Bits Bucket for April 1, 2014
Post off-topic ideas, links, and Craigslist finds here.
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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Had an epiphany driving home from work and saw two bank tellers from my credit union driving home and it occurred to me that women gravitate to that job. Looked it up and apparently no college degree necessary. But in googling it doesnt look they make all that much - 30-40K tops. But hey, that kicks a55 over paying that much to study underwater basket weaving. Live with the folks, save up and uh, buy a house!?!
I think the myth of go onto further education and be set for life is starting to shatter.
“New official forecasts suggest write-off costs have reached 45% of the £10bn in student loans made each year, all but nullifying any savings to the public purse made following the introduction of the new fee system.
Willetts, in response to a parliamentary question from the shadow education minister, Liam Byrne, confirmed that the write-off figure – the resource accounting and budgeting (RAB) charge – was rapidly approaching the 48.6% mark. This is the threshold at which experts calculate that the government will lose more money than it would have saved by keeping the old £3,000 tuition fee system.
The coalition’s decision to introduce higher fees shortly after it formed led to rioting and forced a dramatic decline in the Liberal Democrats’ poll ratings, from which the party has never fully recovered.
Lower pay for young adults, an over-supply of those with degrees and the worsening economic outlook have all contributed to the revised civil service forecasts, which conclude that far fewer graduates will earn enough to repay loans over their working lives. Four months ago, Willetts notified parliament that the rate had risen to 40% from 35%. In 2010 the estimate was 28%.”
http://www.theguardian.com/education/2014/mar/21/student-loans-unpaid-debt-problem-universities-adrian-bailey
I suspect the English experience is far from unique.
careful -oxide is a “cater
even an mba is an asswipe now
either your med/engineer/rocket scientist or save the $$$
In the current economy a liberal arts degree is worthless.
Unless it’s from an elite school, a Business degree is also worthless. You’ll be lucky if a car rental chain hires you to work at the counter as a “management trained” (of which 90+% are fired after the first year).
I’ve also heard that recent nursing grads are having trouble landing jobs as hospitals and clinics want experienced nurses and not rookies.
And if you have a STEM degree, it also pays to graduate from an elite school. My current employer has a very short list of schools that we recruit from. Apparently Podunk State U graduates too many useless engineers.
I think the myth of go onto further education and be set for life is starting to shatter.
I think it already is. You can walk into any chain retail store and all the “leads” (who are paid a whopping $10-12/hr) have university degrees in the humanities. Ditto in most chain restaurants, most of the wait staff have degrees.
Been there, done that in my first year after undergrad (during the ever-lengthening “jobless recovery” of the first George W. Bush recession).
Except it helped that I was only paying $300 for rent then and that $20 would fill your gas tank or buy a week’s worth of groceries.
Did you say groceries?
I noticed at S*itt*Ybank and chase the same people are there after 10+ years, found out they either drive there and free parking in the lot or they live in the nabe and walk to work….
Hint they back into the parking space so they dont get towed from the commissioned tow truck hustler
“Hint they back into the parking space so they dont get towed from the commissioned tow truck hustler”
FWIW, front wheel drive.
Much like Walmart employees, bank tellers rely on food stamps:
http://www.businessweek.com/articles/2013-12-04/a-third-of-bank-tellers-rely-on-government-assistance-study-says
And this is going to continue to grow and absorb many formerly middle class folk.
In a way the US already feels like a two tiered society. Either you’re a six or near six figure STEM or Manager or you’re a lucky ducky. The only people I see breaking that rule are those in the trades, and new construction numbers, even with bubble 2.0, isn’t what it used to be.
today’s 100k job is like a 50k job from 1995. 20 years at official 3% inflation makes a 100k job a joke. For some reason though, those 100k numbers light everyones eyes up.. All an illusion…
“today’s 100k job is like a 50k job from 1995. 20 years at official 3% inflation makes a 100k job a joke.”
+1 The deal today is two of those $100k incomes.
Maybe don’t go so far in debt that you can’t afford to have kids? Or if you have them they get raised by others cause you are stuck in a job trying to pay off that massive debt.
Flexibility is nice if you are going to have babies like 95 percent of people.
Flexibility is nice if you are going to have babies like 95 percent of people.
Methinks that number is shrinking fast.
Stats from something I posted recently note that 18% of American women ages 40 to 44 today do not have children, the highest percentage ever recorded.
Better to be a nurse. Very flexible and seems to always be in demand.
“Better to be a nurse. Very flexible and seems to always be in demand.”
Nursing is a tough job, mentally and physically. Underpaid, IMHO.
Maybe underpaid but I think they do make good money anyway.
A friend’s wife is a neo-natal ICU nurse, he says that with OT she pulls down 150K.
“Nurse” ie RN is a ‘manager’ type position now and pays pretty well. LVNs which make up the bulk of ‘nurses’ (and is a shorter degree path) make less, and most of the people you deal with in a hospital or doctor office (take your weight, your info, do basic tests) are medical assistants, which is even shorter degree path and starts barely above minimum wage.
I dont like blood and guts and project my squeamishness on others, but yeah, if a woman wanted to be a nurse that would be a profession that pays well.
Not red hot on the idea of them working overtime. I want any doctors and nurses I deal with well rested and lucid.
Article details the number of minimum wage hours of work needed to pay for one credit hour of public college tuition, from 1979 to today:
http://www.theatlantic.com/education/archive/2014/04/the-myth-of-working-your-way-through-college/359735/
I think college is very overrated today except for certain specialties..but that piece of paper will get your foot in the door.
Its amazing how many companies require that 4 year degree for some entry level sales job…or quickbooks jobs.
Like i’ve said repossess your degree in ancient history, lose the overhanging debt and continue you real career at Starbucks!
I think college is very overrated today except for certain specialties..but that piece of paper will get your foot in the door
It serves the purpose of an IQ test which is forbidden due to disparate impact. However, in the end no more blacks are hired due to the requirement to have a BA. It is a very expensive system caused by our discrimination laws. If we would allow companies to hire just on the basis of IQ, it would could save the expense of a college degree for millions of people.
I agree,, and so many problems we have today can be traced back to that degree at an ivy college..
What does it takes to get there Blinders strict blinders on getting that 4.0 and 1600 sat….no thinking outside of the box
so when the crap hits the fan they are clueless, and there is no one like me around on the payroll..
Respectfully, that is simply not true. There’s a heckuva difference between people whose sum total is their SAT score, vs. those whose SATs are just another aspect of who they are.
FWIW, the most objectively brilliant engineers I’ve met have been profoundly interesting as well. Richard Feynman might be the exemplar - but there’s a whole subculture of interesting geeks who are WAY more than their SAT scores and who have probably forgotten more than I’ll ever know about the Renaissance, Russian lit, or the history of musical theater.
Jane……….imagine if I worked for anyone at the fed…and i made them read this blog everyday….would they have been so clueless as the recent fed minutes have shown?
Back in the stone age when I was a kid in SoCal I recall some of the teen and pre-teen boys mowing neighbors lawns to “save for college”.
I also recall that almost all of the families in the nabe were single income and the dad had jobs like supermarket clerk, letter carrier, factory worker, etc.
How quaint.
In the decade timespan between when my oldest sibling started at Football Factory State University and I graduated from there tuition rates more than doubled.
Back in the stone age UC didn’t charge tuition and you didn’t need a perfect SAT to be admitted, IIRC you only had to be in the top 10% of your class. For those who didn’t make the cut at UC, Cal State was just a few hundred a year (granted, that money had more buying power back then).
The only bargain leftover from the stone age in California are the community colleges. You can do the first two years at a CC for a few hundred bucks, then transfer to Cal State. I knew plenty of people who did just that.
Back in the stone age UC didn’t charge tuition and you didn’t need a perfect SAT to be admitted, IIRC you only had to be in the top 10% of your class. For those who didn’t make the cut at UC, Cal State was just a few hundred a year (granted, that money had more buying power back then).
Even that was pretty lame. It’s probably safe to assume that, on average, the kids in UCs came from families with higher incomes than the CSU kids. Yet the state made the CSU kids pay, but not the UC kids.
“…women gravitate to that job.”
That’s sexis’.
But to further your point, women gravitate to jobs with low or no pay. And they willingly accept such low-paying work.
Ergo it is discriminatory that men get paid more for the work they do.
But the womyn are getting more degrees and have lower unemployment:
http://finance.yahoo.com/blogs/the-exchange/if-you-re-wondering-what-s-wrong-with-men–here-s-what-180238877.html
(great photo with the article too, because if you don’t borrow $100K to get a Masters Degree in Obama Studies, you’re just a fat looser on the couch consuming groceries)
Yeah, I loved that picture. The problem with shaming tactics is that they don’t seem to work anymore.
