Bits Bucket And Craigslist Finds For November 17, 2006
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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petrodollars for london properties
http://www.immobilienblasen.blogspot.com/
have a nice weekend
Flarda again.
“Most of Citizens Property Insurance Corp.’s 1.3-million policyholders could be hit by a proposed 55.8 percent average statewide rate increase starting March 1 because of a change in state law.
That’s on top of the 25.9 percent average statewide increase Citizens is already scheduled to start collecting Jan. 1….
… That’s the good news. Those rate hikes pale in comparison to another Citizens proposal - to hit commercial policyholders with a statewide average 610 percent increase in March.”
http://www.sptimes.com/2006/11/17/State/Citizens_may_seek_rec.shtml
“…The net effect of the dual January-March increase is that homeowners who have Citizens policies and live in coastal sections of Pinellas could see their premiums rise a total of 97.4 percent.”
So from ~$20.50 / $1000 to $40.50 / $1000 - and with commercial going up “average yearly premium soar from $1,514, to $16,190.” Now the jobs are going to be further jeopardized. Good catch Paradise. Anybody still want to move to Florida?
I never cease to be amazed at the stupendous volume of complete BS that Mark Hulbert dumps onto the marketwatch.com site! He puts most of his financial journalist peers to shame…
—————————————————————————————
MARK HULBERT
Of parabolas and markets
Commentary: Fears that markets are rising too quickly appear unfounded
By Mark Hulbert, MarketWatch
Last Update: 12:01 AM ET Nov 17, 2006
http://tinyurl.com/thrkb
ANNANDALE, Va. (MarketWatch) — Can a market rise too fast?
On the face of it, this question would appear to be absurd. Who could possibly object to making more money rather than less?
But a number of the editors of the investment newsletters I follow nevertheless are worried about the pace of the market’s recent advance. They argue that, historically, the market has tended to fall more sharply whenever the pace of its previous ascent was too steep - and is therefore dangerously unsustainable.
The metaphors these advisers use to describe such situations are instructive. Some draw an analogy to an airplane that tries to rise too quickly. An airplane in such a situation will eventually stall out and then plunge, of course, and the advisers employing this metaphor worry that the stock market today is vulnerable to just such a scary decline. Technicians often refer to the ever-steepening slope of such an ascent as a parabolic rise.
P.S. Can anyone identify any parabolas in this graph?
http://tinyurl.com/ymxhjd
The piece of the brown curve from somewhere in 97 up to the top in 2000 might fit part of a parabola fairly well after filtering out some noise. However it might equally well fit some other function with a monotonically increasing first derivative. Hulbert doesn’t seem to be saying anything spectacular, but we know he is always a reviewer, not an original analyst. Other than that, what’s your objection? Not arguing, just asking…
“Parabolic price increases” don’t often fit parabolas very well, due to extreme discontinuity in the point of inflection at the top.
The WSJ has articles on a possible false bottom in housing, and an essay by the late Milton Friedman purporting to prove that Greenspan did the right thing by reflating after the stock market bubble.
In the latter, Friedman shows the similarities of the stock bubbles/busts in the U.S. in the 1920s/30s, Japan in the 1980s/1990s, and the U.S. in the 1990s/2000s. Only one of these led to a Great Depression, as nominal GDP followed the money supply down in the 1930s and up in the other cases, though with a small decline.
Of course, a real estate boom/bubble correlated with a stock market bubble in the two earlier cases, but came after the stock bubble in this case.
Greenspan was experimenting with history, and he knew it. We are still awaiting the results.
In case I’m not the last one to learn this, Bankrate today has a Dr. Don article on the difference between the traditional FICO and new Vantage credit scoring formulas. I’d think that this will lead to a fair amount of confusion for a while, at least on the part of the borrowers. At any rate, he offers a seemingly nifty and simple means of converting one to the other for at least a good approximation.
http://tinyurl.com/y4gehk
You weren’t the last, thanks for the link.
I’m not looking for credit anytime soon, but when I am this will be helpful!
are we wrong?- UK is rising and j6p in usa is happy again
http://biz.yahoo.com/ap/061117/ipsos_consumer_confidence.html?.v=3
Reflation works, at least if you are running out of land…
P.S. I predict that one decade hence, we will discover the Phillips curve was merely dormant, not extinct, during the early 2000s.
http://volcano.und.edu/vwdocs/kids/volcano_project/activity.html
the consumer confidence survey really isn’t that reliable. During the recession of 2001-2002, it predicted terrible consumer moods yet people went on spending like teenagers. So, it’s really not that reliable of a tool. The holidays, elections, who won the superbowl, what was on TV last night, etc… all indirectly factor into the survey.
