The Housing Bubble

Eventually - even you are going to say the Bush days were the “good old days”

Damn those facts!

Don’t forget that George W. Bush also created the recession that Henry Paulson tried to cover up by firing the economist who was about to issue a report announcing it in December 2007.

Political revisionism of history doesn’t go very far around here.

“Political revisionism of history doesn’t go very far around here.”

It goes farther than you think. And you better think properly or you get slammed.

The Republican party already owns the credit for the Fall 2008 financial panic. Why not add another similar achievement to the list this fall?

Oct. 3, 2013, 12:50 p.m. EDT
Treasury warns of dire consequences of default
Issues report on crippling effects on economy and financial markets
By Greg Robb, MarketWatch

WASHINGTON (MarketWatch) — The Treasury Department warned Thursday that a failure to raise the debt ceiling could lead to a financial crisis and recession even more damaging than the financial crisis of 2008.

A failure of the U.S. to pay its obligations if the debt limit is not raised “would be unprecedented and has the potential to be catastrophic,” Treasury said in a brief report intended for members of Congress and also released publicly by the agency.

“Credit markets could freeze, the value of the dollar could plummet, U.S. interest rates could skyrocket, the negative spillovers could reverberate around the world, and there might be a financial crisis and recession that could echo the events of 2008 or worse,” the report said.
…

RNC political terrorist tactics are well on their way towards guaranteeing a Democrat will occupy the Oval Office for the next forty+ years!

Did they once again err by overestimating the stupidity of American voters, aside from the Pea Brain Party?

CBS News/ October 3, 2013, 7:00 AM
Poll: Americans not happy about shutdown; more blame GOP
By Sarah Dutton, Jennifer De Pinto, Anthony Salvanto and Fred Backus

On day three of the partial government shutdown, a new CBS News poll reveals that a large majority of Americans disapprove of the shutdown and more are blaming Republicans than President Obama and the Democrats for it.

Fully 72 percent of Americans disapprove of shutting down the federal government over differences on the Affordable Care Act; just 25 percent approve of this action. Republicans are divided: 48 percent approve, while 49 percent disapprove. Most tea party supporters approve of the government shutdown - 57 percent of them do. Disapproval of the shutdown is high among Democrats and independents. This CBS News poll was conducted after the partial government shutdown began on October 1.
…

recession that Henry Paulson tried to cover up by firing the economist who was about to issue a report announcing it in December 2007.

I missed that tid-bit somehow—reference/link? Thanks!

I’d hunt down the link, but I suspect the internet has been scrubbed.

If you go back to the December 2007 HBB archives, you can probably locate my post on it.

“George W. Bush also created the recession”

The recession was a long time in the making, with a greater push by all politicians to make home “affordable” by shoving more and more debt onto shaky borrowers, made worse by the Clinton administration taking the reins off Wall Street via the repeal of Glass-Steagal, made worse yet again by the Fed keeping rates too low for too long, allowed to continue as Bush & Co. kept pushing the debt on people seeking “the American Dream” and engaging in DON’T tax and spend policies, and made worse further by the rampant spread of securitized mortgage products with complicit ratings agencies.

To place the blame on Bush II ignores all the other players that were pushing us toward the cliff for a LONG time. Bush II just continued the trend, and didn’t see the cliff until we were over it (or so close to it that the momentum couldn’t be stopped).

Don’t say things like that. People want to feel comfortable lauding the Democrats. They want to feel “safe” voting for politically correct figureheads who just want to “help”.

Great summary, RW. There is plenty of blame to go around.

Don’t forget all the job outsourcing and the stagnation of pay and benefits.

Ox-

I didn’t include that one, as in my opinion, outsourcing, etc. was largely a byproduct of free market forces/globalization, and was allowed to occur because of government INACTION (few protectionist policies being enacted)…I have a hard time placing blame on government for allowing market forces to find their path.

the bush caused recession…do you guys even remember the dot com collapse?

the pre-cursor to his mess we are in.

itulip called the recession in the month the recession began and wasn’t called by gubmint economist until 6 months later.

some people really need to get their head out of the MSMs ass.

“…do you guys even remember the dot com collapse?”

The one that happened while Bush was in office?

“The one that happened while Bush was in office?”

lol

Bush entered office in January 2000, when the Nasdaq was on the way up at about 4,400, peaking over 5,000 in March 2000.

Are you trying to suggest that if we gave Clinton 4 more years there wouldn’t have been a massive dotcom crash?

Obama entered office in January 2008, when the S&P was still around 1,400, and didn’t crash until October 2008. Are you saying that this stock market crash was Obama’s fault?

“Are you saying that this stock market crash was Obama’s fault?”

he is either an absolute idiot or engaging in partisan hackery for shits and giggles.

I usually give people the benefit of the doubt, and hope he’s engaging in partisan hackery to rile people up, but based on conversations I’ve had with other non-centrist folks (people who learn about the world from either Rush L, or R Maddow), I frequently fear that it’s idiocy, or intentional ignorance.

