The Signs Of Excess Are Visible Everywhere
A report from the Guardian. “From New York to London, the air seems to be getting a little thinner at the dizzy heights of the property market. The collapse of a 78-story ’shadow-maker’ condo development in an exclusive enclave of the Upper East Side of Manhattan is sending shockwaves through the city’s real estate market. And in London the decision to hold back the sale of apartments in the landmark Battersea power station development has also rattled already nervous buyers, sellers and developers. Projects in Miami and New York have also benefitted from the EB-5 visa program – the ‘crack cocaine of real estate,’ according to one Manhattan broker – that puts foreign nationals on a path to US citizenship if they invest between $500,000 to $1m in a US project.”
“The net result of EB-5 investment, warns one real estate agent, has been to boost real estate values to the point that it is only affordable to institutional investors and pension funds. ‘They’re the only people buying and this is going to blow up our economy again.’ For this and other reasons, failure of the Sutton Place shadow-maker may be a harbinger of things to come.”
The Telegraph on China. “Elite global banks have begun to warn clients that China’s latest credit-driven boom is nearing its peak and will lose momentum by late summer, dashing hopes for a genuine cycle of fresh economic growth and commodity demand. China’s reflation drive has been explosive. New home sales jumped 64pc in March from a year earlier. House prices have risen 28pc in Beijing, 30pc in Shanghai, and 63pc in the commercial hub of Shenzhen.”
“The signs of excess are visible everywhere as the Communist Party once again throws caution to the wind. Cement production jumped 24pc in March and infrastructure investment rose 19pc. Yang Zhao from Nomura said the edifice is becoming more dangerously unstable with each of these stop-go mini-booms. ‘Structural problems and financial imbalances are worsening. We believe this debt-fueled growth is not sustainable,’ he said.”
Bloomberg on Turkey. “At first glance, the world’s best-performing housing market bears few of the usual hallmarks of a bubble about to pop. Reliance on mortgages is low, and Turkish homeowners reliably repay their loans, helped by house prices that rose faster than in any other country last year. The risk, at a time when construction has grown to make up a bigger share of the country’s investments than in China, is with the builders rather than the buyers.”
“The share of Turkey’s borrowing represented by developers is higher than at any time in the last decade, and represents almost a fifth of all corporate loans, according to the nation’s banking association. An increasing portion of those debts is going bad, with the industry’s portion of non-performing loans nearly doubling in the past five years. ‘Mortgages are not the problem,’ said Ercan Uysal, a banking analyst at Istanbul-based research firm Integras. ‘Developer leverage is.’”
The Daily Telegraph on Australia. “Renting a Sydney home is getting easier — and cheaper. A rush to construct new properties and bulk buying from property investors has ramped up the city’s supply of rental housing, putting prices in the deep freeze, new research shows. Landlords in some suburbs are now advertising their homes at reduced rent to bait tenants. Landlords renting houses in suburbs as far afield as Naremburn, Little Bay and Chester Hill have also slashed rents, with some advertising homes at $100 lower than last year. Some of these areas, like Mascot and Auburn, are construction hot spots where a glut of new properties have become available, particularly units.”
“Taj Singh recently took advantage of the weakening market by negotiating a $40 discount off the weekly rent of a new Baulkham Hills flat. ‘I knew there had been a lot of new developments nearby and that market rent had fallen a bit in the area, so it was getting harder for landlords,’ Mr Singh said.”
The South China Morning Post on Hong Kong. “Hong Kong’s first real estate agency offering 0 per cent commission for clients is finding it tough to survive in the city with its weakening housing market. Online real estate agent Candid Properties, saw staff numbers drop to four from 15 in six months. ‘The market is bad, there are fewer transactions and fewer foreigners coming to Hong Kong,’ said Alastair Hoyne, the chief executive of Candid.”
“Hong Kong home sales dropped 39 per cent in the first quarter compared with the previous three months, to an all-time low of 6,221 in the first quarter, according to Jones Lang LaSalle, an investment management company specializing in real estate. Transactions are very weak, Hoyne said, in both second home and rental market as more owners are taking a ‘wait and see’ attitude rather than cutting prices.”
The Dawson Creek Mirror in Canada. “Construction of new homes in Dawson Creek dropped drastically from 2014 to 2015, according to new data from BC Stats. In 2014, construction started on 297 new houses in the city, compared to last year when 83 new homes broke ground. It’s the second-largest drop among municipalities in the province. The Mile Zero City is sandwiched between the District Municipality of Equismalt, which at 81 per cent had the largest drop in housing starts, and the City of Quesnel, which saw a 71.4 per cent drop in new home construction in 2015.”
“The downturn in oil and gas, which has pushed unemployment in Northeast B.C. to a provincial high 9.7 per cent, is partly behind the drop in new builds. But a large number of investment properties are wrapping up construction in Dawson Creek, which is also playing a role, says Dawson Creek realtor Kevin Kurjata. What he calls ‘the duplex party’ that began in 2012, is officially over.”
“‘We’re oversupplied because for the first time in the city’s recent history, we had a company show up that had the ability to pre-sell investment properties to buyers from the Lower Mainland and Southern Alberta, primarily, based on the (2012) rents,’ Kurjata said, referring to Western Canadian Property Group.”
“In 2012, average rents for two- and three-bedroom rental properties in Dawson Creek sat at $1,048 and $1,242 per month, respectively. ‘When people are making a lot of money off of a relatively low-priced product like a townhouse in Dawson Creek for $220,000 that you are able to rent out for (almost) $2,000 a month, it looked pretty juicy.’”
“According to Fort St. John Realtor Roland Cataford of Century 21 Realty, the slow residential growth trend extends north of the Peace River as well. ‘In 2015, things were growing a little bit,’ he said, adding it was the tail end of a building boom brought on by optimism for liquefied natural gas (LNG) development. ‘Where we are now, there’s been a huge change.’”
“Not only is new construction down, but sales have also dropped off by around 70 per cent, he said. ‘Everybody kind of needs LNG to go through just to keep the bottom from falling out,’ he said. ‘A lot of what I am seeing right now is people saying ‘I got laid off, I need to sell.’ Those are tough ones because people are kind of feeling like they are up against a wall.’”
Signing up for a big fat mortgage payment on a depreciating asset at a grossly inflated price and then sticking $50 a week in your 401k is a fool’s game.
Will stocks and houses suddenly appear overvalued when rates normalize?
Will rates ever normalize?
What is normal?
1. Not deliberately forced against the zero bound
2. Within the middle 95% if the range of interest rates experienced over the course of human history
the range of interest rates experienced over the course of human history
Do we know those?
Yes, pretty much.
Comment and then questions:
It seems to me that artificially keeping rates low causes inflation, so which is the true statement…
1. Rates are not actually being kept artificially low…by virtue of the fact that there is not inflation, the Fed is reacting to the market, not affecting the market; or
2. The Fed actually is creating inflation, but not in a traditional sense, or not picked up by traditional measures.
As with most things in life, I think the answer is more complicated than either 1 or 2.
I think that there is a glut of capital in the markets, which is lowering the price of that capital (a driver of low rates).
Normally, low rates would help drive consumption, but in this case, it appears to be primarily driving up the value of financial assets.
Where is the demand to drive inflation or higher rates?
2. The Fed actually is creating inflation, but not in a traditional sense, or not picked up by traditional measures.
Definitely (2). And we talked about this years ago here. The inflation that the Fed was causing WAS quite noticeable—it just didn’t occur here; with the interconnectedness of global markets today, and most production occurring overseas, the inflation occurred overseas as well, in developing markets. Look at the inflation rates in that segment from 2010-2013.
You’re referring to price fixing and market rigging. That’s not inflation.
Yes, pretty much.
You’re right! Here’s a chart:
http://www.businessinsider.com/interest-rates-since-3000-bc-2015-2
Looks like they’ve been close a few times, late 1800s, 1930s.
Of course, now we have the benefit/curse (?) of fiat currencies. It’s a whole new world.
