The Housing Bubble

Do they work?

Everybody works; but I suspect when the program ends, many more people will end up “working” selling things on street corners:

yssup
moonshine
pencils
apples
coal…

Their bodies
Other people’s bodies

Sometimes trolls make there point with the top of there head.

I frickin love spook!

Trying to con people into believing they were Scottish Royalty. $3 million in the banks, a $1.2 million yacht. All of that probably swindled from others in past deals.

We’re doing something wrong.

“Deephaven couple allegedly got benefits even though they had a yacht and $3 million in the bank.”

So that’s what it takes?

I’m sceptical about both of them. “Fauxahauntas” and her claims of Native American ancestry do not inspire trust in her integrity, while Rand Paul’s endorcement of Romney spoke volumes about his willingness to “go along to get along” and put political expediency over principle.

The high marginal tax rates pertain to members of the so-called middle class, which I guess helps to provide for the 37% of the workforce who don’t work.

The labor force participation rate includes people looking for work, so the number without work is greater than 37%. Of course, that statistic includes everyone over the age of 16. Ask your elderly relatives if high marginal tax rates are keeping them our of the work force.

http://data.bls.gov/timeseries/LNS11300000

Also, what would be your definition of high marginal tax rates? Many people would think that those rates only apply to high incomes.

Many people would think that those rates only apply to high incomes.

And those people would be _wrong_, plain and simple.

Those with the highest incomes pay a much lower marginal rate—the capital-gains rate.

“The labor force participation rate includes people looking for work, so the number without work is greater than 37%.”

Spot on! 37% is conservative.

“Also, what would be your definition of high marginal tax rates?”

My wife, who is self-employed, is probably paying around 50%…

I thought I might be exaggerating, so I checked:

U.S. Federal 28%
Self-employment 15.3%
CA State 9.3%
Total 52.6%

OUCH!

Of course, the above neglects to include sales tax or the share of our rent that goes to paying the landlord’s property tax.

With tax rates like that, I understand why we feel broke all the time, even though our spending habits haven’t changed much over the years and we are earning more on paper now than at any point over the course of two decades as a married couple.

Now add in sales tax, fees, etc. Is freakin’ criminal.

“The labor force participation rate includes people looking for work, so the number without work is greater than 37%.”

My understanding was that the participation rate is LESS subject to missing people based on whether they are trying to look for work or not. This is because it counts those working as a percentage of able-bodied population, instead of counting only those wanting to work or looking for work, like the manipulated unemployment rate.

I think you have the right criticism, but are applying it to the wrong metric.

If you can put the following definition into plain English, please share. In particular, are people who are not looking for work in or not in the labor force?

Discouraged workers

Discouraged workers are a subset of persons marginally attached to the labor force. The marginally attached are those persons not in the labor force who want and are available for work, and who have looked for a job sometime in the prior 12 months, but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. Among the marginally attached, discouraged workers were not currently looking for work specifically because they believed no jobs were available for them or there were none for which they would qualify. See also: Not in the labor force and Alternative measures of labor underutilization.
…

My understanding is that “Labor Force Participation Rate” is
(# in the labor force)/ [(# in the labor force) + (# Not in the labor force)].

Please correct me (with suitable reference) if this is wrong.

Not in the labor force

Persons who are neither employed nor unemployed are not in the labor force. This category includes retired persons, students, those taking care of children or other family members, and others who are neither working nor seeking work. Information is collected on their desire for and availability for work, job search activity in the prior year, and reasons for not currently searching. See also Labor force and Discouraged workers.
…

Exactly, but even simple economics often eludes Whac.

And neither of you degenerate gamblers have the basic skill to calculate the production cost of a ham sandwich.

Production costs can go down as well.

#EconomicCasino

Oil drillers are already drilling the sweet spots, production costs are far more likely to go up then to go down.

“And neither of you degenerate gamblers have the basic skill to calculate the production cost of a ham sandwich.”

Again, if the production costs of extracting oil is directly related to the costs of drilling then as the demand for drilling infrastructure drops then the cost of the drilling infrastructure will also drop.

And if the cost of the drilling infrastructure drops then so drops the cost of production.

It’s a big “if”. And it’s not. Crude production is founded on field development costs.

Also if the delivery costs drop due to construction of a pipeline to connect supply sources with demand sinks, more of the price consumers are willing to pay can go towards paying production costs rather than transportation costs, inducing more production. Apparently AlbqDan skipped class the day when this was covered in Econ 001.

“It’s a big “if”. And it’s not. Crude production is founded on field development costs.”

But if the field is already developed then the field development costs have already been sunk. What’s left are the drilling costs.

There is more than twenty dollars between the price being paid and cost of production, two to three dollars does not make a difference. It is not even economics 101, it is first grade arithmetic.

