Bits Bucket for January 7, 2014
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Comment by Jingle Male
2014-01-04 06:59:53
Wage inflation is the result of price inflation. No one employer will voluntarily pay more wages…..the workers demand raises because prices are rising demand it.
you’re correct that no employer will pay more wages if he doesn’t have to. but you’re wrong that wage inflation is the result of price inflation. you should understand that there’s no such thing as wage ‘inflation’. ‘inflation’ implies a non-legit rise. something like the beanie babies or tulips or housing manias. all those things and more can give rise to ‘bubbles’. but paid labor doesn’t have bubbles. paid labor is a core value. value motivates us to action, to work.
unions do attempt to price fix labor through extortion, but it’s very localized. it’s a small percentage of overall labor. in addition, the overall effect of unions is to lessen the value of labor through its economy weakening actions. but unions are a side point. they aren’t very germane to the issue.
wages (in real terms, if not nominally) rise naturally in a strengthening economy and decline in a weakening economy. prices mostly rise in a weakening economy. and prices naturally decline in a strengthening economy. keynesians and the news media say this is false, but it isn’t.
most people believe that business failures and fewer jobs mean lower prices because more people can’t pay old asking prices. but with fewer people able to buy products, prices often have to rise for manufacturers to stay in business. economies of scale work in reverse.
people should also understand that selling things like cars and houses, isn’t labor. it’s simply selling. the dry wallers, electricians, framers, roofers, plumbers etc. are the laborers. they are at the core of value. salesmen are not, which is why they can often make more than they’re really worth. i’m not saying we don’t need salesmen, just that they aren’t real laborers, so they aren’t tied to primary value. salesmen don’t make a product.
the point is that rising prices don’t dictate wages. rising wealth and prosperity dictate wages. employers competing for workers means better working conditions and higher pay. workers competing for jobs/employers means worse working conditions and lower pay.
There is no inflation without wage inflation. And considering there has been no wage inflation, prices aren’t inflated. They’re fixed.
prices aren’t inflated. They’re fixed.
yes, much price fixing going on.
targeting interest rates = price fixing
unions attempt to fix the price of labor
on and on..
Offshore proxies making buys=Price Fixing
price fixing is prevalent, but not ubiquitous.
price fixing only happens when an authority tries to fix prices. manias, like with beanie babies, aren’t price fixing.
Good point however bidding up the price of commodities required to fabricate beanie babies in the name of “price stabilization” certainly meets the criteria.
price fixing lead to the housing bubble mania.
first, it was artificially low interest rates that made money cheap. cheap money builds bubbles.
next there were laws like the CRA and loosing of regs like glass-steagall. then tax incentives like MID. all these attempts to price fix drove the housing mania.
I think JoneZ eloquently identified the most influential price fixing scheme in housing which is the FHA financing price ceilings.
bidding up the price of commodities required to fabricate beanie babies in the name of “price stabilization” certainly meets the criteria.
yes, that was done with outside authority be it banks or government.
my only point is that manias aren’t always the result of price fixing. they can happen naturally.
I think JoneZ eloquently identified the most influential price fixing scheme in housing which is the FHA financing price ceilings.
yes, there are many examples. it would take a long time to list them all.
“my only point is that manias aren’t always the result of price fixing. they can happen naturally.”
But post-mania, price stasis can(and does in the case of housing) occur with price fixing efforts.
yep.
the point is that rising prices don’t dictate wages. rising wealth and prosperity dictate wages.
Not necessarily.
employers competing for workers means better working conditions and higher pay.
Yup. But even then employers will do whatever they can to prevent this. And there are a lot of eager, hungry and educated workers in the global jobs marketplace, willing to work for a pittance.
Not necessarily.
vague. can you make a logical argument against it?
But even then employers will do whatever they can to prevent this.
agree in the sense that they always try to pay the least amount. don’t agree in the sense that employers actively do things against employees just for spite.
And there are a lot of eager, hungry and educated workers in the global jobs marketplace, willing to work for a pittance.
yes, wouldn’t it be nice if there were many more jobs than workers..
vague. can you make a logical argument against it?
I think you answered it yourself:
“agree in the sense that they always try to pay the least amount.”
don’t agree in the sense that employers actively do things against employees just for spite.
Not out of spite, but they’ll sure do it out of greed.
I think you answered it yourself:
“agree in the sense that they always try to pay the least amount.”
this is what i thought you’d say. it has always been like this. employers have never, and will never pay more out of the goodness of their hearts.
nobody runs a business for altruistic reasons. everyone runs a business to make a profit. there’s nothing wrong with paying as little as you can. and there’s nothing wrong with a worker negotiating for as much as he can get.
the way workers get more, is to have a growing, prosperous economy to work in. then employers have to pay them more because they are in competition with other employers for workers.
Not out of spite, but they’ll sure do it out of greed.
everyone wants as much profit as they can get. don’t forget that wages come from profits. but employers lose their advantage in a good economy, as workers gain other options.
“Remember… Housing is a depreciating asset and always a loss. Your losses are magnified tremendously if you paid more than $40/sqft for a used house. Your losses are irrecoverable in your lifetime if you financed it.”
You better believe it.
good morning renter for life. how much did u tip your landlord for xmas?
Good morning $hitHousePoet…
Did you know that houses are rapidly depreciating assets?
With the money I saved by renting over the years instead of PITI-uM, my mutual fund companies gifted me $3,000 in December. I, in turn, gifted myself by realizing $14,000 in stock gains, converted my 2013 nondeductible traditional IRA to Roth, and bought $1250 more of Dodfx, an international stock fund.
we think your full of beans bill. one who has to brag about his money quite often has none. your not fooling anyone here.
Correction: one who has to brag about his equity quite often has none
I’m sure he has alot of equity…. it just happens to be negative….. just like anyone else who bought a house in the last 15 years.
Honestly do not think that applies to Bill. He has never posted anything inconsistent on this blog that I have seen.
Bill’s single and lives well below his income of course he has allot of money saved up. I work with more than a few single Engineers and most are Millionaires, at least the old timers who went through the IPO.
Divorce and or kids is what separates millionaires from 100 thousandaires where I work.
I’ve never been divorced but have kids and they are incredibly expensive. About 1 million each I guess.
Yes, but the “my balance sheet is huge and growing because I’m renting” commentary is getting old.
The truth is that Bill is doing well because he is living well below his means. From what I can tell, Bill’s success in saving has less to do with renting vs. owning, and much more to do with being single and choosing to live in a 1-bedroom apartment instead of a 2 or three bedroom apartment or house.
We too live well below our means. But for our family, we own our house (subject to a mortgage, of course), with PITI approximately 12% of our income. The result is that our net worth has also been growing quickly…but I don’t post the number of digits that it goes up each month claiming that the reason is because of equity growth.
The reason both Bill and my net worth are rising consistently is because we both are living well below our means, and investing the free cash flow that we generate.
Gee, look at that. I was convinced that you had to rent in order to gain any financial traction. Now it turns out that you only have to live below your means! The big question is: Will the renters continue their diatribe against homeowners, ya know-since they have “so much cash, they don’t know what to do with it because they rent?”
“The reason both Bill and my net worth are rising consistently is because we both are living well below our means, and investing the free cash flow that we generate.”
There is no starker contrast than you and Bill. You paid a massively inflated price for a depreciating asset while Bill rents at a fraction of your inflated costs. That is precisely why guys like myself and Bill have a million in loose cash sitting around.
You’ve got a frog in your pocket.
’so much cash’
thanks for reminding me.
i have so much money left after ‘throwing money away on rent’ every month that i don’t know where to throw it.
i haven’t raked a leaf, mowed a lawn, or shoveled snow since 2006.
and yesterday the temperature outside was less than any of my heating bills for the last several years, the latter of course being zero.
’so much cash, gotta keep it in hefty bags’ — ice t
“i haven’t raked a leaf, mowed a lawn, or shoveled snow since 2006.
and yesterday the temperature outside was less than any of my heating bills for the last several years, the latter of course being zero.”
This may be true, but you paid your landlord to take care of those things anyway. Ditto property taxes, insurance, utilities etc… That is all rolled into your rent also (if you aren’t already paying seperately). No such thing as free.
Paying the landlord is half the cost of buying at current grossly inflated asking prices of resale housing.
Call a spade a spade. You will get screwed on housing no matter what you do. Those things that you think are “free” with rent are still bought and paid for.
Cue the overpriced debt for 30 year response…. I bought below my means and paid a 30 year note off in less than 9 years. People all over have done the same. The people you are targeting with your dribble are probably not those who participate in these discussions.
And your losses grow by the day.
Get over it and get on with your life.
