A Potentially Fast Way To Get Poor
A report from the Arizona Daily Star. “Low interest rates and higher home values have more Tucsonans taking out loans against their houses — a move mortgage lenders and financial planners warn can be risky. Paul Volpe, senior vice president of Tucson-based Nova Home Loans, said the last two months have been the busiest for refinancing in almost 10 years. Debt consolidation and home improvement are the biggest reasons cited for the refinancing, Volpe said, but several customers are looking for cash to buy new cars. ‘People are calling to take cash out,’ he said. ‘Values have appreciated enough.”
“JKR Investment Group Inc. reports a 68 percent increase in cash-out refinancing in the second quarter of 2016 compared to last year. One financial planner’s advise to homeowners considering cash-out refinancing? ‘Be very, very, very careful and thoughtful,’ said Linda Stratton, of Oro Valley. ‘It’s, I think, a potentially fast way to get poor. People used to say, ‘You never lose money on real estate’ and 2008 showed us otherwise.’”
“Stratton strongly discourages using a home to finance luxuries. ‘If people cash out on home equity to spend on vacation or other wishes, it means they don’t have money elsewhere,’ she said. If a client insists on using their equity in a manner Stratton advises against, ‘I’d pull some newspaper articles from 2008 and make them read it,’ she said. ‘We really don’t have long-term memory … it’s human behavior.’”
The Daily Journal of Commerce in Oregon. “After a scorching run of apartment construction, exploding rents and nearly nonexistent vacancies, the multifamily market is beginning to show signs of calming. Incentives are coming back as building owners face more competition to lease up their properties. ‘People are shopping around, which is not unusual when there’s a lot to choose from,’ said Tom DiChiara, principal at Slabtown developer Cairn Pacific. ‘They have some options now. I think that’s going to become more of the norm in the next six months to a year.’”
“Multifamily units permitted by the city of Portland more than quadrupled between 2011 and 2014. There are also some signs that tenants are beginning to balk at rent increases. ‘What I have heard is that for the first time, owners are getting a little pushback,’ said Gary Winkler, a Portland-based multifamily broker. Also, filling apartment vacancies is taking longer, Winkler said. ‘Where we used to be able to get someone in the door within a couple of days, it’s taking a little longer than that,’ he said.”
The San Mateo Daily Journal in California. “A historically tight rental market along the Peninsula may be loosening some, causing prices to drop slightly in the process and perhaps establishing a trend which some real estate experts believe will continue. Ron Morley, of Nest Property in Burlingame, said he believes San Mateo County is on the path to becoming less expensive too, as development continues and more apartment buildings are erected in communities such as San Mateo and Redwood City. The increased availability of apartments has driven down the asking price of some rooms, said Morley, and those listed above the market rate tend to linger until the owner is forced to drop the cost. ‘All sorts of new apartment buildings are coming on the market, and they are filling the lower and middle markets, so that part of the demand is starting to be satisfied,’ he said.”
“A similar trend is taking hold in San Francisco as well, according to Adam Szilagyi, a property manager and Realtor with Property Management SF. A study from ApartmentList.com shows rental prices in San Francisco have started to dip since last year. Szilagyi was quick to note though that he did not believe the minimal downtick was indicative of anything larger than slowing from what had been racing at an unsustainable pace. ‘The city has slowed down from the craziness of the past couple years. I don’t think that the housing prices and rental market was sustainable,’ he said. ‘But it’s not a recession. I think it is more of a market correction.’”
Bloomberg on New York. “Manhattan renters left their apartments in search of better deals last month, pushing back against landlord price increases and taking advantage of a flood of new choices on the market. Apartment dwellers are being helped by a surge of new listings, which is giving tenants the ability to bargain in a month when landlords typically don’t. The number of apartments marketed for rent at the end of June jumped 27 percent from last year to 7,442, according to the report by appraiser Miller Samuel Inc. and broker Douglas Elliman Real Estate.”
“‘If you’re an owner, this is prime time — May, June, July, August — so they feel emboldened to push prices,’ said Gary Malin, president of Citi Habitats, which released its own report on the Manhattan rental market. Apartment seekers are ‘just not willing to bite at certain prices at this moment because they feel it’s a little bit out of reach for them. If they can’t find what they want, they’ll either wait a little longer or they’ll move to a different borough.’”
The Sun Sentinel in Florida. “More than a decade ago, when Alan Hess was looking to buy a home, The Estates of Boynton Waters caught his eye. Today, Hess said he’s still living in a construction zone. Of the more than 100 homes in the community, two dozen remain unfinished, with some only concrete shells. He and some of his neighbors are also upset that Palm Beach County in May gave Kennelly two more years to finish 11 of the homes that were deemed structurally unsafe. ‘When they say two years, that, to us, is a lifetime,’ homeowner Claudia Langieri said.”
“Lisa Glennon lives across from one of the shell homes, and a construction crane has been parked in the vacant lot next to her for weeks, she said. Like the other residents, she’s fed up living in a partially built community. Glennon said she’s leery of entertaining guests because she’s out of excuses for why the community looks the way it does. ‘It’s embarrassing,’ she said.”
“Residents say they’re concerned about sagging property values. Langieri paid $837,448 in 2006, but the county assessed the home in 2015 at $398,847, property records show. Glennon’s home was assessed last year at $437,671, after she paid $790,492 in 2006. Hess’ home is appraised at about half of his $670,000 purchase price. Brenda Fennell bought in the development in 2012. She said her mistake was not talking to existing residents beforehand. ‘If I had known about any of this,’ she said, ‘I never would have bought this house. Never.’”
From Forbes. “After Friday’s market close, people remarked that both the bond market and the stock market were at all time highs. It’s not supposed to work that way. Now, it is a common misconception that bonds always are negatively correlated with stocks. Actually, over the long term, they have a correlation of zero with stocks. But they spend most of their time in one of two regimes, either strongly positively correlated or strongly negatively correlated. Over time it works out to be zero. Yet here we are, with stocks and bonds on the highs.”
“David Zervos, market strategist at Jefferies, commented that ‘Central banks may finally be taking this too far.’”
“We’ve been having a lot of bubbles in recent years (a feature of a world populated with central banks), from the dot-com bubble in 2000 to the housing bubble in 2007 to what people are calling the ‘central bank bubble’ or ‘the everything bubble’ now. Chances are, this could be the biggest bubble of all, and perhaps the most dangerous.”
“I don’t think that stocks are in bubble territory, but bonds certainly are, and if we had a genuine bond market meltdown, a rapid backup in rates of 200 basis points, the losses inflicted on investors worldwide would be more severe than any crash we’ve had to date. Remember, when interest rates are negative, the duration of the bond is actually longer than the maturity. A Swiss 50-year bond trading at negative yields will lose more than 50 percent of its value if interest rates go up just one percent. Think about that.”
‘Foraying out of the Mission and into neighboring Potrero HIll for a moment, a reader pointed out to me recently that a second large planned development there is now up for sale. Meaning a developer went to the trouble of planning, proposing, and getting all the permits squared away for an enormous housing project (172 units) and is now looking to get rid of the site and entitlements instead of running the risk of building really expensive apartments that won’t get rented.’
‘Which might not really matter to your average layperson who doesn’t have piles of money lying around to invest into real estate, but could be relevant, as the reader points out, to the housing and even homelessness crisis: A 48Hills investigation indicated that some 32 percent of new market rate units have absentee owners, and though they could possibly be rented out to long term residents, it’s more likely that they sit empty or are used as vacation rentals.’
a developer went to the trouble of planning, proposing, and getting all the permits squared away for an enormous housing project (172 units) ??
