Subsidizing already inflated housing prices sounds like a GREAT idea. /sarc off
The banks and the GSEs need to bleed so they'll cut these properties loose at deep discounts and accelerate the inevitable further decline of housing prices. It's price declines, not subsidies, that will bring buyers back into the market.
I like it. I read an article last week about a renter who paid his rent on time for 8 years. House was foreclosed and he was thrown out fast. No eviction process needed. This hurts too many renters who paid their bills.
Please recall that a "housing crisis" is a shortage of shelter. We've had plenty of those in New York. Liz had it right on last thread. What good will having these houses sit empty do? Teach us a lesson for 80 years from now? Can't afford to wait for those "free market" corrections.
We have an apparent glut. The government paying people's rent puts a floor under home prices. Evictions are helpful in effectively allocating assets when there is a shortage.
A lot of posters don't understand the operation of a deflationary spiral.
Whatever you may say about stupid borrowers, renters had nothing to do with these bad business decisions, and right now they are taking it on the chin. Combined with layoffs, it's a step toward Grapes of Wrath redux.
I'm with liz...this is a very good idea...you don't want empty properties - rotting hosues is right...turning into crime centers. Much better for the GSEs to scrape up some small income stream, and no, it doesn't do anyting to forestall the inevitable price declines - these people were renters to begin with, and it's the specuvestor landlords being foreclosed. Ease up on the kneejerk folks...
@The banks and the GSEs need to bleed so they'll cut these properties loose at deep discounts and accelerate the inevitable further decline of housing prices.
Dec. 15 (Bloomberg) -- Chinas industrial production grew at the weakest pace in almost a decade as export growth collapsed, increasing pressure on the government to do more to revive a slumping economy.
Production rose 5.4 percent in November from a year earlier, the statistics bureau said today. None of 14 economists surveyed by Bloomberg News predicted such a small increase. Output grew 8.2 percent in October
I hear ya, Liz. I'm just having a fiercely angry response to their attempts to prop up housing prices. They won't move the inventory unless they are forced to take losses. That, and I want them to forgive my rent if they are going to give breaks to others. Nevermind I make enough to cover my nut.
Hugh Hendry says, "not yet." But it is in his game plan. Highly recommend reading / viewing his stuff from the last several months, including an updated thesis from bloomberg earlier this week.
bobn writes:
Is it time to buy gold yet? Not the silly paper that says you have gold in a vault "somewhere" - but the real stuff?
bobn | Homepage | 12.14.08 - 9:33 pm | #
I think it's a fine idea. I wonder why it took about two years for this to happen.
There will be a mild side effect. Declining rents for single family homes and condos. That's because while kicking out reliable renters was stupid, the house either sat vacant or was sold to a new owner. The vacant houses kept the rental market for homes tighter. Many of the REO sales went to owner occupants, reducing sales prices while keeping rental rates higher than otherwise.
It was only the onslaught of individual owners who couldn't sell their homes that caused lower rents until now. Coming soon: even lower rents for SFRs. The good news is not so many vacancies. The home price spiral might also take a bit longer, or not drop quite so far below equilibrium.
The only problem I see is that if current trends continue, and there's no reason to believe they won't, then an increasing percentage of Banks will become landlords and rent collectors....shit, what am I talking about...they're already effectively that, anyway, so there's not much difference.
That is big - and bad - there is one in the article from Bloomberg that is downright scary...wasn't there a decline in the electricity stat previously as well?
China Industrial-Output Growth Is Weakest Since 1999 (Update1)
By Kevin Hamlin and Li Yanping
Dec. 15 (Bloomberg) -- Chinas industrial production grew at the weakest pace in almost a decade as export growth collapsed, increasing pressure on the government to do more to revive a slumping economy.
Production rose 5.4 percent in November from a year earlier, the statistics bureau said today. None of 14 economists surveyed by Bloomberg News predicted such a small increase. Output grew 8.2 percent in October.
[snip] Electricity output fell by 9.6 percent from a year earlier.
I was under the impression that commercial banks were explicitly not allowed to be landlords. There are actual rules and regs that govern the dispersal of under-water proprerty.
YOO HOO these homes have BEEN foreclosed on already.keeping someone in there,whether they used to be renters or were "homeowners" makes real good sense for the lender.An abandoned house goes to hell in a hurry(It is amazing to see how fast),and the loss severity can exceed 100%.much,much better to have a 40%-60% loss and SOME income.Exceed 100%? Easily,a gutted house full of mold would have to be torn down and removed.Good luck selling the lot.
Well, I'm a qualified buyer, but I am going to make calls tomorrow to rent a foreclosure on the cheap. This may take me out of the market for a few more years.
OT, please excuse, but I was thinking about GDP calculations...
Much has been made about the "imputations" made to GDP calculations, especially by Mish. The most notorious is the imputation of owner-equivalent rent (OER) being added to GDP numbers (if you own a home you are paying yourself rent and therefore adding to GDP).
I think a new class of imputation should be added to GDP, namely the intimate services performed by the wife of married couples. If you own a wife, then you are paying yourself for the intimate services. This service is pretty valuable and if purchased from professionals on the open market would cost a fortune.
I submit that we should call this imputation the wife/hooker owner's rent equivalent, or WHORE for short.
..this is where they start - providing your lodging....next will be food vouchers.....FedGov issued credit card like the food stamps & state-directed child support cards...
You wonder why I BOUGHT a small inexpensive place with clean water, warm climate, and plenty of sun? I think you're seeing it...
.....Then they came for the trade unionists
and I did not speak out
because I was not a trade unionist.....
I think that if the number fell below 6% - it was supposed to be very bad. Because 6% is, for China, really a break even number, because of population changes. Changes meaning the rural pop moving to the urban areas and expecting a job.
They're coming for you too, Black Star. They will raise your property taxes to the point where you can't pay, and then you have to forfeit your property due to delinquency. Everybody to the city, or the Shanty Towns surrounding the various Green Zones.
Pissed Off In California writes:
I was under the impression that commercial banks were explicitly not allowed to be landlords. There are actual rules and regs that govern the dispersal of under-water proprerty.
Pissed Off In California | 12.14.08 - 9:46 pm | #
Yeah right. Weve seen how well the rules work here in the USSA!
RockyR(Unrated) writes: \tMaybe I'll go offer to rent one of those suckers myself instead of plowing my cash into a pruchase. F 'em. RockyR | 12.14.08 - 9:41 pm | #
Well, that is exactly what will happen...and prices, like water, will find their level...it will exert downward pressure on housing prices all the same.
RhodesianGreenbackinAZ | \t \t \t \t12.14.08 - 9:35 pm | # I was lucky enough to catch Mr. Hendry the other week on Bloomberg as well, and it was fascinating to listen to him. For anyone who wishes to listen to the interview, the links follows; Eclectica's Hendry Sees Opportunity in 2-Year Treasuries: Video - Bloomberg.com
empty houses are a really bad. Since this will only apply to areas with lots of speculation. Yes it will slow the transition...
It is going to fast as is. We want change, not chaos. This is one of the few sensible moves I've seen by our government. I guess they can stumble upon one.
Its also the only one that benefits honest people (the renter).
As Marx said, history repeats itself; first as tragedy, second as farce. During the collapse of soviet socialism you could not buy anything in the stores. During the collapse of western capitalism, you can buy anything your heart desires for 30-70% off--or more!
The very first absurdity in Economics 101, at least as it was taught to me at Cornell and in high school, is "assume transaction costs are zero".
Some of the costs associated with forcible transfer of a house to a bank, city, investor, or even another sucker with a little better credit or a little more cash:
(note: some of these costs are not easily monetized, but they are real)
Liz's fees (legal)
Moving contents.
Time and effort spent looking for new shelter
Waste of any improvement by owner (new occupant will probably need to remodel)
Adjustment to new location, if affordable housing nearby is not available.
potential loss of foreclosed owner's contribution and investment in the local community.
Brokerage fees.
I'm sure there are others.
Benefits:
Some possible long term gain in efficiency of capital allocation. (Not guaranteed)
How are these people going to hang on to these houses if they don't have a job? No money. They won't be doing upkeep on them.
The China number means nobody is buying here. Who finances our government? I just had this mental picture of the US economy flying through the air. It's a 4 engine jet and we lost number 1 and 2 engines awhile back. Now number 3 just flamed out.
....I don't think I'll outlive the upcoming bad times - but then I didn't think I would live thru Nam either. I DO think it'll get MUCH worse and I think there is no fixing what we have.
Comrade Bear,some developments should be bulldozed flat.Other areas that are viable,or potentially so should be preserved to the extent possible."Bringing back" a neighborhood take a LONG time and a concerted effort by a lot of people.I have helped do it in oakland,never again.I well recall soaking my head in cold water,asking myself "Why did you do that" after sitting down with a serious gangbanger and explaining to him why moving out of the area would be a good idea for him from a business standpoint.It was,and he did.
Twas the night before the bailout, when all thru the Street
Not a banker was stirring, they all were dead meat
Applications were penned for the TARP with care
In hopes that free money, would soon be there
CEOs were nestled all snug in their beds
While visions of bonuses danced in their heads
And Hank in his pajamas, and Obama in his cap
Had just settled in for a pre-inaugural nap
When out in the markets, there arose such a clatter
Hank sprang from his bed to see what was the matter
Away to his terminal, he flew in a flash
He turned on the screen, and then saw the crash
The flickering light of the monitor showed
That banks were not lending, that no money flowed
Automakers were bankrupt, new layoffs were high
No consumers would borrow, deflation was nigh
Panic beset Hank, he knew he must win
Hope sprang in an instant, when he spied Heli-Ben
Faster than than eagles , his facilities came
And he whistled, and shouted, and called them by name
Now TARP!, Now TALF, TSLF and CPFF!
On, TAF!, On PCDF!, TDDWP and MMFLF!
From the top of the Fed to the top of Street Wall
Now lend away!, lend away!, lend away all!
As crisp dollars before the wild hurricane fly
Wet with ink still , did fall from the sky
To the ends of America his helicopter flew
Filled with fresh greenbacks, and Heli-Ben too
And then in a twinkling, Hank heard over the rotors
The clackety humming of printing press motors
As new bills still wet drifted down to the ground
Heli-Ben landed, and leapt out with a bound
He was dressed in Armani, from his head to his foot
But his suit was smudged with black and green ink and soot
A bundle of cash , he had flung on his back
And he looked like a sneakthief when opening his pack
His eyes, they were bloodshot, but hollow and cold
Desperation was within, and had finally grown bold
All caution had been lost, he just had to be right
Fresh ink stained his hands, from his work thru the night
Deflation, he muttered, could always be beat
If you just printed money, and handed it out on the street
His face, it was bearded, with a bald, shiny head
His demeanor inspired new feelings of dread
He was a Keynesian dupe, an academic after all
Hiding debt had not worked, the US dollar had to fall
Deflation would not do, falling assets were bad
And even Ben knew the consequence would be sad
He spoke not a word, but went straight to his work
Handing out sums of money, then turned with a jerk
And flipping his finger to all those that did save
Gave nary a thought to the path this would pave
He repeated his mantra, that this would stop the red
When through he departed, straight back to the Fed
It was heard he exclaimed, as he flew out of sight
Its all that I know, please God let me be right
Joe Stalin | \t \t \t \t12.14.08 - 10:01 pm | # Strange, I wondered if haloscan might have messed it up, its still working for me. Although, if you use the search box in the upper right of the bloomberg home page, and type in 'hugh hendry' you should see a list of the recent appearances. The video from December 6th, 2008 is the one I was trying to link to.
Not only was that Chinese number bad, the speed of its drop is amazing. None of the economists called it correctly. People are way behind the curve on how fast the wheels are falling off, the jet engines flaming out, and how bad the Redskins really are.
When it comes to bulldozing, I think they could do most of the IE and pretty much everything outside the outer loops of Phoenix & Vegas and nobody would miss'em. Oh, and let's (re)turn most of California's central valley back to farmland while we're at it.
I know my way around heavy equipment, so I'll even drive.
For those using CR Companion, I have uploaded a new version (1.03) that hopefully fixes the problems people have been experiencing with "communicating with haloscan", and with automatic thread commenting stopping. You should know that because it is not yet a public add-on, automatic software updates are not enabled, so you need to return to the firefox addin site to install it (you can just install right over the previous version).
I am investigating the pasting special characters problem, and hope to have a fix for that soon. I would love to hear about any other problems people are experiencing as well.
We now return to our regularly scheduled programming.
Keep an eye on China. That boffo economic growth they had was what kept things politically safe there. No telling what'll happen if things deteriorate too much.
Keep an eye on The USA. That boffo economic growth they had was what kept things politically safe there. No telling what'll happen if things deteriorate too much.
Ummm, the banks are the slumlords, or will be when the houses rot.
Unfortunately in the Miami area, the foreclosures are interspersed everywhere. More heavily concentrated in condo towers, but everywhere. So there is not one particular spot that could be bulldozed.
ova,I grew up in Oakland and met quite a few of the old Raiders.They were my team from the time they were the Gaucho's until they moved to LA.since then I want them to lose every game in the last 30 seconds until Al Davis dies.
Bank chief executive officers in Northeastern Wisconsin say their institutions are generally on firmer ground than their counterparts in states where the housing bubble was more pronounced.
In Florida, California and Arizona, where the housing boom was especially exaggerated, the inevitable collapse has hit banks hard, said Paul Beideman of Associated Banc-Corp.,
But Paul needs to buy a dog and name it "Clue" so he has one....
"China will support nine industries, including steel, telecommunications and automotive by cutting taxes, offering subsidies for technological upgrades and helping smaller companies get credit, Li, the industry minister, said.
Chinas industrial-production growth cooled in October to 8.2 percent, the weakest pace in seven years.
China may help steelmakers hurt by weaker demand for automobiles and electric appliances by purchasing steel stockpiles, offering subsidies for plant upgrades and increasing export-tax rebates, Li said.
Just about every industry has overcapacity, he said."
As Mike Shedlock says: "Governments cannot cure overcapacity problems by purchasing stockpiles."
CR if you're there I would love to see charts comparing historical house prices in dollars to precious metals, food, basic materials, the minimum wage, lawyer's fees, burial costs,oil, real estate taxes, etc.
Probably most of these are out there but I'm too tired tonight.
Neil, from the previous thread you were having problems posting. I hope I've fixed your problem in 1.03, but if not, you can restore the standard posting form by clicking on the settings (wrench) button and unchecking "Hide Haloscan Post Fields".
CR wrote "...although I doubt the private sector will follow their lead."
