Bits Bucket for November 23, 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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Region VIII
Vacancy is tight. Posted a house on CL Friday afternoon. Four immediate responses. Four more by Satuday afternoon. Six people coming by today.
I didn’t think it would lease until after the holidays. It seems there is a shortage of rental housing in the Sierra Foothills.
Your empire is crumbling.
Crumbling? How is cash flow “crumbling”? If you bought some properties in 2008, 9 & 10, you could rent them and have positive cash flow too.
The houses were sitting idle, bank owned or abandoned and no one wanted them. I bought them and provided good rental housing for people like you, who don’t want to buy. You should be thanking me for the service!
If you bought some properties in 2008, 9 & 10, you could rent them and have positive cash flow too.
Not true in my area, btw; Seattle housing prices went down only ~30% in the downturn, and they were bubblicious by more like 150% IMO—e.g. a factor of 2.5 overpriced.
And I’m not enough of a fool to want to be a long-distance landlord.
JFraud. 08? Really? Your fraud is showing.
Your empire is crumbling.
Positive cash-flow is positive cash-flow. If he can rent forever at a positive cash-flow, and in the end have the property for only the cost of his sweat-equity, he’ll do fine.
Now, if his plan had been to liquidate after prices recover, as many other investors were/are planning, then he likely wouldn’t come out fine.
It is but if you bought a house in the last 15 years, you’re not positive. And Jingle_Fraud. ….well… The name speaks for itself.
“Positive cash-flow is positive cash-flow. If he can rent forever at a positive cash-flow, and in the end have the property for only the cost of his sweat-equity, he’ll do fine.”
What if rents fell to levels that don’t cover costs. Is it a given that cash flow will always stay as positive as currently?
P.S. For a current reference on how high prices don’t always stay that way forever, I refer you all to the junk bonds used to finance the recent oil industry expansion. I realize California housing is different and special, etc.
Oil industry risks trillions of ’stranded assets’ on US-China climate deal
Petrobas’ hopes of becoming the world’s first trillion dollar company have deflated brutally
Petrobas stock has dropped 87pc from the peak Photo: AFP
By Ambrose Evans-Pritchard
9:52PM GMT 19 Nov 2014
Brazil’s Petrobras is the most indebted company in the world, a perfect barometer of the crisis enveloping the global oil and fossil nexus on multiple fronts at once.
PwC has refused to sign off on the books of this state-controlled behemoth, now under sweeping police probes for alleged graft, and rapidly crashing from hero to zero in the Brazilian press. The state oil company says funding from the capital markets has dried up, at least until auditors send a “comfort letter”.
The stock price has dropped 87pc from the peak. Hopes of becoming the world’s first trillion dollar company have deflated brutally. What it still has is the debt.
Moody’s has cut its credit rating to Baa1. This is still above junk but not by much. Debt has jumped by $25bn in less than a year to $170bn, reaching 5.3 times earnings (EBITDA). Roughly $52bn of this has been raised on the global bond markets over the last five years from the likes of Fidelity, Pimco, and BlackRock.
Part of the debt is a gamble on ultra-deepwater projects so far out into the Atlantic that helicopters supplying the rigs must be refuelled in flight. The wells drill seven thousand feet through layers of salt, blind to seismic imaging.
The Carbon Tracker Initiative says the break-even price for these fields is likely to be $120 a barrel. It is much the same story - for different reasons - in the Arctic ‘High North’, off-shore West Africa, and the Alberta tar sands. The major oil companies are committing $1.1 trillion to projects that require prices of at least $95 to make a profit.
The International Energy Agency (IEA) says fossil fuel companies have spent $7.6 trillion on exploration and production since 2005, yet output from conventional oil fields has nevertheless fallen. No big project has come on stream over the last three years with a break-even cost below $80 a barrel.
“The oil majors could not even generate free cash flow when oil prices were averaging $100 ,” said Mark Lewis from Kepler Cheuvreux. They have picked the low-hanging fruit. New fields are ever less hospitable. Upstream costs have tripled since 2000.
“They have been able to disguise this by drawing down legacy barrels, but they won’t be able to get away with this over the next five years. We think the break-even price for the whole industry is now over $100,” he said.
A study by the US Energy Department found that the world’s leading oil and gas companies were sinking into a debt-trap even before the latest crash in oil prices. They increased net debt by $106bn in the year to March - and sold off a net $73bn of assets - to cover surging production costs.
The annual shortfall between cash earnings and spending has widened from $18bn to $110bn over the last three years. Yet these companies are still paying normal dividends, raiding the family silver to save face.
This edifice of leverage - all too like the pre-Lehman subprime bubble - will surely be tested after the 30pc plunge in Brent crude prices to $78 since June.
…
What if rents fell to levels that don’t cover costs. Is it a given that cash flow will always stay as positive as currently?
Obviously not; if his positive cash-flow becomes negative cash-flow, then things could get interesting for him.
My take is that the odds of significant rent decreases are fairly low, though. In the midst of the 08/09 downturn, I negotiated a slight decrease in my rent, but it was very small—about $50/mo IIRC. Rents are fairly sticky, and demand for rentals seems to be propped up by the shift from owners to renters, as well as the withholding of inventory from the market.
Don’t forget that the Fed has stated very publicly that they are bound-and-determined to pump as hard as necessary to avoid significant price declines; I don’t see anything that would prevent them from cranking up further QE if it came to that.
“My take is that the odds of significant rent decreases are fairly low,…”
Do you assume the myriad investors who were planning a quick flip will hold on forever instead? Or that inventory will be withheld from the market forever? What if Republicans in power start acting like Republicans and try to restore market forces to housing?
Lots and lots of ’sure thing’ bets have been placed on the perceived certainty that the Fed will backstop the housing market going forward under all contingencies. The only problem with so many bets all going the same direction in response to the Fed’s tacit encouragement is that they collectively drive prices far out of line with underlying market fundamentals. Unless the Fed can and will keep the housing market misaligned with fundamentals forever, so many one-way, ’sure thing’ bets are quite likely to unravel at some future point. Be sure to unwind your positions before the race to the exits ensues.
“Brazil’s Petrobras is the most indebted company in the world…The stock price has dropped 87pc from the peak…Roughly $52bn of this has been raised on the global bond markets over the last five years from the likes of Fidelity, Pimco, and BlackRock.”
I love it when these pigs get slaughtered. Unfortunately, they are TBTF, so the taxpayer will likely be picking up the tab if things get too shaky for BlackRock, etc.
“Don’t forget that the Fed has stated very publicly that they are bound-and-determined to pump as hard as necessary to avoid significant price declines;”
Seems its not working out so well considering rental rates and housing prices resumed falling.
Remember….a ‘housing recovery’ is falling prices to dramatically lower and more affordable levels by definition.
Seems its not working out so well considering rental rates and housing prices resumed falling.
Can you point to any data on rental rates falling? If true, that is news to me.
Falling in NYC, falling in LA. Tune into the HBB more frequently.
Do you assume the myriad investors who were planning a quick flip will hold on forever instead?
No, I was assuming to the contrary that they would sell in a panic.
That assumption is likely flawed, though; your point is a good one, that some will sell, and some will remain landlords accidentally. I was ignoring the latter segment.
But for those who do sell, I think my point is still valid: they are moving some portion of the rental stock into non-rental stock, reducing the supply of rental stock.
My main point is that supply is supply, whether rental or for purchase. The end of supply manipulation through holding shadow inventory off market will bring with it downward pressure on both purchase prices and rents, as renting and owning a home are substitutes in consumption and households in the market for a residence can choose the cheaper of the two options, resulting in a high degree of inter-temporal correlation between incomes and rents.
“My main point is that supply is supply”
Precisely. And the liars either conveniently or slyly attempt to draw a distinction. Rentals, for sale, defaulted inventory are distinctions without a difference.
“Can you point to any data on rental rates falling?”
No. No he can’t. He can shout you down, though!
You need to pay more attention to the links on the HBB.
“…inter-temporal correlation between
incomespurchase prices and rents.”Fixed it…I was distracted earlier by a battle royale between two of my sons. (Incomes and rents are also correlated, but that is beside the point I wanted to make.)
My main point is that supply is supply, whether rental or for purchase.
Fair enough to consider it as a single joined market; my comments were from the perspective of analyzing them as two distinct markets, with investors removing supply from one market and adding supply to the other.
“…inter-temporal correlation between incomes purchase prices and rents.”
That correlation appears to me to be much weaker than I would have guessed it to be 9 years back.
lol @ Jingle_Fraud.
The Sacramento Business Journal. “Speakers at the North State Building Industry Association’s 2015 forecast event offered generally positive predictions — but also said the past year is a good lesson about being too positive. A resurgence of homebuying in 2013 led many in the industry to think 2014 would be better yet. Instead, said residential housing consultant Greg Paquin of The Gregory Group, new-home sales appears if they’ll be virtually flat compared to last year. ‘What’s really obvious at this point in time is supply is outstripping demand,’ Paquin said.”
The Press Enterprise. “For all the talk of housing shortages, watch for stealth companies that bought distressed property at rock-bottom prices to put their holdings back on the marketplace in 2015. One sign of heightened activity is at our doorstep. Mana Investments Inc., a Carlsbad firm that picked up more than 2,700 lots in various stages of development in California in the downturn, revealed plans recently to sell some of its land holdings.”
http://thehousingbubbleblog.com/?p=8708
One has to wonder how many times the bad actors running that outfit have been in jail, up on charges or will be in the next 36 months.
Care to allude Jingle_Fraud?
watch for stealth companies that bought distressed property at rock-bottom prices to put their holdings back on the marketplace in 2015 ??
Yep…And, its everywhere outside of the urban cores…And we are talking purchases at 10-20 cents on the dollar as compared to a fully developed lot today…To say that these lot holders are at a competitive advantage is a understatement….
