Bits Bucket for August 10, 2012
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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How’s Europe? Why? What have we come to admire? 50 million dollars for helping to destroy capitalism in the name of “capitalism”?
Romney Persona Non Grata in Italy for Bain’s Deal Skirting Taxes
http://www.bloomberg.com/news/2012-08-06/romney-persona-non-grata-in-italy-for-bain-s-deal-skirting-taxes.html
That’s because Bain Capital, under Romney as chief executive officer, made about $1 billion in a leveraged buyout 12 years ago that remains controversial in Italy to this day…..Italian regulators raised concerns that the price was manipulated and investors traded on inside information ….
In Italy, the deals have spurred at least three books, separate legal and regulatory probes and newspaper columns alleging investors made a fortune at the expense of Italian taxpayers….Romney himself probably earned more than $50 million, ….“The holding company structure was in full compliance with all tax and reporting requirements in Italy, Europe, the U.S. and the resident countries of other investors,” Bain Capital said in an e-mail. ….
“The government got ripped off,” said Alessandro Fogliati, who led a Stet shareholder group that voted against the sale of Seat. “It was the beginning of the destruction of Italian industry.”
From the article:
Bain funneled profits through subsidiaries in Luxembourg, a common corporate strategy for avoiding income taxes in other European countries, according to documents reviewed by Bloomberg News. The buyer, Italy’s biggest telephone company, now has a total market value less than what it paid Bain and other investors for the directory business.
So let me get this right. He bought it low, fixed it, sold it high and then used a “common” corporate strategy for “avoiding taxes”. Yeah, that’s really a bad thing to do, especially when a corporation avoids taxes.
Yep, Republicans evil, Democrats kind and loving.
Give me a break. How do you think your liberal friends get rich? Oh yeah, they just get the government to pay them millions (like in the Obama Admin’s payments to energy cos) then they go bankrupt.
IMO avoiding taxes is our right and those loopholes are there for everyone.
and those loopholes are there for everyone
But the Lucky Duckies earning the “sweet spot” income of $17,000/year that legally qualifies them to receive the maximum Earned Income Tax Credit of $5,700 are bankrupting this country, right?
Yes, but are you the lucky ducky donkey.
Sorry, Lip. I think the worm is beginning to turn on this.
The loopholes aren’t denied to anyone, but they aren’t effectively there to everyone either.
Example 1: It sounds so simple that Romney “bought it low.” Well, you need millions of dollars to “buy it low,” or you need to have the leverage to borrow millions to buy it low. So any tax advantage gained from buying it low is effectively limited to people with millions of dollars.
Example 2: An example closer to home: the mortgage interest deduction. For middle class houses, the amount of mortgage interest is so close to the fixed standard deduction that many times it’s not worth bothering. To take full advantage, it’s best to have several homes, or an expensive home, so that the interest paid is far more than the standard deduction threshold. So this tax advantage clearly favors someone with a lot of money to begin with.
Example 3: Companies get a tax break for offshoring. It’s not worth moving overseas for small manufacturers, or small service businesses, but a large manufacturer like Apple can get huge benefits. Again, it favors the larger entity with more money.
Example 4: For these and many other loopholes, you also need the money to hire the lawyers to properly find and file these deductions, again favoring the rich.
How do you think your liberal friends get rich? Oh yeah, they just get the government to pay them millions (like in the Obama Admin’s payments to energy cos)
Lip, you’re talking about Soyndra again. That grant money went to the salaries of over 1100 employees and building the facility in California, not into a few grubby hands. You can whine about Solyndra, but you CAN’T say that “liberals got rich” from it.
So, the advantages of buying things are limited to those with the money to buy them?
I think you missed the part about leverage and OPM.
As goon points out, it isn’t the loopholes by themselves, but the hypocrisy.
But just to remind you how those loopholes affect your right to avoid paying taxes, Romney paid 13% tax on income of $23 MILLION in 2010. What was your percentage?
But no matter what the law says, you have to do something VERY SPECIAL to piss off an entire country and become persona non-grata in the nation that invented the phrase. In this case, it was “a Stet shareholder group that voted against the sale of Seat. “It was the beginning of the destruction of Italian industry.””
I wonder what Romney’s reputation is in Greece. I thought that avoiding taxes was more acceptable there.
At the moment, Romney is still avoiding releasing his taxes. D’s continue to push the issue, hard, because it’s a lose-lose for Romney. If Romney says no, it looks like he’s hiding something. If Romney says yes, even if everything is legal, it would show everybody just what kind of wealth-favoring loopholes are out there. There was already some consternation over the tax deduction for Ann Ronmey’s horse.
I thought that avoiding taxes was more acceptable there.
It’s acceptable everywhere. Nobody will pay more than they really have to including you, Romney and Buffett.
It’s not acceptable to turkey, which is just one post above yours.
The operative phrase is “have to.” There are a lot of lobbyists who pay a lot of money to be in those quiet rooms where the “have to” is decided.
The most profitable investment is buying politicians.
“Influence” Not just politicians, but influence. It can be bought from various other groups of people as well.
Money buys power. Money buys influence. And money might just buy your vote.
And money buys more money. Sometimes I think of those poor R’s, who think that rich people make their money by hard work. No, they make their money by cheating, maybe legal cheating, but still a form of cheating. And they use their winnings not just to cheat more, but to invent new avenues to cheat. X money of money buys 2x money + 1 more way to cheat. Next time, the same X amount of money buys 3x money. That’s why the accumulation of money is exponential.
The Italians’ problem is their unsustainable debt. It enslaves them.
Correct.
No differently than debt on depreciating assets enslaves home-debtors.
‘What was your percentage’
‘NEW YORK (CNNMoney) — It’s a provocative fact about the tax code: Nearly half of U.S. households end up owing no federal income tax’
http://money.cnn.com/2012/04/26/pf/taxes/income-tax/index.htm
Let’s not focus on wars, NDAA, spying on US citizens, and that we borrow from outside the country to do these things. Because neither party wants to discuss it.
