Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Posted By: Ben Jones @ 1:46 am
I’ve previously mentioned a co-worker who is stuck (underwater) with a Detroit, MI home, nice neighborhood, but still Detroit. Well his current tenant, military, was relocated with a recent promotion. Yesterday the rental agency sent my co-worker an application and credit report from an interested couple. Him: 566; Her: 520; FICO per Equifax. Seriously.
We both enjoyed 15-minutes of laughing fits looking over 25-pages including three ch7 bankruptcy discharge(s), collection activities, charge-offs and maybe two-dozen 60+/90+ day late accounts ranging from auto loans, utilities, cash advances, satellite television, smart phone plans, gas cards, revolving dept-store cards, student loans, etc., real (Dubya, “go buy something”) consumers. But they must have been too “flim-flam” to scam a bubble home, no mortgage cited.
Saw a recent article about how the average FICO of people who got mortgages in 2013 so far is down from 2012, 748 to 739. But hey, have faith, since they succeeded in completely neutering the QRM requirements under Dodd Frank, we’ll be giving out loans to these folks soon enough…
I haven’t been keeping up with the QRM saga. What did they finally require?
There may be a bit of a safety valve. Rich Cordray at CFPB defined any type of ARM as a “risky” mortgage, which means FB’s can sue the bank for predatory lending if an ARM goes bad (no guarantee they’d win). It’s not much of a tooth, but it will encourage banks to originate mostly fixed-rate. I suspect I/Os and options are dead too. That will prevent the frothiest behavior.
But no amount of mortgage regulation can prevent investors, hedge funds, and Chinese from bidding up prices with cheap cash.
What the heck is that?
Shorthand for “buying a house outright using cash that was borrowed from somewhere else at a really low interest rate.” We still haven’t figured out where Blackstone got all the cash to buy those investment houses, but I don’t think they had the Clevelands and Madisons laying around gathering dust.
[The Chinese probably DID have the Clevelands and Madisons, possibly hot.]
possibly hot ??
Ya Think ?? That cash stinks to all high heaven….
The Chinese will buy Blackstone American homes etc. the justice dept will allow them because its not a security risk, and eventually a million homes will be owned by the Chinese…then on to the next million. Easy way to get them off the Feds books without massive tapering.
yea that sounds about right
I just assumed a lot of that cash were margin loans from the markets recent high. Can you imagine if these stooges borrowed against stocks and those tank along with housing??? What an epic house-o-cards that would be.
“We still haven’t figured out where Blackstone got all the cash to buy those investment houses, but I don’t think they had the Clevelands and Madisons laying around gathering dust.”
Blackstone is an “alternative investment” (ie. where pension funds, endowments, etc. invest a lot of their money). The money generally comes in as equity, NOT debt. I’m pretty sure like most private equity funds, the fund itself isn’t leveraged, but money is borrowed at the individual asset level.
So, if Blackstone wants to buy a $100 house with 50% debt, they contribute $50 of equity (which they ultimately got from pension funds, etc.), and they borrow $50 from a bank (or other lender, insurance company, etc.) that is secured by the real estate. Typically these loans are not cross collateralized (so a default on an apartment building in Germany doesn’t impact the loan on a property in NYC).
Take a look at Calpers annual report (which you can Google and search for the word “Blackstone”). They have invested in 7 different Blackstone entities.
Texas Teachers has 9 Blackstone entities in their annual report.
Likewise the NY Pension system discloses fees paid to Blackstone.
And I just picked three of the largest Pension funds that I know of (who are required to disclose such investments).
I’m willing to bet that if you had a list of funds that Yale, Harvard, Stanford, etc. have invested in, you would see Blackstone commonly found there too.
There is no mystery…the money comes from us. Soylent Green is us, we’re eating ourselves! (or less cynical, Jimmy Stewart from It’s a Wonderful Life)
“Can you imagine if these stooges borrowed against stocks and those tank along with housing??? What an epic house-o-cards that would be.”
Then we would start hearing about how it was “necessary” for the government to take over 401k’s, IRA’s, and private pensions, along with a one-time tax on any savings accounts to “save” the 1%’ers, I mean the “country”, you know.
Long story short, QRM = no down payment requirement.
As long as the mortgage meets the QM rules adopted by the CPFB, the requirement is met.
Eh, those are about the FICOs I’d expect from solid first time buyers. More interesting to me would be, what % have they saved as a down payment? And what is the earnings/total payment ratio?
Based on checking FICOs for potential rental prop tenants, I can tell you that a 740ish FICO has probably a few 30 day lates on credit cards in the last 3 years but is overall an on time payer and has been on time for the last year. A 740 could also indicate a charged off cell phone bill from 4-5 yrs ago or something of that nature. Likely they have a small month to month balance on their CC’s. If there was anything really concerning on the report, the credit score would be sub-700. I’ve never had payment-related problems with a tenant with FICO above 700.
In other words, they’re not the most savvy but they’re not a huge default risk IF they have legit skin in the game and saved up for a down payment. What happened in 05/06/07 was people with 600-something credit getting houses despite little or no income. Or people with income buying 5x their annual income, no down payment, and interest-only for 2 yrs.
“What happened in 05/06/07 was people with 600-something credit getting houses despite little or no income.”
It’s still happening Liberace.
I’m just saying that the sub-680 crowd are the ones I’d worry about. If everyone buying a house during the 00’s was 700+ FICO and put down a legit down payment (not necessarily full 20%, but not 0% or 3.5% either), there would’ve been fewer transactions and far less defaults.
I can think of many reasons someone has slightly-dinged credit and most of them wouldn’t worry me if there was a solid down payment involved.
“Or people with income buying 5x their annual income, no down payment, and interest-only for 2 yrs.”
Let’s make sure that we don’t re-write history here. In 2005-6, when I was looking at buying a home in S. FL, I was told by a realtor that the “standard” was 10X income. If you make 40K, you should be looking at house in the 400K range.
So, no, it wasn’t 5X income that got us in this mess (although that’s still way too high, IMHO) it was 10X!
Dodd-Frank = made-to-be-neutered legislation
Speaking of Detroit, today’s the day!
Also today, state pension reform vote in Illinois. Actually think this might pass as it seems to peeve off everybody. Hope it does.
I can’t muster one ray of hope that meaningful pension reform will occur in Illinois. But it would be great to be wrong about this.
if not IL goes bk
Bankruptcy would be the logical conclusion. Not before every possible tax is raised through the roof, however.
You know it’s bad when I start thinking thoughts about public unions that would make 2b proud.
In Illinois, the long-term solution really is the COLA benefits. I haven’t been able to verify this, but the states that have COLAs on the entire pension are the states that are the least funded. You can’t have sustainability if every $40,000 pension becomes a $140,000 pension in 20 years. The unions would be wise to not fight this issue. They will fight it because they claim the problem was lack of state contributions. While this is true, its water under the bridge. I would rather keep my pension and lose the COLAs than risk losing it entirely. Politics, blame game same ol’ same ol’.
SCarton, that’s an excellent point. The current COLA annual raises are in the 3% range for state of IL pensions. Contrast that with my nonprofit employer and husband’s Fortune 100 employer, whose pension plans have a ZERO percent COLA. The unions will fight tooth and nail to keep those raises, though. If they can be brought to concede half of the amount it’ll be a step in the right direction.
I still contend they grossly underestimated the number of people who quit smoking and live 5-10-15+ years longer and collecting money when they should have died.
With reported CPI-U running something like 1.5%, why a 3% COLA?
The precedent for pension cancellation is in place. Look for more going forward.
FWIW, I read your link from yesterday last evening and replied with a couple of paragraphs.
Went back and read your response, rms. I agree with you on the daughter. That program is not for everyone. But then again, I think it was Walt Whitman who wrote Leaves of Grass while selling insurance.
Robocop was set in Detroit for a reason.
What jobs did these Fico friends have?
is there any relationship between your job and your credit score?
Maybe, again, what jobs? What income level?
Is there any relation between income and FICO?
“What the FICO score ignores:”
FICO scores consider a wide range of information on your credit report. However, they do not consider:
•Your salary, occupation, title, employer, date employed or employment history.
Lenders may consider this information, however, as may other types of scores.
However, in my estimation, income is incorpoated, albeit indirectly. FICO looks at your credit history, and if you don’t have good income, no bank will give you credit in the first place. (at least it used to be that way… )
Credit score = hamster wheel debt slavery score.
Even if you pay off your credit card in full every month and have never been late, you are punished for not having a sufficient “mix” of types of credit for not having an auto loan or mortgage.
And you get to pay higher car insurance as a result.
its the way the bankers keep track of you.
“… real (Dubya, ‘go buy something’) consumers.”
My bread and butter. First, dumb them down and, second, send them my way.
“Him: 566; Her: 520; FICO per Equifax. Seriously.”
Okay, got a better look at the rental application. Employment is a Cable TV company. I think most of those guys are 1099-misc these days, i.e., no 30-yr gold watch. Didn’t ask for her, darn it. But three ch7 bankruptcies? They know how the game is played.
It’s fugg’n cold today, cruel north wind, gotta be a wind chill in the single digits. Mostly sunny though, appreciate the sunlight.
You guys will be in stitches when you discover that they’re his best hope to rent the place…
This was in response to rms’ first post.
They’ll just have to redefine how FICO is calculated, like how they re-did the SAT scoring to make dumb kidz look smarter. Everyone gets a trophy, this is ‘Merica, dammit!
Just using FICO at all is too much of a concession to the “everyone’s a winner” attitude. You can rack up a decent FICO from charging toothpaste at Tar-jhay and paying the minimum payment. Forget FICO and look at income. That will sober up people fast.
Now that’s funny!
“You guys will be in stitches when you discover that they’re his best hope to rent the place…”
The home is near a military facility, so he is looking for another “fixed income” type, officer w/family is the goal. Co-worker bought to get his kids in the area’s schools. Yep…another “dad gets boned” sob story.
realtors are liars
When you rent you just throw money away every month and pay your landlord’s mortgage. When you buy a home, you build equity with every mortgage payment. And a rental will never feel like a real home. When you buy your own home you own a piece of the American Dream.
Interest rates are at historical lows. And when interest rates inevitably start to rise, home prices will rise too. You’ll save alot of money in the long run if you buy a home today before prices rise and lock in a low interest rate.
“Equity” is a fallacy. It doesn’t exist.
When you buy your own home you own a piece of the American Dream.
Uhh ohh. Now you’re just going to piss people off.
They’re salesman. It is certainly NOT the case that every salesman is a lying sack of Sh—. But this is a useful working assumption.
They can be perfectly honest, if the truth will make a sale.
If you take on mortgage debt at current massively inflated housing prices, you’ll enslave yourself for the rest of your life.
“Debt is bondage.”~Suze Orman, May 11, 2013
In other words, don’t buy housing at these massively inflated prices. Don’t Be A Debt Donkey®
Some grist for 2B’s mill.
Do Boston police deserve a 25 percent raise?
Boston police officers are among the best-paid public employees, not only in the city, but in the country. Eighty-six earned more than Secretary of State John Kerry. Nine earned more than the vice president. As in, of the United States.
Another fact: Nearly a third of all Boston police officers earned more than Governor Deval Patrick. The governor earned $137,000 last year. About 600 cops took home more.
I am glad I am not paying taxes in Boston,With “public servants’ pulling that kind of dough…..They’ll need their own bodygaurds soon, Like the Vice President has…….
They deserved it, too. They prevented Boston Marathon bombing from happening.
And how many thousands did it take to track down one guy? Even with martial law imposed in the area, a citizen spotted the guy in his boat.
Aptly named - Millstone Drive . With a tax rate of 20.43 per thousand and a $250 HOA the monthly payment is of over $2,000 , NOT including the actual mortgage payment.
lmao! Millstone drive…..
Looky there…. I see a herd of donkeys stampeding now.
But don’t forget the “top ranked schools”.
Best over leveraged street names….
1031 Exchange Drive
That’s the best I got right now…
Over a million bucks for a 4/3 for an SFH where you don’t even own the land??!? The flowery real estate blurb was heavy on “country attitude” and “professional interior design” but made no mention of clubhouses or pools or other amenities. What are those $250/month HOA going to? Mowing the lawn?
The land is essentially worthless. And you’re going to discover that in the most painful way.
Sherborn….come on, the point is to make it exclusive of the riffraff.
Used to house sit there.
leverage your paycheck with risk assets!!! Its your only hope of getting out of the rut your in.
So, any thoughts on this little kerfluffle with China regarding airspace and barren islands?
Joe Biden is “deeply concerned”.
We all should be concerned…China has escalated this to the level of serious and they are not the type to back down…Watch the markets and it will tell you if its going to get worse…
At the moment, DOW is down 54. But the car companies just reported higher-than expected sales (pickup trucks again…), which will override any tension in the East China Sea.
car companies just reported higher-than expected sales (pickup trucks again ??
Yeah but, thats rear-view mirror stuff…Those guys on Wall street up on the 50th floor have their index finger on the “sell button”…
Well, yeah. When you look at the run up the market has taken lately, at this point at the party no body wants to leave any extra punch in the bowl, but everybody want’s to be closer to the door than everybody else, ready to make their exit and prove that they ARE smarter than everybody else.
What is China going to do? They have 1 aircraft carrier they bought from Russia and that was old when they bought it years ago. They have no experience running night carrier operations, so they can only launch and recover during the day. About the only thing they have that might concern us are cruise missiles and of course the Treasury Debt Bomb… bottom line, China can’t project force beyond it’s shores while we can put 4 Carrier Task Forces around the South China Sea in a matter of weeks and run 24×7 operations throughout the Pacific.
Maybe China should turn some attention to building aircraft carriers instead of more ghost towns.
What is China going to do ??
