Bits Bucket For September 1, 2009
Post off-topic ideas, links and Craigslist finds here. Please visit the HBB Forum.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
June 2025 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
U.S. Cities’ Woes to Worsen as Taxes Trail Pace of Recovery.
Sept. 1 (Bloomberg) — U.S. city officials say they expect to face further financial strains because tax collections won’t recover until after the economy emerges from the deepest recession since the Great Depression, a national survey found.
Eighty-eight percent of city finance officers said they are less able to cover the cost of running their governments than a year ago, up from 64 percent a year earlier, according to a survey of 379 cities by the National League of Cities between April and June. It was the most negative assessment since the survey began in 1986. Eighty-nine percent said the next budget year would be even worse.
The survey points to increasing pressure on municipal officials even as the economy shows signs of recovering from the recession that began in December 2007. While property values have plunged since 2006, with home prices down 15.4 percent in June from the year before, according to the S&P/Case-Shiller home-price index, it can take years for that decline to be fully reflected in real-estate taxes. They provide about 32 percent of municipal revenue, according to the city group. Sales taxes can also drop until months after consumers start spending.
“Since city fiscal conditions tend to lag behind national economic conditions, the effects of a depressed real estate market, low levels of consumer confidence and high levels of unemployment will likely play out in cities well into future years,” according to the National League of Cities.
While states cut their budgets during the most-recent budget year, the survey shows that cities continued increasing spending even as they stopped hiring, delayed projects and adopted other cost-saving measures. Nearly half of city budget officials said they raised fees to boost revenue.
“…will likely play out in cities well into future years,” according to the National League of Cities.
What they don’t mention is that people will start voting with their feet. Astronomical pension obligations, perpetually thirsty school systems, soaring payrolls - will all drive up property taxes, sales taxes, and fees & fines of every nature. Already those that can work for cash are stepping up their activities, and everyone except the dirt poor and the pathetically optimistic/trusting knows to travel at least as far as the collar counties to buy big ticket items, and even groceries.
Oh yeah, we are watching this unfold in slow motion. For instance, today (Sep. 1) state taxes on liquor, candy, and soda are all going up. This meant that the state gov’t had to actually define: “what is candy” The answer: if it has flour - it is NOT candy - so Kit Kats are not candy, but Tootsie Rolls are candy. Difference in tax: 1 vs. 6.25 %
Yeah, that is so confidence inspiring I can’t begin to tell ya, makes me want to snap up another condo this afternoon - not!
Yeah, that is so confidence inspiring I can’t begin to tell ya, makes me want to snap up another condo this afternoon - not!
How abouta case o’ Kit Kat?
Nah, but Whoppers will do - and according to the all knowing, all seeing Land of Lincoln - Whoppers contain wheat and are therefore not candy!
Well you know who is behind this fiasco of food vs candy?
The corporate farming agri biz CORN, high fructose corn syrup biz. Not a tin foil moment, but seriously, who was on the ‘Board” to decided what was what? And if it was a congressliarperson, we could probably see who donates to their bid for office. Jus saying.
Cr4p should be taxed if it has corn syrup in it. I just watched the documentary, King Corn, disgusting!!
You’re dead on dd. Reading the law a little further one learns that food and beverages containing wheat, corn, and soybeans are all excluded.
IL of course being knee deep in corn and soybeans.
Soy has been linked to thyroid problems. So, consume it with care. (I speak from personal experience on this one.)
Slim you are so right. Soy is a serious problem for the male population also, too much estrogenic properties in it for the male ‘dna-lia’ or ‘genitic-alia’ The soy in foods goes to issues with their prostrate prostates, cancers.
And soy is big problem for us. Frankly, the asians dont’ have the huge breast cancer counts or other cancers as we do, because I believe they do not have Genetically modified soy. And out entire crop of soy from the Agri Corps are strictly genetically modified soy, corn etc.
The soy in foods goes to issues with their prostrate prostates, cancers.
Not according to the internet
I’ve also read that heavy soy diets are connected to Alzheimers. i’m back to whole milk.
From Phoenix
‘Extreme Makeover’ home in Gilbert for sale for $1.3 million
111 commentsby Richard Ruelas - Aug. 29, 2009 12:00 AM
The Arizona Republic
The first home in Arizona to get the “Extreme Makeover: Home Edition” treatment is for sale, the family blessed with the two-story mansion saying it is looking to escape the crushing bills that came with the house.
The extreme-home asking price: $1.3 million. The Gilbert house, on Redfield Road, has six bedrooms and six bathrooms.
The home was built as a surprise gift to Kassandra Okvath, then 9, who had written to the popular ABC show, asking it to remodel the children’s rooms at a cancer ward at the University Medical Center in Tucson.
Kassandra had been a patient there.
Producers were touched by her letter and granted her wish, sending Kassandra and a crew of Walt Disney Studios animators to the hospital.
While the family was gone, crews leveled the Okvaths’ ranch-style home and replaced it with one that encompassed 5,300 square feet and included a movie theater and a backyard carousel.
Thousands of Arizonans turned out to watch the unveiling of the house on a rain-soaked day in February 2005.
Millions of viewers nationwide watched the March 2005 broadcast.
Bryan Okvath, Kassandra’s father, said the family was happy to get the home on the market.
It was listed Aug. 19 with Keller Williams Realty.
“It took us a bit just to get it cleaned up,” he said. “That was a big challenge.”
People who come to visit the home will “have to understand it’s a lived-in house.”
He and his wife, Nichol, who have added a seventh child, had those extra small hands to help clean up.
“But they’re (also) usually tearing everything up behind us,” he said.
Since moving in, the Okvaths faced soaring utility, landscaping and general-maintenance bills for which they were unprepared.
The Okvaths took out a $405,000 loan on the home in 2006. It was an adjustable-rate mortgage, and the Okvaths struggled to make the payments.
They almost lost the home to foreclosure in 2008.
The home was first on the market in 2007, for $1.8 million, and still didn’t sell when the price was reduced to $1.5 million.
Bryan Okvath, who most recently worked as a long-haul trucker, has suffered back problems and is unemployed. Nichol is planning to enroll in culinary school.
Bryan said the family most likely will rent a home in the Phoenix area after the home sells. He expressed confidence that the home would fetch the $1.3 million price.
The home’s Realtor called the price “optimistic.” Tony Moore said most million-dollar homes in Gilbert are in gated communities. The Okvath home is on an acre lot in an area zoned for horse property, he said.
“The challenge is you have to find that right buyer who likes the farmlike surroundings,” Moore said.
I guess it will sell for $950K so they can get their piece of the $500K tax free gains….
I hate that show. Instead of helping people, they are doing nothing but adding to their problems by saddling them with maintenance bills they will NEVER be able to pay.
I guess the idea is that they should quietly sell after all the publicity has died down and take the money and buy something more appropriate.
It’s like always say, “Never take a million dollars from just anyone as they may give you 2 million dollars worth of problems to go with it.”
There was an Extreme Makeover in Tucson a few months ago. I recently read a construction industry trade paper that noted the numerous safety problems on the job site. Fortunately, no one was hurt, but let’s say that was more due to luck than anything else.
And not surprisingly, it was reported today in the Sun-Times that although sales tax receipts are down in all Chicagoland counties (10.6% over last 6 months), they were down the most in Suburban Cook (11.9%).
I guess raising sales taxes in Cook County last year to 10.25% might not have been the best idea…
Why the brick n’ mortar store owners aren’t leading a wider tax protest is beyond me.
Probably because they are pocketing some of that additional tax revenue? Those new electronic cash registrars have some pretty fancy features on them.
Speak the truth, Skip. I used to work in a bike shop that was down the street from another bike shop that went out of business. Reason for that shop’s demise: State sales tax evasion.
Now, lemme tell you something. That shop had a much, much, MUCH nicer cash register system (called, I kid you not, a POS system — that stands for Point Of Sale) than we did.
And, knowing that shop’s owner the way I did, I wouldn’t have been at all surprised to learn that he set the reg up to skim what should have been going to the state.
Here they just dont ring it up in most bodegas….
so less sales less taxes ………on the register of course
hmmm, what else could POS stand for….?
Piece of…
Piece of…
Piece of something?
Port of Seattle! We lost a bid there once.
“although sales tax receipts are down in all Chicagoland counties (10.6% over last 6 months), they were down the most in Suburban Cook (11.9%)”
I am in Suburban Cook and just about everyone I know is making regular shopping treks to Lake County.
One of our kids and the spouse moved from Chicago proper to the Denver suburbs. While the tax situation wasn’t the reason, they were flabbergasted to learn what a “normal” sales tax rate is.
I wonder how sales tax receipts are doing in nearby Indiana counties — are Chicagolanders “voting with their feet” even more than usual when it comes to cross-border commerce in liquor, cigarettes, gas, etc.?
Everyone I know who travels to Michigan or Indiana regularly takes advantage of the disparity in prices.
Don’t have the numbers for the Chicagoland counties (Lake or Porter), but statewide sales tax revenue is down, down, down. The price differential for gas used to be quite significant, but IN has raised its sales tax (now 7%) to compensate for lost property tax receipts, so I assume that much of the gas price price arbitrage advantage has eroded.
I don’t smoke, so I couldn’t tell you how much IN benefits from the difference between IL and IN. Fewer smokers probably makes the out of state purchases essentially a wash. At least that’s my guess.
Higher taxes notwithstanding, IL allows delivery of out of state wine. IN doesn’t and regulates liquor sales as though it was still the 1930s and the moonshiners are trying to outrace the revenuers.
This is going to be a big problem. Unfunded pension and retiree health care obligations from the past, at benefit levels most people don’t get, and debts from the past, drive a wedge between the taxes people pay and the services they receive. And absent bankruptcy, they can’t be cut.
We face decades of diminished services, deteriorating infrastructure and public buildings, and rising state and local taxes. To go with rising federal taxes, and cuts in Social Security benefits, federal health benefits, and the social safety net.
Generation Greed has picked this country clean. Having the dollar lose its reserve status will be the final insult.
Exactly! And the take away is that going forward every future house buyer (especially the coasts and large cities) ought to allow for all those factors when making an offer.
sounds like our wish to be like the europeans is coming true…yippie!
Sorry, but Europeans GET public services and benefits.
Swedish taxation, with Nigeria services and benefits is more like it.
i was speaking from a more general “standard of living”.
I missed the part about real universal health care, free/subsidized child care, and fantastic public transport. Otherwise, yes, ‘we’ are like Europeans.
You mean I can toss out that stupid “Countdown to 2012″ clock the kids got me? Thank heavens, let’s get this over with!
we will get to the diminished standard of living…the free stuff will just give us something to hope for.
I missed the part about real universal health care, free/subsidized child care, and fantastic public transport. Otherwise, yes, ‘we’ are like Europeans.
Don’t forget free military defense, courtesy of the U.S.
Yahoo has an article on how the French workers are more productive than US worker and work 25% less hours per year.
No housing bubble, no housing bubble blog. No housing bubble blog, employees do work or something.
“Don’t forget free military defense, courtesy of the U.S.”
Oh but they don’t need that. All’s well in Europia.
sounds like our wish to be like the europeans is coming true…yippie!
WeJamEcono, it doesn’t sound like you ascribe to the same belief system as the fine fellas you ripped your handle off from … (What would Watt say?)
VaBeyatch,
True, LOL and uh… too funny.
But wouldn’t we all have been a lot better off if we were on local blogs that get 3 Comments a week complaining about millage rates or… the new sewer bond than attempting to plug ‘this’ dike?
I post all the time on the local newspaper site about the housing bubble. I used to be the only one, now when I show up others have beat me to it. And I’m cool with that.
the sarcasm in my post was suppose to illustrate that the ‘we should be more like the europeans’ crowd will probably be very unhappy with the result.
i think that a diminshed standard of living through more savings generated through hard work along with a greater emphasis on self-reliance would be good for this country.
a diminshed standard of living through a burdensome tax regime, weak currency, and a heavy handed central governement would not.
i wonder which one we will get…i suppose the latter…and watt would probablhy agree.
“And I’m cool with that”
Right, in 2004 I was like “Hey! This is ‘my’ bubble, “I” found it!” ( Sure could’ve used a wee bit more mainstrean recognition back then but..?
Of late I’ve had several friends and local posters say, they simply couldn’t TAKE it any more and that it was getting altogether too depressing.
And I agree. You finally get some time together w/ your spouse and find yourselves talking about “that @ssclown failed flipper down the street” cluttering up the view w/ his/her multiple For Sale/Price Reduced signs and thinking, “Why am I wasting my OFF time on this!?”
the sarcasm in my post was suppose to illustrate that the ‘we should be more like the europeans’ crowd will probably be very unhappy with the result.
i think that a
diminshedDiminished standard of livinI dont’ see that at all in Europe, UK, Japan, Sweden, etc.
Friends in all those countries don’t seem to be lacking in quality of life.Period. And I mean friends in mid to lower economic level.We know the upper level is just fine and dandy. Seriously, travel is a great Enlightener.
The working poor vs and the not working poor- is another subject/post.
Nickel and Dimed. Read it, Jamecono- We have many hard working people who dont’ even make poverty level wages, but still work all the time.
While I’ve always loved the coasts, I’m starting to wonder if the best places to live might be found in flyover country. There seems to be much more of a sense of community, better schools, and less of the out of control spending by local governments.
I just visited Quebec with my aunt. We were both struck by how prosperous it looked as compared to Vermont. And, no, we weren’t in any major cities. Just the countryside.
I dont’ see that at all in Europe, UK, Japan, Sweden, etc.
Friends in all those countries don’t seem to be lacking in quality of life.Period. And I mean friends in mid to lower economic level.
That was my point, too.
Perhaps it was too oblique for the person who stole their handle from a punk band that was proud to be both working class and openly in favor of the kind of benefits that many Europeans enjoy.
“We face decades of diminished services, deteriorating infrastructure and public buildings, and rising state and local taxes.”
I wonder how the Romans felt when all this was happening to them?
one of them fiddled.
The “fall” of Rome happened so slowly that the residents didn’t even know it was happening. At least that’s what I heard on PBS.
the residents didn’t even know it was happening.
Some knew but blamed everyone else. Sorta like now.
kinda like the frog in the boiling water.
Ever see the movie, ‘Idiocracy’?
“The “fall” of Rome happened so slowly that the residents didn’t even know it was happening. At least that’s what I heard on PBS.”
Well, the deterioration happened slowly. But the end was pretty visible and bloody. With Visigoth barbarians pillaging the city.
Interestingly, the Romans created an economic system that concentrated wealth in the hands of powerful landowners, who, of course, pushed to have their tax rates continuously lowered. Thereby starving the government of the resources needed to maintain the kind of overwhelming military force needed to fend off the roving bands of barbarian tribes.
Nothing like here.
In the beginning of the show “Middle Ages” on History Iinternational, they begin at the fall of Rome. When they talk about the aquaducts and the Colliseum falling to ruin because no one was maintaining them, it was quite depressing. I can’t imagine watching systems you took for granted slowly disintegrating while civilization regressed.
The level of education among the masses reversed and soon virtually only the monks continued to read and record history.
Then there was the churn of the clannish power structures w/intermittant rises and falls of enlightenment through the centuries. The Plague didn’t help. Just as plans were being made to restore Rome to its former glory illness swept the countryside and reduced the population by about a third. It took almost a century to recover from the resulting economic devestation. (Cue the swine flu warnings)
But we shouldn’t get all caught up in history. That could never happen again. We’re much smarter than they were.
kinda like the frog in the boiling water.
How do you keep a frog in a pot of water without a lid anyhow?
I can’t imagine watching systems you took for granted slowly disintegrating while civilization regressed.
I can.
“but…its got electrolytes.” “Brawndo is what plants crave!”
The Roman Empire fell? Someone forgot to tell the Pope. Isn’t he still sitting on a golden throne in Rome, running an enormously wealthy and powerful worldwide empire. The Romans weren’t dumb. They saw the writing on the wall and switched to a different, more secure form of governance.
And the Eastern Orthodox church can make a similar claim to be maintaining the Eastern half of the Roman Empire. Czar is actually a corruption of the word ‘caesar’. And isn’t Putin the new czar?
A good empire never really dies, it just transmogrifies.
“And absent bankruptcy, they can’t be cut.”
I think the states and cities are going to have to go bankrupt at some point unless they can negotiate substantial modifications with the unions. Now, don’t laugh. It won’t happen the first 3 or 4 states or substantial cities or counties, but if it starts to happen over and over, they just might come to the table.
Slow motion? Glacial to start with, a little faster after that.
I’m back from vacation, all. Very Shallow report on Canada and an HBB lit crit assessment of a few plays from the festival later in the week. It was nice to be away for a week, but it is nice to be back too.
The water district corps don’t have unions. What about their pensions? The unions are less than 11% here in the us.
