Bits Bucket for November 7, 2015
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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How much money have you lost so far going long on commodities?
BloombergBusiness
Commodities Plunge to 16-Year Low as Job Gains Fuel Dollar Surge
Luzi-Ann Javier luzi_ann
November 6, 2015 — 9:42 AM PST
Catalysts for demand gains `now behind us,’ Cordier says
Index of raw materials heads for fifth straight annual drop
The improving U.S. job market is making the commodity meltdown even worse, sending prices to the lowest in 16 years and dragging down shares of mining companies and energy producers.
The Bloomberg Commodity Index, a measure of returns for 22 components, tumbled to the lowest since 1999. The gauge dropped after gains for American payrolls sent the dollar to its highest in data going back to 2005, cutting demand for alternative assets. The strong labor market is helping clear the way for the Federal Reserve to raise interest rates, which dim the appeal of raw materials because they don’t offer yields or pay dividends.
Investors are suffering through the worst commodity collapse in a generation. Bulls can blame the cooling economy in China, the world’s largest consumer of metals, grains and energy. The nation’s slowest pace of the growth in two decades is stamping out demand and leaving the world oversupplied with everything from aluminum to wheat. The prospect that U.S. borrowing costs will rise for the first time nine years is compounding concern that raw-material users will slow or abandon plans for expansion, eroding consumption.
“It’s all about the jobs report and the outlook for the Fed liftoff,” James Cordier, founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “The quantitative easing in the U.S. that began almost a decade ago boosted commodities, mainly because of the weaker dollar. The infrastructure spending in China has changed dramatically. Both of those are now behind us.”
…
“Bulls can blame the cooling economy in China, the world’s largest consumer of metals, grains and energy. The nation’s slowest pace of the growth in two decades is stamping out demand and leaving the world oversupplied with everything from aluminum to wheat.”
And debt, the world is oversupplied with debt, debt that was taken on to finance the growth.
The growth is now gone but … but the debt still lingers on. And one person’s debt is another person’s money.
So what now? Now what? The effects of the price drops of commodities and such are realized immediately but not so for the price drops - the drops in value - of the debts that were directly or indirectly backed-up by these pricey commodities. No, these debts will look okay for a while but eventually - eventually if commodity prices do not recover - they will have to be written down.
So there is, there will be, a double whammy inflicted on the global economy: The first whammy is the immediate drop of commodity prices that immediately erases the wealth of one group of people, and then, later on, will come the write downs of debt that will erase the wealth of another group of people.
Cash, think cash …
buying stocks and homes makes you feel like your part of something bigger than yourself. Buying those assets is key to your success in life.
What says they need to be written down? They said the same about houses. Then they changed the rules. Did they ever change them back?
“What says they need to be written down?”
The Market will say they will need to be written down, but not for awhile.
Hope will keep the values of the debts alive - the hope that commodity prices will come back - but if commodity prices do not come back then there will come a point where the market will throw in the towel and it will dawn on debt holders that they will not get paid what they are owed, and this is the time that the debts will be considered uncollectable and then they will be written down.
I’d have thought the same thing about all that debt tied to housing.
Housing is “special”. Housing needs to be saved because two-thirds (or thereabouts) of voters are homebuyers.
Commodities are not deemed to be special, at least not globally. In localities where the price of a particular commodity is vital to the local economy then the locals will consider it special, but their considerations do not have the same clout that housing possesses.
The commodities bust lands more on foreign countries than American voters. Someone else’s problem, not ours.
The commodities bust lands more on foreign countries than American voters. Someone else’s problem, not ours.
Not true. A majority of contract positions in the futures markets are speculative — US banks, hedge funds and institutions that buy and sell contracts but never intend to take physical delivery of the underlying commodities.
“…US banks, hedge funds and institutions that buy and sell contracts…”
My point is about the impacts of the commodities bust on the American electorate. What percentage of American voters face the gambling losses to which you allude? I’m guessing it’s well below 1% who have experienced material losses due to the commodities bust, as the broad stock and bond market indexes favored by mom and pop investors are doing relatively well.
If the banks and institutions tank hard because they overspeculated on commodities and futures, then that pain will be spread to all of us indirectly.
Here’s some long-term price charts:
http://finviz.com/futures_charts.ashx?t=ALL&p=m1
Oil is down and so is natural gas, the grains are down, lumber is down, and the metals are down. The prices of these commodities (in the U.S. and elsewhere) gave backing to the debt that was used to finance the production and extraction of these commodities (in the U.S. and elsewhere). When the backing goes poof then the debt that was backed will also go poof once it is realized by Mr. Market that the prices that supplied the backing aren’t coming back.
The backing of the debt and the servicing of the debt; If the debt can only be serviced if prices are high then it follows that the debt will not be serviced if prices go down and stays down.
A price decline has an immediate negative effect to the producers of the commodities because Mr. Market will immediately report this negative effect, but a price decline will have a delayed negative effect on the debt that is associated with and are backed by the commodities because Mr. Market will take his time in determining the debts value - or lack of value.
“My point is about the impacts of the commodities bust on the American electorate.”
Except for the mutual funds and the pension funds, many of which have a stake in high commodity prices - both an equity stake and a stake in the debts.
“…but if commodity prices do not come back then there will come a point where the market will throw in the towel and it will dawn on debt holders that they will not get paid what they are owed,…”
You bring to mind the ‘oh sh!t’ moment in December 2006 when the subprime ABX indexes went over the lip of the waterfall. By seven months later, these indexes had lost 90 percent of thei year-ago value, and the entire U.S. subprime mortgage lending sector had gone POOF.
“If the banks and institutions tank hard because they overspeculated on commodities and futures, then that pain will be spread to all of us indirectly.”
With Dodd-Frank plus the Fed’s post-2009 financial risk management protocol in effect, this is no longer a concern.
I just checked on the 1-year returns on the Vanguard energy mutual fund versus the target retirement fund I got my Mom and Dad into recently. The 1-year return on the target retirement fund was a paltry 0.18%, much better than the -33% return on the energy fund!
P.S. Note that a 33% loss is sufficient to fully erase the last 50% in gains:
(1-0.33)*(1.50) = 1.