Call our Bluff….China knows full well the most important thing to the PTB in America is the 1% wallet…
The golden rule. He who has the gold makes the rules. While the PTB is actively suppressing the price of gold China is buying it up. When they announce a currency backed by gold, we will lose the ability to support our military with fiat currency. They will win the war without firing a shot which they are taught is the best way to win a war.
“PTB are”, we are not quite down to one billionaire running things. For an understanding of how the Chinese think about war:
To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy’s resistance without fighting.
-Sun Tzu, the Art of War
The golden rule:
“He who has the gold makes the rules” 1980, Arthur Laffer to Ronald Reagan
The “other” golden rule:
One should treat others as one would like others to treat oneself Confucius, Buddah and Jesus Christ
excellence consists in breaking the enemy’s resistance without fighting ??
Well, you are making my point Adan…They call our bluff and we back down…They win…Do you really think we will escalate this thing by challenging China on their own turf…Not a chance…We will beat our chest…Thats about it…
Coincidentally, haven’t we been reading in the news lately about a lot of chinese capital flight…Buying crap site-unseen…
One should treat others as one would like others to treat oneself Confucius, Buddah and Jesus Christ
Actually, I think Buddah promulgated the silver rule, Don’t do to others what you don’t want done to you.
You know you still are a rabid dog about Reagan. Just can’t accept that defeated communism, exposed communism for the evil system it was and reinvigorated free enterprise and national pride. It is a shame that after his presidency we reverted to the same U.N. promoting, world government advocating political hacks that have run America down again. We are on the verge of collapse just like we were in 1980. Of course, your Obama by running up almost 7 trillion dollars of debt with three years left in his reign, has done more damage to the country since Carter.
You know you still are a rabid dog about Reagan. Just can’t accept that defeated communism,
Yes, he did that. That was good. Many say Communism would have collapsed maybe 5 years later than it did even without Reagan’s overspending. My point with him is on economics. Reaganomics ruined America.
your Obama by running up almost 7 trillion dollars of debt with three years left in his reign,
Because Reaganomics gutted America like a fish. The 7 trillion was to patch up America’s supply-side hell. It was to protect the Rich. (Reagan’s Supply-side dogma in action) You are surprised?
It must be nice to live in a bubble….
No Rio, I am not buying it because Ronald Reagan left the country far stronger than he found it. I think he created something like 20 million plus jobs during his presidency. See that is why people on the left hate him. The country was suppose to collapse when he took office. If it had, the left would not have let a good crisis go to waste and would have followed the George Soros’ model and created a much more socialistic and internationally integrated country. Instead he set back their agenda by decades and even today they resent that people point to Reagan’s way as the way to economic prosperity not the statist way that you want.
See that is why people on the left hate him. The country was suppose to collapse when he took office.
That is so much BS. No rational person on the left or right wanted or wants the country to collapse. I sure didn’t and don’t. Reagan got many votes from the left - Reagan Democrats.
The problem now is those wackjobs on the right DO want the country to collapse. The right-wing has been whipped up into a frenzy and they HATE Obama so much they’d take the country down to spite him. “End of days”…”go time”, California GOP putting up fake Obamacare websites, ” FOXZ and AM radio “all hate all the time” Mitch McConnel’s only goal of “making Obama a one term president” Trying to torpedo ACA etc.
Reagan’s way as the way to economic prosperity
It’s not theory anymore. It worked for awhile and has now imploded. ReaganOmics, Supply-side dogma has been the economic model we’ve followed for 33 years. It has gutted our economy, destroyed the middle class and made the rich richer than major kings of the past. Supply-side FAILED.
“…Ronald Reagan left the country far stronger than he found it.”
2014 REAGAN RANCH CALENDAR
Reaganomics put us where we are today.
“Reagan’s approach accelerated a de-industrialization of the United States and a slump in the growth of American jobs”
The Abject Failure of Reaganomics
….the Tea Partiers keep promoting a false narrative on why the U.S. debt has ballooned and why the economy struggles,
…The first point to understand is that the current $16.7 trillion federal debt is about $11 trillion more than it was when George W. Bush took office. Not only did Bush’s tax-cut-and-war-spending policies send the debt soaring over the next dozen years but it was those policies that eliminated the federal surpluses of Bill Clinton’s final years and reversed a downward trend in the debt that had “threatened” to eliminate the debt entirely over the ensuing decade.
…Amazingly, President Clinton left office in January 2001 with the federal budget in the black by $236 billion and with a projected 10-year budget surplus of $5.6 trillion…
……Thus, Greenspan, an Ayn Rand acolyte who was first appointed by Ronald Reagan, threw his considerable prestige behind George W. Bush’s plan for massive tax cuts that would primarily benefit the wealthy……When Bush left office in January 2009 – amid a meltdown of an under-regulated Wall Street – there was no more talk about a debt-free government.
……But this debt crisis did not originate with George W. Bush. It can be traced back primarily to President Reagan, who arrived in the White House in 1981 with fanciful notions about restoring America’s economic vitality through massive tax cuts for the wealthy, a strategy called “supply-side” by its admirers and “trickle-down” by its critics.
Reagan’s tax cuts brought a rapid ballooning of the federal debt, which was $934 billion in January 1981 when Reagan took office. When he departed in January 1989, the debt had jumped to $2.7 trillion, a three-fold increase. And the consequences of Reagan’s reckless tax-cutting continued to build under his successor, George H.W. Bush, who left office in January 1993 with a national debt of $4.2 trillion, more than a four-fold increase since the arrival of Republican-dominated governance in 1981.
……During 1993, Clinton’s first year in office, the new Democratic administration pushed through tax increases, partially reversing the massive tax cuts implemented under Reagan. Finally, the debt problem began to stabilize, with the total debt at $5.7 trillion and heading downward, when Clinton left office in January 2001.
Indeed, at the time of Clinton’s departure, the projected ten-year surplus of $5.6 trillion meant that virtually the entire federal debt would be retired. That was what Fed Chairman Greenspan found worrisome enough to support George W. Bush’s new round of tax cuts aimed primarily at the wealthy, another dose of Reagan’s “supply-side.”
…..The consequences – especially when combined with Bush’s decision to rush into two major wars without paying for them – proved disastrous. The federal debt resumed its upward climb. By August 2008, just before the Wall Street crash, the debt was over $9.6 trillion, nearly a $4 trillion jump since Bush took office.
And, after the Wall Street collapse in September 2008, the federal government had little choice but to increase its borrowing even more to avert a global economic catastrophe potentially worse than the Great Depression. By January 2009, just five months later, the debt was $10.6 trillion, a $1 trillion increase and counting.
Many of the Republican leaders who stomped their feet during the recent budget showdown, including House Speaker John Boehner, R-Ohio, were among those who favored the Bush tax cuts, the costly invasion of Iraq and bank deregulation. In other words, they were denouncing President Obama for a debt crisis that they helped create.
But the record of reckless Republican budget policies from Reagan through Bush-43 was not only destructive to the fiscal health of the government. The “supply-side,” “free-trade” and deregulatory strategies – including some facilitated by the Clinton administration – proved devastating to the nation’s ability to create good-paying jobs and to sustain the Great American Middle Class.
Zero Job Growth
During the decade of George W. Bush’s presidency, the United States experienced zero job growth. And zero is actually worse than it sounds since none of the preceding six decades registered job growth of less than 20 percent.
By comparison, the 1970s, which are often bemoaned as a time of economic stagflation and political malaise, registered a 27 percent increase in jobs. Yet, in part because of that relatively slow rise in jobs – down from 31 percent in the 1960s – American voters turned to Ronald Reagan and his radical economic theories of tax cuts, global “free markets” and deregulation.
The U.S. political/media process seems resistant to the one of most obvious lessons of the past three decades: Simply put, Reaganomics didn’t work. As George H.W. Bush once commented – when he was running against Reagan in the 1980 primaries – it is “voodoo economics.”
Yet, the fact that the United States has embraced “voodoo economics” for much of the past three-plus decades and refuses to recognize the statistical evidence of Reaganomics’ abject failure suggests that the larger lesson of this era is that the U.S. political process is dysfunctional, a point driven home by the recent Tea Party-led government shutdown and threatened debt default.
I think (Reagan) created something like 20 million plus jobs during his presidency.
Jobs growth percentage has declined in every decade in America since Ronald Reagan took office. In the 80s it was less than the 70’s (Carter years included) and so on and so on.
“Reagan’s approach accelerated a de-industrialization of the United States and a slump in the growth of American jobs, down to 20 percent during the 1980s…
…By comparison, the 1970s, which are often bemoaned as a time of economic stagflation and political malaise, registered a 27 percent increase in jobs. Yet, in part because of that relatively slow rise in jobs – down from 31 percent in the 1960s – American voters turned to Ronald Reagan and his radical economic theories of tax cuts, global “free markets” and deregulation.”
consortiumnews dot com
Why Obama’s minions do not want us to compare Obama and Reagan:
August 25, 2012
Jobs: Reagan versus Obama
Stephanie Cutter, President Obama’s deputy campaign manager, recently boasted to Willie Geist of MSNBC that, from an employment perspective, the recovery of the economy under President Obama compares favorably with the Reagan recovery. Her claim seemed adequately outlandish to warrant comparing the two recoveries based on two criteria of central importance to the American people: the net number of new jobs created and the change in the number of people of working age who are either unemployed or not in the workforce (and therefore not counted as unemployed).
In each case I used unadjusted data from the Bureau of Labor Statistics from the month which was the trough of the recession experienced at the beginning of each President’s term of office. Those months were January 1983 and January 2010. I then compared that data to the identical data from January of 1989 and July of this year. The results are as follows.
The Reagan recovery, encompassing a period of 72 months, resulted in the creation of 24,833,000 net new jobs, or approximately 344,900 jobs per month. Over that same period the total number of people of working age who were either unemployed or not in the workforce decreased by 5,234,000, or approximately 72,700 per month.
The Obama recovery, encompassing a period of 31 months, has resulted in the creation of 6,317,000 net new jobs, or approximately 203,800 jobs per month. Over that same period, the total number of people of working age who are either unemployed or not in the labor force increased by 205,000, or approximately 6,600 per month.
These differences between the Reagan recovery and the Obama economy take on added significance when you realize that the size of the working-age population increased by approximately 43,180,000 people from January 1983 to January 2010. When that factor is considered, President Reagan’s recovery created 0.0031 net new jobs per month per working-age person. By contrast, President Obama’s “recovery” has created only 0.0013 net new jobs per month per working age person. In other words, when it comes to job-creation, President Reagan was more than twice as effective as President Obama — and President Obama’s policies have been so counterproductive that, during a recovery, they have actually resulted in an increase in the number of Americans who are either unemployed or simply no longer in the work force.
These figures demonstrate the truth of what those of us who were in the workforce during both recoveries intuitively understand. We knew President Reagan, President Reagan was our friend, and Barack Obama is no Ronald Reagan.
Yet, in part because of that relatively slow rise in jobs – down from 31 percent in the 1960s – American voters turned to Ronald Reagan and his radical economic theories of tax cuts, global “free markets” and deregulation.”
No, it was due to double digit inflation eroding worker’s lifestyle and pushing them into higher tax brackets with no rise in living standards just higher taxes. Comparing the beginning of the 70’s with the end of the 70’s is comparing two different economies.
Before Carter economists thought there was a trade off between unemployment and inflation. They did not believe you could have a period of high unemployment and inflation. Carter proved them wrong. They had to create a new term for it, stagflation. And they created a way to measure it called the misery index where you add the inflation and unemployment rate. The misery index was far lower when Obama took office then when Reagan took office, Reagan inherited the bigger mess and fixed the problem not the blame. The fact that someone would even suggest that Carter was thrown out merely because the job creation was slightly slower shows just how much the left is willing to lie to protect Obama.
Why Obama’s minions do not want us to compare Obama and Reagan:
You don’t get it because you don’t want to get it. Obama is president of an economy that has imploded as the result of 30 years of Reaganomics.
What? You think that every time a President takes office there is an economic “reset button”? Like he’s not inheriting the results of decades of prior and in-place economic policy?
I think you might which is why I always question your lack of understanding of long-term trends and the effects of long term policies. You are blind to them when they contradict your narrow view of the world.
That you would equate jobs created under Obama after 30 years of ReaganOmics with jobs created under Reagan (before ReagonOmics destroyed our jobs base) shows that you lack understanding of trends and policy ramifications. And it’s because of your now-proven-to-have failed economic trickle-down dogma.
Trickle down failed. Obama and America are living it. And the Repubs won’t change it or let anyone change it. Enjoy.
Reagan inherited the bigger mess and fixed the problem not the blame.
Reagan inherited a much better situation than Obama.
When Reagan took office in 1981:
1. We were not in 2 very expensive wars
2. Reagonomics had not yet gutted USA manufacturing
3. There was not the health-care crisis
4. Before Reaganomics there was much less wealth/income disparity. Thus a base of demand for products.
5. The rich paid their fair-share of taxes
6. Corporations paid their fair share of taxes
7. Reagan did not inherit a very expensive post 9-11 police state
8. We were a younger population
9. Higher education was affordable
10. There was no bursting of housing bubbles
11. The financial industry was properly regulated
12. The country’s debt was only 33% of what it would be at the end of Reagan’s presidency.
13. There was no credit bubble
14. ……And girls had big hair (I didn’t want to stop on 13)
15. Very little offshoring - There were more private unions and pay was generally a lot higher for the middle class
16. Reagan had great cooperation from the Democrats especially the Speaker of the house Tip O’Niell.
Going on about Reagan just shows how old you are. There is no trickle down anymore. No Chicago school, or even Keynes. What is the dominate economic theory in Washington? Or of this group or that? It doesn’t exist, except on websites. Or white papers from think tanks. The only economics for the past several years is Globalism/Central Bank-ism. Create money, and push it out into the economy in one way or another. It churns from one part of the world to the other, round and round. Next day, do it again.
