Bits Bucket for May 5, 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.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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If you paid more than $40/square foot for your used house, you paid far too much.
20 million households not drinking the echo bubble koolaid:
http://www.marketwatch.com/story/many-renters-have-enough-money-to-buy-homes-2014-05-02
Wall Street Journal - The New Math of Renting vs Buying
http://online.wsj.com/news/articles/SB10001424052702303948104579534230618539424?mod=WSJ_hpp_MIDDLE_Video_second&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052702303948104579534230618539424.html%3Fmod%3DWSJ_hpp_MIDDLE_Video_second
Holy URL string, batman!
I can easily afford a house in my Phoenix neighborhood, which is not a bad area. I can pay cash for one that is equal to 1/6 of my net worth. But I have no guarantees the FHA, HUD, and other subsidies will keep out the riff raff. So why get a depreciating asset? I already have one and it’s an economy car that I get far more utility out of.
“…it’s an economy car…”
Economy car ownership = no monthly payment burden, including no interest paid to Megabank, Inc
So all this Stealtor propaganda about tighter credit being the reason is nonsense. The article itself calls BS on that lie.
Exactly. It’s all BS. Everyone skims over the mortgage purchase volume but it’s the crux of the biscuit. How does it align with NARscum’s “research” and news releases? It doesn’t.
Someones pumping phoney data and it’s not MBA.
Where can you buy a house for that price? Detroit? East St Louis?
You’ve identified the problem.
All you need is the ability to telework or generate income over the internet and you can go oil city big time.
The more people are able to work from home, the less valuable the real estate is near job centers.
Whatever happened to the big telework telecommute revolution?
In the words of Moe from the Three Stooges, “Spread out.”
“Whatever happened to the big telework telecommute revolution?”
It morphed into the work 24/7 revolution, i.e. employers now expect employees to be connected non-stop, available whenever, even on vacations. Some part of the productivity gains over the last several years are simply people working more hours, maybe not in their office, but still working.
And still come in most of the time so we can keep an eye on them.
Whatever happened to the big telework telecommute revolution?
Need you ask? It happened… in India.
YES DETROIT………..its happening http://theeconomiccollapseblog.com/archives/will-detroit-be-the-first-major-chinese-city-in-the-united-states
If China colonizes inner-city Detroit, it will actually be the first significant step to recovery. Remember, racial diversity is a GOOD thing!
What are your thoughts on this tasteful, modest house?
http://www.trulia.com/homes/Maryland/Bethesda/sold/1118913-4410-Chalfont-Pl-Bethesda-MD-20816
Liberace!
It’s about goddamn time already.
No $hit…. that must have been a helluva gig.
Joatse?
Liberace is truly an internet celebrity.
Tier five Joe representing!
Gallup recently found that 56 percent of Americans expect average home prices in their local area to increase, its highest reading since 2007, and up from only 33 percent two years ago. Meanwhile, 30 percent of Americans believe real estate is the best long-term investment option, compared to stocks and gold at 24 percent.
Do they expect it to be 80 degrees and sunny 365 days a year too?
San Diego comes close but it was a bit warm there last week, I usually visit around the 4th of July and Christmas and it was warmer last week than a normal 4th of July.
Warmists gonna warm, Dannyboy.
Sorry Goon just a few weeks earlier they were cooler than normal, Weather is not climate.
Here you go Mr. Housing Analyst
Soaring home prices spur a resurgence near USC
The hot housing market and a rail line push young professionals to the West Adams, Leimert Park areas
Full story below
http://www.latimes.com/business/la-fi-property-report-20140501,0,255322.story#ixzz30tebbuC3
http://www.latimes.com/business/la-fi-property-report-20140501,0,255322.story#ixzz30teV2D00
And not a buyer in sight…….
Remember…. Housing demand has fallen to 19 year lows…..
http://rt.com/usa/low-corporate-tax-rates-275/
Twenty-six of the most powerful American corporations – such as Boeing, General Electric, and Verizon – paid no federal income tax from 2008 to 2012, according to a new report detailing how Fortune 500 companies exploit tax breaks and loopholes.
They are able to accomplish this because they bought a house and now get the tax break.
It goes to show what many here have said. Even though they pay no income tax, they’re still offshoring the jobs.
But the income tax rates here encourage offshoring since money made overseas need to be reinvested overseas to avoid paying income taxes here.
The point is that even with all the loopholes that allow them to pay zero income tax on domestic revenues, they still offshore. Remember, we are constantly told that lower taxes on business will stimulate job creation. But this proves that isn’t necessarily true. Heck, even corporate welfare won’t do it.
But if they could bring back their profits without taxation many would use it here and we would generate revenue and jobs that is my point. More importantly, a corporate tax cut would allow the small and medium sized companies to expand and they historically generate the lion’s share of new jobs.
Your points are getting weaker and weaker Dannyboy. Zero taxes and they still offshore jobs. You can’t spin it, tho you try.
Sorry if you cannot understand the concept. But by not allowing profits from overseas to come back into the U.S. tax free, we are encouraging companies to invest the profits overseas thus offshoring production. A simple concept but too much for an Al Gore or an Igor or any other leftist Democrat, thus the reason that Obama cannot produce even a real recovery never mind a Reagan type boom. Zimbabwe or Brazil type economics lead to their type of economies.