I contend that the Federal govt doesn’t need taxes anymore (or so they think; deficits don’t matter to them). Both ’sides’ talk about taxes to keep us divided, while they plod on with agendas that few mention. All the while, we passed the point of being able to pay this debt off years ago.
What are we doing wrong? We pay federal tax every year, year-in, year-out…
The government GM deal is the model we should be shooting for.
Tell us how he fixed a directory business to make it worth 25x the purchase price in a couple of years, they didn’t invent the iphone here. I would bet that there was some form of kickback to an Italian gov official.
The other possibilities
2. He had someone on the inside advising the Italian gov as to the worth of the directory business.
3. He had someone at the italian phone company that is now worth less than what they paid for the directory business that used other peoples money to way over pay for the phone business. Givent he collapse in value of the phone company I now favor #3.
So let me get this right. (Romney) bought it low, fixed it, sold it high
I agree. With Romney there was a fix.
“It was the beginning of the destruction of Italian industry.”
Did you see/read the Girl with the Dragon Tattoo? Romney is like Martin Vanger… as soon as he sees the victim give up and accept death, he gets, uh, excited.
Why does no one just come out and say that Bain is CIA?
oops.
Hmmm. Interesting idea but seems awfully conspicuous to make that kind of money and have everyone know it. I thought the CIA avoided that?
Duh, God’s Work comes with immunity!
“DOJ Will Not Prosecute Goldman Sachs in Financial Crisis Probe”
http://abcnews.go.com/blogs/politics/2012/08/doj-will-not-prosecute-goldman-sachs-in-financial-crisis-probe/
It’s GOOD to be the Banksta!
dont bite the hand that feeds you!!!!!!!!!!!!!!!!!!!!!
The Justice Defartment is too busy attacking the states and people like Joe Arpaio for trying to uphold the law.
I swear to Jeebus, I’d almost vote for Romney just to see the ass-end of Eric Holder.
He’s waiting for O’s 2nd term to have his Waco “tear gas and burn the women and children alive” moment
That’s what I’m afraid of. Seriously.
+1
We need Polly’s wisdom on this. The bar to prove fraud is very high, and I’m sure GS knows full well where that bar is so they can dance under it. Is there a civil suit equivalent?
The bar for GS seems to be much higher than it is for Bain Capital.
If you are a past, present or future bundler, you can get away with a lot of things in Amrika.
The bar for GS seems to be much higher than it is for Bain Capital.
Was Bain ever prosecuted?
The civil action has already been brought and settled.
“Goldman Sachs reached a settlement with the SEC in July 2010, paying a $550 million fine for admitting that they should have included information about Paulson’s investment position. Tourre is currently in ongoing litigation with the SEC over the case.”
Thanks Polly.
Michael, when has anyone convicted Bain of committing fraud? Not accused, not expressed an opinion. CONVICTED.
I did not say anything about convicted…the democrats have placed much more scrutiny on Bain capital than it has on any of the perpetrators of the largest economic crisis in history…all for cronyism.
I feel the same way when someone criticizes Romney for sending jobs overseas while obama’s top economic advisor is the CEO of GE. My mind cannot grasp that level hypocrisy.
Now I do have one dear liberal friend who told me…”mike…it’s just politics man…lies and hypocrisy on both sides…where the goal is to just win.”
Now I can accept that.
I feel the same way when someone criticizes Romney for sending jobs overseas while obama’s top economic advisor is the CEO of GE. My mind cannot grasp that level hypocrisy.
1. “Jeff” Immelt, the CEO of GE is a Republican. Any CEO Republican would have the same issues as Immelt.
2. You’re bashing Democrats for criticizing Romney’s track record because Obama sought advice from a Republican.
3. You’re putting as much importance on one of many advisers to a President as someone running for President. They are not the same thing.
BTW Immelt is not “Obama’s top economic adviser”. The White house Council of Economic Advisers, is comprised of a Chairman and two Members. The Chairman is Alan Krueger. Katharine Abraham and Carl Shapiro have been confirmed by the United States Senate as the Council’s members. The Council is supported by a staff of professional senior economists, staff economists and research assistants, as well as a statistical office.
Thewhitehouse dot gov
Actually Immelt, Dimon and Blankenstein are Obama’s true advisers. Krueger, Abraham and Shapiro are just show puppets. Look at the actions, not the words.
Well those WS donations to O were down. WS has been giving more of their money to Romney. They had to do something. Romney vs O is a war of prostitutes trying to do more to please their source of money. I’ll roll back regulation, I won’t prosecute, Oh yea well I’ll cut your taxes to zero, I’ll give you the keys to the treasury. etc etc etc
U.S. banks told to make plans for preventing collapse
Yahoo! - Rick Rothacker - August 10th, 2012
REUTERS - U.S. regulators directed five of the country’s biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.
The two-year-old program, which has been largely secret until now, is in addition to the “living wills” the banks crafted to help regulators dismantle them if they actually do fail. It shows how hard regulators are working to ensure that banks have plans for worst-case scenarios and can act rationally in times of distress.
“… develop plans for staving off collapse…”
And these banks should do this because …? Because they are Too Big To Fail (TBTF)?
If they are TBTF they they won’t be allowed to fail. And if they are not allowed to fail they there is no reason for them to seriously care about developing plans for staving off collapse.
As long as these banks enjoy the status of TBTF then they get to enjoy a free pass; they get to do pretty much anything they want. But the moment this TBTF status is yanked away from them then so does the free pass get yanked away from them.
Hence there is a great incentive for them to keep - AT ALL COST - this status of TBTF.
The way to solve the problem of TBTF is to reduce the size of the enitiy until it reaches a size somewhere below TBTF. But this cannot be done because the To Big To Fails are also Too Influential To Fail. And as long as they are Too Influential then they will continue to be Too Big.
These guys have a lock and they know it.
Too Influential To Fail = Too Connected To Jail
Other than a handful of rogue traders or hedgies gone bad, few of the Wall Street pigmen looting this country blind will ever face any consequences.
http://farm4.staticflickr.com/3014/2907411559_117ac480b5.jpg
“These guys have a lock and they know it.”
