August 8, 2013

Bits Bucket for August 8, 2013

Post off-topic ideas, links, and Craigslist finds here.




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194 Comments »

Comment by Resistor
Comment by Housing Analyst
2013-08-08 06:58:59

Yeah but…. but….. If it makes you happy…….

Comment by Darrell in Phoenix
2013-08-08 14:20:46

It;s for the children so they can be in a better school district. Can’t have our crumb munchers in the wrong school you know.

So much better to just move away from the poor people than to actually work on socio-economic policy to improve the conditions of the poor.

Comment by aNYCdj
2013-08-08 15:24:38

Darrell the poor refuse to speak English, not much we can do until they have the guts to change.

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Comment by sleepless_near_seattle
2013-08-08 17:04:15

In my very white city of Portland the poor speak English just fine. Well, their grammar and spelling suck but they seem to know how to speak it.

Or, is that not what you meant?

 
 
 
 
 
Comment by Ol'Bubba
2013-08-08 04:35:58

In the course of my browsing I came across this piece:

9th Annual Demographia International Housing Affordability Survey: 2013
Ratings for Metropolitan Markets
.

The data is from the 3rd quarter of 2012. The table for all markets begins on page 37 of the pdf file. Detroit was the most affordable at 1.5 median multiple (Median Price divided by Median Household Income). Hong Kong was the least affordable at a 13.5 multiple.

Link: www (.) demographia (.) com/dhi.pdf

Comment by In Colorado
2013-08-08 08:58:54

Like I have been saying before: The whole world has been brainwashed into believing that housing is supposed to be expensive and utterly unaffordable. And as long as the masses believe this and are willing to spend the lion’s share of their paychecks on housing, then prices will stay higher than they should be.

Comment by Ol'Bubba
2013-08-08 10:04:58

The ratios in Australia were quite a shocker.

 
Comment by sleepless_near_seattle
2013-08-08 11:04:10

Part of the training is learning the “I got mine, screw you!” mentality.

Get on the ladder now! What are you waiting for?

 
 
Comment by Whac-A-Bubble™
2013-08-08 19:46:29

“Detroit was the most affordable at 1.5 median multiple (Median Price divided by Median Household Income).”

Apparently this affordability calculation has no adjustment for living conditions. Who would live in Detroit if they had other options?

 
 
Comment by Housing Analyst
2013-08-08 04:42:06

This just in from The Blog Knitting Klub Director;

you are directed to overpay by a couple hundred thousand dollars for a depreciating asset in order to be happy. This is the happy blog.

Furthermore, you are expected to maintain Happy Talk on this blog at all costs.

Regards,

The Blog Knitting Club Director and Happy Talker

Comment by 2banana
2013-08-08 05:58:22

Yeah - but I am on the property ladder, never to be a bitter renter again and I can paint the walls any color I want!

Comment by Blue Skye
2013-08-08 06:29:51

What really turns me on is being able to drive a riding lawn mower, all day, every Saturday!

Comment by Housing Analyst
2013-08-08 06:43:56

Getting high jacked by a mechanical subcontractor for $20k in sub zero weather is bestest!

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Comment by samk
2013-08-08 07:13:45

How much land do you have to mow? 5 acres?

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Comment by Housing Analyst
2013-08-08 07:22:08

And don’t fôrget.. ………. Any cutting equipment with an acceptable production rate will cost $5k minimum.

The losses just keep stacking up so stay on that treadmill you hamsters.

 
Comment by MacBeth
2013-08-08 07:22:53

Mow the grass? You can’t be serious. That’s what Mexicans are for.

Besides, mowing my own lawn might interfere with my sense of self.

I refuse to identify as someone who might mow a lawn. It’s beneath me. I might break a nail.

 
Comment by Joe Smith
2013-08-08 07:59:47

I mow my own yard with a reel mower. 1/5 acre so it doesn’t take long at all (leaves my weekends open for gigging at The Pink Hippo club). I have zoysia grass so only need to mow every 2-3 weeks. I strongly suspect that I’m the only one at my firm who has engaged in any manual labor at their residence in a long time.

 
Comment by Housing Analyst
2013-08-08 08:01:09

Don’t hurt your wrists while mowing Liberace………

 
Comment by Beer and Cigar Guy
2013-08-08 08:12:06

Huh. You guys have got it EASY. The only time I have to mow the lawn at MY palatial McMansion is at night, from 1:00 AM until 2:30 AM and then I have to be really quiet and use scissors or I’ll have the HOA on my ass. All my waking hours are spent feeding, bathing and giving manicures and massages to the squirrels in my yard. It takes up a serious chunk of my life, but that is one of the prices you pay for the joy of home-owership (not a typo). Stainless and granite throughout!! Look at me- I’m unique just like everybody else!!

 
Comment by Central Valley Guy
2013-08-08 08:23:42

Nice reference on the squirrels! I wonder how long until we see those demands from used home sellers again.

 
Comment by In Colorado
2013-08-08 09:48:27

All my waking hours are spent feeding, bathing and giving manicures and massages to the squirrels in my yard.

Had a vision of BCG chasing down the squirrels in his yard, with a small bottle of shampoo on his hand.

 
Comment by ecofeco
2013-08-08 10:45:32

:lol:

 
Comment by ahansen
2013-08-08 20:25:19

What a “lawn”?

 
 
 
 
 
Comment by Bubbabear
2013-08-08 05:11:01

Real Personal Income Points to Recession

Every time real personal income goes negative, a recession occurs. Now that personal income is falling, a recession is baked in.

http://oftwominds.com/blog.html

Comment by Whac-A-Bubble™
2013-08-08 06:58:49

So long as the QE3 spigot remains open on full blast, we needn’t fear a recession.

Comment by Neuromance
2013-08-08 11:56:16

Zimbabwe has some of the best performing markets on the planet.

 
 
Comment by ecofeco
2013-08-08 10:48:10

I don’t even need that kind of data.

There has been a recession EACH AND EVERY decade for the last 40 years.

That’s all you need to know.

However, good find, Bubbabear.

 
 
Comment by Bubbabear
2013-08-08 05:13:22

Japan Is Flashing a Warning For What is Coming Our Way

The markets fell yesterday despite the Fed pumping over $5 billion into the system. The primary reason is that the Fed is once again talking about tapering QE. There’s also the uncertainty of who the next Fed Chairman will be (Larry Summers’ odds of filling the roll can be correlated to the dips in the market as Summers has been critical of QE in the past).

http://gainspainscapital.com/2013/08/07/japan-is-flashing-a-warning-for-what-is-coming-our-way/

Comment by Steve J
2013-08-08 11:43:51

Japan has been flashing a warning since 1990…

 
 
Comment by 2banana
2013-08-08 06:11:50

More Detroits on the way…

———————-

Obama Administration Using HUD To Push For More Diverse Neighborhoods
Political Realities | 08/08/13 | LD Jackson

It seems our government will never learn their lesson. For decades, we have seen the political leaders and bureaucrats in Washington push for fair housing practices. They used the Community Reinvestment Act to do this and with each liberal President we elected, the push was intensified. Thus, we saw the housing market plunge off a cliff because so many people who couldn’t afford a mortgage received one, nonetheless. Some bankers were afraid to refuse loans because of threats by groups such as ACORN. This push was the beginning of the trend that helped steer our economy into the worst recession since the Great Depression.

The Obama administration has made much of its policies to bring us out of that recession. Thus far, I would have to give them a failing grade in that effort. A recovery without jobs isn’t much of a recovery. Could it be that they are really focusing on issues other than the economy? Issues that are deemed to be more important than a mere economic recovery that will help lift people out of poverty and expand the middle class? I contend that is the case. Lo, I offer you proof of just how misguided the focus of the Obama administration really is. They are about to use the Department of Housing and Urban Development as a hammer to forge our neighborhoods to their own liking.

Fox News - In a move some claim is tantamount to social engineering, the Department of Housing and Urban Development is imposing a new rule that would allow the feds to track diversity in America’s neighborhoods and then push policies to change those it deems discriminatory.

The policy is called, “Affirmatively Furthering Fair Housing.” It will require HUD to gather data on segregation and discrimination in every single neighborhood and try to remedy it.

HUD Secretary Shaun Donovan unveiled the federal rule at the NAACP convention in July.

Whatever happened to the ideal that Americans are a people free to come and go, to live where they choose to live?

Comment by Amanda Bynes' Bong
2013-08-08 07:11:50

I approve this policy. Hope they start with upper east side, upper west side, bethesda, chevy chase, beverly hills, etc.

 
Comment by MacBeth
2013-08-08 07:17:43

Obama needs to be reminded about the Taylor homes in Chicago, his old stomping ground. Demolished about 20 years ago now.

“Affordable housing” and immigration. Interesting how the topics are being raised simultaneously.

Seems to me that the government housing “investment” companies will make lots of dough off this sham.

With all the empty housing across the USA, you’d think that housing would be plenty affordable. But it’s not.

Two sets of deep-pocketed whores in the housing biz: big banks and government “investors”. Apparently, the twains ain’t meeting up very well. Big banks refuse to clear their books; government “investors” already losing money apparently.

Hence the push for immigrants.

(Sorry, but IT immigrants aren’t gonna help. Why not? Because they aren’t gonna to buy houses in Las Vegas, Chicago, Atlanta, St. Louis, Wichita, upstate New York. Instead, they’ll reside in San Francisco, Austin, DC and Boston - where the housing markets are already just fine, thanks.

Low-wage immigrants will be the rule, not IT immigrants, for whom everyone will be paying higher taxes to support.)

Lots of new slum towns in the offing across the USA.

Brilliant.

Comment by AmazingRuss
2013-08-08 07:38:41

IT is becoming low wage.

Comment by MacBeth
2013-08-08 07:57:02

Yes - and will continue to do so.

IT is not exempt from global wage parity.

Neither are housing prices.

Yet, the plutocrats in Washington haven’t realized it. Or have, but lie about it.

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Comment by AmazingRuss
2013-08-08 10:14:17

They’re still paying top dollar to the contractors, after all.

 
 
 
 
 
Comment by Housing Analyst
2013-08-08 06:46:23

Welcome to the Happy Bubbles Blog Everyone!!!

Does getting high on pure, unadulterated heroin make you happy?? Well push the needle in!!! Be Happy!