Ive said the same thing for a long time….bring the money home No 35% tax just spend the money on Americans in America…No H1b’s no visa only Americans no buyback of stock,NO buying of other companies UNLESS you Increase total employment…fat chance on that…. no executive pay raises unless you give the same percentage to all employees even the janitor!
again why cant an ipod be made in Kansas?
But if they could bring back their profits without taxation many would use it here and we would generate revenue and jobs that is my point. More importantly, a corporate tax cut would allow the small and medium sized companies to expand and they historically generate the lion’s share of new jobs.
Love the short sellers!
If you want to buy a stock or a bond or some commodity futures or whatever then you should love the short sellers because the actions of the shorts will tend to help dampen price rises. The nifty Supply/Demand curve you learned in Econ 101 generally works well because when there are short sellers about then there are sellers about and these sellers tend to become quite numerous as the price rise gets out of line.
But when it comes to something such as real estate there are no short sellers: The only sellers of houses (used houses at least) are the people who already own the things. And if there is a huge price rise then the incentive of an owner of a house is often to hang on to the thing, not sell it. So what you end up with is a highly distorted real estate market, one with very wide price swings.
“… very wide price swings.”
Amplified by the use of leverage.
Wikipedia says:
The four basic laws of supply and demand are:
1.If demand increases (demand curve shifts to the right) and supply remains unchanged, a shortage occurs, leading to a higher equilibrium price.
2.If demand decreases (demand curve shifts to the left) supply remains unchanged, a surplus occurs, leading to a lower equilibrium price.
3.If demand remains unchanged and supply increases (supply curve shifts to the right), a surplus occurs, leading to a lower equilibrium price.
4.If demand remains unchanged and supply decreases (supply curve shifts to the left), a shortage occurs, leading to a higher equilibrium price.
Short sellers will make 3 happen (supply increases) and this added supply will lower prices.
But if you don’t have 3 (an increase in supply) you will end up with 1 (an increase in demand) because the absence of supply will tend to strengthen the demand. IOW the demand feeds on itself.
All that is needed to make this happen is a supply of money, and with the miracle of leveraging money can materialize out of thin air.
“Love the short sellers!”
The plunge protection team didn’t love ‘em.
Sacrificing Africa for Climate Change
Western policies seem more interested in carbon-dioxide levels than in life expectancy. Wall Street Journal by Caleb S. Rossiter
Every year environmental groups celebrate a night when institutions in developed countries (including my own university) turn off their lights as a protest against fossil fuels. They say their goal is to get America and Europe to look from space like Africa: dark, because of minimal energy use.
But that is the opposite of what’s desired by Africans I know. They want Africa at night to look like the developed world, with lights in every little village and with healthy people, living longer lives, sitting by those lights. Real years added to real lives should trump the minimal impact that African carbon emissions could have on a theoretical catastrophe.
Mindful of the benefits, the Obama administration’s Power Africa proposal and the World Bank are trying to double African access to electricity. But they have been hamstrung by the opposition of their political base to fossil fuels—even though off-grid and renewable power from the sun, tides and wind is still too unreliable, too hard to transmit, and way too expensive for Africa to build and maintain as its primary source of power.
It’s hard to imagine living in a place without the basics. Electricity, clean water, air conditioning etc. Yet the leaders of the environmental movement think their position is more important than the modernization of Africa. Are they rascist?
I thought America needed to mind it’s own business and stay out of foreign entanglements?
Yes, yes it does. It needs to MYOB in the worst way.
It does but the globalists that run America believe we need to keep the world safe not for democracy but corporate expansion.
Ukraine post:
http://peakoil.com/publicpolicy/orlov-statecraft-or-witchcraft
The environmental elite live in many countries. We should MYOB IMO.
Air conditioning is a “basic?”
Guess I didn’t have the basics when growing up.
Why should Africa?
Especially if we are paying for it.
Sorry. It’s been close to 100 lately and the heat went to my head.
Can poor Africans afford to light up their villages?
I would think much of Africa would be the perfect candidate for local, even personal scale solar power, given its terrible infrastructure, poor security, and abundant sunshine. Just enough to provide some lighting at night, to charge laptops or smartphones, do some cooking. They wouldn’t have to rely on some easily destroyed or stolen wire running across countless miles of savannah or jungle from a distant power plant.
The permanent majority and Third Reich both seem to have a shelf life less than a thousand years:
http://finance.yahoo.com/news/might-just-worst-poll-yet-124500258.html
Even though we have experienced under GWB from 2001 to 2007 a majority Republican Congress and at the same time “The Patriot” act, horrendous military spending, the socialist prescription medical benefit, and the push for amnesty, the bright side is that Republicans are like Bud Light - they are “socialist lite.”
IOW, they will give me time to finish up my prepping to go off the grid before they get replaced by another dose of severe socialism.
I’m thinking New Hampshire. North part of the state.
And if we get a majority Republican Congress in 2016 with Rep President my money is betting on that they do not repeal Obamacare.
Considering that corporate America wants to cut compensation to workers by not paying for health insurance that could very well happen. The Tea Party will work to repeal it but the corporate interests in the Democratic party and the Republican party will try to save all the Romney care aspects. The key will be whether the left wing of the Democratic party realizes that they have been had and Obamacare was never designed to lead to universal health care.
It will be greatly changed if it remains. After this fall the many Dems will want to repeal it.