Typical response I would expect from a grown man still living in a studio apartment. When confronted with no comeback, will resort to: You have a depreciating asset! No, actually I don’t, because my house is not an asset to begin with; it’s a roof over my head numbskull.
And it’s a loss which grows by the day.
So the cash money millionaires on this site are still working day jobs and dicking around on the HBB all day.
You can do that with a part time job at the mall.
Apparently millions in the bank isn’t worth shit.
“That is all rolled into your rent”
Which is a check written once a month. There are no surprises. My electric bill is $30/month most of the year and up to $80/month in the summer. I spend neither time nor money on maintenance or repairs.
The value of never having to set foot inside of a Home Depot is incalculable.
Ah, but you are spending money for repairs, or the chance there being a repair. You see, landlords have factored all of this into their prices. If your fridge goes out, you are paying for it, just not in the lump sum bill that a homeowner would expect. Show me a landlord that lets you live under their roof at cost, and I will show that you are living in your parent’s basement.
Maintenance and landscaping is not for everyone, thus, renting suits these type of people. I rather enjoy these activities (most of the time), so to me, these aren’t deal breakers.
“Apparently millions in the bank isn’t worth shit.”
No…. its worth about……… a million dollars
You can own your home and have a big bank account the very same way you can rent and have a big bank account.
It’s all about living below your means, saving consistently and starting early.
It may be a surprise to people, a home does not always represent the majority of a person’s assets, nor should it.
“You can own your home and have a big bank account the very same way you can rent and have a big bank account.”
LOLZ
That’s why the homedebtorship rate is at multi decade lows and falling.
“Paying the landlord is half the cost of buying at current grossly inflated asking prices of resale housing.”
Too bad Jingleballs and her band of california debt donkeys didn’t heed that truth.
“living below their means”
That’s why Bill in Los Angeles = WIN
Lamo HA. In fact, you too are paying inflated prices to the landlord that paid an inflated price for the building you reside in. You see, sh1t trickles downstream, and you are in the retention pond. Funny how you think you are somehow getting ahead, when in reality, you will never build equity and always be sometimes rent slave. Your whole argument falls by the wayside when you are talking to people who didn’t pay either grossly inflated or current prices or both. So keep spewing nonsense on these blogs so you can feel better about your lonely life. A million dollars is worth nothing when this country collapses. If you were smart you’d be bragging about how much gold and ammo you own. That will be the only form of currency at that point.
You paid a grossly inflated price for a rapidly depreciating asset like millions of others. You could have saved yourself a lifetime of irrecoverable losses if you’d have rented. Rents are half the cost of buying.
Remember….Housing is a depreciating asset and always a loss.
I’ve owned my house free and clear for the last 16 years. Whether you think it’s grossly inflated is only your opinion, merely conjecture at this point. Fact is I’m paying between a fifth to an eight of your rent costs for a roof over my head. Have fun with those rent payments. I’ll call you expense donkey.
That and a dollar will get you a cup of coffee around here.
The reality is current asking prices are a 40% premium over construction costs (lot, labor, materials and profit).
Great, so if I sell now, I can expect 40% more money. Except I’d be in the same boat as you throwing money away in rent.
I can put a $50k price on my 14 year old Chevy truck but where are the buyers?
So it is with housing.
Remember… Housing demand is at 16 year lows and falling.
No…. its worth about……… a million dollars
…….which is worth…. less and less every day……
“Divorce and or kids is what separates millionaires from 100 thousandaires where I work.”
Divorce — no.
Kids — check.
But in fairness to Bill near Irvine, I honestly doubt I would have tried half as hard in life if I didn’t have kids to support. In fact, I didn’t really try that hard in life until I got married. There is something very admirable about someone who works hard on principle, rather than out of necessity.
Not at all. Remember… we’re in a deflationary spiral.
The truth hurts some times, but that doesn’t obviate it. Just ask the 6.4 million U.S. homeowners with underwater mortgages.
And this number is set to grow by leaps and bounds with the prospect of ever-rising mortgage rates from here on out. Wait for it!
I guess it’s possible the Yellen Fed will further rig the game in favor of the underwater borrowers whose bad financial decisions led to their victimhood. Protecting victims from self-inflicted gunshot wounds seems to be the Democratic party’s modus operandi.
This message sponsored by the National Association of Realtors®
Native American Indian weather broadcast straight off of a reservation TV station in North Dakota:
A weather report that doesn’t take 10 minutes to explain with multiple graphics and words. Short, concise and to the point.
http://www.youtube.com/watch?v=x8hGIF9FljM
The funny thing about it is that the long winded reports are supposed to be entertaining, but this was a lot more amusing.
I can’t stand the local news broadcasts, and the weather report is one of the reasons. So much easier to go online and get the forecast data you want and need, without the filler.
Blackhawk likes brevity!
LOL. It expires in May … Funny. Poor people. That was from over 2 years ago. Let’s see what their weather is in 2014. Oh, hey! A low of minus 19 tonight. Yeah. Poor people.
If you take on mortgage debt at current massively inflated housing prices, you’ll enslave yourself for the rest of your life.
“Debt is bondage.”~Suze Orman, May 11, 2013
In other words, don’t buy housing at these massively inflated prices.
Don’t Be A Debt Donkey®
“Debt is bondage.”
What a beautiful statement.
Slavery is still with us but instead of slavery being forced upon people slavery is now being entered into voluntarily.
The work that coercion used to do is now done by persuasion.
persuasion.
High school peer pressure.
Which is a beautiful thing if this high school peer pressure can be extended out for an entire lifetime.
Dumb ‘em down in high school and keep ‘em dumbed down for their entire lives and you will have it made if you can get them to buy into what you are selling.
Start out telling them “People are smart” and go from there.
I believe this blog is being deliberately disrupted by paid shills. I can’t decide which kind is my favorite though, long termers like Lola or quick hitters who pop up once and are gone forever.
I’ve stated that all along. One media consultant creates two caricatures that take polemic positions and argue with themselves in a way that achieves their desired outcomes. It’s old internet stuff really and media consultants are everywhere on the net.
Beware.
I have not seen any sign whatsoever of shills - paid or otherwise - appearing on this blog.
There’s nutin’ here but da truth.
I just hit 3700 followers on Twitter!
Can you sneak away for a lunchtime quickie today without Mrs. Banker noticing to help me celebrate?
Pick me! I have plenty of time these days!
“Can you sneak away for a lunchtime quickie today without Mrs. Banker noticing to help me celebrate?”
The holidays are over, and the kidz are back in school.
“lunchtime quickie”
How ’bout a morner; It’s like a nooner, but sooner.
Oh no you don’t! Amy is my Tweener……. tween here and home!
Amy, stop being such a slut. You’re making MarketWatch look bad.
Being a slut is how you get on MarketWatch.
At least a financial slut.
Amy can you help me buy in one of these cities:
http://www.escapehere.com/destination/the-10-most-dangerous-cities-in-the-us/10/
familyblogfamilyblogfamilyblog
“Housing is a depreciating asset and a loss, always. Your losses are magnified tremendously if you finance it.”
BINGO
…..”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.”
Skyrocketing housing inventory, collapsing housing demand, collapsing household formation, doubled borrowing costs….
Housing prices are grossly inflated and falling once again.
Actually, around me at least, they will more likely be leaving a crap load of retirement home communities empty. What will happen to those?
“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
disgruntled renter its time for some new material.
Are you willing to double-down on a depreciating asset at current grossly inflated asking prices?
Hello Realtor®
“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%.
“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 16 year lows and falling precipitously.
“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.
“Make it a matter of personal policy; Don’t Borrow Money.”
You got that right!
The ads I’m getting on the HBB pages here in Shanghai crack me up. I always got pretty conservative ads in the USA. These are basically all for video games with very realistic physics for unsupported breasts…if a bit unrealistic regarding size on small Asian women.
Hi Carl:
I am in Shanghai, Puxi area, near the Shanghai Train Station. Let me know how to contact you and we can meet up.
I posted my email address in the previous thread where you asked. Unfortunately my schedule is such that I get on early in the thread and then I’m gone until late and see the responses the “next day”.
Carl, I hope you brought some spam with you to eat:
Shanghai - China has detained seven people in southern Guangdong province for injecting dirty pond water into lamb meat to swell its weight and raise its price, state television reports in the latest food scandal to hit the world’s second largest economy.
The suspects slaughtered up to 100 sheep per day at an illegal warehouse, pumping bacteria-ridden water into the meat before it was sold at markets, food stalls and restaurants in major cities such as Guangzhou and Foshan, reported China Central Television.
China has been hit by a number of food safety scandals, from deadly chemical-laced dairy products to recycled “gutter oil” used for cooking.
