Paying More Kind Of Got Into Everybody’s Mind
The Tribune Live reports from Pennsylvania. “Lawrenceville has become something of a ground zero for house flipping in Pittsburgh, which was cited by real estate data tracker Realty Trac as among the most profitable markets for property investors. These arms-length sales are now more common in Pittsburgh than during the peak of the nationwide housing bubble in 2005, according to Realty Trac, leading to concerns about whether a bubble is building. Josh Adamek buys, renovates and sells homes around the city through his real estate investment firm. Last year, Adamek sold a four-bedroom home for $399,000. He won’t say how much he paid for renovations, but said it was into six figures. Adamek had plenty of room to clear a decent profit. He paid just $110,000 for the property less than eight months before. There are plenty of people willing to pay up to half a million dollars to live in Lawrenceville, he said. ‘Definitely, prices are on the rise, but I don’t think there’s a bubble that’s going to burst,’ he said.”
“Josh Caldwell, president of the Pittsburgh Real Estate Investors Association, said he fields daily inquiries from people who want his advice on how to make easy money flipping homes. He tells them it’s not that easy. Pittsburgh’s housing stock is cheap for a reason, he said. Much of it is more than a century old and requires $100,000 in renovations just to address structural issues to make them safe. ‘We’re getting a heating up in inflation right now because of this national attention,’ he said. ‘A lot of uneducated people are jumping into rehabbing who should not be rehabbing. And they’re going to lose their (backsides).’”
The Real Deal on New York. “Sales of Manhattan development sites slowed significantly in the first months of 2016, adding to broader concerns over the health of the New York real estate market. Bob Knakal, who heads New York investment sales at Cushman & Wakefield, argues that the average market value of development sites has fallen by 25 to 30 percent over the past few months. That price drop isn’t reflected in sales data because most sellers have yet to accept the new market reality and adjust their expectations downward, he explained. Until they do, he said, few sites will trade.”
“A key culprit: weakness in the high-end condo market, which accounted for a large share of Manhattan’s new development activity over the past three years. ‘When you can buy and sell out a building as condos you can afford to pay more for the land and that kind of got into everybody’s mind,’ said Bob Faith, CEO of real estate fund manager Greystar. ‘Now you’re starting to see a pause.’”
The Desert Sun in California. “Canadians have all but stopped buying desert homes, local specialists say. Many are selling their homes instead. Canadians have made up as much as a third of the desert’s homebuyers in recent years and the market is missing them. ‘They’re not buying. Our Canadian buyers are not buying,’ said Kelly Trembley, a Realtor with Bennion Deville Homes who often represents Canadian buyers. ‘This was the perfect storm for the desert, and that’s why our real estate right now is in a bit of a slump.’”
“In the desert, home prices have fallen and the number of homes on the market has spiked. Coachella Valley homes sold for a median price of $283,000 in February — by far the lowest of the winter selling season, according to CoreLogic DataQuick. And inventory jumped by about 25 percent year-over-year, according to data from the California Desert Association of Realtors.”
The Houston Chronicle in Texas. “The hot rental market that enticed developers to launch projects has gone the way of $100-a-barrel crude oil, leaving multifamily property owners worrying about how they will fill their units. Energy companies are cutting the very employees the housing was being built for, and hawkers are now a common sight in front of new projects, spinning signs that advertise free initial rent and other concessions.”
“‘Unfortunately, we can’t turn off the switch and put our shovels down,’ said Philip Morgan, vice president of development for Morgan, a Houston-based multifamily developer that has projects underway near City Centre in west Houston, the Heights and Midtown. ‘There is an imbalance of supply and demand. It’s going to get worse before it gets better.’”
The Alaska Journal of Commerce. “Alaska housing prices peaked in 2015 – and according to statistics, so did homeowners’ willingness to pay them. With layoffs on the North Slope and a precarious fiscal situation for the state government, homeowners in Anchorage appear less willing to fund new residential construction projects than in 2015. An existing home in Anchorage cost $368,012 in 2015, while a new home cost $574,333 to build, according to municipal data.”
“Karen Kissik-Michelsohn, vice president of Michelsohn and Daughter Construction Inc., said her company is beginning to see a new reticence for home building projects. ‘Anybody in the oil industry…they’re all scared,’ Kissik-Michelsohn said. ‘The state of the Alaska economy in general has really had a big impact.’”
Inforum on North Dakota. “The developers of hotels, motels and apartments in North Dakota’s once-booming oil country find themselves in a free-market vice of their own making. Having determined they would invest millions in hotel rooms to accommodate the influx of Bakken oil workers, they now find their new buildings struggling to keep the doors open as occupancy rates plunge to unsustainable lows, sometimes as low as 40 percent – from highs that were routinely at 100 percent.”
“During that period, room rental rates at new (and old) hotels and apartments went sky high, fairly described as ‘gouging.’ Not so, said developers and owners. It was the market at work. The supply-and-demand equation was working in the free market; rates reflected that reality.”
“If it was true then, it’s true now. The ‘free market’ the hotel and apartment folks loved to use as the excuse for exorbitant prices is still at work. But now it’s reflecting a new and bleak reality for the hotel operators and landlords. If they worshiped the free market when times were good, they should not throw their religion under the bus when times are bad. But that’s what they are trying to do by getting government – in the most high-profile case, Williston city government – to force man camps to close in order to shore up sagging hotel, apartment and housing sectors.”
“Williston leaders might conclude man camps – which were enthusiastically invited to town when the boom was booming – should go in favor of ‘protecting’ the city’s hotels and apartments. But let’s not sugarcoat it: It would be a rescue mission that scuttles the free-market principles that conservative business people say they believe in. It would be a not-so-subtle exercise in hypocrisy.”
“In the desert, home prices have fallen and the number of homes on the market has spiked. Coachella Valley homes sold for a median price of $283,000 in February — by far the lowest of the winter selling season, according to CoreLogic DataQuick. And inventory jumped by about 25 percent year-over-year, according to data from the California Desert Association of Realtors.”
