July 19, 2013

Weekend Topic Suggestions

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Comment by polly
2013-07-19 05:47:53

I think this article in Slate is a kind of fascinating exposition on the history of the disappearance of truly affordable (high density) market rate housing in the US. The fact that a few cities are thinking about bringing it back in a small scale is interesting too, but less interesting than the process of it going away.


Bring Back Flophouses, Rooming Houses, and Microapartments
Dumb urban policies wiped out the best kinds of housing for the poor, young, and single. But they’re finally making a comeback in smart cities.

By Alan Durning|Posted Wednesday, July 17, 2013, at 1:27 PM

No time to post bits and snippets right now. I might be able to do it later in the day, but others should read the whole thing and figure out what they think is interesting. No registration is needed to read Slate articles.

Comment by Whac-A-Bubble™
2013-07-19 06:56:54

“Bring Back Flophouses, Rooming Houses, and Microapartments”

How were historic crime rates around these sort of areas? Isn’t crime one of the biggest factors holding back cities like Detroit from livability?

Comment by oxide
2013-07-19 09:50:20

I suppose this is what McDonald’s had in mind when they wrote that bogus “budget” for the employees.

The problem is, once you open the door to offering low-rent single-room occupancy, that would give McDonald’s and Wal-Mart an excuse to lobby to pay even LESS than they do now: “See, since housing is cheap, workers can make less and still have a roof over their heads.”

Gradual price rises and no pay raises will make even these places unaffordable. Soon, those single people in one room will turn into roommates in one room, to entire families in one room. ie. tenements.

Comment by Housing Analyst
2013-07-19 11:05:19

“Soon, those single people in one room will turn into roommates in one room, to entire families in one room. ie. tenements.”

While millions of houses go empty?

You’re deluded.

Comment by ahansen
2013-07-19 13:00:40

Thoughtful city planning that addresses environmentally-sustainable hi-density housing is a commie plot, don’t you know? No surer way to bring out the moon-bat faction of the TeaParty than to evoke Agenda 21.

What are the money interests against the concept of urban sustainability? I originally thought it might be NAR-inspired, but housing units are housing units, after all. Big energy? Auto industry? Suburban developers?

Comment by polly
2013-07-19 13:40:27

In the article, the idea of new versions of the SRO were all depicted as rentals on the assumption that they are going to be occupied by young people who will make more money and be able to afford better later on. Or perhaps oldsters who didn’t save and will eventually need to be shifted to Medicaid nursing homes. Either way, the article didn’t really seem to be suggesting these things as condos. So, since NAR is really much more interested in sales than leases, probably not an NAR thing.

The people who have the biggest interest in this sort of thing are people with under utilized old buildings in central locations that can be converted into these units. And perhaps the folks who think they can sell $10 cocktails to kids who can’t afford a 400 square foot studio apartment.

Comment by I saw it coming
2013-07-19 16:36:18

Another BS. Another central planning bull$hit. Anything to deflect from real issue.

I bet they will name it affordable someting, too…..Yeah that will make it cheaper…Jesus effin’ Christ!

And in the meantime nobody talks about what Central Planners’ easy money policy has done to the housing. Let the market work, people will buy or sell houses based on their needs, not based on some central planner’s ill conceived ideas.


Comment by Blue Skye
2013-07-19 22:00:55

Nothing will rent for less than $500 a month under this government. Tenements were for the working poor without welfare. These people cannot compete with the poor on subsidy. You have to have money up front in this society to arrange affordable housing, and be willing to be counter culture.

Comment by Whac-A-Bubble™
2013-07-19 06:49:49

Will the Detroit bankruptcy have notable ripple effects through the rest of the economy, or is it all contained?

One potential side-effect: A really large city going bankrupt with little noticeable impact may grease the skids for smaller cities with similar financial difficulties to soon follow.

Comment by polly
2013-07-19 08:11:39

The question is how big a haircut will the bond holders have to take and does anyone think that could happen any place else. If other bonds are at risk, how much more interest will they have to pay to get someone to take on that risk?