Vanguard energy mutual fund versus the target retirement fund
What would the Vanguard Total Market ETF have gotten them over the same period?
Vanguard Total Stock Market ETF
1-year return through 9/30/2015 = -0.56%
“BloombergBusiness”
Who knew commodities had “returns”?
Returns = Interest + Capital Gains.
Commodities pay zero interest, and their capital gains turn to losses when inlation is low and rates on interest-bearing investments are rising, as is presently the case.
Hence returns on commodities are currently negative. Try not to catch yourself a falling knife.
“It’s all about the jobs report and the outlook for the Fed liftoff,” James Cordier, founder of Optionsellers.com in Tampa, Florida, said in a telephone interview.
Too many blue-eyed people making money manipulating money while they expect the brown and yellow plebs to increase their productivity.
I just checked out the T Rowe Price Real Assets fund (PRAFX).
Year-to-date return through 11/06/2015 = -10.92%
Here is the description of its investing strategy in the prospectus:
Isn’t it interesting how badly this fund has done over the past year, given that it is heavily loaded with real estate, which has recently done so well?
Realtors are liars.
You can say that again.
What, no Friday Desk Clearing Post? My weekend won’t be the same!
This message sponsored by the National Association of Realtors.
Real Estate Agent Arrested For Child Porn
http://www.orlandosentinel.com/news/breaking-news/os-thomas-bennett-child-porn-arrest-20151021-story.html
Why, are you a Realtor? I thought you sold marijuana in Colorado.
He said realtors are liars. I agree with what he said.
tax increase vs price
up 4%= down 1
up 6% = down 2
counties to make a big grab this year
Got TABOR?
Looks like Carson is getting Cained by the Globalist Progressive Media. I think the jig is up on the media drones, love seeing candidates dress them down on a regular basis.
New York Times, Washington Post, CNN, NBC, ABC, CBS = Hillary leg humpers.
Well, NBC is going to give Trump a huge amount of publicity ahead of Tuesday’s Republican debate by putting him on SNL tonight. Plus the La Raza crowd is supposed to raise a ruckus, guaranteeing even more favorable free publicity for Trump.
Looks like Carson lied and is being called out on his lies. As it should be.
I haven’t really followed it much because I never thought Carson was a serious candidate or had a chance, but it seems he lied many times, almost pathologically. A nice object lesson in crazy.
Who else running is a pathological liar?
Did I ever tell you guys about the time I was walking along the beach in Wyoming, when I saw an orca attacking a baby seal? It was too far out for me to swim out and stop it, so I climbed a nearby palm tree, grabbed a coconut, and fired off the old fast ball right at that “killer” whale, clocked him on the side of the head, and off he swam! The mother seal was so happy she brought me a salmon and left it at my feet.
It’s in my new autobiography titled “Oddfellow, a Life”.
Glad to see they are combing Hillarys statements equally. On second thought they really don’t need to. Every knows she is a venal, corrupt liar with no moral sense beyond her own self interest. This has been known for 20 years. No one cares.
Carson, as an avowed Christian candidate, is supposed to have an actual moral compass, something utterly lacking in the amoral sociopath Hillary Clinton. Yet he is either a fabricator, or he has some pathological issues with impulse control - I mean, who tries to hit their mother over the head with a hammer or stabs a friend who changes the radio station? That is not someone you want anywhere near the White House, either way.
You left out the part about the Bolivian navy patrolling off the Wyoming beach.
They tried to pin me down with sniper fire, but I was too fast back in those days.
“They tried to pin me down with sniper fire, but I was too fast back in those days.”
Was Hillary with you?
“I remember landing under sniper fire.”
“But that’s not what happened, as demonstrated by CBS News video that shows Clinton arriving on the tarmac under no visible duress, and greeting a child who offers her a copy of a poem.”
— Hillary Clinton on Monday, March 17th, 2008 in Washington, D.C.
Video shows tarmac welcome, no snipers
By Angie Drobnic Holan on Tuesday, March 25th, 2008 at 12:00 a.m.
During an introduction to a foreign policy speech on Iraq on March 17, 2008, Sen. Hillary Clinton reminisced about her days as first lady and a trip to Tuzla, Bosnia, she made in March 1996.
“I remember landing under sniper fire. There was supposed to be some kind of a greeting ceremony at the airport, but instead we just ran with our heads down to get into the vehicles to get to our base.”
But that’s not what happened, as demonstrated by CBS News video that shows Clinton arriving on the tarmac under no visible duress, and greeting a child who offers her a copy of a poem. The Washington Post Factchecker also turned a skeptical eye on Clinton’s comments, reporting that a review of more than 100 news stories from the time documented no security threats to the First Lady.
It’s lies all the way down.
You lie!
Everyone knows it was a polar bear eating a penguin.
Don’t be a Lola.
Some names were changed to protect the innocent. Stop combing through my papers!
“Did I ever tell you guys about the time I was walking along the beach in Wyoming,”
No, but you did tell us about how you wished you were a girl in high school.
Comment by phony scandals
2015-11-05 09:41:08
But Donald, Hillary wants people to be able to tell their Transgender sons who want to shower with the other high school girls that they can grow up to be president.
Reply to this comment
Comment by Oddfellow
2015-11-05 10:12:45
I would have enjoyed high school a lot more if I could have showered with the girls.
Did I ever tell you guys about the time I scored six touchdowns in our championship game and the cheerleaders dragged me into their post-game shower? Quite. a. scene.
It’s in my new autobiography titled “Oddfellow, a Life”, on sale now.
A high school with boy cheerleaders?
Pretty impressive.
My you have strange fantasies, phony.
I’m just reading your autobiography titled “Oddfellow, a Life”
“I would have enjoyed high school a lot more if I could have showered with the girls.”
“Did I ever tell you guys about the time I scored six touchdowns in our championship game and the cheerleaders dragged me into their post-game shower? Quite. a. scene.”
So obviously the boy cheerleaders dragged you into the shower after you scored six touchdowns in the Powder Puff championship football game.
Embrace your life and pick a letter.