“It seems to me that artificially keeping rates low causes
inflationdeflation, so which is the true statement…”Fixed it.
Thanks for finding the data!
“Looks like they’ve been close a few times, late 1800s, 1930s.”
Yes, but the current levels are the lowest in 3000 years.
Oops…meant to say LOWEST IN 5000 YEARS.
Rental Watch: 2. The Fed actually is creating inflation, but not in a traditional sense, or not picked up by traditional measures.
It seems there are sectors which are inflating wildly, which are the targets of the Fed and government’s ministrations: housing, education, medical care. These are massively intervened in by the government.
Medicare was explicitly prohibited by Congress from negotiating drug prices in the mid 2000s. It’s madness and naturally the result was skyrocketing drug prices.
It’s all part of the “regulatory capture of the government.” But I digress - back to the original point. I think there is wild inflation, but in limited sectors.
Realize the traditional definitions of inflation and theories which support them (cost-push, demand-pull) point to a general increase in the level of prices. With the very novel (and targeted) interventions of the government and central bank, the result seems to me to be a novel sort of inflation - limited to certain fields in which the government pumps the full force of its monetary firehose.
Regardless of the impact on the larger economy, it makes certain people very rich, and those people are sure to reward politicians and regulators for their fealty.
“It seems there are sectors which are inflating wildly,…”
Don’t confuse Fed-rigged short-term parabolic bubble price moves from the ensuing long-term trend, which is bound to be down, thanks to massive overproduction of durable assets relative to fundamental demand in response to bubble pricing.
Exhibit A: Japan 1990-?
Exhibit B: China 2015-?
Further comments on the trajectory of interest rates since the establishment of the Fed:
1) Rates were far more volatile after than before 1913
2) The current all-time record low rates could be a consequence of the massive Fed-induced bout of inflation in the 1970s
3) The largest rate volatility on record occurred over the past fifty years
4) There is no evidence from the previous 5000 year history of interest rates that the current artificially suppressed rate levels are sustainable
“I think that there is a glut of capital in the markets, which is lowering the price of that capital (a driver of low rates).”
The Fed has and continues suppressing long-term rates, which naturally leads to a capital glut which fundamental demand is bound to prove insufficient to absorb.
inflation plus 1% for short term
we’re under inflation= WAR on SAVERS
“What is normal?”
Men using the Men’s Room and women using the Women’s Room.
Education
Private changing areas quell transgender debate
Mugshot of Deborah Sullivan Brennan
By Deborah Sullivan Brennan | 4:15 p.m. April 11, 2016
Eric Dunn cuts the tile on a shower wall while Todd Miehls sprays water to keep the concrete dust down. They were preparing the wall for a privacy door in the shower area of the women’s locker room at Rancho Bernardo High to accommodate transgender students.
— Peggy Peattie
RANCHO BERNARDO — Students returning to Rancho Bernardo High School next week after spring break will find several new individual stalls in changing areas, as Poway Unified School District addresses concerns sparked by a transgender student who uses the boys’ locker room.
ADVERTISING
The issue arose in February when parents complained that a student who was born female but identifies as male was changing in the boys’ area. After hearing public comment at a packed board meeting in February, the school proposed private changing stalls in an effort to accommodate transgender students and others who wish to dress separately.
…
Goils were goils and men were men…
Tue Mar 4, 2014 - 4:57 pm EST
Sexual predator jailed after claiming to be ‘transgender’ to assault women in shelter
TORONTO, March 4, 2014 (LifeSiteNews.com) – A biological man claiming to be ‘transgender’ so as to gain access to and prey on women at two Toronto shelters was jailed “indefinitely” last week after being declared by a judge a “dangerous offender.”
Pro-family leaders are pointing out that this is exactly the type of incident they warned of as the Ontario government passed its “gender identity” bill, dubbed the “bathroom bill,” in 2012.
Christopher Hambrook, 37, leaned on the ever expanding legal “rights” offered to people who “identify” with the sex opposite their biology. Under the name “Jessica,” he was able to get into the women’s shelters, where he sexually assaulted several women in 2012, the Toronto Sun reports.
The country is burning down, and the tree monkeys have their hair on fire about who pees where, with what.
Pathetic and typical.
It does take the spotlight off of phony scandals and things like the TPP.
Having said that, the number of girls molested to make sure someone feels “comfortable” about which public restroom they use is 0.
So, what number of molestations do you think is acceptable before they prohibit this “identify with” stuff?
At this point, I suspect that institutions/businesses will simply install a separate-room single-hole restroom for disabled/between-gender use and be done with it. Better to pay $15K to a plumber than $30K to a lawyer.
$15k toilets seems to be your area of expertise.
“what number of molestations do you think is acceptable before they prohibit this “identify with” stuff?”
0
I’m sure the governments “acceptable” number is much higher.
121 murders attributed to illegals released by Obama administration
By Stephen Dinan - The Washington Times -
Monday, June 15, 2015
More than 100 immigrants whom the Obama administration released back into the community went on to be charged with subsequent killings, according to government data released Monday that raises more questions about whether immigration authorities are doing enough to detail illegal immigrants awaiting deportation.
Hope and Change not working out for ya?
Comment by The Central Scrutinizer
2016-04-25 10:04:59
“The country is burning down,”
“Hope and Change not working out for ya?”
I voted for Ron Paul, you jingoistic lackwit… and the republicans sandbagged him. Yet you continue to think you have some kind of moral superiority over the democrats for associating with the republicans… or you want to vote for the swindler to ’stick it to the man.’ Did your mama drop you on your head? Intentionally? Repeatedly? She should have dropped you from higher.
As for the bathroom pervs, lets use that gun control argument, probably the best one. You think a law against people who don’t think they have the right naughty bits using the wrong porcelain is going to prevent a perv from getting gussied up and going in anyway? Is there going to be an underwear check at the door or what?
A few years back there was a guy in a wetsuit hanging out in a pit toilet so he could watch ladies poop. You want to outlaw SCUBA gear? It’s a giant, moronic, red herring and you guys are rolling in it like a dog that found something rotten in the woods. Stop.
You’re a Lola.
It appears a “Central” nerve has been touched.
What is normal?
Any rate set by the markets, rather than by central-bank bond-buying activity?
Any bid price set by bidding against someone with a budget of “infinity” is fundamentally artificial.
Also temporary.
Exhibit A: South Sea Bubble
Exhibit B: Chinese stock market
Exhibit C: Oil
Normal: Anywhere above 5%. I was paying 8.25% on a house in 1990.
“The net result of EB-5 investment, warns one real estate agent, has been to boost real estate values to the point that it is only affordable to institutional investors and pension funds. ‘They’re the only people buying and this is going to blow up our economy again.’ For this and other reasons, failure of the Sutton Place shadow-maker may be a harbinger of things to come.”
Whatever became of the bottomless horde of wealthy all-cash foreign investors?
“The signs of excess are visible everywhere as the Communist Party once again throws caution to the wind. Cement production jumped 24pc in March and infrastructure investment rose 19pc. Yang Zhao from Nomura said the edifice is becoming more dangerously unstable with each of these stop-go mini-booms. ‘Structural problems and financial imbalances are worsening. We believe this debt-fueled growth is not sustainable,’ he said.”
It’s a curious world where communist capitalists put regular capitalists to shame with the dimensions of their debt-funded excess.
“Reliance on mortgages is low, and Turkish homeowners reliably repay their loans, helped by house prices that rose faster than in any other country last year.”
How do rising house prices help them repay their mortgages?
Perhaps they are using the magic of the housing wealth ATM machine to convert home equity gains into mortgage payments, just as is done here in the U.S.
I bet it’s that rising prices leads to speculation and flipping, and the mortgages get paid off when the new speculator buys, thereby making it seem the Turkish “reliably repay their loans.”
“Renting a Sydney home is getting easier — and cheaper.”
After year after year of insane rent inflation, one can’t help but wonder how soon similar headlines will appear in California newspapers.