Part of the problem is that just because you’re a guy doesn’t mean you’re cut out to be a STEM major. And a lot of these guys realize there is no point in majoring in baloney, all they’ll have to show for their degree is a menial job and a mountain of student loan debt (which is happening to most of the women as well).
That guy appears to be watching TV. They need an updated photograph of a fat slob lying on a couch, consuming groceries and posting nonsense on a blog.
They need an updated photograph of a fat slob lying on a couch, consuming groceries and posting nonsense on a blog.
Or with a video game controller in his hand.
Accepting less pay reduces the risk of unemployment.
That’s porkis’
hitlery is gonna get you- she’ll win by outlawing high heels
I read somewhere recently that on average tellers make 25K.
$22,500 according to this:
http://www.glassdoor.com/Salaries/bank-teller-salary-SRCH_KO0,11.htm
Yeah, I read that too but IMO its better to make 25K than pay 25K for something that isnt going to land you bigger earnings down the road, i.e., many non-STEM majors offered by our so called institutions of higher learning (hard to not laugh at that description).
Ironically, aside from a few majors, the only schools worth paying for really don’t need the students’ tuition money. They’ll admit a middle class kid and give him a full ride or nearly full ride. (Of course, at these schools, about half the parents make $250k+, so they do end up paying for it in those cases.) I’ve never understood why people would pay for a school that doesn’t provide an eye-catching resume line plus connections. If my kid can’t get into at least JHU/Duke level of school, I’m not paying. It will be up to him/her to go to USNA or turn to a life of crime to pay for college. (Secretly, I kind of hope for USNA, because cost = free.)
The biggest cost of college is the opportunity cost. Making connections and meeting people with connections is vastly underrated. It’s why a relative handful of schools are vastly overrepresented in the “top positions”. If you graduate with a run of the mill degree from a school with no pedigree, you would’ve been better off working in many cases. Being a carpenter or pipefitter is like a million percent better than being a “senior revenue analyst” or “associate product manager” in the majority of cases anyway. Plus the tradesperson can take pride in what they do and act as an owner, not someone’s tool.
I still think people are overrating how crushed kids are by school debt. Any of these state school kids who isn’t copping dat PAYE or IBR at the end is an idiot. And the best move for a lot of them is probably to become a teacher or a nurse at a public hospital and just PSLF the whole student loan issue away in 10 yrs.
Downlow Joe has entered the building.
Liberace!
They’ll admit a middle class kid and give him a full ride or nearly full ride.
If his ACT/SAT scores place him the 99th percentile. It also helps to be a minority.
Ironically, aside from a few majors, the only schools worth paying for really don’t need the students’ tuition money.
Not necessarily. Most UC schools are “elite” and are super competitive in admitting students. As far as I know only the very poor get free rides there. And while “full freight” at UC is less than at an Ivy, it still isn’t cheap.
I bet you’re going to be an amazing businessman in the future even though you apparently do not know what a rate of return is or how to calculate one without the cost side of the equation being ‘free’, or who makes up the majority of the positions for the people you hire. Hope your lawyers and accountants can spare you for a few years from failure in your future business endeavors.
Across half of the US, the average pipefitter and carpenter is a possibly illegal immigrant - how does that compare salary-wise with a “senior revenue analyst”? How long can your career as a pipefitter be vs your career as a ’senior revenue analyst”? How long are your vacations? How does your back feel at the end of the day?
Maybe you are talking about running your own pipefitting business, but that isn’t the same thing as being a pipefitter. (hint: pipefitters connect pipes together, people who run a business do/hire out marketing, contracts, sales, accounting and people managing).
And unless you are a pipefitting artist, you are someone else’s tool. Look at HA’s posts some time for a drywall guy with exacting specs- and tell me that you aren’t someone else’s tool. The only agency you have is how much you’d like to get paid. Hope he’s feeling generous and you don’t have much competition.
In any case, check the following charts about the educational system in the US, which completely destroy your premise. In short, you ain’t getting into Harvard unless your mom & dad are already wealthy: Start at Figure 6.
http://www.demos.org/blog/3/25/14/americas-class-system-across-life-cycle
Sacramento Foothills Rental Inventory Report Update:
A friend has a rental house where the tenant just gave notice because they are buying a home. The owner posted the property in Craigslist Sunday night. On Monday there were three qualified tenants, all of them ready to rent the home. Two of them filled out an application on the spot, stating they had already missed out renting other houses because they were too slow to return the application.
The SFR rental market is very tight in the Sacramento foothills.
Ehhhh…. no J. Fraud.
Inventory is up 63% in the city of Sacramento alone.
http://www.movoto.com/sacramento-ca/market-trends/
Up 63%? Sure. But that inventory is still only 34% of the inventory in 2010. You have to look beyond the headlines with HA, HA, HAlarious.
With collapsing demand it’s a distinction without a difference.
It’s trend enough to show they are jumping ship Bigtime! You’re broke waiting to happen Jingle Fraud.
HA ribs you whether you buy or rent. He won’t be happy until you squat land and build your own home for $55/sq.ft., including builder profits, of course.
No. Why buy from a lying realtor when you can rent for a fraction of the cost?
Oh, and this is interesting: The two people who filled out applications were “downsizing” their rental payments, one by $249/mon, the other by $750/mon, so they could save more money to buy a home in a few years.
And this is even more interesting: Both of the prospective residents were moving because the owners of the properties where they live now have decided to sell the homes.
There seems to be some fluidity in both the rental and sales markets.
When dupes are paying 200 x rental to buy around Sacramento, why not rent?
my hood is 200x rent also
historic number is 120?
The 120 x rent rule of thumb, and the 2.5x income rule of thumb take only price into account. And when those rules of thumb were devised, interest rates were 7-9%. Prices could be substantially higher, that is, more than 120 rent and more than 2.5x income, but still give the same PITI.
If you’re a HowmuchaMonth Debt-Donkey, of course.
Sure, when your horizon is one month away.
Awww…you are such a hopeless romantic. If it was a movie I would be pulling for you.
Blue Skye,
Rent all you want. I like renters. They are my favorite people. I go out of my way to make renter’s lives the best they can be. I never raise their rent and they tend to like that enough to live in my houses for an average span exceeding 4 years. Works for me, works for them.
I also agree with you that housing is getting more expensive and renting makes good economic sense. Buying a house does have it’s advantages, but it also costs more.
Jingle, I don’t mind that you buy houses. I am not a renter. I have cheated the “system”. Mostly I mock debtors, because they are prisoners of that system.
HA, nobody is more of a howmuchamonth donkey than a renter. Blue, nobody’s horizon is month away more than a renter’s. For those who didn’t get the memo, my horizon is about 21 years away.
No my friend. When you’re so blinded by the system message as to commit to 30 years of debt service irrespective of the expense, it is you that is a howmuchamonther by definition.
Remember your substitute. It was and still is a small fraction of your monthly expenses.
“my horizon is about 21 years away…”
You do jump horses like a circus performer.
Total fools to buy in Sacramento now. The SFR rental inventory might be tight but that’s only because speculators are jumping ship from rentals and trying to sell before the inevitable crash. Hence the 63 % increase in sales inventory.
I don’t think the model of buying SFRs in high priced areas and renting them out works.
If you ain’t a slumlord Jingle fraud, then you are a speculator (and broke).
But, but, he has cash flow…and is hedged with stock market investments!
Hi LolaLOL,
I am not a slumlord. The residents in my homes are very happy. The average tenancy is now exceeding 4 years. One was the first occupant to ever live in the house and have been there since 2009. My vacancy factor is less than 1/10th of 1%. You don’t have 99.9% occupancy without a quality product (and a tight market helps too).
Yes Blue, I do have cash flow. That is what you achieve when you buy at the bottom and keep your houses full. I have invested the cash flow in the stock market. VDIGX and VFIIX. Both are up substantially in the last few years. When you are playing with the houses money (ha, ha,) you can afford to take a few risks.
Your negative cash-flow is a tenants gain.
Speculator
Good to have your money in things that go up together.
Which reminds me of an expression I coined recently..
,b>Whore-Logic and Realt-Whore…….. Two great liars that lie great together.
Of course fill in the blank with your favorite known liars.
It’s been established that Jingle is probably suffering from Dunning-Kruger Syndrome.
Add medicine to your long list of expertise.
$250 a month for 3 years (short term money, so it belongs in a bank account) is $9000 plus a little interest.
That is a long time to a 20% (or even a 10% down payment).
Must be nice to live in “God’s Country”. A friend from Shingle Springs used to call it that.
Ah God’s country, people I know call the place I live that, personally I think it’s a little run down, but some people are easily satisfied or just plain delusional.
A place is called “God’s country” when no one else wants it.
Gods country=uninhabitable.