And great expense I might add…The pro forma does not look so hot right now and they likely cannot get the financing to complete the project…At least the amount of leverage that they anticipated meaning its more cash up front to get the project completed…
They got schlonged.
Or their airbnb plans may be going up in smoke, if the city is able to enforce their rules:
http://fortune.com/2016/06/27/airbnb-san-francisco-lawsuit/
‘People are shopping around, which is not unusual when there’s a lot to choose from…They have some options now. I think that’s going to become more of the norm in the next six months to a year.’
‘Multifamily units permitted by the city of Portland more than quadrupled between 2011 and 2014. There are also some signs that tenants are beginning to balk at rent increases. ‘What I have heard is that for the first time, owners are getting a little pushback’
It’s not the first time. Maybe the first time since you got out of diapers, but it’s not the first time.
Eh multifamily units. That seems to be the only new construction I see nowadays even in suburbia. Back in VaBeach, this huge chunk of land in the middle of two busy roadways/shopping plazas was farm land for the longest time. Finally Dragas Properties got their hands on it and filled it with nothing but 4-5 multi-unit “townhomes”, and on the adjacent chunk of land 5 story apartment complexes.
Where have you been? Nobody has built a new detached SFH under 1500 sq ft since 1990.*
In my area, developers have been salivating over the Civil War battlefields for decades. Imagine how many luxury townhomes from the mid $550’s you could fit onto First Manassas!
—————
*unless you count tiny houses, which go to the other extreme. It was only a couple of weeks ago that I discovered that HGTV devoted Monday evenings to tiny house living.
I’m wondering when developers start pitching the ideas of taking over cemeteries. In the UK they cremate to save land since its a precious commodity out there. Just in my little New England town there are 3 HUGE cemeteries, and the median home price is $300,000 for 100 yr old shacks.
Yet a 20 year old shack is the same grossly inflated price. Doesn’t make much sense does it.
‘Langieri paid $837,448 in 2006, but the county assessed the home in 2015 at $398,847, property records show. Glennon’s home was assessed last year at $437,671, after she paid $790,492 in 2006. Hess’ home is appraised at about half of his $670,000 purchase price. Brenda Fennell bought in the development in 2012. She said her mistake was not talking to existing residents beforehand. ‘If I had known about any of this,’ she said, ‘I never would have bought this house’
Well Brenda, these other FB’s paid way too much 6 years before you did. Could you not see the unfinished shacks all over the place?
It’s cheaper than renting.
I used the Google and looked at the development … just a collection of depressing cookie-cutter McMansions between the Turnpike and I-95.
And they bought in 2006, which was very near the peak of the insanity in this state.
Brenda, however, snapped up a sweet deal:
‘Brenda Fennell bought in the development in 2012′
How could she not see the unfinished deadzone construction? Did she just sign/buy and show up after the fact? Also depending on when Ms. Brenda bought in 2012, she didnt even buy at the low….
Look at that depreciation for some of those folks, $837k to $398k…no worries only -53% over 9 yrs. They could have just parked $50,000 into 10Y Treasuries lol and been happy with 1.25% yield.
The houses are zero-lot-line architectural insults, with staircases no less. WTH is any retiree — or anyone for that matter — doing in one of those? And it’s *just* a house. That kind of money should come with a golf course and a pool.
http://wolfstreet.com/2016/07/10/contagion-from-italian-banking-meltdown-apart-french-german-banks/
Contagion is the reason Italy’s banking crisis is all of a sudden Europe’s biggest existential threat. Greece’s intractable problems are out of sight, out of mind; Brexit momentarily spooked investors and bankers; but Italy’s banking woes have the potential to wipe out investors and undo over 60 years of supranational state-building in Europe.
The last few days have seen growing calls for taxpayer-funded state intervention, a practice that was supposed to have been consigned to the annals of history by Europe’s enactment of new bail-in rules on Jan 1, 2016. The idea behind the new legislation was simple: never again would taxpayers be left exclusively holding the tab for European banks’ insolvency issues while bondholders were getting bailed out. But even before the new rules have been tried out, they are about to be broken, or at least bent beyond all recognition.
Meanwhile, the stealth Chinese devaluation continues apace.
http://www.marketwatch.com/investing/currency/usdcny?mod=MW_story_quote
Meanwhile, China is throwing its weight around in the South China Sea dispute.
https://www.theguardian.com/world/2016/jul/11/south-china-sea-state-media-claims-beijing-is-the-victim-as-court-ruling-nears
Too bad our Nobel Peace Prize Laureate prez was unable to make any progress whatsoever with this issue.
Yeah we only deployed two full aircraft carriers out there to loiter and maintain the peace….Nvm the fact that with one carrier comes and entire battlegroup of dozens of destroyers, cruisers, submarines, and support vessels.
That’s nice. Meanwhile, the dispute has not been settled. Or maybe you think the best outcome is for the US to get involved in another shooting war?
“Investors” in these Ponzi markets, beware.
http://www.zerohedge.com/news/2016-07-11/2007-all-over-again-banking-crisis-imminent
More financial crack cocaine for the “markets.”
http://www.zerohedge.com/news/2016-07-11/sp-500-open-all-time-highs-after-japan-soars-yen-plunges-jpy10-trillion-stimulus
So all those zillions that evaporated after Brexit have now recrystallized? You mean the sky wasn’t falling after all? Imagine that, lol
Psh, within a couple of hours the central banks were out promising defense of money an markets. Yellen promised liquidity, ECB promised anything it had in its arsenal.
“Low interest rates and higher home values have more Tucsonans taking out loans against their houses …”
There it is folks, proof positive: A nation of dummys.
“… a move mortgage lenders and financial planners warn can be risky.”
“Risky”. No sh1t.
Risky for some, enormously profitable for others.
1. Dumb ‘em down.
2. Profit.
“‘People are calling to take cash out,’ he said. ‘Values have appreciated enough”.”
Values! Bahahahahahahahaha … prices have gone up because lots of dummys have pushed them up and this particular dummy thinks of these pushed-up prices as “appreciated values”. Bahahahahahahahaha … we shall see just how solid these “appreciated values” are when prices one again perform a spectacular U-turn and decide to head south and leave these debt-laden equity cashed-out dummys a bit stranded. Quite a bit stranded.
Bahahahahahaha … price generated equity is a bit fleeting but as for the debt that is backed by this fleeting equity? Not so much.
A lesson that never seems to be learned, and am I ever glad because this means that:
Pukes work, bankers reap. Pukes forever work, bankers forever reap.
God’s Plan. And a nation full of dummys allows God’s Plan to be fulfilled.
“‘I’d pull some newspaper articles from 2008 and make them read it,’ she said. ‘We really don’t have long-term memory … it’s human behavior.’”
“Long-term memory”? Bahahahahaha … the article was from 2008 and this is considered “long-term”? That’s only EIGHT YEARS!
If they think of eight years as long-term then what do they think of thirty-years as in thirty-year mortgages?
“When you combine ignorance and borrowed money, the consequences can get interesting.” - Warren Buffett
I’ll say. Bahahahahahahahahahaha.
What is the average “lifespan” of a 30 year mortgage? (from start to sale, refi, payoff, foreclosure etc.)
Annie Kruger, Preparing to buy a home? Ask us ANYTHING.
Statistically, it is five to seven years which is why the amortization calculation is 97% interest or more at the beginning of a mortgage repayment term and goes down very slowly (as you near the end of the term of the mortgage, principle becomes the largest part of the payment). That way, even though people, on average, on keep homes for five to seven years, the mortgage lender still makes much of the interest it would have earned if the mortgage had not paid off.
