DataQuick: Almost 50% of Home Sales are Foreclosure Resales in California Bay Area
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CalculatedRisk on Thu, 12/18/2008 - 12:09pm (289 comments)
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Effects of pent-up demand.
I have family out there, renting. In another year, maybe they will be owners.
It seems like I've read this story before.
P.S. San Francisco is immune to price declines
The expensive counties have falling prices and falling volume. Hmmm...
White House rep now being quoted as saying Administration is considering "orderly" bankruptcy for the automakers.
CR,
Good point about the median warning. My observation locally is that the expensive properties are simply not selling. An almost complete freeze-up.
Max pain puts SPX between 880 & 900 cob Friday.
"In November, use of FHA, government-insured mortgages allowing a down payment of as little as 3 percent rose to 20.6 percent of Bay Area home purchase loans."
These are the foreclosures of the future.
P.S. San Francisco is immune to price declines
Nemo | Homepage | 12.18.08 - 2:24 pm | #
Yes, it is the only rational store of value going forward. Why buy Treasuries, gold, or anything else? For the East Coasters, they should invest in Arlington.
In case no one has already posted this:
Credit Suisse to Use Illiquid Instruments to Pay Bonuses
"The Zurich-based bank plans to pool commercial mortgage-backed securities and leveraged loans it can't sell because demand has seized up, then dole out units in the entity to managing directors and directors as part of this year's pay, according to a memo made available by a spokesman."
Heh. Only about six years too late.
Yeah, we know the median is not 8 years of appreciation gone...but I am sure the media will take it and run...
Popeye, that is one hell of a rally going on.
Nice change in the mix of jumbo and FHA. At least the FHA gets actual home inspections and appraisals.
The "squish down" effect from higher and higher end houses coming into the affordability range of the average buyer's income will mean that while the median price paid for a home levels off, better and better homes are being obtained for this price.
That means that the lower end homes currently being picked up at distressed sale prices will continue to have capital value losses.
So those buying on "cash flow" valuations will find that while they may have positive cash flow on recent purchases for investment, they are losing money on the actual value of their home. So, mark to market on their home will be depressing. These better and better homes that will cash flow will push down rental rates on the worst houses. Those that cashflow today may not tommorrow.
Beware all those knife catchers buying forclosures today. The renters that cashflow for you now, will find that they can rent something nicer/newer/bigger for the same price next year.
popeye, you don't by chance use etrade?
As Solano County and Contra Costa County tell us, the only way to get sales volume up is to lower prices signficantly. The other Bay Area counties will learn this, along with the precise meaning of "significantly."
I know that the mix of homes can have a big effect on the median, but a 6.7% drop in one month? Wow. Most of that has to be either capitulation or nothing selling over the conforming limit.
Don't forget, the jumbo conforming limit drops Jan 1. Let's see if the mix changes again.
Gary writes:
Popeye, that is one hell of a rally going on.
Gary | 12.18.08 - 2:32 pm | #
LOL!!
Can I haz a bond crush with a napkin?
Can I haz gold grind on ice?
Can I haz neckbrace for headfakes?
$36.31 on texas tea...
Oil futures tumble 10% to end below $37 a barrel - MarketWatch
Very on topic.... Let me share a an excerpt from an email I received yesterday. This is from a RE agent who's been trying to help me back into the housing market!
The bright side is that although business is a bit slower, your learn to adapt to the current market conditions. Over the past 6 months the Short Sale and REO market has really heated up and that is where 75% of my business is coming from. There is great demand for homes that are below $350K in areas like East Palo Alto, East Menlo Park, and some areas of the South Bay. Most of these REO or Short Sale homes are multipe offer situations the ultimately are pushed up between $25K-$50K above asking which is still a great deal.
Indeed, a great deal today. Wonder how those great deals will look in a few years?
These are the foreclosures of the future
And if you order today, we'll also throw in two free automobile repossessions!
http://www.ForeclosuresOfTheFuture.com!
.
Are there any data that compare prices per sq/ft of foreclosure resales versus ordinary sales?
Let me add,
That those cash buyers waiting to come into the market as investors....you will have to wait a while longer. 4.5% rates will mean alot of competitors willing to pay slightly more than they should for the property you had your eye on. Cheaper money means more expensive houses. In this world that means houses that drop in value very very slowly.
Much like the Nekkei over the last 18 years..and the U.S. market over the last decade..no one has made money as a long term investor. Those buying houses will find that it will be like buying a car. A depreciating asset, bought to use only not as a store of value.
Buy a car, lease a car...no big deal, no big difference....financial advisors don't suggest car purchases as an investment, only an expense. 10 years from now houses will be seen for what they are....a purchase of a depreciating asset requiring upkeep that will pay off long term only if you take care of it and PAY IT OFF.
what's up, rerun?
You are all sleepwalking.
GE downgraded???
It's not my job, but is your name "fear" ?
Popeye is all in....wants to have people to sell to.
When you buy to sell into a rally, you are not an investor.
Popeye has plenty of company in the flip to sell crowd.
Unfortunately to have a real rally, you need sheeple with cash.
Plenty of sheeple. Very little cash.
Important, from last thread:
" TJ writes:
ne...refer=worldwide
Credit Suisse is giving out their dodgy illiquid assets as a part of their executive bonus packages.
This is truly clever!
Bloomberg.com
TJ | 12.18.08 - 2:10 pm | # "
Does this constitute a "market," kicking assets out of Level 3 limbo?
are you being sold a pig in the poke - a bill of goods - can you think
That is the question - can you think.
I rest my case.
Timmy's nap will be over soon and he will be back to the buy butto
Rally caps back on, folks! (Hear those sleigh bells jingling......)
Average Joe,
PDFTT!!!
I thought we only rallied on Fridays.
Baby boomers who've been buying stock their entire working lives now need to cash in to live.
They are praying they have unsuspecting greedy Popeyes to sell to...since the next generation of workers has never seen a "buy and hold" market work, don't have money to invest in large quantities anyway, and frankly have no interest in losing money the same way Mom and Dad did.
yep
U.S. Stocks Extend Declines After GE Credit Outlooks Cut by S&P - Bloomberg.com
"PDFTT!!!"
Translation?
Please don't feed the troll.
yeah a lotta rash cash wants to speculate in equities with all that gloomy news and Fed speak out there.
You first...no,no,no...you first, I insist.
or not
The only stocks I have left are the ones I can sell for a tax write-off.
It is a bad day to be a company that starts with G. If you chart this, you will find that it is highly probable tommorow will be Friday.
Plase down the street from me (Contra Costa C.) is now asking $365k for a 3bdm/2.5ba townhouse. Neighbors say 2 years ago they were asking $550k. Six months ago they were askling $425k.
Still ridiculous considering the area incomes are around $75, but... progress.
Sorry,
Although he didn't seem to respond to what I was feeding him anyway...
But point taken.
You know.. if Wall Street pays out illiquid assets as Xmas bonuses, maybe all of the tier III assets will be gone in a year or two!
cool.
It's impressive that Mr. VIX is still down on the day.
More bad news out of the Bay Area...
Firm started by ex-49ers Montana, Lott in workout with Silicon Valley Bank
SVB Financial Group said this week that it is working to recover $68.9 million owed to it by a privately-held investment firm started by former 49er stars Joe Montana, Ronnie Lott and Harris Barton named HRJ Capital Holdings.