When the courts, governments, regulators, etc. become corrupt and ineffective is when revolutions rely on a piece of wire and the nearest thing that will support the weight.
If a lesser bank were to fail then it will be put out of business. This does not necessairly mean the need for a bank goes away - the need remains - it’s just the bank that used to service this need that goes away.
So if the need remians then what is left to sevice this need? Why, a TBTF, that’s what.
A nifty thing about being a TBTF is the the government ends up eliminating your competition.
Until they don’t.
is to reduce the size of the enitiy .
You wimped out and went vague.
HOW do you propose they reduce the size of the entity. Dust off the Sherman Anti-trust act? Re-instate Glass-Steagal, yeah try getting that through Congress.
I would like to “reinstate” Congress.
Actually making a plan to prevent collapse might prevent another TARP, why would they want to do that. There are bonuses to be made
Because Dodd-Frank tells them to. My understanding is that Dodd-Frank gave the FDIC first dibs to chop up any failing bank per the required bank’s living will. THAT’s what will prevent another TARP.
Obama Finds No Easy Way to Buoy U.S. Homeowners Deep Underwater
By Clea Benson - Aug 10, 2012 - Bloomberg
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, stood in the beating sun amid the scrapyards and vacant lots of Cleveland’s East Side and noted that rising home prices have begun to reduce the number of families whose mortgages exceed the value of their homes.
The ranks of underwater borrowers nationwide dropped by 700,000 in the first quarter of the year, Donovan told a crowd gathered for a news conference last week in a parking lot outside a housing-counseling center. Still, he acknowledged, the problem remains severe in regions like greater Cleveland, where a third of homeowners have negative equity, according to data provider CoreLogic Inc.
The signature federal refinancing effort, the Home Affordable Refinancing Program, has helped about 150,000 borrowers with negative equity obtain lower interest rates and lower monthly payments since the beginning of the year, according to data released Tuesday by the Federal Housing Finance Agency.
“Why would anyone consider it reasonable to stay in a house you’re going to be paying 30 years on, and maybe longer if the neighborhood deteriorates more, before you see any equity?” Paul Bellamy, research director at Empowering and Strengthening Ohio’s People, an organization that assists homeowners, said in an interview.
The FHFA said it would only make financial sense to write down loans if the debt reductions convinced most borrowers who hadn’t made mortgage payments in more than a year to suddenly start paying again. The agency made it clear it considered that highly unlikely and suggested that the best solution was a “graceful exit” from homeownership for those borrowers.
Early signs suggest that those efforts might be coming too late for some of the most troubled borrowers. Bank of America reported last month that it got no response from more than half of the 60,000 homeowners it has contacted offering writedowns of as much as $150,000.
Meanwhile, the Obama administration also is now looking at ways to encourage the use of unspent federal housing funds to get around the FHFA’s objections to cutting principal balances.
California and Nevada are about to begin cutting debt on loans backed by the government-sponsored enterprises using their allocations from the Hardest Hit Fund, a $7.6 billion aid program for families in states with the largest home-price declines. Of that amount, only $351 million had been spent to assist 43,580 homeowners by the end of June, according to a recent audit.
Unlike the plan rejected by FHFA, which offered Fannie Mae and Freddie Mac up to 63 cents for each dollar of principal reduction, the California and Nevada programs will cover 100 percent of the potential costs to the government-sponsored enterprises. The regulator has approved those plans.
Ya know….. I wonder if it has dawned on these GovCorp jackasses that all their schemes to keep housing prices grossly inflated aren’t working….
http://www.youtube.com/watch?v=P36×8rTb3jI
Now I know she didn`t have to pay her mortgage but what about her gas? Does Peggy have a SNAG card that I don`t know about?
Supplemental Nutrition and Gas Program (SNAG)
And if so, is she still eligible for SNARP? Or do you have to be Hardest Hit to recieve SNAG and SNARP at the same time. Is any of this affected by the cash she got for her Clunker? She was probably not eligible for the First-Time Homebuyer Credit so in all fairness she probably should get SNAG and SNARP. And 99 weeks of unemployment benefits. Unless of course she traded in her Clunker on a Chevy Volt. If that`s the case her SNARP money should be OK but the Chevy Volt’s $7500 federal tax credits should be deducted from her SNAG money. (they are good on gas right) Or we can just wait until she retires and take her unpaid student loans out of her Social Security check. Oh well why should I worry about it, Peggy doesn`t have to anymore.
Welfare queens? Tilting at windmills? USA has gutted jobs and transferred massive amounts of wealth and opportunities to the rich. And now we spend about 5% of the federal budget on the nonworking poor. Big deal.
How Much Do We Spend on the Nonworking Poor?
http://www.motherjones.com/kevin-drum/2012/02/how-much-do-we-spend-nonworking-poor
So the Center on Budget and Policy Priorities decided to add up the numbers and figure out how much money the federal government spends on the nonworking poor. The answer: about 10 percent of all federal welfare spending.
It comes to about $235 billion, the bulk of which is SNAP (formerly food stamps) and about one-third of Medicaid. That’s 12 percent of all federal welfare spending and about 6 percent of the whole federal budget. Once you account for the fact that some of these program dollars go to the working poor, you end up with CBPP’s estimate of 10 percent, or about 5 percent of the whole federal budget.
Is that too much? I guess you have to decide for yourself. But I’ll bet most people think we spend a lot more than 5 percent of the federal budget on this stuff. They might be surprised to know the real numbers.
“That’s 12 percent of all federal welfare spending and about 6 percent of the whole federal budget.”
Federal welfare spending isn’t even close to 50% of the budget. Unless the Center is adding Social Security and/or Medicare into the definition of federal welfare spending? That is one weird definition.
LOL, gs. I knew exactly what this was before I clicked on it.
Free at Last! Food and Housing, Free at Last!
“Early signs suggest that those efforts might be coming too late for some of the most troubled borrowers. Bank of America reported last month that it got no response from more than half of the 60,000 homeowners it has contacted offering writedowns of as much as $150,000.”
