What’s The Alternative?
A weekend topic on a pair of articles related to the housing bubble. MarketWatch, “President Barack Obama was in Phoenix earlier this year to talk up something as hot as the desert sun—housing. In a January speech, he announced a new Federal Housing Administration policy to lower the mortgage insurance premium enough to save the typical borrower $900 a year, assuming a $180,000 mortgage. That FHA fee drop was aimed at helping middle-class families. ‘Over the next three years, these lower premiums will give hundreds of thousands more families the chance to own their own home, and it will help make owning a home more affordable for millions more households overall in the coming years,’ Obama said.”
“In fact, what’s happened—for those on the outside, trying to get in—is that owning a home has become less affordable, directly as a result of the FHA move. CoreLogic tracks house prices nationally. What Sam Khater, deputy chief economist of CoreLogic has found, is that prices on lower-end homes immediately vaulted in price. First, a quick explanation of what is a lower-end home—for purposes of the data presented here, it’s one that 75%, or less, of the median transaction price. For the chart above, the median price of a low-end home was just over $140,000 in August.”
“Khater says that lower-end prices, which had been growing at an 8% year-over-year clip, accelerated after the FHA move. In August, the most recent month for which data is available, prices in this segment have grown 11%, faster than the 7% growth for all segments. That extra 3%-per-year in home price growth, on a $180,000 home, amounts to $5,400, or basically, six years of insurance-premium savings. On a $140,000 home, that extra premium amounts to $4,200.”
“The FHA move certainly has helped stimulate demand. Year-to-date, FHA single-family endorsements for purchase have boomed by 24%. But CoreLogic’s Khater says that is not what the housing market needs at this point. ‘In today’s market where supply is so tight, it’s not helping the cause to artificially stimulate demand,’ he said.”
“The White House referred questions to a spokesman for the Department of Housing and Urban Development, who defended the program and said the market, not the government, sets prices for homes. ‘After months of declining home prices, we are seeing markets recover and families seeing equity build in their homes. The MIP reduction makes refinancing and purchasing more in reach for families across the nation,’ he added.”
“That point about refinancing is worth emphasizing—FHA refis have doubled this year. The move was a benefit to those already in their home who then refinanced under the FHA program.”
From Business Insider. “Former Federal Reserve chair Ben Bernanke has no patience for the idea that Fed is creating inequality and hurting savers. In an interview with the Financial Times published Friday, Bernanke takes to task the idea that the Fed’s policy of cutting rates to 0% and keeping them there to support a slow, plodding post-financial-crisis economic recovery has helped enrich the already-wealthy and punished ‘Mom and Pop’ savers who just want a safe return on their money.”
“‘It’s ironic that the same people who criticise the Fed for helping the rich also criticise the Fed for hurting savers,’ Bernanke told the FT’s Martin Wolf. ‘And those two things are inconsistent. But what’s the alternative? Should the Fed not try to support a recovery?’”
“Bernanke told Wolf, ‘If people are unhappy with the effects of low interest rates, they should pressure Congress to do more on the fiscal side, and so have a less unbalanced monetary-fiscal policy mix.’ And in this Bernanke is telling Wolf that Congress approving additional government spending is the thing you’re really looking for if you want additional economic stimulus.”
“The Federal Reserve, in Bernanke’s view, did its part and avoided a Great Depression. ‘A Great Depression is not going to promote innovation, growth, and prosperity,’ Bernanke told Wolf.”
‘the same people who criticise the Fed for helping the rich also criticise the Fed for hurting savers,’ Bernanke told the FT’s Martin Wolf. ‘And those two things are inconsistent’
Not all savers are rich. Many people trying to raise their economic prospects may attempt to do so by saving money. I don’t know about the rest of you, but I learned at an early age about the power of compound interest.
And here’s one problem with propping up asset prices (which mainly helps rich people): “The White House referred questions to a spokesman for the Department of Housing and Urban Development, who defended the program and said the market, not the government, sets prices for homes”
Once propped up, you have to keep on proppin’. Indefinitely, which isn’t very realistic. You could say it’s doomed to fail eventually. I’d say there are plenty of alternatives to that Bernanke.
“I learned at an early age about the power of compound interest.”
My parents are learning at a late age about the uselessness of compound interest with perpetual ZIRP in force.
I’m seeing these statements as corrupted, distorted logic.
Or is it corrupted distorted character?
When Bernanke implicitly conflates two concepts: savers and the wealthy, it immediately seems like dissembling (i.e. bullsh•tting).
Bernanke is smart enough to know better. There are plenty of middle class people who have tried to save during their lives, who counted on interest income as part of their retirement income, who are now actually de facto losing purchasing power due to negative real interest rates.
who are now actually de facto losing purchasing power due to negative real interest rates ??
Its not just unique to the United States…
‘Bernanke told Wolf, ‘If people are unhappy with the effects of low interest rates, they should pressure Congress to do more on the fiscal side, and so have a less unbalanced monetary-fiscal policy mix.’ And in this Bernanke is telling Wolf that Congress approving additional government spending is the thing you’re really looking for if you want additional economic stimulus.’
Congress made you foam the runway for banks? I can recall, in the distant, dim past when the US had a functioning economy. Sure there were recessions here and there and companies would fail or be reorganized. Sometimes, there wouldn’t even be a bail-out!
It is easy to identify the perpetual frailty of this entire path. Let’s suppose tomorrow Yellen came out and said, “Stock and bond markets, you are on your own. We are going to let the market set interest rates.”