I guess HRJ is "Harris, Ronnie, Joe".
Firm started by ex-49ers Montana, Lott in workout with Silicon Valley Bank - Silicon Valley / San Jose Business Journal:
The wife and I were looking at homes in the bay area about 6 months ago. The prices on the higher end homes appear stuck, sellers are very reluctant to budge...We both agreed to wait (Thanks CR and friends) and continue renting, we signed no papers or agreements with any agents, But one agent with which we viewed several properties called the wife one day, yelling and screaming, to ask what the hell was going on and why we were "wasting his time"...I found it ironic that 2 weeks prior he was informing us that the homes would sell fast and we must act fast, now with all the potential buyers lined up he felt it necessary to yell and inform us not to waste his time....now we found a rental in a great school district, asking price of homes was in the high 600k's (6 months ago) the rent in the same nieghborhood about 2k...Hurry rent now or be priced out forever!!!!
A tribute to americas love affair with lies :
10 years ago today :
(Wikipedia says Dec.19 though. Could be)
LiveLeak.com - Impeachment Anniversary
(And yes this is probably when the "subprime crisis" started : the official breakdown of morals (the perjury I mean).
popeye,
What's a short term rally? 1-2 months?
thanks.
Wow, Its Werner88!
OT. I went back to Jan. 2008. Mish is a prophet. Mish says resets will be a net positive for almost all ARM-holders. So, foreclosure activity is going to ease up and with the decline in new home starts maybe it leads to stabilization in house prices. Maybe its time to buy a house in the next 6 months.
toyotaJoe | 12.18.08 - 2:55 pm |
The agent is probably seriously stressing. Invite him over. wait til he goes off, then beat with a wooden baseball bat.
went back to Jan. 2008 = read Mish's articles from back then.
no time machine here.
It's impressive that Mr. VIX is still down on the day.
Popeye calls a rally - You all enjoy your crazy talk - -
Money is - wrap your minds around it - Money just is
this isnt the real popeye
he was actually lucid and interesting
toyotaJoe,
Wow, I'd A) tell him to F off and B) call his employing broker and let him know of your treatment.
No, this is the real Popeye. Reality is. You can pretend stuff, but reality is.
Nova:
The first day we meet him he "effectively" called my daughter stupid, the bat was in the truck...he came close that day...
3-month T Bill
is negative yield again.
Rents need to catch up to mortgage payments or vice versa. Here's a vid on why renting is better right now.
And another vid on why you shouldn't buy a depreciating house.
Of course, you could just go by the 3:1 ratio, which has been the standard for forever.
Obama to propose stimulus package of up to $775 billion over two years: WSJ
Ponyless, although Mish did say that the ARM reset problem will disappear (he has a post on that today), I don't believe he said then or now that the foreclosure problem would go away. The foreclosure problem remains, or gets worse, as long as people continue to lose their jobs.
A loss in faith in housing appreciation will also worsen the foreclosure problem. As will tighened lending standars, especially at the Jumbo end of the spectrum.
Oh!!! the best part was that he was willing to "massage teh finacing... His daughter was a loan officer at a local bank!!! Bof A if I remember right
Overlay the DJI 2007 top on the 1989 NIK top (10 year charts) and the possibility of DJI 4000 pops right out.
Yahoo will show it but it won't link.
Mish is a prophet. Mish says resets will be a net positive for almost all ARM-holders
I remember that one. I was sceptical although I understood the reasoning of it.
The key to the Reboot is to shift net cashflow from house payments to consumer spending. New 30-year mortgate lows (below previous low of 5.3%) would do that.
Market opening soon..... Timmy's got his finger poised......
toyotaJoe | 12.18.08 - 3:01 pm
Yeah, his cash flow is crap, he has 3 houses that he is still trying to flip, AND YOU ARE NOT HELPING!
But - you know what? Its his problem. Until he splashs some on you.
I would probably go with Redfin instead of an agent.
"Obama to propose stimulus package of up to $775 billion over two years: WSJ"
but that's less than 1 Trillion.
Does anyone know why PIMCO is holding out on GMAC? Better terms?
you know the movie "trains, planes and automobiles", where john candy accidently gets on the freeway in the wrong direction....
"you're going the WRONG WAY!"
"how do they know where we are goi
How many sheep went short when the SPX breached the 50 DMA? How many of them will scramble for cover with even a hint of a goosing from Timmah Timmah?
Bush uses the D word? Oh my...this will end badly.
Even though my junk bonds are rallying, somehow I think they'll have a higher yield than SF rental properties as of a year from now. Come to think of it, so do 3-month t-bills.
5 ultrashorts on most-active-up list have traded 6 $BIL, probably half of that CR posters.
How many geniuses went long when the SPX breached the 50 DMA? How many of them will scramble for cover when the year end window dressing starts?
-- raises hand --
but that's less than 1 Trillion.
REBear | 12.18.08 - 3:06 pm
I read the explanation. They did not want to scare the market. Plus they want to show they are capable of fiscal restraint.
Must amuse Timmy to watch all the cows in the herd chasing the feed bag.
"How many geniuses went long when the SPX breached the 50 DMA? How many of them will scramble for cover when the year end window dressing starts?"
Valid point. The captain has turned on the seatbelt sign in anticipation of severe turbulence.
ShortCourage, I noticed that as well. I suppose I have no way of knowing when the employment picture will improve. Maybe I should wait for a glimmer of job creation in the unemployment numbers before purchasing..
I guess my options are either to keep renting or try to buy a condo at a good price with a low 30yr rate from someone desperate to sell with the belief that going forward the rate of decline in RE prices will gradually slow down and with no expectation that the prices will go back to their highs from 2 years ago.
I am also concerned that I would be priced out in a coming inflationary environment with high 1970s style mortgage rates.
And for those in denial -
'Dr Stroeve and colleagues have now analysed Arctic autumn (September, October, November) air temperatures for the period 2004-2008 and compared them to the long term average (1979 to 2008).
The results, they believe, are evidence of the predicted amplification effect.
"You see this large warming over the Arctic ocean of around 3C in these last four years compared to the long-term mean," explained Dr Stroeve.
"You see some smaller areas where you have temperature warming of maybe 5C; and this warming is directly located over those areas where we've lost all the ice."'
BBC NEWS | Science & Environment | Changes 'amplify Arctic warming'
I just hate it when the data shows how even the most pessimistic models were too optimistic by far. This effect was first thought to be observable in 10 to 15 years, using the most pessimistic models.
'These warming effects are not just restricted to the ocean, Dr Stroeve said. Circulation patterns could then move the warmth over land areas, she added.
"The Arctic is really the air conditioner of the Northern Hemisphere, and as you lose that sea ice you change that air conditioner; and the rest of the system has to respond.
"You start affecting the temperature gradient between the Arctic and equator which affects atmospheric patterns and precipitation patterns.
"Exactly how this is going to play out, we really don't know yet. Our research is in its infancy."
The study reported by Dr Stroeve will be published in the journal Cryosphere shortly.'
We won't have to discuss the issue too much longer (well, among those who rely on data, that is) - the results of our planetary wide climatological experiment are starting to leave the modelling phase.