I believe the gov is the largest employer and will have to look at these things.
Unions are not the problem as they are the smallest cog in the wheel. At least name a particular union, they are not all alike in size and scope.
The problem is that the middle class is shrinking and they don’t have the money to keep the economic expansion running, the goose that laid the golden egg has been cooked and eaten by the elite. They covered it up for a while with cheep loans. Many like to vilify the unions but they are one of the few organizations that have the financing and organization to stand up to the corporate take over of our government.
The 1950’s & ’60’s were the greatest age of economic expansion and wealth creation in the nation’s history. They were also the period when the country had the highest level of unionized work force.
I wonder if the two are somehow related.
problem is that the middle class is shrinking and they don’t have the money to keep
The corps owned congress shot the goose that laid the good eggs.
And Jon, I too wonder the equation between huge growth/education/ prosperity and large unionization. Gee wonder if it had anything to do with prosperity overall?
The 1950’s & ’60’s were the greatest age of economic expansion and wealth creation in the nation’s history. They were also the period when the country had the highest level of unionized work force.
I wonder if the two are somehow related.
No.
A. I venture that the mid and late 1800’s were far better. It wasn’t called the industrial revolution for nothing.
B. In the post-WWII period we had the distinct advantage in that every other significant industrialized country in the world had just been mostly destroyed, aside from possibly China who had their own other problems right about then.
One need only look at the auto and airline industries for instance to see the results of unions.
“The 1950’s & ’60’s were the greatest age of economic expansion and wealth creation in the nation’s history. They were also the period when the country had the highest level of unionized work force.”
Unions in the United States achieved their highest level of numbers and powers after World War II when half of the nations in the world had their constructive capacity destroyed and the other half were shrouded behind the political Iron Curtain.
I wonder if the two events are related? Gee, let’s think. The unions thrived when there was effectively no international competition. So, clearly it was solely the actions of the unions that led to our prosperity. Geez.
I put the highwater mark at about 1960-1964. For damn near everything.
“Boy, the way Glen Miller played…”
Generation Greed and Generation Whiner make a great pair don’t they.
YUP busted a spring and strut one leisurely afternoon on the BQE hit 3 big potholes in a row couldn’t avoid them i was in back of a big semi and traffic was heavy
—————————————————————-
deteriorating infrastructure
couldn’t avoid them i was in back of a big semi and traffic was heavy
That should teach you to tailgate.
lavi geez not tailgating, if i stopped short i would have been rear ended or if i swerved i would have hit the cars on my left and right….not a fun situation to be in
“Generation Greed has picked this country clean. Having the dollar lose its reserve status will be the final insult.”
Exactly who is it that promised cradle to grave entitlements to all the illegal immigrants? Exactly who is it that promised free income to everyone over 62?
Exactly who is it that guaranteed the destruction of American manufacturing by over-regulating every shop with over 50 employees? Oh yeah, well meaning, progressive, and generous with OPM politicians. The same politicians who now say “No one could have seen this coming”. Greed did its share,yes; but WELL MEANING, CONCERNED FOR THE LITTLE GUY legislation also did its part in gutting the nation’s economy like a cod too long at the market, glazed-over eyeballs, slimy feel, and unsettling aroma included.
But when unions were at their most powerful, the country was doing great. We’re now seeing what happens when corporations are at their most powerful. It doesn’t look quite as successful.
So very true, alpha-sloth.
I’m also in the camp that would much rather see the productive citizens get the benefit of their labor, instead of the corporations who control money flows and the political structure.
We need unions to counter the money/strength of the corporations. Right now, it’s a unilateral system, with corporations moving more money and power in their direction at an accelerating pace.
“We face decades of diminished services, deteriorating infrastructure and public buildings, and rising state and local taxes. To go with rising federal taxes, and cuts in Social Security benefits, federal health benefits, and the social safety net.”
We just went through decades of exactly the same thing.
Meh.
The cities need to renegotiate with the various unions to cut wages by 30-40% in most cases. Also to shelve a lot of programs.
I bet I could have things straightened out in a couple of months on that front.
The larger lingering problems will be the downward pressure on prices, rents that lag incomes dropping.
Its all adjustments to align with a lower velocity of money. More deflation here.
Clean up Jersey first. James.
Again, someone at the top is reaping all the rewards.
And the east coast has alot of mafia-like overlords in every crevice/union.
So let me get this straight; private unions are good, but public municipal unions are not. We’re willing to pay more for goods, but not for services. I’m perfectly willing to be against ALL unions or for ALL unions. I know I can’t have it both ways, but darnit I want to have my cake and eat it too. sarcasm off.
You don’t have to be at an extreme for this. Most of us have benifited from Unions in a big way. They are also useful from a large scale perspective.
However, the big problem with the government negotiations with unions are always poorly from the public’s perspective.
Used to be govt jobs were lower paying and less desirable. now they are getting hot. So, just like the private sector, paycuts for all. Unlike the private sector it will probably be universal vs directed at low performers.
@desertdweller
I pulled the eject lever on NJ a long time ago. Mom is still there but I make her travel rather than visiting the toxic waste dump.
From Mauldins - Outside the Box.
Spain: The Hole In Europe’s Balance Sheet
Dives sum, si non reddo eis quibus debeo.
I am a rich man as long as I don’t pay my creditors.
Titus Maccius Plautus (c. 254-184 BCE), “Curculio”
Themes
Spain = Japan 2.0? - We argue that 1) the real estate crash in Spain is worse than is widely believed, 2) Spanish banks are hiding their losses, and 3) investors are smoking crack if they believe that Spanish banks are among the strongest in Europe, (see Forbes latest Spanish Banks In Top Form). If all these are true, Spain will soon have zombie banks like Japan.
Banks are hiding losses - We believe that Spanish banks are not marking their real estate loans to market and are extending credit to zombie construction companies. They do this by 1) Getting a boost from accounting changes, 2) Not marking loans to market, 3) Continued lending to zombie companies, 4) Extending 40 year and 100% loan-to-value loans, and other bubble-like lending practices. We look at each of these in turn.
Spain is in deflation - In a deflationary environment, servicing debt becomes even harder. Even when rates go to zero the real burden of debt goes up. That is why deflation is such a terrible thing. Eastern Europe, Spain and Ireland are now all experiencing the beginning of deflation. We believe that we will see much more deflation to come, which will have broad ramifications across the European banking sector.
Who’s holding the bag? - The periphery countries are net debtors, and the rest of Europe is the net creditor. When a debtor can’t pay, the creditor suffers. Germany, France and others will need to cope with recapitalizing the periphery and Spain.
Spain is in deflation - In a deflationary environment, servicing debt becomes even harder. Even when rates go to zero the real burden of debt goes up. That is why deflation is such a terrible thing.
Personally I don’t see that as a terrible thing. It helps us see debt for what it really is - a burden, not an opportunity.
“That is why deflation is such a terrible thing….for debtors.”
Southern California is burning hotter by the day, and it is not even the red hot Santa Anna fire season yet. Does this put you into the mood to buy some LA homes at fire sale prices?
* The Wall Street Journal
* U.S. NEWS
* SEPTEMBER 1, 2009
Fire Spreads to 100,000 Acres
First Evacuations Ordered Within Los Angeles City Limits; Blaze Burns 53 Homes
By TAMARA AUDI and PETER SANDERS
LOS ANGELES — Another day of scorching heat and low humidity helped the massive wildfire north of here burn through thousands of additional acres on Monday.
Firefighters scrambled on multiple flanks to protect houses as well as a mountaintop communications complex that is home to the historic Mt. Wilson Observatory and most of the transmitters for the city’s television and radio stations.
A U.S. Forest Service firefighter used a drip torch to light a backfire in the Los Angeles suburb of La Crescenta, Monday.
“This fire is growing by leaps and bounds,” said Steve Whitmore, a spokesman for the Los Angeles County Sheriff’s Department. So far, 4,300 homes in Los Angeles County have been evacuated as a result of the fire, he said.
By midday Monday, as crews continued to battle the blaze, the so-called Station fire had burned more than 100,000 acres and stretched 20 miles from east to west.
…
Firefighters scrambled on multiple flanks to protect houses
I think its a waste for firefighters to risk their lives to protect houses.
Did they even check with the owners to see if they preferred that their house burn?
I have a friend out there who is underwater, not to mention unemployed (almost a year now). Have no idea how he’s even paying the mortgage at this point. He hates LA and wants to move, but is trapped by the house. I’m sure he wouldn’t mind not saving his house were it to be in the path of the fire (it’s not - just smoky where he is).
I dont think anyone likes LA if they live east of the 405. What is there to like? Smog? Traffic? Crowds? bad schools? Crime?
CentralCoastDude,
I love LA, but you are correct. Excluding the “Whilshire District”, OC, and some of the valley, East and West of the 405 are two different worlds. The issue is the premium required to live West of the 405 is more than the incomes truly support.
Got Popcorn?
Neil
I am 3 blocks east of the 405. I loved LA until I read your post
grrrrrrrr……..
“What is there to like? Smog? Traffic? Crowds? bad schools? Crime?”
Name a large U.S. city that doesn’t have extra helpings of all of the above.
“What is there to like? Smog? Traffic? Crowds? bad schools? Crime?”
Name a large U.S. city that doesn’t have extra helpings of all of the above.
L.A. is the worst city in America on those measures. While it’s true that all cities have those problems to some degree, the problems in L.A. in those areas are massive.
“Bloody red sun of fantastic L.A.” - Jim Morrison
I see Jimena’s expected to hit Baja CA on Thursday. Is the hurricane expected to bring the end of the fire danger?
A friend of ours in the area posted facebook photos of the smoke as seen from his neighborhood. He told us, although the photos look intense, the fire is still an hour away from their home. The thick black smoke is frightening. I hope any hbber’s in the vicinity stay safe.
Seriously.
I have about 80 properties in my ZipRealty account - and I haven’t seen a price cut in two weeks….
Apparently, someone told them the bottom is here in LaLaLand, so they don’t need to reduce prices anymore.
Fires?
Meh…. just makes the remaining properties more valuable….
This is in Charlotte, N.C. There is such a glut of condo’s nation wide it is going to take years to clean this up. These units were priced in the low 300’s to 2.2 mil. Of course they did offer a 1000 bottle wine cellar.
Construction halts at Vue
Tower was one of the few remaining bright spots in uptown’s faltering condo market.
Construction on The Vue, a 51-story uptown condo tower that kept on building as others stalled, will be stopped as of today because the developer hasn’t paid its bills, according to an e-mail sent Monday by the project’s general contractor.
It’s the latest sign of trouble in the center city condo market, where sales have plunged in recent years. The delay also illustrates the real estate market’s lingering weakness as lenders scrutinize projects more closely than in the past.
The e-mail to subcontractors, signed by contractor R.J. Griffin & Co.’s senior project manager and obtained by The Observer, said Griffin had not been paid for work done in July and, while it has been working with the owner and lenders to resolve the matter, “to date we have been unable to reach a resolution.”
As a result, the contractor directed subcontractors to stop all work on the $275million-plus project effective at 12:01 a.m. today, according to the e-mail.
Calls to R.J. Griffin’s Charlotte office were not returned. The Vue’s owner, Chicago-based MCL Cos., declined to talk with The Observer.
At the work site, at Fifth and Pine streets, workers streamed out of the tower at the shift’s end Monday, carrying an assortment of items, such as ladders, buckets and drills, that workers often leave overnight. Workers with four subcontractors, and half a dozen Griffin employees, said they had been told that work might stop because of unpaid bills.
Employees also removed R.J. Griffin signs from fences and used cranes to hoist portable toilets and other heavy equipment to the ground from The Vue’s upper floors.
Michael Smith, president of Charlotte Center City Partners, said MCL’s president and CEO, Dan McLean, told him the project is not shutting down and that it is “working through issues with lenders right now.” Smith said he spoke to McLean on Monday afternoon, after The Observer called to ask about The Vue.
The condo tower is an important project for Charlotte, Smith said, adding McLean is an “experienced developer” and “I have confidence he’ll be able to work with his partners to bring a great product to our center city.”
Two years ago, uptown Charlotte seemed about to burst with high-rise housing. Plans were announced for up to 20 projects.
51 stories? In Charlotte? I don’t think there’s a single building in the entire DC Metro area that’s that tall, except the Washington Monument.
Yes but of the 51 stories, 41 are underwater.
LOL - good one.
I’ve always wondered, why such enormous structures as the pyramids were built, and apparently abandoned. Fore shadowing? Dubai? Charlotte?
Here’s an interesting article on the subject - Skyscrapers and Business Cycles.
It’s very true and makes quite a bit of sense. The latter stages of the biggest booms are characterized by the kind of hubris needed to overbuild things like tremendous skyscrapers.
Burj Dubai is a perfect example.
Thats pretty good. The Myan’s abbandoned their cities due to a massive property bubble and went back to living in huts. Seemed like the best solution.
Explains the 50 yr cycle down there. Probably wrote off all the bad loans every 50 yrs.
This whole bubble… so hard to get anywhere to finding resolution because all the rich people are vested in keeping things going the way they are or extracting themselves while dumping all the losses on the rest of us.
Again the wealth distribution is getting worse rapidly.
james,
You ‘may’ not be that far off? In the end, only (1) top dog Shaman was left and he owned ALL the property! LOL. Then when there were no more ‘willing’ sacrifices to feed the Real Estate God, everyone scampered off back into the jungle from whence they came?
( Leaving no peons to maintain this ancient day Donald Trump to boss around? ) Starting to sound oddly familiar?
Thats pretty good. The Myan’s abbandoned their cities due to a massive property bubble and went back to living in huts. Seemed like the best solution.
It was apparantly the only way to rid themselve of a plague of Realtors(r). Who are we to question their judgment?
51 stories? In Charlotte? I don’t think there’s a single building in the entire DC Metro area that’s that tall, except the Washington Monument.
FWIW - the 60-story BofA building in Charlotte is the tallest building between Philadelphia and Atlanta. Charlotte’s no skyscraper slouch.
Nevertheless I can’t imagine a 50-story building just for condos *anywhere* in the U.S. except maybe Manhattan or south beach.
Austonian condo building in Austin - 56 stories. It towers high above the nearby downtown iconic Austin skyline buildings.
Austin now is the new Manhattan and LA rolled up into one.
Is that the tower over there by the Whole Foods? Passed through Austin a few weeks ago and saw some big condoze. If I didn’t already know about the global real estate bubble, that sight would have amazed me. Instead it was just, meh.
Wow.
Guess I could see that, given Austin’s lack of available land to build on.
tower over there by the Whole Foods?
The Austonian is further east. South of Whole Foods, on Lamar real close to the river, is The Spring, 42 stories and on a small footprint - a spire-type thing. The one that dominates the landscape is 360, just west of Whole Foods with kind of an elongated footprint. I would probably see it from my roof, but fortunately I don’t see it from my yard. It looms annoyingly over the landscape as I move around my neighborhood and nearby haunts.
Austin’s lack of available land
actually, it’s Austin’s abundance of hipness -it’s all “urban” now, baby
Yeah, we saw some of that hipness at a place called the Woodland Cafe? The neighborhood around Woodland had a greater concentration of ‘for sale’ signs than I think I have ever seen in my life.
I googled Woodland Cafe. It’s not too far southeast of where I live. There’s a LOT of apartments converted to condos around there. When I check for foreclosures in my zip code, a lot of them seem to be those units, which has been the case for some time. Woodland Cafe is probably on the north side of a swathe of them that stretches from S Lamar to 1-35. I think there’s a development or two of “green” McMansions in that area too that were probably too late to the party to sell.
In Zilker neighborhood it’s only the Kinney Lofts that have a stunning number of for sale signs in front (and I bet a lot of those just don’t sell and people are just stuck there or renting them out at a loss). But if you focus just on McMansions, it’s surprising how many are for sale after not having been lived in for long (or in the case of some, ever).
I’ll check the neighborhood around the Woodland Cafe when I finally get out on my HBB photo excursion (downtown tower madness, shoddy conversions, halted construction, empty ground floor space in VMU projects, idiotic ‘hip urban’ RE signage, billboards pimping the park and springs to sell condos, etc). I’m waiting for a Sunday morning to avoid traffic, but I’ve been out of town a lot lately.
edge,
My longer post hasn’t showed up. Anyway, I made note of the area you mentioned, as I’m going to go out and take some Austin photos for HBB on some Sunday morning. I reckon that the area south of the Woodland Cafe from Lamar Blvd to I-35 has lots of FBs, including apt-to-condo conversions.
When can we expect Ken Lewis to do a swan dive from the roof?
When you guys with the pitchforks and tar and feathers chase him up there.
I’ve got the feathers and a couple pitchforks. Who’s bringing the tar?
Gosh, no reply. Where is everybody? Out melting tar?