And on the same Sunday, the White House spokesman said from here on out, the market, not the government, will set prices for houses and house loans.
What would happen on Monday?
“What would happen on Monday?”
Financial Armageddon on Monday, followed by Tuesday bailouts.
For the rich maybe. Didn’t we learn that 2014 was the highest in terms of second house purchases, even while ownership continued its multi-year plunge? That rents are consuming a historically high percentage of incomes, reducing what we have to spend on everything else, causing deflation? What is the corporate reaction to these ever lower disposable incomes? Investment in stuff like driver-less cars. Oops, more unemployment. What’s the point of owning Amazon stock if it doesn’t go up? So it charges ahead, squeezing the profit out of one industry after another.
And this isn’t even getting to the myriad mis-allocations of capital; ghost cities. Empty “luxury” condo towers. Land prices doubling in Bozeman Montana and Omaha Nebraska and the resulting over-production of mcmansions. Commodity industries build up on leverage to serve a BRIC-centric global economy that doesn’t exist anymore. Stock buy-backs that accomplish nothing as far as productivity.
It’s all deflationary. It’s smothering the economy in thousands of ways and wages with it. All the while, more of what were productive parts of the economy are swallowed up in the central banks balance sheet and the Federal Governments deficit black hole (see Fannie and Freddie).
^^ I’m not as pessimistic as you, but I think most of this synopsis is correct.
Liberace!
Downlow Joe has entered the building.
“The Federal Reserve, in Bernanke’s view, did its part and avoided a Great Depression. ‘A Great Depression is not going to promote innovation, growth, and prosperity,’ Bernanke told Wolf.”
A policy maker always has the prerogative to claim things would have turned out far worse had his policies not been implemented.
That is the crux of the debate.
What if the bailout was targeted to the bottom, and took place after bankruptcies wiped all the paper wealth off the books?
Worse for older generations and the wealthy, who would have seen their wealth wiped away. Better for the young and future wealth creators, who would have been able to acquire assets at lower prices.
Much worse in 2009 and 2010. Worse today? That’s the question.
“What if the bailout was targeted to the bottom,”
Disingenuous.
What if there were no wallet hijacking, treasury robbing bailouts at all and prices were allowed to fall to their natural levels?
Answer: A roaring first class global economy.
“Worse for older generations and the wealthy, who would have seen their wealth wiped away. Better for the young and future wealth creators, who would have been able to acquire assets at lower prices.”
Which gets back to my question: Is wealth redistribution from prudent savers to reckless gamblers part of the Fed’s mandate?
Which gets back to my question: Is wealth redistribution from prudent savers to reckless gamblers part of the Fed’s mandate?
Your question-statement would be a great launch for an editorial piece which in a thinking world would might result in a “The Emperor has no clothes” moment.
CL ad yesterday- if this family was looking to pay cash they could neither afford the $140,000 low end home and perhaps not want/afford the $180,000 mortgage. When you can’t afford a house in Montana you know the world has turned upside down:
CL
Home needed. Montana dreams. (Bitterroot)
0BR available now
apartment
My family has a dream to own a home. A dream that I have found is nearly impossible to achieve in western MT. A hard working family that could afford and keep up a home in other parts of the country… but not here in MT because only the rich can afford a home. I could afford a home of $120,000 and in the Midwest, that would buy us our dream home (we could save for retirement) A place for my kids to raise animals and run and play.
People no longer give chances or opportunity to others. I remember my grandparents stories of how they built their home and small business in the 40’s and 50’s. My grandma still lives in that house and she is 98. It no longer works that way anymore.
We love MT and the Bitterroot. I will keep dreaming. I believe in miracles and maybe one day our dreams will come true.
END RANT
Much worse in 2009 and 2010. Worse today? That’s the question.
We would have been much better off today without the extreme measures taken. We avoided the purging of mal-investment by the pouring forth of liquidity—directly leading to more mal-investment. We bore some of the pain that was necessary, but not all, and correspondingly avoided learning most of the lessons that we needed to learn.
avoided learning most of the lessons that we needed to learn ??
And who is “we” ?? Because, I am quite sure the ones who got us into this there quality of life would not have skipped a beat…99% would have paid dearly…The 1%…Not so much…
It was the 99% that are neck deep in debt on depreciating assets. Of course they’re going to pay dearly.
Do you expect a free ride?
It was the 99% that needed to learn the lessons that I’m referring to—and if they did, they would not have been so easily fleeced the next time around; they needed to learn lessons like (feel free to expand this list):
- fundamental value; e.g. what is the real purpose of a house? What value does it really provide? Hint: it’s not an ATM.
- exponential growth cannot continue forever; trees do not grow to the moon.
- debt is making promises about a future that you do not fully control; be careful what commitments you make in the face of an uncertain future.
- debt is dangerous; read the fine print. Exploding balloon payments are called “exploding” for a reason.
- think for yourself. Manias happen—but no one can force you to join in on the insanity.
- there ain’t no such thing as a free lunch. Someone who promises one is intending to profit from you somehow.
The GD-I generation learned these lessons, and were changed forever by their experiences; this led to a more stable economy for decades (fifties, sixties).
The GD-II generation apparently has failed to learn anything. This will be directly responsible for MORE instability in the future.
I should print this and hang it somewhere, well said.^^
well said.^^ ?
Yeah right…Get a grip…
It was the 99% that needed to learn the lessons that I’m referring to ??
Yeah…All 99 out of 100 home purchasers right…Don’t need to respond to that imbecile statement…
what is the real purpose of a house? What value does it really provide? Hint: it’s not an ATM ??
