Bits Bucket for August 7, 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
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From yesterday’s post by Neuromance:
“High house prices typically result in more debt for the purchaser, resulting in less disposable income for other goods and services.”
But this more debt for the purchaser, because money is borrowed into existence, ends up putting more money into the economy and this additional money finances the expansion of the economy.
Also, the debt created by the purchaser by buying a house is in the form of investment, not consumption, and the return on this investment will grow as the price (hence the value) of the house grows. And this additional growth in price (which is perceived as a growth in value) will be perceived by the homebuyer as “wealth”, and this additional wealth will cause the homebuyer to become freerer in his spending than he would otherwise be. And this additional spending will find its way into the economy and will cause furthur economic expansion.
Or, instead of just feeling wealthier the homebuyer can actually cash in on some of his ever-growing home equity by borrowing against it (and expanding the money supply even furthur) and begin to not only feel wealthier but also act wealthier.
All this works IF the perception is widely held that lots of debt is a wonderful thing to jump into and IF the perception holds true that house prices always go up. But it all falls apart and everything goes into reverse if these perceptions change. Which seems to be where we are now.
“And this additional growth in price (which is perceived as a growth in value) will be perceived by the homebuyer as “wealth”, and this additional wealth will cause the homebuyer to become freerer in his spending…”
This for me is where the system breaks down. If a house goes up in price, you’re not actually wealthier unless you sell. No one should be making spending decisions based on equity. People shouldn’t think of equity as money; it’s only an accounting term to identify the difference between (potential) sale price and debt.
The wealth effect is bad psychology, nothing more.
This “you’re not actually wealthier” aspect is true looking at it from a micro-economic point of view but the macro-economy benifits from this point of view in that the “feeling wealther” homeowner (or homebuyer) will tend to spend more money than he would otherwise. And this extra spending is what goes into the economy.
“And this extra spending is what goes into the economy.”
True enough. But when the extra spending is based on debt, then spending will be reduced later to pay back the debt with similar negative effects. Best thing for the economy are steady savings rates and debt ratios.
Best thing for the economy are steady savings rates
yes, steady and high savings rates.
Best thing for the economy are steady savings rates
It’s shocking how many people don’t understand or flat out deny that. For the deniers, it’s blasphemous that I’d even suggest (mortgage) rates at 9-10% again.
As far as I can figure it, the boom-bust cycle is caused by the change in savings rate. Decreased savings creates a boom and increased savings rate* causes the bust. Debt, the Fed and other such are enablers but not the actual cause. Short term thinking politicians and business types want the boom, so they encourage spending/discourage saving ignoring the long term consequences.
* increased savings rate includes deleveraging
The wealth effect is bad psychology, nothing more.
true.
because money is borrowed into existence, ends up putting more money into the economy
most loans are from money already saved. getting a home loan doesn’t create new currency. the currency that actually gets newly created is borrowed from the central bank. as i’ve said many times, i don’t understand the internal machinery of the FED, but money doesn’t necessarily get created just from individuals taking out loans. therefore, Neuromance is largely correct that higher priced homes means less for people to spend on other items.
Also, the debt created by the purchaser by buying a house is in the form of investment, not consumption, and the return on this investment will grow as the price (hence the value) of the house grows.
present home prices can’t be supported by present income.
And this additional growth in price (which is perceived as a growth in value) will be perceived by the homebuyer as “wealth”, and this additional wealth will cause the homebuyer to become freerer in his spending than he would otherwise be.
the wealth effect presupposes that there is extra money to spend. most people have little extra right now. most people are strapped by this sinking economy. i think the people who buy now are in for a rude awakening as economic reality sets in.
And this additional spending will find its way into the economy and will cause furthur economic expansion.
it’s a shame that people believe that spending causes economic expansion. for some reason, people do believe you can spend your way into wealth. it’s just so ridiculous that it’s hardly worth commenting on.
And this additional growth in price (which is perceived as a growth in value) will be perceived by the homebuyer as “wealth”, and this additional wealth will cause the homebuyer to become freerer in his spending than he would otherwise be. And this additional spending will find its way into the economy and will cause furthur economic expansion.
This was already covered by Nancy Reagan and Co.
Combotechie:From yesterday’s post by Neuromance:
“High house prices typically result in more debt for the purchaser, resulting in less disposable income for other goods and services.”
But this more debt for the purchaser, because money is borrowed into existence, ends up putting more money into the economy and this additional money finances the expansion of the economy.
Some points:
1) “Borrowing into existence” - the multiplier effect from fractional reserve banking (PDF), the bank lends out 90% of its reserves, which continues down the line. One can imagine this as a collapsible telescope.
The key is though, that money must be paid back. So, with thousands of these telescopes in some state of extension, one takes an average height and one obtains an increase in the money supply and commensurate increase in economic activity. So, agreed, there is some increase in economic activity as a result of bank-loaned money. There is a constant process of borrowing and repayment.
Combotechie: Also, the debt created by the purchaser by buying a house is in the form of investment, not consumption, and the return on this investment will grow as the price (hence the value) of the house grows. And this additional growth in price (which is perceived as a growth in value) will be perceived by the homebuyer as “wealth”, and this additional wealth will cause the homebuyer to become freerer in his spending than he would otherwise be. And this additional spending will find its way into the economy and will cause furthur economic expansion.
Or, instead of just feeling wealthier the homebuyer can actually cash in on some of his ever-growing home equity by borrowing against it (and expanding the money supply even furthur) and begin to not only feel wealthier but also act wealthier.
All this works IF the perception is widely held that lots of debt is a wonderful thing to jump into and IF the perception holds true that house prices always go up. But it all falls apart and everything goes into reverse if these perceptions change. Which seems to be where we are now.
2) So, there is a continuous process of lending and repayment. What is the net effect of all this on the economy? In your scenario, you see the multiplier effect of fractional reserve banking as the driving factor of increased economic activity.
3) BUT - what happens if all the telescopes become fully extended at once - they must all collapse together. Which is what we saw with the “peak debt” of the 2000s, where people had borrowed to their maximum capacity and everyone had to deleverage - pay back their debts - together.
4) Also, what about the economic activity if people were spending directly instead of putting the money into banks for lending? The initial height and subsequent extended heights of the telescopes would become less, but there still would be economic activity independent of bank lending.
5) Additionally, there is “wealth concentration” effect I perceive from debt, as people become more and more beholden on debt and paying it back, which leads to more and more interest for those loaning the money.
Finally, we’ve generated speculative scenarios with bits of facts tossed in. It’s the nature of social science because the observed system is so complex. So, to discover what the actual effect of housing is on the economy is one must IMHO look at homeownership rates and the health of the economy. Since 1996, there have been several studies showing a link - repeatedly - between increased homeownership rates and increased unemployment. Which lends credence to my hypothesis that the deleveraging event (”payback hangover”) associated with a house purchase is greater than the initial burst of economic activity and any residual positive effects from fractional reserve lending.
In an economy there are multiple circuits, all tied together, influencing each other. Which is why it is important to create hypotheses, and thoroughly test them before accepting them as true. I think there are many unexamined beliefs in economics, resulting from very elegant and compelling hypotheses, but not taking into account that circuit’s impact within the greater machine in which it operates. And that effect can only be gleaned from well crafted, repeatable, peer-reviewed studies.
obama lies again…
Kool-aid drinkers to defend and blame Bush is 3…2…1…
It’s pretty simple: when more people buy homes, and play by the rules…
The irony of this statement.
——————————————–
Obama: Immigration reform would boost value of homes
The Hill | August 6, 2013 | Justine Sink
President Obama on Tuesday argued that enactment of the Senate’s immigration reform bill would boost home values across the country.
“It’s pretty simple: when more people buy homes, and play by the rules, home values go up for everybody,” Obama said during a speech on home ownership in Phoenix.
Obama conceded that immigration was “something you don’t always hear about when it comes to the housing market,” but he said the two things go hand in hand.
“According to one recent study, the average homeowner has already seen the value of their home boosted by thousands of dollars, just because of immigration,” the president said.
Cecilia Munoz, the director of the White House Domestic Policy council, tweeted during Obama’s speech that it was a “fact” that immigration reform “will substantially increase home values.”
At a tour of an Amazon.com warehouse in Chattanooga, Tenn., last week, the president argued in favor of “fixing a broken immigration system with reform that independent economists say will boost our economy by more than trillion dollars.”
“It’s pretty simple: when more people buy homes, and play by the rules, home values go up for everybody.”
home values go up for everybody = home PRICES go up for everybody.
See? Price equals Value. Raise the price and you raise the value.
There would be a big outcry in the land if the President wanted to raise the “value” of, say, gasoline because gasoline is a consumption item and people want to pay lower prices for a consumption item, not higher prices.