Wal-Mart Stores, the world’s largest retailer, apologised last week after a Chinese supplier of donkey meat snacks was found to have mixed fox meat into the product.
Link: http://www.fin24.com/Economy/World/Meat-found-plumped-up-with-pond-water-20140106
Do you see that Amy? The problem with the lack of swelling can be solved with the injection of dirty water.
Meet me at my next foreclosure and we’ll see how it works.
Amy, with all the critters that swim around in the dirty pond water maybe we can get a little action out of the little guy.
Let’s meet up and see; Leave your sex toys at home this time.
Carl, I hope you brought some spam with you to eat
I’m just hosed and have to go with it. The hotel is pretty ritzy and caters to Americans and *probably* buys high end ingredients that are OK. But meanwhile at the factory out in the sticks they bring us free lunch and there’s no telling what’s in it and there aren’t any good alternatives. So you just chew and swallow and smile :-).
if a bit unrealistic regarding size on small Asian women
They have boob envy
They can buy them just as easily as we can. Plus I’m noticing down at breakfast that between a good diet and pushup bras the ones with money are doing ok regardless. It’s all relative to body size anyway, it’s not like they have to be huge to look good. Of course the video games go big anyway.
Hit me like a freight train last night. Everything is cyclic. People, weather, events, economies, universe……
Asian religions are cyclic in their cosmology.
So are Native American religions.
No sheet.
Actually what hit me and I am sure others have thought of it earlier, but I was reading it post 9/11 and the stock market crash, is that the novel “Debt of Honor” was actually foretelling both the use of airliners to attack the government and the financial crash. It was like 9/11 and stock market crash combined.
hope and change
‘denver police are investigating whether a string of rnew year’s day attacks downtown are linked and whether they are among the random beatings that nationwide have become known as ‘the knockout game.’
in one, two people reported being assaulted by a group of men near 20th and larimer streets. in another, a man said he was attacked at 16th and blake streets. the third case was a beating at 20th and market streets. each attack involved as many as four suspects, department spokesman sonny jackson said.’
http://www.denverpost.com/news/ci_24856570/denver-police-investigating-whether-downtown-beatings-are-linked
‘if i had a son, he’d look like trayvon’ - president barack obama
‘police said a total of four people were assaulted. in each incident, the victims were knocked down or knocked out by groups of black males, police said.
one victim described a blitz attack where the assailants appeared out of nowhere, striking without warning.
‘it was just like that,’ nick lloyd told 7news reporter molly hendrickson. ‘i didn’t see anybody. i didn’t hear anything. nobody said anything to me.’
lloyd said he was waiting for a ride with a friend near 20th and market streets when they were both punched in the face. the blow fractured his face in several places and broke his jaw on both sides.
denver police said it’s one of three attacks that happened downtown between 1:30 a.m. and 2:15 a.m. following new year’s eve celebrations.
‘all we have is assaults by black males, so we need more details. that’s why we’re asking for the community’s help,’ said denver police department sonny jackson.
http://www.thedenverchannel.com/news/local-news/police-warn-of-multiple-random-attacks-in-downtown-denver-early-new-years-day
Yet the only person subject to federal prosecution under the Obama administration is a white man. No problem with that prosecution, but why does he not at least use the bully pulpit on this epidemic of senseless attacks?
the only person subject to federal prosecution under the Obama administration is a white man.
Don’t worry. The States (With Federal $) take up the slack on arresting Blacks way more than whites on pot and everything else. State Power! (With Federal money of course)
Blacks Are Singled Out for Marijuana Arrests, Federal Data Suggests June 3, 2013
….Federal programs like the Edward Byrne Justice Assistance Grant Program continue to provide incentives for racial profiling, the report said, by including arrest numbers in its performance measures when distributing hundreds of millions of dollars to local law enforcement each year…..
WASHINGTON — Black Americans were nearly four times as likely as whites to be arrested on charges of marijuana possession in 2010, even though the two groups used the drug at similar rates, according to new federal data.
“We found that in virtually every county in the country, police have wasted taxpayer money enforcing marijuana laws in a racially biased manner,” said Ezekiel Edwards, the director of the A.C.L.U.’s Criminal Law Reform Project and the lead author of the report.
……Researchers said the growing racial disparities in marijuana arrests were especially striking because they were so consistent even across counties with large or small minority populations.
….“Whenever federal funding agencies encourage law enforcement to meet numerical arrest goals instead of public safety goals, it will likely promote stereotype-based policing and we can expect these sorts of racial gaps,” Professor Goff said.
http://www.nytimes.com/2013/06/04/us/marijuana-arrests-four-times-as-likely-for-blacks.html?_r=0
Yes, and let me explain the most likely scenario. Police are investigating something like the knock-out game or petty theft and stop four blacks that meet the description. They do a random search and find pot on one or more of them and make the arrests. It is blacks involvement in more serious crimes at a rate of four and five times more likely that leads to more arrests for things like simple possession.
And if we are talking about homicides blacks are eight times more likely to commit that crime. You are much more likely to get arrested for simple possession if you interact with a police office concerning another crime:
http://robertlindsay.wordpress.com/2012/08/14/white-versus-black-homicide-rates-in-the-us/
When the link posts this is a excerpt, being investigated for other crimes does raise your chances of being arrested for pot possession, this compares the white homicide rate to the black rate:
Those figures are completely insane! Excuse me! But as you can see, the Black rate is fully 8 times higher than the White rate. The White rates itself is quite elevated compared to many White European countries. The Black rate is so high that it calls out for public discussion, which unfortunately is now completely blacked out and forbidden. If nothing else, the Black rate is a public health emergency.
That’s why I write about Black crime on here. It’s the one negative thing about Blacks that most pro-Black White liberals will talk about. That’s their big worry and big concern, and they are not necessarily to shy to bring it up.
I understand why Blacks get their back up about this. Suppose you’re a Black with a clean record who more or less obeys the law and certainly has never killed anyone. Your reaction is going to be, “Why are you going on about Black crime? I don’t commit any crimes! Leave me out of this!”
You are aware that:
* Blacks commit 50% of all murders in the USA, despite being only 13% of the populace.
* Blacks murder more people every year in the USA than whites lynched blacks during 80 years of segregation.
* Blacks have an illegitimacy rate of well over 70% (three times that of whites); and that this leads to welfare dependency, school dropouts, and crime on an epic scale which victimizes white communities.
* Blacks use affirmative action to displace qualified white applicants from jobs and schools, and replace them with unqualified blacks.
* Black flash mobs have targeted white people with mass violence (google “Beat Whitey Night”).
* Blacks routinely fake “hate” crimes to demonize white people (see Crystal Mangum, Tawana Brawley, et alia).
* Black race hustlers such as Al Sharpton routinely shakedown white corporations, with much of the black community supporting these cons?
* Black run cities drive out white people via violence and infrastructure collapse, as well as out-and-out discrimination in contracts and such. (Look at Detroit, Birmingham, Rochester, and etc., all covered elsewhere on this website.)
* Blacks have been responsible for every major urban riot since the 1960s, and these riots have led to the decline of many cities; and not only in America, but more recently in Britain.
* Black majority countries have a long history of ethnically cleansing white people. Look at Congo and Zimbabwe.
You do know that in black majority rule South Africa, blacks have murdered more whites in the last 18 years than white security forces killed blacks during 50 years of apartheid?
“You are aware that:”
Your post brings to mind the schooling I received from one of my second-grade school mates whose dad was a cop. My dad was a very enlightened individual who bent over backwards to never make racis’ statements, so I didn’t quite know what to make of it upon hearing that black people committed crimes at much higher rates than white people commit them. Still puzzling over that eye opener to the present day…
Because this is Justice For Trayvon™
a white man
If whites cannot say “blacks” and instead must use African American, then it shouldn’t be allowed to use the term “whites”. They should be called “Americans” or “American Americans” or “Some Term Here Americans”.
Callin’ ‘em whites is Racis.
What about “white” Hispanics? BTW, from a Drudge link (BB), the knock-out game just may get a bit more dangerous for the thugs in Chicago:
On the heels of a federal court striking down Chicago’s ban on gun sales, those seeking gun permits in Illinois flooded the State Police website over the weekend to begin the permitting process.
In fact, the amount of Illinois residents seeking a conceal carry permit already surpasses those who enrolled in Obamacare after the first two months of the launch of healthcare.gov. The Chicago Sun-Times reported 4,525 individuals signed up on Sunday alone for their firearms permits, when the State Police first opened the process to all concealed carry applicants.
Illinois State Police spokeswoman Monique Bond said that number is included in Sunday’s total of more than 11,000 people who have signed up because of an early application process that began December 18 and was open to only firearm instructors. Officials told the Sun-Times they expect 350,000 to 400,000 people (about 1,000 per day) will sign up for conceal carry firearm permits this year.