~~~~~~~~~~~
The private sector culture is cold and greedy, and doesn't care about people. That's one thing that stands out right now, big banks/corporations can be really stupid. Reminds me of the story about machines taking over the earth and enslaving humans...
Hey, did you hear about the reporter that threw two shoes at President Bush in Iraq today? It's supposed to be the worst kind of insult.
This does sound like the right thing to do. The renters here are not at fault and should not be penalized or forced out due to a homoaners default.
I don't like big government, but this sounds like a fair and socially just thing to do - with the benefit of community stability. Now, if the rent can't be paid - different story.
"The land border between the two countries was closed at the beginning of last month, immediately after the Mass Games celebration of North Koreas 60th anniversary.
Chinese tourists trying to visit North Korea have had to fly direct to Pyongyang from Beijing or Shenyang, and no tourists have been permitted from the three provinces neighbouring North Korea in case they are exiled former citizens.
There are now reports that all transport links between China and North Korea will be cut on December 10 as the rogue state becomes even more secretive. On Wednesday, North Korea announced it would close its border with South Korea on December 1...US officials told the Financial Times that the Chinese military has boosted troop numbers along the border amid concerns about the health of Kim Jong-il, the North Korean leader. The United States and Japan are drawing up contingency plans in the event of Kims demise, but Beijing has refused to discuss the scenario"...
Perhaps confirmation of Kim Jong Il's death could provide cover to send the troops in to secure NK's nukes.
Re: China I've been speaking to friends and relatives in China. Right now problems seem to be very segregrated into the Southern Pearl Delta area where most of the export related companies are. It's very, very bad there, but in other areas such as Beijing there isn't nearly as much noticeable issues.
Bascially the same thinking going on there as the koolaid thinking going on in the US. Most people won't realize the problems until it's too late and by then they've already lost their savings, their house and their job.
Hugh Jass writes:
This does sound like the right thing to do. The renters here are not at fault and should not be penalized or forced out due to a homoaners default.
I don't like big government, but this sounds like a fair and socially just thing to do - with the benefit of community stability. Now, if the rent can't be paid - different story.
btw, Black Star - thank you for your service.
Hugh Jass | 12.14.08 - 10:24 pm | #
Hey! We actually agree on something.
We need to find something to argue about and fast.
Morocco Bama - nobody other than you has mentioned an internment camp. Please, for the benefit of our readers, don't hijack this thread (no pun intended).
I know you've all moved the conversation along, but:
this is a good thing for the renters
this is a good way to preserve the property
housing gluts are very rare -- when the price is right. Most vacant houses will become OO-homes or rentals if the prices come down enough and the houses are preserved. Even in the Inland Empire. Encouraging rentals keeps the pipes in the wall, in the meantime.
Basically, this says that real estate is currently worth a reasonable multiple of rents which will generate a return on investment commensurate with the risk.
It also says that, on this basis, the value of real estate is too low for the GSE's and, consequently, the banks owning real estate, to take the write-down to sell the real estate at that price.
I have managed sf rental homes for years. There is no way that a government agency could do that. The work will have to be contracted out. Now this could an opportunity for economic growth. Existing property management firms do not have the capacity to manage the foreclosures coming down the pike. Also the profit margins in these businesses are low. If this happens, I predict the appearance of new businesses made up of mostly Mexican-Americans. They already do our lawn work, this would just put them in the home repairs work as well.
I think it is a good idea. It will, as has been noted, prevent neighborhood decay But we will have to accept that these rents will probably pay only 10 to 20% of the carrying costs of the original mortgages.
Hugh Jass writes:
Ticker - we will never argue over compassion and justice, only the ways in which they should be administered.
Hugh Jass | 12.14.08 - 10:33 pm | #
Maggie Knowles, you are crazier than your sister Solange if you believe the GSEs are doing this because of their altruism, while 'private companies' (ha!) evict paying renters coz that's the 'greedy' thing to do.
These companies are supposed to maximize profits. That's their purpose. And sometimes accepting rental agreements just happens to align with that objective.
Oh great. A whole new way to game the system. The artificial price support component has already been discussed but I'm thinking more basic. Sell long term below market leases to your friends. Pocket the "processing fee" and let the government extend the terms.
This is an interim step towards turning tenants into federally subsidized homeowners. More anti-market nonsense.
These companies are supposed to maximize profits. That's their purpose. And sometimes accepting rental agreements just happens to align with that objective.
Shnaps | Homepage | 12.14.08 - 10:37 pm | #
GSEs are quasigovernmental entities (with the "quasi" part getting a bit faded these days) and are subject to considerably more political pressure, not to mention regulatory monitoring, than a typical bank. I can think of good reasons besides mere altruism that they might want to publicly announce that they've decided not to be the active agent in what's generally perceived to be an injustice, whatever the impact on short-term profits.
The name of the game is delay price discovery. This is the driving force behind every decision being made. People are not being kept in their homes for any altruistic or moralistic reason. If you don't put a house on the market you don't need to take the loss on your books.
It also says that, on this basis, the value of real estate is too low for the GSE's and, consequently, the banks owning real estate, to take the write-down to sell the real estate at that price. MR | 12.14.08 - 10:33 pm | #
Meh - you're assuming rents are sufficient to cover carry costs...I don't think you'd see as many foreclosures if that were truly the case...at least not where you're talking about 'investment' properties. I'd guess that foreclosed specuvestors wouldn't be in forclosure if the rents really covered those costs.
No matter, what, prices have to return to a reasonable rent/income ratio, but this at least stanches the bleeding somewhat - 50% is better than 0%.
That is where we are all pointed (those of us keying off of the China story and particularly the electricity stat). Tremendous manufacturing overcapacity, export based jobs for a market that just ain't there...
Rob Dawg writes:
Oh great. A whole new way to game the system.
So we have to continue tossing paid-up renters onto the street without notice just because if this is poorly administered there's a possibility somebody might take advantage of it in the future?
renter friend got a foreclosure notice on her "house." she talked to landlord. landlord talked to bank, landlord quit paying when arm adjusted to 9.98 % and lost any equity with foreclosures nearby tanking property value, bank said FU to the landlord, renter said FU to landlord.....
so it is a big game of chicken....this will not end well for anyone...9.98% ! WTF? libor adjusted...landlord did the arm on the libor as libor was considered "safe" per the broker....
Fair enough, Yalt, but as I see it, collecting some rent while you're marketing an REO helps the bottom line - whether you're an ex-quasi-government/private housing finance giant or a greedy-little community bank.
Broward has noted the same thing I did. The two numbers about China's industrial output and electricity production are at odds with one another. Believe one or the other, but not both, and since output is measured in money, I am guessing it is the number that is bogus.
Scott -- I think we are saying the same thing. Real estate is now only a good investment if the rental stream has a reasonable risk adjusted return.
The purchase price to support this is much lower than the banks are willing to sell. Ultimately, the banks will be forced to write these values down, and investors will start purchasing properties.
Yalt writes:
Rob Dawg writes:
"Oh great. A whole new way to game the system."
So we have to continue tossing paid-up renters onto the street without notice just because if this is poorly administered there's a possibility somebody might take advantage of it in the future?
Yes. Unfortunate but necessary. The danger of nationalizing housing is already carved in the American psyche. Public housing destroys families, communities, lives.
This will be a disaster for as long as the banks refuse to lower the price to a market price. I don't think they have to recognize loss til they sell. So no motivation. I have been chanting the mantra banks are stupid for nigh on to 30 years.
They don't get any smarter.
Regulators need to force them to mkt and sell, and you will see, upthread, where I suggested, only quasi-snarkily that real estate agents be used.
Some of them actually sorta know how to do this.
And I think we were all only talking about renters who were actually there. Not that I think it is a bad idea to rent to a new renter, except the banks don't know how, and boy, do you have to watch it. The hub and I were no good at picking renters.
Not disagreeing, Shnaps, I just think that at the moment Fannie and Freddie's priorities have moved away from short-term profit considerations. Their survival doesn't depend on profitability, it depends on how well they're perceived to be performing a useful public function. I'm not going to conclude anything about the economics from their announcement, though you may well be right.
That is where we are all pointed (those of us keying off of the China story and particularly the electricity stat). Tremendous manufacturing overcapacity, export based jobs for a market that just ain't there... citizen energyecon | Homepage | 12.14.08 - 10:45 pm | #
Heh...decoupling my ass! Yes, China could be in for a very rough ride! I'm not so convinced of a political meltdown - China is a very old and in many respects very stable society - they've had a number of different governments since the end of the Imperial throne, but the functional structure of their society hasn't changed that much. Russia is the same - Putin is simply the newest Boyar Tsar. The constitutions and legal formalities are just window dressing, and China has had significant internal unrest even during the Deng Xioping era (the past twenty years) - they aren't nearly as homogenous or centrally controlled as we imagine in the west, and perhaps, counterintuitively, this allows for some flexibility in the system to enable them to deal with these shocks.
Is there any big macro-economic reason that China can't turn its attention to building its domestic markets? Isn't that what the US did in the 20th Century?
Fannie Mae said Sunday that it would sign new leases with renters living in foreclosed properties owned by the company.
Does FNM have any semblance of authority to just declare it is entering the rental business, or isn't this just the latest in an ongoing series of outrageous, capricious and illegal agency declarations?
Electricity is like copper, it's very predictable in terms of usage and population growth.
I believe the electricity number and an 8% drop is roughly equivalent (perhaps exceeds even) the first year of the GD. If I remember correctly, the unemployment numbers were roughly correlated to GDP drop.
1930- "normal" unemployment (4%?)
1931- 8% unemployment
1932- 16% unemployment
1933- 25% unemployment
1934- in the 16% range.
Price discovery point could be valid (depending on market), as is the fact that it would be difficult to compete in a GSE-sponsored rental market. But, in some of the horrific markets, we're seeing a no-bid market. SW FL might be an example.
There is almost no value to the price discovery process if the incremental increase in supply is dwarfed by the current supply. Adding a few more hundred homes at this point - even a few thousand in some of these markets, isn't going to set new pricing floors in the short-term.
The name of the game is delay price discovery. This is the driving force behind every decision being made. People are not being kept in their homes for any altruistic or moralistic reason. If you don't put a house on the market you don't need to take the loss on your books.
Not only the GSEs, but the entire financial system from The Treasury right down to the smallest financial firm.
flaminia writes:
Actually ticker tape, we play the Brits. We watch our empire disintegrate and get bombed to hell. Now, who will come to our succor?
flaminia | 12.14.08 - 10:52 pm | #
Hmm.. interesting scenario.. Hmm.. canada maybe? BWAHAHAHAHAHAH! Nah... maybe Germany, after all we did forgive them their debt after WW1.
I have to wonder how Freddie and Fannie will provide the logistics necessary to become landlords. That's a huge amount of properties to manage. Landlords have to provide for the upkeep of the house. I don't see how this going to have to work...
"Pissed off in California writes: "if you don't put a house on the market, you don't have to show a loss" or some such nonsense.
A. Wrong. You obviously don't do loan accounting."
Then explain to me FNM/FRE being solvent for years with crap equity on their books. I may not know accounting but I do know the difference between shit and shinola.
Banks have been gaming the system for years, hiding the losses for years, delaying recognition of losses for years, carrying houses at way over true value for years.
How about when FNM/FRE shifted a few billion in assets from held for sale to held to maturity?
I may not know accounting but I know that it's pretty clear banks have been gaming their accounting for years. More bullshit
Is there any big macro-economic reason that China can't turn its attention to building its domestic markets? Isn't that what the US did in the 20th Century?
Distribution of work. One of the ignored factors during the GD is the 20% reduction in the average work week.
Ultimately, the "owners" of capital have to take a loss. There's no other way to fix the thing. But they'll fight it tooth-n-nail, just like they will in the US because it's their retirement or their second house etc.
As I've said before, there's still an enormous amount of denial even here on CR. The focus on "free market" fixes WILL NOT fix this because it's an issue of distribution of work.
[This does sound like the right thing to do. The renters here are not at fault and should not be penalized or forced out due to a homoaners default]
Oh sure. The USG getting into the slumlording business, not doing repairs setting themselves up for lawsuits, front page news stories when deadbeats are not paying rent for 6 mos & get evicted by Uncle Sam... lots & lots of unexpected horror stories, or worse, they simply let people live rent free for years on the taxpayer dole...
REBear writes:
So what happens if the heater or any other appliance breaks down? Call Fannie Mae?
There seems to be some confusion here about what Fannie and Freddie do. They outsource everything: the loan servicing, the REO management, everything. I assume this will either get handled by whoever's managing the REO or that entity will outsource it to a property manager.
It makes sense to let the renters stay. Why let the house stay empty and generate no income and invite vandalism? Just a couple of questions.
Who is going to collect the rents, dog the delinquent renter for the rent payment, answer the phone when they call about the toilet being stopped up and evict them when they don't pay? Bank on a lot not paying once they figure out that the government owns the house and won't do anything to enforce the rental contract.
The reduction of the work week idea is interesting. Isn't that how the French tried to trim unemployment earlier in this decade? China is still at least a semi-command economy. It might be possible.
MR - yes, I think we are describing the same thing - I'm only saying that in some respects, this accelerates getting price discovery while providing the GSEs some income stream. You cannot get blood from a turnip - so booting out renters who are paying some reduced level strikes me as cutting your nose of to spite yourself...as a taxpayer on the hook for the Fannie/Freddie losses, I'm not anxious to maximize those loses to prove something about why GSEs are evil. This certainly will require property managers, and I suppose out of work Relitters are as good as anyone. I don't think the foreclosures should stop, nor do I see anything in this that suggests the foreclosures will stop. This just mitigates the collective/collateral damage.
No way are the GSE's going into managed housing. It's just an excuse to let any tenants ride without entering into additional rental agreements. The govt would SAVE money just not doing anything to/for the renters of a defaulted loan (they don't give a crap about the house).
REBear, Your complaints would be considered. The manager would have authority for small routine expenditures like plumbing emergencies, but would have to get approval from the owner (Fannie) for more significant items. The items you mention would likely be denied.
Ever heard of it? Want to challenge my assertion that the New York Yankees are the worst run and most unsuccessful franchise in baseball history?
Not tossing an entire six-flat outdoors because the landlord's car dealership blew up and he had to file for personal bankruptcy isn't going to turn the building into Cabrini Green.
bearly writes:
[This does sound like the right thing to do. The renters here are not at fault and should not be penalized or forced out due to a homoaners default]
Oh sure. The USG getting into the slumlording business, not doing repairs setting themselves up for lawsuits, front page news stories when deadbeats are not paying rent for 6 mos & get evicted by Uncle Sam... lots & lots of unexpected horror stories, or worse, they simply let people live rent free for years on the taxpayer dole...
bearly | 12.14.08 - 11:02 pm | #
bearly, I'm not saying they'll DO IT right - only that it sounds like the RIGHT thing to do.