But houses are not considered by most people to be a consumption item, instead they are considered to be an investment item. And since they are considered to be an investment item and most people are either homeowners or homebuyers then most people have an interest in keeping the value (aka the price) of their investment item as high as it can possibly be held.
And so it is with the banks and other lenders, they too want the “values” of houses to be kept as high as they possibly can be held because they have a lot of mortgages that are backed by these houses.
Save the underwater homebuyers and you also save the lenders, which, IMHO, is - deep down, at the core - what all this is really about.
The irony about this is not only do homeowners and those already commited to the process of buying homes want prices to go up, but new and potential homebuyers also want prices to go up.
New buyers may want to see a temporary dip in prices but not a change in the long-term trend of ever-higher prices because it is this perception of a long-term trend of ever-higher prices that makes buying a home so attractive to them as an investment.
So, unlike gasoline, there are very few people around that have an interest in lower home prices and lots of people who have an interest in higher home prices. It may very well be in the interest of many people to have home prices affordable but this “affordable” issue is not addressed by lowering prices, instead the term “affordable” is addressed by easing the terms of financing.
And this leads to another issue which can best be described by the term “debt-slave”.
“…instead the term “affordable” is addressed by easing the terms of financing.”
Credit is king.
Excellent point regarding consumption versus investment items.
But I raised another issue yesterday, in a question - “Since higher home prices benefit certain segments of the economy and harm others (new home buyers, future home buyers), should the government be implementing policies to either boost or suppress the prices of houses?”
True, after a new homebuyer crosses the Rubicon and becomes a homeowner, he’d like his house to skyrocket in value (perhaps - the actual net result of that is higher taxes, resulting in lower net worth, excluding the value of the house). Or at least, retain its value.
But as they say, true democracy is 2 wolves and 1 sheep deciding what to have for dinner. Which is why I wonder if it’s appropriate for the government to consistently favor one segment of the population (homeowners and mortgagees) and penalize another (non homeowners/mortgagees).
“But houses are not considered by most people to be a consumption item, instead they are considered to be an investment item.”
Thinking of a house as an investment isn’t such a bad thing, but you have to recognize what type of an investment it is. If you’re focussing on the price of the house, and the capital gain, then you’re seeing it like gold or a stock which doesn’t really make sense. House prices have tended to creep up at the rate of inflation which makes sense. Houses shouldn’t be a good investment for capital gains, and any good performance in real terms will be reversed.
Thinking of a house as being similar to a bond does make sense, as the coupon is the rent you don’t have to pay. Like any investment, buying a house can prove to be a good or bad investment and it can be difficult to know for sure even in hindsight.
Keep pimpin’ housing boy……. Houses are rapidly depreciating assets…. They always have been and will always be.
I totally agree with your post.
The big foolish mistake the current wave of buyers is making exactly mirrors the big foolish mistake the last wave of buyers made, which is to literally believe in the saying “real estate always goes up” and buy in the expectation that they will soon be living off home equity wealth gains. Unless the Fed doesn’t follow through on announced plans to soon end QE3, the easy money spigot is about to be shut off, at which point this illusion will be shattered.
Even if the Fed keeps the QE going, I suspect the illusion will be shattered. Too many investors and not enough end buyers in this rally. All it takes to scare away momentum buyers is a stall in momentum which we’re already seeing. Of course the momentum buyers will pile back in as soon as they perceive a bottom and the whipsaw will continue.
Over the years I’ve seen speculation on the HBB as to what signal we should be looking for to consider buying. Maybe one signal should be that house price charts have stopped looking like stock market charts.
“the coupon is the rent you don’t have to pay…”
You must have never “owned” a house.
or you use oxymath.
Is your objection that I didn’t include something about taxes, insurance and maintenance as an offset against the value of the coupon? I figured that went without saying. And I didn’t include any math, so your last comment is rather odd.
On the whole, I’m not sure what you’re getting at.
OxyMath! Another one added to the HBB Lexicon.
“I didn’t include any math…”
That’s all I was getting at. Makes it easier to jump to the assumed conclusion though.
What assumed conclusion are you referring to? That a house can be a good or bad investment like any other?
WhiteWashBoy,
A SFR is never an investment and always a loss, ALWAYS.
Al, simply that a house pays a coupon.
Raise the price and you raise the value.
no, raise the price and you lower the value. a higher price means you are getting less for your money.
combo, think of it like this..
subjectively, if you pay a high price for something, it has less value to you. the higher the price, the lower the value.
objectively, the value remains about the same no matter what the price does.
???
Value is synonymous with utility.
If you are willing to pay more for something, it must have more value (utility) to you, or else you wouldn’t pay more.
If the price goes up, and the utility you are getting isn’t worth that price to you, then you don’t buy the product…demand falls, and all else equal so does price (econ 101).
Value is synonymous with utility.
are you sure??
diamonds have a high value.. what is their utility value? does their minor use in industry give them their high value?
water can be said to be almost free, yet it has high utility. can you explain those things?
It is pretty simple; immigration increases joblessness. The value of joblessness has gone up by millions just because of immigration.
!!!
Let’s just export inflation and import poverty on our way to wealth and prosperity.
Here is a possible solution:
Have those new immigrant homebuyers get to work building more homes for everybody. The money spent on supplies of goods and services needed to build homes will generate positive economic impacts on the local economy, as will the new immigrant construction crew members’ expenditures on household consumption. And the new immigrants will be of much younger average age than America’s soon-to-retire aging Baby Boomers, reinvigorating the U.S. workforce.
Presto-chango: New immigrants generate economic growth.
That Obama is lying is unlikely. Instead, I think he really is that dumb.
Why didn’t we think about that before? Oh, wait….
“get to work building more homes…”
Yes indeed. That worked so well 10 years ago.
Some of us did.
Obama = Bush.
It is pretty simple; immigration increases joblessness. The value of joblessness has gone up by millions just because of immigration.”
Companies love a surplus of workers to pick over. We should import foriegn companies like BANKS , universities and pharmaceuticals distributers see how they like it then.
“Companies love a surplus of workers to pick over”.
Now we’re getting somewhere.
Big Government worldwide also loves a surplus of workers. But rather than love them for monetary profit as companies do, government loves them for political profit.
A dependent population yields great profit for Washington. It must, otherwise Washington DC itself wouldn’t have so many poor.
If Washington had to produce monetary profit, it’d be Detroit.
If Washington had no fiat printing press technology, it’d be Detroit.
More immigrants in a bad economy = more unemployment.
More unemployment = lower wages and increased taxes.
How does this improve housing, exactly?
That Obama is lying is unlikely. Instead, I think he really is that dumb.
That Obama is lying is unlikely. Instead, I think he really is that dumb.
It’s a Ron Burgundy presidency…but not funny. He will read any thing off the teleprompter.
In fairness, he is an attorney, not an economist, so it should not be surprising if his economic policy announcements sound a bit incoherent.
he is an attorney,
Reason # 12928282 why we should never elect an attorney to a position of power.
Should we be surprised at his incoherent administration of the law?
Obama is not incoherent of law. Or its administration. He simply disregards it when it suits him and his handlers.
Typical stance of a Neocon-Progressive Party member.
BINGO
Incorrect.
He is President of the United States. His economic policy statements should be nothing if not coherent.
Bush wasn’t an economist either. Did you grant him the same cover?
I had a guy try to sell me a financial product that my gut told me was a bad investment. He showed me a convincing proof why the product would work out well, which he learned from his supervisor. It took me a while, but I figured out what was wrong with the proof. The guy who was selling it couldn’t accept what I showed him.
I think most politicians are the same as that salesman.
I like this, and I agree.
Let me add that, in addition, politicians strongly tend to be arrogant.
Lack of knowledge + arrogance = typical D.C. politician. I think this is why Washington attracts so many lawyers.
at least he admits the main motivation for open borders is SAVE our house prices pleeeze!
Save our house prices…..yes.
Wonder if Obama and his Neocon-Progressive cronies would go as far as to force, say, 33% of all new immigrants to make Washington, DC, their home?
I bet D.C. residents would quickly react in a very NIMBY way. (And how dare anyone suggest such a thing?!)
“We want their VOTES, not their presence, dammit!”
If it’s good enough for the plebes, then it’s good enough for Washington, D.C. Right?
DC is already like 80% nonwhite. Very high rates of crime, homicide, and drug use. Lots of immigrants interspersed with blacks. Where do you get the idea that DC = fancy? The smidgeons of DC that are not majority-black are basically part of Maryland, might as well be Bethesda or Chevy Chase. There are very few exceptions, such as the Mass. Avenue corridor (NoMa) or Dupont Circle but even that is in NW DC and even that area is just a few blocks from crack corridors. (about equidistant from crack houses and from the White House, which is funny when you think about it)
I think I’ve just answered my own question.