About as dumb as the first statement…Hint…Everyone does not use there house as a ATM…
exponential growth cannot continue forever; trees do not grow to the moon ??
Who gives a rats ass if the house goes up in value…It ain’t for sale dude and until it is, I really don’t give a chit….
read the fine print. Exploding balloon payments are called “exploding” for a reason ??
Got it…All the home mortgages have ballon payments…More ignorant the farther down the line I get…
The GD-II generation apparently has failed to learn anything. This will be directly responsible for MORE instability in the future ??
yeah right…This generation has accomplished nothing except for giving your ass the best possible quality of life on the face of the earth…
ATM isn’t the point Dave my friend.
Millions of empty pocketed fools have been paying grossly inflated prices for what is always a depreciating asset.
Dave, it seems you don’t think there is a big credit bubble that might pose some catastrophic risk. Life is better than ever before. The bankers have saved us from really awful stuff by letting us pay them trillions to cover their bad bets.
Dave has been shilling for the central bankers since the day that the bailouts were first announced; he was one of the few here who was in favor of all of the manipulation—he stated many times that they had “saved us” from the GD-II through their grand machinations.
So if someone was going to be offended by my suggested lessons, and it was scdave who pipes up on the defensive, then I’m fairly sure that I am close to a truth that the central bankers don’t want us to think about too deeply.
Thanks for the confirmation, Dave!
p.s. Glad you liked it, Sara!
Dumb question of the day :
Doesn’t wealth redistribution lie outside of the Fed’s policy mandate?
If you are not a member bank, you are not part of any Fed mandate. What were you thinking?
Marketwatch dot com
Andrea Coombes’ Ways and Means
With rates so low, should you pay off your mortgage?
By Andrea Coombes
Published: Oct 23, 2015 11:06 a.m. ET
Terrence Horan/MarketWatch
With mortgage rates averaging less than 5% for the past five years — and 2015 set to become year No. 6 in that trend — there’s never been a better time to carry a mortgage into retirement, right?
Not so fast.
While it’s an appealing idea to hold onto a predictable monthly mortgage payment and plow into retirement savings the money that would otherwise go to a home-loan payoff — the thinking is that you come out ahead if you can earn more in the markets than you’re paying to borrow the money — some say that even at ultralow interest rates, it often makes more sense for people to pay off their mortgage before they retire.
One reason for that is the challenge of getting a decent return given the stock market’s current gyrations and potentially weaker-than-normal returns in the future. Read: The ‘new normal’ for markets: Everything stinks.
If you’re investing for retirement, don’t focus on the Fed and short-term rate hikes. Stick to your long-term investment goals, beware of inflation and keep an eye on asset allocation, say MarketWatch panelists.
That said, these days you wouldn’t need the financial markets to yield much to top the cost of money borrowed to buy a home. In all but one of the first nine months of 2015, the average rate on the 30-year-fixed mortgage was less than 4% (the exception was July’s 4.05% rate). From 2010 through 2014, the annual rate averaged less than 5%, according to data from Freddie Mac. (See the data)
So why not hold onto that low-rate mortgage and try to make a higher return on your money by investing it? In a word: certainty.
“Do we know that markets are guaranteed or what’s going to happen? No. We don’t have a clue. They giveth and they taketh away,” said Michael Falk, CFA, a partner at Focus Consulting and chief strategist on a global hedge fund. Falk spoke at a recent panel event hosted by MarketWatch in New York.
The title of the MarketWatch event was “Rate Quake: How to manage retirement investments in a rising-interest-rate environment.” See the full special report.
Falk was joined by Kathy Jones, chief fixed income strategist at the Schwab Center for Financial Research, and Joseph M. Jennings, Jr., wealth director and senior vice president at PNC Wealth Management.
“What do we know about liabilities? You have to pay every month to repay that debt,” he said. In general, those on the verge of retirement should “strategize to get rid of as much debt as possible,” Falk said.
He admits it’s not always a popular idea. “I usually irritate people when I talk about [how] the liability side of the equation is more important than the asset side of the equation for retirees,” Falk said.
By “liabilities” he means more than mortgage debt. For example, near-retirees and retirees should consider selling all but one car, he said. “The capitalized cost of the average car is upward of $500 a month,” Falk said. “If you start to reduce your liabilities, now you’ve got a much higher degree of control over your spending. If you have a higher degree of control over your spending, you’re less dependent on markets, so they can’t be as disruptive in your financial plan.”
He’s not alone in that thinking. “Generally, the goal is to get your debt down as much as you possibly can, even at the expense of investing, particularly if you’re getting very close to retirement,” said Schwab’s Jones.
“You want to get that debt off the balance sheet as quickly as you can, so that you are freed up to invest,” Jones said. “We do have a generation that’s going into retirement with more debt than in the past. I think that’s going to be a big challenge.”
…
“See the full special report.”
It’s simple. Don’t buy stuff you cannot afford to pay for. Failing that, pay for your stuff before you quit your job.
Don’t Buy Stuff You Cannot Afford
What’s the alternative Bernanke?
‘San Francisco’s hot housing market could be showing signs of trouble. In a note to clients on Friday, analysts at Morgan Stanley led by Vance Edelson wrote: “The tech IPO slowdown has stoked concern that San Fran, one of the hottest real estate markets, could be ready for a pause.”
‘And as the pace of new tech IPOs has slowed, so has the uptake of companies moving into offices in San Francisco. Overall, it’s been a tough year for tech IPOs, particularly in the tech space, where over half the companies filing documents with the SEC to go public have disclosed a “material weakness.”