There is no question the new home sales market has softened. That is exactly why the rental market is so tight. The properties I own have been 99.5% occupied for the last 6 years.
The current resident of the house listed above resided there almost 5-years. It is likely a new resident will commit today to move in as soon as he moves out….and this is late November, hardly a good time to rent a vacant house.
The tightness of the rental market surprised me. There are a couple of important factors: 1) good location, 2) good schools, 3) desirable size (1600 SF), and 4) reasonable rent ($1600/mon).
Ten years ago, the market rent for this house was $1200/mon. The market sales value was $350,000 (on the way to $400,000). The market sales value dropped to $200,000 by 2009. Today the market sales value is $325,000. It has been a curious market.
I am just happy to provide a good home for people to rent and be rewarded with a little cash flow, in exchange for great service as a landlord.
“There is no question the new home sales market has softened. That is exactly why the rental market is so tight.”
That statement makes absolutely no sense.
“There is no question the new home sales market has softened. That is exactly why the rental market is so tight…”
Aha. Rising prices makes rentals tight. Falling prices makes rentals tight. There is no way rentals can lose, especially when the price to acquire these rentals is 200 times the rent that can be collected. Living in the mania.
The cash flow isn’t worth the risk or trouble, even if you consider your time worthless. The whole scheme is ever rising prices. Good luck with that.
That statement makes absolutely no sense.
Doesn’t it? People looking to buying a house for the first time are most likely existing renters. For such a household, they simultaneously decrease demand for rental housing stock while increasing demand for new housing stock.
You better come up with some serious demand. There are 25 million excess empty houses out there and another 35 million just beginning to empty.
“People looking to buying a house for the first time are most likely existing renters.”
Virtually no first-time buyers in California can afford to buy ‘entry-level’ housing at current prices, so your point is irrelevant.
Narrowly focusing on the demand side of the market ignores the ginormous elephant on the supply side, due to all the investors who snapped up California housing with plans to make bucks on a quick flip. If these guys try to cash in en masse, there will be downward pressure on both rents and purchase prices.
If these guys try to cash in en masse, there will be downward pressure on both rents and purchase prices.
More of prices and less on rents, IMO; while they have houses listed for sale, they will want to have them empty for showing. Such a house is not in the pool of rental housing stock.
Inventory is inventory my friend. And there are tens of millions of them.
“More of prices and less on rents, IMO;…”
This reasoning is flawed, as it assumes the rental and owner-occupied housing markets are decoupled. The reality is that renting and owning are substitutes in consumption. A reduction in rents will induce more people to rent, reducing purchase demand and equilibrium purchase prices. This isn’t rocket science, so I am puzzled why so many otherwise-intelligent seeming posters here find this confusing.
Because it’s a mania. They always lead to puzzlement.
Funny thing is, I don’t buy into mania-type thinking one iota. Perhaps I should ask for a new pair of beer goggles as a Christmas gift?
No. Recognize it without living in it. Then step away from the mania. No beer glasses for you.
I’ve tried my best to steer entirely clear of the mania for a decade running, but I seem to keep getting caught in the crossfire.
The reality is that renting and owning are substitutes in consumption.
If they were such close substitutes, then the bubble would not have occurred in the first place; many more rational actors would have chosen to rent instead of join in the mania. The whole notion of “close substitutes” harkens to the economic theory of people be rational actors
Either they are not close substitutes, or people on average are insufficiently rational to notice and act upon that fact.
Prime — your point is taken. The REIC’s highly-successful efforts to brainwash the American public into thinking that home ownership was the path to riches definitely served to tip the boat to the point of capsizing.
However, fundamental considerations suggest ongoing reversion in the rent-own equilibrium going forward as the Housing Bubble continues to unravel.
However, fundamental considerations suggest ongoing reversion in the rent-own equilibrium going forward as the Housing Bubble continues to unravel.
I am all in favor of fundamentals finally asserting themselves! Bring it on!!
(and BTW, I personally do consider renting and buying to be “close substitutes”—which is why I’m happily renting…
Here is what i observe about houses in the Sacramento foothills: 1) sales prices rose 30% since 2011, 2) many people cannot or chose not to buy, 3) there are very few SFR rentals available compared to demand, 4) rents have increased much more slowly, sometimes not at all, since 2011.
Renting is more affordable, thus demand to rent has increased while demand to buy has decreased.
I appreciate your concern for my portfolio value and my rental cash flow. I took a big risk in 2008-10, but it is working oyt nicely. My overall LTV is sub 50% and rents would have to drop about 15-20% to go negative.
Again, my whole point of posting here is to share that buying my own home (and some rental houses) in the bubble bust was the best investment of my lifetime. Others on this blog have continually bashed housing (and me) and have missed a great opportunity. There will be more opportunities in the coming decades.
We believe that the bust is in front of us, not behind.
where are these 2700 lots? I bet they have been trashed by renters but that is my target area!
38 lots in my neighborhood just sold to a home builder for $186,000 each. I say he is now at a competitive disadvantage! But the seller did fine.
anne, do renters trash building lots? Are they sleeping there in their cars?
“What’s really obvious at this point in time is supply is outstripping demand,” Paquin said.
In a free market (not U.S.) falling demand means falling prices.
Here in Phx, I have definitely noticed that the rental market is tighter than the for-sale market. Houses for sale just sit and sit. Houses for rent get snapped up. Wonder why.
Why? It’s simple. Rents are half the cost of buying.
Not half in my town. With 20% down, it is usually close to even at PITI vs rent. Renter has no maintenance, but buyer has interest write off and principal paid off each mo.
“Why? It’s simple. Rents are half the cost of buying.”
This doesn’t square with your “falling rents” mantra. You can’t have it both ways, keyboard cowboy.
Sure it does kiddo. Falling housing prices, falling rental rates.
Riiiiiight. Because stronger demand for rentals vs. buying always favors falling rents. Yawn…
That would be great if there were actually strong demand. There isn’t hence rental rates continue to fall.
You could have stronger demand for rentals vs. buying plus falling prices in both markets. In fact, I submit the only reason we don’t see this currently is due to the massive supply manipulation and demand stimulus that has been used to prop up the market in the post-2009 period.
Whac, you should know rental supply in SD is tight. Demand is high. It is the same in Sacramento. The population has continued to grow by 250,000 household each year. We are building fewer than 100,000 units each year since 2008.
6 years at a shortfall of 150,000 units/year and pretty soon you soak up all the over supply and continued demand growth creates a shortage.
Conditions change. Don’t get stuck in 2007 and don’t miss the opportunities of 2010.
With 4.4 million excess empty and defaulted houses and demand at 20 year lows and prices falling again, there are many opportunities on the horizon.
What’s the urgency at this point?
In part because prices are beginning the fall after the most ridiculous run up in prices in the last 2 years that nonflipper buyers think it makes sense to wait. If prices only drop 10 percent, that’s $30000 on a $300K house. More considering payments over the life of a loan. For a one year wait.
That’s why buying for $200,000 in 2010 was a smart move. It is just that very few recognized the opportunity. Most just kept bashing housing, waiting to get a free McMansion.
Overpaying 200% for anything is never a “smart move” Jingle_Fraud.
Very tight on the central coast too.
“Whatever price you pay for a house, it’ll often end up costing you at least 2½ times as much over the long term…
“High housing costs can make it tough to retire, because they crimp our ability to save while we’re working and increase the nest egg we’ll need to retire in comfort.
“If you’re going to buy an $800,000 house, the real cost is close to $2 million,” he says. “You have to ask yourself whether you can afford it. It’s a tough one to fight against, because people still have this perception that a home is a good investment. But most of the time, it’s a money pit.”
http://www.marketwatch.com/story/in-retirement-a-big-house-can-lead-to-the-poor-house-2014-11-22?mod=MW_story_more_headlines
I’m shocked that gem of truth got published. But it’s the reality. 2.5x the mortgage payment and you might be coming close to your total monthly cost. It is for this very reason rental rates are half the monthly cost of buying at current grossly inflated asking prices. Now that’s a sqft-to-sqft comparison. Rent something less than a SFR and the rental rate falls to 33%-40% of total carrying costs of the SFR.
Reality. Truth. Deal with it.
It’s the triple whammy of buying with debt in a bubble, the price is too high, the debt service to too much and the carry costs are correspondingly high. Anyone who bought in the last decade is going to get the added shock of seeing the price collapse after committing to paying 3 x what the house “cost”.
We’ve tried to walk through this math with various happy house hookers over the years, and they plug their ears.
This isn’t exactly breaking new on the HBB, but here’s some of one guy’s observations about what is going on in China:
“Most of the Chinese cities I visited are ringed by vast, empty apartment complexes whose outlines are visible at night only by the blinking lights on their top floors. I was particularly aware of this on trips to the so-called third- and fourth-tier cities—the 200 or so cities with populations ranging from 500,000 to several million, which Westerners rarely visit but which account for 70% of China’s residential property sales.
“From my hotel window in the northeastern Chinese city of Yingkou, for example, I could see empty apartment buildings stretching for miles, with just a handful of cars driving by. It made me think of the aftermath of a neutron-bomb detonation—the structures left standing but no people in sight.
“Debt paid for the boom, including borrowing by governments, developers and all manner of industries. This summer, the International Monetary Fund noted that over the past 50 years, only four countries have experienced as rapid a buildup of debt as China during the past five years. All four—Brazil, Ireland, Spain and Sweden—faced banking crises within three years of their supercharged credit growth.
“China followed Japan and South Korea in using exports to pull itself out of poverty. But China’s immense scale has now become a limitation. As the world’s largest exporter, how much more growth can it count on from trade with the U.S. and especially Europe? Shift the economy toward innovation? That is the mantra of every advanced economy, but China’s rivals have a big advantage: Their societies encourage free thought and idiosyncratic beliefs.