Comsumer confidence has tracked oil and gas prices rather closely. It does show that people are not worried about jobs. I think that the recent election showed that the middle and working class people don’t quite buy the administration (and Wall Streets) view that the economy is just great.
flatffplan
Don’t let anyone kid you about the UK. I have a wide spectrum of friends there. Those in the “money juggling and currency shuffling” business like mortgage brokers, etc, just like here in the US, have been doing okay but most Brits are a reflection of the US. Maxed out on their credit cards (actually WORSE than here) and living on the equity in their property.
The younger Brits have problems buying property (forget places like London where property prices are in another dimension) and if they do get on the property ladder, the prices are so ridiculous that they are mortgage slaves for many years to come.
The personal debt crisis in the UK is nothing short of a horror story. By cashing in on their UK property, Brits have moved and bought property in France, Spain, Florida, etc. If you think property is over-valued here in the US, you should see what $1 million fetches you in London or Paris or any of the big european cities. Even in the s*ithole areas of London, full of immigrants who are on welfare, the property prices are on another planet.
Yesterday, a Bank of England official stated that home owners should be prepared for a 40% drop in property values in the UK. He quickly followed that statement up by saying, “I’m not saying it WILL happen. I’m just saying it could happen.” Even if UK prices did drop 40%, the prices would still be insane.
The answer to all of this is REAL simple. The masses, both here and in the UK, are not earning anywhere near enough to cover their day-to-day living expenses. Most are not left with enough over from their incomes to save.
The above answer plus an old saying sums it all up. That saying is, “If it looks too good too be true - it probably IS too good too be true.” At some point the piper ALWAYS gets paid. The conundrum is…….when?
I’ve always wondered about those Brits. Everything there costs double what it does here, they get taxed more and they make less. (All converted to a common currency, of course.) Something has to give.
Actually, they don’t make less anymore. The UK CEO’s don’t steal as much as the corrupt USA CEO’s but the UK “average” worker now makes as much as his US counterpart and I think the minimum wage is higher than the US. A lot has changed in the last 30 years.
As for taxes? Taxes are higher but the Brits don’t pay state taxes. They only pay one main “government” tax. That narrows the difference down between US and UK taxes. They do pay a very high “sales tax” which is called Value added Tax or VAT on luxury items. What we call ordinary - they call luxury. Clothing for instance. The VAT tax is about 17% of the price. They also pay something called “rates” which is their version of our property tax. If you are a senior over 60 years old, there is NO CHARGE for prescription drugs. Woman can retire at 62 but that’s going to move up to the same age as men in a few years. The National Health Service still functions but is over-burdened because a lot of the money meant for National Health Service is siphoned off into other projects. Private insurance is cheaper than here. Probably because there is less fraud and corruption as there is in the USA.
There are similar smaller taxes added onto UK incomes just as there are in the USA. Gasoline is MUCH higher but they don’t travel long distances. A 3 hour journey by car will take you right across the breadth of the UK. In the cities, the mass transit systems are excellent but if you want to use your car in the City of London you pay about $10 a day extra within a 5 mile radius. Social Security pensions are smaller than US Social Security pensions.
As NHZ mentions in his post about the Netherlands being a satellite of the US, the same applies to the UK. As much as they might not like to hear it, the UK is basically the 51st State but it hasn’t yet got a star on the flag.
Here’s the problem in my opinion. The UK, and the Netherlands it appears, have copied the US life style or economic system it seems. However, I’m becoming more convinced that the US has seen it’s best days and over the next 20 to 30 years, the dominance and power of the USA in EVERYTHING will decline significantly. The decline(s), which eventually happen to all powerful nations, do not happen overnight but ALL powerful nations have their day in the sun but eventually they are pushed to one side by the new kid on the block. I think that new kid is China or perhaps a group of asian countries like China, India, Korea, etc. The USA no longer holds center stage in the world.
Because of the US massive national debt, it’s slow destruction of the middle class, it’s failure in Iraq, which has TOTALLY blown US credibilty and US world prestige out of the window and it’s “in house” problems liker Social Security and health care, I will be very surprised if the decline (which has already started) can be halted. Added to that, is the oil problem. Unfortunately, God didn’t make America great. Cheap oil did.
At the moment, the decline is being slowed by loose credit but loose credit “parties” always end badly. When powerful nations start to decline, they are like juggernaughts. Moving slowly, gathering speed and VERY hard to turn back in the other direction.
All that “prophecy” above could be wrong but things have REALLY changed in just a few years. Who knows? Perhaps the brilliant economists in Washington have devised a new financial system which will overcome the massive problems we see rippling just below the surface In the USA.
Frankly, knowing how economists are wrong most of the time, I doubt it.