DC Metro has height restrictions I thought? Forget why. Nothing can be taller than the monument? So people can’t fire down at the white house? Planes? I’ve heard various reasons.
I think it has something to do with the, errr, size of the Washington Monument. You know how guys are about that sort of thing ;-)…
LOL zinger!
DC does have hiehg restrictions. No building can be higher in elevation than the Freedom Statue on the dome of the Capitol building, except the Washington Monument. I think the National Cathedral tower snuck over because it’s on a hill, but who’s gonna argue with God?
But there are no height restrictions once you cross the borders into Maryland and VA. There are some tall buildings just across the river (Rosslyn), but nothing 50 stories high.
i think DC has a rule that no building can be taller than the washington monument…not sure if it’s true.
Actually, no building in DC can be taller than the Capitol building although there have been several exceptions granted for cathedrals and the Post Office.
You know… that’s not necessarily a ‘bad’ idea for ANY town!
If I’m not mistaken, I think Philly has a similar height restriction where no building in the center city is supposed to be taller than a statue of William Penn that’s on top of a gov’t building.
Shanghai Index May Drop 25% on Economy, Xie Says (Update2)
By Allen Wan and Erik Schatzker
Sept. 1 (Bloomberg) — The Shanghai Composite Index, the world’s worst performer in August, may fall another 25 percent as China’s economic recovery isn’t “sustainable,” former Morgan Stanley Asian economist Andy Xie said.
The measure plunged 6.7 percent to 2,667.75 yesterday, the most since June 2008, and entered a bear market on concern a slower lending growth may derail a rebound in the world’s third- largest economy. Xie said the index “should be 2000 or less.” The gauge rose 0.6 percent to 2,683.72 today.
“The market is in deep bubble territory,” Xie, 49, who correctly predicted in April 2007 that China’s equities would tumble, said in an interview with Bloomberg Television.
…
No worries over here. I’m sure the de-coupling will work this time.
/snark
Isn’t it a Goldman Suchs economist who perpetually propagates that false theory?
PB,
This is in response to your post the other day, questioning whether or not second/investment homes get the MID…
——————-
Believe it or not, the MID is not limited to owner-occupied housing, though it absolutely should be.
Also, “investors” can deduct (all?) expenses, including the mortgage interest.
From the IRS:
Qualified Home
For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.
The interest you pay on a mortgage on a home other than your main or second home may be deductible if the proceeds of the loan were used for business, investment, or other deductible purposes. [This includes rental homes.] Otherwise, it is considered personal interest and is not deductible.
Main home. You can have only one main home at any one time. This is the home where you ordinarily live most of the time.
Second home. A second home is a home that you choose to treat as your second home.
Second home not rented out. If you have a second home that you do not hold out for rent or resale to others at any time during the year, you can treat it as a qualified home. You do not have to use the home during the year.
Second home rented out. If you have a second home and rent it out part of the year, you also must use it as a home during the year for it to be a qualified home. You must use this home more than 14 days or more than 10% of the number of days during the year that the home is rented at a fair rental, whichever is longer. If you do not use the home long enough, it is considered rental property and not a second home. For information on residential rental property, see Publication 527.
More than one second home. If you have more than one second home, you can treat only one as the qualified second home during any year. However, you can change the home you treat as a second home during the year in the following situations.
If you get a new home during the year, you can choose to treat the new home as your second home as of the day you buy it.
If your main home no longer qualifies as your main home, you can choose to treat it as your second home as of the day you stop using it as your main home.
If your second home is sold during the year or becomes your main home, you can choose a new second home as of the day you sell the old one or begin using it as your main home.
http://www.irs.gov/publications/p936/ar02.html
CA Renter,
While every word true, yet someone ‘please’ show me some level of enforcement? It’s an “honor system” ( w/ very little honor? )
Typical flags are a LL that “insists” on paying your cable bill or keeps the utilities in his/her name. It’s a shell game where multiple residences are concerned.
You’ll get a HELL of a lot more scrutiny having a home office and a seperate office! ( Ask me how I know? )
I am fully in favor of MID for 2nd homes, as long as the home is rented out. Mortgage interest is a legitimate business expense and deserves the standard tax treatment for such expenses.
(I don’t own a 1st home, let alone a 2nd)
So, as soon as the second home goes up for sale, the interest is not a qualified deduction?
Picky, picky. That’s why we have law school interns - to work out the nitty gritty.
Anyway, don’t assume the home can’t be sold while being rented, especially if it is an investment property.
yensoy,
There ‘may’ have been a time when I could have gotten behind that, but not any more. It’s been so abused it’s not even funny.
How many people did we meet over the last decade that owned 4 or 5 homes ALL w/ the intent of selling -each- over the next 10 years at a rate of (1) every other year?
I think Ben Jones said it best in the American Visionaries Series when he laughed off the notion that virtually ALL of us would own multiple residences.
I think Ben Jones was completely wrong here. Basically we own FRN/FRE and FHA exc.
We all “own” multiple residences.
The suggestion that the US and China are fully “de-coupled” is a straw man - no one claims that there is no economic connection between the two. On the other had “de-coupling” ie a process where the connection between the two declines over time, is almost certainly true. The only debate is about the rate of change.
Point taken. But why refer to it as “decoupling” instead of something more accurate like “bitter divorce”?
Only Chinese citizens may buy on the Chinese stock markets and they are also forbidden from buying on the NYSE.
I don’t know if he ever used that term, but wasn’t Peter Schiff also proposing the idea for many years?
the japanese people proposed the idea just a few days ago…through the ballot box.
Schiff’s a whole-hearted believer in the decoupling theory. That’s one of the reasons I’m not as enthralled with him as some are. Roubini has a much more realistic view, pointing out that the Chinese economy is much smaller than the US, and simply cannot ‘go it alone’ in any meaningful way under current conditions. Siamese twins don’t ‘break up’ so easily.
Could be China is GS’s biggest client. They read foreign news while blocking local news, thats why better be on the safe side.
On childhood visits to my grandma’s house out in the country, I liked to hang out in the kitchen and marvel at how hard and fast she worked. She ran a veritable one-woman home food processing operation, using fresh produce from her garden as the raw input!
My attention would inevitably wander to a placard on her kitchen wall which curiously read, “A Watched Pot Never Boils.” I never quite understood what this meant, as rationally speaking, if you heat a pot of water up to 100 degrees Celsius, it normally begins to boil, whether or not you watch it.
As I presently watch the economic meltdown continue to play out, my understanding of this phrase has improved considerably, as I note the Treasury and Fed have more “watched pots” on their hands than a country grandma could shake a stick at!
* THE WALL STREET JOURNAL
* THE OUTLOOK
* AUGUST 31, 2009
Commercial Real Estate Lurks as Next Potential Mortgage Crisis
By LINGLING WEI and PETER GRANT
Federal Reserve and Treasury officials are scrambling to prevent the commercial-real-estate sector from delivering a roundhouse punch to the U.S. economy just as it struggles to get up off the mat.
Their efforts could be undermined by a surge in foreclosures of commercial property carrying mortgages that were packaged and sold by Wall Street as bonds. Similar mortgage-backed securities created out of home loans played a big role in undoing that sector and triggering the global economic recession. Now the $700 billion of commercial-mortgage-backed securities outstanding are being tested for the first time by a massive downturn, and the outcome so far hasn’t been pretty.
…
From The Daily Mail in Ol’ Blighty:
Insurers suspicious as fire damage claims spike 20%
“The insurer believes struggling businesses may be turning to arson to solve financial issues brought on by the recession.
A statement from the ABI said: ‘We do know that there are some crimes that are linked to the underlying economic climate - fraud being one of them and fraudulent arson in particular.’ ”
Anyone know of any stats in the US?
www dot usfa.dhs.gov/statistics/arson/
seems to be no unusual activity as of 2008.
Anyone who’s thinking about it and plans on staying out of prison best invent a way that has never been tried before.
Doing a car is one thing, because you can always report it stolen first… doing a building is another thing altogether.
joeyinCalif,
Right, and as a lot of REIC’ster/Fraudsters ( same damn thing ) are finding out; If you’re going to plan a crime ( best to do it from the “witness stand” backwards! )
But that doesn’t mean the ins. co’s don’t have the right to advertise the fact that they’re uptight? Last year the Seattle’s SOD ( Street of Dreams ) mysteriously caught fire and a radical env. group was blamed ( by the sign left at the construction site )
Oddly enough the only dream home *not to go up in flames was a failed detonator on the (1) home under contract! ( Those -damned- ELF loonies! ) ?
According to that chart (not including 9-11 figures), there’s about one arson-death for every $2.6 M in property damage.
So, if your house is worth about $1.3M, chances are 50-50 someone will die in the fire. Worth $650K and chances are one in four.
I wonder if murder is punished more severely than is major arson.. probably not.
Joey,
In CA felony-murder based on arson is a death-penalty 1st degree murder rap.
Ok joey, so I rent. Does that make the probability zero?
DinOR,
Apparently Ben can’t forward emails. I set up a dummy account flufferdoodle AT hotmail DOT com so please mail me there.
DennisN,
Ben mentioned it was b/c he gets so MANY requests that he’s rec. using Facebook etc. No probalo!
friends ofthe housing bubble blog?
Is the rest of the country starting to enter the anger phase of the credit bust? (Personally, I am hoping and trying hard to leave it behind.)
* WALL STREET JOURNAL
* SEPTEMBER 1, 2009
Health-Care Anger Has Deeper Roots
By JANET ADAMY and JONATHAN WEISMAN
WASHINGTON — Recent town-hall uproars weren’t just about health care. They were also eruptions of concern that the government is taking on too much at once.
That suggests trouble for the president and his party, and fears of losses in next year’s midterm election are likely to shape the Democrats’ fall agenda.
The uproar at town-hall meetings in August has been as much about the role of government as it has been about the health overhaul, WSJ’s Janet Adamy reports.
At August’s town-hall meetings, voters often started with complaints about health care, only to shift to frustrations about all the other things President Barack Obama and the Democrats have done or tried to do since January. The $787 billion economic-stimulus package, the government-led rescue of General Motors Corp. and climate-change legislation all came in for criticism.
“A lot of the anxiety we face here has less to do with health care and everything to do with the overall state of the economy and government,” said Rep. Anthony Weiner, a New York Democrat.
“I have seen a level of dissatisfaction and even anger that I haven’t experienced in the years that I’ve been a member of Congress,” Sen. John McCain, an Arizona Republican, told an audience at a health-care meeting in Kansas City on Monday.
…
So that’s the present. What’s their ideas for the future?
$15k instead of $8k, cash for fridges - yeah that’ll do ‘er! Events have swamped these guys, the task at hand is beyond them.
Seriously. It’s a shame that they’re blowing all of their political capital on stupid a$$ handout schemes instead of achieving something with lasting usefulness, like healthcare reform.
Agree.
There are far greater things the govt could allocate money toward. Instead, we get the perpetual bailouts of deadbeats and bankers. Lovely…
“A lot of the anxiety we face here has less to do with health care and everything to do with the overall state of the economy and government,” said Rep. Anthony Weiner, a New York Democrat.”
The guy speaks sooth. That is exactly the point. “Health care” is just a symbol, where folks can vent without the accusations of “racism” and “protectionism”, etc.
I think many were hoping that Bammy’s administration and the current Congress would clean the clocks of the prior administration and of Wall Street and end the endless war conflicts that go nowhere but to kill and maim service people and citizens of those countries where we are engaged. But the war machine must have its profits. I’m sure even many that bloviate about unfettered capitalism and terrorism would secretly have loved to see some house-cleaning. But justice has been denied, under the guise of “moving on”, and it is interesting that Bammy, in denying the citizenry its ounce of flesh, is himself being denied.
Palmy,
Those of us in the war machine beg to differ. I think the planning and concept on those wars were bad. Very bad.
However, we think we have significantly disrupted the terrorist organizations.
Hopefully we manage to pick apart iran before they do something stupid as well. A nuke armed Iran might end up getting millions of people killed, vs the numbers we have already seen.
Personally I’m all for large scale air/ground opperations to disrupt the government in Iran. Start today. We should be able to destroy most of their military equpiment, disrupt the power grid and cripple their infastructure within weeks.
We will probably end up killing <500K people. Less than what will happen if they do something bad with the nukes they are developing. That is in either a briefcase getting to the US or a potential strike in the direction of Israel. The retaliation against them will probably kill ten times that many people. Perhaps more.
Anyhow. Guess you guys still want to try diplomacy with the crazy people. Good luck with that.
Dick Cheneys plan is brutal, unpopular and perhaps amoral. However it was and possibly is the best plan available.
James,
Marshall Dillon always let the bad guys draw first. Moral high ground. There is no moral authority in a preemptive attack.
We’ve spent our goodwill and more since 9/11.
Yeah. We had a big bunch of good will and I’m so sorry’s from the Europeans. Thanks. Fat lot of good that did for us.
If it was up to me, and its not, I’d give them one last chance to give up the nuke program. Heck, even be willing to build power plants and give them fuel.
After that I’m bringing all of hell with me. Moral ground or not.
Like I said many moons ago. Clinton tried the “lets talk” BS line. Eventually he learned you had to kick the guys ass to get results. And we are talking the serbs who are creampuffs compared to Iraq, Iran and all the others that have sprouted up.
I hope I’m channeling Winston Churchil here and not Hitler. If you remember, lots of people counciled that the Nazi’s were not a problem either. These guys in Iran are just about as big of a problem.
As far as it goes, I trust them about as much as I trust the guys in China.
“…the planning and concept on those wars were bad. Very bad.”
“Dick Cheneys plan is brutal, unpopular and perhaps amoral. However it was and possibly is the best plan available.”
Not sure I follow this line of reasoning. Cheney and Rumsfeld botched those wars like drunken monkeys. I truly can’t imagine how you could have screwed them up worse. They will go down in history as idiots, regardless of the final outcomes of the wars. Hubris personified. If they were fictional characters, their arrogance would have to be toned down to appear realistic. Alas for us, they were real.
Is it really necessary to insult drunken monkeys like that?
Actually, I think history will judge Bush, Cheney and Rumsfeld very well.
The Iraq war was a stunning success that went as well as could be expected. The only answer to the problem of Saddam Hussein was removal. It took physical occupation along with months of searching to finally nail the guy.
The whole rest of the “war” was nothing more than to be expected from being enmeshed in a society that had no form of law other than brutality along with literally millions of tons of arms and explosives scattered randomly through the countryside.
It makes sense to me.
People don’t care so much about big govt spending programs like national health care as long as they have money to burn, but not when dollars are precious.
Dems might be wise to shelve it for a couple years.. concentrate on retaining power in the next election by pretending they are fiscally conservative.
The condition of the country has just decayed too far to play any game of kick the can. And Obama is stuck. He’ll never have the conservatives no matter what he does. If he plays conservative, he’ll lose his base. The independents are too fickle to predict. He’s forced to go all in before his chips rust away entirely.
Gold rusts?
Try mixing it with some Aqua Regia….
+1 Oxide. If Bammy doesn’t go all in & comes out with nothing or some half-a$$ bill that just gives more money to big pharma & insurance, he’s done for. He’s the President. Show up or ship out.
I’ll confess to having a photo of Obama in my studio. In recent months, I’ve taken to hollering this at it:
“It’s not a —-ing campaign anymore! You won! So, preside!”
+1
Maybe he doesn’t know how.
With COBRA expiring, with 40M uninsured, I suspect that most people will not allow this to be shelved.
I do find it amazing that the ones putting up resistance are the ones who already receive health benefits - the over 65s. Freakin’ incredible!
Not only is COBRA expiring for a lot of the already laid-off, more unemployed are joining their ranks.
BTW, a cobra delivers a very nasty bite. Just like this kind of health “insurance.”
Health care town halls are quite different in Vermont. For one thing, they’re very polite.
Socialists! Can’t gays get married there too? Need I say more? wink, wink…nod, nod…
Same-sex marriage became legal in VT today. Not only that, it’s being viewed as a business opportunity. While visiting my Aunt Jean, I saw a TV ad that was specifically aimed at the gay/lesbian travel market.
Oh, one more thing: When Jean and I were out driving around, we had the radio tuned to WCVT, which is VT’s 24/7 classical music station. It’s not NPR, it’s commercial radio, and it’s quite good.
One of the ads was for a free clinic for the uninsured and underinsured. The pitch was that such people are also deserving of high-quality health care that’s provided in a courteous, respectful environment. (The clinic is staffed by volunteers.)
AZ,
That’s an awesome story. Thanks for sharing it.
Just spoke the other day with my BIL who lives in Germany, though he’s an American citizen.
We asked if he preferred the U.S. or the German (socialized) sytem, and he and his wife said, hands-down, the German system is far better.
This is what I’m hearing from every single person I talk to who’s experienced both socialized and U.S.-style healthcare systems.