Sure, we can grow the economy by driving house prices up. Why not, it worked a few years ago. Punish people who save too! That’ll have them hopping into profitless IPO’s lickety-split. That worked a few years ago too.
I remember when there was an economic debate, with different camps. Now we all just sit around and watch, hoping to get a little crumb from the “serious people” in charge.
When was the last time we saw what is going on at the WTO? I mean, actually saw a breaking news report from a meeting, or election or anything? Is this thing on auto-pilot?
Globalism and what these central banks do now determines everything. Is it a revolving door with the multinational corporations? I don’t know, that doesn’t get reported either.
What I see here is a lot of squabbling over ancient history, while these bastards are robbing us blind.
What I see here is a lot of squabbling over ancient history,
Your points on Globalization are good but many of those points are caused by one of the philosophies of trickle-down. But saying there is no more trickle-down is wrong.
Look around America today. The America economy today is the direct result of 30 years of Reagonomics.
“Trickle-down’s” core tenant is to put a lot of money in the hands of the rich, throw in offshoring and the rich will invest and create jobs and everyone will be better off.
We did it and half of the “theory” worked - the rich are way richer than when America bought into Reagonomics 30 years ago.
But half the theory failed. The wealth did not trickle-down to the rest of us. The rich got way richer because wealth was redistributed from the middle class to the rich. It was a farce but a farce Americans are living today.
Reaganomics-trickledown-supply-side-globalization is the dominate economic theory that America is living.
You’ll notice neither party in DC is against it.
People in China and Brazil are more wealthy. But isn’t it interesting that there are real estate bubbles in all of the BRIC’s?
Re-casting an 80’s debate into what we are facing today is likely to get us nowhere.
I agree Ben other than the fact that the history helps determine the path out of this. Reagan was the last President that did not think the path to prosperity was to print money and he created prosperity with tight or a responsible amount of money creation. It is the Globalism/Central Bank-ism that is the problem and no president has practiced it more than Obama. When people complain they are told that it is the only path to prosperity. It isn’t, and Reagan is hated due to his successful path in an entirely different direction.
Many of the Republican leaders who stomped their feet during the recent budget showdown, including House Speaker John Boehner, R-Ohio, were among those who favored the Bush tax cuts, the costly invasion of Iraq and bank deregulation. In other words, they were denouncing President Obama for a debt crisis that they helped create.
Will you guys ever wake up to the fact that corruption(regulatory capture is a great euphemism for it) is rampant through both sides of the aisle? If you’re spending your time rooting for one team or the other, you’re part of the problem.
Either that, or you’re in some way benefitting from the corruption i.e. you’re part of the problem.
The game is to divide the middle and lower classes and keep them fighting amongst themselves over petty differences while the powerful and wealthy run off to the bank with all the money. The ruling class in every society has done this since the Egyptians with few exception.
Only now they’ve bought the bank and the rights to privately counterfeit create new money, and you still actually think it’s worth arguing over whether Quanesha spends her food stamps on Kraft Dinner or Lobster.
All I can say is wow, you’re really dumb.
I don’t understand. Today’s structurally broken USA economy is the direct result of “Supply-Side” winning the 80’s debate and being the dominant theory practiced the past 30 years.
It failed. It is our current problem. It has to be discussed.
Reagan’s supply side proved to funnel middle-class money to the rich. It did not work.
We need to get back to Demand-Side where more money is put in the hands of the middle-class, thus creating demand.
The rich don’t “create jobs” as we were told. In general they hoard it. A strong middle-class (Demand) creates jobs.
What he said.
‘It has to be discussed’
It has been discussed, for 30 years, and the current system just becomes more entrenched. I’m no political strategist, but if I was to go out and try to convince people to change things, and I started talking about Reagan or trickle down, they would roll their eyes and walk away. At some point we have to stop assigning blame to people who have been dead for decades and work on what’s wrong right now.
I can find wide agreement that allowing corporations to take jobs over-seas was a mistake. Isn’t it interesting that no major politician takes up that cause? Why? Because the establishment would bury that person. What’s ruining the economy is the establishment. If we’re to turn this thing around, we have to quit letting the reds and blues divide us, and unite on what many of us would agree is the primary problem.
Reagan was the last President that did not think the path to prosperity was to print money
Maybe Reagan didn’t think it, but he did it. Reagan almost tripled the national debt. Wake me up when Obama even doubles it. Reagan turned USA into a debtor nation. USA has not been a creditor nation since Jimmy Carter
(Under Reagan) the U.S. borrowed both domestically and abroad to cover the Federal budget deficits, raising the national debt from $997 billion to $2.85 trillion. This led to the U.S. moving from the world’s largest international creditor to the world’s largest debtor nation. Reagan described the new debt as the “greatest disappointment” of his presidency.[2
we have to quit letting the reds and blues divide us, and unite on what many of us would agree is the primary problem.
The fight for the middle-class is “a hill to die on”. And the middle-class is almost killed. What if the primary economic problem is that 30 years of “Supply-side” killed the middle class? (Which I firmly believe is)
How are you ever going to get the far reds to understand the major problem when their puppet masters mislabel any remedy to supply-side as “socialism” - and refuse to allow any policies favoring the middle-class over the rich?
On economics, the far reds are never going to unite with the far blues. Ever. But I think the purples (middle) are starting to wake up to supply-side’s abject failure. And to get to the purples, you have to let them know what the heck happened the past 30 years - and forget about the far reds - they are as irrational as the far blues.
‘the far reds are never going to unite with the far blues’
Here’s what I think would work. Start off with a group/plan to get the US out of the WTO, and maybe NAFTA too. Just tell people, we’ve got disagreements. We can go back to feuding over those disagreements after we stop the economic bleeding.
Lola has to be right. H/she is a high net worth individual. Or so he can claim until his losses on that Brazilian crapshack are realized.
All this bitching about Reagan by Lola, but if you believe his lies then he was this great capitalist job creator businessman who did well enuf during this last 30 year period of economic destruction to now be a high net worth individual. It makes no sense, just like the rest of his lies.
I think he is a disgruntled fired air traffic controller holding a 30 year grudge.
Blow up the islands and the problem disappears.
The issue isn’t with the islands, the issue is with the three-mile limit or twelve-mile limit or the two-hundred mile limit - or whatever - and the area of sea floor that is enclosed within these limits. Get rid of the island and you will get rid of the limits. Get rid of the limits and the problem goes away.
( A wee bit of satire her, but just a wee bit.)
Think it’ll escalate?
The locals don’t seem very enthusiastic.
Looking at the other side of this island issue, if I were running a country and I wanted to claim some seafloor as my country’s own and if the waters were shallow enough then I could build me an island and - presto! - I would end up with a huge area of seafloor.
Build empty Chinese cities underwater (not under a dome) to cut out the middleman.
Maybe this island issue should be taken to the new Pope and allowed him decide who gets what, which is similar as to what some Pope of centuries past got to decide.
This is about oil.
“The area is underexplored and the territorial disputes surrounding ownership of potentially rich oil and natural gas deposits have precluded further development. The EIA estimates that the East China Sea has between 60 and 100 million barrels of oil (mmbbl) in proven and probable reserves. Chinese sources claim that undiscovered resources can run as high as 70 to 160 billion barrels of oil for the entire East China Sea, mostly in the Xihu/Okinawa trough.
… The Daioyu/Senkaku Islands consist of five uninhabited islets and three barren rocks. Approximately 120 nautical miles southwest of Okinawa, the islands are situated on a continental shelf with the Xihu/Okinawa trough to the south separating them from the nearby Ryukyu Islands.
…In 1969, a report by the UN Committee for Coordination of Joint Prospecting for Mineral Resources in Asian Offshore Areas (CCOP) indicated possible large hydrocarbon deposits in the waters around the Daioyu/Senkaku islands, reigniting interest in the area.”
It’s always about oil or natural resources. Has been since 1974.
always about oil or natural resources
Or religion and territory. See Kosovo
It is about numerous natural resources. In many ways this year looks like 1999. People have moved away from natural resource investments to buying up overpriced Internet stocks. But China is growing at a stated rate of more than 7.5% which puts the same demand on resources that a 15% rate would only a decade ago. China’s need for resources will drive natural resources prices again very soon.
You’re out of your gourd. Commodities are in a massive bubble. Just about everything which could be driven to nosebleed levels has been. Sure, maybe they can blow a ginormous $200 per barrel bubble, but they have not forgotten what happened last time oil went parabolic.
Moral Hazard, you’re thinking like a CEO obsessed with hitting the quarterly numbers. Oil is long-term. The Chinese want that nice little patch of rock, with its oil safely stored in it right where the gods put it, for their own. Let the foolish Americans beat their chests and burn up their supply! The Chinese will bide their time, and when Mad Max shifts from future to present, they can dribble out their black gold and defeat the Americans without firing a shot. Just as they were taught.
And that is why I’m in no hurry to drill in ANWR. 50 years or more from now, that oil will still be there…And I’m guessing that the technology to get it out safely will be better and the oil will be worth more, so why not burn more Saudi crude in the mean time?
I actually have had that belief for decades. However, I think that the time to get maximum value out of it is probably now. Within thirty years, I do believe alternative energy will have dropped in price so much that it will be cheaper in real terms than presently priced oil. I think the value of the oil today is so high that we can and should require that the best technology is used to extract the oil safely. If we start today it would still take ten years to get production so the window is beginning to close rapidly.
OilHeads continue to look in the rearview mirror.
My oh my are the next two decades going to be a shocker for you.
Question for tj: Does Bitcoin qualify as a currency by your definition?
Well, it IS a medium of exchange, is it not?
toilet paper is a medium of exchange too.
What can you trade it for? (On second thought, don’t answer that!)
I think there is a pretty strong relationship with scarcity and value.
also when your calculating value your thinkn is the next guy who has what you want going to find value in what you have to offer.The only reason you take that dollar bill as payment is cause you know the next guy will take it for what you want. Once that chain is broken those bills are worthless.
Don’t tell me we aren’t only running out of houses, but now also toilet paper as well!?
Anything can be a medium of exchange if it is accepted as such, broadly enough. Bitcoin is. Toilet paper, not so much.
For the moment, at least.
Store credit without the store.
Well, you know, come to think of it, toilet paper has probably never been used to facilitate an illegal or illicit transaction, so it’s probably more of a legit currency than Bitcoin, according to Weidner’s column. Then again, that would make toilet paper more of a legit currency than just about any currently accepted medium of exchange.
I bet somewhere someone really needs to wipe badly. what if you were out in the ocean on a boat. for a period of time that toilet paper has some real value because it is scarce. how much value does a roll of tp have vs a 100 mile trip back to land or a quick shower?
There’s someone on HBB we can ask… but he’s an old freshy(?), not an old salt.
This captain does not advise other adults on matters of personal hygiene, some things a person just has to figure out for themselves. Be prepared, have options and stay off the rocks.
A friend of mine reports that small-time professors in academia, who have a base salary but are unable to secure new funding for research, have started to barter. I will look up background literature for you, if you let me use your X-ray instrument. I’ll buy an extra bottle of carbon nanotubes for you if you help me write this proposal…
Dec. 3, 2013, 6:02 a.m. EST
Bitcoin fever is a fool’s gold rush
Commentary: Bitcoin is not a currency, and not a good investment.
By David Weidner, MarketWatch
SAN FRANCISCO (MarketWatch) — Until now, I’ve held off from offering an opinion on bitcoin, the most visible and popular of so-called digital currencies, that has some investors frothing at the mouth. I was waiting to see if it was for real or just a fad.
Bitcoin, it turns out, doesn’t seem to be going away soon. To the contrary, it’s becoming more popular and well known. There are more than 12 million bitcoins in circulation worth more than $12 billion. And the more people know about virtual currency like bitcoin, the more it becomes accepted, and the more it becomes an option for investors. Read about retailers that offer discounts for paying in bitcoin.
After some investigation, I’ve found that bitcoin is an interesting concept. At best, it’s a digital currency that can facilitate transactions globally. Also, as many of its investors argue, bitcoin offers some protection against potential swings in the U.S. dollar, the currency to which it’s pegged.
Alternate-day fasting could be better for the body and potentially easier to stick to than traditional dieting.
Even Federal Reserve Chairman Ben Bernanke, whose monetary policy franchise is threatened by an alternative currency, is on board. Last month he told Congress bitcoin has the potential to “promote a faster, more secure, and more efficient payment system” globally.
But bitcoin has some serious problems. There’s the volatility. There’s the potential for it to be used in illicit or illegal transactions. There’s the checkered track record.
As serious as those are, the big problem with bitcoin isn’t the currency itself, it’s who’s buying it and driving up the price.
And to be blunt, for the most part it isn’t the people looking for a efficient, safe global currency. It’s mostly the paranoid class of investors. They’re hoarding it to ward off what they believe is coming hyperinflation. They don’t trust the Fed. They don’t trust the government. They don’t trust central banks.
In short, they’re the gold bugs.
And gold bugs love nothing more than unorthodox, meaningless investments to protect themselves from the inflation bogeyman. Without a gold standard pegging the dollar, they’ve found a currency that they think will do it for them: bitcoin.
What makes a bitcoin investment even more tempting is its technological dazzle, or what James Surowiecki called the “cool factor.” Bitcoin is “alternative.” It’s new. It’s anti-government, anti-bank. It’s a currency that allows some investors to believe they’re checking out of the economic system.
There’s nothing wrong with that. Hey, after all, we are a free country, right?
Except as New York Times columnist Paul Krugman noted, hoarding any currency pegged to the dollar takes dollars out of the economic system. That, of course, hurts growth.