‘Additionally, Morgan Stanley notes in its report that this year, sub-leasing spiked to 1.4 million square feet of office space, or about 1.5% of the available stock, indicating that companies occupying huge amounts of office space were looking to supplement their leases by taking in smaller tenants.’
‘The firm notes that about 330,000 square feet of this space was due to one financial services firm leaving for another states, but the remaining 1.1 or so million square feet of sub-leases included firms like Salesforce.com, Zillow, Zynga, and Jack Dorsey’s mobile payments company Square, which just filed documents to go public.’
‘As for the market facing problems with finding enough tenants to occupy future buildings, about 61% of the office space being built in San Francisco is pre-leased. But at around 7% of the current available office space, the amount of new space being built is considerable.’
‘And so the firm expects the market to remain “fairly balanced,” but the latest survey of brokers in city is pretty clear: the market is slowing down.’
Golly, I hope those skinny jean guys didn’t over-pay during the bidding wars.
Napa, CA Housing Prices Plunge 9% YoY; Mortgage And Appraisal Fraud On The Rise
http://www.movoto.com/napa-ca/market-trends/
Davis, CA Housing Prices Crater 6% YoY
http://www.movoto.com/davis-ca/market-trends/
Bernanke told Wolf, ‘If people are unhappy with the effects of low interest rates, they should pressure Congress to do more on the fiscal side, and so have a less unbalanced monetary-fiscal policy mix.’
Bernanke is correct: he had to act alone with QE because it was the only tool available to him and because Congress was useless. Since Congress is loaded with politicians (both left and right) who have no education, training or knowledge in economics, they have no clue what to do. Same goes for Obama, he’s over his head when it comes to economics. All Congress knows is the same old tired mantra of “low taxes good, spending bad.”
QE by itself was not the best solution to the financial crash. Congress should have passed a real stimulus package with infrastructure spending and other projects to inject cash into the hands of middle class working Americans. That’s what Bernanke means by fiscal policy. The ’stimulus’ we got was far too small and most of it did not involve infrastructure.
So bottom line QE was a half-@ss solution because Congress was unable and unwilling to do its part.
Lola,
Choking the economy by driving demand to record lows is not the answer.
Bernanke is a spokesperson for a gang of thieves. He would have preferred we went even deeper into debt (to his gang). He is speaking to those who think they would be better off if they could just borrow more, and especially to those who think that if the debt is spread around it doesn’t matter to them.
“He would have preferred we went even deeper into debt (to his gang).”
Is it part of the Fed’s mandate to perpetuate ultra-low interest rates and ultra-loose lending standards that encourage spendthrifts to dig themselves into debt holes from which they will never escape?
Often only a miniscule uptick in sales will drive a company into overdrive, forcing higher wages, better profitability, and security of workload. That should have been done by government stimulus.
But they couldn’t. They were being helped out of a deeper recession with cheap interest rates and offloading their deficit unto QE. Juggling made them look better.
It just isn’t savers who have been hurt. Every university, graveyard, trust, etc have lost income on these cheap rates and all have drastically had to cut back on their services.
A miniscule uptick in sales cannot make a company significantly more profitable, it is miniscule. It can trigger a company to take on more risk by expanding and taking on more inventory and employees. This pushes down profitability, puts downward pressure on wages and makes the future less secure.
The gamble is on real substantial and sustainable growth, not the original flag of miniscule upticks. Gambling can be fun, but it is never “more secure”.
Blue Skye
Fellow boater. Glad you like Canada. Now, my counter argument.
By miniscule I mean an increase of about 5 to 15% in sales - certainly no where near their capacity. Since Cap Rate was about 80% in manufacturing at that time here in Canada then that kind of government stimulus for infrastructure would have put pressure on capital equipment repairs and improvements for road builders, etc. Say 10% of sales or for a small company an extra $800,000 in sales per year. Since these companies were just marginally profitable and since this type of work carries about a 40% gross profit there would have been about $320,000 added to the bottom line for a company probably not making that much to begin with. Kind of a material change. No the overheads wouldn’t have increased (at least only miniscully as you would not need more lights, heat, etc).
With a solid return to profitability they could have reduced their bank line of credit probably by half, and moved their accts payable to less than 60 days (from 75). Their AR would have drifted up to 45 (less need to hound your customers) which would have increased sales.
You are right about a small company taking on more risk, but generally not in the beginning of a miniscule uptick in sales. I disagree with you on labour demand though - in a recession you generally pare down to the bone - any uptick always requires hiring.
You are also right about consistency. Gov stimulus is generally short term. Flip a coin at the end of it.
Thank you Patrick. I do love Canada, especially the women thereof.
About that little company, one of which I have been studying very closely. It can’t handle jumping up to 95% capacity utilization because of inefficiencies. Despite the fact that business is up with this temporary government spending, the management thinks they are special and that the company will grow by 10% now every year going forward. They take out a long term loan to build a bigger building. They take out more loans to populate their inventory to accommodate the projected increases in business. They hire way more people because training takes a long time. They are spending in excess of what little of that $320,000 originally trickled down to the bottom line and start to pay their suppliers late. The bank now wants a yearly audit that costs $100,000 and things are getting tight. The new MBA CFO increasingly makes presentations with lots of graphs and projections. Somehow, the ranks of management have swelled much more than the ranks of front line workers. Meetings and training sessions are becoming an overwhelming time suck. Expensively framed slogans populate any available wall space. One of the old timers in the shop asks “what if?” but he is dismissed as a crank without “vision”.