That article did leave me wondering why their market is better at responding to fundamentals (e.g. increasing supply causing reduction in rents) than ours are…
Any ideas?
Different point in the cycle. Their bubble kept going as ours crashed.
Cue tech bubble implosion in 3-2-1….
http://wolfstreet.com/2016/04/24/apple-iphone-revenue-decline-sinks-tech-sector-earnings/
Chinese lemmings, aka retail investors, scurrying towards the cliff.
http://www.businessinsider.com/bank-of-america-watch-out-for-another-chinese-commodities-crash-2016-4
“Those are tough ones because people are kind of feeling like they are up against a wall.’”
Up Against The Wall Redneck Mother
Why do so many choose to pay upwards of 40% of their incomes on rent? It seems crazy.
Study: SD rent to grow faster than rest of SoCal
By Phillip Molnar | 2:23 p.m. April 12, 2016
Baseball fans watch a San Diego Padres game last week from a downtown apartment building.
— John Gastaldo
Rent in San Diego County is expected to rise faster over the next two years than the rest of Southern California, said a study released Tuesday.
Researchers found a lack of new construction, mixed with employment and population growth, mean San Diego’s rent should increase by $155 a month by 2018.
The study from the University of Southern California’s real estate school, and prepared by Los Angeles-based Beacon Economics, said San Diego’s rent increases will outpace those in Orange County, Los Angeles County and the Inland Empire.
Higher rents mean more profits for real estate investors, who are paying record-setting amounts to acquire rental units.
But renters are feeling the cost burden, too. A new Zillow report, also released Tuesday, found San Diego renters spend 39.5 percent of their income on rent. That was less than other areas of California. Residents of Los Angeles County pay 47.6 percent; San Francisco, 46.1 percent; and San Jose, 41.2 percent.
…
It’s ten percent of my wages and compensation for me here in the OC.
The new Zillow report, linked in the article, contains some good data. But it’s a bit skewed because (1) the % rent is the % of gross income, not take-home (2) the median income is per capita, and therefore doesn’t account for roommates.
Also from the zillow article:
—–
“Renters don’t take out mortgages, of course, and so don’t benefit from today’s ultra-low mortgage interest rates. More importantly, rents themselves didn’t experience the huge drop during the recession that home values did, and instead have been steadily rising for the past several years (figure 2). ”
—–
There isn’t much practical benefit to those ultra-low mortgage rates. The low rates just pushed prices higher, so PITI didn’t change much.
But it is definitely true that rents didn’t drop during the recession. When house prices were dropping like a rock 2010 - 2013, my LL was jacking rent 7% each year.
Yet the rent is still half your monthly expenses.
I thought you bought in 2012
Now taxes are going up as the annuity pressure is extreme
counties planning on 7.5% roi
and not getting it.
I did buy in 2012, but the rent went up even after I left.
There isn’t much practical benefit to those ultra-low mortgage rates.
That depends on who you are talking about—as there was HUGE benefit to the large banks!!
And possibly to people who bought in 2002 or so. They had the benefit of lower prices when they bought, refi to a lower rate later. This is assuming they didn’t take any cash out during the refi …
In the run up to the 2008 housing bubble bust, rent remained reasonable while property prices escalated. This time around both property prices and rents have escalated. It’s 40% of your income whichever way you go.
And in truth–none of us knows for sure which way property values go from here (though the evidence seems overwhelming for down). If they do go down, we don’t know if it’ll be a pop or a slow leak.
I’m closing sale on one CA property because I no longer use it and want to take the proceeds while they’re good. I’m also looking for nicer place in Los Angeles. (I have a small condo now.) The rent vs own decision is a tough one even at these inflated property prices. And while property prices show some consistency (dollars per square foot for a given locale), the rent prices are all over the map. People are just asking exorbitant amounts–$4500 for two-bedroom houses in the Valley. (And they go much higher.) I honestly don’t know what to do but wait. I feel like some sort of correction is coming and that it will be timed to the election. The last election was a backroom deal between Obama and the bankers. (See The Confidence Men.) This one will be decided by the bankers too.
“This time around both property prices and rents have escalated. It’s 40% of your income whichever way you go.”
Rent and Price are 40% of income only if you’re performing DonkeyMath.
Have you included all the losses to depreciation?
Yes, depreciation included. I rented for years, in rent-controlled apartments, and that’s how I was able to get to the financial position I’m in today. I held off buying in 2004 and bought during the last crash–thanks to the wisdom of the HBB. (That also improved my financial position.) But now when I do the math (and not DonkeyMath) for a nicer place, neither option seems affordable. I’m doing well–but it’s just frustrating not being able to move ahead because of artificial asset-class inflation.
We’d like to see the math then.
How did you account for losses to depreciation?
“it’s just frustrating not being able to move ahead because of artificial asset-class inflation.”
Maybe it stays this way forever ? Like a third world country
500k property.
Annual Mortgage = 2,176×12 = 26,112 (30 yrs/3.25%)
Depreciation = 15,000 (30 yr)
Taxes = 6,000
Insurance = 2,000
HID = 5,000
Total = 47,000
Annual Rent = 4500 x 12 = 54,000
I don’t want to argue the particulars. (And yes, that’s just a quick sketch above.) My point is that with the rental market as expensive as it is, the calculation is NOT always in favor of renting. Rents have risen so much that what used to be decidedly in favor of renting now comes out a wash–in some markets.
I do think, that yes, it’s becoming Third World here in LA. (If not already.) There’s substandard apartment housing and then very expensive detached homes. The middle is gone…
Your mortgage payment is $3700/month on a 15 year death sentence.
Your depreciation is $2.50/sqft/yr or $5500/yr on a typical shack or roughly $500/month loss.
Taxes $500/month
HID $400/month
Total- $5100/month and you haven’t even turned the lights on yet or paid the insurance.
Rents?
Here’s 2500+ of them, all under $2000/month. A mere fraction of the cost of buying a shack.
http://losangeles.craigslist.org/search/apa?searchNearby=2&nearbyArea=63&nearbyArea=104&nearbyArea=103&nearbyArea=209&nearbyArea=62&nearbyArea=208&max_price=2000
And check out the spreads on rentals:
$2400: http://losangeles.craigslist.org/sfv/apa/5540460073.html
$4500:
http://losangeles.craigslist.org/sfv/apa/5553972487.html
That second home is nicer and larger, but not worth nearly twice the cost. The asset bubble has run-over into the rental market and thrown price competition out the window.
Thanks for the perspective. Those rents are for apartments/condos though. And I want I house. Perhaps the lesson is to make do with what I have while the asset bubble remains inflated…
No perspective. Just hard truthful numbers. And the links include plenty of houses.
“15 year death sentence”
A *what*?
You’ve strayed into the weeds Donks.
Annual Rent = 4500 x 12 = 54,000
$4,500 per month to rent a $500K house? I don’t think so. Those numbers are way off. I see similarly-priced houses rent for around $1,800/mo here.
“But now when I do the math (and not DonkeyMath) for a nicer place, neither option seems affordable.”
That’s the California housing situation in a nutshell. And I submit that while California housing has always been more expensive than in many other parts of the U.S., the current extremely overpriced situation is unprecedented and unsustainable.
“Rents have risen so much that what used to be decidedly in favor of renting now comes out a wash–in some markets.”
Rents can eventually come down. Once locked into a 30-year mortgage at rock-bottom rates on an overpriced asset , good luck at getting your payment to ever come down.
Ventura, CA Housing Market Implodes; Prices Plunge 16% YoY
http://www.movoto.com/ventura-ca/market-trends/
Knock on wood, the place we’re renting hasn’t seen a rent increase in the past 2 years. Just renewed for another year. Hoping for a pricing correction in S.D. next year, so we can purchase a house that’s more realistically priced.
If prices don’t correct, then we’ll just renew again and continue building up our savings for when they do. It’s not a matter of if, just “when”. And getting ourselves financially ready when “when” hits.