My experience tells me it'll get mismanaged by a large GSE contractor who partners with a prop. mgt. firm. The recipe will call for plenty of G&A, light on the competence, hold the compliance, and accountability. But, we can't penalize them for good intentions.
At least you can score a drink in Cabrini Greens...Edgwater has weird DRY laws? What rich people do!
alba | 12.14.08 - 11:03 pm | #
You can't get a drink in Cabrini Green because it no longer exists, and I can think of 8 bars within a half mile of my apartment. It was nine before one of them was shut down a couple of weeks ago when their landlord went bust. Twenty families and two thriving businesses evicted without notice. I'm sure the effect on the neighborhood will be great--at least we kept the public housing menace at bay.
Electricity is like copper, it's very predictable in terms of usage and population growth.
I believe that cement and steel production have been hit hard due to a CRE bust in China. Those are electricity intensive industries. A 9.6% drop from last year doesn't sound that dramatic to me. I wouldn't be surprised that OUR electricity consumption has dropped significantly since last year. Probably not that much though.
Not tossing an entire six-flat outdoors because the landlord's car dealership blew up and he had to file for personal bankruptcy isn't going to turn the building into Cabrini Green. - Yalt
Come on. You already know that no matter which metro you mentioned i'd be able to immediately bring up their own version of Cabrini Greens. It isn't an exception. The problem is public housing, not its specific form or location.
LMAO - When was the last time you were in town, Jane Byrne administration?
Daley II "outsourced" Section 8s when he demo-ed all of the high-rise projects several years ago. A win-win as those folks can get alot more for the $ down south - south suburbs and beyond I-80.
Based on some of the comments recently posted, perhaps I should post again:
I have managed sf rental homes for years. There is no way that a government agency could do that. The work will have to be contracted out. Now this could an opportunity for economic growth. Existing property management firms do not have the capacity to manage the foreclosures coming down the pike. Also the profit margins in these businesses are low. If this happens, I predict the appearance of new businesses made up of mostly Mexican-Americans. They already do our lawn work, this would just put them in the home repairs work as well.
I think it is a good idea. It will, as has been noted, prevent neighborhood decay. But we will have to accept that these rents will probably pay only 10 to 20% of the carrying costs of the original mortgages.
The reduction of the work week idea is interesting. Isn't that how the French tried to trim unemployment earlier in this decade? China is still at least a semi-command economy. It might be possible.
Yes, the Europeans seem to have a better, instinctive understanding. The Asian countries are more socially-bound, I expect they'll figure it out faster than Americans.
There's one of two outcomes - an equitable redistribution of work as happened several times before in the US although it always took many years.
Or a two-tier society of owners / workers but it won't be stable and most likely non-competitive in world markets.
I'm not sure I understand what you are saying about "distirubtion of work". Are you saying we're not allocating labor efficiently, or are you implying that "work" (i.e., jobs) are a commodity that needs to be distributed among the people so everybody gets their share?
The problem is public housing, not its specific form or location.
Rob Dawg | Homepage | 12.14.08 - 11:16 pm | #
I grew up in a neighborhood that was probably about 30% public housing. If you didn't actually live there and know the families you could never have identified which 30% were getting assistance.
Yes, capital owners are "fighting tooth and nail" to preserve wealth that has already evaporated by the inability of the debtors to actually make good on the financial assets, and by the loss of demand for the physical assets. They are willing to bankrupt the country to prop up prices for everything. And I agree with you completely that there is even a lot of denial here in the comment threads, though I think a lot of the denialists don't even know they are doing so.
A 9.6% drop from last year doesn't sound that dramatic to me. I wouldn't be surprised that OUR electricity consumption has dropped significantly since last year
It's huge, especially if the Chinese are claiming they still have GDP growth of 8+%. In the U.S., electricity use rises every year slightly faster than population growth, and yes, I think it's fallen in the US.
And I agree with you completely that there is even a lot of denial here in the comment threads, though I think a lot of the denialists don't even know they are doing so
They still think they're going to get their money because they were "smarter" when in point of fact, it's mostly because they're in first on the ponzi scheme.
Henry Ford figured all this out a hundred years ago. The owners of capital can only skim a small amount off the cash stream, otherwise too much money flows into capital assets (overproduction) and no workers can afford their own products.
It's just not that hard to understand. There's a bi-furcated mentality in the U.S. now that's signified by the debt bubble.
A lot of today's work isn't work. The growth of government has actually been an incremental counter-balance to growing imbalances between owners/workers so many of those jobs are unnecessary and inflate the apparent amount of work in the economy.
REBear writes:
So what happens if the heater or any other appliance breaks down? Call Fannie Mae?
You take rent money and fix it! If they complain, they may go to STATE or LOCAL court. If you are justified, your local judge may order them to pay you for your wasted time.
By propping up failing businesses the Fed/Treasury will cause severe crowd-out of private capital markets. This is already happening and will have severe knock-on consequences.
I remember pondering this in the 90s when I saw some people working crazy hours while other people were not working or barely working. And I wondered about the long term sustainability of what appeared to be the hoarding of jobs. Then, to be honest, I forgot about the issue. The problem now, though, is that we've "succeeded" in our wholesale conversion to a "service" economy. I'm part of it--a lawyer--and I can't really see the potential in spreading many of these service jobs around. I expect many of them to evaporate instead.
Are LCD's and DLP TV's more energy efficient than CRT's? I have a hunch they are. The fact that CRT monitors and TV's are being switched out might make some difference in US electricity use. Also, the payback on commercial use of LED lighting seems good, perhaps that is a factor as well.
"Well, why can't debtors just work more to pay back my money?"
Because somebody has to consume the goods that those debtors create, and if you force them to work MORE, prices go DOWN, which means wages go DOWN, which means they're even less able to pay you back AND they don't have time to consume the goods they're producing, which sends prices down MORE.
That's really what's wrong with American economics. nobody accepts that it's bounded by TIME.
As for the topic of the thread, the GSEs are in an untenable position with regards to the renters. Kick them out, and a lot of the properties will deteriorate before they can be sold for anything close to the mortgage face value. It might make a lot of sense if agreements can be reached with the tenants and the properties are sold to private rental property managers. I hope this is the plan, but with the GSEs now nationalized in all but name, I suspect we are seeing a long term situation of the government becoming landlords in absentia (and I suspect HUD will get the job of managing this at the top level) since I really don't think these firms want to sell the properties for what the market is actually willing to pay.
It occurs to me there's an implication throughout the thread that we're talking about single family housing here, "renter" usually being singular.
The GSEs were heavily into smaller multifamily loans. I suspect we're mostly talking about six-flats and 3-story walkup complexes more than individual houses.
Possession is 9/10. The government may only take your property by eminent domain. They need a court order for that. Housing court judges are not from Washington and they are not allowed to receive gifts from bankers and landlords.
A lot of today's work isn't work. The growth of government has actually been an incremental counter-balance to growing imbalances between owners/workers so many of those jobs are unnecessary and inflate the apparent amount of work in the economy. Broward Horne | Homepage | 12.14.08 - 11:28 pm | #
ext stage on horizon from LOC breakdown and baltic dry index telltales. from uk.
panic buying and hoarding to follow is typical. -
Supermarkets' emergency plans to keep shelves full
Retailers fear collapse of lines of supply
Bailiffs prepare for busiest Christmas as shops go under
Just to elaborate on what Broward said; Ford raised his workers' wages so they could afford to buy the cars they were building. It was revolutionary and successful...in that Ford Motor's profits increased after the wage increases.
Is this a special thing only for existing tenants until they decide to move, or are they going to rent out unoccupied properties also? I can't get to the article since I forgot my NYT login.
Ford's competitors were super pissed at that manuever. They lost a lot of their best workers to Ford very quickly and then had to follow suit. And, yep, the American working middle class was born.
Ford raised his workers' wages so they could afford to buy the cars they were building. It was revolutionary and successful...in that Ford Motor's profits increased after the wage increases. citizen Kung Fu Panda | Homepage | 12.14.08 - 11:39 pm | #
You mean he did it without a government mandate?!?! Woah.
How ironic...from your link..."Major players include the heavily indebted Premier Foods and Icelandic group Bakkavor. The latter has £140m trapped in collapsed Icelandic bank Kaupthing, although it says its UK operation, which supplies all the major grocers, is not affected"...British grocers dependent on Icelandic supplier trapped in part by absurd British response to Iceland's default...
December 15, 2008
States Funds for Jobless Are Drying Up
By JENNIFER STEINHAUER
With unemployment claims reaching their highest levels in decades, states are running out of money to pay benefits, and some are turning to the federal government for loans or increasing taxes on businesses to make the payments.
Thirty states are at risk of having the funds that pay out unemployment benefits become insolvent over the next few months, according to the National Association of State Workforce Agencies. Funds in two states, Indiana and Michigan, have already dried up, and both states are borrowing from the federal government to make payments to the unemployed.
Unemployment taxes are collected by states from employers, but the rate varies from state to state per employee. In good times states build up trust funds so that when unemployment is high there is enough money to cover the requests for benefits, which are guaranteed by the federal government.
You dont expect the loans to happen this early in a jobs slump, said Andrew Stettner, the deputy director of the National Employment Law Project, an advocacy organization for low-wage workers. You would expect that the states should, even when they are not well prepared, to have savings.
The Labor Department said last week that initial applications for jobless benefits rose to 573,000, the highest reading since November 1982. It is recommended that states keep at least one year of peak-level benefits in their trusts, but many have not, and already some states are far worse off than others.
Indianas unemployment trust fund went insolvent last month, and has borrowed twice from Washington since then the first such loans to the state since 1983. It also expects to request an additional $330 million early next year.
Michigan, which has been borrowing money from the federal government for the past few years to replenish its fund, is now $508.8 million in the hole and unable to repay it. Next month the state, where the unemployment rate is more than 9 percent, will begin levying a special solvency tax against some employers to replenish its trust fund.
California, New York, Ohio, Rhode Island and other states are inching toward insolvency as well, and may have to borrow from the federal government to get through at least the first quarter of 2009.
In South Carolina, officials recently requested a $15 million line of credit.
Right now we have $40 million in our trust fund, and we are paying out around $11 million a week, said Allen Larson, deputy executive director for the unemployment insurance program at the South Carolina Employment Security Commission. So we think it is going to be very close as to whether or not we can get through this year. We have never experienced anything like this.
Officials in New York said the states trust fund has about $314 million, compared with $595 million last year, and will most likely have to borrow from the federal government in January.
The situation puts states, many of them facing huge deficits, in an even tighter vise. As more people lose their jobs, the revenue base that the benefits are drawn from shrinks, making it harder to pay claims. Adding to that burden is that states will eventually have to pay back what they borrow.
Some states are worried about next year because the lions share of unemployment taxes are collected early in each year, and they are not sure the money will stretch through the end of the next year. The maximum amount of income the federal government can tax employers for each worker is $7,000. (The amount ranges from about $7,000 to about $25,000 for state taxes.)
It is something that we are concerned about, said Kim Brannock, a spokeswoman for the Office of Employment and Training in Kentucky, where the unemployment trust fund balance now sits at $133 million, compared with $250 million a year ago. The fund has not borrowed money from the federal government since the 1980s. At this point we are solvent, she said, but we are monitoring the situation.
States that come up short have the option of borrowing from the federal government, but if the loan is not paid back within the federal fiscal year, 4.7 percent interest is accrued, which cuts into states general funds.
With longer term solvency issues due to the sharp increase in unemployment, federal borrowing quickly becomes expensive, said Loree Levy, a spokeswoman for the Employment Development Department in California, which is already facing a multibillion dollar budget gap. We are anticipating interest payments of $20 million in 2009-10 and if nothing is done to revise the revenue generation model the interest would be $150 million in 2010-11.
As such, they are then forced to raise taxes or cut services, or both.
Robert Vincent, a spokesman for Gtech Corporation, a technology company for the lottery industry based in Rhode Island, said, Unemployment taxes are one of a number of taxes that make it difficult to do business here.
In many cases, states that have kept unemployment tax rates artificially low or in some instances decreased them find themselves in the worst pickle now. Indiana legislators, for example, reduced the tax rates to businesses by 25 percent in 2001.
So, frankly, they created the perfect storm, said John Ruckelshaus, the deputy commissioner for the Indiana Department of Workforce Development. The Legislature will have to go in and look at the whole unemployment trust find first thing when they begin their session.
At the same time payments have gone up in some states.
To recalibrate the balance, several states are raising taxes on businesses often through an automatic increase that is triggered when fund levels are endangered to keep the unemployment checks flowing. An example is the Michigan solvency tax, which will be levied against employers whose workers have received more in benefits than the companies have contributed in unemployment insurance taxes, to the tune of $67.50 per employee.
In Rhode Island, where the unemployment rate is 9.3 percent, the taxable wage base will go to $18,000 from $14,000 in 2009, the highest rate in a decade.
There is a possibility that we might be slightly under the funds we need come the end of the first quarter, said Raymond Filippone, the assistant director of income support at the Rhode Island Department of Labor and Training. The state has not borrowed from the federal government since 1980, he said.
Many states have not raised that tax in years, said Scott Pattison, executive director of the National Association of State Budget Officers in Washington. Some states have automatic triggers. But then of course you have businesses saying, Whoa, you are raising taxes on me when we are having a tough time and it is a recession, too.
Still, some said they were thinking beyond the dollars.
In these times of financial stress every extra cost is a concern, said Linda Shelton, the spokeswoman for Lifespan, a large health care system in Rhode Island. However there are many things that worry us even more. We are much more concerned about Rhode Islands budget crisis, about rising unemployment, the rising number of uninsured and the continuing cuts to health care.
Yancey Ward writes:
As for the topic of the thread, the GSEs are in an untenable position with regards to the renters. Kick them out, and a lot of the properties will deteriorate before they can be sold for anything close to the mortgage face value.
You say this like it's a bad thing. USG involvement for anything except immediate disposition is a stone cold guarantee of unintended consequences. This is a firewall that we breach at our peril.
Rocky...it was totally Henry Ford's own initiative...when he was paying a pittance the employee turnover was astronomical...at the higher wage he had very little employee turnover and saved a lot of cost.