Sincerely,

The Blog Happy Talk/Knitting Club Director

 
Comment by Whac-A-Bubble™
2013-08-08 06:51:43

MARKETS
August 7, 2013, 8:18 p.m. ET
Detroit Rattles Muni Market
Plan to Replace Current Sewer Bonds Raises Concerns Over ‘Safe’ Investments
By MIKE CHERNEY, KELLY NOLAN and EMILY GLAZER CONNECT

A fight over bankrupt Detroit’s sewer system threatens to reshape the nation’s $3.7 trillion municipal-bond market.

The battle pits the city’s emergency manager, Kevyn Orr, against the fund companies, insurers and individuals that hold more than $5 billion of Detroit water and sewer bonds, over a plan to restructure the debt.

Mr. Orr wants bondholders to sign off on a plan to tear up some outstanding bonds and replace them with new ones that could have different terms. The switch could free up millions of dollars in city revenue, potentially reducing losses for other creditors in the city’s more than $18 billion bankruptcy case.

Some bondholders say they don’t want that deal, even though Mr. Orr says they wouldn’t suffer losses on the debt switch. They say tearing up the bonds could set a dangerous precedent that may shock buyers of supposedly safe municipal debt and impair financing for other U.S. states and cities.

A spokesman for Mr. Orr said he thought muni-market participants unsettled over the proposal “should calm down. We are still making our debt payments and the bonds are secured.” He said the proposal is “on the table, but that is by no means chiseled into stone.”

The clash highlights the hard choices facing investors and municipal-debt issuers alike as U.S. cities and states wrestle with dwindling tax bases, tight budgets and the high cost of legacy pension obligations.

Comment by Ol'Bubba
2013-08-08 07:08:12

The Detroit sewer bond investors don’t want their investment to go down the drain.

Imagine if they foreclosed on the sewerage plants and ceased operations…

Comment by 2banana
2013-08-08 07:13:03

Imagine if government lived with it means…

Imagine if city governments were not just job/retirement clubs for public union goons…

Comment by ecofeco
2013-08-08 10:50:11

Imagine if city governments were not just job/retirement clubs for crony contractors…

There. Fixed it.

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Comment by Steve J
2013-08-08 11:47:59

The average Detroit city retiree makes 1,200/mnth.

They probably would have made more by paying into Social Security.

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Comment by 2banana
2013-08-08 13:21:56

1. When do the pensions kicked in? 20 years?
2. Detroit has always had a bloated public union workforce and thus has way more retirees than it should have.
3. Detroit is not an “average” city. Not by a long shot. It has been destroyed by 60 years of progressive rule. So its pensions should be way on the low end.
4. Pensions should be what the taxpayers of the city can afford. Not what you, the union or anyone else thinks is “reasonable.”
5. Plus free health care for life.
6. So the real cost to the city is $50,000+/year per retiree
7. Soon the entire budget of Detroit will be used to pay retiree health care and pensions. What kind of insanity is that? No schools, no parks, no police, no firehouse, no streetlights. But we collect taxes and hey, we are paying pensions.
8. Eventually they will have to make a decision - is the city (or any city) in place for the public unions or for the citizens.

——————

Just how generous are Detroit’s pensions?
By Melanie Hicken - July 23, 2013 - CNN Money

Bankruptcy or not, Detroit’s emergency manager, Kevyn Orr, says the city simply can’t afford the pensions it has promised tens of thousands of retired and current city workers, many of whom are counting on the checks to make ends meet.

So how much money do Detroit’s retirees actually get?

On average Detroit’s firefighters, police officers and other city employees receive pension checks that are similar or slightly smaller in size than the national average of $30,000 a year

 
 
 
 
 
Comment by Whac-A-Bubble™
2013-08-08 06:55:19

Financial vultures are swooping down on economically depressed multicultural communities and feasting on the flesh.

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.

Comment by 2banana
2013-08-08 07:14:35

Call it what it is - theft.

The free sh*t army votes.

Even if they turn their city into Detroit.

Comment by Whac-A-Bubble™
2013-08-08 08:18:48

“Call it what it is - theft rich people who invested foolishly and lost their shirts.”

There…fixed it.

Obviously you have never visited Richmond, CA, or else you would understand why investing in $400K+ subprime loans used to encourage low-income families to purchase condos there would turn out badly for the rich investors.

Comment by polly
2013-08-08 08:56:01

Supreme Court opened a giant can of worms with that economic development case. Giant, squirming, etc.

On the other hand, if absolutely nothing else, it would force the bond holders to “mark to market” because it would buy them out of their position. I’d like to see how large the losses actually are. The information would be interesting. Is there enough information in the law suit to at least answere that question?

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Comment by oxide
2013-08-08 09:44:59

+1 Polly.

Do you think that Richmond will cite Kelo vs. New Haven CT? And would Richmond have a chance to prevail?

 
 
Comment by Whac-A-Bubble™
2013-08-08 09:00:27

A natural consequence of lending households more money than they could ever conceivably repay is that the money will never be repaid.

I’d like some further insight into why some posters view this outcome as “theft.” I chalk it up to foolish gambling activity; how those who participated could possibly have failed to anticipate their losses will always remain a mystery to me.

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Comment by sleepless_near_seattle
2013-08-08 11:11:55

how those who participated could possibly have failed to anticipate their losses will always remain a mystery to me.

When all you know and your only expectation is “up and to the right” it’s easy to see how participants fail to anticipate their losses.

 
 
Comment by 2banana
2013-08-08 10:59:58

That was their decision.

NO WHERE in the bond contract did it say “There is the risk that the local government may seize your mortgage bond at pennies on the dollar and then sell it back to the homeowner for some free sh*t army votes.”

Oh, I forgot. We are in the era of obama where contracts and law mean nothing. Only rewarding your cronies.

Obviously you have never visited Richmond, CA, or else you would understand why investing in $400K+ subprime loans used to encourage low-income families to purchase condos there would turn out badly for the rich investors.

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Comment by Steve J
2013-08-08 13:27:35

The most interesting thing is that 2/3rds of the mortgages are current.

 
 
Comment by Neuromance
2013-08-08 09:47:01

Here is the Supreme Court Kelo v. New London opinion, with dissents.

Justice O’Connor in her forceful dissent writes:

(Page 31): “Our cases have generally identified three categories of takings that comply with the public use requirement, though it is in the nature of things that the boundaries between these categories are not always firm. Two are relatively straightforward and uncontroversial.

First, the sovereign may transfer private property to public owner-ship—such as for a road, a hospital, or a military base.

Second, the sovereign may transfer private property to private parties, often common carriers, who make the property available for the public’s use—such as with a railroad, a public utility, or a stadium.

[Third] we have allowed that, in certain circumstances and to meet certain exigencies, takings that serve a public purpose also satisfy the Constitution even if the property is destined for subsequent private use…

(P. 34) In Midkiff, we upheld a land condemnation scheme in Hawaii whereby title in real property was taken from lessors and transferred to lessees. At that time, the State and Federal Governments owned nearly 49% of the State’s land, and another 47% was in the hands of only 72 private landowners. Concentration of land ownership was so dramatic that on the State’s most urbanized island, Oahu, 22 landowners owned 72.5% of the fee simple titles. Id., at 232. The Hawaii Legislature had concluded that theoligopoly in land ownership was “skewing the State’s residential fee simple market, inflating land prices, and injuring the public tranquility and welfare,” and therefore enacted a condemnation scheme for redistributing title. [ed. note: Incredible - all government policy today is designed towards inflating real estate prices.]

The Court’s holdings in Berman and Midkiff were true to the principle underlying the Public Use Clause. In both those cases, the extraordinary, precondemnation use of the targeted property inflicted affirmative harm on society—in Berman through blight resulting from extreme poverty and in Midkiff through oligopoly resulting from extreme wealth. And in both cases, the relevant legislative body had found that eliminating the existing property use was necessary to remedy the harm. Berman, supra, at 28–29; Midkiff, supra, at 232. Thus a public purpose was realized when the harmful use was eliminated. Because each taking directly achieved a public benefit, it did not matter that the property was turned over to private use. Here, in contrast, New London does not claim that Susette Kelo’s and Wilhelmina Dery’s well-maintained homes are the source of any social harm. Indeed, it could not so claim without adopting the absurd argument that any single-family home that might be razed to make way for an apartment building, or any church that might be replaced with a retail store, or any small business that might be more lucrative if it were instead part of a national franchise, is inherently harmful to society and thus within the government’s power to condemn.”

Kelo is outrageous extension of government power. But even without Kelo, specifically Midkiff took ownership from lessors and redistributed to lessees to directly right an active social harm.

So Richmond just needs to point to Midkiff and say there is an affirmative social harm from defaults and foreclosures due to a drop in real estate prices (e.g. neighborhood destabilization and increased blight. And perhaps increased poverty). And that the transfer from lessor to lessee will directly stop that social harm. Done and done. Pretty cut and dried seems to me.

Comment by Whac-A-Bubble™
2013-08-08 11:06:04

“…affirmative social harm from defaults and foreclosures due to a drop in real estate prices…”

The social harm was due to the influx of subprime lending which drove prices up to levels way out of line with local household incomes.

Comment by Neuromance
2013-08-08 11:32:41

Absolutely true. Additionally, the first cause was reckless predatory lending enabled by the lenders ability to completely shed repayment risk.

However, to make it easy to understand for judges, whose thinking on real estate is likely quite shallow, pointing directly to the harm immediately impacting the population at the end of the chain of events will be more convincing I think.

It’s like looking at a heroin addict who’s overdosed. The cause of the harm was injecting too much heroin, perhaps driven by a heroin addiction, perhaps initiated by poor judgement. The end result - the actual harm - is the physical collapse caused by the overdose.

Similarly, the cause of the harm here is the debauched lending driven by lack of repayment risk. The actual harm is the foreclosures, defaults, blight and intensified poverty.

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Comment by samk
2013-08-08 10:48:48

Using Eminent Domain to keep someone IN their house? Crazy talk.

Comment by In Colorado
2013-08-08 11:29:02

Crazy talk for crazy times.

I wonder how historians in the future will chronicle these “interesting times” we live in.

Comment by Steve J
2013-08-08 11:49:30

Probably on stone tablets.

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Comment by sleepless_near_seattle
2013-08-08 11:15:46

The lawsuit…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.

About the only thing I like about this is the squealing coming from the banks. Squeal, piggy. Squeal.

 
Comment by Whac-A-Bubble™
2013-08-08 18:40:38

Stiffing creditors has its costs.