Dumb or smart aside, we can expect what we saw before; pull out the bubble equity and when prices fall stop making payments and live in the shack free for several years. They’ll be able to buy across the street for a fraction and probably have government assistance to do so.
It would be quite interesting to know how many people successfully employed your strategy to come out better financially than they would have by renting.
I think it depends on the state. Judicial foreclosure process plus non-recourse mortgages plus a state government aggressively limiting foreclosure.
I personally know a guy (a felon in Maryland) who was sued in a foreclosure action in 2010, and sold this year. I doubt he made a payment since 2010.
All the cool kids are doing it.
“All the
cool kidsDebtDonkeys are doing it.”fixt
“… a move mortgage lenders and financial planners warn can be risky.”
Aren’t almost all of these loans federally guaranteed?
I’m missing the risky part…who is at risk here?
3 reasons why you shouldn’t buy into the S&P 500’s breakout effort
By Victor Reklaitis
Published: July 11, 2016 7:27 a.m. ET
Critical information before the U.S. market’s open
http://www.marketwatch.com/story/3-reasons-why-you-shouldnt-buy-into-the-sp-500s-breakout-effort-2016-07-11
S&P 500 near record highs? Treasury yields at lows? Something’s gotta give
By Mark DeCambre
Published: July 11, 2016 7:30 a.m. ET
S&P hasn’t hit a record high with 10-year below 2% since 2013
http://www.marketwatch.com/story/sp-500-near-record-highs-treasury-yields-at-lows-somethings-gotta-give-2016-07-08
9 Ways Near-Record Low Mortgage Refinance Rates Are Helping Homeowners Now
http://themortgagereports.com/21246/9-ways-take-advantage-mortgage-refinance-rates
DONT FIGHT THE FED! LMFAO
“We’ve been having a lot of bubbles in recent years (a feature of a world populated with central banks), from the dot-com bubble in 2000 to the housing bubble in 2007 to what people are calling the ‘central bank bubble’ or ‘the everything bubble’ now. Chances are, this could be the biggest bubble of all, and perhaps the most dangerous.”
Everyone except for central bankers themselves seems perfectly fine with blaming all the froth currently seen in almost every asset market on the present globalized easy money central banking policy regime. One has to wonder if central bankers will ever come around to accept culpability.
“One has to wonder if central bankers will ever come around to accept culpability.”
Shirley, you …
Being jooish means never saying sorry.
The sheeple will never demand accountability or consequences for the racketeers and counterfeiters at the Fed. Instead, they’ll go on bending over for the Oligopoly by voting for its annointed ones.
Today’s 3.5% down payment home buyer = tomorrow’s underwater housing price collapse victim.
Try not to get stucco!
But stucco exteriors go so nice with Home Depot backsplash kits and Pergo flooring
MarketWatch dot com
Brexit at Wimbledon: Vote costs Serena $380,000 in prize money
By Sara Sjolin
Published: July 11, 2016 4:49 a.m. ET
Pound slump deals blow to Wimbledon winner
Serena Williams won her 7th Wimbledon title on Saturday
The overall economic impact of the U.K.’s Brexit vote is still uncertain, but this weekend it became very real for U.S. tennis star Serena Williams, who saw a major blow to her Wimbledon prize money.
After beating Angelique Kerber by 7-5, 6-3 in Saturday’s women’s final, the U.S. tennis ace will claim the £2 million winning prize, the equivalent of $2.592 million at Sunday’s exchange rate.
However, had the tournament happened just before the U.K.’s Brexit vote on June 23, Williams would have walked away with $2.9742 million in prize money, meaning she’s missed out on $382,200 because of the pound’s slide. Since the referendum, sterling (GBPUSD, +0.2779%) has stumbled almost 14% to trade around a 31-year low.
…
I thought devaluing your currency is a good policy.
I hope she doesn’t go hungry due to this.
She probably receives more $$ just from Gatorade, let alone Nike
Bahamas tells its citizens traveling to U.S.: Be careful
By Azadeh Ansari, CNN
Updated 2:50 PM ET, Sun July 10, 2016
(CNN)The Bahamas’ Ministry of Foreign Affairs and Immigration is warning its citizens traveling to the United States of “recent tensions in some American cities over shootings of young black males by police officers.”
The government of the majority-black Caribbean nation emphasized in an statement Friday that its travelers should avoid crowds and demonstrations in the U.S. Young men, specifically, should “exercise extreme caution in affected cities in their interactions with the police … Do not be confrontational and cooperate.”
This is not the first time in recent months that a government has issued travel advisories for its citizens heading to the United States.
In April, the UK Foreign Office cautioned its LGBT over controversial legislation passed in North Carolina and Mississippi.
Good advice for anyone traveling to a banana republic nation: Be careful!
Indeed. We enjoy a little better odds, but cops will happily shoot a white boy.
Heh, I’m here to tell you that when it comes to police harassment, it just might be one of the few truly equal opportunity experiences available these days. You haven’t lived until you’ve been a victim of mistaken identity. And my experience was relatively mild.
A little hint for you renters out there: if you can, try to find out who rented your house or apartment prior to signing a lease and if they’re wanted by the law for any reason.
Another hint: Bounty hunters will be more polite and reasonable than the police.
There’s something happening here
But what it is ain’t exactly clear
There’s a man with a gun over there
Telling me I got to beware
I think it’s time we stop
Children, what’s that sound?
Everybody look - what’s going down?
There’s battle lines being drawn
Nobody’s right if everybody’s wrong
And Yahoo has been running this going on two weeks:
“Why Uber is the perfect job my 70-year-old father”
‘The CEOs of two of the largest U.S companies — Microsoft and GE — pushed back strongly against a political tide that threatens to weaken America’s ties to the global economy. Microsoft CEO Satya Nadella took aim at American trade policies that would prevent the country from remaining a “beacon of progress” on the world stage.’
“Right now what I’m looking for is the politics in our country to get to a place where people can win elections by making a case for both globalization and addressing the inequities that do exist in our society,” Nadella said. “That’s where we need to get to. It can’t be one versus the other.”
Gosh Satya, is your dad 70 years old and driving for uber? Why is he still working at 70? What happened to his pension? Since when was a lower than minimum wage job that wears out your car a “perfect” job?
Oh, that’s right. You and yours are all set up. Beacon of progress…
“Why Uber is the perfect job my 70-year-old father”
I got to ride through the finance district in SF with an elderly lady driving Uber. She was completely out of her depth, just couldn’t process fast enough. People were honking and hollering… felt bad for her.
Right now what I’m looking for is the politics in our country to get to a place where people can win elections by making a case for both globalization
Do these people even listen to what they’re saying? Do they think that the little people won’t reach a breaking point and flip over the apple cart? Or do they believe that it’ll just take the right candidate with the right kind of charisma and a silver tongue in his mouth to get the proles to continue voting for more of the same?
One thing is certain, they’re worried, very worried.
charisma and a silver tongue in his mouth to get the proles to continue voting for more of the same?
They had Obama for 8 yrs. I think the shtick has run its course.
“…by making a case for both globalization and addressing the inequities that do exist in our society,” ”
You can’t fight the fire while feeding the flame…
“Why Uber is the perfect job my 70-year-old father”
Hmm…70 seems old until I think I have 13 years to get there. Hopefully that 70 year old is clear headed and sharp still. David Bowie was 69 when he died and I suppose sharp, not addle-brained.