I know a finance professor whose well-paid colleagues apparently have a penchant for investing in Coachella Valley real estate. I’m looking forward to hearing an update on whether they were able to cash out before the wave crashed on them.
The winter season is high selling season. So summer selling prices are probably going to be much lower. Canadians also love Phoenix and Tucson real estate. Easier to fly to and from with direct flights to Calgary, Vancouver, and Edmonton.
S&P blames the Fed for a coming “spike in defaults.”
http://wolfstreet.com/2016/03/27/sp-gets-bearish-sees-spike-in-defaults-blames-fed/
“After the financial crisis, quantitative easing-induced low interest rates enabled companies across the credit spectrum to borrow at attractive pricing and terms in the capital markets. And, until recently, investors were willing to accept the heightened risks associated with speculative-grade (rated ‘BB+’ and lower) debt in return for higher yields.”
If you were handling somebody else’s money then you weren’t just WILLING to accept the higher risks, you really did not have much choice in the matter because if you were managing somebody else’s money then you really had to earn two returns:
1. A return high enough to keep your client happy (and not walking away and taking his pile of money with him) and …
2. A return for yourself in order to keep yourself happy.
Two returns.
Just one return would be tough to do in this Zirpy-type environment, two returns would be twice as tough without sticking your neck (and your client’s money) out quite a bit.
But this need for two returns did do one thing: It created a market for junk debt because those many, many money managers that desperately needed to earn two returns had to go somewhere in order to get these returns and the junk debt market is one of the places where they ended up going, and the prices of junk debt and the supply of junk debt responded to this hefty flow of money.
That was then, this is now. Let’s see what happens to the direction of money flow (and the prices of the junk debt) as this “junk debt” earns it title.
And there are a whole lot of defaults lined up and baked in. Think about it. The majority of the mortgage market since 2002 is subprime.
I like the term “credit cycle”. I hadn’t seen it used before, but it really is quite descriptive. We don’t have business cycles anymore, we have credit cycles.
Both terms have been used interchangeably but by either description, there hasn’t been a traditionally defined cycle in a few decades now.
Warnings of a market bubble collapse are “chatter” according to the MSM.
http://www.marketwatch.com/story/watch-bubble-collapse-chatter-grow-as-markets-winning-streak-ends-2016-03-28
LOL!
Chattering of teeth.
I think the equities “collapse” happened already–at the beginning of this year. The first signs of the subsequent recession will occur this summer–as mentioned in the article–and then the downturn will pick up steam in September/October while most Americans are watching the presidential circus. That means whoever wins the election will be left with an economic mess–just as Obama was in 2009.
That was a mere hiccup.
Hang onto your hat cowboy because you’re in for the ride of your life.
Concur. By July the first real tremors will be evident, and by September/October it’ll go full Barnum & Bailey.
“Alaska housing prices peaked in 2015 – and according to statistics, so did homeowners’ willingness to pay them. With layoffs on the North Slope and a precarious fiscal situation for the state government, homeowners in Anchorage appear less willing to fund new residential construction projects than in 2015. An existing home in Anchorage cost $368,012 in 2015, while a new home cost $574,333 to build, according to municipal data.”
Because everyone wants to live in Anchorage? Holy cow!
“Because everyone wants to live in Anchorage? Holy cow!”
In Alaska they will pay you to live there.
https://en.wikipedia.org/wiki/Alaska_Permanent_Fund
Yeah, a couple thousand doesn’t go very far in Anchorage. But hey, you should see what the native tribes get. Some of them are handed 70k or more every year per person. You know what most of them do with it? Drugs and alcohol. You’ll never see so much public intoxication as Anchorage Alaska.
Hopefully Russ weighs in on this, I’d love to hear his comments. He’s up in Anchorage taking care of his mother, and he didn’t give the area a good review.
I had wondered how all the homeless natives around here were surviving. A lot of them panhandle, but there is about zero foot traffic. I have dispensed many quarters to wretched looking old Eskimos while trying to get some fresh air and exercise.
Their mannerisms, speech, and look are different enough that it’s hard to tell if they’re drunk, but I imagine they are. You’ll see them in groups of 4 or 5, sitting at a street corner, or crosslegged on the side walk in front of Office Depot, just hanging out socializing without a care in the world. They have a mixture of modern and traditional clothes.
Saw one guy (wasn’t homeless) that was like a cyber eskimo… long dreads, shades, earbuds, and really cool modern versions of eskimo gear. He appeared to be adapting to the white world better than the others.
I see a lot of white guys in carharts standing on the medians, begging. My brother (bigwig in the oilfield) told me they were laid off roughnecks. He figures we have about 4 months before the unemployment benefits for the rest of them run out and the SHTF.
Have wandered around town quite a bit. The city center is pretty nice for about 10 blocks square. Finally gave in and spent the money for the only good hotel in town (The Captain Cook, absolutely beautiful old building) because I was getting seriously depressed. The center is surrounded by 60s and 70s vintage cheap tract homes (the earthquake of ‘64 leveled everything). The houses are brutally weathered and generally look like they need to come down. I imagine it’s what detroit looked like 30 years ago, except the houses were never nice or grand to begin with.
Everything is covered with dirt. They sand the roads all winter, and as the snow melts, you have this snowicemud crap all over. It looks terrible.
The zoning and civil design is spectacularly moronic, and the layouts of the roads and neighborhoods is equally so.As you move out from the core, you see crappy old strip malls, the houses get bigger and newer, but the planning and zoning are still crap, mismatched houses, trailers, etc all randomly thrown down. Many without siding… for what looks like decades. I think you don’t have to pay property taxes if you don’t have siding.