If the previous owner of the house that I bought had accepted a writedown of $150,000, they would still owe $40,000 more than I paid. I believe the $150k writedowns are rserved for victims further underwater than they were.
But I have to change this paragraph…
Meanwhile, back at the Ranch the Obama administration also is now looking at ways to encourage the use of unspent federal housing funds to get around the FHFA’s objections to cutting principal balances.
Jethro,
I hope you remain as vocal after the election as you are now, irrespective of which douchebag “wins”.
Hey, that paragraph thing was not a political statement. I just can`t sand to see a sentence started with “Meanwhile,” unless it is followed by “back at the Ranch”.
Life imitates idiom:
—
9 on trial in China over teenager’s sale of kidney for iPad and iPhone (CNN)
“Nine people went on trial in southern China over allegations they helped a teenager to sell one of his kidneys so he could buy an iPhone and an iPad, a court in Hunan Province said Friday.”
They want the round-eyes to come back.
http://blogs.telegraph.co.uk/news/davidblair/100175001/zambian-miners-crush-a-chinese-manager-to-death-remember-that-when-beijing-boasts-about-its-win-win-african-parternships/
The racist comment was uncalled for.
Ox political correctness is dead Ohbahma killed it……..and the miners want whitey to come back…
dj, don’t even bother, people have gone racially insane or something.
What’s uncalled for is the shooting, looting, crushing and exploitation. Of course, no comment about that. I used a “racist” comment referring to members of a tribe to which I belong, somewhat. Of course, my own round-eye ancestors were oppressed by other round-eye factions. One of them (great grandmother) went to her grave with weals on her back left by Brits who disapproved of her teaching young children. And I’d lay odds with one of the posters, Spook (why doesn’t oxide call him out for being racist, I wonder) that my scourged forebear is closer in time to me than any of his are to him.
It’s all a pile of BS.
LOL, I’m not sure if you’re being serious or sarcastic.
On the (very likely) off chance that you’re being serious, I’m a “round-eye”, (so designated by Orientals). Is that “racist” of them? Maybe. However, I don’t really mind being called a “round-eye”. Really, it doesn’t bother me in the least. If that’s how they see it, so be it.
What’s really racist is the conflict between the Chinese and the Zambian miners. People are being crushed, shot at, exploited, etc. Did you miss that?
They need more COEXIST bumper stickers.
Well, the Chinese didn’t have any of those, so they used the next best thing: bullets.
Which is what totalitarians do when you disagree with them.
Miners are being shot at.
Oxide’s response: “The racist comment was uncalled for.”
African miners crushed a Chinese manager.
Oxide’s response: “The racist comment was uncalled for.”
Zambia is being looted of its resources.
Oxide’s response: “The racist comment was uncalled for.”
Actually, I’m more fascinated by this term “uncalled for”.
Really, when you think about it, NONE of my comments on this blog, on any subject, are “called for”, are they? Yours, however, might be.
I don’t have an overblown sense of my own importance. Which is how I differ from the blog bluenoses.
The palmetto doth protest too much, methinks.
Ya think?
“…Life imitates idiom:”
LOL, oxy
Why buy a house in an environment where prices are massively inflated and falling and the risk of loss grows by the day?
Because Eddie says it’s a good “investment”, just like stocks too. Can’t get a table at Applebee’s in less than 45 minutes these days…
Yes because an $8 sale for a plate of gruel is the best economic indicator going!
Everyone is feasting on exquisite cuisine!….. At AppleBee’s!
To put it in perspective, we just waited for 1 hour 45 minutes for a table for 8 at a restaurant on Martha’s Vineyard. There were 30 parties ahead of us on a Friday evening at 6:30.
The 10% is doing just fine…
That would make sense considering the 10% will always do fine. Otherwise they’d be in the other 90%.
It’s cheaper than divorce.
Perhaps the initiation fee is, but the How-much-a-month savings are substantial. It is always cheaper to rent than to own.
It is always cheaper to rent than to own.
Every school I went to told me to avoid a multiple choice answer if it had the word “always” in it.
Apparently you didn’t learn the distinction between a statement of truth and a multiple choice question.
“It’s cheaper than divorce.”
“Perhaps the initiation fee is, but the How-much-a-month savings are substantial. It is always cheaper to rent than to own.”
Blue Skye
Are you talking about houses or women?
Yes.
It is always cheaper to rent than to own.
Didn’t you recently buy a house?
Sure, but I’m not advertising that as a stroke of genius. Something fell into my range and I have less and less road left.
Do you own your boat or rent it?
Not every market in the USA is “massively inflated and falling”.
Some markets are already off more than 60+% from peak and well under the fundamental value of price/rent and price/income.
that is true.
Yes… every area is massively inflated…… and most importantly…. FALLING.
Tell that to my colleagues in Silicon Valley.
The delusion and fraud is deep and broad. You know this to be true as much as anyone else here.
Will they listen? I have few friends there. Very smart in their craft but very dumb in a lot of other areas.
“Very smart in their craft but very dumb in a lot of other areas.”
Exactly. The delusion there is incredible. They really believe that a tiny tract house is worth a million and a 2 bedroom condo is worth 600K. Most of my colleagues there are dual income (200-300K), so they can afford to pay the insane prices.
Never say “never”.
Never say “always”.
Never say “every”.
Why? Because there are usually exceptions.
Never cherrypick an exception.
Why? Because you’ll use it misrepresent the trend.
In many markets, the housing bubble masked depression for a very long time.
Exactly.
And now the risk of loss is just as high today as it was in 2006.
Since the S&L disaster bottom recovery in 1996, to be exact.
Oh man, I was going to check if VietJetAir had any flights from West Palm to LaGuardia too.
VietJetAir, Vietnamese Airline, Fined For In-Flight Bikini Show (VIDEO)
Posted: 08/09/2012 9:36 am Updated: 08/10/2012 7:46 am
Vietnamese airline VietJetAir was hit with a fine by Vietnamese aviation officials for putting on an in-flight bikini show.
