The Housing Bubble

The folks in this group are not among the sharpest tools in the shed…

Sounds like someone is lonely or needs some more marijuana. Or needs to sell his friends more marijuana.

What’s wrong with owning a house? All you need to do is go back in time about 20 years to a time when standards had not been wholly abandoned and buy one. Then you could crow on and on about what a great investment it was.

Been there, done that. Became happy when I started renting again.

But the most entertaining are first time home flippers. Grab some popcorn and enjoy the show.

+1 so true about new home owners. Trips to Home Depot 2-3 x per weekend is their big outing. Been there, done that.

rolling base said, First time house buyers are some of the most boring people I know.

Lifetime renters are the most ENVIOUS people i know.

What does Sheldon Adelson think about this:

LOS ANGELES — If your website traffic plummets suddenly Tuesday, you can blame it on “Mobilegeddon.”

Google, which dominates online search, is launching an algorithm to favor sites that are “mobile-friendly.” This means that people who use Google to search on their smartphone may not find many of their favorite sites at the top of the rankings. Sites that haven’t updated could find themselves ranked way lower, which in turn could mean a huge loss of business.

Your world is being controlled.

And just when you thought government couldn’t get any smaller and taxes couldn’t get any lower, the racist apartheid state of Israel that has been ripping off American taxpayers for almost seven decades does this

http://www.breitbart.com/national-security/2015/04/21/bibi-declines-jimmy-carter-meeting-over-his-anti-israel-pro-hamas-views/

Remember, Sheldon Adelson has THIRTY FIVE BILLION DOLLARS

But he doesn’t pay for neocon foreign policy, you do!

My Earth Day contribution:

https://www.youtube.com/watch?v=G880gxjj9dI

I bought a new 5 wt fly rod this morning off eBay. It felt like my Earth Day contribution. Off to Idaho in June.

Wall Street can’t lose, LOLZ

http://nypost.com/2015/02/08/wall-streets-no-lose-view-of-2016/

Forward

http://theantimedia.org/hillary-clinton-calls-for-toppling-the-1-while-being-bankrolled-by-the-1/

Happy Earth Day phony (P.S. click on my name)

Truth Is Washington’s Enemy

Paul Craig Roberts
April 21, 2015

Washington’s problem is that whereas Washington controls the print and TV media in the US and its vassal states in Europe, Canada, Australia, Ukraine, and Japan, Washington does not control Internet sites, such as this one, or media, such as RT, of non-vassal states. Consequently, Washington’s lies are subject to challenge, and as people lose confidence in Western print and TV media because of the propaganda content, Washington’s agendas, which depend on lies, are experiencing rougher sledding.

Truth is bubbling up through Washington’s propaganda. Confronted with the possibility of a loss of control over every explanation, Hillary Clinton, Ed Royce, and the rest are suddenly complaining that Washington is “losing the information war.” Huge sums of taxpayers’ hard earned money will now be used to combat the truth with lies.

Ya gotta love it when banks are contractually obligated to pay interest on mortgage loans they made to home debtors. How often has that ever before occurred in eight centuries of banking history?

CNNMoney (New York) March 23, 2015: 1:44 PM ET
The Buzz
Problem: The bond ‘conundrum’ is back
By Paul R. La Monica
Investors can’t seem to get enough of U.S. Treasury bonds.

Even though Federal Reserve chair Janet Yellen strongly hinted last week that the Fed could boost interest rates in June, investors went out and bought even more bonds.

The yield on the 10-Year Treasury, which started last week at 2.11%, tumbled to 1.94% during Yellen’s press conference Wednesday. It’s still hovering around those levels. Bond yields fall when prices rise.

Here’s the issue: The exact opposite should be happening. As the Fed raises rates, bond yields should be going up.

Alan Greenspan called this a “conundrum.” He was troubled by this 10 years ago because it made the Fed’s job more difficult.

The former Federal Reserve chair famously (to market and economy nerds at least) used that word in February 2005 to describe the fact that long-term Treasury yields were falling even though the Fed was raising short-term rates.

