Bits Bucket for September 22, 2013
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
The house I purchased in Sacramento 3 years ago for $400,000 is now worth $532,000, according to Zillow. How about that, a house appreciated in value 33% over 3-years. Housing Analyst will find that curious. He will probably say I couldn’t find a buyer at half that price, but I could sell it in less than 2 weeks for more than $532,000.
I used an FHA loan to purchase it and the selling bank (BofA) paid all the closing costs, so I have about $15,000 into it of my own money. After selling costs of 8%, I could clear about $90,000. Hmmm, that is about a 600% return over three years. Plus, I have owned for less than the cost of renting, I have paid my loan principal down $600/mon ($20,000) and I get to paint the rooms any color I want.
I love where I live and buying a home in 2010 was the best investment in my lifetime. Thank God and Ben Jones I learned something from this blog in 2006, when this very same house sold for $745,000. Wow, it has been an amazing time these last 7 years.
If it were true, you’d sell it now. You won’t because it’s false.
Enjoy your losses.
Or maybe he merely doesn’t care to sell, because he wants to live in it, and is happy with the price that he paid for it?
“Happy”?
Are you a realtor or do you have a brain in your head.
Are you a realtor or do you have a brain in your head.
Ad hominem much?
Compute geek here. And btw: I knew that things were not right in the housing market back in 2002/2003, so I think that qualifies as some evidence that I have a brain in my head.
When did you figure it out, out of curiosity?
“Happy”?
What’s wrong with you?
are you concerned at all about protecting your paper profits?
No, azdude02, I am not concerned about protecting my paper profits. I love where I live, it is cheaper than renting, I get a tax break and I chip away at my mortgage by $600/mon. Profit was not my main motivation for buying and living in this house. It meets my needs for my family in extraordinary ways.
I do own other houses with similar appreciation, but I get great cash flow from the rent, additional tax benefits and I recently did sell one for a 300% return on my invested cash (I would have rather kept it, but sold for reasons unrelated to the market). I enjoy more than a paper profit.
I simply post these comments because there are many here on the HBB who believe housing as an investment is always a loser. I just want readers to know it can be a winner too.
well that is great things have worked out well for you. If it were me a would be thinking of a way to protect myself from a downturn. We all know these parties don’t last forever.
“If it were me a would be thinking of a way to protect myself from a downturn. We all know these parties don’t last forever.”
Ignore the handwriting on the wall at your peril.
You don’t know what it’s really worth till you sell it.
No, azdude02, I am not concerned with protecting my paper profits. It was not my main motivation for purchasing this house. I love where I live, it is cheaper than renting (by about $500/mon), I get a tax break, and I pay down my mortgage by $600/mon. This home provides for my family in extraordinary ways.
I do own other houses I purchased at the bottom of the market (2008-2010). They all cash flow, provide additional tax benefits, and I reduce the mortgage balances by over $2,100/mon. I did sell one recently for a 100% return on my invested cash over three years. I would have preferred to keep it, but sold for reason unrelated to the market.
I post these real life situations because there are some on the blog who believe housing is always a losing investment. It has been a clear winner for me.
“…bottom of the market (2008-2010).”
Hmm, not sure ’bout that bottom. IIRC, lending was restricted to only those who had a down payment and could honestly make the payments.
rms, what are you saying?
2008-2010 was not the bottom because lending was very restrictive? I submit to you that is why it was the bottom.
FWIW, I put 25% down and could make the payments for the houses I purchased.
Considering resale housing prices are priced 250% higher than trend and 250% higher than materials, labor and profit, you can presume we’re no where near the bottom, confidently so.
rms, what are you saying?
2008-2010 was not the bottom because lending was very restrictive? I submit to you that is why it was the bottom.
FWIW, I put 25% down and could make the payments for the houses I purchased.
You’re making very risky bets, IMHO.
Most of the desirable areas that I would consider buying into didn’t budge downward if at all. The lending certainly became cheaper, but the prices are still too high.
One of these days the easy money rug is going to be yanked out from under this asset game so fast that I fully expect to hear Tom Brokaw’s financial lamentations on the national broadcast similar to the 9/11 disaster. “Nobody could have seen it coming…”
Congrats there, jingle. Keep paying down those mortgages. I’ve had several Mortgage Burning Parties over the years, and they are great!
Those losses sure are something to celebrate huh…. lolz
Thanks for letting us know the score at the end of the 2nd quarter.
This post is a wonderful tribute to confirmation biases and the way peoples attitudes change to protect their own personal stakes/egos.
The idea that someone has been reading Bens blog since 06 but is now crowing about how much their house is worth in this obviously gamed and pumped up market, likely on the precipice of another drop, is priceless.
You got lucky on timing, that is all. I know people that bought in 2010 that we’re bemoaning doing it as late as mid 2012.
You got lucky on timing, that is all ??
Great timing makes you look awfully smart…
With that said, Jingle did also take risk…If he sold today he would be rewarded for that risk taking…But that is really not the question we discuss here on the board…The question is; “Is it Sustainable”…
Seems to me that there are very few credible arguments that can be made that it is sustainable…Many credible arguments can be made that it isn’t…
Jingle Male
Happy to hear you’re happy in your home. We bought in east Ventura County (So Ca) in Sept 2012, and our home is up $120K. Like you said, it’s a home to LIVE in. WE own it outright and had to bring it up to move in. (toe-tag home) Like you, we waiting out the first bubblicious cycle to re-enter the housing market. Renting isn’t our flavor.
how close are you to magic mtn? I think I took an exit close to there once to go west towards the coast cause the snow closed the road over the grapevine. I remember driving through ventura. some relatives who live in bakersfield use to do a lot of work out that way.
azdude02
We’re in the county of Ventura, but south of Ventura, closer to the San Fernando Valley. We’re just north of Thousand Oaks. Magic Mountain is about a 45 minute drive in good traffic, and it’s a gang haven these days, from what I’ve heard. The mtn is trying to clean up their visitors and are strict on gang signs, clothing, etc…Good for them!
Ventura County has lots of ag, and for that matter, tech. My EE husband use to work for Intel (now closed here), just a 10 minute drive from our former McMansion.
HA- Chill out babe. You can’t just throw out an artificial loss on our purchase. It’s just silly.
You overpaid Donkey. You know it. We know it. Why lie?
Nice, inchbyinch, good to see you found some clarity in this market too.
And you’re another donkey that overpaid in the neighborhood of $200k.
Tell us what it feels like to have gotten ripped off by a realtor….
“The house I purchased in Sacramento 3 years ago for $400,000 is now worth $532,000, according to Zillow.”
Do Zestimates™ take into consideration:
(1) that the increase in mortgage rates since early May 2013 has knocked 13% off the amount of mortgage principal that can be financed, assuming the same monthly payment;
(2) that by early this year, the Fed’s QE3 MBS purchase program had pushed mortgage rates to their lowest level on record, a level which is unlikely to ever be seen again;
(3) that the Fed is in the process of ending, or at least tapering, or perhaps I should say ‘discussing when they may begin to taper,’ their QE3 MBS purchase program;
(4) that conforming loan limits for California are about to be reduced;
(5) that all-cash investors from Wall Street and foreign countries have recently slowed their U.S. residential real estate purchases;
(6) that millions of California homes remain hidden in shadow inventory, waiting to be unloaded on the market “once prices come back”?
Because unless all of the above critical factors are appropriately taken into consideration, Zestimate™s are likely to exhibit upward bias.
P.S. According to Zillow, the home we live in is now “worth” about what the landlords paid for it back in 2004 — a veritable round trip. The rate of increase in its “value” recently accelerated to the fastest at any time in history, including the peak (pre-2006) bubble years.
how much equity have you got lately?
Are you asking how much as the equity increased in the last month, or what is my total equity in my houses today? I am unclear on your question, but happy to answer if you clarify.
oh I was asking whac a bubble how much equity he has lately?
“how much equity have you got lately?”
I notice this subject is very personal to real estate investors, but as I mentioned yesterday, I am hedged against a ‘larger than expected’ real estate price runup or massive future real estate losses.
Not riding home equity gains generated by the Fed’s QE3 MBS purchases really isn’t the end of the world, provided you are diversified.
as I mentioned yesterday, I am hedged against a ‘larger than expected’ real estate price runup or massive future real estate losses.
How?? I didn’t see any answer to my question late yesterday…
Look again.
In other words, he has no equity.
And neither do you.
“Equity” is a fallacy.
I have no home equity, and particularly none of the negative sort.
Whac,
You seem to be saying Zillow should ignore the current market values and base their analysis on your opinion of 6 future events which you believe may have a detrimental effect on the value of housing?
That seems a little absurd.
Are you so afraid of tomorrow, you are catatonic today? The market is always affected by many factors. More importantly, it appears you suffered from paralysis of analysis in 2010?
If you had purchased a home at the bottom in 2010, you might be seeing some of the extraordinary benefits, just as I have experienced. Housing below rental cost, tax benefits, probable appreciation. In fact your post states if you had purchased the home you rent in 2010, it would have seen quite a large increase in value today. I am simply taking action on what you are observing.
If you had purchased a home at the bottom in 2010, you might be seeing some of the extraordinary benefits, just as I have experienced. Housing below rental cost, tax benefits, probable appreciation.
Jingle Male, I concur that he might have experienced some of the benefits that you have; but he would also be exposed to the risks that you are exposed to.
You seem to be wearing blinders with respect to the fact that your “extraordinary benefits” are the direct result of extraordinary efforts by the Federal Reserve. You have clearly been the beneficiary of their largess. What will the market do when they stop, as they have clearly telegraphed that they will do eventually? How will your extraordinary benefits hold up in a world that is not being extraordinarily manipulated, and in which prices are set based on fundamentals?
But he’s been reading Ben’s blog since 2006. He’s got it all figured out.
P.I.C., I agree with your premise the Fed has taken extraordinary action. However, history has shown that housing recovers from the bottoms time and time again. I benefitted from the Fed action, just as Whac could have benefitted, but chose not to act.
