January 4, 2014

Bits Bucket for January 4, 2014

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




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243 Comments »

Comment by jane
2014-01-04 02:22:38

Happy belated New Year, all!

I picked my nose up from problem sets yesterday to notice that Carl Morris (of low cost living, financial freedom fame) is now in Shanghai. What I did not catch (because I did not read HBB that day) is whether this is a biz trip or a perma-move.

Whichever, Good fortune to you and your family, Carl! Despite the pollution. It’s mind-expanding to integrate into a different culture, even if it’s one week here and one week there (in the case of a biz trip).

In the long term instance, think how many new brain cells your kids will have grown in response to interpreting the world through a whole different language. I’m real Whorfian. The broader our capability to interpret the world through language, the more prepared we are to summon up creative insights and flexible thinking while under pressure.

Please apprise us about the real state of the Chinese real estate buzz when you get back? How it figures into public discourse and shapes the priorities of lives lived on the ground? Thanks!

Comment by Housing Analyst
2014-01-04 07:51:28

“Why would pay more than new construction cost ($60 per square foot) for a depreciating 20+ year old resale house?”

Because that’s what dumb borrowed money does?

Comment by Jingle Male
2014-01-04 11:24:05

Why would you keep posting the same tripe over and over….

…because that is what a Burdbrain does.

Comment by Housing Analyst
2014-01-04 12:07:47

Speaking of dumb. borrowed. money

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Comment by Carl Morris
2014-01-04 02:27:08

OK, so I’ve told you that the stereotypes of Shanghai are pretty much true as far as I can tell, especially bubble-wise.

But today I took a walk down the street and had to stop in at Bubba’s Texas BBQ…just because it was there :-). Pretty much all ugly American white people in there, as you might expect from the name…I just didn’t realize there were that many of us here. Along with last week’s recorded Broncos/Raiders game playing on the TVs and a guy warning everybody to not talk about what they already knew about the score. Funny stuff. The atmosphere was exactly what it should have been…food wise I think they were doing the best they could. It was more like roast beef than smoked brisket, but so be it. Overall a nice place to pretend for a little while that you were in the USA if you were feeling the need. Wasn’t expecting to see that.

Comment by Whac-A-Bubble™
2014-01-04 02:50:21

Sounds like you are enjoying the adventure of a lifetime. Keep those reports coming! (Back here stateside, winter is rearing its ugly head…more on that below.)

 
Comment by Jingle Male
2014-01-04 07:08:52

Do you see many “empty towers” of apartments on the horizon? A friend of mine went to China 3 years ago and said there were whole buildings constructed sitting vacant: hotels, retail centers, apartments……

Comment by Housing Analyst
2014-01-04 12:08:56

There is no need to go to China to see that. We have it right here in the US. 25 MILLION excess empty housing units… and growing.

 
Comment by Carl Morris
2014-01-05 01:09:13

Not just buildings. Whole clusters of highrises.

 
 
Comment by jose canusi
2014-01-04 07:28:25

“ugly American white people”

Ah, the conditioning goes deep.

Comment by Bill, just South of Irvine
2014-01-04 07:33:04

“Ugly American White Voter” - the phrase bandied about by ugly white guilt voters for the Messiah.

Comment by jose canusi
2014-01-04 07:35:37

Absolutely. F*ck globalization. And f*ck the ugly white American people who go along with it willingly. And the brown, black and yellow ones too.

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Comment by Mr. Smithers
2014-01-04 09:41:15

Hatred of globalization = lack of understanding of basic economics. Don’t take my word for it, take the word of pretty much every economist who has ever lived.

 
Comment by jose canusi
2014-01-04 10:02:43

“take the word of pretty much every economist who has ever lived.”

Bwa-hah-hah-HAH! You mean like panty-sniffing con artists like Paul Krugman? Those economists? Trade is one thing. Globalization is another thing entirely. I don’t think we’re talking about the same things.

Every econartist who every lived, what a freakin’ joke.

Do you even know the definition of “economy” and where it came from? Dooya? Wanna know what the basic law of economy is? Here, I’ll tell ya:

Income great than outgo. That applies to countries as well as people. Income greater than outgo.

 
Comment by albuquerquedan
2014-01-04 10:10:04

Hatred of globalization = lack of understanding of basic economics
Sorry; while globalization will make the world as a whole richer, it has and will continue to make the American worker poorer. Moreover, it concentrates money at the very top. The rich get foreign workers at 2 dollars a day, the American workers get laid off. For compensation, the laid off textile worker can now buy his shirt for ten dollars instead of twelve dollars. However, the rich owner has probably seen his profit margin move up from 2 dollars a shirt to five. I understand the basic theory but until we figure out how we can more equitably share the “benefits” of globalization I also say F*ck globalization and the horse it rode in on.

 
Comment by Whac-A-Bubble™
2014-01-04 10:12:25

“You mean like panty-sniffing con artists like Paul Krugman? Those economists?”

I believe Smithers was harkening all the way back to the writings of Adam Smith and David Ricardo. He thereby finally hit a note on which we agree.

 
Comment by Housing Analyst
2014-01-04 10:25:45

Slithers,

I had no idea you were a LIEberal Globalista.

Worshipping at the Fed Altar again?

 
Comment by albuquerquedan
2014-01-04 10:27:13

BTW, the horse I am talking about is one of horses of the of the apocalypse. Yes, I believe in the writings of Smith and Ricardo too. However, it should be noted that they never said everyone would benefit from free trade just that a country as a whole would benefit. When you are facing with competing with workers that make a small fraction of a dollar per hour and you are a worker you are going to lose and lose big. Now, if your primary source of income is making money off your capital, you will win. I was born into a working class family and while now make a very good salary and have accumulated some wealth, I still live primarily on my wages. The fact that you cannot earn a decent interest on savings only makes me less willing to risk my job on the theory. I benefit due to my education and law will probably the last field to fully feel the impact of globalization but I have no doubt it will feel it. It is not rational to support a policy that will hurt me particularly since even delaying the policy will greatly benefit me.

 
Comment by albuquerquedan
2014-01-04 10:46:32

Need coffee but you get the general point.

 
Comment by jose canusi
2014-01-04 10:48:36

“law will probably the last field to fully feel the impact of globalization but I have no doubt it will feel it.”

Yep. Right on time. They’re coming for the lawyers now. Good night and good luck.

http://www.washingtontimes.com/news/2014/jan/2/illegal-immigrant-granted-law-license-california/

 
Comment by Prime_Is_Contained
2014-01-04 11:55:27

Income great than outgo. That applies to countries as well as people. Income greater than outgo.

That reminds me of my favorite Dickens quote:

“Annual income twenty pounds, annual expenditure nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pound ought and six, result misery.”

― Charles Dickens, David Copperfield

 
Comment by scdave
2014-01-04 12:06:57

If it can be out-sourced or off-shored it will be…Gini is is out of the bottle and there are trillions at stake…

 
Comment by oxide
2014-01-04 12:51:52

I agree with a-dan; I don’t see any way to outsource law. Too many hard copies, too many ink signatures, too much nuance in American English. At best, you may be able to outsource some of the lower level work, but I doubt it. It’s more likely for a company to ship the lawyers themselves to work at “home” in a cheaper country. Reminds of how Waterford Crystal shipped all their glassblowers to cheap Poland.

 
Comment by scdave
2014-01-04 14:12:30

ship the lawyers themselves to work at “home” in a cheaper country ??

How about cheaper State ?? Lots New York jobs moving to Utah and I suppose other places as well…Better than off-shore I suppose but still has some of the same effects with the worker bee…Lower pay…

 
Comment by jose canusi
2014-01-04 14:18:25

You don’t “outsource” law, although I did hear/read some anecdotal about outsourcing some of the grunt work parts of it to India. However, what you do is “insource”, like H1-B visas, only you admit any Tomas, Ricardo or Geraldo to the bar, regardless of national origin. And then you let them loose to make hay of “the law”, which has pretty much become a joke in this country anyway, so who cares?

California is leading the way!

Here’s another “profession” that’s going the way of the dodo fast: member of CONgress, seeing as how they’ve outsourced most of their functions to the executive branch. Mark my words. F8ck’em, if this is the way they’re going to act, why pay for their dead-ass weight and gold plated retirements and health plans. Love to see the turds sputtering about “unconstitutional”, lol. Maybe they’ll get the Kim Jong Un treatment, since they’re so eager to suck the d*cks of the outsourcers. That’s be some outsourcing, lemmetellya. NoKo justice! Pay per view!

 
 
 
Comment by taxpayers
2014-01-04 08:53:03

whitey scks
self flagelators agree !

Comment by jose canusi
2014-01-04 09:19:09

You got that right. Buncha sad sacks.

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Comment by Housing Analyst
2014-01-04 07:57:50

Comment by Ben Jones
2013-08-08 07:45:35

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

So the best advice going for 2014 and later is dump that depreciating shack for whatever it can fetch.

And remember… like there is no “shortage” of houses, there is no shortage of land. There is a globe full of it and 95% of it goes undeveloped.

Comment by aNYCdj
2014-01-04 08:45:33

But but but there is always a shortage of land in exactly the place YOU want to live.

 
Comment by Greenshirtwebcamtransient
2014-01-04 08:53:13

And when your friends and neighbors couldn’t afford to buy their own house today, prices will drop to where they could. Incomes determine prices for residential real estate.

This is it all you property moguls. Single family housing. Meant to be lived in. Renting these out has always been a loser for all but a few. And they weren’t renting SFHs in nice neighborhoods. Same with flipping. Usually a loser. Tom Vu, Fonald Trump, Armando Montelelngo and the rest lied to you.

Comment by Whac-A-Bubble™
2014-01-04 09:00:59

“Incomes determine prices for residential real estate.”

Does that remain so even when governments are executing radical interventions left and right to prop up housing prices?

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Comment by Combotechie
2014-01-04 09:18:41

“Does that remain so even when governments are executing radical interventions left and right to prop up housing prices?”

If these radical interventions ever stop then the statement “Incomes determine prices for residential real estate” will again hold true.

It’s all about money flow. It doesn’t matter from where the money flows or why the money flows, it only matters that it flows.

 
Comment by rms
2014-01-04 09:56:46

“It’s all about money flow. It doesn’t matter from where the money flows or why the money flows, it only matters that it flows.”

+1 The more corrupt, the slower the money velocity.

 
Comment by albuquerquedan
2014-01-04 10:58:28

“It’s all about money flow. It doesn’t matter from where the money flows or why the money flows, it only matters that it flows.”

Sorry it only matters if it is flowing to me. Everything else is irrelevant.

 
 
Comment by Jingle Male
2014-01-04 11:30:33

Green says:

“…..Incomes determine prices for residential real estate.”

True to some degree but a large over simplification. Here are a few factors you left out…..

1) reproduction cost
2) financing cost
3) supply/demand
4) government regulations

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Comment by Housing Analyst
2014-01-04 12:06:34

But when you lie to yourself and the public about item #1, the entire outcome is skewed.

 
Comment by Blue Skye
2014-01-04 13:49:29

On number 1, I have bought a house at 10% of its reproduction cost before, so no that isn’t much of a factor. Nobody cares what it cost to build it 100 years ago. It was well maintained BTW.

In Debt Nation, the sticker price is meaningless. How much a month is the only thing that matters. You can afford 30% of your gross, period. Income determines the price of housing.

The price impact of a housing shortage is very temporary, that of overbuilding maybe not so much. In the end, housing will be priced at what people can afford, based on how much they earn living there.

Government regulations…may determine what technology is used to build the house, the spacing and etc. but if people cannot afford standard houses they will get smaller or be built with cheaper materials.

Exceptions happen in a mania.

 
Comment by Whac-A-Bubble™
2014-01-04 14:00:42

“Exceptions happen in a mania.”

And manias are the exception.

 
 
Comment by Prime_Is_Contained
2014-01-04 12:41:23

And when your friends and neighbors couldn’t afford to buy their own house today, prices will drop to where they could.

Not _quite_. The prices will adjust to reflect the affordability of the buyers who are buying there NOW, not the affordability of the people who bought there over the past 30yrs. It is a subtle but significant difference.

Imagine that the demographics of a city completely changed from blue-collar to white-collar for some reason; that doesn’t sound likely, I know, but demographics of locations do change—compare San Fran of today with San Fran of 1980, for example.

The buyers, and the affordability of the buyers, determine the market of today, not the buyers of yesteryear.

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Comment by Housing Analyst
2014-01-04 13:42:59

I can ask $50k for my 10 year old Chevy pickup but where are the buyers?

For this reason, housing demand has fallen to 17 year lows…… and going lower.

 
Comment by Greenshirtwebcamtransient
2014-01-04 18:56:29

“Not _quite_. The prices will adjust to reflect the affordability of the buyers who are buying there NOW, not the affordability of the people who bought there over the past 30yrs. It is a subtle but significant difference.”

I agree with this to some extent, but Google moving in and the prices in Burlingame skyrocketing is the exception and a pretty rare one. Demographics do change, but usually very slowly and over a prolonged period. If higher income people moved in, in droves, then the friends and neighbors I mentioned are making enough to buy their houses now. I’m not seeing that. Instead what I’m seeing is street after street of people who bought 10 or more years ago in neighborhoods where the income mix hasn’t gone up because wages have remained flat. And yet the house prices are out of the reach of the people who live there. Those who do buy at the inflated price are usually not doing it because of a higher income, they are just suckers stretching beyond their means.

 
Comment by Prime_Is_Contained
2014-01-04 20:45:54

Demographics do change, but usually very slowly and over a prolonged period.

Agreed.

Instead what I’m seeing is street after street of people who bought 10 or more years ago in neighborhoods where the income mix hasn’t gone up because wages have remained flat.

That sure sounds like an unsustainable run-up alright! Reminds me of 2005, in fact…

Sometime in 2001/2003, I realized that if I didn’t already own my own home, I would have a hard time making any headway on saving up a 20% downpayment to buy it—the downpayment was going up too fast for savings to keep up! That was my first hint that something fishy was going on…

 
 
 
 
Comment by MightyMike
2014-01-04 09:48:50

Chinese people have many thousands of Chinese restaurants all over America, so it’s only fair that we start setting up American restaurants over there. I wonder if such restaurants will ever be able to attract any local customers.

Comment by Bill, just South of Irvine
2014-01-04 12:32:12

McDonalds sows ears and hens’ feet.

 
 
Comment by shendia
2014-01-04 13:31:20

Carl - yesterday you mentioned that the age of the workers at the company (factory?) was below 25. Do you know what wages the good workers get - or is it roughly the same for everyone at the same level - and the wages that these under 25 bosses get?

Thanks in advance

Comment by Carl Morris
2014-01-05 01:13:46

I was just going by appearance…I may be really bad at estimating age on young Chinese people, though. I do not know the answers to your questions, sounds kind of delicate to ask straight out, but I’ll try to find out what I can over the weeks.

They run it kind of like a military operation…which made me think that these are the same kids who would be in the army if this was North Korea. Instead they are an economic army.