Your fantasies are quite revealing phony. Maybe it’s time for you to embrace your true self. We all know the loudest -phobes have the widest stances. It’s one of the oldest stories in the Book.
funny!!!
Looks like Carson is getting Cained by the Globalist Progressive Media.
More likely it’s the establishment wing of the Repub party that’s trying to sink Carson’s ship. They do not believe he is electable.
http://www.politico.com/story/2015/11/insiders-carson-cant-win-215566
We lefties don’t have to work against any of the Repub candidates. We just stand by and watch them implode on their own.
It’s all fun and games till the disenfranchised tree monkeys start setting off truck bombs.
Isn’t the ability to lie convincingly a job requirement for the CIC position?
It’s the “convincingly” part that he’s showing problems with.
Spot on. If he can’t convince the famously gullible American electorate, how is he going to convince the rest of the world?
Portugal’s Communist party has struck a historic deal with the country’s Socialists and radical Left in a bid to assume power and overthrow the incumbent centre-right after just 11 days.
After weeks of negotiations, the Communists have resolved their differences to form a “triple Left” coalition that will bring down the government of Prime Minister Pedro Passos Coelho when a parliamentary vote of confidence is held on Tuesday.
http://www.telegraph.co.uk/finance/economics/11980629/Communists-ready-to-assume-power-in-Portugal-and-topple-conservative-government.html
the 21% “unemployed” can continue to collect welfare
do they get free phones there?
I see the commies and greens are listed as one block- so true
The people of the PIIGS are pushing back on austerity, which could threaten to reignite the Eurozone crisis.
Thanks for the Grubering!
Hope and change has now forced me from PPO, which I’ve had for 18 years, to HDHSA plan with 9k family deductible. Company says PPO premiums are getting to costly.
Also, the prescription drug coverage is now based on the ACA preventative and expanded preventative drug list. The non expanded list is all birth control, the expanded list excludes a lot of drugs that most would consider preventative, like thyroid pills for example. So most prescriptions will be full price against deductible instead of copay.
At least the starry-eyed tramps will get their morning after pill free of charge, I guess that is one consolation.
You need a government Union job my friend.
“At least the starry-eyed tramps will get their morning after pill free of charge,”
The Morning After by Maureen McGovern - YouTube
http://www.youtube.com/watch?v=_KClpLzFftU - 226k -
You’re going full Church Lady today, aren’t you phony?
“Thanks for the Grubering!”
Time for Rio to chime in and say he’s selfish for articulating how he got screwed.
He’s waiting a few more hours so he can be posting at 3 AM Rio time.
More taxpayer-funded crony capitalism.
http://www.zerohedge.com/news/2015-11-06/us-taxpayer-set-bank-roll-biggest-billionaire-builders
Who says we dont have WPA in this country?
Here’s one more:
The total consumer loans owned by the Federal government as disclosed in the Fed’s monthly G.19 statement on consumer credit - from $100 billion in 2008 this number is now almost $1 trillion.
Can’t we find some grounds to deport WPA?
“The total consumer loans owned by the Federal government as disclosed in the Fed’s monthly G.19 statement on consumer credit - from $100 billion in 2008 this number is now almost $1 trillion.”
This is stunning. I knew conditions were ripe for wholesale financial implosion but this is truly stunning.
The bulk of the consumer loans are probably the auto industry’s pork aka easy credit. You have to wonder what percentage of these loans will never be repaid?
I posted the Bloomberg article when it came out.
‘Freddie Mac’s deals are getting bigger as its regulator expands the definition of affordable housing, enabling the company to make more loans. Properties that are deemed affordable by the Federal Housing Finance Agency are exempt from a $30 billion cap that limits how much the government-sponsored entities can lend to apartment landlords each year.’
‘expands the definition of affordable housing’
So what exactly does this mean? Just change the definition and the GSE’s can make more loans.
‘Freddie Mac provided $34.1 billion for multifamily acquisitions and refinancings this year through September, more than double the $14.1 billion for the same period in 2014…Other than the government-sponsored companies, there aren’t many lenders that have the capacity to fund a purchase as large as Blackstone’s, according to Sam Chandan, president of Chandan Economics, a provider of real estate data and analysis.’
“You could argue convincingly that the deal wouldn’t get done in its current form without agency financing in the market,” he said.’
‘U.S. multifamily-building prices are 33 percent higher than they were at the prior peak in 2007, according to Moody’s Investors Service and Real Capital Analytics Inc., a jump stoked partly by the abundant financing from Fannie Mae and Freddie Mac.’
I posted this past week on the abundance of “luxury” multi-family being built. Note that much of the loans in this Bloomberg piece are just buy-outs and refinancing (probably done to enable more buying). Sure, without government backed loans the “deals wouldn’t get done”. We’ll see the daily gnashing of teeth over renters being “burdened” while they gleefully tell us high rents are pushing people to buy. And these broke corporations stuff fees into the federal governments pockets, simultaneously driving rents higher. Can there be any more of an overt housing policy disaster in the making?
Let me walk you through this, because I follow this segment closely:
‘U.S. multifamily-building prices are 33 percent higher than they were at the prior peak in 2007′
Keep in mind, these building valuations were stretched in 2007. Capitalization rates in some areas were in the 3’s. I listen to these guys talk amongst themselves. In the C and D markets (lowest income) they say prices have doubled in the past 10 years. They talk about adding value (minor changes to raise rents). This is how it works; I’ve got a 30 or 40 year old complex I’ve owned for a few years. I’ve milked the depreciation out of it and avoided a bunch of taxes. Now because of the boom, I can refinance or sell, flip it into a 1031 exchange and buy 75% more units and I’ll accept these new norm single digit returns because we all know it’s going to double again in 10 years. Voila, I’ve got a huge amount of depreciation to avoid taxes yet again.
Here’s the meat of it; these guys tell each other, “we used to only allow 25% of income to qualify renters, now it’s 35% to 50%.” Why they’ve redefined affordability too! How does it break down? When we have a recession, these renters won’t be able to make payments. And we will have another recession, the business cycle hasn’t been repealed. When that happens there will be evictions and multi-family defaults everywhere. Keep in mind also this is most concentrated in low income units (heck of a job Mel) and so called luxury (newer stuff).