Anyone here know how much the Feds are giving monthly to “housing investors”?
I wouldn’t be surprised if all these government-backed “investors” are beginning to take it on the financial chin.
Fewer immigrants = fewer renters.
Millennials staying in Mom & Dads basement = fewer renters.
Taxpayer-backed “housing investment” companies must be complaining about the lack of renters.
Therefore, it’s time to tie the immigration push to a “recovering housing market” that must not be recovering all that well.
When you begin your post with an ad hominem attack you lose any credibility you may have had.
Its true irrespective of whether you believe its an attack.
Obama lies, isn’t that the truth pretty much?
Bernanke lies, Bush lies, Obama lies..most people in power lie to you every day. Why can’t you just accept the simple truth?
One of my college friends drove around with a bumper sticker that read “Impeach the Liar!”
It was great because he didn’t have to change it no matter who was in office….
Works for municipal, state and federal too. Very efficient in its simplicity.
“Immigration reform would boost value of homes”
Wasn’t it recent immigrant buyers walking away from their subprime mortgages which was a primary driver of the 2007-08 housing price collapse?
details…the point is:
1. ballz to the wall immigration
2. ????
3. real estate to the moon!
This article calls it “Fiat Citizenship” and indeed, the value of US citizenship is greatly diminished. He draws an interesing parallel to the devaluation of currency.
http://takimag.com/article/fiat_citizenship_steve_sailer#axzz2bI4OeUZU
“It ought to be readily apparent that Marco Rubio’s push to print up documents for millions of undocumented illegal aliens and tens of millions of new immigrants is similar to the discredited Juan Peron/Salvador Allende school of economic management.”
“Moreover, Americans don’t like to admit that the chief advantage of being an American is that our forefathers carved out for us a big, empty country where the short supply of labor and the ample supply of land would make a middle-class existence broadly affordable. Benjamin Franklin explained in the 1750s that in the Old World, in contrast to high-wage, low-cost America:
In countries fully settled…those who cannot get land must labor for others that have it; when laborers are plenty, their wages will be low; by low wages a family is supported with difficulty; this difficulty deters many from marriage, who therefore long continue servants and single.
Thus, Franklin proposed restricting immigration to preserve Americans’ patrimony of economic independence.
That’s what the Senate is trying to give away with the Schumer-Rubio immigration bill. To them, Franklin’s vision of self-ruling Americans is annoying. In contrast, a nation of Latin American-style debt peonage, keeping citizens single and servile, is the Promised Land.”
At least in Rome back in the day, Roman citizenship could be sold by the individual for some decent money. We are deprived of even that.
Ol’ Ben was a very, very smart man.
Immigration = importing low-wage jobs.
That wasn’t always true, but now that we have too much labor, it surely is.
Yet the Washington elitists want to continue to import low-wage jobs. Just as long as those jobs and THOSE people are NIMBY, of course.
Gee, I wonder why that is.
“Gee, I wonder why that is.”
Hubris. Whom the gods would destroy, they first make proud.
I’ve had the opportunity to contact the offices of my Senators and Rep. It is very interesting to talk to most staffers. I say most because they’re not all far gone, sometimes you get a sentient being. However, the detachment is amazing. These people really do seem to think they’re above the fray. And for now, maybe they are. But when the lights go out, all bets are off. I wonder who they think will defend their sorry, decadent and depraved posteriors when it all comes down.
They need to take a good long look at the photos of Chris whatever his name was in Benghazi.
“Chris whatever his name was in Benghazi.”
Lol, I couldn’t even be bothered looking up his name, that’s how little I care. Sorry footnote to the whole mess over there. I can just imagine the guy looking at his executioners, shaking his hands at them and saying “Wait, wait, you’ve got the wrong person, I was on YOUR side”. Too bad, infidel.
Immigration = importing low-wage jobs.”
Not in High Tech. They make pretty good money over 100K at least. We hire lot’s of H1B. I see the applications left on the copiers all the time.
Managment loves it because they are also foriegn born and can get old world respect from these new engineers not like American engineers who will argue with senior mangement if they see bad ideas. Make them lose face very bad.
This is the future. It happens in CA first and then spreads. Made easy if US birth rates stay negative.
Europe’s ahead of us at any rate good luck to them.
read ” flashback” the book. It has a humorous view of the future in a fictional story set in the west.
Eating your own is a phenomenon that will expand as government expands (particularly at the federal level, which is further removed from pitchfork wielding locals).
Government does not generate profit…therefore, it must throw people under the bus as resources grow slim.
And what better example of throwing people under the bus than Washington, D.C.? Look at it It’s a veritable checkerboard of exclusive elitist areas and slums. Most of it is slums. (In fact, it remains part of the Old South…but don’t tell locals that).
Back to the main gist.
Upwards of 90 percent of the DC metro votes the same way, yet the masses are “under the bus”. Why is that? Much of Washington D.C. is a dump - the elitists can’t even get their own shit together
Many Washington elitists are dumb as a brick, despite pedigree. Arrogance among that crowd runs deep and wide. They can’t even get their own sh*t together (much of Washington DC is a dump), yet they think they know what’s good for everyone else.
The rest have evil intent and should be regarded thusly.
” These people really do seem to think they’re above the fray.”
The people who answer the phone at your Congressman’s office aren’t above the fray. They are below it. Way below it. The people who are in the fray don’t answer the phone. However the people who actually have some influence on policy don’t care much about the opinion of one guy who calls the office. They care about the polling (of likely voters) they have done in the district or state. They care about the opinions of large money donors. And they care about internal party politics. The rest is just paying enough attention to not make you so peeved you are willing to put in lots of time, effort and money into supporting the other guy(s). That is why the staffers you get to talk to don’t sound that interested. I’m sure they take a few notes and someone might even turn those notes into a report that can be used as a resource for a speech if it fits in with the predecided narrative.
You are much more likely to get through at a town hall meeting with the Congress critter. Still a vanishingly small chance that your argument will hav any influence, but the chance is better than it is by just calling and ranting at the person who answers the phone.
Sigh. In referring to the “fray”, I’m talking about those of us who are ordinary citizens dealing with the waste products that Washington desposits on our heads daily. That’s the fray, and we’re in it. Washington is removed from that. So revealing that you thought I was referring to the Congress and other members of government (other than military grunts, who are in a fray of their own) as being in the fray. But thanks for playing.
In New York City [and online] a really interesting [though one sided] Real Estate show on WOR-AM 710 Radio, Saturday mornings 10am-Noon, EST. Some callers are still clueless but a few have their numbers straight, guite entertaining.
I just clicked on the most recent show’s podcast to listen, here’s the first sentence:
“Good morning I’m Dottie Herman and you’re listening to Eye On Real Estate, the only talk radio show that’s about real estate, which in today’s world takes up everything and is everything.”
http://www.wor710.com/media/podcast-eye-on-real-estate-eyeonrealestate/eye-on-real-estate-8313-hour-23541202/
It sounds so familiar its like it came right out of your skull huh Krusty……
I don’t think South Carolinians are allowed to call that show. I did, however hear you call in to describe the skyrocketing value of your Astoria brownstone. Well done.
Didn’t it Krusty The Realtard……. Just how many times have you used those lying words?
I remember Krusty $99K 1 bedroom apartments in Astoria back in 99…..that was the pitch “$99K in 99″
That truth doesn’t compute in Krusty World.
which in today’s world takes up everything and is everything.
This made me think of an old Charlie Brown/Peanuts Christmas special from the 1960’s. There is a scene where Lucy complains that she will get stupid presents for Christmas, such as dolls. Charlie Brown asks her what she really wants for Christmas.
Her answer: Real Estate.
http://xmasfun.com/ACharlieBrownChristmasTrivia.aspx
Well at least it gave some of fellow retirees something to do today. Now i am off to watch McHale’s Navy … I just wish Gilligan’s Island was on the FREE Antenna TV I use. [ Cable is definately not worth it when you are o a fixed ... well you know the rest of that line]
Between online Netflix and an HD antenna, who needs cable, unless of course you are addicted to ESPN.
A big obama supporter
who wants bigger and bigger government
who also wanted more gun control
kills three people at a township meeting with a gun
to get revenge for the township for taking his land
due to township permit rule violations.
Socialism sounds good until it affects you personally. Then it is not so much fun. Why do you think obama and congress exempt themselves from the laws they pass for the rest if us?