“Even powerful Chinese leaders have trouble enforcing their will. I reported earlier this year on the government’s plan to handle one straightforward problem: reducing excess steel production in Hebei, the province that surrounds Beijing. Hebei alone produces twice as much crude steel as the U.S., but China no longer needs so much steel, to say nothing of the emissions that darken the skies over Beijing. Mr. Xi weighed in by warning local officials that they would no longer be judged simply on increasing GDP; meeting environmental goals would count too.
“In late 2013, Hebei staged an event called “Operation Sunday.” Officials sent demolition squads to destroy blast furnaces, and imploding mills made great TV on the 7 p.m. news. But it turned out that the destroyed mills had long been out of production, so blowing them up didn’t affect output. Indeed, China’s steel industry is on track for record production this year.”
Go here for more:
http://www.zerohedge.com/news/2014-11-22/hard-landing-imminent-china-reminds-residents-it-illegal-jump-tops-buildings
Fascinating. Thanks for posting Combo!
Yeah thanks Combo….This sentence raised my eybrows;
the 200 or so cities with populations ranging from 500,000 to several million
Their bubble dwarfs ours, and they are a very poor country.
…just a few people in those areas….between 100,000,000 and 600,000,000……give or take 100,000,000!
There could be some serious inventory problems…..
“From my hotel window in the northeastern Chinese city of Yingkou, for example, I could see empty apartment buildings stretching for miles, with just a handful of cars driving by. It made me think of the aftermath of a neutron-bomb detonation—the structures left standing but no people in sight.”
Sounds like a great filming location for the Omega Man sequel.
A friend is trying to sell their house. Here’s the listing. I think it’s priced way too high, even for bubble prices. Where do you readers (who are not anti-home ownership) think a fair price for this market would be? Lifetime renters and haters need not reply.
http://www.zillow.com/homedetails/221-Soares-Ave-Santa-Maria-CA-93455/72551062_zpid/
“I think it’s priced way too high, even for bubble prices.”
You are correct, but these are strange times.
QuickFacts for Santa Maria
http://quickfacts.census.gov/qfd/states/06/0669196.html
Your friend is smart to sell if they can find a buyer. Good luck to them.
Over the next 30 years, they would probably save $400,000 renting a house like this rather than owning it.
think a fair price for this market would be ??
No way of knowing what your market conditions are….All real estate is local…That house in my zip code would easily fetch $900,000…Likely more…
With that said, @ $200. per foot it probably is a bit more than replacement cost…Again, not knowing the land cost & soft cost in your area makes it hard to determine…
The home is almost new (2008)…I would see what other local builders are offering for the same square footage…That may give you some indication if the asking price is to high…
Nice clean home but there’s nothing special about it to justify an above-market price. Kitchen and shower are low end, basic spec; tiny back yard. Median price for the zip code is about $225/sq ft., implying $320k value. Probably shoulda been listed at $350k instead of $392k.
Having lived on the central coast some years ago…There are no jobs in Santa Maria that pay enough to support that kind of price. Phoenix metro has more tech jobs and the prices are about 40 to 50% lower in good neighborhoods.
#Wow
Yes, good point. People remark but Phoenix weather is hot. Well you pay more for AC in the summer but that’s it. And income taxes are far lower in Arizona. More tech jobs in Phoenix for sure.
I am very familiar with the area as I used to live there and my dad still lives there. He is retired and sold his home in Orcutt(1145 Mira Flores) for 290,000 last year. He had an older 4 bdrm/2 ba with an addtl family room. I’d say that if your friend wants to get this house sold pronto, he should list it at 350K. He paid 299, so I imagine he/she sqeak by with a small profit. 350 will peak interest and could get some higher bids going. 50 days on the mkt is not a good sign.
The link that rms posted above shows that the median family income for Santa Maria is $51,675, so the sellers are asking nearly 8 times that amount.
Are the incomes a lot higher in that neighborhood?
Maybe for the ones in the newer subdivisions but not in the general area. Thanks for your help. 😊
Very helpful, Temeculan. 👍
$60-$70K overpriced. House is nicely staged and cleaned up, but there’s not much land, the house is way over Zestimate, finishings like a granite TILE countertop (cheap) don’t merit that kind of price tag, and good god there’s WALLpaper everywhere!
And I’m an eastern girl and I’m accustomed to basements.
finishings like a granite TILE countertop (cheap) don’t merit that kind of price tag
If you look at charts showing median incomes over the past 50 years, the typical American family maybe a little better off today compared to the days when Formica was the common kitchen countertop. The interior of the house is probably too fancy 75% of the population.
Thanks Oxide. Yes, the wallpaper is obnoxious.
Let’s apply some numbers.
Structure- 1400sq ft($50/sqft) or $70k worth of materials, labor and profit there. Maybe another $15k-20k for utilities and mass excavation. So you can build it brand new for $90k max. Depreciate the existing structure for age and it’s worth about $60k.
Lot- What’s a lot worth? I mean how stupid do you want to be considering the highly speculative nature of raw land? Pay as much as you want but why would you? Even paying an grossly inflated price of $40k for a fraction of an acre(stupid I know) and you’re still only $100k.
Your friend likely got ripped off when they bought it. Did they double down on the losses and finance it too?
Haters are gonna hate.
I guess I would be hating too if I paid 3x for run down junk.
>:-/
https://emilysbrainworks.files.wordpress.com/2014/11/maya-angelou.png
Did they double down on the losses and finance it too?
I don’t know that area but as was said 50 days on market means the house is seriously overpriced. Have been following the HHB off and on since before Bubble 1.0 popped and thanks to that in spring 2007 was (correctly) convinced that the pop was imminent. Decided to sell my house and discussed the going rate w/ my realtor, we agreed on a figure and I put it on the market for about $10K less (about 3%)…she was surprised by that but I had a buyer under contract within a week and got the place sold shortly before the pop. Had I been greedy I probably would have got less in the long run and been in the bad position of chasing the market down. Fall 2014 is feeling a lot like spring 2007 to me…
Thanks Bluto. I completely agree.
You’re right, and the increasingly shrill and desperate posts by denialists on the HBB is one of the primary similarities between then and now.
The desperation is hilarious.
…and predictable.
Bluto, did you buy again at the bottom or are you still renting?
He has to wait for the bottom Jingle_Fraud.
Did you sell those dumps at the peak?
I tried to buy in 2011/2012 with a mortgage but it was virtually impossible, every place I bid on went to a 100% cash flipper or speculator, gave up after a year of that. In the meantime prices are up abut 60% locally and buying no longer makes financial sense for me. May try again after Bubble 2.0 pops…but in the meantime am renting a place I like in the neighborhood I prefer and the rent is reasonable.
Not half in my town. With 20% down, it is usually close to even at PITI vs rent. Renter has no maintenance, but buyer has interest write off and principal paid off each mo.
Rough town! Gangs everywhere. It is know as “Santa Manure.” Not a good town to raise kids. Low paying jobs, wind, fog….
It will always be inexpensive.
Yes rents are half the cost of buying in “your town” too.
Thank you to all of you who offered constructive advice. Houses are selling in the area quite briskly, so it should too if the realtor drops the price. I agree with WPA. I would list it at $349k to get the buyers looking at properties under $350k. Thanks again. Most of you are swell.
Thank you.
But keep in mind housing isn’t selling briskly anywhere and demand is at 20 year lows and falling.
“all of you who offered constructive advice…”
Advice is appreciated as much as it is in line with one’s agenda.
crater
Miami = CRATER
http://www.denverpost.com/broncos/ci_26994801/denver-broncos-seek-revitalize-run-game-against-miami
Miami 14 Denver 10
And it just started snowing
Miami 36 Denver 39
FINAL
crater
Crater!
http://upload.wikimedia.org/wikipedia/commons/b/b6/Sedan_Plowshare_Crater.jpg
Keller, TX (Dallas) Sale Prices Dive 5% MoM and 8% QoQ; Yearly Gain Evaporates As Prices Fall Nationally
http://www.zillow.com/keller-tx/home-values/
San Antonio, TX Sale Prices Crater 6% YoY; Housing Recovery Continues.
http://www.zillow.com/san-antonio-tx-78258/home-values/
Midland, TX Sale Prices Fall 5% YoY
http://www.zillow.com/midland-tx-79705/home-values/
Correction: list price
Oh look, HA actually reads his posts sometimes! Good going HA, maybe you can start analyzing them too! HA, Ha, ha, hahahahaha!
Here’s one for you Jingle_Fraud.
Tustin, CA Sale Prices Plunge 17% YoY As Housing Inventory Balloons
http://www.zillow.com/tustin-ca-92780/home-values/
can monetary manipulation really help grow an economy with major structural problems that inhibit growth?
No. As I’ve posted before, easy credit, ZIRP and QE are all supply-side techniques. This won’t help cure the economy’s “structural problem,” which is a shortage of demand due to surplus labor and low wages.
It seems ZIRP and QE have served to greatly enrich the 0.1% at the expense of the 99.9%, through asset price inflation (aka bubble creation). I’m not sure that is part of the Fed’s mandate, but that appears to be a primary effect of their recent policies.
I’m not sure that is part of the Fed’s mandate
There is the written statutory mandate, and then there is the unwritten sub-text mandate…
The whole objective of ZIRP and easy credit is to get people to go further into debt to consume more. What could be more demand side than that?