More government equals more corruption.
soon to get much bigger w FREEer healthcare
More government equals more corruption.
————————–
I say, “bring it on!” Anything beats what we have now (corporate corruption everywhere we look). I’d prefer that many people benefit from govt jobs than just a few benefit from the top corporate jobs. Either way, power corrupts. Doesn’t matter if it’s private or public.
same story for the Netherlands, after being a nation of savers for many centuries, the last 15 years of liberal-conservative government has made the country into a satellite of the US economic (and military) policy including all the bad that goes with it like surging debt, surging home prices and surging wealth differences. A big part of the Dutch middle class is living from the equity gains on their home; without these yearly gains many will be wiped out. Home prices in the Netherlands are far more insane than in 95% of the US; a return to the historic trendline would require a -85% drop from current levels. Here too the question is when, and how?
For those in the NY metro area, the newest version of Price Reduced!
http://njrereport.com/index.php/2006/11/17/price-reduced-111-1115/
The high-end is taking a beating in North Jersey..
MLS # Town OLP LP % Reduced $ Reduced
2273354 Mendham Boro* (2319) $3,975,000 $3,375,000 15.1% $600,000
2252213 Bernardsville Boro* (2703) $4,495,000 $3,995,000 11.1% $500,000
2329510 Cedar Grove Twp.* (1604) $1,999,999 $1,599,999 20.0% $400,000
2287351 Bernards Twp. (2702) $2,650,000 $2,250,000 15.1% $400,000
2289410 Clinton Twp.* (1906) $1,295,000 $899,999 30.5% $395,001
2246211 Kinnelon Boro (2315) $1,649,999 $1,274,900 22.7% $375,099
2269927 Mendham Boro (2319) $2,150,000 $1,839,000 14.5% $311,000
2318993 Westfield Twp. (2920) $3,300,000 $2,995,000 9.2% $305,000
2332257 Millburn Twp.* (1612) $1,795,000 $1,495,000 16.7% $300,000
2318151 Tewksbury Twp.* (1924) $3,395,000 $3,095,000 8.8% $300,000
Hope it continues unabated for a few years and moves south as well. Like a nice beach getaway, Spring Lake , Sea Girt maybe. No more than 4 blocks. I’m thinking $300K, LOL.
Everyone knows the best time to get a deal on Jersey shore real estate is to wait until after the next hurricane.
jb
It’s all good
Economic Data
11/17/2006 8:33 AM EST
U.S. housing starts for October were down 14.6%, a six-year low, while building permits were down 6.3%.
U.S. Oct. single-family permits fall 3.8% to 1.173
U.S. Oct. single-family starts fall 15.9% to 1.177
U.S. building permits down 28% year-over- year
U.S. housing starts down 27.4% year-over-year
U.S. Oct. starts, permits much weaker than expected
U.S. Oct. building permits fall 6.3% to 1.535mln, 9-year
U.S. Oct. housing starts fall 14.6% to 1.486 mln, 6-year low
can´t wait for the spin……
No more spin. It’s outright head in the sand denial now.
Spin? It’s too easy..
“Builders are cutting back production to let the excess inventory clear out. Builders will not sit through a repeat of the last bubble, so they stopped building earlier than they did before. Once the inventory clears, watch out, housing is going to take off again. It’s going to take the builders a long time to gear up to meet that demand, so look for short-term shortages in the near future!”
However, completions lag starts by 6-8 months, so home completions are still very high. With home ownership at record highs as a percentage of families (something like 70%), shortages are still a ways off. This is especially true of housing in the 200k + range that builders focus on.
And it’s a GREAT time to buy a house!
these numbers are baddddd.
greenspan will eat crow (again!)
housing soft landing so far has been the mantra holding things up..few data like these, and the hedge fund pimps will drop off the cliff.
Yes, that takes out the “September spike” and then some. So much for the theory that August marked the bottom.
Calculated Risk will be all over this number. He was displaying a very scary graph recently showing a huge correlation between Housing Starts (taken forward 6 months), Housing Completions and Housing Industry Employment.
Obvious when you think about it, but the graph was predicting 300K-400K Housing Industry job losses by next February. On this number substitute April for February, and add maybe another 100K.
Updated graph already posted.
When will wall street get it’s head out of it’s a@#. How much bad news can they spin away (the new housing starts data, HOV expects a loss for the 4thQ (analysis still say they will earn a +1.04 $/s), CTX earnings down -72% for the 3rdQ, …) ?
people are believing it though - THAT is the problem
or maybe there are too much black helicopters at work to keep the stock market levitating?