 
 
 
Comment by Whac-A-Bubble™
2014-01-04 02:51:21

Darn frigid temperatures are messing with my global warming hypothesis!

Comment by Whac-A-Bubble™
2014-01-04 02:53:26

Arctic blast to drop temperatures in U.S. to lows not seen in years
By Ben Brumfield and Greg Botelho, CNN
updated 4:27 AM EST, Sat January 4, 2014
Michael Stanton walks between houses covered with ice in the shore town of Scituate, Massachusetts, on Friday, January 3.

(CNN) — A deep freeze will leave much of the nation shivering this weekend, making the nor’easter that just blanketed about 20 states with snow look like a mere curtain raiser.

Get ready for bone-chilling cold you haven’t endured in a decade or so, the National Weather Service says.

Nearly half the nation — 140 million people — will shiver under zero degrees Fahrenheit or lower by Wednesday.

An arctic blast that drove the mercury to subzero in parts of Canada is roaring into the United States.

It is threatening to sweep subzero lows as far south as Alabama, and plunge much of the Deep South into the teens.

 
Comment by tom cruz bustamante
2014-01-04 04:38:42

Wait for few days. We will get a warm spell and your hypothesis will be proven right.

 
Comment by Mr. Sun
2014-01-04 06:26:41

Somebody took away my sunspots so now earth shall pay!

Comment by shendi
2014-01-04 13:39:12

Although your comment is reeking of sarcasm, you don’t know how close the sun spots are to the climate in general. Think in terms of galactic / solar electricity that interacts with the earth’s magnetic field.

For those interested in electric nature of the cosmos including the pulsars, etc. simple plasma physics will shed some light so read up on the Electric universe.

 
 
Comment by 2banana
2014-01-04 07:24:28

Record breaking cold across the whole nation = anomaly

A hot Washington DC summer = global warming and we need more taxes and regulations and bigger government…

Comment by jose canusi
2014-01-04 07:29:56

No, no, you don’t understand, cold means warm. Off to the re-education camp with you, komrade!

Comment by Whac-A-Bubble™
2014-01-04 09:03:29

Or more precisely, global warming causes extreme cold, tornadoes, hurricanes and floods. It’s all a catastrophe caused by human activities, and we need more research dollars to explain how this theory holds together.

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Comment by albuquerquedan
2014-01-04 09:44:58

The satellite figures for the month of December. Much colder than 1998. It will be interesting to see the fabricated figures from NASA. They use to track each other until about three months ago. Don’t get me wrong, NASA using the ground data use to always run hot but now their numbers seem to be pure fiction.

http://www.drroyspencer.com/latest-global-temperatures/

Comment by albuquerquedan
2014-01-04 10:44:26

http://climate4you.com/

For those that really want to learn about climate and not just be able to repeat MSNBC talking points on global warming. I suggest they go to this site. First go to the global temperature links and scroll down. You will see that this interglacial period is actually cooler than the last one.

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Comment by albuquerquedan
2014-01-04 11:12:20

Excerpt:

The diagram above (Fig.2) shows a reconstruction of global temperature based on ice core analysis from the Antarctica. The present interglacial period (the Holocene) is seen to the right (red square). The preceding four interglacials are seen at about 125,000, 280,000, 325,000 and 415,000 years before now, with much longer glacial periods in between. All four previous interglacials are seen to be warmer (1-3oC) than the present. The typical length of a glacial period is about 100,000 years, while an interglacial period typical lasts for about 10-15,000 years. The present interglacial period has now lasted about 11,600 years.

According to ice core analysis, the atmospheric CO2 concentrations during all four prior interglacials never rose above approximately 290 ppm; whereas the atmospheric CO2 concentration today stands at nearly 390 ppm. The present interglacial is about 2oC colder than the previous interglacial, even though the atmospheric CO2 concentration now is about 100 ppm higher.

 
 
 
 
Comment by Mr. Smithers
2014-01-04 09:43:33

Silly wingnut. Don’t you know that colder than average temps, as well as warmer than average temps mean global warming is happening? It’s true. This also applies to rain…more rain = global warming, less rain = global warming. More hurricanes? Global Warming. Fewer hurricanes, global warming.

And anyone that says otherwise is a 5th grade redneck toothless hick.

Comment by Housing Analyst
2014-01-04 09:49:29

Good Morning Slithers….

Thank you for keeping the LIEberal wingnuts in check. It free’s me up to address the Monetary Liars, DebtPimps and Distortionists.

Comment by Mr. Smithers
2014-01-04 10:09:22

Did you check out that mogul book?

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Comment by Housing Analyst
2014-01-04 10:24:00

Not until you give me some more hot tips on downhill skiing in atlanta.

 
 
 
 
Comment by rms
2014-01-04 10:03:22

“Darn frigid temperatures are messing with my global warming hypothesis!”

It 12-degrees right now, but also bright and sunny. We haven’t had any real snow yet, so absolutely zero work for the lawn mowing guys that hang a snow blade on the truck.

 
 
Comment by Whac-A-Bubble™
2014-01-04 02:56:11

Is the British edition of Housing Bubble 2.0 somehow more noteworthy than all the others?

Comment by Whac-A-Bubble™
2014-01-04 02:57:57

The folly of using deliberately-engineered housing bubbles as a form of economic stimulus will only become clearly visible through the lens of history’s rear-view mirror.

Comment by Whac-A-Bubble™
2014-01-04 02:59:36

7:50 am Jan 3, 2014
Europe
The Great British Housing Bubble Redux
Commentary
By Alen Mattich

Housing bubbles have become as quintessentially British as warm beer, milky tea and cricket.

Unfortunately.

Take the latest data. The December Nationwide house price index rose 1.4% on the month and 8.4% on the year as the market gained momentum–prices had been up 0.7% on the month and 6.5% on the year in November. That’s the fastest pace of annual house price appreciation since the summer of 2010. In some parts of the country, the latest bubble has outstripped the previous biggest bubble, which peaked in 2007–London prices are 14% higher than they were then.

Mortgage approvals have motored to their strongest level since the start of 2008, while gross lending has also hit new all-time highs.

This isn’t an accident.

Policymakers have engineered this boom as a means of reviving the U.K. economy. The Bank of England’s Funding for Lending Scheme together with the government’s Help to Buy mortgage guarantee scheme have helped to reflate prices.

Rising house prices, meanwhile, have spurred a sharp rise in consumer credit, which, in turn, has fed consumer demand. At the same time, construction has also boomed. The latest construction purchasing managers’ survey remains near at least decade-long highs, signalling robust levels of house building.

Comment by Whac-A-Bubble™
2014-01-04 09:09:58

“Policymakers have engineered this boom as a means of reviving the U.K. economy.”

The longer I watch the global Housing Bubble saga play out, the more I begin to suspect there is a standard recipe which top policy makers use to create nationwide housing bubbles and sustain them:

1. Implement economic policies which massively subsidize the housing sector, in the name of providing economic stimulus.

2. Wait.

3. When housing prices go sky-high and begin to get out of reach of average households, vehemently deny that a bubble is forming.

4. When the inevitable crash occurs, bail out too-big-to-fail firms as needed, insisting all the while that “this time is different” and “nobody could have seen it coming.”

5. Once most of the dust has settled on the crash, execute hair-of-the-dog housing market stimulus programs to get the housing market up off the floor.

6. Return to 1.

Does that about cover it?

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Comment by Blue Skye
2014-01-04 16:08:27

1. Most people will give up a great deal from out in the future for a little bit more today.

Exploit number 1.

 
 
 
 
Comment by Whac-A-Bubble™
2014-01-04 03:01:31

Housing bubble fears renewed after price surge of 8.4% last year
London and Manchester areas showed greatest rise, as survey finds average home deposit grew to £31,000
Rupert Jones
The Guardian, Friday 3 January 2014
House sales boards, London
A surge in property values has added £40 a day to the price tag of average British homes, finds a survey. Photograph: Guy Corbishley/Demotix/Corbis

House prices across the UK rose by an average of 8.4% last year, helped by a late surge in property values which recorded £40 a day being added to the price tag of an average British home in the final weeks of last year.

However, the headline data on prices, collected by the Nationwide Building Society, masked huge regional variations, with the value of homes in Manchester soaring by 21% in the past 12 months, and some London boroughs surging by as much as 25%. At the other end of the scale large cities such as Newcastle, Coventry, Edinburgh and Glasgow managed annual growth of 1% to 2%. In a few areas, such as the north-east coast of Northern Ireland, Herefordshire and the Isle of Wight, property prices remain in decline.

The new survey shows a typical UK property ended the year valued at £175,826 after prices leapt by 1.4% in December, the biggest monthly rise since the summer of 2009. The figures came a day after David Cameron insisted that in many parts of the country property prices were “barely moving at all”, and coincided with fresh Bank of England data showing the number of mortgages approved by banks in November was the highest since the start of 2008. The two sets of figures prompted renewed warnings that a fresh housing bubble could develop this year.

A separate study by the Halifax mortgage lender, looking at how first-time buyers fared in 2013, laid bare the rapidly-rising cost of entry to the housing market, with the average home deposit now estimated at £31,000 – double the amount first-timers needed to get a foot on the property ladder in 2006.

 
Comment by Whac-A-Bubble™
2014-01-04 03:03:55

David Cameron is failing to see the risk of a housing bubble
Even the Treasury’s independent forecasting unit, the Office for Budget Responsibility, believes house prices will streak ahead of inflation, rising 5.2pc this year and 7.2pc next year
By Telegraph staff
4:32PM GMT 03 Jan 2014

The list of those who deny the development of a property “bubble” grows longer; and is not short of high-profile figures. One member of that club, David Cameron, strongly reaffirmed his support this week.

House prices are still way below the peak they reached in 2007,” said the Prime Minister as he heralded the success of the Help to Buy scheme. “Forecasters do not think they will get back to the level before the crash, even in 2019. So there is no evidence of a problem.

Comment by rms
2014-01-04 10:16:43

It’s difficult for a politician to see things as they really are while they’re in office.

Comment by albuquerquedan
2014-01-04 10:29:14

Particularly when their reelection depends on it.

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Comment by Housing Analyst
2014-01-04 07:59:03

Los Angeles Median Housing Prices Down 18% Since May 2013

http://www.movoto.com/statistics/ca/los-angeles.htm

 
 
Comment by Whac-A-Bubble™
2014-01-04 03:05:50

This sounds like a worthwhile endeavor. However my impression was that the CPI was deliberately rigged to hide housing price inflation?

Comment by Whac-A-Bubble™
2014-01-04 03:07:04

Business
1/02/2014 @ 10:52AM
Helping Inflation Reflect Housing Bubbles
Adam Ozimek, Contributor

Today I am making a working paper available that summarizes some results from my dissertation (you can download the paper here). The basic story is that the consumer price index doesn’t use house prices to measure inflation in owner-occupied housing, and instead they impute inflation using housing rents. This means there can be big discrepancies between house prices and housing inflation as measured by the CPI. For example, from the peak in April 2006 to the first bottom in May 2009, the Case-Shiller house price index fell 32%. In comparison, the CPI for owner-occupied housing increased 9% over this period.

I’m not addressing the overall desirability of the rental imputation, but rather I argue that the way the BLS can improve their rental imputation methodology to help the CPI better reflect the housing market. The improvement I’m suggesting is to account for the nominal rigidity of rents by looking at current market prices instead of average prices. The current practice is to survey households about their current rent expenditures, but most of these expenditures are based on leases that reflect prices which are set in the past. This is kind of (though obviously not entirely) like looking at changes in average household mortgage payments to gauge current housing market prices. A measurement based on market rents, in contrast, would reflect the prevailing market rents that are charged, and would therefore better reflect current housing market conditions.

The overall conclusion of my work is that yes, a market rent series better reflects the bursting of the housing bubble. You can see this in the figure below which compares the Case-Shiller house price index for the Baltimore/Washington D.C. CMSA (right axis, blue line), to the BLS measure of owner-occupied housing inflation and my estimated market rent series, both for the same geography.

Comment by Whac-A-Bubble™
2014-01-04 09:13:04

“The improvement I’m suggesting is to account for the nominal rigidity of rents by looking at current market prices instead of average prices.”

Perhaps the guy is oblivious to the fact that under the Greenspan doctrine, housing price increases or decreases are asset market wealth effects, not inflation or deflation?

 
 
Comment by aNYCdj
2014-01-04 07:50:45

whac….it seems they only care about retail price so a 30 oz jar of helmans mayo at $3.99 means no inflation if last week the jar was 3.99 for 32 oz.

Rite aid brand mouthwash 1L $4.79 Listerine like $7? well glad i used my wellness card got rite aid 2 for $5..

 
Comment by rms
2014-01-04 10:26:10

“However my impression was that the CPI was deliberately rigged to hide housing price inflation?”

I’m waiting for Smithers to respond that the CPI (heck, the LIBOR too) are accurate calculations by well-meaning people.

Comment by Housing Analyst
2014-01-04 10:49:05

Slithers loves the inflationistas at the Federal reserve.

 
 
 
Comment by Whac-A-Bubble™
2014-01-04 03:11:15

So long as the Housing Bubble 2.0 is merely in its early stages, why worry?

Comment by Whac-A-Bubble™
2014-01-04 03:15:52

Boldly cautious prediction:
“We’re sort of in the beginnings of another housing bubble.”

Long-term Investing
Housing market could be facing another bubble: Shiller
Published: Tuesday, 31 Dec 2013 | 9:54 AM ET
Case-Shiller October home prices up 13.6%

Robert Shiller, Yale University professor, shares his outlook on the housing recovery as home prices post the highest annual gains in eight years. I think these markets have a lot of momentum, says Shiller.

The U.S. housing market could be in the early stages of yet another bubble, warned Robert Shiller, co-founder of the Case-Shiller index.

“In the housing market, it has its own momentum right now as people see it coming back. We’re sort of in the beginnings of another housing bubble,” the Nobel Prize-winning economist told CNBC.

U.S. single-family home prices rose less than expected in October, but posted their strongest annualized gain in more than seven years, the closely watched S&P/Case Shiller survey said Tuesday.

The composite index of 20 metropolitan areas gained 0.2 percent in October on a nonseasonally adjusted basis, below economists’ expectation of a 0.7 percent gain. Prices rose 0.7 percent in September.

Comment by Greenshirtwebcamtransient
2014-01-04 18:59:26

Some shill or another recently said they expected house prices to only go up about 5% in 2014. Just like the pensions that need 8+ percent gains, this ain’t enough to sustain the scheme.

 
 
Comment by Whac-A-Bubble™
2014-01-04 03:23:30

A housing bubble ahead?

Fox Business News’ Peter Barnes breaks down the October Case-Shiller housing report.

Date Dec 31, 2013
Duration 1:47
Personalities Peter Barnes

Comment by azdude02
2014-01-04 07:50:19

janet yellen will print enough cash to make sure asset prices stay high .

you better get use to manipulated markets.

Comment by Housing Analyst
2014-01-04 08:17:52

All the more reason to stay in cash.