Comment by Whac-A-Bubble™
2013-07-19 09:36:39

The MSM is tossing around a figure of $18 bn for the bk, but don’t know about the allocation to bond holders, pensioners and other creditors.

Comment by oxide
2013-07-19 10:18:04

In AIG parlance, $18 bn known as “Wednesday.”

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Comment by Jingle Male
2013-07-19 12:26:10

Ha, good one Oxide…..$18 B for AIG should be known as “20 to life”……

Comment by ahansen
2013-07-19 23:14:22

The bondholders are in many cases the same pension funds that are in danger of being defaulted upon (though supposedly guaranteed by the federal pension guarantee fund.)

Can’t see how this won’t end up on SCOTUS’s docket.

Comment by Whac-A-Bubble™
2013-07-19 23:30:04

“…though supposedly guaranteed by the federal pension guarantee fund.”

‘Supposedly’ is a good way to describe the Pension Benefit Guaranty Fund. Let’s just say if it went there, many owed Detroit City pensions could look forward to retiring at pennies on the dollar of what they are owed.

That said, I thought the PBGC only guaranteed private pensions; however, my knowledge of this subject is two decades out of date.

Susan Tompor: Pension safety net won’t help City of Detroit retirees
12:42 PM, June 27, 2013

(L to R) Members of the Retired Detroit Police and Fire Fighters Association, Al Grant, the secretary and treasurer, Greg Trozak, the vice president and Don Taylor, president of the RDPFFA in the conference room of their headquarters in Sterling Heights on Tuesday, June 4, 2013. / Eric Seals/Detroit Free Press

The city of Detroit’s financial crisis will chug along on many of the same roads taken by big-name companies that underwent major bankruptcies. Tough talk with creditors, unsettling restructuring moves, unhappy times for retirees.

But unlike big business, the city of Detroit’s pension problem doesn’t have the backstop of the Pension Benefit Guaranty Corp.

There’s no so-called rescue ahead for retirees by the PBGC. It’s all about emergency manager Kevyn Orr reaching a negotiated compromise, settling the score in bankruptcy court or taking on a longer legal battle to deal with pension payments, the experts say.

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Comment by Army No Va
2013-07-19 09:32:44

Obama to Detroit: You are already dead, right Elon? http://Www.tesla.com

Comment by Army No Va
2013-07-19 09:37:34

I went to a Tesla store. Staffed with the same age and profile as an Apple store! A far cry from a Chevy dealer!

Comment by Whac-A-Bubble™
2013-07-19 06:52:45

Is too-big-to-fail going to end soon, or will the recent talk give way to little or no meaningful reform?

Comment by Combotechie
2013-07-19 07:00:08

As of now one cannot even hint about ending too-big-to-fail without causing all sorts of financial disruptions.

They have us where they want us.

Comment by Whac-A-Bubble™
2013-07-19 07:06:58

Maybe you missed this story.

Updated July 17, 2013, 6:33 p.m. ET

Challenges in Bid to Revamp Banks

Lew, Bernanke Seek More Action in Fight Against ‘Too Big to Fail’

WASHINGTON—Treasury Secretary Jacob Lew and Federal Reserve Chairman Ben Bernanke said some U.S. banks remain “too big to fail” five years after the financial crisis, opening the door to even more aggressive regulation if current efforts fail to address the problem.

Comment by Prime_Is_Contained
2013-07-19 07:29:07

said some U.S. banks remain “too big to fail” five years after the financial crisis

_Remain_ TBTF???


The PTB have actively been biggering, and biggering, and _biggering_ them!

The FDIC’s first choice for getting rid of the husk of a failed bank is to sell it to the big national banks.

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Comment by Housing Analyst
2013-07-19 07:26:20

Speak for yourself …… and AlWog.

Comment by Neuromance
2013-07-19 08:06:27

It all comes down to “What is in the politicians’ best interests?”