And then you have the people. There are some normies, but 70% of the population here is welfare grade white trash that just lost the best job they’ll ever have. I have seen 2 cars in trees on different weekends. Turn signals are taboo. Half the population drives 10 under the speed limit, the other half 25 over. When the roads get slick, there are many accidents everywhere. There was a huge pileup last weekend, and it wasn’t even much snow compared to what you usually get.
I saw a huge WalMart, with fully 25% of the parking spaces marked handicapped. It was swarming, I was bored, so I went to have a look. Those handicapped spaces were mostly full, and the handicap was generally being too damn fat to walk. As I entered, a contingent of porkers was waiting for somebody to be done with an electric cart. They started converging on this hefty gal with back boobs as she rolled up, waddling toward her at their fastest. Two got there at the same time, and began yelling at each other and yanking at the cart before the other fattie was even off of it. I thought they might tip her over. I became embarrassed to be watching and walked in, did a circuit of the store. Was treated to a full on People of Walmart freakshow. It wasn’t some people. It was all the people… each and every one uniquely freaky. If I can work up the courage, I’m going back with a gopro.
I have not seen any house remotely worth 360k, let alone the median. It should be about 90k.
There is about 3 months in the summer where nature up here is amazingly beautiful. Unfortunately, the area is swarming with tourists during that time, and nearly as unpleasant as winter. Winter is f**king brutal. 4 hours of daylight. Ice on everything so you’re always in danger of busting your a$$ if you go outside. Cold that will kill you in an hour or less. This is no place for white people, or any people but the natives that had time to evolve and adapt.
I won’t start about the quality of medical care, but I will say that if anyone tells you they are going to retire up here, you should start slapping them, and continue slapping them, until you slap that idiotic idea out of their skull.
Anchorage - 1 out of 5 stars. Just don’t.
“I have not seen any house remotely worth 360k”
Imagine the realtor (MT)skullduggery associated with a massively inflated price like that. Not just in AK…. anywhere.
Wow. Thanks for the boots-on-the-ground report.
I remember on HBB reading about the number of people basically fall over their shopping carts the moment they get to the store. That’s what the wal-mart stories reminded me of.
Do they have casinos and slots up there? I kinda hope not.
Wow, that sound positively grim. Thanks for the report.
No casinos… the big vice is pull tabs, which I gather are something like lottery scratchers. There are these little strip mall places that sell them. They are like little casinos that make a bunch of trash.
I thought they might tip her over.
Tipping. Isn’t that a pasture pastime?
Man, we have GOT to get modern wheat and vegetable oils out of the food supply and go back to steak, eggs, and butter.
“If I can work up the courage, I’m going back with a gopro.”
It’s beautiful and much to your credit that you can find entertainment value where many would be utterly depressed.
Why do we give Indians 16 billion a yr?
They have 55 million acres
How much did Elizabeth “Fauxahontus” Warren collect for marking “Native American” on her college applications?
Rent on the other 2.3 million acres?
Oops.. .that’s BILLION with a B.
And as an aside, I checked “Eskimo” for race on my college application. I was stoned when filling it out, and still giggle when I think about it. I was actually hoping somebody would call me on it, but they never did.
‘They have 55 million acres’
The federal government owns most of it. BTW, I asked a guy I worked with up there what Eskimo meant. He said it was the name for coastal tribes. He had been there 15 years. I asked him if all the natives were like what we saw in town. He said absolutely not. Some have their stuff together, take the oil money and invest it, work hard, etc. But they don’t go into town much so you don’t see that side of them.
If oil stays down it will be brutal as the state budget relies heavily on the money and the population relies on the government. It is beautiful in the summer. Starting in a month or two the salmon runs start. Go down to Ship Creek and watch it.
If I’m here in a month or two, I’m going to eat a bullet.
No wonder everybody up there is a drunk.
“…public intoxication…”
That leads to other problems…
Rape Culture in the Alaskan Wilderness
In the tight-knit communities of the far north, there are no roads, no police officers—and higher rates of sexual assault than anywhere else in the United States.
Sara Bernard
Sep 11, 2014
…
No true price discovery in bond markets once the Keynesian lunatics at the central banks impose NIRP.
http://www.businessinsider.com/r-japans-negative-rates-a-looming-headache-for-central-bank-2016-3
Swedish lawmakers adopted Wednesday a law limiting mortgage loans to 105 years as the Scandinavian nation seeks to come to grips with high property prices and debt levels.
There had previously been no legal limit on the duration of mortgages, and in fact many Swedish homeowners have been taking loans which only their grandchildren would have a chance to pay off.
The practice developed as a strategy to cope with high property prices as a longer term means monthly payments are lower. But inheritors are left with repaying the balance of the mortgage, often by selling the home.
Swedish regulators calculated in 2013 that the average mortgage term was around 140 years.
Nearly one-third of mortgages issued in 2014 allowed borrowers to repay only interest.
New mortgages will have a 105-year repayment limit as borrowers will be required to reimburse a minimum amount of the loan capital each year, after a five-year grace period on loans for new homes.
“It is important that we have a solid culture” of repayment, the chairman of the parliament’s finance committee, Social-Democrat Fredrik Olovsson, was quoted as saying by the Aftonbladet newspaper.
Swedish banks opposed the law.
http://www.dailysabah.com/real-estate/2016/03/23/sweden-limits-mortgage-loans-decides-105-years-would-be-fine
“The practice developed as a strategy to cope with high property prices as a longer term means monthly payments are lower.”
That’s one way to cope with high prices. Another way would be to lower the prices.
But lowering prices:
Destroys equity, which means it …
Destroys wealth, and ironically it …
Destroys demand because rising house prices creates demand for houses and falling house prices destroys demand for houses. (Very strange if you stop to think about it but there it is.)
‘Destroys demand because rising house prices creates demand for houses and falling house prices destroys demand for houses. (Very strange if you stop to think about it but there it is.)’
stocks do the same thing
“Swedish banks opposed the law.”