“Bush entered office in January 2000, when the Nasdaq was on the way up at about 4,400, peaking over 5,000 in March 2000.”

More revisionist history.

Last I checked, U.S. presidential elections occurred in years which are multiples of 4, and presidential terms began in years which are multiples of 4 + 1, like 2001, 2005, 2009 and 2013.

Nice try, though.

Sorry, I got it wrong then…my math was off. Bush was sworn in Jan 2001.

Bush took office AFTER the crash occurred in January 2001, so it is even MORE clear that the dotcom bust wasn’t as you said “while Bush was in office”–he was clearly handed that steaming pile by Clinton.

Not yet. There’s a healthcare co-op starting here in AZ. I’m very interested in it.

I’m trying to encourage the local food co-op to do a joint membership recruiting effort. As in, join the co-ops and get good food and affordable care.

Officers injured.

Officer injured was struck by car, not shot. Suspect was woman and is dead, shot by police.

Oh, I see…You mean like those guys who work for the Wall Street banks that got bailed out in 2008 to the tune of hundreds of billions of dollars of taxpayer money.

Thanks for the explanation.

Are people who collect paychecks for being unemployed or retired considered to be “gold bricks”? Or how about those who “sit around” all day running counterfeit operations?

I wake up unemployed every day- folks I know in finace work or die- no free sht for them

I think retired people would be classified as “Silver Bricks”

goon squad
Good for you. Grow that pile! Eventually, you’ll want roots and will buy a home. Having a paid off roof is essential for us wage slaves as we reach the autumn of our lives.

Eventually, you’ll want roots and will buy a home. Having a paid off roof is essential for us wage slaves as we reach the autumn of our lives.

There’s truth to this, but it’s not the entire story. Another bit of the truth appears in a discussion on reverse mortgages. At first blush (like many financial products) it seems like a great idea. But upon further inspection, there are significant pitfalls (surprise). Like the following:

Unfortunately, many reverse mortgage borrowers have been unable to either maintain their home, or pay the property taxes or insurance on time. When this situation occurs, the lender may ask the borrower to repay the outstanding loan or face foreclosure. When the remaining equity is less than the outstanding loan, the lender forecloses when the borrower is unable to repay the outstanding balance.

http://articles.chicagotribune.com/2012-11-07/business/sc-cons-1101-savings-game-20121107_1_mortgage-borrowers-borrower-lives-home-equity

So, taxes, insurance and maintenance are going to cost something. On a million dollar house, you are talking a pretty penny annually.

“Eventually, you’ll want roots and will buy a home”

A comment to an online Wall Street Journal article:

“People have learned that a highly leveraged, illiquid, high-transaction cost “asset” requiring regular annual maintenance of thousands of dollars is not worth the risk”

“Eventually, you’ll want roots and will buy a home”

I want lots of things that aren’t always in my best interest at that moment. Maybe someday it will make sense and I’ll indulge myself. But not today.

“Eventually, you’ll want roots and will buy a home.”

Either that, or rent forever at half the cost, with infinite flexibility to relocate to higher paying jobs, overseas, or wherever your fancy strikes you, without the need to unload an underwater debt trap.

Take your pick!

“Eventually, you’ll want roots and will buy a home.”

P.S. Those who can’t stand sexist remarks, please don’t read on.

Only a female poster could have written this.

I am a lady. We can always rent this joint out if we need to relocate. We own it outright.

Goon, you could join the Onwentsia Club. Presto! No more excess cash every month.

We can always rent this joint out if we need to relocate.

Remote landlording? Not the best of ideas…

“Having a paid off roof is essential for us wage slaves as we reach the autumn of our lives.”

Yes, because paying for a new roof, furnace, plumbing repairs, etc. is always within the budgets of retired people with fixed incomes.

Yes, because paying for a new roof, furnace, plumbing repairs, etc. is always within the budgets of retired people with fixed incomes.

If they structured their budget properly, with sufficient reserves and anticipated maintenance and replacement, then yes, it should be.

“join the Onwentsia Club”

HA! I’m gonna BUY the Onwentsia Club just to make sure peasants like you never get in.

When I was in Illinois this summer, I went to a dinner party on an estate in Lake Bluff where they had an original Monet and other Impressionist art hanging on the walls. I was one of the youngest guests, the conversation topics were very boring, if I had as much money as those people my life would be alot more interesting than theirs. Lamenting declining interest in the garden club, young people’s declining attendance at Ravinia, et cetera. So boring…

“Eventually, you’ll want roots and will buy a home.”

I’m glad that I own a paid-off house because my two teenagers are really expensive these days, driving, smart phones, brand name clothing, traveling with team sports, etc., and we’re still eking by on my stem income. Any family signing on for more than 10-yrs of mortgage pain won’t make it past their kid’s teen years without plastic in hand, IMHO.