The insurance and pharmaceutical industries sure have the U.S. sheeple hood-winked.
That’s interesting… and oh, yes, very polite.
My experience in northern Vermont is that lots of Montreal area residents do not mind leaving their own country to come down to Burlington to receive excellent care at UVM’s hospital.
And only once did I talk with anyone going the other way.
She wanted a new laser eye surgery procedure not yet approved by the FDA (since approved; this was in the 1990’s).
More phoney rhetoric? Still?!!!
John McCain’s never experienced this much anger? What happened two years ago when you tried to jam amnesty for illegal aliens down our throats, with a bill with your name on it? Tell us what kind of phone calls your office got. Just go away already, with your Sara Palin poster and your jar of vaseline.
Which state has the zip code with the highest average price? Can you guess? No it’s New Joisey. (I know its just wishing prices, but still, NJ?).
Prices slide, even in the glitziest neighborhoods.
Once, if a neighborhood made Forbes’ list of America’s 500 Most Expensive ZIP Codes, it meant buyers were prepared to spend big bucks to call it home.
But in 2009, even in these exclusive enclaves, home prices took major hits. Though Alpine, N.J. (07620) tops our list with a median asking price of $4.14 million, prices there fell 23% over the past year. Atherton, Calif. (94027) is the nation’s second most expensive ZIP code with a median asking price of $3.85 million, but prices there also declined by 23%. And New York’s once-bohemian West Village neighborhood (10014) is by now fully gentrified, as demonstrated by its third-place finish and a $3.5 million median asking price.
New York’s once-bohemian West Village neighborhood (10014)
Woo hoo!
Link
http://www.forbes.com/2009/08/26/most-expensive-zip-codes-lifestyle-real-estate-zips.html
The Federal Gov’t is now in the mortgage market permanently. See the URL below from the Washington Times.
http://www.washingtontimes.com/news/2009/aug/31/federal-grip-steadies-housing-market
Ok, the FG did a synthetic nationalization of AIG, Goldman, etc. Now we have the same with Freddie and Fannie. There is a good side to this as well as a bad side. The bad first: It will take some time for the housing market to truly become affordable because of the FG support. I’m fairly certain it will get there sooner or later. Now for the good: The FG can’t do any worse than WS in this. WS was allowing anyone with a pulse to get a mortgage for any amount they wanted. If history is any indicator the FG won’t lend unless there is an ability to pay and proper documentation on the borrowers part.
The scary part: What if I’m wrong and things are allowed to go back to what they once were? FG will become bankrupt sooner than later? Or worse?
The $8k down payment credit is a good thing. I’m not against it as long as it benefits the right people, i.e. those that can realistically own and upkeep a house. Still, this will help housing but not get it back to the bad old days. It is a sobering reality that there are many who would like that outcome. Not with the FG in charge.
Roidy
P.S. I was thinking just yesterday that I really like my current house. It is my third and by far the most appealing. I bought an older home which has a nice front porch, circular drive, three really nice oak trees in front, great neighborhood, three blocks from the river. My wife and I have some great walks. The azaleas are beautiful in the spring. I have whites along the house (red brick) and reds along the drive. The bushes are as high as I am, and I am 6 feet.
Sounds like you live in a beautiful house, Roidy. We’d love to have something like that.
OTOH, the $8,000 tax credit really is a problem because it only drives price up; it doesn’t make homes more affordable, not even for poor people.
The best thing that could happen, would be for ALL govt housing subsidies to disappear. That way, housing prices would drop to levels that are truly affordable for the people who intend to live in them.
Sounds like more opportunity for pot growers coming up…
100 California State Parks Closures to be Known Soon
Trailer Life, August 31, 2009
It is expected that a list of about 100 California state parks that may be closing will be known to park districts across the state sometime shortly after Labor Day.
“By Labor Day we should have a list of which parks will be closing,” Shannon Gillespie of the Mendocino District Office near the town of Mendocino said Tuesday (Aug. 25), according to the Ukiah Daily Journal.
Roy Stearns, a spokesman for California State Parks, said an awaited list of closures will be known sometime after Labor Day.
“It is not ready yet,” Stearns said. He said 100 is an estimated figure for closures at this time.
Stearns said that consideration for closure is not regional or based on value. “It is a business decision,” Stearns said, adding that officials look wherever a park closure can have a savings to help close the budget gap.
Cuts to state parks this year total $14.2 million or 10% of the general fund. In 2010, state parks expect to lose $8 million with an estimated additional $5 million loss from park closures.
Wonder how many park service employees are on the take to look the other way from the cartels?
Palmy, listen to these macho idiots. Yeah, ya think? Well you’ll change your mind pretty boys after you have been through a 4, let alone 5.
“We are waiting anxiously, wanting to be right in the middle of it,” said Hurst, who said he has never seen a hurricane as powerful as Jimena.
“We were advised to leave, but we want to be here,” he said. “I’ve always wanted to be in one … a real bad one.”
Saltzman echoed his friend’s enthusiasm: “It’s an adrenaline rush,” he said.
Early Tuesday, Jimena was a Category 4 storm with maximum sustained winds near 155 mph (250 kph) and was moving north-northwest near 12 mph (19 kph), the U.S. National Hurricane Center in Miami reported. It was centered about 155 miles (250 kilometers) south of Cabo San Lucas.
“Palmy, listen to these macho idiots. Yeah, ya think? Well you’ll change your mind pretty boys after you have been through a 4, let alone 5.”
Amen, brothah! Having been through Andrew and the lesser hurricanes of a few years ago, I’ve seen some grown men cowering in fear, one was a buddy of mine.
BTW, my sympathies for your loss, ATE. Would have posted the other day, but so many were posting well wishes, I thought I might get lost in the sauce, as it were.
I didn’t know you went through Andrew. Enough said there.
Thanks Palmy, for being my friend and the kind words.
And of course, it will be the taxpayers who pony up to rescue these sorry yahoos.
Yep oxide, yep.
Some news reports are trying to find the silver lining in the clouds. . .
Jimena may bring some relief to northwestern Mexico’s drought and dump rain on southern Arizona and New Mexico, said Richard Pasch, senior hurricane specialist at the National Hurricane Center in Miami.
The storm is less likely to douse southern California’s wildfires, but “that’s still a possibility and we’re keeping our fingers crossed,” he said.
Here in Arizona, our summer monsoon season has been a real bust. If Jimena brings some rain, we’ll be very happy.
Now that medical MJ is legal in California, is there any legal supply chain from grower to pharmacy?
Lucy: Interesting question, there has to be I guess. If “Medical Marijuana is legal”. It has to come from a “legal” source. However, I understand your curiosity here.
Lucy, I don’t think there is.
As I understand it, there’s a gray area between the end-product and how it gets to market — the people moving the product can apparently be busted for intent to distribute. Though in smaller amounts, perhaps the licensed distributor could be growing on-site.
In addition, a California ganja entrepreneur is still subject to federal law, which is entirely different.
There was a good New Yorker article about a year ago that explored this subject in-depth.
That is interesting ET, news to me.
Aloha,
While I can ‘t speak for Calif. Here in Hawaii With a doctor permision you can grow seven plants on private property. If you have the right to grow, but not the ability to grow, your stash you can designate a “caregiver” to grow your plants for you.
I am a caregiver for three people that can not protect their crop. And I have the legal right to grow for myself too. We used to have a store that sold to people with permits but the cops shut them down last year.
In response to Lucy’s question; If I can grow legaly, transport it to market legaly and the pharmacy can sell it legaly in my book that is a legal supply chain. And I do believe California taxes the sale too.
Keep in mind when Obama came into power he allowed state law to stand, and the Feds are not near the problem they were under Bush.
Medical MJ may be legal in California, it is not legal according to federal laws. The feds have come to the local medical shops and closed them down.
Two months ago we had our monthly green harvest. I had the DEA puma chopper land on my property and two DEA agents counted my plants and checked the paperwork. Under Bush they would have taken everything. Under Obama they said thank you and apoligized for spooking the animals. They took nothing. It may be illegal under Fedral Law but they are not inforcing the law here.
It may be illegal under Fedral Law but they are not inforcing the law here.
The letter of the law and willingness to enforce the law are entirely different things, and as you note, subject to change.
WOW, now that story blows my mind Crash. I guess the difference in knowledge about different states, or sumpin’. I never heard of anything like that before.
I wouldn’t be surprised if there were increasing shoot-outs between the local hippie growers and the Mexican cartels.
I would be. The vast majority of growers must be very low key. The last thing a grower wants to do is attract attention to his grow. And gunshots tend to attract unwanted attention. There is no pay off to harvest young unripe plants.
As for the Mexicans they most of the time they get greedy. They put huge patches in which are easily spotted from the air. All the choppers need to do is find one plant and in comes the ground crew. And they find it all. The Mexicans play a numbers game. They will happily lose five to pull one off. They will not defend their grow. They will melt away to do it again next year.
Crash, that story is wild. Illinois Boy here, though.
For the amount of debt we have, the money saved on park closures is going to be absolute chump change. It’s really sad to see the PTB choosing to stick it to the people in this way.
I notice Arnold didn’t take a pay cut. (Or if he did, I missed it.)
IIRC he foregoes much of his potential salary, due to his already enormous hollywood wealth. I could be wrong though.
I think he takes a $1 a year home. That’s modeled after FDR’s $1 a year team. People who are in government but don’t need the paycheck. The Sainted Ted Kennedy did not take $1 as far as I know. And he did manage to send billions to MA for the big dig cost overuns. Wonder (sarcastic) where that money landed ?
Zell Returns to Grave Dancing With $625 Million Distressed Fund
Sept. 1 (Bloomberg) — Sam Zell, undaunted by his failure to keep Chicago-based publisher Tribune Co. out of bankruptcy, put together a $625 million fund to buy distressed securities backed by assets including commercial real estate.
The 67-year-old billionaire filed a private-placement notice last month for Zell Credit Opportunities Fund LP, described as a private-equity fund that received its initial backing from a pair of unidentified investors.
The fund represents Zell’s return to distressed investing after his $8.3 billion buyout of Tribune culminated in a December bankruptcy filing by the publisher of the Chicago Tribune. Investors expect trillions of dollars in maturing debt on commercial real estate to trigger a wave of bank foreclosures and loan sales.
The Zell fund “is a harbinger of what is to come,” said John Goff, who co-founded Crescent Real Estate Equities Co. with billionaire Richard Rainwater. “A lot of loans are coming due and there are going to be a whole host of opportunities.”
Zell’s sale of Equity Office Properties Trust to Blackstone Group LP for $39 billion in February 2007 marked the peak of the commercial real estate boom. Investors such as Zell, who dubbed himself the “Grave Dancer” for turning a profit on troubled assets, are betting they will profit from the downfall of developers who borrowed heavily to buy property at record prices. U.S. commercial real estate debt outstanding was $3.6 trillion at the end of 2008, up from $1.3 trillion 10 years earlier, Goff said.
So-called vulture investors profit by purchasing debt for pennies on the dollar and negotiating for higher prices or equity stakes as troubled companies reorganize in bankruptcy.
‘Wiped Out’
“If you want to own real estate long term, chances are you are going to need to be acquiring the debt,” said James Corl, the head of distressed real estate investments for Siguler Guff & Co. in New York. “Most of the equity in the industry is wiped out.”
Sam Zell, undaunted by his failure to keep Chicago-based publisher Tribune Co. out of bankruptcy, put together a $625 million fund to buy distressed securities backed by assets including commercial real estate.
Sam Zell is a giant patoot.
Based on his recent track record of running his various ships aground, I have to wonder how the hell he ever made it in business.
At least the Cubbies are out of his grubby hands now.
I would bet most folks driving around in their save the planet cars, do not like mining companies, oh well. These hybrids really suck up the resources.
As hybrid cars gobble rare metals, shortage looms.
LOS ANGELES (Reuters) - The Prius hybrid automobile is popular for its fuel efficiency, but its electric motor and battery guzzle rare earth metals, a little-known class of elements found in a wide range of gadgets and consumer goods.
That makes Toyota’s market-leading gasoline-electric hybrid car and other similar vehicles vulnerable to a supply crunch predicted by experts as China, the world’s dominant rare earths producer, limits exports while global demand swells.
Worldwide demand for rare earths, covering 15 entries on the periodic table of elements, is expected to exceed supply by some 40,000 tonnes annually in several years unless major new production sources are developed. One promising U.S. source is a rare earths mine slated to reopen in California by 2012.
Among the rare earths that would be most affected in a shortage is neodymium, the key component of an alloy used to make the high-power, lightweight magnets for electric motors of hybrid cars, such as the Prius, Honda Insight and Ford Focus, as well as in generators for wind turbines.
Toyota has 70 percent of the U.S. market for vehicles powered by a combination of an internal-combustion engine and electric motor. The Prius is its No. 1 hybrid seller.
Jack Lifton, an independent commodities consultant and strategic metals expert, calls the Prius “the biggest user of rare earths of any object in the world.”
I would bet most folks driving around in their save the planet cars, do not like mining companies, oh well. These hybrids really suck up the resources.
Rare metals can be recycled. They don’t finance Iran, Saudi Arabia, Al Queda, Chavez, Russia ect ect. And from your article it sounds like the US can produce them.
Oil???
I notice the article had no specifics on how much metal rare and other is used to manufacture the prius vs say a giant SUV. When you have some facts report back.
I’m with you on the recycling angle, but China, the Congo et al aren’t exactly beacons of democracy either.
Is there an actual shortage or is this a guy that is long in this position projecting a potential shortage.
This is just as much fun and fact filled infotainment as the peak oil folks.
Of course peak oil is a fact. Cause we have all these people on the ground telling us what is comming out from the oil wells. Oh and someone predicited a timeline that seemed to work out one time. So, clearly that is a mathmatical proof of when oil is going to run out.
Anyhow, this is something worth watching and potentially there might be a problem. That is about all I’ve got from this. Along with a consultant with a vested interest spreading a rumor that might increase the value of his holdings.
These Magnets are why powered DJ speakers have become so lightweight and powerful
These are the speakers I use and they weight 35 lbs vs 51 for the large magnet big heat sink Mackie speaker of the same size
http://www.fbtusa.net/4acs.html
and those 16lbs make a big difference on my back, plus i can carry both up a flight of stairs.
—————————————————————–
Among the rare earths that would be most affected in a shortage is neodymium, the key component of an alloy used to make the high-power, lightweight magnets for electric motors of hybrid cars,
I’ve been having scary dreams lately about economic collapse. I’ll be glad when my dreams return to normal, like going to work naked.
Dennis,
The global economic situation is out of our hands. You going to work naked is something in your control. So let’s stop waiting around for “things to happen” and start making them happen*!
*as long as your not a school teacher
Embrace your fears and become a male lingerie model. It’s the only way to conquer them!
maybe you can combine the two and worry that soon you’ll be so poor you have to go work naked???
Remember, on the White Album, Revolution #9, Yoko said, “You become naked”.
you sleep?
Dennisd,
In mine I don’t go to work naked, I just wake up in the men’s room sitting on stall #3 completely naked and have no way of getting out.
That sounds more like a “trapped at work” job than a naked dream; you need a new job!
That reminds me, THE OFFICE is on the boob tube tonight at 10:00 pst.
dennisd,
Too funny dude! I’m still chuckling…I’ve been dreaming of finding troves of coins as I go about my day…and the naked at work dreams have also evaporated!!!
Maybe someone here can provide some enlightenment.
Did a gang of bears recently invade the MarketWatch production center and take all the bulls hostage?
Before the Bell
Countdown to the open:
Index Futures:
SP 500 1,015 -5.30 -0.52%
DOW -52.00 -0.55%
NASDAQ 1,619 -6.25 -0.39%
Stumbling September start
Stock futures indicate a decidedly weaker open.
I wonder if lil’ sis took big bro’s stock trading advice offered last week? I hope so…
Investor Alert
Stocks hit a wall
My MarketWatch
Welcome, ProfessorBear
‘Overdone’ fears undo rally
Upbeat economic data had already been factored in, investors look to have decided as rally fades.
• U.S. factory expansion is first in 18 months
• Pending home sales rise in July: Realtors
• Good news in factory data?