Legal/Regulatory | Wall Street August 8, 2013, 7:55 pm
Woes of Detroit Hurt Borrowing by Its Neighbors
By MARY WILLIAMS WALSH
Saginaw County, Mich., pulled a bond sale that was planned to put $60 million into a pension fund for county employees, like police officers.
Clay Lomneth/The Saginaw News, via Associated Press

The Detroit Effect has rippled all the way to Wall Street.

Two weeks after Detroit declared bankruptcy, cities, counties and other local governments in Michigan are getting a cold shoulder in the municipal bond market.

The judgment has been swift and brutal. Borrowing costs are up around the state, in some cases drastically. On Thursday, Saginaw County became the latest casualty when it said it was delaying a $60 million bond sale planned for Friday. It had hoped to put the proceeds into its pension fund.

It was the third postponed bond sale in Michigan since Detroit dropped its bombshell on July 18. Earlier this week, the city of Battle Creek said it would postpone a $16 million deal scheduled for August because of concerns that investors would demand interest rates that were too high. And the previous week, Genesee County withdrew a $54 million bond sale from the market for the same reason.

Detroit’s bankruptcy, the largest ever by a municipality, has raised fundamental concerns about the safety and security of municipal bonds, certainly in Michigan but potentially elsewhere in the country, too. The municipal bond market appears to be sending Michigan’s cities a message that no matter how well rated they are, they are going to have to postpone their plans and projects or pay more for them.

When Jefferson County, Ala., declared bankruptcy in 2011, there were warnings it had tainted the credit of all other municipalities in the state, but the expected fallout never materialized. After Orange County, Calif., came through its bankruptcy in the 1990s, its borrowing costs actually fell. But Michigan appears to have something new — a bankruptcy that makes it harder for others in the state to borrow.

Detroit’s state-appointed emergency manager, Kevyn Orr, has proposed imposing deep cuts on some bondholders — treating them the same, in effect, as retired Detroit workers who have been receiving city-paid health insurance that will now end. Mr. Orr’s bankruptcy plan would put them all at the back of the line for whatever money is available, as unsecured creditors.

And because the city’s bankruptcy filing was approved by the governor, Rick Snyder, it is seen as the best distillation of how Michigan will treat certain bondholders in times of trouble.

Putting a city’s “full faith, credit and taxing power” behind a bond no longer means what it did in the past, anywhere in the state, critics say. The governor and Mr. Orr have said they are not concerned about the effect of the bankruptcy plan on the municipal bond market as a whole. But other participants find their treatment of indebtedness profoundly disturbing, and their anxiety has spilled over to other Michigan municipalities.

“A lot of the people I talk to are investors who are just very angry about this,” said Matt Fabian, a managing director at Municipal Market Advisors. “Bonds are so cheap everywhere across the whole market, there’s no reason to put anyone in Michigan bonds right now.”

 
Comment by Whac-A-Bubble™
2013-08-08 19:00:21

“Lenders do have a right not to lend, if in fact the risks seem too high.”

Is redlining minority communities now legal?

“The city will force the mortgage holder, via eminent domain, to sell the mortgage at less than face value — let’s say, $225,000. The homeowner gets to refinance at $250,000. There’s $25,000 left over from the refinance proceeds. That profit would be split by the city (to use for legal and administrative fees, or other public purposes), MRP, and the investors MRP solicits to put up the money for the deal.”

If the courts find this legal, then why shouldn’t the city go all the way: Force the mortgage holder to sell the mortgage at, say, $1. That will allow the homeowner to refinance at $250,000 (the presumptive market value of the loan), but also would “leave over” $249,999 in “profits” that could be split by the city, MRP, and the investors.

If it’s legal for the city to take $75,000 from the mortgage holder ($300,000 - $225,000), why wouldn’t it also be legal for them to take $299,999 ($300,000 - $1)? Isn’t the $225,000 amount to pay off the lender completely arbitrary, and hence susceptible to an arbitrarily lower choice of the amount to force the lender to accept?

P.S. In case this turns out to be legal, WHERE DO I SIGN UP?

Banks sue a California city trying to take over underwater mortgages
David Cohen / Creative Commons
Richmond, Calif.
by Mitchell Hartman
Marketplace for 8/8/13

The city of Richmond, Calif. — a working-class community in the Bay Area — is now in federal court. Banks sued the city yesterday over a novel legal strategy the city is trying to use to deal with a troublesome blot on the city’s economic health: distressed homeowners who owe more on their mortgages than their houses are worth.

With the help of a private investment firm called Mortgage Resolution Partners, Richmond is trying to keep those homeowners in their homes, using ‘eminent domain’ to force banks and investors to sell their mortgages off to the city at a discount.

Richmond, and Mortgage Resolution Partners (MRP), insist this is for ‘the public good’ — just like the use of eminent domain to seize property to build roads, parks or affordable housing. Property owners are entitled to fair compensation, often determined by a court. The same could occur in this case if the parties don’t agree on a price.

Yesterday in federal court in San Francisco, several banks, including units of Wells Fargo and Deutsche Bank, representing multiple mortgage investors, including BlackRock, Pacific Investment Management, Fannie Mae and Freddie Mad, sued, alleging the plan is not in the ‘public good’ at all, and would the banks and investors financially.

Mortgage Resolution Partners’ business proposition for the City of Richmond goes like this:

Let’s say a homeowner is stuck with a $300,000 mortgage. But the house is now worth a lot less — perhaps, $250,000.

The city will force the mortgage holder, via eminent domain, to sell the mortgage at less than face value — let’s say, $225,000. The homeowner gets to refinance at $250,000. There’s $25,000 left over from the refinance proceeds, That profit would be split by the city (to use for legal and administrative fees, or other public purposes), MRP, and the investors MRP solicits to put up the money for the deal.

“MRP’s fee is a flat-fee per loan, and that fee is $4,500,” says John Vhaloplus, MRP’s Chief Strategy Officer. “We don’t share in any profits.” He says the $4,500 fee is the same that any bank would be paid — for instance, Morgan Stanley or Bank of America — to reduce principal and refinance an underwater mortgage under the federal program designed to help distressed homeowners.

But critics say the investors that MRP lines up would take a substantial piece of the profit. And it’s out of someone else’s pie, says Christopher Whalen at real estate firm Carrington Investment Services.

Whalen charges that the losers would be the original holder of the mortgage note. That might be a bank, or a group of bond investors who own slices of a mortgage-backed security. Those investors would be forced to take a bath.

“It’s rather unseemly for somebody in our business to advocate the taking of property,” says Whalen. “When you look at this eminent domain process, I don’t think that the holder of the note — let’s say that they’re compelled to sell — is going to get good value.”

Real estate professor Susan Wachter at the University of Pennsylvania’s Wharton School says the city of Richmond and its homeowners could also be big losers. Lenders could shun them in the future and redline their neighborhoods.

“What does this do to mortgage borrowing and lending in that community?” she asks. “Lenders do have a right not to lend, if in fact the risks seem too high.”

 
Comment by Whac-A-Bubble™
2013-08-08 21:59:19

Financial gorillas say NO to Richmond’s eminent domain proposal.

Perhaps Richmond could call their bluff? At worst, they might have to settle for privately-funded housing loans, which would only cover purchase prices equal to the market value of the collateral.

U.S. warns against eminent-domain mortgage seizures
Federal Housing Finance Agency threatens to curtail lending in cities, including Richmond, Calif., that resort to eminent domain.
By Alejandro Lazo
August 8, 2013, 7:41 p.m.

The nation’s top housing finance regulator threatened to choke off mortgage lending in cities that use eminent domain to seize underwater loans from lenders.

The salvo from the Federal Housing Finance Agency came Thursday, on the heels of a lawsuit directed by major Wall Street firms and U.S.-sponsored mortgage giants Fannie Mae and Freddie Mac against the Bay Area city of Richmond.

Richmond is the first to push forward with the plan, also being debated in cities across the state and nation. Richmond wants to require lenders and investors to sell underwater mortgages at a deep discount. The city would then refinance borrowers into more-affordable mortgages.

The federal housing agency, which regulates Fannie and Freddie, on Thursday made clear it doesn’t intend to let this happen. The agency said it would instruct Fannie and Freddie to “limit, restrict or cease business activities” in any jurisdiction using eminent domain to seize mortgages.

The move would be a “huge blow” to the city of Richmond, said Guy Cecala, publisher of Inside Mortgage Finance.

“It is pretty much a death sentence these days in terms of mortgage financing,” Cecala said. “It is sort of an atom bomb solution, and the real question is would they pull the trigger on it, or is it just a threat? But it is the kind of thing they could do fairly quickly.”

 
 
Comment by Whac-A-Bubble™
2013-08-08 06:56:37

Who’d've thunk subprime mortgages made in Richmond, CA would ever go bad?

Comment by samk
2013-08-08 07:17:45

Is it different there?

Comment by AmazingRuss
2013-08-08 07:40:59

Quite different. One is afraid to exit one’s vehicle there.

 
 
Comment by Steve J
2013-08-08 13:29:27

According to the WSJ, the vast majority of the mortgages are still current. 444 out of 624.

 
 
Comment by SUGuy
2013-08-08 07:18:11

Inflation , deflation, stagflation, or is it going to be an inflationary depression if as the BRIC nations have decided to trade with each other without the federal notes?

My made in china crystal ball says inflationary depression starting with the next leg down in the economy.

Comment by 2banana
2013-08-08 07:40:19

Trade with each other based on what?

China and Russia have defaulted on their currency half and dozen times in the last 100 years.

Brazil has had inflation at over 100% at times.

You want to trade and put your trust in that?

A gold back currency would work - none exists.

Comment by SUGuy
2013-08-08 07:54:26

Why don’t you just stick with bashing Obama.

Comment by AmazingRuss
2013-08-08 10:15:27

Even the liberals are bashing Obama now. It’s no fun anymore.

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Comment by In Colorado
2013-08-08 09:11:39

To a degree they already are trading with each other. A friend of mine is visiting Chile. He says that there are a lot of super cheapo Chinese cars on the road there. But if the Chileans can’t get hard currency (by selling stuff like salmon and copper to the USA) they won’t have money for $4000 Geeley brand cars.

 
 
Comment by Joe Smith
2013-08-08 07:36:49

Tesla stock soaring today on earnings/profits news.

I’ve been saying it for a while but it bears repeating: Unless you’re going to spend 100k+ and cop that high end Merc or Audi, Tesla makes the best cars on the US market right now.

