Getting The Message Perfectly Clear
Readers suggested a topic on used house salespeople. “I’d love to see a ’self proclaimed realtor posting’ index for this blog. I know some folks like to accuse people of being realtors, but there are plenty that gladly offer it up. The index would be for the number of distinct self-proclaimed realtors that post on the blog in any given week.”
“I remember there being lots of them in the early days, and then near silence during the crash, and now they seem to be creeping back into the mix. It’s an interesting contrarion index…the louder they yell (more frequent they post), the more bubbly the market.”
A reply, “You’re just sour grapes because you missed the recovery. Living in a rental will never feel like a real home.”
From News Wire. “For the first time since 2007, there was a monthly increase in the number of Real Estate Licenses. ‘The Market is turning around, and more people are seeing opportunity and jumping on it’ said Nick Dexter, Branch Production Manager of W.J. Bradley Temecula Home Loan Center.”
“Although the California housing market has shown volatility recently, recording as much as 20 percent swings in average housing prices, this is normal for a dynamic market and presents opportunities for buyers and sellers alike. ‘This is a great time to be in the real estate business.’ Dexter says, ‘There are many opportunities to get outstanding deals on new homes and development is starting on several local projects that are going to increase the value of existing properties. A lot of people are looking back to real estate in California as a place to invest once again, and now is the time to get in the market.’”
Delaware News Zap. “Sussex County Association of Realtors reports continued growth across all segments of the market in the state’s southernmost and largest geographic county based on third-quarter data. And more good news from SCAOR: the final selling price for all three categories of single family homes are trending higher in 2013. ‘This is more great news for all of us, not only as Sussex County real estate professionals, but also as local residents,’ said Bob McVey, 2013 president of SCAOR. ‘As the real estate market goes, so goes the local economy. I think we’re getting that message perfectly clear right now here in Sussex County.’”
“‘I believe that the same reasons our markets held up better than most during the recession are the same reasons why it’s bounced back so quickly. Our proximity to the coastline, our lower tax rates and our higher quality of life continue to draw people here to Sussex County, and I believe that will continue,’ said Mr. McVey. ‘Our numbers are up, and I think a big reason for that is because residents of other states continue to see Delaware real estate as a strong investment, which, of course, it is.’”
The Houston County News. “According to a housing report compiled by Re/Max North Central, southeast Minnesota continues to see year-over-year increases in both the number of homes sold and the prices they’re selling for. La Crescent Re/Max agent Lynne Nelson noted that housing market trends in the area are changing. For the past couple of years, it has been a buyers’ market. Now that’s starting to shift, and in many cases, sellers are getting close to what they’re asking — and in some instances, more.”
“‘If they’re offered on the market at a fair price and buyers accept that, then they’re willing to pay their value in order to secure it,’ said Nelson, who’s being inducted into the Re/Max Hall of Fame. ‘We see that in what’s sold by the percentage of list price to sale price.’ That means buyers can’t necessarily expect to bargain when they consider an offer. And in several instances Nelson has seen, there are multiple offers coming in, lessening even more the leverage a buyer may have.”
“‘If they’re a good Realtor, (buyers) are going to be told that’s not going to happen,’ she said of lowball offers.”
‘Our numbers are up, and I think a big reason for that is because residents of other states continue to see Delaware real estate as a strong investment, which, of course, it is.’”
Yet, the reality is a single family residence is never an “investment”.
Realtors are simply ignorant or corrupt. There is no other conclusion.
“Our numbers are up…”
It must be different there in Delaware, as I recently saw a news report that indicated October used home sales were down across the US for the third month running. Hopefully someone can find the story and post it.
Erin Carlyle, Forbes Staff
Real estate: luxury homes and the people behind the big deals.
Business
12/19/2013 @ 10:35AM
Existing Home Sales Fall For 3rd Straight Month In November
Sales of previously owned homes fell for the third straight month in November, as prices continued to rise year-over-year, the National Association of Realtors reported Thursday.
The annual pace of existing home sales (which include single-family homes, townhomes, condominiums and co-ops) fell 4.3% to a seasonally adjusted annual rate of 4.90 million in November, down from 5.12 million in October. For the first time in 29 months, the pace is slower (by 1.2%) than the rate one year earlier. It’s also the lowest annual rate since December 2012.