Uncle Buck is enjoying a nice flight-to-quality rally today. From Bloomberg:
EUR-USD 1.4236 -0.0098 -0.6841% 12:54
GBP-USD 1.6171 -0.0116 -0.7134% 12:54
USD-CHF 1.0652 0.0062 0.5874% 12:53
USD-SEK 7.2657 0.1469 2.0638% 12:54
USD-DKK 5.2284 0.0358 0.6904% 12:54
USD-NOK 6.0790 0.0635 1.0561% 12:54
USD-CZK 18.0160 0.2480 1.3956% 12:54
USD-SKK 21.1620 0.1496 0.7119% 12:53
USD-PLN 2.9286 0.0702 2.4568% 12:54
USD-HUF 194.4000 4.3300 2.2781% 12:54
USD-RUB 31.9050 0.1136 0.3573% 12:53
USD-TRY 1.5138 0.0132 0.8763% 12:53
USD-ILS 3.8115 0.0140 0.3687% 12:53
USD-KES 76.2150 0.0150 0.0197% 10:05
USD-ZAR 7.8820 0.1050 1.3495% 12:53
USD-MAD 7.9494 0.0543 0.6881% 12:53
A word of explanation on this cryptic table might help. If USD is listed on the left, the exchange rate is in terms of foreign currency units per dollar. If USD is on the right, the exchange rate is in terms of dollars per foreign currency unit.
So, for instance, it has just become 0.6841% cheaper in US dollar terms to purchase Euros (EUR), while the Czech Koruna (CZK) price of dollars just went up by 1.3956%.
Why, Professor, it’s so wonderful to see you present a post in a different way. You’ve earned my respect, which is hard to do.
Silver lining for latest downturn in stocks: The bond market benefits when stops drop, resulting in continued low mortgage rates as an ancillary benefit:
Worries about banks drag stock market lower
By SARA LEPRO and TIM PARADIS (AP) – 23 minutes ago
NEW YORK — A stock market ripe for a big pullback succumbed Tuesday, plunging when rumors of a bank failure revived investors’ anxiety about the banking industry and the economy as a whole.
…
Bond prices turned mostly higher after stocks began to fall and investors went in search of safer assets. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.38 percent from 3.40 percent late Monday.
The T-bond market benefits even more when the 800 lb gorilla buyer of last resort steps up to the plate again and again.
Let me reiterate my FAQ: What (if anything) could prevent the Fed from sitting on bond yields forever?
Bond Report
Sep 1, 2009, 4:28 p.m. EST
Treasurys recover as stocks tumble, Fed buys debt
Gains capped by rosy data on manufacturing, home sales
By Laura Mandaro & Nick Godt, MarketWatch
SAN FRANCISCO (MarketWatch) — Treasurys of most maturities rebounded Tuesday, gaining as U.S. stocks tumbled and after the Federal Reserve bought back short-term debt.
Treasurys had dropped after U.S. data showed manufacturing has started to expand and home resales were gaining. But they reversed higher after U.S. stocks fell sharply, pulling investors back to the safety of government debt.
“There’s a return of fear into the market,” said Wan-Chong Kung, a fixed-income fund manager with FAF Advisors/First American Funds in Minneapolis.
“Whether it’s due to the seasonals of poor stock performance in September or the concern that, in general, risk assets have done very well and there needs to be a pause for profit-taking to take place, who knows,” she said.
“It’s all about the return of fear and what’s going on in stocks.”
As prices rose, yields on benchmark 10-year Treasury notes (UST10Y 3.36, -0.04, -1.15%) slid 3 basis points to 3.367%. Earlier they had risen as much as 3.462%, tracking a fall in prices.
…
What (if anything) could prevent the Fed from sitting on bond yields forever?
The Fed can no longer sit on bond yields when the “dollar” becomes worthless on the foreign exchange market. Or rather, it won’t matter whether they do.
I’d say we’re no more than 18 months away from that point.
Bits of info about those “bulk sales” ($10MM++):
From what I hear, the sales are NOT recorded in public records because they are sold in bulk. Somehow, there is no specific price per house, so the discount is not reflected in the official sales price (not sure if there is an “official” sale price???).
This makes it awfully convenient in a world where mark-to-market is shunned for all declining asset prices. Also, it helps the appraisers value comps at the high levels currently paid by anxious buyers who are afraid of being “priced out” in this heavily manipulated market.
That being said, if these bulk sales are happening in the numbers I’m hearing, at some point it all has to come back on the market either as rentals or for-sale inventory. How and when that happens is the billion-dollar question.
Again, this is all anecdotal, and not confirmed. Still trying to find out more about these sales.
not recorded? That seems doubtful. At least there are taxes to be assessed and paid, and a potential buyer (and the public) would have access to that info..
If it’s not recorded, how would it pass a title search?
This is just what I’ve been told. The prices are not recorded because the transaction is treated as a bulk transaction. Not sure how they handle the property taxes. Maybe they use the prior sales price, since it would be a higher price, and the wholesale buyer would probably be willing to pay it because they don’t plan on holding the properties for a long time.
I see a lot of houses that were:
- up for sale at some point in the past and went off the market
- are still sitting empty month after coming of the market
- are recorded as sales as of very recently (sometime in 2009) for a price of $0 or $100. This is along with a note that they are “non qulified sales” for tax purposes.
A few questions pop into mind.
1. Who bought these houses? Chinese, government, new breed of infestors, Santa, Aliens?
2. Who can afford to just have them sitting empty? They still have to pay taxes and the city habitually writes citations for poorly maintained yards. They will come by and do the work and then put a lien against the property.
3. What are the infestors planning on doing with them? Once we run out of $8K knife catchers things will continue to move lower or stay at current levels.
On my block alone are 2 empty houses out of 13 total. That seems about par for the n’hood.
It just doesn’t seem to make much sense to buy a house and then have it sitting empty. No repairs or maintainance, no renters, no 4 sale sign, just an empty house with an overgrown yard. Once in a while some homeless move in.
Whatever they are doing, and whomever is doing might be unknown - but what we do know is that they’re playing for time.
The banks, the PTB, and a lot of our neighbors are all playing for time right now. Or, maybe as George Michael once sang: “Praying for Time”.
Duration. Duration. Duration.
This is my fear, that the wealthy will get to buy all the foreclosures and then keep the proles paying top dollar. I understand it was similar in the S&L crisis.
So how do we find out who bought it? Call the city? There has to be a record of sale.
Perhaps it’s time a for a “zillow” that tracks this?
This is my fear, that the wealthy will get to buy all the foreclosures and then keep the proles paying top dollar. I understand it was similar in the S&L crisis.
That’s just it the proles can’t afford top dollar. This game is up.
VBVB– Property Valuation Administrator (PVA) has a website in my state (KY) that shows who owns the property and the sale price, date, and type of transaction. Takes about a month to update after a sale. Failing that, I believe there are publicly available records at your courthouse.
That’s the thing. These wholesale buyers are buying under a corporate/LLC name. Some of these buyers are foreign entities (maybe some sovereign?), this much I have heard presented pretty much as fact. What Mike said sounds about right. They would be “non-qualified” sales as far as prop taxes go.
Perhaps they are waiting for the dollar to fail?????
Possible/likely that some of the well connected in banking and politics got some insane discounts on these properties at taxpayer expense. Time to move in the homeless and strip the copper pipes out of the walls. At least that will force their hand and instill a sense of urgency.
If you bought these bulk purchases, I’m assuming you got them at a ridiculous discount.
Why not flip them at 50% below “market” and destroy the local housing market for your gain? Then the local banks would be forced to sell you more at big discounts and start it all over again….
Wouldn’t Prop 13 mandate recording any sales price for any property in CA?
“From what I hear, the sales are NOT recorded in public records because they are sold in bulk.”
I would think the sale must be filed with the Recorder of Deeds office (or equivilent) in order for the buyer to have a legal claim to the property going forward. However, AFAIK appraisors use the MLS, which could explain why bulk sales (without an agent involved will not get included) won’t get used as a “comp”.
“That being said, if these bulk sales are happening in the numbers I’m hearing, at some point it all has to come back on the market either as rentals or for-sale inventory.”
Two thoughts here:
1) It would be nice to know where this will all settle out.
2) I would guess the PTB’s plan is to do all they can to keep a high level of churn / gambler’s risk in play in order to avoid ever allowing housing prices to reach anything like a stable bottom before the economic recovery.
3) End-users have the pleasure of gambling with the hedge funds and Megabank, Inc if they choose.
Relax Measton and PB,
There isn’t any market at elevated prices and the house just sit there going to pot and getting further in arrears with back taxes.
Sit back and watch the rent go down along with the prices.
Might not fall as far as we’d like but the oversupply makes this all but inevitable. And if some rich Chinese people want to hold these properties and pay for our school system, why fight it?
The time it takes for the economic realignment is going to shock the PTB and all their manipulations will only make it worse. This is one big macroeconomic mess and nothing they have done or will be able to do will stop it.
Right now, the bottom 80% of the country has nothing and its going to make a big fricking mess.
Is it time to short the market? Or is the risk just too great?
sure….just use stops.
If everyone is doing the ‘obvious’ thing and using stops, doesn’t that tend to exacerbate any market downturn, as sales snowball on the downside as stops are triggered?
Yes - though in this case since we’re talking about shorting, stops would exacerbate a market upturn, not downturn.
Somehow that side of short-selling doesn’t get so much bad press.
yes it does….but I wouldn’t be surprised to see a really strong one day rally….might be best to get stopped out and short again another day.
Sept. 1 (Bloomberg) — Paul Tudor Jones, the billionaire hedge-fund manager who outperformed peers last year, is wagering that Goldman Sachs Group Inc. and Morgan Stanley got it wrong in declaring the start of an economic recovery.
…
“If we have a recovery at all, it isn’t sustainable,” Kevin Harrington, managing director at Clarium, said in an interview at the firm’s New York offices. “This is more likely a ski-jump recession, with short-term stimulus creating a bump that will ultimately lead to a more precipitous decline later.”
Ski-jump recession — I love that one!!! What better visual can you get for where we are at the moment than a ski jumper lifting off into the sky, only to land on the icy slope far below and continue heading downhill from there.
Cue theme from “Wide World of Sports”.
I believe the ski jump scene was right at “..the agony of defeat…”.
Re-post. Palmy, listen to these macho idiots. Pretty boys, after you have been through a 4, (let alone 5) you’ll change your mind.
“We are waiting anxiously, wanting to be right in the middle of it,” said Hurst, who said he has never seen a hurricane as powerful as Jimena.
“We were advised to leave, but we want to be here,” he said. “I’ve always wanted to be in one … a real bad one.”
Saltzman echoed his friend’s enthusiasm: “It’s an adrenaline rush,” he said.
Early Tuesday, Jimena was a Category 4 storm with maximum sustained winds near 155 mph (250 kph) and was moving north-northwest near 12 mph (19 kph), the U.S. National Hurricane Center in Miami reported. It was centered about 155 miles (250 kilometers) south of Cabo San Lucas.
Sorry for double post. Computer got screwy on me, it was weird.
Same idiots that climb Mt. Everest or sneak into Iran or North Korea and then come crying for help.
Yeah Mike.
You don’t have to sneak (As long as you’re not American) into North Korea. Check out this blog page from a rail fan:
vienna-pyongyang.blogspot.com
VB, thanks for the link. I’ve long been fascinated with that place. Here’s another travelogue:
1stopkorea dot com/index.htm?nk-trip2.htm~mainframe
Wow! Neat!
similar to the people that got trapped in the Southern California fire. They didn’t want to leave, now thousands of dollars are being spent to get them out and also put other lives on the line.
Should be mandatory if the state does a mandatory evacuation and if people don’t abide by it and need help, they should pay for the rescue. Slap them with a big bill.
“Should be mandatory if the state does a mandatory evacuation and if people don’t abide by it and need help, they should pay for the rescue. Slap them with a big bill.”
+100
they should pay for the rescue.
Up front.
And they should have to tip their firemen.
I agree. everyone wails about taxes and then expects the gob’mt to save them. You live out in fire country?, then you best have your own personal fire protection service.
You live out in fire country?, then you best have your own personal fire protection service. I’ve always been puzzled by $1 million homes built in wildfire-prone places, which are not designed to be super-fire-resistant with built-in automatic fire suppression systems.
Oh you should see them here, with pines hanging all around close to the bldg because it’s all so nice and woodsy you know.
There was some discussion in yeseterday’s BB that happened late on Facebook. I guess someone started a “Friends of HBB” page? I’m a novice so not sure how that works - I tried to find it but couldn’t. Seems like a good way for some of us to do some offline correspondence - e.g. Ben mentioned he’s gotten a lot of requests for email ID exchanges that he can’t keep up with.
Just go to facebook.com/search and click on “groups”. Then search for “housing bubble”.
Hmm - thought I did that last night, but not sure if it was a “group” search vs just a general search. Will have to try again tonight since it’s blocked from work.
Professor Bear - I figured that’s one way we can exchange email / data, since I haven’t heard back from Ben.
You’ll need to create a facebook page for yourself in order to join groups. You can keep it simple (just enter that necessary information such as name, email, etc.) and make sure your privacy settings are what you want (I keep all mine on “friends only”, but you can make your page completely private if you want and you can keep yourself out of the search).
After joining, just look up “Friends of the housingbubbleblog.com” and you’ll find the group. Join and contact people or post messages, etc.
The one thing that’s hard using just the facebook group is knowing who people are without their HBB handles. I was trying to figure out last night if there was a way to do this other than just posting on the wall who you are, couldn’t figure it out. Need a directory of sorts.
please post a link to the housingbubble FB page, search comes up empty for me. thx.
No access to facebook from work (we are blocked). Will post tonight so check this thread later this evening (unless someone else posts the link in the meantime).
Hopefully, this will work:
http://www.facebook.com/group.php?gid=108043917435&ref=search&sid=1406745016.2441996738..1
It’s an extraordinary popular delusion for one to believe speculating wholly in stocks week after week will provide a comfortable retirement when you consider demographics and economic cycles, particularly with the knowledge that the last two decades of speculation have been fueled largely by the largest credit bubble known to man. The housing bubble did not burst in Sept. 2008. The credit bubble did.
Well the demographics are certainly inexorable, which IMHO is why “privatizing” social security makes so little sense. We’re just starting to see the baby boomers transition from saving for retirement by putting money INTO the stock market to spending their retirement savings by tatking money OUT OF the stock market. This will put a nearly unstoppable outflowing tide on equity prices for the next couple of decades IMHO.
People have lost their minds. They’ve been duped into believing buying stocks is investing. It’s speculation — pure and simple.
They look at the total value of the market and think they can some how cash in on it when they are ready. It’s an extraordinary popular delusion.
Same words said in 1976, 1983, 1987, 2000, 2003…(yawn)
So then I better give up my 12.5% yielding Canadian oil trust stock?
Check the balance sheets for those companies. Not pretty.
Mine is fine for now. I’m switching to a U.S.-based oil trust that has over $450m net tangible assets in a year. It currently yields 13.9%.
symbol? I would like to take a look.
I suppose I haven’t gone through anywhere near all of the oil and gas trusts, but the sample I took all showed obscene levels of long term debt. With the high levels of cash payout (sometimes more than earnings) they don’t look like good companies to survive in a tight credit market.
look for symbol evep. $450 million net assets.
Oil trusts tend to not have a lot of cash, supposedly much more debt. But remember they are sitting on resources. You cannot look at them the way you look at Genentech or Coca Cola or Disney. Also note on their key stats that they are usually priced below book value. PGH is a Canadian oil trust priced below book value. EVEP price is around $21 per share and book value $25.
Don’t even bother to look at Genentech. The company is now 100% owned by Roche. I believe Genentech is no longer traded on the stock market.
Well Bill,
Just a little man to man note sharing:
As I recall, the Rolling Stones were actively drilling in the Margaret Trudeau National Preserve oil patch in the 1970’s or so, but that’s all played out.
They gathered no moss or other green stuff from that particular venture.
Now, what’s been hot lately, is up by Sarah Palin’s south forty, if you catch my drift. And I think you do.
I “trust” you won’t press your luck on that big “yield”.
blue: That is one of the most hilarious and Quality Things, I have ever heard. When it reeks pure Quality, it must be recognized.
You’ve been dollar cost averaging during the largest speculative mania known to man — herded 401-k contributions, increasing tax incentives, over-trading, corrupt politicians, easy credit, and on and on. The end is nigh. My generation will not by your worthless pieces of paper. Dream on.
The link below is for the S&P 500 from January 1950 to now.
http://moneycentral.msn.com/investor/charts/chartdl.aspx?iax=1&Symbol=%24INX&CP=0&PT=11
Look at the relatively smooth rising curve from 1950 to 2000, and look at what’s happened since.
But you really need to look at that chart in log base 10. Why? A logarithmic view reflects percentage differences better.
A move from S&P 10 to S&P 20 is a 100% move, a sharp jump up. But a move from S&P 800 to a 1000 seems dramatic in a linear view, but it’s really just a 25% move. A logarithmic view would make the 100% difference seem more dramatic than the 25% move, even though the 100% move is only 10 points and the 25% move is 200 points.
On second glance, even in logarithmic view, it looks like there was a sharp increase from 1950 to 1965. Then from 65-80, it was flat. Then from 80-2000, it leapt up again. But, for the past 10 years, it’s been flat and going down.
We might be in uncharted territory. It’ll take some astute forecasting to see where we’re headed next.