Wishful thinking. The only change that Dems will want will be in the direction of Single Payer. And they can argue that the private insurance companies had their chance and still screwed it up; now it’s time to try a more European/Canadian system.
Sorry Oxide that may be the only change that the rank and file Democrat might want but the average office holder is just going to want to survive the next cycle and if it takes a repeal to achieve that they will vote to repeal.
I like the Pays on area myself.
Payson, AZ that is.
What about the Gulf Coast. Jimmy Buffet style, you know, a swinging hammock, close to a beach, the smell of shrimp they’re beginning to boil….
Sarasota would be my number one Florida pick.
Bill, make sure you rent through a Winter before you buy. A Payson Winter is fine, Northern New Hampshire is fit for musk ox. BTW, have you checked out the price of gold today?
Yeah Northern AZ a good pick as well. Arizona forests are prone to fires though.
I know of an area near/in Happy Jack where the water company has hydrants throughout the residential neighorhood. In my experience, where there are hydrants, the fire depts can fight and stop the fires. Some friends bought one of these homes in the last couple of years and they love it. Very quiet, cool and about 7000-8000 ft in elevation.
I know of an area near/in Happy Jack
That messed with my mind, there’s a place between Cheyenne and Laramie Wyoming also called Happy Jack at about the same elevation.
Thanks Lip. I noticed Happy Jack seems to be a less expensive area compared to other parts of flagstaff. And the elevation is right where I would like to be in Arizona. The pluses include the castle doctrine of Arizona and that I own a big chunk of municipal bonds in that state.
“I’m thinking New Hampshire. North part of the state.”
Oye. It’s hideously bitter cold for 4 months minimum.
Bill is involved with the Freedom Project (something like that), a group of Libertarians planning to move en masse to a state and vote it into a libertarian paradise. They chose New Hampshire for its already existing independent attitude and its small population. I read that it would only take 15,000 (?) moving there to swing all the local politics the way they want.
The reverse was done in Vermont where the left targeted the state and turn if from being a libertarian state to being a leftist state.
turned it
Bill, you might find Lost Nation, a historical novel by Jeffrey Lent, interesting. In the 1800s, a section of No NH was claimed by both Canada and the US - and for that reason, became the very image of the lawless frontier. Anybody on the lam from anywhere, it appears, went there!
It is a harsh and unforgiving story. I found it compelling. Perhaps you might find it worth your while. I surely find it an apt metaphor for life in Metro DC.
We here on the HBB - other than the shills - seem to direct ourselves according to our own gyroscopes.
Sincerely, your HBB Assistant Librarian (hat tip to Slim)!
Thanks!
http://wattsupwiththat.com/2014/05/03/the-ocean-ate-my-global-warming/
This climate change racket is too important to let a little data get in the way.
Single mom wonders if she made right decision to buy a home
Liz Weston - Money Talk LA Times - May 4, 2014,
Dear Liz: I am a single mom who has been renting a condo for seven years. My landlord decided to increase my rent and for two weeks I didn’t know by how much. In the meantime, I looked for a house so I would have a Plan B. I found a totally renovated foreclosure. By the time I found out what my new rental amount would be (just $46 a month more), my son and I had decided to get the house. I used my entire life’s savings of $25,000 as my down payment. Now I owe $62,000. Do you think I made the right decision to buy the house, or should I have stayed in the condo and continued renting? I am torn.
Answer: Of course you are. That’s a very common emotion after taking such a big step.
Tying up all your money in a single purchase or investment is never ideal, but what’s done is done. Focus now on rebuilding your savings (including your retirement savings) and keeping your house in good shape so that you don’t face expensive repairs down the road.
You’re unlikely to get any tax benefit from this home, given your enviably small mortgage, but you will build equity over time as you pay down the loan. You’ll quickly discover the many challenges and rewards of owning a home, which most people prefer to renting.
No, no, no. She’s looking at this all wrong. Doesn’t she realize that the simple act of home purchase has propelled her into the middle class?
“Shaun Donovan, secretary of Housing and Urban Development said, “Homeownership is one of the most important paths to the middle class for families. It’s how folks put down roots, build wealth, put kids through college, start businesses. If there are people who are ready to buy a home, but who aren’t getting access to credit, then we’ve got a problem, and that is what we are facing right now.””
Purchase a house today. Be financially independent tomorrow.
Not sure about the actual decision to buy, but the decision to put 25% down was probably a bad one. She should have kept some cash for repairs or emergencies. She can always pay more on the mortgage. It would have been helpful to know the woman’s income.
Hope and change
Forward
Yes we can
Never a better time to buy a house
———————-
92,594,000: Americans Not in Labor Force Hits All-Time Record; Participation Rate 36-Year Low
CNS News | May 2, 2014 | Terence P. Jeffrey
A record 92,594,000 Americans were not in the labor force in April as the labor force participation rate matched a 36-year low of 62.8 percent, according to data released today by the Bureau of Labor Statistics.
In March, according to BLS’s non-seasonally adjusted data, there were 91,630,000 Americans not in the labor force. In April, that increased by 964,000 people to an all-time record of 92,594,000. The previous record was 92,534,000, set in January of this year.
BLS employment statistics are calculated using what BLS calls the civilian noninstitutional population. This includes all persons in the United States 16 and older, who are not on active duty in the military or in an institution such as a prison, nursing home, or mental hospital.