God’s country Saudi Arabia:
http://www.independent.co.uk/news/world/middle-east/saudi-arabia-declares-all-atheists-are-terrorists-in-new-law-to-crack-down-on-political-dissidents-9228389.html
God’s Country is Georgia and only Georgia. Everybody knows that. Sheesh.
Is that the Georgia next to Armenia, where that nice Mr Stalin came from?
“God’s Country is Georgia and only Georgia.”
+1 I spent time there in the military. Muggy got the word.
There’s no Starbucks and the NPR reception is terrible. What’s its walk score? How far to the nearest Whole Foods?
LolaLOL, I had no idea you were an urban snob! LOL
God’s country is actually on Georgian Bay amongst the 30,000 islands tied to a tree on a summer night with a little breeze rocking your boat and only the moon to see with, just after a refreshing swim.
And then a violent thunder, lightning, and wind storm just after you start sleeping.
Without anyone within ten miles.
God’s country is actually on Georgian Bay
Hadn’t known much about that area until a colleague told me he had to visit the elephant’s a$$hole.
Convenient strawperson argument.
I would never buy starbucks, I agree that most NPR content is dumbed down (the best programs aren’t the “news” shows anyway).
Walk score actually is a decent indicator that you’re not going to waste a lot of time/energy getting around.
WholeFoods is largely for idiots.
I love how many of the walkscore haters seem to think that it’s either Manhattan or nothing.
I drive 30 minutes / 15 miles to work alone each way because I don’t want to live on the east side in a clusterfark of 6 lane roads with 3 minute long traffic lights, strip malls, McMansions, prairie dogs and tumbleweeds.
And when at home, I can walk or bike to the grocery store, Walgreens, library, bus stop, train station, et cetera. If I’m not going to the mountains, some weekends I don’t drive at all.
If you like your clowncar lifestyle, you can keep your clowncar lifestyle.
My Walkscore to the couch beats any Walkscore you can come up with. Even with the side trips to the fridge.
I drive 30 minutes / 15 miles to work alone each way because I don’t want to live on the east side in a clusterfark of 6 lane roads with 3 minute long traffic lights, strip malls, McMansions, prairie dogs and tumbleweeds.
Aurora is not on trial!
Aurora is not on trial!
Just a lynching will be fine.
Sacramento, CA Rental Rates Fall 7% YoY As Demand Sinks Across State
http://www.zillow.com/local-info/CA-Sacramento-home-value/r_20288/#metric=mt%3D48%26dt%3D1%26tp%3D4%26rt%3D8%26r%3D20288%26el%3D0
Hmm. HA, is that the same Zillow which points out home prices rose 22.9% over the last year? Funny how you always like to discount Zillow’s numbers when they indicate values are rising! HA, HA, HAlarious!
I can ask $50k for my 14 year old Chevy truck but where are the buyers?
Housing demand is collapsing across California.
If you will finance it, you can find a buyer. Just don’t expect him or her to actually make the payments. Good luck finding the collateral.
Environmentalism Is For The 1% - Editorial, Investor’s Business Daily
Saving The Planet: It used to be said that socialism was the opium of the liberal intelligentsia. But now the drug of choice for the elite is environmentalism.
The dirty little secret of the modern green movement is that it’s become a luxury good for the uber-rich who espouse policies — from carbon taxes to renewable energy standards to closing down coal plants — that impose high costs on poor people who can least afford to pay the green tab.
We wonder if wealthy liberals even understand that the green dictates they favor are making the rich richer and the poor poorer. Do they care?
For many, the answer in “No’”
You’re busy this morning ‘Blackawk’.
Are the shills out today? Seems like there’s quite the rotation.
With a reworked narrative.
Lola and The West Coast Weirdos with second billing support from the DCGovLiars.
And there’s one from GA too.
Georgia? Did Jimmy Peanut show up with Billy?
By controlling the behavior of an hundred, one more than compensates for the behavior of one’s self.
mostly it’s the $7500 tax credit for your tesla
that impose high costs on poor people who can least afford to pay the green tab.
Ultra-capitalist IBD automatically assumes that the high costs are automatically passed onto (poor) customers. Paying the green tab out of corporate profits, leaving customers unaffected, didn’t even enter their minds. Well of course not… they aren’t “investors” for nuthin’.
But that’s what the libs are trying to do; convince those companies to cut into their own profits. Or elect legislators who will pass laws or ordinances or deny rates hikes, to keep the cost away from the customers. The rich libs didn’t give up socialism for environmentalism. They are mixing the two: use the socialism (i.e. the rich) to pay for the environmentalism. Will the libs succeed? My guess is, not now but maybe eventually.
Thanks for explaining that the liberals didn’t give up socialism for environmentalism. I also owe thanks to Lola for equating a free trade agreement with Canada to one with Mexico.
Free trade between economically similar societies, who are truly free-trading, is the model which leads to the much touted benefits of free trade.
Free trade between a wealthy and poor society leads to the wages in the rich society going down and the wages in the poor society going up. This is a well known but little touted fact in economics circles.
As an environmental issue and labor issue, companies here simply bypass labor and environmental standards here by exporting the factories to places with little or no labor or environmental standards. Bangladesh has its fires and building collapses and China has its truly inconceivable air pollution as a result.
Win-win I guess?
“out of corporate profits, leaving customers unaffected…”
There you go. Couple that with making taxpayers foot the bill while leaving actual people unaffected!
California Housing Demand Falls To 5-Year Low; Heads Lower
http://www.zillow.com/local-info/CA-home-value/r_9/#metric=mt%3D30%26dt%3D1%26tp%3D4%26rt%3D14%26r%3D9%252C394806%252C395057%252C395025%26el%3D0
The chart is a beautiful thing.
http://picpaste.com/pics/965f824decf169a199e0fe93de2149de.1396361004.PNG
Salinas, CA Housing Demand Collapses 23% YoY
http://www.zillow.com/local-info/CA-Salinas-home-value/r_54288/#metric=mt%3D30%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D54288%252C35767%252C113865%252C27215%26el%3D0
Here Comes $75 Oil - By GENE EPSTEIN. Barron’s
Lower energy costs will have a salutary effect on the U.S. economy. Not so Russia, where oil provides 50% of government income
Vast new discoveries of oil and natural gas in the U.S. and around the globe could drive the oil price to as low as $75 a barrel over the next five years from a current $100.
The demand side, too, will put pressure on the supremacy of petroleum. For the first time in its 150-year history, the internal combustion engine can be run efficiently on alternative fuels from a number of sources, including natural gas. As these alternatives are increasingly introduced, global consumption of oil will slow its growth and flatten out.
So you see, we’re on the verge of a new day, especially if our government will get out of the way.
HA.
Did you even notice this article throws you a bone on demand for oil?
thats nice
For the first time in its 150-year history, the internal combustion engine can be run efficiently on alternative fuels from a number of sources, including natural gas.
That points to what I think historians are going to look at as the biggest mistake made by Obama even bigger than Obamacare. He failed to exploit the opportunity to use the NG bonanza he was handed. He could have jump started the conversion of vehicles to NG and jump started the U.S. economy. He could have used it as an example of government promoting economic development. Instead, he showed the problem with government, they usually back things that are not economically viable. Government is spending $40,000 a vehicle including environmental credits to support Tesla. We are talking about a 1,000 vehicles a month which cuts about as much energy use as I can raise the Pacific Ocean by pis#ing into it. There could be millions of NG vehicles on the road with the same amount of aid given to electric cars. Instead Government backed a toy for the rich. Thus, $75 oil under Obama, do not count on it. The world is actually reducing oil stockpiles, there is no sign of a glut or policies that could cause a glut.
If you look at NG, it is selling for a $4.30, historically oil would be around $43 a barrel when it was selling for so cheap. On a BTU basis it would need to be selling for about $17 to equal the present price for oil. We are wasting a great opportunity in this country. However, because we are wasting it, I would not be selling my energy shares, we are more likely to see $150 oil due to a supply disruption than we are to see $75 oil due to a glut in the next five years.
Hmm, fascinating Blackhawk. I better sell my Vanguard energy fund VGENX. It wasn’t doing that well anyway, compared to other funds.
Baron’s been so wrong lately that I would put my farm against it if I had one.
Another article I just found that supports what I have been saying in my other energy posts. This article has a great collection of graphs:
http://peakoil.com/consumption/the-absurdity-of-us-natural-gas-exports
That’s probably why you don’t have one!
Vast new discoveries of oil and natural gas in the U.S. and around the globe could drive the oil price to as low as $75 a barrel over the next five years from a current $100.