Another serious issue is bitcoin’s rapid price growth. In January, bitcoin was worth $13. More recently, in just 60 days, bitcoin has soared from $211 to $1,242. Along the way, however, there have been significant zigs and zags. As of Monday night, it was trading at around $1,094, according to bitcoincharts.com.
While there’s no arguing that bitcoin has been a good investment, the currency’s volatile climb doesn’t suggest it’s the safe harbor its proponents argue it is. Right now, at least, bitcoin looks like the opposite: a speculative investment that’s at the mercy of market whims, rising and falling on popularity, selloffs and buying. At worst, bitcoin looks like a bubble.
“There’s the potential for it to be used in illicit or illegal transactions.”
Well, that just glutzed the guy’s article for me. As if other currencies have never, EVER been used in illicit or illegal transactions, ROTFLMAO.
Marketwatch oughta dump this Weidner guy and fast, after a statement like that. Most. Idiotic. Ever.
I can’t even believe he wrote that.
Hey folks, just get your info from MarketWatch, because those guys really know what they’re talking about, yessir.
He lost me at “potential.” Potential? Bitcoins were already the primary currency on Silk Road.
Want to know the best investment secret out there? It’s as old as time: NO DEBT.
Want to know the best investment secret out there? It’s as old as time: NO DEBT.
I have no debt but “no debt” is not always the “best investment”. I’ve borrowed money in business and made money because of it.
My mother lives in a beautiful place, paid off the past about 14 years and for 20 years of her 25 year mortgage, she was paying PITI less than renting, the last 10 years of it, MUCH less. She told me that even when things were going very badly for her at times, when she drove into her community and up to her house, it gave her peace and strength. You don’t think my mother wants to live the rest of her life in that house? You don’t think she’s glad she borrowed money to get it. She does and she is.
And now she’s stuck with a rapidly depreciating asset that bled her dry.
Houses are never “investments”. Houses depreciate rapidly and are a loss ALWAYS.
Your mother bought before prices became OVERINLFATED. She did well. If you buy now and pay more than what it cost to build in the late 90’s you’re throwing your money away. If you borrow to buy now your killing yerself. Mortgage interest deduction is a ruse.
Everything about your sentence is false. Everything.
And now she’s stuck
Stuck? How so? She could sell it for a lot of money. If she priced it 15% below recent comps, she could sell it and be out in a couple months.
a rapidly depreciating asset
“rapidly depreciating” It’s a house, not sushi or unrefrigerated milk. It’s kept pace with inflation for almost 40 years. While providing shelter.
that bled her dry
“bled her dry”? It has been one of the joys of her and her family’s life. For almost 40 years. And financially, it has no more “bled her dry” than renting. And now she has an asset.
In my mom’s case everything about your above sentence is wrong. Your thinking is one-track.
If you buy now and pay more than what it cost to build in the late 90’s you’re throwing your money away.
Not if you can buy for less or about the same as renting right? Isn’t that what everyone was saying here in 2006? Why has that changed now?
Not necessarily Puggs. When his mom bought before prices were overinflated, INTEREST RATES were overinflated, so PITI probably wasn’t that much different, relatively speaking.
The house I bought cost more than that magical 2.5x income, and yet my PITI is still less than the magical 28% gross income.
Don’t be silly Donkey. The price/interest ratio isn’t linear. (I know you wish it were)
Yes houses depreciate…But they do provide the “in kind” dividend of HOUSING. And if you’re not selling what do you care what the “price” of the house is? I don’t. Higher prices just mean more taxes, so the bubble didn’t do me any favors. (although the lower interest rates that the bust brought did) Having paid off my house a year ago, my housing costs are significantly lower than rent, and have been for years. And rent/price ratios are pretty competitive with Dividend/Price ratios on the stock market.
The idea that housing is ALWAYS a bad purchase is JUST as stupid at “RE always goes up.” Price, people, price MATTERS.
Rio, it is very, very hard to do, but I believe the best response to HA is no response at all. The rest of those on this blog whom HA has not already driven away will thank you for it.
I believe that is anal-yst. I agree with your assessment. Anyone who repeatedly uses the words always and never is ignorant of the facts.
The rest of those on this blog whom HA has not already driven away will thank you for it ??
I hope they come back….Don’t engage with him…Ignore his post…Just scroll right by them…
Yes… please ignore. But you won’t be.
“My mother lives in a beautiful place, paid off the past about 14 years and for 20 years of her 25 year mortgage”
Woo hoo, your Mama bought 39 years ago, that is relevant to now how? Might as well be talking about the civil war.
How many folks are dumping their gold to go all-in to Bitcoin?
Dec. 3, 2013, 3:19 a.m. EST
UBS cuts 2014 forecast for gold and silver
By Barbara Kollmeyer
MADRID (MarketWatch) — UBS has cut its forecast for 2014 on gold to $1,200 an ounce from $1,325. UBS said the “struggle for gold not only rests with the predominant selling interest among investors currently, but with limited positive catalysts looking forward, gold is unlikely to regain its former appeal,” in an extract from research that published Dec. 2. UBS also cut its silver forecast to $20.50 an ounce from $25 for 2014 and to $21 from $24 for 2014. UBS also said that as downward momentum continues to build for gold, investors could test $1,050, a level that could be approaching a “decent buying level,” but the path would be “very turbulent.”
“How many folks are dumping their gold to go all-in to Bitcoin?”
Yeah, because gold has never, EVER been used to facilitate an illegal or illicit transaction.
Heck, time was when illegal or illicit transactions were all about gold, getting more of it, etc.
Come on, Whac-a, you know better than that. The guy who wrote this article has got to be a major feeb, making a statement like that.
PTB want people to dump gold for bitcoins but for the most part I do not think the groups overlap much. Much of the buying of bitcoin comes from the silicon valley not where you find most gold buyers. The only place I think that there is some overlap is China where the rich are desperate to get their money out of the country. But they do not seem to be slowing down on their gold buying.
I just want to know if Weidner would prefer to get paid in toilet paper than dollars, since toilet paper doesn’t have much of a potential to be used to facilitate illegal or illicit transactions.
On another note, it’s not like I haven’t made some real boner statements myself. But I don’t get paid to make them. And people don’t take them seriously anyway.
can you finance physical gold? Lets say i wanted to own an oz of gold. Is there anyone who would sell it to me on payments?
can you finance physical gold?
Yes. And all PM’s.
Lola…. Back for more schooling today?
bitcoin 1100 + 1000% ytd
gold 1200 - 40% YTD
silver 19 - 60% YTD
I am pleased to say I have not even one bitcoin.
The peanut gallery this year obviously has been rushing into stocks after being in cash from 2009 to the end of 2012. This is a sign that the stock boom is long in the tooth.
Gold’s peak was in 2011. It was not a peak like in January 1980. However a fall of 35% took gold from 1900 to around $1225. Figure $800 in late January 1980 and you would be at the equivalent $520 per ounce with a 35% drop. But gold bottomed at $490 and went back up later in 1980 to above $690.
The big difference is this: Volcker had the controls and was tightening the money supply.
In 2013 the money supply has been talked about of “tightening,” which is actually “tapering” which is not really tightening! This is a major difference the peanut gallery is too dumb to observe.
The smart money is realizing stock gains and using some of the proceeds to go into cash and precious metals - silver, gold, platinum, paladium, rhodium.
My ideal asset allocation is 10% precious metals but I’m way less than that.
And of course, “talk of tapering” is not tapering. Tapering is not tightening.
Even so, Joe Six Pack has his panties in knots and stay away from precious metals - movable, hidable wealth.
There isn’t enough dumb money interest in equities…. yet. Give it 18 months tops.
Does Bitcoin qualify as a currency by your definition?
If Wall St. can sell “paper gold”, why can’t they sell “paper bitcoin”?
Just because it’s going up instead of down in value doesn’t mean that Bitcoins aren’t WAY to volatile to be a good medium of exchange.
Have you dumped your bonds and gone all-in to stocks by now? I heard stocks could gain another 18 percent by this time next year.
Why U.S. stocks could gain another 18% by November 2014
December 2, 2013, 5:10 PM
Santa Claus won’t have to shimmy down Wall Street’s chimney this year; he can just rappel down the market’s towering wall of worry.
The Standard & Poor’s 500-stock index is up about 28% so far in 2013 including dividends, but many Wall Street strategists are still unconvinced that stocks should dominate a diversified investment portfolio.
And that’s bullish for U.S. stocks – to the tune of another 18% gain for the S&P 500 over the next 12 months.
That’s the conclusion of analysts at brokerage giant Bank of America Merrill Lynch, whose market-sentiment measure, the “Sell Side Indicator,” remains firmly in favor of stock buyers.
it seems that some rich people are benefiting by the increases in the stock market while the taxpayer absorbs the debt to get stock prices higher. You call this a recovery?
It is even worse than that the easy money has lowered the cost of capital all over the world making it easier to close down factories here and open up factories with the slave labor overseas. Meanwhile Krugman tells us QE is helping us. Sure.
Last time I checked, Ameritrade does not discriminate against income and there is no minimum purchase.
IOW, you could buy stocks like the wealthy.
I don’t want the garbage to tell you the truth. what I am saying is basically the taxpayer is going into more debt so the stock market can go higher. is that anyway to have a recovery?
it seems that some rich people are benefiting by the increases in the stock market ??
And Rich institutions….They, by themselves, move the market…As a individual, if you are on the right side you win, if not, you lose…
Those who control the majority of a product, usually control the price…
thats true dude. but the whole basis of this recovery is the FED printing money, buying treasuries so the govt has more money to spend. that borrowed money has to be paid back. of course this scheme can go on basically forever by issuing more treasuries to pay off maturing treasuries. it seems like one big game of shuffling treasuries.
I believe it. Pain will be severe Fall of 2015.
U.S., German and U.K. government bond yields are too low to be attractive given the outlook for improving global growth, according to JPMorgan Asset Management.
Treasury 10-year notes should yield 3.50 percent based on growth and inflation forecasts and the impact of the Federal Reserve’s asset-purchase program, instead of today’s 2.78 percent, JPMorgan executives said in a presentation in London. Benchmark German bund yields should be at 2.20 percent, versus 1.72 percent, while similar-maturity U.K. gilts should yield 3.30 percent instead of 2.82 percent, the company said.
Why do MSM-favored ‘experts’ persistently assume the Fed is going to unwind its Treasury portfolio? Since they most likely would precipitate a crash if they did so, why would anyone assume they ever will?
Putting my question into another light, what would be the problem with the Fed keeping those bonds buried on their balance sheet forever?
I do like this guy’s philosophy!
Robert Lenzner, Forbes Staff
I’m trying to wise up 300 million people about money & finance
Investing | 11/25/2013 @ 8:08PM |4,268 views
I Bet You Didn’t Know the Fed owns 40% of All Treasuries Over 5 Years in Maturity
Talk about creating moral hazard. The Fed has cornered almost 40% of all Treasuries over 5 years in maturity. I’ve just discovered the killer aspect line from Quantitative Easing. The Fed’s 4 years of QE, QE1, QE2, and QE3 has accumulated 36% of all Treasury securities between 5 years and 10 years in maturity plus 40% of those government bonds over 10 years in maturity as well as 25% of all the mortgage backed securities not owned by Fannie Mae and Freddie Mac. Just how do you suppose Chairman Yellen will devise an exit strategy to this concentrated ownership that makes up some $3 trillion of the central bank’s $4 trillion balance sheet?
Short of a miracle, Chairman Yellen faces one of the most imposing and possibly impossible challenges facing the financial markets over the next several years. If anything will derail the economy, force the stock market into a mighty retreat and destroy all hope of further expansion of the residential real estate market, it is the Fed’s quandry over the retreat from quantitative easing. And you can be sure that the potential overhang of Treasury securities and mortgage backed bonds overhanging the market are not going to look like bargains to the cash-rich central banks of China, Japan, Russia,or to the pension funds and endowments.
Preventing a depression in 2008 looks easier and more straight-forward to me than the devilish predicament the Fed faces when QE finally is played out and the central bank is left holding a record amount of securities that one way or another are going to start losing value as the cost of money creeps higher. All geniuses need apply at Fed with their schemes to get us out of this trap. We are going to have to start looking at this problem early in 2014 without denying its severity and multiple ramifications.
I say it will be impossible to liquidate $3 trillion in any short term or medium time period without causing the bond and stock markets to crash. And it’s even possible the Fed might have to position another $500 billion to $1 trillion bonds if the job numbers don’t look promising.
Therefore, the Fed might be forced to hold the bonds to maturity, requiring more than a decade to see the securities run off, delivering trillions in cash to the central bank. I can’t even get my head around what that predicament would mean down the road.
Or if the Fed begins to liquidate bonds and interest rates rise while the bond market declines it means that the Fed ‘s profits from its book will be reduced, wiping out its ability to pay a huge dividend to the Treasury for use in running the government. Honestly, I’m not going to shed that many tears for this loss, though others will be wailing and tearing out their hair.
I’m sure right now the economists at the regional Feds are writing papers to suggest the various policy choices we face. The potential nightmare I was warned about by a Wall Street elder is that once higher interest rates are a reality the Fed might face large paper losses on its portfolio of intermediate Treasuries. Thankfully it is not required to mark those securities to market and officially recognize the losses.
Dec. 3, 2013, 4:34 p.m. EST
U.S. stocks fall for third day on taper worries
By William L. Watts, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks fell Tuesday, with the S&P 500 and the Dow Jones Industrial Average falling for a third straight day on uncertainty over when the Federal Reserve will begin to scale back stimulus and self-fulfilling fears the market was overdue for a pullback from record levels.