———–
City hall shooter: ‘They stole my land!’ (took land at Sheriff’s sale)
http://www.bayoubuzz.com
Bernie Kozen stands near the scene of Monday’s shooting on Tuesday, August 6, in rural Pennsylvania. Kozen, a local parks director, is being hailed as a hero for stopping the alleged gunman, Rockne Newell, who opened fire at a town council meeting in Ross Township on Monday night, August 5, killing three people, police said. Newell had been in an ongoing feud over property rights with the township’s board of supervisors.
BTW, the election was last November and your candidate lost.
Why not give the anti-Obama diatribes a rest?
Are you kidding me?
I have three more years.
Then at LEAST 5 more years into the next president’s administration.
That is what the democrats taught me about Bush.
Can’t wait for the next president to ignore any/all laws he does not like and sign EO orders to do the exact opposite.
Why not find or establish an anti-Obama blog so you can enjoy the affirmations of like-minded souls?
What?
After 13 years here of “Bush and the republicans are responsible for all the evil in the world?”
After hearing how obama was going to save us? Heal the planet? Usher in a new post racial America? Close gitmo? The most transparent administration in history? Have the rest of the world love America again? Go after Wall Street and the Bankers? Cut the deficits in half?
Heck - I remember left wing kool-aid drinkers talking here on how the Bush $200 billion deficits/year were immoral and discussing the American military death count daily…
Your strawmen are turning into the attack of the zombies.
“What? After 13 years here of “Bush and the republicans are responsible for all the evil in the world?”
So your goal is to come across like they did, but on the other side of the spectrum?
Whackster - there is only so much one can expect from a Fox-parrot like banana boy. Adjust your expectations accordingly.
Please don’t feed the troll.
Expectations are very well adjusted.
However, I still like to gently encourage those whose main focus is hammering Obama to find a blog of like-minded ranters. I thought politics was over and done with after the election last November, but some posters here seem stuck in the past.
I couldn’t find that story at the link bayou link.
Found one here.
http://www.dailymail.co.uk/news/article-2385544/Bernie-Kozen-pictured-Hero-tackled-Pennsylvania-gunman-opened-town-planning-meeting-victims-named.html
It’s not socialism to punish someone who won’t follow the rules.
As I suspect you will find the hard way one day, cabana boy.
Anyway, Mr. Moore’s list of cities (in order, and they aren’t all cities; some are whole counties) is: Compton CA, East Greenbush NY, Fresno CA, Gulf County FL, Harrisburg PA, Irvington NJ, Jefferson County AL, Menasha WI, Newburgh NY, Oakland CA, Philly’s school district, Pontiac MI, Providence RI, Riverdale IL, Salem NJ, Strafford County NH, Taylor MI, Vadnais Heights MN, Wenatchee WA and Woonsocket RI.
20 Cities That May Face Bankruptcy After Detroit
Newsmax | Tuesday, 06 Aug 2013 09:23 PM | Steve Moore
Detroit’s bankruptcy filing sent shivers down the spine of municipal bondholders, government employees, and big-city urban residents all over the country.
That’s because many of the 61 largest U.S. cities are plagued with the same kinds of retirement legacy costs that sent Detroit into Chapter 9 bankruptcy this summer.
These cities have amassed $118 billion in unfunded healthcare liabilities. These are legal promises to pay healthcare benefits to municipal workers beyond the employee contributions to finance those funds. This is a giant fiscal sink hole — and because of defined benefit plans, the hole keeps getting deeper.
Detroit may be the largest city in American history to go bankrupt, but it is not alone. The city raced to the financial insolvency finish line before anyone else in its class.
Keep an eye on “too big to fail” cities like Chicago, Philadelphia, and New York.
According to an analysis by the Manhattan Institute, several Chicago pension funds are in worse financial shape than the worker pensions in Detroit. One is only 25 percent funded, and where the other 75 percent of the money will come from is anyone’s guess. And there are about a dozen major California cities having systemic problems paying their bills.
And the states can’t bail them out because Illinois, California, New York, and Pennsylvania face their own money challenges. Republicans in Congress have been insistent that Washington, D.C., won’t be tossing a life-preserver to troubled cities, either.
>…won’t be tossing a life-preserver to troubled cities, either.
Because we all know that Wall St deserve the bailouts and not Main St.
Any new taper talk developments?
My take: If the Fed talks enough about tapering before actually doing anything, any market adjustment to tapering will already be fully priced in before they take action, making it impossible to blame any significant market moves on tapering.
Goldman Sachs sees September start for Fed tapering
August 7, 2013, 8:50 AM
The Federal Reserve will start to scale back, or taper, its asset-purchase program in September, according to an economist at Goldman Sachs Group Inc.
In a research note, Kris Dawsey, an economist with Goldman, cautioned that the decision to taper would ultimately depend on economic data.
The Fed currently buys $85 billion in bonds each month and market participants have been very focused on indications as to when those purchases will begin to be reduced.
If the Fed begins to taper in September, it is likely that the purchases would conclude in mid-2014, consistent with Fed Chairman Ben Bernanke’s recent guidance, Dawsey said.
Total purchases under the third round of quantitative easing would total about $1.3 trillion, bringing the Fed’s securities holdings to just under $4 trillion.
…
Is there any reason to expect the Fed to ever have to unwind the security holdings (Treasurys and MBS) on its balance sheet, which Goldman Sachs estimates will reach $4 trillion before QE3 ends? Or have these effectively been permanently taken out of circulation, akin to the millions of homes in shadow inventory?
The Fed will never unwind because those in elected position would not benefit from it.
Unless forced to do so by the market…
If they do it, this may be the year. Next year is election year so they can crank it back if need be.
I wonder how many houses the Fed ‘owns’ via MBS?
I would guess more of less ALL of them.
The Fed is no grim reaper for the Wall Street bovine herd
5 gut checks before the stock market’s opening bell
August 7, 2013, 7:01 AM
By V. Phani Kumar
Good morning.
A hat-trick of losses looms as Wall Street looks forward to more Fed-speak to confirm what has been made all but too clear: the spigots are about to be tightened. The markets will be all ears as Philadelphia Fed President Plosser and his Cleveland counterpart Pianalto take turns this afternoon to present their tapering perspectives.
Not surprisingly, the mood on the Street is being preset by offshore cues, after Japan took a particularly hard hit during the Asia day. U.S. stock futures, by comparison, are quite calm. And that may be the sign of a market that is in need of some rest, rather than one that sees the need to bolt toward the exits, if you follow IG Markets’s Chris Weston.
“It seems to us that the market looks tired and a pullback would be healthy, although on current news flow it’s hard to make the case for any more than a 5% pullback,” he says. “A clearout of tired long positions would entice a fresh wave of traders and longer-term capital, with a move to 1,780 [for the S&P 500] potentially being seen over the medium term.”
His doesn’t seem to be a lone voice. BTIG’s Dan Greenhaus says he doesn’t view the Fed’s policy “as the proverbial reaper, coming to sink equity prices.”
…
Stocks stuck in red as taper talk returns
By CNNMoney Staff
@CNNMoneyInvest August 7, 2013: 7:41 AM ET
NEW YORK (CNNMoney)
Global stock markets and U.S. futures were in the red Wednesday amid new talk that the Federal Reserve may soon begin easing its stimulus measures.
U.S. stock futures were roughly 0.5% weaker ahead of the open, with negative market sentiment blamed on hawkish statements from Chicago Fed president Charles Evans and Atlanta Fed president Dennis Lockhart.
“Both indicated the Fed could initiate tapering [to its bond-buying program] as early as September,” said Ishaq Siddiqi, a market strategist at ETX Capital in London.
The prospect of the Fed cutting back on its massive quantitative easing campaign, which has helped push U.S. stocks to record highs, had investors feeling “uneasy,” Siddiqi said.
…
Does anyone besides me find it interesting how PMs take a hit every time the Fed hints of a sooner taper? I guess it is totally obvious by now that the only thing propping up PMs are the current historically low returns on Treasurys and other traditional safe-haven fixed income investments. Investing in gold at this point is a bet the Fed won’t follow through on stated intentions to wind down QE3.
Forbes
Kitco News, Contributor
We write about metals market news.
8/07/2013 @ 8:31AM
A.M. Kitco Metals Roundup: Gold Lower, At 3-Week Low, As Bears Gain Technical Momentum
(Kitco News) - Comex gold futures prices are moderately lower and hit another three-week low in early U.S. trading Wednesday. The chart postures of both gold and silver have turned more bearish just recently, which is inviting fresh technically related price pressure. December gold was last down $6.60 at $1,275.80 an ounce. Spot gold was last quoted down $6.10 at $1,277.00. September Comex silver last traded down $0.263 at $19.26 an ounce.