I wish Fisker was around too so they could move into the middle part of the car market instead of just high end, but I think carl morris or combotechie (I forget which) was right - there is only room for one innovator at this point. My buddy drove a Fisker at this event where they closed down Martin State Airport for the day and you could buy a bracelet to drive Ferraris, Bugattis, etc. Said the Fisker stood up to any of them. He’s a mechanic so I trust him on this.

Tesla Type S easily the status symbol on K street these days, for both shitlibs and reptiles. It probably helps that they’re the only dealer on K street at K & 11th (5 blocks from Treasury Dept/White House, 1 block from CATO for the reptile crowd).

Comment by Carl Morris
2013-08-08 08:11:45

I don’t *think* it was me that said what you’re thinking of. But anyway, Fisker is dead. Tesla is now the Apple of cars. Question is, can they stand up to the dealer lobby who wants to force them to use or create a dealer network?

Comment by Joe Smith
2013-08-08 08:37:48

If Tesla defeats the dealer lobby, it will be just as significant as the cars they make.

The DC Tesla dealership is in the ground floor of a building that houses a lot of K Street lobbyists. They only have 1 car of each model and they’re beautifully displayed, almost like art objects. Missing are all the tacky signs and ribbons and flags that one usually finds at auto dealers. No huge inventory, no used car lot, no waiting area, just the cars and a service area. The closest thing I’ve ever seen is the Mercedes or BMW dealer (I forget which) in Midtown Manhattan near Park Ave at maybe 52nd Street.

Comment by Carl Morris
2013-08-08 09:14:24

If Tesla defeats the dealer lobby, it will be just as significant as the cars they make.

I’d say far more significant. On the same order as bypassing the 6%ers.

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Comment by sleepless_near_seattle
2013-08-08 11:20:10

I hope it happens. I like the street-side showrooms, like the one on the ground floor of an old brick building in the South Lake Union neighborhood of Seattle.

Was shocked, and a little disappointed, when I saw one in the local mall. But, if it gets the message to the most people, and educates on the technology, more power to them.

 
 
 
Comment by inchbyinch
2013-08-08 17:00:47

Tesla Type S
Signed up for a test drive (in our area) and omfg, nice car to drive. Put my husband’s Vette to shame.

What ever happen to free enterprise in this country? Tesla should be free to decide its own distribution method.

Comment by sleepless_near_seattle
2013-08-08 17:08:42

Tesla should be free to decide its own distribution method.

Yup. And until they have a better sense of scale why would they go with dealers? Most of their stores are in populated areas.

If they go mass production, THEN I could see them adding dealers in outlying, if not all, areas.

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Comment by Carl Morris
2013-08-09 08:18:09

What ever happen to free enterprise in this country? Tesla should be free to decide its own distribution method.

The dealer cartel has much more power than you understand. You’re surrounded by it but you don’t realize it because “it’s always been that way”. Tesla’s challenge to it is a big deal, much bigger than just some upstart company making a few electric cars.

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Comment by (Neo-) Jetfixr
2013-08-08 10:13:27

“Tesla makes the best cars on the market”

A $100K car is not affordable to 95% of the “market”. So how can it be the “best”?

(Of course, if the long range plan is to put the wretched refuse in mass transit, bicycles, or walking, and your market is the top 5% of the rentiers, you’ve nailed it).

Anyone can make a $100K car, for a clientele where the “cool” factor overrules reliability and practicality.

(We’ll almost anyone……Tesla was circling the drain, until they finally figured out that maybe those guys in Detroit knew something about building cars, and hired some of them).

Throw enough money and hype at a product, and it can succeed in spite of itself.

A defeat of the dealer lobby will do one thing, however. It will show a bunch of dealers that the big boys in DC and on Wall Street consider them as cannon fodder, just like the rest of us schlubs.

Elon Musk = Silly Valley’s automotive equivalent of Vern Raburn.

Comment by Joe Smith
2013-08-08 11:19:01

Tesla model S is like 60something, probably around 70k with the options. That’s the car I’m comparing to 100k+ cars.

Tesla has new models coming out in the 25-40k range.

Tesla > any other automobile company. Unless you’re driving a super high end car, you can’t beat their product head to head.

Comment by (Neo-) Jetfixr
2013-08-08 12:00:32

We don’t know what they will cost, until they actually come out.

And how are they going to price “options”. Maybe they will follow the Porsche model, where the “options” cost a small fortune.

Here’s the deal……as we’ve found out in the bizjet business, your customers are going to find/create all kinds of problems, no matter how much testing you do beforehand. And most of our customers are technologically savvy.

One thing I’ve found in my career is that the top 10%ers don’t give a crap about “little people” problems. And they don’t want to know about them. They want to act like this high-dollar and high tech gear is the same as your toaster. They just want to get in and go. And have giant hissy fits when it doesn’t happen.

Tesla is selling to the same demographic. Their cars had better be 100% durable/reliable straight out of the box, and have a backup plan for no questions asked, butt-kissing, sacrifice some virgins customer support when they have problem.

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Comment by In Colorado
2013-08-08 11:33:31

A defeat of the dealer lobby will do one thing, however. It will show a bunch of dealers that the big boys in DC and on Wall Street consider them as cannon fodder, just like the rest of us schlubs.

Oh yes, they think they are members of the “club”.

This is why small business owners shouldn’t support the GOP. Sure, they like the idea of paying less taxes. What they don’t understand is that the GOP serves the interests of the super rich, and basically views Main St., small business owners as expendable.

Comment by Steve J
2013-08-08 11:52:49

Buying news cars over the Internet will never be legal. It’s just too dangerous for Americans to handle.

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Comment by (Neo-) Jetfixr
2013-08-08 12:10:59

Another deal that makes “free market” propaganda such a laugher (Dealer Franchise Agreements)

You would be shocked to see what Detroit could/would sell cars for, if they were allowed to throw their dealer networks under the bus. (Buddy of mine’s dad owns a couple of car dealerships…..he bought a car with a +$21K MSRP for about $12K)

Kill the dealers, and put a bunch of people out of work. Or they will get turned into 1099s, doing warranty and dealer prep work part-time, or on contract.

Fixing cars will get real expensive, or mechanics hard to find, or both. No more dealers to act as OJT centers.

You will also kill the reason that a bunch of towns out in flyover even exist. Hey, but nobody cares about Flyover anyway.

 
Comment by Joe Smith
2013-08-08 12:49:32

Flyover is already heavily supported by fed gov’t money - blue states in the NE and West Coast. Meanwhile, the politicians out in the bible belt badmouth the godless taxpayers of the coasts and preach “fiscal responsibility”… while paying for it with federal cheese.

 
Comment by My failure to respect is unacceptable
2013-08-08 14:15:31

You are spreading lies. Which states get the bernanke bucks first? Any other discussion is pointless.

 
 
 
Comment by measton
2013-08-08 16:53:34

My Tesla was under 50k but I bought early.
I’ll save over 2k a year for the next 10 years vs a similar gas model and 1200k a year vs my hybrid.
I won’t need new brakes as the electric motor does 95% of the stopping. Saving another 1000 bucks.
I won’t need oil, filters, spark plugs so I save another 1000-1500 bucks.

The battery should work well to 150k at least,
Then I can swap the battery for 10k or let my wife drive it.
Motor should last 500k minimum then just change the bearings.
No rust as the car is aluminum.

Go test drive one of these you will soon realize why the company is doing well. 0 to 60 in 5 seconds or less and no engine noise, no shifting just smooth acceleration. Seats up to 7. You can’t go anywhere with out hearing some one say sweet car.

Comment by Prime_Is_Contained
2013-08-08 18:40:37

0 to 60 in 5 seconds or less

Rode in a friend’s a few weeks back; I would say the 70-to-90 is even more impressive! Nice torque for highway speeds…

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Comment by Carl Morris
2013-08-09 08:36:15

And they’re just as fast at high elevation, while everybody else is significantly slower due to the thinner air making less power. Even more impressive (relatively) up here.

 
 
 
 
 
Comment by Jingle Male
2013-08-08 07:45:02

Yesterday on the Bits Bucket:

Comment by Rental Watch 2013-08-07 20:03:42

Hey Jingle (if you are still on):

At what point do you begin to get concerned about another bubble?

My biggest concern is that the Fed keeps rates too low for too long (especially for the CA housing market), and creates bubble 2.0 here (if not elsewhere as well).

My $0.02, is that I hope that we start seeing a reduction in the price increases within the next 3-6 months, or else I fear that we are going to replay a slightly smaller version of the last bubble (not as big because liar loans aren’t coming back this soon).
__________________________________

Answer: The biggest contributor to the 2006 housing bubble was the funny money liar loans. It drove prices to ridiculous levels because the buyers did not care what they paid, since they made no down payment and had low starter payments. When they walked away, they lost nothing.

The housing market today is supported by real buyers and real loans where the borrower is qualified to make the payments. None of these people are likely to walk away with equity and affordable payments, so none of these houses will be tossed back into the pool at fire sale prices. There is nothing to drive the market down.

The rate of appreciation will top out and level off(actually it already is) as the builders bring more homes on the market, some underwater homeowners reach the surface, interest rates rise and the pent up demand is eased. Housing goes up and down in value. It is supply and demand (even artificial demand of 2004-6). The demand today is real. The supply will catch up, but new supply will dictate prices at reproduction cost. I don’t see reproduction costs dropping. Thus downward price pressure, yet a maximum price cap of reproduction costs. In 2005-7, people paid 150% to 200% of reproduction costs. That will not happen today (but maybe again in 7-10 years?)

Comment by Housing Analyst
2013-08-08 07:47:54

JingleBalls,

How do you account for massively inflated asking prices.

ANSWER the question

Comment by Joe Smith
2013-08-08 08:31:01

Lots of JOBS in Sacramento, RAL. Call center/customer service sector is booming. $10/hr is the new “middle class”.

 
Comment by Jingle Male
2013-08-08 13:18:17

It is easy to analyze…. “Housing Analyst” ….. supply and demand, reproduction cost, population growth, income and debt service ratios, wealth. There are multiple factors….they all contribute to the equation, some support, some do not.

No real reason to run the numbers for you as you just refuse to believe there is a recovery. I can give you a 127,000 examples, but that doesn’t seem to have any effect either.

Keep on bloggin’, that seems to be what you do best…

Comment by Housing Analyst
2013-08-08 15:16:25

“Reproduction” costs huh? What are they?

Spit it out now… then we’ll get to what a “housing recovery” is.

Get typing.