“I’m glad that I own a paid-off house…”

Before I wrote my last mortgage check I walked outside and took a picture. I included it on a separate page along with our annual Christmas letter, and not one person replied, congratulations. Twenty years ago friends used to have a mortgage burning party.

Here’s my 3/2 spec, 1550-sqft, $125k in 03/2003:
http://picpaste.com/100_1494s-xlXr6PMX.jpg

When I was in Illinois this summer, I went to a dinner party on an estate in Lake Bluff where they had an original Monet and other Impressionist art hanging on the walls.

Whoa. You are WAY out of my league, esteemed Herr Goon!

As for Ravinia, the one time I went there this summer, it was packed. And the Chicago Symphony was performing, too. Of course the fact that they were playing the complete soundtrack as Lord of the Rings: The Two Towers was showing may have had something to do with it.

At some point, the maintenance on a house will overrun any savings in rent vs. buy. At that point, the little old lady needs to sell, take the cash, and downsize. Housing Analyst Pimp, can you build a snug 2-bed 600 sq ft house for $40K?

Housing Analyst Pimp, can you build a snug 2-bed 600 sq ft house for $40K?

Should only be about $33K, based on his $55/sq-ft numbers. Or am I misremembering?

You’re forgetting the 5K for the lot.

You’re forgetting the 5K for the lot.

I thought that was only $1K?

Aww…. look at the helpless knitting club nannies.

rms
Thanks for the picture. Cute home w/ great potential. I just jazzed up the panel garage door by painting it bright white, adding carriage door hardware (HD $9) and painted on faux windows with Rustoleum High Gloss Black Paint. Looks great!

I might do plexiglass faux windows next year. I wanted an immediate cheap diy fix for the plain jane garage door.

How cute…. a parade of dumb.borrowed.money.

painted on faux windows with Rustoleum High Gloss Black Paint. Looks great!

Picture? Honestly, I’m curious, awaiting—but having a hard time knowing whether that would look good to me.

Prime
I found a blog for you to see it. My EE husband gave me a veto on it, and when I finished he liked it as well. He thought it sounded cheesy as well.
http://housetohomeblog.com/2011/11/18/faux-garage-door-windows/
(one of many blogs w/ this idea)

1. I used a can of the Rustoleum $4 (not the spray) and used a small sponge paint.
2. I taped off the door below to protect it and the carriage hardware.
3. From the sidewalk it looks like glass. I probably should have left a little white. Some say it looks more like glass.
4. I used 3/4″ masking tape for the grid effect.
Curious what you think? (You will not offend me.)

“sponge to paint”-oops, long day

Thanks for the picture.

You’re welcome, inchbyinch.

I half expected to get hammered here in the bits bucket for not living it up in the Taj. The place serves my purpose just fine, but I really miss not having a shop being a mechanical guy. Yeah I paid a bit too much, but I timed the dot-com downturn well buying at its depth. My wife has raised our two kids in it, and she feels comfortable and secure given the area’s population and expenses. I can repair replace anything in it, so no insecurities.

Next up, the looming college/technical school obligation.

I half expected to get hammered here in the bits bucket for not living it up in the Taj.

Hey rms, I _liked_ that you weren’t living it up in a Taj/GarageMahal. That place looks nice, tidy, well-kept, and not excessive. Nice. If I could buy that on my side of the mountains at that price, I would too!

awaiting: ok, that does look really nice! I was a little hesitant, as I’m generally opposed to “faux” just about anything. Nice look, though.

Ben
Maybe not forever, but man, this is starting to look like a financial Star Trek episode. These guys have pulled so many rabbits out of their hats, I wonder if another decade of this is ahead. A decade of paying rent is a lot of $. I would not jump in the market right now either, but 12 months ago there was an entry point going on in So Ca. Just to clarify.

In my case, 10-15 years might as well be “forever”.

Noticed in the Realtytrac survey that 1/3 of the homes in my metro are “zombie occupied”…..out here in boot-strapping, Fox News watching, Obama-is-the-AntiChrist, Johnson County, Kansas.

Uh oh…so the real zombie apocalypse is us?

“A decade of paying rent is a lot of $.

A lifetime of losses on a depreciating asset is alot more money.

‘If Uncle Sam can’t afford to pay his bills’

I was thinking about something this morning. When I was a controller and a public accountant, I experienced and witnesses many different types of management in a variety of fields. I saw people who were very careful with the company purse. And I saw people who had fancy offices, took everybody out to lunch or drinks (on the company, of course), hiring new people willy-nilly, had splendid Christmas parties, you get the idea. The latter were always scrounging to make payroll and all went out of business in a short time. For the most part, the former are all still in business decades later. I’ve heard people complain about working for the managers that were “tight” with their money. I tell them I would always prefer to work for someone like that because I would be more likely to have a job for the long term.

The managers that spent freely made many mistakes. They were basically bad managers. A lot of this was rooted in the idea that they would never run out of money. Something would happen; cash would somehow walk in the door.

