Bits Bucket for May 10, 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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Jerry Pournelle: This is the slowest economic recovery in the history of the nation – assuming that you believe we are recovering. The signs of recovery are faint, and if you count the number of permanently unemployed and thus not part of the work force and thus not officially unemployed at all, the economy is a disaster. I think this demand for growth, for income through capital gains rather than from profitable return on investment – taxed as income – is a key. It is no longer enough to have a company making good profits on its investments. Now it must have capital growth as well. This doesn’t serve the customers very well. I could give a hundred example of old staid merchant enterprises that sold things I like at a profit who have experienced the Growth Phenomenon, peaked, crashed, and now no longer exist, or exist in a truncated condition – and no longer sell what I wanted.
People seem to be catching on.
For the past 16 years at least, we’ve not been the slightest bit interested in the growth of wealth. It’s all been about retaining it for those who already possess it.
This corresponds rather well with the growth of government. As government grows, opportunities for individuals and businesses to generate wealth diminish.
“It’s all been about retaining it for those who already possess it.”
And redistributing it to those who don’t. Squeeze play for the middle class monkey in the middle.
Not to want to cloud your rant with any statistical evidence, but do you have any idea of how the U.S. federal workforce has evolved as a share of total employment over recent decades?
That would be an interesting statistic if you could find it. One unusual feature of the current recovery is that total state and local government employment is still below its pre-recession level.
http://1.bp.blogspot.com/-MWctN5QE9c8/U2OjiowpCsI/AAAAAAAAe4E/bXq-2YmBn9c/s1600/StateLocalApr2014.jpg
I was going to post a statistic that showed the size of the federal workforce was higher back in the 1960s than currently, but why bother clouding rants with factual information?
That touches on a topic which is discussed occasionally on this blog. Much of the reduction in the federal workforce was accomplished by paying private contractors to do work previously done by federal employees. Studies have shown that it costs the taxpayer more to do things that way.
Back in the 60s when the Vietnam war was going on? Does the statistic include military?
“Back in the 60s when the Vietnam war was going on? Does the statistic include military?”
You get similar answers whether you include or don’t include the military back in the 1960s when the U.S. was only in one war compared to the more recent period when we were in three or so.
And if the media wasn’t entirely carrying water for the anointed one you’d hear more about it and there would be more outrage. And I don’t mean this as a partisan comment. Whoever is in power and continuing this weak faux recovery deserves to be called out on it and the lies that allow it.
That’s the problem with having a biased media.
Indeed. They’ll carry water no matter what fraudster is in charge. The media prints what they’re told and we’re not giving the orders.
I’m not so sure they’d handle it the same if it was an R in the white house.
“Now it must have capital growth as well.”
Capital gains are taxed at a lower rate. So it is better for the 0.1% to invest in startups doing useless which nevertheless grow at an astronomical rate, then get out before the ultimate crash, than it is to invest in mature companies which provide jobs and incomes to Americans.
We can thank our inane tax structure for this.
“…doing useless…”
I meant to say producing useless virtual widgets, though I guess doing useless isn’t far off the mark.
The easiest way to remedy this is to allow say the first $25,000 a year at 0% the next 50.000 at say 15% anything over S75,000 a year in cap gains at regular income tax rates…
so this won t penalize the small investor.
I don’t care if even 99% of all people have been duped to like tax method a or tax method b. It is not about what a majority thinks. Taxation is theft and must be abolished.
Then how do you pay for government?
He is proposing a return to the feudal castle system of pre-20th century Europe.
Even the castles levied taxes, in carrots, cows, and first born if necessary. And what the castle didn’t take in taxes, the Roman Catholic Church took in tithes.
No, what Bill in LA wants is to do is leach off the taxpayer by working for the government, then leach off the taxpayer by working for a government contractor, then pretend that he got all his money by his own superiority and therefore nobody should extract back even a penny of the taxes that he leached for decades, including playing tax games with his addresses.
There are names for that.
Then how do you pay for government?
He wants someone else to pay for it. Just like someone else paid for it when he suckled for decades at the government’s teat.
“Even the castles levied taxes, in carrots, cows, and first born if necessary. And what the castle didn’t take in taxes, the Roman Catholic Church took in tithes.”
Good points, all. The 0.1% has always claimed its tribute, and probably always will.
I don’t think all taxes should be abolished, but I do think the government could be drastically reduced, especially the federal government. What does the FCC do? Seems like a lot of irrelevant meddling, particularly in these internet days.
It’s also a huge waste to have all these different federal law enforcement agencies. Consolidate it all into one, just like a police force with multiple different specialty areas.
Repeal the “progressive” 16th amendment. Abolish ALL taxes.
how about no corporate income tax……but that also means no corporate tax breaks or refunds since thy wont be paying any taxes in the first place?
First, government is way too big and must be cut 90% at least. Second, government should be funded by lotteries.
No corporate income tax will take a decent size chunk of revenues away from the govmint.
But here is a biggie….All jobs paid or “intern” will be subject to EEOC rules…..no discrimination against older people who want to learn or keep up their skills..
No more handouts with out something in return…..no more 99 weeks of UI unless you are in school or job training No more welfare unless you get your ged and training….
“Second, government should be funded by lotteries.”
Lotteries are an excellent way to levy taxes on those who are bad at math.
What’s interesting is if you go to places that have lots of poor people then you will find a lot of places to buy lottery tickets. If you go to places that have a lot of rich people then you won’t.
A rich man buys lottery tickets, too. They just have different names (stocks, bonds, real estate investment trusts, etc etc etc).
Shouldn’t end the laws against gambling to reduce the power of the state? If we did that, government lotteries would have to compete against many forms of private gambling, which would make it difficult to raise revenue.
“A rich man buys lottery tickets, too. They just have different names (stocks, bonds, real estate investment trusts, etc etc etc).”
So in a poor area I should see a lot of lottery ticket outlets and in a rich area I should see a lot of Merrill Lynch-type places.
Which is what I see.
Also, since Utah is a relatively wealthy state, you will find more Merill Lynch-type places there and more gambling casinos in poorer Nevada.
Checking my facts here:
For Utah –
Per capita money income in past 12 months (2012 dollars), 2008-2012 $23,794; median household income, 2008-2012 $58,164.
and for Nevada –
Per capita money income in past 12 months (2012 dollars), 2008-2012 $27,003; median household income, 2008-2012 $54,083.
So Nevada is actually nearly as wealthy as Utah in terms of median household income, and more wealthy on a per capita basis, thanks to all those large Mormon families in Utah.
The FedGov really doesn’t need to collect taxes. They can spend all the money they want without the revenue.
“A rich man buys lottery tickets, too. They just have different names (stocks, bonds, real estate investment trusts, etc etc etc).”
Yet you do not stop your wife from buying emerging market stocks? Which BTW are doing very well now, unlike 2 months ago when you sent out daily posts that emerging markets are tanking.
Give me three examples,thanks.
“The signs of recovery are faint, and if you count the number of permanently unemployed and thus not part of the work force and thus not officially unemployed at all, the economy is a disaster.”
Don’t forget the formerly big-spending retiring boomers who will be expecting their heath care entitlements.
“18,700,000 vacant units across the country”
Given the rampant lies and deceptions endemic to the U.S. real estate industry, is it safe to assume that 18.7 million is an undercount. Especially given the new wave of construction underway in the wake of the Fed’s QE3-fueled housing market stimulus.
9 Worst Recession Ghost Towns in America
Ghost Towns, Demolition, Kittens
By BLAIRE BRIODY, The Fiscal Times
America has a new kind of ghost town, haunted by the spirits of the recession. Developers caught up in the runaway housing boom overbuilt and oversold lots, houses and condos, leaving neighborhoods barren with uninhabited model homes, eerily desolate luxury condos, and abandoned McMansions in the aftermath of the collapse.