The gold and silver markets are seeing some residual selling pressure following more “Fed speak” on Monday, in which two Federal Reserve officials made comments that the market place perceived as slightly favoring the hawkish side of U.S. monetary policy. The market place remains preoccupied with the timing of just when the U.S. central bank will begin to “taper” its monthly bond-buying program, also known as quantitative easing. So, when any Fed officials make remarks to the press, markets tend to see knee-jerk reactions of varying degrees. Many traders and investors believe the Fed will start to reduce its monthly bond buying before this year ends.
…
Taper talk is great for Treasurys; not so good for gold.
Aug. 7, 2013, 9:05 a.m. EDT
Gold extends losses on Fed tapering fears
By Saumya Vaishampayan and Carla Mozee, MarketWatch
NEW YORK (MarketWatch) — Gold futures extended declines into a seventh consecutive session on Wednesday, pressured by expectations that the Federal Reserve will soon begin to scale back stimulus.
…
The latest taper tantrum is hammering global share prices.
Global shares fall on Fed tapering talk, pound up on BoE
By Richard Hubbard
LONDON | Wed Aug 7, 2013 9:07am EDT
(Reuters) - Signs the U.S. Federal Reserve might soon begin trimming its stimulus program sparked falls in world shares on Wednesday, while a new Bank of England policy lifted sterling by changing expectations for a rate rise.
U.S. stock index futures pointed to Wall Street extending the share selloff, which was triggered when two Fed officials suggested the central bank may reduce the pace of bond purchases as early as next month, depending on economic data.
…
6 bank accounts that earn over 10% interest
In these countries, savings accounts beat the stock market
Savings account yields in other countries can trounce those in the U.S., but savers abroad aren’t necessarily better off.
Interest rates are so low on American savings accounts that putting money in the bank seems only slightly smarter than putting it under a mattress.
With the average savings account yielding 0.08% and the typical one-year certificate of deposit paying 0.24%, according to Bankrate.com, the old-fashioned approach holds little appeal. But in other countries, rates are as much as 100 times higher than in the U.S. — returns that would thrill stock market investors.
Unfortunately, such rates are made possible in part by skyrocketing inflation, financial instability, central bank actions and currency fluctuations. And many of these yields are off limits to Americans, since some banks will only make accounts available to residents or people doing business in those countries.
Savers have to look at the “whole picture,” says Greg McBride, senior financial analyst for Bankrate.com. “Earning 10% when inflation is 9% is no better than earning 2% when inflation is 1%.” Here is a look at the top saving rates from around the world.
— By Jonnelle Marte
1% gain is better than negative percent, which what we really have.
Would now be a good time for dips to buy?
Looks like white yokels in Dayton OH are freaking out that buses may connect blacks with nearby hospitals and a university.
http://thinkprogress.org/justice/2013/08/06/2419681/ohio-bus-discrimination/
“A lily-white Ohio suburb is doing everything it can, including risking millions in federal highway funding, to keep mostly minority bus-riders from a nearby city from entering their community.
The showdown began in 2010 when the Greater Dayton Regional Transit Authority proposed adding three new bus stops in Beavercreek, a largely white suburb 15 minutes east of Dayton. These new stops would give Dayton bus-riders access to Beavercreek’s major shopping mall and nearby businesses, as well as a medical clinic and Wright State University.”
Chumming the waters today, are we?
The South is Rising Again!
“What’s wrong with denouncing white interlopers?”
– Al Sharpton in National Review (20 March 2000)
Is it legal for a mayor to offer female constituents political favors with the expectation of sex in return? And does this arrangement work better if the mayor is a Democrat?
Not just any democrat, a progressive Dem.
I’m sure this is covered in Agenda21.
Yes and yes.
Only if he sends them pictures of his peculiars first, so she knows what’s on offer.
Wait - did Bill Clinton get elected mayor somewhere?
No…it’s the San Diego mayor, who is a California Democrat.
Pardon the French, but this guy is a total d!ck who makes Bill Clinton and Herman Cain look like celibate monks by comparison. I can’t wait for the opportunity to vote to recall him.
Military Veterans Accuse San Diego Mayor Of Sexual Harrasment
by Eyder Peralta
August 07, 2013 6:27 PM
Two military veterans are the latest women making allegations against San Diego Mayor Bob Filner.
Eldonna Fernandez, a retired master sergeant from the Air Force, and Gerri Tindley, an Army veteran, said Filner made unwanted advances back when Filner was serving his 10th term as a U.S. congressman in 2012. What’s more, they told CNN in an interview, he did so knowing the two women had said they were raped while in the military.
Filner, has faced a barrage of accusations, but he has refused to step down, despite pressure from his own party. Filner entered a two-week treatment program on Monday.
Before the two women came forward, the Women’s Veterans Association of America dropped its plan to give Filner, who had served as the leading Democrat on the House Veterans Committee, a lifetime achievement award. The organization also dropped him as a speaker at one of its upcoming galas.
“It has hurt our organization tremendously as what our overall cause is. That’s why we encourage San Diego to stand before the entire nation and send a message of who they are, that whatever is going on does not define our city,” NWVAA President Tara Jones.
…
Gropes and Sloppy Kisses: 13 Women’s Accusations Against Bob Filner
What began with the complaints of three women against the San Diego mayor has snowballed into allegations of crude come-ons from more than a dozen.
Garance Franke-Ruta Aug 7 2013, 10:16 AM ET
…
Obama cancels meeting with Putin.
http://online.wsj.com/article/SB10001424127887324522504578653791984020314.html
In other news, Putin expresses relief. Lol, if someone told me he gave Snowden asylum just so he could avoid meeting with Obama, I’d so believe it.
Exactly.
Let’s boycott the olympics next year…
I was about to say that next year is the World Cup, but remembered that it’s also the Winter Olympics. In any case, the World Cup is the event most countries care about.
Unless your Olympics is cancelled after a lifetime of hard work to make the US team….
Listing #13009300
$499,500 (LP)
Price/SqFt: 342.12
4331 Mill Valley Rd, Moorpark, CA 93021 Pending
Beds: 3* Baths: 2 (2 0 0 0) (FTHQ) Sq Ft: 1460* Lot Sz: 5663sqft*
Area: SMP Yr: 1981
“Today’s transaction at a grossly inflated price is tomorrow’s default.”
Correct. And there will be millions of them…… Combined with the already massive defaulted inventory in the 20+ million range (4million of which are in California)and it becomes a perfect storm of massive personal losses as a result.
cactus
In the real world worth $250K - $275K move in ready. That is just insane compensation for
an average tract home, $500K list price. This no inventory manipulation is working.
Even after our remodel costs, we come in under that price, and our home was gutted, a 4+2, and is 500 sq ft bigger w/ a pool.
Good Morning HA,
Just to clarify, 10’s of $1,000’s cheaper.
Housing has become a Las Vegas mentality. To me, it’s a place to live.
That Amber Alert (Ca) on our cell phones at 11:00PM Monday night educated us all to opt out. Only general emergency issues like N Korea up to no good (as in kiss your arse goodbye) or weather perils should be wake up situations. Millions spent on a worthwhile system, run my morons. The alleged murderer/kidnapper fled Sat at 5:00PM, and they wake up the public after bedtime on Monday 11:00PM?
I read that the President’s message is for “perceived” threats. I hope that first run goes better. Actually, I hope we never have a REAL one.
That Amber Alert (Ca) on our cell phones at 11:00PM Monday night educated us all to opt out. ”
yea that was werid. my phone was downstairs where my daughter was sleeping she said the phones were making all kinds of loud noise.
” This no inventory manipulation is working. ” hasen’t been affordable inventory around here since I was 18 years old working at a lumber yard in TO and thats a long time ago.
“Even after our remodel costs, we come in under that price,”
And you still got ripped off by a few hundred thousand.
Hows that feel?
HA
vs. paying overinflated rent in So Ca. The break-even point on rent vs. ownership remodel is 3 years, and then we live on the cheap.
Gotta pay to live somewhere HA. We weighed the variables and settled in.
No great answer since housing has been broken for a decade. A decade. It has been a long time since things at least had the illusion of “normal”.
You’ve got to chose those three years very carefully, especially since they are in the past. Dropping half a mil to save a few hundred a month doesn’t pencil out in three years with real math. Any drop in house prices pretty much turns the own vs. rent calculation on its head over any time period. You can only make this look good by ignoring depreciation and assuming steady price (or rent) increases to infinity. Oxymath.
“You’ve got to chose those three years very carefully,”
Of course she did. It’s the only 3 years a liar can select to make the OxyMath work.
Can you imagine taking a $250k loss? Think about it.
And yet she’s happy with her choice.
Why does this bother you so?
Oh…… The important thing is “happy”!!
This is from The HBB Knitting Club Happy Talker!