If whites cannot say “blacks” and instead must use African American, then it shouldn’t be allowed to use the term “whites”. They should be called “Americans” or “American Americans” or “Some Term Here Americans”.
Many blacks prefer to be called black. And by your logic and the logic of “African Americans” they could not be called simply “Americans” or “American Americans” unless they were Native Americans.
Thus, they would need to be called “Irish Americans” “French Americans” “English Americans” etc.
No how could they tell where all us whites came from? Since we all look alike, they could not. Therefore for practical purposes the term “Whites” would have to be used.
The Blacks might also be noting the fact that African Americans were the only group brought to America against their will in chains, dying in the belly of stinking ships to be sold like cattle, worked to death, raped and murdered after their family members were separated to the highest bidder.
IDK. Maybe that’s part of the reason.
All whites are, by default, members of the oppressor class.
Slavery, colonialism, genocide, racism, sexism, homophobia were all created and enforced by whites. This “knockout game” is just the chickens coming home to roost.
The Blacks ..were the only group brought to America against their will in chains….IDK. Maybe that’s part of the reason.
(That some want to be called African-Americans.)
The Blacks might also be noting the fact that African Americans were the only group brought to America against their will in chains, dying in the belly of stinking ships to be sold like cattle, worked to death, raped and murdered after their family members were separated to the highest bidder.
Yes and all their descendants are far better off living in America than in the African countries that they came from. Even people in “poverty” in America have a lifestyle that 99% of the people in Sub Sahara Africa can only dream about. Read the book Redneck Manifesto, unless you were born to the very rich, if you were white you also suffered and many white people were worked to death etc. In some ways whites were more disposable since a mill owner could just hire someone new if a worker died. Since a slave was property there was an incentive not to work him or her to death. Rio, you won the lottery by being born in this country as has every black.
Yes and all their descendants are far better off living in America than in the African countries that they came from. Even people in “poverty” in America have a lifestyle that 99% of the people in Sub Sahara Africa can only dream about. Read the book Redneck Manifesto, unless you were born to the very rich, if you were white you also suffered and many white people were worked to death etc. In some ways whites were more disposable since a mill owner could just hire someone new if a worker died. Since a slave was property there was an incentive not to work him or her to death. Rio, you won the lottery by being born in this country as has every black.
This may be true, but it’s not relevant to his dicussion.
Honestly why not? While Rio moved around quite a bit he implied that it was alright for the Obama administration to not arrest blacks for the knockout game due to unfair arrests in other areas. He then asserted that special conditions justified using the term African American. I am asserting that whites also suffered and you can break that down to Irish, Italians etc. had their own tales of hardship.
My main point is that slavery 150 years ago does not justify a teenager assaulting an innocent often helpless person today. Further, there is another explanation for different arrest rates due to pot possession. It is true of all racial groups that if you are committing other crimes you are more likely to get arrested for simple possession. That is the discussion and the use of the term Afro-American is just a subpart of the discussion. However, it does speak to a victim’s mindset and perhaps a perceived need to get even in the context that he was using it.
Your comment about being off-topic is more applicable to Rio than it is to me since he tried to move the topic from the knock-out game and refusal of the Obama administration to address it, to pot busts.
This may be true, but it’s not relevant to his dicussion.
The discussion ought to be that we’re all Americans. Period.
“The discussion ought to be that we’re all Americans. Period.”
That would be true if America was Nirvana, but it is not.
That would be true if America was Nirvana, but it is not.
Then by all means lets keep perpetuating the issues.
Honestly why not? While Rio moved around quite a bit he implied that it was alright for the Obama administration to not arrest blacks for the knockout game due to unfair arrests in other areas. He then asserted that special conditions justified using the term African American. I am asserting that whites also suffered and you can break that down to Irish, Italians etc. had their own tales of hardship.
I may have read through Rio’s posts too quickly, but it didn’t appear to me that he was saying or implying that.
My main point is that slavery 150 years ago does not justify a teenager assaulting an innocent often helpless person today.
I think that we would all agree that with that statement. It isn’t necessary to mention the historic suffering of whites.
“…we’re all Americans. Period.”
Politics of Whitey versus Blackey = highly profitable!
State Attorneys General to Obama - Enforce your own Obamacare law - Washington Examiner
I have to wonder are the President’s dictates regarding ACA lawful?
Will the IRS follow the letter of the law? Or the Pre Z’s changes?
Will they apply all of these equally to all?
They work for the president and will do what he says.
“When the President does it, that means it is not illegal.”
–Richard M. Nixon, TV interview with David Frost, May 20, 1977
Did he set a historically important precedent, or was his treatment historically unfair? I’m still trying to figure that one out…
Denver Housing Prices Crumble 10% Since May 2013
http://www.movoto.com/statistics/co/denver.htm
Denver housing prices and Denver rents only go in one direction and that’s up.
This isn’t Sacramento, this isn’t Atlanta, this isn’t Spokane. People actually want to live here and want to move here and are doing just that.
^This message sponsored by the National Association of Realtors®
Don’t take it personally. I moved here from the sh*thole rust belt. And thousands more have followed and will follow. They aren’t flocking to upstate NY and rural NE.
Nor are they to Denver…lolz
its the peyton effect. put topping on it buddy!
Pot pizza in the mile high city!!
Toppings of Maui wowwee,pineapple and ham since real men must eat meat.
Is that why home prices feel about 20% during the bust? Denver does currently have a strong economy and a lot of growth in population. But, it is not immune to housing price downturns. Which was proven just 3-5 years ago.
denver is different. everybody wants to live here. we have peyton and legal weed.
“…legal weed.”
That has to increase housing prices!
“Which was proven just 3-5 years ago.”
That’s ancient history, long forgotten.
Today’s reality: Real estate always goes up!
Will the unemployment benefits be extended again? I heard the congress is debating on that.
Faux tightening in the form of taper, lower loan limits, an end to extended unemployment benefits, and maybe a quickened pace in unveiling shadow inventory and going through foreclosures are signs the economic crutches are about to disappear. And double digit annual stock gains are also about to disappear.
Diversifying a tad more in overseas stocks is a good move while the storm clouds are gathering.
“And double digit annual stock gains are also about to disappear.”
Bill,
Have you observed a preponderance of dumb.retail. money. entering the market?
dumb money always buys hyped stocks like twtr and fb before they crash.
wall street has these puppets right where they want them.
Twitter and FB suck. They are run by NSA.
Careful Bill, Obama will take away your security clearance for that.
Twitter and FB suck. They are run by NSA.
So true … let’s all rush out and store our personal data on the cloud. It’s private, safe and secure, so we have nothing to worry about.
So true … let’s all rush out and store our personal data on the cloud. It’s private, safe and secure, so we have nothing to worry about.
Two possibilities here:
1. Sarcasm
2. You spent four hundred dollars an OZ for the legal pot.
Based on your past posts, I will go with one.
Just like houses….
Not yet. The signs are there though. JSP posts starting sometime in 2012, near the end, on the Yahoo Finance blogs stopped Laughing at the stock market as a suckers game. They were really yukking it up 2009 through 2011 though, and swearing they will never buy stocks.
If you made huge gains and you have many years worth to cushion you, it is better to be a year early than a day late. It could even be six months early at this point! But it’s an election year.
Thank you.
Keep us posted on j6p sentiment.
Have you observed a preponderance of dumb.retail. money. entering the market?”
I don’t know about retail money but have been reading many bullish internet articles these days on stocks.
Pump and dump
I’ve heard they think the can get votes to extend it and that the payments will be made retroactive. I imagine they will do both (extend and make retroactive payments) but time will tell.
That would imply that some GOP house members would break ranks and vote with the Dems. Given the current atmosphere in the GOP and Tea Party challenges to “RINOs” it makes me wonder if that will happen.
That would imply that some GOP house members would break ranks
I think they will get enough Repub votes. There are enough rational House Repub districts out there imo.
It passed the Senate with some Repub votes.
As soon as the Democrats come up with a plan to pay for the benefits the Republicans will vote for it as long as it cuts back on government.
As soon as the Democrats come up with a plan to pay for the benefits the Republicans will vote for it as long as it cuts back on government.
That shouldn’t be too hard …
oh wait … you mean a plan that doesn’t cut any GOP favored programs
True but that is politics. But Obama could have passed Simpson/Bowles a bipartisan agreement at the beginning of his administration and avoided these constant budget battles. The economy would have done far better.
NAR, MBA, NAHB, FR and their consultants hate this blog and is doing everything they can to destroy it.
Paranoid much? Somebody forgot his meds again today.
No no.We love this blog! Really! It’s just your imagination!