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Comment by Housing Analyst
2014-01-04 08:00:40

Seattle WA Median Housing Prices Down 18% Since April 2013

http://www.movoto.com/statistics/wa/seattle.htm

Comment by Prime_Is_Contained
2014-01-04 13:00:49

I see that you need me to make me school you yet again.

Seattle Median Price/sq-ft is only down ~6%:

(294-276)/294 = .0612 = 6.12%

http://www.movoto.com/statistics/wa/seattle.htm#city=&time=5Y&metric=Median%20%24%2Fsqft&type=0

Price/sq-ft is a better metric for actual house prices, as it reflects actual sales. List price is more a reflection of seller expectations/wishing prices, and not of actual prices or actual sales. Your choice of words in summarizing that chart made it sound like you were talking about actual prices, not wishing prices. Please stop misrepresenting the data.

Comment by Housing Analyst
2014-01-04 14:25:34

Falling median price, Falling price per square foot…

Enjoy your losses.

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Comment by Prime_Is_Contained
2014-01-04 21:00:37

Falling median price, Falling price per square foot…

Falling listing prices, yes.

Enjoy your losses.

I have none—as I am a renter. I rent for half the price of buying in Seattle.

 
Comment by Housing Analyst
2014-01-04 21:05:33

Falling median price, falling price per square foot.

 
 
 
 
 
Comment by Whac-A-Bubble™
2014-01-04 03:17:05

Is there a real risk Chinese economic liberalization may inadvertently pop their housing bubble?

Comment by Whac-A-Bubble™
2014-01-04 03:21:03

South China Morning Post
PROPERTY
Sat Jan 4, 2014
Updated: 4:37pm
China’s push for reforms could burst property bubble, economists say
Analysts say reforms like an attack on graft and a more liberal interest rate regime are propelling a bloated sector towards a hard landing
PUBLISHED : Friday, 03 January, 2014, 10:52am
UPDATED : Saturday, 04 January, 2014, 4:15am
Langi Chiang
* Cooling measures send flat sales crashing to a 17-year low but prices up
* China’s push for reforms could burst property bubble, economists say
* Cooling measures send flat sales crashing to a 17-year low
* Kerry Properties offers 15.8 per cent discount for The Summa units
* Cheung Kong woos Diva buyers with discounts

China’s resolve to quicken economic reforms will push its frothy housing market nearer the brink of a crash, with the bubble expected to burst this year in some cities that are already suffering oversupply, economists said.

The spreading of the anti-graft campaign, interest rate liberalisation and a likely expansion of property taxes to other cities could cumulatively be the last straw, they warned.

Debate has been going on for more than a decade over whether China’s housing market is bubbly and will soon burst. However, home prices have kept soaring, with a brief hiccup during the global financial crisis.

Many homeowners hope the government will steer the market to a soft landing eventually, without much damage to the economy and fragile banking system.

“All bubbles will eventually burst – there are no exceptions,” said Hao Hong, managing director of research at Bocom International in Hong Kong.

“With the United States now cutting its bond purchases and interest rates rising in China, if property sales slacken, the bubble will soon burst.”

 
 
Comment by Whac-A-Bubble™
2014-01-04 03:31:02

I’ve heard of Korean people eating dogs, but Korean dogs eating people? Blech!

Comment by Whac-A-Bubble™
2014-01-04 03:33:22

World
Release the hounds! Kim Jong Un executed uncle by feeding him to pack of starving dogs
Jang Song Thaek was stripped naked, thrown in a cage and mauled by 120 hunting dogs that had been starved for five days, according to a report in a Hong Kong newspaper. Kim Jong Un and 300 officials reportedly watched the gruesome hour-long horror show.
By Stephen Rex Brown / NEW YORK DAILY NEWS
Friday, January 3, 2014, 10:25 AM

Kim Jong Un’s former second-in-command, Jang Song Thaek, was fed to a pack of 120 starving dogs, according to a gruesome new report.

Kim Jong Un literally threw his uncle to the dogs.

The North Korean leader executed his high-ranking uncle by having him stripped, thrown into a cage and eaten alive by 120 starving hounds as the despot himself looked on, the Singaporean Straits Times reports, citing an article in a Hong Kong paper with close ties to China’s ruling Communist Party.

Comment by AbsoluteBeginner
2014-01-04 10:52:05

As George Noori said, what would hold N Korea back from using nukes if this is their level of payback? Dennis Rodman, wtf were you thinking?

 
Comment by rms
2014-01-04 12:30:43

“Jang Song Thaek was stripped naked, thrown in a cage and mauled by 120 hunting dogs that had been starved for five days, according to a report in a Hong Kong newspaper.”

Man…this video would go viral. Upload!

 
Comment by Whac-A-Bubble™
2014-01-04 13:21:18

Some MSM outfits are reporting this as factual while others are questioning it. Given the difficulty of confirming any news out of North Korea, who should one decide if the story is real?

Comment by rms
2014-01-04 14:12:03

What does Lara Logan have to say about it?

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Comment by reedalberger
2014-01-04 14:23:10

“Kim Jong Un literally threw his uncle to the dogs.”

Progressives in this country are willing to lie, cheat and steal their way towards that type of government tyranny. Why?

 
 
Comment by tom cruz bustamante
2014-01-04 04:41:22

So Koreans are cannibals?

Comment by Carl Morris
2014-01-04 04:47:29

Nah, it’s just the circle of life. A very small circle.

Comment by Albuquerquedan
2014-01-04 07:56:26

Using the recently invented dog device to translate thoughts it was found out that the dogs thought that the problem with Korean food is that you are hungry within an hour.

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Comment by albuquerquedan
2014-01-04 08:42:07

On a much more serious note, remember A-Hansen quoting from North Korean studies and the conservative part of this blog pointing out just how brutal that government was?

 
Comment by albuquerquedan
2014-01-04 08:43:08
 
Comment by jose canusi
2014-01-04 08:57:36

Excellent, thanks for posting. Probably falls on a lot of blind eyes. Interesting checklist to debauch the society.

 
 
 
Comment by Whac-A-Bubble™
2014-01-04 09:14:16

Korean dogs are man eaters.

 
 
Comment by Whac-A-Bubble™
2014-01-04 13:59:24

This story brings to mind other lurid tales of horrific executions at the top of the power structure over the course of history, including the beheadings of King Henry VIII’s wives, the execution by guillotine of Marie Antoinette, the defenestrations of Prague, and the execution of the Romanovs.

Will this story survive the test of time?

Comment by rms
2014-01-04 15:46:45

“…the defenestrations of Prague…”

There used to be a time when Wall street managers had the decency to perform this act without any outside help following the loss of their client’s portfolio.

Comment by Whac-A-Bubble™
2014-01-04 16:13:11

In due time we will see it happen again.

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Comment by tresho
2014-01-04 05:39:57

Detroit’s derelict Packard Plant site purchased by Peruvian
Peruvian developer Fernando Palazuelo now has official ownership of the 40-acre Packard Plant site.

The deed for the land was issued late Tuesday, according to the Wayne County Treasurer’s Office. Palazuelo placed the final payment of $364,590 with an escrow agent last month, said Wayne County Chief Deputy Treasurer David Szymanski. He had made a down payment in November. The purchase price of the once iconic and now ruinous former auto plant was $405,000.

Palazuelo was the third person awarded the winning bid on an online auction in October. Two others had their bids — for $6 million and $2 million — rejected after they failed to pay. Palazuelo was allowed to pay the lower price because that is where he dropped out of the bidding.

Chicago-area developer Bill Hults wised up forfeited $200,000 after making an initial deposit but saw the error of his foolishness failed to come up with the rest of the amount.

Palazuelo plans to turn the site into a mixed-use development, one of the uses being to train police as they continue to investigate a body found inside the plant on Christmas Eve. Investigators are treating it as a suspicious death.

In 1903, the Packard Motor Car Co. built the plant, which was one of the most modern of its time.

But fortunes changed after World War II when Packard switched to mid-price cars. Sales fell, and it closed the plant in 1956 and merged with Studebaker.

After the closing, the site had tenants off and on until the late 1990s, when many were driven out in a dispute between the purported owner and the purported city of Detroit.

Comment by Combotechie
2014-01-04 07:53:06

From the Department of Lots of Luck we have word that Detroit can be saved:

http://www.ted.com/talks/toni_griffin_a_new_vision_for_rebuilding_detroit.html

 
Comment by jose canusi
2014-01-04 07:54:16

“Palazuelo plans to turn the site into a mixed-use development, one of the uses being to train police as they continue to investigate a body found inside the plant on Christmas Eve.”

Robo-Cop!

 
 
Comment by Can Bubble
Comment by In Colorado
2014-01-04 09:38:02

Nearly half a decade after the recession officially ended, companies across all sectors have been handing out pink slips at a troubling rate, while the jobs that have been created over the past year have tended to be part time positions.

That sure sounds familiar. Japanese college grads working in convenience stores. American college grads waiting on tables at Applebee’s. European college grads working “1000 Euro” jobs (if they’re lucky enough to find one). And apparently not even China can employ all its people, even though they build entire ghost cities.

It’s a small unemployed world after all.

Comment by aNYCdj
2014-01-04 09:45:02

Employment down 42% in east kentucky coal mines interesting article…and scary

http://www.kentuckyliving.com/article.asp?articleid=3952&issueid=405

 
 
Comment by Mr. Smithers
2014-01-04 10:19:07

How can this be? Canada has a socialist health care system, a $10 minimum wage, 52 weeks of maternity leave, 2 week vacation pay guaranteed and exorbitant taxes.

All the stuff that leftists claim make an economy stronger.

And the job market is no good for yuuts? You don’t say!!

 
 
Comment by 2banana
2014-01-04 07:11:54

Expand a program that is going bankrupt?

The logic of Congress.

The rest of you better save and save and save and pray to God we don’t pull a Cyprus on you…

——————-

Lawmakers Hear Proposals to Improve Retirement Security
PJ Media | 1-3-2014 | Rodrigo Sermeño

WASHINGTON – Experts told a Senate panel Congress should expand Social Security for the poor and encourage middle- and upper-income individuals to ramp up private savings to improve their retirement prospects.

Sens. Sherrod Brown (D-Ohio) and Patrick Toomey (R-Pa.) recently held the first of a series of hearings focused on how to enhance retirement security for Americans.

From 1979 to 2011, the number of private workers with retirement plans covered by defined benefit pension plans fell from 62 percent to 7 percent. At the same time, the percentage participating in defined contribution plans increased from 16 percent to 66 percent. This shift to defined contribution plans as the primary retirement vehicle has transferred the responsibility and risk for capital accumulation for retirement from employers to employees.

“At a time when we’re told that we are in charge of our retirement futures, only one quarter of American workers have automatic access to a defined contribution plan,” Brown said.

Brown said that many middle-class and low-income seniors rely on Social Security for a majority of their retirement income.

“The vast majority of economic gains in the last 25-30 years have gone to those at the very top of the income distribution in this country, obviously affecting savings and retirement,” Brown said.

Comment by Combotechie
2014-01-04 07:43:39

“The logic of Congress.”

What an amazing sentence.

 
Comment by Bill, just South of Irvine
2014-01-04 07:54:03

It is not the Congress we should worry about. They are all drones of the wolves who vote. There are far more wolf voters than sheep voters. And this sheep voter stopped playing their phony rigged game of “who prevails.” I am still a sheep, but I stack movable, hidable wealth.

 
Comment by Mr. Smithers
2014-01-04 10:32:25

“WASHINGTON – Experts told a Senate panel Congress should expand Social Security for the poor and encourage middle- and upper-income individuals to ramp up private savings to improve their retirement prospects.”

Translation: The middle class and evil rich (white) people will continue to contribute to SS but get nothing in return.

 
 
Comment by phony scandals
2014-01-04 07:26:17

Charlotte Iserbyt on The Perils of Common Core

http://wckg.com/2014/01/04/charlotte-iserbyt-on-the-perils-of-common-core-2/ -

 
Comment by 2banana
2014-01-04 07:34:59

How Obamacare Could Kill the Housing Market in 2014
InvestorPlace | December 10, 2013 | Ethan Roberts

The Affordable Care Act (ACA), otherwise known as “Obamacare”, was created to give millions of uninsured Americans access to health care. But in their zeal to pass historic legislation, the designers and proponents of the law failed to consider the possible negative economic ramifications of the devilish details within the ACA, particularly as it may affect the real estate market.

So what exactly is the problem with Obamacare, and why should a well-intentioned law be so negative for both the general economy and the real estate industry?

There are several reasons that Obamacare could mean trouble for the housing industry: • Work hour reductions: One of the requirements of the ACA was that businesses with 50 or more employees who work more than 30 hours a week must provide their staff with health insurance. But rather than helping more workers to obtain health care, this rule has instead prompted many companies to cut workers’ hours below 30. Additionally, many companies are suddenly discovering that having only 49 employees on staff works very well for them. The companies say that without these measures, they would have to lay off more people just to stay in business. Cutting hours and positions leads to lower salaries and higher levels of unemployment or underemployment. Unemployed and part time workers have a very difficult time qualifying for a mortgage.

• Rising costs of healthcare: Millions of consumers have already lost their health insurance because of Obamacare and now have sticker shock when they try to gain new coverage through the ACA website. Media stories abound of individuals’ health care costs doubling or tripling from previous levels. If U.S. consumer begins to pay out hundreds of dollars more per month for their health insurance, it severely impacts the ability to save for down payments and loan closing costs. It’s also money they won’t have to spend in their local economies, and that could very well snowball into more layoffs and business closings.

• Higher deductibles: Along with higher premiums, consumers are finding that under ACA, annual deductibles are multiplying by four or five times what they had under previous policies. The least expensive “bronze” plan has deductibles of $5,000 or more. So even those who are getting government subsidies to pay part or all of their premiums may still have to shell out thousands of dollars more for health care. One trip to the ER, or even a difficult pregnancy could wipe out a year’s worth of savings for a down payment or closing costs. Those who default on paying their medical bills could see their credit scores fall below the levels necessary to secure a mortgage for quite a while.

• Older workers can’t retire: If workers in the 55 to 64 age group — who are not yet Medicare eligible — cannot afford to retire due to higher premiums and deductibles under Obamacare, then the 26 to 40 age group — which comprises the largest demographic of first-time home buyers — cannot move up the ladder or be hired from outside the company to fill those better-paying positions.

• Low salary service industry jobs: Despite the October jobs report showing 204,000 new jobs created, many of those were either part-time or low-salaried service industry jobs, as higher health care premiums continue to deter companies from hiring more workers. 16% of all the jobs created in the last year were restaurant, fast food, and hotel jobs that have average salaries of less than $12 per hour. People who live on these salaries cannot afford to buy a home in many areas of the U.S., and usually have poorer credit scores and higher debt-to-income ratios than those with higher salaries.

Comment by 2banana
2014-01-04 07:43:18

It makes sense until you realize strawberry pickers got loans to buy $750,000 houses at the height of the last housing bubble (just a few short years ago)…

Comment by Housing Analyst
2014-01-04 07:48:12

ObysmalCare merely serves to bury housing even deeper in the mire.

Remember…. Housing Demand has fallen to 16 year lows… and sinking.