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Comment by 2banana
2013-08-08 07:51:43

Your biggest concern is obama and the Fed’s greatest hope…

My biggest concern is that the Fed keeps rates too low for too long (especially for the CA housing market), and creates bubble 2.0 here (if not elsewhere as well).

Comment by In Colorado
2013-08-08 09:57:00

Obama isn’t doing much of anything will be gone in a few years. The Fed will be with us forever.

Comment by Housing Analyst
2013-08-08 10:48:47

Just pay up right “Colorado”? Just like the rest of your OxyThink.

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Comment by 2banana
2013-08-08 11:06:18

Funny how I never heard these apathetic comments when Bush was president…

Obama isn’t doing much of anything will be gone in a few years. The Fed will be with us forever.

Hint: Who appointed SEVEN of the SEVEN of the current Federal Reserve Board of Governors???

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Comment by Steve J
2013-08-08 11:54:29

Obama == Bush

You guys just don’t get it.

 
Comment by (Neo-) Jetfixr
2013-08-08 12:31:54

Obama = Bush

Pretty much where it counts, when it comes down to dollars.

That’s what makes all of these rants about Obama being a socialist so comical.

 
 
 
 
Comment by Beer and Cigar Guy
2013-08-08 09:14:42

Biff! Came back again to reassure yourself of what a great decision you made going all-in? I’m shocked… Also from yesterday:

“Comment by Beer and Cigar Guy
2013-08-08 03:42:00

“Comment by Ben Jones

2013-08-07 20:49:52

‘At what point do you begin to get concerned about another bubble’…

There’s this question; what made you think the bubble was over? When the government stopped backing 90% of loans? When the jobs picture improved and incomes rose? When structural problems in the economy were addressed, instead of a years long flood of stimulus and ridiculously low interest rates? And the easy one; when people could afford the dang houses?”

We just can’t seem to comprehend it, but the bubble resolved BECAUSE he decided to buy. When he decided to jump back into the market, THATS when the bubble was at its nadir. He bought at EXACTLY the right time and since there is no more bubble, all of his gains are permanent, irreversible and can only increase from this point onward. For him and many people like him, ‘the bubble MUST be over, because I NEED it to be over! I’M all-in now!’ This is the essence of magical thinking.”

 
Comment by sleepless_near_seattle
2013-08-08 10:55:55

My $0.02, is that I hope that we start seeing a reduction in the price increases within the next 3-6 months, or else I fear that we are going to replay a slightly smaller version of the last bubble (not as big because liar loans aren’t coming back this soon).

I’m trying to reconcile this with the articles about SF saying that they are within 6% of the peak bubble price.

How, without liar loans and such, are we this close to peak prices? How?

Portland isn’t far off, either. In the more desirable nabes we’re near, if not at, peak prices.

Where is all this money coming from?

 
Comment by cactus
2013-08-08 11:09:26

My $0.02, is that I hope that we start seeing a reduction in the price increases within the next 3-6 months, or else I fear that we are going to replay a slightly smaller version of the last bubble (not as big because liar loans aren’t coming back this soon).”

Agree. It would be unbelivable if the central bank let another bubble form so soon after the 2008 one.

I expect a slow down and possible price drops ahead as interest rates go up and lenders like FNMA get smaller.

Longer term like 10 years ? No idea. The way government likes to meddle SFH could be outlawed for all by a few.

 
Comment by Neuromance
2013-08-08 13:57:32

The government has a little something to do with today’s market too (p.10 - PDF)

The market runs on securitization - lenders being able to offload loans into mortgage backed securities. And it’s government that’s been issuing nearly 100% of MBS for the past 5 years. No private party would do it at today’s prices. Because they know better.

As long as the government is 100% of the mortgage market, you get the same effect that happens when government wades into any market - skyrocketing prices.

Comment by sleepless_near_seattle
2013-08-08 17:13:01

No private party would do it at today’s prices. Because they know better.

That’s gold. I need to work that into my next housing related conversation. Methinks that should bring out the crickets and blank stares. Thanks.

 
Comment by Whac-A-Bubble™
2013-08-08 21:30:11

“…you get the same effect that happens when government wades into any market - skyrocketing prices.”

Plus a future collapse.

 
 
 
Comment by Housing Analyst
2013-08-08 07:45:45

It must be very frustrating for the liars knowing they can’t dominate the dialogue and distort the truth on the #1 housing blog on the planet.

Comment by Carl Morris
2013-08-08 08:15:29

I don’t know how many readers we have, but as far as contributors go it feels like there are only maybe 10 people under about 30 aliases. I’m skeptical that we have much of a footprint in the big scheme of things. But it does seem to be enough that people feel the need to try to hijack it anyway, so I guess there’s still hope of making a difference.

Comment by Amanda Bynes' Bong
2013-08-08 09:11:54

I’m skeptical that we have much of a footprint in the big scheme of things.

but you know what lance armstrong said, “it’s a small leap for…..”

 
Comment by cactus
2013-08-08 11:11:23

it feels like there are only maybe 10 people under about 30 aliases.”

hahaha yep

 
Comment by Robin
2013-08-08 13:11:00

CM, it seems sadly so. Now just tossing barbs - sometimes philosophical, oft times political, more often anal, like the analyst.

Thank God Ben gives us some content. HA spews negativity and should FOAD.

Comment by Housing Analyst
2013-08-08 15:14:07

Oh poor thing. Another dishonest one dressing truth up as negativity.

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Comment by Beer and Cigar Guy
2013-08-08 15:28:56

“HA spews negativity and should FOAD.”

Well, at least YOU lead by example and don’t devolve into negativity and insults, huh? So, you’ve got THAT going for you, which is nice…

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Comment by phony scandals
2013-08-08 08:22:41

CNN President Jeff Zucker’s teenage son resigns from cushy consulting gig as ‘millennial adviser’ at Cory Booker start-up Waywire - Twitter critics blast hire as ‘gross nepotism alert’

By BETH DEFALCO, REUVEN FENTON and BRUCE GOLDING
Posted: 1:59 AM, August 8, 2013

He isn’t even old enough to drive — but CNN President Jeff Zucker’s teenage son has already resigned from a cushy position at Cory Booker’s closely watched Internet start-up.

After somehow scoring a seat on the advisory board of the rising Democratic star’s Waywire video-sharing site, 15-year-old Andrew Zucker abruptly quit yesterday amid questions over his qualifications.

The rich kid’s consulting career as a “millennial adviser” ended just hours after it was revealed that he had been granted stock options in the firm co-founded by Booker, the Newark mayor who polls show is a shoo-in for the US Senate after a special election.

“Despite the fact that his affiliation with Waywire was extremely limited to only an advisory capacity, in order to avoid even the perception of a conflict, Jeff’s son has resigned from the Waywire advisory board, effective immediately,” CNN said in a statement.

News of Andrew’s stock deal lit up social media yesterday, with critics on Twitter branding it a “gross nepotism alert.”

Corporate-governance experts also called his hiring highly unusual, saying they’d never before heard of anyone so young getting such a cushy gig.

Advisory boards are usually stocked with “seasoned folks who have been through the process of making that kind of a start-up work, or enhancing the capacity of a company so it can move to an IPO [initial public offering] or the next level of business,” said Eleanor Bloxham, CEO of The Value Alliance. “So you’re not generally looking in the high-school age range.”

HUGE LEAD FOR BOOKER

Another prominent expert said the arrangement “raises more questions than answers” about the relationship between Jeff Zucker and Booker — who is routinely covered by the CNN chief’s flagging cable network.

“It creates a conflict of interest,” the expert said.

Andrew, the eldest of Zucker’s four children with wife Caryn, previously made headlines in 2011, when his powerful pop threw him a lavish, $250,000 bar mitzvah at the Four Seasons featuring a performance by the rapper Drake.

A spokesman for Booker said the mayor was not involved in wooing the tech-savvy teen to the new company.

“The mayor never met with or talked to Andrew when he advised the company, and wasn’t involved in him joining Waywire,” said Kevin Griffis.

A Waywire spokesman said Andrew was hired in March after another member of the firm’s advisory board told co-founder Sarah Ross that he “had developed a reputation of being able to identify technologies that would be popular with teenagers and which ones wouldn’t be.”

The spokesman said the stock options Andrew got in exchange were “minimal” in comparison to those granted other advisers, who include Lady Gaga’s manager, Troy Carter, and Ustream founder John Ham.

http://www.nypost.com/p/news/national/son_burn_cnn_kid_quits_cory_7jVu0L0hkP5FqvYsISlABO

Comment by Amanda Bynes' Bong
2013-08-08 09:10:13

Watch out for the strings, politicians are just the puppets.

Comment by phony scandals
2013-08-08 14:52:00

Amanda Bynes’ Bong

I wonder if she spilled the bong water when she flung it?

If memory serves, bong water can get pretty rank if not changed regularly. I mean it wouldn’t take a drug sniffing SWAT dog to figure out that the nasty trail of swamp water by the open window came from a frequently used, but not well cared for bong.

 
 
Comment by In Colorado
2013-08-08 09:16:23

The spokesman said the stock options Andrew got in exchange were “minimal” in comparison to those granted other advisers

I’ll bet they were still worth several times a typical Lucky Ducky’s annual income.

Where do I sign up to be an “adviser”?

Comment by ecofeco
2013-08-08 11:02:55

First you have to pick the right parents.

Comment by In Colorado
2013-08-08 11:40:20

There is always a catch

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Comment by oxide
2013-08-08 09:54:00

Age 15 is too young to be a Millenial”

For lack of a better term, I guess Zucker would be an older “echo buster,” kids of the forgotten Gen Xers.

Comment by Steve J
2013-08-08 11:57:05

1998 sounds about right to be a Millennial.

The millennium was in 2000, right?

Comment by oxide
2013-08-08 16:26:01

The Millennial refers not to birth date, but to when the kids would graduate from high school: Class of 2000. Millenials are the children of boomers and are now about age ~20-30. They have college loans, no career, and are putting off marriage.

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Comment by sleepless_near_seattle
2013-08-08 17:16:17

They have college loans, no career, and are putting off marriage.

What are they doing for housing?

 
Comment by Whac-A-Bubble™
2013-08-08 20:27:36

“What are they doing for housing?”

Soon to come: OBAMALOANS.

 
Comment by Whac-A-Bubble™
2013-08-08 20:32:11

Y’all thought I was making it up, didn’t ya?

In this case, truth is stranger than fiction. History will marvel at the folly of the hair-of-the-dog Housing Bubble remedy!