And the blog owner forgot his meds yesterday, right? RIGHT?
There are plenty of shills on this blog that own houses. Squeaky wheels such as yourself is not the norm.
And none of us are underwater; You can believe me!
“Why would pay more than new construction cost ($55 per square foot) for a rapidly depreciating 20+ year old resale house?”
Let me guess…… Because realtors tell you that the cost of a house cannot be evaluated using math?
no way can you build in CA for $55 pr sq ft. Even in 1984 it was $100 if you DIYS.
$150 psq ft is tough, permits costs are crazy high.
We build in all 48 states for less than that.
My good friend is a GC, not possible in CA.
see this discussion: http://www.zillow.com/advice-thread/What-is-the-average-per-square-foot-cost-to-rebuild-my-house-in-Montclair-district-in-zip-94611-2026/271528/
google this: What is the average per square foot cost to rebuild my house in Montclair district in zip 94611-2026
for a discussion on building costs in CA.
50-60/sq ft.
did you read the discussion? $270 looks average
Did you read what I said? We build in all 48 sates for 50-$60/sq ft and make money doing it.
Why do the bears always take the blame when stocks tank? Isn’t the problem really that the bulls lost their balz and aren’t buying enough?
Jan. 7, 2014, 8:31 a.m. EST
What could go wrong for stocks?
Gains for equities in 2014 unlikely to match 2013’s strong run
By Irwin Kellner, MarketWatch
PORT WASHINGTON, N.Y. (MarketWatch) — While the bulls ran rampant on Wall Street last year, you can be sure that the bears are scratching around looking for ways to slow the stock market down – if not reverse its course all together.
As good as last year was for equities, it might have been a case of too much too soon. This is because a long-standing measure of the market’s valuation, its price-earnings ratio, begins the New Year at a fairly lofty level.
This measure ended up last year at 17 – the highest ratio since the current recovery got underway back in the middle of 2009. By contrast, the long-term average ratio for stocks is 13-15.
This lofty P/E resulted from the biggest annual gain for stocks since 1995, close to 30%. It follows a gain of around 16% in 2012.
While no serious analyst or money manager expects an increase even the size of 2012’s – much less 2013’s – the consensus looks for stocks to rise another 6%-10% this year.
For this to occur without expanding the market’s multiple, earnings would have to rise by at least this much – something that many economists doubt can be achieved. Higher costs and slowing volume pose a challenge that few firms will be able to surmount.
Welcome to the first item that could derail the market – disappointing corporate profits. Speaking of profits, here is another: profit-taking. After this recent run, few will be able to resist taking some money off the table. And whenever the urge to sell is greater than the urge to buy, stock prices invariably take a header.
…
This is gonna be tricky.
On one hand stocks are overvalued. Fundamentals indicate that they should come down.
On the other hand, as long as central banks around the globe continue with ZIRP, where else are “investors” gonna put their money, I mean if they want an annual return that is higher that 1%?
And I think that in the game of ZIRP Chicken, no one wants to blink. Raise your interest rates and your currency will appreciate, which is the opposite of what you want to do if you are a next exporter.
Plus, if you have piles of sovereign debt, you don’t want interest rates to rise either. Imagine what would happen to Japan, the EU or the US if bond rates rose.
Plus, if you have piles of sovereign debt, you don’t want interest rates to rise either. Imagine what would happen to Japan, the EU or the US if bond rates rose.
Yes, now that we are pushing almost 18 trillion dollars and debt, there is no way we can afford to allow interest rates to rise. 180 billion dollars for every one point interest rates rise sure is going to create problems.
Yes, now that we are pushing almost 18 trillion dollars and debt, there is no way we can afford to allow interest rates to rise.
Nor Japan, nor the EU, nor many other countries. Even China, which has effectively dismantled its social safety net from the Mao days, is starting to face ballooning debt. It’s a global problem (along with the worldwide shortage of jobs).
Sorry Colorado but we have a gross government debt over 100% of our GDP. That makes us very exceptional but not in a good way:
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt
A link will soon posts that show the U.S. as having a gross government debt over 100% of GDP while China has a debt in the 23% range. Yes, the Chinese may be hard charging but they are not in our league. We needed to get a handle on our budget and our debt when Obama first came into office instead we may matters much worse. Thus, while I may not agree with everything the Tea Party wants at least they are trying to address the issue before we collapse economically. The establishment in both parties just want to kick the can down the road so the can get reelected.
Sorry Colorado but we have a gross government debt over 100% of our GDP.
Japan is in worse shape than we are, they are over 200%.
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt
Greece, Italy, Portugal, Iceland, Ireland, Singapore, Belgium, France. United Kingdom, Spain, Canada, Germany, Hungary, Austria, Israel and several banana republics have a higher public debt to GDP ratio than we do, which is alarming, but probably explains why we are seen as a “safe haven” (we suck less).
A link will soon posts that show the U.S. as having a gross government debt over 100% of GDP while China has a debt in the 23% range.
China’s was zero not that long go. It’s growing fast.
I’m not trying to downplay our debt, because it is bad. But we aren’t alone in this sad situation.
If you look at the color map we far exceed most countries. I think you need to look at Germany again. We may not be alone but we are near the head of the pack with only Japan leading us by far but they had an amazing savings rate and up to the earthquake a Current account surplus. We have twin deficits.
Yes, I checked again. Not to split hair or perhaps to split hairs, Germany’s gross government debt is around 82% to our 106.525%, they do have more public debt. The monetization by the Fed along with the Social Security trust fund explains how that happens. But if we are going to consider the trust fund a real asset, I don’t think it should be taken out-of-the debt equation since unless the federal government comes up with that money, the checks will not be going out.
Sorry, I mean they do have more gross government debt.
Three times is the charm. Sorry, I mean we do have more gross government debt.
I’m not trying to downplay our debt, because it is bad. But we aren’t alone in this sad situation.
i’d feel a lot better if we were the only country in this situation..
i’d feel a lot better if we were the only country in this situation..
True dat. Unfortunately, a majority of the people in the democracies of the world have figured out that you can vote yourself other people’s money so democracy is nearing its end just like Tocqueville envisioned. Transfer payments are always the kiss of death for democracies.
we used to have a republic.. before we gave it up.
we’d have been better off if the constitution would have been unchangeable. nearly every change we made has been for the worse.
should have left most of the power with the states so people could vote with their feet. can’t do that now.
Transfer payments are always the kiss of death for democracies.
Which democracries have died due to transfer payments? Are there any examples?
Welcome to the first item that could derail the market – disappointing corporate profits.
That could do it. That is the problem with the insatiable corporate maw. Stratospheric profits “suck” if they aren’t even bigger than last year’s numbers.
Why do the bears always take the blame when stocks tank? Isn’t the problem really that the bulls lost their balz and aren’t buying enough?
Can be short selling by the bears but yes it is usually because the bulls cannot or will not buy anymore shares.
Sold some Vanguard Wellington today a mutual fund
Time to re-balance for a asset allocation of 60% stocks 20% bonds 20% cash
See what happens in 2014 ?
What was your previous percentage in stocks? Higher than 60, I would expect, right?
No bubble here(?)
Home prices seen finishing 2013 with fastest growth in eight years
January 7, 2014, 10:53 AM
U.S. home prices in 2013 likely rose at the fastest pace in eight years, with almost half of states recently within 10% of peak levels, according to data released Tuesday.
In November, monthly home prices ticked up 0.1%, with annual growth of 11.8%, CoreLogic, an Irvine, Calif.-based analysis firm, reported. CoreLogic expects growth for all of last year to hit 11.5%, which would be the fastest pace since 2005.
Relatively few homes on the market and pent-up demand led to fast price appreciation last year. Also, some borrowers rushed to take advantage of the ultra-low interest rates for fixed-rate mortgages that started rising in early May.
Looking forward, economists expect home-price growth to cool down for several reasons. Price gains over the past year will make more sellers willing and able to place their homes on the market, and encourage builders to ramp up construction, thereby raising inventory. Also, home-price growth that outpaces income gains is unsustainable. And interest rates are expected to continue to rise, cutting some demand, though economists say expected increases won’t derail the market’s recovery.
New mortgage rules this year and ongoing housing-finance reform could also curb some lending.
“The outlook for 2014 looks a bit less robust as regulatory complexities and tight credit can be expected to cool the housing market,” said Anand Nallathambi, CoreLogic’s chief executive.
…
“If you bought a house in the last 14 years, you’ve lost a tremendous amount of money.”
No question. They could have rented for half the monthly cost of buying and banked it. Instead, they’re all underwater and all that money they threw away at a rapidly depreciating house is gone.