The budget carrier staged the “production” to celebrate its maiden flight between Ho Chi Minh City and the tourist area of Nha Trang, reports news.com.au. The show involved local beauty pageant candidates performing a three-minute, Hawaiian-themed dance clad in yellow and red bikinis and sarongs.
http://www.huffingtonpost.com/2012/08/09/vietjetair-vietnamese-airline-fined-for-bikini-show_n_1759646.html - 335k -
They always punish the good things in life.
Just saw some video of it.
The male passengers look very happy. Some of the female passengers look pizzed.
One of the women passengers is probably the narc.
Take a look a this house folks…..
http://tinyurl.com/buz6dyq
The only way house prices are going to crater is by falling into an actual crater?
I’d say the loss is roughly what yours is.
I’d say you don’t know what you’re talking about.
Speaking of underwater specu-debtors….
A sinkhole has developed by a house in Butte, and everyone acts like they don’t know why. Yet the entire old part of town is riven with mining shafts underneath…duh. Lawsuit in the making, no doubt.
They built OVER old mining shafts?
Truly, you really can’t fix our kind of stupid.
Oh, hell, yeah, turkey, here in Florida, there was a story on the local news shortly after the height of the bubble where a developer was in the process of getting permitted to develop an area the substrate of which was like Swiss cheese. They showed the topographic maps with the ground-penetrating underlay that showed all the sinkholes and dry springs, etc underneath.
17 miles of the Erie Canal drained in July, into a sink hole. For all I know, they are still pouring concrete into the hole.
Do you have a link to a story and/or some pictures? Seriously.
Oh, the Erie was rising
and the gin was getting low
and I scarcely think we’ll get a drink
’till we get to Buffalo-o-o
’till we get to Buffalo
Polly, I haven’t seen an article. When I came through Baldwinsville the lock master told me what was going on ahead, and that the guard gate had been dropped. I left the Erie at Montezuma, so it didn’t affect me, but there were others changing their cruise plans. You can go around, but it can take a while.
Here is something from the Buffalo paper, doesn’t have any pics though.
http://www.buffalonews.com/city/article983557.ece
Wow!
Thank you!
Bet the farmers are happy…..
The water drained from the canal was allowed to flood into nearby farmers’ parched fields, Groneman said.
Actually the houses can predate the expansion of the many different mines in Butte. I don’t see how anyone there can think his house is safe from collapse.
Gale Crater I am in you!
New article in the WSJ about foreclosures: “Mortgage Delinquencies Rose in Second Quarter”
The part of the article that goes directly to the difference in shadow inventory from judicial to non-judicial:
“At the same time, the report showed that most states with the highest levels of loans in foreclosure weren’t necessarily those that have had the biggest housing busts. Instead, states in which banks must process foreclosures by going before a judge have faced growing backlogs because court systems are overwhelmed and banks are having difficulty meeting state requirements.
Florida led the nation with the largest share of loans in foreclosure, at 13.7%, more than triple the national average. Others with elevated foreclosures included New Jersey (7.7%), Illinois (7.1%) and New York (6.5%). All of those states require so-called “judicial” foreclosures that must be processed in court.
By contrast, Arizona and California, which had some of the highest foreclosure rates as the recession deepened in 2008, now have foreclosure rates below the national average, at 3.2% and 3.1%, respectively.”
Pimp,
We can always rely on you for misinformation.
The truth about California is found right here.
“Number of Homes Facing Foreclosure Rose in July”
“That didn’t keep California from posting the nation’s highest foreclosure rate last month. One in every 325 households reported a foreclosure-related notice in July, more than twice the national average.”
http://www.cnbc.com/id/48563823
A foreclosure-related notice is different from an actual foreclosure. There are deadbeats who have been “facing” foreclosure and wallpapering the living room with “foreclosure notices” for years on end.
And a sure sign of people not actually getting foreclosed is a swelling in the number of people in the foreclosure process (the focus of the WSJ article).
13.7% of all mortgage holders in FL are in the foreclosure process.
3.1% of all mortgage holders in CA are in the foreclosure process.
Buying now is a gamble that the number of people in the foreclosure process will go up forever.
It won’t.
You really don’t get it, or you choose not to get it.
People go into default on their homes, which creates non-current loans. This is the pool of potential foreclosures, call that pool “A”, delinquent loans that are not yet in foreclosure.
Then those homes have foreclosure notices sent to them to start and continue the foreclosure process (your stat), and the loans move from simply being delinquent to being in the foreclosure process, call this pool “B”. The higher the number of foreclosure notices sent, the more loans are being pushed through the foreclosure process.
Then those homes leave pool “B” through various methods (going back go “A”, short sale, modification, foreclosure sale, foreclosure to REO to sale).
The rate you are talking about is essentially the speed at which homes in pool “A” are leaving to go to pool “B”, and being processed through pool “B”.
The article is talking about the total number of loans in pool “B”.
They are different concepts.
For those who care about future distress (shadow inventory), the applicable number is A+B (lower means less shadow inventory).
For those who care about how quickly homes are being released to the market, the applicable concept is the pace of A becoming B, and B NOT growing (ie. homes are not being stuck in the foreclosure process, but moving through).
For California, A+B has been shrinking since February 2010, the pace of A going to B and being processed is the highest in the country (your stat), and the overall level of B is much smaller than judicial states (the WSJ article).
This is good, if “good” equals “allowing the market to clear”.
For places like Florida (and other judicial states), A+B is VERY high and not really shrinking, the pace of A going to B is less than California, and homes are getting clogged up in the foreclosure process, which means that the number of homes stuck in “B” is extraordinarily high and not really going down (the WSJ article).
This is NOT good, if “good” equals “allowing the market to clear”.
You can misrepresent statistics and parse data to detract and to support your agenda of an eternity of inflated prices all you want. It’s not going to work
Specifically which statistics am I misrepresenting? And which data am I parsing?
You are quoting a rate.
I am quoting a level.