Current Fed chair Yellen hasn’t spoken about a bond conundrum just yet. But you have to wonder if she’s thinking about it.
…
Yellen reiterated last week that the Fed would continue to reinvest in the bond market until it felt that “economic conditions were appropriate after we begin raising rates.”

Unless the Fed stops completely, it will still be one of the forces helping to keep long-term yields low.

It’s not the only one of course. Many foreign buyers — particularly China and Japan — are big holders of Treasuries since the United States is still the safest market in the world to put their money.

Treasuries are even more attractive now that Europe is purchasing bonds in a quantitative easing program similar to what the Fed had been doing up until last year. European bond yields are even lower than the rates on U.S. debt.

But this conundrum can’t last indefinitely. Sooner or later, the bond market or the Fed is going to have to blink.

If the 10-Year yield remains this low once the Fed actually starts tightening, there is a risk that short-term rates will top long-term rates.

That’s something economists call an inverted yield curve. And it’s not good. That’s happened before every recession in the past 50 years.

Locations deemed ‘walkable’ appreciate more than those that are car-dependent ??

Yep…Happening in every town around here (Except Richmond :>)…Real estate walking distance to town is Hot….Apartment Rents walking distance to town are up,up,up….New apartment complex in 95008 next to town…2 bedroom 2 bath goes for $2800.

Here’s one for you.

TRULIA’S BLOG \ Real Estate 101 Where Are Homeowners Getting High on Home Prices?

Median home prices in states with legalized marijuana are blazing.

With 4/20 (the unofficial cannabis holiday) fast approaching, we thought we’d see if legalized recreational marijuana has affected real estate in Colorado and Washington — or if it’s all just smoke.

So we crunched the numbers, cross-referencing Trulia and Yelp data, to create this infographic. Believe it or not, rather than negatively affecting the asking price, the data indicates that homes for sale within a one-mile radius of some cannabis clubs have a higher median asking price than others in the metro area.

Intrigued by the possibilities? Here’s everything you need to know before looking for a house with ideal THC (that’s “total housing cost”) potential in your neighborhood.

http://www.trulia.com/blog/homeowners-getting-high-home-prices/

It goes up in price because of a depreciating currency and the access to credt. Value is a pretty vague term. I may see value in something where someone else does not.

Do I see value in a 50k truck, no I do not.

Do I see value in a 6 pack of little sumpin for 8.99, yes I do.

Do I see value in some of these shanties around here for 300k, no way in h@ll.

Another bad quarter at McDonald’s adds weight to the view that the economy is too weak to raise interest rates any time soon, which is good for stock and bond prices.

This site is the little out of the way book store with the funny mirror in 1984.

If the URL string of the link does not contain a phrase or sentence indicating what the article is about, then you should provide an excerpt, summary, or article title

You have alot of work ahead of you Jack. No short-cuts. Get movin’.

Your link provides zero context as to what the article is about, Dannyboy

Lazy lazy lazy

Is she going to wear a blue dress to the inauguration to get back at Bubba?

So far, so good, Dan.

A little more than a month ago, prices were roughly $43. Now, it’s $56. That’s a 25% + gain.

Time will tell whether you are correct. Thus far, you have been.

The take away is that there was a huge bubble. China pulled forward decades of demand to build useless crap in the biggest credit Ponzi in history. Now there is no place to put all the excess supply. You need to have a scenario that brings demand back up to bubble levels to justify an expectation that price will go back to bubble levels.

$80 oil? Good call Dan! I like higher oil prices as it helps attract more capital investment into renewables, like solar

http://2.bp.blogspot.com/-t52×0DoEDNs/VS_vkbcCB0I/AAAAAAAACJE/nOG5QiIpJLg/s1600/Solar%2Bon%2BFire.jpg

I got bumped out of my position in USO yesterday for a tidy 6% over the last 5 weeks. Based on my reduced exposure to the upside I expect the price to take off now…:)

Ha, a forward thinker, it boggles the mind. I think I need coffee to process the disconnect.