The civilian noninstitutional population is divided into two basic parts: those in the labor force and those not in the labor force. To be in the labor force a person must either have a job or have actively sought a job in the last four weeks. A person not in the labor force is a person who neither had a job nor actively sought one. The unemployment rate is the percentage of people in the labor force who actively sought a job in the past four weeks but did not get one.
Because of the way the unemployment rate is calculated, the rate can actually go down even when the number of people who are employed is also going down.
This includes all persons in the United States 16 and older, who are not on active duty in the military or in an institution such as a prison, nursing home, or mental hospital.
The problem with including everyone 16 and older is that senior citizens are included in that group. So the large number of people who have been reaching the age of 62 or 65 and retiring every year for the past few years contribute to the increase in the number of people “not in the labor force”.
It would be more useful to see statistics on people in the age range 21 - 64. It’s difficult to find such information. However, if you look at this graph of people aged 25 to 54, you can see a slight increase in the proportion who are employed, indicating a slow recovery.
http://2.bp.blogspot.com/-DUHzK7T6-ss/U2OfTfl0gWI/AAAAAAAAe3c/L7TM5Ui12iM/s1600/EmployPop2554Apr2014.jpg
You do realize that your own chart shows that the participation rate for 25 to 54 is dropping. This undercuts any argument that the declining participation is just due to demographic changes. The aging population should be increasing the employment levels of people aged 25-54 since we should be filling the jobs of people that are retiring with people from that age group. Also, healthcare jobs should be surging. We have an economic recovery so slow it cannot even keep up with natural population increase. Mike, the lengths you will go to avoid the truth. Obama is a complete failure just like Carter was a complete failure. It should be no surprise since they both thought that government was the solution when big government is the problem.
It appears that the participation rate may have stopped dropping. We’ll see about that in the coming year.
The red line, which represents the postion of that population which is in work, is the more important statistic. What it shows is some improvement over the past 3 years. Unfortunately, the improvement has been very slow. If the blue line has been falling while the red has been rising, that represents a decline in the number of people looking for, but not finding, employment.
Those are the facts. I’m not avoiding the truth. I’m posting links to the truth. Also, it’s very simplistic to label any president a success or a failure.
This statement below is devoid of meaning. What is “the problem”? What is “the solution”?
It should be no surprise since they both thought that government was the solution when big government is the problem.
The red line, which represents the postion of that population which is in work, is the more important statistic.
No, it is not the more important statistic. A successful recovery generates enough new jobs to both employ the natural increase in population and to significantly reduce the number of unemployed workers. At best, we are barely keeping up with population growth but by substituting lower paying positions for higher paying positions. In fact, we are breaking forty hour jobs into two twenty hour jobs and then pretending that we created a job. So this “recovery” is indistinguishable from a continuing recession. The blue line is far more important and Obama’s spin does not change that fact. Obama has killed real jobs like coal mining jobs with more regulation regulations and left people to clean peoples’ butts as health care aides for ten dollars an hour instead of earning thirty dollars an hour.
The red line, which represents the postion of that population which is in work, is the more important statistic.
No, it is not the more important statistic. A successful recovery generates enough new jobs to both employ the natural increase in population and to significantly reduce the number of unemployed workers
Dude, you’re disagreeing with yourself. As I wrote, the red line shows a slow increase in the portions of that age group that is employed.
At best, we are barely keeping up with population growth but by substituting lower paying positions for higher paying positions. In fact, we are breaking forty hour jobs into two twenty hour jobs and then pretending that we created a job.
You have no real evidence of this.
“It appears that the participation rate may have stopped dropping. We’ll see about that in the coming year.”
Rain drops in the desert Lola…. raindrops in the desert.
“Dude, you’re disagreeing with yourself. As I wrote, the red line shows a slow increase in the portions of that age group that is employed”
Clearly wrong, their participation rate is declining as shown by the blue line,.
“You have no real evidence of this.”
The BLS has documented that part time work has increased. The only question is whether Obamacare has directly caused it or it is coincidental. I avoided blaming it directly on Obamacare but the part time work portion is clear as is the fact that you are considered “employed” even if you have a crappy minimum wage part time position which is the only reason the red line has made even a minor move up.
Have another post but this shows the amazing growth in part time positions:
http://marginalrevolution.com/marginalrevolution/2013/09/the-growth-in-part-time-employment.html
Excerpt from link (Sept 2013), 96% of jobs part time and Mike is still defending Obama:
John Lott points out the following: “So far this year there have been 848,000 new jobs. Of those, 813,000 are part time jobs…. To put it differently, an incredible 96% of the jobs added this year were part-time jobs.”
In addition to all of this underemployment, today’s job market report shows the labor force participation rate is down to its lowest level since 1978 (when fewer women wanted to work, of course). And population growth is outpacing job growth, as indeed it had earlier in the oughties before the financial crisis and recovery.
- See more at: http://marginalrevolution.com/marginalrevolution/2013/09/the-growth-in-part-time-employment.html#sthash.fnclGF7D.dpuf
Mike, post the entire link so it is clear whether the red percentage is a percentage of the entire population group or just a percentage of the people still in the employment pool. Not just the graph the source material for the graph.
Rain drops in the desert Lola…. raindrops in the desert.
The participation rate will stop dropping when the only people that are employed are Obamacare “navigators” with felony convictions.