“Home sales are hurt by higher mortgage interest rates, constrained inventory and continuing tight credit,” said Lawrence Yun, NAR chief economist. “There is a pent-up demand for both rental and owner-occupied housing as household formation will inevitably burst out, but the bottleneck is in limited housing supply, due to the slow recovery in new home construction. As such, rents are rising at the fastest pace in five years, while annual home prices are rising at the highest rate in eight years.”
…
I never heard of ones primary residence (owned) as an investment before the turn of this century. Who started that meme? A house you buy is not an investment.
Here are things I regard as NOT investments
1) T-bills - Just a place for safety and park your realized gains from investments to be used later for the corrections of investment classes.
2) Precious metals bullion - Insurance against big government.
3) Collector cars. Not an investment. But useful as a tangible perhaps. The lucky few do have value gains.
4) Your house - a place for you and your family. A shelter. The only investment in this is you invest in your neighbors decency to keep the value of your house reasonable and to keep a decent area for raising your kids.
“I never heard of ones primary residence (owned) as an investment before the turn of this century. Who started that meme? A house you buy is not an investment.”
BINGO
I’ve posed this question over and over again. Nobody can answer in a rational way. Nobody.
“I never heard of ones primary residence (owned) as an investment before the turn of this century.”
I believe this “investment home” meme gained traction in the seventies when inflation became the new normal. It worked great while housing and incomes inflated together. Biscuit?
I was a teen in most of the 70s so I did not notice. However my mom took a personal finance class in Junior college while I was at a state university. I was very interested in her text book. Never did it say your primary residence is a way to retirement or wealth.
Never! That was early 80s.
I agree with you.
However, you would be shocked at the number of high net worth wealth advisors who include a person’s primary residence in their real estate allocation.
I wonder if they include the person’s car alongside their Ford and GM stock holdings.
high net worth wealth advisors who include a person’s primary residence in their real estate allocation ??
When your zip code is 94303-06 then it probably should be included…
I have a bulletin for you two CaliClowns……. “high net worth” individuals aren’t interested in a depreciating millstone of a house around their necks. It’s the reason they’re “high net worth”.
I never heard of ones primary residence (owned) as an investment before the turn of this century.
Really? When I lived in SoCal in the 80’s and early 90’s (before the bust) everyone I knew who owned a house yammered about their growing equity. I knew more than a few people who bought rental properties and who owned more than one house (all with mortgages). I also knew people who flipped houses back then.
Yeah really.
Keyword: Investment
‘Nelson, who’s being inducted into the Re/Max Hall of Fame…“‘If they’re a good Realtor, (buyers) are going to be told that’s not going to happen,’ she said of lowball offers.’
I know some agents who are straight shooters. But I wonder where some learned this approach above. It’s not your job to lean on some one you are representing. Part of the problem is this:
‘As the real estate market goes, so goes the local economy’
This isn’t true, in fact it’s the exact opposite. But once you accept this, it’s easy to see booster-ism as down right patriotic! But some of this goes beyond booster-ism. If they are whispering lies in people ears, people that may be relying on them for the truth, it’s something else entirely.
BTW, I’ve got to meet a plumber here in a few minutes. Have you ever heard of a plumber being inducted into the plumbing hall of fame?
Indeed. This is precisely why the state of California is the most impoverished state in the nation.
Here’s the link;
California Most Impoverish State In The US
http://en.wikipedia.org/wiki/List_of_U.S._states_by_poverty_rate
(geography adjusted)
That’s an interesting map. The sunbelt, where home prices are massively inflated, also harbors the highest poverty rates.
The poors gather where the taxes are fattest.
I think technically Mississippi is the most impoverished state iirc. At one time it was.
Mississippi has the highest obesity rate, IIRC.
There is a young woman in the next building and she’s “as big as a house.” Her only exercise is to walk her tiny dog out to the lawn to take a dump.
Thyroid issues? There’s medicine for that. Physics principles apply. If you burn the carb calories you take in, it means it won’t go to fat. If you eat more carb calories than you burn it goes to fat. If you don’t burn, the fat piles onto the fat.
Obesity is a choice.
“Obesity is a choice.”