Obama Is Pushing Banks To Make More Home Loans To Borrowers With Poor Credit
Brett LoGiurato Apr. 3, 2013, 8:26 AM

The Obama administration is readying a push to get banks to make more home loans available to individuals with weaker credit, The Washington Post’s Zach Goldfarb reports.

It’s a push that walks a tightrope, since it is expected to help boost the continuing economic recovery immediately but risks opening up the shaky lending that led to the housing crash. Obama’s plan would provide for more lending to individuals such as young people buying their first homes, as well as people whose credit has been damaged by the recession.

 
 
 
 
 
Comment by Little Al
2013-08-08 09:07:14

It would be a good time right about now for many people to realize that the mini manufactured housing bubble we’ve seen this Summer is about to fizzle out. I sure hope that’s true so I can buy my dream-retirement farm in a location to be disclosed with bells, whistles, and other useless frivolity and jollity after my purchase.
Please stay eagerly tuned in to progress on my great dream.
On the other hand, Obama handing a victory in 2016 to Hillary depends on inflated housing prices.
But, Bernanke has to control the Kool-Aid spigot quickly or inflation will spiral out of control. That will stall the stock rally and housing.
I’m taking profits today on my stock investments.
Oh for a crystal ball.

Comment by oxide
2013-08-08 09:57:03

“my dream-retirement farm ”

I know that there has been a boom in farmland prices, but does that apply to smaller acreages with a house on it, or only to huge parcels for large scale subsidized monocrops?

Comment by Housing Analyst
2013-08-08 10:51:36

And what are you planning to farm? At what yield are you profitable? Have you ever dirt farmed? Ever had to milk a 200 head herd 2x/day?

Comment by Little Al
2013-08-08 12:09:28

I think retirement means to me to look out my window and survey my land, and say wow this is mine, and plant a little garden. My nephew is going all in and is giving up his lawyer career to plant an organic farm and live in a cob house. I don’t know if I want to get that hard core, but when you look at global warming seriously, a city could be a very dangerous place in the not-too-distant future when the trucks stop bringing all that petro food. You know peak oil and all that. When Los Angeles was living in the stone age it could probably feed 20,000 mouths. I believe we have already burned half the fossil fuel on this planet since the start of the Industrial Revolution in 1820. In 193 years we have burned half of what it took nature 500 million years to form. Not good when you do the math.

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Comment by Robin
2013-08-08 13:17:20

So we should have another 193 years left to go?

Will stem cells keep me alive and comfortable that long?

If so, I’m in! - :)

 
Comment by Housing Analyst
2013-08-08 15:12:24

A garden doesn’t equal farming. Not even close by the widest definition. And a garden can be planted on a few hundred square feet. You don’t need a bunch of worthless non-productive dirt at massively inflated prices to do it.

 
 
 
 
 
Comment by inchbyinch
2013-08-08 09:57:33

Kangaroo stays with boy lost in Australian wilderness
http://abclocal.go.com/kabc/story?section=news/bizarre&id=9199732

With all the doom and gloom in this world, I thought this was a nice story.

Comment by ecofeco
2013-08-08 11:08:50

Pretty cool.

 
 
Comment by Neuromance
Comment by ahansen
2013-08-08 23:41:42

Hah.

 
 
Comment by Middle Coaster
2013-08-08 10:08:02

Gee whiz, only a half million per bedroom, what a bargain!

Marc Trestman, 57, who was named head coach of the Chicago Bears in January, and his wife paid $2.94 million in May for a newly built six-bedroom mansion in Winnetka.

The French Provincial-style house has 6 1/2 baths, a kitchen with top-of-the-line appliances, a cherry wood library, a third-floor loft and a lower level with a movie theater, a wine cellar and a fully equipped sports court.

“They were a pleasure to work with, and we’re happy to have them in Chicago,” said Karen Ruchim of Jasco Realty, who represented the Trestmans.

Yes Karen, you’re even happier to have the commission on a house that cost $3 million.

 
Comment by Housing Analyst
2013-08-08 10:23:23

“Just for the record; there is no shortage of housing. Not in California, not in Tokyo, not anywhere. And there will come a day (again) when the media will tell us, ‘there’s a glut of houses for sale in….’, and regale us with sob stories, ‘I was doing great until the economy went south and my income went away and I can’t get rid of this damned house!’”

~Ben Jones, August 8, 2013

Comment by Whac-A-Bubble™
2013-08-08 11:01:07

Try not to catch yourself a falling house.

 
Comment by 2banana
2013-08-08 11:08:24

And “I am a victim and deserve a bailout!”

 
Comment by cactus
2013-08-08 11:14:29

Going to be a shortage of water if things keep up the way they are. At least in the West.

Cheap water at any rate

Comment by In Colorado
2013-08-08 11:38:50

I can’t imagine how places like Phoenix or Vegas will endure if the Colorado creek only delivers a fraction of its usual water volume over an extended period of time.

We drove past the Colorado River on I-70 two weeks ago. It looked very muddy and the level looked low.

 
 
Comment by Robin
2013-08-08 13:21:28

And there will come a day (again) when the media will tell us, ‘there’s a glut of houses for sale in…

Bring it on!

 
 
Comment by cactus
2013-08-08 11:17:05

In a new note to clients on Thursday, Pimco’s bond chief Bill Gross promised the fund would triumph in the “bond wars” that could see investors earn lower returns, characterized by sustained easy money policies.

In the midst of a debate over whether the Federal Reserve is planning a strategic retreat from its massive monetary stimulus, Gross wrote in an investment note published on Thursday that bond managers “must adapt to a new world of near zero bound interest rates and the likelihood of lower total returns.”

In colorful language chock-full of war metaphors and weapons references, Gross added that investors must focus on carry and investment diversity, in order to guard against “downside risks” that could roil markets.
Gross-notorious among Wall Street for his colorful investment research-likened the whipsawing of bond yields to Britain’s 1916 battle of the Somme against German forces. He has good reason to compare his battle against market forces to a war: in June, investors yanked more than $14 billion from Pimco’s U.S. mutual funds, according to data from Morningstar. Since May, redemptions have topped $18 billion, Morningstar analysts recently said.

“Now that bonds have suffered a near Somme-like defeat in the past few months, fixed income investors are concerned about their prior conceptions of bonds as an asset class-an asset that has historically provided reliable income and stable to higher prices,” he wrote.

The nearly $300 billion fund-the world’s largest-has recently been caught flatfooted by the selloff in U.S. Treasurys. In May, the fund posted a negative return of about 1.9 percent, its biggest monthly loss since 2008. In 2011, Pimco sold off all its government debt-in anticipation of a bond blowout that ultimately never materialized.

“While our strategic execution in May/June of 2013 can and has been publicly faulted, we are confident that we know how to win this evolving bond war,” Gross said.

“We have spent months-indeed years-preparing for this new dawn. We intend for you-our clients-to be surviving veterans of this battle, not casualties,” he added. “Pimco will not go down at the Somme.”

 
Comment by 2banana
2013-08-08 11:59:03

Why do we enslave our children to debt?

Sometimes it is hard to feel sorry for them. They volunteered for obama, they cheer obama’s every word, they worship obama, they wish obama could be their president forever. And when he promised to fundamentally change America, the greatest engine for economic progress that the world has ever known, they gave him a standing ovation.

Most still have the minds of children. Maybe after a few years of part time jobs and living in basements they will realize that big government just crushes them - not helps them.

——————-

What Happened to the $1 Trillion of Student Debt?
MainStreet.com | 8-8-13 | Michael P. Tremoglie

NEW YORK (MainStreet)— The Consumer Financial Protection Bureau (CFPB) Student Loan Ombudsman Rohit Chopra recently responded to those who asked the CFPB about the status of the $1 trillion that has already been borrowed to pay for college tuition.

An August 5 article by Chopra paints a bleak portrait. Chopra found that there are over 7 million borrowers in default on federal or private student loans. The CFPB also estimates that roughly a third of Federal Direct Loan Program borrowers have chosen alternative repayment plans to lower their payments.

The CFPB emphasizes that a “noteworthy number of borrowers are in default.” They caution those who are in default in the following way: “Defaulting on a federal student loan has serious consequences. Unlike other consumer credit, borrowers in default on a federal student loan might see their tax refund taken and their wages garnished without a court order.”

Comment by Steve J
2013-08-08 13:34:27

Darn that Obama for inventing student loans and forcing kids to take them out. Truly, Obama is the devil himself.

 
Comment by Darrell in Phoenix
2013-08-08 13:36:17

“Why do we enslave our children to debt?”

Because a loan creates both money AND debt. We have embraced an economic policy based on massive trade imbalances, allowing a few people to accumulate insane amounts of money. A trade imbalance plagued economy can only function as long as new money (and the offsetting debt) is created as fast as it leaks out of active circulation.

The ugly girl didn’t get pretty DESPITE the guy getting drunk.

The economy did not boom post 1980 DESPITE debt increasing from $4T to $40T over the next 33 years. It boomed BECAUSE we set the debt monster lose!

Every recession for the last 35 years has had the same solution: lower interest rates, loosen lending standards, and get the debt/money flowing!

Debt increasing at an unsustainable rate is the FOUNDATION of our economic policy.

Comment by Whac-A-Bubble™
2013-08-08 20:23:40

“The ugly girl didn’t get pretty DESPITE the guy getting drunk.”

Nonetheless, both got some as a consequence.

 
 
 
Comment by Darrell in Phoenix
2013-08-08 12:11:48

The madness continues.

At a recent wedding, my sister (who owns 5 rental properties in Oceanside CA) says to me, “Do not pay off your house. If you are no longer upside down, you should cash-out ReFi and use the money to buy some investment properties. You know prices are only going to go up.”

I say, “I know no such thing. We’ve not addressed ANY of the fundamental issues in the economy, we’re only short-term papered over the problems with $1.5T a year federal government deficits. Take away the unsustainable government deficits, and full blown crash is inevitable.

“Also, I have NO interest in being a landlord.

“And finally, I’d much rather have a paid off house going into my 60s, than be worrying about making half a dozen monthly mortgage payments.”

Fortunately, most of my family agreed with me, but a few were with her, imagining a world where everyone is a mini-Trump. The problem is, she bought her initial set of investment properties in the 1990s, when Oceanside was a military town reeling in the face of troop draw downs at Pendilton.

Trying to convince her that today’s market, with prices still more than 100% above where they were 15 years ago, IS NOT the same market as 15 years ago.