Did you see the article linked above about an illegal alien criminal invader performing an “act of love” on a ten year old, LOLZ

Jeb Bush is a big fan of NSA surveillance

By Jeremy Diamond, CNN
Updated 11:12 AM ET, Wed April 22, 2015

Washington (CNN)If there’s one thing Jeb Bush likes about President Barack Obama’s presidency, it’s the continuation of the NSA’s controversial spying program.

Bush, the former Florida governor likely to jump into the 2016 GOP presidential race, on Tuesday called the NSA’s bulk collection of phone and internet metadata –the “best part” of the Obama administration.

“I would say the best part of the Obama administration would be his continuance of the protections of the homeland using, you know, the big metadata programs, the NSA being enhanced,” Bush said on the Michael Medved radio show on Tuesday. “Even though he never defends it, even though he never openly admits it, there has been a continuation of a very important service, which is the first obligation I think of our national government is to keep us safe.”

http://www.cnn.com/2015/04/22/politics/jeb-bush-nsa-surveillance-metadata-program/index.html

Strange thought for the day: if I short a negative-yielding bond, does someone pay me interest?

Hint: when you borrow and sell short a positive-yielding bond, you are responsible for making the interest payments to the owner that you borrowed it from.

Home
Opinion
Commentary
Why the Fed may (almost) never raise interest rates
Federal Reserve Chair Janet Yellen attends a Board of Governors meeting at the Federal Reserve in Washington, Wednesday, Sept. 3, 2014. The meeting is to discuss a final rulemaking to implement a quantitative liquidity requirement in the United States as well as a proposed rule on margin requirements for non-cleared swaps of prudentially regulated swap entities. (AP Photo/Susan Walsh)
By Peter Morici - - Tuesday, April 21, 2015

Investors in securities markets are now strongly betting the Federal Reserve won’t raise interest rates in June, but the million dollar question is will the Fed ever be able to raise interest rates again?

Fed officials are debating whether recent economic weakness—flagging industrial production, housing starts and jobs gains—are temporary or will the economy continue to disappoint.

The harsh winter and falling oil prices took a big bite out of first quarter growth, but consumers have not rushed to make up for lost time by spending the recent bonanza in purchasing power from lower gas prices. Labor market slack—for example, the contingent labor force of 7 million men ages 25 to 54 not holding a job or looking for work, nor counted in the official unemployment rate—limits wage gains and breeds uncertainty.

Stagnation in southern Europe and Japan, and slowing growth in China has prompted foreign central bankers to print lots of money, and depress the dollar values of the euro, yen and yuan. That makes foreign products even cheaper on store shelves and U.S. exports too expensive to sustain both market shares and profits abroad.

Economists and Fed officials can argue whether these forces are temporary or permanent, but capital for use in the private sector is in great abundance around the world—witness cash rich corporations buying back stock and their robust pace of business acquisitions.

Meanwhile, governments—states like Illinois and countries like Brazil—face interest rates they increasingly can’t afford because slower economic growth limits tax revenues.

If the Fed pushes up interest rates on U.S. government securities that would push up rates on state and foreign sovereign debt. Nations recovering from bailouts like Italy and Spain could quickly become basket cases like Greece.

Moreover, the private sector simply does not need as much capital as it once did to expand. Leaders in capital intensive industries like Toyota are pioneering new modular systems that sharply cut fixed costs for equipment and service activities need much less capital to create new enterprises.

In 1999, Google was established with only $25 million dollars and grew into a $23 billion enterprise at its initial public offering six years later. The story set a pattern for enterprises like Twitter and Uber.

As companies like IBM shift from hardware to software and consulting to power growth and startups—the next Googles, Twitters and Facebooks—are increasingly software based, the demand for private capital is simply much smaller than the supply.

If the Fed pushes up rates, it risks pushing start up activity abroad. Many American entrepreneurs will find it more profitable to organize their companies in Ireland, Japan and China where private capital would be adequately abundant and cheaper than in the United States.