You may not be familiar with the terms. The particpation rate includes people with job and people looking for jobs. That’s why there are lines on the graph.
No, it is not the more important statistic. A successful recovery generates enough new jobs to both employ the natural increase in population and to significantly reduce the number of unemployed workers
BTW, Mike how could you possibly call that small upturn in the redline significant, thereby saying that I was arguing against myself?
You may not be familiar with the terms.
Why will you not post the source material for the graph? Every graph verbally explains its meanings and often times the explanations are counter intuitive or counter to how the words are generally used. Also, as I said above a solid recovery not only generates employment due to population growth it significantly reduces the number of people unemployed that small jot up hardly does that even if it is based on the entire demographic. Also, the graph does not show if 25 year olds are displacing teenagers in the employment area. I wonder if there are other graphs showing such effects, thus the cherry picking of one demographic.
From data supplied from another poster showing this not a case of a slow recovery but a case of no recovery:
#5 There are 1.3 million fewer jobs in the U.S. economy than when the last recession began in December 2007. Meanwhile, our population has continued to grow steadily since that time.
#6 According to a new report from the National Employment Law Project, the quality of the jobs that have been “created” since the end of the last recession does not match the quality of the jobs lost during the last recession…
•Lower-wage industries constituted 22 percent of recession losses, but 44 percent of recovery growth.
•Mid-wage industries constituted 37 percent of recession losses, but only 26 percent of recovery growth.
•Higher-wage industries constituted 41 percent of recession losses, and 30 percent of recovery growth.
I joked about this a month ago when I was not sure about the methodology. I wondered if we could get to a point where we have negative unemployment with more jobs filled than people in the country. Apparently, it is theoretically possible:
— Posted Monday, 5 May 2014 | Share this article | Comment - New!
By Graham Summers
About that jobs report.
Upon closer inspection, the report was a total disaster. You wouldn’t know this from the financial media’s coverage, but it was.
The establishment survey shows a gain of 288,000 jobs last month. However, the household survey shows that that the economy lost 73,000 jobs in April.
This is critical. The household survey does not allow for “duplication of individuals,” meaning that if someone holds more than one job, they’re only counted once. In contrast, if someone is working multiple low paying jobs, every single job will be counted in the establishment survey.
Put it this way. If you go from one solid full time job to working as a waiter, cab driver, and tossing pizzas, the establishment survey will show that the economy created TWO jobs (one job lost plus three started= two jobs net) whereas the household survey will show NO growth (one person lost a job and started working elsewhere).
I thought the only rich people involved in the political process were the evil Koch brothers???
—————–
Liberal donors eye new long-term investments in states and new voters to boost Democrats
Washington post | 5/4/2014 | Matea Gold
A group of wealthy liberal donors who helped bankroll the Center for American Progress and other major advocacy groups on the left is developing a new big-money strategy that could boost state-level Democratic candidates and mobilize core party voters.
The plan, being crafted in private by a group of about 100 donors that includes billionaire hedge fund manager George Soros and San Francisco venture capitalist Rob McKay, seeks to give Democrats a stronger hand in the redrawing of district lines for state legislatures and the U.S. House.
Bill would really like this article but it is an interesting article on why a democratic government naturally devolves into the use of government force by the minority to extract wealth from the
http://mises.org/daily/6742/Democracy-War-and-the-Myth-of-the-Neutral-Statemajority:
Whew! You and 2ban must be exhausted from carrying all that water.
Unlike the Obama supporters on this blog, we are not water carriers.
Bookmarked (it’s late by Bill in LA standards - 8:46 pm)
There was a thread this weekend regarding hedge funds buying homes and manipulating markets to get more fees, etc. Let me shed some light on this for people:
Broadly speaking (emphasize broad, since there are lots of different private fund structures)
1. The world of private investment is split into two worlds, “Hedge Funds” (all things tradeable with few transaction costs) and “Private Equity” (Venture Capital, Buyout, Real Estate, etc.).
2. “Hedge Funds” generally trade in things that are easily valued…lots of transactions, and have ways that investors can exit their funds (unless “gates” are thrown up). Investors are typically charged 2% on the VALUE of their holdings…as the value can be easily determined on a quarterly basis, and 20% of profits. I know of at least one such manager that was found guilty of manipulating their “value” by pushing up the value of some thinly traded securities near quarter end to show better performance, and get higher fees. Yes, the 2% fee can be manipulated.
3. “Private Equity” generally invest in things that are NOT easily valued…even with appraisals of things like real estate, there can be disagreements. Also, the investments are generally less liquid, so investors don’t have an ability to simply exit from a fund…they are locked in to the investments. Liquidity is obtained with the manager sells assets, or they sell their interest in the fund on the secondary market. The management fee is based on 2% of the original INVESTED CAPITAL, and they receive 20% of profits. Value manipulation does NOT increase the fees they get along the way, what increases their fees, is if the ultimate value of the investments goes higher and higher.
In other words, there is no incentive by real estate funds to buy thinly traded assets (like all the homes in a subdivision) to drive up the price…EXCEPT to be able to show excellent interim performance in efforts to raise more money for the next fund. Ultimately, these guys make money by selling what they bought at a profit.
http://bkfs.com/LPSCorporateInformation/NewsRoom/MortgageMonitor/201403/MortgageMonitorMarch2014.pdf
New mortgage monitor…lots of data.