What’s in the politicians’ best interests are:

1) Keeping the bread and circuses flowing to the populace.
2) Getting money from contributors.

Until the people complain by unseating or credibly threatening to unseat (internal polling) politicians, the situation will continue as is.

Comment by Ben Jones
2013-07-19 10:11:39

‘They have us where they want us…the situation will continue as is’

This reminds me of a mind bender I heard recently in a Charlie Chaplin movie:

‘Our knowledge has made us cynical’

How can this be? We’ve all been told, knowledge is power. But it’s hard to deny there’s some truth in this statement.

cyn·i·cal Adjective: 1. Believing that people are motivated by self-interest; distrustful of human sincerity or integrity. 2. Doubtful as to whether something will happen or is worthwhile.

So how does knowing something, meaning knowing how things really are, turn into this? This is entirely my opinion, but I believe it is rooted in some basic human instinct or conditioning. The first is laziness. What can you do, you can’t fight city hall, might as well be apathetic. The problem with that is, you will be taken advantage of.

Another explanation, (and I’m no psychologist), is there is some part of us that desires to submit. Just give me a cot and three square meals a day, and I’ll do what you say. This easily can become, who am I to question? These people in charge must know what’s best or they wouldn’t be in charge. Now stop asking questions and eat your gruel.

I think back on a saying about seemingly unbeatable opponents; they put their pants on one leg at a time just like me. As for the banks, consider this; Bernanke can’t wait to get the heck out of dodge. He wants to get away from this position and go out and start a pile of those green paper thingies he currently conjures out of thin air. Interesting. Maybe he puts his pants on one leg at a time too?

We say, ‘powers that be’. They’re just bullies. Have you ever seen someone stand up to a bully and realize how phony his ‘power’ was all along?

Comment by Al
2013-07-19 10:23:03

“Another explanation, (and I’m no psychologist), is there is some part of us that desires to submit.”

Not everyone can be alphas. The bravos and omegas have a place in society. Omegas survive by going with the flow and following the lead of the alphas. I don’t consider our current alphas strong or smart; they pretty much rely on the complexity of the system to protect themselves.

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Comment by Whac-A-Bubble™
2013-07-19 13:44:50

“Just give me a cot and three square meals a day, and I’ll do what you say.”

Sounds like prison life.

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Comment by Carl Morris
2013-07-20 15:40:40

Or army…they even have a phrase for it. “Three hots and a cot”.

Comment by Blue Skye
2013-07-19 22:18:30

“They’re just bullies…”

Yes, well a bloody nose is the classic solution to that. How to deliver it is the challenge. Complaining is a step that needs to be skipped.

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Comment by Whac-A-Bubble™
2013-07-19 06:55:15

How soon from now will broad awareness of the U.S. echo housing bubble lead to a tipping point where nobody is willing to buy any longer and a large number of recent investors try to cash in at about the same time?

Comment by Housing Analyst
2013-07-19 07:28:00

<90 days.

Comment by Prime_Is_Contained
2013-07-19 07:32:16

<90 days.


Comment by Housing Analyst
2013-07-19 11:00:35

Remember the rapid collapse in sales post-homedebtor tax credit.

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Comment by Beer and Cigar Guy
2013-07-19 12:38:23

I don’t know about my prognostication skills, especially because prices are always ’sticky’ headed downwards, but it will happen quickly and I do believe it has already started. In its least destructive incarnation, all Housing Bubble 2.0 has done is sucked in the 2nd tier of greater fools and pulled forward future demand. With the Fannie/Freddie trickery and block sales of foreclosures/distressed to the hedgies, it was more like a ‘Cash for Clunkers’ for housing. Hedge funds and every other ‘investor’ in housing don’t want to own houses. They don’t want to be landlords or leasing companies- they want the cash. They want to be liquid and nimble so that they can quickly leap upon the back of the next great thing like a rabid Capuchin Monkey. Well, housing ain’t real liquid and they are going to realize that very quickly. When values fall enough, or sales/rentals underperform enough or some MORE attractive bubble grows fast enough, these indifferent investors are going to slit each others’ throats trying to get out from under these buildings. I think it will start to get more interesting after August, because most people with children have to be settled into a school zone by then. Ben can verify or correct me, but it would also seem that monthly expenses for mothballing/carrying an empty house- in most of the country- might be more expensive during the winter months.