I don’t get my dander up often but this situation pisses me off. The tax code is encouraging it, the GSE’s are funding it, and the tenants (and eventually taxpayers) are getting screwed.
When we have a recession, these renters won’t be able to make payments.
They will start eviction foreclosure. The criminal PTB with it’s government enablers will do whatever it takes to keep the ponzi.
‘do whatever it takes to keep the ponzi’
IMO the end game on this is baked in the cake. You can’t have single digit returns and high vacancies. We’ve now had years of single digit returns that can’t be undone - it’s in the purchase/refi price. Don’t forget, this is single digit return at a time when rents have shot way up! Qualification of renters incomes is way out of line.
The end has come thus; price of land has doubled or tripled in just a handful of past years. Can only build luxury now - more can’t go back - out of whack. Meanwhile the C and D stuff is getting flipped around. And at the center of it all, the implicit assumption that prices will double again. These guys aren’t landlords anymore. They are speculators, who are looking for a greater fool. What used to be an investors market that provided shelter for the lowest incomes has become just another housing casino.
Just a more sophisticated way of saying;
Millions paid a grossly inflated price for a depreciating asset.
A painful reckoning for anyone holding any amount of debt.
There really are no consequences for these buyers who in hopes of some free equity on the way up. They turned the housing market into a casino like stocks.
You pay rent or u buy with basically nothing down in hopes of getting some free money from the bubble economy. It is really gambleing but the bottom line is you need a roof over your head no matter what.
If prices tank simply give the home back and go rent. Come back when the market bottoms and get another FHA loan and buy again.
Only a small amount of these folks will ever fully pay off a 30 year loan and be actual owners. They simply ride the bubbles.
central planning is awesome.
What used to be an investors market that provided shelter for the lowest incomes has become just another housing casino ??
Nice commentary Ben and I agree with much of your post…I received a email the other day from a realtor in Grants Pass Oregon…It was for a 12 unit apartment building that he was putting on the market…Rents were at market and the CAP rate was 4.5%…I emailed him back and asked why would someone purchase a investment in Grants Pass Oregon with that kind of CAP ?? He said that he has been selling 4% CAP’s for a couple of years now…Said there was a lot of cash sloshing around Grants Pass looking for a return…
“Said there was a lot of cash sloshing around Grants Pass looking for a return…”
LOL. And Frog Balls, Arkansas too right? I’m not surprised a Realtor would say such outlandish BS. Remember……
dumb.borrowed.money.
‘will ever fully pay off a 30 year loan’
I was listening to a guy this past week who has over 1,000 units. He uses interest only loans. He’s in the process of flipping it all up to 3 times the leverage via 1031.
Ben Jones:: IMO the end game on this is baked in the cake.
Bernanke, the oft-touted “Depression scholar” was installed in 2006, at the height of the housing bubble. In 2009, Holder was appointed head of the Justice Department, and Lanny Breuer was installed as head of its Criminal Division, both coming from the same top FIRE defense law firm.
Uncanny. I guess the DC advisory class knew what was coming too.
‘U.S. multifamily-building prices are 33 percent higher than they were at the prior peak in 2007′
Which means … which means a lot of equity magically SPRUNG INTO BEING!
Equity = Wealth.
Why, it’s a miracle! Pump up prices and you pump up equity. Pump up equity and you pump up wealth. And this magic is performed by making houses (choke) affordable.
(Affordable not as defined by the price but affordable as defined by the cost of the monthly payments.)
There is truly a miracle at work here: At the very same time that you increase the prices of houses (which automatically makes every homebuyer “richer”) you at the very same time make them “more affordable”.
There is nothing when there are no buyers at that price.
America seems to be a giant Cheeto dropped in the grass with crony capitalist ants swarming all over it trying to get their piece before it’s gone.
“When we have a recession, these renters won’t be able to make payments. And we will have another recession, the business cycle hasn’t been repealed.”
It’s hilarious to watch the bovine herd relearn this lesson every time. What a bunch of stupid ungulates…
“Can there be any more of an overt housing policy disaster in the making?”
Maybe in other countries with centrally planned housing markets, like China…
Stockman’s Corner
China’s Monumental Ponzi: Here’s How It Unravels
by David Stockman • March 31, 2014
China is the greatest construction boom and credit bubble in recorded history. An entire nation of 1.3 billion has gone mad building, borrowing, speculating, scheming, cheating, lying and stealing. The source of this demented outbreak is not a flaw in Chinese culture or character—nor even the kind of raw greed and gluttony that afflicts all peoples in the late stages of a financial bubble.
Instead, the cause is monetary madness with a red accent. Chairman Mao was not entirely mistaken when he proclaimed that political power flows from the end of a gun barrel-–he did subjugate a nation of one billion people based on that principle. But it was Mr. Deng’s discovery that saved Mao’s tyrannical communist party regime from the calamity of his foolish post-revolution economic experiments.
Just in the nick of time, as China reeled from the Great Leap Forward, the famine death of 40 million and the mass psychosis of the Cultural Revolution, Mr. Deng learned that power could be maintained and extended from the end of a printing press. And that’s the heart of the so-called China economic miracle. Its not about capitalism with a red accent, as the Wall Street and London gamblers have been braying for nearly two decades; its a monumental case of monetary and credit inflation that has no parallel.
At the turn of the century credit market debt outstanding in the US was about $27 trillion, and we’ve not been slouches attempting to borrow our way to prosperity. Total credit market debt is now $59 trillion—-so America has been burying itself in debt at nearly a 7% annual rate.
But move over America! As the 21st century dawned, China had about $1 trillion of credit market debt outstanding, but after a blistering pace of “borrow and build” for 14 years it now carries nearly $25 trillion. But here’s the thing: this stupendous 25X growth of debt occurred in the context of an economic system designed and run by elderly party apparatchiks who had learned their economics from Mao’s Little Red Book!
That means there was no legitimate banking system in China—just giant state bureaus which were run by party operatives and a modus operandi of parceling out quotas for national credit growth from the top, and then water-falling them down a vast chain of command to the counties, townships and villages. There have never been any legitimate financial prices in China—all interest rates and FX rates have been pegged and regulated to the decimal point; nor has there ever been any honest accounting either—-loans have been perpetual options to extend and pretend.