Jan. 7, 2014, 1:28 p.m. EST
Foreign stocks flash warning signal
By Anthony Mirhaydari
Although the U.S. markets are taking last month’s surprise “taper on” decision from the Federal Reserve in stride, the same can’t be said for the emerging markets. Bolstered by years of inflows from cheap dollars pumped into the system by Fed chairman Ben Bernanke’s historic experiment in extreme monetary policy easing and a weak dollar, the beginning of the end of this era is reversing this dynamic.
The result is persistent currency and equity-market weakness overseas that, in many ways, shows similarities to the run up to the 1997 Asian financial crisis.
Look at the dichotomy. The Dow Jones Industrial Average is barely off of its New Year’s Eve all-time high after finishing 2013 with no major corrective pullback or close below its 200-day moving average. Yet the iShares Emerging Markets EEM -0.43% , which suffered a 9% decline in 2013, is in full breakdown mode as it falls away from its 200-day moving average and collapses through its lower Bollinger Band. That violates a five-month consolidation pattern and puts the summer 2013 lows back in play.
There’s a lot to say about the structural issues hitting the emerging markets, especially China, as they reorient away from an export-led growth model and deal with large credit overhangs. All of this was enabled, over the last decade, by the constant flow of capital from the United States — via the trade deficit or by investors looking for investments not denominated in dollars — into countries like Vietnam and Indonesia.
With the Fed starting to pull back on the flow of stimulus a little, a stabilization in the U.S. dollar and a bump up in the 10-year Treasury yield over 3% is drawing that money back out. The results are potentially destabilizing capital flows — which is exactly what torpedoed emerging Asian economies back in 1997.
…
You usually look for countries running the biggest current account deficits for collapse, Turkey should be on your list.
As you can see Brazil and South Africa make the list. It is ironic that Obama’s Fed gold suppression scheme is destroying South Africa and causing major problems for Rio’s Brazil. Mandela is probably rolling over in his grave.
LONDON, Jan 6 (Reuters) - Balance of payments deficits widened over 2013 in four of the “Fragile Five” emerging economies, highlighting their heavy reliance on foreign capital.
South Africa, Turkey, India, Indonesia and Brazil earned the collective name after bearing the brunt of a sell-off provoked by a hint from the U.S. Federal Reserve at the end of May that it could start winding down its economic stimulus.
http://en.wikipedia.org/wiki/List_of_countries_by_gold_production
Once again Israel shows that it knows how to protect itself, imagine a country that actually deals harshly with illegal immigration:
http://news.yahoo.com/israel-no-longer-haven-sends-african-migrants-prison-203436992.html
Israel is doing the best job of achieving a racially pure state since Hitler.
How does Israel compare to Japan for racial purity?
Both Israel and Hitler had to work hard to achieve this by putting undesirables in concentration camps. Of course Japan is very homogenous, but haven’t they always been?
The fact that this is in the news or that people are thinking of this again is frightening: Global sunscreen via h-bomb
It was so cold outside I even saw a LIEberal with his hands in his own pockets!
I wonder what the FOX news crowd thinks. Who sucks more off the gov: a Wall St bailout queen, the military complex, an illegal working at Foster Farms, or a single mom on food stamps?
I can assure you the FOX news / Glenn Beck crowd don’t think for once that military OVERspending is just a redistribution of wealth.
The deal is that it’s a tug of war between the ones who sit on their behinds and watch TV and do drugs and have/claim ten kids versus the college educated types who are part of the military industrial complex.
Up to the late 80s we had a real enemy and it was communism. Now we have a manufactured enemy and overspending. The FOX news crowd is blind to the distinction.
The war against Muslims is a war to prop Israel and the Israel lobby runs the USA, probably the NSA as well. We can solve a big economic problem by cutting our military spending way back to where we defend against North Korea. Yes. North Korea is the only real enemy of ours. And we can even pare that back if we just let South Korea defend itself. The hundreds of billions of dollars saved would go to pay the debt. It will take decades to pay if off, so there should be tax cuts every year to bring the tax rate down gradually on incomes, capital gains, dividends and corporate taxes.
After we have a real defense (not offense) we need to stop this insane 48 year old war on poverty - cost Trillions of dollars and more people are poorer than before.
“The war against Muslims is a war to prop Israel and the Israel lobby runs the USA, probably the NSA as well.”
How did Israel manage to take over the U.S.?
The social conservative religio-political organizations somehow love Israel far more than American jews love Israel. I bet many American jews are embarrassed about it. I would not be surprised if 95% of NSA is social conservative Christian or jewish.
I wrote to a local Realtor about a prop. Of course it already had multiple offers, (uhgg) Her “brilliant” response to the market.
___
My opinion is mortgage regulation will continue to become more strict not less and rising rates along with rising prices will for sure knock a lot more people out of the market. The economy is on the upswing and investors don’t care, there will always be people to buy homes and invest in real estate, even if the interest rates are 18%, such as what occurred back in the 80’s. I see this happen on a daily basis, people who thought waiting was the answer – now many find they no longer qualify.
However, some people are not aware of the USDA loan program, which is still in effect and has helped many obtain homes. This program is applicable for homes in the north county area. The program will most likely phase out by the end of the year or sooner. We real estate agents have rallied with our state senator & law makers to keep it in effect for our area and have been successful in doing so for the short term.
The biggest problem with this loan, is it’s not as competitive as let’s say conventional financing, so the homes that are good deals, resulting in multiple offers, most likely the USDA loan buyer loses out to the better term offers. The USDA buyer needs to understand they can be successful using this $0 down payment loan program, with low MI, but they may have to make compromises, just as the FHA or VA buyer does. You’re not going to get a smoking deal and be successful using these types of loan programs, those days are over.
I do understand whatever works best and is important to you should be your goal. I don’t really have a clear understanding of exactly what you’re seeking or how I can help? I believe you’re stating you want to wait a while or possibly don’t have the financial means at this time or are waiting for interest rates, terms or prices to drop? Yes that correct?
Strange that someone at the cutting edge of housing market fraud would deny that housing demand is at 16 year lows and falling.
people who thought waiting was the answer – now many find they no longer qualify.
Last time I checked, this rented roof over my head functions as well as one that is bought.
In 2010, just four years ago I could not even buy my former house in cash for the one/sixth amount of my net worth. Now I can buy two of them for one sixth of my net worth. And that is not in Detroit.
No one should worry or not whether they qualify for a loan now or in ten years or in 15 years. I don’t know what my credit score is and could not care less. I pay off my debts every month. Plastic is a convenience to me. I was told by first generation Chinese Americans that people from China like to wait for interest rates to go high in the USA, then they buy houses for cash.
Young people who eventually want a house should instead save up money and rent cheap. The higher interest rates later mean low house prices.
Does the news that investment bank trading activity is in a slump signify a drop in Megabank, Inc’s ability to rob everybody else through scam operations, such as the Detroit aluminum shuffling game?
Isn’t this kind of price fixing illegal under the Sherman Antitrust Act?
The House Edge
A Shuffle of Aluminum, but to Banks, Pure Gold
David Walter Banks for The New York Times
Aluminum ingots waiting to be shipped from a processor. Financial institutions like Goldman Sachs have used industry pricing regulations to earn millions of dollars each year.
By DAVID KOCIENIEWSKI
Published: July 20, 2013
MOUNT CLEMENS, Mich. — Hundreds of millions of times a day, thirsty Americans open a can of soda, beer or juice. And every time they do it, they pay a fraction of a penny more because of a shrewd maneuver by Goldman Sachs and other financial players that ultimately costs consumers billions of dollars.
The story of how this works begins in 27 industrial warehouses in the Detroit area where a Goldman subsidiary stores customers’ aluminum. Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.
This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back-and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country.
Tyler Clay, a forklift driver who worked at the Goldman warehouses until early this year, called the process “a merry-go-round of metal.”
Only a tenth of a cent or so of an aluminum can’s purchase price can be traced back to the strategy. But multiply that amount by the 90 billion aluminum cans consumed in the United States each year — and add the tons of aluminum used in things like cars, electronics and house siding — and the efforts by Goldman and other financial players has cost American consumers more than $5 billion over the last three years, say former industry executives, analysts and consultants.
The inflated aluminum pricing is just one way that Wall Street is flexing its financial muscle and capitalizing on loosened federal regulations to sway a variety of commodities markets, according to financial records, regulatory documents and interviews with people involved in the activities.
The maneuvering in markets for oil, wheat, cotton, coffee and more have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone. In the last year, federal authorities have accused three banks, including JPMorgan, of rigging electricity prices, and last week JPMorgan was trying to reach a settlement that could cost it $500 million.