The Dow Jones Industrial Average (DJIA -0.59%) dropped more than 100 points during the session before settling at 15,914.62, down 94.15 points, or 0.6%, taking it well below the psychologically important 16,000 level. The drop was the index’s biggest one-day decline since Nov. 7.
The S&P 500 (SPX -0.32%) lost 5.75 points, or 0.3%, to 1,795.15 and the Nasdaq Composite (COMP -0.20%) declined 8.06 points, or 0.2%, to 4,037.20.
“I hate to use the words, ‘we’re due,’ but we’ve gone straight up,” said J.J. Kinahan, chief derivatives strategist at TD Ameritrade in Chicago.
Dec. 3, 2013, 3:58 p.m. EST
Dollar falls broadly, retreats below ¥103
By Saumya Vaishampayan, MarketWatch
NEW YORK (MarketWatch) — The dollar retreated below ¥103 as part of a broad decline Tuesday, as investors looked toward data later this week that could shed light on when the Federal Reserve could begin to reduce its unprecedented monetary stimulus.
The dollar (USDJPY +0.16%) fell to ¥102.31 from ¥103.08 late Monday, when it firmly jumped above ¥103 for the first time since May 22.
But the dollar’s pullback on Tuesday still left it near recent highs. The greenback rose 4.4% against the yen in November.
“The yen clawed its way back from a six-month trough against the greenback as profit-taking encouraged investors to trim some short exposure to the Japanese currency,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc., in a note.
The highlight of the week is Friday’s nonfarm payrolls report for November, with economists expecting gains of 180,000 jobs and a tick down in the unemployment rate to 7.2%, according to a MarketWatch poll. The Fed examines labor-market data closely as it decides when to slow its monthly bond purchases, currently set at $85 billion. Those purchases have been understood to weigh on the dollar.
The bigger question is what the jobs data could imply for monetary policy, ahead of the December Fed meeting. But a look at the Fed’s dual mandate, or its commitment to price stability and maximum employment, suggests that tapering is more likely early next year, said Eric Viloria, a senior currency strategist at Forex.com.
“The Fed is missing on both mandates: employment and price stability. We don’t think that tapering of [quantitative easing] is likely this month,” he said.
Socialism at its finest:
Viva la revolucion!
Quick send Al Gore money before this is well known:
You can clearly see what really caused the global warming particularly if you factor in the PDO (Pacific ocean warming and cooling cycle).
I saw polly comment on RAL’s use of gay slurs w/r/t me yesterday. I don’t need the defense, we all know it’s a joke. I actually don’t think RAL would slur someone who actually has same-sex preferences, that doesn’t seem like his schtick. There is (was) a lesbian poster here who RAL used to pillory based on her purchase (debt-ridden, of course) of a home in San Fran. I might have missed it but I never saw RAL or anyone else harp on her being gay, having a gay marriage, or raising children in that household.
The implication about me being “downlow” probably has something to do with outspoken support for marriage equality & the joke about Liberace relates to a comment I made that when I go to the symphony or a museum I see childless people my age but if I go to walmart, every 30 yr old has multiple kids with them. I implied that the “wrong people” are having kids bc the incentives in this country are messed up. So now RAL calls me Liberace.
I’m guilty of saying questionable things here as well — such as that 2ban is a brony or that northeasterner is W.T. I doubt they care, but if they do, I apologize.
You got your characters mixed up again Liberace.
Doesn’t bother me in the least. Aside from my support for Republican politics as a counter to socialist Democrats, I don’t fit the profile of “white trash”. College educated. Live in the Northeast. Work in high-tech. Six-figure income. Two children in private school. Have been with my wife for 17 years, married for 10.
My affinity for firearms is a hold-over from my years in the Army and my ardent support of the 2nd Amendment is an issue of liberty and Constitutionally-protected rights.
Having said that, I would probably fit in better in Dallas than in Boston…
“Downlow” is not a slur like calling someone a f*****, it describes a pattern of behavior, of allegedly straight married men who seek secret gay encounters, i.e. “on the downlow”.
This behavior is responsible for many non drug user female HIV infections, a large number of whom are minorities.
What the hell is wrong with being gay?
You guys have issues.
Are you looking for some downlow?
If so, you and your wife have issues.
Well… I thought about hittin’ up Liberace and Lola but they’re a dedicated pair.
But they are looking for a threesome with Obama.
?? That’s one of the most contradictorily obtuse things that I’ve read in a long time.
(On about 5 levels I can think of off the top of my head.)
I agree. I think it’s highly likely that 2ban is a Brony.
lesbian poster here who RAL used to pillory based on her purchase (debt-ridden, of course) of a home in San Fran ??
SF Renter ?? I thought she said she & her “husband” were teachers long time ago even before she purchased.. ??
There is (was) a lesbian poster here who RAL used to pillory based on her purchase (debt-ridden, of course) of a home in San Fran.
Yeah.. Another one that just stomped her feet in a tizzy wanting to be right even in spite of the truth that she got ripped off.
Here’s an interesting development:
‘In his new book, The Mortgage Wars, Timothy Howard, the former vice chairman and CFO of Fannie Mae vehemently defends his former firm and, by extension, its smaller cousin Freddie Mac. “The ‘GSE model’ for the secondary mortgage market was not flawed,” he writes. “It was sabotaged by hostile and inept regulation.”
‘Howard is convinced the current push to “wind down” Fannie and Freddie and replace them with private lenders – however difficult it may be – is a recipe for disaster.’
‘… of course, having the implicit backing of the U.S. government helps. Howard doesn’t apologize for that, arguing that a system based purely on private lending would be “much more expensive, riskier and you wouldn’t be able to sustain the level of home ownership we have now.”
‘Among others, Dick Bove of Rafferty Capital Markets agrees, recently writing that the fallout on the housing market would be “colossal” if Fannie and Freddie are wound down because “no bank would be willing to assume the risk” of 20- or 30-year fixed-rate mortgages.’
This smells like a history re-write. If Howard and Raines were doing such a great job, how come the GSE’s couldn’t produce financial statements in 2005? Jeebus, house prices hadn’t even started falling yet and they were broke in Spring 2005.
I wonder if this is part of a propaganda move. From the Reuters article I posted yesterday:
‘In the U.S., David Crowe, economist at the National Association of Housebuilders argues that the biggest threat to a stomping housing market recovery there is not an eventual end to purchases of Mortgage-Backed Securities by the Federal Reserve. Until recently at least, those purchases, along with zero rate policy, have kept mortgage rates firmly pinned down. Nor is it the threat of an economic slowdown or poor job growth: “The biggest threat to the recovery would be a heavy-handed, ill-considered attempt at GSE reform that derails the secondary mortgage market and greatly reduces the availability of credit to the mortgage markets.”
This is all so bizarre. Imagine if the government had taken over Enron, and allowed them to continue to control California electricity. Oh heavens, we can’t “reform” two giant bankrupt corporations!
How do you “wind down” something that has collapsed years ago?
Like we already know….. rotten and corrupt to the core and one swift kick away from collapse.
You really need your head examined if you buy a house in this environment.
“It was sabotaged by hostile and inept regulation.”
That right there is pretty interesting. The regulator decided to do an audit of the GSEs. I guess looking for the truth is pretty hostile. Fraud was discovered and the CEOs resigned. Nobody went to jail. I guess that is pretty inept. So this Howard guy is the one who cooked the books that “couldn’t” be published in 2005, and now he wants us to buy his newest book. Sure.
Obama got rid of Falcon. What a mess that DC is.
…. and I’m waiting for the first donkey to make excuses for the Corruptocrats and Corrupticans in an attempt to deflect from the rotting, fraud driven carcass that is housing finance.
Well OFHEO was a pretty toothless regulator…the GSEs had a bipartisin degree of regulatory capture that the big investment banks were jealous of….That ensured that OFHEO was a little lapdog without the political werewithal to force them them to hold adqequate reserves (and allowed said reserves to be in MBS, the same asset class which they were trying to reserve against losses in!!!!) or even the authority to liquidate them if they became insolvent.
And Armando Falcon left OFHEO in 2005…I know some people want to blame Obama for everything that that’s a stretch.
His appointment ended in 2005, but the article I was reading said he stayed on until Obama appointed a replacement. So, the Busch administration let the GSEs off and the transition to the next administration was seamless. DC is a pretty deep cesspool.
no bank would be willing to assume the risk” of 20- or 30-year fixed-rate mortgages ??
Well they may be willing but it will carry a risk premium…More likely if the GSE’s go bye-bye the mortgage market will look more like the commercial lending market…25 year amortization with a 7 or 10 year roll-over to a high margin adjustable or an outright call…
So, no private company could make money on this product. Government steps in, via the GSEs, to make the profit profitable.
Want to know why the government would step in to backstop and guarantee a socially destructive and radically unprofitable model?
See page 35 (page 40 actual) of this semi annual FHFA report to Congress (PDF, 12.7 MB) : http://fhfaoig.gov/Content/Files/FifthSemiannualReport.pdf - to understand this - the housing finance model.
Then, see what Andrew Huszar had to say in “Confessions of a Quantitative Easer” :
“I had left the Fed out of frustration, having witnessed the institution deferring more and more to Wall Street. Independence is at the heart of any central bank’s credibility, and I had come to believe that the Fed’s independence was eroding….
You’d think the Fed would have finally stopped to question the wisdom of QE. Think again. Only a few months later-after a 14% drop in the U.S. stock market and renewed weakening in the banking sector-the Fed announced a new round of bond buying: QE2. Germany’s finance minister, Wolfgang Schäuble, immediately called the decision “clueless.”
That was when I realized the Fed had lost any remaining ability to think independently from Wall Street. Demoralized, I returned to the private sector.”
He’s talking about the central bank, but this also applies to the government/GSEs.
“B…bbbut… what about the homebuyers? You’ll be harming them if they can’t get loans! The GSEs are doing God’s work!”
Sorry, no. Saddling crushing debt onto individuals, putting them in houses they can’t afford or maintain, is no mercy, no favor. The only benefit from that model accrues to Wall Street and politicians (via property taxes). This does not improve the homebuyer’s quality of life.
It’s a pretty good deal for politicians, and by extension Wall Street, because it’s a complex scenario, and not many people put it together. All of the blame for this starts with politicians, as they write the rules. Both have plausible deniability before the average voter, as they claim they are trying to help. But a little bit of digging reveals the true picture.
As the PTB claim greater and greater consumer surplus, eventually the system will break. It’s just a question of when.
BINGO! And we have a Winner!
You sir, win teh internets for today for the most succinct and accurate assessment of our national economic situation.
These days the government is making a fortune off Fannie Mae, Freddie Mac and student loans. They do not want to give up on those cash cows. Of course, when interest rates normalize they will loose vast amounts of money. However, government will not let them normalize as long as possible and the people running government think only to the next election.
I’ll note two things:
1. The housing bubble was a global phenomenon, and to my understanding, only the US had GSEs backing mortgages. You can’t pin the bubble on the GSEs (although they were a big cog in the machine at least in the US).
2. Too much regulation has a real risk of creating an environment of complacency instead of diligence. If those people committing institutional capital to buy RMBS were not solely relying upon ratings agencies stamping “AAA” on securities, they would have dug deeper and NOT invested (either because the securities were not able to be understood, or because they would have seen all the risk in the underwriting). The flow of capital to housing would have been cut off (or slowed considerably), and the bubble would not have blown up to the level it did.
The “anti-wind down” cries are coming from people who are incredibly short sighted, and/or in love with the idea of a 30-year mortgage helping to keep housing markets stable. Fannie and Freddie guarantee the loans, they don’t provide all the capital for all the loans…they sell securities to raise the money. If Fannie/Freddie were to be wound down, that money would be seeking to buy mortgages elsewhere on the market.
Would mortgages be more expensive?
It probably depends on the type of mortgage.
It is clear to me that the 30-year would be more expensive (or wouldn’t exist), it is not clear that ARMs, or short term fixed rate loans would be more expensive.
The housing bubble was a global phenomenon,
It still is.
Remember…. Current asking prices of resale housing are 200%+ higher than long term trend.
The housing bubble was a global phenomenon, and to my understanding, only the US had GSEs backing mortgages. You can’t pin the bubble on the GSEs (although they were a big cog in the machine at least in the US).
The ability of lenders to shed repayment risk via securitization, was the core debt/housing bubble driver. Being able to make loans as big as possible, get them stamped AAA by ratings agencies, then offloading them to third parties was just about equivalent to printing money.
The GSEs have enabled this model to continue unabated for the past five years, as they’ve purchased a vast amount of mortgages and issued virtually all MBS for the past five years..
No private party would dare buy mortgages or MBS with current underwriting standards without an explicit government guarantee.
Non-GSE debt is sold today…not nearly as much as before, but it does happen. Check out Redwood Mortgage. They buy jumbo loans from lenders like First Republic, package them up, and sell them.
It all comes down to the underwriting. 3% down? Not a chance. 20-25% down with high FICO scores, where there is a buffer between the AAA tranche and lower tranches? Absolutely.
‘Invesco Mortgage Capital Inc. (IVR) bought all of the residential mortgage-backed securities created last month in a $300 million deal without government backing, amid lower demand for the top-rated portions of such transactions that’s stunted a revival in the non-agency bond market.’
‘While issuance of non-agency securities tied to new loans has climbed to about $13.4 billion in 2013 from $3.5 billion in all of last year, the pace has slumped since July, as investors demanded higher yields and banks retained more loans, according to data compiled by Bloomberg.’
‘Analysts at Bank of America Corp. and Credit Suisse in 2014 outlooks published last month forecast a drop or little change in issuance, after the AAA securities went from being sold at the same or higher prices than similar U.S.-backed agency mortgage bonds earlier this year to about four cents on the dollar less than debt with comparable coupons.’
Thanks for that link Ben.