…
Spain is too big to bail out, and the succession movement in Catalonia threatens to derail Spain’s supposed recovery.
http://www.businessinsider.com/spain-threatening-to-cut-off-catalonia-2015-11
By their fruits you shall know them….
http://blogs.wsj.com/washwire/2015/11/06/ben-carson-backs-white-houses-tpp-trade-deal/
First lies and now this. Hillary got her match.
The MSM is scrambling to turn off reader comments due to “nastiness” - or is it from calling out Establishment media hacks on their BS and highlighting truths the MSM won’t touch?
http://news.yahoo.com/nastiness-threatens-online-reader-comments-053929979.html
Remember what I posted a few weeks ago, that the narrative, once scripted, must be controlled. Lose that control and they lose everything.
What’s great about this though is that people like comments and like reading them and so they then vote with their feet and go to another site. Plenty of opportunity to comment with all the competition out there.
‘with all the competition out there’
Is that really how you see it? The real cost is moderation. My original blog didn’t have a moderation feature and it was a mess with me having to delete hundreds of cursing posts and spam an hour. (Once I created a test blog and it had spam in 30 seconds, that’s how active the spam can get.) One of the valuable things about this blog is the spam widget, which learns over time and does much of this automatically now. It has screened 6,507,382 spam posts since 2006. I see that this is the 2,491,867th comment on the 9,334th post since then. That database also costs money to keep going.
Spam swamps the comments and crashes the servers. (Remember those crash days? That’s why I had the function built that limits comment timing). Without moderation, the back and forth slows down and we can’t have a discussion. If I go to the grocery store, I moderate 2 or 3 times. If I’m on a plane, I moderate as soon as we touch down. It’s the first thing I do every morning and the last thing I do every night. If you value this comment community, the technology and time behind it, you should support it.
What I’m saying is that people value places they can comment that are reasonably moderated like here and if the larger news sites become places where there can’t be any commenting then that drives traffic other places, like here.
The article is wrong. “Nastiness” can be moderated away, but it’s expensive in time. Their automated systems are failing to keep it under control. You have to read the comments to do that, not just purge a comment using word recognition software.
!t$ h@rd t0 scr33n pr0f@n!ty if d!sgu!s3d w!th subst!tut3 l3tt3r$.
Albeit, regular expressions could potentially help…
These are big websites like CNN though, can’t they hire someone in India to do it for pennies?
A corporate agenda in ObamaTrade??? I am shocked, shocked!
http://america.aljazeera.com/articles/2015/11/6/critics-trans-pacific-partnership-has-corporate-agenda.html
Vote for dems they will carry forward the gop fascists agenda.
In a way it’s unfortunate the TPP was bungled. It does have one appealing virtue: by forming a trade alliance with Vietnam, Malaysia, Peru and Mexico, it seeks to break the stranglehold that China has on us. If we have to import stuff, it would be wise to diversify among the exporters we deal with.
I would rather see my hard-earned dollars go to Vietnam, Malaysia, Peru, and Mexico than China. More than anything, though, I’d like to see American manufacturing jobs brought back home.
Sacramento, CA Housing Prices Crater 5% YoY
http://www.zillow.com/east-sacramento-sacramento-ca/home-values/
Non-farm payroll reports: the big lie.
http://investmentresearchdynamics.com/non-farm-payroll-reports-the-big-lie/
SubPrime Nation: “Consumer Credit Has Biggest Jump In History, Led By Government-Funded Car And Student Loans”
http://www.zerohedge.com/news/2015-11-06/consumer-credit-has-biggest-jump-history-led-government-funded-car-and-student-loans
not.going.to.end.well.
Miami, FL Housing Prices Sink 4% YoY
http://www.zillow.com/downtown-miami-fl/home-values/
28,169 nearby properties found Tampa, FL Real Estate and Homes for Sale
http://www.realtor.com/realestateandhomes-search/Tampa_FL?ml=4
10,085 nearby properties found Tampa, FL Price Reduced Homes for Sale
http://www.realtor.com/realestateandhomes-search/Tampa_FL/show-price-reduced?ml=4
36% of Tampa sellers reduced their price at least once.
Chronic Unemployment And Underemployment: Labor Force Participation Rate Plummets To 37 Year Lows
http://data.bls.gov/timeseries/LNS11300000
I don’t want to go back to work in the defense sector so I work extra hours for free in my commercial software company. It helped that I dumped my money drain, the other apartment in Phoenix. And I have an 8 mile commute. Going to go work later this afternoon in my Irvine office. Dumping burdens and focusing on health and career is the key.
Yesterday’s report the big employment gains were in the 55 and older. I am 56. Still enthused about writing software and working on embedded systems.
Mom and pop will be working till the keel over. rates are not going up cause the 18.5 trillion in debt has to be serviced with your interest money.
All the jawboning is just to feel like they are in control.
If rates went to 5% the debt would eventually cost a trillion a year to service.
Everything reverts to the mean. In this case, 6%-8%.
I look forward to higher rates because it will cause the American public to protest finally against spending money on permanent war. I think more people are aware that war is a big waste. A bloody luxury is having an empire, and having an empire does not make sense to global investors.
If rates went to 5% the debt would eventually cost a trillion a year to service.
And every other country is in the same boat: up to their eyeballs in debt. If rates go up there will be a daisy chain of public and private defaults unlike anything ever seen.
You’re being dramatic now.
Defaults are a natural part of markets clearing excess.
rising rates would deflate all the bubbles.
most importantly rising rates would require the FED to pay more interest on the excess reserves.
Why would they screw themselves when they can hose savers and people just accept it as business as usual?
Rising stock and homes have deflected a lot of the attention from not getting any interest.
That’s sounds nice but the end result is collapsing demand of everything.
@ drummin j
I’ve found a new glitch. When I hit refresh, the first new post is temporarily listed and displayed (e.g. it will say 5 new posts and I’ll be very briefly brought to the first new post), but then, without me doing anything, the first post is cleared as a new post and I’m navigated towards, but not all the way to, the next post (e.g. it will go from 5 new posts to saying 4 new posts, but I can’t hit “previous” and go back to the original first post). This happens sometimes, but not always. Weird, huh?