So I’m thinking about this deal in DC right now. The house Republicans are basically hiding the credit card. But does anyone really think it will stay hidden? Of course not. That is incomprehensible to everyone in DC, and to the public.

If I said, there is no limit to the amount of free money, some would say, that’s a fantasy. Yet it’s this fantasy this country operates on. OK, easy enough. But I was thinking about my good and bad management concept in this. We’ve basically set up a government that gets up every day thinking it can spend as much as it wants, with no limit, forever. Sure, we have these little spats, hear speeches about restraint, or frugality, but no one really believes it.

So if a manager who spends freely makes a lot of mistakes, how poor is the judgement of a manger who truly believes he or she can spend as much money as desired, get re-elected and do it again?

So I’m thinking about this deal in DC right now. The house Republicans are basically hiding the credit card. But does anyone really think it will stay hidden? Of course not. That is incomprehensible to everyone in DC, and to the public.

Yeah, it’s not like they don’t want to run it up, too.

So if a manager who spends freely makes a lot of mistakes, how poor is the judgement of a manger who truly believes he or she can spend as much money as desired, get re-elected and do it again?

Pretty poor if the manager’s goal is to be a wise steward over the country’s resources. But I don’t think our “managers” share that goal.

For managers at large corp, there is really no downside in spending as much as OPM available to their disposal. For small businesses it’s life or death. If you have a choice, never ever work for a profligate business owner. I know good times can be fun, but the bad times will be much worse.

An example of this poor decision making is the F-35 fighter. It has taken forever to get it going, costs have ballooned. It doesn’t live up to the hype. Is there any thought to ditch the program? No way! We’ve spent so much already, we have to keep going. Only in a world where there is no end to the free money would no one even consider stopping it. It’s just one example.

Consider this; we never really needed it in the first place. Our fighters are already the best in the world. And how many dog-fights do we have in any given year? We spend more than most of the world combined on the military. Who is going to challenge that militarily? Of course, some would say, this keeps anyone from even thinking about challenging the US military. After all, why take the risk when the money is endless and free?

“An example of this poor decision making is the F-35 fighter. It has taken forever to get it going, costs have ballooned. It doesn’t live up to the hype. Is there any thought to ditch the program? No way! We’ve spent so much already, we have to keep going.”

I know nothing of the program, but perhaps it’s a classic example of “throwing good money after bad.” A lot of times it makes sense to just admit failure, take your losses, and move on, but pride and foolishness get in the way.

If Uncle Sam can’t afford to pay his bills, how do you expect him to continue propping up the value of Coastal California housing?

Uncle Sam may be broke, but the Federal Reserve is incapable of being broke. So Uncle Sam’s manipulation may be wound down, but the Federal Reserve may maintain or increase theirs to compensate.

And I wouldn’t bet on even Uncle Sam’s manipulation being wound down.

There are a whole slew of reasons (valid or not) why they have proceeded with the F-35.

-The US (and other countries) are trying to develop smaller, cheaper, more automated aircraft carriers. All of them are dependent on operating S/VTOL F-35s to keep them relevant. (AV-8B Harriers won’t cut it against current generation air superiority fighters/air-to-air missiles)

-Nobody is buying F-16s and F-18s anymore. Everyone knows they will get their azz kicked, if going up against a stealth aircraft.

-The USMC wants it. Because the USMC doesn’t think the USAF and USN really want to do the close air support thing, 12 years in Afghanistan and Iraq notwithstanding (Guadalcanal flashbacks, I guess). The USMC have cultivated this image of “Selfless knights, defending the country” deal for a long time, and have a nice little lobbying arm to make sure they get what they want from Congress.

If it was me, I’d have continued to build F-22s, and run the F-35 program as a “fly before buy” deal, but that’s just me.

you’re just a friggin’ anarchist ben….there is plenty of money…just ask the rich. if the rich would just pay more we would be fine.

If it was me, I’d have continued to build F-22s, and run the F-35 program as a “fly before buy” deal, but that’s just me.

+1. That would have been the smart move. Move development along, and keep it in the wings when/if needed, undoubtedly much better in the electronics area when/if they ever finally started production. The F-22 is sufficient air-superiority for now.

One drone with a pocket nuke (or three commercial jets with box-cutters for that matter) trump all your automated carriers, F-whatevers, and vast military budgets.

It’s a self-perpetuating scam, but think of the jobs!

If you want to make the argument that we don’t need an Army/Navy/USAF/DOD, then go ahead and make it.

I might even agree with you, at least partially. Being the “World’s Policeman” and Israel’s piss-boys hasn’t done us much good.

So war is either nukes or nothing?

News Flashes! (among others)

-Airplanes wear out, and/or get too costly to rebuild.

-So do ships like aircraft carriers. The plan is to replace Nimitz-class ships with ones about half the size, with 2000 guys onboard, instead of 5500 or thereabouts.