Most of these recession ghost towns lie in heavily-hit regions of the housing crisis: South Florida, Arizona, California and Nevada. Some in metropolitan areas like Phoenix and Miami, have a better chance of surviving after the housing market recovers, but others are in remote desert developments where municipal services have long since left. “We saw a lot of overbuilding in areas where there isn’t going to be much buying activity,” says Rick Sharga of RealityTrac. “Those areas are going to take a long time to come back, if they ever do.”
There are currently 18,700,000 vacant units across the country, according to Census data, and vacancies rates in the homeowner market have grown 12 percent since the recession started. Vacancies are the highest in the southern and western regions of the country.
With tens of millions of excess empty houses and many millions more houses currently coming on the market as boomers die off, housing prices have a long way to fall. A very long way to fall.
A small neighborhood I watch that had inventory increase dramatically the last few months has two more houses on the market this week. Two MORE, the other ones are still sitting. This is after months and months and months of virtually nothing for sale.
Hear that fraudsters? Your “low inventory” lie is going out the window in the rush for the exits happening now in PHX and then rolling through the rest, just like last time. The Mexican standoff is over, you blinked.
My view is biased by the vacant home next door, which still sits empty a couple of months after the absentee investor owner kicked out the single mom and her three kids who lived there and made a madcap effort to fix it up so good that it would sell for $100K above any recent comp sale price. I just checked the listing on Zillow, which says the home is “off market,” even though the “For Sale” sign in the yard was clearly visible from just outside our door as recently as last week. The Zestimate™, which also exceeds any recent comp by a wide margin, is nonetheless over $15K below where they listed the home; and it also apparently has slipped by $4700 over the past 30 days.
I expect the eventual new tenants will move in by Christmas.
By Christmas? So that’s how many months of lost rent trying to sell? 8-9??
I’m half-tempted to move our downsizing family next door and save $5000 in take home pay from our rental tab next year. We have to start saving up for our next European vacation.
Liberace is dead !!
He lived by the piano and died by the organ…
OK, I got that one, ick.
The Fiscal Times article clearly reads, “There are currently 18,700 vacant units across the country, according to Census data”. Not 18,700,000.
The figure is 18.3 million, according to the Census Bureau.
Why promulgate lies here? We are going to catch you and call you on them, and you know it.
U.S. Census Bureau News
RESIDENTIAL VACANCIES AND HOMEOWNERSHIP IN THE FIRST QUARTER 2014
Does “vacant” include squatting, no mortgage payments?
Grand. I have no idea what the right figure is and have no wish to promulgate lies. I’m talking about the above quote:
“There are currently 18,700,000 vacant units across the country, according to Census data, and vacancies rates in the homeowner market have grown 12 percent since the recession started. Vacancies are the highest in the southern and western regions of the country.”
It was taken verbatim from the Fiscal Times article of 2011, except 18,700 was used in the article, but was changed to 18,700,000 here.
I had assumed that the article was just talking about 18K vacant units in these “ghost towns”, as 18K is surely low for a national scale. I mean, 3 years is a long time for a typo of that magnitude to lie around unchanged.
You’re a liar.
http://www.mortgagenewsdaily.com/data/housing-inventory.aspx
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?
Commerce City(Metro Denver), CO Rental Rates Plunge 16% YoY As Empty Housing Inventory Balloons
http://www.zillow.com/local-info/CO-Commerce-City-home-value/r_17545/#metric=mt%3D46%26dt%3D1%26tp%3D4%26rt%3D8%26r%3D17545%26el%3D0
My favorite thing about driving through North Denver is going by the Purina Puppy Chow factory on a warm day with the windows down and getting overwhelmed by the earthy, skunky, meaty smell
http://bethpartin.com/wp-content/uploads/2010/03/Purina-Puppy-Chow-York-I-70-Feb-20101.jpg
Yeah my sister lives there and says the entire city is enveloped by one big stinky brown cloud.
Bayou Vista(Houston Metro) Housing Prices Plunge 12% YoY As Foreclosure Inventory Hits Market
http://www.zillow.com/local-info/TX-Bayou-Vista-home-value/r_50902/#metric=mt%3D18%26dt%3D1%26tp%3D5%26rt%3D8%26r%3D50902%26el%3D0
Dallas/Near East, TX Housing Prices Sink 14% YoY As Housing Demand Sinks
http://www.zillow.com/local-info/TX-Dallas/Near-East-home-value/r_276468/#metric=mt%3D18%26dt%3D1%26tp%3D6%26rt%3D8%26r%3D276468%26el%3D0
What’s happening in Lubbock?
Post some data and we’ll discuss Blackawk.
I went to your Zillow source and things seem to be different there. What do you think?
Then post it. Why backpedal from it?
Isn’t Lubbock a pretty tiny west Texas town? Like 250,000 people. It’s no Dallas Fort Worth area which is 6.5 million. Entirely irrelevant outlier for the real estate market except for the few who live there. Not just apples and oranges, apples and robots.
Zilker (Austin Metro), TX Housing Prices Collapse 24% YoY As Inventory Skyrockets
http://www.zillow.com/local-info/TX-Austin/Zilker-home-value/r_271667/#metric=mt%3D18%26dt%3D1%26tp%3D4%26rt%3D8%26r%3D271667%26el%3D0
How do you define economic optimism? Not speculative BS like phones and boom-bust oil drawdowns. These are empty temporary events that result in tears.
Real economic optimism is falling prices to dramatically lower and more affordable levels.
Keep up the good work, Analyst. I am seriously thinking of promoting you to an Associate before year’s end.
Sir yes sir. But I’m quite satisfied with my current role at this firm.
How are your firm’s stock shares faring these days?
Up and Down Wall Street
Housing Stocks Discount Return to Old Normal, Which Is Unlikely
Whether you watch societal changes or stock charts, signs clearly point toward less-robust home building.
By Randall W. Forsyth
May 6, 2014
Is the American dream of home ownership dead? Or is it merely delayed?
This is a sociological, political, and most particularly, an economic question. Home building and the ancillary purchases that go into a dwelling, whether new or previously occupied, have been major growth spurs for the U.S. economy.
Will it continue to be so?
Some 2.5 million household formations have been delayed in recent years by economic circumstances, according to Dmitri Rabin, senior securitized asset analyst at Loomis Sayles. (Mortgages underlie most of those securitized assets; hence his focus on housing trends.)
Those deferrals mean the aspirations of those new households have been delayed, Rabin told a media lunch recently. But, he added, they are not dead. Once these folks’ fortunes improve and set up housekeeping, either on their own or with a significant other, he says they will follow the path of previous generations and buy a home of their own.
That expectation of a return to the Old Normal is unlikely to be fulfilled, avers Jeffrey Gundlach, head of DoubleLine Capital. The investment premise for single-family housing is “overbelieved and overrated,” he told the Sohn Investment Conference Monday, as colleague Brendan Conway reported from the confab.
Unlike as in past cycles, when prospective owners swooped in to buy their dream house when mortgage interest rates became attractive, the post-crisis period has seen a different dynamic.
Opportunistic private investors have been scooping up houses, funded in part by a rebound in second-lien loans, he observed. That suggests investment buyers are tapping their primary residence to fund investment purchases in houses to rent—”not exactly indicative of the organic growth in the market from real buyers,” he added.
…
Privately held shares but based on the bonuses that arrive like clockwork, very profitable.
Better than your firm’s. Besides Yellin’s got my back…can’t lose with this stuff.
Touche’!
rev Ike…..
https://www.youtube.com/watch?v=lE-dXg5fChI
That guy is awesome.
We are all going to be millionaires!