This sounds like the 13th floor (movie). Yours is the dream.
So you sat out since 1982 in cash? L-O-S-E-R
…speculative bubble and lots of boomers playing catchup(like me).
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/08/31/BUQI19FAVM.DTL
Savvy buyers use self-directed IRA to buy homes
Nathan Foran used his self-directed IRA to buy a dilapidated foreclosed house in Richmond for $25,000 cash. Another $25,000 to $35,000 from the retirement account will go toward fixing up the property. He then hopes to rent it out for about $1,000 a month, money that will go straight into his retirement account.
“He then hopes to rent it out for about $1,000 a month, money that will go straight into his retirement account”.
Nothing like some good farcical personal financial planning to start off the day. First spend 50- 60K and then “hope” after 5 or 6 or more years you get most of your original “investment” back, minus taxes, insurace, repairs, and deadbeat tenant losses and vacancies, etc.
I sure hope some candy-crappin’ unicorn will put ten million dollars in my 401K, but I don’t plan on eating “hope” for breakfast or pay for an “investment” renovation and mortgage with it.
I think that part where he expects the value to quadruple in under five years is the best. He hasn’t learned a thing.
$1,000 a month in rent? Really?
And how much maximum can be put into an IRA per year? A few thousand?
wtf.. ok.. nevermind.. i see this is a story about a RE “broker and investor”..
he’s gonna turn that $25K POS over for $200,000 in a few years.
I recommend one consult a tax attorney before messing with an IRA. The IRS is very touchy about those babies.
The limit is something like $16K for an IRA…no wait, that’s the 401K. The limit is $5K for Roth IRA, does that inclue normal IRA?
$1K in rent in dilusional. If a house can be bought and fixed for $60K, it’s either a tiny shack or in a gangsta neighborhood or both. You could probably buy a nice place for that payment.
Yes, it’s 5k per year max. If he’s self-employed he can do a SEP-IRA though, and the limit is higher.
The limits apply to out of pocket contributions, not earnings on assets owned by the fund.
yeah.. i forgot about that.
But i’d still be damn careful. Using a healthy portion of money socked away in an IRA to gamble in RE give me the chills. Screw up and retirement is spent collecting aluminum cans and eating cat food.
The article says that any expenses on the property must come out of the IRA. So, if a property doesn’t cash flow, it steadily drains the IRA until it’s sold.
What happens if, due to costs, the IRA is emptied? A forced sale? A hefty penalty?
I’d have about a million questions to ask before even considering it.
Anyway, if a RE broker suggests it these days, chances are good it’s a bad idea. “OK folks.. i know you really want this property. Maybe we can make this happen. Do you by chance have an IRA?”
For people that aren’t from that area…
Richmond CA is a burned-out ghetto town where residents shoot one another with alacrity. This “investor” is nuts.
According to what I’ve heard, Richmond used to be beautiful.. highly desirable. Of course I’m talking 1940 and before.
The war changed everything, industrializing the area.. shipyards.. rail and lots and lots of workers recruited from all over the states..
My mother was actually born there….in 1920.
I get to Richmond a lot - got a brother who lives there. Parts of it are quite nice actually; both in town and the ‘burbs.
It’s like most cities. Bad areas and good areas.
I used to live there. The hilltop parts are reasonably nice, so long as no toxic emissions are currently blowing your direction from nearby refineries; not so nice down in the flats near heavily industrialized areas and drug war zones.
Nuts, or just early?
Have to admit our Richmond condo tripled in value while we owned it. I doubt all the bubble gas has deflated out of the market yet.
But marginal areas tend to see larger price volatility over the cycle. Nobody wants to live in a ghetto during a downturn, due to the contemporaneous increase in crime, and hence prices tend to get drummed into the ground. In boom times, a wealthier demographic getting priced out of more desirable areas shifts into the ghetto, driving gentrification and more upside potential than nicer areas.
the company i work for got its first CA IOU today for a tax refund check we applied for.
Green shoot?
Seriously, I know that probably translates to hard times for all work for them. Cash is tight right now…
Got Popcorn?
Neil
A follow-up to my post yesterday about the Outer Banks. a quick Zillow of the area where we were staying (Carolla NC) revealed 115 houses for sale and 15 (all but one more modest places on the bay side of 15, or North of the McMansion area) that were recently sold. We are nowhere close to capitulation here. This is going to get UGLY for the owners.
There are McMansions on the Outer Banks? What are they nuts?
On stilts I’m sure. Them beach houses that rent to tourists cost some serious jack.
But many of those million-dollar houses have enclosed part of the first floor BELOW the stilts, and that’s a NFIP no-no.* But I’ll wager that their claims won’t be denied the next hurricain that comes through.
*http://www.miamiherald.com/news/florida-keys/story/1158877.html
I remember John Stossal doing a report on freeloaders and including how the government keeps rebuilding his house on the outer bank for him every time a hurricane knocks it down even though he’s a pretty rich guy.
Yep - the federal flood insurance program is just insane.
It’s the same principle as spending billions of $$ to rebuild whole cities below sea level after they, just on a smaller scale.
We are nowhere close to capitulation here. This is going to get UGLY for the owners.
It’s different when it comes to overdevelopment in fragile ecosystems!
They were built for all those rich DC folks. Locals hate the ditdotters and dingbatters. Those beach digs will all be stripped clean before long.
Not too many people in DC are rich enough for a ~1m second home, even if many of them have managed to swing a 750k primary residence. The govies are well paid, have good benefits, and stable jobs, but these aren’t Wall Street salaries.
I live in North Cackalacky along the coast. The OB was marketed to the DC folks. Everyone needs a beach house, you can rent it out till you retire. God aint makin’ no more waterfront property. It worked for a little while.
God aint makin’ no more waterfront property.
I thought hurricanes remove some waterfront property & lay down some new property every season.
“The Fed is an obstacle to change, which is why more and more people are starting to figure out that the Fed has got to go.”
~ Mike Whitney
My impression is that the green shoots and Bernanke reappointment are part of a grand plan to muddle through until recovery, all the while holding the line on political pressure for significant financial reform. This is just my subjective interpretation of what bubbles up through the MSM — don’t have any insider information to bolster my case.
Mormons Become Victims in $50 Million Scam to Sell Gold Bullion.
Sept. 1 (Bloomberg) — Henry Jones delivered the good news in a conference call with Tri Energy Inc.’s investors: The gold deal the company had been working on for years was about to pay off.
Jones, 55, a record producer in Marina del Rey, California, and his two partners had raised more than $50 million from 735 investors, which they said they were using to broker the sale to Arab buyers of 20,000 tons of gold owned by a group of Israelis. They promised to triple investors’ money — if only Tri Energy could overcome some last-minute glitches.
All the company needed to close the deal, Jones said on the Dec. 20, 2004, conference call, taped by one of the participants, was a “safe-passage letter” that would cost $450,000. A few days later, on another call, he said Tri Energy had to come up with $100,000 to open a “commission account.” Then, on Jan. 15, 2005, a new request: The bank handling the deal wanted $125,000 to conduct an audit.
Like those caught up in other get-rich scams — from Bernard Madoff’s $65 billion Ponzi scheme, which initially snared wealthy Jews, to an alleged $4.4 million fraud aimed at deaf people — Tri Energy’s investors had something in common. Many were Mormons and born-again Christians who shared dreams and prayers on nightly conference calls. They vowed to use the profits for charitable works and kept raising funds, at times taking out second mortgages, draining retirement accounts and recruiting relatives.
While the delays and pleas for more money never stopped, the charade did.
Restraining Order
In May 2005, the U.S. Securities and Exchange Commission obtained a temporary restraining order against Jones and his partners, Robert Jennings, an associate pastor at the New Life Fellowship Church in Perris, California, and Arthur Simburg, a former marketing representative for sporting-goods manufacturer Puma AG.
Jones, a native of Nigeria, and Jennings, 59, were later convicted in federal court in Los Angeles on charges of mail, wire and securities fraud. Jennings was sentenced last November to 12 years in prison, and Jones got 20 years in April. Both men have filed notices that they intend to appeal. Simburg, 64, who pleaded guilty and cooperated with prosecutors, received a nine- year sentence.
Ah, nothing better than doing the Lord’s work. Nice to see Jews ripping off Evangs & Mormons who are trying to rip off Muslims. Must be something about Monotheism that brings out the larceny in the hearts of Man.
Must be something about Monotheism that brings out the larceny in the hearts of Man.
It’s not that it brings about larceny, but thieves know that the religious are more likely to believe and buy into a get rich Ponzi scheme. If you tell them your a believer they will believe in you. Meidoff, Stanford (Caymen bank), about every tele evengelist in America, and many others all know this. The best part is that if you get caught, like Gov Sanford you just repent. Others do the same thing using nationalism or race but not to the same degree. The ultimate con artists are those who convince young men to blow themselves up so that the religious leader can gain political or financial power all in the name of God of course.
Blind the sheep with religion then sheer the sheep.
Peter Schiff is running for Senate: www schiffforsenate dot com
that’s a lot of f’s
Not confirmed yet. He said that he will *definitely* run if he raises 1.5 million, and he *may* run regardless. I believe he is planning to make the announcement on Labor Day if he doesn’t reach 1.5 mill by then.
I encourage all anti-Republicrats to donate to this man’s campaign (I gave $200 a few days ago). The promise of the Republican party returning to its roots is exciting. I would believe what Schiff says about the economy before anything Obama says.
Imagine a Paul/Schiff (or Schiff/Paul or even Schiff/Rand Paul) ticket in 2012? I would vote for that in a heartbeat!
Anybody seen the movie Bulworth?
Bulworth was excellent. I keep hoping that at least one of our current politicians has a Bulworth moment.
“The promise of the Republican party returning to its roots is exciting.”
That’s the way I feel.
Hope his handlers get him past this hurdle:
“Irwin A. Schiff (born 1928) is a prominent figure in the tax protester movement. Schiff is known for writing and promoting literature that claims the United States income tax is applied incorrectly. He has lost several civil cases against the federal government and has a record of multiple convictions for various federal tax crimes. Schiff is serving a 13-plus year sentence for tax crimes (with his location listed as the Terre Haute Federal Correction Institute as of April 21, 2009). His projected release date is 7 October 2016.[1] Irwin Schiff is also the father of stockbroker Peter Schiff.” (wikipedia)
I don’t know, LF. I’m mostly too young to remember but didn’t Jimmy Carter espouse higher interest rates, living within our means, and not wasting resources? Didn’t work out too well for him…
My concern is that Americans SAY they want fiscal conservatism, as long as it doesn’t destroy the economy and especially not THEIR job or way of life…
I apologize in advance for hijacking the convo, but am in need of advice from HBBS–I am in the process of buying a foreclosure in Cathedral city (next to Palm Springs), for 150k cash.(from an inheritance–I still have an equal sized chunk left in bonds.) I’m going to live in it with my kids. It’s in a ‘good’ neighborhood (Century Park.) Short question: am I nuts? I realize prices will sink downward yet more, but my time frame is at least five years of living in it. Thoughts/advice/severe chastistement all appreciated … Thank you.
+ 1
I don’t think its nuts.
I would ask:
a) is this a good school district?
b) is your job stable? (so you don’t have to sell anytime soon)
c) is there an HOA and what’s your risk exposure if neighbors don’t pay assessments?
I think prices will go down further, and I think holding for just five years will be on the short side in terms of breaking even. However, it seems you can easily afford this. You have to weigh the downside risk against the benefit of not having to move your kids around anymore and keeping them in a school with their friends. I wouldn’t mind taking that bet if I were in your position.
At least five years?! My plan is to “buy where I die.” I don’t understand people who buy houses for 5 years.
Same here. That’s why we’re still renting… Still waiting for that affordable house that’s in a safe neighborhood and close to work.
Not anywhere near there, yet.
I wouldn’t expect to break even within 5 years. After that, who knows. Whether that makes you nuts or not depends on your situation, if owning a place versus renting one is worth the difference.
Rent it. Or something like it. Have you learned nothing here?
buying a foreclosure in Cathedral city
plan on 20-30 K more to fix the house..plus with all that cash burning a hole in your pocket
why not upgrade the kitchen with granite and stainless steel appliances
and the $3000 gourmet stove…that should make you fell better…
Go for it. You have the funds to withstand any downturn for quite a while. Just don’t expect to sell any time soon and realize any profit.
Also depends when the house was built. If it’s cookie cutter crap, you’re nuts. If you truly like the design of the house, you’re fine. It’s hard to find a house ing ANY part of the country for 150K.
My best guess is that the market is going to slow leak for some time. The government is going to wean housing from its teat last, because of the massive influence the Finance, Insurance, and Real Estate industries have over the politicians. Eventually house prices will come in line with incomes again I think. It could be 2 years, it could be 15. Your mileage may vary. My crystal ball has some scuffs on it.
But, if you find something that suits your fancy, is in a good neighborhood (location, location, location - it’s always been true with real estate, always will be), and you own the land underneath the house (no “ground rent”), it has a good school district - and you can swing the payments without destroying your standard of living - I say, go for it.
Yep, agree with this.
Go for it, if it meets all the above, AND you can easily see yourself living there for 10 or more years.
The Tsunami Is Curling Over: Commercial Real Estate
I have warned for more than two years that despite all the claims that “The government has this under control” that they do not - they were doing what so many people in government do - either lying outright or displaying tremendous hubris, believing that by waving their hands in the air and shouting they can overcome the math.
If you have been in this market picking up fish as the water went out, smugly congratulating yourself on your intelligence while failing to look upward, you may be about to get a really ugly surprise:
Their efforts could be undermined by a surge in foreclosures of commercial property carrying mortgages that were packaged and sold by Wall Street as bonds. Similar mortgage-backed securities created out of home loans played a big role in undoing that sector and triggering the global economic recession. Now the $700 billion of commercial-mortgage-backed securities outstanding are being tested for the first time by a massive downturn, and the outcome so far hasn’t been pretty.
Except that the lying hasn’t stopped, you see. Indeed it has been abetted by Washington DC and the willful blindness of regulators who have for more than two years refused to apply the principles of sound banking in their dealings with these institutions. The result?
Until now, banks have been able to keep a lid on commercial-real-estate losses by extending debt when it has matured as long as the underlying properties are generating enough cash to pay debt service. Banks have had a strong incentive to refinance because relaxed accounting standards have enabled them to avoid marking the value of the loans down.
The Journal calls this “relaxed accounting standards.”
Still, most of the $6.7 trillion in commercial real estate is privately owned. Also, it is unlikely commercial real estate will benefit much from an early stage of an economic recovery. What landlords need is occupancy and rents to rise, and that means employers have to start hiring and consumers need to shop more. So far, there are few signs this is happening.
Got it? $7 trillion of exposure that had its “value” set during the era of fraudulent lending and accounting, where rents and occupancies rise to the sky, growing literally all the way to the sun. Such magical thinking - the belief that compound (exponential) earnings growth can be maintained indefinitely on a planet that is comprised of a finite landmass with finite resources is the height of stupidity.
When that “expectation” is embedded in securities it is by definition a fraudulent act, as mathematics make such structures impossible to work on an indefinite forward basis, and yet commercial real estate is nearly always financed on a cash-flow debt-service basis, with principal payoff being accomplished not through amortization but rather through rollover - a rollover that is, at best, highly-speculative and at some point in the future mathematically certain to fail.
If we had honest regulators these structures would be deemed felonious and everyone responsible would find themselves on the business end of an indictment. Every financial institution sandbagging the “value” of these instruments would be forced to recognize their impairments or be closed.
But we don’t live in a nation with honest regulators. We live in a nation where the mathematically impossible is not only allowed to be sold and the suckers (that would be you, your pension fund, etc) money harvested, but when the mathematically inevitable blowup comes we instead (try to) bail out, once again, the purveyors of these scams with taxpayer money.
It may look easy to pick up fish off the newly-evacuated sea floor, but if you fail to heed the roar in your ears and fail to look up what will inevitably come, while it may surprise you, does not surprise anyone who has passed sixth grade math.
(From K. Denninger)
Survey: More young workers unable to pay bills.
Tue Sep 1, 2009
NEW YORK (Reuters) - One in four young U.S. workers does not earn enough money to pay their bills, more than twice as many as a decade ago, said a survey released on Tuesday.
Fewer than a third of young workers earn enough to pay their bills and save some money as well, while 10 years ago that number was more than half, according to the research released by the AFL-CIO, a federation of labor unions.
The nationwide telephone survey polled 602 workers ages 18 to 34 in July 2009 and compared the results to a similar survey 10 years ago, the AFL-CIO said. The young workers polled were part of an overall survey in July of 1,156 people.
Of the young workers, 24 percent said they do not earn enough to pay their monthly bills, compared with 10 percent in 1999, it said.
Another 31 percent say they can pay their bills and save a bit, down from 53 percent in 1999, it said.