 
Comment by Albuquerquedan
2014-01-04 08:02:45

Exactly. Remember who is getting appointed to run the housing agencies and even the push to bring back liar loans.

 
 
Comment by albuquerquedan
2014-01-04 08:28:22

The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation.
Vladimir Lenin
Read more at http://www.brainyquote.com/quotes/authors/v/vladimir_lenin.html#p7VoZ3mShhwkdqP8.99

Comment by albuquerquedan
2014-01-04 08:47:14

From same source:

The best way to destroy the capitalist system is to debauch the currency.

Vladimir Lenin

 
Comment by taxpayers
2014-01-04 08:55:10

the key to socialism is socialized medicine ” vlad lenin

 
 
Comment by ibbots
2014-01-04 08:32:27

Work hour reductions - the 30 hour rule doesn’t take effect until 2015. If a persons hours got cut, they were cut for reasons other than the ACA.

Comment by 2banana
2014-01-04 08:40:56

Open your eyes.

Business ARE getting ready for obamacare.

There is also a “reach back” in obamacare so employers want to set trend before it goes in place.

You are naive if you think businesses and people do not change their behavior based on new governmental taxes and regulations.

Comment by ibbots
2014-01-04 09:00:02

One of my wife’s co-workers was recently lamenting ‘all these new Obamacare taxes’ that were being withheld from her paycheck.

After we stopped laughing, my wife and I put the over under on the number of days until the co-worker walks into the path of a moving train at 65.

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Comment by albuquerquedan
2014-01-04 10:33:03

The train going 65 or is walking in front of a train at 65 years old Obama’s plan to save Social Security?

 
Comment by Mr. Smithers
2014-01-04 10:48:26

The medical devices tax has been in effect for 3 years. That’s a 10% tax on everything from glasses to hearing aids to heart valves.

But what’s an extra 10%? For the glory of Comrade Obama’s socialist dream, it’s a small price to pay.

And yes there are Obamacare payroll taxes as well. If you are an evil rich (white) person making more than $200K a year, Medicar tax doubled under Obamacare. But that’s cool, someone making $201K is rich enough not to notice an extra $3K in taxes. These people light cigars with $100 bills after all.

 
Comment by albuquerquedan
2014-01-04 10:51:43

No wait I know, it is how Obama is taking 500 billion out of Medicare without impacting the quality of care. Throw moma from the train or something close.

 
Comment by Prime_Is_Contained
2014-01-04 13:07:04

If you are an evil rich (white) person making more than $200K a year, Medicar tax doubled under Obamacare.

Reference? First I have heard of this…

 
Comment by MightyMike
2014-01-04 14:39:23

The increase only affects income above $200k. That’s the way these things usually work. So a person making $201k would pay an extra .9% on $1,000. That would be 90 dollars, not 3,000.

 
Comment by Prime_Is_Contained
2014-01-04 21:06:31

The increase only affects income above $200k.

EARNED income, you mean.

In other words, yet another tax that working people will pay and Romney will not.

So a person making $201k would pay an extra .9% on $1,000. That would be 90 dollars, not 3,000.

That would be $9 rather than $90, then.

 
Comment by MightyMike
2014-01-04 22:51:33

Yes, I realized that tonight while I was walking home after seeing a movie. It works about to be nine bucks for every $1,000 of income over $200k.

 
 
 
Comment by Mr. Smithers
2014-01-04 10:44:56

“Work hour reductions - the 30 hour rule doesn’t take effect until 2015. If a persons hours got cut, they were cut for reasons other than the ACA.”

Correct. Businesses NEVER plan in advance.

 
 
Comment by Greenshirtwebcamtransient
2014-01-04 09:10:54

In that case, I change my mind. I’m now in favor of Obamacare.

 
Comment by MacBeth
2014-01-04 11:47:39

“If U.S. consumer begins to pay out hundreds of dollars more per month for their health insurance, it severely impacts the ability to save for down payments and loan closing costs.”

Really? I thought the opposite was true.

Such a genius, this journalist.

How else might having $200-$1200 a month less to dispose affect the economy?

Gee, let’s start at buying cars. And technology. Leisure travel. Food. Utilities. Toys. Clothes. Education. Pharmaceuticals. Booze.

Nah…none of these will be negatively affected by ObamaCare. Not at all.

 
 
Comment by phony scandals
2014-01-04 07:42:53

Billionaires Dumping Stocks, Economist Knows Why

Friday, 03 Jan 2014 09:36 AM
By Newsmax Wires

Despite the 6.5% stock market rally over the last three months, a handful of billionaires are quietly dumping their American stocks . . . and fast.

Warren Buffett, who has been a cheerleader for U.S. stocks for quite some time, is dumping shares at an alarming rate. He recently complained of “disappointing performance” in dyed-in-the-wool American companies like Johnson & Johnson, Procter & Gamble, and Kraft Foods.

In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

With 70% of the U.S. economy dependent on consumer spending, Buffett’s apparent lack of faith in these companies’ future prospects is worrisome.

Unfortunately Buffett isn’t alone.

Fellow billionaire John Paulson, who made a fortune betting on the subprime mortgage meltdown, is clearing out of U.S. stocks too. During the second quarter of the year, Paulson’s hedge fund, Paulson & Co., dumped 14 million shares of JPMorgan Chase. The fund also dumped its entire position in discount retailer Family Dollar and consumer-goods maker Sara Lee.

Finally, billionaire George Soros recently sold nearly all of his bank stocks, including shares of JPMorgan Chase, Citigroup, and Goldman Sachs. Between the three banks, Soros sold more than a million shares.

So why are these billionaires dumping their shares of U.S. companies?

After all, the stock market is still in the midst of its historic rally. Real estate prices have finally leveled off, and for the first time in five years are actually rising in many locations. And the unemployment rate seems to have stabilized.

It’s very likely that these professional investors are aware of specific research that points toward a massive market correction, as much as 90%.

One such person publishing this research is Robert Wiedemer, an esteemed economist and author of the New York Times best-selling book Aftershock.

In the interview for his latest blockbuster Aftershock, Wiedemer says the 90% drop in the stock market is “a worst-case scenario,” and the host quickly challenged this claim.

Wiedemer calmly laid out a clear explanation of why a large drop of some sort is a virtual certainty.

It starts with the reckless strategy of the Federal Reserve to print a massive amount of money out of thin air in an attempt to stimulate the economy.

“These funds haven’t made it into the markets and the economy yet. But it is a mathematical certainty that once the dam breaks, and this money passes through the reserves and hits the markets, inflation will surge,” said Wiedemer.

“Once you hit 10% inflation, 10-year Treasury bonds lose about half their value. And by 20%, any value is all but gone. Interest rates will increase dramatically at this point, and that will cause real estate values to collapse. And the stock market will collapse as a consequence of these other problems.”

http://www.moneynews.com/mktnews/billionaires-dump-economist-stock/2012/08/29/id/450265?PROMO_CODE=110D8-1&utm_source=taboola - 66k -

Comment by jose canusi
2014-01-04 07:51:45

In real estate news, Warren Buffet bought the Prudential real estate franchise. Prudential is now Berkshire Hathaway Real Estate. Go figure.

Comment by Combotechie
2014-01-04 08:02:55

Buying a real estate franchise just might be a good bet because MOST OF YOUR EMPLOYEES WILL WORK FOR FREE!

Well, not exactly for free but free to the owner in that the owner doesn’t have to pay them. The way it is set up the employees pay themselves and while they are working to pay themselves they are also working to pay the owners.

Comment by Combotechie
2014-01-04 08:07:54

And … because it is a widely known fact (choke) that a sure way to become rich is to sell real estate the number of prospective agents you can have lining up to work for you is endless, which means you can churn ‘em and burn ‘em if you so choose and as you so choose.

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Comment by Bill, just South of Irvine
2014-01-04 07:58:31

Hence short term t bills for a few years until ten year notes and twenty year notes yield more than 15%. Also precious metals bullion - keep stacking!

Comment by Housing Analyst
2014-01-04 08:13:36

“A sea of excess empty houses…. millions of them with massively inflated prices attached.”

And it’s for that reason that housing demand is at 14 year lows and falling precipitously.

 
Comment by Whac-A-Bubble™
2014-01-04 09:31:31

You are reminding me of an episode I recall from the late-1980s, when I started out my career working in the FIRE sector and began routinely reading articles in the Wall Street Journal. Around that time Brazil was undergoing rampant inflation and there were some very interesting articles about how Brazilian households (at least those “in-the-know”) were coping financially. One of the key strategies they employed was to park their savings in short-term government bonds (akin to t-bills), which paid high interest rates over short durations, enabling rollover into new short-term government bonds at even higher rates as inflation spiraled out of control.

By contrast, here are the yields you could get as of yesterday on Treasurys of different maturities:

Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
01/03/14 0.02 0.07 0.10 0.13 0.41 0.80 1.73 2.42 3.01 3.69 3.93

I bolded the rates out to five years (1.73%) to help make my table readable. My question is, with yields out to five years under 2%, does it make sense to stay short, or would you do better by stretching out the duration a bit (i.e. to 7, 10, 20 or 30 years) with the expectation the Fed will not raise short-term rates off the floor for at least several more years? So long as Treasury rates out to 1-year are paying close to zero percent, how high can the long-term rates possibly go?

Comment by Bill, just South of Irvine
2014-01-04 12:42:14

Hard to say, but in light of being mostly in equities with an ARR of over 7% since 2003, I will not worry about busily expanding my stake in 52 week bills at .13 and 2 year notes at .41 and rolling back in when they mature.

More and more I am worrying about the return of my principle instead of the return on my principle.

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Comment by Whac-A-Bubble™
2014-01-04 09:19:33

“Billionaires Dumping Stocks, Economist Knows Why”

That headline has a way of resurfacing once every few months, including a few times last year. Do you think this stopped-clock prediction is correct at this point, given how it was consistently wrong over the past several years?

If so, why?

 
 
Comment by Housing Analyst
2014-01-04 07:47:04

25 MILLION excess, empty and defaulted houses CHECK

Housing demand at 14 year lows and falling CHECK

Housing prices inflated by 250% CHECK

Household formation at multi decade lows CHECK

Rampant housing fraud CHECK

Public denial formed and supported by a corrupt media CHECK

Population growth the lowest in US history CHECK

Immigration flat to slightly negative CHECK

Oh my word

Comment by 2banana
2014-01-04 07:55:57

$1 Trillion per year annual government deficits - CHECK
Unlimited QE forever - CHECK
Bailouts of banks continue - CHECK
Easy and cheap money forever - CHECK

Nothing will change

Comment by Housing Analyst
2014-01-04 08:02:31

Yes one thing will change….

Housing Demand collapse will accelerate even faster

QE is a good thing in that regard.

 
Comment by tom cruz bustamante
2014-01-04 08:12:47

Nothing will change

On that we agree. Wars abroad and home need the status-quo intact.

 
 
 
Comment by 2banana
2014-01-04 07:52:31

It used to be bankers went to jail or at least got fired for things like this.

Now they just get bailed out by the US government and have already pocketed their bonus checks…

—————

Man, 30, who stole $11 MILLION from banks to fund his ‘rock star’ lifestyle ….
The Daily Mail Online | January 4, 2014 | ASSOCIATED PRESS and ALEXANDRA KLAUSNER

The frontman for a fledgling Los Angeles rock band who was sentenced to seven years in prison in after illegally bilking more than $11 million from banks and using it to fuel his fantasy of being a rock star says he ‘regrets losing control’ over his fraudulent fortune.

Robert Mawhinney, 30, pleaded guilty in April to five counts, including money laundering. He was sentenced to seven years in prison in October.

He received more than $11 million in loans from four banks. Prosecutors said he gave lenders statements that claimed he had nearly $8 million in assets, but it turned out his account had less than $10,000, authorities said.

With his borrowed money, Mawhinney managed to afford a $10,500 a month house in the Hollywood Hills and he managed to buy his dreams of becoming a rock star in order for them to come true.

The thing I regret is…kind of losing control,’ Mawhinney told ‘20/20′ over the phone from prison. ‘My lifestyle…it was crazy, and I was hoping deep down that I could rectify the situation and…pay these things back.’

‘I wish I could have done it, or I would have done it without all that money,’ he said.

Mawhinney was the lead singer for Lights Over Paris, and authorities say he gave the appearance the band was successful.

Ranee Katzenstein, assistant U.S. attorney, told 20/20, ‘The loan officer in the bank asked Mr. Mawhinney to provide proof of the statements that he made in the application, regarding his assets and his income.’

The tax return was entirely fake, and the CPA whose name was used on the letter…we interviewed him, and he said, again: ‘Robert Mawhinney? Never heard of him,’ said Katzenstein.

Prosecutors said he attempted to pay off of some of his loans with proceeds he received from earlier payouts but eventually defaulted.

Comment by Housing Analyst
2014-01-04 08:19:15

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

Don’t Be A Debt Donkey®

 
 
Comment by Housing Analyst
2014-01-04 07:56:11

“So do you really think wages are going to double or triple to meet inflated prices of everything including depreciating housing? Of course not. Prices will fall by 50% to meet existing wages as demand continues to collapse.”

Exactly.

Comment by 2banana
2014-01-04 08:05:01

Not as long as a strawberry picker can borrow enough money to buy a $750,000 house…

Comment by Housing Analyst
2014-01-04 08:08:27

They used to be able to anyways.

Comment by tom cruz bustamante
2014-01-04 08:28:06

I think they still do, but they go by different names these days.

Here’s a snippet of a letter I got from Discover Home Loans the other day.


The questions isn’t “Can you afford a new home?”

The question is “Can you afford to keep renting?”

When you rent, money goes directly down the drain month after month. But when you own, you build equity. In effect, you are paying YOURSELF each month. And, with so many homes on the market with low prices, it’s an ideal time to buy. Act now before rates climb!

Perhaps, you have delayed buying because you thought you needed a 20% down payment. Don’t let that stop you. You can now buy a new home with as little as 3.5% down thanks to government banked-FHA loans.
…..
…..
…..
…..

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Comment by Housing Analyst
2014-01-04 08:30:18

No question to the Housing Crime Syndicate efforts get more desperate by the day but is it productive when housing demand is at 1997 levels and continues to crater?

 
 
 
 
 
Comment by 2banana
2014-01-04 07:59:22

The Congressman Who Went Off the Grid
politico | Jan 3, 2014 | JASON KOEBLER

When Roscoe Bartlett was in Congress, he latched onto a particularly apocalyptic issue, one almost no one else ever seemed to talk about: America’s dangerously vulnerable power grid. In speech after late-night speech on the House floor, Bartlett hectored the nearly empty chamber: If the United States doesn’t do something to protect the grid, and soon, a terrorist or an act of nature will put an end to life as we know it.

Bartlett loved to conjure doomsday visions: Think post-Sandy New York City without power—but spread over a much larger area for months at a time. He once recounted a conversation he claimed to have had with unnamed Russian officials about how they could take out the United States: They would “detonate a nuclear weapon high above your country,” he recalled them saying, “and shut down your power grid—and your communications—for six months or so.”