-Drones aren’t worth a damn thing, unless you own the skies you want to use them in.

“Addressing paycheck to paycheck; yes, many workers do live that way.”

Not good enough; ALL workers need to live that way.

There is still much work that needs to be done in this area.

“ALL workers need to live that way.”

Wait a minute. Don’t bankers get a pass on that? With trillions of dollars in bailout showered down on the banking sector at the moment they blow up the economy, no banker ever needs to be left behind.

Living paycheck-to-paycheck = An employer’s dream come true.

Keep ‘em living on the edge and you just may end up owning their souls.

read mr money mustache and these problems can be avoided

Only need to Don’t spend money you don’t have.

A prerequisite for this is to not already have spent money that you don’t have. Most people are beyond living paycheck to paycheck. They spent the money years ago. Being a debtor and “having a slush fund” are contradictory.

“read mr. money mustache and these problems can be avoided.”

Read what he says and DO what he says and maybe these problems can be avoided.

Q. Which diet plan is the best for me?

A. The one that you will follow.

‘Don’t they have at least a three day slush’

Yesterday I posted a blurb that mentioned a lender had set up a hotline for Federal workers who had mortgages. It’s interesting that it is inconceivable that landlords would set up a hotline for renters in such a situation.

If it’s a good tenant, then allowances are made. If it’s a deadbeat tenant, then it’s a reason to start eviction… my tenants have my cell phone. They know where they stand.

Having said that, much depends on the liquidity of the landlord. I have friends who own a rental property in upstate NY. Their tenant has been in the property a year and is at least 1 month behind in rent and is consistently late with the rent when he does pay. But… at least he is paying, sort of, and maintaining the property. My friends know that there is very little chance of finding another decent tenant in that area so they don’t evict as they can’t afford to pay the mortgage without the rent.

“It’s interesting that it is inconceivable that landlords would set up a hotline for renters in such a situation.”

There seems to be a presumption that all federal workers are homeowners. I wonder how many military personnel that logic doesn’t fit? (Albeit they are exempt from the shutdown.)

Whac, I suspect that that’s a big chunk of the reason that the military were exempt in the first place, aside from support-the-troops PR. Lower ranks are notoriously low paid, don’t stay somewhere long enough to buy. And who knows what landlords do overseas?

There seems to be a presumption that all federal workers are homeowners.

I don’t know about “all,” but Fed work is usually skilled or professional work, with a salary that lends itself to homebuying. Low-skill low wage jobs are usually contracted out. Where I am, the lowest skill I’ve seen is GS-7, $42K. That’s usually not a primary breadwinner.

I know a few Fed renters, but they are smart enough to keep a cash cushion somewhere. The cushion may not be as cash in the checking account, but it could be in a liquid mutual fund or savings account. That’s why I referred to three days to move money. For example, Polly here has admitted to managing her spending by moving money between a checking and savings account. She may (don’t know) be one who has the cash but would need a day or so to move the cash so she can write the rent check.

In defense of the so-called “spendthrifts”.

I’ve never had a whole lot of money, so i’ve always been pretty careful about what I spend it on.

I may need some help with the list, but I’m listing all of the stuff that you need to survive, or what the “financial experts” say you should be doing:

-Shelter (purchase or rent)
-Food
-Transportation
-Health Care
-Save money for College
-Save money/get vested for retirement

Back in the eighties, as just a lowly wrench-turner, I could comfortably manage paying for the things on this list.

But, as anybody J6P who has been working in a lot of industries know, almost 30 years of 1-2% “raises/COLAs” in a land with defacto 5% inflation means, over time, that a single paycheck can’t cover what it used to.

So, we find ourselves in the position where we might have enough money to cover three out of the six items.

Anybody who talks about how great the nineties were under Clinton, never worked in the manufacturing sector. We didn’t need “ShadowStats” to know that we were getting screwed.

“-Shelter (purchase or rent)
-Food
-Transportation
-Health Care
-Save money for College
-Save money/get vested for retirement”

Forgot one:

-Entertainment (big screen TV, Netflix subscription, cable, wireless, Smart Phone, fancy toys, SUV, exotic vacations, expensive restaurant meals, etc etc etc)

Back in the eighties, as just a lowly wrench-turner, I could comfortably manage paying for the things on this list.

But, as anybody J6P who has been working in a lot of industries know, almost 30 years of 1-2% “raises/COLAs” in a land with defacto 5% inflation means, over time, that a single paycheck can’t cover what it used to.

You will need close to $60000 in 2013 for $25000 in 1983. That, if you believe in the government statitistics. The Fed and the US Government are the biggest enemy of your purchasing power….no ifs and buts. Let’s get moar of these two, that will solve everything.

“For example, Polly here has admitted to managing her spending by moving money between a checking and savings account. She may (don’t know) be one who has the cash but would need a day or so to move the cash so she can write the rent check.”