That’s racis’
Think again. California
“As the real estate market goes, so goes the local economy.”
As the real estate market goes, so goes the lender’s balance sheet.
Which, IMO, is at the root of what this is all about.
Save the banks and you will save the world. Allow the banks to fail and it all comes apart.
Whether this is true or not really does not matter. What really matters is that people believe this to be true - especially those people who are in positions of power. And the people who hold positions of power will believe this to be true because I helped select those who hold positions of power.
“You can’t lose with the stuff I use.” - Rev Ike
What’s it like being a govt. sponsored internet sock puppet….the jig is up with the propaganda being spewed
What’s it like being a government sponsored blog troll?
govt. sponsored internet sock puppet = government sponsored blog troll…
Thankz for the confirmation. ole buddy!
Ben
Plumber, oh joy. They give you the bs hourly rate and then flip it into a high priced project rate. I despise their marketing ploys. Plumbers do offer a service that’s not a monopoly, I’ll give them that.
They know you have no idea what you’re talking about. Why wouldn’t they rob you blind?
That’s what happens when you don’t know what you’re doing. You get ripped off.
LOL…That was funny Ben…
“Nelson, who’s being inducted into the Re/Max Hall of Fame…”
This is vomit inducing stuff. Realtor Hall of Fame? GAG. These people are nothing but parasites with their tentacles attached to the wallets of those who just want shelter over their head. I propose and END to Realtors, period. GET RID OF REALTORS and their commissions. They add NOTHING to the transaction. The feed, like a leech.
you should contribute more frequently.
Hangin’s too good for em… BURNIN’S too GOOD FOR EM! THEY SHOULD BE TORN INTO ITSY BITSY PIECES AND BURIED ALLIIIIIIVVVVEE!
A little extreme for typical realtor fraud isn’t it?
When I first read the blurb, I thought it said “indicted”, not “inducted”.
Have you ever heard of a plumber being inducted into the plumbing hall of fame?
No, but there should be one. The last plumber I had here was able to solder a shutoff valve onto the main supply line of my house while the city’s shut-off valve outside was leaking slowly. That’s supposed to be impossible,but he did it with a clever combination of a small tank of compressed air and a long thin bit of tubing he ran through the new valve, far into the supply line. He blew out the water with the compressed air, quickly soldered the valve before the leak cooled off the area, then shut the valve off & soldered the rest on.
I’ve soldered a few pipes myself. His solution was ingenious. I supplied the valve and he just charged me $50, what a deal.
Now whenever I leave my house over night I shut off the main water line and don’t worry about a water line breaking while I’m gone.
Let me understand this.
He mocked up your new valve, evacuated all the liquid from the piping downstream of the corporation stop with compressed air at a rate faster than the leak at the corp stop, allowing enough time to soldered the joints at the new valve.
I take it this is 1″ or 3/4″ rolled copper tubing?
I take it this is 1″ or 3/4″ rolled copper tubing?
Looked more like 3/8″ rolled copper tubing, straightened out to be about 3 feet long. That’s just my guess as to the tubing’s size. The copper tubing had the right O.D. to fit inside the I.D. of the main house supply line coming in through the basement wall, and also to fit inside the new valve in the fully open position. He blew the water in the line out back toward himself, and also back through the new valve which was in position but only fluxed in place. He ran some more air through to dry the pipe somewhat, then applied heat & solder.
We drove through Temecula yesterday en route to visit family in UT. What a clusterfork of congestian that community of priced-out San Diego commuters creates! The last time we hit a traffic snarl like that one was on the LA freeway.
If I had to sit in heavy traffic congestion every day, I’d have to have one of those Google cars which drives for me. I literally can’t handle the stop and go crawl for hours on end. It’s a broken model!
So is 21st century US.
I have 5 miles on I-5 and one mile on 405, then a mile through business complexes in Irvine. My 2003 ‘Yota still has under 75,000 miles on it. I move to where my job is and rent.
Another reason you don’t buy a house (besides encroaching section
is that it limits your money making opportunities or piles on commuting costs. Driving 90 minutes each way and no exercise is why people get fat and they have to buy roomy SUVs every 3 years to tuck their flab into the seats.