The survey found 55 percent of young workers are hopeful and confident about achieving their financial goals in the next five years, down from 77 percent who felt that way a decade ago. Another 41 percent said they were worried and concerned, more than twice the 20 percent who felt that way in 1999.
A third of young workers do not have health insurance, compared with a quarter who were uninsured a decade ago.
It found that currently 45 percent of young employees work more than 40 hours a week, a third do not get paid vacation days and 40 percent do not get paid sick days.
A third still live with their parents, it said.
“It found that currently 45 percent of young employees work more than 40 hours a week”
We better get those numbers up to 100% and 80 hours a week. Millions on social security, medicaid, public pensions and bailout recipients depend on you! We also have to fund various wars scattered about the globe, they don’t just finance themselves. Now get busy!
Vacation days? Sick days? Hmmmph! The youts of today. They want everything! Thats whats wrong with this country.
Someone was bashing unions up above, it’s obvious that the worker has no power at all anymore. Even educated workers. All those who work for a living will continue to see their quality of life decline until they band together in some form and have a riot or two.
Educated workers never had much collective power, much less a union. You have to rely on your education and your “networking,” which sucks big time. The only time I *ever* heard of an educated union was a bunch of grad students going on strike.
And educateds can’t strike anyway. There are too many Chindians who would love the business.
it’s obvious that the worker has no power at all anymore. Even educated workers
I don’t know about that. People have power, they’re just unwilling to exercise it. ie, if you’re not happy with your situation, LEAVE. Just saying you’re unhappy won’t change anything if it doesn’t cost the company anything. That’s how unions are effective - they go on strike, which hurts the company.
I’ve left jobs before because I felt I was underpaid and under-appreciated. My current salary is about 75% higher than what I was making at the place I left (2 years ago). Was I unemployed for 9 months? Sure..but that was part of the price I paid for wanting a better-paying gig. And the company I was working for hired me back on contract for a brief while, paying considerably more than they were when I was employed by them directly.
Unions as they exist are only helpful for those who have no leverage. Valuable employees always have leverage. The trick is to provide value.
Sorry but in the age of outsourcing and unemployment and a crashing economy very few are willing to leave a job because they want more. If you have a family to support and are in debt you are even less likely to reach for the door. The US is on the fast track to a hand full of elites and a small middle class that will be used to keep the mobs at a distance and distracted. ie the same model that is used in the vast majority of countries around the world.
If you have a family to support and are in debt you are even less likely to reach for the door.
Who’s fault is that, though? If you *need* the job that badly, then you have no leverage. I could afford to leave because I have no debt, and no dependents. But that is all by choice. Certainly there’s luck involved - I’m not denying that…I’m just saying that your statements don’t undermine or disprove mine, IMO
Do they ever define the word “bills” in this story?
Do bills include cable TV, the daily trips to SBUX, and the fresh pedicure/manicure I seem to see on every 20-something female these days?
Those items alone add up to what, $200 a month?
Cant forget the Gucci bag to impress the rap homeboys into tossing money your way while slithering away as a pole dancer.
hmm maybe that’s how they afford all that luxury
$200? One of my friends told me his cable bill alone was $250. Turned out his new wife was ordering PPV movies - when the same movies were already in their TV cabinet on DVD!
He did ‘ask’ her to stop it though. He has been trying to cut their $3,700/ mo. in bills lately. For encouragement I regularly send him comps for the condos he owns. The most recent comp for his 1 bdrm is $75k - his purchased for $145k.
(FPSS laugh)
zactly..
people run their household budgets just like the govt runs it’s budget.. spend every freakin dime and, if you run short, raise taxes (or complain that there’s not enough income).
Govt spending mirrors our own.
This truly stinks, really and truly. Not that much different, though, from when I was in my ‘apprenticeship’ years, in my 20s. Unless you snag a job in a hot area, you will be living on beans in your 20s, and working long hours to get that first layer of skills, and then that second layer that you can call upon in times of true desperation. Add kids into the equation, and you are talking times of true desperation.
This is the decade when you are gathering the data points that will eventually coalesce into “gut”, or “intuition”.
I don’t work those hours anymore unless I am gripped by a problem I like. I have so dam many data points that I see most things in patterns, with strong covariances among unexpected indicators. I can sense where to dig and what’s important. This benefit would not have happened without enormous quantities of data points from my 20s.
Not one of the anointed. I went through three different fields in my 20s and started at the bottom every time. But the data points from all of them contribute to a tapestry of experience. I see patterns and symptoms in any domain, anymore.
Just my two cents.
Wonder if this news tastes like green shoots to those affected:
DALLAS (AP) — American Airlines is cutting 921 flight attendant jobs as it deals with an ongoing downturn in traffic and lower revenue.
The airline said Tuesday that the cuts will take effect Oct. 1.
American, the second-largest U.S. airline, said 228 employees will be furloughed — laid off but with rehiring rights — and the company will put 244 more on leave for two months. Another 449 will take voluntary options such as leave.
Nearly half of the flight attendants to be furloughed are based at New York’s LaGuardia Airport.
The airline said it planned to cut 1,200 flight attendant jobs but was able to reduce the number by adjusting staffing requirements for the winter.
The airline said in June that it would cut jobs as it reduced flights to meet lower travel demand.
American said Tuesday that of the 228 furloughs, 105 would be at LaGuardia, 67 at Chicago’s O’Hare Airport, 25 in Boston, 17 in St. Louis and 14 at Reagan National near Washington.
Loose lips
Sink ships.
Financial Stocks
Sep 1, 2009, 2:13 p.m. EST
Traders flee financial stocks; AIG slips as much as 20%
By John Spence, MarketWatch
BOSTON (MarketWatch) — The U.S. financial sector was sharply lower on the first day of September as investors nervous about the summer run-up and the new month’s bearish reputation fueled the selling momentum.
Shares of bailed-out insurance giant American International Group Inc. (AIG 37.44, -7.89, -17.41%) took a major hit for the second straight session after their recent surge. The stock, which nearly hit $56 last week, was down as much as 20% on Tuesday.
AIG more than tripled in August as traders bid up other so-called high-beta financial stocks such as Citigroup Inc. (C 4.68, -0.32, -6.40%), Bank of America Corp. (BAC 16.72, -0.87, -4.95%) , Fannie Mae (FNM 1.62, -0.31, -16.06%) and Freddie Mac (FRE 1.99, -0.30, -13.10%) .
…
Financial stocks sold off Tuesday despite decent economic data. There was talk among traders of a looming bank failure, although some investors dismissed the speculation as pure market rumor.
…
Buy the dips!
That’s the plan. How long will the current leg of the correction to rational pricing continue before green shoots intervene again to the upside?
Not exactly a recipe for green shoots either:
Southwest Airlines reduces flights on 92 routes to cope with falling travel demand
DALLAS (AP) — Southwest Airlines will temporarily halt flights on three routes early next year as it deals with a decline in air traffic and tries to bend its schedule to fit seasonal demand.
The airline published a new schedule Tuesday that covers flights from next Jan. 9 to March 12.
The airline will cut one flight per day on 92 routes and increase service on 42 routes, usually by one trip per day as well.
Southwest also will suspend service between Albuquerque, N.M., and Portland, Ore.; and between Manchester, N.H., and Phoenix, with flights resuming in February. Flights between Kansas City, Mo., and Seattle will stop in January and resume in May, according to the airline.
Chief scheduler Bill Owen said Southwest is adjusting for seasonal travel patterns — the Pacific Northwest routes are stronger in summer, he said — and bolstering service in cities where Southwest has recently started service.
Southwest will add nonstop service from St. Louis to Boston and Minneapolis in January. Southwest began service in Boston and Minneapolis this year.
Dallas-based Southwest, the nation’s largest discount carrier, operates about 3,300 flights per day.
When I went back east last Xmas, I flew on Southwest (Tucson-Chicago, Chicago-Philadelphia, Philadelphia-Chicago, Chicago-Tucson). Only one of my four flights, Chicago-Tucson, was full.
Am about to book another SWA flight to Detroit. (Wolverine Homecoming’s approaching.)
The proles can’t afford to fly.
Yet somehow oil prices remain high.
I read another article about how Texas oil workers are loosing jobs in large numbers, even with oil at 60-70. This tells me that there are some mighty strong forces propping things up but those that sell oil realize it won’t last or are in on it.
Someone posted the other day about a possible quid pro quo that would see the US pump up oil prices and Saudi Arabia ect would continue to buy US bonds. A stealth tax on the world to enrich oil producers and keep the US treasury full.
Just bought an electric car.
Would such collusion even be possible? Seems a lot of other players could trip such an arrangement up.
Granted, at the same time I realize our pols will do anything to please their masters - the princes and sheiks, but still.
The proles can’t afford to fly.
I was surprised when trying to book a flight for my mom to come visit me. Her body has gotten creaky in her old age, and she’s had a knee replacement, so I wanted to fly her first class so she could stretch out her legs. I was astonished that American wants $1500 for the round-trip from Chicago to Seattle. Coach fares are only $300 or so.
Even though demand is apparently down, prices seem to be sticky.
Forgot to say, congrats on snagging your new job! They’re lucky to have you, although I know you have too much class to exude that vibe.
Car Dealers Still Waiting On ‘Clunkers’ Cash
Mai Martinez CHICAGO (CBS)
Here’s the figure: $2.878 billion. That’s how much money the government owes car dealers for the “Cash for Clunkers” program.
More than $200 million of that is owed to dealers in Illinois and Indiana, so CBS 2’s Mai Martinez checked with some of them to see how much money they’ve collected from Uncle Sam.
Now that the popular program has ended, many dealerships are asking the federal government to “show me the money.”
CAPTURE MY CHICAGO: Send us your pictures of Chicagoland. You could get published in a book.
“Out of 142 deals they owe us for, we’ve gotten paid on seven,” Lou Tornabeni of Ettleson Hyundai said.
“We had 102 cash for clunkers,” Carm Scarpace of Westfield Ford said. “We’ve been paid for one.”
With each Cash for Clunkers deal worth between $3,500 and $4,500, many dealerships are anxiously awaiting their government payday.
Some, like Advantage Chevrolet, which sold cars up until the last minute, have more than half a million dollars on the line.
“It was chaotic towards the end,” Jason Roberts said.
Roberts says his dealership sold 142 cars under the program — for a total of about $568,000 in government rebates. So far, the dealership has only been paid about $68,000 for about 17 of the deals, which means Uncle Sam still owes them roughly $500,000.
“It’s not crippling, but it definitely affects the cash flow on a regular basis,” Roberts said.
Roberts says his dealership can handle the cash crunch, but others may not be as lucky, especially if they didn’t follow the government’s strict guidelines for the program.
“We know of one dealer that sold 40 cars under the Cash for Clunkers programs, and out of those 40 cars, he’s expecting to get paid on eight,” Roberts said.
But even those who did follow the guidelines say they won’t rest easy until they have the cash in hand. For Westfield Ford, that’s about $400,000.
“You’re always nervous when the money’s out there, but you’ve got to believe in the government,” Scarpace said. “It should come back to us.”
The million-dollar – or should we say, billion-dollar — question now is when? Dealers say they don’t know, but it can’t come soon enough.
The piggies at the trough go oink, oink, oink!
What are they worried about, they’ll have plenty of time to wait for the mail this fall. Especially those wizzes at GM and Mopar, who couldn’t even make good on a gimme.
No worries on sickness care, dead Teddy will help get it done, say’s Reid.
Reid: Teddy’s death “going to help us”
The Reno Gazette-Journal has a sit-down with Senate Majority Leader Harry Reid (D-Nev.), who addresses the Ted Kennedy question in, um, an interesting way.
Q: How will U.S. Sen. (Edward) Kennedy’s death affect things?
A: “I think it’s going to help us. He hasn’t been around for some time. We’re going to have a new chairman of that committee, it’ll be, I don’t know for sure, but I think Sen. (Chris) Dodd, (D-Conn.). He has a right to take it. Either him or (U.S. Sen. Tom) Harkin, (D-Iowa), whichever one wants it can have it. I think he (Kennedy) will be a help. He’s an inspiration for us. That was the issue of his life and he didn’t get it done”.
NHS could cut 6,500 nurse jobs as recession bites.
Nursing Times.Net
The number of nurses in England will be cut by more than 6,500 in the next three years, according to one of the first estimates of how the recession will affect jobs in the NHS.
Nursing Times calculated the figure based on foundation trust hospitals’ plans. But experts say expected cuts in investment mean the actual reduction is likely to be much larger.
The Royal College of Nurses said the figure was “deeply worrying” because of the potential impact on quality of care.
Foundation trusts, which account for about half of hospital trusts, are planning on average a 2.17 per cent cut in nurses between 2009-10 and 2011-12. The figures were in plans submitted to their regulator and sent to all FTs last month.
If similar cuts were applied to the 303,315 nurses employed by all acute and mental health NHS trusts in 2008 it would mean 6,590 fewer nurses overall.
The total number of NHS nurses has increased every year in the past decade except in 2006, when the NHS faced huge financial problems and there was a drop of about 6,700.
The estimate for non-clinical staff is a 3 per cent reduction in the next three years – which equates to about 12,800 posts.
RCN head of policy development Howard Catton, responding to the estimate for nursing numbers, said: “What we are looking at is deeply worrying because we know of the direct relationship between nurse staffing levels and the quality of care.
“We know that taking out nurse numbers just to achieve savings or balance the books is highly likely to have an immediate and detrimental impact on patient care.”
Just a little climb up Mt. Everest for those who felt the S&P Price/Earnings multiple was a little out of whack:
http://www.bullandbearwise.com/SPEarningsChart.asp
back to the basics…
http://www.youtube.com/watch?v=bNmcf4Y3lGM&feature=player_embedded
I have some thoughts on the current health care debate.
It does not need to be 1000 pages long, but rather as a self employed person, the formation of large groups anyone could join and buy whatever coverage you wanted through, which mitigates the pre-existing conditions issue and decouples people from their jobs as a source of health coverage. Not to say employers could not continue to choose to provide this valuable perk, but just so if you did choose to go to another firm or work for a small company your pre-existing conditions etc would not be an issue.
The second part is what to do about those who are too poor to buy health coverage. My solution which would cost a small fraction of any plans on the table would be to fund the community clinics, and even provide community based care in hospitals, where those with non life threatening conditions would be sent down the hall, solving our emergency room problem with illegals and uninsured using them as a regular doctor.
These two simple to implement ideas would go a LONG way towards making our health care a LOT better, and without breaking those things folks do like about our health system.
I’m already in one of those self-employed group insurance plans. For several years, I’ve been covered, if you want to call it that, by a Mega Life policy sold by the National Association for the Self Employed (NASE).
After I purchased the policy, I learned that NASE/Mega Life has been sued by several state attorneys general. There have also been class action suits. Do a Google search on “NASE class action” and you’ll find plenty of information. None of it is very favorable toward NASE/Mega.
I’ve tried to get on the Arizona state plan for small business people, the Healthcare Group, but guess what? Our legislature recently passed a law that excludes sole proprietors from this plan. Thanks a lot, legislature.
So, I continue with NASE/Mega. Let me tell you, if and when that nationwide public plan goes into effect, I will cheerfully kick that NASE/Mega policy to the curb.
All I can say is, I hope I live long enough to do so. I’m 51 years old and already avoid/delay regular checkups and tests because I fear that, if something is found, the cost of treatment will bankrupt me to the point where I will lose my house.
So, that’s where things stand for me. Too bad that such things are allowed to happen in the richest country on earth.
if and when that nationwide public plan goes into effect, I will cheerfully kick that NASE/Mega policy to the curb
Aren’t there other options, slim? I imagine AARP has group plans (I know you’re only 51..not sure what the age to join is), doesn’t AAA, the NRA, etc? Seems there are many other options out there to join in on group health plans.
The trouble with group health plans is that you can get cancelled from them too. That’s happened to me in the past.
The insurance company connected two things in my health history (which had nothing to do with each other), claimed that I had an undisclosed pre-existing condition, and wham! no more health insurance.
I had no right of appeal, other than going to the Arizona Department of Insurance. All it did was act as a mail-forwarding service to the insurance company.
I hear you Arizona Slim . I found out how bad faith my Health Insurance Company was recently ,and in my case it resulted in a death . The insurance companies are using this pre-existing
BS as a excuse to not honor claims . What good is private health insurance if they are always trying to squeeze out of paying a claim ? I really believe now that health insurance should be non profit .
I had a life or death matter going on while I was arguing with those bastards .In my case my insurance was actually to good ,
and they saw me as a huge liability ,IMHO . I had the duty to protect my loved one ,and those bastards were trying to
ration care . When I started screaming bloody murder they
sprung into action ,but we got done in by hospital germs in the end . The complaint process is a joke as you eluded to .
