Bits Bucket for March 14, 2015
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
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Update: Crude Crashes Through $45 Floor; Bounces Off 52 Week Low
http://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic
“The dramatic drop in oil prices and the transfer of wealth to consumers is going to be very painful …” said Bob Dudley, CEO of BP
“The dramatic drop in oil prices and the transfer of wealth to consumers is going to be very painful …”
It’s going to be painful to consumers too if the jobs these consumers have are somehow - directly or indirectly - associated with the oil industry.
Bahahahaha … some of these consumer pukes are not at all going to be joyful at falling gas prices if their wages fall or (the horror) vanish entirely.
Luckily for them their friendly lender will always be there with a helping hand in the form of a Dotted Line Special.
Salvation is but one signature away.
Bahahahahahahahahahahahahaha
wages already fell. now prices are falling.
Its the way the world works.
“The dramatic drop in oil prices and the transfer of wealth to consumers is going to be very painful …”
Wait a minute — aren’t we talking about lower gasoline prices here?
My economic outlook felt the best it has in several years after oil and gasoline prices cratered. And my wallet has cash in it again. Whose pain is it we are discussing?
Whose pain is it we are discussing?
The pain of the Pig Men, the only ones who count in this brave new world.
Squeeel like a pig!
The world market is at risk of drowning in an oil tsunami.
Markets
U.S. Producers Ready New Oil Wave
Even as crude plummets, energy firms are waiting to unleash more supply, capping any price gains
Pumpjacks outside Williston, N.D. Photo: Bloomberg News
By Erin Ailworth and Benoît Faucon
March 13, 2015 7:21 p.m. ET
The ocean of oil from U.S. shale drove crude prices back toward six-year lows Friday, and American energy companies say they are poised to unleash a further flood that would keep prices from returning to lofty levels for a long time.
The International Energy Agency reinforced the prospect of a prolonged slump in energy prices Friday, saying U.S. oil output was surprisingly strong in February and rapidly filling all available storage tanks. The Paris-based energy watchdog said this could lead to another sharp drop in crude prices, which fell by about 50% late last year.
The report sent oil prices tumbling around the world, with the global benchmark Brent crude falling $2.41 to $54.67 a barrel. The U.S. benchmark West Texas Intermediate lost $2.21 to settle at $44.84, less than 40 cents above a six-year low it reached in late January. Last summer, both traded well above $100.
It was only last month that the IEA said a price recovery seemed inevitable because the U.S. production boom was likely to cool. Instead, “U.S. supply so far shows precious little sign of slowing down,” the agency said Friday. “Quite to the contrary, it continues to defy expectations.”
Independent shale-oil producers have slashed their planned 2015 spending on drilling by $50 billion, compared with last year’s, but have promised to increase production by focusing on their best oil fields. Total U.S. crude oil production hit a high of 9.4 million barrels a day in the week ended March 6, according to federal data.
Now many are adopting a new strategy that will allow them to pump even more crude as soon as oil prices begin to rise. They are drilling wells but holding off on hydraulic fracturing, or forcing in water and chemicals to free oil from shale formations. The delay in the start of fracking lets companies store oil in the ground in a way that enables them to tap it unusually quickly if they wish—and flood the market again.
This strategy could put a cap on how high oil prices can rise once they are recovering, said Ed Morse, global head of commodities research at Citigroup Inc.
“We’re in slightly unexplored territory,” Mr. Morse said. “It’s an experiment—a big, big experiment.”
…
Wall street is on the wrong side of the trade. They are short and oil has seen its bottom and the Saudis have no interest in driving it lower. Production is falling months before they claimed it would and they are making excuses. They are using their msm and the government’s ability to spike the dollar to try to cover without needing 2008 type bailouts. They are finally realizing that a lot of production is not viable even at 95 a barrel. No more time to post but I will lay out case Sunday. But a hint it is shown in two contradictory sections of the WSJ.
Too bad about the fail on your prediction:
Oil Prices: Get Ready for the Next Leg Down
By Matt DiLallo
March 14, 2015
After a steep drop late last year the price of oil has stabilized over the past month to right around $50 per barrel. However, that stability might not last long as there are signs on the horizon that the oil industry could be in for another leg down. That has some analysts suggesting that oil could hit $30 per barrel before rebounding later this year.
…
Excerpt from URL to article posted below:
oil-price-pressured-by-growing-inventories
Oil Markets
Oil Prices Tumble After IEA Warning
Energy watchdog warns that recent rebound in prices may not last
By Timothy Puko And Benoît Faucon
Updated March 13, 2015 5:09 p.m. ET
The benchmark U.S. oil price tumbled to a six-week low Friday, thwarting hopes for a sustained recovery after an influential energy watchdog said U.S. production growth is defying expectations and setting the stage for another bout of price weakness.
Investors and oil producers should brace for further declines in oil prices, the International Energy Agency said in a monthly report. Prices haven’t fallen far enough yet to cut supply, and some signs of rising demand are just temporary—bargain buyers using cheap oil to fill up stockpiles, the agency said.
That outlook weighed on sentiment in the oil-futures market, which has stabilized in recent weeks following a seven-month selloff that saw the benchmark price on the New York Mercantile Exchange plunge 59%. Behind the selloff, which by some measures was the steepest in decades, was a global glut of crude spurred by rising production in the U.S. and Libya.
“This IEA report today confirmed a lot of things bears had been talking about,” said Todd Garner, who manages $100 million in energy commodity investments at hedge fund Protec Energy Partners LLC based in Boca Raton, Fla. “It is a big deal.” His fund is slowly adding to a bet the growing supply will keep bringing down gasoline futures, he said.