Already, inflation is near zero and negative interest rates have emerged on government bonds and large company bank deposits are emerging in more stable and stronger European jurisdictions—Germany, Denmark and Sweden—and those may well stay negative for a long time.

Economists fret that zero inflation and deflation will discourage spending as cautious consumers to hold out for lower prices—but not if banks start charging interest to hold their money.

In a modern economy, cash is terribly inconvenient. Credit card bills, mortgages and most family expenses can’t be paid with greenbacks, and corporations can’t pay suppliers, workers or just about anything else with currency either.

If prices start heading south, banks will be in a strong position to charge a nuisance fee—read negative interest rates—to ordinary consumers for holding their cash, because like corporations they need bank deposits to pay bills in an era when only electronic transfers and checks are practical for settling with most vendors and workers.
…

No. The negative yielding bonds exist because you are paying a premium for the bond. The coupon is still positive.

Example:

Maturity: 1 year
Par: $100
Coupon: 1%
Price: $102

Negative yield to maturity, positive coupon.

How or on what basis did the woman in Houston got a court order awarding her the custody of 14 year old?

Worse yet, what was she planning to do with a 14 year old girl?

Mexican girl grabbed from school, sent to U.S. not the daughter of Texas woman who claimed her

Alondra Luna was flown to Houston where DNA test proved she was not the daughter of a Texas woman.

By: The Associated Press, Published on Wed Apr 22 2015

MEXICO CITY—A 14-year-old Mexican girl pulled screaming from her middle school by federal police and sent to a woman in Houston was being returned home Wednesday after DNA tests showed she is not the woman’s daughter, Mexico’s Foreign Ministry said.

Last week’s removal of Alondra Luna captured national attention after a video was circulated by media and on social networks of the girl screaming as she resisted federal police who seized her in the central state of Guanajuato.

The Foreign Ministry said the police were carrying out an order from a judge to send the girl to Dorotea Garcia, who claimed the girl had been illegally taken to Mexico by her father years ago. Alondra’s family insisted that authorities had taken the wrong girl and said their efforts to prove her identity were ignored.

“They stole my daughter,” Susana Nunez said Wednesday to Milenio Television. “I didn’t know this woman existed.”

The girl was flown to Houston, where she recorded a video, posted to social media, in which she looked calm and happy and told her parents in Mexico not to worry. “I’m fine. I see that the United States is nice,” she said, adding, “I don’t understand anything they’re saying, because everything is in English.”

She was put on a flight back to Mexico on Wednesday after a DNA test conducted at the Mexican Consul’s office proved she is not Garcia’s daughter.

The Foreign Ministry said it first received a request in 2007 to return the girl, who had been taken by her father from the U.S. and, according to the information, was in the western state of Michoacan. This year, Garcia came to Mexico and said she had identified her daughter in Guanajuato, a state neighbouring Michoacan, prompting U.S. authorities to seek the help of Interpol to bring her to the United States.

Not a good time to live in a border town.

If the GOP wants a fence so bad and they have full control of congress now, why are they not taking action? Heck they had full control with 6 yrs of Bush and did nothing to secure our boarder (yet they talk about it).

20 Things I Trust More Than Barack Obama - LOL
Posted: Apr 16th, 2015 - 2:28 pm

1. Mexican tap water
2. A porcupine with a “pet me” sign
3. Bill Clinton, with my teenage daughter
4. A fart while fighting the flu
5. An elevator ride with Ray Rice
6. Taking pills or a drink offered by Bill Cosby
7. A Bigfoot sighting
8. A Hillary Clinton war story reported by Brian Williams
9. Gas station sushi
10. Jimmy Carter, with the economy
11. A Palestinian on a motorcycle
12. Pete Carroll coaching decisions
13. Eating an apple from an orchard at Fukushima reactor #4
14. Hitching a ride from a guy in a goalie mask
15. The ingredients in a hotdog
16. Nancy Pelosi’s grip on reality
17. Black Ice
18. Jerry Sandusky as a Boy Scout leader
19. Alien abduction stories
20. Barney Frank in the shower asking you to pick up the bar of soap

Author Unknown

general.mtstars.com/412604.html - 39k -

Apparently no US president has ever called that incident “genocide”, because Turkey is a NATO ally. I think though, that many hoped he would break the mold and call it what is was. Fat chance. Don’t expect Hillary or Jeb to be any different.