“can flooring the gas pedal really keep an engine with no oil in it running faster?”
http://www.huffingtonpost.com/2014/11/21/fed-too-big-to-jail_n_6201476.html
“Until May, large financial institutions investigated for wrongdoing had dodged criminal prosecution under the Obama administration, despite evidence from federal regulators and prosecutors showing that big banks had, for instance, laundered money for suspected terrorists and drug cartels; manipulated interest rate benchmarks; rigged various commodities markets; mislead investors in mortgage-linked securities; duped homeowners into taking out expensive mortgages; manipulated municipal debt markets; and broke state and federal rules when attempting to seize homes after borrowers fell behind on their payments, a scandal that became known as “robosigning.”
B..b..but don’t you understand it would cause SYSTEMIC RISK if the rule of law was applied to the banksters? Here’s Eric Holder explaining the DoJ’s failure to criminally prosecute a single Wall Street felon despite the massive fraud that caused the 2008 crash.
https://www.youtube.com/watch?v=Z3zwhp5-jXA&spfreload=10
Eric Holder is Wall street’s stooge.
Yes, given that Dimon was Obama’s biggest bundler, he more or less secured this administration for Wall Street.
I’m glad Dimon got his. Here’s hoping the stooge does, too. But he’s busy inciting in Ferguson at the moment.
Actually, Jon Corzone was Obama’s biggest bundler. You know, the guy who ripped off MF Global customer accounts for $1.6 billion, but under crony capitalism can break the law with impunity?
‘….big banks had, for instance, laundered money for suspected terrorists and drug cartels; manipulated interest rate benchmarks; rigged various commodities markets; mislead investors in mortgage-linked securities; duped homeowners into taking out expensive mortgages; manipulated municipal debt markets; and broke state and federal rules when attempting to seize homes after borrowers fell behind on their payments, a scandal that became known as “robosigning.”’
Wouldn’t breaking up the ‘too big to jail’ banks be a first step towards restoring a sound U.S. financial system? For comparison, just look at the great strides China’s government has made towards rooting out corruption.
Wake me up in case either of the duopoly parties manage to field a 2016 presidential candidate who pledges to pursue this objective.
Wouldn’t breaking up the ‘too big to jail’ banks be a first step towards restoring a sound U.S. financial system?
+infinity.
Either Too Big To Fail or Too Big To Jail—the solution is both simple and obvious: break up the banks!!
Not going to happen as long as 95% of the electorate are sheeple who willingly grab their ankles for Wall Street-owned candidates.
Humor? From Region IV
Our federal government has three parts. They are the Imperial, (Emperor and about 5,000,000 workers) Legislative (Senate and House of Representatives) and Judicial (Supreme Court and lower Courts).
The Emperor of the United States administers the Imperial Branch of our government. He writes the laws when the Legislative Branch (Congress) won’t do what he wants. The President is elected by United States citizens, 18 years of age and older, who vote in many cases several times in the presidential elections in their states and other states if necessary. These votes are tallied by states and form the Electoral College system. States have the number of electoral votes which equal the number of senators and representatives they have. It is possible to have the most popular votes throughout the nation and NOT win the electoral vote of the Electoral College if that is what was decided at the Bilderberg meeting the previous year.
The Legislative part of our government is called Congress. Congress makes our laws that the Emperor agrees with, doesn’t care about or disregard at any time of his choosing. Congress is divided into 2 parts. One part is called the Senate. There are 100 Senators–2 from each of our states. Another part is called the House of Representatives. Representatives meet together to discuss ideas and decide if these ideas (bills) should become laws that fill the pockets of those who helped get them elected. There are 435 Representatives. The number of representatives each state gets is determined by its population. Some states have just 2 representatives. Others have as many as 40. Both senators and representatives are elected by the eligible (choke-cough) voters in their states.
The Judicial part of our federal government includes the Supreme Court and 9 Justices. They are special judges who interpret laws according to the Constitution and whatever dirt the NSA may or may not have on them. These justices only hear cases that pertain to issues related to the Constitution. They are the highest court in our country. The federal judicial system also has lower courts located in each state to hear cases involving federal issues.
All three parts of our federal government have their main headquarters in the city of Washington D.C. which is why there is never a recession in Washington D.C.
I think we’ve reverted to the old three branches, the Imperial, the Court Jesters (Congress) and the Court Viziers/wizards (old frauds on the SC).
Don’t forget the “Fourth Estate” - Obama’s leg-humpers of the MSM.
“Don’t forget the “Fourth Estate” - Obama’s leg-humpers of the MSM.”
Real journalist Bilderberg Charley Rose on the Emperors birthday this year…
“Happy birthday my friend”
Happy birthday, President Obama | CBSTV Videos - Yahoo Screen
screen.yahoo.com/happy-birthday-president-obama-145145586-cbs.html - 606k - Cached - Similar pages
President Obama turns 53 Monday and will celebrate by attending meetings at the … Charlie Rose reports. … Happy birthday, President Obama … CBS News.
CBS Finally Covers Gruber Revealing ObamaCare Deception
newsbusters.org/…/11/13/cbs-finally-covers-gruber-revealing-obamacare-deception - 76k - Cached - Similar pages
It is telling that the MSM and so-called “conservatives” maintain a cowardly silence when it comes to the destruction of the Fourth Amendment and legalized police theft known as Civil Forfeiture. The Daily Show, as usual, is the closest thing we have to a mainstream media watchdog.
https://www.youtube.com/watch?v=3kEpZWGgJks&spfreload=10
Indistinguishable to my eye from the corruption you might find in a third-world $#1%-hole with a shakedown-by-cop situation, except for the razor-thin veneer of legality. Which actually makes it worse, IMO. At least in other countries, they acknowledge that it IS corruption!
Comment by phony scandals
2014-11-23 09:18:54
Real journalist Bilderberg Charley Rose on the Emperors birthday this year…“Happy birthday my friend”
https://screen.yahoo.com/happy-birthday-president-obama-145145586-cbs.html
2014-11-23 09:22:58
CBS Finally Covers Gruber Revealing ObamaCare Deception
http://newsbusters.org/blogs/kyle-drennen/2014/11/13/cbs-finally-covers-gruber-revealing-obamacare-deception
Domestic Imperialism.
I’ve said it here since March, and I’ll continue to say it. Until I hear something that sums it up better.
The so called conservatives never understood the boomerang effect of overseas imperialism. Chickens are coming home to roost.
Brandon Duncan has no criminal record, but could face a life sentence of 25 years in prison as prosecutors say his latest album lent artistic motivation for a recent string of gang-related shootings.
http://rt.com/usa/207903-rapper-california-gang-crime/
This is bizzare. Life in prison for publishing a CD with a picture of a gun on it.
well fair is fair dee synder vs tipper gore
https://www.youtube.com/watch?v=veoYcsH7Wrs
But that was before the U.S. and state governments got too totalitarian.
Yeah - I remember those days when the Gores wanted to censor the music industry.
My, how things change.
Big Al ended up finding a much bigger and more lucrative target for his censorious impulses, didn’t he. What’s a divinity school dropout to do?
Nobody is getting life in prison, that’s just hyperbole. And the guy is a gang thug facing charges with something about encouraging and assisting a gang. Eff him. I’ll worry about someone who isn’t helping scumbag criminals.
+25 to life.
Shillow and I agree on something!
“I’ll worry about someone who…”
Oh, rights are for the good guys. Puts us all on thin ice.
When being a good guy means having all (not most, all) of the right opinions, and said opinions are constantly changing…
It’s better any more to assume that one is on the outs, and plan accordingly IMO.
Rights are for the good guys? This guy is getting his rights, he’s gonna get a jury trial and if the charge is some bogus smokescreen the jury can let him off. He’s probably also getting a lawyer at taxpayer expense.
“This guy is getting his rights…”
Sure. He’s charged with lyrics. Also with publishing a picture of a gun. In jail over a picture of a gun. I just wrote the word “gun”. What are my rights? Do I have any?
A lot of “conservatives” will be applauding this, unfortunately.
Almost as though the platforms were swapped.
This is a long post but …
When I was a kid I used to read - used to LOVE to read - what was then known as “horror comics”. Then, all of a sudden, they disappeared. It was years later - as an adult - that I learned why.
Horror comics were published by William Gaines who later, after being put out of business by Congress, went on to publish Mad Magazine.
Look up “William Gaines” in Wikipedia and you’ll be presented with a good read. Here’s a hint of what you’ll find there:
“With the publication of Dr. Fredric Wertham’s Seduction of the Innocent, comic books in the Gaines style drew the attention of the U.S. Congress. Gaines’ testimony before the Senate Subcommittee on Juvenile Delinquency in 1954 achieved notoriety for his unapologetic, matter-of-fact tone, and Gaines became a boogeyman for those wishing to censor the product. One exchange became particularly infamous:
Chief Counsel Herbert Beaser: Let me get the limits as far as what you put into your magazine. Is the sole test of what you would put into your magazine whether it sells? Is there any limit you can think of that you would not put in a magazine because you thought a child should not see or read about it?
Bill Gaines: No, I wouldn’t say that there is any limit for the reason you outlined. My only limits are the bounds of good taste, what I consider good taste.
Beaser: Then you think a child cannot in any way, in any way, shape, or manner, be hurt by anything that a child reads or sees?
Gaines: I don’t believe so.
Beaser: There would be no limit actually to what you put in the magazines?
Gaines: Only within the bounds of good taste.
Beaser: Your own good taste and saleability?
Gaines: Yes.
Senator Estes Kefauver: Here is your May 22 issue. [Kefauver is mistakenly referring to Crime Suspenstories No. 22, cover date May] This seems to be a man with a bloody axe holding a woman’s head up which has been severed from her body. Do you think that is in good taste?
Gaines: Yes sir, I do, for the cover of a horror comic. A cover in bad taste, for example, might be defined as holding the head a little higher so that the neck could be seen dripping blood from it, and moving the body over a little further so that the neck of the body could be seen to be bloody.