Reverend Ike owned sixteen Rolls Royces. They were paid for over time by the many thousands of dollars sent to him by other people.
And I make my money in the same way.
Reverend Ike: “You can’t lose with the stuff I use.”
Jeff Gundlach Says Investors Should Short Homebuilder Stocks
May 7th, 2014
Homeownership in America is headed down and investors should short homebuilder stocks, according to one of the most influential fund managers in finance. Speaking to the Irah Sohn Investment Conference, Jeff Gundlach, manager of the $49 billion DoubleLine, the U.S. will never see the days of 1.5 million annual housing starts ever again. Just a decade ago, housing starts were about 2 million per year. Today, it’s less than half of that.
High student debt and bad memories of the housing crisis have soured a generation of potential new homebuyers. “The kids aren’t alright,” Gundlach told the conference. “I’m really surprised at how people are so copasetic about the homebuilders and the housing market,” said Gundlach to CNBC’s Scott Wapner at the Sohn Conference. “You look at the data and it’s gotten really soft…. You look at mortgage applications, housing starts, [and] you look at new home sales in particular. They’re no better than they were at the so-called trough of the recession.”
…
Real economic optimism is falling prices to dramatically lower and more affordable levels.
I didn’t realize that optimism is something that could be bought and sold. How much does it go for these days?
Die yuppie scum!
http://blog.sfgate.com/culture/2014/05/09/class-war-graffiti-in-the-mission/
I read the blog and didn’t quite understand the beef of the vandal.
Is it, “I hate Google therefore I hate you because you sell their employees lattes?”
Article comment:
In best petulant nine year old voice, stomping foot, “Because we were here first!”
“Oh, so you feel a similar obligation, then, to those who were here before you?”
Nine year old voice again, “No!”
“An as-yet-unnamed Chicago investment group is seriously considering buying the distressed building at 1100 Cleveland St. and finishing the project, either as high-end condos and townhomes or as apartments, a real estate brokerage firm confirmed Friday.
That would be bad news for the homeless, partying teens and rodents that have sheltered, cavorted and scurried through the building since work stopped in the fall of 2009, but a welcome turn of events for the city, desperate to revive the sagging East Gateway district on the edge of downtown.”
http://www.tampabay.com/news/growth/new-hope-for-clearwater-albatross-the-strand-may-have-buyer/2179150
As soon as one bagholder has taken enough of a loss, he dumps it on another, fresh bagholder, eager and willing to soak up another loss on the way down the price scale… before the real owner is found.
It would be a thing of beauty, if it didn’t run on gross Human stupidity.
But I can’t be too critical, since it’s how I got my current building. $5/sf. Cash deal. I’ve benefited directly from the stupidity of others. Gadzooks.
“$5/sf.”
Wow! Do tell.
THAT is crater. You may be the winner.
It’s a warehouse space. The previous owner was a screwball who got it via inheritance. I saw the documents at the title company; lots of liens chasing this guy. The crazy thing is the guy probably thought he got a deal. But he took a loss, really. The sale price was a lot lower than the assessment, and his liens took half of the money anyway. Guys like that in life just burn money like cordwood. Easy come or not, they blow it all.
And what did the guy do for a living at the time? This can’t be a surprise, not on this blog: A general contractor. He kept coming back to my building after the sale, trying to get me to hire him to fix the place up. Pathetic. The entire housing bubble was pathetic and stupid and I’m never going to shut up about it.
Revisiting a Questionable Study on Shale Gas and Methane Leaks - Energy in Depth by Steve Everley
“For those of us who pay attention to the ongoing question over “methane leakage” from shale development, it was hard to ignore the headlines earlier this month:
Los Angeles Times: “EPA drastically underestimates methane released at drilling sites”
Washington Post: “Unexpected loose gas from fracking”
E&E News: “Significant methane leaks found from wells still in drilling process – study”
FuelFix.com: “Study raises new concerns about emissions from shale gas wells”
Huffington Post: “Methane Emissions From Gas Wells Up To 1,000 Times Higher Than Federal Estimate: Study”
“What was largely overlooked, however, is that area monitored – southwest Pennsylvania, chiefly Greene County – is also the largest coal producing region in the entire state. A variety of law dictate that coal mines must have methane ventilation systems to prevent explosion and to protect workers. The researchers did make note of the coal mines, but the discussion was largely stuffed away in the supplemental information.”
Here is how you can get wonderful headlines in the “anti fracking” media.
You fly an airplane over a part of PA that has many coal mines, somehow determine that there’s a lot of methane in the area and then blame Fracking for the higher levels of methane. Just overlook the fact that coal mines “must ventilate” their underground gases in order to prevent mine explosions.
If their case against Fracking is so good, why do they have lie and mislead?
Warmists gotta warm?
What was that definition of “shill” you gave us the other day, Blackhawk?
Where’s Slithers?
He will be here soon. He’s very protective of Blackhawk. Doesn’t want his feelings hurt.
Shill - Someone who disagrees with me (whoever me happens to be). So tell me Igor, who are you a shill for?
Shill - Someone who disagrees with me (whoever me happens to be). So tell me Igor, who are you a shill for?
Given your definition, a better question might be who is he a shill against.
Hilarious and revealing that Blackhawk Dan thinks everyone is a shill. Believe it or not, Blackie, some of us post for free. We actually have our own beliefs and opinions.
“Blackhawk Dan”
I thought his name was Dan Rasmussen, or some such. Isn’t he the guy whose failed Romney victory prediction made him a laughing stock around these parts?
If you disagree with Blackhawk Dan, that proves you are a terrorist.
It’s trendy to be anti fracking. There’s a lot of hippie lib types who are at their core anti-technology. Then they get on Facebook and spread their ignorance, and all of the people who get their news from Facebook get worked into a tizzy.
Then there’s the shills on all sides.
The number of lawyers slithering around this place tells you everything you need to know.
“The number of lawyers slithering around this place”
Don’t worry, most of them didn’t break 163 on the LSAT, and therefore neither went to a top law school nor practice Big Law.
They work for Brown Shoe law firms. Tier five in the house!
Chasing ambulances when not posting or reading here…
I’m not anti-fracking, but I am anti-fracking-propaganda. Fracking is a last gasp in getting ever-depleting liquid and gas resources out of the ground. Fracked wells deplete even faster than normal wells. I wouldn’t stop fracking from happening, but the risks to ground water and the real future of fossil fuels need to be sanely addressed. The larger question still hangs: We’re running out of the cheap stuff, so we need to stop running an energy-intensive civilization. One way or another.
I think half of the objections stem from a “fracking, what’s that?” objection to newness and the titillation of the sound of the word fracking.
Then we should all learn about Thorium….we have tons of it…
http://energyfromthorium.com/
http://www.zillow.com/indianapolis-metro-in_r394705/home-values/
rent to own ratio 135 = normalville
I thought it was 100?
Only at higher interest rates. Really, we should be indexing rents and incomes against PITI, not prices. What really matters is the howmuchamonth.
And before you tell me that I’m a donkey who only cares about the howmuchamonth, please note that the first thing renters look at is the howmuchamonth. And the first thing that people want to know about a job is howmuchamonth they’re gonna get paid. Everything is about the howmuchamonth, not just housing.
And howmuchamonth renting is half the cost of howmuchamonth donkeying.
What is your point?
Nope.
100x monthly rent.
Lengthy article about the poors in sprawlburbia Atlanta
http://www.politico.com/magazine/story/2014/05/sprawled-out-in-atlanta-106500_full.html?print
This is what the Lucky Ducky future looks like
And a similar lengthy article about the poors in Inland Empire
http://www.nytimes.com/2014/05/10/us/hardship-makes-a-new-home-in-the-suburbs.html?hp&_r=0
Sounds like The Grapes of Wrath are growing in the IE Empire.
