required financial documents and fully complied with terms of the trial period,” said William E. Wilson, a former Bank of America underwriter who worked for the company between June 2010 and August 2012. “The delay and rejection programs within Bank of America were methodically carried out.”
Wilson, whose statement was taken June 5 and filed with the court two days later along with affidavits from six other former employees, says he was fired by Bank of America after complaining the denials were unfair.
Bank of America issued a statement Thursday saying the statements are “rife with facutal inaccuracies” that will be addressed in opposition documents filed next month.
“We continue to demonstrate our commitment to assisting customers who are at risk of foreclosure and, at best, these attorneys are painting a false picture of the bank’s practices and the dedication of our employees,” the statement said.
Simone Gordon, who worked for Bank of America between July 2007 and February 2012, said she was told to lie about documents not being received so they would get stale and the process would have to restart.
Employees who placed 10 or more accounts into foreclosure in a month could get gift cards to Target and Bed, Bath and Beyond or $500 bonuses, Gordon said.
“We were regularly drilled that it was our job to maximize fees for the bank by extending HAMP modifications by any means we could, including lying to customers,” Gordon said.
Comment(s)
bankofBS
I have been working for over a year with Bank of America. I was 3 months late on payments and submitted a short sale offer. They rejected the short sale 3 times for paperwork not getting returned in 48 hours. We called and called to try to get help yet they act like robots and don’t care to help.
They did 3 appraisals all for less then what my buyer was paying and still declined us. They filed foreclosure after sitting on the short sale for 4 months. I was still trying to get it approved and then they sent us a DOJ letter. We applied for the DOJ principal reduction (we are upside down) they declined us for that. Between the short sale and DOJ request we had 11 “point of contact” people assigned, three appraisals, attorneys fees, etc. It is clear that Bank of America makes more money on servicing fee’s, appraisals, and 3 bank attorneys assigned to our foreclosure case. instead of helping customers. They could have been paid off a year ago but keep dragging us out so they make more money on servicing fee’s. Our credit is now ruined and they are trying to take our home. This is the worst group of people and I cannot believe the government let them get away with this sort of consumer fraud. Someone needs to step up and do something about this, it’s all intentional, not just employee’s dropping the ball.
knittygal
Can anyone tell me how I can sign up for this class action lawsuit B of A was my bank and they lied lost papers played head games and put me through hell
nancylee1
Wells Fargo and several other banks do the same thing. Let me know when there is a class action going on for Wells Fargo and I will tell my story also
RebeccaMiller
I met my current husband and he was letting his house go due to a divorce and loss of job. I emailed BOA
12:53 a.m. Jun. 16, 2013
So many innocent victims! So many evil banks! Oh, the humanity!
If you’ve never been screwed around by a business large or small, you’ve led a very sheltered life.
http://www.nytimes.com/interactive/2009/02/04/business/20090205-bailout-totals-graphic.html?_r=1&
Dump that rapidly depreciating shanty while you still might get a few nickels out of it.
It’s a robo-signed love story.
RebeccaMiller
“I met my current husband and he was letting his house go due to a divorce and loss of job. I emailed BOA”
12:53 a.m. Jun. 16, 2013
But it should have read…
I met my future ex-husband husband while he was letting his house go due to a divorce and loss of job. I am sure our current foreclosure defence lawyer will handle our divorce.
Rednex - Cotton Eye Joe - YouTube
http://www.youtube.com/watch?v=VcDy8HEg1QY - 287k
It’s all thanks to Robo-signed Joe
I quit payin’ long time ago
Where did you come from, where did you go?
Where did you come from, Robo-signed Joe?
He came to town like a midwinter storm
Flippin those condos it didn’t last long
HARP was his tools and MERS was his gun
Thought refi cash was for having some fun
If it hadn’t been for Robo-signed Joe
I’d been foreclosed long time ago
Where did you come from, where did you go?
Where did you come from, Robo-signed Joe?
Housing disaster wherever he went
The hearts of the girls was to Hell, broken, sent
They all ran away so nobody would know
And left vacant houses of Robo-signed Joe
It’s all thanks to Robo-signed Joe
I quit payin’ long time ago
Where did you come from, where did you go?
Where did you come from, Robo-signed Joe?
Given the dearth of mortgage securitization at levels above the conforming loan limit, it’s a very small wonder that homes priced north of $1 million either sit on the market forever or else sell by Dutch auction after drastic price reductions.
June 14, 2013, 6:32 p.m. EDT
Mortgage-backed securities find favor with savers
By Anya Martin, MarketWatch
More real-estate investors, particularly those saving for retirement, are seeking solid returns. But they’re not buying homes. They’re buying mortgages.
As the residential market bounces back, investors are showing renewed interest in buying mortgage-backed securities—loans that the lenders have bundled and sold as consolidated debt. Since selling off jumbo mortgages lessens lenders’ risk, more banks, credit unions and other financial institutions are offering jumbos. And more competition could mean better terms for consumers.
In the first quarter of 2013, $4 billion worth of jumbo loans were sold by lenders, more than the $3.5 billion total of securitized jumbos in all of 2012, according to Guy Cecala, publisher of Inside Mortgage Finance. If the pace holds through 2013, the volume of securitized loans could reach $16 billion, Cecala said.
However, while a 400% annual increase is significant, $16 billion still represents just 7% of the $220 billion volume projected for jumbo loans in 2013, he added. Lenders issued $203 billion in jumbo loans in 2012, and securitized loans accounted for less than 2% of that total.