Just in time, at least in one sense, as those models have proved completely inadequate in actually predicting the observational data. Now they can be refined using real time data, instead of all the fuzzy predictions that have tended to cloud this issue.
The future is now. And the term is 'climate change,' because that is what climate does.
Bush uses the D word? Oh my...this will end badly.
Comrade Kristina | 12.18.08 - 3:07 pm
Today? I think you mean depression and not denial, delightful or dumbass.
I am also concerned that I would be priced out in a coming inflationary environment with high 1970s style mortgage rates.
Why? This would only serve to depress prices further.
ova, Yes, today in an interview, CNN is reporting it right now.
Hmmmm CNN cut to commercial in the middle of explaining what he said...
Spent the day in SF last Sat, wondering around my old hood. Remember how unreal it felt after the .com crash because you saw for rent signs in windows? I got a little of that deja vu though it wasn't as bad as Winter of 01 - yet.
The east bay on the other hand is getting hammered. Started working on a documentary project with some other CalArts alums (now unemployed Apple folks). We're currently mapping all the empty CRE in and around the silly valley - it's spookier then you folks think. I should have our preliminary location schedule done by the middle of Jan.
Comrade Kristina | 12.18.08 - 3:14 pm
I am not seeing it. Why, scratch that, who approved that for todays script and why?
DAMMIT TIMMY, PRESS THE BUTTON FASTER
Mish overestimates the power of lower rates on resets. The resets are not the killers as much as the price paid for the house.
Upsidedown houses don't allow MEW.
That is the elimination of hundreds of billions into the economy every year.
Besides, even if you cashflow better will lower mortgage and lower fuel, you still don't lever up again. You save by paying off debt or increasing retirment savings.
The fact is that higher mortgages haven't killed the current consumer. There is actually MORE money moving from paying the mortgage to consuming and saving.
In fact, if there is hope by low rates that many who overpaid can "hang on" to their house....you will have LESS money to spend because otherwise you'd walk away...giving you a year of living free and then moving into something that is at a reasonable rent or a purchase at 3x income.
Low rates will mean millions who are squeezed in a home at 4 and 5x income will continue to hang on, instead of being forced to do what's prudent and giving up and moving on.
Anyone facing a reset that will kill them are, by DEFINITION, in a house they can't afford no matter the interest rate and are UPSIDE DOWN.
Again, this means years of no MEW, and a constant nagging/disincentive to overspend elsewhere.
ova, they came back from break and went to talking about Caylee Anthony. Never did explain in what context he said it...
deflationary jane
Why? Are you just going to show real estate carnage or is there a reason?
why the heck would Bush choose now to start telling the truth?
broward horne, that seems reasonable. Lower mortgage rates + lower energy costs = consumption stimulus. Only problem (can one call this a problem?) is if there is an actual fundamental shift in consumer spending/saving patterns. I am pretty sure the current shift in consumer spending patterns is due to lack of funds rather than actual shifts in thinking, though if we go into a prolonged deflationary recession it would be a more permanent change in thinking about consumption like after GD[1?]
Broward Horne writes:
Mish is a prophet.
Mish is smart. Popeye is the prophet. It's seldom a question of who is right; it's a question of when. But feel free to pick your own heros.
CNBC guest calls CNBCs GE a hedge fund with a light bulb factory attached to it.
Didn't catch his name but positive he is not on the Obama finace advisory team.
They are discussing it now, apparently it was in the same context as the last time he talked about trying to avoid a Depression greater than the Great Depression. I just listened to the quote.
Bush uses the D word? Oh my...this will end badly.
Comrade Kristina | 12.18.08 - 3:07 pm
It was 'duck'. Or 'dodge'.
Anonymous, higher interest rates would drop prices, but by how much?
But feel free to pick your own heroes.
Peter Griffin from Family Guy.
Eventually this has to end correctly? Thanks to the foreclosures townhouses in my particular neck of the woods near DC are down 67% or more from the high's.
Now I'm looking at renting my townhouse instead of selling (to be closer to family) because I find going into foreclosure unpalatable, and selling, with all the fees and closing cost would leave down 18-20K from where I am now.
Bought in 2003 at 140K, house prices had doubled sometime in 2006-7, and now down to 85-120K with some as low as 50K.
I expected the bubble to pop, and never expected the prices to stay that high, but wasn't prepared for this. Life's learning lesson.
Broward,
I was busting your chops. You are just as smart as Mish is. It's a question of whose dollars are being bet.
Trade well.
duck
lame
May be a down day on the DOW which will be a departure from the data delightfully delivered earlier.
They wouldn't dare crash it just before Christmas, would they? Grinchish, but would catch a lot of unsuspectings.
toyotaJoe writes:
Oh!!! the best part was that he was willing to "massage teh finacing... His daughter was a loan officer at a local bank!!! Bof A if I remember right
TJ, Run from him as fast as you can. On second thought, beat him senseless and then run from him.
I found a transcript on Fox news from an interview Bush did yesterday. In it he says
PRESIDENT GEORGE BUSH: There was a-- a meeting in the Roosevelt Room, which is right outside the Oval Office. And Chairman Bernanke and Secretary Paulson were there briefing me on the state of the economy. This is after we had made, you know, some serious decisions like on AIG and-- Freddie and Fannie. And they said the market's just so frozen that if we don't do something-- the-- the upcoming depression could be greater than the Great Depression. In other words, there is a chance that if we don't move, the economy could really go in the tank. And-- I vowed then and there that I wasn't gonna let that happen under my watch.
32 minutes ago
WASHINGTON The Bush administration is looking at "orderly" bankruptcy as a possible way to deal with the desperately ailing U.S. auto industry, the White House said Thursday as carmakers readied more plant closings and a half million Americans filed new jobless claims.
"And they said the market's just so frozen that if we don't do something-- the-- the upcoming depression could be greater than the Great Depression"
Which would be bad. Not great. Just bad. Freakin liars. They have know for years perhaps...
Short documentary film to cover the unwinding of paperwealth in northern CA. This was the brainchild of a friend who just lost his job. I mentioned that it might be good to use the time constructively while keeping his skills sharp. He ran with it.
ova, surely Paulson has, his company was in the thick of it.
deflationary jane writes:
Could be a great comedy...
Wanna know the irony on the ARM Resets? You and I will get mortgages at 5%. This is because the 2008 mortgage market is weighing deflaiton (pushing rates down) against we lose our jobs and default (pushing rates up).
This isnt a problem for the ALT A guys. They are contractually obligated to get from the banks a new rate based solely on Libor or Treasuries - the banks wont have the opportunity (per the mortgage terms) to price in the risk of default. In sum, the Alt A crowd will be able to get deals us responsible homeowners will never see. Damn...
congrats to those that pulled the trigger on SRS in the 50s yesterday.
Comrade Kristina | 12.18.08 - 3:28 pm
Then there is BB, a depression expert, getting apointed. Naw, these guys are not that competent.
Is this the Santa Claus rally I keep hearing about?
It's falling off the cliff a little early, this could get ugly.
Bush: "And-- I vowed then and there that I wasn't gonna let that happen under my watch."
Does that mean rally to Jan. 20?
Market no likey that S&P gives a 33% chance GE could lose it's AAA.
just a little short covering at the end of the session
nothing to see
oh, wait a minute, somebody turned my monitor upsidedown
posting to refresh
Comrade Kristina writes:
Is this the Santa Claus rally I keep hearing about?