I purchased my houses at well under reproduction cost in this area. Now that the builders are constructing new houses and selling them, I feel my risks are very low. In the meantime, if I never sell, I am getting a 5-7% ROI in cash flow. I can handle that forever, particularly as rents go up and my ROI will approach 12-14% when new occupants move in (I don’t raise rents on existing residents)
In 1990-1994 interest rates went to the moon, yet people still purchased houses. Many here are obsessed fear of the future they see. It may never be reality. A good example is the fear that baby boomers will be retiring and no one will be left to buy their houses. Well, the fact is that by 2060, there will be more working people than non-working people (ratio) than there are today. This is due to the fact that there will be fewer children and the elderly will work into their late 60’s. Some might bemoan this as horrendous. The fact is, it bodes well for the housing market, because a larger percentage of larger population base will be working and able to purchase a home. It may not be the first choice (fewer kids, longer working careers), but it is reality and many here refuse to see it.
I don’t have all the answers, but I do have an open mind. That is why I enjoy this blog and why it served me so well in 2006 and again in 2010 and is proving up again in 2013! Will my conclusions be proved up in 2016? We will see.
In the meantime, if I never sell, I am getting a 5-7% ROI in cash flow. I can handle that forever, particularly as rents go up and my ROI will approach 12-14% when new occupants move in (I don’t raise rents on existing residents)
If you are cash-flowing, then you are in a less-risky position, that is for sure.
How much would the local economy have to soften, though, before you have a property sit empty for 6mo? I’m sure you have the reserves to cover that, so that risk is relatively low as well.
But I do find myself wondering how rents have continued to go up nationwide, while the average household income has continued to decline for the past 5yrs. Do you have any ideas regarding how that works?
In 1990-1994 interest rates went to the moon, yet people still purchased houses.
I’m sure you just made an honest mistake in your chosen data-range, but mortgage rates were declining from 1990 through 1994—and even 1990 was nowhere near the historical peak; it was on the order of 10%. I’m guessing that you meant 1980-84?
Even then, rates went up a few points, from ~13% to ~16%, and then back down within a couple of years. Note that it was only about a 30% increase; relative change is more significant than absolute change.
We just had a 30% change since May, and will have many more such in a series if rates ever return to historical averages.
“What will the market do when they stop, as they have clearly telegraphed that they will do eventually?”
In fairness to Jingle Male’s decision process, the Fed signaled just last week that they can and will do a 180 degree reversal of their previously telegraphed message when and if they see reasons to do so.
At this point, I have no reason to believe the Fed will follow through on announced plans to taper QE3. In the event they do follow through, there is also a very good chance of a token taper, whose ’smaller than expected’ magnitude is actually stimulative for further housing price gains.
At this point, I have no reason to believe the Fed will follow through on announced plans to taper QE3.
I think the markets mistook BB’s point back in May/June; he never committed to tapering in Sept, he merely state that it was the timeframe when it could conceivably be started based on the information available back then, but that actual timing would shift based on the most recent data.
In the interim, the participation rate has continued to trend down, so though headline unemployment is trending favorably, it is not truly resulting in more people working—so essentially their more recent position seems to be that they are trying to base the taper on _real_ employment, not the manipulated figures. I would argue that that is actually a good thing, as it suggests that they are not smoking their own product.
I do think that they will follow through at some point; I am having a hard time imagining that 5yrs from now, QE will be continuing exactly as it is today, and we will have a 9T Fed balance sheet. Could I merely lack sufficient imagination? Possibly so.
PIC:
Fun with math:
A move of 30% in rates from 3.5% to 4.55% increases the monthly mortgage payment by 13.5%
A move of 30% in rates from 10% to 13% increases the monthly mortgage payment by 26%.
Because payments never go to zero (there is always a need to amortize the principal), big percentage moves in rates mean less when you start at very low rates than when you start from very high rates, IF you are looking at this from a “howmuchamonth” perspective only (and not a “what’s my cost of debt” perspective).
Piss poor excuse for grossly inflated prices JingleBalls.
“I purchased my houses at well under reproduction cost in this area.”
What are “reproduction costs”?
ANSWER the question.
“You seem to be saying Zillow should ignore the current market values…”
How do you define ‘current market values’?
Basing this on averaging recent comps is clearly wrong, because the comps obviously don’t reflect the ~13% drop in the purchase budget for anyone counting on a mortgage to finance a home purchase out of their monthly income stream.
How do you define ‘current market values’?
The question is, how do you determine if current asking prices of resale housing are inflated or not.
Answer: New construction (material, labor and profit) is roughly $55-60/sq ft. A used structure is adjusted downward by 33% to account for depreciation.
Basically, if you paid more than $35-40/sq ft for a used house, you paid too much.
“Are you so afraid of tomorrow, you are catatonic today?”
If you miss overpaying for a California home, it means you are catatonic?
That’s the best California Realtor® sales pitch I’ve seen to date.
However:
• Your property taxes are commensurately higher.
• If you wish to sell, and still live in that same area, you’re faced with other houses that have had similar appreciations, which will reduce or eliminate any profit from your gain.
If you’re able to get rents to support the mortgages plus maintenance for your other houses, well, bravo. From the purchase history of houses for rent in my area, those who have positive cash flows are the ones who purchased well built houses well before the bubble. Bubble-era landlords - well, it’s hard to see how they can cover mortgage-plus-maintenance.
The reality for most is that, in goosing prices higher, Wall Street and the politicians have claimed the economic surplus (”money on the table”), that was typically left to the physical asset buyer at the end of his mortgage.
Your property taxes are commensurately higher.
Prop 13 would limit that increase to 6%
Correct. The property tax man is limited in CA.
Prop 13 would limit that increase to 6% ??
1.2% unless there are also local levies…
Correction…1.2% is the initial assessment…After that 2% max per year…
Exactly! This is why buying at the bottom in CA is imperative; it also explains why the PTB might not want CA home prices to ever revert to a fundamental bottom (although they did so as recently as 1996-1997).
Nueromance,
In California, property taxes can only go up 2%/year, which is part of the reason I will stay in this home for many more years.
When I sell, I will downsize from 3000 SF to a 1200 SF urban condo, so will not purchase another house like this one in the same area. I will likely be able to take my appreciation and add it to my retirement account.
I agree, bubble era landlords (2004-2006) are completely hosed. They will never recover their purchase price and the negative cash flow will bury them in the meantime. That is why I bought nothing in during those years (in part thanks to Ben and the HBB for my education and “reversion to the mean”)
“I agree, bubble era landlords (2004-2006) are completely hosed. They will never recover their purchase price and the negative cash flow will bury them in the meantime.”
Not sure about that; perhaps the outcome will be location-specific?
For instance, our landlords bought in late 2004, and Zillow says the value of our half-duplex is nearly back up to its $500K+ purchase prices (albeit not inflation-adjusted).
Are you suggesting that perhaps we have recently reached an Echo Bubble peak from which prices will never, ever recover?
how are the property taxes substantially higher? property taxes in ca are based on what you paid for the property. your property taxes after you have bought have nothing to do with current market value. Under proposition 13 your property taxes are 1% of current market value and the taxes can go up 2% / year. So with a 4000,000.00 purchase price the property taxes would be ~ 4000/ year. 2% of 4000 = 80
So after 1 year the taxes went up 80 bucks. 4080 *1.02 = 81.60 for the second year. so after two years the property taxes went up 80.00+ 81.60= 161.60
after 3 years = 4244.00 so after 3 years property taxes went up 244.00/ 12 = 20.33 / month
I’ll pay 20 bucks more a month for over 100 grand in equity.
The good thing about California is that the cost of providing services to homeowners never goes up more than 2%.
The good thing about California is that the cost of providing services to homeowners never goes up more than 2%
Is that per month?
JM, if you are happy with it, fine. And the most important thing to have is good neighbors, those who are not foreclosing. Congratulations!
****TROLL ALERT***
This is a lot of conversation in response to someone who starts off with us pretending to be someone else. I guess it is argument for its own sake.
“Why do trolls always use “there” when it is supposed to be “their?”
“There’s no their there. It bugs me alot!”
Well then….
There dog got lost when there gate was left open in there backyard, the last time he was spotted was right over their. There not sure if they will ever find him, but if they do they will put a new lock on they’re gate.
Over their, over their
Send the word, send the word over their
That the Yanks are coming, the Yanks are coming
The drums are rum-tumming everywhere
So prepare, say a prayer
Send the word, send the word to beware
We’ll be over their, we’re coming over
And we won’t come back till it’s over over their.
Over their.
we have to fight them over their so we wont have to fight them over hear
“we have to fight them over their so we wont have to fight them over hear”
I think I here what you are saying.
“I think I here what you are saying.”
+won Me two!
I think I here what you are saying.
hear here!
Interestingly, there’s an answer for the dolts who cannot effectively use the words “affect” and “effect”.
That word is “impact”.
It’s why you hear the word “impact” in the media all the time. What a wretched word. That and “impactful”.
affect and effect aren’t misused as much as ‘here here!’. proper usage is either ‘hear here’ or ‘here hear’, with the former probably being the most proper.
and yes, proper use of ‘affect’ and ‘effect’ is better than substituting ‘impact’.
. proper usage is either ‘hear here’ or ‘here hear’, with the former probably being the most proper.
Bzzt! Wrong on both counts:
one of the many times that wiki (like you) is wrong.
‘hear here’ had it origins with town criers. ‘hear here’ was short for ‘hear at this place’.
hear hear: huh? huh?
here here: where? where?
“one of the many times that wiki (like you) is wrong.”
That’s gonna leave a mark.
I’d like to get to the bottom of this hear hear hear here debate.I usually trust the OED and can’t find any citation referring to a town crier. It could be of course that one was appropriated by the other.
“It was originally an imperative for directing attention to speakers, and has since been used, according to the Oxford English Dictionary, as “the regular form of cheering in the House of Commons”, with many purposes depending on the intonation of its user. Its use in Parliament is linked to the fact that applause is normally (though not always) forbidden in the chambers of the House of Commons and House of Lords.
The phrase “hear him, hear him!” was used in Parliament since the late 17th century, and had been reduced to “hear!” or “hear, hear!” by the late 18th century. The verb hear had earlier been used in the King James Bible as a command for others to listen.”
It could be of course that one was appropriated by the other.
yes it was.
ask yourself why there are exactly two ‘hears’. why not one, or three or more? two ‘hear/here’s fits exactly with the town crier usage and there no reason why the number should fit the house of commons usage. it’s been bastardized by nimrods that didn’t understand the original meaning.. as often happens.