The octogenarian Republican from western Maryland—more than once labeled “the oddest congressman”—found himself gerrymandered out of office a year ago and promptly decided to take action on the warnings others wouldn’t heed, retreating to a remote property in the mountains of West Virginia where he lives with no phone service, no connection to outside power and no municipal plumbing. Having failed to safeguard the power grid for the rest of the country, Bartlett has taken himself completely off the grid.

Not that his life out here in the mountains is anyone’s idea of retirement. He rises at dawn every day except Saturday (he’s a Seventh Day Adventist) and spends 10 to 12 hours cutting logs, tending gardens and painting walls. I ask Bartlett, as he climbs a ladder to an attic, if he has ever had any health problems. No, he says, besides a little arthritis and acid reflux. He may be pushing 90, but his weathered skin, hearing aid and walking stick are the only reasons you’d think he’s gotten old. When his wife suggests we use “the Gator,” a John Deere golf cart-like vehicle, to tour their refuge, he refuses, preferring to go by foot.

Comment by Mr. Sun
2014-01-04 08:17:11

You earth people are idiots. The Russians cannot come close to doing to you what I can do to you.

Go here for an example:

http://en.wikipedia.org/wiki/Solar_storm_of_1859

Now give me back my sunspots!

Comment by albuquerquedan
2014-01-04 09:28:33

They actually have not completely gone away but that will happen soon. The AGW crowd is hoping for el nino this year since this is their last hope to be higher than 1998. But even if it happens it will drop like a stone the next year without El Nino and the Sunspots.

Comment by Mr. Sun
2014-01-04 10:31:56

When I decide to use my strong and powerful magnetic field to blast enormous quantities of ions to your measly little planet (and I leave behind sunspots as a result) your measly little planet uses it’s mealsy little magnetic field to direct and concentrate these enormous quantities of ions at your measly little planet’s poles. One of the effects of this are the Northern lights and the Southern Lights. Another effect JUST MAY BE (but the jury is still out regarding this thought) the melting of the ice that is located at your measly little planet’s poles.

And, looking at the other side of this issue (whereby the jury is still out) the ABSENCE of enormous quantities of ions concentrated at the poles just may cause the ice at your measly little planet’s poles to build up again.

We shall see if I am correct. History suggests (but it does not confirm) that I am.

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Comment by Housing Analyst
2014-01-04 08:04:02

Palo Alto CA Housing Prices Down 10% Year Over Year

http://www.movoto.com/statistics/ca/palo-alto.htm

Comment by aNYCdj
2014-01-04 09:48:22

OMG please NO NO…….

New York is running out of luxury condos

http://www.cnbc.com/id/101308576

Comment by scdave
2014-01-04 13:12:15

Some analysts said exactly that the other day….Foreign purchases coming from all over the globe for many reasons but mainly to diversify out of their Native land to what they believe is a safer place for their money and chattel…

Comment by Housing Analyst
2014-01-04 14:23:09

So you foolishly repeat them?

“Manhattan Apartment Rents Drop for a Third Straight Month”

http://www.bloomberg.com/news/2013-12-11/manhattan-apartment-rents-drop-for-a-third-straight-month.html

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Comment by Housing Analyst
2014-01-04 08:06:07

…..”as far as “baby boomers” go, they’re exiting SFR’s and entering assisted living facilities. This trend will continue leaving an additional 35 MILLION excess empty houses on the market. That doesn’t include the already bloated inventory of 20-25 MILLION excess empty houses.

The boomer retirement fad has long since passed years ago.”

Correct. The boomer retirement fad occurred 1998-2006. It drove the housing bubble.

 
Comment by 2banana
2014-01-04 08:07:10

More Hope and Change for ya!

——————-

ObamaCare forces poor cancer patients into crippling debt
AP/NY post | january 4, 2013

For working people making modest wages and struggling with high medical bills from chronic disease, President Barack Obama’s health care plan sounds like long-awaited relief. But the promise could go unfulfilled.

It’s true that patients with cancer and difficult conditions such as multiple sclerosis or Crohn’s disease will be able to get insurance and financial help with monthly premiums.

But their annual out-of-pocket costs could still be so high they’ll have trouble staying out of debt.

You couldn’t call them uninsured any longer. You might say they’re “underinsured.”

These gaps “need to be addressed in order to fulfill the intention of the Affordable Care Act,” said Brian Rosen, a senior vice president of the Leukemia & Lymphoma Society. “There are certainly challenges for cancer patients.”

“Cost may still be an issue for those in need of the most care,” said Steven Weiss, spokesman for the American Cancer Society Cancer Action Network. That “makes it critically important for patients looking at premiums to also consider out-of-pocket costs when choosing a plan.”

Comment by Housing Analyst
2014-01-04 08:16:18

“Crippling debt”??????

“A ‘housing recovery’ is falling housing prices to dramatically lower and more affordable levels by definition.”

Considering housing prices were never allowed to correct to the long term price trend, it appears housing hasn’t recovered. Nor will it recover…… until prices fall to dramatically lower and more affordable levels.

 
 
Comment by Housing Analyst
2014-01-04 08:09:58

“Housing as a rental investment is a huge gamble considering it’s negative cash flow at current inflated asking prices of resale housing.

Beware.”

Exactly.

 
Comment by Housing Analyst
2014-01-04 08:12:04

“Resale housing is currently prices 40% higher than new construction costs (materials, labor and profit).

And considering new construction prices are massively inflated, resale housing is overpriced by 250%.

 
Comment by Housing Analyst
2014-01-04 08:24:59

“More cheap dollars thrown into a morbid economy will make the inevitable collapse more severe.”

No question.

 
Comment by 2banana
2014-01-04 08:27:00

Where QE cheap and easy money gets invested…

———————–

New York is running out of luxury condos
Robert Frank - CNBC Reporter and Editor - 3 Jan 2014

CNBC’s Robert Frank reports the foreign buyers are really driving the luxury real estate in Manhattan. The median price for luxury condos are up 13 percent.

The records keep piling up for Manhattan real estate.

The fourth quarter saw a string of records broken—from number of deals and average sale prices to dwindling inventory—as the rich from around the world scoop up luxury apartments as a store of wealth.

The average sales price in Manhattan rose 5.3 percent to $1,538,203 in the fourth quarter compared to a year ago. That marked the highest-ever price for a fourth quarter. The median sales price for condos is the highest-ever tracked, hitting $1.3 million.

And the inventory of apartments for sale has shrunk to its lowest level in recent memory, with a little over 4,000 apartments for sale.

The total number of sales surged 27 percent—a surprisingly strong increase given the rush in the fourth quarter of 2012 to do deals before the “fiscal cliff” tax changes.

“I think we’re on a path for strong and sustainable growth this year as well,” said Dottie Herman, president and CEO of Douglas Elliman.

While the overall market is on fire, New York is quickly becoming a tale of two markets—the soaring condo market and the lackluster co-op market.

Brokers say the main reason for the difference is foreign buyers, who are virtually banned from the co-op market, since co-op boards often won’t approve them and the overseas rich don’t want to reveal their financials.

Plus, foreign buyers prefer the newly built, gleaming glass condo towers to the prewar co-op apartments of the past.

Miller added that the condos going up around Manhattan are larger than they’ve ever been, as apartment developers are catering almost exclusively to the very rich. The average condo being built is now 1,697 square feet—fairly large for Manhattan—and about 23 percent larger than last year.

Comment by Housing Analyst
2014-01-04 08:44:18

Yet Manhattan rental rates have been falling every month for months now.

“Manhattan Apartment Rents Drop for a Third Straight Month”

http://www.bloomberg.com/news/2013-12-11/manhattan-apartment-rents-drop-for-a-third-straight-month.html

Hold your cash close and stay out of debt.

 
 
Comment by Housing Analyst
2014-01-04 08:35:21

I see the Debt-Pimps renewed their efforts to continue their lying to the public.

And we’re resolved to overwhelm them with the truth.

 
Comment by 2banana
2014-01-04 08:35:30

No Accounting for Government Cost
Barron’s | Jan 4, 2014 | Joseph H. Marrent

The financial position of the U.S. is not just troubled; it is artificially created to fool the people.

The nation’s budget deficit and debt are exponentially higher than what our politicians say they are. None of the headline figures used as the basis of public discourse have any relevance to the true state of U.S. finances.

The government’s financial reporting is misleading because our political leaders have subverted the democratic process to advance their personal interests.

Adding all of the costs associated with the nation’s social-insurance programs to the amounts reflected in the Financial Report shows that over the past decade the federal government effectively spent more than $88 trillion, while its revenues totaled a little over $22 trillion. The government pretends that obligated money is not spent until the future arrives; a legally correct accounting must accrue for those future payments.

In June 2012, the Supreme Court ruled that the Medicaid expansion in the Affordable Care Act was unconstitutional. But each of the opinions issued contained economic and political analysis based on the government’s false financial information. The court should reopen the case to apply the rule of law and restore needed accountability.

 
Comment by 2banana
2014-01-04 08:45:48

He has maintained a pretty good quality of life but has to go on welfare (Medi-Cal) to get health insurance …

Nothing to see here. No fraud. It is not real money anyways…

—————-

Obamacare: Hundreds of thousands of Californians finally get health insurance
Santa Cruz Sentinel | 01/03/2014 | Tracy Seipel

The last time John Nunnemacher had health insurance was 15 years ago, when his employer paid for his coverage.

Since then, the freelance graphic artist hasn’t been able to afford a policy. Luckily, he didn’t get seriously ill or have a bad accident — which could have left the San Jose man bankrupt.

But as of New Year’s Day, the 43-year-old Nunnemacher was once again insured.

Nearly four years after Congress passed a controversial health care law, tens of thousands of Californians like Nunnemacher can now see a doctor without begging for charity care.

In Oakland, 32-year-old independent music producer Clifford Brown said it’s been five years since he’s had medical insurance. Brown said he’s been able to support his family and maintain a “pretty good quality of life,” as long as he doesn’t “get too sick.”

Brown initially thought he was eligible for an exchange plan as well, but his income is too low to qualify for a private plan. So he’s reluctantly joined Medi-Cal, with the hope of moving to a Kaiser exchange plan later this year if he makes more money.

 
Comment by Whac-A-Bubble™
2014-01-04 08:53:22

Is the hair-of-the-dog hangover cure losing its heft?

Comment by Housing Analyst
2014-01-04 08:54:48

Clearly is isn’t working as evidence by the new raft of propagandists armed with the same rusty old inflationista scare tactics.

 
Comment by 2banana
2014-01-04 08:57:46

I am too drunk with cheap and easy money to care right now…

 
Comment by Whac-A-Bubble™
2014-01-04 08:58:33

It’s that old standby bugaboo of economic activity, bad weather, that explains the drop in December auto sales.

Dec. auto sales falter; 2013 still best in 6 years

By DEE-ANN DURBIN AP Auto Writers, TOM KRISHER AP Auto Writers
5:01 a.m. Jan. 3, 2014

DETROIT (AP) — December U.S. auto sales slowed a bit from the brisk pace earlier this year, but automakers still were on target to finish 2013 with the best numbers in six years.

Nissan posted an 11 percent gain for December and Chrysler managed a 6 percent increase. But General Motors, Toyota, Ford and Volkswagen each posted disappointing numbers. Still, most major automakers reported at least a 7 percent increase for 2013, and analysts expect full-year sales to be up around 8 percent to 15.6 million when all the numbers are in. That would be the highest sales figure since 16.1 million in 2007.

“The auto industry was a consistent bright spot in the economic recovery throughout 2013,” Bill Fay, Toyota division group vice president, said Friday in a statement. “We expect the economy will continue to gain strength in 2014, with car sales rising to pre-recession levels.”

But automakers may need to do more to lure shoppers into showrooms. Analysts say discounts rose in December, and there were signs that automakers were beginning to lower prices to match competitors. That could foreshadow better deals in the new year, especially on pickup trucks and midsize cars.

GM’s December sales were off more than 6 percent as sales of its top-selling model, the Chevrolet Silverado pickup, fell 16 percent. Toyota sales were down 1.7 percent from a year ago, while Ford sales were up only 1.8 percent for the month. Volkswagen, which has struggled all year, saw sales fall 23 percent.

Ford and GM said bad weather cut into December sales, and discounts in late November pulled sales ahead from December.

 
 
Comment by albuquerquedan
2014-01-04 08:56:56

This quite is from the site in the Ukraine, I have seen it on numerous other anti-communist sites but cannot confirm it validity but it is amazing, makes you just want to discuss DWTS and gay marriage:

V. I. Lenin (Russian Communist dictator - Ukraine’s past - PLEASE LEARN from it …):
“Democracy is indispensable to Socialism.

The goal of Socialism is Communism.
–On advancing Communism:


1. Corrupt the young, get them away from religion. Get them interested in sex. Make them superficial, destroy their ruggedness.

2. Get control of all means of publicity and thereby:

3. Get the peoples’ mind off their government by focusing their attention on athletics, sexy books and plays, and other trivialities.

4. Divide the people into hostile groups by constantly harping on controversial matters of no importance.

5. Destroy the peoples faith in their natural leaders by holding up the latter to ridicule, contempt and obloquy.

6. Always preach true democracy but seize power as fast and as ruthlessly as possible.

7. Encourage government extravagance, destroy its credit, produce fear with rising prices, inflation and general discontent.

8. Foment unnecessary strikes in vital industries, encourage civil disorders and foster a soft and lenient attitude on the part of the government towards such disorders.

9. By specious argument cause the breakdown of the old moral virtues: honesty, sobriety, continence, faith in the pledged word, ruggedness.

10. Cause the registration of all firearms on some pretext, with the view of confiscating them and leaving the population defenseless.

Comment by 2banana
2014-01-04 09:04:24

Go google the 10 planks of the communist manifesto…

Tell me what political party in America it sounds like:

1. Abolition of private property and the application of all rents of land to public purposes.

2. A heavy progressive or graduated income tax.

3. Abolition of all rights of inheritance.

4. Confiscation of the property of all emigrants and rebels.

5. Centralization of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.

6. Centralization of the means of communications and transportation in the hands of the State.

7. Extension of factories and instruments of production owned by the state, the bringing into cultivation of waste lands, and the improvement of the soil generally in accordance with a common plan.

8. Equal liability of all to labor. Establishment of industrial armies, especially for agriculture.

9. Combination of agriculture with manufacturing industries, gradual abolition of the distinction between town and country, by a more equitable distribution of population over the country.

10. Free education for all children in public schools. Abolition of children’s factory labor in its present form. Combination of education with industrial production.

Comment by Housing Analyst
2014-01-04 09:10:15

The American Democrat-Republican Duopoly.

You forgot number 11

11. Enslave your citizenry and destroy your economy by pushing crushing levels of debt.

Comment by jose canusi
2014-01-04 10:04:59

Amen, brothah!

BTW, how’s the weather up there? I take it you’re all warm and cozy and tappin’ away at the keys.