Comrade Kristina | 12.18.08 - 3:30 pm | #
LOL, you made me flash on the scene near the end of "Waterworld" where the little girls asks, "Was this your big vision?"
Gov Paterson: Why we need an obesity tax
Bush: "And-- I vowed then and there that I wasn't gonna let that happen under my watch. So I said to myself 'lets have a drink and think about this' and decided 'ah, what the f#$k. Let it crash'
My Secret Service agent rushed to my side; afraid something was wrong. I reassured him that I was fine and realized I was giggling manically.
Popeye is buying - profit is not marked by the moment. Ive said my peace.
near the end of "Waterworld"
citizen energyecon | Homepage | 12.18.08 - 3:34 pm | #
Someone got to the end of Waterworld?
ova writes:
Does anyone know why PIMCO is holding out on GMAC? Better terms?
PIMCO got a heads-up mehtinks....
Taxpaper-financed bailout
(Cerberus is interested because they have been told by Treasury that they can have the Wells Fargo tax incentive, i.e. they can monetize past GM losses.- AM)
Last update: 11:41 a.m. EST Dec. 18, 2008
SAN FRANCISCO (MarketWatch) -- The struggles at General Motors Corp. and Chrysler LLC took a surprising turn Thursday with the two automakers reportedly jumping back in to merger talks as they await word from the White House on a crucial cash lifeline.
Chrysler owner Cerberus took the initiative to restart the negotiations that failed weeks ago
I vowed then and there that I wasn't gonna let that happen under my watch.
Well he's got a watch to keep, so go to it.
hedgies unwinding?
--
Median price of 350K from a high of 665K only 15 months ago. Two words come to mind UGLY and HORRIBLE. The high-prices altos would take 50% haircut in prices once the depression in the US becomes an accepted reality. Patience.
Jas
I've provided occasional comments re Oakland home sales. Here's one more.
According to Redfin, 29 homes with identifiable addresses in Oakland went on the market this past Tuesday. Of those 3 were unencombered, 1 was a short sale and rest (25, or 86%) were REO.
These data are consistent with the last few months, typically 80-90% of homes entering the market are encombered in some way.
..."the upcoming depression (meaning we are going to have one) could be greater than the Great Depression (and it might be worse than just a DEPRESSION - it might be worse than even THAT)".....
Geeze...this day just keeps getting better....(also looking at DOW)
I gotta go talk to the cow...(175 days pregnant)
But feel free to pick your own heros
Mish ain't my hero and he's occasionally banned me from his board for my annoying commentary on free market god worship.
However, I have to admit the guy has a good grasp on what's happening and he's made two calls that stupified me, and they were spot on.
Remember how unreal it felt after the .com crash because you saw for rent signs in windows?
Yes, I do recall this. I used to spend time with a friend in the avenues, around the Richmond and Golden Gate Park, and from 1997 to 1999, the for rent signs disappeared, and then, one day, maybe late 1999, early 2000, we walking around a neighborhood near 20th and Clement, and . . . there it was, a FOR RENT sign in the window of an apartment building
after we recovered from the shock, we both said the same thing: IT'S OVER
The most prevalent credit in Synthetic CDOs is GECC ... this could leave a big mark!
Anonymous Monetarist: Synthetic CDOs Top 50 'hits'
1.General Electric Capital Corp. 67% 480 bps
"The high-prices altos would take 50% haircut in prices"
and the fat lady sings... though I'm pretty sure she's a soprano
I guess I'd better check the ticker for my winnings. Following Popeye's well-reasoned and thoughtful posts in the last thread, I maxed my credit cards and margin and went all in to reap the rally benefits.
[whistles happily]
Gary owes me a keyboard now..
Trulia/redfin/zillow all just started showing a few SFH in the "right" part of El Cerrito under $400k. A couple under $350k. All this in the last two weeks.
Yes yes I know those in the know have better information, but this is still significant from my perspective.
Albany, Berkeley, still insane. We'll see how long that lasts.
comrade swan
So they were waiting on word from the White House or where ever whos in charge calls from. So the market gets the news, rallies and Popye is vindicated, and life glows with fuzzy love?
bgates
sorry the fat lady hasnt sung yet and there is a chorus of them they rehearsing
"early 2000"
the nas peaked in late march. oddly enough, the blue chips didn't crack until february the next year, when we all realized that W really is/was that stupid.
The funny thing is that the SoMa commercial vacancies in 2001 were kind of a headfake - holding until 2006 would have been smarter than selling at that point.
oh to be a cobol goddess in sacramento in 98/99 sighs
.com crash:
What stupified me was RE estate prices rising after the crash.
I was all set to buy, and prices jacked up fast.
Made no sense at the time. (Still doesn't, really)
the fat lady hasnt sung...
when the priciest of the los/palo zip codes go to a half-mil, she'll be approaching the stage. the deflationary hammer can only smash so much.
don't forget, Joe Kennedy put much of his booze/hollywood/shortsale gains into RE in the 30s.
I knew Cobol Goddesses in the early 80's. The time of the bonus that hatched white powder. All across cubicle land the sound off bonus sniffing and snorting was heard. I bought a short wave radio instead.
I've noticed there hasn't been much talk of derivatives/credit default swaps lately. Are there big shoes that are still going to drop there, or were those fears overblown?
What stupified me was RE estate prices rising after the crash.
Instead of trading dot.com stocks, people were trading real estate.
"people were trading real estate."
mostly trading up and refi-ing. realtors with established businesses were certainly positioned to do well, the newbs, not so much, even in the best of times.
Altair, I've wondering about those myself...
Will refrain from the looting (though triggered, awaiting final beckon) until after inauguration. Thereby the Bush legacy isn't damaged as much as the Obama.
Recite your presidents; sounds like a Eton polo club. You know that Obama will have to carry a lotta water for his place.
anonymous:
My hunch is a large number of .com people bailed, plowing their winnings^H^H^H^H^H^H^H earnings into RE.
That's what I would have done had I had not left Sun at the peak to finish my PhD.
[Popeye, that is one hell of a rally going on.
Gary]
Quad Witch OpEx. Always choppy but lately, violent. SRS is a cobra biting everyone that comes close.
600 billion shoes and
General Electric Capital Corp. 67% 480 bps
is the biggest....
Anonymous Monetarist: 600 billion bottles of beer on the wall
Altair writes:
I've noticed there hasn't been much talk of derivatives/credit default swaps lately. Are there big shoes that are still going to drop there, or were those fears overblown?
Altair | 12.18.08 - 3:43 pm | #
"I've noticed there hasn't been much talk of"
i think most of the punditry is just staring slack-jawed at treasuries. i know i am.
dot.com people ran into an asset class where you could 'never lose money'. If I had a dollar for every time I've been told THAT in the last 8 years.. I'd have enough to bailout AIG & Gm!
Bush uses the D word? Oh my...this will end badly.
Given his track record for prescience, that might be a good thing.
" nova writes:
I knew Cobol Goddesses in the early 80's. The time of the bonus that hatched white powder. All across cubicle land the sound off bonus sniffing and snorting was heard. I bought a short wave radio instead.
nova | Homepage | 12.18.08 - 3:43 pm | # "
Boy, that takes me back. Went to work at a small financial software company in downtown SF, MBS software running on VM/CMS, and the woman in the next cube was a hot COBOL goddess/BofA escapee. They'd actually trained her internally, and she was the only one who knew the ins and outs of their trust system.