I manage my money by having my paycheck deposited in a savings account and moving my living money to my checking account each month. When the savings account is too big, I move some of that money to investments, but it always has around a year’s worth of living expenses in it. I moved my “October” money to my checking account around September 25th so that I could tell my bank to send my landlord the rent check to arrive before October 1. Most of my other bills (insurance auto-withdrawals, cable, the credit card that I use for on-line purchases) are also due at the beginning of the month. Since all of that month’s money is transferred to checking at the beginning of the month, the exact timing of a paycheck is irrelevant. If I had to live like this for over a year, then I could sell some investments or use my “down payment” account (an entirely separate account in a small local bank that doesn’t sell its mortgages) to keep going. After all that was kaput, I could get some money out of my Roth though I vastly prefer not to.

Paycheck timing is not an issue for me. That being said, I think I am very, very unusual in my office. I don’t know anyone who lives this way. It takes about 10 seconds to move the money from one account to the other. When it is an internal move, they can do that. I’m not sure if they are required to do it that quickly, but they can.

I am not so complex as you. I simply let my checking account grow in anticipation of a shutdown. If/when this all shakes out, I’ll assess what’s left over and probably invest.

The founding fathers had sufficient foresight to constitutionally guarantee the Congress’s pay. However, I would like to see in writing where other federal workers pay was guaranteed? Is this just something you “believe,” similar to “real estate always goes up”?

Congress still gets paid — it’s in the Constitution
By Lisa Desjardins, CNN Capitol Hill reporter
updated 3:24 PM EDT, Wed October 2, 2013

Washington (CNN) — In an extended shutdown, most of the federal workforce would go without pay, but the checks will keep coming to the 533 current members of Congress.

Who gets paid in a shutdown and who doesn’t?

“That is disgraceful in my view,” said freshman Rep. Tulsi Gabbard, D-Hawaii, told CNN. “Basically the only people who get paid in a shutdown are members of Congress, and that is irresponsible.”

Gabbard plans to send any pay she receives during a shutdown back to the Treasury. The combat veteran said she was shocked to find out recently that members’ pay is protected.

It is — by the Constitution.
…

However, I would like to see in writing where other federal workers pay was guaranteed? Is this just something you “believe,” similar to “real estate always goes up”?

WTF is up with the insults? I don’t like this HBB assumption that buying a home suddenly turns me into a liar. I never posted the real estate always goes up, certainly not as a blanket statement. I have always been careful to qualify my statements.

But just to please you on the Fed employees: my google searches point to several types of employees:

1. Workers who are paid by revenue streams outside the budget. Some Social Security, Post Office, Obamacare etc. They seem not to be affected.
2. Members of Congress. I guess they get paid by the Constitution. Not much we can do about that except complain (unless you want to file a Constitutional Amendment).
3. “Excepted” workers (essential)
4. “Non-excepted” workers (non-essential) <– I assume this is what you mean by “other Federal workers.”

Regarding Excepted workers: Their back pay seems to be guaranteed. This is most direct that I can find:

————-
Q: Will excepted employees be paid for performing work during a shutdown furlough? If so,
when will excepted employees receive such payments?
A: Agencies will incur obligations to pay for services performed by excepted employees during a lapse in appropriations, and those employees will be paid when Congress passes and the President signs a new appropriation or continuing resolution.

http://nffe.org/ht/a/GetDocumentAction/i/32015
————-

If you’re looking for the actual legislative language for excepted workers, all my google searches point to the Antideficiency Act, now codified at 31 U.S.C. 1341 and 1342:

http://www.gao.gov/legal/lawresources/antideficiencybackground.html

The main gist of that law is that the government is not allowed to accept voluntary non-paid work. No funds, no work. However, the Act then goes on to list exceptions for workers who protect life or property, with some wiggle room for defining exceptions.

The workers who are “excepted” from the Antideficiency Act law are thus allowed to “volunteer” their work during the shutdown.

Now, does this guarantee that excepted workers are guaranteed back pay? That is, is the work only voIuntarily on a temporary basis? I can’t find actual legislative language for it, but the Office of Personnel Managment says Yes.

Regarding Non-Excepted workers: These Feds are not allowed to work during a shutdown. They are not immediately protecting life or property, so they are still subject (not excepted) to the Anti-Deficiency Act. If they DO work during the shutdown, it would be considered “volunteer” work which is explicity prohibited. However, since they didn’t work, they don’t have to get paid. They would need a specific law passed by Congress to receive back pay, as I said in my above post. It’s actually pork. Back pay has been awarded in the past, but there are noises that this time, it won’t be.

Sorry if I seemed to be insulting you by suggesting you believe that “real estate always goes up.”

But aren’t “excepted employees” the ones who are currently working, despite the shutdown?

Excepted employees DO work during the shutdown. In fact, several guidance documents say that those excepted employees are “not furloughed.” The only different thing for them is that the pay won’t come in on time. I guess they get a lump sum as soon as the gov starts back up, but I don’t know for sure.