IE-Landlord, would you care to comment? Are the poors driving your investment property prices skyward?
That’s “IE LANDLORD KING” to you, peasant renter
I hope the Inland Emperor is not upset if I point out that he is walking around naked.
MoVal is full of illegals.
Lengthy article about the poors in sprawlburbia Atlanta
I didn’t know Julia Roberts was a Georgia Peach.
I look at it as the bitter fruits of the push to turn all American households into members of the Ownership Society. So many people goaded by the Real Estate Industrial Complex into using loans in amounts they could never hope to repay in order to buy homes they couldn’t afford served to bankrupt a large swath of the middle class into poverty.
Next.
Haven’t seen Eddie around here lately…
He’s busy waiting in line at Applebee’s.
Eddie, Eddie, Eddie…(shaking my head…)
HA! You read my mind while this was pending to post.
“…and its population keeps rising (it’s now almost 6 million, equivalent to the population of Missouri)”
That’s amazing. Also double the rough 3 million population in San Diego County.
Sounds like hell on earth.
The writer is missing a beautiful symbiosis here: Gridlock is great for oil companies, since untold gallons of gasoline wasted by motorists sitting in traffic translates into higher gasoline demand and pump prices. And the high personal and financial costs to people locating farther out from the city center steepens the rent gradient, thereby increasing the returns to real estate investors who own properties along the path through more desirable locations closer to the center.
So in short, it’s all good!
interesting quote from the Politico article:
metro Atlanta is huge (8,300 square-miles, about the size of Massachusetts)
the horror, the horror
Nothing like an 8,300 hundred square mile sprawling slum…
another quote about Atlanta:
Porsche North America, for one, is building a swank new headquarters
This calls to mind Toyota moving its offices from California to Texas. So any city or state that wants to attract jobs from big foreign companies needs to be sprawly and keep a large portion of its population in poverty.
¨needs to be sprawly¨
It kind of makes sense for a car company. They don’t want their employees taking the subway to work.
“poors in sprawlburbia Atlanta”
That one guy be killin it.
Do you know any first-time landlords? I can think of at least three such households among my immediate family members, but perhaps my family is “different”?
More homeowners are becoming first-time landlords
Katie Falkenberg, Los Angeles Times
Scott Riddle, left, helps his friend Angela Smith paint her El Sereno home. Smith is moving out of town but decided to rent her home out rather than sell it.
April 27, 2014 12:15 am • Tim Logan Los Angeles Times
The real estate market has long worked on a simple system: If you want to buy a new house, sell the old one and use the equity for a down payment.
But the past few years of low ownership costs and rising rents have some move-up buyers trying a new approach: Buy the new house. Keep the old one. And rent it out.
Real estate firm Redfin recently asked 1,900 prospective home buyers nationwide what they planned to do with their old house when they bought a new one. As you’d expect, the majority said they would sell. But 39 percent said they’d rent it out. In Western markets that have seen big price growth lately, like Los Angeles, the percentage was even higher.
“We certainly didn’t expect that,” said Ellen Haberle, Redfin’s real estate economist and the survey’s author.
It’s the first time that Redfin has conducted this kind of study. But real estate agents and property managers say they’re seeing the same thing: a noticeable uptick in the number of home buyers who want to rent out their old place.
“We’ve had more calls in the last two months with situations like this than we’ve had in two years,” said Trevor Henson, managing partner at First Light Property Management in Manhattan Beach, Calif. “It is definitely on the upswing.”
If this trend holds, it could mean even fewer homes for sale in an already tight market. But for a certain type of homeowner, becoming a landlord could make a lot of sense.
Rents are up in parts of the country. Buyers who bought at the bottom of the market in 2009 got a bargain. Then came years of opportunity to refinance into record-low interest rates. That means many owners can rent out their home for more than it costs them each month, even with taxes and other ownership costs figured in.
With the tenant covering the note, they can build equity — especially if home prices continue to rise.
“It’s a market-based decision,” Henson said. “They know they can get really high rents right now. If I’m locked in on a 30-year fixed (mortgage) at 4 percent, and if home values are going up, it can make a lot of sense.”
It did for Brian Darcy. The 36-year-old and his wife recently moved to North Carolina to be closer to her family. Instead of listing their three-bedroom in Manhattan Beach for sale, they signed with First Light and put it up for rent. Within a week they had a tenant and a lease that paid more than enough to cover the mortgage, Darcy said.
“The confluence of events kind of blew my mind,” he said.
…
Take a look at this:
“We’ve had more calls in the last two months with situations like this than we’ve had in two years,” said Trevor Henson, managing partner at First Light Property Management in Manhattan Beach, Calif. “It is definitely on the upswing.”
“It is definitely on the upswing.”
And it is “definitely on the upswing” because …
“Buyers who bought at the bottom of the market in 2009 got a bargain. Then came years of opportunity to refinance into record-low interest rates. That means many owners can rent out their home for more than it costs them each month, even with taxes and other ownership costs figured in.”
That was then, this is now. The conditions that may have made sense in 2009 are no longer there. However what is there is a nifty line on a chart somewhere that slopes up - it slopes up due to what happened between the lows of 2009 and the highs of today. And this nifty up-sloping line makes for a good selling point for someone who has an interest in keeping the upslope going.
Think Blackstone and those guys. Think of what they were once doing (such as buying up lots of houses) and then think of how they have slowed on doing what they were once doing.
Think strong hands selling to weak hands.
In the world of price equals value the way to market a product is to increase its price.
In such a world buyers who balk at buying at low prices will jump in when prices have risen because the thinking is:
If the price went up then the values also went up. And if the values went up from yesterday into today then the values are sure to continue to go up from today well into tomorrow.
This price equals value phenom works well when value is difficult to determine but doesn’t work at all when buyers have a sense of just what a “right price ” looks like.
Raise the price of tomatoes and you will sell less tomatoes BECAUSE tomato buyers carry with them a sense of just what the right price for a tomato is, and if the asking price is substantially higher than this right price then they will not buy your tomatoes.
But as for items that are difficult to value, such as houses and stocks, the “right price” gets disconnected from value because there are a lot of buyers who do not understand how to determine value so they end up relying on price to determine the value. And markets driven by price equals value buyers get out of whack because there are a lot of these types of buyers about and somehow these buyers are able to come up with the money needed to do the buying.
Buffett said something about combining ignorance with borrowed money will produce some interesting results.
Since there seems to be no shortage of ignorance the only restriction placed on price rises in a price-equals-value market is the availability of money, and if this available money is borrowed money then whomever it is that controls the flow of this borrowed money ends up controlling the market.
And, so, here we are.
“… and if this available money is borrowed money then whomever it is that controls the flow of this borrowed money ends up controlling the market.”
And since Janet Yellen seems to be in control of the flow of borrowed money and her main concern seems to be the status of the price of housing I suppose it is reasonable to expect a lot of borrowed money to be continuously channeled into housing.
And I suppose it is reasonable from her point of view to do this, to support housing, because housing construction will support a lot of jobs that cannot be exported (because all real estate construction is local) and also housing construction will create a lot of empty closet space and other types of empty space that will need to be filled up with stuff.
And the way to get stuff is to buy it, and if you don’t have money to buy stuff then you will need to borrow it, and if you need to borrow it then you will need some sort of collateral to put up - such as maybe your house.
Keep up the price of your house and you automatically keep up its value, and this value that is kept up is something that you can borrow against, and borrowing - and spending what is borrowed - is the magic that keeps our magical consumption-based economy rolling along.
See? It’s all good.
IN DEPTH
FIRST-TIME LANDLORDS
Instead of selling their homes, some move-up buyers renting them out
By HANG NGUYEN • Special to the U-T
12:15 a.m. May 9, 2014 Updated4:19 p.m.