You’ll find far more accurate data here.
Jeff Gundlach makes bear case on single-family housing: Ira Sohn
May 5, 2014, 11:53 AM ET
Where are the first-time buyers, Gundlach wonders.
Household formation is depressed and this appears to be a generational rather than a cyclical trend.
Home ownership for all age brackets is back to where it was in 1995. Meanwhile, “the kids aren’t alright,” he says, noting bleak job prospects for young adults.
Case-Shiller indicates rents will continue to rise, making it tougher for young people to save for downpayments while also struggling with student loans, he says.
New home sales are “flat on their back,” while mortgage purchases have never gained traction, remaining at same level as 2010. Starts picked up but have plateaued below an annualized 1 million.
Bulls like to point to “affordability,” but notes they remain well above levels at boom. He also notes comparison suffers due to preponderance of exotic mortgages during boom.
“If affordability was so great, why was interest rate rise of last year responsible” for a big drop in sales, he asks.
If you think rates will rise again as Fed withdraws QE, that implies a pretty ugly outlook for “affordability,” he says.
…
I wonder how well interest rates correlate with population growth?
Reading some old Time Life books from the early 1960s always talking about with a world wide population of 3 billion and the challenges ahead to feed a growing population - and now here we are.
If you’re looking for somebody to blame for rising inequality, blame babies. Or, rather, the fact that there soon won’t be enough of them.
A drop-off in population growth is a big reason why global economic growth is going to slow down in the decades ahead, French economist Thomas Piketty points out in his new book, Capital in the 21st Century. The top-selling book on Amazon.com is getting a lot of attention for its predictions of soaring wealth concentration and inequality and its call for a massive global tax on the wealthy.
But a key component of Piketty’s rising-inequality forecast is a slowdown in economic growth, which theoretically means labor income will slow, too. If returns on investment stay higher than economic growth, as they typically have been, then voilà, you’ve got a growing gap between the rich (who own all the investments) and the poor (who get paid for their labor).
And the slower-growth future Piketty foresees will be at least partially the result of slowing population growth. Typically, population growth drives about half of all economic growth. Here is a very, very long-term chart by Piketty that shows what population growth has done since the birth of Christ, along with forecasts of what it is going to do for the rest of this century:
But a key component of Piketty’s rising-inequality forecast is a slowdown in economic growth, which theoretically means labor income will slow, too. If returns on investment stay higher than economic growth, as they typically have been, then voilà, you’ve got a growing gap between the rich (who own all the investments) and the poor (who get paid for their labor).
No, I could not disagree more, after the black death wiped out a third of Europe, wages rose and inequity declined. A shortage of labor reduces inequality, that is why immigration both legal and illegal has increased inequity in America. The normal business cycle, starting at the bottom, at the end of recession has too many workers looking for jobs. A situation that favors capital. However, capital hires workers to rebuild inventories etc. creating more hired people which creates more demand for even more workers. Profits of corporations soar during this stage, favoring the rich. However, as the recovery continues corporations compete with each other for labor raising wages, favoring workers, and reducing profits and inequality. However, it still creates more demand until the marginal cost of hiring a worker exceeds the revenue of that worker starting the down cycle. The problem in America due to open borders is that a labor shortage never occurs. Labor unions use to insist on border control even using appeals to racism to ensure that massive labor surpluses would not happen. Unions cannot exist in such an environment. When Unions stopped being an advocate for limited immigration they signed their own death warrant and caused the entire working class from benefitting from the natural economic cycle.
No, I could not disagree more, after the black death wiped out a third of Europe, wages rose and inequity declined.
There is an important difference. Back then the economy wasn’t debt driven like it is today, and for good reason. Prior to the Reformation it was illegal to charge interest on loans in Europe.
Debt driven economies only work when they grow. When they shrink, you get deflation and with it defaults.
Debt driven economies only work when they grow. When they shrink, you get deflation and with it defaults.
Simple answer move to supply side economics instead of debt driven demand side economic system. Austrian economics does not rely on debt for growth and thus is much more stable.
Simple answer move to supply side economics instead of debt driven demand side economic system.
correct.
now on to something different.
income inequality is a natural function of rising prosperity. the result is higher high wages and higher low wages. in other words, everyone benefits from rising prosperity even as it widens the income gap. if you like prosperity, accept the widening income gap.
of course in communism the income gap is very small for nearly everyone.. unless you’re one of the political elite.
so if you want income equality, just adopt communism and you’ll get there rather quickly.
“its call for a massive global tax on the wealthy.”
This is why I’m happy with my Arizona stash of AR-15, glock-17, Colt 45 and various appropriate ammo.
Molon Labe - my wealth or guns.
Cactus,
BTW, everyone here in America, by world standards, is wealthy.
All 300 million of us should be armed with AR-15s, plenty of .223 ammo, and be behind every blade of grass.
Ouch http://blog.roostify.com/2014/01/the-mortgage-refinancing-slow-down-and.html
The Mortgage Bankers Association regularly puts out a Mortgage Origination Estimate of purchase and refinance originations in the industry. As the most recent MBA Estimate below shows, and anyone in the mortgage industry knows, the drop-off in refinance originations is dramatic.
That’s right - in dollar terms, the refinance segment has more than halved in the last year. And the industry as a whole has contracted by more than 25% in that time. In fact, the MBA projects that refinances will comprise ~35% of all originations by 2015.