Surprise, surprise, surprise
Wait, wasn’t there some rule of thumb that once a mortgage reached 40(?) years, adding more years didn’t lower the monthly payment at all? What is the advantage of 105 years? None for the buyer, I guess only for the bank?
Sweden will be part of the Caliphate well before then, and you won’t be able to give those houses away.
Do Swedes typically live long enough to pay off a 105 year loan? Amazing!
‘AP Investigation: China launders cash of foreign criminals’
‘The country’s well-developed underground financial networks have caught the attention of foreign criminals who are using China to clean their dirty money and pump it back into the global financial system — largely beyond the reach of Western law enforcement, an Associated Press investigation has found.’
‘Chikli told the AP his preferred method for laundering money was import-export schemes. He would bounce stolen funds to front companies in Hong Kong, then have the cash withdrawn and used to buy merchandise in China. He’d purchase, say, 20 tons of steel, but bribe the vendor to give him a receipt for 100 tons. Then he’d sell the goods and send the money to Israel, where the false invoices made the entire sum look like legitimate trading profit.’
“Give me the documents and everything is fine,” he said.’
‘Such trade-based money laundering is a growing concern to U.S. authorities. Three Colombians based in Guangzhou, China, led a global money-laundering network that moved over $5 billion for Spanish and Mexican drug cartels, according to a U.S. Justice Department indictment unsealed in September. The network allegedly spanned the United States, Colombia, Spain, Ecuador and Venezuela.’
‘The U.S. State Department, in a report this month, reproached China for lackluster performance on money-laundering investigations. “U.S. law enforcement agencies note China has not cooperated sufficiently,” the report said.’
‘Europol also has no cooperation agreement with China. Once funds land there, they vanish. “For us it’s a blind spot,” said Angelini. “What happens after that is a black hole.”
‘From Israel to Colombia, who’s laundering money in China’
http://finance.yahoo.com/news/israel-colombia-whos-laundering-money-060903479.html
One comment:
‘Then why the west protest like crazy when China try to monitor suspicious capital flows? Because China is trying to block their money laundering?’
A reply:
‘Because the problem for China is that the tainted money is flowing out of China to find new homes in the western world. Chinese reserves are going down fast as the criminal set, worried about being caught, get their assets out of China and into anything abroad where they won’t be noticed. The issue is not the money laundering per se but the fact that Chinese citizens are disobeying the CCP by not leaving their money on deposit in Chinese banks and prefering to look overseas instead of home for better returns. The CCP regards these people as unpatriotic.’
‘There are plenty of people willing to pay up to half a million dollars to live in Lawrenceville, he said’
I used to work in Lawrenceville, at an oil refinery. Back then it was a filthy run down post steel mill town. Very hard to imagine half a million for a house there.
It’s difficult to imagine a million dollar house anywhere given the fact production costs are $50/sq ft irrespective of location.
I was in Pittsburgh a few years ago for a couple of days. Went to the Heinz museum (pretty cool) and wandered around. I was struck by how Appalachian-poor a lot of the people seemed.
I went to Mount Washington to see the view and take a trip on the incline. Unfortunately, I decided to wander around the area on foot a bit. There are signs for tourists pointing to places you can walk to, but I guess I must not have followed one of them correctly. I ended up in a neighborhood with the some of the poorest, saddest white people I’ve ever seen.
Obviously, there are poor, middle class, and moneyed people in every city, but after spending a couple of days there I can’t imagine half million dollar houses.
What to do with millions of unemployed, womanless, angry young men? Start a war, of course.
http://www.zerohedge.com/news/2016-03-28/employment-plunges-4-year-low-capex-worst-history-china-beige-book-reveals
Yup. They’ll help us trim down the ranks of our unemployed, and those of us past draft age will have our pick of the lovely young ladies left manless.
The scions of the neocons might be your only competition. They will never be tapped to fight in AIPAC’s wars.
In China, women who are older than 27 and still unmarried are sheng nu “leftover women,” and are thought to be single probably because they were too ugly to attract a mate.
Why don’t the womanless guys — surely not heartthrobs themselves
— take up with those leftover women? Everyone could be happy.
The paper bag industry could merge with the wedding industrial complex.
Because the leftover women are doubling down on their failed strategy of holding out for a zillionaire. Some men would accept, byt the women just refuse. It is Japan demographics all over again.
+1. They might be leftover women, but the hypergamy is what it is.
How’s that hope ‘n change working out for ya, ‘Murica?
http://theeconomiccollapseblog.com/archives/23-percent-of-americans-in-their-prime-working-years-are-unemployed
What killed the middle class? (Besides stupid people voting for oligarchy puppets).
http://charleshughsmith.blogspot.com/2016/03/what-killed-middle-class.html
‘He’d borrowed from banks and investors and retirement funds, all in a frenzied mission to drill for oil and gas, and by the time Terry Swift realized he’d gone too far, this was his debt: $1.349 billion. His company, founded by his father almost 40 years earlier, had plunged into bankruptcy and laid off 25 percent of its staff. Its shares had been pulled from the New York Stock Exchange. And now Swift was in a company Chevrolet Tahoe, driving back to the flat and dusty place where his bets had gone bust.’
‘Swift was coming to this energy-rich strip of South Texas trying to grapple with how much blame he shouldered for the failure of his company. A low-key and historically cautious oil chief executive who eschews private jets and orders low-fat salads for lunch, he had made what he thought was the best financial move of the past decade - a gamble on rising oil prices - and yet he was ensnared in an industry-wide craze of dangerous debt.’
“Maybe we were wrong to believe there wouldn’t be a bust this bad,” Swift, 60, said as the Tahoe rumbled south of San Antonio. “It didn’t even feel risky.”