Comment by Carl Morris
2013-07-19 13:30:53

the 2nd tier of greater fools

Talking about the Isaac Newtons of today?

Comment by Carl Morris
2013-07-19 13:32:21

these indifferent investors are going to slit each others’ throats trying to get out from under these buildings.

You don’t think they have enough juice to qualify for a taxpayer funded bailout?

Comment by Beer and Cigar Guy
2013-07-20 05:01:27

No, I don’t see another bailout as being feasible- there are no votes for Washington to gain and many to potentially lose. The individual speculators have no mouthpiece except the NAR and no other unified muscle/lobbiest. The hedgies are mostly comprised of (or are perceived as) rich, hard-core, right-wing Republicans. Obama and Democrats will not risk political capital to save hedgies, because they are not going to start voting Democrat out of gratitude. If the Democrats tried, there would be an angry backlash and the Dems could actually lose votes/seats. How will you sell a bailout for ‘ rich, fat, old, white millionaires who gambled their excess cash in driving up the cost of housing for the common man’? Because that would be how it was portrayed.

Since there is significant risk, but no gain in saving them, the political animals will look for some way to profit from the speculators’ demise. They will get mileage from demonizing the hedgies and blaming them for the bubble, holding up their plight as an example of ‘fairness’ and ‘our free market at work’. House prices correct significantly, most of the Bubble 2.0 purchases were cash so there is not additional credit-related systemic risk, the ‘Bad Guys’ get outed and thwarted, a few billion in excess hot money gets sucked out of the system, Obama gets his ‘teachable moment’ in the spotlight and rides off into the sunset on his unicorn, having saved capitalism while ensuring ‘fairness’ once again. Everbody wins. Except those who don’t.

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Comment by Blue Skye
2013-07-19 22:28:12

It will be entertaining. I didn’t expect the sucker’s rally to play out this way, but I can see it will lead to a rush to the exits. Downleg 2.0 was baked in the cake though. Buckle up!

Comment by Whac-A-Bubble™
2013-07-19 07:08:33

Does “financial stabilization” (e.g. asset price support measures) serve to inadvertently increase financial fragility by increasing the level of foolish investing?

Comment by Whac-A-Bubble™
2013-07-19 07:09:35

Fed notes ‘excessive’ investor risk-taking
July 18, 2013, 2:07 PM
By Matthew Heimer

The risky hunt for investment income in a low-interest-rate world has been a preoccupation of retirees for almost five years now—ever since the Federal Reserve slashed interest rates in a bid to revive the economy. So there’s been at least a small measure of satisfaction this week in seeing the Fed acknowledge its role in putting investors in that bind. In a Monetary Policy Report, published Wednesday in conjunction with Fed Chairman Ben Bernanke’s testimony in Congress, the Fed acknowledged that while the extended period of low interest rates had done some economic good, it has also pushed some investors “to ‘reach for yield,’ through excessive leverage, duration risk, credit risk, or other forms of risk-taking.”

The discussion of that reach takes place on pages 26 and 27 of the report, in a section called “Developments Related to Financial Stability.” (Please note that the “stability” in question is that of the overall financial system, not of your IRA balance per se.) The Fed authors note that the low-rate climate has driven up investor demand for both investment-grade and high-yield “junk” corporate bonds, assets they might eschew if rates on government bonds were closer to historic norms. The authors also give special attention to agency REITs – real estate investment trusts that rely heavily on borrowed money to invest in mortgage-backed securities. Recent increases in interest rates have led to big selloffs in this asset class, the report notes, and the situation could disrupt mortgage markets in general if it worsens.

