The Housing Bubble

I don’t agree with everything here, but there are some good points:

‘Shah Gilani writes: When I moved to Sarasota, Fla., in 1999, I was invited by a prominent local to an “un-wedding wedding” to make new friends in town. I accepted the invitation and, not wanting to display my ignorance, avoided asking the burning question: “What’s an un-wedding wedding?”

‘Inevitably, I found out what an un-wedding wedding is. It’s a full-blown wedding, only the host isn’t actually getting married. He or she wants to get married but isn’t – and goes through the motions anyway.’

‘This manipulation of celebratory events to fabricate optimism about a desired future reminds me of the state of housing in the United States today. There’s no reason to celebrate anything in the housing market’s un-recovery recovery. Past and present manipulations must be continued to prevent collapse, but they won’t help economic growth in the United States as they did until 2000. Instead, those manipulations only act as a headwind from time to time.’

‘According to a graph on the National Association of Home Builders’ website, new single-family home sales going back to 1978 show that current levels of sales are barely approaching 1980 levels. They are more than 50% below average sales from 1980 to 2006. While new home sales, which make up one-tenth of home sales, on the surface looked robust in February, existing home sales rose a scant 1.2% according to the National Association of Realtors.’

‘Free-market capitalism wedded to democracy yields a living, changing economic system that thrives on creative destruction and withers under socialist-style command and control. The Federal Reserve’s interest-rate manipulations over the past 20 years only prove they are incapable of fostering natural growth in the economy.’

‘The Fed never should have been allowed to manipulate rates so low for so long to inflate the housing bubble in the first place. Fannie Mae and Freddie Mac had to be bailed out, but by now should have been dismantled. They’re backing more mortgages now than ever before.’

‘While two governments and the Fed couldn’t let the financial system implode and too-big-to-fail insolvent banks eat their own poison, everybody should have by now worked together to have broken up Fannie Mae and Freddie Mac once they were back on their feet.’

‘What people forget is the Fed and the government helped bail out builders after the crash. In a May 6, 2010, Reuters article, author Helen Chernikoff quoted Moody’s Economy.com Chief Economist Mark Zandi saying, “Without the government’s support, in all likelihood we would have seen more failures among the builders. It’s almost hard to list all the things that have been done to support homebuilding either directly or indirectly.”

‘Then the Fed, with a wink and a nod from successive government administrations went on a $2 trillion Treasury bond-buying binge to start up its zero interest-rate policy (ZIRP). And to prove no matter how much money it throws at housing it is hapless, the Fed bought $1.8 trillion of mortgage-backed securities (MBS) to narrow the MBS-over-Treasury spread to try and make more mortgage money available. That didn’t work.’

‘Without a so-called “clearing mechanism” that balances home sales and rental rates based on supply and demand against free-market interest rates reflecting real-world risk and returns in the $16.8 trillion U.S. economy, not only won’t the housing market ever fully recover, but the economy won’t either. Like an un-wedding wedding, the housing market’s un-recovery recovery is a sad state of affairs.’

Did private equity firms go overboard with their shipping industry investments?

Well, well:

‘Welcome to Housing Bubble 2.0
Written by The Tim on March 30th, 2015′

http://seattlebubble.com/blog/2015/03/30/welcome-to-housing-bubble-2-0/

‘Real estate data company RealtyTrac says Boise is in better shape than most of the country when it comes to the difference between wages and home prices. RealtyTrac looked at wage growth and home price growth from 2012 to 2014 in the nation’s 184-largest metro areas. Nationally, price growth outpaced wage growth 13-to-one. RealtyTrac vice president Daren Blomquist says in Boise, it was closer to four-to-one.’

‘A report out last week from the U.S. Bureau of Economic Analysis showed Idaho had one of highest increases in personal income in the country from 2013 to 2014. Of course, Idaho has among the nation’s lowest wages. Blomquist says, while Idaho’s wage and home price gap is better than much of the country, it is not sustainable. If it continues to widen he says, the area will find itself inside another housing bubble. But he says he expects Boise’s price growth to level off soon.’

“That will mean those buyers who are in the market right now who maybe are having trouble finding a place to purchase, they don’t have to have that urgency to buy now,” he says. “They can wait a little bit until the time is right for them.”

‘Blomquist says some places, like coastal California, are already in a housing bubble. He says like the housing bubble before the Great Recession, it’s being driven by institutional investors. He doesn’t think big investors are buying much in Boise yet. He says in many California cities home prices have gone beyond the means of the average person.’