Using special exemptions granted by the Federal Reserve Bank and relaxed regulations approved by Congress, the banks have bought huge swaths of infrastructure used to store commodities and deliver them to consumers — from pipelines and refineries in Oklahoma, Louisiana and Texas; to fleets of more than 100 double-hulled oil tankers at sea around the globe; to companies that control operations at major ports like Oakland, Calif., and Seattle.
In the case of aluminum, Goldman bought Metro International Trade Services, one of the country’s biggest storers of the metal. More than a quarter of the supply of aluminum available on the market is kept in the company’s Detroit-area warehouses.
Before Goldman bought Metro International three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than tenfold — to more than 16 months, according to industry records.
Longer waits might be written off as an aggravation, but they also make aluminum more expensive nearly everywhere in the country because of the arcane formula used to determine the cost of the metal on the spot market. The delays are so acute that Coca-Cola and many other manufacturers avoid buying aluminum stored here. Nonetheless, they still pay the higher price.
…
“The maneuvering in markets for oil, wheat, cotton, coffee and more have brought billions in profits to investment banks like Goldman, JPMorgan Chase and Morgan Stanley, while forcing consumers to pay more every time they fill up a gas tank, flick on a light switch, open a beer or buy a cellphone. In the last year, federal authorities have accused three banks, including JPMorgan, of rigging electricity prices, and last week JPMorgan was trying to reach a settlement that could cost it $500 million.”
Thank gawd our RICO laws prevent this sort of behavior.
“We are a client-oriented investment bank.”
Morgan Stanley’s Hadden Departs as Head of Rates Trading
By Michael J. Moore Jan 7, 2014 6:13 AM PT
Morgan Stanley (MS)’s Glenn Hadden has left as head of interest-rates trading, citing differences with his bosses over how the business should be run as the firm seeks to boost the unit’s returns.
Mitch Nadel and Jakob Horder were named to replace Hadden, 43, according to an internal company memo yesterday. Horder, who led global structured-rate products, and Nadel, who was head of liquid flow rates in North America, will be co-heads of the unit, the firm said. Mary Claire Delaney, a spokeswoman for the New York-based company, declined to comment.
Ken deRegt, 58, who helped bring Hadden to Morgan Stanley in 2011, left as head of fixed-income sales and trading last year to join hedge-fund firm Canarsie Capital Group. Michael Heaney and Robert Rooney were named to replace deRegt in May, and Hadden said he had differing views on his business than the new leadership, declining to elaborate.
“I’m extremely proud of the success we had at Morgan Stanley, both me personally and the team we built,” Hadden said in a telephone interview. “I have no intention of retiring from investment finance, and my goal is still to serve clients as best I can in whatever capacity that is.”
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As long as investment banking stock prices are rising by leaps and bounds, why is this news whatsoever concerning?
Markets
Slump in Trading Threatens a Wall Street Profit Engine
Industry Could Post 11th Trading Decline in 16 Quarters
By Saabira Chaudhuri and Julie Steinberg
Jan. 6, 2014 7:52 p.m. ET
The trading boom that helped reshape global investment banks over the past decade is sputtering, raising fears that one of Wall Street’s biggest profit engines is in peril.
Executives have warned that lackluster markets could lead to year-over-year declines in fixed-income, commodities and currency trading revenue when banks begin reporting fourth-quarter results next week. That would mark the fourth consecutive drop and the 11th in the past 16 quarters.
Few corners of banks’ trading operations have escaped the slump. A 10-year commodities rally has fizzled, while foreign-exchange trading volume has fallen sharply from its 2008 peak. Since the financial crisis, investors have eschewed exotic fixed-income securities in favor of low-risk government bonds, which are less profitable for banks, and overall trading volumes have dipped.
A rash of new regulations, meanwhile, have prompted Wall Street firms to exit from once-lucrative businesses such as energy trading and storing and transporting physical commodities.
The slump has gone on so long that some observers are beginning to question whether it is part of an ordinary down cycle or a more permanent shift.
“I think it is worrying,” said Oppenheimer analyst Chris Kotowski, who expected trading revenue to have hit bottom and stabilized by now. “You can’t turn around a fundamental trend…if that’s what this is.”
Mr. Kotowski cited the big transformations that have rocked global markets in the past few years, such as new technologies. Those advances have helped level the playing field by allowing institutions to make some trades on their own, reducing the amount banks bring in for matching up orders.
For Goldman Sachs Group Inc., fixed-income, currency and commodities trading historically has been a crucial profit engine. Yet the New York investment bank is expected to post a 21% decline in trading revenue from fixed-income, currencies and commodities, or FICC, in the fourth quarter from the same quarter a year earlier, according to estimates from Citigroup Inc. C +0.69% analyst Keith Horowitz. Goldman is on pace for its worst year for FICC trading since the financial crisis.
While rival Morgan Stanley is expected to post an 8% increase in fixed-income, currency and commodities revenue in the fourth quarter, according to Mr. Horowitz, its business has shrunk considerably since the crisis and is smaller than rival Goldman’s. Big commercial banks like J.P. Morgan Chase JPM -1.15% & Co. and Citigroup also have trading operations, but they represent smaller chunks of their overall revenue. Citigroup Chief Financial Officer John Gerspach in late December warned that the bank’s trading results would be down slightly year-over-year, while J.P. Morgan senior executive Michael Cavanagh in November said client trading volumes were “down slightly.”
Overall, revenue from fixed-income, currency and commodities trading is expected to drop an average of about 11% at Goldman, J.P. Morgan and Bank of America Corp. BAC -0.96% , according to estimates from Mr. Horowitz.
The declines have prompted waves of job cuts and departures. In the first half of 2013, there were 19,554 FICC traders at the 10 largest global investment banks, down from 25,257 in the first half of 2008, according to London research firm Coalition, whose parent is majority-owned by McGraw Hill Financial Inc.
Deutsche Bank AG DB +2.29% last month said it would sell or shut down almost all of its global commodities businesses, sparking about 200 layoffs. UBS AG UBS +2.46% in the past year has laid off some traders as part of what the firm calls a shift toward more focus on managing customers’ wealth.
Some of the traders who remain in the industry are bracing for decreases in year-end compensation. Compensation for J.P. Morgan’s fixed-income, currency and commodities traders is projected to drop 5% from last year’s levels, said people familiar with the bank’s plans. At Citigroup, bonuses for salespeople and traders will range from flat to down 2% from last year’s levels, said people familiar with the bank’s plans.
“Fixed income is going to remain quite a tough business” in 2014, said Richard Staite, an analyst with Atlantic Equities.
The trading boom began in the early 1980s, as bonds, after a decade of weakness, embarked on a rally that has spanned more than 30 years. The emergence of derivatives—instruments tied to the value of bonds, currencies, commodities, stocks and other securities—helped fuel more trading activity. In the early 2000s, low interest rates and strong demand for mortgage securities kicked the boom into higher gear, and Wall Street refocused operations to profit from that.
While the financial crisis temporarily slammed the brakes on trading in 2008, it roared back the next year, helping salvage bank profits at a time when lending and other banking activities were moribund. Since 2009, however, trading has been slowly fading, prompting bankers to worry whether the glory years will ever come back.
To be sure, the slump could reverse. Revenue declines aren’t expected to be as severe in the fourth quarter as they were in the third, when Goldman reported a 44% drop in FICC revenue from a year earlier and Morgan Stanley posted a 43% drop, excluding accounting adjustments tied to Morgan’s debt prices. Citigroup and J.P. Morgan reported declines of 26% and 8%, respectively. Mr. Horowitz expects J.P. Morgan to post an 8% decline and Bank of America a 3% dip.
Brad Hintz, an analyst with Sanford C. Bernstein & Co., said improvement could be around the corner, as the U.S. Federal Reserve begins to wind down its bond-buying program. That could nudge investors into more profitable bonds and other securities, bolstering banks’ trading revenue.
But a robust recovery still seems far away. London-based brokerage ICAP PLC on Jan. 3 reported that foreign-exchange volumes on its trading platform were the lowest on record in December, down 23% from the same month in 2012. Average daily trading volume in the U.S. bond markets, meanwhile, fell 3.6% in 2013 through Dec. 6 from the same period a year earlier, according to the latest available figures from the Securities Industry and Financial Markets Association.
In commodities, bank trading revenue clocked in at $6 billion in 2012, the last full year for which data are available, according to Coalition. That was down more than 50% from its 2008 peak.
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“Slump in Trading Threatens a Wall Street Profit Engine
Industry Could Post 11th Trading Decline in 16 Quarters”
Am I the only observer who detects a massive decoupling between the real picture on Wall Street and recent stock price movements?
Is there any substance to rumors that the government agency with fiat money printing privileges could require a bailout of its own?
Why couldn’t they simply print themselves out, under any and all circumstances?