The IEA’s report echoed growing concerns in the market that the amount of available oil storage is dwindling, which potentially could weigh further on prices if output continues unabated.
…
iea-sees-renewed-pressure-on-oil-prices-as-us-glut-worsens
IEA sees renewed pressure on oil prices as U.S. glut worsens
Alex Lawler and Dmitry Zhdannikov
LONDON — Reuters
Published Friday, Mar. 13 2015, 5:53 AM EDT
Last updated Friday, Mar. 13 2015, 11:52 AM EDT
Oil prices might have stabilized only temporarily because the global oil glut is worsening and U.S. production shows no sign of slowing, the International Energy Agency said on Friday.
The West’s energy watchdog said the United States may soon run out of spare capacity to store crude, which would put additional downward pressure on prices.
…
Epic miss, right up there with the failed 2012 election prediction!
“No more time to post but I will lay out case Sunday.”
For a sneak preview, does your ‘case’ play out before or after oil drops below $30/bbl?
I feel like we are paying a dollar more / gallon than we should be in the golden state. Is the golden state sunk?
I just came back on because I saw this about Warren Buffett and had to show why he does not mind paying on his earned income but would hate to pay taxes on his wealth:
http://www.themarketbusiness.com/2015-03-14-buffett-never-raise-his-us100000-salary-for-decades
But hey why don’t we make a bet PB, if oil drops below $30 anytime this year, I have to change my screen name to dumbazz, it it doesn’t you have to use the name next year everyday you post to dumbazz. Do we have a bet?
“I have to change my screen name to dumbazz.”
I like that idea, though I’m not much of a gambler.
In the article posted yesterday, Buffett explicitly called for an increase in the capital gains and dividend tax rates for the wealthy.
So yet more misinformation. You’re on a roll, Dan.
Traveled thru Flagstaff yesterday. I thought I should offer to buy Ben a nice dinner and a beer, then remembered he doesn’t live there anymore. Where did you go Ben?
Not Sacramento for sure.
He didn’t say. I think it’s great to allow us to keep guessing and for him to stay mum about it.
So this cat Ben or whatever is name is…. has it dawned on everyone yet that his blog isn’t about him and he’s likely one of the sharpest knives you’ve pulled from the drawer?
‘one of the sharpest knives’
I don’t know about that. What we are considering is, a mania is there for anyone to see. From the weekend post:
‘tales of excess from the market fail to shock anymore. And so, as the average price of a detached home in Toronto passes the $1-million mark, it was noted with more amusement than alarm. In Vancouver, rundown shacks continue to list for close to $1 million. And why not? Lenders are hard at work pushing mortgages with rates as low as 2.24 per cent for two years’
http://thehousingbubbleblog.com/?p=8906
From the comments:
Comment by Patrick
I know of condos that are selling for $100,000 less than their peak price; I know of whole areas of single family ranch style houses that are selling for less than $400,000.
Comment by toast on the coast
I have a home in Rancho Mirage and follow the market closely. It has peaked and has gone down since the summer. Homes that would have been $425,000 in the summer are now $350,000 or less. The decline of the exchange rate and the oil glut has certainly cooled the Canadian buyers that were flush with cash and snapping up the bargains from the bust.
I first started thinking about the idea of a housing bubble in 1998, in Austin Texas. I had experienced the 80’s bust and was soon to get a nice slap from the dotcom mania. It was in the back of my mind for years. When I arrived in Sedona in 2004, everybody was acting like they were on a drug; giddy, people were acting like houses were perpetual money machines. I was concerned, as it looked too much like Texas in the 80’s. Yet here we are; tiny crappy houses in Vancouver - over a million. Same with the SF area. Even worse in New Zealand and parts of Australia. A million won’t buy you a box of smoggy air in Beijing. It’s not cleaver or wise to see that something is wrong. Also at this link:
‘Home prices rose 7.8 per cent in the greater Toronto area, and were 6.4 per cent higher in Vancouver last month compared to February 2014.’
“Is it a bubble? It’s hard to say given that demand reflects more strong fundamentals than rampant speculation. But something’s not right. For most goods, high prices discourage demand. But in these two cities, first-time buyers are fearful of getting shut out of the market. So they keep buying despite worsening affordability, a trend last seen in the late 1980s,” the economist said. “And that did not end well.”
It’s like the grilled cheese sandwich trucks “valued” at $24 million each. How can one not see what’s going on? That is the essence of a mania. The majority have to be blind to it or it wouldn’t exist.
We lived in Richmond, CA when my moment of Housing Bubble enlightenment arrived. First it was the condos along the shore that saw rapid price appreciation, but these were different because of the scenery plus a perceived buffer against the social woes of the Iron Triangle. When interior Richmond condo prices went stratospheric roughly concurrent with the Beanie Baby Bubble and the Tech Stock Bubble, it was clear to anyone with their eyes open that we were witnessing a mania.
It still sticks in my mind I worked with a man in his late 70s from Atlanta who would drive back and forth to Tampa where I worked - in his corvette. He was consulting like me. This was in 2011.
He told me he and his wife were paying $4,000 per month on their house in Atlanta. And his daughter and granddaughter were moving out. The younger ones moving to where the granddaughter would go to college. So they have a huge house to take care of and huge mortgage - while in their 70s!
Amazing. I only read about people past 65 having mortgage payments up to that point. Thought no one in their right mind would decide to get a home loan past the age of 37.
Now with potential climate change, why would anyone want to obligate themselves for the next 30 years in a spot that could be so uncomfortable that few would want to live there?
There is a reason Southern California has over 10 million people - climate. But now the reports say California has only one more year of water supply left.
What’s a home owner gonna do? Homemoan.