“Hear, hear” is a shortened version of “hear ye, hear ye,” which goes back to British Parliament in the 1600s
which was ‘appropriated’ from town criers. undoubtedly because it became an ‘in’ slang.
which was ‘appropriated’ from town criers. undoubtedly because it became an ‘in’ slang.
link?
which was ‘appropriated’ from town criers. undoubtedly because it became an ‘in’ slang.
Because there is no way that town criers were also using it as a short-hand for “Hear ye, hear ye!”
link?
look up the definition of ‘undoubtedly’.
Because there is no way that town criers were also using it as a short-hand for “Hear ye, hear ye!”
exactly.
exactly.
LOL…
ok, sarcasm. believe whatever you want.
look up the definition of ‘undoubtedly’.
You are undoubtedly wrong.
You are undoubtedly wrong.
you must have looked up the definition. keep educating yourself. you need it.
It’s just a flag that they’re not well read. Literacy is not a requirement for mortgage qualification.
Financial illiteracy (and suicidal tendencies) are required for mortgage qualification.
My fave is “would of”.
Easy. Moral Hazard is quite helpful around here. One gaff out of hundreds of good posts is forgivable no?
Or “I could care less.” if you could care less, why don’t you?
My brother’s ex said he was postá [sic] pay for everything.
My friends I’m spota be dare…
It’s spota….. not pota.
“lemee borrow yo “pee-yo-so”
Phony Scandal says….
“…..It bugs me alot!”
The Grammarist dot com says…..
“Though common in informal communication, alot has never made its way into edited writing, and it’s generally considered a misspelling”
Their seams to be alot rong whith you’re protest….like grammer for won! Get over yourself.
“Their seams to be alot rong whith you’re protest….like grammer for won! Get over yourself.”
Comment by Whac-A-Bubble™
2013-09-21 18:49:16
“Why do trolls always use “there” when it is supposed to be “their?”
There’s no their there. It bugs me alot!
—————————————————————————-
“The house I purchased in Sacramento 3 years ago for $400,000 is now worth $532,000, according to Zillow.”
Their seams to be alot rong whith you’re Zestemet two.
It is not my Zestimate, Whac, though you are correct there is a lot wrong with it. My model sold 6 months ago for $575,000 without many of the features my house has, like a view, large lot, etc.
How entirely illiberal of all these liberals here wanting to actually follow some rules rather than just do whatever feels good.
I’m actually a liberal when it comes to grammar. And even more liberal in any writing other than formal writing, especially when it’s stuff on the internet and even half of that is autocorrected anyways.
Glad I learned another term today, “Progressive Grammar”. (And I don’t care what the rules are, I like the period outside the quotes).
The good thing about grammar nazis is it helps people like me who grew up learning grammar by reading BOOKS.
Back when the only things to read were in books, most of the spelling and grammar was correct because someone checked it before it was allowed to go to print.
But now with the internet, it is very easy to read articles written with spelling and grammatical errors because they don’t last that long.
Isn’t that the truth! Reading actually helps one’s grammar and writing style. I can see this in all corporate emails - no etiquette and bad grammar, even from VPs.
You mean like a question mark (?) after a question:
“Isn’t that the truth!”
Isn’t that the truth?
Yes, it is not the truth…..get over yourself, too!
Hey Spook, look again….
“….But now with the internet, it is very easy to read articles written with spelling and grammatical errors because they don’t last that long….”
Here, for instance, is an edict found recently on an English professor’s “Composition Cheat Sheet”: Never begin a sentence with a conjunction of any kind, especially one of the FANBOYS (for, and, nor, but, or, yet, so).
You should not be starting a sentence with a conjunction! You might try this: “Now with the internet…..”. I will improve your writing clarity.
I will say it again. Get over yourself.
Sure,and I think that’s good. Learn grammar in schools and through reading books. Those books are edited by professionals. They know the rules and there should be rules (although they are often changing).
But grammar nazis are just looking to point out how smart they are and how stupid you are. Nothing to do with the substance.
Couple that with an inability of most people on the internet to say, “I was a dumb ass” when making a mistake and we have fun!
Couple that with an inability of most people on the internet to say, “I was a dumb ass” when making a mistake and we have fun!
Yeah, tj’s doing that above.
Yeah, tj’s doing that above.
you are just too clever and cool, aren’t you? got your mirror handy?
Jingle Male
2013-09-22 09:00:59
Hey Spook, look again….
I will say it again. Get over yourself.
——————————————————————-
Calm down, Im not even in this. I was just pointing out that as bad as my grammar and spelling is, it would be much worse if I didn’t have the advantage of all those years READING correct English from BOOKS.
Let me clarify it for you:
http://www.youtube.com/watch?v=mjQZNkiY7ds
Public unions plus long term democrat rule = bankruptcy and ruin
Actually - even worse than bankruptcy. The public unions would rather seize fire trucks and watch your city burn to the ground rather than take one cut to one insane public union pension.
And you wonder why I call them goons.
————————
Scranton police/fire unions get $21M judgment against city; may seize assets
Scranton Times Tribune | September 20, 2013 | By Jim Lockwood
Scranton’s police and fire unions have received a judgment against the city for the overdue $21 million that the city owes the unions from a landmark arbitration ruling.
The money was due July 2, but the city has not yet paid and is still seeking borrowing or selling an asset to honor the bill, Mayor Chris Doherty said.
But the judgment means the unions now can seize city assets and sell them to collect what is owed, said city solicitor Paul Kelly and the unions’ attorney, Thomas Jennings.
“Whenever a judgment is granted, you can go to the sheriff and levy against assets,” Mr. Kelly said. “They (the unions) can sell city assets. They can sell firetrucks, garbage trucks - they can sell City Hall.”
Mr. Jennings said, “Do I want to take firetrucks and City Hall? Of course not. But would I do it if I have to? In a New York minute.”
Could the unions instead sell the sewer authority out from under the city?
“I haven’t given it a moment’s thought. But if that’s where I’ve got to go to get the money, that’s what I’ve got to do,” Mr. Jennings said.
“You go for the big assets first. Why would I go for ballpoint pens? Why would I not start with the most valuable assets.”
Taxes that are collected also are an asset that perhaps could be levied by the unions, he said.
wow, that’s just a sad situation all around. My dad’s side of the family is from Scranton, I spent some time there when I wuz a pup, we’d travel to visit the aunt and other relatives during various holidays. It was sort of a gray place during the winter, but there were some great old modified Victorian style homes with huge lawns that were fun to play on and I was always fascinated that the sidewalks in the neighborhood were made of slate.
Many Catholic families there, Irish, Italian and Polish. As you can see from some of the names, Irish tended to dominate politics. And they put on some awesome cocktail parties. The sibs and I used to joke that there were three states of being for the adults in Scranton: drunk, drinking and hung-over.
I think I know that Doherty dude, somewhere in my collection of memorabilia is a bunch of Scranton photos where they’d pose all the kiddies from connected families on someone’s massive staircase, dressed in their holiday best, and this included Doherty and Casey progeny. No Bidens, though. The kids were cool, but some of the parents were bunch of souses.
‘wow, that’s just a sad situation all around. My dad’s side of the family is from Scranton, I spent some time there when I wuz a pup, we’d travel to visit the aunt and other relatives during various holidays.’
Same for me except down the ways in Wilkes-Barre. Until the Susquehanna flooded the town. Yep. Pivotal moment. Truly, for our family. Fond memories of life in that ethnic area. Sort of like a Sesame Street meme to it IMHO.
http://en.wikipedia.org/wiki/Goon_squad
If a goon squad adds members can it become a goon platoon?
I think I hear Barber’s Adagio for Strings in the background…
I love a battle between thugs for the taxpayer loot.
Scranton police, fire unions seek pension increase
By Jim Lockwood (Staff Writer)
Published: June 20, 2013
Scranton’s police and fire unions want the state Commonwealth Court to reconsider its rejection in 2010 of an increase in maximum pension benefits, from 50 percent of salary to 70 percent, that the unions had won in prior arbitration cases.
At the time of that ruling, such an increase in pension benefits would have approximately doubled the city’s annual mandatory minimum contributions to the police and fire pension systems.
A motion by International Association of Fire Fighters Local 60 and Fraternal Order of Police E.B. Jermyn Lodge 2 stems from the state Supreme Court’s landmark arbitration ruling in favor of the unions in October 2011. One facet involved a possible restoration of the increase in pension benefits that Commonwealth Court had struck down in October 2010.
In allowing the union to appeal the pension matter, the Supreme Court in February 2012 sent it back to Commonwealth Court to be reconsidered.
The unions on June 5 filed a motion in Commonwealth Court to have it set a schedule for updated legal briefs to be submitted from both sides and a date for arguments to be heard.
The case is a lingering remnant of the epic legal war between the city and unions pitting conflicting state laws, Act 47, the Distressed Municipalities Act of 1987, against Act 111, Pennsylvania’s arbitration law of 1968. The unions won that war when the Supreme Court ruled in October 2011 that the city’s Act 47 recovery plan limitations did not trump Act 111 arbitration awards outside of the recovery plan.
The unresolved pension facet of the case centers on a third statute, Act 205, the 1951 Municipal Pension Act.
Unions’ attorney Thomas Jennings said, “The issue is whether or not it (the arbitration awards’ pension increases) passes muster with Act 205.”
Act 205 holds that in a class 2A city, of which Scranton is the only one in the state, “the total allowance from the (pension) systems shall not exceed 50 percent of the salary currently paid to a patrolman or fireman of the highest pay grade,” according to the Commonwealth Court ruling.
The two arbitration awards underlying the case, including one from 2008 for the fire union and one from 2009 for the police union, involved wage increases, health benefits and other items.
It also allowed for pensions as follows:
- For 20 years of service, a pension of 60 percent of average year salary;
- 21 years, 62 percent;
- 22 years, 64 percent;
- 23 years, 66 percent;
- 24 years, 68 percent; and
- 25 years, 70 percent.
http://m.thetimes-tribune.com/news/scranton-police-fire-unions-seek-pension-increase-1.1508142 - 16k
Up next for BK….Scranton
Priceless. They can seize then lease back to the city.
Which may be a good thing if the trucks maintenance costs are high. In the end these so called assets, if not maintained properly (just like a house) will depreciate to zero.