Kefauver: You have blood coming out of her mouth.
Gaines: A little.
Kefauver: Here is blood on the axe. I think most adults are shocked by that.
“Gaines’ opening statement was out of touch with the mood of the day, and of the subcommittee hearing in particular. But it has come to be remembered as a steadfast defense of the intellectual and creative freedoms later affirmed by Gaines’ Mad, among others:
“Entertaining reading has never harmed anyone. Men of good will, free men should be very grateful for one sentence in the statement made by Federal Judge John M. Woolsey when he lifted the ban on Ulysses. Judge Woolsey said, ‘It is only with the normal person that the law is concerned.’ May I repeat, he said, “It is only with the normal person that the law is concerned.” Our American children are for the most part normal children. They are bright children, but those who want to prohibit comic magazines seem to see dirty, sneaky, perverted monsters who use the comics as a blueprint for action. Perverted little monsters are few and far between. They don’t read comics. The chances are most of them are in schools for retarded children.What are we afraid of? Are we afraid of our own children? Do we forget that they are citizens, too, and entitled to select what to read or do? Do we think our children are so evil, so simple minded, that it takes a story of murder to set them to murder, a story of robbery to set them to robbery? Jimmy Walker once remarked that he never knew a girl to be ruined by a book. Nobody has ever been ruined by a comic.”
Here’s some more …
“Gaines was depicted by the national media as America’s most amoral publisher. By 1955, EC was effectively driven out of business by the backlash, and by the Comics Magazine Association of America This was an industry group that Gaines himself had suggested to the industry in order to insulate themselves from outside censorship, but he soon lost control of the organization to John Goldwater, publisher of the innocuous Archie teenage comics. The Comics Code that was approved and adopted by most of the country’s prominent publishers contained restrictions specifically targeted at Gaines’ line of horror and crime comic books. Although he had already ceased publishing his line of horror comics, Gaines refused to subscribe to the Code, considering it hypocritical and not applicable to the new, clean line of realistic comics that he was promoting by then. This refusal, together with his already tarnished reputation, put EC on the verge of bankruptcy. Although Gaines relented and accepted the code, distributors refused to pass his titles along to newsstands. The damage was done, and Gaines abandoned comic books completely. He chose to concentrate his business on EC’s only profitable title, Mad, which had recently changed to a magazine format. After distributor Leader News went bankrupt in 1956, EC was left with over $100,000 in unrecoverable debt. Gaines invested a considerable portion of his personal fortune to keep the company alive until a deal could be made with a new distributor.
Mad becomes a magazine
Gaines converted Mad to a magazine in 1955, partly to retain the services of its talented editor Harvey Kurtzman, who had received offers from elsewhere. The change enabled Mad to escape the strictures of the Comics Code. Kurtzman left Gaines’ employ a year later anyway and was replaced by Al Feldstein, who had been Gaines’ most prolific editor during the EC Comics run. (For details of this event and the subsequent debates about it, see Harvey Kurtzman#Departure from Mad.) Feldstein oversaw Mad from 1955 through 1986, as Gaines went on to a long and profitable career as a publisher of satire and enemy of bombast.[2]
Although Mad was sold in the early 1960s for tax reasons, Gaines remained as publisher until the day he died and served as a buffer between the magazine and its corporate interests. In turn, he largely stayed out of the magazine’s production, often viewing content just before the issue was shipped to the printer. “My staff and contributors create the magazine,” declared Gaines. “What I create is the atmosphere.”
Remember Tipper Gore and the PMRC…Jeez. Music is the greatest form of free expression, if nuts use it as an excuse to commit violence, sex acts or use drugs, then go after the nuts.
The Megadeth song “Hook In Mouth” from their 1988 album So Far, So Good… So What! is “aimed at the P.M.R.C.
#Metal!!! \,,/(^_^)\,,/
5 squatters who lost — and 1 who won
The claim: When Michael Sharkey deployed to Afghanistan two years ago, the army specialist asked a friend to keep an eye on his home in New Port Richey, Florida. But while Sharkey was deployed, people broke in, changed the locks and began squatting. When Sharkey tried to remove the squatters, they claimed that they had made an oral agreement with Sharkey’s friend to live on the property in exchange for making repairs. Sharkey and his friend both disputed the existence of any agreement. But when Sharkey asked the sheriff to give the squatters the boot, he learned that law enforcement couldn’t do anything because the squatters appeared to have established a residence, making any attempt to remove them a civil matter.
The outcome: Sharkey’s ordeal generated a lot of media attention and public outcry. A few days after the story broke, neighborhood pressure forced the squatters to move out. One squatter was charged with grand theft for allegedly stealing electricity from neighbors, while another squatter was charged with violating her probation. As for Sharkey, the nightmare ended happily because a veterans group organized volunteers to clean and repair the house.
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Read more: http://www.bankrate.com/finance/real-estate/squatters-true-tales-1.aspx#ixzz3JtymKbOa
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Real Army v. Free Sh!t Army.
Real army won the battle but who will win the war?
The Free Shitters can claim a victory but there will be nothing left.
What real Army? In the last two elections, 95% of the electorate (admittedly only 30% of elible voters went to the polls) voted for corporate statists, i.e. McCain and Romney. In other words, carbon copies of Obama who would’ve followed identical Wall Street-dictated policies. The producers in this country have no voice, and that is their own damned fault.
“Real Army v. Free Sh!t Army” Nice! Good call!
Then there’s the “homeless veteran Army” that numbers at least 100,000, while an estimated 22 veterans commit suicide every day.
Plenty of veterans collect nice pensions that are funded by taxpayers. Does that not also make them “free shit army”?
WTF! Free?? A military pension is 50% pay after serving 20 years, 75% pay after 30 years…that is hardly free money.
WTF! Free?? A military pension is 50% pay after serving 20 years, 75% pay after 30 years…that is hardly free money.
Why should they get taxpayer funded pensions at all? Aren’t they paid a salary? Why is it OK for them to get pensions, but it’s not OK for cops, firefighters, teachers and other government employees to get one?
Should everyone who has a job get a 50% pension after working 20 years?
Those pensions will be paid in debased FRNs, so the 50% of base pay figure is nominal in a world where a can of beans is going to cost $10 as the Fed prints away government and Wall Street debts and liabilities.
Where in this country do cops, firefighters, teachers, or other gov’t employees not get a pension?!
BTW, that 50% after 20 years is 50% of base pay only, not 50% of full active duty pay. For an enlisted person, this may be $1500/month or less.
A lot of military guys make very poor choices when it comes to both spouses and “friends.”
A lot of military guys make very poor choices when it comes to both spouses and “friends.” ??
When you take a 18 year old kid and teach him how to kill and then let him go do it, many times this is the residual result you get in return…
Oh please. I spent enough time in the military to see that a lot of military guys (and girls) lack both morals and judgement even if they never go near the sounds of the guns. Go to any military base and you will see pawnshops and payday lenders “ripping off our heroes” who tend to be deficient when it comes to financial responsibility.
Oh please. I spent enough time in the military to see ??
Well good then…Your an expert…What does the military teach you to do ?? And, if you happen to be the poor smuck that Bush sent off to his little war games what did that do to your persona ??
What does the military teach you to do ??
To kill people?
To kill people?
There are plenty of support personnel who don’t end up anywhere near having to kill people. One of my nephews is training for computer security in the AF right now. Chance of ever pointing a weapon at someone? Essentially zero.
Doesn’t it teach you a certain amount of discipline, having to get along with others and eat sh!t from your superiors in rank? Each a good lifeskill/lesson for someone who has none of them.
There are plenty of support personnel who don’t end up anywhere near having to kill people ??
Oh but your mistaken my friend….Those troops need support to be able to wage warfare so, by proxy the support personel are killing, kinda…
Each a good lifeskill/lesson for someone who has none of them ??
I don’t disagree with that if thats the only thing you come away with…Unfortunately, as the homeless & suicide rates show, these military personel come back seriously F%#@!*-Up…
A lot of people who join the military are basically directless and lack better job or life prospects. Once they leave that structured environment, they flounder. Not every homeless vet or suicide is a combat vet. I would guess most are support pogues.
I got out of the military because in my experience, about 85% of the people were along for the ride and knew they were going to get paid the same on the 1st and the 15th whether they busted their ass or just did just enough to get by. As an organization, the Armed Forces are tremendously wasteful and have a complete inability to efficiently budget time and money or properly use their people’s talents. There was also a LOT of deadwood, especially in the higher ranks.
Forget Orwell And Rand, We’ve Gone To Full On Plato
Submitted by Tyler Durden on 11/22/2014
Lately, we hear a lot about Orwell’s “1984″ and Rand’s “Atlas Shrugged” but perhaps the best crystal ball to our current state of affairs is Plato’s Republic. You see both Rand and Orwell were describing a world outside of themselves. A world they couldn’t understand or accept. And while those works are brilliant and incredibly prophetic, I expect that to understand a world borne of narcissistic sociopathy one must examine the construct of such a world by a narcissistic sociopath. Fortunately Plato, perhaps the world’s most (in)famous narcissistic sociopath, provided us a vivid illustration and explanation of his ideal state in “Plato’s Republic”. Plato provides us the why to Orwell’s and Rand’s ‘unideal’ states.
As in Plato’s Ideal State, today’s philosopher kings are the only ones with the right to and capacity for (as decided by them) absolute truth. The rest of us live within the realities provided for and to us. We are handed the explanations and when the explanations don’t suffice the subject matter disappear altogether; refer to Ukraine, Ebola, Malaysian airliner, Benghazi, Fast & Furious, IRS criminality, NSA, Breitbart and the Constitution, etc. We the people take what we are fed in stride and in line with our respective places in the hierarchy of truth. If we dare challenge the hierarchy of truth, as men like Snowden have attempted, we are exiled with a bounty on our head. Or for minor offences such as providing the truth behind declining same store sales your career is taken from you like Bill Simon, ex Walmart CEO who was fired for stating that Americans are buying less because they have less income than before. The philosopher kings make it so.