"In the period from 1937 to 1941, the Ford company became the only major manufacturer of automobiles in the Detroit area that had not recognized any labor union as the collective bargaining representative of employees. At hearings before the National Labor Relations Board Ford was found guilty of repeated violations of the National Labor Relations Act. The findings against him were upheld on appeal to the federal courts. Ford was constrained to negotiate a standard labor contract after a successful strike by the workers at his main plant at River Rouge, Michigan, in April 1941."
Maybe the Fed could put small amounts of depleted uranium in the dollars. Not so much to actually hurt us, mind you...but hot potato could be an effective tool of monetary velocity.
Or they could put pictures of leaders we really hate on the notes..hmm
"To forestall union activity Ford promoted Harry Bennett, a former Navy boxer, to head the Service Department. Bennett employed various intimidation tactics to squash union organizing.[citation needed] The most famous incident, in 1937, was a bloody brawl between company security men and organizers that became known as The Battle of the Overpass."
Nuance, yogi, nuance. Nobody said Ford was a leftie or a philanthropist. But he was a smart businessman. That's why he upped what he was paying his workers when he did. Eventually, like nearly all patriarchs, he lost touch with the times. He hung onto the Model T too long and was slow to adopt independent front suspension and hydraulic brakes after it had become quite clear that these developments were superior. (At the same time he blew people away with the first cheap V-8.) And like all patriarchs he didn't like loosening his hold on power. His personality was sure to resist the unions.
Seems kind of quiet around here, so I'll throw out a poll...
The person that we could put on a Federal Reserve note (say equivalent to $100 US) who is so offensive that people will get rid of the notes as soon as possible (and therefore increase monetary velocity) is....
Put Greenspan on a $500 note. Soon we will be using them daily in ATMs. It would be good to have his picture on our daily use currency to remind us of how this whole mess got started.
Man, am I ever on the wrong side of the bench (I represent servicers/lenders in REO evictions). I need to be a tenants' right attorney, targeting tenants in these FHLMC or FNMA REO properties.
All I need is a few of these babies with habitability concerns - particuarly in a state like CA, MA, or NY - and I've struck gold.
I know letting renters stay makes for a fuzzy, warm headline. But, there's liability in being a landlord. And, no deeper pockets for a landlord than the federal government - meaning, they'll make a fantastic target for opportunistic tenants' rights attorneys.
I can state with confidence that this move was pretty much politically motivated. This will increase the loss severity on the loans - which is a check you, I, and every other federal taxpayer will be footing (one way or another).
Congratulations on scoring cheap political points. May all your houses belong to us.
OK I threw this out, so here goes, in increasing orders of infamy
(btw, I'm assuming future 'real-world' values)
$1,000,000: me (the whole throwing stones thing, but I wonder, what could I have done? Prolly not much, but I wasn't carrying any signs. I saw it coming, as did a whole lot of smart people, but, unlike Tanta, CR, and many of us, I wasn't really helping empty the bus before it went off the cliff (more like I was playing some random harmonica tunes)
$5,000,000: Ben Stein, Jim Cramer, or Robert Rubin, Maria B. ....
$10,000,000: The 'Dick' and he likes guns
$100,000,000: GW (though, he could use some help counting that high)
$1,000,000,000: Alan Greenspan
$10,000,000,000: the alumni yearbook from Harvard, Yale, and Princeto
Sorry, wasn't trying to copy those of you who posted before. I put on Velvet Underground and started to type, and it took a while, but we are thinking along the same lines.
The scary thing is the theme/meme here.
No it's not scary, it's sanity.
oh and forgot to add....who owns the landlords mortgage paper.....AIG!!!!
yes AIG is not willing to play ball and would rather see another property go into foreclosure....
my guess : this is one of many (thousands) and letting them go to foreclosure means AIG can ask Uncle Sam for more taxpayer dollars wonderful vicious circle and game of chicken
Japans Tankan Confidence Plunges Most in 34 Years (Update2)
The overseas situation is worsening so quickly and so dramatically; its really getting dangerous, said Tomoko Fujii, head of economics and strategy at Bank of America Corp. in Tokyo. The next few months are going to be a very severe period.
Awfully nice of the government who is buying all those worthless MBS's from these nationalized companies with printing press money to do that. Must not want to start a bunch of riots or something right here around Christmas.
People need to remember when they hear any policy being discussed by anyone in a position of power (including Bernanke,Paulson, head of any bank/corporation) it is:
not to help a home owner not to help a renter not to help tax paying citizen not to help a retiree on social security
it is :
to keep the current system going regardless of the long term consequences to keep those who are currently in power and currently in financial power still in power.
Yogi, that's all fine and good, but you're talking about tenants as defendants. I'm talking about tenants as plaintiffs. Apples and oranges.
In the situation I'm talking about, the tenants will have no trouble getting representation, if the right facts exist. The attorneys will be falling all over themselves to find tenants in FNMA REOs - and, they'll do it on contigency if the facts are what they're looking for.
Completely different than tenants as defendants in an eviction action (particularly in housing court - I assume you're in MA or NY, using that terminology - which generally handles no-pay evictions).
Assuming FNMA's knowledge of property management matches their experience doing it (which is to say, none), it will be like taking candy from a baby.
I'm also guessing FNMA hasn't figured out the details. Like, will the raise the rent? If not, they'd better get ready for all manner of goodness (i.e. pre-paid rent for 5 years, rent at $100/month, oral leases paid with all cash, etc.).
Again, this ws clearly a political move. I can assure you FNMA didn't talk with anyone who actually does this work, much less probably even their own REO director.
And, no deeper pockets for a landlord than the federal government - meaning, they'll make a fantastic target for opportunistic tenants' rights attorneys.
Good luck suing. There is no federal landlord law; that's a creature of state law. Good luck suing the federal government in warranty or torts since there is no federal common law.
Detroit is doomed. The Big Three are going to shed most of their pension liabilities, burying the Pension Benefit Guarantee Corporation, resulting in another federal bailout. The direct job loss will be accompanied by much larger indirect losses at the 6000 suppliers that service the carmakers. Then there will be a spreading circle of economic disaster radiating from Michigan in a 600-mile radius. Two million jobs, more or less, will disappear by the end of the first quarter of 2009. And then there are the tens of thousands of dealerships and franchises nationwide, which will have to cut countless jobs, something that state laws dictate will cost the No-Longer-Big-3 billions of dollars.
Nothing Congress can do will stop it. Detroit is built for a nation buying at least 15 million new vehicles a year; sales in 2009 are projected to be half of that and they may well turn out to be overly optimistic. And it's worse than it appears, since it'll be the small, high mileage cars that get sold. The bulk of Detroit's profit margins in the past decade have come from SUVs and taking that out may mean the fifty percent reduction in sales includes a 75% reduction in gross margin on what is sold. View those vehicle sales as Detroit's currency their pay is cut by more than half and oil depletion makes their individual 'coins' worth a quarter of what they were.
Someguy writes:
Well, it looks like MW was telling the truth, and the doubters were all trolls.
WSJ confirms condos up for sale, and high-end pawn shops seeing heavy business over the weekend in Florida due to Madoff.
This wall street article shows that there is increased activity in pawn shops, not that MW is some super-millionare-ultra-rich mogul who is first on his super-connected-wealthy-circle's speed dial for pawning their yachts.
In these circules where status is everything, your first impulse upon discovering that you're broke and about to "fall from grace" out of this circle in friends is not to CALL AROUND AND ASK TO PAWN YOUR SHIT TO YOUR OTHER RICH FRIENDS.
This article also says nothing about his other claims, that one of the most well known "jewish businessmen" in america referred to the fund collapse as the worst thing to happen to jews since the holocaust.
MW smells about as legit as chinatown electronics.
Electricity output fell by 9.6 percent from a year earlier.
citizen energyecon 12.14.08 - 9:44 pm
Actually I've been seeing a lot of dark buildings in China all year. Anywhere inland (not Shanghai Beijing or HK territories) and they don't run the office lights during the day. Only run full lighting on the assembly lines. The only way they're saving electricity is the way we're saving gas, no production!
In town you can tell where the tourists are staying, because they have all the lights on, but the residentials don't. I couldn't quite tell if it was an energy saving or social enforcement (it's kind of obvious if you flout the gov's new electricity initiative by lighting your windows?).
This was in Fuzhou and Quanzhou specifically, but also near Guangzhou and outside of Shanghai. This was as early as January last year. I couldn't get any good response to why the lights were out. At the time I couldn't tell if my warnings (over drinks) of coming banking trouble were merely politely listened too, or actually filed away... it turns out they remembered when I was back recently. Not that it helped... and the higher end electronics firms are still pumping away, but toys are dead.
Goldman faces $2bn loss its first since 1929
As the banking giant prepares to unveil shock figures, Morgan Stanley braces itself to add its own bad news
By Simon Evans
Sunday, 14 December 2008
Goldman Sachs, the US investment bank, is this week expected to post its first loss since the Wall Street crash of 1929 when it unveils full-year results on Tuesday.
In the week when many Square Mile bank staff find out if they have scooped a bonus this year, Morgan Stanley is expected to complete a miserable Christmas picture when it also reports a loss, one day later.
Pissed Off In California- Cramer on the $ bill
Kudlow on the $5
Ben Stein on the $20
Bernanke on the front of the $100 and Paulson on the back.
Pissed Off In California
Hoop-
Your post last thread about the futility of fighting the system got to me. Here's my small prayer for the moments I feel powerless.
I am only one,
But still I am one.
I cannot do everything,
But still I can do something;
And because I cannot do everything
I will not refuse to do the something that I can do.
Just a FYI, you can see some the concentration of foreclosures and short sales relative to short sales in the San Fernando Valley and Ventura County here:
Also mortgage insurers are tightening max LTV for loans above $417k to 85% LTV and 720 FICO in California. Combining with the conforming limit drop on January 1st this should put a lot of pressure on the higher end markets:
People ought to gain equity in the homes they rent. In each country the government could maintain a database to handle the intricacies of such a plan. In our current search for better, more open and more equitable financial systems which are so vital to the well-being of all we should encourage the development of a new consciousness as regards real estate ownership.
In most provinces in Canada as far as I know, a change in ownership (including foreclosure) does not affect terms of an existing tenancy. Thus foreclosure does not mean eviction for tenants. A new owner (human being not body corporate) does however have the right to occupy the property after giving the tenant fair notice or at the end of an existing lease term.
Surprising this is not the case in the US. A lease (either written or implied) is a lien on the property just as property taxes or constructions liens are, and should not be extinguished just because of a change of ownership.
Very calm, measured, restrained discussion here. Tentative, careful, on topic, and de-politisized. No real sense of urgency...light hearted. Analysis of the headlines. Comraderie and chat. National and regional focus primarily. Brief comments. A sense of playfulness. Carry on. Minimum emotionalism & intensity. Friendly disagreement but mostly consensus building.
Basically kind of a detached blog to the events unfolding. Emphasis on 'official' stats from Fed and govt. and a play by play reporting of the data. Trader angles shared.
Link on "MW"? TIA \t hong konger | \t \t \t \t12.15.08 - 2:46 am | #Couple days ago, claimed that CR knew who he was and said this to a disbelieving crowd:
MW(Unrated) writes: \tYou have no idea how utterly destructive the Madoff bust is.
I am hearing stories this morning out of Palm Beach and London that are horrific.
Older folks in their 80's pawning their diamonds on Worth Ave, walking into real estate office saying "sell my house for anything you can get."
I have received three calls this morning from friends offering me their jewels, boats, houses, cars.
This cuts deep into heart of major cities. London, Miami, Palm Beach, L.A, NYC, Tel Aviv.
Do not for a second underestimate the consequences of what has transpired. \t MW | \t \t \t \t12.13.08 - 12:26 pm | #
Is that Conjure's time?
What is the war? (pretext or place)
Why only use Oct lows as an entry point?
When do you go into GLD?
When do you buy fertilizer and lead?
Thanks... saw references to it, didn't seem like folks believed it, but then later it got backup in the "media".
Hard to believe that even $50B could be that big, but BMIS' enormous quirk was stability.
Throwing Ponzi's name around doesn't make people feel exactly calm though...
I'm not a psychic, but I too think the Madoff story is underappreciated. If for no other reason than a lot of people will be wondering about their own assets held in these so-called "funds".
A 50 billion dollar loss by a company makes for front page material even when it's a semi-legitimate loss. But a Ponzi scheme? That's just nuts.
I mean, a run on the hedge funds was already underway. And some are denying clients timely sales of their held assets.
So the question remains, how many other cockroaches are there?
Dec. 15 (Bloomberg) -- The biggest foreign-exchange strategists and investors say the best may be over for the dollar after a four-month, 24 percent rally.
1 currency soon [yogi] writes:
While on cars, can someone educate me as to whether Japanese makers share information and resources more than the Detroit 3? (My guess is yes)
1 currency soon [yogi] | 12.15.08 - 12:10 am | #
I don't know much about autos, but I read about the development team that engineered the Prius. They were a group of Toyota employees, not just engineers, according the author. The team learned to get information anywhere: from other engineers at other companies anywhere in the world,on the internet, anywhere. Few rules, incredible pressure and deadlines.
Were not in the business of managing rental properties, and were not in the business of being a landlord, said Thomas Kelly, a spokesman for JPMorgan Chase
Just another example how the business model for banking is changing dramatically. Many of those regs Rubin and friends were fighting off will slowly be put into place.
Uh. China has a long history of violent social unrest and regime change. Every dynasty has been followed by a period of violence, leading to the emergence of the next. There's already been quite a number of protests, some violent. It will only get worse, and there is a probability of systemic collapse, although unlikely.
Thanks for the information, it's very useful and give me new knowledge.
Please keep to give more information..we need people like you.
Once more, thank you very much for the posting.
=)
Dawg, you're right on the viability of public housing. My family lived in some once. It made me understand at an early age that poverty doesn't cause crime - crime causes poverty. One could substitute "misbehavior" or "self-distructive behavior," for "crime," and reach the same result.
If you don't believe bad behavior causes poverty just look at the behavior of our last two Fed chairmen.
Last week Chinese authorities rescued 500 people--many of them children--from brick factories in Shanxi. The workers had been sold to these kilns by unscrupulous labor agencies and then kept there against their will as slaves, working 18 hours a day under the constant threat of physical abuse. All the while, authorities in the province turned a blind eye to the goings-on at the kilns.
Earlier this month, a group of distraught parents stormed the kilns trying desperately to rescue their children, only to meet stiff resistance from the usual suspects--thugs hired by the kiln owners with support from corrupt local officials.
Frustrated and frantic, the parents went online, writing an open letter and posting it on Dahe. Eventually the letter ended up on the popular Chinese website Tianya and the subsequent internet frenzy forced the government's hand. Police raided the kilns and freed the workers. As of this week, 168 people have been arrested in connection with the incident.