Two things that most ruined local government are public unions and real estate developers. Both are fat sources of campaign dollars. Neither care about the public.
The elitists love to go off about corporations and how their purpose is to produce a bottom line profit, societal interests be damned, and therefore their influence should be limited in politics. Well, the same goes for public unions, whose sole purpose it to look out for their own interests, societal interest be damned.
Yeah, the politicians are entirely blameless.
That was a given. But they come from people backed by the money of these two groups. Decent ones don’t stand a chance.
Decision time - Granite counter tops or kids…
——————————
10 things your kids won’t tell you Fewer people are having kids, and those who do..
MarketWatch | Sept. 22, 2013, 7:50 a.m. EDT | Quentin Fottrell
1. “I will cost you your dream house.”
Couples thinking about starting a family might want to boost their saving goals. The cost of raising a child from birth to age 17 is higher than the price of the average American home: Middle-income parents spend over $241,000 to raise a child, according to a study released last month by the U.S. Department of Agriculture’s Center for Nutrition Policy and Promotion. The median price of a home, in contrast, currently stands at $203,500. And statistics show that, unsurprisingly, the more a family earns, the more they spend on their kids.
There are some economies of scale. The cost per child decreases as the number of children increases—even though the overall cost continues to climb. Families with three or more children spend 22% less per child than those with only two children, as the kids get hand-me-down clothing and toys, help baby-sit, and share bedrooms. Plus, food can be bought in bulk and some child care services offer discounts for more than one child, says Mark Lino, a research economist with the Department of Agriculture. “But you’re better off economically if you have an only child, as most parents only have a set amount of income,” Lino says.
Except, of course, for the DC area…
Hope and change is working in DC.
———————-
Median Household Income Has Fallen For Five Years in a Row
TEC | 09/21/2013 | Michael Snyder
If the economy is getting better, then why do incomes keep falling? According to a shocking new report that was just released by the U.S. Census Bureau, median household income (adjusted for inflation) has declined for five years in a row. This has happened even though the federal government has been borrowing and spending money at an unprecedented rate and the Federal Reserve has been on the most reckless money printing spree in U.S. history.
Despite all of the “emergency measures” that have been taken to “stimulate the economy”, things just continue to get worse for average American families. Americans are working harder than ever, but their paychecks are not reflecting that. Meanwhile, the cost of everything just keeps going up. The Federal Reserve insists that inflation is “low”, but anyone that goes grocery shopping or that stops at a gas station knows that is a lie. In fact, if inflation was calculated the exact same way that it was calculated back in 1980, the inflation rate would be somewhere between 8 and 10 percent right now. Paychecks are being stretched more than ever before, and that is probably the reason why about three-fourths of the entire country is living paycheck to paycheck at this point.
According to the Census report, the high point for median household income in the United States was back in 1999 ($56,080). It almost got back to that level in 2007 ($55,627), but ever since then there has been a steady decline. The following figures come directly from the report, and as you can see, median household income has fallen every single year for the past five years…
2007: $55,627
2008: $53,644
2009: $53,285
2010: $51,892
2011: $51,100
2012: $51,017
How far does that number have to go down before we admit that we have a major problem on our hands?
The new Census report also revealed that 46.5 million Americans are living in poverty. As CNSNews.com noted, this is far higher than when Barack Obama first entered the White House…
During the four years that marked President Barack Obama’s first term in office, the real median income of American households dropped by $2,627 and the number of people on poverty increased by approximately 6,667,000, according to data released today by the Census Bureau.
So why does Obama continue to insist that things are getting better?
Right now, one out of every five households in the United States is on food stamps.
One out of every five.
How bad does it have to get before we acknowledge that what we are doing economically is not working.
As I’ve said earlier, nothing will be addressed until it’s publicly visible by all.
When we see EBT-card users waiting outside in the rain for a bowl of soup, then we’ll doing something about it.
EBT cards and the like are a Godsend to the government, which has a vested interest in NOT solving the problems.
Government must strip wealth from society in order to grow. Government does not produce its own wealth, so it must confiscate it.
And sweep its role as opiate supplier under the carpet.
Any questions?
Why is the Food Stamp program run by the Department of Agriculture?
Because it’s government.
We need the Department of Welfare.
How bad does it have to get before we acknowledge that what we are doing economically is not working.
we have reached the tipping point. it’s possible to prosper with a little socialism. prosperity will just rise slower. but when there’s too much socialism, prosperity retreats and poverty rises.
there will be less jobs for less pay in our future, which means a weaker economy. a weaker economy means a weaker dollar (price inflation). more and more businesses will fail because they won’t be able to raise prices. they’ll probably even fail because they can’t lower them.
Indeed.
Our government is killing its host (the taxpayers).
Since our government is too stupid to realize this, the day will soon arrive when government must eat itself. Government is not exempt from the dog-eat-dog world.
It believes it lords over it without being subject to it.
‘government is killing its host (the taxpayers).’
If the US government had to live on what it takes in with taxes, it would shut down pretty fast. Many have asked, how can you have almost half of the population paying zero income tax, yet spending more than any government in history? Does any one believe we’re going to “grow” out of a $200 trillion hole?
Jeebus, now the Fed prints the money and buys government debt. We don’t even pretend to rely on taxes anymore.
Excellent point Ben…And if there is no way of raising enough taxes to retire the Debt, then what happens ??
INFLATION! Coming soon to a country near you….in fact, you may be living in it right now. It is the only way out.
“We don’t even pretend to rely on taxes anymore.”
True, except when taxes are used as a tool for social re-engineering (ex: ObamaCare).
You and I are expected to cough up more money as our incomes drop.
Our government stabs us in the back every chance it gets.
“INFLATION! Coming soon to a country near you.”
Perhaps…we’ll have to wait and see.
Inflation during a period of dropping incomes and dropping home ownership will be a disaster…and not just for those who have upper-middle class incomes and below.
Who is buying all the houses these days? Single families? “Investors”? Government-supported entities?
Houses used to be the place to store wealth during periods of high inflation. Not so sure they will be next time ’round.
Just who is going to be able to buy all these empty houses as inflation rears its head? People with declining incomes? People with tens of thousands of dollars in other debt?
There will be a decreasing number of people able to even RENT these houses much less buy them, unless there’s two or more families living in each single family house.
Further, there will lots of folks living in houses inherited from their parents. When the parents die, the houses will not be placed on the open market.
Note that this phenomenon will take place among those already relatively well off. The middle class won’t be able to pass housing down to future generations. They’ll have to sell to deal with immediate needs.
While I could very well be wrong, I still think that boardinghouses are due to make a big comeback.
If we stopped spending more money than we take in how could we invade all those countries??
“Jeebus, now the Fed prints the money and buys government debt. We don’t even pretend to rely on taxes anymore.”
Isn’t this the little-known secret by which Republicans back to Ronald Reagan have been able to cut taxes yet magically keep funding the military-industrial complex?
Isn’t this the little-known secret by which Republicans back to Ronald Reagan have been able to cut taxes yet magically keep funding the military-industrial complex?
Yep!
Don’t worry, Capital One is going to send the Messiah a check so he can transfer the balance on that Military Industrial Complex debt and pay no interest for 6 months.
“INFLATION! Coming soon to a country near you….in fact, you may be living in it right now. It is the only way out.”
Bingo! It’s all they know.
Who said;
“But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”
Ben Bernanke
Granted, in the end the dollar is toast, but the infrastructure, including houses, will still be standing, and will be priced in new currency, what ever that may be, as will the rents.
It won’t be the first time a nation has survived the demise of a Central Bank and it’s debt based currency. Most likely, won’t be the last either.
The Federal Reserve has been creating a bunch of money since the 90’s and vast amounts in the last few years. Does it take a decade or two for inflation to show up? Or do we just get bubbles?
“inflation”?
If you think wages are going to double(the definition of inflation) to meet massively inflated housing prices, you’re in for the surprise of your life.
The reality? Housing prices will bottom 65% lower to meet wages….. wages that are still falling.
Enjoy.
“If you want to be fleeced, just buy a house at current asking prices.”
And it’s a fleecing that your offspring will suffer for. Do you really want to screw over your own kids?
why save any dollars when you can invest in stocks and homes and make a lot of quick cash? Put your dollars in risk assets not under the mattress.
You can make more in risk assets than punching that time clock. Risk is still on!!!! Tell your boss to take his job and shove it!! You are a day trader and real estate guru now.
What inning are we in regarding risk assets?
Well you are right. Sixth inning, IMO, unless a big war or natural disaster like killer quake in California.
Hey Liberace…..Where’d you gig last night Lib? At the whitehouse for your bosses?
Who is Liberace?
Housing Analyst is confused…..nothing new here….move on people…..
There’s going to be some moving on going on here shortly…. and it won’t be Housing Analyst.
Are you positioned for the “race to the exits” which is set to occur once residential real estate investors are convinced no further gains are in the offing?
“Housing Trade Groups Lobby Against Lower Limits on Loans
http://realestate.aol.com/blog/2013/09/20/conforming-loan-limits-reduction-letter/
RealtorScum and Centex/Lennar run NAHB still up to their fraudulent tactics.
“Central banks on guard against new housing hot spots”
http://www.reuters.com/article/2013/09/19/economy-global-housing-idUSL3N0HE1DV20130919
More PR.
They are setting the stage for further interventions to artificially prop up U.S. housing prices.
professor bear’s day at the s cal beach:
http://www.youtube.com/watch?v=NqQM0zZrUYY
I don’t drink hard liquor, ever, I’m not obese, and I have no facial hair.
Otherwise the resemblance is striking.
“Vacant Japan Homes Show Holes in Abenomics’ Push for Housing
http://www.bloomberg.com/news/2013-09-17/vacant-japan-homes-show-holes-in-abe-s-push-for-housing-growth.html
The globe awash in excess empty houses. Most of which are in the US.
Why do governments think it is good policy to keep housing prices propped up at levels where 18-24 percent of homes sit vacant?
It’s a huge waste of societal resources and a scam.
NJ: “HOME VALUES DROP AGAIN WHILE HOUSING COSTS REMAIN HIGH”
http://www.njspotlight.com/stories/13/09/19/home-values/
Why are prices falling? Because demand is collapsing. Why is housing demand collapsing? Because housing prices are grossly inflated by 250%.