The facts are we will never know the facts.
http://www.zerohedge.com/…/forget-orwell-and-rand-we%E2%80%99ve-gone-full-plato - 155k -
Gruber’s “stupid American voters” are about to swell by several million, as Comrade Pelosi and corrupt Democrat urban machines mobilize their new Democrat-for-Life entitlement voters following Obama’s imperial amnesty.
http://news.yahoo.com/video/undocumented-immigrants-urged-advantage-obama-131345242.html
My take is let them in. Let them all in. Let everyone in from everywhere. If that is what it takes to turn the old FSA (traditional ghetto-based folks several generations here) into anarcho capitalists, let’s have it!
For too long, the Republican voters were quiet about the real reason there should be no amnesty. The real reason is that the system of forced redistribution of wealth and taxation is immoral.
I just lost all respect for you.
Be that way. You have not thought carefully what i wrote.
That’s not his strong suit.
Assumption. Most or all of these 5 million people are already in the USA. Many or all of the working-aged are working, not paying into social security, paying sales taxes however, and already jamming emergency wards with non-emergency illnesses. And the costs are already spread to the rest of us.
Let’s assume the worst case scenario if we remove all the borders and require no passports: Imagine millions of people per month adding to the USA population. Let’s add your worst fear: All of the Liberians (with Ebola and all) arrive. All Syrians and Al Quaeda arrive. But the bottom line is millions of people per month arrive. And they arrive without jobs! Without much money!
What do you think will happen? The social services will be saturated and close down when their funds run out. Government will have a choice to raise taxes 50%, inflate us into hyperinflation, or to just say freakin’ no.
Meanwhile on Main Street the taxpayer will revolt. Yes revolt. By blatantly declaring many exemptions and refusing to pay capital gain taxes on investments.
This is exactly what the USA needs. The USA voters for many decades voted to spend other people’s money. But it has to take a significant tax hike, significant inflation, or significant spending cuts to wake up the stupid voter.
A massive influx of people will wake up the taxpayer, including the “progressives” into knowing forced redistribution of wealth must completely stop.
What do you think will happen? The social services will be saturated and close down when their funds run out. Government will have a choice to raise taxes 50%, inflate us into hyperinflation, or to just say freakin’ no.
There’s somebody here who occasionally makes references to the writers Piven and Cloward, who could probably reasonably called strong left wingers. I think they advocated a similar strategy.
A web site explaining how to help statism collapse says We need to encourage as much government spending as possible, to bleed the government with a million tiny cuts. Every time they waste money on useless programs that helps our mission. It’s ammunition for us to expose government failures.
By our assumptions, more people will be knocking on the doors of welfare offices taking money.
“Left-socialists tend to think government money is in endless supply. Right-socialists tend to think that government money is “their tax money.” Both are wrong. Once the money is stolen it’s not yours anymore. Thinking it’s still yours is right-wing collectivist thinking. It’s thinking that you are part of government. Government will always steal as much money as they can, but they can never steal enough to cover all their spending. That means the more they spend, the more they have to print, which exploits one of their greatest weaknesses. So, encouraging more spending assists the government on its path of self-destruction.”
Ayn Rand herself (and our very own “Aladinsane,” who often quoted from Atlas Shrugged) would vote for the worst of two evils to try to hasten the collapse of statism.
I personally don’t like that idea, as voting is a form of consent to the failed system. Their intent is correct, we need to hasten the collapse of collectivism, but it does not mean we must sanction it.
I think that Lenin said something along those lines - the worse, the better.
Sometimes I wonder from the audacity of these elected (and unelected) heads of state if they are really trying to goad the people into hating the state and establishing a far better form of society than what the USA’s founders tried to make through the “checks and bounces.” Even some past classical liberal scholars (equivalent to modern minarchist libertarians) were well aware that the trend of government is always to become bigger and meaner so that it is no longer a servant but a master.
Ayn Rand herself (and our very own “Aladinsane,” who often quoted from Atlas Shrugged) would vote for the worst of two evils to try to hasten the collapse of statism.
That will probably work. The downside is that things could get “interesting”, and having a stash of gold coins and guns probably won’t make a difference if you go solo.
Even some past classical liberal scholars (equivalent to modern minarchist libertarians) were well aware that the trend of government is always to become bigger and meaner so that it is no longer a servant but a master.
If you’re talking about people like John Locke or Thomas Jefferson, there probably was concern about government doing things which violated the rights of the citizens. However, I think that worries about the size of the government are a more recent concern.
Republicans aren’t exactly antitax, SH.
At least the next Republican president will be able to effectively lower taxes by executive order to the IRS. So they got that going for them, which is nice.
And guess who will reap the lion’s share of that bonanza? Hint: it won’t be wage earners.
FSA (traditional ghetto-based folks …
There you go again.
For too long, the Republican voters were quiet about the real reason there should be no amnesty. The real reason is that the system of forced redistribution of wealth and taxation is immoral.
What does that mean about the reason that they were quiet? Were they quiet because they didn’t agree with that reason, or is another explanation for their quietude?
http://wolfstreet.com/2014/11/23/mexico-on-the-brink-but-of-what/
Pelso & the DNC must be salivating at the prospect of countless millions of new Democrat-for-Life entitlement voters flooding into the U.S. from our failed-state neighbor to the south.
Hey W-A-B / Professor Bear,
Since you rent a SFH in the San Diego area, are you expected to mow the lawn, trim the hedges, and so forth? And when you see a problem like a leak from the ceiling into the garage, does the owner take care of it right away, even if it could be a re-shingling of the area above? My worst nightmare when I rented a SFH from a small landlord was my swamp cooler broke several times. It was on the roof of the two story triplex and I had no ladder anyway. I was in the high desert and swamp coolers work well when they are well-maintained.
Thinking ahead 3 years and might move into a quiet residential SFH neighborhood in my part of the OC. But thinking that I have been far better off in other investments than real estate the last 11 years.
It’s better not to lose the opportunity cost of stock index funds investing, better to keep mobility in case of job change / climate change getting unbearable. And in my case I will retire in ten or eleven years. My lifestyle in ten years will be more recreational and where I can keep a home based business and own firearms - so that will be North Scottsdale / Cave Creek (I like the desert sunrise and sunsets). Then I will rent a luxury SFH over there.
Hoarder, I am the rental expert. My oceanside landlord has never done one thing except fix the 4 four leaks. I’ll stay here in my 1800 sq ft fire mountain rental because it’s near a trader joes, the ocean and my mom in pasadena! Can’t wait for the real housing crash!
This is still going on? This is why I have been renting apartments (owned by professionally-managed big businesses with same day maintenance). This is what keeps me renting.
Maybe I will just move up to a 2 bedroom / 2 bathroom apartment in three years. I have one like that in Phoenix but want one like that in the Irvine area.
“Since you rent a SFH in the San Diego area, are you expected to mow the lawn, trim the hedges, and so forth?”
That’s where immigrant yard care service comes in handy (especially if your kind landlords foot the bill).
http://s296.photobucket.com/user/saihukaru/media/Gif%20Funny/dapdaunhanh.gif.html
^
Jingle_Fraud
Diversity is our strength (European edition).
http://www.telegraph.co.uk/news/worldnews/islamic-state/11247941/Dutch-jihadi-bride-Is-she-a-victim-or-a-suspect.html
Womyn of America, you’ve been warned. Never ever take drugs given my Bill Cosby or any other celebrity.
And never assume realtors or divorce lawyers have your best interests at heart.
http://www.thesmokinggun.com/documents/Ohio-lawyer-hypnotizes-female-clients-687543
NOVEMBER 19–An Ohio lawyer is under criminal investigation for hypnotizing a female client during meetings and directing her to engage in a series of sexual activities while in a trance and under his control, police report.
i find it very odd for this to happen………women groupies want to notch one up to tell their friends so drugging and raping women seems very unnecessary…..even a younger dj gets propositioned to play their music in exchange for……ahem
the only thing i can think of it’s some fetish….maybe they all have the same birthday, or maybe they have to be passed out , or even the same bra size…….it just doesn’t make any sense
“…even a younger dj gets propositioned to play their music in exchange for…”
I recommend you check out this movie in case you haven’t seen it:
Play Misty For Me Trailer 1971 Movie with Clint Eastwood
Charles Manson, a mass murderer in prison is getting married. Meanwhile, a very rich, very famous celebrity who is funny enough to make millions laugh needs to slip girls mickeys to get laid?
‘Analysts were right to say that the Republican takeover of Congress bodes well for the war machine: already we see the levers of power slowly shifting in reverse, eager to get back to salad days of post-9/11 wartime spending.’
‘But waiting in the wings, Hillary Clinton just may prove to be what the defense establishment has been waiting for, and more. Superior to all in money, name recognition, and influence, she is poised to compete aggressively for the Democratic nomination for president. She might just win the Oval Office. And by most measures she would be the most formidable hawk this country has seen in a generation.’
“It is clear that she is behind the use of force in anything that has gone on in this cabinet. She is a Democratic hawk and that is her track record. That’s the flag she’s planted,” said Gordon Adams, a national security budget expert who was an associate director in President Bill Clinton’s Office of Management and Budget.’
‘Karen Kwiatkowski, a retired Air Force lieutenant colonel who has spent her post-service days protesting the war policies in Iraq and Afghanistan, is more blunt. “Interventionism is a business and it has a constituency and she is tapping into it,” she tells TAC. “She is for the military industrial complex, and she is for the neoconservatives.”