Fiesta Del Norte by Pardee Homes in Las Vegas just reduced a 1973 sq. ft. model from $395,000 to $295,000 on 11/17/2006. It was a cancellation from a sale back in August. That’s a 25% haircut on not what I consider a high end product. Can you say “screwed flippers”? I am going to count the resales in this very large and very well desireable development, but they just got slaughtered.
Slightly under a Buck & a half a foot….Interesting….
Those numbers are gonna help the REIC more than hurt. James Bednar put it more eloquently than I. Nevertheless, I was hoping that the forecast numbers would hold. They didn’t.
Some early morning SPIN from Diana Olick on CNBC:
– Permits were down only 6%
– The margin for error is 8%, implication (6+8=14)
– These numbers were expected, no surprise
“– These numbers were expected, no surprise ”
Yup, I heard that on CNBC this AM. But, if this is the case, why was the estimated market consensus 1,680,000 when the actual number was 1,480,000?
Perhaps the markets “estimator” needs some fine tuning.
Roubini comments on data: http://tinyurl.com/tpvc7
Don’t you hate reading sugar-coated commentaries?
————————————————————————
Housing Free Fall Turning into Meltdown…2007 Recession Ahead
Nouriel Roubini | Nov 17, 2006
For the last few weeks and months I have been writing dozens of detailed notes and blogs (see my latest here) rebutting the utter nonsense that has been spewed - based on little or no data - on the alleged bottoming out of the housing recession. Even Alan Greenspan - the allegedly careful reader of macro data - had joined this cheerleading clown show and the NAR spin of half-lies that “we are near the bottom of the housing recession”. The actual data that were coming out of the housing market in the last few weeks were clearly inconsistent with this cheerleading non-sense and spin. So, maybe these delusional optimists will now shut up for a while and listen to the numbers after today’s announcement that housing starts fell over 14% last month and that they are now at their six year low. Even worse, building permits, that are THE leading indicator of future housing activity, fell further by 6.3% and they are now at their lowest level since 1997.
There’s this in the AP report;
“The only region showing strength was the Northeast, where construction jumped by 31 percent.”
There is no way that is correct. It is either an error or an anomaly due to some weird stat.
The overall numbers should be much lower.
Has anyone seen anything close to a specific prediction about the number of ARM re-sets to occur in 2007 and 2008? While we talk about a trillion or two dollars, I can’t imagine what that means, in number of mortgages per state. It seem like the mortgage industry should have this information. I’d love to know rough numbers by state and within broad mortgage-amount ranges.
600 billion this year, 1 trillion each of the next two years, and it’s cumulative, these loans adjust every six months, most to the libor, so in 2008 if the libor is up you’ll have 2.5 trillion marked to market.
Housing Starts plunge to lowest level since 1997. Also, what impact will this have on contractors and construction prices? Does this makea home cheaper to build? WIll builder margins improve even with lower prices and less demand?
What about the greedy flippers with all the speculative property? Will builder get back to marketing affordable housing to families instead of flippers looking to make a quick buck?
I hear about too many cases of “High-End luxury condos”.
Will the builder that focuses on affordable housing be the one who actually survives, thrives, and make a decent profit?
Sorry for the typos. I had one eye opene and just woke up : )
It would be nice if builders built affordable housing ,but one wonders if the flippers wouldn’t just snatch up the product and try to do a flip on it .
The luxury condo market seems to be really weak right now .
Anyway, I think your right that the first time buyer affordable housing would be the market that would be needed .
if buyers start building affordable housing at just above cost (to keep busy) and flippers snatch up the new housing while the market keeps declining, that might be a good way to make affordable housing even more affordable
sorry, buyers above should read ‘builders’.
as a foreigner I really need an edit option …
“Will the builder that focuses on affordable housing be the one who survives?” — I was just thinking the same thing. I wonder if there’s some tax/regulatory/structural problem that makes it impossible to get a decent profit building $100,000 houses.
Given what I know about building costs, I can’t envision any profit in a $100,000 single family house anywhere in the country. Sad, but true.
Smaller houses can be profitable, but the “herd mentality” of home buyers have to think it trendy to go small. Maybe 1800 sq ft homes will make a comeback, but probably not soon.
Let’s start our own housing company. We can hire out-of-work construction workers. Let’s call it Green Homes. The environmentally friendly home for middle class Americans. Who says you can’t live in a home while helping the environment??
OR how about Apple homes. You know people would buy it. Outfitted with IPod jacks all over the house.
I live very happily in less than 1,000 square feet.
Ditto - “Small spaces concentrate the mind” - Japanese saying.
Re low starts/permits numbers: should lead to extreme weakness in construction employment in Q1 2007, esp. in bubble areas - will also have an effect on non-documented workers and will likely increase friction between competing groups - political overtones as new Congress is sitting and amnesty/immigration reform is near top of agenda.
about a year ago I noticed a major trend change in architecture books: there are now many titles available about small (and trendy) homes, apartments, offices etc.