Why thank you for your daily dose of Happy Talk!
Oh…… The important thing is “happy”!!
It makes more sense to value “happy”, as opposed to valuing having the largest possible pile of fiats when you die…
If those dollars are so fake or fiat, send them my way.
Deal?
I didn’t say they were fake—merely that there are things in life more important than the size of your stack when you die.
http://www.bloomberg.com/news/2013-08-07/bofa-put-toxic-debt-in-bond-as-staff-resisted-u-s-says.html
The Department of Justice accused the company in a lawsuit yesterday of misleading investors about the quality of loans tied to $850 million in mortgage-backed securities. The complaint chronicles friction among bank staff in 2007 and 2008 as they excluded risky Alt-A loans while leaving in wholesale debts once scorned as “toxic waste” by the firm’s then-chief.
We used to people in jail for fraud.
Now we sue them to recover (to the government) of 10% of what they stole.
Better late than never. I guess.
In general terms I think this kind of investigation has to be on the late side if it’s going to be done right and have a hope of being successful in court.
In this specific case it will most likely turn out to be too little too late, and not much of a deterent even if it is successful.
The GOV forced BOA to buy countrywide, who actually is the wrongdoer, and then charge BOA for fraud.
It appears to me that BOA has been set up.
The purchase of Countrywide wasn’t done under duress. It happened before the Great Meltdown in the fall of 2008. Reference:
http://en.wikipedia.org/wiki/Bank_of_America_Home_Loans
My vague recollection is that the Fed somehow had a hand in brokering a deal for BoA to purchase Countrywide, but I cannot find the evidence on the internet.
Sounds like it’s wrist-slapping time again for BoA.
I listened to the President’s conversation with Zillow CEO so you didn’t have to:
KEY POINTS-
-Homeownership is the quintessential element of the America drea,; providing stability and security
-We need to modify administrative rules on refinance. HARP3 will save homeowners up to 3K tax cut.
-We’ve seen a robust pickup in housing growth but it’s
still a soft market because there’s a soft employment market
-Real economy is directly related to the housing market
-There’s nothing wrong with renting…. I’m living in a rental
Jill Fitzpatrick question:
Renters should logically be able to buy a home but can’t because the bounce back in prices prevents us from buying.
-Keeping interest rates low will help. With Harp3 there “should” be hope. Shouldn’t be an ideological barrier because Romney supported it too (implying rise in the near future, duh)
Question from Phoenix. How do we re-gain our footing?
-We got depressed houses off market so they didn’t destabilize the neighborhood . We need to repair and put them on the market as rentals or tear them down
-Advantage of renting is maintenance and stabilized property values for neighborhood.
-Institutional investors buying and renting them back is good business sense for those seeking an immediate return through renting and hoping for long term appreciation.
Jacob lives with his parents, has massive student loan debt, is not looking to buy just to rent. But he can’t afford even that.
-We need more quality low-cost housing. Proposes reforming GSE’s to construct more affordable housing on market.
- Renting is best option until you know you can make your payments responsibly. We let too many people buy houses who couldn’t afford them.
- What for parents would have been the down payment is going to service strudent loan debt.
-Proposes we reform the system so students graduate faster, for instance, –
-Reducing interest rate on strdent loans.
BTW, Immigration reform:
-Suddenly all kinds of families will come out of the shadows, start paying taxes and penalties, will buy houses in lower-income neighborhoods thus renovating and stabilizing them.
-Most Americans have their wealth in housing.
QUESTION:
If you scale down fnma/fmac what model fills the gap?
-Most countries don’t have such a large presence in housing market as the United States. Prior to recession fnma was smaller percentage in the lending market. Can’t have govt guarantee all lending, but big profits are being made by fnma. Must address this
-The government is trying to reduce FNMA/FDMC portfolio incrementally so the private market can catch up.
-We must make sure there’s still a 30 year market is available.
-Still make sure there is affordable housing for veterans and young families.
-We’re SELLING OFF HOUSES TO PRIVATE MARKET GRADUALLY SO THERE”S NO SHOCK TO SYSTEM
-Want to prevent a shock to the system by phasing in over the years.
-Lending standards are tightening because of private sector involvement in the system.
-HARP3 will help entire economy by putting more money back into economy
Question from Jennifer:
My rent goes up my salary doesn’t. A fixed rental price would be helpful.
-Strong employment market =strong housing market
-Stong housing market is a function of improved middle class security
-Get more affordable housing on market. Properties are sitting there not being rented.
-Renovate and rehab those to stabilize rental prices.
Points out that he and Michelle lived in her mom’s house for several years to save the down payment for their first house
-We’re trying to simplify mortgage transparency. Touts CFPB.
-Oh, by the way, HARP3
(You’re welcome)
Strong employment market =strong housing market
Well, duh!
Looks like the Coles notes version is…
more of the same.
Summary:
Bigger and bigger government is good
More and more government programs is better
Amnesty is great!
ahansen thanks.
It sounds like what I expected: “Our policy is good jobs at good wages!”
Re: the GSE windown, they’ve been issuing nearly 100% of MBS for the last five years. It’s big money for the politicians and cronies. Only the market will make them stop.
The Senate bill Obama referenced would replace FNMA and set up a Federal Mortgage Insurance Corporation (much like the FDIC) that would collect fees from lenders to insure mortgages.
It would require tighter documentation from borrowers, require that lenders to buy back bad mortgages, ensure there be no predatory or anti-consumer features and be modeled after Dodd-Frank.
In essence, the government would act as a reinsurer rather than the primary one and consequently serve a buyer pool some 30-40% smaller than currently.
With this model, higher interest rates are a given, and 30-year fixed rate mortgages will be hard to preserve unless they can packaged into MBS. Unsurprisingly, banks don’t want to hold fixed rate mortgages on their books, preferring the more profitable ARMs instead.
Chances of its passage are slim.
“In essence, the government would act as a reinsurer rather than the primary one and consequently serve a buyer pool some 30-40% smaller than currently.”
Government + insurance program = CLUSTERFORK!
The worst aspect of this entire episode in financial history is that the Fed and the Treasury Department have recently managed one of the worst government-sponsored financial disasters in the history of modern finance, YET THEY ARE STILL PRETENDING THEIR EFFORTS ARE FOR THE GREATER GOOD, AND TRYING THE SAME FAILED EXCESSIVELY INTERVENTIONIST POLICIES THAT LED TO THE HOUSING CRASH IN A HAIR-OF-THE-DOG HANGOVER CURE.
Rule No. 1 for getting out of a hole: STOP DIGGING!
“It’s big money for the politicians and cronies.”
Dressed up as a hair-of-the-dog cure for the housing market collapse.
Thanks !!
HARP 3.0 vs HARP 2.0
•With HARP 2.0, your mortgage had to be insured by either Fannie Mae, Freddie Mac or a participating lender. The revisions that HARP 3.0 offers is that every mortgage, even owned privately, including jumbo, sub-prime or other loan programs will have the same refinancing options guaranteed by the Federal government.
•With HARP 2.0, your mortgage had to be in place by June 1, 2009. With HARP 3.0, legislation is working to possibly eliminate that requirement, or at least push the date up. This will make it possible for just about any borrower to be able to refinance at the lower interest rates.
•When HARP 2.0 was put in place, you could only apply and use it once. With HARP 3.0 though, you can apply and get refinanced even again, getting to take advantage of even lower rates than they were three years ago.
•Before you couldn’t be late in the 6 months with HARP 2.0. Now you can be late once in 6 months with HARP 3.0
So while there are still some restrictions to be met, such as late payments and income requirements, this new set of guidelines put forth by HARP 3.0 will open up the possibility of refinancing at a lower rate to millions of more Americans. Stay tuned..change is coming.
Posted a detailed and timely summation of Obama/Zillow conversation over an hour ago. Wha’ happened?
Thank you, ahansen!
Thank you, I have plenty of time to waste (work is slow this summer) but even I didn’t want to dignify that Zillow/Obama interview. No President is going to answer any question honestly, ever. Sad but true.
Amazing NY Times Magazine story today…
http://www.nytimes.com/2013/08/11/magazine/the-opt-out-generation-wants-back-in.html?hp&_r=1&
Excerpts:
“Sheilah O’Donnel tells herself that her new home, a townhouse in a development in Chevy Chase, Md., just a stone’s throw from a Safeway, isn’t really all that bad. Sure, it’s near a gas station. And the front window, with its cheerily upholstered cushions, overlooks a dreary parking lot. And yes, it’s kind of small — “an apartment,” O’Donnel, who is 44, sometimes says bitterly, when she’s reminded of her former life with her ex-husband in their custom-built, six-bedroom home. But then again, it’s perfectly maintained and impeccably furnished, and most important, it’s rented with her own money, from the first real job she has had in almost a decade.”