Which explains why I’ve been getting the refi calls from the mortgage company. Hadn’t gotten any calls from them until last year. And then two calls within six months.
Mortgage lending slows to a 14-year low
What with higher interest rates and fewer home sales nationwide, just $235 billion in home loans are started in this year’s first quarter.
April 25, 2014|By Tim Logan
That’s down nearly a quarter from the end of 2013 and more than half from the same period last year, when the housing market was heating up, especially in Southern California. And it is lower even than the levels recorded during the worst of the housing crash.
The fall-off was particularly sharp for mortgage refinancing, which was hurt by higher interest rates after record lows last spring. The average 30-year fixed-rate mortgage surged to 4.3%, up from 3.3% last May. That’s still quite low by historic standards, but the run-up, after years of low rates, means there isn’t a lot of demand for refinancing now.
Kan is one of several economists who see the longtime low interest rates as a factor in slower sales. Homeowners who refinanced into 3% rates two years ago are likely to pay a higher rate today if they were to sell their house and buy something bigger. That’s dampening sales in the so-called move-up market and making it harder for entry-level homeowners to buy in.
trouble ahead
NEW YORK, May 5 (Reuters) - Jeffrey Gundlach, chief executive and chief investment officer of DoubleLine Capital, said on Monday that investors should bet against the SPDR S&P Homebuilders ETF because he does not see the expected rebound in single-family housing occurring.
Gundlach, speaking at the Sohn Investment Conference in New York, said that problems dogging the housing market include expected rises in mortgage rates and the amount of student loan debt carried by young adults, which makes saving for a down payment difficult.
He also said that if mortgage financiers Fannie Mae and Freddie Mac were wound down by the government, mortgage rates would rise.
Sobering Stats on the ailing US economy- yikes!
http://theeconomiccollapseblog.com/archives/17-facts-to-show-to-anyone-that-believes-that-the-u-s-economy-is-just-fine
Great article and it confirms what I was saying above there is no real recovery going on just clever manipulation of numbers to argue that we are creating a recovery.
yes, it’s getting very hard to believe any of these stats. nothing seems trustworthy anymore.
Especially unverified BS from people who stand to profit.
That article is stunning.
Wow that’s sobering. How much longer shall we hide our heads in the sand folks?
Is you is, or is you ain’t?
http://www.yqalr.com/uploadfile/20120421/20120421103407245.jpg
A pic of Oxide headed to closing:
http://www.yqalr.com/uploadfile/20120421/20120421103359618.jpg
(JFWY again)
She is the definition of runway foam.
Not sure about the runway… but.. only in France:
http://maisondusavonparis.com/After-shave-cream
I’m getting bored, so I *might* buy a waverunner.
The problem is I could rent one 175 times for the cost of ownership minus maintenance, even paying beach tourist prices. Let’s say by some miracle a waverunner owner is able to ride 1x/week — it would take about 4 years to “break even” (again not factoring maintenance/fuel).
Seems like a lot of mispricing is going on these days.
(Forgive me Blue, I know in the Finger Lakes Region PWCs are the bane of the waterways.)
I went out on a waverunner before. First of all, it’s fun. But it’s not a jet ski. With a jet ski you have the ability to do the acrobatics. Waverunners are heavier and bulkier for cruising. Like giant slalom skis. But I liked it. I was in the Sea of Cortez in Mexico off of Las Cabos on a wave runner and the hour went way dam fast.
You get thrill for an hour rental time, return it to the beach at the concessionaire’s then go your way. You are done.
Then you avoid the ugly part. Spraying out the salt water from all the innards. It’s a long maintenance process. If you can handle the responsibility - the downside, and maintain it, then owning might be the right thing. If you are out on the wave runner every other weekend, maybe you will get your money’s worth.
Morgan Stanley probably wants this prediction back:
http://www.mining.com/morgan-stanley-gold-price-wont-see-1300-again-92623/
If at first you don’t succeed lie lie again
LA County Sheriff Admits Big Brother Is Here “But We Kept It Pretty Hush Hush”
Zero Hedge
May 5, 2014
“This is the future if nothing is done to stop it,” is the ominous way The Atlantic describes the recent Big Brother tactics used by LA County Sheriffs to “police” areas such as Compton. Residents were unaware (“A lot of people do have a problem with the eye in the sky, the Big Brother, so to mitigate those kinds of complaints we basically kept it pretty hush hush“)that, as the police stated, “we literally watched all of Compton during the times that we were flying, so we could zoom in anywhere within the city of Compton and follow cars and see people,” as they trialled a new system which if adopted, would mean Americans can be policed like Iraqis and Afghanis under occupation. As The Atlantic concludes, the sheriff didn’t conclude that the “wide area surveillance” wouldn’t be like Big Brother after all, just that Big Brother capabilities would help to solve more crimes… so why not tryout mass surveillance?
As The Atltantic reports,
In a secret test of mass surveillance technology, the Los Angeles County Sheriff’s Department sent a civilian aircraft over Compton, California, capturing high-resolution video of everything that happened inside that 10-square-mile municipality.