REBear writes:
So what happens if the heater or any other appliance breaks down? Call Fannie Mae?
You take rent money and fix it! If they complain, they may go to STATE or LOCAL court. If you are justified, your local judge may order them to pay you for your wasted time.
Well, what if they had the rent set up to debit your account?
ille_vir writes:
Uh. China has a long history of violent social unrest and regime change. Every dynasty has been followed by a period of violence, leading to the emergence of the next. There's already been quite a number of protests, some violent. It will only get worse, and there is a probability of systemic collapse, although unlikely.
If you don't believe bad behavior causes poverty just look at the behavior of our last two Fed chairmen. kidbuck | 12.15.08 - 7:13 am | #
I don't mean to pick on you, but what does this mean? By last two, you are excluding the current one? Volker and Greenspan then? Have they behaved badly? And ended up poor? This relates somehow to public housing? Just wondering.
## As of yet unlikely, the outcome still in doubt. \t Volker the Viking | \t \t \t \t12.15.08 - 7:35 am | Yeah, must admit looking likelier and likelier with every piece of data that comes out.
Interesting observation above by Pissed off in California, I think.
Seems this person must be from China with friends and relatives still there. The real unrest is purportedly in the Pearl River/City area with scant awareness in places like Beijing.
Meanwhile, some slaves have been repatriated with families from some sort of manufacturing/mining racket. The internet is what saved them, not the authorities, not the MSM.
What do we take from all this boys and grils? God help us if this system of tubes ever shuts down.
Capital One Financial Corp , one of the largest issuers of MasterCard and Visa credit cards, said on Monday credit quality deteriorated in several areas of lending in November, as unemployment grew and the economy eroded.
In a regulatory filing, the company said the annual net charge-off rate for U.S. credit cards increased to 6.98 percent in November from 6.54 percent in October, while the rate for loans at least 30 days delinquent rose to 4.70 percent to 4.48 percent.
Aching for a new thread here... Let's see what's on tap today. Empire State Manufacturing Survey 0830. Industrial Production at 0915 Housing Market Index at 1300. Wonder which ones will be worthy of a new post.
What is the war? Well if you followed, the Mumbai attacks had a very similar resonance to a failed terrorist hijacking of New York hotels in 1993. Again every signifant act of terrorism that coincides with market debasement is followed by acts of war. Why a war and why now? My assumption is that it is a resource led war, and probably be between US and China in Africa and US and Russia for the arctic riches. To undertake the largest public works project this world has ever seen, infrastructure will have to be turned into ruble. Cheaper to rebuild from ruble, than have contractors trash and rebuild. Plus defence companies worldwide are seeing record levels of business. This to me implies some level of war evel planning.
Why only use Oct lows as an entry point? Because we most likely are going to Dow 2100. But before we go there, we have to rally. Paul Kedrovsky has a really good chart regards to ETF's both inverse and regular. Have a look at it.
When do you go into GLD? I went into gold since I was a late 2005. I never invest in gold for speculation. My philosophy is that gold is a store of value. Fiat money has been in existence for less than a 100 years. Regardless of the fluctuations in gold prices, I buy in small quantities every month. Hopefully I will get the best price that way, but I doubt it. One thing though, I sleep peacefully every time I have bought gold. I like the value aspect, that is what I was taught since childhood.
When do you buy fertilizer and lead? Lead I don't know anything about. Fertilizer is going to be needed, but I prefer the organic methods of crop cultivation, and where I stay (Kenya) I use elephant dung for fertilizer. Why? It is abundant and FREE. Most of the zoos are happy to let me have it, saves them the disposable aspect.
Hopefully I have addressed a portion of your thoughts, maybe I haven't.
What do you propose Dawg, to get the banks actually selling property for prices well below the mtg amounts and thus displaying/ acknowledging their losses?
And who is going to finance the purchases?
Suppose I find a property for 100k that used to be 300k. I have 10k and a 699 credit rating. Who, besides FHA is going to finance me in Florida: answer: hard equity lenders or FHA. There is NO OTHER LENDING GOING ON.
I gather Dawg doesn't approve of FHA.
And at 12% interest, say, I am not making enough rent to pay the nut!!
And, Dawg, you don't really have your mind wrapped around the scale of the thing.
First
Second
. . . and third
2nd. Nipsy doesn't count after 1.
Council Housing for the USA - here we are!!! Such a crock. I wish I bought beyond my means so I can suck off of your tax dollars.
/sarc off
This is a good idea, folks. Avoids rotted houses. Avoids sad renters undeserving of their fate. Gets a small stream of income going.
The renters might be persuaded to rent with an option to buy.
So now we need a rent czar?
Nope.
Just need lots of real estate agents to supervise the rentals for 10% of rent.
Snark. Well, semi-snark.
Subsidizing already inflated housing prices sounds like a GREAT idea. /sarc off
The banks and the GSEs need to bleed so they'll cut these properties loose at deep discounts and accelerate the inevitable further decline of housing prices. It's price declines, not subsidies, that will bring buyers back into the market.
I like it. I read an article last week about a renter who paid his rent on time for 8 years. House was foreclosed and he was thrown out fast. No eviction process needed. This hurts too many renters who paid their bills.
Selling the houses.
They think they are gonna be selling the houses, they way they act, the prices they are holding out for????
Hahahahahahah.
Giggle giggle snort snort.
May as well get a little money from the renters.
Please recall that a "housing crisis" is a shortage of shelter. We've had plenty of those in New York. Liz had it right on last thread. What good will having these houses sit empty do? Teach us a lesson for 80 years from now? Can't afford to wait for those "free market" corrections.
We have an apparent glut. The government paying people's rent puts a floor under home prices. Evictions are helpful in effectively allocating assets when there is a shortage.
A lot of posters don't understand the operation of a deflationary spiral.
The. money. is. gone.
At least it reduces the collateral damage.
Whatever you may say about stupid borrowers, renters had nothing to do with these bad business decisions, and right now they are taking it on the chin. Combined with layoffs, it's a step toward Grapes of Wrath redux.
I'm with liz...this is a very good idea...you don't want empty properties - rotting hosues is right...turning into crime centers. Much better for the GSEs to scrape up some small income stream, and no, it doesn't do anyting to forestall the inevitable price declines - these people were renters to begin with, and it's the specuvestor landlords being foreclosed. Ease up on the kneejerk folks...
"If it bleeds, we can kill it."
@The banks and the GSEs need to bleed so they'll cut these properties loose at deep discounts and accelerate the inevitable further decline of housing prices.
Is it time to buy gold yet? Not the silly paper that says you have gold in a vault "somewhere" - but the real stuff?
Sorry for being OT but this may be a bigger deal.
Dec. 15 (Bloomberg) -- Chinas industrial production grew at the weakest pace in almost a decade as export growth collapsed, increasing pressure on the government to do more to revive a slumping economy.
Production rose 5.4 percent in November from a year earlier, the statistics bureau said today. None of 14 economists surveyed by Bloomberg News predicted such a small increase. Output grew 8.2 percent in October
I hear ya, Liz. I'm just having a fiercely angry response to their attempts to prop up housing prices. They won't move the inventory unless they are forced to take losses. That, and I want them to forgive my rent if they are going to give breaks to others. Nevermind I make enough to cover my nut.
Hugh Hendry says, "not yet." But it is in his game plan. Highly recommend reading / viewing his stuff from the last several months, including an updated thesis from bloomberg earlier this week.
bobn writes:
Is it time to buy gold yet? Not the silly paper that says you have gold in a vault "somewhere" - but the real stuff?
bobn | Homepage | 12.14.08 - 9:33 pm | #
I think it's a fine idea. I wonder why it took about two years for this to happen.
There will be a mild side effect. Declining rents for single family homes and condos. That's because while kicking out reliable renters was stupid, the house either sat vacant or was sold to a new owner. The vacant houses kept the rental market for homes tighter. Many of the REO sales went to owner occupants, reducing sales prices while keeping rental rates higher than otherwise.
It was only the onslaught of individual owners who couldn't sell their homes that caused lower rents until now. Coming soon: even lower rents for SFRs. The good news is not so many vacancies. The home price spiral might also take a bit longer, or not drop quite so far below equilibrium.
Are the GSE's going to put vacant foreclosed homes up for rent? I wouldn't mind moving into one if it's nice & cheap!
I agree with Liz...this a good idea. Why add further insult to injury? This helps mitigate some of the sting.
Maybe I'll go offer to rent one of those suckers myself instead of plowing my cash into a pruchase. F 'em.
The only problem I see is that if current trends continue, and there's no reason to believe they won't, then an increasing percentage of Banks will become landlords and rent collectors....shit, what am I talking about...they're already effectively that, anyway, so there's not much difference.
ova | Homepage | 12.14.08 - 9:34 pm | #
That is big - and bad - there is one in the article from Bloomberg that is downright scary...wasn't there a decline in the electricity stat previously as well?
China Industrial-Output Growth Is Weakest Since 1999 (Update1)
By Kevin Hamlin and Li Yanping
Dec. 15 (Bloomberg) -- Chinas industrial production grew at the weakest pace in almost a decade as export growth collapsed, increasing pressure on the government to do more to revive a slumping economy.
Production rose 5.4 percent in November from a year earlier, the statistics bureau said today. None of 14 economists surveyed by Bloomberg News predicted such a small increase. Output grew 8.2 percent in October.
[snip]
Electricity output fell by 9.6 percent from a year earlier.
I was under the impression that commercial banks were explicitly not allowed to be landlords. There are actual rules and regs that govern the dispersal of under-water proprerty.
Look at the bright side...that will be less coal-fired power plants they put into production...it'll give us a few more months to live.
YOO HOO these homes have BEEN foreclosed on already.keeping someone in there,whether they used to be renters or were "homeowners" makes real good sense for the lender.An abandoned house goes to hell in a hurry(It is amazing to see how fast),and the loss severity can exceed 100%.much,much better to have a 40%-60% loss and SOME income.Exceed 100%? Easily,a gutted house full of mold would have to be torn down and removed.Good luck selling the lot.
This is a State of Emergency. Former rules can be changed at will.
Well, I'm a qualified buyer, but I am going to make calls tomorrow to rent a foreclosure on the cheap. This may take me out of the market for a few more years.
Tom,
So you're saying this'll help preserve the over-supply of housing?
OT, please excuse, but I was thinking about GDP calculations...
Much has been made about the "imputations" made to GDP calculations, especially by Mish. The most notorious is the imputation of owner-equivalent rent (OER) being added to GDP numbers (if you own a home you are paying yourself rent and therefore adding to GDP).
I think a new class of imputation should be added to GDP, namely the intimate services performed by the wife of married couples. If you own a wife, then you are paying yourself for the intimate services. This service is pretty valuable and if purchased from professionals on the open market would cost a fortune.
I submit that we should call this imputation the wife/hooker owner's rent equivalent, or WHORE for short.
..this is where they start - providing your lodging....next will be food vouchers.....FedGov issued credit card like the food stamps & state-directed child support cards...
You wonder why I BOUGHT a small inexpensive place with clean water, warm climate, and plenty of sun? I think you're seeing it...
.....Then they came for the trade unionists
and I did not speak out
because I was not a trade unionist.....
RockyR,
Let us know what you find out! What market you looking at, BTW?
May as well get a little money from the renters.
lawyerliz | 12.14.08 - 9:31 pm |
Sensible. Might as well get some revenue.
#you don't want empty properties - rotting hosues is right...t
Scott | 12.14.08 - 9:33 pm | #
No you don't, that created South Central LA... Nice to ghetto in little time.
I want a return to sensible prices, but I also want society to continue. Just a little reformed.
Got Popcorn?
Neil
I think that if the number fell below 6% - it was supposed to be very bad. Because 6% is, for China, really a break even number, because of population changes. Changes meaning the rural pop moving to the urban areas and expecting a job.
They're coming for you too, Black Star. They will raise your property taxes to the point where you can't pay, and then you have to forfeit your property due to delinquency. Everybody to the city, or the Shanty Towns surrounding the various Green Zones.
Pissed Off In California writes:
I was under the impression that commercial banks were explicitly not allowed to be landlords. There are actual rules and regs that govern the dispersal of under-water proprerty.
Pissed Off In California | 12.14.08 - 9:46 pm | #
Yeah right. Weve seen how well the rules work here in the USSA!
RockyR(Unrated) writes:
\tMaybe I'll go offer to rent one of those suckers myself instead of plowing my cash into a pruchase. F 'em.
RockyR | 12.14.08 - 9:41 pm | #
Well, that is exactly what will happen...and prices, like water, will find their level...it will exert downward pressure on housing prices all the same.
RhodesianGreenbackinAZ | \t \t \t \t12.14.08 - 9:35 pm | #
I was lucky enough to catch Mr. Hendry the other week on Bloomberg as well, and it was fascinating to listen to him. For anyone who wishes to listen to the interview, the links follows;
Eclectica's Hendry Sees Opportunity in 2-Year Treasuries: Video - Bloomberg.com
So, the Chinese have a serious problem. Their export based economy is collapsing.
when a home buyer puts little or no money down essentially they are renters with an option to buy. This just regularizes the process.
Shoot posted wrongthread...
empty houses are a really bad. Since this will only apply to areas with lots of speculation. Yes it will slow the transition...
It is going to fast as is. We want change, not chaos. This is one of the few sensible moves I've seen by our government. I guess they can stumble upon one.
Its also the only one that benefits honest people (the renter).
Got Popcorn?
Neil
As Marx said, history repeats itself; first as tragedy, second as farce. During the collapse of soviet socialism you could not buy anything in the stores. During the collapse of western capitalism, you can buy anything your heart desires for 30-70% off--or more!
Christmas - Salon.com
The very first absurdity in Economics 101, at least as it was taught to me at Cornell and in high school, is "assume transaction costs are zero".
Some of the costs associated with forcible transfer of a house to a bank, city, investor, or even another sucker with a little better credit or a little more cash:
(note: some of these costs are not easily monetized, but they are real)
Liz's fees (legal)
Moving contents.
Time and effort spent looking for new shelter
Waste of any improvement by owner (new occupant will probably need to remodel)
Adjustment to new location, if affordable housing nearby is not available.
potential loss of foreclosed owner's contribution and investment in the local community.
Brokerage fees.
I'm sure there are others.
Benefits:
Some possible long term gain in efficiency of capital allocation. (Not guaranteed)
Hendry link doesn't work.
Bear, I'll be looking in TX.
Glad you mentioned my fees first!!!