The company becomes more fragile because of the stimulus.
Blue Skye
” I do love Canada, especially the women thereof.”
Funny. I met my wife in New York State !
I don’t argue with you about the possibility of your outcomes, but business here today is shy of taking any chances right now.
Hopefully will see you next summer on the water.
Yes I hope the same. Thank you.
Amazing, from where in NY? Do you guys ever get down the Kingston area or visit NY?
The company I was talking about is the one I work for. They have already taken their chances!
If s&p earnings are off 4% and the market is at par are we talking a p/e over 20?
Bahhhh
“S&P stock market at par (staying the same), S&P (total) earnings off 4%, p/e over 20?” Base ?
To paraphrase Harry S Truman, Ben Bernanke is a shifty-eyed g*dd*mn liar, who talks out of both sides of his mouth and lies out of both sides too.
“The White House referred questions to a spokesman for the Department of Housing and Urban Development, who defended the program and said the market, not the government, sets prices for homes. ‘After months of declining home prices, we are seeing markets recover and families seeing equity build in their homes. The MIP reduction makes refinancing and purchasing more in reach for families across the nation,’ he added.”
How does inflating a ginormous credit - fueled bubble make homes more affordable? Makes no sense whatever.
‘Million-dollar homes are starting to pop up in some seemingly unlikely neighborhoods and towns as real estate prices hit new records. Dorchester now has two homes for sale in the million-dollar range, while East Boston, Roxbury and Revere each have one.’
‘The appearance of million-dollar listings in otherwise humble zip codes comes as the number of homes with seven-figure price tags rises across the state. Sales of homes between $1 million and $1.5 million rose 15 percent during the first seven months of the year, compared to 4 percent for homes under $1 million, Pinnacle Residential Group has reported.’
“If they are not record prices, they are near record prices,” said Thomas Callahan, executive director of the Massachusetts Affordable Housing Alliance, which is based in Dorchester. “You have not seen those numbers all that much – it is definitely concerning.”
Tom, you are a doom and gloomer. Don’t you know higher house prices are a bonanza for these humble people? It’s probably all cash Chinese looking for sweet deals that you local bumpkins can’t afford to recognize.
Rule No. 1 for getting out of a hole:
STOP DIGGING!
‘The Federal Reserve, in Bernanke’s view, did its part and avoided a Great Depression. ‘A Great Depression is not going to promote innovation, growth, and prosperity,’ Bernanke told Wolf.’
‘PORTLAND, OR (KPTV) - The property at 16015 Southeast Stark Street is a unique building for sure. It used to be home to the Woodshed Restaurant, and then the Black Cauldron, a vegan strip club.’
‘But Thursday morning, the Multnomah County commissioners approved a $300,000 loan to help Human Solutions, a charity working with homeless and low-income families, buy the property for a family shelter.’
“It is a former strip club. There’s no bones about it. It is what it was,” Miller said. “What I think we’re really excited about is what it will be like inside in five months when we’re done with the renovations. It’ll be a warm, bright well lit space for kids and families who are experiencing homelessness in Multnomah County.”
‘Miller said the shelter will provide much needed help, as the lack of affordable housing forces families from their homes. “It’s been very well documented that we’re in a housing crisis in Multnomah County,” he said. “We believe we’ve been in that crisis for some time.”
‘Some of the people living nearby said the shelter is a good idea, and will be a change in the area. “We have a strip club right over there and down the road. Four bars, every corner,” neighbor Donny Lund explained. “This will be good for the neighborhood.”
“Vegan Strip Club”
How the hell does that work???????? Tip them with lettuce and kale? “Make Daddy’s carrot Bigger” dances??
Two-drink minimum; V8 vegetable juice.
LOL…
‘Over the next three years, these lower premiums will give hundreds of thousands more families the chance to own their own home, and it will help make owning a home more affordable for millions more households overall in the coming years,’ Obama said.’
‘In fact, what’s happened—for those on the outside, trying to get in—is that owning a home has become less affordable, directly as a result of the FHA move. CoreLogic tracks house prices nationally. What Sam Khater, deputy chief economist of CoreLogic has found, is that prices on lower-end homes immediately vaulted in price.’
‘Homeless people sleeping outside has been a big issue for the city of Boise for a long time. The city has passed laws against it and fought in court for years to keep those laws on the books. But over the summer homeless people began doing something new. From hidden camp sites scattered throughout Boise, they’ve gathered together in one place and pitched dozens of tents. And for now, the city is letting them stay.’
‘The man, who doesn’t want to give his name, seems to be in shock. He says he’s been middle class all his life, but found himself suddenly homeless and penniless two days ago. He’s been sleeping at nearby homeless shelter Interfaith Sanctuary and spending his days in the alley.’
‘He says the people here have been kind to him but he can’t seem to come to grips with the realities of the place, like the lack of bathrooms and the smell that issue creates. But he’s most bothered by the presence of children.’
“This is third world right here,” he says. “There’s no reason why an American child should have to live like this.”
‘Obama: ‘Housing Market Is Beginning to Heal…Home Prices Rising at Fastest Pace in 7 Years’
‘With the real estate industry soaring hotter than an Arizona August, President Barack Obama visited Phoenix Tuesday to address the recovering state of the U.S. housing market. Obama said action needs to be taken to “make it easier for qualified buyers” to get houses. These included making the popular 30-year-fixed mortgage available to a larger pool of borrowers; he also tied in his plan for immigration reform, which he said will help the housing market and many aspects of the economy.’