A couple of years and a really expensive failed conversion later, BofA was outa the trust business.
She didn't snort coke, though. That was the marketing staff at the PC accounting software company I worked at previously. They even dealt out of there.
"Altair writes:
I've noticed there hasn't been much talk of derivatives/credit default swaps lately. Are there big shoes that are still going to drop there, or were those fears overblown?"
Things have calmed down alot since mid sept. Problem was the fear associated with now knowing how big the problem was or how they would unwind.
The problem is about as big as feared, but a few have already unwound and so far, the unwind was remarkably orderly.
Since then, alls quiet on the western front...
re: comrade swan
gotta love those synthetic CDO's, designed by geniuses, by golly
sure hope Buffet wasn't on to something
Does 775B include state bailout?
What stupified me was RE estate prices rising after the crash
1987 - Market Crashes.
1987-1990 CA RE rises almost 100%
1991 - recession sets in
2001 - Market Crashes
2001-2007 RE skyrockets
2007 - recession set in
The money which got panicked out has to go somewhere. Did you ever get a bubble of air trapped in your wallpaper, pushed it around until it finally whoooshed out from the edge?
I've placed my bets. If I'm wrong, I'll suffer - you don't need to pile on.
pushed it around until it finally whoooshed out from the edge?
Broward Horne | Homepage | 12.18.08 - 3:51 pm
No.
" the unwind was remarkably orderly."
except for the whole negative rates and sub-2% ten year thing... and that whole multiple-days-on-the-all-time-top-ten list of one-day gains/losses thing... and that whole all-5-major-investment-banks-no-longer-existing as such, if at all thing...
bearly, yah.. holding SRS for longer than a day is damaging to mental health. definitely not a good way to invest in the collapse of CRE that will come. that collapse still obvious to me but i am not touching SRS. maybe april puts on spg?
"The money which got panicked out has to go somewhere. "
I thought this was a good argument for buying and support back at 1200 spx. now, I more think of one of my favorite lines from Spring 2000 - "Alot of money died and went to money heaven today".
popeye,
What are you betting on?
Thanks
GM and Chrysler are shutting down until Obama and the new congress are in power. Bush wanted and was refused the rest of the TARP money. Here's his payback. He's finally demonstrating the limits of his power as a lame duck prez.
No one is going bankrupt and the money will be given. Good or bad it will happen.
FASTER TIMMY, FASTER
PLEASE
Oil down nearly 10% on the day. Sub $1 gas soon?
"The money which got panicked out has to go somewhere. Did you ever get a bubble of air trapped in your wallpaper, pushed it around until it finally whoooshed out from the edge?
Broward Horne | Homepage | 12.18.08 - 3:51 pm | # "
One of my neighbors is a high-end Silicon Valley financial advisor. Post dot-com, many of her (very wealthy) clients piled into real estate continued to do so for several years.
After a few years, when prices got 'way crazy, she bit the bullet and told her clients that the boom couldn't go on. She told me, "They look at me like I'm crazy and say, "Real estate always goes up." This is the cream of Silicon Valley, by the by.
And now, where will the cream put their money? I'll have to ask her.
"No one is going bankrupt"
except a few million small businesses who are paying their final quarter estimated this week - but no one IMPORTANT is going bankrupt this winter, right?
Hank and Ben must be flogging poor Timmy...
Soon, soon.
ReBear,
Primarily specific retail bets and specific pharma. Pretty much the same stuff I've talked about before.
900 TIMMY, 900 !!!
Was talking today about the economy with a co-worker, and about how in recent years, fabric stores disappeared from our area. Right when people might want to start making clothes again, I said.
Co-worker scoffed airily... "This isn't going to last very long."
People really are clueless.
Oil down nearly 10% on the day. Sub $1 gas soon
Hee Haw Yippie I Oh, Texas here we come!
FASTER TIMMY, FASTER
PLEASE
I somehow keep getting a picture of button-mashing arcade game when I read this.
Market crashes, RE rises pattern:
Bernake may be right in his liquidity theory, but wrong in his timing, as I see it the Bush Administration and the Greenspan Fed applied liquidity post the tech crash and created the market revival to the 2007 high and the housing bubble. But then the Keynesian liquidity ran out of steam, i.e. effectiveness, and we have now.
As a casual student of the Great depression I wonder: did we not have two economic attacks on the suffering economy at the same time: Keynes liquidity and bankruptcy liquidity reduction. Was it not the latter that really ended the great depression?
May become the same ultimate solution today, once the liquidity nonsense finishes its destruction.
"3:48 p.m. Bush won't leave auto 'catastrophe' for Obama"
LOL!!! Too late!!
where will the cream put their money? I'll have to ask her
T-bills, of course.
I know a RE agent in L.A. She was already down $150K or so in early 2007, and in late 2007 she and several investor friends were piling back in because they knew "the bottom was in".
I half-heartedly argued against it.
She said, "What else would I do?"
I said, "I'd short Washington Mutual".
Oh, well.
Yep. The O'Man will have to face carmeggedon on his own.
Oil down nearly 10% on the day
maybe if OPEC cut another couple of million they will pump it for free
USO broke its swing low with quality of volume. No bullish spring here. Expect $30 oil shortly, followed by $25, $20, and maybe lower if people keep buying it! =)
mal writes:
Was talking today about the economy with a co-worker, and about how in recent years, fabric stores disappeared from our area. Right when people might want to start making clothes again, I said.
Co-worker scoffed airily... "This isn't going to last very long."
People really are clueless.
Agreed. Many people in my social circle are convinced housing recovery will happen this spring. These same folks deployed most of their spare cash into the stock market in October. Only now are a few beginning to think of whether they'll have jobs next year.
Rebear,
I pretty much think the question now is whether you want to bet on breaking the bank - I don't think it will happen; but it's an open call.
Ponyless in NJ writes:
"... holding SRS for longer than a day is damaging to mental health."
EEV seems to have lost its lift, even in good days like today.
"Was it not the latter that really ended the great depression?"
interesting question. the war is the short answer, but folks forget that the economic was actually pretty crappy after the war, which didn't really resolve until stalin had icbms and mao's control was final. i would imagine that domestic overcapacity wasn't a big issue for japan and germany circa 1948, and that this was a factor in the global economy, as was their cultural bias towards manufacturing.
"EEV seems to have lost its lift"
IFN is green, which is a recent long i currently regret wimping out o
And now, where will the cream put their money? I'll have to ask her.
Bob Dobbs | Homepage | 12.18.08 - 3:56 pm | #
That problem (where to put your money if you're stupid) has a way of sorting itself out.
looks like 400 points to get a 9 handle tomorrow
" mal writes:
Was talking today about the economy with a co-worker, and about how in recent years, fabric stores disappeared from our area. Right when people might want to start making clothes again, I said.
Co-worker scoffed airily... "This isn't going to last very long."
People really are clueless.
mal | 12.18.08 - 3:57 pm | # "
Sewing has become a high-end hobby, because it's cheaper to buy something than make it yourself.
To make me a Hawaiian shirt, for example, my wife will spend upwards of $25 bucks for cloth and notions. Not counting the labor.