Do you plan to Sell in May and Go Away?
Short in May and enjoy the ride?
Doesn’t quite have the same ring to it, though…
Short in May and sell away.
“The net result of EB-5 investment, warns one real estate agent, has been to boost real estate values to the point that it is only affordable to institutional investors and pension funds.”
institutional investors and pension funds = institutional lemmings
“They’re the only people buying and this is going to blow up our economy again.”
The only people who are buying are using money that belongs to somebody else.
Their selling point boils down to: A rise in price equals a rise in value.
They get a cut of the rise in value so, from their point of view, what’s not to like?
What happens to the whole charade at the point when further price rises become untenable?
“What happens to the whole charade at the point when further price rises become untenable?”
Poof?
“What happens to the whole charade at the point when further price rises become untenable?”
I think we can agree that it’s a charade, and that a correction is likely coming, but it may be a long, slow leak this time instead of a sudden drop. While it seems like we’re forgetting the Lessons of 2008, there is still systemic memory of that meltdown.
Long slow leak = a frog boil.
there is still systemic memory of that meltdown.
Sadly, the “systemic memory” is of their being no consequences arising from the excesses—so party on, Garth!!
They’ll threaten to crash the economy, and the government will send them truckloads of cash.
These institutional lemmings need to earn two returns on the money that they handle, one return goes to their investors (the owners of the money) and another return they get to keep for themselves.
If these institutional lemmings do not earn a good return on the money that they handle then this money will move off to somewhere else - somewhere else where the promises of a return are greater.
So to keep the money in-house they need to keep the returns up and if this means chasing prices then so be it. The rewards for doing so is a hefty return on the price increases, the downside of doing so is the loss of money - the loss of money that belongs to somebody else.
It’s the story that keeps giving, nonstop…
Global Stocks Drop With Oil as Glut Seen Persisting; Yen Rises
Eddie Van Der Walt
James Regan
April 24, 2016 — 4:46 PM PDT
Updated on April 25, 2016 — 4:54 AM PDT
Shares fell around the world as oil dropped on signs a global surplus of crude is likely to persist. The yen strengthened, reflecting investor caution before central bank meetings this week in the U.S. and Japan.
Crude futures gave back some of Friday’s gains in New York on Saudi Arabia’s plan to complete an expansion of the Shaybah oilfield by the end of May. Energy companies and miners led declines in the Stoxx Europe 600 Index, which headed for its biggest loss in a week, as industrial metals also sank. The yen was among the best-performing major currencies, after tumbling on Friday by the most since 2014. The pound climbed on signs the “remain” camp is pulling ahead in the campaign over Britain’s membership of the European Union. Italian bonds fell, extending a decline from last week.
While West Texas Intermediate crude has recovered from levels reached in February that were the lowest since 2003, signs of a saturated market persist. Saudi Arabian Oil Co.’s planned expansion of the Shaybah field will allow the world’s largest exporter to maintain total capacity at 12 million barrels a day, according to two people with knowledge of the plan. Iran has increased output by 1 million barrels a day since sanctions were lifted in January, adding to the glut. The movements in oil have also whipped up price swings in equities and currency markets this year.
“This adds to the supply at a time where other OPEC producers are also raising production so it has attracted some attention,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by e-mail. “Oil remains an important driver for other commodities such as industrial metals but also other asset classes.”
…
THE WALL STREET JOURNAL
Middle East
Cheap Oil Shaved $390 Billion From Mideast Economies in 2015, IMF Says
Oil-dependent Mideast nations face up to $150 billion in losses this year
By Nicolas Parasie
Updated April 25, 2016 5:48 a.m. ET
DUBAI—The International Monetary Fund estimates the Middle East’s oil-dependent economies have missed out on $390 billion in oil revenues last year alone and face up to $150 billion in income losses this year as a result of cheap oil prices.
…
I was getting 5.25% interest on a savings account in 2008.
War on savers.
I vaguely remember that.
I also remember thinking that there would be buying good opportunities available shortly, so I shouldn’t tie up my cash; instead, the Fed avoided the buying opportunities, and handed me zero yields instead. Hindsight being 20/20, I should have backed the truck up on 30yr Treasuries around that time, and counted on the Fed to buy them from me at above-market prices.
I don’t remember rates that high in ‘08. I have a 10 year note maturing this summer and its yield is 5%. And no, I’m not going to buy another 10 year note as soon as this one matures. Freakin’ 1.75% yields.
AmTrust Bank in Cleveland (that has since gone bye bye) was paying 5.25% on money market savings in 2008.
The real legacy of obama.
What do the progressives and liberals say?
Leaving a turd sandwich for the next administration is just dandy.
————-
U.S. Government Is Now a Major Counterparty to Wall Street Derivatives
Wall Street on Parade | 21 April 2016 | Pam Martens and Russ Martens
According to a study released by the Federal Reserve Bank of New York in March of last year, U.S. taxpayers have already injected $187.5 billion into Fannie Mae and Freddie Mac, two companies that prior to the 2008 financial crash traded on the New York Stock Exchange, had shareholders and their own Board of Directors while also receiving an implicit taxpayer guarantee on their debt. The U.S. government put the pair into conservatorship on September 6, 2008. The public has been led to believe that the $187.5 billion bailout of the pair was the full extent of the taxpayers’ tab. But in an astonishing acknowledgement on February 25 of this year, the Government Accountability Office, the nonpartisan investigative arm of Congress, issued an audit report of the U.S. government’s finances, revealing that the government’s “remaining contractual commitment to the GSEs, if needed, is $258.1 billion.”
This suggests that somehow, without the American public’s awareness, the U.S. government is on the hook to two failed companies for $445.6 billion dollars. And that may be just the tip of the iceberg of this story.
The official narrative around the bailout of Fannie and Freddie is that they were loaded up with toxic subprime debt piled high by the Wall Street banks that sold them dodgy mortgages. While that is factually true, the other potentially more important part of this story is the counterparty exposure the Wall Street banks had to Fannie and Freddie’s derivatives if the firms had been allowed to fail.
Matt Taibbi reported at Rolling Stone three days ago that the government has been fighting a pitched battle to keep 11,000 documents pertaining to Fannie and Freddie under seal in a court case. You can rest assured that some of those documents relate to Fannie and Freddie derivatives and counterparties. But that pile of 11,000 documents pales in comparison to the 25 million documents the Justice Department withheld from the public when it settled its case against Citigroup in 2014 for $7 billion. What the public got instead was a meaningless 9-page statement of facts.
But until we have a President in the Oval Office who believes that the citizens of a genuine democracy deserve the right to sift through the documents of the most epic fraud in the history of financial markets so they can reach their own conclusions, all we really have are slogans, including the one that says we live in a democracy.
“Brooksley Born is best known as the sole regulator in the Clinton administration who attempted to regulate derivatives and became the target of bullying by then Treasury Secretary Robert Rubin, his enforcer, Larry Summers, and Fed Chair Alan Greenspan. Frontline aired an expose on the guts Born summoned to stand up to the Wall Street enablers’ cartel. In the end, of course, Wall Street had its way and derivatives remained unregulated. Born resigned her post.”
http://wallstreetonparade.com/2015/05/brooksley-born-still-telling-the-uncomfortable-truths-about-wall-street/
The rule of law? How quaint.
Liberal and progressive governors now think they are all obama.
Wolf (PA) is another that comes to mind.
It doesn’t matter what the law or state constitution says.
I have a phone and a pen and can write EOs all day long…
And liberals and progressives NEVER think this will ever be used against them.
——————–
How to Steal a State: Governor McAuliffe Expands the Criminal Vote for Democrats
National Review | April 25, 2016 | HANS A. VON SPAKOVSKY & ROGER CLEGG
In what is likely an unconstitutional state action seemingly calculated to ensure that the purple state of Virginia goes blue in the November election, Governor Terry McAuliffe (D.) signed an order on Friday restoring the voting rights of 206,000 ex-felons in Virginia, including those convicted of murder, armed robbery, rape, sexual assault, and other violent crimes. The order also restores their right to sit on a jury, become a notary, and even serve in elected office.