Here it is, the Phoenix cheerleader for RE back in action.
http://www.azcentral.com/business/realestate/articles/20130912phoenix-housing-market-new-issues.html
scary the media has never any any good financial advice or data. they just appeal to the advertisers.
Rented “Iceman” from Red Box last night. It occurred to me to that all of these types still exist. It’s just that they’ve probably moved on from violence and cash to…
Hmmm, I wonder what industry they work in now?
Charlie Crist is positioning himself to run for FL Gov:
http://www.tampabay.com/opinion/columns/column-florida-schools-need-course-correction/2142977
Looks like education will be at the center.
“Houses never ‘appreciate’. Houses depreciate like all man made items.”
Correct.
Combine the losses to depreciation and financing costs and you have nothing but debt-service and inflated payments for your entire life at current grossly inflated asking prices of resale housing. Don’t do it.
Gotta wonder…the smell. Hehe.
“Sewer turns into geyser after flooding in Colorado”
http://photoblog.nbcnews.com/_news/2013/09/13/20474958-sewer-turns-into-geyser-after-flooding-in-colorado
I suspect that “geyser” was mostly water and mud.
I question the wisdom of Colorado parents who let their kids wallow in the post-flood mud. You never know what got washed into the water by a flood.
Colorado people aren’t experienced with floods.
This man writes periodically about a myth in recent history most ignore:
“Imperial ‘Exemptionalism’
Balkans Myth Fuels Worldwide Delusion
by Nebojsa Malic
Just as it seemed the Empire was going to embark on yet another evil little war, a miracle happened on the road to Damascus. A sensible solution proposed by Moscow caught the Washington warmongers off-guard, and removed their justification for war. Between that and the overwhelming lack of popular support, the Empire backed down – for now.
Russia has never been hostile to the US – only to the notion of a world-spanning absolute Empire the US seems to have become. Demonizing Putin and Russia has actually harmed America’s national security, as Stephen Cohen recently argued. Except the Empire doesn’t care about national interests any more: white-knighting around the world is the default foreign policy in Washington.
It is precisely this internalization of Imperial discourse – coming to love Big Brother, to borrow Orwell’s phrase – that enables Empire’s delusions about the world to continue, though. After all, how can they be delusions if someone else believes them as well? Thus fortified, Washington warmongers are trying to shoehorn Syria into the Balkans narrative, even though in reality a Syrian war would be far more destructive and dangerous, not just to the region but to America itself.
One of the reasons for the (un)civil war in Syria in the first place is that the Empire has already intervened there, from the very beginning. Just like in Kosovo, however, its proxies are being soundly thrashed by the government, so an escalation to overt war is a way to save their hides, as well as Empire’s prestige.
Empire’s blundering on Syria has been compared to that of Germany’s Kaiser Wilhelm on the eve of WW1. Perhaps that explains the ongoing push to rehabilitate Berlin and Vienna – while shifting the blame onto Russia and Serbia – as the centenary of the Great War approaches.
Reality is not something that can be changed with enough wishful thinking. There is no such thing as a humanitarian bomb. Those who consider themselves above the law aren’t police, but rogues. So “exceptional” is the establishment in Washington, these simple truths continue to elude them.
http://original.antiwar.com/malic/2013/09/20/imperial-exemptionalism/
Russia has never been hostile to the US – only to the notion of a world-spanning absolute Empire the US seems to have become.
——————————————————————————-
Yeah. I remember an “crazy old white man” out in from of DMV with his folding table loaded with pamphlets explaining a similar concept. He was saying the “cold war” was just theater and that the super powers were really working together for mutual benefit.
Can you really go to war with someone you share a 100 billion dollar space station with?
Funny how this guy forgets things such as Cuba in 1962. How he forgets the Warsaw Pact. How he forgets the imperialism wrought on Russian citizens after 1917. Afghanistan in 1979.
The United States is by no means blameless.
“Those who consider themselves above the law aren’t police, but rogues. So “exceptional” is the establishment in Washington, these simple truths continue to elude them.”
With this, I agree. It’s called elitism, Nebojsa. Ours is a time where leaders ignore and rewrite laws at will, when it suits their personal and political agendas.
As far as “embark on a new little war”, I highly doubt the U.S. was ever going to bomb Syria. Obama’s statements and behaviors were made deliberately to trash the United States.
Ethics? That’s for the little people.
Cuba?
Didn’t the US agree to withdraw nuclear missiles from Turkey and Italy in exchange for the USSR removing nuclear missiles from Cuba?
Is only the US allowed to keep nuclear missiles in other countries?
Cuba?
Didn’t the US agree to withdraw nuclear missiles from Turkey and Italy in exchange for the USSR removing nuclear missiles from Cuba?
+1. Why would we not have expected the USSR to make an equivalent ground-leveling play, after we had ALREADY camped missiles on their doorstep, first?
“A sensible solution proposed by Moscow caught the Washington warmongers off-guard, and removed their justification for war.”
Op-Ed Contributor
A Plea for Caution From Russia
By VLADIMIR V. PUTIN
Published: September 11, 2013
MOSCOW — RECENT events surrounding Syria have prompted me to speak directly to the American people and their political leaders. It is important to do so at a time of insufficient communication between our societies.
Relations between us have passed through different stages. We stood against each other during the cold war. But we were also allies once, and defeated the Nazis together. The universal international organization — the United Nations — was then established to prevent such devastation from ever happening again.
The United Nations’ founders understood that decisions affecting war and peace should happen only by consensus, and with America’s consent the veto by Security Council permanent members was enshrined in the United Nations Charter. The profound wisdom of this has underpinned the stability of international relations for decades.
No one wants the United Nations to suffer the fate of the League of Nations, which collapsed because it lacked real leverage. This is possible if influential countries bypass the United Nations and take military action without Security Council authorization.
The potential strike by the United States against Syria, despite strong opposition from many countries and major political and religious leaders, including the pope, will result in more innocent victims and escalation, potentially spreading the conflict far beyond Syria’s borders. A strike would increase violence and unleash a new wave of terrorism. It could undermine multilateral efforts to resolve the Iranian nuclear problem and the Israeli-Palestinian conflict and further destabilize the Middle East and North Africa. It could throw the entire system of international law and order out of balance.
…
I’ve been wondering out loud about phones and society. I’m not the only one:
‘A Brilliant And Disturbing Short Film About The People Who Wait In Line Forever Just To Buy An iPhone
http://www.businessinsider.com/casey-neistat-on-iphone-5s-lines-2013-9
I guess they have more time than money? Looking for their 15 minutes of fame?
L.A. homeless hired to buy latest iPhones
Michael Winter,
USA TODAY
7:27 p.m. EDT September 20, 2013
Many driven from Skid Row to Pasadena say they were unpaid and stranded after Apple Store halted scheme.
A businessman scheming to get his profit-minded hands on dozens of new iPhones allegedly recruited about 100 homeless people from Skid Row in Los Angeles to wait in line overnight at the Pasadena Apple Store, but many were left unpaid and stranded after his plan was exposed, local media reported Friday.
The unidentified reseller had offered $40 to each hired hand who bought an iPhone for him, which he bragged about to others in the line of about 200 people, the San Gabriel Valley Tribune reported. When they learned of the scheme, store personnel stopped selling the latest iPhone models to the homeless stand-ins.
http://www.usatoday.com/story/news/nation/2013/09/20/homeless-recruited-to-buy-iphones/2844979/ - 47k -
Sleeping in a sealed garbage bag? Priceless!
A few years ago, I was reading about 12-Step programs for cell phone addiction.
Showing one’s intelligence and mettle about all things cell/I-phones is all the rage among some 20-somethings. Phone knowledge seems to be a game of one-upmanship. If you know your device tech, you are a cut above.
Reminds me of those who used to brag about tennis clubs in the 1970s, breakdancing and cocaine binges in the 1980s, SUVs and BMWs in the 1990s.
I find it hilarious, and make jokes about it with friends. We spot such people and start laughing.
When I was reading reviews of smart phones recently (mentioned elsewhere in this post) one guy said he texts 500 times a day. He has to be exaggerating, but even if it’s 100 times a day, that’s a lot of LOLs and WTFs.
He has to be exaggerating, but even if it’s 100 times a day, that’s a lot of LOLs and WTFs.
I have seen evidence of the way young adults text first-hand, at family gatherings. Family members who haven’t seen each other recently can be sitting next to each other on a sofa, both texting their friends, and perhaps occasionally also each others. Crazy.
Does the FHA consider California homes sold for more than $729,750 to be “affordable”? It is very generous of federal taxpayers in Flyover Country to contribute to the financing and mortgage guarantees for California homes owned by millionaires.
POLITICS
September 8, 2013, 7:32 p.m. ET
Loan Size to Be Cut for Fannie, Freddie
By NICK TIMIRAOS
CONNECT
Federal officials are preparing to reduce the maximum size of home-mortgage loans eligible for backing by Fannie Mae (FNMA +6.40%) and Freddie Mac, (FMCC +7.50%)…
The proposed move is designed to wean the mortgage market off government support and allow the market for non-government-guaranteed mortgages to take a bigger role.
…
Currently, Fannie and Freddie Mac can back mortgages that have balances as high as $417,000 in most parts of the country and up to $625,500 in expensive housing markets, including parts of California and New York, and as much as $721,050 in Hawaii. Mortgages within the limits are called “conforming” loans; mortgages that exceed them are called “jumbo” mortgages.
The Federal Housing Finance Agency, which regulates Fannie and Freddie, hasn’t announced how far it will drop the loan limits, which would take effect Jan. 1, 2014, and a spokeswoman declined to elaborate on specifics. But in a statement, the agency said a “gradual reduction in loan limits is an appropriate and effective approach to reducing taxpayers’ mortgage-risk exposure…and expanding the role of private capital in mortgage finance.”
The FHFA says it doesn’t need congressional approval given broad powers it enjoys, so long as Fannie and Freddie remain under government control. The policy change illustrates a key challenge facing federal housing officials, who have taken extraordinary steps to keep mortgage credit flowing since the housing market crashed six years ago.
Home prices have rebounded due partly to record low interest rates. But with nine in 10 new loans receiving some form of government backing, officials are trying now to engineer a retreat without upending the recovery.