But you can buy a casual shirt for $10-$15 at a discount place, or $5 for a good used one. If you're really trying to save cash, what's the percentage?
Sewing to repair clothing? Now that may make a comeback. But that's mainly thread and buttons and zippers; you don't need a whole store for that.
any thoughts on the drift between spx and djia?
they were an even 1-10 at the recent bottom.
Damn and I spent all my bonus money paying off my student loans.
Mal,
Fabric stores started carrying nothing but church crafts crap and then they wondered why business tanked? Lots of fabric shopping is now done online now. That's just where the retail end of the industry went if you want anything decent. Me? I loves me the LA garment district and Britex.
What is going on with this market?
We were just having a rally on Monday.
[SRS for longer than a day is damaging to mental health]
Actually been averaging in in small lots, middle of the day all week.
Bob Dobbs writes:
"They look at me like I'm crazy and say, "Real estate always goes up." This is the cream of Silicon Valley, by the by."
I've had the same conversations with the same people. Just because you're smart about one field, doesn't make you wise in all.
Co Co & Solano Medians are now 50% off their peaks.
DQ News California Home Price Appreciation Tracker
And so are Sacramento & San Bernardino.
Housing Crash anyone?
There are three kinds of people -
1] [Watch CNBC] Those who have come to the conclusion lately that this is a big event but are staying the course.
2] [Watch CNN] The govt will show us a a way out this mess.
3] [Mall fans] These don't want to talk about 'it'.
CONJURE'S BOND CRASH CLOCK
The time is--
11:55:00
Conjure asks, "Do you know where your money is?"
deflationary jane writes:
oh to be a cobol goddess in sacramento in 98/99 sighs
deflationary jane | Homepage | 12.18.08 - 3:41 pm | #
sounds like you wouldn't be surprised at how primitive IT systems and software can be in state government
believe it or not, we still use Groupwise as our internal e-mail
oh well, as I tell everyone, we are virus proof
What is going on with this market?
the invisible hand is marching to a different drummer today
popeye,
Sorry i must have missed your previous posts.
mp,
what type of bonds? just curious, as oft stated I am strictly in rolling short term CDs for the past 18 months and no intention of changing horses any time soon.
Richard Estes | Homepage | 12.18.08 - 4:08 pm
I manage Novell servers running WordPerfect.
Bob Dobbs, yes. For me it was an Amdahl 470 VM/CMS and JES2. 4MB RAM in that monster.
"what type of bonds?"
long-dated treasuries.
Conjure says, "Have a nice day."
Eric writes:
And now, where will the cream put their money? I'll have to ask her.
Bob Dobbs | Homepage | 12.18.08 - 3:56 pm | #
That problem (where to put your money if you're stupid) has a way of sorting itself out.
Hmmm, - - European kids are rioting over economic inequality {citations available upon request]; India in uproar over Pakistan; China in upheaval over migration to the cities.... Oh yeah, this all calms down fast without some meaningful change.
Think. There is a point after which the game ends. Think.
bgates writes:
any thoughts on the drift between spx and djia?
Believe it's a weak oil component of SPX.
i think most of the punditry is just staring slack-jawed at treasuries. i know i am.
bgates | 12.18.08 - 3:47 pm |
billions upon billions were given to the banks, and they go out a scoop the curve....on leverage in the bond pit.
150 billion x 20 times leverage w/minumum margin.
Biggest Bond Pop in history!
"Sewing to repair clothing?"
Great way to make bank. All green.
Hmmmmm....Here's your dozen eggs, gal. of ice cream, and gal. of milk, Ma'am....would you like a reconditioned XL-blue Jantzen to go with that milkshake?
Financial markets, which have been depressed by fear not seen since at least the 1930s, are likely to rebound in the next six to 12 months, former Federal Reserve Chairman Alan Greenspan said in a commentary published by The Economist online.
Thank god. No more anxiety attacks about the end of the world!
bgates writes:
"IFN is green, which is a recent long i currently regret wimping out on"
Thanks, this may explain disappointment with EEV, but I wouldn't have enjoyed ride down on IFN either. Hopefully, for you it was a very short trade.
long-dated treasuries.
Oh, yeah.
Let's see you top that kind of risk-taking, Popeye!
Greenspan Says Financial Markets Are Likely to Rebound in 6 to 12 Months
Greenspan Says Financial Markets May Rebound in 6 to 12 Months - Bloomberg.com
DAFIS - that is all that needs to be said >; )
I was an analyst, not a pure coder. I'm frighteningly aware of how archaric the software is. How I got to here (socio-econ research) from a MFA is a long and weird tale which is 86.378% (+/- 3.5) accurate.
bearly, good luck. i still have some SRS but I am quickly souring on the whole ultra experience.
moving on to different ideas.. like is it at all possible to lose money by shorting both TYP and TYH or any other pair of ultras or 3x?
"Hmmmmm....Here's your dozen eggs, gal. of ice cream, and gal. of milk, Ma'am....would you like a reconditioned XL-blue Jantzen to go with that milkshake?
Black Star Ranch | 12.18.08 - 4:13 pm | # "
I picked up a quality tweed sportcoat for five bucks at a garage sale, had it tailored for $40, and got $200+ worth of coat for $45, new condition. There's a business doing that sort of thing, when the conditions are right.
Think. There is a point after which the game ends. Think.
Popeye | 12.18.08 - 4:12 pm | #
Click, click, plonk.
Thanks, Ken!
What is the catalyst that will cause the bond market to crash? I just don't see it right now. Banks can borrow at 0%, put them into 10-year treasuries at 2.1% and pocket the difference. Thus, as long as the fed keeps rates at Zirp there will be an insatiable appetite of domestic (& international) banks for T's.
Of course, international investors will look at those returns and turn away due to risk. In fact they will probably start dumping their holdings slowly. But they have no incentive to crash the market by selling aggressively. And this plays into the hand of the banks, since they profit from the spread of T's from Fed's target. The more selling, the more spread -- free money!
Sure it will eventually crash, since the real economy will wither and die due to bank hoarding. But this scheme can work for a long time. And eventually the banks will be worse off because they have AGAIN mispriced risk and overpaid for a shitpile of T's.
Where am I wrong? Is there a black swan event lurking?
re Greenspan: but what will be the level from which the rebound occurs?
to 8000 from 5000, etc
surely not to 14,000 from 8500
(assuming the WAG is accurate)
bearly,
You need to pick a good exit from SRS. The current level of volatility will eat up all your money, no matter which way the underlying index moves. This goes for all the UltraShort ETFs.
Understand how they work, or you will lose your money, even as your macro call is validated.
....."Hey Darlin'...get that old sewin' machine out of the closet".....
"Hopefully, for you it was a very short trade."
something like in at 17.20 and out at 17.40. woohoo. but I really do want to believe in the BRIC story, show me single digit rsx, 13 buck eem, i'll be there like michael jackson.
ORCL and RIMM meet earnings.
TAKE THE MARKET ON THAT (oh, they are...... never mind!).
I wanted to buy my 17 yr old daughter a sewing maching for Christmas. I saw a Singer at KMART for $49.95 My wife gave me the "Are you freakin insane " look and I put it back.
"Believe it's a weak oil component of SPX."
yes, dookie in XOM's pants, which really rallied before the bottom. sounds right, thanks.