That is weird, if I understand what you’re saying.
When you click on the link from the main page to see the comments, it should take you to the ‘#comments’ tag, which isn’t exactly the first comment. Clicking “next” should take you there. The extension should only register a comment as ‘read’ if you click ‘next’ and navigate past it.
If you’re seeing different behavior, the only way I have a chance to sort it out is if you can come up with a reliable repro scenario. I use the extension daily and haven’t seen this behavior, so I really don’t have a way to figure out and fix what you’re seeing.
Also, I don’t always read the blog, so the best way to get feedback like this to me is via the contact link on either the mozilla or chrome extension pages. Thanks.
It happens when I refresh the page, I’ll briefly be automatically taken to the first new comment, highlighted like it’s new and included in the new comment count, but then I’m navigated past it to somewhere down the thread, and I can’t return to it by hitting the Previous button, and it’s no longer included in the new comments count (the count will go from say 5 to 4). It’s as if I read the post before refreshing, as it’s neither available as Next nor Previous.
More hope ‘n change: female coeds turning to sugar daddies to finance their higher education.
http://www.thedailysheeple.com/sugar-babies-a-rising-number-of-college-students-are-selling-sex-to-pay-rising-tuition-costs_112015
There’s hope for me yet. But something tells me that I need not spend so much since I got great abs.
Sorry, SH, but great abs on a 56-year-old doesn’t pay for those babes’ tuition or living expenses.
That’s what I was thinking. Why go for a 56-year-old with great abs when there are so many horny 25-year-olds with great abs and better hair?
Okay, then great abs plus money?
The truth about the national debt & Janet Yellen.
http://www.theburningplatform.com/2015/11/07/the-truth-about-the-national-debt-janet-yellen/
Goleta, CA Housing Craters; Prices Plummet 15% YoY
http://www.zillow.com/goleta-ca/home-values/
The gloom and doom debt Cassandras, who form an opinion and then massage “data” to fit their narrative, are going to have to wait a while longer before their debt apocalypse arrives:
The Jobs Report Is Even Better Than It Looks
Jobs up across many different sectors. Wages up. Maybe we’ll have a nice Santa rally in the stock market this year.
‘gloom and doom debt Cassandras’
Have you ever been inside a foreclosure? I’ve been inside hundreds of them. Sure some were flips that the “owners” never even saw, but a lot were people who didn’t know anything about bubbles or that prices had been jacked up. It changed me. I saw their hand scrawled messages to the lenders on the walls, the evidence of the anger and loss they felt. Jeebus it already happened and it’s happening to tens of thousands each month still!
I’m sure they will take comfort in your Santa Claus rally, but I have my doubts about imaginary space aliens making this all go away.
Oh I agree a good jobs reports isn’t going to wash away the precarious world debt situation. It will kick the can down the road for a while. I was just making a wisecrack at some of the commentary on here that the world is going to end tomorrow using cherry-picked data to support that view. Sometimes it’s over the top and I find it a little bit amusing.
I am pretty sure you see yourself in these remarks.
I am pretty sure you see yourself in these remarks.
I am pretty sure it’s not an accident Blue Skye can be abbreviated as BS.
Your stupid Santa rally example seems pretty cherry picked, and not very relevant to the low income household who bought off the 40% of household income mortgage payments, only to lose their life savings to Megabank, Inc in foreclosure.
I’m also wondering how the Fed will be able to make December liftoff and a Santa Claus rally both happen. Maybe another head fake and punt on liftoff until 2016?
The data supports my thesis: in 11 out of 16 initial Fed rate hikes, the market went up in the following 12 months by an average of 8.4%.
http://www.cabot.net/~/media/images/cwa%20images/2015/072315cwa-3
And this chart shows that when rates are below 5%, stocks go up when rates go up:
http://www.boucheyfinancial.com/wp-content/uploads/2014/12/chart-550×323.jpg
So much for the myth that when the Fed raises rates, stocks always go down. It makes me wonder why the financial media repeats these shibboleths.
We’re any of those 16 prior incidents of rate hikes done after having had ZIRP for many years before?
If you wanna play the percentages then it’s the Repubs turn after an 8 yr Dem president. It’s happened every other time in the modern era. That don’t stop you from shouting Hillary! Hillary! Hillary!
That don’t stop you from shouting Hillary! Hillary! Hillary!
Nah. I’m a Sanders guy. If it’s Hill vs. any GOP candidate, I’ll take Hill as the lesser evil.
in 11 out of 16 initial Fed rate hikes, the market went up in the following 12 months by an average of 8.4%.
Typically, an initial rate hike is due to the economy coming out of recession, and the beginning of a virtuous cycle. This time is not that.
We supposedly came out of recess, what, six year ago? And most of the middle class can’t really tell on a personal level yet.
Hint: this time is not typical, since it was a once-in-three generations debt bubble busting.
And most of the middle class can’t really tell on a personal level yet.
Probably most of the middle class didn’t become unemployed during the recession and so didn’t experience one if want to look at it that way.
“This time is not that.”
That’s right. It’s different this time. You need to go back to the 1933-1945 to find a similarly protracted period of low risk premiums.
Seriously??
ShadowStats Alternate Unemployment Rate (translation: how we USED to count unemployment in this country, before we decided to stop counting vast swaths of the unemployed) has been at 22-23% for the past five years. Can you really say with a straight face that “most of the middle class didn’t become unemployed”? Sure, greater than 51% were employed at all times! But a whole lot of families have been affected and had to struggle as a result.
Lies, d@mned lies, and statistics.
It sounds unlikely that the some old way of federal counting of unemployment would result in a 22% unemployment rate instead of 5%. And if these shadow people say that the unemployment rate is currently 22%, they probably had it at over 12% before the recession.
Once again, MightyMike: “oh yeah, sez you”
The long term trend here is more able people not working. How many in the last decade, is it 20 million yet? I read that in this last jobs data that another 100,000 young people lost jobs, while the hiring of old folks for the holiday season is up. Manufacturing, which is largely not in the GDP, is the backbone of the economy and it continues to languish. There is no indication that the country has turned a corner towards peachy keen prosperity.