McAuliffe believes that ex-felons can be trusted to make decisions in the ballot booth and the jury box but apparently not to own a gun. He draws the line at restoring their Second Amendment rights; that would be a bridge too far. His order specifically does not restore their “right to ship, transport, possess, or receive firearms.” And while his order requires that felons complete probation and parole before enjoying restoration of their rights, it applies regardless of whether they have paid any court fines or restitution to victims.
Yet that is exactly what McAuliffe attempts to do through his executive order, in a violation of the separation of powers. He is acting like a superlegislator in voiding the policy that has existed in Virginia “in one form or another since the [Virginia] Constitution of 1830,” according to the Cuccinelli’s report. (The New York Times incorrectly reported that the policy dated only to the Civil War; the Richmond Times-Dispatch, to the state’s 1902 constitution.)
What McAuliffe entirely dismisses is the principle that if you won’t follow the law yourself, you can’t demand a role in making the law for everyone else, which is what you do when you vote. Restoring a felon’s right to vote should be done not automatically, as soon as he has completed his sentence, but carefully, on a case-by-case basis, after he has shown that he has really turned over a new leaf. The unfortunate truth is that many people who walk out of prison will be walking back in; recidivism rates are high. We have both testified before Congress and written about this problem. Governor McAuliffe may be happy as long as the ex-felons who can now vote just don’t walk back into prison before November.
Governor Terry McAuliffe (D.) signed an order on Friday restoring the voting rights of 206,000 ex-felons in Virginia,
Darn it, that messes up our whole apartheid plan.
LOL apartheid. Hyperbole much? It’s pretty simple: don’t commit felonies and retain your voting rights.
It’s pretty simple:
Except for the unequal treatment of blacks by the legal system, particularly with regard to the “drug war”.
Except for the unequal treatment of blacks by the legal system,
Where is it proven that it is unequal?
For instance: lots more folks carry weed around in the ‘hood, then thus get popped for possession on a lot of BS stops. People in better parts of town have the judgement to leave it at home rather than carry it around. I had a buddy who bought enough to last a LONG time, then kept it in a freezer at home—thus minimizing the time that he was either transacting, or carrying it around; that greatly diminishes the odds of getting a possession charge.
Now, the minimum sentencing differences between powdered vs crack cocaine: yeah that looks like fairly open-and-shut inequity…
So we agree that blacks and whites are committing the same “crimes” (using pot and coke), but blacks get felony charges for it a lot more than whites, and thus get disenfranchised.
Your meaningless voting rights.
90% of felons will vote dem
that’s why dnc goes to prisons to register
In Maryland, felon voting rights were expanded as well. The Republican governor tried to veto but it was easily overridden along party lines (Democrats for, Republicans against).
In Virginia, I don’t know what their redistricting timetable is, but if they can turn it solidly blue with the help of felons, and then redistrict accordingly, it is unlikely to go red again for quite some time.
Rules and laws don’t matter if we can play the race card. Obama showed us the way.
And the irony - felons in VA already COULD get their voting rights back. They just had to apply for it.
Funny how you are not complaining that these felons didn’t get the right to buy and own a gun back.
Doesn’t play to the meme…
Ah, the haunting cry of the butt hurt FAOM….
did u see Lindsay Graham (Rhino trnsgd)
wants to marshal plan the M. E.
“Fresh off a trip to the Middle East, Graham (R-S.C.) identified Egypt, Lebanon and Jordan as the most critically in need of quick help to shoulder the burden of refugees fleeing Syria and to deal with the Islamic State expanding into Libya and the Sinai Peninsula. He also listed Israel as a would-be recipient of an early tranche of aid money.”
https://www.washingtonpost.com/news/powerpost/wp/2016/04/08/lindsey-graham-wants-a-new-marshall-plan-for-the-middle-east/
250 more military advisers going to Syria to combat ISIS.
Neocons gonna neocon.
Hawthorne, CA Housing Market Implodes; Prices Crater 34% YoY As Price Declines Appear Across SoCal
http://www.zillow.com/hawthorne-ca/home-values/
Hmm. It’s not so much that the prices dropped 34% y-o-y, but that Hawthorne had a huge spike (almost doubling) in March 2015. I’m totally at a loss as to what could have caused that aberration. Any ideas?
Given the fact it’s CA, I’d wager it was fraud driven transactions. Keep in mind the trend is down.
NPR just aired a puff piece about a dozen Detroit Public School principals getting kickbacks from contractors, but how many of the students’ parents don’t care, because the principals did such a good job for the children…
getting kickbacks from contractors, but how many of the students’ parents don’t care, because the principals did such a good job for the children…
Sounds like Russians’ praise of Putin.
Gimme an N…
Also reported that bailing out Detroit Public Schools will cost Michigan taxpayers (not just Detroit residents) half a billion dollars. That’s alot of money.
Detroit Public Schools teachers protest at Michigan Capitol - YouTube
http://www.youtube.com/watch?v=ZTc-u4a2P4U - 257k - Cached - Similar pages
Apr 30, 2015 ..
Click on…
‘Sick out’ closes three Detroit schools in protest against state control
and the real problem for Detroit Public Schools will be revealed.
The “no snitch” policy, at a institutional level. Is it any wonder that the city (and shortly the school district) are bankrupt?
Dewberry is the senate sponsor of SB 1071. It hasn’t received a bunch of media attention this legislative session, but if passed and signed into law, it will essentially allow the state to fine or imprison squatters.
http://www.thelostogle.com/2016/04/06/now-oklahoma-lawmakers-wants-to-send-squatters-to-jail/
Housing sales in the west down 23%
http://finance.yahoo.com/news/us-home-sales-fall-march-140729719.html
Long but good article on the (lack) of savings of the American Middle Class:
http://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/
The Secret Shame of Middle-Class Americans
Nearly half of Americans would have trouble finding $400 to pay for an emergency. I’m one of them.
ince 2013, the federal reserve board has conducted a survey to “monitor the financial and economic status of American consumers.” Most of the data in the latest survey, frankly, are less than earth-shattering: 49 percent of part-time workers would prefer to work more hours at their current wage; 29 percent of Americans expect to earn a higher income in the coming year; 43 percent of homeowners who have owned their home for at least a year believe its value has increased. But the answer to one question was astonishing. The Fed asked respondents how they would pay for a $400 emergency. The answer: 47 percent of respondents said that either they would cover the expense by borrowing or selling something, or they would not be able to come up with the $400 at all. Four hundred dollars! Who knew?
Well, I knew. I knew because I am in that 47 percent.
It’s a pretend society. People go into severe debt so that they can pretend to own a huge house and luxury car. They think their health and job lasts forever, then when it does not, they get bailed.
Well my gold and Bitcoin are not bailing them.
Yup, this article has been discussed here. And I can see why the author isn’t making making ends meet with his writing.
The author could have found some real examples and statistics about real middle-class Americans who got screwed over by structural changes from trickle-down, outsourcing, in-sourcing, automation, war on savers, etc. Instead, the author spends 2/3 of his text whining about himself and his own bad choices. And there’s quote a laundry list of bad choices. The commenters on the article lambaste the author, and justifiably so.
FWIW, Robert Reich’s documentary “Inequality for All” does a much better job.
“Instead, the author spends 2/3 of his text whining about himself and his own bad choices. And there’s quote a laundry list of bad choices.”
My take-away… he was supporting his family, “in a manner that they had become accustomed to.” His income was deteriorating all along, and he closed the gap with credit rather than seek other employment. I really liked the comment (jab), “so how are you going to send your kid’s kids to Standford?”
Union City, CA Housing Market Caves; Prices Plunge 9% YoY As Bay Area Housing Prices Crater
http://www.zillow.com/union-city-ca/home-values/
Arcadia, CA Housing Market Craters; Prices Plunge 10% YoY As LA Area Housing Market Sinks
http://www.zillow.com/arcadia-ca/home-values/
And that is how/when government started to grow exponentially.