Comment by Whac-A-Bubble™
2013-07-19 09:40:28

Does anyone else recall the savvy under-30 generation folks who invested just before the 2007-2008 collapse?

It’s happening again.

July 18, 2013, 7:29 p.m. ET

The Rise of the Young Buyer
A new generation is skipping the ’starter home’ and betting heavily on high-end real estate.

Two years ago, when he was 26, Matt Winter paid a little over $1 million for a four-bedroom, Mediterranean-style house in Culver City, an artsy, formerly industrial section of Los Angeles. This month, the now 28-year-old Mr. Winter, who runs his own interior design firm, paid about $1.7 million for his second home, a three-bedroom, Spanish-revival in Westwood, a neighborhood near UCLA.

“I have always felt that having your money in property is the safest and best thing to do if you want to grow your personal wealth,” says Mr. Winter, who founded his design company at 23. None of Mr. Winter’s assets are in the stock market—he says the market “spooks him” and that he prefers to invest in real estate.

Comment by Ol'Bubba
2013-07-19 18:56:17

One question for you, Ms. Schuker Blum - in the course of interviewing Mr. Winter, did you ask him how much cash equity he invested when he acquired these properties?

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Comment by Bill, just south of Irvine, CA
2013-07-19 19:57:25

“I have always felt that having your money in property is the safest and best thing to do if you want to grow your personal wealth,” says Mr. Winter, who founded his design company at 23. None of Mr. Winter’s assets are in the stock market—he says the market “spooks him” and that he prefers to invest in real estate.


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Comment by Whac-A-Bubble™
2013-07-19 22:52:46

St00pid iz as st00pid sez.

Comment by Whac-A-Bubble™
2013-07-19 07:11:10

Are gold prices different than those of other assets?

July 19, 2013, 6:01 a.m. EDT
Bernanke is only partly right about gold
Fed chief said no one understands gold prices, but investors can
By Myra P. Saefong, MarketWatch

SAN FRANCISCO (MarketWatch) — Federal Reserve Chairman Ben Bernanke said no one, including himself, understands gold prices, but that doesn’t mean you can’t.

“Nobody really understands gold prices and I don’t pretend to understand them either,” Bernanke said during the Senate Banking Committee hearing on Thursday.

Comment by Bill, just south of Irvine, CA
2013-07-19 19:55:32

Bernanke is too immersed in devaluing the dollar. Of course he does not understand gold prices! LOL. He’s a statist.

Comment by Robin
2013-07-19 13:36:53

How much more % of buyers taking out ARMs per 1% rise in mortgage rates?

Comment by Whac-A-Bubble™
2013-07-19 23:46:55

Still have yet to hear a single NPR news story that characterizes Mr Martin as anything but an innocent victim

Distorted reporting to create the misperception of flagrant racial injustice is irresponsible and helps to increase America’s racial divides.

Sources: Medical report says Zimmerman had broken nose, other injuries after fight
By Lateef Mungin, CNN
updated 9:58 PM EDT, Thu May 17, 2012

(CNN) — A medical report by George Zimmerman’s family doctor shows the neighborhood watch volunteer was diagnosed with a fractured nose, two black eyes and two lacerations on the back of the head after his fatal confrontation with Trayvon Martin.

The medical exam, which was taken a day after Zimmerman’s February 26 altercation with the unarmed 17-year-old, says Zimmerman suffered a “closed fracture” of his nose, according to two sources who have detailed knowledge of the investigation.

Comment by Dan McLean
2013-07-22 16:10:06

This comment on Trayvon is unrelated to housing. Why did you post that here??? We don’t want to hear what you have to say about irrelevant subjects.Why not post your thoughts on the Royal baby while you’re at it?


Comment by Dan McLean
2013-07-22 16:05:35

I would like to see someone post what the average household income is in Vancouver, Victoria and even Toronto. Although the term ” average (or sometimes median) household income” is used in many articles on the subject, no one has bothered saying what those figures are. Internet searches are of little help for current data.

Thanks, Dan

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