The long term trend here is more able people not working.
The labor participation rate is an overplayed and overhyped statistic used by the conservative media to try to dismiss jobs growth and reduced unemployment under Obama. Much of it is due to the Boomers, who are turning 65+ at an increasing rate and dropping out of the workforce. Another factor is the rise of the “gig economy.” If you are a freelancer, jumping from gig to gig doing coding or whatever as a 1099, you’re working but counted as not looking for work.
The number of self employed has declined in the past decade.
Gig work generally pays less than a full time job. Superstars aside, most of these gigs are like pizza delivery and toilet scrubbing.
The job increases you crowed about are boomers.
And a sharp increase in the number of chronically unemployed working age individuals.
Data Lola data.
Chronic Unemployment And Underemployment: Labor Force Participation Rate Plummets To 37 Year Lows
http://data.bls.gov/timeseries/LNS11300000
And then they hire a H1B fresh off the boat.
And then they hire a H1B. [This posted in the wrong place for some reason - is supposed to be below.]
people cant find good jobs. they are tired of bartending and peddling chinese stuff. They want a job that can support a house payment.
I would also argue that most folks dont want a job rather they want an opportunity to make sh@t happen.
tired of bartending
Ironically, a friend of mine was telling me he wanted to take early retirement and go back to working in restaurants as he had done in college, he so hates his job.
I just went on an internet job posting board and found 305,445 help wanted ads nationally that pay $70k or above. Poke around Monster or Indeed and you’ll find lots of well-paying jobs.
Doesn’t seem to help the the record high chronically unemployed.
I just went on an internet job posting board…
Which does nothing to address the lies posted above.
I just went on an internet job posting board and found 305,445 help wanted ads nationally that pay $70k or above.
Your stupidity is beyond repair. The same job gets posted by 5 0r 6 agencies in every internet site.
It Takes A Village… To Build A House?
Here’s an interesting end-run solution to overpriced housing for low-income families: build it yourself with pooled labor.
“Goshen (California) is a small, rural town along Highway 99 in Tulare County. The county has a poverty rate of nearly 25 percent, which means, coupled with increasing housing costs, the need for affordable housing is growing.”
“The housing program, which is run by the non-profit Self-Help Enterprises, assembles groups of 10 to 12 low-income families and first-time homebuyers and helps them get mortgage financing together in order to build their own home. The group of families enters into a shared labor agreement with each other to build all the houses and no one moves in until all the homes are completed. Each family is responsible for contributing 40 hours a week on the construction of the homes, which takes between 9 and 12 months to complete.”
I like this idea. The pride of ownership in this neighborhood has to be off the charts. Maybe they will achieve HA’s $55/sq
You certainly can’t do work for $55/sq Lola. You’re not a contractor.
Seems like building a home can be a bureaucratic nightmare.
The process is quite streamlined really.
I am from the San Joaquin Valley, the farm belt. The peak prosperity of the valley was the early 1960s. It was considered on a par with coastal California. But the fact was it was mostly about farming. And with every generation since the 1950s the brightest young people would move to the jobs the colleges trained them for. Those jobs were in STEM fields, arts, and finance. And the people would only return for reunions or nostalgia. Sad to return every few years and see more decay. There was and still is hope that UC Merced will incubate nontraditional industry to set up roots. But this was not the case with UC Davis. The best draw for Fresno, my hometown, was that it is within an hour of the high Sierra for snow skiing or sailing at Huntington Lake. Or 90 minutes from the coast. Otherwise a bedroom community. The real best hope is home high tech businesses, but the real deal killer is the heavy air pollution in the valley. It is a huge bowl of stagnant air. Pollution blown in from the Bay Area. Funny how San Francisco and San Jose are lauded for their clean air. It’s because all their dirty air blows into the big valley.
One last thought for the day: why is Merkel so welcoming and accommodating to Syrians but so mean and austere to the Greeks?
There is a certain poetic justice in the queen of austerity receiving a flood of economic refugees. The refugees didn’t want to go to some poor country with heavy debt and no future, like Greece.
Indeed. Logically, whether Germany extends aid to imported Syrians or extends aid to Greece, they both represent a drawdown on Germany’s resources. So why one and not the other? If anything Germany owes Greece help because the EU itself is partially responsible for Greece’s undoing.
Fascinating question; one must suit the globalists agenda, and the other must not.
Mutti is a Lutheran preacher’s kid. She feels a mixture of empathy for war-torn refugees from Syria and antipathy for financial profligates in Greece.
‘Boeing on Saturday gave its strongest indication yet about a near-term sale of F/A-18E/F Super Hornets to Kuwait, although the world’s second-largest weapons maker said lower oil prices were delaying some arms purchases by Gulf states.’
‘The United States has not publicly acknowledged talks to sell Boeing fighters to Kuwait, but sources familiar with the matter have said it is in negotiations about selling 24 F/A-18E/F Super Hornets to the Gulf nation in a deal valued at over $3 billion. In September, Kuwait also signed a memorandum of understanding to buy 28 Eurofighter jets built by Italy’s Finmeccanica, Britain’s BAE Systems and European aerospace firm Airbus Group.’
‘Kuwait and other Gulf and Middle Eastern countries are looking to acquire new high-tech military equipment to protect themselves from neighbouring Iran and internal threats unleashed by the 2011 Arab Spring uprising.’
http://www.reuters.com/article/2015/11/07/dubai-airshow-boeing-idUSL8N13206720151107#ZscmpZv1oBmgaybt.97
http://www.bizpacreview.com/…-liberal-media-sign-crashes-set-for-hilarious-segment-271439 - 171k -
Comment by phony scandals
2015-11-07 11:16:00
Best MSNBC moment! ‘Don’t Believe the Liberal Media’ sign crashes set for hilarious segment
bizpacreview.com/2015/11/07/best-msnbc-moment-dont-believe-the-liberal-media-sign-crashes-set-for-hilarious-segment-271439
“It was the most appropriate thing that happened during the segment where the two heaped praise on Hillary Clinton.”