I like to buy houses during real-estate crashes for next to nothing, then rent them out at huge profits, and use my profits to pay my own rent. I move whenever I want for any reason. It’s cool.
“Huge profits”…..lolz
“We drove through Temecula yesterday en route to visit family in UT. What a clusterfork of congestian that community of priced-out San Diego commuters creates! The last time we hit a traffic snarl like that one was on the LA freeway.”
I can imagine a snarl at the the 15 and 215 intersection, or ??
The last time we hit a traffic snarl like that one was on the LA freeway.
I understand that southbound I-15 going into San Diego easily backs up all the way to Fallbrook and beyond.
I am so glad we left that hell hole.
Hi everyone. I’m not gonna buy health insurance until they let me have a catastrophic plan. That’s the only type of insurance that makes any sense. What about the rest of you?
Not me. I’ll just show up at the emergency room broke and make the hospital eat it.
and make the hospital eat it
More like make the “tax payer” or “insurance buyer” eat it…
‘tax payer’ or ‘insurance buyer’
So we’re back to the idea that if you don’t pay some huge corporation a monthly premium, you’re a deadbeat, eh?
Insurance is a scam. Hospitals and clinics are where you go to get screwed over and die. Do you know how many people die every year because of prescription drugs? Do you know how many young people are taking legal drugs every day, because some doctor lets them?
What ever happened to an apple a day keeps the doctor away? I haven’t seen a doctor for many years. The one time I did, a dermatologist, many years ago, I negotiated a payment of about 10% of insurance rates by paying cash.
High cost is the problem. Insurance is the cause of never-ending higher costs. I could say, you are making my health care unaffordable by buying insurance. But I’m not of the belief that I can tell you what to do with your life and money. If you want to deal with the devil, it’s your call. Just leave me out of it.
So we’re back to the idea that if you don’t pay some huge corporation a monthly premium, you’re a deadbeat, eh ??
Not suggesting anybody is a “deadbeat” Just stating the “fact” that when someone receives healthcare that they neither have insurance or the resources to pay for it, then “someone” pays wether it be the government via taxes or people via higher group insurance rates…
What ever happened to an apple a day keeps the doctor away? I haven’t seen a doctor for many years ??
I am quite sure that the human beings below have not had much time to eat many apples…What would you suggest we do with them if they don’t have insurance which, is likely many don’t;
http://www.google.com/aclk?sa=l&ai=CUNtjbS-3UqKjJsqCiQL4w4HIA6aAhrMCxrWY8heYkp96CAAQASgCUIT6mMQGYMnW-obIo6AZoAGK-on6A8gBAaoEJ0_QFxkBcBI5-8jlX-9o3UtuWjX7O0-ZNcov16yHPSGwCCgNM_mtAYAH3oX2BZAHAQ&sig=AOD64_0rLQkWBNN0gnDg4VhUPVDa3Rgi9g&rct=j&q=Childrens+hospital&ved=0CC4Q0Qw&adurl=http://www.ucsfbenioffchildrens.org
If you want to deal with the devil, it’s your call. Just leave me out of it ??
I get your strong desire for independents Ben…You may have some intense internal strength that allows you to tempt fate in that tragedy will not strike you god forbid…But the fundamental question really is, if it did strike what would you do ??
Here is where some go when they are ill, frail or broke wether it be self inflicted or not…
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CC8QFjAA&url=http%3A%2F%2Fwww.sacbee.com%2F2013%2F12%2F19%2F6015644%2Fstudy-at-least-500-homeless-people.html&ei=EjK3UpC7D4i8oQTG_4LwAQ&usg=AFQjCNGN0EMOFv_q7xt9UUdclhBP6B9o8g&sig2=5X653E0vp6CKHaVPNG8gTA&bvm=bv.58187178,d.cGU
‘if it did strike what would you do’
Not go to Obamacare, because it doesn’t work.
I’m aware of all the positions on all sides. But many including myself said this thing couldn’t work. Not because I was a psychic; I just paid attention to the process and it’s a half-assed grab bag of lobbyist dreams and bureaucrat wishes. It’s not single payer! It’s not what Canada has. We can’t afford to pay for all the things Obama wants to do. Even if you force it on us, we won’t have any money left for necessities and the economy will crash.