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Comment by Bill, just South of Irvine
2014-01-04 15:03:41

Look up anti Communist Ayn Rand. She wrote a wonderful piece I think titled “Atilla and the Witch Doctor.”

 
 
Comment by MightyMike
2014-01-04 14:28:45

That list doesn’t look like something written by a Russian a hundred years ago. It turns out that it was probably put together by an American in the late forties or early fifties.

http://www.snopes.com/history/document/communistrules.asp

Comment by Prime_Is_Contained
2014-01-04 21:08:05

It turns out that it was probably put together by an American in the late forties or early fifties.

That seemed obvious to me from a quick glance; it read like a nice propaganda piece.

 
 
 
Comment by phony scandals
2014-01-04 09:12:32

With benefits cut off, long-term unemployed brace for a grim new year

Sat Jan 4, 2014 5:15 AM EST.158
Gretchen Ertl / for NBC News

There was little merry or bright this holiday season for millions of unemployed Americans who are losing their extended unemployment benefits.

Many depend on these meager payments, a federal extension of state unemployment programs that expired as of the last Saturday of 2013, to stay afloat. After tapping out their savings, downsizing their living space, and draining their retirement funds, one-time managers and MBA grads bought Christmas gifts secondhand and worry over what the new year will bring.

“I shopped at the dollar store because I really didn’t have any expendable income,” said Nancy Shields, who said she also picked through the toys at thrift stores to find gifts for her three grandchildren— which she was only able to afford because her sister sent her money before Christmas.

Earlier this year, Shields lost her townhouse and now rents a single room in her Southern California town. At one point, the 59-year-old managed a team of 60 people for a large retailer. She lost that job in 2011 but took another one — and a 20 percent pay cut — some months later. When that store closed in 2012, her luck ran out, and she has been looking for work ever since.

“My federal [unemployment] benefits are about $1,200 a month, and that’s all I get… I have been very dependent on the generosity of my family members,” Shields said. Her retirement savings exhausted, Shields said she didn’t know what she would do if Congress doesn’t authorize an extension.

VeraMae Volk and her husband Eric Vaughn use their dining room table as an ebay center.

The National Employment Law Project estimates that more than a million Americans are in the same situation. “For a lot of people and a lot of families, this is their only income source,” said NELP federal advocacy coordinator Judy Conti. “This could pull the rug out from under 1.3 million families,” she said. Without an extension, an additional 2 million will fall off the rolls in the first half of the year.

“Job opportunities are, by most measure, really no better than they were a year ago,” said Heidi Shierholz, labor market economist at the Economic Policy Institute. The improving unemployment rate is largely due to people dropping out of the labor force, and hiring hasn’t budged from a year ago, she said. “The reason they extended it last year, that reason is still almost exactly the same right now.”

Despite more than 25 years in the retail industry, Shields said the fact that she doesn’t have a college degree makes landing a management level job challenging. “It’s such an employers’ market at this point. They seem to be more interested now in your education, if you’ve got a bachelor’s degree, than they used to be,” she said.

Higher education is no silver bullet, though. Abe Gorelick’s Ivy League undergrad degree and MBA from the University of Chicago weren’t enough to keep the 57-year-old Massachusetts resident off the unemployment rolls.

Gorelick said his family recently borrowed around $12,000 from his wife’s sister, and that his parents as well as his brother had given them money over the duration of his unemployment. With three kids, two in college and one in high school, Gorelick said just covering their health insurance through COBRA cost around $1,200 a month, and January would bring with it new deductibles that would have to be met before coverage kicks in.

“I feel responsible for juggling every month and figuring out how the bills are going to get paid,” he said. “There’s just so many things to juggle and address… and spending as many hours as I can trying to find work.”

Gorelick echoed a common refrain among the better-educated jobless: He’s turned away from entry level positions because he’s overqualified, but he can’t find a job that matches his level of experience.

“Their education does not help them get out of long-term unemployment,” said Ofer Sharone, a professor at the Massachusetts Institute of Technology’s Sloan School of Management. Sharone founded the Institute for Career Transitions to help older, white-collar workers get back into the workforce with mixture of career and emotional support. The longer people stay out of work, the harder it gets to find a new job, Sharone said.

“Once you become unemployed for more than six months, you pretty much fall into a trap,” said Rand Ghayad, a visiting scholar with the Boston Federal Reserve and research associate at MIT.

Massachusetts resident Vera Volk also has a master’s degree, but the 53-year-old biotech researcher lost her job at the end of May and has been selling prized possessions in order to stay afloat.

VeraMae Volk and her husband Eric Vaughn pose for a portrait at their home in Lynn, Mass., Tuesday, Dec. 31, 2013.
“We’ve had to cash in everything that we could potentially cash in,” Volk said. “We’ve got our water heater down to the lowest we could potentially tolerate.” Volk’s extended unemployment benefits of $480 a week are the couple’s sole source of income. They’re four months behind on their mortgage, and although she and her husband both have chronic health conditions, they couldn’t afford to keep paying for health insurance.

The families receiving extended unemployment benefits are generally in dire financial straits, so helping them helps the economy overall, economists say. “Emergency UI has one of the largest economic bangs for the buck,” Mark Zandi, chief economist at Moody’s Analytics, said via email. According to Zandi’s calculation, these payments have a multiplier of 1.49: For every dollar in extended unemployment benefits jobless Americans get, $1.49 goes back into the economy.

“Nobody wins when we leave people looking for work out in the cold,” said Amy Traub, a senior policy analyst at advocacy group Demos. “It hurts the economy when local businesses can’t rely on basic spending… It strains the private safety net when food banks and charities have to serve more people,” she said. “It slows down our recovery.”

“In the next couple months, if I don’t have that extra income coming in, there will have to be drastic cutting,” said Chris Nitso, a 46-year-old Massachusetts retail manager who has been out of work since February.

“Ultimately, I need a job. I would have to resort to …applying for jobs I wouldn’t normally apply for or part-time jobs,” Nitso said. “I’m going to have to be a sales clerk somewhere… It definitely feels like a step back, for sure.”

Increasingly, those are the only jobs out there. A NELP study says nearly 60 percent of jobs created in the post-recession recovery pay $13.83 or less an hour. CEPR found that the number of low-wage workers with a four-year college degree nearly doubled between 1979 and 2011.

“There seems to be more job seekers who are willing to take any job,” Alexandria Vasquez, a lead researcher with the Institute for Career Transitions and Brandeis University sociology professor, said via email.

Writing in the National Review Online in December, Michael R. Strain, a resident scholar at the right-leaning American Enterprise Institute argued that extended unemployment benefits should be continued, writing that without them, “it’s likelier that these workers will need other kinds of government assistance.”

“We see people who run out of unemployment benefits get absorbed into other parts of the safety net program,” Conti said.

This is the case for San Francisco resident Thadd Evans. He also holds a master’s degree, but the 63-year-old has been unable to find a job since being let go from a market research position in March. With unemployment insurance his sole source of income, Evans said he had no choice but to apply for Social Security this fall, when he saw the writing on the wall and suspected that his extended payments might be terminated.

“My hope was at the last minute something would pop up and I’d be saved,” he said. “But it didn’t happen.”

Comment by 2banana
2014-01-04 09:40:51

“We’ve had to cash in everything that we could potentially cash in,” Volk said. “We’ve got our water heater down to the lowest we could potentially tolerate.”

But still have your iphone 5s, $100/month data plan, cable, smokes and drinks…?

 
Comment by Mr. Smithers
2014-01-04 10:52:02

Awwwwww the poor babies. They can only stay on the dole for 2 years.

“This is the case for San Francisco resident Thadd Evans. He also holds a master’s degree, but the 63-year-old has been unable to find a job since being let go from a market research position in March. With unemployment insurance his sole source of income, ”

Dude, if at 63 you don’t have money saved up to supplement UI benefits, the problem is with you, not UI.

Always the same story….give me, give me, give me. And who pays for it? Who cares.

 
Comment by A Public Service Announcement
2014-01-04 10:55:26

Couple this article with the report furthur up in today’s blog about Warren Buffet’s decision to cut back on his holdings of companies that are dependent on consumer spending and one just may reach the conclusion that money flow eminating from consumers just may slow down a bit.

Which, if true, will cause any source of money flow that is lucky enough to remain intact to INCREASE IN VALUE.

And if this source of money flow that remains intact happens to be a job then one would do well to do whatever it takes to hold onto this job. And one of these things to do is to NOT RETIRE.

 
Comment by aNYCdj
2014-01-04 11:44:13

I keep telling you its not UI or benefits…its letting the resume get stale..

We should have never extended benefits without something in return, like school or even a non paid internship 20 hours a week..

Its the top job on your resume today, and very little else that matters..and it has to be in your filed not just a survival job during those 99 weeks.

 
Comment by MacBeth
2014-01-04 12:00:17

“This could pull the rug out from under 1.3 million families,” she said. Without an extension, an additional 2 million will fall off the rolls in the first half of the year.”

Lemme see….pass a healthcare law that will cost millions of people many hundreds of dollars a month for less benefit, then complain there’s no work for the downtrodden.

Move money out of productive use and into government hands, and this is what happens…

Congrats to all the NeoCon-Progressive Party members reading this board. Your plan is working.

 
Comment by Bill, just South of Irvine
2014-01-04 15:19:15

These 1.3 million people who disappear from the unemployment lines will still be able to vote for more Free $hit. And they don’t care if it is redistributed from your bank account or retirement account as long as it goes to them. Their drone agents will do the clerical duties and give the Eternal Robbery Service the okay to electronically tap YOUR accounts and redistribute. Problem solved. And don’t give me bll about the constitution forbidding this. The Messiah violated the constitution a lot. Statists and voluntaryists seem to agree on one thing: the constitution is not binding.

 
 
Comment by phony scandals
2014-01-04 10:14:14

This kind of False Flag event is going to take a lot of coordination with the Feinstein approved media.

So far the testing has gone well.

USA USA USA

“Today Americans would be outraged if U.N. troops entered Los Angeles to restore order; tomorrow they will be grateful. This is especially true if they were told there was an outside threat from beyond, whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will plead with world leaders to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well being granted to them by their world government.”

Henry Kissinger

Comment by rms
2014-01-04 10:59:54

“Henry Kissinger”

Dog food!

Comment by jose canusi
2014-01-04 11:06:15

Perverted pile of barely animated rotting meat. Can’t believe he’s still alive, if that’s what you call it.

Comment by Housing Analyst
2014-01-04 11:26:28

+ infinity.

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Comment by Housing Analyst
2014-01-04 11:24:12

Santa Rosa CA Housing Prices Down 8% Year over Year and Falling;

http://www.movoto.com/statistics/ca/santa-rosa.htm

Comment by azdude02
2014-01-04 14:44:05

the whole economy relies on rising asset prices. without rising asset prices there is no growth.

Comment by Housing Analyst
2014-01-04 14:51:30

Speak for yourself instead of the rest of us.

Comment by azdude02
2014-01-04 21:02:13

I speak the truth daniel son.

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Comment by Housing Analyst
2014-01-04 21:03:22

You don’t know what truth is.

 
 
 
 
 
Comment by phony scandals
2014-01-04 11:37:33

Should Congress give Obama fast-track authority for trade deals? No

By Don Kusler
McClatchy-Tribune News Service
Originally published Sunday, December 29, 2013 at 5:00 PM

FAST-track authority is a good idea in auto racing, but not in international trade policy.

That’s because fast track — also known as “trade promotion authority” — speeds trade pacts through Congress, denying the people’s representatives the chance to improve them.

Our democracy is damaged along with our economy. Since fast track’s original enactment in 1974, the U.S. has put dozens of trade agreements in place without this special anti-democratic process.

Our Constitution gives Congress exclusive power “to regulate commerce with foreign nations.” But fast track significantly interferes with that power by prohibiting the House and Senate from amending trade treaties or related legislation presented by the administration, instead allowing only up-or-down votes after limited debate.

It’s no coincidence that this assault on the principles of republican government is being raised again just when the administration wants to rush through Congress several big, flawed trade treaties. Advocates of unfair trade know they could never get the secretly negotiated pacts approved as currently written unless they rigged the rules first.

The most disturbing of them is the Trans-Pacific Partnership (TPP), which would economically unite a dozen countries in vastly different states of development and with radically different standards for worker rights, consumer safety and environmental protection.

As has been true of all our nation’s recent unfair trade pacts, rather than raise the standards to serve the public interest, the TPP would lower them to serve the interests of multinational corporations.

It’s important to understand that modern, comprehensive trade treaties like the TPP are about more than tariff levels. They threaten the very ideas of national sovereignty, community, self-determination and personal freedom in order to smooth the way to greater profits for transnational corporations, often by trumping laws passed by states and local communities.

Worker rights that might lead to higher wages, consumer safeguards that might add to the cost of production, environmental regulations that might crimp expansion plans: All of them can be swept away under the provisions of unfair trade pacts like the TPP.

Because such treaties are so far-ranging in their impact, there’s a need for more congressional oversight, not less. That’s particularly true because, beyond the social disruptions caused and despite the rosy predictions of unfair trade proponents, pacts like the TPP have not turned out to be good for the American economy.

As just one example: After signing a free-trade pact with South Korea a few years ago, our trade deficit with that country increased by 30 percent — not only did the Koreans export more to us, but we exported less to them. Falling exports translate into fewer good jobs for Americans.

Even proponents of the North American Free Trade Agreement — the 20-year-old pact between Canada, Mexico and the U.S. that was the prototype for megadeals like the TPP — have been hard-pressed to identify any net economic benefits for us. Meanwhile, the lost jobs, closed factories and fractured communities that resulted from the shifting of production to low-cost Mexico are tragically easy to measure.

Opponents of free-trade agreements are not opposed to international trade — we just want it to be fair. We want it to be good for American workers and consumers, not just big corporations. Included in the core of any such pacts (side agreements have never worked) should be respect for worker rights, consumer safety and environmental quality. Members of Congress from both parties have important improvements along these lines to make to the TPP, if given the chance.

But under fast track, they won’t have that chance. Congress should stand up for its rights as a coequal branch of government, and protect our rights as citizens of a democratic republic, by rejecting fast-track authority and beginning the process of transforming free trade into fair trade.

Don Kusler is executive director of Americans for Democratic Action in Washington, D.C.

http://seattletimes.com/html/opinion/2022546195_donkuslercontradeoped30xml.html - 81k

 
Comment by 2banana
2014-01-04 12:38:38

Judicial Watch Releases 11 Most Corrupt Politicians of 2013
JudicialWatch.org | 1/2/2014

(Washington, DC) – Judicial Watch today released its 2013 list of Washington’s “Ten Most Wanted Corrupt Politicians.” The list, in alphabetical order, includes:

• Speaker of the House John Boehner (R-OH)
• CIA Director John Brennan
• Senator Saxby Chambliss
• Former Secretary of State Hillary Clinton
• Attorney General Eric Holder
• Former IRS Commissioner Steven T. Miller / Former IRS Official Lois Lerner
• Former DHS Secretary Janet Napolitano
• President Barack Obama
• Senator Harry Reid (D-NV)
• Health Secretary Kathleen Sebelius

This year, Rice makes the Ten Worst list all on her own by joining with Barack Obama to add insult to injury by pulling an end-run around the United States Congress. Realizing that after her campaign of deception involving Benghazi, she could not be approved by the Senate for the job of Secretary of State she so clearly coveted, Rice accepted the position of National Security Advisor, which requires no Senate approval. Thus, her duplicity could be rewarded – without the American people having any say whatsoever in the matter.