But I cannot imagine why someone enjoys driving around, sharp-minded and careful or not. Many other people are not paying attention on the roads. 33,000 people died on the roads in 2015. Get me in a location with dedicated bike paths and I would not care if my license to drive a car would be gone or not
Oh, don’t worry about it. When you’re senile, you don’t have problems. The people around you have problems.
Shoot, I’m in my 20s and I dread driving in cities. Even if you;re quick, you just arent quick enough for some a-holes, constant honking, pedestrians running every which way, cyclists…
When I was in London last yr, I had to drive from the center of the city to 2 hrs north, I could not wait to get to rural stretches of their highway
“You haven’t lived until you’ve been a victim of mistaken identity.”
I was working for moving company in Cos Cob Connecticut in 1981. A couple of days before Christmas I got sent with a driver to New Jersey for a pick up. We stopped at a truck stop about 8 AM in New Jersey to get some coffee. We went to get back on the road but when we hit the entrance ramp we got pulled over. Thinking we were being pulled over for a bad taillight or something I told the driver I was going to run back in the store and get whatever. I opened my door and got one foot out when I noticed the New Jersey State Trooper with his gun pointed at my head (a definite oh sh#t moment).
According to them, the driver and I matched the description of two of the three guys who did this to a tee.
HIGHLY DECORATED STATE TROPPER SLAIN ON I-80
By ROBERT HANLEY
Published: December 22, 1981
A highly decorated New Jersey state trooper wearing a bulletproof vest was killed in a shootout yesterday afternoon on an isolated stretch of Interstate 80 near the Pennsylvania border.
The slain trooper, Philip Lamonaco, 32 years old, was the first state policeman shot in the line of duty since 1973. Three 9 millimeter bullets struck Trooper Lamonaco in the chest, with at least two of the bullets penetrating the vest, the state police said.
Before falling mortally wounded on the roadway, the state trooper managed to fire at least six shots from his .38-caliber service revolver at his assailants before, or possibly as, they sped away in a car, the police said.
The getaway vehicle, a 1977 blue Chevrolet Nova with Connecticut license plates, was found abandoned at about 7 P.M., some three hours after the shooting, on a narrow country road in Knowlton Township, a few miles away in Warren County. Window Shot Out
The car’s rear window had been shot out. There were several bullet holes in its exterior, the state police said. Bloodstains were found inside the car.
Bloodhounds were taken to Knowlton Township last night to search the surrounding farmlands and woods for three men thought to have been in the car. In Connecticut, authorities said they had no indication the owner of the vehicle had reported its theft.
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We were there for over an hour while they made sure we were who we said we were.
One of the most dangerous interstate roads is I-10 between Tucson and the California border. I knew for years of all the bad accidents, but only recently read an article that it’s one of the ten most dangerous routes in the U.S. So I don’t care much for cars.
The dedicated bike paths near me in California make you feel you’ve been dropped into the countryside. The closest one is along a scenic creek and lots of shade, some parts have Eucalyptus trees (widow makers). It puts Scottsdale’s greenbelt bike path to shame. Then in Irvine there are 54 miles of dedicated bike paths, one of which I take to the beach from my office. I see older folks all the time with skinny bodies and powerful legs on these paths. I am pretty fast myself and can still outdistance younger people but my medicine I have to take limits my heart beats.
“Get me in a location with dedicated bike paths and I would not care if my license to drive a car would be gone or not.”
Please put in a request for a grocery delivery service too, Bill. I hauled my own groceries for 15 years (bike and back), and I don’t recommend it for anyone.
They had Obama for 8 yrs. I think the shtick has run its course.
Never underestimate the staying power of stupid.
Phony, if I was you I would have gotten an attorney regardless afterward and see if there is any grounds to sue the cop who put a gun against your head. The b^stard.
“the cop who put a gun against your head.”
It was about 4 feet away and pointed up. He was on the ground and I was attempting to get out of a 26′ straight truck cab.
Stopped my @ss from moving in a hurry.
“Get me in a location with dedicated bike paths and I would not care if my license to drive a car would be gone or not”
Same here. If I could afford to live within 3 miles of work and ride a bicycle every day, I certainly would do so.
Thanks to bubbly valuations, this is not an option … yet.
“Thinking we were being pulled over for a bad taillight or something…”
EXCLUSIVE: ‘Both lights were clearly on’ - Witness rubbishes police claim that black man whose death was streamed on Facebook had busted taillight on his car when he was pulled over
Gregory Ford shares new video of the aftermath of the police shooting of Philando Castile and casts doubt on police account of event
Cops say he was pulled over by Officer Jeronimo Yanez because of a busted taillight on the Oldsmobile Aurora
But Ford, 42, says he could clearly see the taillights on the car were working when he was at scene minutes later
‘The rear lights were on. The car was still running and it was night-time, so you could clearly see both lights were on.’
…
“One of the most dangerous interstate roads is I-10 between Tucson and the California border. I knew for years of all the bad accidents, but only recently read an article that it’s one of the ten most dangerous routes in the U.S.”
Seems surprising to me, based on limited experience of driving home that way from 2015 spring break vacation in AZ. The freeway seemed mostly deserted, at least during our travels, which makes me wonder what explains the high accident risk.
https://en.wikipedia.org/wiki/Tom_Manning_(prisoner)
“Do not be confrontational and cooperate.”
…e.g., do not try to disarm a policeman over a parking ticket.
“I don’t think that stocks are in bubble territory, but bonds certainly are, and if we had a genuine bond market meltdown, a rapid backup in rates of 200 basis points, the losses inflicted on investors worldwide would be more severe than any crash we’ve had to date. Remember, when interest rates are negative, the duration of the bond is actually longer than the maturity. A Swiss 50-year bond trading at negative yields will lose more than 50 percent of its value if interest rates go up just one percent. Think about that.”
Whoever is left holding the bag on long-term sovereign bonds when rates finally undergo liftoff is in for a world of pain which nobody could have seen coming.
I was unaware of the duration-maturity reversal at negative rates. It seems like the normal rules of financial valuation don’t work in a negative rate environment as they are commonly understood.
Abreast of the Market
Black Hole of Negative Rates Is Dragging Down Yields Everywhere
As developed-world rates slide, investors widen search for income, driving down yields in corporate bonds and emerging markets
Visitors at Disneyland in Anaheim, Calif.
Walt Disney Co. locked in the lowest long-term borrowing costs of any U.S. company in history on Thursday when it issued a 10-year bond with a 1.85% coupon and a 30-year bond with a 3% interest rate.
Photo: Jae C. Hong/Associated Press
By Christopher Whittall and Sam Goldfarb
July 10, 2016 2:23 p.m. ET
The free fall in yields on developed-world government debt is dragging down rates on global bonds broadly, from sovereign debt in Taiwan and Lithuania to corporate bonds in the U.S., as investors fan out further in search of income.
The ever-widening rush for yield could create problems if interest rates snap back, which would cause losses on investors’ low-yielding portfolios, or if credit quality falls. And the global yield grab is raising questions about whether rates can prove reliable economic indicators.
Yields in the U.S., Europe and Japan have been plummeting as investors pile into government debt in the face of tepid growth, low inflation and high uncertainty, and as central banks cut rates into negative territory in many countries.
…
‘How Duration Affects the Price of Your Bonds’
‘So how does this actually work? As a general rule, for every 1% increase or decrease in interest rates, a bond’s price will change approximately 1% in the opposite direction for every year of duration.’