Comment by In Colorado
2013-08-08 12:55:25

The problem is, she bought her initial set of investment properties in the 1990s, when Oceanside was a military town reeling in the face of troop draw downs at Pendilton.

That’s the only way it works, you have to buy the properties when they are cheap. At today’s prices there is now way you can cash flow positive in a coastal community like Oceanslime.

Comment by sleepless_near_seattle
2013-08-08 17:25:47

As I’ve said before, the investment to get into right now is properties you bought in the 80s-90s. How exactly do I do that?

(Kinda like that “choosing your parents” quandary discussed earlier…)

Comment by Housing Analyst
2013-08-08 17:37:41

Sit tight and watch prices roll back to that era. (Yeah… that’s about what a 30 year old house is worth once depreciated.)

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Comment by Whac-A-Bubble™
2013-08-08 20:22:08

What convinces you the Fed will ever allow prices to roll back to the 80s-90s era? Wouldn’t it be in their interest to use stealth inflation to prevent that from ever occurring?

Putup or shutup.

 
Comment by Housing Analyst
2013-08-08 20:33:52

And what convinces you “the Fed” can defy gravity indefinitely?

 
Comment by Whac-A-Bubble™
2013-08-08 20:42:12

‘And what convinces you “the Fed” can defy gravity indefinitely?’

1. I never suggested they could.
2. There is a fine line between ‘indefinitely’ and ‘until you are too senile to care or even be aware.’
3. So far, so good!
4. Real estate always goes up.

 
 
 
 
 
Comment by Joe Smith
2013-08-08 12:14:24

Two hot British teens were splashed with acid in a muslim part of Tanzania (Zanzibar). Video and pictures here:

http://www.bbc.co.uk/news/uk-23611840

They were there for a few weeks working an aid agency.

Comment by (Neo-) Jetfixr
2013-08-08 12:46:56

At the risk of getting flamed for being sexist, I don’t know why these women think traveling and working in these crazy-azz countries is a good idea.

Acid throwing in Tanzania……gang rapes/sexual assaults in India and Egypt,…….the list goes on.

Over there ain’t over here.

Comment by Whac-A-Bubble™
2013-08-08 20:07:37

“I don’t know why these women think traveling and working in these crazy-azz countries is a good idea.”

Naive innocence, apparently…plus bad parenting.

 
 
Comment by In Colorado
2013-08-08 12:52:43

I have a niece who sent out a email asking for people to sponsor her on a “mission” trip to Ecuador. I replied, asking her if she knew what she was getting into, as we Yanquis aren’t exactly loved down there lately, and that she shouldn’t be lulled into trusting that God will protect her, as missionaries are not immune to tragedy.

Comment by Joe Smith
2013-08-08 13:06:58

You didn’t encourage her to help paint a beautiful picture of diversity?

 
Comment by 2banana
2013-08-08 13:24:13

Just make sure you have a “COEXIST” sticker on your suitcase and t-shirt.

That should protect you.

Comment by In Colorado
2013-08-08 15:25:36

They aren’t bed wetting libtards. She’s a Protestant Fundy, so I would expect to see a “Coexist” sticker on her car’s bumper. If anything, she’d either have a “Jesus fish” or some Biblical passage on it.

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Comment by Steve J
2013-08-08 13:36:35

Ecuador is not a dangerous place.

Comment by In Colorado
2013-08-08 15:23:43

She could be targeted simply because she is a yanqui. Not saying it will happen, just that sometimes these kids go there with unrealistic expectations.

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Comment by Whac-A-Bubble™
2013-08-08 20:06:04

What is it with Islamic culture and splashing acid in beautiful, sincere, innocent young ladies’ faces? Why do we humans collectively tolerate it?

This religion is a pimple on the face of humanity.

Comment by ahansen
2013-08-08 23:54:48

With all due respect for these girls’ intent, how to you suppose two 18-year old Tanzanians dressed in burka’s would be treated if they came into Myrtle Beach to proselytize for Islam during spring break?

 
 
 
Comment by phony scandals
2013-08-08 12:57:07

WTF they want that poor old bus driver to do?

A School Bus Beating In Florida Bus Driver May Face … - YouTube
http://www.youtube.com/watch?v=I63gkt_k3lc - 129k - Cached - Similar pages
1 day ago

Comment by Lemming with an innertube
2013-08-08 15:38:12

How does one little boy protect himself from this?

Comment by phony scandals
2013-08-08 16:13:43

“How does one little boy protect himself from this?”

From what I know of the story, the three 15 year old thugs tried to sell the 13 year old a bag of dope in the bathroom that day. Thinking he was doing the right thing, the 13 year old told a teacher (if you see something, say something). Whoever in the school confronts the three 15 year old thugs. Then the brilliant Pricipal, guidance coucelor or whoever puts the three thugs on the same GD bus as the kid who ratted them out. (although if they had a squirt gun or a Hello Kitty Bubble gun the police would have come and taken them away).

Once they did that, the little boy never stood a chance and it doesn’t look to me like that 60 something year old bus driver could have done much more than he did.

 
 
 
Comment by Darrell in Phoenix
2013-08-08 12:57:52

Zillow is at it again…. LOL!

A year ago I bought a condo for my daughter to live in. I paid $48K. Zillow says… LOL…. it is now worth $76K. Coughbullshartcough.

My primary, they say has gone from $110K to $160K, over the last 2 years. Again… LOL, no way!

They don’t have ANY specific sales in my neighborhood to base those insanely overinflated values on. Oh, I take it back.. there are a few where the bank took the house back at the trustee sale for what they were owed. HARDLY a real comp!

 
Comment by Joe Smith
2013-08-08 13:22:25

Shanghai in 1987 and from the same vantage point in 2013. Amazing picture:

http://cdn.theatlantic.com/static/infocus/shanghai080713/s_s01_RTX1292L.gif

Comment by sleepless_near_seattle
2013-08-08 17:31:44

And just a little photoshop and those smoggy skies clear right up!

 
Comment by Whac-A-Bubble™
2013-08-08 19:48:46

Very cool indeed, though the photo reeks of an incipient hard landing.

I’ll be sure to say “I told you so” when it happens.

Comment by ahansen
2013-08-08 23:57:56

It won’t though.

 
 
 
Comment by Darrell in Phoenix
2013-08-08 13:29:40

Are we ready to ween ourselves off the government debt teat?

I’m sure we all realize that our trade imbalance plagued economy needs about 8% of GDP new debt creation every year to maintain the amount of money in active circulation. For decades, it was the private sector doing the bulk of the new borrowing needed to make the trade imbalance plagued economy functioning.

When the private sector hit its debt carrying limit and the house of cards called the USA economy began to collapse under its own weight, the government stepped up with $1.3T a year new debt/money creation needed to pump in the new money that our trade balance plagued economy needs to function. This stopped the crash.

Now, 5 years later, there is BS lies that the private sector economy is healing and talk of trimming government deficits. But, is there any truth to the idea that the private sector is picking up enough to let the government step away from the $1.3T a year new debt/money it has been pumping into the economy?

Looking at the Federal Reserve Z.1, table D3 (debt outstanding by sector) for 2013Q1 (release June 2012) we see….

Household debt down $20B from prior quarter and down $40B from prior year.

Business debt UP $170B from prior quarter and up almost $800B from prior year,

While $800B a year added business debt seems impressive, it is not nearly enough to cover both $600B a year international trade deficit and $800B a year making the super-rich ever richer.

And the federal government? Up $300B for the quarter and $1 trillion for the year.

Our economy has been just barely treading water despite the $1.8T new debt/money pumped into the economy through the federal government and business borrowing, but with households still tapped out and simply unable to return to generating $1T a year new debt/money, HOW does anyone expect the government to step away from it’s massive deficits and crash to NOT return?

It’s as if people have no clue where money comes from!

Seriously, do people think money grows on trees?

 
Comment by Whac-A-Bubble™
2013-08-08 14:02:59

Wall Street will cut 15% of its jobs over 18 months: Meredith Whitney
August 8, 2013, 3:23 PM

Are investment bankers and traders facing near-extinction very soon?

Yes, according to analyst Meredith Whitney.

“We are on the precipice of a seismic downsizing on Wall Street, the likes of which have never occurred before,” said Whitney in a recent research note to clients, acquired by the New York Post.

Whitney says the financial sector is set to see layoffs of up to 100,000 or as much as 15% of the work force in the next 18 months, as banks contract and muddle through a sluggish economy.

Several banks have already announced layoffs in the last several months, including J.P. Morgan Chase & Co.jpm JPM , Bank of America Corp. BAC , Citigroup Inc. C and HSBC Holdings Plc HBC . Many of the announcements affect operations globally.

J.P. Morgan announced plans in February to cut 17,000 jobs, including about 4,000 this year.

Bank of America announced 16,000 layoffs in September.

HSBC announced 14,000 layoffs in May.

Citigroup announced 11,000 layoffs in December.

Critics says it’s not a secret the industry has contracted in the last several years since the financial crisis.

“To argue that this is new suggests you have been sleeping for the last five years,” said Richard Bove, an analyst at Rafferty Capital.

Comment by prayer walker
2013-08-08 17:35:23

How can it be? Bernanke is handing them money hand over fist ….

Is it “eat your own kind” time already?

Comment by Whac-A-Bubble™
2013-08-08 19:31:22

“Wall Street will cut 15% of its jobs over 18 months: Meredith Whitney”

If true, sounds as if ‘this sucker is going down’ again. How soon until the grim announcement from the Treasury Secretary, the Fed Chair and the President — JUST LIKE IN FALL 2008?

 
 
Comment by Whac-A-Bubble™
2013-08-08 19:42:35

“To argue that this is new suggests you have been sleeping for the last five years,”

Either sleeping, or drinking too much of the Fed’s ‘Green Shoots’ flavored Kool-aide.

 
 
Comment by Darrell in Phoenix
2013-08-08 14:18:37

The root of the problem, in my opinion, is the way we do housing appraisals based on comparable sales. Comparable sales is a pro-cyclical method that encourages booms and busts. Also, it is too easily manipulated with everything from cash-back to home “swaps” as seen in the recent bubble.

Buy a few houses in a neighborhood. Sell one for $20K more than you bought it for, offering the buyer $20K cash back at closing. Sell another at $40K more than you bought it for, offering the buyer $40K cash-back. Now, all the other houses you own in the area are worth $40K more than before, based on a “comp sale” method of appraisal.

A MUCH BETTER method for doing appraisals would be an analysis of comparable rent compared to total cost of ownership.