There is also growing awareness of green architecture, but at least in Europe it’s only for the rich and upper middle class. Combining the two should be possible and would be great, especially for the US where housing (including construction etc.) is probably the biggest factor in energy consumption.
In the Netherlands an entry-level (existing, very basic) home now costs around 200K euro. It is possible to build new homes for small families, including a small garden, for around 75K euro (despite sky-high land and construction prices!). But nobody wants to build those homes, because all parties involved make more money by building a few luxury estates for the rich instead of a lot of smaller homes.
“The level of building activity in October was 27.4 percent below activity in October 2005, the biggest year-over-year decline since March 1991.”
And yet, the sellers continue to drink the Kool-Aid, holding onto 2005 pre bubble-crash prices on their listings. Down here, the new mantra is ” prices will rebound in the spring”, and I will simply list then.
for those who are interested in the ‘Herengracht Index’ and similar historic housing bubble facts, some anecdotal evidence of the current housing mania in the Netherlands.
I found some details on historic prices for my parents’ home; it’s similar to the homes that are included in the Herengracht index, but smaller and in a much smaller city (regional capital). The home dates from the 17th century and was never changed significantly (property size, building volume etc.), but there was an extensive restoration in 1971-1973, costing around Hfl. 150.000 I guess - partly subsidized. The official Herengracht index stops in 1970, just before the biggest price rush in history started.
Here are some historic sales prices:
1830: Hfl 1200,-
1868: Hfl 1540,-
1891: Hfl 2126,-
1970: Hfl. 10.000,- (before restoration)
* in 1980 there was a -40% housing crash in Netherlands
1990: est. value Hfl. 200.000,-
mid-2006: est. value Hfl. 1.300.000,- (EUR 600.000)
#10 From Dutch history, a real estate lesson
By Russell Shorto
Matthew Cox was arrested.
http://www.sptimes.com/2006/11/17/Tampabay/Sitter_s_fears_set_ar.shtml
The article is amazing. The 60-year old lady who was the part-time babysitter researched the web to figure out who he really was.
I thought there was something fishy about the big drop in oil yesterday. Is another hedgie about to bite the dust?
Dollar falls on talk of problems at hedge fund
By Wanfeng Zhou
NEW YORK (MarketWatch) — The dollar fell against the euro and yen in mid-morning trade Friday on market talk that a major hedge fund is in trouble.”Rumors of a major U.S. hedge fund collapse appear to be behind the dollar’s latest dip,” said Brian Dolan, director of research at Forex.com, a division of Gain Capital. Dolan said the speculation centers on Citadel Investment Group, which was not yet available for comment. The euro was last up 0.3% at $1.2833, while the dollar fell 0.5% at 117.60 yen.
Citadel? Crap get ready for some big swings in the Vix, they are one of the larger option market makers out there.
Hedge Funds=catastrophic systemic risk.
Counterparty failures are going to cause a lot of pain as firms realize that their hedging strategies don’t work as well in real life as they do on a computer model.
the only larger danger to our economic system is Fannie Mae. good thing they’re too big to fail. the silent bailout continues there.
Maybe Lereah and friends are have the inside scoop on the silent bailout at Fannie Mae. They must have some reason to be so utterly confident that housing inflation will get rolling again by late 2007…
Derivatives Trading Soars to $370 Trillion
“…The rapid growth of derivatives is also raising concerns that their ease of use may lead to market abuse such as insider trading related to leveraged buyouts, after unusual price changes occurred prior to the announcement of takeovers in the U.S.
Derivatives are financial obligations derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates.
Trading in derivatives overall grew 24 percent in the first six months…”
http://tinyurl.com/yy656l
Bloomberg
“What, me worry?”
I thought it was weird oil was going down so much, I guess its ala natural gas and aramanth.
Another major hike in insurance is expected in 2007 by Citizen’s, Florida’s insurer of last resort, as reported in the PNJ. Expect an echo bubble in Tennessee, Alabama, and Georgia as those states should be the destination of choice for most Floridians who speak English.
http://tinyurl.com/y76xo2
We will never allow India to overtake economically : China
“…It doesn”t matter whether China surpasses India. The key issue is how to keep China on a path of sound development, with long-term, rapid and sustainable growth,” the senior Chinese trade expert said….”
India daily
http://tinyurl.com/vqof8
And after this weeks APEC - India will be an even stronger economy.
“…This will probably be the fourth year in a row that the S&P 500 index has beaten the average hedge fund (as determined by the various hedge fund indices).