Sorry if I seemed to be insulting you by suggesting you believe that “real estate always goes up.”

If she stated her assumption the other way, “the value of the dollar always goes down,” then she would appear to be correct…

To be fair, Oxy’s basis was that rent always goes up, and that her house will not go down and depreciation doesn’t matter. I don’t think she ever said that houses always go up.

I’m sure the furloughs seem like the biggest deal ever to those of you living in the belly of the beast, but out here in flyover, we wouldn’t know the government was shut down except from reading your posts. I guess that is the definition of non-essential. Of course, I haven’t gone up to the National Forest to see if the trout are still biting, or if essential Feds are blockading the access trails.

“Oxy’s basis was that rent always goes up, and that her house will not go down and depreciation doesn’t matter. I don’t think she ever said that houses always go up.”

Different mistake, same result (assumes that owning a home bought at recent historically expensive prices will be cheaper than renting over the next couple of decades).

Trouble is, you can’t buy a damn thing with a government IOU.

Well…there are multiple classes of IOUs. But you are probably correct in regard to that class.

“Instead of pay, he’s going to get IOUs.”

Many years ago California couldn’t pass a budget either. At CalTrans the rank and file clerks received late paychecks while the engineers received post dated drafts. According to management the rank and file peeps were assumed to be living hand to mouth and unable to manage their financial affairs. Welfare checks were issued on-time by a judge’s order.

If there are no POMO days who will support the stock market?

Do you actually believe there is any growth in the economy?

walmart revenues are basically zero year over year. I guess they cant open any more stores to grow revenue cause the new stores cannibalize the old stores.

Did u get a piece of the REMAX ipo fella?

Perhaps, but that doesn’t mean you can get away with letting my bank fail.

I really have it made, don’t you know?

And a very warm thank you goes out to all those who have made all this possible, have made my life so wonderful and easy.

With out your help God only knows where would I be, what I would do. I may have had been forced to get a … a … (gasp!) … a job!

Why does the stock market need to be supported? Doesn’t such support just amount to welfare for wealthy people?

Same comment for housing prices: Why do rich homeowners need the welfare generated by the Fed’s printing press operation?

its in the best interest of the economy?

Why is giving away all the chips to the 0.1% in the best interest of the economy? I’m missing it…didn’t a similar change in the U.S. wealth distribution to the recent one kick off the Great Depression?

“I am an old school type but at the same time I acknowledge you have to adapt to what is happening now and the FED has completely taken over the US Stock Market. Do not fight this unless you do it with small size so you keep some powder dry for when we get a real decline. We will get one and it is going to be a biggy when it arrives, you don’t want to be out of money when it gets here.”

Adapt!!!

Yeah I’m thinking if he hasn’t scraped together sec dep in four years 3 more mos ain’t gonna help. What a piece of work. Ill bet he’s got a BK in his past. None of these BKers ever learn how to budget.

What’s most exasperating is that a $4K security deposit is at most THREE months of house payments. This guy skipped ~48 payments. So not only is not paying, he didn’t even bother to plan 3 months ahead?!?!

More OxyMath? Remarkably similar to a Grand Distortion.

More like a heroin addict dependent on injections from the Fed’s QE3 needle…

QE3 = ‘breaking bad’ banking

At least if they were cooking meth it would add to GDP.

QE3 = ‘breaking bad’ banking

Awesome.

“QE3 = ‘breaking bad’ banking”

+1 Trying to imagine Bernanke in his Fruit of the Loom briefs at the printing press keeping the ink tank full.

Trying to imagine Bernanke in his Fruit of the Loom briefs at the printing press keeping the ink tank full.

Nice image, but it’s all digital ink these days…

‘the NSA could pinch hit for the IRS to provide income verification’

I heard a joke on the radio. ‘Do you come here often?’ is a pick up line. For the NSA, it would be ‘you come here often.’

NSA: You come here often. You spend $12 on boxes of wine and pints of ice cream on friday night.
You have a gym membership though, and you attend 3 days a week so you haven’t let yourself slide.
You have never taken any pictures of your private parts, but you do swear in your texts. You have a solid job and your parents are relatively well off. You have a cordial but not clingy relationship with your parents based on your phone conversations. Your credit rating is fair.

Our databases say you are cool. You will date me or you will be declared a terrorist, your call!

“You will date me or you will be declared a terrorist, your call!”

I will get lucky on our date, or you will be declared a terrorist, your call.

If I were NSA, I would have say “I will get lucky twice on our date, or you will be declared terrorist, your call.”

“$40 bn liquidity injection”

per month!

You think that’s bad… you should hear how the NSA and DHS view you. Anarchist would be kind.

Sometimes I think people confuse what being a true anarchist is. It’s not hard since there seems to be many shades of grey when it comes to precise definitions. Of course there is the classic definition by Jean-Jacques Rousseau of passive chaos and then there are others who lean to more to violent overthrow of the state. I find the writings of Emma Goldman inspired.