‘Swift’s miscalculation has made his company, Swift Energy, a casualty of the greatest wave of financial defaults since the subprime mortgage crisis ravaged the U.S. economy. And it’s a jarring reversal from just a few years ago, when Swift felt as if he’d taken his company to a pinnacle by capitalizing on a massive surge in U.S. energy production - one that promised an era of American energy independence thanks to revolutionary new technologies.’
‘Borrowers feasted on what Bloomberg estimates was $237 billion of easy money without scrutinizing whether the loans could endure a drastic downturn. “It was drill, drill, drill,” said Fadel Gheit, an analyst at Oppenheimer, an investment bank. “Every Tom, Dick and Harry was trying to become an oil baron. Now all of a sudden you say, my God - all these people spent beyond their means.”
‘As Swift arrived in Tilden, the site of some of Swift Energy’s fields in South Texas, the signs of decay were everywhere. Scrubby two-lane roads once clogged with heavy-duty vehicles were almost empty. Roadside hotels that sprang up to meet demand - including one that once was booked solid for a year by Halliburton - had vacant parking lots and dust glazing the windows. McMullen County, where tens of thousands had worked every day at the peak, had shriveled back to a quiet place of 800.’
‘The Tahoe turned onto a straight country road and headed toward Swift Energy’s field office, a series of trailers that were the base for its drilling operations. He was quiet for a moment, pausing on what had transpired. “You know the thing that’s disappointing?” he said. “All the wealth that was created - it dried up.”
‘Producers such as Swift didn’t think this was a bubble: Instead, they saw a new chapter in American energy - one in which technology had helped expand the market permanently at a time of global energy needs, led by China.’
“Not that the industry was bust-proof, but the cycles maybe wouldn’t be as deep,” Swift recalled. It was a profoundly wrong call. “By the time this is over,” he said, “this might be the worst of all the busts.”
‘Now all of a sudden you say, my God - all these people spent beyond their means’
‘A key culprit: weakness in the high-end condo market, which accounted for a large share of Manhattan’s new development activity over the past three years. ‘When you can buy and sell out a building as condos you can afford to pay more for the land and that kind of got into everybody’s mind’
There’s kind of a universal theme going on here.
‘technology had helped expand the market permanently at a time of global energy needs, led by China’
Reminds me of 2007, when the movers and shakers of my former employer were getting off the airplane, and patting themselves on the back, saying “This company is going to do great for the next 30 years, no matter what the economy does……..”
OTOH, thanks to the HBB, I was getting out of stocks (and taking the 10% penalty) just to be sitting on cash when the SHTF.
Their “miracle investment”? Mortgage Backed Securities, because they were “safe and insured” (by AIG)
By the spring of 2009, they had turned a $4 billion company into an $800 million dollar company (before liabilities). And I was out of a job.
Word to the wise. These guys only see what they want to see, and hire researchers/advisers that tell them what they want to hear. And profess that “no one saw it coming” when it all goes south. Doing anything else at that point makes them civilly and/or criminally liable.
“You know the thing that’s disappointing?” he said. “All the wealth that was created - it dried up.”
It didn’t exist in the first place. Much like the false notion that a used house is somehow worth multiples of construction cost(lot, labor, materials and profit).
“Oil!” by Upton Sinclair is a book on a similar boom/bust in California nearly 100 years ago, an uneven novel but worth a read anyway for the better parts on the Federal Reserve, speculation, etc….
The movie “There Will be Blood” was loosely based on the 90 YO book and revived interest in it.
Upton Sinclair was a genuine American hero.
Among many other things he was also was sort of the Bernie Sanders of his day, ran for Governor of California in 1934, was written off in the beginning of the race by the powers that be but unexpectedly gained a LOT of momentum and got 38% of the vote. Read a biography on him recently, he lead a fascinating life.
The snowflakes are breeding. God help us all.
http://imgur.com/gallery/YyxMf
Oh, for heaven’s sake. You must be too young to remember the hippie movement. Except for the hair color, not much difference. The guy looks a bit like one of the Carnaby Street boyz from back in the day.
I’ve met a number of millenials. For the most part, they’re gentle souls and the majority are not much like the college vultures that the media loves to feature. Many may support Bernie, but much of the reason for that is, the way they see the future, socialism in their only chance at survival.
Why did she marry Edward Scissorhands?
“Hazi & Matt”
Hazmat?
That’s covered in the comments…
Hey Snowflakes….put some Gossip in your i-thingy and “Get a Job”.
‘Uber CEO sees profits in China in 2 years’ time’
‘Asked by CNBCs Geoff Cutmore if he was losing a $1 billion a year in China, Kalanick replied he was “investing” a $1 Billion a year in the country.’
‘Uber’s China unit alone is valued at $8 billion with the world’s second largest economy being flagged as a key market by the start-up. But it faces fierce competition from local rival Didi Kuaidi, which itself is valued at $16.5 billion investments from the likes of Alibaba and Tencent. Didi Kuaidi is using its deep pockets to expand across China and is matching Uber’s own cash piles.’
‘Still Kalanick is optimistic some areas of China will begin to reap profits for the company. “I’m not yet sure how much…investment will take to get to profitability in China, but I’m optimistic that within the next couple of years we’re going to start seeing Chinese cities start to prop up and be profitable,” the Uber CEO told CNBC.’
Step back and think; these are taxis. Not some new cancer treatment, not even a web page for watching puddles. Taxis.
Is there a web page for watching puddles? I’d like to invest in your puddle idea!
‘Thousands of miles away, at his home in San Francisco, Dorsey sat watching passers-by confront the puddle. Some simply walked through it. Others made a running leap. A few circumnavigated it, lunging at a railing for balance. As word of the live puddle coverage spread online, an audience of 20,000 gathered on Periscope. Soon, the people of Newcastle were in on it. Someone arrived at the puddle with a surfboard. A pizza was delivered to it. And thousands of people took to Twitter to consider the puddle.’
“I was connected to the audience, and I could actually talk with them,” he says. “I could say, ‘Isn’t this ridiculous? We’re watching a puddle.’