Any thoughts on how far the dollar rally will go before it peaks?
Markets Currencies Foreign Exchange
Dollar Gains to Nearly 13-Year High
Emerging-market currencies fall as data pave the way for a Fed interest-rate increase
By Ira Iosebashvili and James Ramage
Updated Nov. 6, 2015 8:01 p.m. ET
Emerging-market currencies declined Friday, after strong U.S. employment data paved the way for the Federal Reserve to raise interest rates next month and sent the dollar to its highest level in almost 13 years.
A looming rate increase likely shuts the door on a rally that has buoyed emerging-market assets over the past few months. A stronger dollar is typically associated with lower prices for oil, metals and other commodities, a trend that tends to hurt emerging-market nations that depend on resources-related industries for employment and growth.
The Wall Street Journal Dollar Index, which gauges the U.S. currency against a basket of 16 currencies, rose 1.2% Friday to 90.42, its highest level since December 2002. The Mexican peso fell 1.2% to 16.81 per dollar, its weakest level in more than a month. The Russian ruble sank 0.9% to 63.90, and the South African rand shed 2% to an all-time low of 14.17.
A stronger dollar would be welcome in places such as Japan and Europe, where central banks’ bids to kick-start economic growth have been complicated by rising local currencies. But a rising dollar tends to hurt emerging economies by making dollar-denominated commodities exports more expensive to foreign buyers and debt in the U.S. currency more expensive to service.
“This is definitely a negative for emerging markets,” said Lucy Qiu, emerging-markets strategist at UBS Wealth Management. She believes the currencies of South Africa, Turkey and Brazil are particularly vulnerable, because of current-account deficits.
…
They have been paving the way for like 5 years. It is not going to happen brother. They might raise it a .25 to make some people happy and say they did it but don’t expect real market rates for years.
How much money is sitting as excess reserves right now? I think it could be around 2 trillion.
2 Trillion * .0025 = 5 billion dollars to keep that money parked
Just a 1/4 point hike = 10 billion dollars to keep that money parked
The article I read last week said those excess reserves can be used for interbank loans or to meet customer withdrawals.
There are so many excess reserves. what really matters is how much it costs to keep them there.
When the Fed buys the bonds from primary dealers it credits the primary dealers account with deposit money and then credits the same amount to the banks reserves. So the banks had no control over the amount of reserves that have built up.
Rampant inflation hasnt occurred caused most of the reserves have been kept parked.
If the fed has grand plans of selling those bonds someday then I assume it would debit the excess reserves at some point.
What is really seems like the FED is doing is just buying time. I’m sure their bonds mature at different time frames. So the longer they can buy time the more it helps them. Its like they created all these reserves but dont want the money moving.The lower the interest rate is on the reserves the less it costs them to keep that money parked.
Seems like the longer rates stay at the zero bound, the greater becomes the cumulative effect of moral hazard to borrow money for nothing and invest it frivolously in light of interest free repayment terms. Pretty soon you’ll see a massive amount of malinvestment with zero or worse expected returns.
Pretty soon you’ll see a massive amount of malinvestment with zero or worse expected returns.
“Pretty soon”?? Didn’t you just describe the last six years?
How’s that hope ‘n change working out for ya, ‘Murica?
http://www.zerohedge.com/news/2015-11-07/19000-premiums-4x-passage-crippling-effect-obamacare-middle-class
“Paying interest on reserves breaks this link between the quantity of reserves and banks’ willingness to lend. By raising the interest rate paid on reserves, the central bank can increase market interest rates and slow the growth of bank lending and economic activity without
changing the quantity of reserves. In other words, paying interest on reserves allows the central bank to follow a path for short term interest rates that is independent of the level of reserves. By choosing this path appropriately, the central bank can guard against inflationary pressures even if financial conditions lead it to maintain a high level of excess reserves.
Paying interest on reserves allows a central bank to maintain its influence over market interest rates independent of the quantity of reserves created by its liquidity facilities. The central bank can then let the size of these facilities be determined by conditions in the financial sector, while setting its target for the short term interest rate based on macroeconomic conditions. This ability to separate monetary policy
from the quantity of bank reserves is particularly important during the recovery from a financial crisis. ”
http://www.newyorkfed.org/research/staff_reports/sr380.pdf
11k boomers turning 65 each day for the next 15 yrs combined with:
American students’ debt reached $1.08 trillion — yes, you read that right, trillion — in 2013, an increase of over 300 percent in 10 years, reports Time magazine. What that means for the economy is a sluggish housing market. Rohit Chopra, from the Consumer Financial Bureau, told Time in late 2013 that “three-fourths of the fall in household formation can be directly correlated to student debt.” Graduates do not have the “disposable income or the credit score to buy a house. So they boomerang back home,” Time reported.
The article noted that 81 percent of borrowers are considered the “most burdened borrowers,” meaning they have more than $40,000 of student debt — some owing hundreds of thousands. This means that graduates return home, and delay marriage and family, to save money and pay back their debt, according to Businessweek.
Looks Gen X has to carry the load. But we dont give-a-shet.
70 million bummers headed to the grave leaving 35 million excess empty houses.That’s in addition to the 25 million excess, empty and defaulted houses.
Where is your data, my friend? Give me a Zilloto link or something.
The data is all there my friend. You just can’t bring yourself to look at it.
Renton-Newcastle, WA Housing Craters; Prices Plunge 7%
http://www.zillow.com/newcastle-wa-98056/home-values/
And think of all those useless university personnel salaries that will go away when this busts. Many people over-employed and should be making far less, but they got in at the right time. This is more of Ben’s overcapacity argument.
We have massive, massive overcapacity being floated in so many places. For Christ’s sake everywhere I go there is a Target right next to a Walmart, both selling pretty much the same crap.
The scary part about XL being rejected by the US is that a major pipeline feeding most Canadian needs goes thru the northern states.
About three million bbd of bitumen are also being exported into the USA - you know, those tar sands that the President doesn’t like.
Will he shut off that supply because it comes from the tar sands, and in doing so also shut off that line feeding eastern Canada ?
I cannot wait until Energy East is completed - an all Canadian line -
Don’t worry…President Trump will renew the XL deal.