How are these people going to hang on to these houses if they don't have a job? No money. They won't be doing upkeep on them.
The China number means nobody is buying here. Who finances our government? I just had this mental picture of the US economy flying through the air. It's a 4 engine jet and we lost number 1 and 2 engines awhile back. Now number 3 just flamed out.
they just know abandoned homes get destroyed by mold, vandals, and neglect, plus upkeep costs to have yards mowed.
....I don't think I'll outlive the upcoming bad times - but then I didn't think I would live thru Nam either. I DO think it'll get MUCH worse and I think there is no fixing what we have.
Comrade Bear,some developments should be bulldozed flat.Other areas that are viable,or potentially so should be preserved to the extent possible."Bringing back" a neighborhood take a LONG time and a concerted effort by a lot of people.I have helped do it in oakland,never again.I well recall soaking my head in cold water,asking myself "Why did you do that" after sitting down with a serious gangbanger and explaining to him why moving out of the area would be a good idea for him from a business standpoint.It was,and he did.
The Night Before the Bailout
Twas the night before the bailout, when all thru the Street
Not a banker was stirring, they all were dead meat
Applications were penned for the TARP with care
In hopes that free money, would soon be there
CEOs were nestled all snug in their beds
While visions of bonuses danced in their heads
And Hank in his pajamas, and Obama in his cap
Had just settled in for a pre-inaugural nap
When out in the markets, there arose such a clatter
Hank sprang from his bed to see what was the matter
Away to his terminal, he flew in a flash
He turned on the screen, and then saw the crash
The flickering light of the monitor showed
That banks were not lending, that no money flowed
Automakers were bankrupt, new layoffs were high
No consumers would borrow, deflation was nigh
Panic beset Hank, he knew he must win
Hope sprang in an instant, when he spied Heli-Ben
Faster than than eagles , his facilities came
And he whistled, and shouted, and called them by name
Now TARP!, Now TALF, TSLF and CPFF!
On, TAF!, On PCDF!, TDDWP and MMFLF!
From the top of the Fed to the top of Street Wall
Now lend away!, lend away!, lend away all!
As crisp dollars before the wild hurricane fly
Wet with ink still , did fall from the sky
To the ends of America his helicopter flew
Filled with fresh greenbacks, and Heli-Ben too
And then in a twinkling, Hank heard over the rotors
The clackety humming of printing press motors
As new bills still wet drifted down to the ground
Heli-Ben landed, and leapt out with a bound
He was dressed in Armani, from his head to his foot
But his suit was smudged with black and green ink and soot
A bundle of cash , he had flung on his back
And he looked like a sneakthief when opening his pack
His eyes, they were bloodshot, but hollow and cold
Desperation was within, and had finally grown bold
All caution had been lost, he just had to be right
Fresh ink stained his hands, from his work thru the night
Deflation, he muttered, could always be beat
If you just printed money, and handed it out on the street
His face, it was bearded, with a bald, shiny head
His demeanor inspired new feelings of dread
He was a Keynesian dupe, an academic after all
Hiding debt had not worked, the US dollar had to fall
Deflation would not do, falling assets were bad
And even Ben knew the consequence would be sad
He spoke not a word, but went straight to his work
Handing out sums of money, then turned with a jerk
And flipping his finger to all those that did save
Gave nary a thought to the path this would pave
He repeated his mantra, that this would stop the red
When through he departed, straight back to the Fed
It was heard he exclaimed, as he flew out of sight
Its all that I know, please God let me be right
Joe Stalin | \t \t \t \t12.14.08 - 10:01 pm | #
Strange, I wondered if haloscan might have messed it up, its still working for me.
Although, if you use the search box in the upper right of the bloomberg home page, and type in 'hugh hendry' you should see a list of the recent appearances. The video from December 6th, 2008 is the one I was trying to link to.
Truly wonderful, mb.
Not only was that Chinese number bad, the speed of its drop is amazing. None of the economists called it correctly. People are way behind the curve on how fast the wheels are falling off, the jet engines flaming out, and how bad the Redskins really are.
Tom,
When it comes to bulldozing, I think they could do most of the IE and pretty much everything outside the outer loops of Phoenix & Vegas and nobody would miss'em. Oh, and let's (re)turn most of California's central valley back to farmland while we're at it.
I know my way around heavy equipment, so I'll even drive.
Nova,the 'skins could whip the Raiders if half their team stayed in the locker room.
OT:
For those using CR Companion, I have uploaded a new version (1.03) that hopefully fixes the problems people have been experiencing with "communicating with haloscan", and with automatic thread commenting stopping. You should know that because it is not yet a public add-on, automatic software updates are not enabled, so you need to return to the firefox addin site to install it (you can just install right over the previous version).
I am investigating the pasting special characters problem, and hope to have a fix for that soon. I would love to hear about any other problems people are experiencing as well.
We now return to our regularly scheduled programming.
We're all sharecroppers now.
The USG is the newest slumlord in town.
Keep an eye on China. That boffo economic growth they had was what kept things politically safe there. No telling what'll happen if things deteriorate too much.
Bear,I will bring the beer and barbecue.Building shitboxes on good farmland is an obscene thing to do.
Tom Stone | 12.14.08 - 10:09
Ah, but they were great once. Kenny "The Snake" Stabler.
Keep an eye on The USA. That boffo economic growth they had was what kept things politically safe there. No telling what'll happen if things deteriorate too much.
LOL!
Building shitboxes on good farmland is an obscene thing to do.
So is having a gazillion choices of tractors to work that former farmland, and still existing farmland.
Grrrrooowwwlll: A run on the hedge funds (redemptions) coming up??
Ummm, the banks are the slumlords, or will be when the houses rot.
Unfortunately in the Miami area, the foreclosures are interspersed everywhere. More heavily concentrated in condo towers, but everywhere. So there is not one particular spot that could be bulldozed.
Ah, but they were great once. Kenny "The Snake" Stabler.
And Lyle, where's my steroids, Alzado.
ova,I grew up in Oakland and met quite a few of the old Raiders.They were my team from the time they were the Gaucho's until they moved to LA.since then I want them to lose every game in the last 30 seconds until Al Davis dies.
News Article 12/14
This is scary!
Bank chief executive officers in Northeastern Wisconsin say their institutions are generally on firmer ground than their counterparts in states where the housing bubble was more pronounced.
In Florida, California and Arizona, where the housing boom was especially exaggerated, the inevitable collapse has hit banks hard, said Paul Beideman of Associated Banc-Corp.,
But Paul needs to buy a dog and name it "Clue" so he has one....
Associated Bank-C received 525m Tarp
RE China from Bloomberg:
"China will support nine industries, including steel, telecommunications and automotive by cutting taxes, offering subsidies for technological upgrades and helping smaller companies get credit, Li, the industry minister, said.
Chinas industrial-production growth cooled in October to 8.2 percent, the weakest pace in seven years.
China may help steelmakers hurt by weaker demand for automobiles and electric appliances by purchasing steel stockpiles, offering subsidies for plant upgrades and increasing export-tax rebates, Li said.
Just about every industry has overcapacity, he said."
As Mike Shedlock says: "Governments cannot cure overcapacity problems by purchasing stockpiles."
I expect social unrest in China in 2009.
I expect social unrest in China in 2009.
They'll need a diversion....like war.
CR if you're there I would love to see charts comparing historical house prices in dollars to precious metals, food, basic materials, the minimum wage, lawyer's fees, burial costs,oil, real estate taxes, etc.
Probably most of these are out there but I'm too tired tonight.
Electricity output fell by 9.6 percent from a year earlier
wow.
the other numbers are bogus.
looks like china entered an honest-to-god depression on a par with 1929.
They'll need a diversion....like war.
China may not be the only government looking for ways to switch attention of their populace away from the economy
Over_the_hedge writes:
Grrrrooowwwlll: A run on the hedge funds (redemptions) coming up??
Over_the_hedge | 12.14.08 - 10:14 pm | #
Invasion of Normandy - war of the hedgerows:
The war of the Hedgerows
Neil, from the previous thread you were having problems posting. I hope I've fixed your problem in 1.03, but if not, you can restore the standard posting form by clicking on the settings (wrench) button and unchecking "Hide Haloscan Post Fields".
CR wrote "...although I doubt the private sector will follow their lead."
~~~~~~~~~~~
The private sector culture is cold and greedy, and doesn't care about people. That's one thing that stands out right now, big banks/corporations can be really stupid. Reminds me of the story about machines taking over the earth and enslaving humans...
Hey, did you hear about the reporter that threw two shoes at President Bush in Iraq today? It's supposed to be the worst kind of insult.
This does sound like the right thing to do. The renters here are not at fault and should not be penalized or forced out due to a homoaners default.
I don't like big government, but this sounds like a fair and socially just thing to do - with the benefit of community stability. Now, if the rent can't be paid - different story.
btw, Black Star - thank you for your service.
Maggie 2 and 3 threads back we've been over it and over it.
Ken,
Thanks for the update -- working great!
Morocco,
See Chinese Station 150,000 Troops on the North Korean Border...
"The land border between the two countries was closed at the beginning of last month, immediately after the Mass Games celebration of North Koreas 60th anniversary.
Chinese tourists trying to visit North Korea have had to fly direct to Pyongyang from Beijing or Shenyang, and no tourists have been permitted from the three provinces neighbouring North Korea in case they are exiled former citizens.
There are now reports that all transport links between China and North Korea will be cut on December 10 as the rogue state becomes even more secretive. On Wednesday, North Korea announced it would close its border with South Korea on December 1...US officials told the Financial Times that the Chinese military has boosted troop numbers along the border amid concerns about the health of Kim Jong-il, the North Korean leader. The United States and Japan are drawing up contingency plans in the event of Kims demise, but Beijing has refused to discuss the scenario"...
Perhaps confirmation of Kim Jong Il's death could provide cover to send the troops in to secure NK's nukes.
This does sound like the right thing to do. The renters here are not at fault and should not be penalized or forced out due to a homoaners default.
Unless, of course, they're Muslims. Then they should be evicted and sent to internment camps, right?
Re: China I've been speaking to friends and relatives in China. Right now problems seem to be very segregrated into the Southern Pearl Delta area where most of the export related companies are. It's very, very bad there, but in other areas such as Beijing there isn't nearly as much noticeable issues.
Bascially the same thinking going on there as the koolaid thinking going on in the US. Most people won't realize the problems until it's too late and by then they've already lost their savings, their house and their job.
citizen Kung Fu Panda, as the wise Zen Master said, "we'll see...we'll see."
Hugh Jass writes:
This does sound like the right thing to do. The renters here are not at fault and should not be penalized or forced out due to a homoaners default.
I don't like big government, but this sounds like a fair and socially just thing to do - with the benefit of community stability. Now, if the rent can't be paid - different story.
btw, Black Star - thank you for your service.
Hugh Jass | 12.14.08 - 10:24 pm | #
Hey! We actually agree on something.
We need to find something to argue about and fast.
Morocco Bama - nobody other than you has mentioned an internment camp. Please, for the benefit of our readers, don't hijack this thread (no pun intended).
I know you've all moved the conversation along, but:
Makes me wish I had 'signed up' to rent a million-dollar place I could not afford. What a dope I was to play the game straight.
I wonder if they'll still let me drive my car if I stop making the payments?
Basically, this says that real estate is currently worth a reasonable multiple of rents which will generate a return on investment commensurate with the risk.
It also says that, on this basis, the value of real estate is too low for the GSE's and, consequently, the banks owning real estate, to take the write-down to sell the real estate at that price.
Ticker - we will never argue over compassion and justice, only the ways in which they should be administered.
I have managed sf rental homes for years. There is no way that a government agency could do that. The work will have to be contracted out. Now this could an opportunity for economic growth. Existing property management firms do not have the capacity to manage the foreclosures coming down the pike. Also the profit margins in these businesses are low. If this happens, I predict the appearance of new businesses made up of mostly Mexican-Americans. They already do our lawn work, this would just put them in the home repairs work as well.
I think it is a good idea. It will, as has been noted, prevent neighborhood decay But we will have to accept that these rents will probably pay only 10 to 20% of the carrying costs of the original mortgages.
Hugh Jass writes:
Ticker - we will never argue over compassion and justice, only the ways in which they should be administered.
Hugh Jass | 12.14.08 - 10:33 pm | #
+1
BTW - I like your clever nickname.
I declare Weather Helm's comment as comment of the year. Still laughing my ass off 10 minutes later.
Maggie Knowles, you are crazier than your sister Solange if you believe the GSEs are doing this because of their altruism, while 'private companies' (ha!) evict paying renters coz that's the 'greedy' thing to do.
These companies are supposed to maximize profits. That's their purpose. And sometimes accepting rental agreements just happens to align with that objective.
looks like china entered an honest-to-god depression on a par with 1929.
Broward Horne | Homepage | 12.14.08 - 10:19 pm | #
They are playing the USA from the '29 go-around...
Oh great. A whole new way to game the system. The artificial price support component has already been discussed but I'm thinking more basic. Sell long term below market leases to your friends. Pocket the "processing fee" and let the government extend the terms.
This is an interim step towards turning tenants into federally subsidized homeowners. More anti-market nonsense.
citizen energyecon writes:
looks like china entered an honest-to-god depression on a par with 1929.
Broward Horne | Homepage | 12.14.08 - 10:19 pm | #
They are playing the USA from the '29 go-around...
citizen energyecon | Homepage | 12.14.08 - 10:39 pm | #
Let's just hope that we don't become the 4th reich. Let russia play that role this time.
These companies are supposed to maximize profits. That's their purpose. And sometimes accepting rental agreements just happens to align with that objective.
Shnaps | Homepage | 12.14.08 - 10:37 pm | #
GSEs are quasigovernmental entities (with the "quasi" part getting a bit faded these days) and are subject to considerably more political pressure, not to mention regulatory monitoring, than a typical bank. I can think of good reasons besides mere altruism that they might want to publicly announce that they've decided not to be the active agent in what's generally perceived to be an injustice, whatever the impact on short-term profits.
China has a lot more than a depression to think about in the coming years. Try revolution.
Dawg,
Yeah, just thought about that myself. Yuck.
Most likely, they'll just never get to the rental agreement, nor even realize someone is "renting" the home, until it is sold.
The name of the game is delay price discovery. This is the driving force behind every decision being made. People are not being kept in their homes for any altruistic or moralistic reason. If you don't put a house on the market you don't need to take the loss on your books.
It also says that, on this basis, the value of real estate is too low for the GSE's and, consequently, the banks owning real estate, to take the write-down to sell the real estate at that price.