Oh, and Alan Greenspan say we'll be OK in six to twelve months:
Greenspan Says Financial Markets May Rebound in 6 to 12 Months - Bloomberg.com
Financial markets, which have been depressed by âfear" not seen since at least the 1930s, are likely to rebound in the next six to 12 months, former Federal Reserve Chairman Alan Greenspan said in a commentary published by The Economist online. âMarkets are being suppressed by a degree of fear not experienced since the early 20th century (1907 and 1932 come to mind)," Greenspan said in the commentary. âHuman nature being what it is, we can count on a market reversal, hopefully, within six months to a year." A stabilization in home prices, which will allow financial institutions to judge the value of collateral underlying mortgages and mortgage-backed securities, is likely in 2009 and is another âcritical piece" to ending the turmoil, the former Fed chairman said.
Gavshire Hathaway writes:
Where am I wrong? Is there a black swan event lurking?
Are you referring to the black swan event that can theoretically be found in the field of possibilities that arise after the black swan event has already occurred in the realm of normal; or, in the alternative, are you just an idiot ?
wow
i lost a lot of paper money today
damm you timmy
...BOTH teenage boys know how to sew - they even brag it up at HS....girls think it's cute....
What is the catalyst that will cause the bond market to crash?
Same reason it did before?
bond blowup 1994
The whole point is to scare capital into loans which are below the rate of real economic growth. That's why Bernanke was talking about 4.5% 30-year loans.
If the Fed is successful in rebooting the economy, we should see a major bond crash. Look for indicators that the economy is recovering.
Personally, I vote idiot.
Popeye writes:
Gavshire Hathaway writes:
Where am I wrong? Is there a black swan event lurking?
Are you referring to the black swan event that can theoretically be found in the field of possibilities that arise after the black swan event has already occurred in the realm of normal; or, in the alternative, are you just an idiot ?
That was uncalled for. Go fly a kite.
"A stabilization in home prices"
only for units under 400K in bubble markets and well under 200K everywhere else.
CR .... thanks for this clarification note:
"NOTE from CR: be careful with median prices. This doesn't mean prices have fallen to an eight year low - this means that a combination of price declines and a significant change in mix (to lower priced homes) has happened."
This is really important for people to understand ... that product MIX is as or more important as actual prices when it comes to medians
The other thing to note is the effect that the "distressed" sales have on price. A number of studies now are confirming that distressed sales rpices are a lot lower than non-distressed current sales prices.
This is common sense of course, but still important to note. The Mpls St Paul numbers were something like a 11.8% decline from 2007 for distressed and just 3.9% or so for non-distressed ... I believe the Orange County numbers were very simnilar.
With distressed sales appx hald the market - you still have half as well non distressed, and those are selling for a higher price.
As distressed sales eventually taper off there should be an initial spike in median price as a result.
If the Fed is successful in rebooting the economy, we should see a major bond crash. Look for indicators that the economy is recovering.
Why? Because money wants to be free and go back to equitys? A nascent recovery would mean stocks would be good again?
Sewing is something everyone should know. Just like CPR, and how to order Mexican food.
ullpointer, if you believe hyperinflation is coming its just going to be play money anyway.
thats my rationalization.
tiresome troll, this poopeye.
And frankly Popeye, I gave a lucid, rational explanation founded on fundamentals. The only contributions you've made to this board are your short term trading opinions, based on nothing, that have been WRONG.
But since I'm an idiot, my opinion doesn't really matter. Does it?
"As distressed sales eventually taper off there should be an initial spike in median price as a result."
yes - the high-end finally breaking down and having good volume on 40% off sales will mean a big rise in the media
poopeye.
Twilight of the Gods | Homepage | 12.18.08 - 4:27 pm | #
LOL. Simple. Elegant. Truth.
Gavshire Hathaway writes
But since I'm an idiot, my opinion doesn't really matter. Does it?
Nope.
We have way too many undeliverable promises in our eCONomy - social security, medicare, public & private retirement plans, trade deficits, commercial & residential mortgages, credit card debts, auto loans, etc.
No way can we make good on these deals.
The future will be smaller than most had projected.
I have to assume popeye is being spoofed. I don't recall him being a pump-monkey idiot in the past.
@bgates:
Ooh. Missed that. Thought you meant spx -25% vs dji -20% over last few months.
Why? Because money wants to be free and go back to equitys? A nascent recovery would mean stocks would be good again?
I don't know.
But what I do know is that you can probably get a good idea of when bonds will crash by monitoring rates of change in a few things.
For instance, the current-of-change for house prices is still accelerating downward. Almost nobody believed that would happen.
I wouldn't be surprised if the situation stabilizes by end of 2009 enough that the rate-of-change slows down, implying a price bottom, which puts a boundary in place.
I believe bonds will crash, and big. If I had to guess, I'd say sometime in 2010. That's assuming the Feds hold the whole cake together. There are forces in place which could disintegrate the whole thing and then nobody knows what happens.
Bloomberg Headline
Madoffs Wife Said to Be Probed Over Helping Keep Ponzi Records
Do you think they warmed it up first?
Gavshire Hathaway writes:
What is the catalyst that will cause the bond market to crash? I just don't see it right now. Banks can borrow at 0%, put them into 10-year treasuries at 2.1% and pocket the difference.....
Where am I wrong? Is there a black swan event lurking?
Gavshire Hathaway | 12.18.08 - 4:17 pm | #
What would happen when the short term rates on the money you have to keep borrowing go well above those of the long bonds you're holding?
bgates, and if the fed starts buying up jumbo mortgage backed bonds? wouldn't that drop the jumbo rates down to a level where it would stabilize higher-priced houses as well?
"As distressed sales eventually taper off there should be an initial spike in median price as a result"
I would think at this moment with foreclosures hitting nominal records, and plenty of potential foreclosures in the pipeline, what with option-arm recasts and fallout from recent job losses, distressed sales are at least as likely to increase in the near term as they are to taper off.
If the distressed sales persist for a sufficiently long period of time, the selling prices on the non-distressed sales will have to adjust to compete, and thus bring down assessed values. Not to mention that increased foreclosure sales could bring distressed-sale prices down even further, giving the non-distressed sellers a moving target.
Mish and some other people need to read Tanta's post on "reset vs recast"
The looming problem is not when the loans reset. It is when they recast.
If rates were really high, reset would be a problem. Regardless of rates, for many, the recast on a home that is 20% underwater on neg am loan that is now at 110% of the original loan amount is all the incentive they need to stop paying.
Recast is the issue, not reset.
Thank you Broward.
Ponyless in NJ-
this is why i am a tormented soul - my thesis is spot on 90% of the time, but i SUCK at timing entries and exits
ugh
The free market keeps Ben Bernanke & wall street awake at night.
In a free market, everyone is expected to act in there own self interest (within the law) and in theory this leads to the best economic outcome.
Where are we now? A large portion of society has negative net worth. The best option for the vast majority of these insolvent folks is to default on all debt. The sooner the better.
Think about that. The invisible hand of credit destruction.
And remember, the liabilities of those defaulting are someone elses assets.
What's in your portfolio?
What would happen when the short term rates on the money you have to keep borrowing go well above those of the long bonds you're holding?