In fact, the S&P 500 thrashed hedge funds so soundly that the S&P Hedge Fund index shut down rather than face further embarrassment by its own sibling. And don’t even ask what happened to the Investable S&P Hedge Fund index run by Rydex. It was not pretty….”
Financial Times Nov 14
http://tinyurl.com/u94fe
So who is stoopid enough to invest in hedge funds and pay their unearned management fees, then? Is it just institutional players who gamble with other peoples’ money in exchange for a kickback? Because I have a hard time imagining enough really dumb, really rich folks out there who are willing and able to keep the hedge fund bubble aloft by putting their own skin in the game…
I swear this time around the bubble is worse. it’s hedge fund bubbles. private equity bubbles. every week there is an article saying “is there too much” of some investing vehicle or bubble employment.
Perhaps money is no longer a veil under conditions of a global liquidity tsunami?
http://en.wikipedia.org/wiki/Veil_of_money
Good one, GS.
“So who is stoopid enough to invest in hedge funds and pay their unearned management fees, then?”
Easy: Pension funds, insurance carriers, and the common man now etc. (like SD that got whalloped by Amaranth).
As returns started moderating, and pension liabilities started soaring, the funds require a higher yield. Thus, the pension managers start chasing yield. In the past, the Hedge funds were nimble and quick. They were run by some of “the best”. They were enormously profitable, both to the managers, and also investors.
This of course brought on overenthusiasm. Too many players now, most are incompetent at best. They’re all chasing the same returns. Thus, the market is more efficient, which makes exploiting inefficiencies even harder. (like what happened with LTCM’s arbitrage opportunities once all the other big firms hired their PHDs in mathematics)
Thus, the hedge funds must gamble more to bring higher returns. (like Amaranth)
As others have said… it works well. until it doesn’t.
Some hedge funds will blow up as they do every year. And sometime a big one might fail, bringing down everybody.
Then people will point fingers and ask “how can this happen”?
As we all know, gov’t intervention of any kind is bad. I hear it here all the time. And all the excesses and ills of society are directly attributable to the govt.
well, the gov’t has left hedge funds largely unregulated. They do what they want. And now we will see what total deregulation can do! Hooray. And when they implode, and take everybody down with them, many on this board will say “it was the FED waaaahhhhhh” (the fed is hardly free of blame, in fact they are culpa #1. but they’re hardly omnipotent, and thus others share the blame)
Yes, with freedom comes the freedom to fail. Those who trade their liberty for some perceived security deserve neither. You are assuming gov’t regulators know what is best. Time to grow up and not be so naive. Trusting any government is foolish.
Trusting any government is foolish.
——————————-
So we should trust a handful of self-interested, unregulated, manipulative crooks instead????
European Economies: Trade Gap Grows With China, Japan (Update1)
By Fergal O’Brien
Nov. 17 (Bloomberg) — Europe’s trade deficit with China and Japan soared in the eight months through August, increasing pressure on Asian government officials at the Group of 20 meeting this weekend to allow their currencies to appreciate.
The trade deficit with China grew 21 percent in the first eight months of the year to a record 55.1 billion euros ($70.4 billion), the European Union’s statistics office said today. China is poised to overtake the U.S. this year as the second- biggest source of imports to the euro area, behind the U.K. The trade gap with Japan widened 17 percent to 14.4 billion euros. …
A report commissioned by the U.S. Congress yesterday criticized the Chinese government’s policies on trade and said the U.S. should file a complaint at the World Trade Organization over its currency policies and intellectual-property violations. Liu Jianchao, a spokesman for China’s Foreign Ministry, today said the report by the U.S.-China Economic and Security Review Commission was “baseless.”
http://tinyurl.com/y8qn95
Bloomberg
The Times November 17, 2006
American buyout activity takes private equity into record territory
From James Doran in New York
MORE than $30 billion of deals involving private equity firms have been struck in America during the past 24 hours, cementing a record year for the industry.
Before yesterday’s flurry of deals, a record 901 private equity acquisitions, worth $289 billion (£152 billion), had been announced in the United States this year — almost double the value of deals struck in 2005 — according to data compiled by Dealogic.
*
That number swelled to 903 deals worth more than $320 billion yesterday as Clear Channel Communications, the largest radio station operator in the US, and Reader’s Digest Association, publisher of the world’s most widely read magazine, were sold to private equity firms. …
…For example, a consortium of private equity firms including the private equity arm of Merrill Lynch made a return worth billions of dollars as they floated Hertz, the car rental company on the new York Stock Exchange for $15 a share valuing the company at $4.8 billion. The firms bought Hertz for $2.3 billion, plus $13 billion of debt, last December.”
http://tinyurl.com/y63bf4
Timesonline Nov 17
I can’t beleive the media blitz that’s happening in San Diego at the moment. I just listened to “Editors Roundtable” on KPBS in the car. They were discussing how condo conversions are Gods gift to mankind. All the callers except one were praising the low price condo’s. The one caller was correcting a glaring error. She pointed out that you can deduct $250k/$500k of the profit from selling your house, they questioned the accuracy of this! Their point was how real estate generates taxes each time a house is sold…. Every now and then the KPBS journalist would say, so has the market turned? (after the 4% downturn).