MR | 12.14.08 - 10:33 pm | #
Meh - you're assuming rents are sufficient to cover carry costs...I don't think you'd see as many foreclosures if that were truly the case...at least not where you're talking about 'investment' properties. I'd guess that foreclosed specuvestors wouldn't be in forclosure if the rents really covered those costs.
No matter, what, prices have to return to a reasonable rent/income ratio, but this at least stanches the bleeding somewhat - 50% is better than 0%.
hugh hendry link works but take out the spacebetween ? pid
pq,
That is where we are all pointed (those of us keying off of the China story and particularly the electricity stat). Tremendous manufacturing overcapacity, export based jobs for a market that just ain't there...
Rob Dawg writes:
Oh great. A whole new way to game the system.
So we have to continue tossing paid-up renters onto the street without notice just because if this is poorly administered there's a possibility somebody might take advantage of it in the future?
renter friend got a foreclosure notice on her "house." she talked to landlord. landlord talked to bank, landlord quit paying when arm adjusted to 9.98 % and lost any equity with foreclosures nearby tanking property value, bank said FU to the landlord, renter said FU to landlord.....
so it is a big game of chicken....this will not end well for anyone...9.98% ! WTF? libor adjusted...landlord did the arm on the libor as libor was considered "safe" per the broker....
what a FU country!
Delay - Nor unravel a CDS with a default loan (which is all they care about...the home is collateral damage.
If you don't put a house on the market you don't need to take the loss on your books.
Pissed Off In California | 12.14.08 - 10:44 pm | #
Why would Fannie care about that? If they take a loss Treasury just cuts them a check.
Fair enough, Yalt, but as I see it, collecting some rent while you're marketing an REO helps the bottom line - whether you're an ex-quasi-government/private housing finance giant or a greedy-little community bank.
Loan Modification can help in the long run.
Broward has noted the same thing I did. The two numbers about China's industrial output and electricity production are at odds with one another. Believe one or the other, but not both, and since output is measured in money, I am guessing it is the number that is bogus.
Scott -- I think we are saying the same thing. Real estate is now only a good investment if the rental stream has a reasonable risk adjusted return.
The purchase price to support this is much lower than the banks are willing to sell. Ultimately, the banks will be forced to write these values down, and investors will start purchasing properties.
HaloScan.com - Comments
From here Yalt...
"Why would Fannie care about that? If they take a loss Treasury just cuts them a check."
You think the money comes from some magic trunk where you can just keep printing?
Just remember, there is no free lunch. Been following CDS spreads on USG? Or how much GSE debt foreign CB have dumped?
People need to understand that one way or another balance will be returned. Everyone will be hurt one way or another. There is no free lunch.
Yalt writes:
Rob Dawg writes:
"Oh great. A whole new way to game the system."
So we have to continue tossing paid-up renters onto the street without notice just because if this is poorly administered there's a possibility somebody might take advantage of it in the future?
Yes. Unfortunate but necessary. The danger of nationalizing housing is already carved in the American psyche. Public housing destroys families, communities, lives.
Misplaced compassion is our greatest failing.
er Yancey...
This will be a disaster for as long as the banks refuse to lower the price to a market price. I don't think they have to recognize loss til they sell. So no motivation. I have been chanting the mantra banks are stupid for nigh on to 30 years.
They don't get any smarter.
Regulators need to force them to mkt and sell, and you will see, upthread, where I suggested, only quasi-snarkily that real estate agents be used.
Some of them actually sorta know how to do this.
And I think we were all only talking about renters who were actually there. Not that I think it is a bad idea to rent to a new renter, except the banks don't know how, and boy, do you have to watch it. The hub and I were no good at picking renters.
Some are.
Actually ticker tape, we play the Brits. We watch our empire disintegrate and get bombed to hell. Now, who will come to our succor?
Not disagreeing, Shnaps, I just think that at the moment Fannie and Freddie's priorities have moved away from short-term profit considerations. Their survival doesn't depend on profitability, it depends on how well they're perceived to be performing a useful public function. I'm not going to conclude anything about the economics from their announcement, though you may well be right.
That is where we are all pointed (those of us keying off of the China story and particularly the electricity stat). Tremendous manufacturing overcapacity, export based jobs for a market that just ain't there...
citizen energyecon | Homepage | 12.14.08 - 10:45 pm | #
Heh...decoupling my ass! Yes, China could be in for a very rough ride! I'm not so convinced of a political meltdown - China is a very old and in many respects very stable society - they've had a number of different governments since the end of the Imperial throne, but the functional structure of their society hasn't changed that much. Russia is the same - Putin is simply the newest Boyar Tsar. The constitutions and legal formalities are just window dressing, and China has had significant internal unrest even during the Deng Xioping era (the past twenty years) - they aren't nearly as homogenous or centrally controlled as we imagine in the west, and perhaps, counterintuitively, this allows for some flexibility in the system to enable them to deal with these shocks.
Pissed off in California writes: "if you don't put a house on the market, you don't have to show a loss" or some such nonsense.
A. Wrong. You obviously don't do loan accounting.
B. What makes you think they're not going to put the house on the market? I'm sure that is stipulation number one of the new rental agreement, d00d.
Is there any big macro-economic reason that China can't turn its attention to building its domestic markets? Isn't that what the US did in the 20th Century?
Fannie Mae said Sunday that it would sign new leases with renters living in foreclosed properties owned by the company.
Does FNM have any semblance of authority to just declare it is entering the rental business, or isn't this just the latest in an ongoing series of outrageous, capricious and illegal agency declarations?
It has nothing to do with the home, nor the renters. Just the loan, and the CDS it's in, and any legal liabilities.
REWORKED LOANS AREN'T WORKING AT INDYMAC BANK - NYPOST.com
Loan mods are re-defaulting at 30% within 3 months, 50% in 6 months and up to 80% after 1 year.
Electricity is like copper, it's very predictable in terms of usage and population growth.
I believe the electricity number and an 8% drop is roughly equivalent (perhaps exceeds even) the first year of the GD. If I remember correctly, the unemployment numbers were roughly correlated to GDP drop.
1930- "normal" unemployment (4%?)
1931- 8% unemployment
1932- 16% unemployment
1933- 25% unemployment
1934- in the 16% range.
Don't live in your America, RobDawg, and I wouldn't care to. The "American psyche" is a bit different around here.
Price discovery point could be valid (depending on market), as is the fact that it would be difficult to compete in a GSE-sponsored rental market. But, in some of the horrific markets, we're seeing a no-bid market. SW FL might be an example.
There is almost no value to the price discovery process if the incremental increase in supply is dwarfed by the current supply. Adding a few more hundred homes at this point - even a few thousand in some of these markets, isn't going to set new pricing floors in the short-term.
From Pissed Off in California:
Not only the GSEs, but the entire financial system from The Treasury right down to the smallest financial firm.
flaminia writes:
Actually ticker tape, we play the Brits. We watch our empire disintegrate and get bombed to hell. Now, who will come to our succor?
flaminia | 12.14.08 - 10:52 pm | #
Hmm.. interesting scenario.. Hmm.. canada maybe? BWAHAHAHAHAHAH! Nah... maybe Germany, after all we did forgive them their debt after WW1.
That drop in electrical use is incredible.
Nitey nite.
Yalt writes:
Don't live in your America, RobDawg, and I wouldn't care to. The "American psyche" is a bit different around here.
Where is "around here?"
Yalt, doesn't the GSE's own 58% of all conventional loans? Sounds like a quasi-nationization of housing to me.
I have to wonder how Freddie and Fannie will provide the logistics necessary to become landlords. That's a huge amount of properties to manage. Landlords have to provide for the upkeep of the house. I don't see how this going to have to work...
"Pissed off in California writes: "if you don't put a house on the market, you don't have to show a loss" or some such nonsense.
A. Wrong. You obviously don't do loan accounting."
Then explain to me FNM/FRE being solvent for years with crap equity on their books. I may not know accounting but I do know the difference between shit and shinola.
Banks have been gaming the system for years, hiding the losses for years, delaying recognition of losses for years, carrying houses at way over true value for years.
How about when FNM/FRE shifted a few billion in assets from held for sale to held to maturity?
I may not know accounting but I know that it's pretty clear banks have been gaming their accounting for years.
More bullshit
Chicago. Edgewater.
Is there any big macro-economic reason that China can't turn its attention to building its domestic markets? Isn't that what the US did in the 20th Century?
Distribution of work. One of the ignored factors during the GD is the 20% reduction in the average work week.
Ultimately, the "owners" of capital have to take a loss. There's no other way to fix the thing. But they'll fight it tooth-n-nail, just like they will in the US because it's their retirement or their second house etc.
As I've said before, there's still an enormous amount of denial even here on CR. The focus on "free market" fixes WILL NOT fix this because it's an issue of distribution of work.
So what happens if the heater or any other appliance breaks down? Call Fannie Mae?
Fannie will undoubtedly subcontract to property management firms.
And how will they manage the massive increase in properties?
Yalt writes:
Chicago. Edgewater.
Cabrini Greens. Ever heard of it? Still want to challenge my assertion that public housing is an unqualified disaster?
[This does sound like the right thing to do. The renters here are not at fault and should not be penalized or forced out due to a homoaners default]
Oh sure. The USG getting into the slumlording business, not doing repairs setting themselves up for lawsuits, front page news stories when deadbeats are not paying rent for 6 mos & get evicted by Uncle Sam... lots & lots of unexpected horror stories, or worse, they simply let people live rent free for years on the taxpayer dole...
REBear writes:
So what happens if the heater or any other appliance breaks down? Call Fannie Mae?
There seems to be some confusion here about what Fannie and Freddie do. They outsource everything: the loan servicing, the REO management, everything. I assume this will either get handled by whoever's managing the REO or that entity will outsource it to a property manager.
Serfdom has returned
It makes sense to let the renters stay. Why let the house stay empty and generate no income and invite vandalism? Just a couple of questions.
Who is going to collect the rents, dog the delinquent renter for the rent payment, answer the phone when they call about the toilet being stopped up and evict them when they don't pay? Bank on a lot not paying once they figure out that the government owns the house and won't do anything to enforce the rental contract.
The devil is always in the details.
The reduction of the work week idea is interesting. Isn't that how the French tried to trim unemployment earlier in this decade? China is still at least a semi-command economy. It might be possible.
At least you can score a drink in Cabrini Greens...Edgwater has weird DRY laws? What rich people do!
Zephyr ,
So if i complained enough they might replace my windows, oven, fridge and carpet? It's not the subcontractors money.
MR - yes, I think we are describing the same thing - I'm only saying that in some respects, this accelerates getting price discovery while providing the GSEs some income stream. You cannot get blood from a turnip - so booting out renters who are paying some reduced level strikes me as cutting your nose of to spite yourself...as a taxpayer on the hook for the Fannie/Freddie losses, I'm not anxious to maximize those loses to prove something about why GSEs are evil. This certainly will require property managers, and I suppose out of work Relitters are as good as anyone. I don't think the foreclosures should stop, nor do I see anything in this that suggests the foreclosures will stop. This just mitigates the collective/collateral damage.
No way are the GSE's going into managed housing. It's just an excuse to let any tenants ride without entering into additional rental agreements. The govt would SAVE money just not doing anything to/for the renters of a defaulted loan (they don't give a crap about the house).
REBear, Your complaints would be considered. The manager would have authority for small routine expenditures like plumbing emergencies, but would have to get approval from the owner (Fannie) for more significant items. The items you mention would likely be denied.
Not tossing an entire six-flat outdoors because the landlord's car dealership blew up and he had to file for personal bankruptcy isn't going to turn the building into Cabrini Green.
Yalt,
Where at? I lived on Bryn Mawr just a block west of Broadway when I was in grad school.
Zephyr ,
I have a feeling renters will find ways to get a Pony.
bearly writes:
[This does sound like the right thing to do. The renters here are not at fault and should not be penalized or forced out due to a homoaners default]
Oh sure. The USG getting into the slumlording business, not doing repairs setting themselves up for lawsuits, front page news stories when deadbeats are not paying rent for 6 mos & get evicted by Uncle Sam... lots & lots of unexpected horror stories, or worse, they simply let people live rent free for years on the taxpayer dole...
bearly | 12.14.08 - 11:02 pm | #
bearly, I'm not saying they'll DO IT right - only that it sounds like the RIGHT thing to do.
My experience tells me it'll get mismanaged by a large GSE contractor who partners with a prop. mgt. firm. The recipe will call for plenty of G&A, light on the competence, hold the compliance, and accountability. But, we can't penalize them for good intentions.
At least you can score a drink in Cabrini Greens...Edgwater has weird DRY laws? What rich people do!
alba | 12.14.08 - 11:03 pm | #
You can't get a drink in Cabrini Green because it no longer exists, and I can think of 8 bars within a half mile of my apartment. It was nine before one of them was shut down a couple of weeks ago when their landlord went bust. Twenty families and two thriving businesses evicted without notice. I'm sure the effect on the neighborhood will be great--at least we kept the public housing menace at bay.
Does this sound like Commie blocks?
Electricity is like copper, it's very predictable in terms of usage and population growth.
I believe that cement and steel production have been hit hard due to a CRE bust in China. Those are electricity intensive industries. A 9.6% drop from last year doesn't sound that dramatic to me. I wouldn't be surprised that OUR electricity consumption has dropped significantly since last year. Probably not that much though.
Not tossing an entire six-flat outdoors because the landlord's car dealership blew up and he had to file for personal bankruptcy isn't going to turn the building into Cabrini Green. - Yalt
Come on. You already know that no matter which metro you mentioned i'd be able to immediately bring up their own version of Cabrini Greens. It isn't an exception. The problem is public housing, not its specific form or location.
"Cabrini Greens"
LMAO - When was the last time you were in town, Jane Byrne administration?
Daley II "outsourced" Section 8s when he demo-ed all of the high-rise projects several years ago. A win-win as those folks can get alot more for the $ down south - south suburbs and beyond I-80.
Based on some of the comments recently posted, perhaps I should post again:
I have managed sf rental homes for years. There is no way that a government agency could do that. The work will have to be contracted out. Now this could an opportunity for economic growth. Existing property management firms do not have the capacity to manage the foreclosures coming down the pike. Also the profit margins in these businesses are low. If this happens, I predict the appearance of new businesses made up of mostly Mexican-Americans. They already do our lawn work, this would just put them in the home repairs work as well.
I think it is a good idea. It will, as has been noted, prevent neighborhood decay. But we will have to accept that these rents will probably pay only 10 to 20% of the carrying costs of the original mortgages.
Not far from St. Gert's, Yancey. Think I won't put my address online if you don't mind...nothing personal....