‘But even as Twitter’s annual revenue soared last year from $1.4 billion to $2.2 billion, the company lost $507 million. Its user base has stalled.’
http://www.bloomberg.com/features/2016-twitter-turns-ten/
“And thousands of people took to Twitter to consider the puddle.”
And this will continue to happen over and over again because …
Well, it will probably only happen once.
Reminds me of this:
http://snltranscripts.jt.org/79/79sreal.phtml
The comedian Brian Regan nailed it:
https://www.youtube.com/watch?v=AlqA9bwP090
Two words: “Zombo com”
http://www.zombo.com
That’s been around for 17 years. That exact site. I remember being shown it at the height of the tech bubble.
I guess the enduring, unchanging whimsicality of the site adds to its appeal.
So you’re saying it has a proven revenue model…
Like a bucket with a hole in it.
Reminds me of some of the housing fools walking around with holes in their empty pockets.
“we’re just building a plywood city that 15 years from now isn’t going to hold up”
http://www.cpr.org/news/story/denver-s-building-boom-good-design-losing-out
Denver’s massive influx of Democrat-on-Arrival dependency voters need to be housed somewhere.
Looks like Soviet style housing.
From the article:
——
“Sheppard: “Well, I think if if you look at the buildings around Denver, many of the new ones, and you travel across the U.S., you’ll see similar buildings and in other cities and states. And using the term meaningless and uninspiring really gets to the fact that many of these buildings look like they could be anywhere, that they don’t look like they’re respecting the context of Denver, the environment, the conditions that we have here in terms of the amount of sunlight. So they really end up, basically looking like they don’t belong in Denver.”
——
Not nearly as uninspiring as that word salad you tossed, Jeff.
But he’s right that similar buildings are in other parts of the country. DC is full of the same stuff. Plastic-panel pretend-modern condo-ish mixed-use buildings for the young and horny.*
But what did he expect? Individual architecture? What? Pay all that money for a blueprint that you’re going to use only once? Ask your workers to build something new? Give up the quantity discount?
And what is the context of Denver? Log cabins? Sod houses on the east (prairie) side? Circa 1880 false fronts? And sunlight, like windows on two sides of the unit? Heh.
——————–
*oh my god… just checked out one the floor plans to alexansloanslake (dot com), one of the apt complexes. I guess it’s not cool enough to label “bedroom,” “kitchen,” “bath,” as if we can’t figure that. Nope, now the special snowflakes need instructions like:
Front door ==> Arrive
Bedroom ==> Snooze (Rest up for your next adventure here, reflect on your interesting day here)
Living room ==> Chill (Veg out on the couch here, dreams of rocky mountain hikes here)
Dining area ==> Gather (Hang out with your guests here)
Balcony ==> Relax (Sip your coffee here, relaxation station here)
Kitchen ==> Conjure (Prepare a delicious dessert here, recipe testing here, Your dinner party cooking spot ere)
Bathroom ==> Primp (Get ready for the first day of the rest of your life here, Relax your muscles in a warm bath here)
Closet ==> Heap (Prep outfits for the week ahead here)
Good god, is this how Millenial brains operate???
Fewer Colorado kids living in poverty, but more identified as homeless:
“Many of our families are working multiple jobs, but they’re just not making a livable wage for the increases in rental prices we’ve been seeing.”
http://www.denverpost.com/news/ci_29692632/fewer-colorado-kids-living-poverty-but-more-identified
Another article from a year ago reported on black and Latino gangs being pushed onto each other’s turf by rich white yuppies house buyers driving up the rents in North Denver, replete with some choice quotes from whitey demanding that the mayor and city council “do something” about the gang violence in their new neighborhoods. I’ll post the link if I can find it.
All those lifetime Democrats need fixed addresses to get their benefit checks and Democrat Party get-out-the-vote mailers.
‘a plywood city that 15 years from now isn’t going to hold up’
Plywood? Let me tell ya. When I would board up a dump, the standard was HUD. Most everybody referred to it. HUD says you have to use 3/4 inch plywood. What I recorded in Colorado Springs and Arizona is particle board. Oh, and foam, and chicken wire! These were $800,000 houses, being thrown up by guys speaking only something other than English, the finest of artisans, imported I’m sure.
You’re not being had! The cheapest materials available stapled together by half hung over guys listening to some kind of blaring boom box crap (I’m sure they are paying attention to your shack). Sure, spend 30 years paying off $800k for this giant box on a quarter acre. Will it last even 15 years?
My apartment building was built in the 1970s and it is the quietest place I have ever lived. I’ll probably keep renting there until I leave Denver.
Easter dinner conversation yesterday included alot of discussion of leaving Denver, how bad it has become, and how it keeps getting worse every day.
My total monthly housing costs including rent, parking, electricity, internets, cleaning products, light bulbs, etc is less than $1,000 a month, which enables me to save $2,000+ every month. When it breaks that $1,000 threshold then it’s time to leave.
And the loanowners who remain here can look forward to their commute times doubling and tripling, you can keep all that.
“discussion of leaving Denver”
And going where?
Having been on numerous job sites lately, and I too am shocked at the use of stucco sprayed over Styrofoam and chicken wire. I know current construction techniques were cheap, but I had no idea they were that cheap.
The most telling observation? The older phase of the subdivision (on one side of the street, about 6 years old) had places where cracks in the stucco were visible, as the architectural details made from foam were pulling away from the rest of the structure. On the other side of the street, houses being built using the same materials, by the same builder. I’d be shocked if these houses made it 15 years without $$$$$ repairs.
If it’s man made or manufactured, it will end up back in the ground right where it came from. None of it is worth much so don’t pay too much for it.
Know some peeps that bought a McMansion built in 2006. Since that time…bathroom re-plumbing and lower level re-drywall after tub drain failure, entire re-roof job, all wood floors redone and half the doors in the house stick… On and on it goes….