I don’t know why Toronto housing is always going up - must be mostly new high priced condo units - because large sections of TO like North York have many older condos that are staying listed and $100,000 below their peak.
They are reporting that Toronto and Vancouver are the runaway markets and that the rest of Canada has not really been in a bubble (exempt Calgary/Edmonton) - which I agree with. Vast areas of Canada have housing at give away prices - no jobs =no buyers (Thunder Bay, Wallaceburg, Winnipeg, etc).
I guess the real estate industry is hyping the market by focussing on the runaway markets which gives the perception that all of Canada is in a bubble - which it surely has not been for a while - but some areas have been in a bubble (still).
My point ? There is a disconnect between what the Canadian real estate market is really like - and what it really is.
I believe mix has distorted reality.
Several years in a row of double digit price increases in housing is a clear and objective bubble. Very simple.
There is a reason Southern California has over 10 million people - climate. But now the reports say California has only one more year of water supply left.
What’s a home owner gonna do?
Enjoy the dead lawn?
California will survive, but there will be some changes. Like xeriscaping and gravel as far as the eye can see.
Ben says: “When I arrived in Sedona in 2004, everybody was acting like they were on a drug; giddy, people were acting like houses were perpetual money machines….”
I am staying in the Village of Oak Creek near Sedona and pulled up the first two listings in the neighborhood. They are interesting:
One house sold in 2002 for $300k, just foreclosed by the lender in 2014 for $330k, now listed for $360. 1600SF. The other purchased in 2003, listed for sale for many years, high of $700k, slowly working down to $425k today. It’s 2300sf and has been on the market for 410 days!
The conclusion of these observations: There is still plenty of denial and lots of hangover from the excesses Ben observed in 2004.
California will survive, but there will be some changes. Like xeriscaping and gravel as far as the eye can see.
For decades, California has been pushing xeriscaping on people, but they mostly ignored it.
I had a landscaper xeriscape my front hard when I was a home moaner in the 1990s. He was local to that small down but did a darn good job.
Xeriscape is a win-win deal. Low maintenance was my priority since I used to like to get away on weekends a lot, instead of do yard work.
But this was in the high desert.
“The conclusion of these observations: There is still plenty of denial and lots of hangover from the excesses Ben observed in 2004.”
You demonstrate that denial perfectly Jingle_Fraud.
Now lets review the additional excess of 2009-2014 ontop of the excess of 1999-2008.
Shillow
You may be right, but that would be more a mean average rather than a modal one.
Because Toronto and Vancouver are big cities. They could probably account for all of the smaller cities in Canada like Thunder Bay, Wallaceburg, Three Rivers, etc that definitely have declined.
I think the Selling Price most often happening is representative of these small markets and selected areas of the bigger cities.
Of course they are.
Renters are so confident in the housing market as a whole, in fact, that roughly 5.2 million say they expect to buy a home this year, according to results from the latest Zillow Housing Confidence Index (ZHCI), up from 4.2 million at the same time last year.
http://www.zillow.com/research/housing-confidence-jan-2015-9097/
If you trust realtor demand numbers, sure. Keep in mind they’re surveys, not data and NAR was caught lying about demand every month for 4 years straight.
I still think of the buying versus renting thing. At my age - mid 50s, I think I would be better off renting a Mark Taylor apartment in the Phoenix area. I’m thinking a 3 bedroom unit, at 1500 square feet. It comes with an attached garage. It’s between $1700 and $1900 per month. It’s all carefree living.
And if the Phoenix heat island effect gets as bad in my lifetime as predicted, 5 degrees hotter, I could easily move my trash to a different city in a cooler climate.
And when I’m gone (hopefully several decades away) my beneficiaries would not have the headache of selling a depreciating stucco box.
And when I’m gone (hopefully several decades away)
You’re planning on living to 120+? Even Jack LaLanne only made it to his 90’s.
It’s not like I’m 70 years old dude.
You did say “several”, so I took that to mean “seven”. But yeah, “several” is fuzzy, but I tend to think of it as more than 3 or 4 (a few).
Anecdote:
My FIL passed away two months ago at the age of 90. When he was a lad he was a cyclist, so good in fact that the German Olympic committee was considering him for the Olympic team. The war put the kibosh on that. He was still cycling 40 miles in his early seventies and his heath was amazing.
That is, until he noticed the first stages of dementia and then later Alzheimer’s. He was pretty much a vegetable during his last 5 years. We’d go visit him in the “memory care” home and he’d give me that “who the hell are you?” look. Eventually he didn’t recognize his own kids
If 6.5 million Americans can make it past 112 to collect social security, maybe I have a chance too!
http://benswann.com/social-security-audit-reveals-6-5-million-active-accounts-of-people-over-112-years-old/
” Even Jack LaLanne only made it to his 90’s”
Jack drank like a fish his last couple decades.
He died of pneumonia, not cirrhosis
I’m also mid 50’s, am currently renting 1/2 a duplex that I like for $1500, great location and a big garage for my tools and toys…but I’d still buy a SFH if the price were about 10 years rent, roughly $250K. That was the case up until 2012, tried to buy for a year but it was hopeless when competing with legions of 100% cash flippers and speculators…had I been able to get on offer accepted (or even considered) w/ $50K down the mortgage would have been right about $1000/mo. Similar houses are now $400K plus locally and buying would be foolish. When Bubble 2.0 pops if prices drop 30% or more will consider buying again.
Did buy a place at 40, sold it at 50, did very well on the deal and enjoyed owning my own place…even enjoyed the many repair and remodel jobs I took on and miss using my tools.