So why not have the government pay for it? One little problem; we’re broke. Canada hasn’t spent the entire worlds budget on military for 40 YEARS! You can’t ignore that. So even if you managed to get single payer passed, it would be just like Social Security; it will collapse just as the maximum number of people have come to rely on it and it’s too late to make a plan B. That isn’t compassionate. That isn’t smart.
The current system is collapsing, thats why they were so hot to do something about it. Obamacare IS plan B.
Think there will be a plan C?
I’m not buying insurance either. I’ll show up to the emergency room and stiff them as well. F**k ‘em. It’s working for the illegals, so I’ll take a page out of their book. We’ll see if “no speaka anglais” works with light brown hair and green eyes and a poor spanish accent.
I’ll show up to the emergency room and stiff them as well. F**k ‘em ?
Hell…What a outstanding idea…Lets all do it…Free $#it Army of America Health Care Program…Viva America free Healthcare…Sounding more like Cuba with each step…
If it’s ok for the goose, it’s ok for the gander, right? I mean, you’re not suggesting that it’s fine for illegals, but not legal citizens, are you scdave? I would sure hope not.
They’re dirtbags when they do it, and you’re a dirtbag when you do it. It’s a great way to earn your dirtbag badge.
As long as you don’t mind people thinking of you as a dirt bag, go for it! Just don’t get mad at us for thinking of you as a dirt bag.
That emergency room health care isn’t free. The price is the respect of your peers… and the chance that some overworked medical person might decide to put you down for the good of mankind.
Getting a little angry, aren’t you Russ. Why don’t you take your angry @ss and go do something about the illegal alien problem? Now git, boy!
Harney’s back at it:
‘Record rebound in home equity gives owners new options’
http://www.latimes.com/business/realestate/la-fi-harney-20131222,0,7456235.story#ixzz2oDMIdhEQ
A comment:
“What a stupid article. Encouraging people to borrow against the equity in their house to pay bills or college tuition is just wrong. Has everyone forgotten 2007 already?”
Nothing like financing your utilities for 30 years. LOLZ
‘Sales by Realtors in November of existing single-family homes and condos/townhomes shows though inventories of single-family homes increased from a year ago in all three Treasure Coast counties for the first time since the recession, those increases are still not keeping pace with sales.’
https://www.tcpalm.com/news/2013/dec/20/housing-inventory-increased-in-november-compared/
If the inventory increased, it more than kept up with sales.
‘(Source: NAR) – Existing-home sales fell in November, although median prices continue to show strong year-over-year growth, according to the National Association of Realtors®.Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, dropped 4.3 percent to a seasonally adjusted annual rate of 4.90 million in November from 5.12 million in October, and are 1.2 percent below the 4.96 million-unit pace in November 2012. This is the first time in 29 months that sales were below year-ago levels.’
‘Lawrence Yun, NAR chief economist, said the market is being squeezed. “Home sales are hurt by higher mortgage interest rates, constrained inventory and continuing tight credit,” he said. “There is a pent-up demand for both rental and owner-occupied housing as household formation will inevitably burst out, but the bottleneck is in limited housing supply, due to the slow recovery in new home construction. As such, rents are rising at the fastest pace in five years, while annual home prices are rising at the highest rate in eight years.”
http://www.loansafe.org/nar-housing-market-squeezed-inventory-mortgage-rates
‘the bottleneck is in limited housing supply, due to the slow recovery in new home construction’
No it isn’t. The “bottle neck” is millions of houses being held back by banks and the GSE’s, combined with the poor bastards trapped underwater in houses you dogs sold them, all the while singing about the prosperity they would reap.
‘household formation will inevitably burst out’
It surely saddens these UHS that people are leaving loan-ownership behind by the thousands and becoming renters. Worry not Mr Yun, I’m sure Blackstone and company have your commissions high on their priority list.
This “constrained inventory” fallacy is laughable.
25 MILLION excess, empty and defaulted houses in the US is constrained inventory?
You can’t trust a word Yun/Realtor says.
“…dropped 4.3 percent to a seasonally adjusted annual rate of 4.90 million in November from 5.12 million in October, and are 1.2 percent below the 4.96 million-unit pace in November 2012. This is the first time in 29 months that sales were below year-ago levels.’”