All signs point to higher long-term rates in the relatively near future…got taper?
And, of course, having the implicit backing of the U.S. government helps. Howard doesn’t apologize for that, arguing that a system based purely on private lending would be “much more expensive, riskier and you wouldn’t be able to sustain the level of home ownership we have now.”
Sounds like a great justification for private lending. We shouldn’t have this high a level of home ownership. The jobs and wages/salaries aren’t there to support it. It’s only keeping the people who are responsible/able from buying and luring the less responsible/able in to debt traps.
I think feeling some real economic pain is the only way people are going to demand trade equality (rather than just wide open borders) and conditions which support the return of manufacturing and middle-class jobs.
Essentially up to the Reagan years we had a system that delivered a fairly regular golden egg of relative prosperity and upward mobility.
Then we had “Free” trade / Globalization shoved down our throats (among other things).
Basically they killed the golden goose. All for a few extra egg fragments in the short term with no consideration for the country’s long term health and well being.
U.S. Students Slide In Global Ranking On Math, Reading, Science
by Bill Chappell
December 03, 2013 7:37 AM
A graphic released with the 2012 PISA results shows the annualized change in performance in average math scores between 2003 and 2012. The chart includes only nations that have comparable data from both 2003 and 2012.
A graphic released with the 2012 PISA results shows the annualized change in performance in average math scores between 2003 and 2012. The chart includes only nations that have comparable data from both 2003 and 2012.
American 15-year-olds continue to turn in flat results in a test that measures students’ proficiency in reading, math and science worldwide, failing to crack the global top 20.
The Program for International Student Assessment, or PISA, collects test results from 65 countries for its rankings, which come out every three years. The , from 2012, show that U.S. students ranked below average in math among the world’s most-developed countries. They were close to average in science and reading.
“In mathematics, 29 nations and other jurisdictions outperformed the United States by a statistically significant margin, up from 23 three years ago,” reports . “In science, 22 education systems scored above the U.S. average, up from 18 in 2009.”
More money, more Marxist indoctrination, more union shakedowns and more administrators should fix the problem.
That’s what LIEberals and debt donkeys want.
It’s a shakedown.
more Marxist indoctrination…should fix the problem
Interesting. Can you elaborate on how American schools indoctrinate and promote the Marxist concept of dialectical materialism?
And since a main purpose of education is for its product to maintain or rise in class, how even if they did promote dialectical materialism, would it not be in direct conflict to educations’ said goal?
Says the self proclaimed member of the petite bourgeoisie. Sorry education is filled with self-proclaimed Marxists. It does not matter that many would be the first shot in any real Marxist take over. The would share the same fate as the anarchist socialists after Lenin came to power.
Sorry education is filled with self-proclaimed Marxists.
Education is filled with self-proclaimed “capitalists” too.
Elaborate on how American schools indoctrinate and promote dialectical materialism?
Says the self proclaimed member of the petite bourgeoisie
Why tell an untruth? When did I ever describe myself in that term?
Why when I always outdo you in facts, you lie and call names?
(It takes awhile but it’s predictable.)
America is in it’s lousy shape because supply-side failed. We did it, it didn’t work. America is living the results of Reagan’s faulty ideas. I think Reagan truly loved America. He was just too intellectually limited and scarred to know his ideas would sink the country he loved.
Reagan was a soldier of a real war - the Cold War - which somewhat understandably warped his ideology too far in one direction - a sort of economic theory PTSD.
Isn’t that an oxymoron?
Per wikipedia: “Anarchism holds the state to be undesirable, unnecessary, or harmful”
No actually it is an actual political term. They believed that centralized government was bad and would always lead to tyranny. However, they believed that means of production should be in the hands of the workers. So the workers ran the factory and had a democracy at the factory level. You do not hear about them because like I said they were shot very quickly when the Lenin type Marxists came to power.
The comment section was great. Bottom line consensus is more real education, eliminated pie in the sky dream education (actors and sport stars), less distractions (arts, computers and phones in schools) real learning vs. test competency, and other insights. Oh, and most commenters thought it wasn’t a money thing, it was about focus, discipline and mastering real subject matter. Religion and politics should not be taught, no time or responsibility. Poli-Sci, Civics, yes.
I’m not fond of knee-jerk reactions.
No amount of money will fix the gap the average US public school student has in math, science and reading as compared to the global top 20.
Public Union teachers are, for the most part, overpaid for the services they provide. There is high turnover inthe first 5 years of teaching and teaching doesn’t attract the “best and brightest”. Public school administration is too political and too top heavy, with vast amounts of budget going to administrators. Of course, much of that is required by the Federal Government. Additionally, parents of the average public school student don’t have the time or resources to ensure their children learn. Standardized tests have been “dumbed down” and grades inflated to make up for a lack of effort and/or lack of ability of students today.
Need an example? My children have a minimum of 1-2 hours of homework a night in addition to a monthly project/book report and studying for quizzes and exams. They don’t spend any time “preparing” for standardized tests, rather they take the test as a barometer to their overall learning. My wife spends a significant amount of time every night helping and reviewing homework and study preparation. This is for 4th and 1st grade in private school.
One of my daughter’s friends recently transferred to public school. In addition to enjoying not having to wear a uniform, she doesn’t get homework because the teachers “don’t believe in it”. My take? The teachers don’t want to spend the additional time coming up with assignments and grading work. Their lesson plans are built around the MCAS standardized tests and since that is how the state and thus the school judges the success of the educational efforts, that is all that the public school teachers are required to do… teach to the test.
As I said above, no amount of money will make up for all those lost hours of additional “homework” and study every day for years. No amount of money will change the bureaucracy or politics that drives our public school education. No amount of money will make up for a lack of prioritization of education for the average public school parent as they are too self-centered, too lazy, or just too ignorant.
Conclusion? Public schools are part of the Idiocracy that is our society. Private schools are a concerned parent’s only recourse, and that requires sacrifice… something the average American doesn’t understand anymore.
One of my daughter’s friends recently transferred to public school. In addition to enjoying not having to wear a uniform, she doesn’t get homework because the teachers “don’t believe in it”
It is actually for a politically correct reason. The reasoning and I use that term very loosely, is homework favors whites over minorities since they are more likely to come from two parent households that are educated enough to help them with the homework. Equality of opportunity is not enough for these people, we must have equality of results so to narrow the achievement gap homework must go.
While this was not a total prohibition it reflects the ideology:
One of my daughter’s friends recently transferred to public school.
That reminds me of a story, how I got a niece to transfer between private high schools, after I made a comment on one of her homework assignments that I happened to glance at. She was complaining of getting an A minus on a paper of hers. I looked at it & found punctuation errors & some doubtful grammar. I told her that in-my-day such errors would have meant a grade no higher than a B, no A of any kind would have been given.
My assessment shocked her. She began to think academic standards at her school were too low, and within a month transferred to another local religious school with what turned out to be higher standards. Several years passed. The summer after her high school graduation she was working at Bell Labs, as a part of the full ride engineering scholarship she learned about, and won.
No amount of money will make up for a lack of prioritization of education for the average public school parent as they are too self-centered, too lazy, or just too ignorant ??
Spot on…And, in defense of at least some teachers, how the hell can they over come this type of parenting…
No amount of money will fix the gap the average US public school student has in math, science and reading as compared to the global top 20 ??
Again it goes back to parenting as far as I am concerned…The asian & indian immigrants children in our public schools do quite well here…
Blackstone Begins Rental Housing Empire in Spain
By Sharon Smyth and John Gittelsohn November 07, 2013
While Spain traditionally has a lower percentage of renters than the U.S., the government last year introduced measures to increase demand in the rental market by abolishing tax breaks for individual home buyers. Legislation was passed to protect landlords by allowing them to raise rents above the annual inflation rate, speeding up evictions of tenants who don’t pay and reducing the length of leases, which means owners can raise prices more frequently.
The government has pledged that Sareb, a bank it set up last year to acquire soured real estate assets at a discount from bailed-out banks, will sell €1.5 billion of assets this year. Private equity firm H.I.G. Capital agreed in August to buy a majority stake in a portfolio of about 1,000 homes from Sareb. Juan Barba, head of real estate for the bank, says it will prepare a portfolio of rental housing to sell next year in response to investor demand. “This type of sale will be flavor-of-the-month in coming years,” says Alfredo Laffitte, head of sales to investors at Banco Sabadell.
Goldman Sachs (GS) and Azora Capital, a Madrid-based private equity firm, outbid Blackstone in August by agreeing to pay almost 20 percent above the asking price for 32 social-housing developments sold by the capital’s regional government. Blackstone and Goldman Sachs are again competing to purchase a portfolio from the regional government, according to a person with knowledge of the bidding who asked not to be identified because the information is private. The portfolio includes 22 developments with 1,458 housing units and 1,588 garages situated in and around the capital, according to an investor presentation.
http://www.businessweek.com/articles/2013-11-07/blackstone-begins-rental-housing-empire-in-spain - 62k
Another government that just wants to help people by making housing more expensive.
How do they get 1458 houses and 1588 garages? Public storage? Mansions with both attached and detached garages? And for a capital city on a continent that scorns automobile use, that’s kinda a lot of garages.
How do they get 1458 houses and 1588 garages?
Keep in mind that by “houses” (casas) they include apartments. I learned that when I visited, people refer to their apartments as “casas”. In fact, I wouldn’t be surprised if they were all apartments, as detached housing in the big cities is a luxury for the wealthy. Garages probably mean garage spaces. An apartment with a garage space commands a higher rent, if it has two spaces then it is deluxe.
I’m thinking this is high density “housing”, not two story houses with detached garages.
Here is a proper use for Facebook:
Prosecutors: Pizza robber tracked down on Facebook
Attorneys Indicted For Mortgage Fraud
Published on Tuesday, 26 November 2013 06:19
70% Of Brooklyn Home Sales Are To Hedge Funds, Investors And International Buyers
Submitted by Tyler Durden on 11/25/2013
It has been over a year since we listed the three “pillars” of the latest dead cat bounce in the housing market. Recall: “the REO-to-Rental subsidized investment program, which led to an epic surge in demand for multi-family housing, i.e., rental, units was, together with offshore investors parking their cash in the US for safekeeping (taking advantage of the NAR’s anti-money laundering check exemptions) and the big banks Foreclosure Stuffing, the key reason for the recent, stimulus-fueled and quite transitory bounce in house prices in assorted markets.” In other words, the latest artificial move higher in the housing market had nothing to do with an “improving” economy (and implicitly, everything to do with the epic injection of liquidity by all global central banks and chinese loan creation). Today we got confirmation that once again we were correct: to wit: “Douglas Elliman rep: 70% of Brooklyn home sales going to hedge funds, investors and international buyers.”
In other words, just over two thirds of the “bounce” in the Brooklyn housing market has - much to the chagrin of hipsters everywhere - been due to the REO-to-Rent program and various other initiatives to make Wall Street America’s biggest landlord, as well as foreigners parking hot cash in the US, for money laundering reasons or otherwise.
From the NYT:
Standing in the dining room of the early 1900s-era brick rowhouse, deep in the Bushwick section of Brooklyn with not a frozen yogurt shop or Starbucks to be found, Alan Dixon, an investor from Australia, struggled to tally the houses he had bought in the area over the last year.
“What, 70? 72?” he asked, raising his eyebrows in question at a group of investors, contractors and designers standing nearby. A dozen construction workers scurried around, fastening plasterboard to walls and laying tile on floors, readying the four-bedroom house that the group purchased in June for $635,000 for leasing in less than two weeks’ time for as much as $5,490 a month.
Finally, someone locates the number on a piece of paper — 70, later corrected to 71. “That sounds right. Something like that,” Mr. Dixon said with a laugh, tugging on the cuff of the pink shirt he wore under his gray suit jacket.
It’s easy to understand why it might be difficult for Mr. Dixon to keep track. In just two years, the investment fund he oversees for Australian investors and retirees has purchased more than 538 homes, townhouses and brownstones from Jersey City to Queens and Brooklyn.
Mr. Dixon and his investments in New York area residential real estate are a microcosm of a much bigger trend sweeping the country.
A handful of large private equity and real estate investment firms, including the Blackstone Group and Colony Capital, have bought billions of dollars’ worth of single-family homes in some of the areas most affected by the housing collapse. The goal for these Wall Street investors is not to buy and flip the properties for a quick profit à la real estate bubble of the early 2000s. Instead, they are hunting for steady, dividend-like returns they believe can be earned by renting out the homes.
“I’d say by the spring, maybe 70 percent of the sales we were seeing were to hedge funds, investors and others taking advantage of what was happening in Brooklyn,” said Stephanie O’Brien, a real estate broker with Douglas Elliman in Brooklyn. “Only about 30 percent were actual end users or first-time buyers.”
The higher prices have changed the character and makeup of neighborhoods, often pushing more lower- and middle-income families farther east in the borough. “What’s happening is good, because it increases real estate values, but on the other hand people who have been living in these neighborhoods and hoping to one day buy or rent a larger apartment are getting priced out,” said Ron Schweiger, the Brooklyn borough historian.
So with 70% of “buyers” accounted for by the Wall Street investment and the international money laundering community, the other 30% or so of the appreciation has been banks continuing to keep millions of shadow inventory units off the market, creating an artificial subsidy and pushing prices higher due to a fake housing shortage.
Oh, and no so-called recovery.
What a rotten corrupt market ripe for collapse.
How long have we been hearing about the “hot” NYC housing market???
Investors, please meet NYC landlord/tennant laws. Have fun.
“Local Realtor sentenced in mortgage fraud”
“Mortgage Salesmen Pleads Guilty To Band Fraud”
‘The conspirators frequently resold the properties from one straw buyer to another, each time at an inflated, higher price so that the conspirators and CCRE could extract the purported increased “equity” from the property for their benefit.’