‘when rates finally undergo liftoff’
It doesn’t have to be a final lift-off. Rates could just vary a bit and these guys would get hammered. They are betting rates won’t go up for 50 years. Somebody is wrong; investors in stocks or bonds, maybe both. Meanwhile, artificially low rates continue to incentivize bad investments all over the world. See San Francisco and Portland apartments.
I wonder how many financial experts have figured out that the same dynamic which will hammer long-term bonds after liftoff is likely to have a similar effect on real estate valuations?
The Financial Times
US financial regulation
US banks raise regulator fears over property loan bubble
Morgan Stanley report says smaller lenders behind 44% rise in commercial real estate loans
4 hours ago
Alistair Gray in New York
US banks have increased lending to shopping centres, apartment blocks and other commercial property developments even after regulators warned they were scrutinising the sector for signs of risky practices.
Commercial real estate loans originated by banks in the first quarter leapt by 44 per cent from the same period in 2015, according to a Morgan Stanley analysis that will add to concerns that bubbles are forming in parts of the US property market.
Banks’ share of CRE originations has risen from just over a third in 2014 to more than half in the first quarter of 2016 — a record.
They have filled a gap as other lenders, notably capital market investors, have retreated from the market. Issuance of commercial mortgage-backed securities has dropped to four-year lows.
Morgan Stanley warned of the risk that commercial property prices would decline if regulatory pressures caused banks to pull back from CRE.
The report said small banks — those with less than $10bn in assets — were largely behind the CRE lending drive and identified 25 institutions that “may face pressure from regulators given rapid growth and high concentrations”.
“The threat of regulatory scrutiny could lead smaller banks to pull back on CRE lending, raise equity and/or drive M&A,” said the report, published just before second-quarter earnings season gets under way.
…
I am sure there’s a way to bailout bonds, no?
It’s ongoing in many parts of the world, and called Quantitative Easing.
The Financial Times
US Treasury Bonds
Need for yield sends bond and equity prices in lockstep to record
Pattern defies history and shows extent to which negative interest rates are shaking up markets
Negative interest rates: a remarkable financial moment
3 hours ago
Nicole Bullock and Joe Rennison in New York and Leo Lewis in Tokyo
A fundamental relationship between bonds and equities has broken down as the pressure for returns intensifies in an ever-expanding world of negative interest rates.
An insatiable thirst for income has driven both US bond yields and equity prices — two areas that traditionally move in opposite directions — into record territory.
In total return terms the S&P 500 sits at an all-time high, vulnerable to persistent profit contraction at US companies, while long-dated Treasury yields have dropped to record lows, providing scant protection against higher inflation and a stronger economy.
The contradiction of bullish price performance in both US equities and bonds — corporate bond yields are also at multi-decade lows — strikes investors as the most compelling sign yet of how distorted markets have become eight years after central banks enacted zero bound interest rate policy and become massive buyers of bonds.
“Policy is like a big elephant sitting on the rate structure and causing this distortion,” says Jim Paulsen, chief investment strategist at Wells Capital Markets.
As bond yields in Japan and Europe drive ever deeper below zero, further intensifying pressure on the profitability of financial institutions, while Brexit casts a lengthy shadow over Europe and global growth prospects, investors say locking in income dominates portfolio objectives.
“That thirst for income is a direct function of the rate environment we are in,” says Russ Koesterich, director of asset allocation for the $45bn BlackRock Global Allocation fund. “People can’t source yield from traditional sources.”
With an ever growing universe of negative yielding bonds — at $12tn and counting — investors are flocking to higher yielding US paper, while the equity rally reflects demand for safety in dividend paying companies, utilities and telecoms.
The scale of this trade, however has set a new mark, with investors shrugging aside last week’s robust June employment data from the US and pushing both bond and equity prices to new peaks.
Investors like Michael Underhill, a portfolio manager at RidgeWorth Investments, talk about “Tina” — there is no alternative.
“You can stay in cash and have 1.5 per cent inflation erode your return, invest in bonds and get 1.2-1.5 per cent or negative yields abroad or invest in dividend-paying stocks and get 3, 4, sometimes 5 per cent,” he says. “That is what the average investor is challenged with in the current market environment.”
‘’As interest rates decline, the value of future cash flows increase. That’s just math,’’ says Nicholas Colas, chief market strategist at CovergeEx who makes the point that at around $100 per share of earnings for the S&P 500, ‘’domestic stocks generate reasonable free cash flow and dividends’’.
…
“…An insatiable thirst for income…”
AKA, millions of 401k accounts…gotta make people think they’ll actually be able to retire someday.
Those will be nationalized within the decade. The Fed Gov is already trying to push mandatory retirement accounts for the little guy, as if they cant figure out how to click a few buttons on the interwebz and start a Vanguard acct.
This…
https://www.dollarvigilante.com/blog/2016/07/07/signs-government-planning-confiscate-retirement-funds.html
US bond yields have never been this low—and we looked at data going back to 1786
Alexander Hamilton: Spirit animal of the bond markets. (Reuters/Mike Segar)
Written by Matt Phillips
July 07, 2016
Usually, the bond market is a cautious, prudent and a deeply boring place, especially when compared its tempestuous kid cousin, the stock market.
Yields on the key benchmark securities such as the US 10-year Treasury note—that serve as the foundation for rates paid to finance everything from cars and mortgages to skyscrapers and armies—placidly bob around for a few hours before settling a few basis points from where they started. (Basis points are hundredths of a percentage point. So one basis point is 0.01 percentage point.) A big day would see yields move by 10 basis points, or a tenth of a percentage point.
But to really understand what makes the bond market interesting, you have to look at the big picture. A really big picture. You basically need like 200 years worth of data. Luckily, the good people at Global Financial Data have just provided us with just that in the form of monthly US long-term bond yields stretching all the way back to 1786. Using more than two centuries of amalgamated data on long-term high-quality bonds, we can see that interest rates in the US have struck never before seen low levels recently.
…
The entire focus of central bank actions are to reduce the real value of the debt on debtors (to transfer value to debtors), and to transfer value away from those who have resources.
It seems an odd equation with debt being so high, but they are after all, bluntly, the banking lobby masquerading as a government agency. They are people who understand the bank business model and are there to support it.
Stimulus as a stealth tax, inflation as a stealth tax, NIRP as a stealth tax - the people who benefit from this are lenders and to a lesser extent debtors. Inflation is the Holy Grail, as there is no collateral damage on debtors - their debt merely is reduced. The effect of inflation on bank profitability is unclear to me. But as long as the banks are charging positive real (inflation-adjusted) rates, they should remain profitable.
The problem though with these clever plans is that when people’s purchasing power is being eroded, they tend to spend less and they’re not keen to load up on yet more costs. I’m not sure the PTB models accurately reflect this feedback.
Come for the weed, stay for the fires:
“A poorly extinguished campfire, smoldering as hot, dry winds whipped down from mountain peaks, sparked the fire that on Sunday destroyed three homes and spread across more than 600 acres, forcing evacuations of nearly 2,000 people southwest of Boulder.
And Boulder sheriff’s detectives Sunday afternoon arrested two men from Alabama at the Nederland High School evacuation site.
Campers Jimmy Andrew Suggs, 28, and Zackary Ryan Kuykendall, 26, both of Vinemont, Ala., face felony arson charges because, according to a statement issued by sheriff’s commander Mike Wagner, “lives were endangered as a result of the fire.” The men were booked into the Boulder County Jail.”
http://www.denverpost.com/2016/07/10/two-arrested-for-starting-cold-springs-fire-more-homes-threatened-as-fire-grows/
Nice going you f*ing goobers. Thank you for visiting Region VIII.