Ker Plunk! Buy at Wal-mart!!
I was much more active in posting in 2005-07, and this blog saved me by my seeing the light and selling my Central Valley (Calif) house in 2005 and renting until 2011 where I bought in another (much less expensive) part of the country.
While I don’t see housing as being particularly cheap, the fact is most markets are not horribly off the mark, excepting the immediate coasts. My thought is housing prices overall will be relatively steady to slightly down over the next five years.
The big bubble, IMHO, is in US stocks. Almost triple gains in four and a half years, with virtually any relevant historical measure suggesting overvaluation of 35-55%. Also, most stock bugs have become very smug and very defensive of their gains…sentiment which often marks a top. But the MSM seems to be pushing stocks much more than housing as a wealth-generation vehicle at this particular time. I’m so amazed how quickly people have forgotten about the pain the stock market can inflict: 40%+ down 2000-2002; 55% down 2007-09…yet here we are again…another bubble waiting to burst. I guess people really have convinced themselves that “this time is different” when it comes to stocks due to the perceived FED backstop. Yeah, right.
I guess people really have convinced themselves that “this time is different” when it comes to stocks due to the perceived FED backstop ??
Well, it is in fact different “this time” compared to the two “pops” that you offer because of the FED…It being different does not necessarily make the end result different but what the FED has done is new uncharted territory…
‘the fact is most markets are not horribly off the mark’
I could bring a lot of things up, but let’s stick to this one point. You say it’s a fact. How do you know? The median price (a flawed statistic, I know) in greater Phoenix went up 71% from 2011 to 2013. Of course, we’re all told it fell too far, etc. But what ultimately decides the price of anything?
The market, right? Not you, not me, not Bernanke. This is the problem; there is almost nothing being decided by market forces in housing. The biggest market force being distorted is credit. What happened a few years ago, when prices fell? The government took over the lending business. They actually raised caps on lending when prices were falling! Who the hell in their right mind would do that?
Who would make a 200% LTV loan to someone who had already defaulted on a previous house loan? The US government has made 2 million of these loans, even though they re-default over 30% of the time within two years.
Who told the banks/GSE’s they didn’t have to foreclose, or didn’t have to sell when they did foreclose? The US government. Who is it that drove mortgage interest rates down to under 3 freaking percent, after the biggest credit disaster in modern history? Not the market; it was the central banks. Isn’t this how investors have borrowed huge sums to buy thousands of foreclosures?
I ask you, have any of these “interventions” resulted in lower house prices? Isn’t it interesting that all of these actions have been intended to raise prices or reduce market pressures that would lower prices?
Which brings me back to my main point; Blackstone doesn’t know what any given house is “worth”. Only a market transaction, in market conditions, between a seller and end user can determine that. Until we get that, we have no idea what these houses are worth. But for the reasons above, I’m pretty sure it’s less than current asking prices.
It’s changing. Next month several things that the government does will actually serve to lower prices, mainly on the lending side. I don’t think it’s a coincidence that this is happening all at once.
Good point, as always, Ben. And I agree.
Another example:
‘Baltimore, MD – December 19, 2013 – Attorney General Douglas F. Gansler, joined by 42 state and territorial attorneys general, today urged Congress to extend the Mortgage Forgiveness Tax Relief Act through at least 2014, in order to continue helping financially strapped homeowners. The Act expires on December 31 at a time when the housing market, while still fragile, has shown signs of gradual improvement over the past year.’
“Thousands of Maryland families who have been able to get mortgage debt relief should not face a tax bill they cannot afford,” said Attorney General Gansler. “Letting this tax relief expire would undercut the purpose of the mortgage settlements. It’s vital to helping families stay in their homes and to continue the housing market recovery that supports and stabilizes so many Maryland communities.”
http://maryland.realestaterama.com/2013/12/19/ag-gansler-urges-congress-to-extend-tax-relief-for-struggling-homeowners-ID0505.html
‘It’s vital to helping families stay in their homes and to continue the housing market recovery’
‘It’s vital to helping families stay in their homes and to continue the housing market recovery’
Who in the hell in their right mind calls a return to the very problem a recovery? The problem was expensive houses which nobody could afford so they defaulted, but now the solution is a return to those prices? Wake up, STUPID!