Compton residents weren’t told about the spying, which happened in 2012. “We literally watched all of Compton during the times that we were flying, so we could zoom in anywhere within the city of Compton and follow cars and see people,” Ross McNutt of Persistence Surveillance Systems told the Center for Investigative Reporting, which unearthed and did the first reporting on this important story. The technology he’s trying to sell to police departments all over America can stay aloft for up to six hours. Like Google Earth, it enables police to zoom in on certain areas. And like TiVo, it permits them to rewind, so that they can look back and see what happened anywhere they weren’t watching in real time.
If it’s adopted, Americans can be policed like Iraqis and Afghanis under occupation…
Sgt. Douglas Iketani acknowledges that his agency hid the experiment to avoid public opposition. “This system was kind of kept confidential from everybody in the public,”he said. “A lot of people do have a problem with the eye in the sky, the Big Brother, so to mitigate those kinds of complaints we basically kept it pretty hush hush.” That attitude ought to get a public employee summarily terminated.
“Our first initial thought was, oh, Big Brother, we’re going to have a camera flying over us. But with the wide area surveillance you would have the ability to solve a lot of the unsolvable crimes with no witnesses, no videotape surveillance, no fingerprints.”
Notice that he didn’t conclude that the “wide area surveillance” wouldn’t be like Big Brother after all, just that Big Brother capabilities would help to solve more crimes.
So why not try them out?
He later explains that while the public may think its against this, we’ll get used to it:
I’m sure that once people find out this experiment went on they might be a little upset. But knowing that we can’t see into their bedroom windows, we can’t see into their pools, we can’t see into their showers. You know, I’m sure they’ll be okay with it. With the amount of technology out in today’s age, with cameras in ATMs, at every 7/11, at every supermarket, pretty much every light poll, all the license plate cameras, the red light cameras, people have just gotten used to being watched.
Many Americans elect their own sheriffs. This is the future if nothing is done to stop them.
This article was posted: Monday, May 5, 2014 at 5:45 am
Tags: big brother, domestic spying
Then they are doing a terrible job cause crime is still rampant there.
And they still wont go after people carrying illegal guns on public property……5 years no bail……
If Uncle Warren is worried about housing, should we all be?
Tue, May 6, 2014, 2:12AM EDT -
US Markets open in 7 hrs and 18 mins
Buffett is worried about housing. Should you be too?
By Lawrence Lewitinn 15 hours ago
Warren Buffett is considered the greatest investor in history, yet even he is confounded by the housing market.
In a recent interview with CNBC’s Becky Quick, Buffett said:
“Housing is not that strong yet. I’m surprised at that. But, it’s better than it was a couple of years ago. The pickup in housing has been slower than I would have anticipated. And, I would say that’s true right to this date. And it’s true in the secondary market for houses. The prices have recovered some and all of that. But, if you look at transactions and pending transactions in March, it’s not booming.”
…
He doesn’t sound worried enough. Or maybe he’s holding back. I like Buffet because he’s an atheist. I don’t like Buffet because he’s a shill for big government.
Here is a shocker: I bought the dip on a long-term Treasury fund last August, against all the conventional wisdom that said the Fed taper would send long-term yields soaring and long-term Treasury bond values plummeting.
Turns out these folks were wrong, as long-term Treasury yields are retracing towards May 2, 2013 levels.
Credit Markets
Stubborn Treasury-Bond Yields Touch a Low
10-Year Treasury Rate, Briefly Hitting 2.566%, Continues to Defy Expectations of U.S. Growth
By Min Zeng and Steven Russolillo
Updated May 5, 2014 7:01 p.m. ET
Anxious investors are powering a rally in U.S. Treasurys few would have expected this year.
U.S. government-bond yields, which move inversely to prices, briefly touched their lowest level in six months Monday as geopolitical fears combined with uncertainty over global economic growth to push fund managers toward havens. The surprise strength in Treasurys is confounding bond-market bears: In 2014, U.S. government bonds have gained more than the Dow Jones Industrial Average.
The bond action is the latest sign of anxiety among investors surveying the outlook for U.S. and global growth.
Many investors entered the year expecting Treasury prices to decline, as they did last year, and yields to rise as U.S. economic growth and interest rates perked up. And many forecasters still expect Treasury yields to rise before the end of the year. Managers position for higher yields by holding fewer Treasury bonds than benchmark bond-indexes suggest, while hedge funds and bank traders place bets on bond prices falling, and yields rising, known as short bets.
But bonds haven’t yet behaved as bearish investors expected. On Monday, the yield on the 10-year Treasury note fell in early U.S. trading to 2.566%, its lowest since Nov. 1, before rebounding to 2.611%. The Treasury yield has dropped from 3% at the end of 2013.
Soft economic data and harsh winter weather have thwarted many forecasters’ expectations of a steady rise in yields as the Federal Reserve reduces its monthly bond purchases. A standoff in Ukraine, reversals in developing markets such as Turkey and Brazil and a slowdown in the once-roaring U.S. stock rally all have conspired to prod more investor cash into safe-harbor bonds.
“Falling bond yields have been a big surprise,” said Erik Weisman, a global bond-portfolio manager at MFS Investment Management, which has $420 billion in assets under management. “The compelling story” at the start of the year—higher yields and faster growth—”didn’t pan out.”
…
Toxic housing….. toxic toxic housing… it’s gets more financially toxic with each passing day.
Obama is no Ronald Reagan. Nor is he a Bill Clinton. Nor is he an Eisenhower
http://www.gallup.com/poll/166964/obama-averages-job-approval-year-five.aspx