What gets me is that foam plastic trim they stick on after. Seems to come unstuck about 6 months later.
Seems like most construction after 1999 is just slapped together…
The house we had built in 1999 in Phoenix (Tatum Ranch) was built just like this. Stucco on chicken wire and styrofoam in between wood 2×4s
Sold it in 2013 for a profit and it was holding up pretty good. Not sure if it will last 100 years, but there you go.
We moved to San Diego, where renting is cheaper than buying. Adding to our cash reserves and waiting for a price correction before buying something. Rent has not increased in 2 years, so far so good.
Ben, what about the bubble McMansions that were built in 2005 and 2006? Was it this bad back then?
I remember the saying about Tool Brothers luxury homes: They last for 5(?) years and then they fall apart. But it’s been 10 years. Evidently the stuff is holding up, because I haven’t seen any widespread news about it not holding up. Maybe a weekend topic — articles about bubble houses falling apart?
Good idea Donk. A “Housing Depreciates” Topic.
There’s a difference. I did a lot of work in two very expensive gated golf communities in Flagstaff. Those houses were stout. Even the drawers glided out like magic. Last time I was in Texas my Mom’s house was getting some renovation. It’s about 90 years old now. It was the first time I could see how it was put together. The frame was all 6 inch beams or larger. No two by fours. And it was this reddish wood, still straight as an arrow. The block that was behind every wall had been carefully put in even though it wasn’t meant to be seen.
I worked with a master carpenter in central Texas once. He was building a bed and breakfast complex for a guy who had a lot of money. They were going all over buying old wood from churches, schools that were being torn down. This guy explained to me how this old wood wasn’t available commercially anymore. It had better qualities. The newer woods are from inferior trees. The wood isn’t “cured” right (I think cured was the word he used). He didn’t drive nails or screws through it. He would carefully drill holes and put in bolts and screws that fit just perfectly. Quality houses can be built, it just isn’t done much anymore.
Even when 2×4’s were used in the old days they were actually 2×4, not 1.5×3.5…that was the case in an 80 year old house I owned and did a lot of work on. The shiplap siding was clear old growth redwood and completely impervious to rot and bugs.
I had forgotten about the shiplap siding. This carpenter was recycling that too. It was maybe 70 or 80 years old. Fit perfectly. It’ll probably be there in another 70 or 80 years.
Nominal 2×4 framing fails(sags and bows like an old sway back mare) eventually. The most robust wall and foundation design to date are cast in place walls with 2×6 platform framing and plywood sheathed wall and roof. There is nothing costly or expensive about it and it’s has been around since the 1950’s. Going back to cast iron bathtubs and glass fuses only sounds nostalgic.
We’ve discussed Dryvits siding system here before. It seems to be popular in the west and south but the basic structure doesn’t change. Foundation walls, 2×6 platform framing, plywood sheathing. It’s an architectural treatment, not structural hence doesn’t get alot of attention by those watching.
But why the expense of Dryvit? Or more to the point; why waste a pile of money and mountains of maintenance on wood siding?
I searched it and found this:
At least it comes off easy.
The first picture doesn’t look like this.
Sounds like Dryvit isn’t protecting their system.
‘a plywood city that 15 years from now isn’t going to hold up’
From the article:
Good gravy, those really won’t last 15 years,
I think the goal is to get in, make money and when the scam is discovered, get out, laughing all the way to the bank.
With others left holding the bag.
Wait till the lawsuits begin.
Another Keynesian success story: elderly in Japan are commiting crimes to ease the cost of living or go to prison where at least they get free food, lodging, and medical care.
http://www.cnbc.com/2016/03/27/japans-elderly-turn-to-life-of-crime-to-ease-cost-of-living.html
That’s my strategy. I’m going out with guns a-blazin’.
Except they are going to Japanese jails. I would imagine your experience as a U.S. American would differ significantly.
Cellmate Bubba: “Boy, you sure due got a pretty mouth…….”
CS: “I’m tellin’ you now, we ain’t gonna have none of this “Give up the Booty” s##t around here……..”
Although it does sound like a business opportunity. Travel guide to all of the worlds jails, so the US elderly can find a place to retire with dignity.
The Boomers deserve to be jailed for the way they shafted younger generations.
elderly in Japan are commiting crimes
When had a job in a supermarket in NYC as a teenager in the seventies, the recession was in full swing. Old people were shoplifting like crazy; people said they were surviving by eating cat food (urban myth, maybe.)
I was called by the assistant manager to the back, where he ordered me to frisk this terrified old woman he had caught. I flat out refused and told him off (so long ago, I forget what happened in the end.)
I’ll have a cane when I shoplift, so I can whack people with it and make my escape.
Give ‘em hell
Back in the early 1970s, I remember my neighbor (ran a gas station, and rented across the street from me) who make hamburger patties from canned pet food.
Irving, TX Housing Market Implodes; Prices Crater 14% YoY As Speculators Dump Properties
http://www.zillow.com/irving-tx/home-values/
“China Beige Book Reveals Employment Plunges To 4-Year Low, Capex Worst In History”
http://www.zerohedge.com/news/2016-03-28/employment-plunges-4-year-low-capex-worst-history-china-beige-book-reveals
If history is any lesson, we know it’s far worse than they’re admitting.
Sitka, AK Housing Market Craters; Prices Plummet 9% YoY As Housing Correction Ramps Up
http://www.movoto.com/sitka-ak/market-trends/
Mr. Banker on Saturday said this……
Comment by Mr. Banker
2016-03-26 08:46:46
Bahahahahaha … if was to want to market some condos that shared a large swimming pool then I would suggest to a lot of foxy chicks that they come to my swimming pool party that I would throw for them (and that they should attend wearing their bikinis) because as a very large plus to them a lot of single millionaire men would be looking into buying some of my condos and just possibly they, the foxes, just might happen to meet a few of them.