‘Obama chose Phoenix for the location of his speech, as it was one of the markets hit the hardest in the real estate drought, and is currently on a rapid rebound. This made the city an ideal stopping point for the president to publicly map out his plan for keeping the housing market on the upswing and leading the nation further into economic recovery.’
‘Since 2011, when Phoenix’ market crashed hard, the city has made large strides toward recovery. As of June 2013, according to a recent CoreLogic report, Arizona was one of the five states with the highest home price appreciation, landing at 16.2 percent. The Phoenix, Mesa and Glendale markets came in at a 17.1 percent increase for single family homes, including distressed property, and 14.7 percent excluding distressed. Home prices nationwide, including distressed sales, increased an encouraging 11.9 percent on a year-over-year basis in June 2013 compared to June 2012, according to the June CoreLogic Home Price Index (HPI) report. This change represents the 16th consecutive monthly increase in home prices nationally.’
‘According to an analysis by Mike Orr, a researcher at Arizona State University’s W.P. Carey School of Business, the median single-family-home price in Arizona is up an incredible 25.9 percent from last year.’
‘Following the president’s remarks, Heather MacLean, a real estate agent with Arizona-based Realty Executives, said the Phoenix market has never been better. “We are seeing numbers in some areas that actually rival numbers that were seen in the mid 2000’s,” MacLean said.’
‘Tim Irvine, another real estate agent with Realty Executives in Ahwatukee, agreed commenting, “The median sales price for all resale properties in July is projected to be $182,500 which would be a 1.4% increase over June ($180k). More specifically for Ahwatukee, the affluent Phoenix suburb where the president directed his message to the middle class today, the three month, rolling average sales price is up 2.0% to $312,845 for July.”
‘Housing Market Is Beginning to Heal…Home Prices Rising at Fastest Pace in 7 Years’
Given the fact that a ‘housing recovery’ is falling housing prices to dramatically lower and more affordable levels by definition, can anyone explain WTF this guy is talking about?
we know the gov will steal your savings and in a scuttle way the fed is doing that now,but otherwise we have 1937/8 for the fed model w holdings at a % of gdp etc.
how does it end?
Already had WW2
so?
‘Ben Bernanke is not envious of the “tough call” Janet Yellen must make with respect to raising interest rates. Bernanke said the Fed is keenly aware of the potential for asset price bubbles and other imbalances in this low interest rate environment. However, he does not see any current trouble, saying, “Whether it be in emerging markets, whether it be various asset prices and so on, I have to say I don’t see any asset prices — or major categories of assets — that are wildly out of line.”
‘Nevertheless, the prolonged period of near-zero interest rates since 2008 does raise concerns for the Fed when combined with the possibility of another recession. “If we were to get another recession, then we would be in trouble,” Bernanke said. “So there’s a case there for being cautious…You don’t want to have to raise rates and then have to come right back down to zero in a situation where the economy is weak and you don’t have the tools,” he said.’
‘Though Bernanke thinks another recession is possible, the odds are not high because of the growing domestic economy and low price inflation. He tempers this, saying, “There can always be a shock of some kind that was not anticipated, so you want to be careful about your forecasting…Economists are not very good at predicting recessions.”
You aren’t very good at seeing bubbles and neither is Yellen.
‘If we were to get another recession’
The business cycle hasn’t been repealed. How in the world this thinking took hold, I can’t understand. It is literally economics 101 that there will be periodic recessions. If class starts on a Monday, it’s probably covered by Wednesday.
Take it from an expert.
Evelyn M. Rusli
5/17/2007 @ 4:21PM
Bernanke Believes Housing Mess Contained
The subprime mess is grave but largely contained, said Federal Reserve Chairman Ben Bernanke Thursday, in a speech before the Federal Reserve Bank of Chicago. While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S. economy, he said. The speech was the Chairman’s most comprehensive on the subprime mortgage issue to date.
“Given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited,” Bernanke said.
In March, Bernanke had said that the problems in the subprime market would only reduce somewhat the effective demand for housing. But on Thursday Bernanke’s language was sharper.
“We are likely to see further increases in delinquencies and foreclosures this year and next,” Bernanke said. “Although a leveling-off of sales late last year suggested some stabilization of housing demand, the latest readings indicate a further step-down in the first quarter.”
The bleak forecast weighed on Wall Street, as the S&P 500 edged 2.03 points down, or 0.1%, to 1,512.11.
…
Foreclosures and delinquencies have skyrocketed since 2006, with the rate of serious delinquencies among subprime borrowers currently standing at 11 percent.
Recent economic indicators seem to support Bernanke’s forecast of a depressed housing market. On Wednesday, the Commerce Department reported that building permits fell 8.9% in April, the worst decline in almost two decades. Foreclosures also surged 62% this April, versus April 2006, says RealtyTrac, an online company that tracks foreclosures.
There are signs of self-correction in the lending market, Bernanke said, but the Fed, Congress, and other regulators will need to step in. In a fragile balancing act, regulators will have to walk a fine line to clamp down on bad practices and not stifle responsible lending or close off all refinancing options for borrowers.
The first line of defense against improper lending, Bernanke said, is effective disclosures, or improved transparency between lender and borrowers. If consumers are more educated about the loans they are applying for, and what options are available, it is less likely that high-risk borrowers will find themselves entangled in impossible loans. Regulators should also outline sharply drawn rules that prohibit clearly abusive practices and offer principles-based guidance combed with supervisory oversight.