“The men did not ensure that the fire was properly extinguished by dousing it with water or making sure the ashes were cool to the touch before leaving the site,” Wagner said. “It is believed that the winds in the area, combined with the weather, allowed the fire to continue smoldering.”
So they were “extremely careless” but I see no evidence of intent.
If there is no intent then no “reasonable prosecutor” would bring charges.
That logic only applies to elites, not little people.
It didn’t take long, as soon as it stopped raining and got hot (was 100F yesterday) we got our first fire.
Skies still crystal clear here in South Denver.
At the rate fires have been burning out there in CO over the last 10 to 15 years - the Rocky Mountains will be utterly “bald” with no figgin trees.
Drive west from Castle Rock to Sedalia and down into Deckers and you’ll see the damage from the Haymen fire in 2002, it’s like driving on the moon.
Yep - that is the image I have -
Wife and I were in that area back in 2010 I think it was. Stayed at what turned out to be a fly fish camp - an old railroad oasis outside of Deckers. Pretty cool place actually. Owned by an interesting couple from NYC.
The image the owner / manager gave me at that time was what was left on the ridge just above their little piece of heaven. The whole thing had not one stick on it. Just a pure moon scape -
I hear the fishing in the South Platte has never been the same since. The ash and the mud flows into the river have literally choked the fish to death. Not sure if that is still the case 6 years hence.
Why the hell do people have to light campfires anyway? You can cook on a stove and I doubt they are huddling around the fire for warmth at night. Yes I know it gets cool/cold at night up in the mountains, but that’s what sleeping bags are for.
SMH at people and their damn smoky fires (especially after they go out for the day or just plain decamp and leave it smouldering). They are why I have to camp somewhere away from others and definitely not in campgrounds.
P.S. Hopefully by the end of the week I will be out in CO and in the high country for the rest of the summer.
I have fires from September to May, usually while camping at 8,000 feet or well above that. It’s a social thing as well as keeping warm. Coldest I’ve ever slept outside was minus 10°F.
Campfires are cool in a primeaval sort of way. But stupid people should refrain from lighting them.
Is it time to short Pulte Homes, Lennar, Toll, Home Depot, and Lowes yet?
I am out for blood. 30 cents on the dollar from their peak prices is where I am expecting them to head.
I will short them all over the course of a year.
Be careful. Last time the farce took much longer than was reasonable to play out, and the ptb no doubt have more ways to prop it up this time.
Yeah, but you have to think like the PTB. They’re gonna have to shove some companies under the bus to make it look like they’re doing something. I would say a couple of builders and retail home improvement companies would be on that menu.
I think the safer bet is to wait for them to fall, and then buy in as the government reflates it all. Then again, I’m not much of a gambler. My plan is to wait for house prices to crash and pay cash for something that puts an end to my rent expense.
That’s what I said back in 2006. Still renting. Never quite got down to where I thought it should have to make me let loose of a big chunk of cash.
I was ready to rock in 2011, but the spouse (who is no longer a spouse) made it impossible. I would have pushed harder if I’d have know it was going to bounce back so quickly.
So down the drain with 5 years of rent payments, and counting…
Depending where you live buying in 2011 might have been very tough anyway…I tried for nearly a year and my offers were repeatedly ignored as there were one or more 100% cash bids (this was in Sonoma Co., Calif wine country). I didn’t anticipate this, when I bought in 1997 in a normal market I looked at about 10 houses, made two offers…one was rejected and one was accepted. (FWIW sold that place in early 2007 thanks in large part to the HBB)
Am renting happily in the meantime and may try buying again after Bubble 2.0 pops.
All offers are cash. Borrowed cash.
Do HouseDebtors accept credit cards? Of course not.
Good thing you didnt buy a house with the-soon-to-be ex-spouse.
I’m a poet and did’nt know it.
Could sub 2% 30 year mortgage interest rates be on the horizon?
I never thought I’d refinanance from my 3.75% rate, but if someone threw a 2% rate my way…well, that’s different. I’d probably push to faster amortization.
Maybe TPTB are waiting to see who wins the election?
I can’t wait to see what happens in March when the debt ceiling waiver runs out.
I wouldn’t be surprised if we see S&P 2,800 and if so the bubble areas on the coasts are going to rip our faces off. I base this on the perception that there is no will in any central bank to stop the endless flow of liquidity and ZIRP. New employment gains may falter but if so it’ll just give them more of an excuse to fill up the punch bowl and let it overflow. But what the hell do I know? Do your own due diligence. For things to unravel we’d have to see Deutsche Bank fail outright (not just receive a cash infusion). I can’t imagine they have to spine to let her go under.
‘rip our faces off’
These discussions are always in a vacuum. The missing ingredient is negative implications of low rates. Overbuilding? Miss-pricing risk? I posted an article last week saying central London landlords are getting a 2% annual return before taxes. Heck, they lost 2% each day last week. As I type this Chinese steel makers are borrowing money to make steel no one needs. And forget about the long term stuff like pensions. Every day that goes by is less many millions will have to compound into retirement.
In the long run we’re all dead. But asset inflation can decouple from the real economy for longer than we expect. Yes, I agree we will collectively hang for this one day. Until then we have enough momentum and liquidity to fake it all the way to S&P 2800 before we enter another bear market. We’ve had a long consolidation. We may see some seasonal weakness in August and / or September but then we’re off to the races. There - I made a prediction - you should probably fade me.
Remember…… I can ask $50k for my 10 year old Chevy Pickup but where is the buyer at that price?
So it is with all depreciating assets like houses.
“As I type this Chinese steel makers are borrowing money to make steel no one needs.”
Why would a rational firm want to make stuff that nobody needs? The textbook economic model suggests they would have to give away the stuff or even pay others to take possession.
“no will in any central bank to stop the endless flow of liquidity”
If they do, the economy will collapse almost immediately. If they don’t, they can stave that off for an unknown amount of time.
When it does finally go, there will be real war, not this piddling around like in the middle east, so I can see what motivates them.
Time to buy popcorn then because BOJ’s Haruhiko Kuroda is BACK! He’s not going to piddle.
From a political standpoint, it amazes me that the Japanese people keep doubling down on something that hasn’t worked for decades, and clearly is not working now. Maybe Japan goes to minus 4% interest rates, and that might fail too.
Japanese voters, like their ‘Murican counterparts, are overwhelmingly stupid.
Personally, I wouldn’t short the homebuilders.
After the crash, a lot of the builders wrote down their land assets in order to get tax refunds back from the Feds. My guess is that a lot of the builders haven’t yet written back up the values.
We are still way below trend in terms of total single family development in the nation, and based on the carnage after 2008, the public builders have a stronger market position than they did pre-crash–private builders have struggled to come back.
I haven’t seen the stats recently, but the public builders used to be approximately 25% of the market…I think they are quite a bit more now.
Reversion to the mean still favors increasing number of new homes constructed. Publics will benefit greatly if we do trend back to historical normal levels of development.
While I think shorting the builders is a bad idea, I submit that I could of course be wrong. It’s your money…you can do what you want…I just wouldn’t go “all-in”.
These publicly traded marketers you refer to as “homebuilders” are a minority of the SFR construction market. The majority of SFR construction is performed by contractors.
If anyone is interested in investing in publicly traded constructors, look at actual construction firms performing high risk high reward work like Skanska or Bechtel.
Except Bechtel is private.
Fremont(Bechtel), Jacobs, Balfour, KBR, Fluor, Chicago Bridge, Granite.
This list goes on my friend.
AECOM too.