Do not agree that buying is necessarily foolish when older and/or retired, will buy again if and when the fundamentals make sense…renting or buying will be a monthly expense either way barring homelessness, right now renting is the better choice for me.
more tire kicking this weekend at open houses?
Why dont you accept serfdom with a loan?
Zillow says 5.2 mil are very eager to do just that.
(chuckle)
When you devalue money, you devalue labor.
Why does Yelling hates labor?
Hate labor? No banker hates labor (as long as somebody else is the one that is doing it).
Bankers LOVE labor. Bankers love it when others labor to earn money and then willingly send large chunks of what they earn to bankers.
Bahahahahaha .. one of the greatest sales job ever done by central bankers - EVER done by central bankers - was convincing millions of laborers that their main goal is to …
(bahahahahahahahahahahahahahahahahahaha)
… is to help workers by keeping the unemployment rate at a minimum. And they do this by CHEAPING THE VALUE OF THE MONEY that the workers earn by the use of their labor.
Bahahahahahahahahahahahahahahahahahaha
Again,
1. Dumb ‘em down.
2. Profit.
The central bankers have fully realized success beyond their wildest dreams. Fully 95% of the electorate are so dumbed down and conditioned to love their serfdom that they willingly bend over and grab their ankles on demand from the Wall Street-Federal Reserve looting syndicate. The banksters have a free hand to use their Republicrat henchment to rig the system even more flagrantly since the sheeple fall into two categories: the Stupid (the Obama Zombies) and the Profoundly Stupid (the McCain Mutants and Romney Retards). Soon 2016 will roll and and give the banksters a new category: the Beyond Stupid (the HillaryJeb cretins). IDIOCRACY has indeed arrived right on schedule.
I like my increasingly valuable cash.
Are you saying that your portfolio is 100% allocated to US Dollar denominated cash and cash equivalents?
“I like my increasingly valuable cash.”
Seems easy to understand.
Given your deflationary outlook, why aren’t you 100% invested in long term bonds?
Because that deflation is going to turn on a dime at some point.
What does it matter when prices are falling?
Money = labor? Nah, not so much. Now that the financial sector dominates US GDP, we don’t need no stinkin’ labor. Sell a derivative here, do a leveraged buyout over there, some vulture capitalism, underwrite some junk bonds … we can move tons of money in a day’s “work” without breaking a sweat.
U.S. Army sending armored convoy 1,100 miles through Europe
I am sure they are there to party……
If we don’t fight them over there then we’ll have to fight them over here.
(or sumtin’)
Whatever. The Empire must be preserved.
(By any means necessary.)
Didn’t they make that movie already? I think it was called Stripes.
Denver, CO Housing Inventory Balloons 89% On Foreclosure Inventory As Prices Sink
http://www.movoto.com/denver-co/market-trends/
http://www.globalpost.com/dispatch/news/thomson-reuters/150314/investors-patient-panic-over-fed-language
Raise rates when every other country in the world is cutting them…And some of the strongest are negative…If yields rise, won’t that just attract more foreign investment in the 2’s & 10’s thereby driving the yield back down ?? Its a conundrum….
Another neo-con “mission accomplished.” Many more to follow after HillaryJeb gets elected.
http://www.telegraph.co.uk/news/worldnews/africaandindianocean/libya/11471411/Special-report-from-Libya-How-Natos-toppling-of-Gaddafi-has-turned-to-disaster.html
Happy Pi Day HBB’ers
It’s a special Pi Day today because Pi = 3.1415926… which means at 3-14-15 9:26 you can celebrate pi to 7 digits
Say that Funky Number, Math Guy
https://www.youtube.com/watch?v=Qs464DqnPTo
See you at the pie shop, I”m buyin’…
Pi, besides being an irrational number, is too often expressed as an improper fraction, and I believe this, this exposing our children to improper fractions and irrational numbers, goes a long way in explaining why our children lag much of the rest of the world when it comes to math proficiency.
True believers say Pi = 3 because in the Bible it says King Solomon’s temple was 10 cubits across and 30 cubits in circumference and it was round…
Tell ‘em that Pi really is and even 3 and tell ‘em those other digits are mere expressions of interest that must be paid out to lenders so as to carry out God’s Plan.
I guess the Babylonians had a better approximation of Pi (= 3.125) back in 2000 B.C.
Not to suggest that it matters, as they were heathen.
Good enough for government work.
“…this exposing our children to improper fractions and irrational numbers, goes a long way in explaining why our children lag much of the rest of the world when it comes to math proficiency.”
I hope you are being facetious.
“I hope you are being facetious.”
So do I.
How are kids going to become proficient in these nuances of math if they’re never exposed to them?
Get rid of the nuances and - presto! - the problem is solved.
Start with rounding pi down to 3 (where it belongs) and go from there.
And do away with radicals!
Wait until they find out about imaginary numbers.
“imaginary numbers”
Oh, so now we’re going from discussing math to discussing economics?
Or philosophy: “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we don’t know.” –Donald Rumsfeld
10 digits today at 9:26 and 53 seconds. Okay to all us HBB nerds, let’s list our favorite kinds of PIE. (No savories like frito or hare).
Mine is blueberry.
I’m the PieMan. Pizza, fruit, you name it. I’ll eat any old pie.
Somebody get him a slice of eel pie.
I think Lola likes Gooseberry.
Lola is a pie fly.
Double the diameter, quadruple the amount of pie. (Or just multiply the diameter by 1.41421356237 in case you only want twice as much pie.)
Sorry — didn’t read all the way down the thread before posting.
Or you can take it all the way out to 3-14-15 9:26:53 (or use :54 if proper rounding is a concern) — twice in the same day. Woo hoo!
We’re set to celebrate. 3.14159265358979323846264…, baby!