Even as the housing industry stumbles through its correction, major financial institutions should be spared. Importantly, we see no serious broader spillover to banks or thrift institutions from the problems in the subprime market; troubled lenders, for the most part, have not been institutions with federally insured deposits, Bernanke said.
It is literally economics 101 that there will be periodic recessions ??
Its been sometime but IMO, we need to reflect on how close to disaster we were in September 2008…The response from central banks was to flood the markets with liquidity…
Bernanke, Guietner and Paulson took a action to stave off a depression & the deflation that would come with it….I might add that congress has done “NOTHING” from the fiscal side to help our country create jobs and heal…
No we find ourselves in uncharted waters with anemic growth “here” but growth none the less…The FED is in a tough spot….
Dave,
2008 wasn’t a disaster. Allowing the market to clear and correct was interfered with. The “disaster” were the 8 years leading up to it and the 7 years subsequent to 2008.
The piper will be paid, one way or another. The longer the delay, the larger the payment.
+infinity.
The disaster is in preventing the market from finding its natural equilibrium.
Preventing a natural bottom from being found prevents the natural recovery—which is why we have an anemic recovery instead.
The system was too fragile because there was too much debt. These heroes you mention doubled down by doling out enormous quantities of additional debt. This doesn’t “help” our country, it makes it weaker and ever more fragile. The debts need to be unwound, AKA deflation.
Isn’t INflation what’s needed to make those debts shrink to insignificance?
You are such a peach. Inflation is brought about by ever increased lending. This helps the central government swell like a tick, while the populace is consumed.
INflation makes the debts diminish while they are being serviced; DEflation makes the debts go away because they are being defaulted.
These heroes you mention doubled down by doling out enormous quantities of additional debt ??
Never called them hero’s….They took the action necessary to stop a full fledged meltdown…All academics & economists agree with that…Now, I know its easy for you to just say let the SHTF when you float on a boat or live in moms basement every day and would pay little consequence for 30% + unemployment and BK’s across the country…It would put a big smile on your face I know but it just suggests how sadistic you would be willing to be…
GWB…Your HERO…”This Sucker Could Go Down”….
https://www.google.com/search?q=Picture+of+1932+depression&espv=2&biw=1319&bih=719&tbm=isch&tbo=u&source=univ&sa=X&ved=0CDcQ7AlqFQoTCPL7xLD83cgCFUjJYwodXMQIGw
Dave my friend….. Unemployment did skyrocket in spite of the misguided efforts of your money printing friends.
Labor Force Participation Rate Falls To 37 Year Low
http://data.bls.gov/timeseries/LNS11300000
What is easy for me to say is that your CB role models did not wind down the credit bubble gently, they doubled down and spread whatever foul stuff we will have to clean up out longer and deeper into the future. In the meantime they supported the global speculation in the necessities of life that had all the mortals paying multiples for everything from bread to housing. Thanks Dave.
BTW, GWB was in the Bernanke club, and my mother is long gone.
We should all pause in a moment of silence for Greenspan and Bernanke, who are in the tough spot of giving $100,000+ speeches.
No one did squat for borrowers when the oil states bubble burst. The feds ran around closing banks and sending people off to prison. (Congress also pulled the rug out from under real estate with the big tax changes in the mid-80’s.) The rest of us, we had to find jobs outside of oil and real estate. Unfathomable, I know. The biggest adjustment was mental. No more electric bulls in the living room. Fewer $400 eel skin cowboy boots and $10,000 Rolex watches. Even some of the private jets went away. We thought everyone was rich. But we discovered an incredible amount of debt instead.
So while we all shed a tear for Bernanke, lets consider that the end of the story to his courageous, unprecedented, easy-way-out “policies” hasn’t been written yet. The past few years, I have read many reports of various sectors of the global economy “gorging” on debt. They’ve used that exact word. A lot of it was in the emerging markets, and they’re going down like a drunk camel on a hockey rink.
2008 just showed who “matters” to the PTB/Deep State/US oligarchs/whatever you want to call them.
Banksters, hedgies, Silicon Valley, real estate (in that they generate swindling opportunities for the first two).
On the outside looking in? Everybody else. Even the oil industry.
The central bank had a big hand in creating the housing bubble in the first place.
Central banks = just one subset of banksters.
The central bank had a big hand in creating the housing bubble in the first place ??
Yes they did….And in September of 2008 it all came crashing down….That was the impetus to the housing meltdown….It just took Lehman for it to go systemic…When Paulson spoke to Bush and then to congress he made them both blink because he made it clear to them act or this puppy is going down…
Now, I know Blue-Sky has a different opinion and surely he is more qualified than Paulson but I am happy that Paulson was at the helm and not him…
Time magazine on Henry Paulson[edit]
Time named Paulson as a runner-up for its 2008 Person of the Year, saying, with reference to the global financial crisis, “if there is a face to this financial debacle, it is now his…” before concluding that “given the … realities he faced, there is no obviously better path [he] could have followed”.[36]
Paulson was former CEO of the vampire squid. He wasn’t going to let his buddies, or his own fortune, be diminished.
Paulson was former CEO of the vampire squid.
+infinity. The squid-sters look out for their own kind; everyone else is either a mark, or collateral damage.
“…like a drunk camel on a hockey rink.”
I’d like to see that. If anyone has a youtube link, please post. (Also don’t tell the PETA people!)
“…like a drunk camel on a hockey rink.”
LOL, +1! And I just got home from a hockey game, so I am particularly fascinated by that image!