Here comes the next bust. I suppose we will be treated to stories of ghost towns in North Dakota, with the national news reporter standing in the parking lot of a shuttered McDonalds, with tumble weeds blowing by, reporting how just two years earlier burger flippers at this very outlet were paid $20/hr
Vast new discoveries of oil and natural gas in the U.S. and around the globe could drive the oil price to as low as $75 a barrel over the next five years from a current $100.
You cannot produce shale oil at $75 and if you stop drilling you lose 30% of your production in a year. The reason oil companies shares are not doing well is there is very little profit in shale oil even at $100 a barrel. With oil, I favor the drillers and the commodity. With gold, I favor the miners.
Agree. The US oil reserves are NOT “vast new” discoveries. We’ve known about the oil sands and oil shale for decades. Would you believe, I read about it in a Disney comic book published in the 1970’s as part of the conservation propaganda. Donald Duck held up some oil shale and said we have a bunch but we don’t know how to extract it so we have to conserve yada yada. That was for written for kids. More likely, the method was known but it was too expensive.
For reference, I heard that $80 is the point where oil companies stop spending money on R&D and concentrate on their core business. So my guess is that $80 is the low price.
We’ve known about the oil sands and oil shale for decades.
Actually, we knew about oil in shale too. Shale oil is real oil locked in shale. Oil shale is really the precursor to oil in the shale. Think of oil shale as being baby oil, shale oil as being adult oil and oil sands being old oil. However, what they all have in common is that they are not cheap to produce and the return on the energy inputted is low. The days of cheap oil where you could spend a $1 per barrel and get $40 oil and get 100’s or thousands of times the energy that you put into the system back are over.
Is Fracking that costly?
Also consider that it isn’t just being done here. If it’s cost effective (aside from potential environmental issues) and done around the world, then we must have a temporary glut and lower prices, which could put a damper on the oil patch and its perennial visions of a boom that doesn’t end.
Is Fracking that costly?
Yes, if you are dealing with relatively dry NG, you need $6 gas just to break even. Only if it has a lot of NG liquids such as propane can you produce for less. Oxide’s number of $80 a barrel is a pretty good estimate for oil but that number is going up because the best or richest spots have already been drilled. The oil fracking boom is coming to an end although the NG resource has much more time to play but not at $4.30 mmbtu.
I hope my detailed response posts but the short answer is yes.
The oil fracking boom is coming to an end although the NG resource has much more time to play but not at $4.30 mmbtu.
So either way the oil patch boom is short lived … like they always are.
Elite environmentalism has walked hand in hand with socialism since socialism’s inception. You only have to look at the history of the “Arts and Crafts movement” to see that. Many of the leading lights in that movement where leading socialists.
“William Morris (24 March 1834 – 3 October 1896) was an English artist, writer, textile designer and socialist associated with the Pre-Raphaelite Brotherhood and English Arts and Crafts Movement.”
http://en.wikipedia.org/wiki/William_Morris
Arts and Craft Movement
The movement developed first and most fully in the British Isles,but spread across the British Empire and to the rest of Europe and North America. It was largely a reaction against the perceived impoverished state of the decorative arts at the time and the conditions in which they were produced. It stood for traditional craftsmanship using simple forms and often applied medieval, romantic or folk styles of decoration. It advocated economic and social reform and has been said to be essentially anti-industrial
http://en.wikipedia.org/wiki/Arts_and_Crafts_Movement
Picture of Bejing prior to the Olympics showed me all I needed to know about lack of environmental regulations.
Or the way it looks now. Every time we send someone to the Beijing office they come home sick.
When I was in private practice I had a client of mine go to China and die of Sars. Not directly related to pollution but I don’t think the pollution levels help your immune system.
Everyone Must Check In
Everybody must get stoned. Bob Dylan
Legal retail Maui Waui from Evergreen Apothecary:
http://www.picpaste.com/IMG_20140401_172308_072-SGqRXS90.jpg
Now if you’ll excuse me, I need to go lay on my couch consuming groceries…
Yeah but no NFL.
Do you want me to read the card?
“Legal retail”
Friends I grew up with did time in state prison just for getting pulled over and getting caught having goodies like that.
In 2014 you buy it legally and as casually as you buy a Big Gulp
Check.
Czech
“Czech”
+1 Czech Mate.
Now, walk in circles around and in and out of the same building so anyone watching will think you are here for a reason and doing something about it.
/
\/
Round 2 recession?……Yankee One Dollar to close local stores
SCHENECTADY & ROTTERDAM — Yankee One Dollar is shutting down its entire chain of stores, including locations in Rotterdam Square Mall in Rotterdam and Crosstown Plaza in Schenectady.
Chain Owner Keith Flike said the action is a “reflection of the times.” He estimated that the two local stores will be closed within six to eight weeks.
At the chain’s peak, there were 39 Yankee One Dollar stores. Now 23 are left in New York, Vermont and Western Massachusetts.
Flike said the plan to close the chain has been in the works for about a year. He said he has other business interests but plans to “semi-retire.”
All items in the stores are now priced at 75 cents or less.
http://www.dailygazette.com/news/2014/mar/27/0327_yankee/
Well? It is upstate NY after all…… and dollar stores are doing so poorly that even they’re closing. LOL
No, they probably got beat out by Dollar General and the like. Economies of scale. If we think that Wal-mart cuts quality to save pennies with suppliers, imagine what Dollar General must do! And I’ve noticed that Dollar General now has an entire food aisle. I didn’t see that five years ago.
Of course Mz. Craterton. Optimism is one thing, blind allegiance is another.
It occurred to me that Ronald Reagan was the best president since Eisenhower. That’s the best president in the last 10.
“It turns out that wealth inequality isn’t about the 1 percent vs. the 99 percent at all. It’s all about the 0.1 percent vs. the 99.9 percent (or really, the 0.01 percent vs. the 99.99 percent, if you like) … While nine-tenths of the top percentile hasn’t seen much change at all since 1960, the 0.01 percent has essentially quadrupled its share of the country’s wealth in half a century.”
http://www.theatlantic.com/business/archive/2014/03/how-you-i-and-everyone-got-the-top-1-percent-all-wrong/359862/
Hey Goon, I have making that point every since the 1% vs. 99% debate started. The .1 or .01% have thrown the rest of the 1% under the bus to save their wealth. George Soros and Buffett would rather the 1% pay more than have themselves subjected to a wealth tax.
Hey, hey, ho, ho, Obamacare has got to go!
hitlery will offer to make it FREE-er. And she’ll win. BTW open heart surgery abroad is 13-15k so just keep some $ handy.
OH, GAWD, don’t get me started. You KNOW it’s going to be JEB! vs Hillary 2016. I can’t stand it. It’s too AWFUL to even contemplate. Oh, the horror. The horror.
http://www.picpaste.com/a_hillary_campaign_colorposter-QLXu3wKS.jpg
Jillary 2016!!!
The Gobi Desert is Gods country.
Arlington, VA Housing Prices Dive 22% As Demand Craters 21%YoY
http://www.movoto.com/arlington-va/market-trends/
http://www.zillow.com/local-info/VA-Arlington-home-value/r_30258/#metric=mt%3D30%26dt%3D1%26tp%3D4%26rt%3D8%26r%3D30258%26el%3D0
Got Excess Empty Inventory?
http://www.rigzone.com/news/oil_gas/a/132359/Paper_Russia_Plans_to_Build_Undersea_Gas_Pipeline_to_Crimea
No sign that Putin is backing down. The costs for this new pipeline will be paid for with the additional money that Russia will receive the Ukraine now that it has raised the price of NG it sends to the Ukraine. Of course, the United States will help pay for it due to its direct loans and its share of the IMF loans to the Ukraine.
Good Morning and Welcome to the Housing Bubble Blog;
Press 1 for English - Press 2 to learn English - Press 3 for Immigration
Slight change:
Press 1 for English - Press 2 to learn English - Press 3 for deportation
Well… Once again GovCorp has seized up the housing market tighter than tight.
And what do you think it is that’s going to un-seize it?
Survey finds boomers optimistic on housing:
http://m1.marketwatch.com/articles/BL-235B-2046
Read it and weep boys!
Pick yourself up off the floor and cheer up. Why? Because falling housing prices to dramatically lower and more affordable levels is bullish optimism.
I just looked into the sauce pan labeled “Precious Metals.” The boiling of the last four weeks has all disappeared and the liquid is lukewarm.
Time to head to the coin shop and get a dozen or two quarter ounce gold eagles.
The fiddlers are happy the yellen printing press is going crazy and buying up more stocks. Fine. This also helps my stocks but I still am selling my former company stock from time to time. The market cycles will reverse. I don’t want to be caught at low tide without my trunks.
I like your thinking. I could never pull the trigger on buying gold. Not at $300, not at $600 and not today. I lost big time since 2007, but I like investments that have cash flow. That provides consolation, I guess.