‘The latest numbers out of China no longer mask its economic decline. Chinese industrial production “slowed at its sharpest rate in the first two months of the year since the global financial crisis” shouted the Financial Times on Wednesday.’
‘Wang Tao, UBS’ chief economist on the Chinese economy, was dour: “Today’s disappointing data release highlights just how quickly domestic demand is deteriorating as the ongoing [real estate] downturn continues to spread its negative impact through the economy.”
‘In China that impact is huge, representing more than 20 percent of the country’s total economic output. From the mining of iron ore to the employing of finish carpenters, the ripple effect of any decline in housing is immense. That decline is breathtaking: In just the first two months of 2015, housing sales have dropped by one-sixth — that’s 16 percent! — compared to a year ago. And that follows a 7.6 percent decline in December. This is the worst decline in the real estate market since the start of the global financial crisis, and likely signals the final victory of supply over demand that the Chinese government has stoked for decades.’
Sounds like that supposed 7.5% GDP growth rate in perpetuity might be subject to slippage some time in the near future?
Lola…. Liberace. Present yourselves.
A horrid thought.
A letter to the editor:
‘There are a host of bills in the Montana Legislature dealing with taxes. One is Sen. Bruce Tutvedt’s SB 157 dealing with property reappraisals. In the past decade thousands of Montanans were caught in the housing bubble and had their property reappraised at significantly higher value only to find that the actual value was hundreds of thousands less than the taxable value. Tutvedt’s bill tinkers with this problem.’
‘Why not eliminate the problem? Do away with reappraisal altogether.’
‘When you buy property, that price would be the appraised value as long as you own the property. The actual tax you pay could not increase more than 3 percent a year.’
‘Example: If you buy a property for 200k, that is the appraised value. Twenty years later, when you sell the property for 500k, that is the new appraised value. Gone would be the days when an out-of-state millioniare buys up the property next door, raising the appraised value of your home, and resulting in you getting taxed out of your home.’
‘Three percent a year would allow for reasonable inflation, and people will know that they aren’t going to be taxed out of the homes they have lived in for many years.’
‘only to find that the actual value was hundreds of thousands less than the taxable value.’
And the actual value hundreds of thousands less than what they paid too.
Housing is a horrible place to park your money. Housing is a depreciating asset that simply drains your wallet.
‘Why not eliminate the problem? Do away with reappraisal altogether ??
Which is exactly what prop.#13 did in California…
One of the fundamental problems is the “appraisers” don’t have any idea how to evaluate and establish costs associated with a fixed structure.
Solve that problem and most of this mess goes away.
appraisers are suppose to be there to protect the bankers from fraud. unfortunatly they hosed a lot of bankers with bogus numbers in the last bust.
Do away with reappraisal altogether
A guy living a couple of houses away from me bought his house for $150,000 or so about 12 years ago. Current county appraisal is $100,000 and even that is a gross exaggeration of its current resale value. At least his real estate taxes are not spiking.
Redmond, WA Prices Dive 5% As Inventory Billows 129%
http://www.movoto.com/redmond-wa/market-trends/
I live here - this is absolute nonsense. Inventory is virtually nil. My neighbor’s house sold in four days a couple of weeks ago. There is a 4-lot short-plat being developed behind me (prices from the mid-900s) and another property across the street from me just sold for $500K to a builder who will do a 2-lot short plat.
It’s still going crazy here - there are far more wealthy millenial dual-income techies who want to buy than there are houses available.
Redmond is not Detroit. Not yet, anyways.
Well…. right on your street there are multiple houses that have been on the market since last fall.
It’s absolute reality my friend.
History repeats itself.
http://www.washingtonpost.com/blogs/wonkblog/wp/2015/03/06/asias-housing-bubbles-look-a-lot-like-the-u-s-housing-bubble-did/
Asia’s housing bubbles look a lot like the U.S. housing bubble did
History might not have to repeat itself, but sure does it. For the last 25 years, the global economy has lurched from one big housing bubble to the next. First it was Japan, then it was the U.S. and Europe, and now it’s the rest of Asia.
You can see that in the chart above from Nomura. Since the end of 2008, housing prices across Asia have, for the most part, tracked those in the United States during its bubble years. That’s because money poured into those countries in search of better—or really, any—returns right after the crisis, and, more often than not, it found its way into the property market. Now some of them, like Korea’s, barely went up at all. But that was an outlier. China, Taiwan, and Malaysia’s housing markets have all risen, and now started to fall, in not quite perfect, but still close sync with the U.S. market circa 2005. And Hong Kong and India’s prices have galloped a lot higher than even that.
Now a bubble isn’t a bubble unless it bursts. Until then, it’s just a boom.
It’s the same bubble Lola. In the US or abroad. Same.
It’s Salad day - lots of green. Have you gone to your CU yet to get some lettuce to stash under your mattress?
Speaking of collapsing demand drowning in a supply glut, what about dry bulk shipping?
Bulk shipping rates sink further as cargo volumes dip
in Dry Bulk Market, International Shipping News
12/03/2015
Global non-oil trade volumes shrank further, plunging the shipping markets deeper into gloom in the last few weeks.
Lowest in history
The Baltic Dry Index, which measures cost of shipping of dry bulk cargoes, sank to just above 500 levels, the lowest in about the 30-year old history of the index.
While a few ship owners are optimistic about a quicker recovery, AK Gupta, Chairman and Managing Director of Shipping Corporation of India, strikes a more realistic note. “The (dry bulk) market is in shambles. I do not think there will be any meaningful recovery before two years,” he told BusinessLine on the sidelines of an event here last week.
He attributed the plunge of the index to shrinking cargo volumes and over supply of ships in the market.