Jill Robertson and her husband Ben in 2012. Jill Robertson and her husband Ben in 2012. — Ashley O’Brien photographer
It seems many homeowners are experimenting with a new job title: landlord.
Indeed, folks looking to buy their next home often intend to sell their current house. But a recent Redfin poll showed that some homeowners plan to rent out their last home when they purchase that next property. This decision partly explains why the supply shortage has largely helped home prices in San Diego County rebound nicely.
Redfin, a national real-estate brokerage, in February polled buyers who were actively working with one of its agents or searching its website. Of the nearly 800 consumers nationwide who answered a question on renting vs. selling, 39 percent said they plan to buy another home and then rent out their last house instead of selling it, according to Redfin.
For the San Diego metropolitan area, that figure was 31 percent. In other parts of Southern California, that percentage was higher. In Orange County and the Los Angeles metropolitan area, it was 41 percent and 62 percent, respectively.
“This was the first time we asked a question about renting versus selling, but the data provided us fantastic insight into one reason why inventory remains so limited,” said Redfin economist Ellen Haberle.
Low mortgage, high rent
Why would someone want to rent out their last home after buying another? Haberle offered two reasons.
“Many homeowners refinanced over the past few years because mortgage rates have been at historical lows,” she said. “So their monthly mortgage payment is very low.”
Second, the rental market is strong, allowing landlords, especially those who refinanced, to charge rent that’s higher than their monthly mortgage, Haberle added.
According to Zillow, the median rent for apartments, condos, co-ops and single-family homes in the San Diego metropolitan area rose an average of 2.2 percent year-over-year from January 2012 through December 2013. For March, the local median rent increased 4.4 percent year-over-year to $2,214.
Rents are increasing across Southern California, too. For Los Angeles County, the median rent gained an average of 2.1 percent year-over-year from January 2012 through December 2013. For Orange County, rents jumped 7.1 percent in the same time. Nationally, rents climbed 3.3 percent for the same period.
Jordan Clarke, a Redfin real-estate agent in the north coastal area of San Diego County, said his clients aren’t refinancing their homes to pull out equity to pay for another property. Instead, they’re turning to 401(k)s, checking accounts and stocks to fund the purchase of their next home.
Broker Jason Kardos said he’s seeing clients rent out their home for a short period with the goal of selling it.
“I have personally had clients move out of town and rent out their home for at least a year and now that prices have risen, they have sold because they do not want to be an out-of-town landlord once the tenant lease is up,” he said.
…
With so many too-clever-by-half homeowners concurrently venturing into landlordship for the first time, I can’t help but wonder how the trend will come back to collectively bite them. When too many savvy people employ the same smart strategy at the same time, it often doesn’t turn out well for all of them.
A modest correction:
When too many
savvynot-so-savvy people employ the samesmartdumb strategy at the same time, it often doesn’t turn out well for all of them.“When you combine ignorance and borrowed money, the consequences can get interesting.” - Warren Buffett
Sorry — once again I forgot to include those sarcasm tags.
Do you have a vision of the fate that lies in store for the rapidly growing pool of accidental landlords?
Yes, but I’m trying to keep it G-rated.
goonsquad posted two articles below. That is basically the upshot.
Let’s just say tomorrow morning you asked to become an EMT - something I have absolutely no experience or qualification for. I think “interesting” things might happen to the casualties.
Why is landlording any different? It’s a job and requires experience, skill and aptitude.
If you haven’t done it before, you shouldn’t expect to magically become good at it.
“If you haven’t done it before, you shouldn’t expect to magically become good at it.”
That’s true.
I keep meaning to ask my biologist friend whose wife goaded him into buying an investment condo how he is enjoying his weekends these days, now that he is a landlord, but I can’t bring myself to raise the subject. The last time I mentioned it, he shot me a look that clearly said, ‘Don’t go there.’
Maybe a better place to gather anecdotal information would be my immediate family members. I have two first cousins out here on the west coast who recently became accidental landlords when they were ready to sell their homes but couldn’t get the price they wanted. When I saw them at a family funeral three months back, both indicated they planned to sell this spring. If they did, the news didn’t make it through the family grapevine yet.
And then there is my little sister, who rents out one of the three houses in their family real estate portfolio to a single mom who makes ends meet through Section 8 fraud and drug dealing. Last I heard, there attempt to work out a “lease to own” deal with this woman fell through. But the good news is that even though she is unemployed on paper, she faithfully makes the monthly. I can’t recall whether she pays cash…have to check on that detail next time I get on the phone with Lil’ Sis.
“their attempt”…
The last time I mentioned it, he shot me a look that clearly said, ‘Don’t go there.’
Was his wife within earshot?
It should be interesting. If they sell within the occupy two of the last five year period their winnings are tax free. But that would be complicated if they took tax depreciation on the now rental when selling the property. If they lease longer than the three year window and rents dive and maintenance costs excellerate it will indeed be fun to watch!
First ,a economy is fake and prices are fake and not sustainable if prices don’t tract with wages/income and credit expansion does not solve what is really price fixing . So, consumers have their ability to influence pricing by wages taken away and its replaced by this false system of price fixing based on credit expansion and consumers paying for future value not present value .
It’s really clear that all the major consumer markets sellers ( Corporate Monopolies ) are making up prices based on how much profit they want to make ,rather than what profit is possible given wages and income . Therefore, you see prices exceeding all prior levels just based on what the sellers want to make . To this end the sellers of needed products ,such as medical care ,food ,housing ,etc .is based on price fixing ,that exceeds wages ,which forces a false credit expansion to pay for the faulty inflated prices . Consumer has no power to influence prices by wages in limiting how much price inflation can take place . The price fixers want 100 % more than you make or can afford ,and if you have to borrow to even survive ,so be it .
“The price fixers want 100 % more than you make or can afford ,and if you have to borrow to even survive ,so be it.”
Yes!
The Age of the Slave yields to The Age of the Indentured.
I call this progress.
Also today’s indentured servitude is voluntary, compared to yesteryear’s mandatory slavery, although the end result is the same.
“Also today’s indentured servitude is voluntary, compared to yesteryear’s mandatory slavery, although the end result is the same.”
The brutality of coercion yields to the gentle art of persuasion.
The brutality of coercion yields to the gentle art of persuasion.
Some rob you with a six-gun, and some with a fountain pen.
Trey Howdy video clips. Hillary’s worst enemy?
http://www.breitbart.com/Big-Government/2014/05/09/Supercut-Video-Trey-Gowdy-Fights-for-the-Truth-in-Benghazi-Investigation
What if there really is no Benghazi Invasion cover-up, and it turns out the Republican political apparatus is just making up a story in a lame attempt to block Hillary Clinton from taking her rightful place as the next President?
Then I guess the spread of authoritarianism can continue unabated. Everything breaks in favor of the fascists, just be patient…we are probably just days away from a shocking Trey Gowdy airport bathroom scandal.
Are you suggesting the “gay Republican Senator in the airport bathroom” story is false and the Senator lied when he pleaded guilty to it?
Why would a gay Republican Senator do such a thing?
And wouldn’t Trey Gowdy have to engage in similar conduct in order for “the fascists” to successfully blow the cover on such a scandal?
I apologize for my ignorance of how these political hatchet jobs work. Please explain if you understand better than I do.
Sounds to me like it was the police officer’s testimony versus Craig’s, and Craig changed his story 180 degrees after the trial. Whom would you trust: A career politician, or a Minneapolis-St. Paul police officer with everything to lose if his story about a U.S. Senator turned out to be a lie?
updated 9:24 p.m. EDT, Mon August 27, 2007
Senator pleaded guilty, reportedly after bathroom stall incident
(CNN) — A Republican senator pleaded guilty earlier this month to a misdemeanor disorderly conduct charge stemming from his arrest at the Minneapolis-St. Paul International Airport, according to state criminal records.