Then after the swimming pool area was thoroughly stocked (at no cost to myself) with bikini-clad foxes I would bring to the condos my prospective condo-buying customers who would not necessarily be millionaires but, hey.
My retort - this….imagine Mr. Banker throwing a party?????
Dire Straits - My Parties
Lyrics:
well this is my back yard - my back gate
I hate to start my parties late
here’s the party cart - ain’t that great?
that ain’t the best part baby - just wait
that a genuine weathervane - it moves with the breeze
portable hammok baby - who needs trees
it’s casual entertaining - we aim to please
at my parties
check out the shingles - it’s brand new
excuse me while I mingle - hi, how are you
hey everybody - let me give you a toast
this one’s for me - the host with the most
it’s getting a trifle colder - step inside my home
that’s a brass toilet tissue holder with its own telephone
that’s a musical doorbell - it don’t ring, I ain’t kiddin’
it plays america the beautiful and tie a yellow ribbon
boy, this punch is a trip - it’s o.k. in my book
here, take a sip - maybe a little heavy on the fruit
ah, here comes the dip - you may kiss the cook
let me show you honey - it’s easy - look
you take a fork and spike ‘em - say, did you try these?
so glad you like ‘em - the secret’s in the cheese
it’s casual entertaining - we aim to please
at my parties
now don’t talk to me about the polar bear
don’t talk to me about the ozone layer
ain’t much of anything these days, even the air
they’re running out of rhinos - what do I care?
let’s hear it for the dolphin - let’s hear it for the trees
ain’t running out of nothing in my deep freeze
it’s casual entertaining - we aim to please
at my parties
“My retort - this….imagine Mr. Banker throwing a party?????”
I wouldn’t actually “throw” a party, I would instead set it up whereby the party threw itself.
I’d tell the foxes that it was a BYOB party and that the millionaires they were sure to meet would probably be interested in their cooking and so it might be wise for them to bring along some food along with bringing the booze - expensive booze in that, after all, the guys they were most certain to meet and most certain to latch onto were millionaires (every single one of them).
A wee bit of imagination is a terrible thing to waste …
A long time ago a movie producer was asked how much it cost him to hire all the extras that he had assembled for a shot of a crowd for the movie he was filming and he said he set it up so the people in the crowd paid him money to be there.
He circulated flyers saying that if anyone wanted to be in a movie then they should show up at the location at a certain time and each one of them, if they were accepted for the part, would then be charged a fee of ten dollars.
Seems the party is off at Mr. Banker’s new condo development - at least for me - I ain’t paying him to have a party at my expense.
2 B rules for debt donkeys???
Housing losses just end in a…TRAIL. OF. TEARS.
Some Wymyn trying to influence/cooerce the male voters, by threatening to “cut them off”
http://tinyurl.com/hkm3mst
Basically, using the vajayjay to cooerce the guys, and get what they want. Of course this is nothing new.
And this is different than prostitution, how?
The -fixr’s ex- pulled this crap for the last 15 years of out marriage, for all sorts of reasons. Like when I said no to the McMansion that would take both our salaries to pay for. Or later, my refusal to buy her the Dream Ranch “for the kids”……… I saw where that was going. My new “hobby” was going to be unpaid/uncompensated “ranch manager/horse $##t shoveler/groundskeeper/repairman.
Her mistake was getting things to a point where the divorce plus child support was cheaper than staying married.
It is always cheaper to rent.
“Her mistake was getting things to a point where the divorce plus child support was cheaper than staying married.”
How is the new car anyway?
Dallas-area apartment rents set new record with $1,083 average in February
http://bizbeatblog.dallasnews.com/2016/03/dallas-area-apartment-rents-set-new-record-with-1083-average-in-february.html/
And a small fraction of the cost of buying at current grossly inflated asking prices of resale housing.
Dallas, TX Housing Prices Plunge 17% YoY On Billowing Excess Housing Inventory
http://www.zillow.com/bluffview-dallas-tx/home-values/
And the next recipient of the Darwin award is…….
http://www.theburningplatform.com/2016/03/28/kids-dont-do-this-at-home/
I am a 2nd Amendment supporter, but there are far too many mental defectives allowed to own guns.
When will Yellen the Felon announce QE4?
http://wolfstreet.com/2016/03/28/1st-quarter-2016-gdpnow-forecast-atlanta-fed-plunges-consumer-spending-exports/
We first need to see another Wall Street big crash and spike in unemployment. QE4 will follow within 18 months of the onset of the next recession, though the timing is tricky because recessions typically are not officially announced until many months after they begin.
For instance, the last recession officially began in December 2007, but I don’t believe it was officially acknowledged until November 2008, after the election. And QE1 was underway by March 2009.
So roughly speaking, QE started about 15 months after the onset of recession, but only about four months after the recession was officially recognized as being underway.
WTF….
http://www.zerohedge.com/news/2016-03-28/full-metal-retard-part-deux-cia-backed-rebels-now-war-pentagon-armed-fighters-syrias
Yellen IS the dark side.
http://www.cnbc.com/2016/03/28/yellen-to-battle-the-dark-side.html
the Minders — “Build”
https://www.youtube.com/watch?v=hpRfziXt2uY
Music by snowflakes, for snowflakes, their 2012 show in Denver was excellent:
Neutral Milk Hotel - King of Carrot Flowers Part 1-3:
https://www.youtube.com/watch?v=zJTl4EyY_Hk
Need to go listen to more Kinks now…
The Tractors - Shortenin’ Bread
https://www.youtube.com/watch?v=QlJS3z1RQnE
I’m thinking about seeing the Grateful Dead in Atlanta on spring tour 1994, and a dead friend with us at that show who would have turned 40 next month.
Oxycontin OD 2002, before that even was a thing…
Saw them around the same time. Think maybe I was the only one at the concert that wasn’t on some mind-altering substance. Known a few who checked out before their time.