 
Comment by 2banana
2014-01-04 12:53:18

Lord help you if live in NYC and are not part of the 1%…

—————————–

In NYC: De Blasio is All Ready to Make Bloomberg Look Great
Townhall | 01/04/2013 | Michael Schaus

Looking for advice on how to improve the NYPD’s ability to keep New Yorkers safe, incoming Mayor Bill de Blasio is turning to the experts in violent crime and criminal activity. . . Ex-convicts. And not the white collar Bernie Madoff convicts. De Blasio’s transition think tank (bankrolled by the liberal billionaire, George Soros) listened to the concerns of convicted criminals when it came to the NYPD’s policies and policing efforts. The message was pretty much what one would expect from convicted kidnappers, killers, thieves, and other NYC scum: “Get Soft on Crime.”

According to the NY Post, “A group of 50 ex-cons, junkies and chronic vagrants gathered at a Manhattan ‘Think Tank’ Thursday to describe what they thought the NYPD should be doing to make their lives easier… The event, which was held in Morningside Heights, was hosted by an advisory group called Talking Transitions, run by liberal billionaire investment magnate George Soros.”

Arthur Castillo – who has been convicted for possessing stolen property and assault – complained about the NYPD’s persistent surveillance of felons. The felonious forum member opined that “newly released prisoners are watched by the police, and a lot of us don’t feel we have an opportunity to readapt to normal life because we are treated as criminals.”

Castillo also called for a more “redistributive” approach to policing, parole, and prison operations. “A lot of money is spent on the prison system — it should be used to cultivate prisoner’s lives,” he explained.

Other ex-cons suggested that de Blasio make the city easier for illegal immigrants to find work.

The transition think tank will be advising de Blasio directly on this, and a number of other issues. And while it seems like lunacy to allow lunatics the chance to advise asylum management, the move is depressingly less-than-shocking. De Blasio, the City’s most left leaning Mayor in decades, ran on a decidedly socialist and altruistic platform. However, his liberal desire to paint aggressors – such as kidnappers, robbers, and violent criminal thugs – as the victimsof society’s prosperity was never made as abundantly clear as it was last week.

Comment by jose canusi
2014-01-04 15:13:05

Unbestinkinglievable, innit? As our old friend Neil used to say, “Got Popcorn?”

 
Comment by aNYCdj
2014-01-04 16:42:49

Well those thugs who beat jews in park slope can rest easier, hate crimes will only apply to white folks….

 
 
Comment by phony scandals
2014-01-04 13:45:11

Woof! Woof! Woof!

What’s that Lassie?

Woof! Woof!

The Realtor is lying again?

Woof!

Good girl Lassie, good girl.

http://www.youtube.com/watch?v=OqDcxr_Rw7M - 116k -

 
Comment by AbsoluteBeginner
2014-01-04 14:07:38

Thank you Colorado.

 
Comment by Whac-A-Bubble™
2014-01-04 15:41:41

Did you dump your bond fund yet? Don’t say I didn’t warn you — I’ve been posting and reposting this warning for months on end.

Comment by Whac-A-Bubble™
2014-01-04 15:46:24

Markets
Gross’s Black and Blue Year
Clients Pull a Net $41.1 Billion From Pimco Total Return Fund, an Industry Record
By Min Zeng
Updated Jan. 3, 2014 6:48 p.m. ET

A tumultuous past year for the world’s largest bond fund got a little rougher, as investors in Pimco Total Return Fund pulled out a net $41.1 billion in 2013, a mutual-fund industry record.

Client redemptions at the fund, run by Pacific Investment Management Co. co-Chief Investment Officer Bill Gross, broke the previous record of $33 billion in 2011 set by the Growth Fund of America stock fund run by American Funds, according to Morningstar Inc. (MORN +0.18%) data going back to 1993.

The figure underscores the challenges confronting Mr. Gross and other managers of traditional bond funds at a time when rising interest rates are prompting many investors to embrace alternatives such as floating-rate bonds and riskier debt such as “junk” bonds and stocks, which posted their biggest gains in more than a decade last year. When bond yields rise, their prices fall.

Mr. Gross’s fund, with $237 billion under management, is particularly vulnerable because of its large holdings of bonds such as U.S. Treasurys, which posted their first annual loss last year in five years. The 10-year Treasury yield rose 1.271 percentage points in 2013 to end the year at 3.030%, and many analysts expect the yield to rise further this year. On Friday, the 10-year yield rose to 2.997%, from 2.985% on Thursday.

Some investors aren’t waiting to see how the fund fares in the coming year. Margaret McDowell, a financial adviser at Arbor Wealth Management in Miramar Beach, Fla., pulled out of Mr. Gross’s fund in 2013. The company has $76 million in assets.

You don’t want to be the last one without a chair when the music stops,” Ms. McDowell said. “My advice is getting out of traditional bond funds and preparing for rising yields.”

Mr. Gross didn’t respond to a request for comment. He has urged investors in recent months to stay on board. “Flexible bond managers can adapt as well,” Mr. Gross said in his August investment outlook.

Mr. Gross’s fund posted a total-return loss of 1.92% in 2013, the second-biggest calendar-year decline since the fund’s debut in 1987, according to Morningstar, compared with a 2.02% drop in the Barclays U.S. Aggregate Bond Index. Pimco, based in Newport Beach, Calif., and a unit of Allianz SE of Germany, manages $2 trillion in assets.

The Pimco Total Return fund took in $85.8 billion in new cash from 2009 to 2012. Investors sought safety in Mr. Gross’s fund as Treasury bond prices soared following the financial crisis. The fund benefited from Mr. Gross’s shift before the crisis away from areas that would be hard-hit during the 2008 meltdown, such as debt backed by home loans. That move made the fund one of the industry’s top performers during the crisis years. But government-bond prices tumbled last year, as investors took heart over an improving U.S. economy and prospects the Federal Reserve would start winding down its bond-buying program. In December, the Fed said it would start tapering its bond purchases in January. The $85 billion a month in bond purchases has helped keep interest rates low.

Investors withdrew a net $31.1 billion in 2013 from Pimco’s U.S.-listed mutual funds, according to research firm Morningstar. Net inflows into the company’s stock funds and some nontraditional bond funds last year partly offset the redemptions at Pimco Total Return Fund. It was the first annual outflow for Pimco’s U.S.-listed mutual funds since 1993 when Morningstar started reporting fund flows.

“It may not matter whether [Mr.] Gross’s bond fund is particularly successful or not relative to its peers going forward, as long as investors continue to flee high-quality, interest-rate-sensitive bond portfolios overall,” said Eric Jacobson, director of fixed-income research for Morningstar.

Comment by Bill, just South of Irvine
2014-01-04 16:03:31

T-bills have 0 expense ratio at treasurydirect.gov. I have TBills maturing every four weeks, but they are 52- week T-bills. When my stake grows to $104,000 I will shift out of T bills and completely into two year notes, maturing on the same days I buy more.

Comment by Bill, just South of Irvine, CA
2014-01-04 22:09:27

While I do love Vanguard funds, not all of them are the best deal.

International:

PRASX beats VEIEX long run
DODFX beats any similar Vanguard international fund.
And the US Government’s TreasuryDirect T bills beats the highest quality Vanguard short term bond funds, even with maturities of 2 years.

Hopefully Vanguard will wake up and get its international funds in gear. Or maybe it’s just that T Rowe Price has a solid gold New Asia investment team and Dodge and Cox has a solid gold international investment team.

In most cases index funds beat managed funds and at lower costs.

Then the US government site. It has 0 expense fees. No one can top that for government securities investing. It handily beats Vanguard in short term securities.

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Comment by Prime_Is_Contained
2014-01-04 21:13:09

The Pimco Total Return fund took in $85.8 billion in new cash from 2009 to 2012.

What a pittance! They took in, in three year, what the Federal Reserve buys in a single month!

Pikers.

Comment by Whac-A-Bubble™
2014-01-04 21:22:19

Now you see why I always say, “Don’t fight the Fed.”

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Comment by Whac-A-Bubble™
2014-01-04 18:08:07

Barron’s MFQ | SATURDAY, JANUARY 4, 2014
What the Smart Money Says About Bonds
By MICHAEL ANEIRO

Bond investors just closed the books on a rough 2013. We surveyed some of the best fixed-income investors to hear what they expect this year.

Bond investors were more than happy to close the books on 2013. The question they face now is whether they’re in for anything better in 2014.

Thematically, income investors still face a backdrop similar to that of a year ago: A three-decade bull market is over; rates are now more likely to rise than they are to fall; and yields remain paltry, making big gains improbable and further losses possible. And of course, this all comes at a time when the growing number of retirees is raising the aggregate demand for income. Barron’s spoke with some big bond-fund managers to see how they’re preparing to weather what could be another choppy year.

FOR STARTERS, everyone agrees that rates will rise — a bit, at some point, probably not that soon. While there are many uncertainties about how the Federal Reserve under Janet Yellen’s leadership will continue the just-begun tapering of its bond-buying, there’s near-universal consensus that the Fed will keep short-term rates near zero well into next year.

Slow economic growth and inflation concerns will put a lid on any big moves, and augur a gradual rise over months, or even years. “We know rates are going up, but they’re bounded above by low growth and inflation, and bounded below due to the Fed’s tapering,” says Meg McClellan, global head of market strategies for fixed income at JPMorgan Asset Management.

The best hedge for rising rates, of course, is shifting toward shorter-duration bonds, which are less sensitive to rising interest rates. “The Fed isn’t going anywhere in terms of its policy rate, and that anchors the front end of the yield curve,” says Bill Gross, manager of the $244 billion Pimco Total Return fund (ticker: PTTAX), the biggest bond fund around. “There’s a lot of price safety in the one-to-five-year maturity range of investment-grade bonds, like corporate bonds and agency mortgages.”

 
 
Comment by Whac-A-Bubble™
2014-01-04 15:47:26

Would you stake your financial future investing in castles made of sand?

Comment by Whac-A-Bubble™
2014-01-04 15:56:31

Take it from a news magazine that is partially owned and dominated by members of the Rothschilds banking clan: America’s housing market is not in a bubble.

For the record, evidence that housing prices are increasing at similar rates to their pre-Housing Bubble collapse rates of increase suggests that the Housing Bubble continues. You’ll know this episode in financial history has finally ended when following the news about housing prices is more boring than watching paint dry.

Global house prices
Castles made of sand
Monetary policy may call an end to the house-price party
Jan 4th 2014 | From the print edition

HOUSE prices are now rising in 18 of the 23 countries we track across the globe, compared with just 12 a year ago. America tops our table: the Case-Shiller index released on New Year’s Eve reported price increases of 13.6% in the year to October 2013. Homes have risen in value by 24% since their March 2012 trough, but they remain 20% below their peak in April 2006.

Builders started work on over 1m new homes in America in the year to November, for only the second time since the financial crisis ended. But this is far short of the 2.3m recorded in January 2006, and below the long-run average of 1.5m. In all, American property is enjoying a recovery but not a bubble.

The Federal Reserve’s decision to start tapering its buying of bonds with newly-created money (ie, to scale back the policy commonly known as quantitative easing, or QE) by $10 billion to $75 billion a month from January may take some wind out of house sales. Although mortgage rates are rising, thanks to higher bond yields, housing remains affordable. Prices are now at or around fair value according to The Economist’s measure, which compares prices with the long-run average of rents and personal incomes.

Prices in Britain increased at their fastest rate for three years in October, fuelling fears of a housing bubble (and subsequent crash), particularly in London where prices increased by 12%. Although by our measure housing is overvalued against both rents and income, Britain did not suffer a housing crash on the scale of America’s, largely because supply is so tight. Britain’s government scrapped house-building targets in 2010. Projections of new-household formation suggest 290,000 new homes will need to be built every year through to 2031. But in the 12 months to March 2013 housing completions fell to 135,000, their lowest level since records began in 1949.

The north-south divide in the euro area continues: in Greece, Spain and Italy house prices declined by between 5% and 10%. However, the market has finally bottomed out in Ireland: after halving over six years, prices are now 9% above their March low. Prices in Germany, which has the lowest home-ownership rate in the EU at 53%, are rising at the fastest rate since reunification, although housing is still undervalued against both rents and income.

 
Comment by Whac-A-Bubble™
2014-01-04 16:00:04

This is a recurring theme at The Economist. I wonder how many more years will pass before top Western country economic policy makers take note?

Housing
Building castles of sand
Governments spent a fortune encouraging people to buy houses. That was a mistake they now risk repeating
Apr 16th 2009
| From the print edition

BANKERS, frauds, predatory insurers: there has been a stampede to punish the villains of the global meltdown. Yet one culprit is not only rarely seen as an offender, but is also being cosseted and protected. Governments’ obsession about home ownership has contributed as much to the meltdown as any moustache-twirling financier.

The bust began in America’s housing market and soon spread to government-sponsored institutions created to increase home ownership, Fannie Mae and Freddie Mac. Part of the problem came about because of policy. In most rich countries the state subsidises private housing. Some places (America, Ireland and Spain) give tax relief on mortgage-interest payments. Others, such as Britain, eliminate or lower the tax on capital gains from sales of someone’s main house. Still others use state-backed outfits to direct credit to housing or to make it easier for first-time buyers or the poor to buy their own homes. Subsidies are not to blame for everything—the housing bubble affected a range of markets regardless of how much they were subsidised—but the distortions aggravated the boom and bust by making housing artificially attractive.

Governments subsidise home ownership because they think it encourages stable, more law-abiding neighbourhoods. The children of homeowners do better at school than the children of renters do. Homeowners are more engaged in local democracy. And, because homeowners must pay off their mortgages, housing supposedly encourages people to save more than they otherwise would.

Yet as our article argues, the benefits of subsidies have proved smaller than expected and the costs much greater. Home ownership may indeed instil neighbourly stability (though Germany with its high levels of stability and renting suggests the two need not go together). But who said local stability was so desirable? A stable neighbourhood may be one in which people refuse to move in search of jobs.

Government backing sucked money into housing, boosting prices. Since millions use their homes as collateral for general loans, the house-price boom also exaggerated the consumer boom while it lasted, and amplified the bust when that came. Perversely, public policy even undermined the very things governments were trying to encourage. Housing policy aims at boosting savings. Yet home-equity loans and “negative amortisation” mortgages boosted spending.

Comment by Bill, just South of Irvine, CA
2014-01-04 16:22:51

“Governments subsidise home ownership because they think it encourages stable, more law-abiding government force-tolerant neighbourhoods full of sheep. The children of homeowners do better at school than the children of renters do (where is the URL of proof?). Homeowners are more engaged in the local sport of democracy using the ballot box to steal from their neighbor. ”

Fixed it for ya.