I find the writings of Emma Goldman inspired.

Another Leon Czolgosz in making?

LOL

“I had family in the Warsaw Pact under the Soviets.”

Same here 2banana. The stories told during my childhood about that part of the extended family’s experiences were harrowing. Recently I’ve considered that hearing those stories at a young age may be behind my more serious consideration of what is occurring on our shores.

“my more serious consideration of what is occurring on our shores.”

If you have some money and guts you can always move.

If you have some money and guts you can always move.

As long as you pay your taxes on the way out the door—or forever, your choice.

Incidentally, Rio, what’s your tax status? Do you get credit for taxes paid in Brazil, or are you exempted there?

But realize this - this enormous effort against the ACA is driven in no small part by the massive industry that has built up around the healthcare system.

Which has long charged high “because we can” prices for its services. Alas, that party’s coming to an end.

” I don’t know if its on the scale of the FIRE sector though.”

Isn’t the I in FIRE for insurance, including health care?

Isn’t the I in FIRE for insurance, including health care?

Yes, indeedy-doody, it is! I is for Insurance of all kinds!

“Where Poor and Uninsured Americans Live”
http://www.nytimes.com/interactive/2013/10/02/us/uninsured-americans-map.html

25 MILLION excess empty houses. Call it the Housing Analyst put.

Right Grand Distortionist?

I’ve flown Allegiant a couple of times…….actually got called by them once, they were looking for a contract mechanic to cover AOG stuff at one of their destinations close to my house. Unfortunately, my employer at the time had a “No Contracting on the side” clause.

I’d fly them again. Their airplanes are older, but they have their own guys working on them, or actually on site, overseeing contractor work. Plus, they see the same airplanes every day.

They operate differently than the majors. All of their stuff is out, then back to the hubs. Aircraft flies out in the morning, then returns in mid-afternoon…..two cycles a day.

Besides, the in-flight entertainment is great. Nothing like drunk people flying direct to Vegas.

A couple of 20-ish women were on my flight to Vegas. Were semi-buzzed when they got on the flight, started hitting the Jack-and-Coke as soon as the airplane leveled off. Were trashed after a couple of hours

During this time, they:

-Made puppets out a couple of airsickness bags, and had an impromptu R-rated puppet show.

-Made some “Show us your T##s” signs, and flashed them at the Flight Attendants

-Started a females-only singalong, each verse describing the size of their boyfriends “junk”

Best entertainment i’ve ever had on an airline flight.. you should have been there (without any of the little kids).

Did you show some skin?

Perhaps the driver missed the memo that Secret Service agents are essential federal government personnel?

sigh…..

Yep—it’s how we treat our mentally ill in this day and age.

Yep—it’s how we treat our mentally ill in this day and age.

Just occurred to me that the classic “treat ‘em and street ‘em” has morphed into “street ‘em and shoot ‘em.”

It’s is a sad testimony on our society.

My guess is that (b) is the most likely outcome, for households caught between the household-budget constraint, and the rental-market supply constraint.

As I mentioned in another post, ISTR hearing that (b) is exactly what happened during the 70’s inflation era.

Good to know…

Do you think the large apartment builders would be a good short when apartment cap-rates start to rise? Their mainline business should start to dry up…

Most public apartment REITs have development as a small part of their activity, so you really need to decide if the public will start to value their stock at higher yields (thus pushing their value down)

Here’s the challenge…if apartment yields rise, forcing down development activity, are vacancy rates low enough currently for rents react quickly? How much fixed-rate debt do apartment REITs hold as opposed to adjustable rates? If higher interest rates do trigger (or are associated with higher rental inflation), will the “inflation-protected, yield-driven” investors (like retirees/pension funds, etc.), be buying MORE apartment REITs? Or fewer apartment REITs?

Full disclosure, I own no apartment REITs, and I think they’ve been fairly stagnant recently, but I don’t think I’d short them. Nor would I go long at this stage.

If I wanted to place a directional bet on higher yields, I think there is an inverse 20-year treasury ETF that would react quite well with higher interest rates. That said, while I think that bet will ultimately pay off, I’m not sure when.

In the meantime, I continue to own my industrial REITs, discount retailer REIT, and grocery anchored retail REIT.

You should be skeptical of anything Rental Watch states.

Personally, I find a lot of value in what he posts—good data, thoughtful commentary, and essentially no ad hominem or politics.

I think the HBB would be a better place with more posters who follow that model, regardless of whether I agree with their opinions or not; honing one’s opinions against the differing opinions of others results in better thought-out opinions.

Then proceed at your sole risk.

Then proceed at your sole risk.

I’m not taking much risk here, actually.

Still taking my guaranteed 3% loss on mostly-cash like a good little Fed whipping-boy…

If you execute based on “information” from the Grand Distortionist, the risk is great.

It is a mania. The information the mania supplies is only useful if you want to be in the mania. If you don’t, then it is useless.