“The vast majority of jumbo loans aren’t securitized still, and the [secondary] market has a long way to go to be any reflection of what it used to be before the housing crash,” Cecala said.
Before 2008, as many as two-thirds to three-fourths of all jumbo residential mortgages were securitized, he said. Then the mortgage meltdown occurred, and investors shunned jumbo securitized mortgages in favor of investments containing pools of government-backed mortgages by Fannie Mae (FNMA -16.85%) or Freddie Mac (FMCC -18.24%), which only guarantee loan amounts up to $417,000 in most of the U.S. and $625,500 in pricey metro areas, such as New York and San Francisco. That dearth of the secondary market meant lenders had to hold any jumbo mortgages, which are above those dollar limits, on their books.
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Oh bugger! The Japanese bear stock market is continuing its downward trajectory into yet another week…
June 16, 2013, 8:23 p.m. EDT
Japan blue-chip stocks edge lower in early trade
By V. Phani Kumar
HONG KONG (MarketWatch) — Japanese stocks edged mostly lower Monday, reflecting caution after a weak finish on Wall Street Friday and ahead of the Federal Reserve’s policy decision later this week. The Nikkei Stock Average (JP:NIK -0.12%) fell 0.4%, remaining in a so-called bear market, …
12 Year Old Girl Tells The SHEEPLE the Truth about …
http://www.youtube.com/watch?v=d1IgiNnOZV4 - 252k -
June 13, 2013, 6:00 a.m. EDT
Retiring on less than a million bucks
By Mitchell Tuchman
You’ve probably heard a lot of messages coming from all directions about saving and retirement: You pay too much in fees. Bonds are risky now. Stocks unclear. Government is in disarray.
Now this: You haven’t saved enough. Not even close.
The New York Times covered the topic extensively, explaining what they call “the million-dollar illusion.” Put simply, a million bucks isn’t what it used to be, if it ever was. Low interest rates have choked off safe income in such a way that even millionaires aren’t sure how long their money will last.
Meanwhile, there’s always the dreaded return of inflation. Savers ramping up to the magic number of $1 million by age 65 could easily find that they shot too low. If bonds were to snap back to their historic return of just under 5%, it won’t mean much if inflation is near the same level. Also see: Inflation shatters illusion of “safe” investing
A lot of the grief comes from the inability of financial planners to plan. Once, they could tell a retiree to invest it all in tax-free municipal bonds, take out 4% a year, and worry not.
In number terms, taking 4% meant $40,000 of income. Add that to Social Security and perhaps a pension, and things turned out fine for most.
Now, however, the “failure rate” of that strategy is unacceptably high. A million bucks at 2% generates half the expected income. If the client takes out more (and most retirees overspend in the first few years), the results could be catastrophic.
How can near-retirees with far less than $1 million even attempt to cope? The answer is not easy, yet the problem shouldn’t be ignored.
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Is the Fed in the driver’s seat, or rather out in the road, about to get run down by Mr Market’s SUV?
BBQ was great — everyone is well fed and full of protein now!
June 16, 2013, 7:01 a.m. EDT
Stock volatility only owes so much to Fed
A reversal of the yen carry trade has also upset markets
By Wallace Witkowski, MarketWatch
SAN FRANCISCO (MarketWatch) — Stock investors can’t stop thinking about the Federal Reserve these days, and the pressure is on policymakers to come clean about their plans after a turbulent few weeks of trading.
Yet even if the Federal Reserve clarifies its intentions about scaling back asset purchases—the worry that’s dogged stocks for three weeks—it may not be enough. The resurgence in the yen (USDJPY +0.44%), whose April-May dive coincided with the last leg of the recent stock rally, may undermine any support from the Fed, say analysts.
“Some of the volatility we’ve seen is more a reflection of greater forces at work,” said Doug Sandler, chief equity officer at Riverfront Investment Group.
The last time the Fed raised rates after a stretch of easing measures was in June 2004. The federal funds rate was raised to 1.25% from 1%, and the S&P 500 fell 7% over the next six weeks.
Given the attention on the Fed since its last Federal Open Market Committee meeting, this week’s two-day meeting starting Tuesday will be of particular interest. Stocks, which had been on a continuous rally since November, kept on running in May when the Fed said it could “increase or reduce the pace of its purchases” of assets. They hit a ceiling later in the month when Fed Chairman Ben Bernanke told Congress purchases could get scaled back in the next few months.
The more the word “tapering” figured into investors’s lexicon, the more stocks seemed to drop. From their nominal all-time closes in late May, the Dow Jones Industrial Average (DJIA -0.70%) has fallen 2.2% and the S&P 500 Index (SPX -0.59%) has lost 2.5%. This past week, stocks finished lower for their third weekly loss out of the past four.
What the Fed needs to do at this week’s FOMC meeting is spell out that a scaling back of monthly asset repurchases and a raising of the federal funds rate are two completely different things, said Dan Greenhaus, chief global strategist at BTIG LLC.
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More Luxury condozes….
Fast Food Restaurant From ‘Coming To America’ To Be Razed
http://newyork.cbslocal.com/2013/06/16/reports-fast-food-restaurant-from-coming-to-america-to-be-razed/
But this one has 1 big thing going for it the M&R subway would be right outside the side door…. maybe even an underground entrance so the richie peeps wont have to get wet or deal with snow…
Fast Food Restaurant From ‘Coming To America’ To Be Razed
O dear god, we’re losing all our cultural landmarks.
O dear god, we’re losing all our cultural landmarks.
LOL…