I heard that. I was even going to make a comment, but the discussants were so clueless that I decided not to even bother trying to bring them to their senses — too hard to achieve anything with a fifteen second question. One has to remember when listening to such discussions that (1) the “experts” typically have never taken a college econ class and (2) all of them are home owners hoping above hope that price appreciation gets back on track soon.
Are housing #s giving StrFcks investers cold feet? It is awfully hard to afford overpriced caffeinated sugar water without any home equity ATM to pay for it…
http://tinyurl.com/yn6uqz
CNBC Market Dispatches11/17/2006 11:40 AM ET
Hard landing for the housing market
October housing starts plunge to a 6-year low. Nymex Holdings’ IPO skyrockets in its debut. Starbucks’ profit drops for the first time in five years.
http://tinyurl.com/y7s69l
(Didn’t know SBX was a sector housing stock now)
You sure are right about that one. When will people wake up and realize that are paying the same price for a cup of sugar water soaked in beans as they are for a gallon of gas. However, if Starbuck’s continues to sink, maybe people are finally coming to their senses. In fact, watching Starbuck’s trend (up or down) might give us some insight into the US economy. More free money and re-fi’s = more crowds in Starbucks. Less free money and less re-fi’s = less crowds on Starbucks. However, they don’t get my $3. I go next door to Ralphs and pay $1, then go and sit outside Starbucks. F*ck ‘em. I might be cheap - but I ain’t stoopid.
San Diego Isn’t the Only City With Pension Troubles: Joe Mysak
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_mysak&sid=aumexv8vt5rc
I was thinking along similar lines — SEC is the pot calling the kettle black. Why don’t they go after a bigger fish like Fannie Mae if they want to restore law and order to our financial system?
For schadenfreude’s sake — and don’t miss the last line:
“Help! Home for sale - Basile and Neuffer”
Two displaced Easterners get a lesson in the realities of California real estate.
http://money.cnn.com/2006/11/17/real_estate/help_Basile_Neuffer/index.htm?section=money_pf
Just in time for the holidays: The butcher getting a little misty eyed leading the sheep to the slaughter-house:
http://realtytimes.com/rtcpages/20061117_buyerswarm.htm
“I started the session and explained where mortgages came from, who loan officers and loan processors are and how mortgage rates are set. But I soon noticed something that I hadn’t seen in quite some time — people were taking notes. I mean really, really taking notes.
Everything I said they seemed to jot down in their workbooks. I could see wheels spinning and a few “a-ha’s!” every now and then. They acted exactly like college students. Good college students even. They were paying attention!
Then I again asked for questions: Boom! Nearly every hand shot up. And some of the questions were so naïve that it made me smile.
* “How much does it cost to apply for a mortgage?” (Nothing)
* “How much does a prequalification letter cost?” (Nothing)
* “Is the rate on my good faith my mortgage rate?” (No)
* “Is it okay to buy less than what I’m approved for?” (Certainly)
* “How much money do I owe everyone if I change my mind and don’t buy?” (Nothing, except maybe your earnest money)
What made me smile most of all is the thought that I had forgotten people even had such questions.
It was a young lady in San Diego who literally began to cry when I told her she was approved to buy the house she wanted. I got a little misty-eyed too. It’s the first timer that I’ll always love.
I think I’ll start doing these first time homebuyer seminars again. Good for my heart.”
Sniff, sniff. Where’s that jumbo-size box of Cleenex? “Where do mortgages come from, mommy?” Sniff, sniff. “Is it okay to buy less than what I’m approved for?”
Realty Times using the F-word (well almost) to describe SF prices:
http://realtytimes.com/rtcpages/20061117_bayfog.htm
“The median price of all homes — new, resales, single-family and condos — was dead flat in the nine-county region (which includes San Francisco and Silicon Valley) at $614,000 in October 2005 and October 2006.
The median hovered around $630,000 last spring and early summer, and spiked at $644,000 in June before heading down, DataQuick reported.”
Let’s see down to $614k from $644k. That’s not dead-flat in my book. That’s down 5%….
“For first-time home buyers, though, falling home prices are great news.
For them, declines get translated directly to the bottom line of how
much house they can afford to buy. But there could be one harmful
consequence for home buyers if prices fall too far: They might find that
they will have to pay a higher interest rate on the mortgage they get to
buy those lower-priced houses.”