Catastrophe, but if Japan is any indication -- that won't happen anytime soon. And the bond market would have to collapse first.... So I don't think that could be the cause. No way HeliBen raises rates and throws banksters under the bus.
Don't get me wrong -- I think it will collapse eventually. And banks will be royally screwed. But short term, I don't see a catalyst.
What's in your portfolio?
Angry Saver | 12.18.08 - 4:36 pm
Socks, 52 cents, my keys, and a belief that in America a man can do anything if he just trys hard enough.
Haliben,
I am honored that you have even tracked my comments. I will openly apologize to Gavshire for my friendly insults. However, for the record, I am calling a short term bottom.
I have been "playing" today with insults but honestly did not intend to offend anyone.
It is my genuine opinion that we are at a short term bottom and that the market will rise in the next two to three weeks. Please note that, in the event I'm mistaken on that call, I hold lotsa cash.
"Gavshire Hathaway writes:
What is the catalyst that will cause the bond market to crash? I just don't see it right now. Banks can borrow at 0%, put them into 10-year treasuries at 2.1% and pocket the difference. Thus, as long as the fed keeps rates at Zirp there will be an insatiable appetite of domestic (& international) banks for T's."
You may well be correct. I would have thought that banks would be hesitant to buy 10 year bonds yielding only 2.1% with the long-term inflation outlook so uncertain, but apparently the bond market doesn't have that concern. Why they don't have that concern is beyond me, but I assume that the bond market is smarter and more knowledgeable than I am.
large portion of society has negative net worth. The best option for the vast majority of these insolvent folks is to default on all debt. The sooner the better.
Two things in my mind -
1 - most people & the Feds are debtors. there's a huge incentive to inflate at the expensive of savers (bond holders). I know the history is that the U.S. has endured four deflationary periods but i don't know that the incentives were ever this high before.
2 - Japan as a model only goes so far. I think an argument can be made that Japan's 17-year deflationary period is actually dove-tailed into the larger credit bubble of the U.S. If so, then Japan's experience loses predictive value past a certain point.
ova, try as hard as one may but without a credit line or venture capital one won't get very far in America....
Ponyless in NJ writes:
nova, try as hard as one may but without a credit line or venture capital one won't get very far in America
I know. I actually believed that once upon a time tho.
Broward Horne,
I can see inflation or deflation. Either or both are possible.
Prosperity has left the building.
Well said Ponyless.
I would have thought that banks would be hesitant to buy 10 year bonds yielding only 2.1% with the long-term inflation outlook so uncertain
Simple. They are already insolvent, are compensated on short-term gains, and have incentive to keep this ponzi scheme running. This is looting, not investing.
ew thread
"Madoffs Wife Said to Be Probed Over Helping Keep Ponzi Records"
To make full disclosure, I've got some old Caruso 78's and I keep them in old paper record covers.
P.S. San Francisco is immune to price declines ...
~~~~
Until the next quake ...
Prosperity has left the building
She was awesome but I still have J, Beth and my Wiccan stalkers.
I have been lucky with SRS pretty much all along. I trade in small lots. I may see deep red on my panel for a period as I add until it rips higher and I peel off shares slowly. I must admit that I was shocked to see $50s this year.
The Fed is shooting for inflation at any cost. Deflation is coming in for a landing. We'll see who wins. Fed's best case is to maintain ANY inflation. The deflationary pressure is massive.
Hyper-inflation may come eventually, but no time soon - unless we have a bond market crash, which throws everything up in the air.
Uh oh.
[C] Moody's downgrades Citigroup senior debt to 'A2' from 'Aa3
Whenever inflation wins out, whoever has been buying treasuries lately is TOAST.
Moody's downgrades Citigroup senior debt to 'A2' from 'Aa3'
Isn't that like downgrading the U.S. treasury (again!)?
It's getting comical.
Where am I wrong? Is there a black swan event lurking?
'09 budget deficit. plus interest on debt, will require 1 trillion in new issuance to satisfy, not to mention BO's chicago lottery(850b)
" Gavshire Hathaway writes:
Catastrophe, but if Japan is any indication -- that won't happen anytime soon. And the bond market would have to collapse first.... So I don't think that could be the cause. No way HeliBen raises rates and throws banksters under the bus.
Don't get me wrong -- I think it will collapse eventually. And banks will be royally screwed. But short term, I don't see a catalyst.
Gavshire Hathaway | 12.18.08 - 4:38 pm | # "
For better or for worse, deflation should be expected. With the amount of additional debt we've taken on, high interest rates that would result from printing money would kill us.
Someone got to the end of Waterworld?
Eric | 12.18.08 - 3:35 pm | #
Smokers!
In the SF East Bay, my former 1500sqft residence, which has been resold 3 times since I sold it (for $475K...insane) in 1999, was foreclosed upon and "sold" for $665K (well under the last/top sold price of $839K)...and this is still basically an unaffordable 1940s starter house with no garage....even to those young folks with the highest paying bay area jobs. This house price has to be cut
another 50%...or the dollar does.
Then, in our current neighborhood, there stands an empty 4500sqft home priced at $1.4M....which isn't worth even $1M (no granite, no stainless steel...shag carpets), but it's stood empty for many months at this price, as the former owners have vacated. The real estate agent camped out in a suit all summer long, waiting for a random drive by showing...then degraded over time to wearing a t-shirt, reading the newspaper, and tapping the cooler he brought. Now he doesn't even show up any more...the plastic chair sits on the front porch day in and day out, looking quite lonely. Again, a person with good income might pay 50% of the current price, or the dollar has to devalue by half....
...but a 50% dollar drop will mean we cannot afford imports.
This is gonna still suck come Dec 2009.
" Broward Horne writes:
Prosperity has left the building
She was awesome but I still have J, Beth and my Wiccan stalkers.
Broward Horne | Homepage | 12.18.08 - 4:49 pm | # "
Where can I get some Wiccan stalkers?
Look for indicators that the economy is recovering.
~~~~
Can I borrow your telescope ?
" wouldn't that drop the jumbo rates down to a level where it would stabilize higher-priced houses as well?"
hard to say, we're in a world of under 2% ten-year notes and 25% APRs from the plastic merchants and similar yields from corporate paper.
where on that spectrum will jumbos be in the near future? dunno. will there be pressure on expensive houses in any case? yup.
And with long-term rates rising in every major country, the worldwide decline in bond values this year figures to be on the order of $1.5 trillion
6.2% at the start of the year to 7.75% in mid- September
that was from 1994.
can you imagine that we just had a bigger move, in a positive direction, on a bigger total nut!
that means the banks balance sheets just got north of 4trillion in mtm increases.
"What stupified me was RE estate prices rising after the crash.
I was all set to buy, and prices jacked up fast.
that was all part of Greenspan's plan--replace the tech bubble with the housing bubble. 1% interest rates and no Glass-Steagall to get in the way of securitization of mortgages.
"Expect $30 oil shortly, followed by $25, $20, and maybe lower if people keep buying it! =)"
There will be war before oil goes that low.
Greenspan should just shut up and go quietly into the night.
"be careful with median prices. This doesn't mean prices have fallen to an eight year low - this means that a combination of price declines and a significant change in mix (to lower priced homes) has happened. The Case-Shiller repeat sales index is a better measure of actual price declines."
I agree, but the 6.7% MOM drop really can't be attributed to the change in mix, can it?