Roll Call newspaper reported Monday that Sen. Larry Craig of Idaho was apprehended June 11 by a plainclothes police officer investigating complaints of lewd behavior in an airport men’s room.
Roll Call reports on the U.S. legislature.
Craig denied any inappropriate conduct in a prepared statement, and said he now regrets his guilty plea.
“At the time of this incident, I complained to the police that they were misconstruing my actions. I was not involved in any inappropriate conduct,” he said. “I should have had the advice of counsel in resolving this matter. In hindsight, I should not have pled guilty. I was trying to handle this matter myself quickly and expeditiously.”
Congress is currently in recess, and Craig’s office said he was on vacation in Idaho with his family, with no public appearances scheduled.
Craig, 62, paid a $500 fine when he entered his guilty plea on August 8 in Hennepin County Municipal Court in Bloomington, Minnesota, according to state criminal records.
CNN confirmed that Craig was sentenced to 10 days in jail but that sentence was stayed.
Minnesota law defines disorderly conduct as brawling, disturbing a meeting or engaging in “offensive, obscene, abusive, boisterous or noisy conduct.”
According to Roll Call, the arresting officer alleged that Craig lingered outside a rest room stall where the officer was sitting, then entered the stall next door and blocked the door with his luggage.
According to the arrest report cited by Roll Call, Craig tapped his right foot, which the officer said he recognized “as a signal used by persons wishing to engage in lewd conduct.”
The report alleges Craig then touched the officer’s foot with his foot and the senator “proceeded to swipe his hand under the stall divider several times,” according to Roll Call.
At that point, the officer said he put his police identification down by the floor so Craig could see it and informed the senator that he was under arrest, before any sexual contact took place.
…
Perhaps a bad example, but you know you get my point.
No Benghazi cover up? Possible but not likely. I hear that there’s a lot of evidence that has yet to be “made public”. Professor, isn’t it possible that your favored sources in information would rather protest Hillary and the Prez?
Where was the Prez the night of this attack?
Where was Hillary?
Who told the special forces to stand down?
Why was the security being farmed out to the Libyan security company/
Why was that company let go on Aug 31?
History is not going to be kind to this Administration.
Maybe it has something to do with this article.
U.S.-Approved Arms for Libya Rebels Fell Into Jihadis’ Hands
By JAMES RISEN, MARK MAZZETTI and MICHAEL S. SCHMIDT
Published: December 5, 2012 297 Comments
WASHINGTON — The Obama administration secretly gave its blessing to arms shipments to Libyan rebels from Qatar last year, but American officials later grew alarmed as evidence grew that Qatar was turning some of the weapons over to Islamic militants, according to United States officials and foreign diplomats
I have no “favored sources of information.” I frankly found the first one that seemed useful for poking a hole in your post.
And for the record, I have nothing personal against Gay Republican Senators. I’m not quite a libertarian, but I have voted for them on occasion.
Prof, let me tell you, they’re covering better than Nixon ever wished he could. Time will tell.
When the secret stuff starts coming out the MSN is going to have to save their face for covering up this stuff.
The article above, ” U.S.-Approved Arms for Libya Rebels Fell Into Jihadis’ Hands” is a NY Times article from 2012.
Why one article and then nothing, crickets?
What if they framed a guilty man? How would you know to do this, hmmmm?
“Why one article and then nothing, crickets?”
1. The Benghazi issue doesn’t interest me.
2. I’m also disinterested in presidential politics.
3. My only interest in politics in general is to poke fun at screaming tree monkeys.
4. This is a housing and economics blog, not a political attack blog.
“…screaming tree monkeys…”
Also the shrieking varieties…
Whac,
That right there is a typical lib response. Can’t win the discussion with reason? Then attack and call the other names.
Have a nice weekend.
“That right there is a typical lib response.”
Anyone who points out that you are spewing political propaganda like a fire hose is a liberal, huh?
Got it.
Nobody cares but the shrieking tree monkeys.
Sorry about poking a stick in the poor monkey’s eye…my hand slipped.
I’m happy to say that my efforts which began three months ago to get my eighty-something parents to fire their financial adviser, who had them very long in a stock-heavy portfolio that would have made a hedge fund manager blush which subtracted a 1% advisement fee against the gross returns, have finally paid off. They fired the guy, sold off all the stock funds, and parked the proceeds into one of the Vanguard retirement income funds which provides a low-fee (0.17%) balanced portfolio with suitable risk profile for eighty-somethings.
This was no mean feat, as dad is a lot slower than he was a few decades ago, and mom finds discussion of financial matters insufferably boring.
Until hearing this news, I was hoping, praying and cheerleading that Mr Market would not go into crash mode before Mom and Dad made this portfolio adjustment. Now I don’t care what happens, though I do note that the market action early this year, with the stock market continuing to hit new records on a frequent basis against the backdrop of ever more frequent crash predictions, feels a heckuva lot like Spring 2008.
May 9, 2014, 10:58 a.m. EDT
The stock market is ripe to fall
By L.A. Little
For two months, the stronger indexes have been trying to break higher, while the weaker ones have been building the case to break lower. Thursday they did both — on the same day. It has become just that bifurcated. Throughout this period, there were range trades that could be made trading long the strong and short the weak. All the while, the wolves were gathering for the kill. Now it is time for the endgame.
No, this is not the big one. It’s not a 2008-style crash. It’s probably more like the May 2010 or May 2012 cascades lower, and those types of setups you typically want to at least avoid, if not profit from.
It’s been so long that most have forgotten what the setup even looks like, since the last time it occurred was way back in November of 2012. Like then, the probabilities are high that it will unfold and do so fast. The setup at hand is multiple clustered swing points on multiple timeframes across multiple indexes. They started to crack Thursday, with the Russell 2000 on the daily time frame.
If we close at these levels or lower today, then the break will span multiple timeframes, and the Russell will be the first of the majors to transition to something other than a bullish trend. Whether it happens tomorrow or next week, in my estimation, there is enough evidence to suggest it is coming.
The reason this isn’t 2008 is because you don’t have symmetry in the setup which, if you move beyond the technical picture, is also true fundamentally. There you don’t have the setup either. From a technical perspective, only the Russell 2000 and the Nasdaq have faster selloff setups, and when you have that kind of divergence, the massive move down is not a high-probability candidate. What is much more likely is a two-staged breakdown from here based on the daily and weekly timeframes.
…
A warning sign? Market divergence worries traders
Patti Domm | @pattidomm
Thursday, 8 May 2014 | 9:59 AM ET
Beware the market’s warning signs: Domm
Wednesday, 7 May 2014 | 5:30 PM ET
CNBC’s Patti Domm discusses the warning signs from within the stock market and why traders should be cautious.
The volatile selling in Nasdaq and small cap names is making some traders nervous, and technicians say it’s a time for caution while the once sizzling names continue to burn.
The divergence between those once hot names and big caps and blue chips was dramatic Wednesday, when the Nasdaq fell like a rock but recovered toward the close to finish down just 13 points, or 0.3 percent at 4,067. But at the same time, the Dow, up 117 points, and the S&P 500 had their best day on a percentage basis in three weeks.
…
Stocks, Housing and Bond Market Castles in the Air
Stock-Markets / Liquidity Bubble May 07, 2014 - 09:42 AM GMT
By: Fred_Sheehan
The word “bubble” is suffering from overuse. Still, with money for nothing inflating markets around the world, we are seeing how prices inflate to enormous proportions where the prospect of pushing those prices even higher draws a crowd. When such artificial stimulants to bond, mortgage and tea-cup enthusiasm reaches a peak, the switch from green to red is often quick.