————-
“ ‘All this would be easier if you didn’t work,’ ” O’Donnel recalled her husband saying. “I was so stressed,” she told me. “I said, ‘This is ridiculous.’ We’d made plenty of money. We’d saved plenty of money.” She quit her job, trading in a life of business meetings, client dinners and commissions for homework help, a “dream house” renovation and a third pregnancy. “I really thought it was what I had to do to save my marriage,” she said.
But the tensions in her marriage didn’t improve. The couple’s long-term issues of anger, jealousy and control got worse as O’Donnel’s dependency grew and a sense of personal dislocation set in. Without a salary or an independent work identity, her self-confidence plummeted.
“I felt like such a loser,” she said. “I poured myself into the kids and soccer. I didn’t know how to deal with the downtime. I did all the volunteering, ran the auctions. It was my way of coping.”
Five years after leaving her Oracle job, O’Donnel began volunteering for Girls on the Run, a nonprofit group devoted to girls’ emotional empowerment and physical well-being, and was eventually hired part time, at low pay. She loved the work. The organization’s message, about respecting yourself and surrounding yourself with people who appreciate you, resonated with her. “I started feeling very devalued when I was with him,” O’Donnel said of her husband, “but when I was doing all this nonprofit stuff, I felt great.”
O’Donnel and Eisel agree the job drove a destructive wedge between them. “I look back on it as the beginning of the end of our marriage,” Eisel said when we talked by phone last month. “Once she started to work, she started to place more value in herself, and because she put more value in herself, she put herself in front of a lot of things — family, and ultimately, her marriage.”
O’Donnel’s family encouraged her to leave. But with three young children and no means of support, she couldn’t see a way out. Eventually, after a particularly bad fight, she went to see a lawyer.
“He said, ‘Before you do anything, you get a job,’ ” she recalled. “I said, ‘Everyone I spoke with said you don’t get a job because your spouse will have to pay less in alimony and child support.’ He said, ‘You have to look at the next 30 years of your life, and if you’re in control of the situation, and you have a job that’s paying you money, he’s going to be far less powerful over you in the process.’ ”
A few weeks later, O’Donnel separated from her husband. She soon ran into an old Oracle colleague in a doctor’s waiting room. The woman was working at Monster.com, the employment Web site, and encouraged O’Donnel to get in touch. One former Oracle connection led to another. O’Donnel found that her reputation — 11 years out — was still intact, and she was quickly offered a job. But while she waited for her first paycheck, she found herself with no access to cash. She took a big chunk out of her old 401(k) and borrowed money from her sister. It was “the scariest time in my entire life,” she told me when we first spoke last summer.
That was an amazing article. I remember reading the original one about the opting outs. Funny thing is, that plenty of us who kept working still had to take jobs at lower salaries even with no time out of the work force except for the occasional months unemployed.
It’s a sad saga that plays out for countless unfortunate souls. One can only wish those on the long road to finding self ultimate peace.
Hmmm, my mother couldn’t wait to get back to work. She started going to grad school when I was in 4th grade, and the reason was because she needed the advanced degree to apply for a teaching job. Which she did, and she taught for 22 years.
Aw. Poor baby.
Not.
If the new breed of Republican would just quit lying/cheating out their azzes, maybe I would quit picking on them.
Or resident Faux News kool-aid drinker has been carping repeatedly about how public pensions are bankrupting governments.
While at the same time, Republicans are sabotaging the ROI that pension funds should be getting.
“Bombshell: Plutocrats brazenly collude to hurt state economies and screw working people”
http:/tinyurl.com/o45p3oj
Typical modus operandi for the neavo-Republican……actively backstab/sabotage something, then complain about how inefficient and stupid they are.
Try this link:
http://tinyurl.com/l67c8rn
“Republicans are sabotaging the ROI that pension funds should be getting.”
Well-known fact: BEN BERNANKE IS A REPUBLICAN.
The GOP longs for and is actively working to bring back the 19th century where women and poor people knew their place and didn’t get uppity or question their betters.
Doesn’t seem to be posting….
Neavo-Republican Modus Operandi: Actively sabotage/backstab, then use the results chaos/poor results as evidence of government inefficiency, or how it “doesn’t work”
http://tinyurl.com/o45p3oj
To a T.
It occurs to me that the 30-year mortgage is what creates the need for a 30-year mortgage.
Meaning, it drives up house prices so that a 3 decade mortgage is necessary to pay it off. I don’t think it’s the homebuyer that’s the primary beneficiary of the 30 year mortgage.
The 30-year mortgage is, to my understanding almost entirely unique to the US. The housing bubble was not. The 30-year mortgage didn’t drive home prices higher.
In fact, what caused prices to rise during the bubble, was when people started to use short-term ARMs as an affordability product in order to afford home prices.
A recent news article was about how the percentage of buyers using ARMs was starting to go up…Uh Oh…flashing yellow light on rebubble, in my mind.
In other words, if the only mortgage allowable by law was a 30-year, fixed rate, fully amortizing mortgage, home prices would be lower, because people would NOT be able to use ARMs as a mortgage product to improve affordability at higher price points.
The 30-year mortgage didn’t drive home prices higher.
Knock it off azzwipe. If 30 year paper weren’t available housing prices wouldn’t be inflated by 250%.
Your bull$hit is shockingly transparent.
Actually, it’s not only the availability of 30-year paper, but the Fed’s rock-bottom rate policy, which is driving the echo bubble.
Once they pull the plug on QE3, watch out below. And the main ‘victims’ will be the folks the Democrats are currently trying to ‘help,’ by getting them into homes financed by easy-money low-downpayment low-interest 30-year mortgages.
The current 30-year mortgage rate (according to Zillow) is 4.26% –over a full percentage point (100 basis points) higher than the 3.125% rate which was reached within the past six months. The same monthly payment that would have financed $500,000 in December 2012 is now merely sufficient to finance $434,876.42 — a 13% drop in purchase budget!
And mortgage rates are climbing rapidly with no end in sight.
The Echo Bubble is a debt man walking. (Pun fully intended!)
It’s gonna be a hoot watching the all-cash foreign residential real estate investors trying to cash in their accumulated quick-flip home equity gains before the Fed takes away the QE3 easy money punchbowl.
Got popcorn?
I’ve been following housing prices in CA since the late 1950’s and can report that during periods when adjustable rate mortgages were popular, housing and rent prices bubbled. During periods when they were frowned upon, housing and rental prices were relatively stable. (My parents were serial flippers.)
Their increasing popularity in the early 2000’s is what brought me to HBB.
Post hoc ergo propter hoc.
30 year mortgages exist because most people cant afford anything else.
Unaffordable housing prices exist because of 30 year mortgages.
In other words, if the only mortgage allowable by law was a 30-year, fixed rate, fully amortizing mortgage, home prices would be lower, because people would NOT be able to use ARMs as a mortgage product to improve affordability at higher price points.’
yep
Interesting how those of us who’ve lived in CA for awhile all agree on this one, HA.
And it’s interesting how you’re anchored to prices founded on a 30 year term.
owned.
Given that QE3 will soon end, isn’t it a no-brainer that long-term Treasury bonds are the worst possible investment at the moment? If so, why don’t investors simply dump their holdings?
Oh wait…
Mutual Funds
Outflows Clobbered Treasuries In July; Munis Down Too
By PAUL KATZEFF, INVESTOR’S BUSINESS DAILY
Posted 08/05/2013 05:15 PM ET
The investor stampede out of long Treasuries that began in May, and in June for other types of rate-sensitive bond funds, continued in July.
Exhibit A: Treasury funds fell 0.69% last month, according to preliminary Lipper Inc. data.
Shareholders yanked $44 billion from taxable funds in June, says the ICI. They pulled out an additional estimated $19 billion last month, according to TrimTabs.
As a result, bond fund categories seen as the most vulnerable to interest rates were down in July. The least sensitive groups were up.
Treasury funds led decliners down. But high-yield funds gained 1.87%. Foreign debt funds tacked on 1.19%. Loan participation funds added 1.08%.
The rush out of taxables was fueled by Federal Reserve Chairman Ben Bernanke’s hints of earlier-than-expected tapering of the Fed’s bond buying. It was also fed by concerns over Japan’s volatility and slower growth in China.
…
Guess what day it is?
http://www.youtube.com/watch?v=kWBhP0EQ1lA - 163k -
I was disappointed to read that Blue Skye said, “It is pretty simple; immigration increases joblessness.” As if regulations played no role, as if the decades of prior immigration didn’t equal great prosperity for the nation when regulations and taxes were lower.