In short, it is a lot safer loaning someone money to buy a house with a $1000 monthly payment when the cost of renting is $1200, than it is when the cost of renting is $800.

Carter encouraging banks to loan to poor people, when the house payment was less than rent was one thing. Bush mashing the gas to the floor on the lending after house prices had doubled and rents were almost half the cost of buying, is something totally different.

Then again, for this to be a “better” would require that we NOT want another housing bubble. If we want another bubble, then I guess the easily manipulated and pro-cyclical “comp sale” is the better method for ding home price appraisals.

Comment by Housing Analyst
2013-08-08 15:23:48

There is only one way to assess the value of an asset and that is replacement cost less depreciation as houses depreciate ALWAYS.

 
Comment by oxide
2013-08-08 16:27:31

Wait, you’re BACK???

:cool:

 
Comment by Whac-A-Bubble™
2013-08-08 19:38:57

“The root of the problem, in my opinion, is the way we do housing appraisals based on comparable sales.”

It isn’t bad in principle. The problem comes in when banks with massive market power (such as the Fed) manipulate the system by top-down intervention to artificially inflate the comps. Once a small number of banks and hedge funds have so much financial fire power that they can set prices to guarantee themselves investment profits, the housing market is FUBAR so far as end users are concerned.

 
Comment by Whac-A-Bubble™
2013-08-08 19:44:26

“In short, it is a lot safer loaning someone money to buy a house with a $1000 monthly payment when thee cost of renting is $1200, than it is when the cost of renting is $800.”

What if said rents are artificially inflated, due to banksters withholding shadow inventory from the market, or a long lag between when investors snap up residential rental properties and when they actually start renting them out?

 
 
Comment by Housing Analyst
2013-08-08 18:24:19

“The reality is that prices are inflated by 250% because of the 30 year mortgage term.”

Correct. For decades housing notes were 5 or 7 years.

 
Comment by Whac-A-Bubble™
2013-08-08 19:26:19

Dumb question of the day: If Uncle Sam is winding down its oligopolistic mortgage securitization business, why not just cede the entire mortgage market to the private banking sector, aside from enforcing a rule of law (snark!). In particular, why is it essential for the government to stay in the mortgage insurance business? Does the government really do insurance better than the private sector?!

 
Comment by Whac-A-Bubble™
2013-08-08 19:29:03

Ilyce Glink /
MoneyWatch/ August 7, 2013, 7:33 AM
Obama’s housing plan draws cheers, jeers

(MoneyWatch) President Barack Obama introduced policies yesterday that he says will help another devastating housing crisis. “As home prices rise, we can’t just re-inflate another housing bubble,” he said, speaking from at a high school in Phoenix, one of the hardest-hit cities during the 2008 housing crash.

Chief among Mr. Obama’s plans to reform the nation’s housing system is to bring private capital back into the mortgage market. Right now, more than 80 percent of mortgages are backed by the U.S. government. While Obama wants the government to continue playing a role in the mortgage market, he doesn’t want to do it through Fannie Mae and Freddie Mac, the two secondary mortgage market leaders that have been in conservatorship for years and that, as housing rebounds, are now producing billions of dollars of profits for the U.S. Treasury.

The president threw support behind the a bill backed by Sens. Bob Corker, R.-Tenn., and Mark Warner, D-Va., that would dismantle the mortgage giants over a period of five years and pave the way for the return of a private mortgage market, where private-sector lenders bundle mortgages and sell them to investors.

These mortgages would still be guaranteed by the government, although in a more modest way, under a mechanism called the Federal Mortgage Insurance Corporation. Lenders would pay premiums for that guarantee.

In the case of catastrophic default levels, like those seen in 2008 when the mortgage giants were bailed out, private capital would have to shoulder significant losses before the government’s guarantee kicks in.

The president said he doesn’t want a system where companies are able to profit knowing that if their bets go bad, the taxpayers will be left holding the bag. That was effectively the system put in place with Fannie and Freddie. The implicit U.S. guarantee allowed the mortgage giants to borrow more cheaply than their competitors and reap massive profits.

While Mr. Obama’s ideas for fixing the housing market closely parallel the Corker-Warner bill, they don’t line up exactly.

Barry Zigas, director of housing policy at the Consumer Federation of America, said the bill seems to be propelling the debate over housing reform. But the measure can be improved, he said.

“It doesn’t have a sufficiently strong expectation or requirement in return for having a federal guarantee. Any new system should include a federal guarantee on long-term fixed rate credit and ensures access for the broadest possible range of people.”

Obama: “I actually believe in the free market

Comment by Prime_Is_Contained
2013-08-09 03:26:25

“As home prices rise, we can’t just re-inflate another housing bubble,” he said, speaking from at a high school in Phoenix, one of the hardest-hit cities during the 2008 housing crash.

Double-speak at its finest, considering that that is clearly precisely what they are striving to do.

 
 
Comment by Whac-A-Bubble™
2013-08-08 20:16:30

Has Hillary started her run for the WH yet?

ALL THE EX-PRESIDENT’S SCANDALS
Report: Lewinsky sex tape to Clinton surfaces
Monica: ‘I could take my clothes off and start … well …’
Published: 07/31/2013 at 12:31 PM

While the sexting of former congressman and current candidate for new York mayor Anthony Weiner is still making national headlines, a blast-from-the-past sex tape involving Monica Lewinsky and former President Bill Clinton has just reportedly surfaced.

An audio tape obtained by the National Enquirer purports to reveal the former White House intern planning a secret sexual meeting with the president and proclaiming to her paramour she’s “too cute and adorable” to be ignored.

The recording, made in November 1997 at the height of the pair’s sexual affair, is three minutes, 47 seconds long, and is addressed to “handsome.”

At one point, Lewinsky is heard trying to seduce Clinton, saying: “I could take my clothes off and start … well … I know you wouldn’t enjoy that? I hope to see you later and I hope you will follow my script and do what I want.”

Monica’s voice is the only one heard on the tape, which was thought to have been destroyed years ago, though a duplicate was secretly made and has now surfaced, according to the Enquirer.

On the recording, Lewinsky tells the commander in chief: “Since I know you will be alone tomorrow evening, I have two proposals for you, neither of which is you not seeing me.

Comment by Whac-A-Bubble™
2013-08-08 20:35:52

How many of you folks would give Hillary Clinton a “break the glass ceiling vote,” regardless of the hideous Bill Clinton baggage?

DON’T DO IT! IT’S NOT WORTH SUFFERING THROUGH ANOTHER FOUR YEARS OF NATIONAL EMBARRASSMENT!!!!

Comment by Whac-A-Bubble™
2013-08-08 20:38:55

I’ll vote Republican before voting for Hillary, EVEN IF THE CANDIDATE IS HERMAN (”STILL JIGGIN’ IT”) CAIN!

Pro-Hillary Clinton Efforts Whir to Life with Iowa Campaigning
PHOTO: hillary clinton
Hillary Clinton speaks to guests at the Clinton Global Initiative, June 13, 2013, in Chicago, Ill. (Scott Olson/Getty Images)
By RICK KLEIN (@rickklein)
Aug. 8, 2013

Friday morning, as Washington slumbers through recess and public attention even in Iowa is far from presidential politics, a group of Democratic activists and office-holders will gather in Des Moines to discuss a topic very much on their minds – and now on their agenda: “Madam President.”

Organizers aren’t naming this hypothetical president. But they don’t have to, of course.

Meet the shadow campaign for Hillary Rodham Clinton.

Just beneath the surface, and without evidence of direct involvement by the Clintons themselves, a Clinton machine is whirring to life. A series of self-started, independent ventures are adding up to a sweeping effort to unite all levels of the Democratic establishment behind a candidacy that backers hope and trust they’ll have a chance to support.

“We want to make sure we’re ready for her if she decides to run,” said Stephanie Schriock, president of EMILY’s List, which is running the “Madam President” event in Iowa and has similar events planned for New Hampshire and Nevada in the months to come. “We want to be prepared to do all we can to break through that glass ceiling.”

Comment by Carl Morris
2013-08-09 08:46:34

In the meantime the Rs prepare their response in the form of Dick Cheney’s daughter who is preparing a primary challenge against a sitting R senator from Wyoming as we speak.

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Comment by Whac-A-Bubble™
2013-08-08 22:04:13

The (strained) argument for Salman Rushdie to be Fed chairman — and the author’s response
August 8, 2013, 3:06 PM

Salman Rushdie (or some other writer) for Fed chairman? One columnist says yes.

“I think that the president should consider writers as well as economists as he looks for the next chairman of the Federal Reserve,” writes Financial Times columnist Gary Silverman on Thursday. “Near the top of any list would be Salman Rushdie.”

Why pick Rushdie, author of the infamous novel “The Satanic Verses,” or some other wordsmith to head up the U.S. central bank? Silverman says a big part of the Fed’s role these days is literary.

“It doesn’t change rates. It issues statements about its feelings — which are then parsed by the financial community, as if they were passages of the Bible, for signs of policy shifts to come,” writes the columnist.

Silverman says he’s hopeful this state of affairs will pass, “but a wish won’t make it so.” So he offers up Rushdie: “There’s a man who wouldn’t go weak-kneed at the sight of bond market vigilantes; after all, he has taken on the real-life Revolutionary Guard.”

UPDATE: The famed author checked out this blog, and offers his response:

Salman Rushdie ✔ @SalmanRushdie

.@MarketWatch just for the record I don’t want the Fed job..,
2:27 PM - 8 Aug 2013

Other suggestions include the Czech author Milan Kundera, who today writes mainly in French: “Think of what it would be like if the Fed could move between the two tongues to suit the situation.”

Former Treasury Secretary Larry Summers and current Fed Vice Chairwoman Janet Yellen (neither known for writing novels) are viewed as two of the top contenders for the post.

See more MarketWatch Fed coverage and Capitol Report: Your Guide to Fedspeak: Part II.

– Robert Schroeder

 
Comment by Whac-A-Bubble™
2013-08-08 22:18:45

Whisper word is that this home was bought by an investor who will rent it out.

Note it is 2brs, smallish, and 30+ years old. And sold for a 10% premium over the Zestimate®.

15958 Big Springs Way, San Diego, CA 92127
Sold on 7/25/13: $459,000
Zestimate®: $418,192
Est. Mortgage:
$1,800/mo
Bedrooms: 2 beds
Bathrooms: 2 baths
Single Family: 1,240 sq ft
Lot: 3,902 sqft
Year Built: 1980
Last Sold: Jul 2013 for $459,000

 
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