I believe both stats to be true.
Truly, Rental, your equanimity is inspirational. Do you teach seventh graders in your spare time?
I have a spirited 2.5 year old. I’m used to this kind of behavior.
“You really don’t get it, or you choose not to get it.”
Why do you bother? Clearly, anyone who resorts to name calling in a discussion is not worth your time.
I know, I know. I try not to feed him, but I can’t help myself sometimes…
“Why do you bother? Clearly, anyone who resorts to name calling in a discussion is not worth your time.”
Isn’t it interesting you seem to interject yourself into this.
Why is that Drama Queen?
You can’t help lying to readers here. That’s what you’re paid to do. And your drama queen from the rockies seems to show up to distract every time.
Why is that?
“…banks are having difficulty meeting state requirements.”
I wonder why that is? (rhetorical question)
Why buy a grossly inflated used house when you can build a new one for 40% less?
Because you appreciate all of those unique personal touches the former owner added, like the pictures of naked women on black velvet, the built in bookcases loaded with DVD and VHS porn, and the gynecologist-type exam table in the basement?
Or the fancy, industrial strength, steel entry door, the one installed as a replacement after the SWAT team raid?
Why aren’t you building homes and selling them at today’s prices and making that profit?
If homes are grossly inflated based on replacement cost, why aren’t people building homes like crazy and undercutting the existing home market?
And “lack of demand” isn’t an answer, since last year more than 4 million existing homes traded hands at prices that you consider “grossly inflated” above actual cost. There is plenty of transaction volume to make a profit by undercutting the market.
Why aren’t publicly traded homebuilders turning a massive profit on the homes that they are selling…is it a massive conspiracy?
Why aren’t you building homes and selling them at today’s prices and making that profit?
Because
1) We’re constructors….. we construct. Slapping together dimensional lumber isn’t “building”.
2) We’re not interested in petty change.
If homes are grossly inflated based on replacement cost, why aren’t people building homes like crazy and undercutting the existing home market?
1) Houses aren’t based on “replacement cost. This is part of another one of your misrepresentations.
2) My counterparts are undercutting resale housing prices by huge margins. This is reality.
And “lack of demand” isn’t an answer, since last year more than 4 million existing homes traded hands
Which is lower than the year before that, and the year before that, and the year before that and the year before that. Housing demand is at 15 year LOWS and falling. Meanwhile, new construction is taking ever larger market share because they’re selling at prices far under resale housing. You better get used it.
Why aren’t publicly traded homebuilders turning a massive profit on the homes that they are selling…is it a massive conspiracy?
By your own admission, housing sales are 60% lower than they were. Every day you put your foot in your mouth and misrepresent the truth about housing.
Who are you working for and why are you lying to the public about housing?
Why indeed would you buy a grossly inflated used house when you can build a new one for 40% less? But in many areas that is not the case, so why not buy a nice used house for a third of the replacement cost and be happy in your new “used” home?
I am perfectly content with my home purchase, it is less than a comparable house would cost to rent, plus I have more freedom to do what I want with it than when renting.
If I end up losing some money on the deal, Oh Well. I didn’t buy it to make any money, so not a big deal.
Ken,
Anywhere resale housing is priced in excess of 50-$60/square foot, new construction is competitive.
There’s the concept of “security theater” at airports. Well, this is what I call “reform theater” :
Exclusive: U.S. banks told to make plans for preventing collapse
U.S. regulators directed five of the country’s biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.
This is pure election season theater. The only thing that’s actually going to make these banks not get government help is their breakup into non-[perceived]-systemically-risky pieces. That’s it. Everything else is theater.
http://www.reuters.com/article/2012/08/10/us-banks-recoveryplans-idUSBRE87905N20120810
Another “collapse” will be the real test…….finding out if typical US American still has a pair, if the banksters get bailed out AGAIN.
“If He did not want them sheared, he would not have made them sheep……..”
More dark comedy. So Goldman Sachs was free of wrongdoing in the financial crisis. Or at least not criminally responsible for anything. However, a programmer who supposedly stole code from them has done jail time, had his charges dismissed but now is being charged again.
Letting Goldman Sachs off the hook, along with the rest of the financial sector, while pursuing little guys like this undermines the rule of law. I see the Goldman Sachs thing as little different than a mob boss who sits smiling in a courtroom, smirking as his lawyers get him off once again.
“Laws are like spiders’ webs: if some light or powerless thing falls into them, it is caught, but a bigger one can break through and get away.” - Solon ( http://www.britannica.com/EBchecked/topic/553609/Solon/553609suppinfo/Supplemental-Information )
Ex-Goldman Programmer Is Arrested Again
By PETER LATTMAN
New York Times
The legal odyssey of a former Goldman Sachs programmer, Sergey Aleynikov, took a surprising turn on Thursday when the Manhattan district attorney charged him with state crimes.
Mr. Aleynikov was charged in state court less than six months after a federal appeals court overturned his conviction on federal criminal charges that he stole secret source code from Goldman’s computers.
While the case involved a relatively low-level ex-employee at a financial firm, the government has taken a particularly hard line. The district attorney, Cyrus R. Vance Jr., and Preet Bharara, the United States attorney in Manhattan, have made the prosecution of corporate espionage and high-tech theft a top priority.
If only they’d take financial crimes a bit more seriously. But, can’t piss off future employers I suppose.
http://dealbook.nytimes.com/2012/08/09/ex-goldman-programmer-is-arrested-again/
Laws are only for the little people
Taxes too.
I think we’d be better off, if the Chinese stole some of this so-called expertise. In five years, they might be as effed up as we are.
I thought there was this thing called “Double Jeporady”.
I guess the plan now is to keep charging the wretched refuse with something, and burn thru his money until you can make something stick.
Unfortunately, this won’t work with people who own the keys to the printing presses and helicopters.
“I see the Goldman Sachs thing as little different than a mob boss who sits smiling in a courtroom, smirking as his lawyers get him off once again.”
That is EXACTLY where we are at.
In case no one has noticed, the parallels to our situation approx 100* years ago are eerily similar.