Are James Hamilton’s comments meant to be tongue-and-cheek?
As stimulus tab rises for Fed, worries grow it may require a bailout
The Fed’s bond-buying binge could put the central bank’s finances at risk if interest rates were to rise sharply, critics warn.
By Jim Puzzanghera
October 29, 2013, 5:00 a.m.
WASHINGTON — The Federal Reserve has taken unprecedented steps to stimulate the economic recovery from the Great Recession, but the tab has risen to such tremendous proportions — fast approaching $4 trillion — that some worry the central bank ultimately could require its own taxpayer rescue.
The Fed’s total assets on its balance sheet have more than quadrupled to $3.8 trillion since 2008 amid a massive bond-buying effort. And there are few signs that the growth will stop any time soon.
That could put the finances of the world’s most powerful central bank at risk if historically low interest rates were to rise sharply — something top Fed officials said they do not expect but that critics warn is very possible.
It also could inhibit the ability of central bank officials to respond to future economic and financial crises.
“It’s really pretty cut-and-dried as far as the arithmetic goes: If you buy bonds and interest rates go up, you’re going to take a capital loss on those bonds,” said James D. Hamilton, an economics professor at UC San Diego. “The more they buy, the bigger their balance sheet, the bigger the loss they’re going to face.”
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* The Fed’s swelling assets Graphic: The Fed’s swelling asset
* Fed nominee Janet Yellen’s confirmation hearing expected in November
* Alan Greenspan praises Fed chair nominee Janet Yellen as ‘very bright’ * Alan Greenspan praises Fed chair nominee Janet Yellen as ‘very bright’
Do you think taxpayers would agree to a fed bailout?
Hear hear!
ft dot com
January 7, 2014 4:28 pm
Coastal dwellers should take their own chances
By John Kay
It is hard to see why those who cannot afford sea views should subsidise those who can
About 70 per cent of the surface of the earth is covered in water. For billions of years, the boundaries between sea and land have been in flux. The volume of water has risen and fallen in parallel with rises and falls in the temperature of the earth. And the topography of the land has changed as a result of earthquakes, tectonic shifts, and the deposit of sediment. Parts of the world that are land today were once sea, and parts that were once sea are now land.
Until recently, minor shifts in the shoreline did not matter very much to the life of the planet. But now they do, for several more or less unrelated reasons. Some economic activities – such as building ports and catching sea fish – are necessarily conducted on the shoreline. The deltas of great rivers such as the Ganges, the Mississippi and the Rhine provide fertile agricultural land that supports a dense population. And people like living by the shore. Sea views and beachfront locations add greatly to the value of a house.
The worst sea flooding western Europe has experienced for 50 years is a reminder that even modest and temporary advances of the sea can have substantial costs. The 2004 tsunami in the Indian Ocean and Hurricanes Katrina and Sandy were damaging to property and life because so much economic activity takes place on the shoreline.
No one wants the sea to advance. But almost nobody wants the sea to recede either. True, Holland and Monaco have recovered valuable land. But the beautiful Belgian city of Bruges was for several hundred years one of the great commercial centres of Europe, and lost that status when it ceased to be a port. Occupants of beachfront and sea-view residences want beach and sea to stay just where they are.
So we have created powerful vested interests, businesses and property owners, who want the shoreline to remain unchanged in perpetuity. These lobbies want taxpayers’ money to be spent on achieving this outcome. Yet the history of the world tells us that this unnatural objective is likely to be formidably expensive even if it is technically possible.
When the sea defies mankind’s efforts to keep it in place, the shore people want these costs, too, to fall on the public at large. In the aftermath of a disaster, it is difficult to argue with such demands. Victims of Hurricane Katrina legitimately felt that the US government should have been there to help. When Hurricane Sandy hit, everyone rallied round. The world donated generously for the victims of the Asian tsunami. And while history tells us that archipelagos come and archipelagos go, we are understandably reluctant to say that to the inhabitants of the Maldives.
But when the storms have abated and calm returns, it is hard to see why those who cannot afford sea views and beachfront properties should subsidise those who can, or why commercial activities related to the sea should not meet the costs that proximity to the sea entails. (Full disclosure: I own a property with a sea view in France. French government arrangements mean that, in effect, the cost of flood insurance is pooled between all residents, whether their property is in the Alps or the areas of the Landes and Gironde, which are gradually disappearing into the Atlantic.)
It is almost impossible to reconcile the objectives of flood-control policy; solidarity in disaster, fairness between different home occupiers, spending neither too much nor too little on flood prevention, and discouraging people from building vulnerable properties. Different countries have adopted different solutions, and most are thinking of changing to something else.
The US has an insurance scheme similar to the French, but messier and more complex, and is controversially attempting to move to a more market-based approach. The UK has equally controversial plans to move in just the opposite direction. The Netherlands has socialised the whole system – flood insuranceis not available but the government has generally picked up the bills. With Dutch flood risks apparently well controlled, proposals have been made to move back to a private market.
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How is the world economic outlook at the end of Ben Bernanke’s tenure?
January 3rd, 2014 11:45 AM ET
World still downbeat on economic prospects
By Bruce Stokes, Special to CNN
Editor’s note: Bruce Stokes is director of global economic attitudes at the Pew Research Center. The views expressed are his own.
In the Marx Brothers’ movie Duck Soup, Chico Marx asked: “Who you gonna believe, me or your own eyes?” As 2014 dawns, this seems to be the question guardedly optimistic economic forecasters are asking recession weary pessimistic publics around the world. And many people appear to trust their experience over the views of the experts, raising new doubts about consumer behavior – the willingness to spend and to invest – in 2014.
The U.S. economy grew at its fastest pace in nearly two years in the third quarter of 2013, expanding by 4.1 percent on an annual basis. And the Wall Street Journal reports that the International Monetary Fund, in its mid-January forecast, is poised to boost its current forecast of 2.5 percent for U.S. growth in 2014.
But the American public is not necessarily convinced their economy is on the cusp of a recovery. The unemployment rate is now down to 7 percent. But, thanks to the Great Recession, joblessness has been above that figure longer than at any time since the Great Depression. And the share of the unemployed who have been out of work for six months or longer remains well above the average over the last six decades.
It may be little wonder then that a mid-December Gallup survey found that 56 percent thought the economy was doing worse; just 39 percent said the economy was getting better. This optimistic minority was actually up from the quarter who were upbeat in mid-October, but such sentiment is hardly a ringing endorsement of economic revival.
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The Global Economy in 2014
January 8, 2014
Author: KLAUS SCHWAB
At the dawn of a new year, the world is in the midst of several epic transitions. Economic growth patterns, the geopolitical landscape, the social contract that binds people together, and our planet’s ecosystem are all undergoing radical, simultaneous transformations, generating anxiety and, in many places, turmoil.
From an economic standpoint, we are entering an era of diminished expectations and increased uncertainty. In terms of growth, the world will have to live with less. To understand the implications of this, consider the following: If the global economy grew at its pre-crisis pace (more than 5% per year) for the foreseeable future, its size would double in less than 15 years; at 3%, doubling world GDP would take about 25 years.
This makes a significant difference to the speed at which wealth creation occurs, with profound effects on expectations. We ignore the power of compound growth to our detriment.
As for uncertainty, the world’s four largest economies are currently undergoing major transitions. The US is striving to boost growth in a fractured political environment. China is moving from a growth model based on investment and exports to one led by internal demand. Europe is struggling to preserve the integrity of its common currency while resolving a multitude of complex institutional issues. And Japan is trying to combat two decades of deflation with aggressive and unconventional monetary policies.
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“demographic cliff”
Hard to argue with him. In fact, many of us have independently offered similar arguments right here on the HBB.
HARRY DENT: America Is Headed Off The ‘Demographic Cliff’ And Another Crisis Is Near
Steven Perlberg
Dec. 12, 2013, 3:00 PM
Harry Dent lays out the ultimate bear case in his new book.
Take one look at Harry Dent’s body of work and you’ll know he likes to make predictions.
He wrote The Great Boom Ahead in 1993, The Great Jobs Ahead in 1995, The Great Depression Ahead in 2009, and The Great Crash Ahead in 2011.
What’s ahead now? A “demographic cliff,” according to Dent’s new book… Demographic Cliff: How to Survive and Prosper During the Great Deflation of 2014-2019.
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Last month’s agenda already gave the “demographic cliff” 15-minutes.
TreasuryDirect.gov 4-week T-bills for issue date 1/06/2014 have finally gone to 0% yield. 52-week T-bills are down to .125% yield. Makes those 3 year note yields of .799% look gigantic!
Still, 4-week t-bills appeal to me as a piggy bank, where I can hide money from myself and lock it up until I need it.