Should we pay 2.00 more/ gallon so people have jobs?

Should we pay 100,000.00 more for a house so people have jobs building homes?

Value can be hard for some to see. where is there value right now? where should I invest?

I see value on craigslist sometimes.

It seems value only matters when greed turns to fear for some.

I dont see any value in a stock like home depot. I feel like I am paying for corporate insiders to get rich if I buy. they give you the illusion that you can get rich too, well for awhile. once they got theirs you are left holding the bag.

And so are the drill costs. It’s all pumping after that.

And the key point you keep missing is while conventional fields might have decades of prime production, shale oil fields have less than a year. You do not understand shale oil but you have plenty of company, the “experts” the MSM interviews do not understand the difference either.

‘cost of production’

What is this but a current cost structure. That can’t change? Nigeria is devaluing their currency. Ding! Production cost changes.

I am reminded of a UHS in my hometown back in the day. When things got lean, she was taking a 1% commission “to keep food on the table.” I wonder what her cost of production was?

Nobody cares about shale that’s why shale is imploding as the glut balloons and crude prices crater.

In other news;

Colorado Housing Demand Dives 8% YoY

http://files.zillowstatic.com/research/public/State/State_Turnover_AllHomes.csv

I wonder how many of these companies can produce at a loss for a considerable time period to keep people working and some of the bills paid?

Some money is better than none for awhile.

You know some of the companies will take that route just to stay afloat in hopes for a turnaround.

You never know there could be a bailout package around the corner.

Continuity of the business to hold key personnel and keep the operation going doesn’t always mean loss. It simply means they’re not earning profit and it’s done frequently in the construction biz. Basically everyone gets a paycheck.

“What is this but a current cost structure. That can’t change?”

Bankruptcy court is one way to change the cost structure.

Shed lots of expensive debt and - presto! - down goes the cost structure.

Some US oil companies are “asking” servicers to reduce prices 25%. It’s all so ridiculous. Yesterday I read the Federal Reserve gave 90 + billion of interest earnings to the treasury. This is interest on the 4 trillion of US bonds. Let me get this straight; Yellen prints money, buys bonds, and gives the interest paid back to the US government.

Maybe, just maybe, all of this is being done in the backdrop of a deflationary spiral. The central banks think they are creating inflation, when in fact they are producing the opposite. (And possibly trapped in a cycle they cannot control). OPEC thinks they are in a price war, when they are unwittingly playing a role in said spiral.

‘The euro hit a nine-year trough on Wednesday as collapsing oil prices and worries about the world economy drove skittish investors into the arms of safe-haven sovereign debt.’

‘From Japan to Germany to Australia, government borrowing costs fell to all-time lows as oil fell 10 percent in just two days - Brent crude broke below the psychological $50 barrier - as investors wrestled with the risk of global deflation.’

‘With fears of deflation rampant, yields on longer-dated Japanese, German, French, Dutch, Austrian, Belgian, Finnish, Canadian and Australian bonds all touched record lows.’

‘Even if the Fed sticks to its current timetable and moves around mid-year, markets are wagering it will be so far ahead of the curve that inflation will remain permanently low. As a result, investors are willing to accept less compensation for inflation risk over time, so pulling down yields on even the longest dated bonds.’

‘Yields on U.S. 30-year paper fell to 2.51 percent, above the all-time trough of 2.443 percent hit on Tuesday.’

http://finance.yahoo.com/news/global-stocks-spooked-oil-rout-002652978.html

And Wrong Way Yellen thinks she can produce 2% inflation?

‘keep the operation’

I saw on TV once, there were people in Japan that got up every day for years and went to a job that no longer existed.

yeah that interest back to the treasury is sure interesting. The more you borrow the more interest you get? Seems like a great incentive keep someone borrowing more. More dollars get created by the borrowing is the bottom line.

The FED note bears no interest and has no maturity but a treasury note does. Think about that one.

“The more you borrow the more interest you get? Seems like a great incentive keep someone borrowing more.”

Bingo!

Nigeria is devaluing their currency. Ding! Production cost changes.

Yes and no. Their labor costs would drop, but given that Nigeria is a third world nation, they already were rock bottom (I’m fairly certain that they were paying their roughnecks a small fraction of what their counterparts get in North Dakota) and thus a small portion their production costs. The cost of equipment would not change, since they certainly don’t make their own and no doubt have to import pretty much everything.

“There is more than twenty dollars between the price being paid and cost of production, two to three dollars does not make a difference.”

Now I’m starting to doubt AlbqDan passed freshman economics.

“I wonder what her cost of production was?”

Food & gasoline costs?

“You never know there could be a bailout package around the corner.”

Or a near-term return to $100+/bbl prices, as certain HBB posters have assured us is right around the corner.