Comment by phony scandals
2015-04-22 11:26:41

Cost of housing soars: How high can it go?
cnbc.com/id/102609843

Hard to believe.

Similar story for me, have been following the HBB since 2005 or so, thanks to that sold my place (in Mendocino Co.) in spring 2007 and had a buyer under contract within a week by pricing it about $10K under market, was (correctly) convinced by the HBB and OTM blogs that the pop was imminent. Tried to buy again (in Sonoma Co.) in 2011 and 2012 but it was virtually impossible with a mortgage, was shut out by 100% cash flippers or speculators about 6 times, gave up in disgust after a year or so. Local prices are up about 60% since then and buying makes no sense for me now…may try again after bubble 2.0 pops.

YES!! I pray for the Realturd scam of 6% to end soon!! $24k for data entry and an SUV with a few water bottles in it is ridiculous! The easiest deal I ever did was direct from the seller with my lease/option to buy.

I just read that Amazon (AMZ) is starting to get into the travel bus.
What will be the mode of transport…..wait for it…..ummmm….. a drone!!! Yea that’s it - we’ll transport ‘em all via drone to a lovely destination filled with white sand beaches, tan blond no nothings and umbrella drinks….yea that’s the ticket!!

Gotta wonder about the rankings.

Your links do tend to “say it all”:

- peakoil dot com
- china daily dot com

etc etc etc

how do you like paying more for the basics so wall street can have a stock party?

China property developer Kaisa defaults on overseas debt
21 April 2015
From the section Business
Shenzhen is one of China’s largest cities and is home to many industrial estates and companies

Kaisa Group has become the first Chinese property developer to default on its overseas debt, which is estimated to be about $2.5bn (£1.7bn).

The Shenzhen-based company said it missed two interest payments, raising concerns that more of its creditors could demand their money back.

Kaisa has borrowed billions in order to pay for large land purchases in China.
…

What happens when you push over the first domino in a long chain?

Markets
China Suffers First Default by State-Owned Company
Baoding Tianwei, a power-equipment manufacturer, fails to make a $14 million interest payment on a domestic bond
China’s first state-owned company to default on a domestic bond, Baoding Tianwei Group, failed to make an interest payment April 21. Photo: Reuters
Updated April 21, 2015 7:43 a.m. ET

Baoding Tianwei Group, a power-equipment manufacturer, became China’s first state-owned company to default on domestic debt.

The company said it failed to make an 85.5 million yuan ($13.8 million) bond interest payment due Tuesday after suffering a huge loss in 2014.

Baoding Tianwei was unable to raise enough funds to make the payment, it said on the website of China’s bond clearing house.

The company said it lost 10.1 billion yuan in 2014 mainly as a result of its new energy businesses. Previously, the manufacturer had said its new energy businesses were under pressure from overcapacity and falling prices.

The 1.5 billion yuan note was issued by Baoding Tianwei in 2011 and carries an interest rate of 5.7%. It will fall due in April 2016.
…

China should be letting a hundred defaults bloom
By William Pesek, Bloomberg News Bloomberg
April 22, 2015, 11:20 PM

This week, Kaisa, a former poster child of China’s booming real estate market, made history by becoming the first Chinese developer to renege on dollar loans. The immediate causes of Kaisa’s default are clear enough: Plunging property values left it with excessive debt. But it’s still too early to know what Kaisa’s failure will mean for China. Chinese President Xi Jinping must decide whether he is more interested in stoking short-term growth, or curbing the excesses that imperil the country’s future.