* ok, so it was more like 90.
Anybody remember what happened to more or less end the Depression?
A judge has ordered Tea Party Nation founder Judson Phillips to pay a six-figure hotel bill for a large number of rooms he booked for a tea party rally, which he later cancelled when the event failed to draw enough attendees.
The Venetian Las Vegas Casino Resort alleged that Phillips had reserved 1,637 rooms for the July 2010 event, and then cancelled the reservations just a few weeks before the scheduled date. He did not pay for the rooms.
In a court order last month, which The Tennessean reported Thursday, a judge ruled that Phillips owed the resort $748,000, including the $554,000 hotel bill and $194,300 in accrued interest.
This is not the first time a Republican group has found itself in a bind over an unpaid hotel invoice. In February, the Charleston Place Hotel sued a South Carolina political consultant and the Southern Republican Leadership Conference for an allegedly unpaid hotel bill, FITSNews.com reported.
The conference was held in January, the weekend before the South Carolina Republican primary. The hotel alleged that the conference was “poorly attended,” that consultant Robert Cahaly and the SRLC owed $227,800, and that they had behaved unethically “in an effort to evade their responsibility for payment.”
I thought these were the law and order types?
That’s what they said. Then again they joined republican party soon after that.
1600 plus rooms at the “Venetian”? In July.
$338/night. LOL……yeah, that’s about right. The least he could have done was negotiated a room discount. Or was he getting a kickback from the hotel for booking the show there?
Yeah, keep pushing that “austerity” meme to the wretched refuse.
A few observations about Dem and Republican campaign events and fundraisers:
Dems have better booze
Republicans have better shoes
Dems tend to keep their bills low and pay them promptly
Republicans tend to stick others with the bill– especially on media and venue buys
Dems linger after it’s over
Republicans leave early
Dems do better food
Republicans have better valet service
FWIW
” TALLAHASSEE — Justin and Ashleigh Leto were ready to buy their Florida dream home. The property was perfect, the price was acceptable and the sellers were ready to hand over the keys to the first-time homebuyers.
One problem: insurance”
http://www.tampabay.com/news/business/banking/article1245080.ece
Yeah, and how is that “free market” home insurance solution working out for you ?????
I’m guessing they didn’t bother checking on property taxes either.
What? They don’t want to write policies for homes in areas that might actually be at risk for a claim?
Really, the Gods don’t look like they are going to be happy, unless there is a full scale Chernobyl-like financial/ethical/political/societal meltdown.
There’s no fixing our kind of stupid.
wow, 11K/year! and I thought ours was bad at 800.
*For years* I have been advising FL buyers here to wait until the insurance catastrophe plays out, because it may not go back… and that needs to be reflected in the price.
Most chumps only see the PI in the PITI.
CBS, Hip Roof, hurricane shutters or impact windows, no flood zone and built after 2002. Home owners and wind $1,300 a year from a private insurance company, for a single family house in SE Florida. Take any of that out and it goes up fast.
“wow, 11K/year! and I thought ours was bad at 800.”
I’ve mentioned a FBr at work with a Detroit, MI home that he can’t sell without bringing money to the closing table. He is currently trying to refinance, and I saw the paperwork: property taxes are $353/month, and property insurance is $70/month, and this is a 2200-sqft home. Michigan has income, property and sales taxes — all three, and they’re fugg’n high too!
Posted: 4:06 p.m. Friday, Aug. 10, 2012
Chase makes loan modifications easier
For some homeowners, no documents or signatures required
By Kimberly Miller
Palm Beach Post Staff Writer
JPMorgan Chase is reducing home loan interest rates and cutting mortgage debt balances with nothing more than a homeowner’s signature, and sometimes even that isn’t required
No more faxing documents over and over again or waiting months for an answer.
The plan, which is ramping up nationally for eligible Chase-owned loans, is so easy that some homeowners think it’s a hoax.
When a client of Wellington foreclosure defense attorney Malcom Harrison got a letter from Chase offering to cut his interest rate and loan debt without a lengthy paperwork exchange, he brought it to the office to see if it was authentic.
“He asked if it was for real or a joke,” Harrison said. “After some checking and phone calls we verified it was for real.”
Nearly 8 percent of Chase’s home loans are in Florida.
Chase’s program has two main components. Homeowners whose mortgage payments are seriously delinquent may get a letter offering them a lower interest rate, principal reduction or both, and all they have to do is sign and return the offer.
It’s even easier for homeowners who owe more on their mortgage than their home is worth but have been current on their payments for at least a year. Chase will reduce the interest rate on its own, sending the homeowner their new lower payment amount with no effort needed on their part.
The average savings is $300-a-month for homeowners current on payments.
“Chase is taking a proactive approach to helping homeowners,” a statement from the lender said. “We are sending modification offers, many of which include principal forgiveness, to thousands of families that are struggling with their mortgage payments.”
Chase is part of the 49-state attorneys general settlement announced in February, which requires it to provide about $4.2 billion in mortgage relief to homeowners. Nationally, the $25 billion deal with Chase, Wells Fargo, Citigroup, Bank of America and Ally Financial could provide up to $40 billion in cash, refinances and principal write-downs to homeowners.
Harrison said the settlement is one motivator, but that lenders are also realizing it’s better to have a functioning loan than another foreclosure on their books.
Chase gave another client of Harrison’s a $152,000 debt reduction on his mortgage and lowered his interest rate to 3 percent.
“I think they are becoming more realistic about the real estate and job market,” Harrison said. “At the end of the day it’s always, always better to have a performing loan.”
There was more commentary yesterday related to someone’s guess that California has a massive oversupply of housing (lots of vacant housing). The number 3 million was thrown out as the amount of excess vacant housing. Using some shooting from the hip, starting from a thin-air guess of 25 million for the whole country.