FWIW, I was talked out of buying long-term put options on the publics pre-crash. Big mistake on my part. The bubble was so out of control, and construction was at such high levels that I didn’t see how the builders wouldn’t crash hard. However, for the put to payoff, they would need to crash SUPER hard…the trade was already crowded by the time I looked into it.
Remember, builders make money by selling homes, and they often buy land right before they start building at prices that allow them to make money. Generally speaking, a flat market is an OK market for the publics. The question is really one of volume. If they build and sell more homes, they make more money.
So, will they be building more or fewer homes in 2017 than 2016?
Given the burgeoning inventory levels, irrelevant.
Rental Watch - what’s your prediction? I say S&P to 2,800 before the next bear market. Prove me wrong
Hover around 2100 until election and then mother of all collapse.
I honestly have no idea about the stock market, but I believe we won’t see a meaningful home price correction until we have exceeded 1.5MM housing starts for a bit.
No need to build more excess empty houses. There are far too many as it is.
Maybe the builders, but not the big box stores. When housing is booming, regular schmoes are taking out home equity and redoing their kitchens in Pergraniteel. When housing is busting, Blackrock and similar hedgies are snapping up busted housing and redoing kitchens in Pergraniteel. Either way, HD gets its money.
Nothing like throwing good money at depreciating materials after bad money on a depreciating house eh Donk?
‘Tesla Model X goes off the road and crashes in Montana, driver blames the Autopilot’
‘Ever since the very publicized fatal Florida accident in a Model S while the Autopilot was activated, Tesla’s semi-autonomous driver assist system has been getting its reputation tarnished in the media.’
http://electrek.co/2016/07/11/tesla-model-x-crash-montana-driver-blames-autopilot/
From the comments:
‘You are reckless and definitely did not follow tesla’s autopilot instructions. This accident just like the other 2, is your fault. Stop blaming tesla’s autopilot. It is clear that the driver was not paying attention. It’s very clear that the auto pilot needed the driver to take over because the system Lost road markings. Why didn’t the driver grab the wheel when his car started to beep? even if it didn’t beep (which we all know that it did) why didn’t the driver grab the wheel when he started to notice the tesla veering off the road? I plan on driving in Auto pilot mode only in bumper to bumper traffic or on the highway with well marked lanes.’
‘Yes it is his fault for allowing an autonomous system to drive his vehicle in the first place. You are an idiot if you cannot drive your own vehicle.’
Well, I was drunk the day I refinanced my airbnb
And I took the money, and bought a car in the rain
But before I could get to the next uber pickup
She got runned over by a damned old tesla on auto pilot
And I’ll hang around as long as you will let me
And I never minded standing’ in the rain
No, a’ you don’t have to call me darlin’, darlin’
You never even call me
Well I wonder why you don’t call me
Why don’t you ever call me by my name
Apologies to:
http://www.azlyrics.com/lyrics/davidallancoe/youneverevencallmebymyname.html
What’s the point of having an “autopilot” system on the car in the first place, if you aren’t supposed to let it drive the car?
You could ask the same question about cruise control. I guess Autopilot is just advanced cruise control. You can let go of both the pedals and the wheel.
No comparison, really. It is not possible to let go of the steering wheel to watch a video and hope cruise control will keep you on the road.
“It is clear that the driver was not paying attention.”
Uh, isn’t a primary rationale for self-driving automobiles that it will relieve drivers from the burden of always having to pay attention?
I’m planning to continue training my kids behind the wheel, just in case this self-driving concept never goes beyond the conceptual stage.
On July 1st I was rear ended by a driver wearing flip flops, that got caught on the pedal. She took down the stop sign (I was stopped at), and a tree. We all walked away. I get my car back from the body shop Wednesday. Flip Flop cause a lot of accidents, don’t drive in them.
Driving while stupid and voting while stupid never end well.
Right, as we will find out if enough stupid voters vote to elect either of the Republicrat candidates…
It’s time to get these deathtrap TeslaJunks off the road.
UFC, aka WWE 2.0, sold for $4 billion.
The brothers who just sold it paid $2 million (not a typo) for it in 2000. Even Hillary never got a return like that on any of her “investments”, lol.
http://www.cnbc.com/2016/07/11/billionaire-brothers-to-get-massive-windfall-from-ufc-sale.html
Makes ya feel sorry for Rorion Gracie.
One of the repercussions will be fighters demanding a larger purse now that they have a baseline valuation. From what I’ve read only a handful of the fighters at best are worth a couple of million $ after holding titles, headlining, etc.
http://www.reuters.com/article/us-italy-banks-montepaschi-analysis-idUSKCN0ZO1TZ
I post this because just last night I was watching the Neflix and found an Italian documentary on the Palio Race held there for several hundred years. Monte Di Paschi Bank has sponsored that race of much of its history.
I think the start of the documentary is an image of what will happen to Monte Di Paschi Bank if things don’t turn around soon. Tough video to watch.
By the way - having been to Siena many times it is a beautiful town in an amazing part of Italy - yet this last trip 8 years ago left me a bit down - the place had lost its ‘vibe’ and was looking the worse for wear and was by any stretch extremely expensive. We’ll see what the future holds.
Damn bareback, would be easy to slide off.
Why We’ll Never See “Normal” Interest Rates Again
by Andrew Snyder, Editorial Director, The Oxford Club
Sunday, July 10, 2016
These are historic times. In recent weeks, interest rates have plunged into record-low territory.
Uncle Sam has never been able to borrow money so cheaply. In fact, it’s never been cheaper across the planet.
The idea has us worried.
But it’s not new.
Interest rates have been on a downward trend for nearly as long as they’ve been in existence.
It’s a trend investors need to understand. It helps explain why the idea of going back to “normal” rates in our lifetimes is downright preposterous.
Think of interest as a huge, rocky mountain. Only this mountain is eroding faster than anything in the natural world.
With each passing storm, the rains wash away more and more of it.
It was during the Neolithic age (about 5000 B.C.) when man first got serious about interest. Our mountain was mighty and strong. Interest rates were a noble and highly respected idea.
But the primitive man wasn’t borrowing money to buy a boat or run his city. No, he simply borrowed seeds. And interest rates were high - often half the harvest.
But the key here is that early man borrowed assets that naturally created more wealth. One seed would turn into many more. The debtor simply gave a portion of his harvest to the lender.
And so it went for many years. Grain was the leading currency for centuries. But somewhere around 3000 B.C., copper became a store of wealth. And with it, interest could be paid in a share of the harvest - or in metallic money.
As the trend toward what we would now call traditional money grew, the penalties for not being able to pay your interest got quite serious. You could go to jail, become a slave, lose your home or even lose your wife.
Folks were serious about debt. And interest rates were high, but falling. A loan of barley repaid in copper could cost 33% per year.
It was here that our mountain began eroding.
Fast-forward a bit and we see the Greeks expanded the credit system. In 600 B.C., they paid rates of around 16% in a quickly modernizing monetary system. By 100 B.C., though, a typical loan came with a rate of just 8%.
And then things got interesting…
Just about the time Rome was reaching its peak as an empire, interest rates became the center of quite a debate. The government did something that would eventually become synonymous with the state… it borrowed money. And in an ironic bout of foreshadowing, the bankruptcy system was created at nearly the same time.
For a short time, perhaps to save the government a few slivers of gold, interest was flat-out outlawed.
Through it all, though, rates averaged between 5% and 12%.
The erosion continued.
The surging power of the church was perhaps the most powerful early force on interest rates. Somewhere around 300 A.D., the idea of usury pushed interest rates to fresh lows.
The church made it clear that charging high interest rates (it viewed it as taking advantage of the poor) was a sin. In several historic instances, usury was touted as worse than murder.