The only way I can see gold taking a long term tumble is for governments around the world getting their acts together and their central banks turning off the printing presses. The likelihood of that happening in the next 10-20 years is probably zero.
It’s failing anyways.
Go ahead and double the speed of the press.
While the PTB will never admit it, QE was about two things. Monetizing the deficits so the government would not have to pay higher interest rates and buying mortgage debt so Freddie and Fannie could survive their write-downs and actually send money to the treasury to make the deficits look smaller. The PTB are able to cutback on QE due to smaller deficits and the mortgage write-downs being smaller, however, if either the treasury or GSEs start having to pay substantially more for their money, I expect the taper to come to a halt.
I would buy some palladium, between one is happening with Russia and the strike in South Africa, hard to see it falling in price.
one=what, don’t ask me how I did that.
Home sweet home
HEEHAW!
http://1.bp.blogspot.com/-1×7vNuOhGmU/UoGhzmGiEgI/AAAAAAAC8Iw/e24ML1mTapU/s1600/contactsImage_donkey.jpg
http://1.bp.blogspot.com/-1×7vNuOhGmU/UoGhzmGiEgI/AAAAAAAC8Iw/e24ML1mTapU/s1600/contactsImage_donkey.jpg
What, no pootie?
“There is nothing better for your wallet than a deflationary spiral.
Let the spiral proceed.”
You better believe it Mister.
“Where is Liberace today?”
Pickin’ cherries.
Considering we’re profitable building new structures anywhere in the country at $55/sq foot(lot, labor, materials and profit), why pay more than $35-$40/sq ft for a 20+ year old house?
Well?
Having an April Fools Day joke?
I know. Your entire future is founded on the massively inflated price you paid for a rapidly depreciating asset.
Seeing as I have a bunch of money in savings doing absolutely nothing for me, how would you guys invest 50K-60K give or take? *Aside from hookers and blow of course.
Buy a congressman or a senator.
Buy a congressman or a senator.
Hookers and blow, is commonly used for that.
is=are
http://www.city-data.com/forum/work-employment/2084405-news-260-000-graduates-minimum-wage.html
Finding a place to live may get more pricey in the Treasure Valley (Boise, ID)
http://www.kboi2.com/news/local/Looking-for-a-place-to-live-is-about-to-get-more-pricey-253292521.html
This illustrates my rent vs buy dilemma in Boise - the rental market is pretty tight and rents are going up. With the housing market also a little tight, I’m hoping this will encourage more houses to come to market and cause prices to drop a bit. Other than auctions and foreclosures, the market is running too high to attract a lot of investors looking for rentals.
I do find this comment to be funny: “We’ve seen the rental market tighten up because the houses aren’t there to buy or to rent,” said Karen Nelson, owner of Nelson Realty LLC.
I suspect the real reason rental market is tight because people’s credit is shot and/or they can’t qualify for a home loan.
Well remember…… Rental rates in Boise are half the cost of buying at current grossly inflated asking prices of resale housing. Worse yet, rental rates are falling.
Sit tight.
How do you arrive at “half the cost”? If you strictly look at a payment basis rent vs buy is an equal proposition in Boise with like housing - not including tax implications/deductions or maintenance.
Right now rental rates definitely are not falling - they are greatly inflated at the moment. In my neighborhood of 18 yo 3/2 tract homes rents have gone from $800-$900 a month when the bubble burst to $975-$1100 a month.
I’m trying to look at everything objectively and balancing the current rental/resale market with out of pocket costs and intangible costs like having to pack/move myself and kids several times with renting vs putting down roots.
Rental rates are indeed falling in Boise. See for yourself. Don’t feel bad because they’re falling in Manhattan too.
http://www.zillow.com/local-info/ID-Boise-home-value/r_3737/#metric=mt%3D48%26dt%3D1%26tp%3D4%26rt%3D8%26r%3D3737%26el%3D0
You’re understating the massive losses to to taxes, insurance and depreciation which is skewing the calculation. Include all expenses.
I suspect the real reason rental market is tight because people’s credit is shot and/or they can’t qualify for a home loan.
Captain Ninja-Loan to the rescue?
Uh oh…
———————————————
“According to the center’s projections, 600,000 Hispanics will be newly eligible to vote in Florida in 2016. Over the same period, fewer than 125,000 new white voters will be eligible in Florida. In Arizona, more than 175,000 Hispanics will enter the voter pool as roughly 10,000 white voters leave it. In Texas, 185,000 new white eligible voters will be overwhelmed by the roughly 900,000 Hispanics expected to enter the electorate.”
http://fivethirtyeight.blogs.nytimes.com/2013/03/01/can-democrats-turn-texas-and-arizona-blue-by-2016/?_php=true&_type=blogs&_r=0
Census Bureau reports that over half of children age 5 and under in USA are non-white.
Remind me again how “take America back” and “restore our future” will win elections?
You just gotta keep those pesky brown people from voting.
New Mexico is the most Hispanic state in the Union. However, it has a Republican Governor (Latina) and the mayor of Albuquerque is a white male Republican. Before his election, after Obama was elected, it had been decades since a Republican was elected. The PTB would like to convince Republicans that they have to approve amnesty to have a future but it is not so. They only have to adopt policies that are more friendly to the working and middle class which they need to do anyone. As I said presently the middle class is an orphan, the dominant party going forward will be the party that fills that void.
anyone=anyway
Eligible to vote doesn’t equal will actually vote.
yet more evidence that the bill in los angeles lifestyle = win
http://time.com/41820/divorce-watch-couples-of-all-ages-are-less-stable-than-ever/
I seem to recall reading somewhere that the lower you are on the socio-economic ladder the less likely you are to marry and the more likely you are to cohabitate and switch partners frequently.
Yesterday someone mentioned a second bubble and the idea of it being surprising. As I’ve said before, I think it’s the same bubble, but let’s consider how unsurprising it might be. How many places had a significant decrease in house prices only to see a familiar mania pattern re-emerge: Canada, Australia, China, New Zealand, London, and Dubai, to name a few. The latter is interesting in that you have speculators standing in line around pre-construction condo tower sales offices, even as there are FB’s suing developers for half-completed condos in the same vicinity.
For the general public, there has to be some sort of amnesia for this to occur. Let’s examine what has become our “collective” memory: the media. Lest anyone of note realize the glaring similarities of the “bubble” and what’s happening again, the media has to find itself in a pickle to explain things. First, Australia never had a bubble; it was the great financial crisis (GFC, they call it that without spelling it out, that’s how common the term is). Canada never had a bubble either. In the US, the media gave in on the bubble idea, but the media can get past that. Now we are in recovery, you can’t spot bubbles when they occur, so don’t be such a worry wart, and the ultimate excuse, bubbles are good! In short, the general public is greedy and that’s why a mania is so easily accepted. The media just provides a little mental cover for that.
OK, but for policy, and central banks/government, it’s a more sticky subject. After all they are supposed to be stewards of blah, blah. And we all remember how terrible the LAST crisis was! How does the media spin the bubble in this realm?
‘Federal Reserve Chair Janet Yellen, easing investor concern that interest rates may rise earlier than previously forecast…said today the Fed hasn’t done enough to combat unemployment even after holding interest rates near zero for more than five years and pumping up its balance sheet to $4.23 trillion with bond purchases.’
“This extraordinary commitment is still needed and will be for some time, and I believe that view is widely shared by my fellow policy makers,” Yellen said at a community development conference in Chicago. “The scars from the Great Recession remain, and reaching our goals will take time.”
See, it wasn’t a housing bubble; it was a “Great Recession.” The semantics are important to understand how we got here. If too much was made of the housing bubble, people might freak out about what’s happening with prices. They may actually, gulp, remember! And commitment sounds so soothing doesn’t it? Much better than ‘reckless money printing and bubble blowing’.
Well, the amnesia massaging can’t stop there.
‘CNN Money contributor Christopher Matthews deserves some props for taking on popular opinion in regards to Alan Greenspan in his recent article, “Redeeming Greenspan: Don’t Blame the Fed for Bubbles.” Unfortunately, the logic behind Matthews’ piece is severely flawed.’
‘The Greenspan Fed aggressively lowered interest rates in the early 00’s in spite of surging housing prices, strong loan growth, and high money supply growth. “Cheap money” policies by the Greenspan Fed altered the economics of housing, incentivizing both banks and borrowers to engage in reckless behavior.
The Greenspan Fed deserves the lion’s share of the blame for the housing bubble and subsequent financial crisis.’
Oh dear, someone remembered. Good thing the amnesia is on CNN and the dots were connected on seeking alpha; not too many people will notice.