A reminder comes by way of “Run, Run, Run, Was the Financial Crisis Panic over Institution Runs Justified?” by Vern McKinley. Published on April 10, 2014, by the Cato Institute, McKinley writes: “Countrywide’s [a premier sub-prime lender when the going was good - FJS] second-quarter 2007 financial results indicated no significant weaknesses and the major rating agencies assigned it strong ratings with a stable outlook. [Although, a MarketWatch headline on July 24, 2007: "U.S. Stocks Close Sharply Off on Credit Woes, Dow Slides 226 points; Countrywide Says Risks Extend Beyond Subprime." This is a reminder that "the market" quickly forgets what it does not want to know, as we see on May 1, 2014. - FJS]
“This calm changed dramatically on August 2, 2007, as Countrywide was unable to roll over its commercial paper or borrow in the repo market…. On August 14, Countrywide released its July operational results, reporting that foreclosures and delinquencies were up and that loan production had fallen by 14% during the preceding month…. On August 15… a Merrill Lynch analyst switched Countrywide from a “buy” to a “sell” rating…. [T]hat led to a Los Angeles Times article that [Angelo] Mozilo [CEO of Countrywide] blamed for causing the run that ensued…. One customer pulled $500,000 from a Countrywide Bank branch… ‘It’s because of the fear of bankruptcy…. I don’t care if it’s FDIC-insured - I want out.’”
Countrywide follows a pattern seen dozens of times over the past twenty years. The quality of loans had fallen off a cliff but the economists, the brokerage houses, and - of course - the Federal Reserve - were in the dark. The stock market played the schizophrenic, “Oh, No!” and “Good thing that’s Over!” game. It peaked in October 2007. The catalyst for collapse was “loan production had fallen by 14%.” Even the carpe diem frat boys on TV know the deteriorating quality of loans will not cause a ruckus as long as the percentage of missed payments and defaults does not rise. But, once Countrywide & friends could no longer feed the fast, rising rate of new loan production, the façade was near its end. The combination of more defaults and lower production is soon impossible to hide.
The FOMC (Federal Open Market Committee, where monetary policy is set) had talked about houses at its meeting on March 27-28, 2006. Federal Reserve Chairman Ben S. Bernanke reminded the anointed: “residential housing is, of course, only about 6 percent of GDP.” We can read, actually see, inside the professor’s mind, since it is so simple: He is looking at a pie chart of the GDP, with slices of red, magenta, honeydew, and fern. The residential housing slice is a thin one, and, as his sort is programmed to regurgitate, isolated from the others. Any ambitious student at Princeton or the FOMC knows “6%” is the “A” response. Lights out.
At the December 2006 meeting, reclining even deeper into his barcalounger, the most prominent cheerleader for the Great Moderation was tranquil. He tossed manufacturing sectors, including furniture and appliances into his splendid-isolation view, since “this is about 15 percent of the economy compared with 85 percent of the economy.” The 85 percent was another world.
Bernanke went on in this vein through 2007, not taking the time to bone up on inevitable cross currents that accelerate when recognition and margin calls lead the man at the bank to declare “I want out.”
A sample of the commotion after Countrywide’s August 15, 2007, hiccup follows; showing how quickly an accumulation of accepted beliefs vanish in a credit collapse:
Aug. 15, 2007 (Bloomberg) POOLE SAYS “REAL ECONOMY”UNHURT BY SUBPRIME COLLAPSE
…
If it inflates like a bubble, glistens like a bubble, and pops like a bubble, IT’S A BUBBLE.
Does anyone have an accurate count of how many 500 year financial floods played out over the past two decades?
Now that is a good story. Glad your 80-something parents shifted out of high risk stocks. Although they should have some part of their portfolio in dividend stock funds. Maybe up to 30%.
“Although they should have some part of their portfolio in dividend stock funds. Maybe up to 30%.”
They have.
As you may know, the essence of the Vanguard Target Retirement Funds is to combine diversification for an age-appropriate balance of risk and return, access to thousands of U.S. and international stocks and bonds, automatic rebalancing, and low costs. It’s a good thing the masses don’t catch on to this strategy, as it would drive down returns relative to a world in which many greater fools chase the next dot com bubble mania instead of investing for long term growth and financial stability.
“Vanguard Target Retirement Funds average expense ratio: 0.17%.”
This is a good reason for guys like me to hate Vanguard.
Interesting to see that my current asset allocation is very close to the Vanguard Target Retirement 2020 Fund, although I would not want to retire for another 12 years at least. So my investment style is not really aggressive after all.
I cannot post this on Mother’s Day, so I’m gonna post it now.
When I was a kid my friend Mike and his older brother invited me along when they were going to get some Mother’s Day flowers on the Saturday before Mother’s Day (like today). His older brother was like a junior in high school and could drive. Their dad had given them some money to buy the flowers. I jumped in the car and the brother immediately drove us to the local cemetery where Mike and his brother got out and each stole a bouquet of flowers off some poor dead old lady’s grave. That way they could keep the money.
Two points. 1. People like this live among you. 2. Buy your mom some flowers.
“I jumped in the car and the brother immediately drove us to the local cemetery where Mike and his brother got out and each stole a bouquet of flowers off some poor dead old lady’s grave.”
I like it. Makes me think that maybe I should open up a flower shop.
Hmmmmm … if the owners of a cemetery were also the owners of a flower shop … think of the possibilities.
And then there’s this …
http://www.washingtonian.com/articles/people/the-things-they-leave-behind-artifacts-from-the-vietnam-veterans-memorial/
Made in China.
Awesome. In the Midwest there’s a mall store called The Old Farmstead, or something similar. They sell all kinds of rural nostalgia items like quilts or dishes or candles notepads emblazoned with Murkin’ flags or red barns or tractors or folk-art cows or rustic wood motifs.
I turned over these rustic items… Made in China. None of the customers seemed to understand that buying nostalgic tokens of an idealistic agricultural period was supporting the exact opposite of idealistic agriculture.
Hi Whac-A-Bubble , ( Professor Bear ) . I split yesterday and didn’t see your post from yesterday until today . How are you doing my friend ? Wow ,what has happened in the last 9 years has been shocking ,to say the least.What happened following the Great Housing Boom of 2000-2007 is stranger than fiction ,just unbelievable . As we use to speculate for years ,it’s a set up for a greater fall when you build your house on fraud/sand .
Anyway ,glad to see your still around and vocal .
“How are you doing my friend ?”
Still wasting my life tilting against windmills, propagandists, liars and political shills. But otherwise just fine.
Good to see you posting again.
The S&P 500 is up 50% and the average Long&Short hedge fund is down 6% over the same time period.
http://www.zerohedge.com/news/2014-05-09/death-hedge-funds
So, why is that?
A possible answer:
Since hedge funds subtract a two-and-twenty from the pile of OPM they get to exploit, er, handle, and this six-percent loss is the average of the gains and loss of lots of hedge funds then this six-percent loss makes sense because the hedge funds get to enjoy a twenty percent share in any gains but do not have to endure any suffering if there is a loss. And even if there is a loss they still get to reap two-percent taken from the pile of OPM that they handle.
The hedge funds need to earn a large return just to pay for their fees, which implies that to do so in this low-return environment means they have to take a lot of risks, and if they take a lot of risks then they will end up with a lot of losses. But not all of the time, maybe only now and then. But when they do have losses then the owners of the OPM will have to eat them - all of them. But when they have gains then the owners of the OPM have to share twenty-percent of the gains with the hedge fund managers. Hence the hedge fund managers have an incentive to take a lot of risks; not prudent risks, just risks.