“two to three dollars”

Thinking that drilling rigs have something to do with oil sands, he wouldn’t have figured out where the class was.

‘Yields on U.S. 30-year paper fell to 2.51 percent, above the all-time trough of 2.443 percent hit on Tuesday.’

Given the central bankers have tried to create inflation for over half a decade with increasing deflationary pressures as the result, what’s to keep Treasury yields from going still lower?

“I saw on TV once, there were people in Japan that got up every day for years and went to a job that no longer existed.”

That’s the flip side of this story:

Indian civil servant finally fired after epic 24-year absence
By Harmeet Shah Singh
@CNNMoney January 9, 2015: 4:41 PM ET

NEW DELHI (CNNMoney)
For government employees in India, one perk is valued above all others: Job security. Even if you’re a terrible employee, a public sector job is usually seen as a job for life.

But when one employee skipped work for 24 full years, India’s government finally had enough.
…

ben brings up an interesting point

If the interest on the bonds the fed buys is handed back to the treasury how does the fed actually make a profit?

I had read that administrative fees are taken out and some other stuff is subtracted before interest money is handed out.

There is a debtor and creditor listed on the federal reserve note.

There is no specific date it has to be returned. It is a promissory note that bears no interest. The debtor can redeem the note at any time in exchange for another.

If the note requires no interest what incentive does the debtor have to return it? also if the note has no maturity it could stay out there a long time. why would you want to give the note back as the debtor?

I dont think the fed is usually the buyer of treasury notes. Usually they are sold to investors here or abroad. In the crisis they had to buy them to get rates down and provide money to the govt for bailouts and other deficit exspenses.

Member banks can borrow from the fed through the discount window. I am not sure what happens to interest on those loans.

Banks can borrow from each other to meet reserve requirements or whatever through the fed funds rate.

Out of the 18 trillion in debt I think around 3 trillion is debt the fed has. The other is other investors or countries.

The bottom line is the fed is the lender of last resort. They are not typically in the business of lending money. That’s what the member banks are for.They are in the business of creating money.

Eventually all those bonds the fed has bought will mature. Just like when you buy a bond you eventually get your principal back. the fed bought those bonds through the primary dealers so the fed created money to pay them. So it will be interesting to see if the treasury will be able to sell more bonds in the private market to pay them back.

“If the interest on the bonds the fed buys is handed back to the treasury how does the fed actually make a profit?”

I guess if they printed enough to hyperinflate, then we could see how a misstep could result in a failure to make a profit.

Yellen prints money, buys bonds, and gives the interest paid back to the US government.

Don’t forget, they also get to spend as much as they want on their own “expenses” first, before they return any surplus to the Treasury.

Who approves the Federal Reserve’s budget?

“If the interest on the bonds the fed buys is handed back to the treasury how does the fed actually make a profit?”

Even pre-crisis, the Federal Reserve held nearly a TRILLION dollars on their balance sheet. How can you NOT make a profit on that??!? Even invested in government bonds earning only a couple of percentage points, we’re talking about just under $20B. Sure, they have to make payroll and fund their operations, but that would cover a LOT of operational expenses!!

Doesn’t the Fed get paid perpetual interest on our whole money supply? Mind boggling.

Or was it Purple Drank?

there is some nice cash to be made in short covering rallies.

The FED doves keep creating the short covering rallies in stocks.I guess the algos must like those words.

When is warren buffet gonna be wheeled out again?

When your last rationalization is quoting futures contracts and suggesting that 1000 barrel deliveries are being made to “smart people”, you’ve got a problem.

How many “people” do you know that are taking delivery of 1000 steel barrels of crude?

The fall off in drilling rigs that has already occurred assures that there will be no supply glut going forward. Of course, the fall off that is still occurring means we are moving to a shortage.

Don’t confuse practical reality with Uncle Dan’s arguments.

at what price is there value in a barrel of oil?

You guys have learned by now that markets will tend to overshoot to the downside.

How should I go long oil and at what price?

How do I use leverage to maximize my opportunity for profits in this casino?

Will oil test the lows of the lehman crisis?

Wasn’t cramer telling people to buy bear stearns and a few days later sh@t hit the fan?

“The fall off in drilling rigs that has already occurred assures that there will be no supply glut going forward.”

Did the debt that financed these drilling rigs all off as well?

At some point something has to give.

“At some point something has to give.”

Something already has. The Down is Up clown is just a distraction.

If people in general are broke (and they are), $900 won’t make any difference.

Neither will the $500 Obama wants to give them to go get an Associates Degree make any difference.

Neither will the $500 Obama wants to give them to go get an Associates Degree make any difference.

Correct, they’d have to quit one of their three part time jobs to have time to go to school.