To wrap this up; is it that surprising we find ourselves in a bubble? We have the same central bank policies - even worse! Gamblers weren’t sufficiently punished, the media made them victims! Heck, the banks were given billions. Besides, the bubble is ancient history, onward and upward - we’re told. Flipping TV shows, multi-billion $ IPO’s for tech stocks that have never made a dime.
And best of all, no one that mattered went to jail. That would have been the ultimate admission that stupid housing prices showed something is wrong. I was thinking, today begins David Crisps first full day in jail; he got 17 years yesterday. The prosecutors talked about how he had artificially inflated house prices and all the people he had hurt.
What is Greenspan doing this morning? Having a nice breekie, I bet. And Bernanke, how many thousands will he make today speaking for an hour? And Yellen sits up there. What are the chances she’ll see a jail cell for artificially driving asset prices here or there?
The only thing that surprises me is how dumb most people are. On second thought, even that’s not very surprising.
A good look at the ugly behind us but it’s even uglier in front of us. The risk going forward is tremendously larger than it was in 2005. And this isn’t happenstance; it’s deliberate and intentional.
And here is what you can be certain of; the goal is always to take your money. Go ahead and play but you’re going to pay dearly.
Got cash?
Being dumb is the new black.
It requires more than just being dumb. Senseless? Gullible?
It requires more than just being dumb. Senseless? Gullible?
Having money or access to credit and still being dumb. Actually, It is a rare combination and seldom lasts long.
Just remember, there is nothing wrong with being dumb so long as everyone else is doing it. In fact, being smart and different is highly suspect!
But why wouldn’t the bubble reflate immediately, considering every bad behavior of 04-07 was rewarded?
Paid too much? No worries, someone will slash interest rates from 6% to 3% and halve your monthly payment, so you get a $1mil house for a $500k monthly payment. Win!
Took out a 5/1 ARM you couldn’t possibly pay back? No problem, HAMP and HARP and cramdowns and foreclosure moratoriums will either reduce your payment, reduce your principle, or let you save money by living in your pre-foreclosure for free. Win!
Used your investment property as an ATM? That’s ok, mark-to-model means your bank can’t ever foreclose without taking a massive writeoff. And while your property is in forclosure limbo for a decade, you can rent the place out on Airbnb and pocket the cash. Win!
Waited prudently on the sidelines for markets to return to sanity? LOSE.
There are some popular economics commentators who say that “Economics is not a morality play”. HOWEVER - if you encourage socially destructive behavior, you get more of it. It’s just that simple.
“Waited prudently on the sidelines for markets to return to sanity? LOSE.”
And overpaying 300% for a depreciating asset is a win?
I don’t think so.
Ben Jones: What is Greenspan doing this morning? Having a nice breekie, I bet. And Bernanke, how many thousands will he make today speaking for an hour? And Yellen sits up there. What are the chances she’ll see a jail cell for artificially driving asset prices here or there?
We talk about Russian oligarchs; we have our own. And ours have a much tighter grip on the levers of power than the Russians’ ever did.
These small potatoes criminal prosecutions are pawns being flogged to keep attention away from the oligarchs.
Preet Bharara was making ominous noises about pursuing Wall Street firms the other day. I thought, “Wow, just in time for the elections.” Do I expect the show to continue after the election or any of the oligarchs to be inconvenienced? Of course not.
The politicians make the laws and the big donors fund the politicians. The only way any real change will occur is when one of those factors changes.
Great post, Ben.
Funny, I just wrote something similar on another thread where you mentioned David Crisp…why is Greenspan not in jail. IMHO, he is the #1 culprit behind the “Great Recession.”
Obama is taking note:
http://news.yahoo.com/venezuela-issues-id-cards-curtail-food-hoarding-043206090.html
Take it from a real estate economist: Record home prices are the norm.
No fooling — record home prices are the norm!
Four states hit record highs for home prices
April 1, 2014, 12:40 PM
Despite harsh weather, home prices in the U.S. held up in February, with four states setting record highs, according to CoreLogic data released Tuesday.
Home prices in Colorado, Nebraska, North Dakota and Texas hit peaks, and another 18 states were within 10% of their peak prices (see the above chart from CoreLogic).
Factors driving home prices include low inventory and strong employment growth. The Dallas area, for example, recently posted the third largest annual gain in jobs among 32 U.S. metropolitan divisions. Over in North Dakota, county populations are booming, and the state had the No. 1 rate of personal income growth last year.
Of note, the four states that posted record high prices in February also all missed the extreme price volatility seen during the housing bubble and its aftermath.
“While they had some declines, it was not the same magnitude of the hard hit states. So combined with relatively strong employment growth, it’s not a surprise that they are reaching record highs, which is the norm in healthy housing and economic markets,” said Sam Khater, CoreLogic’s deputy chief economist.
…
Prices in Denver are insane, twice what you would pay in Lairmer County (Ft. Collins and Loveland) and even triple of what you’d pay in Weld County (Greeley).
Prices way past bubble peak in prime SF/LA. If anything came on the market for its ‘07 price today, it would be considered a real bargain. Low interest rates especially are affecting the “how-much-a-month” crowd - what was $950k in ‘07 is $1.6m today.
Luckily rates are going to stay low forever, at least according to the latest forward guidance from the Fed.
Sacramento prices today are at 60% of bubble peak. Of course all the buyers were from the SF Bay Area, so they thought they were buying at below market in 2006!
Asking prices in the 80210 have blown past their 2006-2007 bubble peak.
Everyone wants to live there. You do, right?
“Everyone wants to live there”
Actually, I think many don’t, and are only buying here now because they’ve been priced out of other yuppie enclaves like Washington Park or the Highlands. They are settling for sloppy seconds and ruining it for the rest of us.
my hood is 7% off 2005/6 peak
and bama be hiring here
In a fiat currency world actually a record price for a home, in nominal terms, is the norm. When your currency loses over 95% of its value since the creation of the Fed in 1913, a house would have to be priced 20 times its 1913 price just to breakeven in real terms. Of course, that number would ignore all the maintenance money you spent to keep the house standing.
Points taken. (But the real estate economist did not seem to suggest any of your points…)
Now because houses were inflated in the boom, we can have an actual decline in nominal terms.
However the housing rise is similar to global warming. If we had CAGW we would have a new record high temperature every few years. You have to, if you are going to match the computer models since the trend line is up. In nominal terms, housing prices historically only fell during recessions. Hence, the Realtors claiming that housing prices never fall except during recessions, just before 2006 hit and we started to fall prior to the recession. But that was because housing prices increased so much faster than inflation prior to that period. If you go back and look at 100 years of data, you see houses tracking inflation and perhaps adding 1% per year. However, that was during a period of rising population, if that ends and it will if will control immigration, then houses should lag inflation.
“However, that was during a period of rising population, if that ends and it will if will control immigration, then houses should lag inflation.”
The Echo Bubble price reflation effort has lead to a collapse in fundamental end-user U.S. housing demand, as college debt-strapped, unemployed or underemployed twenty-somethings can’t qualify for a mortgage at inflated prices or even afford to move out of Mom’s basement to form a new rental unit household. Hopefully for the come-lately investors, the all-cash buyers from abroad will keep prices aloft.
Economists worry as adult kids stay in nest
The Orange County (Calif.) Register
Lawyer Bobby Waltman, 29, lives with his mother, Nasrin Waltman, left, and his grandmother in Huntington Beach, Calif. “It’s hard to take on a mortgage with law school debt,” he said. Nearly one-fifth of 25- to 34-year-olds lived with their parents in 2012, the National Association of Home Builders found.
Burdened by $85,000 in college debt, attorney Bobby Waltman lives with his mom and grandmother in a three-bedroom house in Huntington Beach, Calif.
Past frugality led the 29-year-old to live in a van parked at the beach, a one-room house behind a Santa Ana, Calif., home and a tent in Alaska. Now, he’s counting the days until his finances are sound enough to afford a home of his own.
“I’ve had this plan to move out for a while, and it just keeps getting postponed,” said Waltman, who works for a personal injury firm. “I’m working at a really good firm and I’m still living at home, and I figure it’s time I move on. (But) it’s hard to take on a mortgage with law school debt.”
Waltman may be symptomatic of a problem that’s still plaguing the housing market — and, to some extent, the economy as a whole. The recession forced millions to move in with parents and relatives, or delay leaving, and to double up with roommates.
Not only did those people put off buying or renting homes of their own, but the impact has rippled through the economy in the form of reduced demand for furnishings, appliances and home and garden supplies.
Although job growth has returned and the housing market has turned a corner, some economists worry that not enough young people are leaving the nest.
Whether it’s because of student loans, credit card debt, a foreclosure hangover or a need to save for a mortgage, “household formation” has yet to get anywhere near pre-recession levels.
At a time when investors are buying fewer homes, the slow pace of household formation means fewer first-time buyers taking up that slack, which could limit the housing market going forward.