On the one hand, Xi’s government claims “market forces” will play a “decisive” role as it shifts to a growth model more reliant on domestic demand than exports and investment. Even Deng Xiaoping, China’s first Communist leader to embrace free markets, never went so far in his rhetoric. And Xi’s handling of major economic players like Kaisa and state-owned power- transformer manufacturer Baoding Tianwei Group, which defaulted this week on an onshore bond, has signaled his seriousness.

But for all of Xi’s talk about market forces, he has also allowed the state to get even more deeply involved in the economy. Many observers see this week’s move by the People’s Bank of China to cut bank reserve requirements by 1 percentage point as a sign that the government’s top priority is to prop up GDP. That’s on top of the help that local governments recently received in refinancing debt, which essentially amounted to a stealth bailout from Beijing.

It’s understandable that Xi would want to mitigate the turbulence and potential embarrassments associated with allowing China’s credit bubble to burst. China is attempting a macroeconomic shift unprecedented in size and scale, at a time when all of its missteps will be chronicled by the international media. But China can’t build a healthy economy unless it develops the stomach for letting companies and banks fail. Last week, Standard & Poor’s expressed concerns about the faltering profitability of Chinese companies and warned “more defaults cannot be ruled out.” But it’s still unclear whether Beijing will allow these failures to occur.
…

China government firm’s default shocks market — Is more to come?
Published: Apr 22, 2015 7:19 p.m. ET
Reuters
The Pudong Financial District in Shanghai.
By Laura He
Asia markets reporter

HONG KONG (MarketWatch) — Chinese power-equipment maker Baoding Tianwei Group made history this week, becoming the first-ever Chinese government-owned company to default on its debt.

The news came just one day after another milestone, in which Kaisa Group Holdings became the first Chinese real-estate developer to default on a U.S.-dollar-denominated bond. But it was the Tianwei case that holds far greater implications for Chinese markets: State-owned enterprises (SOEs) such as Tianwei are traditionally seen as enjoying implicit government support and therefore possess lower default risks.

The news has stoked concerns about rising credit risk in the country, with analysts now warning of more defaults to come, and even the likelihood of a major credit crunch.

In a report Tuesday, China’s largest investment bank — China International Capital Corp. (CICC) — described Tianwei’s default as a “landmark” in the history of the nation’s bond market.

Failure to repay public debt was once practically unknown in China, but that changed last year, when Shanghai Chaori Solar Energy became the first Chinese firm to default on a corporate bond. But although the market has now had time to get used to the idea of Chinese defaults, and although Tianwei’s financial difficulties had been widely reported even back before Chaori defaulted, its inability to honor its bonds has surprised the market, CICC said.

The report notes that Tianwei is a fully-owned subsidiary of China South Industries Group Corp., one of China’s largest military-defense companies. Just as importantly, the main underwriter for the bond was China Construction Bank, one of China’s largest state-owned lenders.

Based on past experience, investors assumed that the government would ultimately come to the rescue.

“The impact of Baoding Tianwei’s default may be unprecedented,” the Beijing Business Today newspaper reported Wednesday, quoting analysts from Guotai Junan Securities as saying that the event has “broken the presumption that SOEs have lower default risks.”

The case itself might cause “some psychological shock to investors,” the report said.

More to come?

As CICC sees it, one of the lessons of the Tianwei default is that quite a few struggling Chinese companies, no matter whether they are privately owned or state-owned, are facing great difficulties in successfully refinancing their debt.
…

Cockroach Theory is about to undergo a real-world test.

Does Cockroach Theory apply to China debt defaults?

China HSBC manufacturing PMI falls to one-year low
By MarketWatch
Published: Apr 22, 2015 9:58 p.m. ET

BEIJING–The preliminary HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, fell to a one-year low of 49.2 in April, compared with a final reading of 49.6 in March, HSBC Holdings PLC said Thursday.

A reading above 50 indicates expansion from the previous month, while a reading below 50 indicates contraction.

Production increased only marginally, but total new business declined for the second straight month, HSBC said.
…

Shouldn’t China stocks be falling if their economy is contracting?

Right…. and you do one-handed backflips too.

Enjoy your debt.