…
Lenders say they are eager to fill any gap left by a decline in the loan limits. Already, banks have been competing to make loans to the most creditworthy jumbo borrowers by offering rates that are in some cases lower than conforming-loan rates. Before the crisis, jumbo rates were at least a quarter of a percentage point above conforming loans, and until last year, jumbo loans were more than 0.5 percentage points higher.
“Given where banks are pricing jumbo mortgages, it seems like a relatively small risk on the part of the government to take the next step,” said Michael McMahon, managing director at Redwood Trust Inc., a Mill Valley, Calif., investment firm that securitizes jumbo mortgages.
During the second quarter, banks made nearly $59 billion in jumbo mortgages, up 20% from the previous-year period to a six-year high, according to Inside Mortgage Finance. “There’s plenty of liquidity in the market to handle a drop in the conforming limit,” said Brad Blackwell, executive vice president at Wells Fargo Home Mortgage, the nation’s largest mortgage lender.
…
In San Rafael, Calif., where home prices are up by more than 17% from one year ago, a reduction in loan limits could make it more difficult for borrowers like Christine Gironeto find a home that they can afford and find desirable. She and her husband closed last month on a 1,700 square-foot four-bedroom home built in 1961. They borrowed the maximum—a $625,500 loan—and made a 20% down payment in order to get a 4.6% rate. “It’s by no means a mansion. It needs a lot of work,” said Ms. Girone, 45 years old and a mother of three. While $625,500 may sound like a lot of money in most parts of the country, it doesn’t buy much in the San Francisco Bay area, said Ms. Girone.
…
Historically, loan limits have been tied to median home prices, and the limits rose as price increased during the past decade. Fannie and Freddie increased their maximum loan limit to $417,000 in 2006. But as prices later fell, the limits didn’t.
In 2008, after jumbo lenders pulled back sharply from the market, Congress instead authorized Fannie and Freddie to buy even larger loans in certain high-cost areas. Those high-cost limits fell by around 15% in late 2011. The drop had a negligible impact, in part because Congress maintained higher loan limits for mortgages insured by the Federal Housing Administration.
Reducing the limits for Fannie and Freddie—but not for the FHA, which has different ones—could simply shift more business to that agency, which has among the most liberal terms. The FHA allows borrowers to make down payments of just 3.5% and has limits that vary by county, from $271,050 up to $729,750.
…
I was in Bank of the West last Friday and their rate sheet for mortgages was on the counter. The cost and rates on their Jumbo loans was lower than the conforming loans. So much for Fannie and Freddie helping out the housing market. BotW seems to be doing a better job on loans where they don’t have GSE rules and regs!
“The cost and rates on their Jumbo loans was lower than the conforming loans. So much for Fannie and Freddie helping out the housing market.”
I agree.
I would love to see the Congress’s rational for keeping the conforming loan limit on FHA affordable California housing loans at $729,750. If anyone has this information in hand, please post.
I would love to see the Congress’s rational for keeping the conforming loan limit on FHA affordable California housing loans at $729,750. If anyone has this information in hand, please post.
Clearly, there is none.
The only sensible approach that I have been able to come up with personally for setting the conforming loan limit is to set it at the median house sale price for an area, and adjust regularly. That way the government is only subsidizing the bottom half of the housing market; those buying in the top half of a market clearly do not need to be subsidized.
Does the FHA consider California homes sold for more than $729,750 to be “affordable”?
I suppose it is if you make 250K. For the average Californian, not so much.
The maximum “affordable” FHA loan of $729,750 is 12.5 times the 2012 median California household income of $58,328.
P.S. Without checking, I would guess the reported increase in U.S. median household income is misleading, as it ignores households whose adult workers dropped out of the labor force. But that is just a hunch; I would be interested in evidence to the contrary.
HUNNEMAN: Southwest County doing better than the region
September 19, 2013 by John Hunneman
The median household income in Murrieta is $80,792, well above the regional average. (JOHN HUNNEMAN)
The new numbers are out on household income and poverty levels from the U.S. Census Bureau this week and, while they paint a fairly bleak picture of the Inland Empire as a whole, Southwest County residents are generally doing better than the rest of the region.
As we often do here, let’s go inside the numbers.
Overall California’s median household income dipped from $58,509 in 2011 to $58,328 in 2012, a drop of 0.3 percent.
The number of states that gained and lost household income from 2011 and 2012 was about evenly split. The country’s income, as a whole, rose just 0.1 percent from $51,324 in 2011 to $51,371, or $47, enough for dinner for two — with adult beverages — at Applebee’s.
Remember median income means half of the households make more money and half make less. This will be on the final.
The median income in the Riverside-San Bernardino-Ontario region fell 2.8 percent, from $53,201 in 2011 to $51,695 in 2012, the worst performance of the 25 most populous U.S. Metropolitan areas.
…
But that is just a hunch; I would be interested in evidence to the contrary.
We’re supposed to disprove your hunch? I think you’re supposed to prove it.
Feel free to prove it, disprove it, or ignore it, as you see fit.
Meanwhile I will maintain my hypothesis that Congress has collectively gone insane, as evidenced by the fact that they consider a home financed by a $729,750 mortgage to be ‘affordable.’
Your hunch is that household income is excluded from stats if someone in the household has dropped out of the work force?
“Your hunch is that household income is excluded from stats if someone in the household has dropped out of the work force?”
Let me spell this hunch out more clearly. There currently is something on the order of 115 million U.S. households. A correct calculation of median household income would consider the incomes of all of these, sort them in increasing order, and report the income for household number 57,500,000.5.
My guess is that the 23,116,928 U.S. households on food stamps, plus a few million others which have fallen on hard times, are systematically excluded from the median household income calculation, in order to paint a bit of lipstick on the pig.
But I would be interested to see evidence to the contrary, if anyone has some.
“The maximum “affordable” FHA loan of $729,750 is 12.5 times the 2012 median California household income of $58,328.”
+1 Good thing 2013 isn’t the “dark ages”, or logical sages like yourself would be arrested by the king’s knights, and you would end up chained to the wall of some church basement awaiting the removal of your tongue.
The terrible injustice of individually carved, flawless, tasteless ice cube spheres for the 1%, with only misshapen ice cubes from freezer trays for the 99%, is very troubling.
Luxury tampons? Companies spurn middle class - to everyone’s loss
Ben Popken NBC News
Sep. 20, 2013 at 3:25 PM ET
Paper towels embossed to look like cloth. Tampon packages with a glossy metallic sheen. Designer ice cubes for $75 a bag. Marketers are going glam with everyday products, taking them upscale as they give up on selling to the middle class.
Companies have reacted for years to the shrinking middle class by developing both top shelf and bargain versions of their product lines. Toyota has been successful with the Lexus. Frito-Lay has introduced Olive Coast, kettle-cooked chips with a Mediterranean flavor, as well as “Taqueros,” a discount tortilla chip. Apple’s new iPhone comes in both a $199 version and a $99 one with cheaper components.
For the wealthy, a 20 percent markup is a small price to pay for “luxury.” For some in the middle class, it’s a way to feel affluent, at a cost. For the poor? There’s the bargain brands. In an economic recovery that has magnified income inequality, consumers are either spending at the Family Dollar stores of the world, or at the Nordstroms.
The U.S. Census Bureau recently reported that national real median household income was $51,017 in 2012, 8.3 percent lower than in 2007 and 9.0 percent below the income peak in 1999. As the middle class feels like it’s scraping by, it has less buying power to target with average products at average prices. By 2011, the top 5 percent of Americans by income accounted for 37 percent of all consumer spending, according to a Moody’s Analytics survey. By contrast, the bottom 80 percent accounted for 39.5 percent.
…
Tampax “Radiant” costs 59 percent more per unit and use “designer packaging and wrappers.” And Dean and Deluca is selling premium ice cube spheres “individually carved from a 300lb block to ensure flawless quality and a zero-taste profile.” A 10 cube bag costs $75.
…
I love how this article is written!
“For the wealthy, a 20 percent markup is a small price to pay for “luxury.” For some in the middle class, it’s a way to feel affluent, at a cost. For the poor? There’s the bargain brands.
I know quite a few wealthy people who consistently buy bargain brands.
Funny how the writer assumes that everyone buys products in an effort to look cool. What a dumb@ss.
Do you know of anyone buying “luxury tampons”? I, for one, have never heard of such a thing before reading this article.
How on earth do internet blog-posters and bloggers manage to see things like the housing bubble and other economic problems, while the leaders of the Treasury and Fed claim to be unable to see such things?
cause it gives them an excuse to create more money?
After years of living without a Blackberry, I’m thinking of finally throwing in the towel and buying one. Would now be a good time to buy? Or is there a better product on the market for a comparable price?
TECHNOLOGY
BlackBerry takes huge loss as sales collapse
SEAN SILCOFF AND OMAR EL AKKAD
The Globe and Mail
Published Friday, Sep. 20 2013, 3:10 PM EDT
Last updated Saturday, Sep. 21 2013, 9:29 AM EDT
BlackBerry Ltd. will cut 4,500 jobs, write off more than $900-million (U.S.) worth of unsold phones and abandon parts of the consumer wireless market in an attempt to save a business in freefall.
The Waterloo, Ont.-based company said the writedown will lead to a loss of nearly $1-billion in its second quarter ended Aug. 31. The company said the inventory charge is largely related to its Z10 touchscreen phone, which it unveiled in January at a splashy event in New York. Sales of the device have been so dismal that BlackBerry said its smartphone revenue will be less than $800-million in the quarter, less than half the $1.7-billion it reported a year earlier.
…
One thing that is great about this is that the “death of a business” or business that matures quickly and dies quickly still exists. There is no govt prop-up. IMO it is a good thing.
Next question is: What do businesses in a segment that relies on the next big “hype” need to do to continue to survive?
‘What do businesses in a segment that relies on the next big “hype” need to do to continue to survive?’
Hire hobos to stand in line for their phones?
I am sure that you noticed (it is difficult not to) that most young people with no income - relying on parents - have these iphones and are on it all the time. It is really dumbing down the masses!
I went by a Verizon office the other day. About one fourth of the people going in had bills and checkbooks in their hands.