Look at the vacancy rates as reported by the Census:
http://www.census.gov/hhes/www/housing/hvs/hvs.html
Look at the data by state:
Homeowner vacancy rate in CA is 1.8%, vs. US as a whole at 2.1%
Rental vacancy rate in CA is 5.3%, vs. US as a whole at 8.6%
Remember, CA is approximately 14% of the whole, so their lower numbers drag down the US statistics. The US-ex CA rental vacancy rate is about 9.1%.
If you look at other states, you see rental vacancy rates in many cases in the low-teens, and homeowner vacancy rates greater than the US average.
If you don’t like the US Census methodology, then look at Trulia, which just did a study looking at vacant homes as measured from postal service data:
http://trends.truliablog.com/2012/08/housing-glut-or-housing-shortage-americas-got-both/
Their assessment of CA : “California, in fact, has a very low vacancy rate – despite the huge price declines and massive foreclosure wave during the housing crisis. That’s because geography and restrictive regulations make it difficult to build new homes in California,”
And the estimate of “25 MILLION excess empty housing units” in the US is also without backup. The Census released their data recently for the quarter here:
http://www.census.gov/hhes/www/housing/hvs/qtr212/q212ind.html
They estimate vacant housing at 18.5 million. However, some level of vacancy is normal. The lowest this number has been going back 45+ years is about 6.1 million, when the total housing stock was a bit over half of today’s number (68 million vs. 132 million).
The lowest level of vacancy on a percentage basis going back to 1965 was about 8.3% (including seasonally vacant). Far more common however was about 11% starting in the late 80’s.
We are now at approximately 14.2%. So, in the US as a whole, we have an excess of between 4.2 million and 7.8 million extra housing units over the “normal” and low point baselines respectively over the prior 45 years. However, these are not evenly spread over the entire country (see the US Census and Trulia data).
But if you believe in conspiracies, have at it. I have not seen any data to support massive excess housing stock in the state of California. I have seen lots of data to support the opposite.
Take a closer look at the estimate of 3 million thrown out yesterday. This would mean that of California’s ~14 million housing units, there are 3 million, or 21% are vacant.
This is laughable.
The Census 90% confidence interval is 0.3% for owner occupied and 0.7% for rental. To believe the Census to be off by 15%+ is Olympic Champion conspiracy theory.
If someone has DATA to support that CA has a massive excess of housing units, please post the source.
“please post the source.”
There are no good sources. Everyone is lying.
Next…
Then they all seem to be lying in the same direction with respect to CA. Because for places like Florida, they certainly aren’t sugar-coating the problems–those issues of shadow supply and excess housing stock actually show up in the data.
You’d think that someone could glean the data through some other clever method (like adding up all the cable and satellite TV subscribers in a state, or Trulia’s looking at “dead” addresses from the postal service, or Apartment REIT auditors, or Property Management Company interviews). True data would leak out somewhere.
So either:
a) the data, if not perfect, is at least on the right track (and for CA has been a consistent drumbeat of lack of supply PRE-dating the bubble); or
b) all data sources are lying with respect to California only (since they don’t seem to by lying with respect to places like Florida), and no one has been able to expose the lies credibly.
You and your media consultant friends are out here lying…. lying every day.
25 million excess empty houses is a thin air guess? Nice try pimp.
The fact is you’re a known liar and pimp inflated prices every day.
Why is that?
If not a thin air guess, what’s your source?
I’ve posted mine…US Census and Trulia, including 45+ years of data from the US Census.
In a case study showing that not all bipartisanship is good, New Jersey Governor Chris Christie, a Republican, has worked with his Democratic legislature to get his state invested in not one but two troubled real-estate megaprojects.
One is American Dream Meadowlands, a partly-built mega-mall just outside New York City that boasts an indoor ski slope. American Dream is more widely known by its former name, “Xanadu,” but that name became so tainted by the project’s troubles that rebranding was needed.
Construction on American Dream has been off and on since 2004, and in 2011, New Jersey put up $200 million to allow the $3 billion project to be completed. If and when the mall opens in 2014, we’ll see whether Christie is right that state’s investment will lead to job creation and robust sales.
Christie’s other real estate venture, Revel Casino in Atlantic City, is already open — and early returns are not favorable. Like Xanadu, Revel is a project that was conceived of at a time when the real estate market was strong and that stopped mid-construction when money ran out. And as with Xanadu, New Jersey re-started Revel’s construction by agreeing to make a public investment in the project on favorable terms.
Revel opened in April and needs to bring in about $25 million to $30 million a month in gaming revenue to service its bonds. Last month, it brought in $17.5 mil.
Ouch.
Repubs and Dems 2 sides of the same coin all F’ing the middle class to bail out and enrich their campaign contributors.
In the old days the gov would build something that had public value now they give the money to casino operators and builders.
New Jersey Governor Chris Christie reminds me of the Golden Corral buffet restaurant.
How student loans could hit your Social Security
http://www.marketwatch.com/story/how-student-loans-could-hit-your-social-security-2012-08-10?dist=afterbell
“By Anna Andriotis
It’s no secret that falling behind on student loan payments can squash a borrower’s hopes of building savings, buying a home or even finding work. Now, thousands of retirees are learning that defaulting on student-debt can threaten something that used to be untouchable: their Social Security benefits.
According to government data, compiled by the Treasury Department at the request of SmartMoney.com, the federal government is withholding money from a rapidly growing number of Social Security recipients who have fallen behind on federal student loans. From January through August 6, the government reduced the size of roughly 115,000 retirees’ Social Security checks on those grounds. That’s nearly double the pace of the department’s enforcement in 2011; it’s up from around 60,000 cases in all of 2007 and just 6 cases in 2000.
The amount that the government withholds varies widely, though it runs up to 15%. Assuming the average monthly Social Security benefit for a retired worker of $1,234, that could mean a monthly haircut of almost $190. “This is going to catch an awful lot of people off guard and wreak havoc on their financial lives,” said Sheryl Garrett, a financial planner in Eureka Springs, Ark.
Many of these retirees aren’t even in hock for their own educations. Consumer advocates say that in the majority of the cases they’ve seen, the borrowers went into debt later in life to help defray education costs for their children or other dependents.”
There’s more…