“You don’t get to be a serious person in Washington until you are considered pro-intervention,” said Mike Lofgren, who spent 30 years as a budget analyst and aide on Capitol Hill, specializing in defense. Plus, the “Clintons, they really like to hang out with rich people and there is a lot of money in the military industrial complex.”
http://www.theamericanconservative.com/articles/the-military-industrial-candidate/
Obama says the American people want that “new car smell” in 2016.
http://abcnews.go.com/Politics/president-obama-american-people-car-smell-2016-campaign/story?id=27108324
Did Obama just take a covert shot at Hillary and JEB!? I think he just did. Even though he puts it on himself as being shopworn goods, as his excuse for not campaigning for dems, and damns Hillary with faint praise, this is pure Obama, sending covert messages.
Because Hillary sure doesn’t have that new car smell. (and neither does JEB!) And he darned well knows it.
Wow! That will leave two bad choices for president. Hillary and the other one!
And Gruber’s “stupid American voters” will once again show a foolish consistency in 2016 by voting for Jeb or Hillary - the same Republicrat corporate statist candidate, in other words.
You will still vote for one of them. Look in the mirror, who’s the fool?
Wrong. I wrote in Ron Paul rather than vote for the “choices” the Republicrat Duopoly gave me.
Never a truer statement than this one right here;
“Interventionism is a business and it has a constituency”
Ben, As far as Hilary being a hawk, I am just not quite sure…Not saying she isn’t, just saying I am not sure…I have a suspicion that the “hawk” persona that she may be elevating may be due to the fact that she will be the first electable female President in our history…Thats even bigger than the first Black president…
The notion is that a female will not make the most difficult of decisions to send men and woman off to war or worse, threaten and follow through to push the button in the black box…I think that was the purpose of the 4 year stint as Sec. of State…
I am thinking she is acting tough, but once in office will be much more dovish…I say that because I believe Bill has a huge influence on her and although he claims that she is her own person and he will not have any say in the presidency, I don’t believe it…
If she wins, along with the first female president, and although stealth, we will have the first three term president since FDR…And, between the both of them, we could see FDR type policies…
Just my take on it…
I am just not quite sure
Read the article
Just read it Ben….The Last few paragraphs;
“Clinton understands that the only avenue of safety for a Democrat in the arena of national security is to throw money at the Pentagon,” said Adams, and “this is consistent with her worldview on national security. She sees military force as an essential tool and if you take that view, why wouldn’t you want to increase the military’s budget?”
More importantly, her support of the military allows her to project an image of leadership and toughness during the campaign, which Adams says is absolutely necessary for winning the White House.
“What this does is protect her right flank, it makes it very hard for anyone in the general election to accuse her of being soft on national security,” said Adams.
“And where did she learn that lesson? Her husband.”
I see her pivoting somewhat…She will support Israel and talk tough on Iran so as to neuter Lindsey Graham and others…But I believe the military is just background noise…I really think the country wants the next President to address the issues facing our country in the vein of FDR…I think between her & Bill in the White House we will see that…
Since when does being an obviously power hungry sociopath not disqualify you for the job?
“Clinton understands that the only avenue of safety for a Democrat in the arena of national security is to throw money at the Pentagon,”
That was one thing that Eisenhower had going for him. When suggested cutting defense, he didn’t have to worry about being called weak or not understanding the issues involved.
Whoever ends up as our first female president will have to prove her hawkishness to deflect statements like that one.
Wars is one of the FDR type policies.
Wars is one of the FDR type policies ??
My history tells me Japan, in a sneak attack, hit Pearl Harbor…Hardly a FDR policy…
Um, not to sound all superior, but it was the Germans who attacked Pearl Harbor.
https://www.youtube.com/watch?v=q7vtWB4owdE&spfreload=10
The Vampire Squid defrauds yet another “client” (mark) as it goes about doing God’s work.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11247025/Goldman-Sachs-told-banker-who-raised-Libya-concerns-Dont-get-involved.html
Bosses at Goldman Sachs castigated a junior employee for questioning a trade the bank conducted on behalf of Libya’s sovereign wealth fund, warning him that it was not his business to get involved.
According to documents seen by The Telegraph, Youssef Kabbaj, the senior Goldman banker who led the bank’s relationship with the Libyan Investment Authority (LIA) during the Gaddafi years, told the employee: “This is very serious… Do not ever call [the] LIA without me… to discuss transactions”.
The banker, who had enjoyed a relationship with the Libyans, was sharply reprimanded after relaying LIA concerns about a foreign exchange trade, referring to it as “scary”. Mr Kabbaj, the head of Goldman’s North Africa office at the time, told the individual: “Do not speak with my clients without me on the line… Especially this one as you don’t know all the background.”
A headline on Yahoo finance:
“Falling inflation a worry for Europe but also the world”
I come across people everyday who tell me, “ya know, I’m concerned that I’m not paying enough for food and housing and utilities.”
This explains the sudden rise of the Reverse WalMart. The mega stores that promise the highest prices for every one of the 15,000 items available.
Only bagholders who went deeply into debt for overpriced houses fear deflation.
And governments who create money out of thin air to buy constituencies and perpetuate their hold on power.
“Falling inflation a worry for Europe but also the world” ??
Is the latest answer to this question in the action that China took on interest rates ??
Chinese central bankers going full retard to try to defer the inevitable.
http://www.zerohedge.com/news/2014-11-23/fear-surge-debt-defaults-business-failures-and-job-losses-means-china-will-cut-rates
Sunday funnies from TBP.
http://www.theburningplatform.com/2014/11/23/sunday-funnies-38/
Marion Barry died
http://www.washingtonpost.com/local/obituaries/marion-barry-dies-4-term-dc-mayor-the-most-powerful-local-politician-of-his-generation/2014/11/23/331ad222-c5da-11df-94e1-c5afa35a9e59_story.html
Don’t let the door hit him where the good lord split him.
“Marion Barry died”
Did he leave anything to family, or check-out owing?
i think he had a few hundred kilos of coke stashed away that could be worth millions
http://www.narcoticnews.com/drug-prices/cocaine/
Given his lifestyle choices, he was quite lucky to make it to age 78.
Given his lifestyle choices, he was quite lucky to make it to age 78.
Makes me wonder whether a lot of 78-year-olds are leaving a lot of living on the table!
The Brits once ruled the world, but post-WW II socialism and the capture of their political establishment and all three mainstream parties by the globalist City of London banksters has leached any semblance of a work ethic or morality out of the British people. Unsurprisingly, millions are just a step away from joining the ever-growing FSA living off the dole.
http://www.independent.co.uk/news/uk/politics/millions-of-britons-only-days-from-the-breadline-claims-report-9877881.html
Gee, that’s an exciting brownstone; not!
http://www.dailymail.co.uk/news/article-2845969/Former-Scotland-Yard-detectives-say-young-boys-murdered-Westminster-paedophile-ring.html
Hardly surprising the UK elites who turn a blind eye to bankster fraud have also turned a blind eye to pedophile rings in high places.
The Brits once ruled the world, but post-WW II socialism and the capture of their political establishment and all three mainstream parties by the globalist City of London banksters has leached any semblance of a work ethic or morality out of the British people.
Really, absolutely nobody over there has any morality or work ethic? How did you come to that conclusion? And was their empire an example of morality - conquering nations, enslaving people, stealing resources?
New York Times wets the bed on North Dakota’s fracking boom
http://www.nytimes.com/interactive/2014/11/23/us/north-dakota-oil-boom-downside.html?_r=0
If the farmers say the fracking is ruining the water and the land, we’d better listen to what they have to say. Let’s not sacrifice our food supply for energy please.
+1
I watched some so called “immigration activists” over the last day or two on several news programs and I have this comment and question.
These activists are so entitled; they break the law by coming into our country illegally, commit identity theft and document fraud, and then have the audacity to demand the president violate the constitution of the United States of America just to give the activists what THEY demand.
Do we really want people who could give a rat’s behind about our rule of law and Constitution becoming citizens and voters of this great country?
#FundamentalTransformationOfAmerica
It occurs to me that a lack of transparency at the Fed implies they can define and execute their mandate with full discretion.
Any chance a future Republican Congress will audit the Fed to make sure they are not stretching the scope of their mandate to include income and wealth redistribution schemes?
never
and on a quasi-related subject, i got a random compliment on my ron paul t-shirt while out and about last week
A good question. I doubt the Fed employees or politicians will bite the hand that feeds.
We have always elected scoundrels, except in a few, very lucky, key critical instances. When we allow them to legally sell their loyalties to the highest bidder, the system breaks down.
The Founders knew we would always elect scoundrels. So they implemented the system of checks and balances so they would vie with one another and not unite and turn on the American people.
However, what I don’t think they considered was:
1) the possibility of politicians legalizing the sale of their loyalties to private entities and
2) an entity becoming so wealthy and powerful that it could buy not only a controlling interest of politicians but create and control the nation’s central bank.
“The Untouchables” indeed.
Here’s an analysis of that famous Oxfam data point that 85 people control as much wealth as the bottom half of the world’s population:
http://www.bbc.com/news/magazine-26613682
They say it’s true. If so… it wasn’t a reality that I think entered the minds of the earliest planners of the republic.
The Bought Congress duly held a hearing regarding the Segarra revelations.
And that is the end of it as far as the are concerned. Congress is not going to bite the hand that feeds.
http://www.nbcnews.com/news/china/chinese-investors-snap-property-bankrupt-detroit-n253186
Snapping up the fixers in Detroit!
Maybe the new Chinese owners will collectively figure out a way to reinvent Detroit as a livable city with decent housing, walkable neighborhoods and low crime rates that can attract a sustainable base of businesses. You can’t do much worse than the folks who drove the city to bankruptcy over the past half century did.