“One of the other things we looked at is affordability. ‘Are we seeing homes that are unaffordable in each market?’ And in Boise that is not the case yet,” he says.’

‘Barney Frank has a new autobiography out. So why has a critical revelation from Frank’s book, one that implicates the most powerful Democrat in the nation, been entirely expunged from the record? Nobody has focused on Frank’s allegation that Barack Obama refused to extract foreclosure relief from the nation’s largest banks, as a condition for their receipt of hundreds of billions of dollars in bailout money.’

‘San Francisco is one of only three markets in the U.S. where the coming office supply is forecast to outpace tenant leasing this year and next, according to Reis Inc., a real estate research company. The others are Houston and Fort Worth in Texas, where developers added new offices amid growth in the energy industry, which is now being hurt by a plunge in oil prices.’

‘In San Francisco, about 2.1 million square feet will come to the market this year, the most since 2002, Reis data show.’

“There is just a lot of supply coming online in a short period of time,” said Ryan Severino, a senior economist at New York-based Reis. “It’s not going to be as easy for developers going forward as it was in the last four to five years, when you essentially could do no wrong because there were no new developments.”

‘Construction cranes dominate the skyline in the South of Market area, where crews are working on office towers as well as luxury condominiums and a new transit center.’

‘Over the past two years, more than 80 percent of new office demand was driven by technology companies, according to Colin Yasukochi, director of research and analysis for Northern California at CBRE. The share is almost twice that of the dot-com boom of the late 1990s, when the financial, legal and media industries were rapidly expanding as well, he said.’

“The office market in San Francisco is strong,” Yasukochi said. “One cautionary point to raise is how dependent this market is on the tech industry.” If demand diminishes, “there is no alternative as most non-tech companies have been reducing their office footprints and getting more efficient,” he said.’

How many of these ‘tech’ firms (black market taxi cabs are tech?) would exist if there weren’t trillions of central bank phoney bucks floating around the world?

Not many. “Tech” is so attractive to get rich quick schemes with such a low barrier to entry.

I follow Jeb Bush on Facebook and today he’s plugging this on my news feed:

https://righttorisepac.org/stand-with-israel-2/

Is the stock market too risky of a place to park new money right now?

Former Astronauts & NASA Employees Letter on Global Warming

by Wynne Parry | April 12, 2012 10:02am ET

A NASA spokesman confirmed that the agency received the letter on Tuesday (April 11). [Read the full story about the letter]

March 28, 2012

The Honorable Charles Bolden, Jr.
NASA Administrator
NASA Headquarters
Washington, D.C. 20546-0001

Dear Charlie,

We, the undersigned, respectfully request that NASA and the Goddard Institute for Space Studies (GISS) refrain from including unproven remarks in public releases and websites. We believe the claims by NASA and GISS, that man-made carbon dioxide is having a catastrophic impact on global climate change are not substantiated, especially when considering thousands of years of empirical data. With hundreds of well-known climate scientists and tens of thousands of other scientists publicly declaring their disbelief in the catastrophic forecasts, coming particularly from the GISS leadership, it is clear that the science is NOT settled.

The unbridled advocacy of CO2 being the major cause of climate change is unbecoming of NASA’s history of making an objective assessment of all available scientific data prior to making decisions or public statements.

As former NASA employees, we feel that NASA’s advocacy of an extreme position, prior to a thorough study of the possible overwhelming impact of natural climate drivers is inappropriate. We request that NASA refrain from including unproven and unsupported remarks in its future releases and websites on this subject. At risk is damage to the exemplary reputation of NASA, NASA’s current or former scientists and employees, and even the reputation of science itself.

For additional information regarding the science behind our concern, we recommend that you contact Harrison Schmitt or Walter Cunningham, or others they can recommend to you.

Thank you for considering this request.

Sincerely,

(Attached signatures)

CC: Mr. John Grunsfeld, Associate Administrator for Science

CC: Ass Mr. Chris Scolese, Director, Goddard Space Flight Center

Ref: Letter to NASA Administrator Charles Bolden, dated 3-26-12, regarding a request for NASA to refrain from making unsubstantiated claims that human produced CO2 is having a catastrophic impact on climate change.

http://www.livescience.com/19643-nasa-astronauts-letter-global-warming.html

Is fractional reserve lending ridiculous?