But there’s nothing wrong with California house prices returning to these inflated levels.
This article clearly demonstrates why and how housing prices have crept up in CA.
California is fraud central due to the pressures of the high cost of living and the certain morally casual attitude developed over the last 50 years.
Mortgage Salesman Sentenced In Mortgage Fraud Scheme
‘“There is some danger of an abrupt collapse in investor confidence and Brazil should be watched closely in the days ahead,” warns Michael Shaoul of Marksfield Asset Management, adding “Brazil’s capital markets appear to be suffering from a sudden flight of capital.”
‘Brazil’s 10-year yield shot up and its spread over the U.S. Treasury is now at the highest level since the summer of 2009.’
“Brazil’s capital markets appear to be suffering from a sudden flight of capital.”
Hot money- where is it going next ?
There is some danger of an abrupt collapse in investor confidence and Brazil should be watched closely in the days ahead,”
This danger is real. I’ve seen it happen about 7 times in 25 years. And it might be a good thing because Brazilians get complacent when things are going well. And things have gone well for running on almost 15 years. Reforms here are needed and usually only take place during a crisis.
But the funny thing about Brazil is, is that it always bounces back sooner than one would imagine. 08-09 were hardly a blip. And Brazil has not gutted it’s jobs base with 30 years of supply-side tripe as has the USA. And the wealth gap has improved the past 20 years in Brazil relative to the USA where it has gone to hell. Brazilians still make stuff. (but not as much as before).
Although in a “bubble”, Brazil housing has always been where Brazilians run with their cash during a crisis. And for about 300 years, land and housing were about the only place most Brazilians could “invest” in. It’s in their blood that housing is the family’s base and most housing is owned outright.
So the the bottom line imo is: “Don’t cry for Brazil, Argentina“
Shiller’s opinions on US stocks, US real-estate, Brazil real-estate:
Nobel Laureate Robert Shiller Warns Of Bubble In US Equity Markets, Brazil Property Sector
Robert Shiller, one of three American economists who won the 2013 Nobel Prize, warned on Sunday that the recent sharp rise in equity prices in the U.S. is a dangerous development, and it could signal the building of a financial bubble…..I am most worried about the boom in the U.S. stock market. Also because our economy is still weak and vulnerable,”
He noted that house prices in the Brazilian cities of Rio de Janeiro and São Paulo, in the last five years, mirror the investment conditions that prevailed in the U.S. during the real estate boom.
“There, I felt a bit like in the United States of 2004,” Shiller said, referring to investor sentiments he observed in Brazil’s property markets….
…..prices have shot up 230 percent in Rio de Janeiro since 2008. For São Paulo, the rate is 188 percent.
….However, Shiller, in a separate interview told Barron’s that he did not see any bubble in the U.S. housing property market, even though the home price index has soared 13.3 percent this year through September, Money News reported.
“We went through the biggest housing bubble in U.S. history in the 2000s, and there is a knee-jerk reaction among some people who think maybe we are doing that again,” Shiller told Barron’s.
“But you have to consider that these are very rare phenomena, and it was such a decisive break at the end of the last housing bubble that we might not be psychologically ready for another bubble,” he added.
Fairfax VA Mortgage Salesman Convicted On Fraud Charges
Mortgage Firm Principal Cops Guilty Plea In Bank Fraud Case
Mortgage pimps, realtors, “appraisers”….. they can’t be trusted.
Wall Street slumlords’ outrageous new scheme: How they could wreck the economy again
Wednesday, Nov 6, 2013 07:44 AM EST
You’d think that investors would run away from a new Wall Street innovation as fast as Congress runs away from a good idea. But instead, they’re flocking to the latest product peddled by large banking interests, even though they look almost exactly like the mortgage-backed securities that were a primary driver of the financial crisis. These new securities, backed by rental payments, also have real-world implications for millions of renters, who could end up turning in their monthly checks to Wall Street-based absentee slumlords.
Over the past couple of years, private equity firms and hedge funds have bought up over 200,000 single-family homes, mostly discounted foreclosed properties in communities wrecked by the housing crash, such as Phoenix, Atlanta, Tampa, Sacramento, Los Angeles and Riverside, Calif. They have spent billions to scoop up these vacant homes at fire-sale prices, renovate them, and rent them out, promising investors double-digit annual returns on the rental revenue. Private equity firms like Blackstone, which owns more than 40,000 single-family homes, think they can build an entirely new asset class out of this scheme, controlling the rental market for single-family homes. The irony is rich: Wall Street created the conditions for millions of foreclosures, then they sweep in to buy up the homes and rent them out, often to the same people they kicked onto the street.
In order for this to work, firms need cash to outbid the competition. So Blackstone teamed with Deutsche Bank, Credit Suisse and JPMorgan Chase to put together the first-ever rental revenue bond, named “Invitation Homes 2013-SFR1.” Basically, Blackstone took out mortgages with the banks on 3,207 of its rental properties, in exchange for $479 million in cash, and they will forward rental payments to the bondholders to pay back the loan.
The problem mirrors issues that bedeviled securitized mortgages. In that instance, lenders had no concern for the well-being of the homeowners, because they sold off their loans to other investors. Here, Blackstone passes off the day-to-day operations to local property managers, who get paid whether they perform repairs or not. In fact, Wall Street firms apply plenty of pressure to fix up homes cheaply and quickly, to get them in shape for rental and kick-start the monthly payments. So there’s no reason for anyone in the process to care about quality.
Strong tenant laws are supposed to counteract this slumlord misbehavior. But what if investment firms corner the market on rental homes and use political influence to subvert those laws? That’s already happening in places like Huber Heights, Ohio, where Magnetar Capital now owns nearly 10 percent of the homes. They have appealed to the city to cut their property taxes, a windfall that would save Magnetar $1.39 million.
The potential for abuse is high, because there’s so much money on the line. As institutional investors increase their purchases in cities, they muscle out traditional homebuyers for the scarce properties available. And the added market share allows them to be even more brazen. Residents of the largest apartment complex in Manhattan, Stuyvesant Town, are facing large mid-lease rent increases after ownership reverted to CWCapital Asset Management. You can easily see a trend here, as Wall Street firms use their wealth and power to mute opposition from city councils and demand more from renters.
http://www.salon.com/2013/11/06/wall_street_slumlords_outrageous_new_scheme_how_they_could_wreck_economy_again/ - 198k -
You can easily see a trend here, as Wall Street firms use their wealth and power to mute opposition from city councils and demand more from renters.”
Wait until they sell out to the Chinese, you think they demand allot now?
And imagine the losses when the rug gets pulled out from under US assets. Roc center x1000.
DETROIT (AP) — Detroit is eligible to shed billions in debt in the largest public bankruptcy in U.S. history, a judge said Tuesday in a long-awaited decision that now shifts the case toward how the city will accomplish that task.
Judge Steven Rhodes turned down objections from unions, pension funds and retirees, which, like other creditors, could lose under any plan to solve $18 billion in long-term liabilities.
But that plan isn’t on the judge’s desk yet. The issue for Rhodes, who presided over a nine-day trial, was whether Detroit met specific conditions under federal law to stay in bankruptcy court and turn its finances around after years of mismanagement, chronic population loss and collapse of the middle class.
The city has argued that it needs bankruptcy protection for the sake of beleaguered residents suffering from poor services such as slow to nonexistent police response, darkened streetlights and erratic garbage pickup — a concern mentioned by the judge during the trial.
“This once proud and prosperous city can’t pay its debts. It’s insolvent. It’s eligible for bankruptcy,” Rhodes said in announcing his decision. “At the same time, it also has an opportunity for a fresh start.”
Detroit will be the established roadmap for municipal bankruptcy for all the California counties and cities teetering on the edge.
Charlotte’s Wall Street landlords move quickly to evict renters
By Andrew Dunn The Charlotte Observer
Posted: Sunday, Nov. 10, 2013
The Wall Street-backed investment firms that have bought Charlotte homes by the hundreds are moving with unusual speed to evict their new renters when payments don’t come in as expected.
Court documents and interviews with more than a half-dozen current and former tenants show these new companies have brought with them an aggressive stance toward collections that has caught longtime renters by surprise.
It’s the latest sign of how Wall Street’s entry into the local single-family home market has transformed that corner of Charlotte’s housing sector.
Doretha Johnson, 59, had rented a home near North Graham Street and Interstate 85 for nearly four years when her landlord sold it to a subsidiary of Blackstone, a Wall Street private equity giant. The house’s new owner, Invitation Homes, raised the rent by a third, beyond what she said her fixed income would bear.
In the shuffle of ownership, Johnson paid her old rate of $650 when $875 was due. She received a notice of eviction.
She offered to pay $875 for another month or two in exchange for time to find a new place to live. The answer was no. She was forced to leave in late October.
“They’re buying people’s houses, but they don’t care about people,” Johnson said. “They just care about money.”
Lured by low home prices in the wake of the recession, Invitation Homes and other large investment companies have bought up wide swaths of single-family houses across the country. They started in states devastated by the housing collapse, such as Nevada and Florida, and quickly branched out. They began stepping up their Charlotte purchases in March, and today they own more than 2,200.
A marked rise in evictions
In general, the homes are worth between $100,000 and $200,000. They’re clustered in middle-class neighborhoods stretching from the Steele Creek area, to Huntersville, to the Interstate 485 corridor in eastern Mecklenburg County.
Combined, their purchases have made Charlotte the second-busiest market in the country among single-family home investors. Over the summer, one in every five Charlotte-area homes sold was bought by an investment group.
Since then, these Wall Street-backed landlords have aggressively moved to evict people from their homes if payment doesn’t come in as scheduled, current and former tenants say.
To be sure, evictions are an inevitable part of the rental business. But local real estate veterans say the investment companies’ rapid evictions differ markedly from the stance of many mom-and-pop landlords, who work with renters during difficult months as they try to avoid costly tenant turnover.
Johnson’s case is among more than 240 eviction proceedings filed in Mecklenburg County’s small claims court by the four largest investment companies in the past few months.
Invitation Homes, which bills its housing investments as “a bet on America,” has begun eviction proceedings on about 10 percent of its Charlotte portfolio in just a few months, court and property records show.
http://www.charlotteobserver.com/2013/11/10/4452995/charlottes-wall-street-landlords.html - 238k
That’s a pretty misleading article. The issue here isn’t that the investors are faster evictors than the old landlords. No, what’s noteworthy is that the investors are evicting faster because they jack up the rent by one-third in a month.
They will have a lot of evicting to do. The only way that ANYone will be able to pay those rents is by shacking up. If every Doretha Johnson got a roommate, they could afford the rent. Eventually, half the units will be occupied at high rent and the other half will be empty at NO rent. Yet another game of musical chairs among investors. When the music stops, the trick is to make sure that your units are the occupied ones, and your competitor’s units are empty.
We’re setting up for another scenario where there are houses with no people and people with no houses.
No worries, these investment companies already have their strategy all planned. When the number of empty units due to rent increases gets too high for them to make any profit, they’ll be pounding on the government’s door demanding a bailout.
And if the government was smart it would say “You already got a bailout. No more. Buh-bye!”
Gov. Romney basically said this in his campaign. I think he was in Nevada at the time.
Housing markets rebound faster when foreclosures proceed quickly
Home prices are rising faster in ‘nonjudicial’ states such as California, where foreclosures can be carried out without being tied up in court procedures for years.
WASHINGTON — Why have many of the local housing markets that were hit hardest during the bust — especially in California — bounced back so vigorously and quickly, with prices close to or exceeding where they were in 2005 and 2006?
And why have many others along the East Coast and in the Midwest had a slower move toward recovery, with sluggish sales and gradual increases in values?
Though multiple economic factors are at work, appraisal industry experts believe that they have isolated a crucial and perhaps surprising answer: Real estate markets rebound much faster in areas where state law permits foreclosures to proceed quickly, moving homes with defaulted loans into new owners’ hands expeditiously, rather than allowing them to sit and deteriorate, tied up in court procedures for years. Prices of foreclosed homes in such areas typically are depressed and negatively affect values of neighboring properties, but they don’t remain so for lengthy periods because investors and other buyers swoop in and return them to residential use rapidly.
By contrast, in states where laws allow large numbers of homes in the process of foreclosure to remain in legal limbo, often empty and unsold, home-price recoveries are hindered because lenders are prevented from recovering and reselling the units to buyers who will fix them up and add value.
Pro Teck Valuation Services, a national appraisal firm in Waltham, Mass., recently completed research in 30 major metropolitan areas that dramatically illustrates the point. All the fastest-rebounding markets in October — those with strong sales, price increases and low inventories of unsold houses — were located in so-called nonjudicial states, where foreclosures can proceed without the intervention of courts.
All the worst-performing markets — where prices and sales have been less robust and there are excessive numbers of houses available but unsold — were located in judicial states, where post-default proceedings can stall foreclosure completions for two to three years or even more in some cases.
Among the best-performing areas were California markets such as Los Angeles and San Diego. California is a nonjudicial state. Among the worst performers were Florida markets such as Tampa and Fort Myers, as well as parts of Illinois and Wisconsin. All of these are judicial states.
Not until the 4.4 MILLION excess, empty and defaulted houses in California are disposed of.
I think I’ve been saying this for a while now (over a year).
Where there are lots of foreclosures, there are what I call lots of “differently motivated” sellers.
The guys who buy at foreclosure auctions to “flip” have hot money…they have promised returns at a rate of 20% annually to their investors.
How do they achieve these returns?
Speed. They want to buy and sell homes quickly.
During the downturn, how did they avoid issues that could make homes sell less quickly (contingencies and the properties not appraising)?
They priced homes aggressively, so that the appraisal wouldn’t be a problem, and they could appeal to “as-is” buyers.