Until crime is under control, the situation will never turn around, as anyone who is sufficiently affluent to vote with their feet will leave.
If you have enough cash, you too can buy a “collaborative, not punitive” approach to your behavior.
And we see how well the “collaborative” model has worked for financial regulation.
“Lynn D. Helms, the director of the North Dakota Department of Mineral Resources, advocates a collaborative, not punitive, approach to oil industry enforcement.”
http://www.nytimes.com/interactive/2014/11/23/us/north-dakota-oil-boom-downside.html?_r=0
“You should have sold the dump when you had a chance. Now you’re stuck.”
That’s right. Better yet, you shouldn’t have bought the dump in the first place.
Is “Beggar thy Neighbor” back in vogue?
Are you prepared for the coming explosion of the Chinese mortgage bomb?
AlbqDan said China would grow at 7.5% pretty much forever. Perhaps not, but isn’t 4% a smidgen on the pessimistic end of the forecast range?
Opinion
Is China building a mortgage bomb?
By William Pesek, Bloomberg
Saturday, November 22, 2014 07:00
Residential buildings stand illuminated at night in the Nanshan district of Shenzhen, China. Residential buildings stand illuminated at night in the Nanshan district of Shenzhen, China.
RELATED NEWS
China ready to cut rates again on fears of deflation: sources
China’s PBOC cuts interest rates for first time since 2012
The first Chinese interest-rate cut in more than two years is a stark recognition that the world’s second-biggest economy is in trouble.
After years of piling ever more public debt onto the national balance sheet, it makes sense to have the People’s Bank of China take the lead in propping up gross domestic product. Yet while today’s benchmark rate cut should help stabilize growth, the move also adds to worries about looser credit that could pose risks to the global economy. Case in point: mortgages.
Earlier this year, Chinese officials took several stealthy steps aimed at stabilizing the property sector and bolstering GDP growth. The China Banking Regulatory Commission loosened lending policies. Even before cutting the one-year lending rate to 5.6 percent and the one-year deposit rate to 2.75 percent today, the central bank had cut payment ratios and mortgage rates, while prodding loan officers to ease up on their reluctance to approve borrowers without local household registrations. Pilot programs for mortgage-backed securities and real-estate investment trusts got more support. Incentives were rolled out to encourage high-end buyers to upgrade properties.
There’s good news and bad in all this. The good: It marks progress for President Xi Jinping’s efforts to recalibrate China’s growth engines. In highly developed economies like the U.S., the quest for homeownership feeds myriad growth ecosystems and offers the masses ways to leverage their equity for other financial pursuits. And China’s debt problems are in the public sphere, not among consumers. The bad: If ramped-up mortgage borrowing isn’t accompanied by bold and steady progress in modernizing the economy, China will merely be creating another giant asset bubble.
“Expanding the underdeveloped mortgage market is not bad news,” says Diana Choyleva of Lombard Street Research. “But if China relies on household credit to power the economy and pulls back from much-needed financial reforms, the omens are not good.”
Take the experience of South Korea after the 1997 Asian crisis. With regulatory tweaks and a variety of ill-fated incentives, Seoul effectively shifted the nation’s debt burden from government to families. By the early 2000s, fresh headwinds were intensifying; in April 2004, one in 13 Koreans was three months or more behind on debt payments. Of Korea, Choyleva says, “all it has to show for its efforts are the mess left by a burst household-debt bubble and an economy even more dependent on exports.”
For all the grand talk of reining in state-owned enterprises and the shadow banking system and tolerating a “new normal” of slowing growth, Beijing remains intent on getting as close as possible to this year’s 7.5 percent GDP growth target. With Moody’s and S&P watching, and prominent economists like Larry Summers arguing that China could soon slow to 4 percent growth, officialdom is looking for covert stabilizers. Among them: securitization.
…
China ready to cut rates again on fears of deflation - sources
November 24, 2014 - 8:49AM
Deteriorating growth convinced China’s top leaders to cut interest rates after months of resistance to a move.
Deteriorating growth convinced China’s top leaders to cut interest rates after months of resistance to a move. Photo: Bloomberg
China’s leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making.
Friday’s surprise cut in rates, the first in more than two years, reflects a change of course by Beijing and the central bank, which had persisted with modest stimulus measures before finally deciding last week that a bold monetary policy step was required to stabilise the world’s second-largest economy.
Economic growth has slowed to 7.3 per cent in the third quarter and policymakers feared it was on the verge of dipping below 7 per cent - a rate not seen since the global financial crisis. Producer prices, charged at the factory gate, have been falling for almost three years, piling pressure on manufacturers, and consumer inflation is also weak.
“Top leaders have changed their views,” said a senior economist at a government think-tank involved in internal policy discussions.
The economist, who declined to be named, said the People’s Bank of China had shifted its focus toward broad-based stimulus and were open to more rate cuts as well as a cut to the banking industry’s reserve requirement ratio (RRR), which effectively restricts the amount of capital available to fund loans.
China cut the RRR for some banks this year but has not announced a banking-wide reduction in the ratio since May 2012.
“Further interest rate cuts should be in the pipeline as we have entered into a rate-cut cycle and RRR cuts are also likely,” the think-tank’s economist said.
…
Will the prospect of building more empty housing units in China save the iron ore market from collapse?
Iron ore miners surge after Chinese rate cut
November 24, 2014 - 12:17PM
Max Mason
Business Reporter
China’s housing sector accounts for a quarter of the country’s steel demand.
China’s first rate cut in more than two years has sent shares in Australia’s iron ore miners surging higher, with the prospect of lower lending rates expected to boost the ailing housing construction sector in the world’s second largest economy.
Iron ore pure-play Fortescue Metals shot up as much as 12.6 per cent – the biggest intra-day jump since September 2012 – on trading volumes nearly double its daily average.
BHP Billiton had its biggest intra-day surge since December 2011, pushing as much as 4.3 per cent higher. Among the other miners, Rio Tinto rose as much as 4.1 per cent, Atlas Iron as much as 10 per cent and both BC Iron and Arrium as much as 12.5 per cent. All these miners have had larger intra-day jumps in the last three months.
The Chinese government’s decision to loosen monetary policy and stimulate its economy came as a surprise to most market pundits who were expecting policy makers to remain conservative.
Last week, data from China’s National Bureau of Statistics showed that the average price of new homes across 69 of 70 Chinese cities measured slumped for the sixth straight month in October.
In the year to October, prices fell across 67 of 70 cities.
China’s residential housing sector accounts for close to 25 per cent of steel consumption in the country. A rate cut, and some loosening of lending conditions is expected to help stimulate the sector again. Should the rate of growth in China’s steel consumption begin to rise again, the price of iron ore is likely to rise in tandem.
On Friday, the price of iron ore measured out of the Qingdao port in China fell 0.9 per cent to $US70.31 per tonne, according to Metals Bulletin. Iron ore has slumped close to 48 per cent this year.
The announcement by the People’s Bank of China was made after the local market closed, so the price of iron ore, determined by gathering of sale data after market close and updated once daily, has not yet been affected.
…
“Iron ore has slumped close to 48 per cent this year.”
The collapse of the commodities markets this year has been nothing short of spectacular. I suggest a Holiday Season thread to take stock of improving affordability in iron ore, oil and many other commodities prices in 2014.
Prospects for Growth
There’s a Giant Contradiction at the Heart of the U.S. Economy
NOV. 21, 2014
Neil Irwin
Suppose you told an economist these facts and only these facts: Long-term interest rates have fallen sharply over just a few months. Prices for oil and other much-needed commodities have been in free fall in the face of weak demand. Markets are predicting that inflation will be low in the years ahead and that the central bank will keep interest rates lower for longer.
Knowing only those facts, the economist would conclude that this country was staring down the barrel of a significant economic slowdown, and maybe even a recession.
What would that economist conclude, though, if stock prices are consistently rising toward record highs, job gains are the best in years, corporate sales and profits are rising, and business surveys and other real-time indicators of the economy point to steady expansion?
That country, of course, would seem to have a perfectly strong economic outlook. And as you have surely guessed, both these situations apply to the same country at the same time, which is to say the United States in November 2014.
…
BHP Targets Further Spending Cuts as Iron Prices Tumble
By David Stringer and James Paton
Nov 23, 2014 4:55 PM PT
BHP Billiton Ltd. (BHP) plans to take a scalpel to capital spending and costs to bolster cashflows as plunging iron ore and crude oil prices heighten investor concerns over returns.
Capital expenditure will be cut to $13 billion in fiscal 2016, down more than 40 percent from 2012. The world’s biggest mining company also increased its annual target for productivity gains by 2017 by $500 million.
With the market downturn, BHP’s ability to maintain or increase dividends has been questioned by brokers including JPMorgan Chase & Co. (JPM) and Credit Suisse Group AG. (CSGN)
The producer, though, remains confident in its ability to cover its dividend payments even as the prices of key commodities decline, Chief Executive Officer Andrew Mackenzie told investors and analysts at a presentation today in Sydney.
“They are having to really ramp up their productivity drive a lot faster than I believe they were willing to do,” Evan Lucas, markets strategist at IG Ltd. in Melbourne, said by phone. “They were already looking for a good amount of cost savings, so it shows how much pressure that price is having.”
Spending on projects and exploration will be trimmed to $14.2 billion in the 12 months to June, from a previous estimate of $14.8 billion. The producer allocated $22.7 billion in fiscal 2012, according its 2012 annual report.
Efforts to lower costs in its iron ore unit have “barely scratched the surface,” Mackenzie said in the presentation.
…
Perhaps this is so obvious that it hardly bears mentioning, but collapsing commodities prices will reduce U.S. housing construction costs, putting downward pressure on prices of new homes going forward.
phony scandals