“Low household formation during the recession meant weaker demand for housing, which held back construction,” said Jed Kolko, Trulia’s chief economist.
Figures from the U.S. Census Bureau highlight the problem.
While the nation averaged nearly 1.2 million new households a year in the past five decades, that number fell to about 650,000 annually in the past five years, census figures show. Last year, 160,000 new households were created.
“During this past recession, household formation really got affected negatively because some of these kids lost their jobs and moved back with their parents, or they coupled up,” said Chapman University economist Esmael Adibi.
…
While the nation averaged nearly 1.2 million new households a year in the past five decades, that number fell to about 650,000 annually in the past five years, census figures show. Last year, 160,000 new households were created.
To me this is the amazing part of the story, as the “recovery” ages we are seeing fewer not more household formations. It suggests that household formations have become very elastic depending on rental rates and housing prices. If so, it does not bode well for the housing market.
“Last year, 160,000 new households were created.”
Just how far below the average 1.2 million new households a year over five past decades is the 2013 rate of new household formation? Wait for it…
(160,000/1,200,000-1)*100% = -86.7%.
It also means we constructed one million homes to house 160,000 households.
With housing demand down to 1995 levels, who cares what the fantasy asking prices are?
“…who cares what the fantasy asking prices are?”
We should all care, as older homeowners who ‘won’t just give it away’ stand in the way of new household formation. It’s young people moving away from home and forming new households who plant the seeds for tomorrow’s economic prosperity.
We can look forward to a failed harvest of poor economic yields for decades ahead thanks to policies which deliberately price starter housing out of reach for young families.
“It also means we constructed one million homes to house 160,000 households.”
I thought it was to satisfy the transient demand of 840,000 investors who plan to all get rich when they sell in a few years at a higher price?
“We should all care, as older homeowners who ‘won’t just give it away’ stand in the way of new household formation.”
The only thing static in this world is death. Everything else is in a state of flux. As this disaster gains speed as it surely will, you’ll see that fantasy asking prices are meaningless.
Whac for Pres!
While the nation averaged nearly 1.2 million new households a year in the past five decades, that number fell to about 650,000 annually in the past five years, census figures show. Last year, 160,000 new households were created.
This is stunning, PB, and the first I’ve seen as far as the new number. No wonder home builders have been largely sitting on the sidelines.
FWIW, we plan on having our kids live with us for a long time; indefinitely, even. Since Americans are now expected to compete with Third World workers for wages, then we can only expect our traditions to follow suit. Most people from poor countries have multiple generations living together. IMO, that will be the “new normal” in the U.S.
Personally, I think it’s not such a bad thing. It means that people will have more help if they ever encounter job instability or medical issues, etc.
Screw capitalism. If “globalism” is what they want, then that’s what they will get, in all it’s lovely forms.
http://sanfrancisco.cbslocal.com/2014/04/01/some-bay-area-residents-refuse-to-sign-up-for-insurance-will-pay-penalty/
For healthcare to work if you remember Obama’s own numbers, they needed about 38% of the people signing up to be young. Unless there was a large percentage of the last minute enrollees being in that category this thing is in real trouble and ironically meeting the 7 million number is bad news instead of good news. The logic goes like this: if only 25% of those enrolled are young as the February numbers showed, the program is not financially viable and the larger the number of older enrollees, the deeper the hole will be. Many of these older folks may have been thrown off their existing policies so it does not even reduce the number of people uninsured. Increasing deportations would have probably decreased the numbers of uninsured more.
Two big questions for me at this point:
1. How many of the 7 million sign ups were people signing up who had their coverage dropped? and
2. What is the MIX of the 25% “young” enrollees between the unsubsidized, those that are subsidized, and those who had pre-existing conditions?
My suspected answers:
1. 1 million+;
2. The very fact that only 25% of the “young” signed up, on its face STRONGLY implies that the cost of insurance for the young wasn’t low enough to entice them to avoid the fine. If that is true, then it is highly likely that those “young” who DID sign up, disproportionately are getting subsidized, AND/OR had pre-existing conditions.
Ultimately, I’m willing to bet that the portion of the 7 million who weren’t replacing coverage that was lost, disproportionately are folks who are getting subsidized or had pre-existing conditions. For this cohort, the ACA is a great deal…for the rest of us, not so much.
http://www.dailymail.co.uk/news/article-2594309/President-plans-victory-lap-strong-Obamacare-enrollment-Sebelius-faces-unpopular-law-blank-stare-tough-questions-remain-whos-signing-up.html
Just saw this.
“Numbers from a RAND Corporation study that has been kept under wraps suggest that barely 858,000 previously uninsured Americans – nowhere near 7.1 million – have paid for new policies and joined the ranks of the insured by Monday night.”
That’s what I had heard also.
You didn’t read the card Obama gave you?
What are you reading?
Sounds suspicious…
We can pay for the uninsured with our premiums which subsidize hospital charges incurred in emergency room visits, or we can offer them subsidies to see a doctor and get better healthcare, possibly less expensive. Either way, we pay, yet one way is better for all.
We can pay for the uninsured with our premiums which subsidize hospital charges incurred in emergency room visits, or we can offer them subsidies to see a doctor and get better healthcare, possibly less expensive. Either way, we pay, yet one way is better for all.
Option three: We deport illegals keeping them from using the emergency room. It also we create a shortage of unskilled workers which will cause employers to pay unskilled workers more to bring many back into the labor pool and probably cause employers to insure their employees since there continue to be tax incentives for employers to offer coverage and this benefit is not taxed. It is bad enough that the Chamber of Commerce has caused the illegal immigration problem, I do not want to relieve their members from having to pay for health insurance with my taxes.
Yes.
However,
Instead of specifically providing for coverage for the poor, creation of subsidized high risk pools, and/or fixing the payment system to encourage more insurance company competition, we have instead found ways to do that under a complicated system that potentially pushes the healthiest OUT of the insurance market because the ACA is trying to force them to buy insurance they don’t want to pay for (no more catastrophic plans) at a cost far more than their actuarial risk (the 3x rule).
Just like the current administration seem to find it fine to tax those with an over-abundance of income, Obamacare finds it perfectly acceptable to tax (by virtue of higher premiums than actuarial risk) those with an over-abundance of health.
While I think the desired outcome is worth some cost (fewer uninsured, more preventative care, less hospital visits), the ACA seems to be having a lot of unintended consequences that are not desirable (lots of folks foregoing insurance because the ACA has pushed up their personal premium too high, people getting policies cancelled, etc.).
Healthcare in England is mainly provided by England’s public health service, the National Health Service, that provides healthcare to all permanent residents of the United Kingdom that is free at the point of use and paid for from general taxation. Since health is a devolved matter, there are differences with the provisions for healthcare elsewhere in the United Kingdom.[1] Though the public system dominates healthcare provision in England, private health care and a wide variety of alternative and complementary treatments are available for those willing to pay.
———————————————————————-
Posted: 6:32 p.m. Saturday, March 29, 2014
Man cuts off own hand with a homemade guillotine
A man from Devon, England, was so desperate to end his suffering after spending many painful years with an injured hand that he did the unthinkable—he built a guillotine and cut off his own hand.
According to the Daily Record, Mark Goddard, 44, amputated his arm because he suffered excruciating pain since injuring the arm during a motorbike accident in 1998. Goddard claims to take 40 painkillers a day and says he had to quit his garage job. While Goddard would have preferred for the surgery to have been done professionally in a hospital, Goddard claims that doctors were hesitant to honor his amputation request because his injured hand, despite the nerve damage, was still functional.
It took two weeks for Goddard to build the guillotine. Before amputating, he tied two tourniquets to his arm and had a first aid kit nearby. After severing the hand, he tossed the body part into a fire he had started in an outdoor garden bin. Goddard’s wife came home soon after and, upon discovering the grisly scene, immediately called emergency services.
Local authorities claim Goddard appeared rational when they arrived on the scene. Officers attempted to salvage Goddard’s hand but it was too badly damaged. Goddard hopes his desperate act will convince doctors to implant a spinal stimulator in his back to ease his pain.
http://www.daytondailynews.com/news/news/weird-news/man-cuts-own-hand-homemade-guillotine/nfNkn/ - 135k -
You have a strange obsession with missing limbs, Mr. Phony. Weren’t you writing a few days ago about some family you know in which several members had amputated hands or something?
A good friend of mine grew up in the UK, so he has a pretty good understanding of the healthcare system there.
Basically, the doctors aren’t big fans because they don’t get paid very much by the system, and the public system doesn’t work nearly as well as the private system (longer waits to see doctors, etc.), so most people who can, buy private insurance as well.
“some family you know in which several members had amputated hands or something?”
You would have to read the card.
That must be some card.