Lots of foreclosures caused/exacerbated the negative price spiral.
Market value for a home is $200k (properly marketed, not distressed, etc.).
Foreclosure flipper assumes that they will sell for $190k. They buy at auction based on making a profit if they sell for $190k.
Perhaps the auction purchase is at $150k…many data sources don’t call this a “market” sale, and don’t include it in their analysis.
HOWEVER, when the “flipper” sells for $190k, even though they are “differently motivated” (speed is their primary motivation), THAT sale counts toward the analysis.
The “differently motivated” sellers, when there are enough of them, constantly push home sales prices below the most recent comps to keep up with speedy sales, driving prices even further down.
Until prices fall to a level where people want to buy and hold them long-term for rentals.
And then you see the number of “differently motivated” sellers shrink considerably, and prices rebound.
You get this strong negative feedback loop if you have lots of foreclosure auctions (non-judicial states), the feedback loop is weaker in judicial states. Once the foreclosures burn themselves out, it’s like lifting your foot off a mattress, as this negative feedback loop disappears.
That doesn’t work in the current environment and at current asking prices.
Remember, a house depreciates and results in a loss ALWAYS.
Here in Arizona, there are still quite a few zombie foreclosures. There are houses sitting here empty. In some cases, for years.
I thought the title of this article was cute. Convenient fiction about who’s actually in charge.
JPMorgan, Goldman Sachs Capital Plans Clear Fed Review
By Hugh Son & Michael J. Moore - Dec 2, 2013 8:23 PM ET
JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS), the world’s biggest trading firms, had their revised capital plans for 2013 cleared by the Federal Reserve yesterday, a month before next year’s submissions are required.
Fed officials will be seeking jobs on Wall Street. Just like Geithner just a few months after his leaving the Treasury Secretary post. When Jamie or Lloyd say ‘Jump’, they have one question: How high?
Thats the sound of collapsing housing demand and prices…. coming to your neighborhood.
“Real estate agents plead guilty to bank fraud in short sales”
In every state, in every town in America, there are people getting ripped off on housing.
San Diego Housing Prices Down 11% YoY, Inventory Up A Whopping 50%
Get what you can get for your house today because it’s going to be much less tomorrow for decades to come.
Those are list prices; the relationship to sale prices, which are more directly linked to market value, is unclear.
That said, there are some very interesting patterns to note in the San Diego median list price data:
1) Unless there was a higher peak list price before the $569,000 level reached on July 31, 2009, then the second peak of $579,000 reached on March 31, 2013 was the highest ever on record.
2) In the eight-month period from March 31, 2013 through December 2, 2013, median list prices in San Diego fell to $480,000 — a drop of $99,000, or about 17%.
3) The drop in San Diego’s median list price since March 31, 2013 has occurred at an annualized rate of ((480/579)^(12/8)-1)*100% = -24.5%.
4) The drop mentioned above occurred against the backdrop of a very small increase in mortgage rates, to a level which remains far below historic norms.
What a crapper if you bought pre-March ‘13!! Euphoria turns to desperation. ” Yeah, I’m the highest bidder…Crap, I overpaid!!!!”
“The median listing price in San Diego went down from November to December. There were a total of 131 price increases and 623 price decreases.”
very expensive to get sick these days..
The American healthcare system is fubar’d beyond repair.
“very expensive to get sick these days..”
+1 For now Kaiser leads the way!
but where does the money come from ? ha check out this total laundering at HSBC
Cruz charges that the 1,000 pages of customer account records suggest HSBC relied on identity theft to capture legitimate Social Security numbers that were then used to create the bogus retail and commercial bank accounts through which employees systematically deposited and withdrew hundreds of millions of dollars on a daily basis, apparently without the knowledge of the identity theft victims.
“When an individual finds out they got a loan they never knew about, 5 percent of that loan went to the accounting firm that made up the phony tax returns, and the other 95 percent of that loan went to the manager,” he said.
“One manager was involved in the transaction, another manager was involved in notarizing the transaction, and senior management was involved where they signed off permission to give the loans even when the loans get rejected by underwriting.”
Saudis are deporting foreign workers to make room for its young people in the job market, what a concept, go to the link about unemployment:
RIYADH, Saudi Arabia – Garbage is piling up on streets around the mosque housing the burial site of the Prophet Muhammad. Grocery stores have shut their doors and almost half of Saudi Arabia’s small construction firms have stopped working on projects.
The mess is because foreign workers on which many businesses rely are fleeing, have gone into hiding or are under arrest amid a crackdown launched Nov. 4 targeting the kingdom’s 9 million migrant laborers. Decades of lax immigration enforcement allowed migrants to take low-wage manual, clerical and service jobs that the kingdom’s own citizens shunned for better paying, more comfortable work.
“Bove says the banks he spoke with won’t be able to provide 30-year mortgages in large quantities without Fannie Mae and Freddie Mac in the markets. “I’ve called a number of very large banks – the largest issuers of mortgages in the United States – and asked them, ‘If there was no Fannie and Freddie, what would be the typical mortgage in the United States?’ And, the answer is a 10- to 15-year adjustable rate mortgage.”
The end of Fannie Mae and Freddie Mac is a major sea-change in how the government views affordable housing, according to Bove.
“It is no longer the goal of the United States government that every household should have its own home,” say Bove. “In my view, that’s a call for a return of public housing and all of the ills that went with public housing.”
Public housing ? Maybe he means private housing with Blackstone etc.
It’s BS. What the guy means is :the banks he spoke with won’t be able to provide 30-year mortgages in large quantities at Bubble-era interest rates in support of Bubble-era home prices without Fannie Mae and Freddie Mac in the markets.”
They probably couldn’t afford to have security built into Obamacare site.
Published: 11/22/2013 at 11:31 PM
By spending $650 million on a no-bid contract, awarded to a firm with political connections to the White House, for the problem-plagued Obamacare website
Read more at http://www.wnd.com/2013/11/what-to-do-if-when-obamacare-collapses/#moA4QGvkuRAyRpA0.99
http://www.wnd.com/2013/11/what-to-do-if-when-obamacare-collapses/ - 51k -
No security ever built into Obamacare site: Hacker
Published: Monday, 25 Nov 2013 | 9:54 AM ET
It could take a year to secure the risk of “high exposures” of personal information on the federal Obamacare online exchange, a cybersecurity expert told CNBC on Monday.
“When you develop a website, you develop it with security in mind. And it doesn’t appear to have happened this time,” said David Kennedy, a so-called “white hat” hacker who tests online security by breaching websites. He testified on Capitol Hill about the flaws of HealthCare.gov last week.
“It’s really hard to go back and fix the security around it because security wasn’t built into it,” said Kennedy, chief executive of TrustedSec. “We’re talking multiple months to over a year to at least address some of the critical-to-high exposures on the website itself.”
(Read more: Shh! Obamacare enrollment errors)
According to the Department of Health and Human Services, which oversaw the implementation of the website, the components used to build the site are compliant with standards set by Federal security authorities.
“The privacy and security of consumers’ personal information are a top priority for us. Security testing happens on an ongoing basis using industry best practices to appropriately safeguard consumers’ personal information,” said the spokesperson.
Another online security expert—who spoke at last week’s House hearing and then on CNBC—said the federal Obamacare website needs to be shut down and rebuilt from scratch. Morgan Wright, CEO of Crowd Sourced Investigations said: “There’s not a plan to fix this that meets the sniff test of being reasonable.”
(Read more: How GOP should react to Obamacare mess)
Last month, a Sept. 27 government memorandum surfaced in which two HHS officials said the security of the site had not been properly tested before it opened, creating “a high risk.”
HHS had explained then that steps were taken to ease security concerns after the memo was written, and that consumer information was secure. Technicians fixed a security bug in the password reset function in late October, the agency said.
But on CNBC, Kennedy disputed those claims, saying vulnerabilities remain on “everything from hacking someone’s computer so when you visit the website it actually tries to hack your computer back, all the way to being able to extract email addresses, users names—first name, last name—[and] locations.”
Government officials and contractors have been working around the clock for weeks, releasing fixes on HealthCare.gov nightly with the goal of meeting the Obama administration’s self-imposed deadline of the end of the month to have the site working smoothly.
“When you look at the site itself, it could be really good. It could do really well. They’re just not building the security into the site itself,” said Kennedy. “Putting your information on there is definitely a risk.”
The federal portal serves 36 states not operating their own health insurance exchanges. Fourteen other states and the District of Columbia run their own marketplaces. All of them launched on Oct. 1 as part of the Obamacare provision mandating most Americans have health-care coverage for next year or face tax penalties.
(Read more: Obama needs to heed insurers: Ex-HHS chief)
Kennedy said those state-operated exchanges also face security risks. “These are going to be a large area for attack.” He pointed to a problem on the Vermont website on Friday. Officials overseeing the Vermont Health Connect website confirmed a security breach on the system last month.
When it comes to securing personal information online, Kennedy cited Amazon, Facebook, and Twitter as models for the industry. He even said the IRS website does regular testing to help “ensure that when the websites come out they’re protected.”
http://www.cnbc.com/id/101225308 - 86k
“He even said the IRS website does regular testing to help “ensure that when the websites come out they’re protected.”
You mean the IRS could have helped?
Oh that’s right, they were to busy hunting Teabaggers.
Hey Lois, could you give me a hand?
Shhh. Be vewy vewy quiet, I’m hunting Teabaggers.
Oh that’s right, they were too busy hunting Teabaggers.
I know things like to instead of too are like nails on a chalkboard to some of you guys.
things like to instead of too are like nails on a chalkboard
dont fret. its a blog not a english exam
Ben, busier than ever… thanks for the Oly post over Thanksgiving.
“Re-casting an 80’s debate into what we are facing today is likely to get us nowhere.”
But the music!
Let’s play a game. To add a dislike or a like, you have to add one for both parties.
Here is what I don’t like about Democrats:
Here is what I don’t like about Republicans:
Here is what I like about Democrats:
Here is what I like about Republicans:
Folks in high places are starting to question the rationale to support the debt bubble hair-of-the-dog hangover cure.
ft dot com
UK must be more alert to housing bubble risks
By John Plender
Tackling excessive debt by asking people to take on more is lunacy
Is the global economy confronting another rash of housing bubbles? In the aftermath of the most recent housing crash in the US, which saw real house prices fall by more than 40 per cent nationwide, that seems counter-intuitive. Excessive real estate lending was, after all, at the very heart of the great financial crisis. To forecast a repeat performance in short order would imply a collective memory loss in banking of quite colossal dimensions.
Yet as Nouriel Roubini of Roubini Global Economics points out, signs of frothiness, if not outright bubbles, are reappearing in housing markets in Switzerland, Sweden, Norway, Finland, France, Germany, Canada, Australia, New Zealand and the UK. In emerging markets, bubbles are also appearing in Hong Kong, Singapore, China, and Israel, and in major urban centres in Turkey, India, Indonesia, and Brazil. It is therefore worth considering scenarios in which politicians and central bankers might unleash a return to house price bubbles.
The obvious starting point is the UK, where three of the most sacred cows of the postwar political economy have been home ownership, rising house prices and veneration for first time buyers. This desire to promote home ownership encouraged a tolerance of inflation along with relative neglect of enterprise. It also created the illusion that if house prices were going up and people felt richer, the economy must be doing well too.
For a time, it looked as though this deep seated obsession might come to an end after the departure of Margaret Thatcher from office. That was because the 1989-1992 house price boom and bust cast the housing market in a less attractive light, leaving many mortgagors with negative equity. Policy took a symbolic turn when Norman Lamont, Conservative chancellor in John Major’s government, removed mortgage relief for higher rate taxpayers in 1991. After being allowed to dwindle as inflation eroded the value of the relief, it was finally abolished by a Labour chancellor, Gordon Brown, in 2000. At the same time fewer and fewer new homes were built.
One reason why the British may be less alert to the risk of a housing bubble today is that the crisis-related peak-to-trough fall in UK house prices was only 17 per cent, according to the LSL Acadametrics index, far less than in the US. That was partly a reflection of the lack of new homes built before and during the crisis. Mortgage defaults were also low because British employers were less keen to lay off employees than their US equivalents. The real damage to the big UK banks came more from commercial property lending, ill-judged acquisitions and toxic structured products than from residential property.
Another reason is that today’s Tory-led coalition has reinstated the sacred cows. Its Help-to-Buy mortgage guarantee scheme, which encourages high loan-to-value lending, now extends not only to new homes but to the outstanding housing stock. The logic is similar to the 1980s. Then, the economy appeared to have lost its capacity for spontaneous innovation and growth, so throwing debt at it seemed the only way of keeping up living standards. Today it is the debt hangover from the crisis that results in anaemic growth, so cranking up the housing market with more debt is an electorally tempting strategy.
That said, addressing a problem of excessive debt by encouraging people to take on more debt borders on lunacy. It is also more dangerous than in the 1980s – and not just because the UK household debt-to-income ratio of 140 per cent is much higher than in the US and the eurozone. Back then inflation was so high that while real house prices went down in a housing bust, nominal prices remained pretty stable. So banks did not have to make big write-offs. From the borrowers’ perspective the value of the debt eroded and real interest rates remained negative as they waited for the value of the home to go back up.
Here is a newfangled theory, and you guys feel free to let me know if you think I am off base here.
But suppose the federally guaranteed mortgages in excess of $600K to California home buyers was brought back in line with the rest of the country’s federal mortgage guarantees. Wouldn’t that help level the playing field between overpriced housing markets in California and deeply depressed markets elsewhere, as Californians would be motivated to sell and relocate to cheaper environs, rather than holding on to falling knife residential property in California. And Joe Sixpack in Flyover Country would no longer be forced to help California millionaires purchase expensive homes.
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