By Blurtman Follow Mon, 30 Mar 2015, 7:46pm PDT

You have $2,000 in your checking account, you write a check for $20,000, you re in big trouble.

The Bank of America writes a check that it can only back with 10% of the check’s amount, and no problema.

Should criminal organizations be able to create money?

Is fractional reserve lending a negative contributor to economic stability?

‘China has admitted that its economy is hurting with the country’s growth rate experiencing a rough slowdown that significantly needs a major intervention. According to China’s top banker, Zhou Xiaochan, the country’s economy has tumbled ‘a bit too much’ as he urged the government to take drastic measures to arrest the slowing growth rate.’

‘Zhou said China has still room to set the economy in order, such as adopting ‘quantitative measures’ and setting interest rates.’

‘Zhou said China’s economic slowdown has affected the performance of various financial sectors such as banking, housing, and the corporate scene. Reports said corporations are neck-deep in debt and are seeing pathetic profit margins. Banks are swamped with debts, too, while the housing market is experiencing a slowdown. Zhou, who spoke before regional leaders at the Boao Forum for Asia, admitted that the country’s economy has not been growing this slowly since the 1990s.’

‘As it acknowledged that the slowdown was rough, China assured the world that the situation is under control. Despite the financial experts’ calls for China to issue intervening measures, Chinese officials have opted to ‘monitor deflation’. The experts said that the problem with deflation is that China is strapped for cash and that the banking system is laden with debt.The people need cash in order to pay interest on their debt.’

‘Another thing reportedly hurting the economy was President Xi Jinping’s anti-corruption campaign. Zhou said the campaign has driven away the rich who are scared to spend that much amount of money. Add to this, rich government officials and businessmen accused of corruption have been arrested and thrown in jail. Zhou said these arrests have disrupted the way businesses are being run in China.’

So Dan, do you want the feathers on or off?

https://rachelhopecleves.files.wordpress.com/2013/11/images.jpeg

Region VIII news

“The city of Denver is looking into installing at least two public toilets downtown as a way to curb complaints about public urination and defecation.”

http://www.bizjournals.com/denver/morning_call/2015/03/will-denver-approve-aplan-for-sidewalk-toilets.html

I used the bathroom at a Denver Burger King last weekend and there was dried blood on the floor and back of the door, LOLZ

I saw some of you comment on this:

‘There was a story in The New York Times today that made you just stop and say, wait… what? There are, apparently, tens of thousands of homeowners in this country who — thanks to the mortgage meltdown and the ensuing foreclosure crisis — haven’t made a mortgage payment in more than five years.’

“People in states like Florida, New York and New Jersey — where lenders have to sue to evict you from your house if you’re delinquent on your mortgage — many of these cases, thousands of them, have gone on for so long that they’re up against the statute of limitations,” says Michael Corkery the the Times.’

But I picked up on this a while back. Reposting, again:

‘Jan 16, 2015‘

‘Investors including US mortgage giant Fannie Mae holding decade-old residential mortgage bonds are fretting over potentially huge losses on securities where delayed foreclosures could lead to complete write-offs on defaulted loans. Mortgage servicers, whose job is to ensure bondholders receive repayments on loans, have frequently failed to foreclose on delinquent debt in a timely manner, and therefore risk falling foul of legal deadlines which limit the time home-owners can be chased for payment.’

‘Fannie Mae’s general counsel held a conference call just before the Christmas holidays - all of its retained law firms were required to participate - to ask how the government-run mortgage agency could alleviate such losses, a person with knowledge of the call told IFR.’

“[Fannie Mae's] general counsel asked: ‘How bad is it?’” the person said, adding that one of the lawyers on the call answered: “We can’t even begin to tell you - there are so many loans.”

I’ve been fighting a strong urge to short the market recently. Risky, I know, but if you look at the 10yr chart for the S&P500, and then try to align that with reality as we know it… Um, no—something has to give.

http://eaglefordtexas.com/news/id/149349/u-s-may-skirt-oil-storage-crisis-as-drivers-hit-the-road/

As I said before the thought of inexperienced Asian drivers hitting congested streets in SUVs is kind of scary. China may have to do away with its one child policy just to replace the accident victims.