I am talking about being able to sign up for the same plan you can through a large employer - say a school district or fortune 500 company. Good coverage, no pre-existing conditions, good legal protection. Just without the stupid W2!
Of course the insurance industry will press against this, and the current schemes are atrocious, so for now as bad as it is I am opposed to change for the worse.
Nietzsche had a prophetic warning for stock market bulls lusting over their “green shoots” driven gains since last March:
“Sensuality often grows too quickly for love to keep up. Then love’s root remains weak, and is easily torn up.”
–Beyond Good and Evil–
Wall Street stumbles into September
Stocks plunge on worries that the market gains have raced ahead of any economic recovery. Dow down 185 points; S&P 500, Nasdaq sink 2%.
By Alexandra Twin, CNNMoney dot com senior writer
Last Updated: September 1, 2009: 5:45 PM ET
After a bleak 2008, equities are looking up. But whatever the market, our trademark long-term portfolio can help you build a nest egg for a secure future.
The Dow has rallied 11.7% this summer.
NEW YORK (CNNMoney.com) — Markets tumbled Tuesday, as investors retreated at the start of what is typically a rough month, betting that the six-month stock advance has raced ahead of the economic recovery.
“I think we’ve had a nice run and it’s time for a bit of a pullback,” said Tom Schrader, managing director at Stifel Nicolaus. “I wouldn’t be surprised if we moved back to the 880 level (on the S&P 500) before moving back up.”
…
This September superstition is really throwing a wrench into the green shoots rally! Makes me happy once again that I am not religious (though I do factor others’ religious beliefs into my investment decisions).
Sep 1, 2009, 9:05 p.m. EST
Asian Shares Drop On DJIA’s Fall; Cyclical Stocks Weak
By Colin Ng
SINGAPORE (MarketWatch) — Asian stock markets were falling Wednesday after a weak session on Wall Street, with analysts saying a correction was due after months of gains. Cyclical stocks were leading the declines in Tokyo and Sydney.
“Everyone has been calling for a pullback,” said Patersons private client adviser Chris Blair. “Economic data are still okay and the longer-term view is bullish, but in the short term I think there has to be some profit-taking.”
Japan’s Nikkei 225 was down 2.8%, with South Korea’s Kospi Composite down 1.3%, Australia’s S&P/ASX 200 off 1.8% and New Zealand’s NZX-50 falling 1.0%.
The Dow Jones Industrial Average lost 2.0% Tuesday, even though the Institute for Supply Management’s monthly manufacturing index marked its highest reading since June 2007.
“Tellingly, on a day when a green shoot seemed to blossom, an old worry rose to the fore - concerns about the health of banks, though one might struggle to pinpoint a definitive trigger for the day’s move, apart from the calendar,” said David Watt, Senior Currency Strategist at RBC Capital Markets.
“There has been intense focus over the past few weeks on the historical fact that September can be painful to equities. Not usually so early though,” he added. DJIA futures were three points lower in screen trade.
…
…though one might struggle to pinpoint a definitive trigger for the day’s move..
Who knows what the day traders and speculators are up to besides the normal trading and speculating based on guesswork and rumor.. Who cares? Who should care?
I see volume at about 3 billion shares a day. It may sound like a lot but is it a lot of trading compared to how many investors and shares are out there?
WalMart has something like 4 billion shares. AT&T has about 6 billion total shares.
So an average day’s trading of 3B is equivalent to trading half of AT&T’s stock, while no stock from any other company is bought or sold.
And a lot of shares sold are nullified by someone else buying them.
or.. Am i mistaken?
Folks who thought they had recently bought green shoots ended up with falling knives instead.
Wall Street Journal
* ASIA MARKETS
* SEPTEMBER 3, 2009
Nikkei Falls 2.8%, Leads Asia Lower
By COLIN NG
SINGAPORE – The Nikkei fell 2.8% Wednesday, leading Asian stock markets lower, after Wall Street declined and as analysts said a correction was due after months of gains.
“Everyone has been calling for a pullback,” said Patersons private client adviser Chris Blair. “Economic data are still okay and the longer-term view is bullish, but in the short term I think there has to be some profit-taking.”
Japan’s Nikkei 225 was down 2.8%, with South Korea’s Kospi Composite down 1.3%, Australia’s S&P/ASX 200 off 1.8% and New Zealand’s NZX-50 falling 1.0%.
The Dow Jones Industrial Average lost 2% Tuesday, even though the Institute for Supply Management’s monthly manufacturing index marked its highest reading since June 2007.
“Tellingly, on a day when a green shoot seemed to blossom, an old worry rose to the fore — concerns about the health of banks, though one might struggle to pinpoint a definitive trigger for the day’s move, apart from the calendar,” said David Watt, Senior Currency Strategist at RBC Capital Markets.
“There has been intense focus over the past few weeks on the historical fact that September can be painful to equities. Not usually so early though,” he added. DJIA futures were three points lower in screen trade.
…
Click on the 5-year time horizon on this graph to get a visual of the collapsing Chinese stock market bubble. The market appears to currently be on the next leg down from a recent dead cat bounce. The high was 6395.757 on October 16, 2007. It dropped to a local trough of 1806.791 on October 29, 2008 (a 1-year decline of (1806.791/6395.757-1)*100 = -71.75 percent) before rallying to a green shoots peak of 3634.984 on August 3, 2009. It’s current level of 2816.325 is already down by (2816.325/3634.984 - 1)*100 = -22.5 percent off its recent high, and with a downtrend underway.
What better way to express my excitement for the beginning of college football (or should I say, FB) season and also tie it to the housing market than by posting news of a victim of condo loans gone bad…
Michigan’s Rodriguez sued over Va. condo deal
COLUMBIA, S.C. (AP) — Michigan head football coach Rich Rodriguez has been sued in federal court by a bank claiming he failed to pay back millions on a loan for a struggling Virginia condominium project, according to court documents.
http://sportsillustrated.cnn.com/2009/football/ncaa/09/01/rich-rodriguez.ap/index.html
That is of course only one of Rich Rod’s problems at the moment. An enraged fan base, pending Big 10(11) and NCAA investigations into excessive practice time, and players transferring out by the dozen.
He also told Michigan fandom in a radio interview to not take their 3-9 performance last season too seriously.
He’ll likely have plenty of time available to be deposed in the suit after the last Saturday in November.
Ummm, a U-M alum is hereby expressing doubts about Alma Mater’s decision to hire this guy. Up until now, I was willing to give RichRod the benefit of the doubt.
However, I’m quickly coming to the conclusion that he’s the same kind of hiring mistake that the University of Arizona football team made with John Mackovic a few years ago.
Being a Buckeye fan, I’m having some fun with all the negative news…
OTOH, when you don’t have a strong OSU-MICH, you don’t really have a Big Ten, so I’m hoping for a resurgence soon.
Florida takes $250 million loss from investment in huge New York City apartment complex
By DARA KAM
Palm Beach Post Staff Writer
Tuesday, September 01, 2009
TALLAHASSEE — State managers lost $250 million in pension-plan money by investing in a massive, 1940s-era Manhattan apartment complex - yet another tale of woe from the real estate bubble that burst shortly after that 2007 deal.
The investment has turned into a total loss, State Board of Administration executive director Ash Williams today told Gov. Charlie Crist, Chief Financial Officer Alex Sink and Attorney General Bill McCollum, who oversee the board.
But the sour deal hasn’t turned Crist and Sink off on real estate. They want the board to put money into Florida properties while the prices are cheap.
The $250 million loss is hardly a sliver of the nearly $100 billion in state pension plan investments, about one-quarter of 1 percent of the total. About $7.8 billion of those investments are in real estate.
But it is a lesson in timing affecting many Florida residents in the state’s own real estate boom-turned-bust.
The state invested $250 million in Manhattan’s Peter Cooper Village along the East River, not far from Gramercy Park, the Flatiron District and the East Village. Less than two years later, the value of the investment is zero, Williams told the panel today.
“We think we’re carrying that investment as a zero on our books,” said Williams, who was hired to head the SBA last year.
Sink, an investment banker and former Florida president of Bank of America who once lived in New York, asked Williams if he would have made the same investment.
Williams said the property may have been sold at its peak value in late 2006, shortly before the state made its investment. He said the buyers, including the BlackRock investment management firm, had borrowed money to revamp the aging apartments.
YUP kick out all the rent stabilized long time blue collar workforce, and make them into LUXURY apartments at double and triple the rent
wonderful idea….
You all will like Peter Morici, an econ professor at University of Maryland. He comes on DC News radio on Tuesday mornings. He’s like a cup of coffee. He’s stating the obvious (to me anyway
He’s the only one I’ve heard dare to suggest that housing price supports are not a good thing.
Here’s a link to some of his articles:
http://seekingalpha.com/author/peter-morici/articles/latest
Hey Prof - check out the facebook stuff if you’re interested and want that data file. I just joined the group (”Pack Man”; no picture yet), so you can send me email (I guess) through that.
Not sure how much longer I’ll be on tonight - so if you contact me I may not respond until tomorrow FYI.
* The Wall Street Journal
* AHEAD OF THE TAPE
* SEPTEMBER 2, 2009
Bubbleless, Stocks Still Playing Catch-Up
The economy may be coming out of recession, but stocks are still stuck at recession levels. Absent new bubbles in credit and energy, they might take a long time to climb out.
Part of the market’s problem can be chalked up to simple math.
Stocks fell so far from their prerecession, October 2007, highs, that — despite a 47.5% rally since March — the Standard & Poor’s 500-stock index is still missing $4.8 trillion in market value.
[financial and energy stocks]
After Tuesday’s selloff, which came despite the Institute for Supply Management’s manufacturing index returning to prerecession levels, the S&P still needs a 28.5% gain to reclaim its levels before Lehman Brothers collapsed nearly a year ago.
It still needs a 57% gain to return to its October 2007 high.
Financials, while the worry du jour, aren’t the only hurdle. All sectors are down from a year ago and, in fact, it is the energy sector (which Monday made up 11.7% of the market) that has been the biggest obstacle keeping the S&P from its pre-Lehman levels.
This is partly because crude oil fetched $115.46 a barrel a year ago, compared with $68.05 on Tuesday.
That slide has punished the shares of energy companies, which are still missing some $500 billion in market value from a year ago, or nearly a quarter of the $2.2 trillion in total market capitalization the S&P 500 has lost post-Lehman.
Financials, in comparison, are down $314 billion in the past year, trailing the $386 billion lost in the industrial sector. Financials had already fallen far pre-Lehman.
But look back to October 2007, and it is the financials that make up the bulk of the market’s losses since — $1.4 trillion of a total $4.8 trillion in losses.
Much of that lost value was built on profits gained from the use of too much debt.
…
Please remind me once again why it is that everyone wants to live (and own a home) in California?
Suggested revision to story title: “Fierce California fires burn larger hole in tattered budget”
Fierce California fires tear into tattered budget
Tue Sep 1, 2009 6:30pm EDT
By Peter Henderson
SAN FRANCISCO, Sept 1 (Reuters) - California’s wildfires are burning through state cash at an alarming rate, with the government spending more than half its annual firefighting budget just two months into the fiscal year — even before the traditional fire season began on Tuesday.
The state’s ballooning budget deficit and sharp drop in revenues resulting from the recession have forced delays in replacing aging firefighting equipment, including 40-year-old bulldozers.
The firefighting effort could face new strains if the prison system, also trying to cut costs, releases 27,000 or more low-risk inmates — the type the firefighting agency depends on for cheap, abundant labor.
Last year’s emergency fire costs were close to $500 million. Wildfires this year have already cost the state $106 million of its $182 million emergency firefighting budget. The agency therefore expects to have to tap a $500 million state reserve, funded primarily through cuts in social services.
Crews battled on Tuesday to contain a 190-square-mile (492-square-km) blaze barely a dozen miles (19 km) north of downtown Los Angeles that has cost $14 million to fight in its first week. It is forecast to burn for two more weeks.
With the tinder-dry state’s third year of drought and reservoirs far below average levels, California faces another potentially catastrophic wildfire season.
Governor Arnold Schwarzenegger has made fighting fires a priority despite crippling budget problems in America’s most populous state linked to the housing industry meltdown and national recession.
“The bottom line is we will take whatever actions are necessary to ensure the budget will never be an obstacle to put crews on these wildfires,” said Schwarzenegger finance spokesman H.D. Palmer.
That could also hasten plans to revise the state’s fragile budget, now scheduled for January. State lawmakers agreed this year on closing a $60 billion, 18-month budget deficit. Their plan involved a wide array of spending cuts.
“If there is action that needs to be taken prior to January, we’ll take it,” Palmer said.
…
* The Wall Street Journal
* OPINION ASIA
* SEPTEMBER 1, 2009, 1:27 P.M. ET
Shanghai Reality Check
Global investors are finally questioning China’s ability to drive global growth.
…
Economists increasingly believe asset bubbles are forming in the stock and property markets. Companies are stockpiling commodities. Meanwhile, China’s export engine is sputtering, despite the authorities’ best efforts to keep it going. There still are too few buyers abroad. China’s stimulus is merely delaying a tough transition from export dependence to domestic consumption.
These problems have been masked by superficially strong economic data. GDP growth bounced to 7.9% in the second quarter, from 6.1% in the first. It even looked for awhile like the benefits were spreading—stronger exports to China were cited as a factor in improvements to the German and Japanese economies earlier this summer.
Yet, as investors abroad are noticing now, these headline data distract from warning signs that China’s boom is more a credit-driven bubble. Only economic liberalization—such as deregulating industries or setting banks free to make market-driven credit decisions—will unleash sustainable Chinese growth. As for policy makers in developed economies, it’s growing clearer by the day that Chinese stimulus will be no substitute for pro-growth policies of their own.
Has Wall Street always worked to financially bail out people who squandered billions of dollars, or have the rules recently been rewritten? I was thinking people who ruined businesses jumped off the roofs of buildings back during the 1930s, but perhaps that is a romanticized notion?
So You Just Squandered Billions . . . Take Another Whack at It
By Steven Pearlstein
Wednesday, September 2, 2009
You’ve probably never heard of Jay Levine, Chris Ricciardi, John Costas or Stanford Kurland, but they are charter members of Wall Street’s Mulligan Club.
Back during the heyday of the credit bubble, they were the financiers who earned huge bonuses for creating, trading and investing other people’s money in those complex securities that resulted in trillions of dollars in losses and brought global financial markets to their knees. And now they’re out there again hustling for investors and hoping to make another score buying and trading the same securities.
…
Why aren’t they in jail?
Sounds like Wells Fargo may be the latest victim of the vicious banking sector rumour mill.
Financials suffer amid concerns on profits
By Francesco Guerrera, Michael Mackenzie and Greg Farrell in New York
Published: September 2 2009 00:06 | Last updated: September 2 2009 00:06
US financial shares suffered their biggest fall since late June on Tuesday as investors brought the sector’s long rally to a halt amid concerns over the profitability of banks during the economic downturn.
Wells Fargo was one of the day’s biggest losers, dropping 4.8 per cent – its biggest slide in two weeks. Traders linked the fall to speculation that the San Francisco-based bank might be preparing a share sale to raise capital.
Wells declined to comment on rumours but said it had not changed its position that it does not need to raise external funds to repay $25bn in bail-out money and plug a capital shortfall identified by the federal government’s “stress tests”.
…
I note that inflation was already “on the way” according to many gold bugs a couple of years ago.
Sep 1, 2009, 12:01 a.m. EST
Beware, inflation is on the way
Commentary: It’s a good time to buy gold and short Treasurys
By Thomas Kee
LA JOLLA, Calif. (MarketWatch) — Inflation is coming, so it’s time to buy gold and short Treasurys.
Bloomberg
By M.P. MCQUEEN
With housing prices still in the dumps, many Americans are finding themselves in the uncomfortable position of landlord.
Some have been forced to relocate for a job and can’t sell their houses. Others have moved, but are holding on to their previous homes, hoping for prices to rebound before selling. Many are finding that rent checks don’t come close to covering their mortgage payments.
Hard data are scant on how many homeowners are renting out their homes, but anecdotal evidence suggests numbers are up. In one indication of the trend: More homeowners are converting their homeowners insurance to landlord policies that cover the additional risks of leasing out a home. Allstate Corp., the second largest home insurer in the U.S., reported a 27% increase in conversions in the first quarter from the previous year.
In Frederick, Md., Realtor Jim Bass says that because of rising demand, a couple of months ago his real-estate group started offering property-management services, tending to the rented homes of absent owners. Mr. Bass says a client recently rented out his 4,700-square-foot house after failing to sell his home, which he listed for $790,000. Now a tenant pays $2,995 per month—a shortfall of $2,000 from the $4,995 mortgage payment. The homeowner “feels that two years from now, the market will improve to the point where he can recapture that,” Mr. Bass says.