Speaking of “going back to school” I was perusing through my linked in contact list the other day. What struck me as interesting is that several former tech colleagues, all now middle aged, have posted that they are “Taking time off to sharpen my skill set”. I’m thinking that this is code for “I got laid off and I can’t find a job because I look as old as a 57 Chevy.”

“If people in general are broke (and they are), $900 won’t make any difference.”

Not everyone is broke, and some folks will buy houses this year with the marginal benefit of a $900/year reduction in mortgage payments over a 30 year amortization period. It doesn’t sound like much until you run the numbers. At a 3.25% interest rate, the present value of $900/year for 30 years ($75/mo) is worth $17K+ in extra potential purchase budget.

So, you think because he spoke the words, it is already an accomplished fact?

“…it is already an accomplished fact?”

Does Congress have to go along with executive orders?

The state would still fail. It has a population that it can’t feed without oil and the people would see what a failure a theocratic facist state is. If they attacked us no more kids gloves we could start taking out cities because it would be openly state sponsored.

The big issue is that our elites wouldn’t be able to make as much money.

“The big issue is that our elites wouldn’t be able to make as much money.”

Oh bugger.

“Make the check out to cash”

My middle name.

To get 5 years prison in California you gotta do more than beat the crap out of someone. He must have beat him half to death. Mehta kind of people are you hanging out with?

I know a NY’er who lived in OK back in the 80’s and did 4 years in prison there for possession of an ounce of weed. He’s not too bright so I’m sure he screwed himself post-arrest.

“To get 5 years prison in California you gotta do more than beat the crap out of someone.”

Wasn’t it 3-yrs for crime-of-passion murder under Rose Bird?

Folsom’s for profit all right. For the profit of the Union goon guards, but I’d think California would be shipping out, not accepting in from Reno.

Last year there was an article on a couple of judges taking kickbacks for sending youth to for profit juvy jails.

It’s a matter of being able to separate out the transactions which were all-cash from those which were mortgage-financed.

You were fortunate. Had you made that mistake, you’d be underwater right now.

It is precisely keynesian. It just happens to get in the way of the truth for you.

The boomer bump goes back to 1940. They’re dropping like flies already.

We oughta try real Keynesian economics some time.

A flaw in Keynes’ logic: Most, if not all, societies will operate at the most bleeding-edge, maximum debt they can. Not doing so leaves politicians vulnerable to challengers, so they spend the maximum they can in order to maximize their chances of re-election.

It’s not Keynsian spending because total government spending was decreasing until very recently.

Why do Americans tolerate breaking contracts made with old people?

We are told that they are part of the free shit army, that they are looting the government, that they are getting something they don’t deserve, and that we can’t do anything to prevent it because the money is gone.

Yet we can find money to bailout banks??

“Yet we can find money to bailout banks??”

The money wasn’t found; rather it mysteriously appeared on the Fed’s balance sheet.

Although enough appeared there to bail out U.S. and foreign banks to the tune of $4 trillion, there was not enough left over to avoid retirees in places like Detroit, Stockton and San Bernardino from taking pension cuts. And now it appears some multiemployer pensions may be looking down the gun barrel of future cuts.

As I mentioned earlier, the elderly are easy targets for separation from their money.

You paid in $50k, that’s what you’re gonna get back.

8% interest? Says who?

I’d be happy having it back just inflation-adjusted. Of course, I’d like a more accurate gauge of inflation used, rather than the typical manipulated (e.g. hedonics) government figures.

@Shillow — CAGR of stock market since I started working until today is 8.1%. If I had a Soc Sec opt-out option I would have put the money into mutual funds (IRA) and would have earned the 8% compounded.

Until today…. Until the Fed pumped it up from 50 percent less you mean. You want all the benefit but not to pay the fiddler.

I dunno why my post appeared below but I’ll say it again.. Only in the mind of a gambling fool or somebody who wants something for nothing does $50k turn into $400k+ annuity.

SS is a complete failure.

Small now; continuously growing to ginormous over the next two decades.

3 million more over 65 a year for the next 20.

So it is in the mind of a free $hitter.

howmuchamonthharvey is alive and well.

anyone have any experience with reverse mortgages?

Looks like a scheme to get your home and hope you die fast. maybe I’m wrong but the commercials on tv seem shady.

I guess you get some income from your equity but I have to assume they get your house at some point.

I want to see tom and giselle hug it out when they loose.

Gisele Bundchen Pissed Off After Being Heckled by … - YouTube
http://www.youtube.com/watch?v=T5vFZHC5HPM - 209k -

Gisele Bundchen “My Husband Cant F*cking Throw and … - YouTube
http://www.youtube.com/watch?v=j4ZsNbKvo68 - 372k -

“…tom and giselle…”

A nice two-income family.