I was just looking at the NWS forecast out 14 days. I have to say this has been an if you like your weather you can keep your weather type year. Northeast and Midwest cooler than normal and the West warmer than normal.
This has been the best Florida winter since I’ve lived here. Amazing.
Like an Indian Summer an upstate New York.
Now, are we gonna have to bailout General Murders again after this?
‘Deeply Sorry’ GM Chief Barra Answers Lawmakers on Car Recall
By Steve James
April 1 2014, 12:38 PM
The head of General Motors said on Tuesday she was “deeply sorry” about the recall of millions of her company’s cars for a defect blamed for at least 13 deaths and that she was disturbed by past GM comments that the cost of replacing defective switches in some cars was too high.
Chief Executive Officer Mary Barra also told a House of Representatives committee that the company had retained Kenneth Feinberg, who oversaw victims compensation funds after the Sept. 11 attacks, to help in its response to the crisis.
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Lawmakers are seeking to establish who is to blame for at least 13 GM auto-related deaths over the past decade and challenged Barra over the automaker’s slow response to defective ignition switches in its Cobalt and Saturn Ion cars.
“This was an extraordinary situation that came to light on my watch,” she said in her prepared statement. “I can’t turn back the clock, but we acted without hesitation. Today’s GM will do the right thing.
“I express my sincerest apologies … I am deeply sorry,” he said.
Later, in response to questioning, Barra said she had not met with the engineering team responsible for the defective ignition switch, but that they were being interviewed as part of an in-house GM investigation.
Barra, who is a 25-year GM veteran, but only became CEO in January, said the automaker was working with its parts supplier to ensure new replacement switches are safe. When asked why GM had not replaced a part in the switches that would have cost very little, she said it was “very disturbing.
“It is unacceptable and not the way we do business at GM.”
She also said that information about the defective switch had been known in parts of the company years before the recall this year, but that the information had not been shared and she only learned about it on January 31 this year.
About the Fed and Yellen, great chart showing the “real” fed funds rate:
http://mises.org/daily/6708/What-to-Expect-From-Janet-Yellen
I may have mentioned this here once or twice before, but the last time the “effective” Fed Funds Rate collapsed to the level attained in 2008 was 1933. It remained pinned to the mat for roughly fifteen years hence (circa 1948).
Excerpt from a link that will soon post:
Now, Yellen may preside over a gradual “tapering” of the unprecedented “quantitative easing” program begun under Bernanke. But this does not mean that she is different. Remember, that program was unprecedented; everyone knew at its beginning that it could not continue forever. Whoever occupies the Fed chairmanship would have to end that program at some point — we hope. There is no guarantee, however. If rates start to rise, unemployment rises, and businesses start to go bust, the Fed could jump right back into the program, because that is all it knows how to do — print money. The real question is whether Yellen and her fellow travelers will accept a recession that most likely will occur as QE ends. The Fed likes to think of QE as a jump start, a one-time boost, a helping hand, etc. But these are false analogies. QE funds projects that cannot exist in its absence; therefore, when QE ends or even slows down, these projects will be revealed to be unprofitable. No amount of cost cutting will make them profitable. They were born of QE and they will die when QE ends. The only question is whether the Fed will accept the necessary recession or will jump right back into money printing. If it does the latter, we can expect an even greater bust in the future.
The Fed has painted itself into a corner. There is no way that the nation can avoid either a recession or the collapse of the value of the dollar. We should prefer the recession, then insist on an end to monetary expansion, regardless of the howls from the politicians that the government cannot continue its many programs otherwise. At the core this is a political problem. Only a radical change in the mindset of government can end the monetary madness.
We should prefer the recession, then insist on an end to monetary expansion, regardless of the howls from the politicians
A recession generally involves a large increase in unemployment, leading to millions of people falling into poverty, as well as increases in bankruptcy, divorce, suicide, etc. Why do these guys like the idea of recession os much? Part of the answer must be that they assume that they’ll be just fine.
1920-21 worked fine- no free sht-prices and wages fell together.
Instead we have Japan 2.0
That doesn’t make sense. If unemployment doesn’t increase, it’s not really a recession. Wikipedia has a pretty long article on that recession. It includes the sentence “Unemployment rose sharply during the recession.”
http://en.wikipedia.org/wiki/Depression_of_1920%E2%80%9321
Also, as I mentioned last week, my grandparents told me what life was like in those days. It was quite miserable.
Mike, maybe you haven’t noticed. We’ve had all this stuff but we just called it a recovery, faked the unemployment numbers, ignored the poverty and stuffed the pockets of Wall Street too the moon. We will get the bill for the party, and it will be larger than our per diem for hanging in there with mouths shut.
The little part that I quoted from Dan’s post was “We should prefer the recession.” That guy appears to disagree with you. He apparently thinks that we’re not currently in recession and that a recession would be a welcome development.
Of course, he’s probably one of those people who think that the poor and the unemployed are to blame for their low incomes. So he’d like to see the Fed raise rates and throw millions of currently employed people out of work. That would be people who are presently getting out of bed five days a week and putting in a honest day’s work. Then, after the policies that he advocates cause these millions to lose their jobs, he’ll write articles blaming them for own predicament.
‘He apparently thinks…that a recession would be a welcome development’
When I was studying economics in the 80’s, there were a few things taught as truths and no one questioned it. One was that a recession was how the economy purged bad investments. Bad investments in companies, industries, careers, you name it. This is how capital and resources are freed up to fund and work in more sustainable economic endeavors and jobs. It sucks, but busts happen after booms for a reason.
In the 90’s I began to see how central banks started to act and talk like they could prevent recessions. We saw this with the Asian Crisis, the LTCM/Russian Crisis, the stock bubble, the housing bubble. Each imminent recession is met with an ever larger intervention ostensibly crafted to prevent what was considered inevitable 30 years ago. Of course some would say these interventions are really to bail their rich buddies out of tight spots, not actually help the little guy. After all, how many “jobless recoveries” have we had now?
That said, as we’ve talked about here many times, what are the roots of these economic ills? Are these bubbles allowed or designed to mask larger problems someone doesn’t want to address? Is this why we see the idea that recessions, once considered a part of the business cycle, cannot be tolerated? That is another subject entirely.
Back to the point; maybe it’s just the wording: liquidating bad investments is a welcome development. It brings more jobs and income.
I took a few economics courses when I was an undergraduate in the ’80s. I don’t recall learning of any such benefits of recessions. Then again, that was a long time ago and I’m sure that I’ve forgotten some of what was taught. I’ll have to go see if I can find my old textbook.
I’m sure that one could say that any great tragedy, if it’s big enough, will have some sort of silver lining. For example, the flu pandemic of 1918, which killed half a million Americans, and millions of other people around the world, probably led to increased knowledge of infectious disease.
But getting back to my criticsm of the writer that Dan quoted - we just had a brutal recession a few years ago. We’re now struggling through a feeble recovery. The writer appears to think that another recession this year would be a good thing. I don’t think that there’s evidence that shows that recessions are so wonderful that we need to have them on such a regular basis.
‘benefits of recessions’
I don’t like analogies, but I’ll try one. Is there a benefit to a hangover? The body is processing the toxins, lack of sleep, the dehydration. Drink some more, and you’ll feel better. Or get through it.
‘recessions are so wonderful that we need to have them on such a regular basis’
How about you stop drinking so much?
“I don’t like analogies”
Why not Ben?
Anyone else feel like it’s been alot less than 20 years since Kurt Cobain blew his brains out?
Whos that?
Before grunge rock, there exists pure poetry:
http://www.youtube.com/watch?v=JMKdovsjjGs
http://www.youtube.com/watch?v=MQ9la5cp5fk
It freaks me out more that this is approaching 25 years old.
https://www.youtube.com/watch?v=OU4o1CrdOQY
Whoa. Unexpected find of the day (give it a second):
https://www.youtube.com/watch?v=JRGAHLKLYuU
Fun stuff! Brings back memories.
(Wow, we’re really getting old.)
Yeah, it’s freaky to think about how 20 years can by so quickly. I want to find a way to slow down the clock, but I haven’t found one yet.
Thinking about Kurt Cobain’s also make me feel like I’m 80-something years old. Sometimes I can remember something that happened decades ago with amazing clarity, but I can’t remember what I had for lunch yesterday.
THIS
http://www.youtube.com/watch?v=PbgKEjNBHqM
No…… This—-> https://www.youtube.com/watch?v=1dNIQVYGXbM
Yes!
Oh yeah, Egypt is coming back on the tourist must-see-the-Sphinx locations list real soon:
http://www.cnsnews.com/news/article/patrick-goodenough/egyptian-islamists-murder-young-christian-after-dragging-her-car#sthash.RuhSxX5P.dpuf