These hedge fund guys have a nice thing going for themselves, no?
“The S&P 500 is up 50% and the average Long&Short hedge fund is down 6% over the same time period.”
Nobody put a gun to the heads of people with buckets of money and boxes of stupid to make them invest in soon-to-be-trimmed hedge funds.
P.S. How to make a small fortune:
Invest a large fortune with a hedge fund manager that charges a ginormous management fee off the top.
“Invest a large fortune with a hedge fund manager that charges a ginormous management fee off the top.”
Plus, as it is in much of today’s financial world, they get to in effect capitalize the gains and socialize the losses.
Right. In particular, a hedge fund that achieves too-big-to-fail size, such as Long Term Capital Management did in the late 1990s, can be assured of a Fed-sponsored bailout in case their untoward gambling activities end in financial collapse, as a failure to bail out such firms could endanger the entire global financial economy. Many such firms also qualified for low-interest discount window loans in the wake of the Fall 2008 financial meltdown, allowing them to restart their casino gambling operations at the expense of everyone else who didn’t qualify for the cut rate financing.
And despite this fact there are people who still claim that we do not live in a perfect world.
This business model is only sustainable to the point when they run out of customers with buckets of money and boxes of stupid.
There is no shortage of boxes of stupid (because there seems to be boxcars of stupid) so the only limiting factor is the actions of the people who provide the buckets of money, and this would be the Federal Reserve Bank …
… and this fact once again brings us back to boxes of stupid.
http://maine.craigslist.org/lab/4463762562.html
Seems legit.
Does the $12/hour include gas cost? It seems like you could easily burn through $12/hour in fuel while offering cab service, if you didn’t get raped and killed in the process, that is.
“Seems legit” is an internet meme that is meant ironically.
McCain: Americans Should “Accept” That Their Private Conversations Are Being Monitored
“It’s just the way we live”
Paul Joseph Watson
Infowars.com
May 9, 2014
Senator John McCain told a radio show recently that Americans should “accept” the notion that their private conversations are being recorded by the government, even in the privacy of their own homes.
McCain was asked by host Dan Patrick what his thoughts were on the Donald Sterling controversy, in particular the concept of private conversations being recorded and then released publicly. Sterling’s controversial remarks became public after his girlfriend V. Stiviano taped hundreds of hours of private discussions between the two.
“What about taping somebody in his own home, using that…..” asked Patrick.
“It’s the world we’re living in, you don’t like it, but everything I say I expect to be recorded,” McCain responded.“It’s just the way we live, Dan. It’s something you’ve got to accept. I don’t particularly like it, but it is what it is,” added the Senator, making reference to a recent poll which revealed that 53% of Americans believed their telephone conversations were being listened to.
McCain went on to remark that young people were naive about government surveillance of private communications because the country had forgotten the lessons of 9/11.
“We’re all grown people and we have to realize we live in the 21st century,” added McCain.
Though McCain denied that the NSA was listening to every telephone conversation in America, as former NSA employee turned whistleblower William Binney has emphasized on multiple occasions, the space required to store mere metadata and not actual content of conversations is minimal.
The reason the NSA is building huge data centers which cover 1.5 million square feet, like the facility in Bluffdale, Utah, is because the agency is storing actual content of phone calls, online chats and conversations.
Indeed, according to Binney, the NSA is analyzing conversations in real time and has a Google-style search capability for all our communications.
If Americans were aware of the level to which their supposedly private conversations were being monitored, they may be a lot less willing to “accept” such an intrusion, despite McCain’s attempt to couch the debate in the fatalistic notion that mass government surveillance is an inescapable inevitability.
The longer this “progressive” administration goes on, the more people drop out from supporting him.
One of my cousins (I never met in person), in San Diego, undoubtedly did not support Obama from day 1 but his posts on Facebook are anti-O, several posts a day.
A S.O. of mine back in 2007 was thinking about supporting Ralph Nader (definitely a “progressive,”) but she became very anti-socialist and anti-Obama starting in 2008).
And my younger second cousin, in New Mexico, now made it known on FB he is with the NRA and the 2nd amendment. I was fearing that he was one of those hipster Albuquerque types, even though he attended West Point.
Obama’s popularity rating is quite low, and I figure there is a large set of people who voted for O in 2008 and totally regret it, and are part of the polls. Two and a half years to go and there is a lot of time for him to be the least popular POTUS in U.S. history.
Hipster ABQ types, like me Bill?
Ice T - New Jack Hustler:
https://www.youtube.com/watch?v=OBUxUa0TrsY
If you want to get away with alot of illegal shit, get elected to Congress
“If you want to get away with alot of illegal shit, get elected to Congress.”
Wrong: If you want to get away with a lot of illegal shit, get your lackey elected to Congress.
Set it up so that if things go wrong he’s the one who will take the fall.
Populations
Europe (2013): 740 million (includes Russia)
http://www.worldpopulationstatistics.com/europe-population-2013/
Australia/New Zealand: 36 million
North America 529 million
South America: 386 million
Asia: 4.14 billion, including India and China.
Total (and I excluded Africa and parts of the middle east):
5.83 billion
- population of USA: 313 million
The USA population is 5.83% out of the first and second world nations (developing nations - Africa still far to go).
How long can finance pundits in the USA be so arrogant that the world will suffer if the American economy takes a big dive?
“Silicon Valley”
http://www.latimes.com/business/la-fi-silicon-valley-reality-20140404-story.html#page=1
We watched this during our Friday lunch at our software company in Irvine yesterday.
The part I paid attention to was the startup founders who were very wealthy snobbishly calling themselves “progressive,” - as well as their yes men and yes women entourage.
This is part of the satire I know, but it probably is close to the truth. The software types in the trenches tend to call themselves social liberals and fiscal conservatives - and some of these same social liberal / fiscal conservative types haven’t yet discovered libertarianism and denounce libertarianism. I know. That is how I was in the 1970s. Then there are a lot who do know libertarianism and call themselves libertarians. There are very few socialist software engineers. The conservative ones tend to live in the small towns and earn small salaries.
The ones who become wealthy from startups become poseur progressives. Take Zuckerburg for example: What does he have to win by calling himself “progressive?” His wife’s adoration, for one. Most women are not libertarians and prefer security far more than freedom. The phony ones who are after something more than money - adoration and power, tend to call themselves “progressives.”
And at the bottom of the totem pole, the lower income people or middle income people who announce themselves as “progressive,” expect admiration, adoration, and recognition of being very intelligent and wordly.
This does not work for me. I see right through them. My former roommate would publicly (in front of people he wants to impress as “worldly”) would give food to a homeless person. In private he is a real cheapskate, having others drive their car in carpools to work and he would not pay. The same guy would bltch and moan about so much litigation in society and a lot of people pretending to be hurt and suing other people. A progressive is just as much a scammer.
Peak Staffing industry.
What’s going on in staffing?
My former staffing company’s quarterly report last month blasted it out of the ballpark. More than any quarter at least in the last 8 quarters. So what’s going on? Why isn’t this a $40 stock now after a quarter that topped the other record breaking quarters and topped the same quarter by tons a year ago? Well I looked at Manpower’s stock price over a year. Manpower is still doing well. Then I looked at Kelly Services. Oops. What happened to Kelly? AHS? Then CCRN? Look at their charts for the last year. My former company is at this point like Wiley Coyote as he is running in the air off a mesa and has not looked down yet. My average cost is under $5.15 and the stock price is above $35. The book value is above $12. But I still am selling some shares every few weeks. Had at one point 10,000 shares and now down to just under 4500
I notice I’m getting more cold calls lately from SW staffing places that got my numbers somehow and want to know if I ever hire contractors. I’m curious if that’s how they are increasing business? Or if it means things are turning and they are getting desperate?