And even with all that money coming in - we are trillions in debt.
The FSA votes are expensive.
And wait - a conservative democrat???
——————
“The Forgotten History of the Federal Income Tax”
The Coach’s Team ^ | 4/25/16 | Susan Frickey
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” – The 16th Amendment, Ratified 1913
The birth of the income tax! Prior to 1913, the constitutionally limited responsibilities of the federal government were generally covered by import tariffs. Occasionally, temporary taxes were imposed to pay for wars, but were to be apportioned by the states and could not be direct, personal taxes, according to the Constitution in Article I, sections 2 and 9. W. Cleon Skousen wrote a very informative and entertaining “History of the 16th Amendment”.
Our Founding Fathers, having just rebelled against England because of imposed taxes, were not supporters by any means of a federal tax unless it was apportioned by population so the small states wouldn’t have the same burdens as the bigger states. This was one of the biggest bones of contention in the formation of our government.
The 16th Amendment and the debates regarding it are what spawned the class envy sentiment of “soak the rich,” still present today. Mr. Skousen writes, “In April 1909, Sen. Joseph Bailey, a conservative Democrat from Texas who was opposed to income taxes, decided to embarrass the Republicans by forcing them to openly oppose an income tax bill similar to those which had been introduced in the past – and always shot down by the conservative Republicans (which is how they got labeled “the party of the rich”). He introduced his bill, expecting it to get the usual opposition. However, to his amazement, Teddy Roosevelt and a growing element of liberals in the Republican Party came out in favor of the bill and it looked as though it was going to pass.”
“It turned out that the slogan “soak the rich” had aroused Pavlovian salivation among liberal politicians both Federal and State. The Senate approved the Sixteenth Amendment with an astonishing unanimity of 77-0. The House approved it by a vote of 318-14. The end run of the Republican leadership did indeed backfire. State after state ratified this “soak the rich” amendment until it went into full force and effect on February 12, 1913.”
So, that’s how middle-class Americans became stuck with an ever-increasing income tax burden – all because of the class envy motto of “soak the rich” and political shenanigans that no one thought would pass. Congress had violated two founding natural law principles: “Thou shalt not covet” and “Thou shalt not steal”.
Within five years of ratification, the federal income tax became the principal source of income for the federal government. The first tax ranged from 1% on the first $20,000 of taxable income and was only 7% on incomes above $500,000. In 1943, FDR changed the collection process, creating “withholding from wages and salaries.” Withholding was collected from payrolls before it was even due to be paid by the taxpayer, shifting the tax from its original design as a tax on the wealthy to the masses.
Fast forward to today: according to Pew Research only 38% of taxpayers earn $50,000 or more, but pay almost 95% of all federal income taxes collected.
Former IRS Commissioner T. Coleman Andrews stated, “Please remember that under the Sixteenth Amendment, Congress can take 100% of our income anytime it wants to. This is downright confiscation and cannot be defended on any other grounds.” Supreme Court decisions prior to 1913 agreed with Andrews.
The Senate approved the Sixteenth Amendment with an astonishing unanimity of 77-0. The House approved it by a vote of 318-14.
Wow. That’s about as unanimous as it gets.
Apparently Americans want to soak the rich.
Yeah - it went from 1% tax on the rich
to now the average middle class taxpayer pays 50% of his income to taxes.
Amazing - isn’t it?
It’s not that amazing really. America has changed a lot in the last 100 years. Life was quite miserable back then.
One of 2banana’s favorite posts is about how government meddled in housing, health care, and education, and of course ruined them all. Because they were all so much better when they were available only to the rich.
Irrelevant.
One of 2banana’s favorite posts is about how government meddled in housing, health care, and education, and of course ruined them all. Because they were all so much better when they were available only to the rich.
It is funny how some people have this PollyAnna like vision of the past and how it was so much better back then. They forget that most people died in their late 30’s or early 40’s, and that many did backbreaking work for long hours, for low pay and that young children worked dangerous jobs in sweat shops. Funny how the “invisible hand of the market” did nothing about that.
Irrelevant.
‘were available only to the rich’
When I was a kid if someone went to the doctor they just wrote them a check.
oxide: One of 2banana’s favorite posts is about how government meddled in housing, health care, and education, and of course ruined them all. Because they were all so much better when they were available only to the rich.
I’ve concluded that government interventions help the poor, harm the middle class and have no impact on the rich.
They grant money to the poor, drive prices dramatically up for the middle class, and the rich are not affected because they are not price sensitive, or minimally so.
the rich are not affected because they are not price sensitive, or minimally so.
The rich are not affected because they’ve dog whistled a bunch of poor dupes into voting against their own economic interests, and in the economic interests of the rich.
That’s why we’re supposed to be so concerned about trannies in the girls’ room now. That’s how they herd the sheep.
When I was a kid if someone went to the doctor they just wrote them a check.
When my MIL passed early this year, one of the things we found in her papers was a receipt for the birth of her second son, now roughly 50yrs old. The total bill (hospital stay, doctor, everything) was ~$38 and some change IIRC. My, what a 50 years we’ve had…
Yeah - it went from 1% tax on the rich
to now the average middle class taxpayer pays 50% of his income to taxes.
I thought half of all Americans (the Lucky Duckies) paid no income tax at all.
50%? Maybe if you make 200K and have no tax shelters.
As income inequality continues to grow, the average income becomes much higher than the median.
Not necessarily. If you make enough middle class into poors the median can be still be near average. Like a teeter-totter. Put a billionaire on one end and a million people with $1000 net worth on the other end.
It occurred to me today that my goal should not be to avoid long term realized gains, as long as my ordinary income is the source of most of my taxes.
The goal is to lower your tax rate, not necessarily taxes paid. Be like Warren Buffet and get taxed at the long term capital gain rate. For high gains that is probably the 18% rate.
This is why growth stocks bought low and sold high are good to be in. Yes you have to time the markets on individual stocks.
Find an industry that’s been beaten down and no one likes and that a lot of pundits even on his blog hate. Gold mining is the current one. I think it has several years from here to climb and double digit gains per year.
I like the staffing industry but it’s saturated and I think peaked. I made huge gains in that and sold the last of my stock in 2015. I like to use stock screeners for companies with high book value to price ratio, with more cash than debt, and with insiders buying.
Update: Oil Down 2%; Crude Craters 45% YoY
http://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic
Eventually it’s always down from here for oil.
Global Housing Bubble: “The Canary In Canada’s Real Estate Mine Just Died: Toronto’s Urbancorp Files For Bankruptcy”
http://www.zerohedge.com/news/2016-04-23/canary-canadas-real-estate-mine-just-died-torontos-urbancorp-files-bankruptcy
‘Urbancorp raised 180 million shekels ($48 million) through a bond sale in Israel last year. The bonds plunged to a record low this month after the company announced a delay in 2015 results and the resignation of legal advisers.’
‘The restructuring focuses on six Urbancorp entities in Toronto, which were created for each property. They include the St. Clair Village townhouse project in midtown, which its website says is sold out, and Downsview Park, one of Toronto’s largest residential developments at 300 acres.’
http://www.bloomberg.com/news/articles/2016-04-22/toronto-condo-builder-urbancorp-files-for-debt-restructuring
I guess they paid too much for the land.
Pretty shrewd to be able to swindle the Israelis, gotta give them that.
They didn’t swindle them. I’m sure due diligence was completed. It penciled out. Somebody made some bad calculations/decisions. They are getting burned in Manhattan too.
When I was studying real estate in the 80’s, we were told every building over 13 floors was financed by life insurance companies. That’s probably no longer the case, but long term money is what is behind every tower. You know those annuities and such you hear about on the radio? That’s who is behind these projects. Millions of little old ladies and guys sitting in places like Florida, getting ready to retire.