Before you read on, let’s dispel one oft-repeated misconception which is parroted in the story. The big risk to new buyers is not that they might have to pay off a loan with an unacceptably large interest rate. The big risk is that if they buy now, they may find out they caught themselves a falling knife.
———————————————————————————
Real Estate Weekly
http://www.marketwatch.com/news/story.asp?column=Real+Estate+Weekly&dist=nwtreal&siteid=mktw
______________________________________________________________________
THIS WEEK’S REAL ESTATE STORIES
Homeowners do not want to see home prices fall. A drop in the value of
your house lowers your net worth, gives you less equity against which to
borrow and can generally sour your mood on a host of other financial
topics, including how much you are going spend on holiday gifts this
year.
Home sellers might be ambivalent about falling home prices. You
certainly don’t want to get less value on the selling end, because that
leaves you with less down payment for your new place. But if prices are
also falling in the place you’re looking to buy, you will need less down
payment in the first place. So as long as you are making it up on the
buying end, lower prices aren’t necessarily the worst thing that could
happen.
For first-time home buyers, though, falling home prices are great news.
For them, declines get translated directly to the bottom line of how
much house they can afford to buy. But there could be one harmful
consequence for home buyers if prices fall too far: They might find that
they will have to pay a higher interest rate on the mortgage they get to
buy those lower-priced houses.
Admittedly, that scenario is a stretch. But here’s how it could work.
Fannie Mae and Freddie Mac, the two giant mortgage agencies, can only
buy mortgages that are under what is called the conforming loan limit.
That limit is tied to an index of home prices, which has been rising
smartly most of this decade, pushing up the limit and expanding the pool
of loans Fannie and Freddie can jump into. That is generally good for
home buyers, since conforming loans carry interest rates about half a
percentage point lower than noncomforming loans, also known as jumbos.
The reset of the conforming loan limit comes each year based on the
Office of Federal Housing Enterprise Oversight’s October price numbers,
based on the difference in price from the previous October. This year,
for the first time, there is a danger that the 2006 price could be
significantly below the 2005 value, since October looks like it was an
especially rough one in the housing market.
That would create a problem for OFHEO and for Fannie and Freddie since
theoretically they could be forced to lower the conforming limit. And
that would push more home buyers into the jumbo category, particularly
in the highest cost markets in the country.
Before facing that conundrum, however, OFHEO said this week that if
prices do show a drop, it will allow the conforming limit to stay put
for 2007. That means loans of $417,000 and below will still be eligible
for Fannie and Freddie participation. You could hear the big sigh of
relief in mortgage circles.
The question, though, is what happens if there is a sustained downturn
in home prices? That would be unprecedented in the post World War II
era, but it could force regulators to drop the conforming limit for 2008
and set up a potential clash with those who think the limit is already
too low to do much good in the really high-cost cities.
Steve Kerch, real estate editor
Unbelievable.
“What made me smile most of all is the thought that I had forgotten people even had such questions”…THEY LEFT OUT THE REST OF HIS QUOTE:
“…and that I’d just discovered a fresh supply of GFs to help me pay for my 7series Beemer.”
These RE guys are masters of the non-violent shakedown.
You gotta love this guy - http://360.yahoo.com/profile-Z_CEVEQ1dLM4G5ZxiF9kXtrUIyw-?cq=1
Indicted on mortgage fraud in Oklahoma City - and still finds time to do a blog - ( hmm, does that sound familiar, Casey? ) and even moan about how busy things are in real estate in OKC. Read his blog - it is a lot of laughs - “Anyone who thinks we are in a downturn in real estate is crazy - things have been SOOOO busy here” — I guess they are busy when you are committing fraud — http://www.mortgagefraudblog.com/index.php/weblog/permalink/seven_indicted_in_oklahoma_cash_back_at_closing_scheme/
Come to think of it, Mr Casey Serin - iamfacingforeclosure.com - what this guy got indicted for and what you did by defrauding the lenders - are not that far apart. I wonder how long Casey has….before iamfacingcriminalindictment.com
Time will tell.
In case anyone has access to the Sydney Morning Herald, here is a story that is worth a look. It brings to mind California fruit growers who sometimes allow the fruit to rot on the vine rather than incurring the cost of picking it and selling on a glutted market.
———————————————————————————–
Empty homes that will make renters weep
AS SYDNEY’S rental crisis deepens, public housing worth millions is being left to rot or sit empty in a prestigious city location with harbour views.
Sydney Morning Herald 18/11/2006
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Whitney Houston reportedly faces foreclosure
http://news.yahoo.com/s/ap/20061116/ap_en_ce/people_houston