SCI, India’s biggest ship owner, operates 17 dry bulk ships, out of its total fleet of 69 vessels.
The index first hit its lowest in the first week of February when it dipped to 560 levels — it tanked from 1,300 in mid-November to 800-odd in mid-December. Before this, the lowest the index had touched was in February 2012, when it slipped to below 700. At its peak since the index came into existence, it touched close to 11,000 in May 2008.
Shrinking volumes
Gupta said, at current levels, dry bulk vessels were struggling to get daily hire charges of between $4,000 and $5,000 a day. “This is barely sufficient to breakeven on a voyage,” he says.
The situation has worsened as too many ships are chasing the shrinking volumes.
On March 9, a cape-size vessel got a daily charter price of $4768, while a Panamax got $4707, as against their year-ago rates of $24,748 and $8,757 respectively.
Globally, shipping companies are trying different methods to reduce current exposure to bulk markets. One trend has been that ship owners, who placed orders for new bulk carriers, are trying to convert these ships mid-way during construction into tankers, which are commanding better freight rates. There have been reports of cancellation of orders too.
Conversion factor
“With regard to cancellations, a lot of it does not come out (in the open), but some of the companies have publicly converted or announced conversion of dry bulk orders to tanker orders. So Capesize vessels have been converted to LR1 tankers or LR2 tankers. But it is few and far between,” Shivakumar, Group CFO of Great Eastern Shipping, said at an analysts meet last month.
Large crude carriers
Shipping companies are being somewhat compensated by the better buoyancy in the tanker segment, as lower crude prices have increased demand for shipment of the oil. Gupta said traders are even hiring very large crude carriers (VLCCs) just to store the crude.
“At least 35 VLCCs are being used for storage globally — so those many ships have gone out of market, which is pushing up the rates,” he said.
…
Doesn’t it seem like this should eventually cause the ships that are the least efficient to operate to be scrapped—thus removing supply?
“Doesn’t it seem like this should eventually cause the ships that are the least efficient to operate to be scrapped—thus removing supply?”
Yes. Eventually. But, time wise, this type of market isn’t all that responsive.
“… eventually …”
But until this eventually thingy comes to pass one can easily go broke.
Or VERY easily go broke, especially when there’s lots of borrowed money involved.
Oh yeah…in fact, they are converting the dry bulk ships into oil storage ships (The Economist magazine story about to post documents this).
The shipping industry
Low rates on the high seas
A slump in shipping rates reflects the chronic optimism of shipowners
Mar 14th 2015 | From the print edition
Timekeeper
OLD salts interpret low-flying seabirds as a sure sign that a storm approaches. For some observers the Baltic Dry Index (BDI), which tracks the cost of shipping iron ore, coal, grain and other materials, is delivering much the same message about the global economy as a wave-skimming albatross. Last month it hit a 30-year low (see chart 1). Yet its decline says more about the predicament of those who own the vessels that carry such cargoes than it does about economic growth or the prospects for world trade. For container ships, which move finished goods, and oil tankers the outlook is less gloomy.
True, fresh signs emerged this week that China’s economy is slowing. Growth this year may be 7% or less, compared with 7.7% in 2013 and 7.4% in 2014. China absorbs three-fifths of the world’s ship-borne iron ore—the most commonly carried dry-bulk cargo—and a quarter of its coal. Yet this alone does not seem to justify a two-thirds fall in the BDI over the past year. Clarksons, a shipbroker, still expects Chinese imports of iron ore to grow by 7.5% this year.
Cargo rates have foundered along with the share prices of shipping firms mainly because the growth of capacity has run ahead of the growth in demand. Some firms have sunk completely. Copenship, a Danish ship operator, went bust in February. Last year the bankruptcy of Genco Shipping was one of the largest in America.
The industry is suffering a flashback to what happened around the time of the global financial crisis. In the run-up to the crisis China’s appetite for raw materials seemed insatiable and shipping rates soared: the BDI peaked in May 2008 at 11,793, more than 20 times its current value. That prompted a frenzy of orders for new ships. But by the time these vessels started arriving, a couple of years later, they were launching into a global slump, so rates plummeted. In 2013, just as the scrapping of old ships and a scarcity of new launches were restoring a semblance of order, Chinese coal imports surged, and the BDI began to recover.
Shipowners took this as a cue to start ordering ships again. But no sooner had they done so than, in 2014, China’s coal imports fell back sharply once more. This was not because of the state of its economy but because a policy to wean the country off coal had begun to take effect, as power began flowing from big, new hydroelectric projects. Ships ordered in 2013 are starting to roll down the slipways, nonetheless, and even record Chinese imports of iron ore are not enough to soak up excess capacity.
All the steel that China is making with that ore has also been hurting the shipowners, explains Crystal Chan of IHS, a research firm. Usually, low shipping rates encourage the owners of old vessels to scrap them. But a flood of low-cost steel from Chinese mills has brought down the value of scrap metal, making it less attractive to send ships to the breaker’s yards.
There are now signs that shipping’s self-righting mechanism is finally beginning to work. Demolition rates have started to pick up, from a low base, and orders for new vessels have all but dried up, says Marine Capital, a shipping investment fund. But it may take a year or two before bulk-carrier rates, and thus the BDI, pick up.
For other types of ship, things look a bit brighter. Tankers, which shift crude oil and refined products such as petrol, had a period of oversupply and a collapse in rates after a similar ordering binge ahead of the financial crisis. But tanker rates are showing tentative signs of a pickup (see chart 2).