This is all the horror the central banks have conned us with. There is no free money, they can only create claims on wealth. So all these people are having their retirements whittled down by Bernanke and pals. Bill Gross said months ago that the Fed would have to raise rates because it’s killing pension funds and life insurance companies. He’s right, but the damage is done. Vast sums have been lent to companies like this, based on prices that may turn out to be an “illusion” (remember how often the word illusion was used a few years back?)
“Tellingly, the core PCE also came under scrutiny during the PEAK years of the housing boom because it failed then, as it fails today, to capture the immense drag housing puts on household budgets. Harvard’s Joint Center for Housing Studies most recent data find that almost half of all renters spend more than 30 percent of their income on rent; they call this cohort ‘burdened’ and I’d have to agree. More than a quarter of all renters are ‘severely cost burdened,’ and spend more than half their income, half, on rent. The Harvard data reveal that lower income individuals are even more disproportionately burdened, which distressingly stands to reason.”
“In a recent report titled, ‘The Burden of Shelter,’ Michelle Meyer, Bank of America economist and renowned housing expert, nodded to policymaker’s dilemma: ‘If renters have to allocate more of their disposable income on shelter, there is less money to spend elsewhere, contributing to the disinflationary pressure for consumer goods.’ And that’s just what we’ve seen.”
“As for the prospects for truly normalizing interest rates one day, demographic trends only promise to increase the ranks of severely cost burdened renters in the coming years. Harvard’s data project that due to the rise in minorities and elderly as Baby Boomers age, those who spend more than half on rent will increase by 11 percent over the next decade and that’s IF rental inflation slows to that of income growth.”
“Of course, the opposite scenario unfolding would be ideal – that income growth begins to outpace that of rent inflation. Such an economic miracle, though, will only be possible with a radical change of thinking among policymakers. Policymakers are either blind, or worse, willfully blind to the financial asset price inflation that flashes red today, just as it did during the dotcom and housing bubble eras. If that is the case, the bust to come will be followed by yet another boom in asset prices, one that will require firehoses to douse the flames of impending deflation.”
“At the core of policymakers’ Catch 22 is the fact that there is no easy way out. To borrow from Hoisington’s philosophy – developed countries such as the U.S. are simply too large to devalue their way out of debt by using a depreciating currency to reduce debt loads. That leaves belt tightening which generations of central bankers have been trying to avoid at all costs.”
“Can the same brands of debilitating debt loads that leveled the global economy during the Great Depression be sustained indefinitely? That’s surely the hope as the frequent application of additional debt-creation bandages over the open wounds of high debt levels seem to be the only solution politicians find palatable.”
“Perhaps the privileged skiers atop the world’s financial markets will be nimble enough to avoid sliding on the ice as one season of asset bubble glides into the next creating the illusion of a powdery permanent winter wonderland for a chosen few. Perhaps they can be magically transported from PEAK to PEAK with little in the way of collateral damage.”
“But what of the hard landing on the fully-thawed bare earth at the bottom of the mountain that must be endured by the millions of workers who cannot choose a more accommodating trail to escape their budgetary shackles? Will central bankers always be seemingly divinely endowed with soothing words to calm and assure the masses? After all, inflation in the wise words of central bankers, is only an illusion and does not exist. Except it does exist in a very real way for the masses far below the rarefied air of the lofty PEAKS.”
http://thehousingbubbleblog.com/?p=9299
“we were told every building over 13 floors was financed by life insurance companies.”
I think it’s pretty funny that anyone financed that unlucky 13th floor. What *should* have happened is for banks to finance buildings up to and including 12 floors, and life insurance companies taking over the financing of 14 floors and up. Then no one would build 13-floor buildings.
Lots of buildings already don’t have a 13th floor. One in downtown Bellevue (One Bellevue Center) where I used to work has a 12th, and then a 14th. I always chuckled when I took the stairs between those two floors.
And all of the money spent on this will not be spent in the “real economy”
http://www.thehill.com/policy/healthcare/277347-obamacare-premiums-expected-to-rise-sharply-amid-insurer-losses
Health care is 18% of GDP. Wait until it hits 25% or 30% and tens of millions of baby boomers on Medicare bankrupt the system.
Got Soylent Green? LOLZ
And don’t forget the push to “concierge” general practice doctors; who expect you to prepay them thousands for the privilege of being a patient.
Of course, we know what will happen. People will do what many are already doing with their high deductible plans: they’ll do without seeing a doctor when they get ill.
Everything government touches - it destroys.
Health care
Housing
Higher education
families
great society has 3x the rate of fartherlessness
I just saw this:
Saudi Arabia tries to break ‘dangerous’ addiction to oil
http://money.cnn.com/2016/04/25/news/economy/saudi-arabia-oil-addiction-economy-plan/index.html?iid=hp-stack-dom
My favorite part:
Holy FSA, Batman!
Also, the Saudis need oil to return to $86 a barrel (per the IMF) to make ends meet.
And finally:
I guess it was fun while it lasted.
“Also, the Saudis need oil to return to $86 a barrel (per the IMF) to make ends meet.”
And I need triaxle full of $100’s.
Irrespective of their need, their production cost for a barrel of oil is in the $6 to $7 range.
Oil prices have a long way to fall.
The FSA army taken to its logical conclusion.
It works - if you sit on the world’s oil reserves.
When it runs out - you turn into Syria.
“Also, the Saudis need oil to return to $86 a barrel (per the IMF) to make ends meet.”
Sure, if by “making ends meet” you mean employing 70% of your country’s population at ridiculous wages.
I require $1,000,000 per year to make ends meet (in the lifestyle to which I would like to become accustomed.)
This is a population which, a couple of generations ago, was wandering around the desert. I kinda think there’s a little fat they could trim.
Agree. $86/bbl buys a lot of government services. They must have killer Parks and Rec.
Colleyville, TX Housing Market Affordable Grows; Prices Fall 21% YoY As Dramatically Lower Oil Prices Lift The Economy
http://www.zillow.com/colleyville-tx/home-values/
The City of Cleveland is paying Tamir Rice’s family $6M to settle for fatally shooting him in 2014.
No “smaller government” or “less regulation” or “lower taxes” happening here.
A long time run democrat city totally controlled by public union goons and pandering to a FSA.
It will end like Chicago and Detroit.
Drudge Report links to a New York Times (real journalists) article on life in San Francisco:
http://www.nytimes.com/2016/04/25/us/san-francisco-torn-as-some-see-street-behavior-worsen.html?_r=0
$1.2M for a 800 square foot shack and this can all be yours.
Crime, poverty, sexual predators…… That’s California.
If the city government does not enforce the laws , the citizens will think there is no punishment for breaking the law, and be more disruptive in their personal actions.
Strong law enforcement may be unobtainable in some cities due to the attitude of the governing body.
the body politic does not seem to want to punish people for crime in any way other than to re-educate the criminal!
Broken windows theory may or may not be true, but I wouldn’t want to be a young black male in Giuliani’s New York.
I wonder how many of these crimes are being committed by ex-felons that were formally detained for felonies that were reduced to misdemeanors under prop 47: Passed by voters in November 2014 and effective immediately, Proposition 47 downgraded many drug possession and theft crimes from felonies to misdemeanors.
http://www.nolo.com/legal-encyclopedia/california-prop-47
Calling Rio……
What is your sense now inside Brazil given this?
Sad tale of a once prosperous country.
https://joelhirst.wordpress.com/2016/04/23/the-suicide-of-venezuela/
Venezuela only failed because they didn’t have the right socialists/progressives in power.
Hillary and obama are the right people.
The FSA votes. And they got what they voted for…
—————-
Tonight there are no lights. Like the New York City of Ayn Rand’s “Atlas Shrugged”, the eyes of the country were plucked out to feed the starving beggars in abandoned occupied buildings which were once luxury apartments. They blame the weather – the government does – like the tribal shamans of old who made sacrifices to the gods in the hopes of an intervention. There is no food either; they tell the people to hold on, to raise chickens on the terraces of their once-glamorous apartments. There is no water – and they give lessons on state TV of how to wash with a cup of water. The money is worthless; people now pay with potatoes, if they can find them. Doctors operate using the light of their smart phones; when there is power enough to charge them. Without anesthesia, of course – or antibiotics, like the days before the advent of modern medicine. The phone service has been cut – soon the internet will go and an all-pervading darkness will fall over a feral land.