Who in the hell in their right mind calls a return to the very problem a recovery?
Why would you think that people moving out of houses that they cannot afford is “a return to the very problem” that we had initially? It doesn’t look that way to me at all!
I would argue that every time someone moves out of a house that they cannot afford, the market has taken a tiny step in the direction of a return to sanity.
If allowing them to do so without taking a huge tax hit encourages them to take this corrective action, then that is a good thing—as in the aggregate, it might help return the market to some semblance of sanity.
This is one of the very few government actions that doesn’t strike me as counterproductive.
“I don’t think it’s a coincidence that this is happening all at once.”
Which suggests that perhaps something is forcing a move to stop encouraging Americans by the millions to buy homes they can’t afford.
But what? That is, what is to stop the PTB from keeping the mortgage lending punch bowl heavily spiked with Bacardi 151 forever?
CPM’s Jeff Christian Shuns Bitcoins,
Advises
25% stocks
20% REITS
30% Cash and Cash equivalents (probably T-bills)
25% Commodities (mostly precious metals)
Regarding Bitcoin investors:
“Bitcoin investors seem to have been in a coma the past several decades, and probably slept through their school years.”
http://www.kitco.com/news/2013-12-20/experts-David-Morgan-Jeff-Christian-Don-Coxe-Frank-Holmes-investment-outlook-2014.html#
That is a reasonable asset allocation for the next three years. But after that I would change it to 65% stocks, 5% REITS, 10% precious metals - physical kind and 20% cash, T-bills, 2 year notes, and series I savings bonds.
‘On Friday, fears of another quarter-end credit crunch drove money-market rates in China sharply higher despite emergency central bank intervention announced Thursday. In the last five business days, interbank rates have doubled.’
‘Beijing’s statistics hide the extent of the problem. As Anne Stevenson-Yang of J Capital Research in Beijing points out, the prudential standards of Chinese banks are “deceptively low” because they have pushed “apparent risk into a cascading series of shadow institutions in order to realize rate arbitrage.” What looks like a 20% reserve requirement ratio is really 15%, she notes, and what looks like a 75% loan-to-deposit ratio is around 90%.’
‘Even without adding in shadow banking exposure, China’s banks are undoubtedly balance-sheet insolvent if their assets were classified according to international standards. Yet these institutions have always remained liquid. Now, as we have seen at the end of this quarter and the second one, they are beginning to run out of cash.’
‘Chinese technocrats need to tighten because of systemic flaws, especially runaway debt creation. Last year, China’s risk-laden shadow banking sector grew 42% according to one estimate, and credit overall may have soared by almost a third. If credit grew by only 20%—a conservative estimate one hears—then debt is increasing more than twice as fast as officially stated gross domestic product. My sense, based on guesses as to the extent of back-channel lending and more realistic GDP figures, is that credit is growing about seven times faster than the economy. In any event, Beijing has no choice but to rein in credit.’
“If China is insolvent, why haven’t there been any big defaults yet?” asks Quartz’s Guilford. “Here’s why: China’s shadow lending system keeps credit pumping to insolvent companies, so no one can tell that they’re bankrupt.”
‘“We believe the PBOC is faced with some serious challenges with rapid unfolding of bottom-up interest rate liberalization and is confused on whether to target volume or rates of liquidity,” writes the normally optimistic Lu Ting from Bank of America Merrill Lynch. “With its limited predictability of flows and its insensitivity to market reactions, the PBOC finds it much more likely than before to make operation mistakes.”
‘The problem is even worse than the oft-quoted analyst thinks. Lu assumes that the central bank has a way forward. Yet it is much more likely that there is none. Chinese technocrats continually talk about “reform” and the need to accept lower growth rates, but they always flinch, falling back on state stimulus and rampant credit creation when growth rates falter. They do that, I suspect, because they know restructuring would cause the economy to fail. ‘
‘If Beijing could implement reform, it would have done so by now.’
http://www.forbes.com/sites/gordonchang/2013/12/22/in-china-rates-soar-stocks-fall-businesses-fail/
‘Now, as we have seen at the end of this quarter and the second one, they are beginning to run out of cash.’
Is the fat lady beginning to sing?
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