Comment by Whac-A-Bubble™
2014-01-04 18:03:00

Good job! I love the corrections!!

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Comment by Whac-A-Bubble™
 
 
Comment by Whac-A-Bubble™
2014-01-04 16:01:28

Is the plan for U.S. municipal governments to use eminent domain to help “underwater” homeowners still in play?

Comment by Whac-A-Bubble™
2014-01-04 16:11:56

Well whad’ya know?

The thing I like about this idea is that it pits homeowners in local municipalities directly against lenders who made foolish subprime loans. The more private entities like mortgage lending firms are on the hook for housing market losses, the less other American taxpayers who had nothing to do with the bad loans will get stuck with the tab for bad gambling debt.

America’s housing market
Not waving but drowning
A radical plan to help “underwater” homeowners makes a comeback
Jan 4th 2014 | IRVINGTON, NEW JERSEY, AND LOS ANGELES | From the print edition

IN 2000 Loretta and Clifton Christian bought a two-family home in Irvington, a hardscrabble New Jersey town of 54,000, for $132,000. They poured money into it, fixing the roof and replacing the boiler. But in 2008 the world caved in and the couple lost their jobs soon afterwards; they now live off their pension and the income from a second-floor flat they let out. They manage to meet their monthly mortgage payments of $1,845. But their house is now worth just $71,000, significantly less than the outstanding mortgage of $115,000.

Nearly 11m American homes are similarly “underwater”. Despite the housing recovery, parts of the country are still struggling: 3m-4m people are in default, in foreclosure or awaiting liquidation. According to New Jersey Community United, a lobby group, nearly one in four homes in the state is worth less than the mortgage.

Hence the return of an unorthodox proposal many thought had been laid to rest: for municipal governments to use eminent-domain (or compulsory-purchase) powers to seize underwater mortgages at below the home’s market value and to refinance them at lower rates. Homeowners get to stay put, and the city and a private sector partner split the profit. Governments traditionally use eminent domain to force property owners to sell their land for public projects such as railways. But high foreclosure rates lead to problems like blight, crime and falling house prices; some argue that cities and counties ought therefore to be able to invoke eminent domain in depressed housing markets for the public good.

The San Francisco-based Mortgage Resolution Partners (MRP), the private partner in question, first floated the idea in 2012. Several municipalities in the Inland Empire, a sprawl east of Los Angeles whacked by the foreclosure crisis, expressed interest, but dropped the idea last January under pressure from investors. Greg Devereaux, chief executive of San Bernardino county, one of the municipalities, says public support was not particularly forthcoming.
Explore and compare house prices in 20 US cities over time with our interactive house-price tool

But like a movie monster, the eminent-domain proposal is back, and apparently stronger than ever. Irvington is in talks with MRP. Nearby Newark, New Jersey’s biggest city, is considering it, as are about a dozen other cities around the country. Most have been influenced by Robert Hockett of Cornell Law School, who has written about municipal governments’ eminent-domain powers. He has been advising several cities about the proposal. Farthest down the road is Richmond, a struggling city east of San Francisco. In July the city wrote to the holders of 624 mortgages asking to purchase the debt at 80% of market value and threatening to invoke eminent domain if it did not obtain satisfaction. (Those that responded said they were not authorised to comply.) The council has voted to push the plan forward several times since then, although it does not yet have the supermajority that state law requires to execute it. Officials hope to get around that by partnering with other Californian cities.

Comment by aNYCdj
2014-01-04 16:49:08

Irvington’s problems are due to the people of Irvington — not foreclosures….hint people of color moved in..lots of them….prices plummeted.

 
 
 
Comment by phony scandals
2014-01-04 16:21:55

Jupiter police charge West Palm man with retail theft; ‘I have to make a living somehow,’ accused allegedly tells officers

Posted: 8:57 a.m. Saturday, Jan. 4, 2014
By Julius Whigham II
Palm Beach Post Staff Writer

JUPITER —
Adam Zucchini didn’t give up easily after getting caught trying to steal from a drug store Thursday night, town police said.

Zucchini handed the stolen merchandise back to its manager, then took items from another drug store across the street, then moved down Indiantown Road to Home Depot, where he was finally arrested, police said.

In all, he took more than $900 in merchandise from the two drug stores, according to a probable-cause affidavit made public Friday.

Police also alleged Zucchini made a fraudulent return at Home Depot store in suburban Lake Worth back in May.

The 30-year-old West Palm Beach man was booked into the Palm Beach County Jail on Thursday on a charge of retail theft. He remained in custody Saturday evening in lieu of $3,000 bond.

The most recent incident began around 6 p.m. Thursday at the Walgreens store at Indiantown Road and Military Trail, the affidavit said. The store manager watched Zucchini fill a shopping cart with items, then walk to the store exit.

She asked him for a receipt. Zucchini handed her the items.

“I don’t have one. You caught me,” the affidavit quotes Zucchini as saying.

Asked what he thought he was doing, he reportedly said: “I have to make a living somehow.”

http://www.palmbeachpost.com/news/news/crime-law/jupiter-police-charge-west-palm-man-with-retail-th/nccPS/ - 85k -

 
Comment by Bill, just South of Irvine, CA
2014-01-04 17:44:54

In Southern California there are areas which are annually in the top ten safest places to live. At least we heard of this a lot for years: Simi Valley, Orange County.

Southern California has a population of roughly 22 million people http://en.wikipedia.org/wiki/Southern_California. The Greater Los Angeles area is 17.5 million of this.

If you are a trained engineer and you work in tech in the above region, and you’ve been in this area for many years, you are well aware that you have employment cycles, such as the 1990s BRAC (Base Realignment and Closure) which turned a lot of engineers’ commuting and lives - http://www.tailgate365.com/wp-content/uploads/2010/09/falling-down.jpg - upside down. To survive and stay employed and be able to be a sheeple who drank the Kool-Aid thinking real estate is the way to go for a white collar worker in this huge region, you had to have two hour commutes each way 5 days a week for a few years at some points.

Defense jobs are scattered all over the area. Inland empire March AFB area, for example - but a lot of its functions were reduced by BRAC), Edwards AFB in Lancaster, San Diego’s huge navy installations, El Segundo’s defense companies and so on.

I knew of people commuting from Palmdale, Rancho Cucamonga, Thousand Oaks, Irvine, even San Diego to the South Bay part of L.A. Just so they could say they “own” a house.

These are 4 or 5 hours of driving per day. Add work to that, which is usually “twisted arm work for free beyond 8 hours) and you don’t have much of a day left. You spend maybe 4 conscious hours a day with your spouse and kids and house.

I rented a total of $2,350 per month when I lived in the South Bay two miles from where I worked. These colleagues were driving cars they had to replace every five or six years and paying mortgages on houses they hopefully bought before 2004. If they spend one hour of day exercising, they lose one more hour of sleep.

How much sleep do they really get?

Is it all worth it to say you are a “home owner” and a “parent” and you are therefore participating in a community and being a “law abiding” sheople and more likely to participate in “democracy?”

Where’s the Hoaxster to answer this?

Comment by azdude02
2014-01-04 20:59:34

time to leave ca for greener pastures.

Comment by Realtor Fun
2014-01-05 14:04:06

I’d love to leave California but I just can’t get rid of this house without losing my shirt!

Comment by Whac-A-Bubble™
2014-01-05 16:34:09
(Comments wont nest below this level)
 
 
 
 
Comment by Bill, just South of Irvine, CA
2014-01-04 21:19:56

Here is why looks do count:

http://www.blubberbuster.com/school/benefits.htm

Today’s young people not only have less net worth than their parents, they will live shorter lives than their parents.

Fitness = health.
Health = sexy.

 
Comment by Whac-A-Bubble™
2014-01-04 21:20:23

I’ve been reading discussions about what bubbles are or aren’t in finance textbooks. The flavor of these is generally of this nature:

– Such-and-such mathematical assumptions in this model of asset prices imply that trees will grow to the sky.

– Since trees can’t grow to the sky, bubbles are impossible.

However, it trees can evidently grow to the sky for quite a while before they topple over of their own weight. I’d like to see a model of a bubble which includes this toppling over tendency of bubbles that grow out of control for too long.

 
Comment by Whac-A-Bubble™
2014-01-04 21:29:41

Is it possible that another stock market bubble is forming?

Comment by Whac-A-Bubble™
2014-01-04 21:31:15

Heard on the Street
Bursting the Stock-Market-Bubble Bubble
By Justin Lahart
Dec. 15, 2013 1:46 p.m. ET

No, stocks are not in a bubble. But that doesn’t mean investors must like them.

With the S&P 500 up a blistering 25% this year, and with stocks like Tesla Motors TSLA -0.36% sporting valuations that strain belief, the word “bubble” has been getting batted around a lot lately. Case in point: Over the past three months, a Factiva search returns 391 news articles with “bubble” in close proximity to “stock market”, up from 130 over the same period last year.

Stock-market volume remains muted, a sign that stocks are not in a bubble. Above, traders at the NYSE last week. Reuters

Given that the dot-com stock bubble occurred during the professional lives of many, if not most, people investing today, the idea that what’s happening now is similar is odd. The S&P traded at 28 times prior-year earnings at its peak in 2000 compared with a price/earnings ratio of 17 now. The Nasdaq Composite’s ratio was 142 at its peak compared with 22 now.

Nor should the fact that some companies’ shares seem bubbly be taken as a reason to be in a lather about the overall market. Think about the great enthusiasm investors showed for bowling-company stocks in the late 1950s and early 1960s.

 
Comment by Whac-A-Bubble™
2014-01-04 21:32:42

Stocks Begin 2014 With Inflating Bubbles
BY Richard Suttmeier | 01/02/14 - 07:32 AM EST
Find out if (DIA) is in Cramer’s Portfolio.

NEW YORK (TheStreet) — The stock market begins 2014 as an inflating bubble in a setup that reminds me of the market dynamics at the end of 1999. With the Nasdaq at 4069 on Dec. 31, 1999, I said, ‘I don’t know how high the Nasdaq can go in 2000, but it will drop into the 3500 to 3000 range at some point during the year.’

The stock market begins 2014 with 86.4% of all stocks overvalued and with 61.2% overvalued by 20% or more. The five major equity averages have positive but overbought weekly chart profiles. My proprietary analytics begin the year with tangled bowl of spaghetti of monthly, quarterly, semiannual and annual value levels, pivots and risky levels. It seems like the stock market bubble can inflate further, but that there’s significant downside risk to annual value levels when the bubbles pops. In this environment I am providing my buy-and-trade parameters for the SPDR Dow Jones Industrial Average (DIA), the Nasdaq 100 Shares (QQQ) and the S&P 500 SPDRS (SPY).

Three of the five major equity averages ended 2013 setting new all-time intra-day highs at 16,588.25 on the Dow Industrial Average, 1849.44 the S&P 500 and 7410.25 the Dow transportation average. The Nasdaq set a new multi-year intra-day high at 4177.73. The Russell 2000 set its all-time intra-day high at 1167.96 on Dec. 26.

 
Comment by Whac-A-Bubble™
2014-01-04 21:35:13

INVESTING
Stocks begin 2014 in growing bubbles
The major equity averages show bubble characteristics with overvalued fundamentals, overbought weekly technicals and a spaghetti bowl of value levels.
By TheStreet.com Staff Thu 12:15 PM
Bubble with dollar sign © Ikon Images/CorbisBy Richard Suttmeier

NEW YORK (TheStreet) — The stock market begins 2014 as an inflating bubble in a setup that reminds me of the market dynamics at the end of 1999. With the Nasdaq at 4069 on Dec. 31, 1999, I said, ‘I don’t know how high the Nasdaq can go in 2000, but it will drop into the 3500 to 3000 range at some point during the year.’

The stock market begins 2014 with 86.4 percent of all stocks overvalued and with 61.2 percent overvalued by 20 percent or more. The five major equity averages have positive but overbought weekly chart profiles. My proprietary analytics begin the year with tangled bowl of spaghetti of monthly, quarterly, semiannual and annual value levels, pivots and risky levels. It seems like the stock market bubble can inflate further, but that there’s significant downside risk to annual value levels when the bubbles pops. In this environment I am providing my buy-and-trade parameters for the SPDR Dow Jones Industrial Average (DIA +0.17%), the Nasdaq 100 Shares (QQQ -0.72%) and the S&P 500 SPDRS (SPY -0.02%).The Street on MSN Money

Three of the five major equity averages ended 2013 setting new all-time intra-day highs at 16,588.25 on the Dow Industrial Average, 1849.44 the S&P 500 and 7410.25 the Dow transportation average. The Nasdaq set a new multi-year intra-day high at 4177.73. The Russell 2000 set its all-time intra-day high at 1167.96 on Dec. 26.

Last year was the first year of the past 20 years where the major equity averages did not test their 200-day simple moving averages with just two exceptions. The Nasdaq stayed above its 200-day all year in 1999 and Dow transports did the same in 1997. Over the last 20 years there have not been two consecutive years where the 200-day SMAs were not tested. My prediction for 2014 is that the major equity averages will their 200-day SMAs as a reversion to the mean. The 200-day SMAs begin 2014 at; 15,294 Dow Industrials, 1679.3 S&P 500, 3639 Nasdaq, 6564 Dow transports and 1034.53 Russell 2000.

 
Comment by Whac-A-Bubble™
2014-01-04 21:36:32

ft dot com
December 27, 2013 4:08 pm
Nearly half UK money managers fear stocks are in bubble territory
By Christopher Thompson

Nearly half of all UK money managers believe that stock prices are in bubble territory following one of the biggest annual stock market rallies in over a decade, according to new research.

Forty-four per cent of investment managers polled by the CFA Society, the largest organisation of UK asset managers, believe that stocks in developed markets were overvalued during the last quarter of 2013, up from 37 per cent in the previous quarter.

The survey added that two-thirds of money managers believe corporate bonds are overvalued while 78 per cent of respondents think government bonds are richly priced. By contrast, half of the respondents said that stocks in emerging markets are undervalued, the largest proportion of any asset class, although this is a slight decline from the third quarter.

Will Goodhard, CFA’s chief executive, said the poll chimed with a broader market view that the quantitative easing programmes pursued by the US Federal Reserve and the Bank of Japan helped inflate some asset prices.

“It appears that members see the stimulative central bank monetary policies as having inflated asset values broadly,” he said. “During the third quarter, there had been signs that our members believed we were moving towards a normalised market . . . the final quarter of 2013 marks a reversal of this trend, with the perception that asset classes are overvalued rising across the board, most markedly in developed market equities and government bonds.”

 
Comment by Whac-A-Bubble™
2014-01-04 21:37:32

I really had to search high and low to find articles on the stock market bubble (not!).

With so many folks out there who “know” a stock market is forming, is it even possible for one to form?

Comment by Prime_Is_Contained
2014-01-05 05:38:57

With so many folks out there who “know” a stock market is forming, is it even possible for one to form?

Seems unlikely, doesn’t it? I think of a bubble as requiring the psychology of denial, but perhaps my mental definition is flawed.

 
 
 
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