Goooooood Morning Chicago…..A reprise of yesterday’s missive on Chicago ILLANNOY.
As one HBB’er says from time to time - “This sucker could go down” - G. W. Bush………
You gotta live here to truly understand how bad it really is - the dirt on the streets after the Feb 1 snowstorm is just now emerging as the drifts melt away……Sorta like Chicago - pretty and clean for a while until the facade melts away to expose the dirt underneath.

http://www.nationaljournal.com/magazine/rahm-emanuel-reelection-chicago-mayor-20150327

Comment by Oddfellow
2015-03-29 14:06:37

“Where did I say he was a drug dealer?”

Prosecutor: Your Honor, I object to this witness. Improper foundation. I’m not aware of this person’s qualifications. I’d like to voir dire this witness as to the extent of his expertise

J: Granted. Mr. Trotter, you may proceed.

Q: Oddfellow, what’s your current profession?

A: I’m an out of work hairdresser.

Q: Out of work hairdresser? Now, in what way does that qualify you as an expert Swindler?

A: It doesn’t.

Q: In what way are you qualified?

A: Well, my father was a Realtor, his father was a Realtor, my mother’s father was a Realtor, my three brothers are Realtors, four uncles on my father’s side are Realtors–

Q: Your family is obviously qualified to swindle, but have you ever worked as a Realtor?

A: Yeah, at my father’s Century 21 office, yeah.

Q: As a Realtor? What did you do in your father’s Century 21 office?

A: Swindle, Deflect, Bamboozle

10 to 1 the old man was a drug dealer

Noun: welcher - someone who swindles you by not repaying a debt or wager

Make the $1,000.00 check payable to…

Ben Jones
PO Box 5914
Peoria, AZ 85385-5914

Hope and Change

http://mobile.nytimes.com/2015/03/31/health/research/enterovirus-68-may-be-linked-to-paralysis-in-children-study-says.html?_r=0&referrer=

Forward

Monday, March 30, 2015

The Fed Has Failed the Nation, in One Chart

There is only one way to end the financial tyranny of the Federal Reserve–abolish it, and put an end to the predatory pathologies of its policies.

The Federal Reserve has failed not just the nation and the U.S. economy, but more importantly, the American people that it supposedly serves. It has also failed the world, by showing other central banks that they can reward private banks and the top .01% with absolute impunity.

The Fed’s free money for financiers enriched the top layer of corporate management and the top 1% who own most of the nation’s equities. You can read the details here: Factset Buyback Quarterly.

The other group of financiers with access to the Fed’s free money for financiers has been private equity. So did the private equity multi-millionaires borrow the Fed’s largesse to build new plant and hire new employees? Did they invest the borrowed billions in productive startups?

No–they used the money to buy existing companies and bleed them dry. The Glory Days of Private Equity Are Over (Via Mark G.):

There you have it: the Fed has lowered productivity and GDP and stripmined savers, widows and orphans to further enrich the obscenely wealthy. Recall this from my entry last week, Will Cash Always Be Trash, Or Will It One Day Be King?

Between 2009 and 2012, the first years of the economic recovery, the top 1% saw their incomes climb 31.4% — or, 95% of the total gain — while the bottom 99% saw growth of 0.4%.

charleshughsmith.blogspot.com/…/03/the-fed-has-failed-nation-in-one-chart.html - 181k -

I just bookmarked Ben Bernanke’s new blog:

http://www.brookings.edu/blogs/ben-bernanke/posts/2015/03/31-why-interest-rates-low-secular-stagnation

In his posting today, Mr. Bernanke explains why he doesn’t agree with Larry Summers’ view that the U.S. is in a state of “secular stagnation.” Bernanke takes “issue with Larry’s claim that we have never seen full employment during the past several decades without the presence of a financial bubble.”

I just got an email advertising what I think is this listing:

http://www.zillow.com/homedetails/9221-Sierra-Mar-Dr-Los-Angeles-CA-90069/20534820_zpid/

The ad says:

‘Located in the coveted “Bird Streets” area above Sunset Boulevard. Just off Doheny and minutes from the action on the Sunset Strip. This is your chance to tailor a home to your individual taste and specific needs and watch your investment grow. 3 bedrooms and 3 bathrooms upstairs with living space downstairs, including an office and a bonus studio. Great patio deck off the living room with an incredible view.