America’s shale-oil boom means it has fewer tankers heading in its direction—but much of the oil produced in the Atlantic basin is now making a longer journey to Asia, keeping tankers busy. Saudi Arabia and fellow OPEC members are still merrily pumping their oil aboard ships. The recent weakness in the crude price has put the oil market into “contango”, meaning that the spot price is lower than the forward price. This has encouraged some traders to charter tankers just to store oil and sell it at a higher price later.
As a result, for some oil tankers rates are at their highest since 2008. That said, some shipowners are said to be negotiating with builders to convert orders for their now unwanted bulkers into ones for tankers, which will bring more supply into the market for those vessels.
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China’s Biggest Shipyard Is Now a Ghost Ship
http://english.caixin.com/2015-03-11/100790192.html
They sure do have plenty of ghost capacity over in China.
“Heavy Debt”
’nuff said…
Steelmaker Powerless as Iron Mines Sink Abroad
One of China’s largest steel companies invested heavily in South and North American iron mines that have been shuttered
A Chinese steelmaker digging for its own iron to save money may have hit a rock by investing heavily in overseas mines.
Wuhan Iron & Steel (Group) Corp. (WISCO), a state-owned and Shanghai-listed conglomerate that’s also one of China’s largest steel producers, is grappling with the consequences of financial trouble at Brazilian and Canadian mines in which it invested.
http://english.caixin.com/2015-03-12/100790513.html
Big Oil’s Broken Business Model
The Real Story Behind the Oil Price Collapse
By Michael T. Klare
http://www.tomdispatch.com/blog/175967/
Funny how dumbazz is ignoring that post…
is the yellen put still in place? how long can you cry wolf?
Deposit some cash so the bankers can loan 90% of it out. Your 1000 deposit could turn into 10000 in new money creation.
The Free Sh!t Army and the banksters who underwrote their borrowing for useless degrees (in the Obama-Fed-Goldman Sachs economic “recovery”) are demanding that taxpayers pick up the $1.3 trillion dollar tab for student loans. Because we aren’t saddled with enough debt already.
F*** you, Obama Zombies. F*** you, McCain Mutants. F*** you, Romney Retards, for this culture of entitlement and fraud your votes have perpetuated.
http://www.zerohedge.com/news/2015-03-14/cancel-all-student-debt-petitions-begin
disgruntled?
Do you really think this has any chance of happening?
irrational exuberance in tuition? hey the schools got paid and made some donations so who cares?
Paying your bills honestly is testing some real limits u think?
people want fairness.
While corrupt Democrat administrations do what they do best - turning formerly productive cities into bankrupt dystopian hellholes - there is a silver lining: these post-apocalypse landscapes are yielding some fine old building materials.
http://business.financialpost.com/2015/03/13/detroits-70000-abandoned-homes-a-treasure-trove-for-rubble-sifting-artisans-its-like-a-treasure-hunt/#__federated=1
Audit: 6.5 Million on Social Security Are Over 112 Years Old
By Drew MacKenzie
Tuesday, 10 Mar 2015 09:09 AM
The audit by the Inspector General released this month revealed that the agency does not have the technical ability to record death information on “numberholders” who exceed “maximum reasonable life expectancies,” including people who were born before the Civil War.
“We obtained Numident data that identified approximately 6.5 million numberholders born before June 16, 1901 who did not have a date of death on their record,” the report says.
The inspector general says that the numbers given to long-dead people were used fraudulently to open bank accounts and that thousands of those numbers were also used by illegal immigrants to obtain work, according to CNS.
“People are fraudulently, but successfully, applying for jobs and benefits with these numbers. Making sure Social Security cleans up its death master file to prevent future errors and fraud is a good government reform we can all agree to.”
Calling it “a major problem,” Delaware Sen. Tom Carper, the Homeland Security Committee’s ranking Democrat, said that the scandal exposes Americans to identity theft and is throwing taxpayers’ money down the drain.
“It is simply unacceptable that our nation’s database of Social Security numbers of supposedly living people includes more than six and a half million people who are older than 112 years of age, with a few thousand having birth dates from before the Civil War,” said Carper.
Read Latest Breaking News from Newsmax.com http://www.newsmax.com/US/ssa-audit-millions-dead/2015/03/10/id/629253/#ixzz3UOzg89s9
Urgent: Rate Obama on His Job Performance. Vote Here Now!
Wayne Paul The USA has been bankrupt since 1933!! - YouTube
http://www.youtube.com/watch?v=IlCs7u1ihws - 372k - Cached - Similar pages
Mar 25, 2009 … This video is Ron Paul’s brother Wayne who explains how the Federal Reserve has bankrupted our country. This video is an excerpt from the …
“However, the fact remains that all bubbles burst. This bubble will be no different other than the fact that it was in fact been the FED that created and perpetuated it long after it normally would have burst.”
http://www.zerohedge.com/news/2015-03-14/what-happens-when-fed-finally-fails-prop-markets
do you guys like buying overpriced assets cause of the yellen put?
Did dumbazz somehow miss the news that oil prices dropped by 9 percent last week?
The U.S. Has Too Much Oil and Nowhere to Put It
Overflowing storage tanks could lead to another drop in prices
by Matthew Philips
2:00 AM PDT
March 12, 2015
Seven months ago the giant tanks in Cushing, Okla., the largest crude oil storage hub in North America, were three-quarters empty. After spending the last few years brimming with light, sweet crude unlocked by the shale drilling revolution, the tanks held just less than 18 million barrels by late July, down from a high of 52 million in early 2013. New pipelines to refineries along the Gulf Coast had drained Cushing of more than 30 million barrels in less than a year.