Needless to say, rates at the time were low… if they were charged at all.
And so it went for several thousand years. But as global exploration began to outweigh the pull of the church, interest rates began to rise. After all, if you’re investing a big chunk of change in a high-risk journey across an unknown sea, you want a big reward.
A typical 15th-century loan came with a rate of 10% or more.
But the trend didn’t last.
Rates fell once again in the 1700s as England found itself in one costly battle after the other. As William III took on France, he found the need to borrow from his citizens. He paid about 8%. But more importantly, throughout this period of heavy borrowing, the Bank of England was created.
The erosion-inducing realm of central banking was upon us.
The bank and the growing power of its brethren across Europe pushed rates to fresh lows throughout the 18th and 19th centuries. Borrowers of the day could expect to pay little more than 3% for a short-term, high-quality loan.
The same was true in the quickly expanding United States. Westward-looking railroads were paying interest rates just shy of 3% as we welcomed the 20th century.
Throughout the century’s minor and major crises, rates remained consistent. Not until the financial turmoil of the 1970s did the benchmark Fed discount rate rise above 4.6%…
The same benchmark rate that stands at 0.25% today.
The biggest disruption to the millennia-long downtrend in interest rates - and perhaps the reason so many folks feel rates must return to “normal” - came during the Reagan administration as the Fed fought the “Great Inflation.” At their peak, rates rose to an incredible 20%.
They’ve fallen ever since.
Despite the short-term blip some 35 years ago, the historic trend has been toward falling interest rates…
From over 30% to 12%… to 8%… and, now, below zero.
Our mountain is nearly gone.
To believe we’re somehow going to reverse this centuries-old trend within our lifetimes is preposterous.
…
“To believe we’re somehow going to reverse this centuries-old trend within our lifetimes is preposterous.”
It’s also irrelevant.
The relevant question is, given that we saw interest rates over 10% as recently as the 1980s, is there any reason to assume we will not see them over 10% again in the foreseeable future?
Who cares about the centuries-old trend.
Is there a reason? Heck yes! The US Government will go bankrupt if interest rates rise.
Interest rates will never go back up. The existing monetary system will collapse before then, to be replaced by a global cashless currency.
The is still room for stocks to climb according to the stock peddlers.
reminds me of one of my term papers at cal in econ.
I advocated the depreciation of money at 10% per annum with no income tax, forcing money in to the economy to allow money to circulate and increase economic flow.
Prof didn’t think much of it.
But negative interest does the same thing, but in smaller amounts.
Article for Ben Jones:
“This incident also has to be viewed against the backdrop of police militarization in this country. Since the drug war exploded in the 1980s, police departments have assumed an increasingly militarized posture. Thanks to the “War on Terror” and the little-known National Defense Authorization Act, domestic police departments have used federal grants to procure surplus military equipment. (According to at least one report, that’s how the Dallas PD acquired the robot used to kill Johnson). Drones, tanks, bomb-resisting robots, and anti-ambush military vehicles have landed in the laps of local police, who’ve found ways to use use these weapons of war. Images of tear gas and cops in combat garb toting military-grade weapons on American streets has become commonplace. And unsurprisingly, with the rise in paramilitary tactics and military-style raids, incidents of excessive force and police brutality have spiked.”
http://www.salon.com/2016/07/11/a_frightening_precedent_can_we_talk_about_the_dallas_police_using_a_bomb_robot_to_kill_a_man/
RIP, 4th Amendment.
http://www.motherjones.com/politics/2014/10/swat-warrior-cops-police-militarization-urban-shield
I’ve never been to Mr. Bing’s but I feel like all my locals could close any day now due to higher rents:
http://www.sfgate.com/local/article/dive-bar-Mr-Bing-s-gets-new-owners-may-close-8341922.php
Gennaro’s has Deschutes draft pints 2 for $6, a killer jukebox, hot waitresses, good cheap Italian food, free parking, and live bands. This place can’t last:
http://www.yelp.com/biz/gennaros-cafe-italiano-denver
Has a stealth bank run started in Italy?
https://www.armstrongeconomics.com/world-news/sovereign-debt-crisis/banking-panic-in-italy/
Radiohead - Creep
https://www.youtube.com/watch?v=XFkzRNyygfk
^this
https://www.youtube.com/watch?v=DPlZu4mU-XM
Civil unrest is bullish for housing, right?
http://www.shtfplan.com/emergency-preparedness/civil-unrest-looms-as-protesters-attack-police-firestorm-erupts-all-across-the-country_07112016
If you like your crony capitalism, you can keep your crony capitalism.
http://wolfstreet.com/2016/07/11/congress-too-big-to-jail-justice-department-decision-not-to-hold-wall-street-accountable/
If you do not want your country turned into a Goldman Sachs looting colony, you must be a nationalist.
http://www.ft.com/cms/s/0/53fc4518-4520-11e6-9b66-0712b3873ae1.html#axzz4E8ygXthH
Two words: Banana. Republic.
Wait, what? Yes, it’s the Stone Roses’ self titled album from 1989:
https://www.youtube.com/watch?v=klQllZ-y-tc
Did FBI Director James Comey say Hillary was extremely clueless or extraordinarily careless or absolutely absent minded with her handling of very sensitive, highly classified information?
I can’t remember the words he used and I want to make I’m with clueless buttons.
I’m with Her Button Combo - The Shop - Hillary Clinton
https://shop.hillaryclinton.com/products/im-with-her-button-combo - 62k -
https://www.flickr.com/photos/expd/16629031224/
Great. I looked at that page and now I’m getting Clinton ads everywhere.
When the Comrades of Proven Worth at the DNC get their permanent Democrat Supermajority, the looting and expropriation of ex-pat companies is going to be epic.
http://www.zerohedge.com/news/2016-07-11/venezuela-seizes-local-kimberly-clark-factory
China is joining the printing orgy. Got gold?
http://www.bloomberg.com/news/articles/2016-07-10/china-pension-readies-300-billion-warchest-for-markets-foray
The Tractors - Shortenin’ Bread
https://www.youtube.com/watch?v=QlJS3z1RQnE
Kate Bush - The Man WIth the Child in His Eyes
https://www.youtube.com/watch?v=9F5XHZ0NPGc
why are so many people broke?
“why are so many people broke?”
… ’cause Sam ain’t loaning ‘em enough.
go out there and go shopping! stop with the hipster up-cycling!
Paula Cole - Where have all the Cowboys Gone
https://www.youtube.com/watch?v=JPR108kwNo4
Japanese voters rival ‘Muricans for sheer stupidity. However, the intelligent 5%, as in the US, see what’s coming and are stacking precious metals.
http://www.zerohedge.com/news/2016-07-11/japanese-savers-flood-gold-fearing-endgame-coming
Redwood City, CA Housing Prices Crater 10% YoY On Ballooning Housing Inventory
http://www.zillow.com/redwood-city-ca/home-values/
Apparently the U.S. is not the only country with riot issues on its hands…
Tear gas and rioting in Paris as violence breaks out during Euro 2016 final
RIOTING broke out underneath the Eiffel Tower tonight as France’s Euro 2016 final dream turned into a nightmare for thousands of spectators.
By Zoie O’Brien
PUBLISHED: 22:15, Sun, Jul 10, 2016 | UPDATED: 22:31, Sun, Jul 10, 2016
…
GOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOAL DE PORTUGAL!!!!! EDER!…
crater
http://www.rushlimbaugh.com/daily/2011/05/13/origins_of_the_eib_theme_song - 55k -