I just went through a little odyssey of thinking about this. I finally got a BB in 2009 because so much foreclosure work is done out in the field with no power available. At the time these hand held computers (smartphones) weren’t the whiz-bang time wasters they are now. (I know, they’ve got some handy tools like navigation). It is very useful as a phone and email device, and now some people are texting me so I have to use that too.
Recently my battery is failing. I called verizon and they don’t have these batteries any more. They’re too old, I was told. I can get refurbished ones online. So the issue caused me to consider an upgrade I’ve been eligible for for years. I started looking into it; man what these things can do! And the choices. I decided to read the reviews. Lot’s of unhappy customers out there, it seems, locked into plans with phones that don’t live up to the hype. After lots of this, I looked at Blackberry reviews. Mostly people are happy; it’s a phone for work, not playing on the internet, they say. And I can’t help but conclude I would miss the physical keyboard. I get messages from the touch screens all the time that are misspelled, no capital letters; they look child like. So I kinda decided I should get a new Blackberry. Then I realized; I already have one, I just need a $10 battery. The end.
I apply the same lesson to automobiles. Good work Ben.
I was still using an old Motorola dumb phone until the thing finally gave up the ghost a year ago. Speaker went so I couldn’t hear anyone anymore. I bought a Samsung Galaxy S3 and couldn’t be happier. I won’t upgrade until this thing breaks.
We are five years out from the Fall 2008 financial meltdown, which seems like a good time to take stock of how things have changed in the wake of the “crisis.”
1) Too-big-to-fail banks have a larger share of the banking sector than at any previous point in history.
2) The U.S. housing market is more dependent than ever before on federal government support of mortgage financing from the Fed, Fannie Mae, Freddie Mac, FHA and other government mortgage financing agencies.
3) The Housing Bubble is nearly as big as it was in 2006, thanks to federal intervention in the housing market.
4) The headline Wall Street stock market indexes have recently surpassed their all-time highs, thanks to quantitative easing.
5) Millions of formerly middle-class working-aged Americans have left the labor force, never to return.
6) Aside from a few fines paid by too-big-to-fail Megabanks in the millions of dollars to compensate for crimes which earned the perpetrators billions of dollars in profits, nobody at the top of the financial structure which made a fortune off this financial collapse has paid a price.
Does that about sum it up, or am I missing any important details?
What’s left to fix financial meltdown?
U-T EconoMeter panel weighs in on what remains to do
By Roger Showley
Noon Sept. 20, 2013
Trader Jonathan Corpina works on the floor of the New York Stock Exchange Wednesday, Sept. 18, 2013. The stock market hit a record high Wednesday after the Federal Reserve’s surprise decision to keep its economic stimulus in place. (AP Photo/Richard Drew)
Question: Is there still work to be done to clean up after the 2008 financial meltdown? What are the top reforms you advocate?
Panel’s answers: Yes 8, No 0
…
Here is one excellent UT-EconoMeter suggestion for what work remains to fix the American financial system.
What’s left to fix financial meltdown?
Question: Is there still work to be done to clean up after the 2008 financial meltdown? What are the top reforms you advocate?
Marney Cox, San Diego Association of Governments
Answer: YES
Our capitalist system works best when there is chance for business failure or success. So, at the top of a cleanup list is eliminating too-big-to fail. Total assets at the nation’s 10 largest banks have increased 28 percent since the meltdown to $11.3 trillion, representing nearly 70 percent of GDP. Banks could be wound down or capital buffers increased to protect taxpayers from another bailout. Second, denationalize the home mortgage market. About nine of every 10 new mortgages are backed by the U.S. taxpayer. Eliminating Fannie Mae and Freddie Mac would limit the implicit federal guarantee and allow the private sector to shoulder the risk.
…
There are two Americas still. Nothing has changed. The matrix has a great cloaking device.
What has changed since 2008 is an increase in U.S. wealth inequality to the greatest degree since the 1920s, just before the onset of the Great Depression.
“McDonald’s Big Mac patties are the same patties used on the regular hamburgers, known in McD’s lingo as “10 to 1’s”—that’s ten patties per pound of beef, or 1.6 ounces per patty.”
They keep complaining about the cost of beef. Well I can get ground beef over at costco ant day of the week for 3.19 / lb.
So they must be getting it for around 2 bucks in bulk.
2.00 / 10 burgers = .20 cents a burger for meat
they are still making money on these 1.00 burgers.
Budget, Inequality, Personal Finance
The looming budget battle and rising U.S. income inequality: Recent research
…
A comprehensive update from Berkeley economist Emmanuel Saez suggests the tax changes may not be enough in the long run to reverse widening inequality. His new paper, “Striking It Richer: The Evolution of Top Incomes in the United States,” builds upon earlier research Saez conducted with Thomas Piketty of the Paris School of Economics. (Their work remains a leading source and barometer on these issues for the media and academia.) In the updated research, Saez indicates that the wealthiest 1% of earners are close to making a full recovery from the recession while bottom 99% have barely recovered at all. Placing this in a historical context, Saez explains that inequality has been growing in the U.S. labor market over the last 30 years, with the top earners capturing an ever-increasing portion of productivity gains. He points to a number of factors to explain this, highlighting in particular “the retreat of institutions developed during the New Deal and World War II — such as progressive tax policies, powerful unions, corporate provision of health and retirement benefits, and changing social norms regarding pay inequality.”
Key findings of the study include:
* From 2007 to 2009, average family income declined by 17.4%, the largest two-year drop since the Great Depression.
* Average real income for the top 1% of earners fell 36.3% while average real income for the bottom 99% fell by 11.6%. By comparison, the top 1% absorbed a larger fraction of losses in the 2000-2002 recession (57%) than in the Great Recession (49%).
* From 2009 to 2012, average income per family grew by 6%, but these gains were very unevenly distributed. “Top 1% incomes grew by 31.4% while bottom 99% incomes grew only by 0.4% from 2009 to 2012. Hence, the top 1% captured 95% of the income gains in the first three years of the recovery.”
* Average real incomes of the bottom 99% grew by 6.6% from 1993 to 2012, an annual growth rate of 0.34%. The top 1% of incomes grew by 86.1% during the same period, an annual growth rate of 3.3%.
* “The top decile income share in 2012 is equal to 50.4%, the highest ever since 1917.” This level “even surpasses 1928, the peak of stock market bubble in the ‘roaring’ 1920s.”
Such results should not come as a surprise given historical patterns, Saez states: “Falls in income concentration due to economic downturns are temporary unless drastic regulation and tax policy changes are implemented and prevent income concentration from bouncing back.” The larger-scale policy changes after the Great Depression as part of the New Deal were effective, he suggests, reducing income inequality until the 1970s. In contrast, “the policy changes that took place coming out of the Great Recession (financial regulation and top tax rate increase in 2013) are not negligible but they are modest relative to the policy changes that took place coming out of the Great Depression.”
…
“Falls in income concentration due to economic downturns are temporary unless drastic regulation and tax policy changes are implemented and prevent income concentration from bouncing back.”
In an absurd reversal, the Fall 2008 bailouts handed over hundreds of billions of dollars to the wealthiest Americans on a platter. People who should rightfully have lost their shirts on foolish gambling losses instead came out richer than Croesus.
Was Congress busy funding barber shops and luxurious health spas with taxpayer money after the Great Depression?
Can you tell me where in my Toyota Matrix I can turn on this cloaking device?
‘Can you tell me where in my Toyota Matrix I can turn on this cloaking device?’
You see, you think it is a car.
more people than ever living in poverty?
Wealth is goods and services.
Customary on my Sunday to check the air in my tires. A group of older people in a car behind me asked me to help them check their tires. They were headed to S.D. So I helped them. My own gauge was not working properly. I don’t trust the gauge on those air hoses. I referred them to the tire place down the road. Then a lady in a BMW asked me to help. Her display said the right front tire is low. This time I noticed my own gauge was still not right. So I went back to relying on the hose. Odd, her spec said 32PSI on the front and 35 on the back. She just had me do the front two.
Funny thing…the BMW lady gave me a $5 for helping! I accepted and thanked her. She probably assumed I was driving an older Matrix and must have had no money. But see I was out there for ten minutes in all. Grease on my fingers from the tires and I am treated like a less fortunate type so might as well carry it on further.
By the way, yesterday I donated more than $5 in non perishable canned food for hungry people.
Karma.
Keep up the good work, Bill. Thanks to folks like you, one of these days, religious zealots may have to finally admit they don’t have a monopoly on “goodness.”
I only use the word “dude” when I mean, “more than you realize”
So dude, back in the 1970s while I was a long hair high school student who listened to Black Oak Arkansas, Black Sabbath, Led Zeppelin, and Humble Pie, my dad was a business consultant. Legally blind. He had run ins with a lot of scammers trying to take advantage of his blindness. Even though decades more, my dad never gave up his love of people and being an extrovert people person. One of his business acquaintances was some reverand. A guy that had some religious profession. He stole $20,000 worth of business equipment from my dad in the 70s. And despite events like that he had faith in fellow man.
I never was impressed with the religious profession. In college I read Moliere’s “Tartuffe,” and it resonated well. Or at least reaffirmed my disgust with religiocrits.
I guess they are not on the bottom of my list of dishonest people. I put employment recruiters at the bottom of the pile. Lawyers and politicians next. Above that would be car salesmen, fundies, religious “professionals” and Bernie Madoff.
RE brokers are at the same level as politicians and lawyers.
Now of course there are some people in each group (except politicians) who are great people. I have to generalize in this case and be in danger of branding myself a collectivist. The culture of those groups is built-in scam, so I have to generalize.
I grew up the son of a preacher, so had a much different view of religion. He was always one of my heroes for not following the throng, but rather following the dictates of his own conscience in deciding the right course of action. I have also known many very impressive individuals As an adult who use religion as the basis of a principal-centered life. Though I don’t follow this approach myself, I nonetheless respect those who sincerely do so.
But I also recognize that religion is the last refuge of scoundrels, and it sounds like your dad had a run-in with one of these.
“…Led Zeppelin…”
One of my most memorable free lance gigs ever was playing in a backup orchestra for Page and Plant (the vestiges of Led Zeppelin). The experience greatly raised my level of respect for the musical achievements of top rock artists.