As quickly as it emptied out, Cushing has filled back up again. Since October, the amount of oil stored there has almost tripled, to more than 51 million barrels. As oil prices have crashed, from more than $100 a barrel last summer to below $50 now, big trading companies are storing their crude in hopes of selling it for higher prices down the road. With U.S. production continuing to expand, that’s led to the fastest increase in U.S. oil inventories on record. For most of this year, the U.S. has added almost 1 million barrels a day to its stash of crude supplies. As of March 11, nationwide stocks were at 449 million barrels, by far the most ever.
Not only are the tanks at Cushing filling up, so are those across much of the U.S. Facilities in the Midwest are about 70 percent full, while the East Coast is at about 85 percent capacity. This has some analysts beginning to wonder if the U.S. has enough room to store all its oil. Ed Morse, the global head of commodities research at Citigroup, raised that concern on Feb. 23 at an oil symposium hosted by the Council on Foreign Relations in New York. “The fact of the matter is, we’re running out of storage capacity in the U.S.,” he said.
If oil supplies do overwhelm the ability to store them, the U.S. will likely cut back on imports and finally slow down the pace of its own production, since there won’t be anywhere to put excess supply. Prices could also fall, perhaps by a lot. Morse and his team of analysts at Citigroup have predicted that sometime this spring, as tanks reach their limits, oil prices will again nosedive, potentially all the way to $20 a barrel. With no place to store crude, producers and trading companies would likely have to sell their oil to refineries at discounted prices, which could finally persuade producers to stop pumping.
Oil investors appear to be coming around to the notion that a lack of storage capacity could lead to another price crash. In the futures market, hedge funds have spent the past few weeks cutting their bets that oil prices will rise. Instead, they’ve built up a record short position, increasing their wagers that prices will fall. During a March 11 interview on CNBC, Goldman Sachs President Gary Cohn said he’s concerned the U.S. is running out of storage, particularly as refineries enter their seasonal maintenance period, to prepare for the summer driving season. Around this time they usually cut the amount of crude they buy. Cohn said prices could go as low as $30 a barrel.
…
You blew tomorrrows HBB headline.
Did it have something to do with life on dumbazz ranch, down in Albuquerque, NM?
dumbazz, his monikers and his pimping minions are enraged.
Oil Rigs Tumble for the 14th Week
The Baker Hughes rig counts are out. We haven’t seen the end of this
by Tom Randall
10:07 AM PDT
March 13, 2015
Drillers idled 56 oil rigs (excluding gas rigs), dropping the total to 866, Baker Hughes reported on Friday, March 13. The oil rig count is down 46 percent since October, an unprecedented retreat. The median forecast from a Bloomberg survey of 15 #RigCountGuesses on Twitter was for a decline of 49.
Oil is headed for its biggest weekly decline since January as production continues to outpace demand and threatens to max out storage capacity. Prices of WTI crude have fallen more than 9 percent this week, to around $45 a barrel, wiping out a rebound in prices that started in late January.
…
What’s not to like about ever-lower oil and gasoline prices?
Oil drops 9 percent on week on stronger dollar, glut warning
By Barani Krishnan
NEW YORK Fri Mar 13, 2015 4:30pm EDT
An oil well is seen near Denver, Colorado February 2, 2015. REUTERS/Rick Wilking
(Reuters) - Global oil prices tumbled on Friday and fell 9 percent on the week, hit by a renewed rally in the dollar and a warning by the International Energy Agency (IEA) that the oil glut is growing.
Data that showed a sharp drop in the number of U.S. rigs drilling for oil failed to inspire market bulls.
Benchmark Brent oil settled near a one-month low below $55 a barrel and U.S. crude settled near a 2-1/2 month low under $45.
The dollar hit a 12-year high in its march toward parity with the euro, jacking up the cost of oil and other dollar-denominated commodities for holders of other currencies. The 19-commodity Thomson Reuters/Core Commodity CRB Index .TRJCRB fell a six-year low.
“We aim to break the year’s low in crude next week,” said Tariq Zahir, an oil bear at Tyche Capital Advisors in Laurel Hollow, New York. Brent fell to $45.19 in January, while U.S. crude dropped to $43.48.
Oil began the day lower after the IEA, which advises industrialized countries on energy, warned the global glut was building and the United States may soon run out of tanks to store crude.
“U.S. supply so far shows precious little sign of slowing down,” the IEA said. “Quite to the contrary, it continues to defy expectations.”
…
408Magenta
1 day ago
Here’s just a few of those who were unfortunate enough to have worked with the Clintons:
1 – James McDougal – Convicted Whitewater partner of the Clintons ( died of an apparent heart attack)
2 – Mary Mahoney – shot while working in Starbucks before going public with a story of sexual harassment by Clinton, silencers used, $4000 remained in store. (It was a hit )
.3 – Vince Foster – found dead in park near DC, gunshot wound to mouth (supposed suicide) with a .38 by his side. (Former White House Councilor, and colleague of Hillary Clinton at Little Rock’s Rose Law Firm)
4 – Ron Brown – Sec. of Commerce and former DNC Chair ( died of a gunshot wound to the head [suppressed by the media/DC] and then went down in a plane crash.)
5 – C. Victor Raiser, II – major Clinton Fundraiser ( plane crash)
6 – Paul Tulley – DNC Political Director (48 yrs old of natural causes)
7 – Ed Willey – Clinton Fundraiser ( gunshot wound to the head)
8 – Jerry Parks – Head of Clinton’s gubernatorial security team ( gunned down in his car)
9 – James Bunch – Influential Texan (suicide by gunshot)
10 — John Wilson – Connections to Clinton’s Whitewater deals. (suicide by hanging)
Of the 47 dead associates, the majority happened to die of apparent suicides. ALL deaths untimely. Oh, I don’t know … but if your IQ is greater than that of a banana … you can see a pattern here………………