Offered at $2,995,000′

Looking at the price history on zillow:

02/22/93 Sold $463,000

07/19/95 Sold $580,000+25.3%

07/21/14 Listed for sale $3,800,000+555%

09/04/14 Price change $3,299,999-13.2%

09/30/14 Price change $2,899,999-12.1%

11/17/14 Pending sale $2,899,999

New broker:

03/13/15 Price change $2,995,000+3.3%

US: Oil Sinks Through $48 Floor

http://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic

“US Corporate Profits Set For Second Straight Quarterly Fall”

http://www.ft.com/intl/cms/s/0/15223fa4-c354-11e4-8fa9-00144feab7de.html

2 former federal agents charged with stealing Bitcoin during Silk Road probe

By Evan Perez, CNN Justice Reporter

Updated 5:20 PM ET, Mon March 30, 2015

Washington (CNN)The federal government became owners of one of the biggest troves of Bitcoin, thanks to seizing millions of dollars in the digital currency from criminals associated with the online black market Silk Road.

Two federal agents who helped lead one of several investigations in the case allegedly decided they wanted some of the money for themselves, according to a new federal court documents.

The two now-former agents from the Drug Enforcement Administration and the U.S. Secret Service are charged with wire fraud, money laundering and other offenses for allegedly stealing Bitcoin during the federal investigation of Silk Road, an underground illicit black market federal prosecutors shut down in 2013.

The charges against the agents could end up causing complications for the government’s case against Ross Ulbricht, also known as “Dread Pirate Roberts”, the Silk Road founder. Ulbricht was found guilty last year of aiding drug trafficking with his site.​ He is awaiting sentencing. As a result of the case against Ulbricht and others, the federal government seized bitcoin that it said at the time was valued at more than $33 million.

http://www.cnn.com/2015/03/30/politics/federal-agents-charged-with-stealing-bitcoin/ - 231k -

Crater…………………… Crater Taters For Debt Donkeys.

which FED member is gonna create the next short covering rally?

Time to buy back some more shares to boost eps cause business is way down again this quarter?

100 students refuse to pay their loans

By Katie Lobosco

CNNMoney (New York) March 31, 2015: 4:55 PM ET

Dawn Thompson racked up $155,000 in student loans for a Corinthian College degree that proved worthless. Now she refuses to pay it off.

It’s a risky move, but she’s not alone. More than 100 of the now-defunct for-profit school’s students are taking the same stand. And the government is willing to hear them out.

The “debt strikers” are asking the federal government to forgive their loans because they were ripped off by the school.

On Tuesday, 14 of the strikers were scheduled to meet with reps from the Consumer Financial Protection Bureau and the Department of Education, which has the power to cancel the loans. Officials wouldn’t say what the agenda was for the meeting, and it’s not uncommon for the CFPB to meet with students struggling to pay off loans.

This is the first time the “debt strikers” have been acknowledged by the government.

“I believe every student from Corinthian College who was lied to should have their loans forgiven so they can to go a real school and get a real degree,” she told CNNMoney before Tuesday’s meeting.

Thompson, 49, earned a bachelor’s degree in paralegal studies from one of Corinthian’s online schools, Everest, in 2011. As a single mom of two young kids at the time, she enrolled at the school mostly for the convenience. She could log in online after work and still be home with her children.

But the wealth of job opportunities the school touted never transpired. So Thompson returned to the school to pursue a master’s in business administration, trying to make herself more marketable.

But the CFPB started investigating the for-profit school in 2012, so Thompson decided it wasn’t worth the money and dropped out. She now works as a bank teller.

Her story is similar to those of other Corinthian students. The school is being sued by the Feds for an alleged predatory lending scheme, preying on low-income students, and falsely inflating job placement numbers. It was largely sold off for parts last fall.

Related: If I marry you, do I marry your student loans too?

The government has already ordered about $480 million in debt relief for Corinthian students thanks to a deal it made with a company that’s acquiring some Corinthian campuses. The lawsuit is ongoing, and students could see even more debt relief.

For now, Thompson doesn’t know if she’s eligible for any relief under that deal.

Of her $155,000 in debt, Thompson owes about $120,000 in federal loans. Payments aren’t due yet on those, but they are on the $35,000 she has in private loans.

“I’m constantly worrying about being homeless, it’s always on my mind,” Thompson said.

http://money.cnn.com/2015/03/31/pf/college/student-debt-strike-corinthian/index.html?iid=Lead

More positive economic news….

Pismo Beach, CA List Prices Plummet 13% YoY; Foreclosures Drive Inventory Up

http://www.zillow.com/pismo-beach-ca/home-values/