Lutz, FL Housing Market Housing Affordability Rises; Prices Plunge 16% YoY
http://www.zillow.com/lutz-fl/home-values/
In the meantime, “trickle down”’s favorite Governor, Sam Brownback, and his Republican lap-dogs in the state Senate and House, try to come up with answers for the annual budget shortfall.
Last year……..cuts to programs benefitting poor people, increase taxes on poor people (cigarrette, sales tax increases, including food and drugs)
This year…….mortgage the future.
http://tinyurl.com/ht9×8vv
- Steal/transfer more money from the State Highway fund. It’s not like anyone has missed the 1.5 billion stolen/transferred from the fund since 2011 so far. Except maybe all of the construction companies and heavy equipment dealers/repair shops. I guess that zero percent tax rate doesn’t help much when you have zero income.
- Delay /”reschedule” a $99 million payment to the Kansas State employee pension fund. (All state employees are deadbeats/takers anyway……)
- Cut the state university budget by another 3% (after a 3% cut just a few months ago).
No big deal……….university educational money is just a subsidy that goes to other states. Because anyone smart enough to get a college degree GTFO of Kansas as soon as they graduate.
- Go to the “Fast Cash for your settlement” guys, and sell off the state’s tobacco settlement money for a quick, one time payment.
Tax increases of any kind, including on the 330,000 farmers/small businesses/LLCs who had their taxes cut to zero back in 2011? Forget about it. Raising taxes on the “producers” is a crime against humanity.
Brownback says things would be hunky-dory, if it were not for the screwed up commodities markets, and the crappy airplane sales.
But who screwed up the commodities markets, and who doesn’t buy bottom feeder jets like Cessna Citations and Learjets? The same guys he just gave a giant tax cut.
A dirty little secret……..Kansas makes very little from the sale of aircraft and parts. Most sales taxes are avoided by closing the sale on aircraft in Deleware. And they don’t make much off sales taxes on parts and maintenance labor, because out-of state airplanes don’t pay sales taxes on parts/labor, either here, or “at home”.
The NBAA/airplane owners convinced one state to exempt parts and maintenance labor from state sales taxes to create “growth”, then bash all of the other states with the threat of “taking their business elsewhere”, unless the other states did the same. So we do all of our schedule major maintenance out of state, and pay zero sales taxes on anything.
A $1 million dollar invoice on a large business jet for inspections/engine overhaul/avionics and interior updates/paint is not uncommon. Assuming a 6% sales tax rate that hasn’t been collected……..$60K here, $60K there, pretty soon, you are talking about some real money.
The only benefit most states see from aircraft maintenance are the income taxes slapped on the employees. Some of which goes back to the employers for “creating jobs”. Some goes back as Industrial Revenue Bonds.
I can only assume the airplane business is just the tip of the iceberg.
no worries KS will be wonderful after they raise taxes
There is no problem in the world that can’t be solved with bigger government and higher taxes.
And when taxes aren’t high enough just use civil forfeiture to fill the gap.
No “smaller government” or “less regulation” or “lower taxes” happening there.
Or we could cut spending.
Crazy talk, I know.
And that right there is what civil forfeiture is all about. Out of control, overreaching government.
Or we could cut spending.
Small business owners love to say that, that is until it’s their ox that gets gored.
“Projects in Miami and New York have also benefitted from the EB-5 visa program – the ‘crack cocaine of real estate,’ according to one Manhattan broker – that puts foreign nationals on a path to US citizenship if they invest between $500,000 to $1m in a US project.”
Pardon me, but isn’t the EB-5 visa program only supposed to be used to build businesses in rural communities?
If you see anyone suspicious in your neighborhood, it might be a realtor. Lock your doors and call the authorities immediately.
Been listening to live recordings of Genesis on the youtubes lately and the song that comes to mind to describe the times in which we live is:
“Robbery, Assault & Battery”
The streets were deserted though the police were alerted,
They considered the phone call a hoax.
Furtively glancing then jauntily prancing
The youth caught the guards unaware.
Slipping between them he ought to have seen then
The eyes and their owner so near.
With torch shining bright he strode on in the night
Till he came to the room with the safe.
“Hello son, I hope you’re having fun.”
“You’ve got it wrong Sir, I’m only the cleaner.”
With that he fired, the other saying as he died,
“You’ve done me wrong,” it’s the same old song forever.
Robbery, assault and battery,
The felon and his felony.
Robbery, assault and battery,
The felon and his felony.
Picked up the diamonds and bundles of fivers
He pushed them well down in his sack.
But the alarm had been sounded, he was completely surrounded
But he had some more tricks up his sleeve.
“Come outside with your hands held high.”
“You’ll not get me alive Sir, I promise you that Sir.”
With that he fired, the other saying as he died
“You’ve done me wrong,” it’s the same old song forever.
Robbery, assault and battery,
The felon and his felony.
Robbery, assault and battery,
The felon and his felony.
“He’s leaving via the roof, the bastard’s got away.
God always fights on the side of the bad man.”
“I’ve got clean away but I’ll be back some day,
Just the combination will have changed.
Some day they’ll catch me, to a chain they’ll attach me,
Until that day I’ll ride the old crime wave.
If they try to hold me for trial
I’ll stay out of jail by paying my bail
And after I’ll go to the court of appeal saying
“You’ve done me wrong,” it’s the same old song forever.”
Done me wrong - same old song - done me wrong.
Genesis - Illegal Alien (1983) - YouTube
http://www.youtube.com/watch?v=_61hzuGGJX0 - 340k -
It’s no fun being an illegal alien, I tell ya
It’s no fun being an illegal alien, no no no no no
Consideration for your fellow man
Would not hurt anybody, it sure fits in with my plan
Over the border, there lies the promised land
Where everything comes easy, you just hold out your hand
Even the MSM is finding it difficult to ignore how blatantly the Fed exceeded its powers and played favorites during the (continuing) financial crisis.
http://www.marketwatch.com/story/how-the-fed-ignored-the-constitution-and-played-favorites-during-the-crisis-2016-04-25
The fact that Stanley Fischer wants an explicit 3rd Mandate, to stabilize financial markets, means he wants to explicitly indemnify Wall Street and further entrench the plutocracy. Once the Fed is explicitly indemnifying Wall Street (instead of implicitly, as it is now, with back-of-hand-to-forehead theater about how it’s just so terrible but oh so necessary for the little guy), is merely entrenching the plutonomy and the money pipeline to politicians, and the revolving door between regulators and Wall Street.
Why bother setting forth an explicit third mandate when the implicit one works so well every time a systemically important institution blows up?
US-style mortgage fraud comes to Australia, aided and abetted by regulators who turn a blind eye to the really big fish and only go after the small fry (sound familiar?).
http://wolfstreet.com/2016/04/25/u-s-style-mortgage-fraud-australian-banks-rmbs-control-fraud/
“Anyone who says the American economy is in decline is peddling fiction.”
– Barak Obama, 2016 SOTU Address.
http://www.businessinsider.com/a-new-report-signals-disaster-for-american-shopping-malls-2016-4
David Bowie — After Today (1975 album outtake):
https://www.youtube.com/watch?v=efZChbxtqbM
Ice T — Mic Contract:
https://www.youtube.com/watch?v=bc5RXiTJFrA
The problem is that despite some signs of excess are visible, buyers are crazy and still entering the Canadian RE market - sales in March were extremely high in Toronto. I agree that the biggest incentive are low interest rates. But still, some of the housing is so overpriced, that I’m surprised that people are willing to buy in, hoping that future will bring increase in prices. Which it won’t, I assume.
_