Why do so many people such as MacBeth continue to fail to understand economics by saying things such as, “More immigrants in a bad economy = more unemployment. More unemployment = lower wages and increased taxes. Immigration = importing low-wage jobs.”
Have people like that never read any history? Have they ever been exposed to Austrian Economics, or do they always just accept what a guy in a suit and tie tells them?
Anyway, I haven’t noticed anyone mention the fact The Fed is buying approximately 133,333 houses per month.
Since September of 2012, the Fed has bought 1.43million houses. !
More wrist slaps are gonna hit Megabank, Inc.
ft dot com
August 8, 2013 12:02 am
JPMorgan faces new criminal probe over mortgages
By Tom Braithwaite and Kara Scannell in New York
The Department of Justice has opened a criminal probe into JPMorgan Chase’s sale of mortgage-backed securities, a new front in the government’s examination of the largest US bank by assets.
JPMorgan, which has come under unprecedented scrutiny from regulators after it lost $6bn in a trading debacle last year, said on Wednesday it was “responding to parallel investigations” – civil and criminal – into its sale of mortgage-backed securities between 2005 and 2007.
Investigators from the civil division of the United States Attorney’s Office for the Eastern District of California told JPMorgan in May that they had “preliminarily concluded that the firm violated certain federal securities laws” when it sold subprime loans packaged into securities, the bank said in the filing. A spokeswoman for the attorney’s office declined to comment.
The disclosure came a day after the US government launched a civil lawsuit against Bank of America, alleging it committed fraud by packing mortgage-backed securities with loans that it knew to be “toxic waste”.
Jamie Dimon, chief executive of JPMorgan, had warned in April that “we expect we will have more” action from regulators after myriad investigations into its mortgage business, anti-money laundering practices and the fallout from the “London whale” trading scandal.
On Wednesday, alongside its disclosure of the criminal investigation into its structuring and sale of MBS, JPMorgan revised up its estimate of “reasonably possible losses” from litigation to $6.8bn on top of existing reserves from $6bn last quarter.
The US government’s focus on possible wrongdoing in the mortgage market took on a fresh impetus in January 2012 when President Barack Obama announced a new task force to examine alleged misconduct by financial institutions.
…
Bagholder identification process underway:
ft dot com
August 8, 2013 2:46 am
Bondholders sue US city over mortgage debt
By Tom Braithwaite in New York
Wells Fargo and Deutsche Bank are suing a city in California, seeking to block a plan to reduce homeowners’ mortgage debt in a legal fight that is rippling across Wall Street.
The lawsuit, filed on Wednesday in district court in San Francisco, paves the way for a showdown on a constitutional issue that pits bondholders against cities.
Wells Fargo and Deutsche are acting as trustees for bondholders in mortgage-backed securities who are threatened by the city of Richmond’s attempt to use government powers to seize mortgages of struggling borrowers and replace them with cheaper loans.
If successful, the plan – pitched to cities across the country by Mortgage Resolution Partners, an investment group – would cause the value of the MBS to fall sharply. Pimco and BlackRock are among the bondholders affected in the Richmond case but the idea could hit all large institutional investors.
In its complaint, the trustees ask the court for an injunction to stop the plan, warning of “severe irreparable economic harm” to retirement plans and “and potentially the entire US mortgage industry” from a scheme that “violates the United States Constitution”.
It estimated losses at up to $200m in Richmond alone and “billions of dollars” if the plan were rolled out across the country.
The plan involves using government powers known as “eminent domain” that are commonly used to force homeowners to sell their property to make room for public projects such as new roads.
MRP has proposed that local governments should instead use that authority to seize mortgages worth more than the underlying property and write down borrowers’ excess housing debt with the stated goal of averting default. The owners of the loans would receive compensation at “fair market value”.
Investors believe it could set a precedent to be used across the US and, as eminent domain requires paying compensation only at the current – depressed – prices, force them to take significant losses.
MRP and local governments aim to profit from the plan by sharing in the gains between the price at which they pay for the original loan and the price they sell on a new smaller loan.
…
Who’s the favorite in this latter-day incarnation of Gulliver versus the Lilliputians?
Here’s to hoping tiny, powerless, crime-ridden, multicultural, impoverished Richmond, CA gives these too-big-to-fail financial behemoths and their highfalutin NYC attorneys a heaping helping of “what for.”
MARKETS
Updated August 7, 2013, 11:24 p.m. ET
Investor Group Calls Richmond, Calif., Eminent Domain Plan Unconstitutional
Suit Against City Would Block Its Plans to Seize and Buy Mortgages
By NICK TIMIRAOS
CONNECT
Banks representing some of the nation’s largest bond investors filed suit against the city of Richmond, Calif., on Wednesday to block plans by city officials to seize and buy mortgages using their powers of eminent domain.
The lawsuit, filed in federal court in San Francisco, could serve as a key test for whether a city can move forward with such a strategy, which would allow it to forcibly buy mortgages from investors at a price potentially below the property’s current market value. The city would then reduce the loan balance and refinance the mortgage, resulting in a lower mortgage payment for the borrower. The aim is to help struggling homeowners avoid foreclosure.
The legal challenge could serve as a key test for whether cities from Newark, N.J., to Seattle are able to follow Richmond’s lead.
The lawsuit was filed by three mortgage-bond trustees, units of Wells Fargo & Co. and Deutsche Bank, that were directed to act by a group of investors, including BlackRock Inc., Pacific Investment Management Co., as well as Fannie Mae and Freddie Mac, the government-supported mortgage companies.
City leaders in Richmond, a working-class suburb of around 100,000 on the San Francisco Bay, began sending letters last week to mortgage companies seeking to purchase loans on 624 properties and threatening to force sales via eminent domain if investors resisted. The city is teaming up with Mortgage Resolution Partners, a private investment firm based in San Francisco, which was also named a defendant in the lawsuit.
At least four other California cities have signed agreements to work with Mortgage Resolution Partners, but none have taken the step of contacting bondholders about loan sales.
The lawsuit alleges that the proposed use of eminent domain is unconstitutional because it benefits a small group of Richmond citizens at the expense of out-of-state investors, violating the law on interstate commerce. The lawsuit also argues that loans aren’t being seized for a valid public purpose—a key criterion for a city that invokes eminent domain.
“Mortgage Resolution Partners has led the city of Richmond into an unprecedented use of eminent domain seizure that is unconstitutional, harmful to homeowners and taxpayers, and unfair to millions of individual savers and investors,” said John Ertman, a partner at Ropes & Gray in New York.
An MRP representative said it was confident its proposal is “entirely within the law.” “No investor in any trust will be made worse off by the sale of any loan,” said a company spokesman.
Richmond officials said Wednesday they didn’t have an immediate response to the lawsuit.
Eminent domain allows a government to acquire property by force that is then reused in a way considered good for the public—new housing or roads. Property owners are entitled to compensation, often determined by a court. Instead of acquiring houses, Richmond would buy the mortgages.
Legal advocates of the eminent-domain plan have said that constitutional challenges aren’t likely to hold up in court. The loan strategy wouldn’t burden interstate commerce “because it doesn’t prevent credit from flowing in any particular way,” said Robert Hockett, a Cornell University law professor who advocates for using eminent domain to seize underwater mortgages.
“This is a bluff,” said Mr. Hockett. “It’s meant to scare city officials into saying, ‘Oh, who are we to argue with the big guns.’ ”
…
Bloomberg News
Pimco, BlackRock Try to Stop Mortgage Seizure Plan in California
By Jody Shenn, Karen Gullo and John Gittelsohn
August 08, 2013
Pacific Investment Management Co. and BlackRock Inc. (BLK:US) are among bond investors seeking a court order blocking Richmond, California, and Mortgage Resolution Partners LLC from seizing mortgages through eminent domain, saying the initiative would hurt savers and retirees.
The city’s plan is unconstitutional, according to a complaint filed yesterday by mortgage-bond trustees in federal court in San Francisco. The trustees, Wells Fargo & Co. (WFC:US) and Deutsche Bank AG, were directed to take the action by investors in the debt that also include Jeffrey Gundlach’s DoubleLine Capital LP, said John Ertman, a partner at Ropes & Gray LLP.
“Mortgage Resolution Partners is threatening to seriously harm average Americans, including public pension members, other retirees and individual savers through a brazen scheme to abuse government powers for its own profit,” Ertman said in an e-mailed statement on behalf of investors.
The plan advanced last month with Richmond backing offers to buy 624 loans, making it the first city to push the idea so far forward. Those offers would need to be refused before the city could follow through with its mayor’s vow to invoke its potential powers to force sales of the mostly non-delinquent loans, so that homeowners could get their debt balances cut to less than the current values of their properties.
…