Today’ Fixer feelgood story…
When the fixr was in high school, he was asked to go to the “Sadie Hawkins” dance by a girl I had several classes with. Unfortunately, as I was already scheduled to work (as a assistsnt manager at Mickey Dees), I turned her down.
Thus proving that, when it comes to women, I started being a dumbass early.
Since then, I’ve found that about 95% of the guys invited to this dance were already dating the girl that asked them. Even now, its an exceptionally rare event. It took some real “stones” on her part, and then I just shot her down. I started thinking about it and regretting it the night of the dance, and many times since.
Fast forward 40 years, to last week………..found out that she was going to be at the reunion. Decided to go. When I ran into her, I told her that I had a bunch to apologize for……..that I wasn’t lying about work, I genuinely would have gone, but I chose to honor a commitment to a half-azzed high school job. That I should have done something to set things right at the time, but I didn’t. That I was the protoytypical dumbazz, and hoped she might feel better about it, if she knew that this had been troubling me as long as it had.
She accepted my apology…..then baled me out again a little while later, when I almost screwed up again. After the dinner, there was a DJ and dancing. She came up and said here was my chance to go dance. I declined, because dancing is a skill-set that has eluded me, and I haven’t had enough alcohol yet to think otherwise.
She left, and I started thinking ” I think I just screwed up again” Fortunately, she came back a few minutes later and told me “You’ve had two beers, they are playing slow dance stuff, and anyone can dance to that……..you are out of excuses!” She was right, so we went out and danced, much to the enjoyment of our mutual friends.
As we are walking out to dance, she says “Oh by the way, after we dance, you are supposed to meet my husband out in the parking lot, so he can beat you up.” Oh well, what’s got to happen has got to happen…….
Good thing you carry a big azz wrench with you all the time
Now, if I can just find the gal that asked me to take her out to the “submarine races”.
Which I proceeded to do, then brought her back to town when we couldn’t find them.
Hint to women: The -fixr is a little slow sometimes. Subtle doesn’t register. Try a frying pan upside the head.
Look up “Giant Dumbazz” in the dictionary, and you will see my picture.
You’re not the only one who is slow in that department, so don’t feel bad. A girl in college told me years later of her intentions toward me (details I’ll leave out), and I had absolutely no clue at the time.
WPA
“Here, in a nutshell, is why capitalism must be regulated if you want a civilized society. Nothing wrong with the owner wanting to make a return on investments, but this is just cruel and immoral”
http://blog.oaklandxings.com/2015/06/lakeshore-avenue-landlord-raises-monthly-rent-from-1080-to-3870-to-force-tenants-out/
Notice he never ties the crazy money printing to such situations. And where is the outrage when someone pays a million over asking in California? No, that draws ohhs and ahhs like a fireworks show.
Realtors Are Liars®
That warrants repeating. Realtors Are Liars®
You can say that again buddy.
Weird observation of the week
House a few blocks up the street had a makeover, for sale sign went up last month.
A day or two ago, “For Sale” sign came down, “For Rent” sign went up.
In the meantime, Mom has given up on selling her condo, scratching the move to DFW. Selling price is now the same as what she paid in 2001. No jobs. Or at least none that pay more than 12/hour
The Rust belt now stretches to the Rocky Mountains
And all the way to the Atlantic Ocean.
Massachusetts Housing Prices Fall 6% YoY, Statewide
http://www.zillow.com/ma/home-values/
They keep pushing this “American is the Greatest” propaganda.
What used to be doesn’t mean it’s that way now. We are morphing into a Banana Republic, sans bananas. In fact, around here, we are even adopting their language.
But why should I care? Im one of the people the rich people need to escape from the pitchforks and torches.
Selling price is now the same as what she paid in 2001.
Sounds like she should be glad to get out at what she paid.
Why should her move to DFW be contingent upon expectations of bubble-era gains?? If she wants to move, she wants to move.
And one for the “Crapistan” file.
Ono of my neighbors in the hangar had their APU fail last week. Electrically, deader than a doornail. Troubleshot it to a 300 amp fuse that powers the APU off the main battery bus. They ordered a new one from the OEM.
New one installed, no workee. WTF? Found out the new fuse was bad……….broke at a solder joint when it was torqued down on the mount studs.
Looked at the new fuse vs. old. Same manufacturer, same part number, but the new one is made differently, joint on the old one was secured with a crimp and copper rivets, instead of a poorly done solder. Because the little attach tab got hotter than the body of the fuse, it let the solder flow, but it
didn’t adhere to the fuse body.
Old fuse was Made in USA.
New, screwed up fuse……….Made in Mexico.
Does the electrical code allow solder joints on power distribution? I’m not allowed to have any in my boat wiring because its a fire hazard.
Code? What is this “code” you speak of? Sounds like some kind of “regulation” to me. And we all know how evil regulation is.
My buddy returned the bad part, along with a Nasty-gram. QC on incoming components at OEMs is becoming extinct, replaced by a “I’ve got a piece of paper that says it’s good” department.
This is sadly becoming the rule rather than the exception. I could give dozens of similar examples but will limit myself to this:
When you are in a global race to the bottom, you hire less skilled workers and pay them less. These workers, in turn, have less incentive to do a good job, as they are just as likely to take a different job installing cable TV for a dollar more an hour as they are to stay with the company.
This in turn leads to piss-poor assembly quality. I’ve seen it on my latest project in which we purchased over a million dollars’ worth of electrical distribution equipment from one of the top manufacturers. Bolts left untightened, poor wire routing, missing or incorrect parts, and so on. And this is on stuff “made in America” as well, so I can’t even blame the Chinese.