Rock and roll is like NASCAR. “Serious” musicians talk a lot of smack about it, and usually for good reason. But like anything else, if you try to run with the top dogs you find that doing it well requires far more skill and artistry than people think. The devil is in the details…and as far as the music goes if you can’t “feel” it you sound like crap even if you hit all the notes.
“Rock and roll is like NASCAR.”
Which brings to mind a favorite movie:
Talladega Nights The Ballad of Ricky Bobby [trailer] (2006)
Liberace….. your Ravens are putting a beatin’ on the Texans.
Are you going to be playing your harpsichord in the locker room?
Now the worries about the onset of tapering are safely receding into memory, Wall Street can redirect its attention towards the incipient debt ceiling showdown.
Stock market’s anxieties turn to debt-ceiling battle
…
Obama: No deals on debt ceiling
President says he won’t negotiate with Republicans on the debt ceiling; says their plan threatens to plunge U.S. back into recession.
so he is basically saying that printing money to buy debt is the only game in town?
Don’t know how much longer money printing is going to last as a macroeconomic survival strategy.
At any rate, the MarketWatch peops have offered no shortage of reasons to sell this fall.
Sept. 20, 2013, 1:28 p.m. EDT
The days of easy money may be over
Commentary: New indicator says the time to sell is here
By Mark Hulbert, MarketWatch
The days of easy money in the U.S. stock market could be behind us.
That sobering assessment seems out of step with this past week’s developments after the Federal Reserve’s surprise decision to continue its massive bond-buying program quickly propelled markets to new records.
But making money over the long term often requires investors to defy the conventional wisdom.
Now may be just such a time, according to one newly developed indicator that attempts to identify both when it is safe to allocate more funds to the stock market and when equities should be avoided altogether — as well as the stages in between.
If the indicator is correct — and extensive historical testing has shown it to be prescient — investors might want to begin selling their riskiest positions and adding to their holdings of safer and more-conservative stocks.
…
If the indicator is correct — and extensive historical testing has shown it to be prescient — investors might want to begin selling their riskiest positions and adding to their holdings of safer and more-conservative stocks.
I prefer this approach:
To just invest enough to get the matching 401k contributions.
Fully invest in my IRA - they can go to Roth easily, and I will be 59 and a half in five years so I can get my Roth out tax-free.
With money I would have invested in 401k, the new money goes 50/50 in cash and physical precious metals.
I would not touch my existing asset classes except to rebalance them. My bet is continued bubble in stocks, and ended by a big confiscation by President Hillary between 2017 and 2020. I’ll have cash “under the mattress” and precious metals where bubba suggested (I think behind the oatmeal in the cupboard?).
The USA dropped out of the top ten of the freest economies in the world. If I did not have relatives here, I’d be heading to Singapore. But I prefer to stack precious metals and cash. The erosion of our freedoms is slow but there may be a nonviolent and nonpolitical way the remaining taxpayers will force government to greatly downsize. For instance, our incomes getting lower and lower. Our tax revenue going away, forcing government to close down.
The back doors the NSA pushed for can be cracked by bad guys. Way to go NSA!
‘A major American computer security company has told thousands of customers to stop using an encryption system that relies on a mathematical formula developed by the National Security Agency (NSA). Last week, the New York Times reported that Snowden’s cache of documents from his time working for an NSA contractor showed that the agency used its public participation in the process for setting voluntary cryptography standards, run by the government’s National Institute of Standards (NIST) and Technology, to push for a formula it knew it could break.’
‘A person familiar with the process by which NIST would have accepted the PRNG told Reuters that it accepted the code in part because many government agencies were already using it. RSA had no immediate comment when quizzed by Reuters about the email. It was unclear how the company could reach all the former customers of its development tools, let alone how those programmers could in turn reach all of their customers. That could mean that the weakened PRNG has been used in products spread around the world over the past seven years.’
http://www.theguardian.com/world/2013/sep/21/rsa-emc-warning-encryption-system-nsa
“Former local Realtor executive charged with embezzling funds”
http://normantranscript.com/previous/x789529812/Former-local-Realtor-executive-charged-with-embezzling-funds
Well blog realtliars….. why the silence?
ft dot com
September 22, 2013 4:16 am
Billions of dollars wasted on investment advice
By Steve Johnson
Pension funds and other large investors are throwing away billions of dollars a year on worthless advice from investment consultants, according to academic research.
The funds recommended by consultants do no better than any other, and by some measures they underperform the wider market significantly, the research* found.
On an equal-weighted basis, US equity funds recommended by consultants underperformed other funds by 1.1 per cent a year between 1999 and 2011, according to analysis of 29 consultancies accounting for more than 90 per cent of the market by a team from Oxford university’s Saïd Business School.
“The enormous power wielded by consultants is not matched by their performance,” said Jose Martinez, one of the authors of the study.
“In US equities, one of the largest asset classes, investment consultants as an industry appear to add no value in fund selection,” added co-author Howard Jones.
According to the Oxford team, more than $13tn of US institutional money was advised on by consultants from 2011, with 82 per cent of public pension plan sponsors and half of corporate sponsors paying for advice. Worldwide, consultants advised on $25tn of assets.
If only one basis point of this was allocated for manager selection, this would amount to $2.5bn a year. An estimated $2tn of assets a year are also subject to “transition management”, often driven by consultants’ recommendations to hire and fire managers, incurring significant, and seemingly pointless, transaction costs.
In the US, the academics found consultants’ recommendations were highly influential. A fund recommended by many consultants could typically expect to see additional inflows of $2.4bn, “confirming survey data which reports that manager selection is one of the most highly valued services offered by consultants”, the paper said.
The Oxford team found these flows, and the fact that consultants tended to recommend larger funds in the first place, explained the underperformance of 1.1 per cent a year, as unwieldy funds suffer from diseconomies of scale.
However, they found “no evidence that the recommendations … enabled investors to outperform their benchmarks or generate alpha [market-beating returns]”.
…
OPINION
September 16, 2013, 7:08 p.m. ET
Martin Feldstein: How to Create a Real Economic Stimulus
Entitlement reform is key to shrinking the ratio of debt to GDP and making room for pro-growth tax cuts.
By MARTIN FELDSTEIN
Earlier this year, former U.S. Treasury Secretary Larry Summers expressed doubts about the Federal Reserve’s quantitative easing policy of buying $85 billion a month of government bonds and other long-term assets. His skepticism antagonized some Fed insiders and liberal Democrats, who recently opposed his consideration by President Obama as the next Fed chairman.
When Mr. Summers on Sunday withdrew his candidacy for the chairman’s job, there was one immediate benefit: Now Larry Summers will be free to voice an even clearer and stronger critique of current policy.
The United States certainly needs a new strategy to increase economic growth and employment. The U.S. growth rate has fallen to less than 2%, and total employment is a smaller share of the population now than it was five years ago. The official unemployment rate has declined sharply (to 7.3% last month from 10% in October 2009) only because so many people have stopped looking for work or are working part-time.
The Fed’s monetary policy is no longer effective in stimulating demand. The near-zero interest-rate policy and aggressive quantitative easing, it has become increasingly clear, create dangerous risks to future stability. The Fed’s announcement in June that it will soon reduce the rate of buying long-term assets raised long-term rates, slowing the recovery in the housing market and other activity. And the unemployment rate is approaching the 6.5% threshold that could lead the Fed to raise short rates.
…
People whose paychecks depend on federal housing market subsidies agree that some level of federal intervention in the housing market is essential.
How is it that such an outsized federal government role in housing is essential in the U.S., yet other western nations without massive federal intervention have thriving housing markets?
‘Tis a puzzlement!
Debate over Mortgage Interest Deduction, Government Role in Housing
by Jann Swanson
Sep 19 2013, 3:36PM
There was sharp disagreement among participants in at least one panel at a forum on the future of housing sponsored by the National Association of Home Builders (NAHB) and produced by CQ Roll Call. Fellow panelists agreed while that the private sector needs to play a greater role in mortgage financing maintaining some level of federal support is essential.
Peter Wallison of the American Enterprise Institute said lowering the conforming loan limits of government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac over time will allow the private sector to come in and pick up that business. “If you simply made those changes and authorized the withdrawal of the GSEs, you would find we would gradually move to a completely private system, which is where I think we should be going,” he said.
Michael Calhoun, president of the Center for Responsible Lending retorted that “Private capital by itself will not secure a safe market and most importantly, private capital during a down market is least likely to be there.” Georgetown University Law Professor Adam Levitan concurred, saying private money dries up when the going gets tough.
Michael Stegman, counselor to the Secretary of the Treasury for Housing Finance Policy told the audience “We know how much more serious the [housing and economic] crisis would have been without the FHA stepping up.”
Another panel on tax reform drew broad general agreement that the mortgage interest deduction (MID) plays a key role in shaping housing demand, while differing in their evaluation of current policy. NAHB economist Robert Dietz quoted the Tax Foundation that repealing the MID and lowering marginal tax rates would cause the GDP to decline by $100 billion annually. It would also cause home values to fall.
…
If you know a policy sux but stand to personally benefit from it, why not throw in the towel and take advantage?
Pascal-Emmanuel Gobry, Contributor
Business
9/04/2013 @ 12:50PM
How I Learned To Stop Worrying And Love The Home Mortgage Deduction (No, Really)
The American Dream, New Jersey 1991 (Photo credit: Wikipedia)
An article of faith among policy wonks is that the home mortgage deduction is a terrible policy. It’s also an extremely popular policy.
I used to think it was a terrible policy. And I get all the arguments. In fact, I agree with them. It encourages Americans to take on more debt. It encourages Americans to pour their savings in an illiquid, risky investment. It favors home ownership over renting when renting is a very good way to live. It distorts the marketplace. It provides a huge subsidy to the construction industry.
All of these things are true.
All of these things are true…and yet, if there’s a common thread in all my political writing, it might be a thesis which would probably be self-evident to most people but alien to many wonks, which is that people form political associations not merely to secure certain rights or privileges, or not even merely to improve their material well-being, but also to live by a commonly shared set of values.
And the simple fact of the matter is that in the United States of America, the vast majority of people share the value “Owning one’s home is an important thing and life goal.” It’s part of “the American Dream”, fercryinoutloud. The American Dream is that “if you work hard and play by the rules”, you get to have the means to support your family, and you get to buy a house in the suburbs with a garden.
…