The reduction of the work week idea is interesting. Isn't that how the French tried to trim unemployment earlier in this decade? China is still at least a semi-command economy. It might be possible.
Yes, the Europeans seem to have a better, instinctive understanding. The Asian countries are more socially-bound, I expect they'll figure it out faster than Americans.
There's one of two outcomes - an equitable redistribution of work as happened several times before in the US although it always took many years.
Or a two-tier society of owners / workers but it won't be stable and most likely non-competitive in world markets.
Yalt,
Wasn't looking for a specific address, just a general location. Feeling nostalgic this evening.
Good night.
Broward H,
I'm not sure I understand what you are saying about "distirubtion of work". Are you saying we're not allocating labor efficiently, or are you implying that "work" (i.e., jobs) are a commodity that needs to be distributed among the people so everybody gets their share?
RR
The problem is public housing, not its specific form or location.
Rob Dawg | Homepage | 12.14.08 - 11:16 pm | #
I grew up in a neighborhood that was probably about 30% public housing. If you didn't actually live there and know the families you could never have identified which 30% were getting assistance.
OT - more bad news with state coffers ... Funds to Pay Unemployed Inch Toward Insolvency - NY Times
Broward,
Yes, capital owners are "fighting tooth and nail" to preserve wealth that has already evaporated by the inability of the debtors to actually make good on the financial assets, and by the loss of demand for the physical assets. They are willing to bankrupt the country to prop up prices for everything. And I agree with you completely that there is even a lot of denial here in the comment threads, though I think a lot of the denialists don't even know they are doing so.
A 9.6% drop from last year doesn't sound that dramatic to me. I wouldn't be surprised that OUR electricity consumption has dropped significantly since last year
It's huge, especially if the Chinese are claiming they still have GDP growth of 8+%. In the U.S., electricity use rises every year slightly faster than population growth, and yes, I think it's fallen in the US.
Surprise Drop in Power Use Delivers Jolt to Utilities - WSJ.com
yes, it looks like the fall in US usage is roughly equivalent to GDP fall of 5-6%.
If you ever visit the 'hood, Yancey, let me know and I'll buy you a burger at Moody's.
"Mom, why are there so many graffiti painted houses with cracks in the driveway, uncut weeds in the yards, and broken windows with bars?"
Welcome to 21st Century middle class America - Pick a home where you have the high ground.............
Pay no attention to the Dawg barking outside . . . .
And I agree with you completely that there is even a lot of denial here in the comment threads, though I think a lot of the denialists don't even know they are doing so
They still think they're going to get their money because they were "smarter" when in point of fact, it's mostly because they're in first on the ponzi scheme.
Henry Ford figured all this out a hundred years ago. The owners of capital can only skim a small amount off the cash stream, otherwise too much money flows into capital assets (overproduction) and no workers can afford their own products.
It's just not that hard to understand. There's a bi-furcated mentality in the U.S. now that's signified by the debt bubble.
A lot of today's work isn't work. The growth of government has actually been an incremental counter-balance to growing imbalances between owners/workers so many of those jobs are unnecessary and inflate the apparent amount of work in the economy.
STOP
REBear writes:
So what happens if the heater or any other appliance breaks down? Call Fannie Mae?
You take rent money and fix it! If they complain, they may go to STATE or LOCAL court. If you are justified, your local judge may order them to pay you for your wasted time.
By propping up failing businesses the Fed/Treasury will cause severe crowd-out of private capital markets. This is already happening and will have severe knock-on consequences.
I remember pondering this in the 90s when I saw some people working crazy hours while other people were not working or barely working. And I wondered about the long term sustainability of what appeared to be the hoarding of jobs. Then, to be honest, I forgot about the issue. The problem now, though, is that we've "succeeded" in our wholesale conversion to a "service" economy. I'm part of it--a lawyer--and I can't really see the potential in spreading many of these service jobs around. I expect many of them to evaporate instead.
even a private arena landlord would let (or have to let) a current renter in good standing stay on when a property is sold
i've looked at many a house for sale with a tennent i had to arrange my time with to see the house
this is actually one of the few first good reasonable things i've heard the gse's are doing
'bout time
flaminia writes:
Pay no attention to the Dawg barking outside . . . .
Wow. Devastating and a valuable contribution to the discussion. How do you do it?
Are LCD's and DLP TV's more energy efficient than CRT's? I have a hunch they are. The fact that CRT monitors and TV's are being switched out might make some difference in US electricity use. Also, the payback on commercial use of LED lighting seems good, perhaps that is a factor as well.
"Well, why can't debtors just work more to pay back my money?"
Because somebody has to consume the goods that those debtors create, and if you force them to work MORE, prices go DOWN, which means wages go DOWN, which means they're even less able to pay you back AND they don't have time to consume the goods they're producing, which sends prices down MORE.
That's really what's wrong with American economics. nobody accepts that it's bounded by TIME.
As for the topic of the thread, the GSEs are in an untenable position with regards to the renters. Kick them out, and a lot of the properties will deteriorate before they can be sold for anything close to the mortgage face value. It might make a lot of sense if agreements can be reached with the tenants and the properties are sold to private rental property managers. I hope this is the plan, but with the GSEs now nationalized in all but name, I suspect we are seeing a long term situation of the government becoming landlords in absentia (and I suspect HUD will get the job of managing this at the top level) since I really don't think these firms want to sell the properties for what the market is actually willing to pay.
It occurs to me there's an implication throughout the thread that we're talking about single family housing here, "renter" usually being singular.
The GSEs were heavily into smaller multifamily loans. I suspect we're mostly talking about six-flats and 3-story walkup complexes more than individual houses.
Possession is 9/10. The government may only take your property by eminent domain. They need a court order for that. Housing court judges are not from Washington and they are not allowed to receive gifts from bankers and landlords.
A lot of today's work isn't work. The growth of government has actually been an incremental counter-balance to growing imbalances between owners/workers so many of those jobs are unnecessary and inflate the apparent amount of work in the economy.
Broward Horne | Homepage | 12.14.08 - 11:28 pm | #
You hit the nail right on the head about this.
So how close is this to the government being a landlord?
This is creepy, even though I understand the logic of keeping the house occupied and off the loss books....
ext stage on horizon from LOC breakdown and baltic dry index telltales. from uk.
panic buying and hoarding to follow is typical. -
Supermarkets' emergency plans to keep shelves full
Retailers fear collapse of lines of supply
Bailiffs prepare for busiest Christmas as shops go under
Supermarkets' emergency plans to keep shelves full |
Business |
The Observer
No one could have predicted this:
States Funds for Jobless Are Drying Up
Funds to Pay Unemployed Inch Toward Insolvency - NY Times
Just to elaborate on what Broward said; Ford raised his workers' wages so they could afford to buy the cars they were building. It was revolutionary and successful...in that Ford Motor's profits increased after the wage increases.
Is this a special thing only for existing tenants until they decide to move, or are they going to rent out unoccupied properties also? I can't get to the article since I forgot my NYT login.
Ford's competitors were super pissed at that manuever. They lost a lot of their best workers to Ford very quickly and then had to follow suit. And, yep, the American working middle class was born.
Ford raised his workers' wages so they could afford to buy the cars they were building. It was revolutionary and successful...in that Ford Motor's profits increased after the wage increases.
citizen Kung Fu Panda | Homepage | 12.14.08 - 11:39 pm | #
You mean he did it without a government mandate?!?! Woah.
serf alan,
How ironic...from your link..."Major players include the heavily indebted Premier Foods and Icelandic group Bakkavor. The latter has £140m trapped in collapsed Icelandic bank Kaupthing, although it says its UK operation, which supplies all the major grocers, is not affected"...British grocers dependent on Icelandic supplier trapped in part by absurd British response to Iceland's default...
December 15, 2008
States Funds for Jobless Are Drying Up
By JENNIFER STEINHAUER
With unemployment claims reaching their highest levels in decades, states are running out of money to pay benefits, and some are turning to the federal government for loans or increasing taxes on businesses to make the payments.
Thirty states are at risk of having the funds that pay out unemployment benefits become insolvent over the next few months, according to the National Association of State Workforce Agencies. Funds in two states, Indiana and Michigan, have already dried up, and both states are borrowing from the federal government to make payments to the unemployed.
Unemployment taxes are collected by states from employers, but the rate varies from state to state per employee. In good times states build up trust funds so that when unemployment is high there is enough money to cover the requests for benefits, which are guaranteed by the federal government.
You dont expect the loans to happen this early in a jobs slump, said Andrew Stettner, the deputy director of the National Employment Law Project, an advocacy organization for low-wage workers. You would expect that the states should, even when they are not well prepared, to have savings.
The Labor Department said last week that initial applications for jobless benefits rose to 573,000, the highest reading since November 1982. It is recommended that states keep at least one year of peak-level benefits in their trusts, but many have not, and already some states are far worse off than others.
Indianas unemployment trust fund went insolvent last month, and has borrowed twice from Washington since then the first such loans to the state since 1983. It also expects to request an additional $330 million early next year.
Michigan, which has been borrowing money from the federal government for the past few years to replenish its fund, is now $508.8 million in the hole and unable to repay it. Next month the state, where the unemployment rate is more than 9 percent, will begin levying a special solvency tax against some employers to replenish its trust fund.
California, New York, Ohio, Rhode Island and other states are inching toward insolvency as well, and may have to borrow from the federal government to get through at least the first quarter of 2009.
In South Carolina, officials recently requested a $15 million line of credit.
Right now we have $40 million in our trust fund, and we are paying out around $11 million a week, said Allen Larson, deputy executive director for the unemployment insurance program at the South Carolina Employment Security Commission. So we think it is going to be very close as to whether or not we can get through this year. We have never experienced anything like this.
Officials in New York said the states trust fund has about $314 million, compared with $595 million last year, and will most likely have to borrow from the federal government in January.
The situation puts states, many of them facing huge deficits, in an even tighter vise. As more people lose their jobs, the revenue base that the benefits are drawn from shrinks, making it harder to pay claims. Adding to that burden is that states will eventually have to pay back what they borrow.
Some states are worried about next year because the lions share of unemployment taxes are collected early in each year, and they are not sure the money will stretch through the end of the next year. The maximum amount of income the federal government can tax employers for each worker is $7,000. (The amount ranges from about $7,000 to about $25,000 for state taxes.)
It is something that we are concerned about, said Kim Brannock, a spokeswoman for the Office of Employment and Training in Kentucky, where the unemployment trust fund balance now sits at $133 million, compared with $250 million a year ago. The fund has not borrowed money from the federal government since the 1980s. At this point we are solvent, she said, but we are monitoring the situation.
States that come up short have the option of borrowing from the federal government, but if the loan is not paid back within the federal fiscal year, 4.7 percent interest is accrued, which cuts into states general funds.
With longer term solvency issues due to the sharp increase in unemployment, federal borrowing quickly becomes expensive, said Loree Levy, a spokeswoman for the Employment Development Department in California, which is already facing a multibillion dollar budget gap. We are anticipating interest payments of $20 million in 2009-10 and if nothing is done to revise the revenue generation model the interest would be $150 million in 2010-11.
As such, they are then forced to raise taxes or cut services, or both.
Robert Vincent, a spokesman for Gtech Corporation, a technology company for the lottery industry based in Rhode Island, said, Unemployment taxes are one of a number of taxes that make it difficult to do business here.
In many cases, states that have kept unemployment tax rates artificially low or in some instances decreased them find themselves in the worst pickle now. Indiana legislators, for example, reduced the tax rates to businesses by 25 percent in 2001.
So, frankly, they created the perfect storm, said John Ruckelshaus, the deputy commissioner for the Indiana Department of Workforce Development. The Legislature will have to go in and look at the whole unemployment trust find first thing when they begin their session.
At the same time payments have gone up in some states.
To recalibrate the balance, several states are raising taxes on businesses often through an automatic increase that is triggered when fund levels are endangered to keep the unemployment checks flowing. An example is the Michigan solvency tax, which will be levied against employers whose workers have received more in benefits than the companies have contributed in unemployment insurance taxes, to the tune of $67.50 per employee.
In Rhode Island, where the unemployment rate is 9.3 percent, the taxable wage base will go to $18,000 from $14,000 in 2009, the highest rate in a decade.
There is a possibility that we might be slightly under the funds we need come the end of the first quarter, said Raymond Filippone, the assistant director of income support at the Rhode Island Department of Labor and Training. The state has not borrowed from the federal government since 1980, he said.
Many states have not raised that tax in years, said Scott Pattison, executive director of the National Association of State Budget Officers in Washington. Some states have automatic triggers. But then of course you have businesses saying, Whoa, you are raising taxes on me when we are having a tough time and it is a recession, too.
Still, some said they were thinking beyond the dollars.
In these times of financial stress every extra cost is a concern, said Linda Shelton, the spokeswoman for Lifespan, a large health care system in Rhode Island. However there are many things that worry us even more. We are much more concerned about Rhode Islands budget crisis, about rising unemployment, the rising number of uninsured and the continuing cuts to health care.
Yancey Ward writes:
As for the topic of the thread, the GSEs are in an untenable position with regards to the renters. Kick them out, and a lot of the properties will deteriorate before they can be sold for anything close to the mortgage face value.
You say this like it's a bad thing. USG involvement for anything except immediate disposition is a stone cold guarantee of unintended consequences. This is a firewall that we breach at our peril.
If Ford were really smart he would have paid them with some equity, because then they would have that magic profit motive.
And of course that is the only efficient motivator...
Economics=circular reasoning
Rocky...it was totally Henry Ford's own initiative...when he was paying a pittance the employee turnover was astronomical...at the higher wage he had very little employee turnover and saved a lot of cost.
My friend Jim does this, we should do the same. w silencia, ahmen:
C
The history of the Ford Motor Company's labor relations is not all that pretty.
How bout that race to global zirp?
Fed's Rate Cuts Threaten to Chill Japanese Investment - WSJ.com
"In the period from 1937 to 1941, the Ford company became the only major manufacturer of automobiles in the Detroit area that had not recognized any labor union as the collective bargaining representative of employees. At hearings before the National Labor Relations Board Ford was found guilty of repeated violations of the National Labor Relations Act. The findings against him were upheld on appeal to the federal courts. Ford was constrained to negotiate a standard labor contract after a successful strike by the workers at his main plant at River Rouge, Michigan, in April 1941."
Those neocons and their mythic heroes...
When Henry raised wages, it was to attract skilled machine (German) specialists. There were a lot of small car companies that were hoarding labor.
Henry Ford was not an altruist. That was just the 'spin.'
Savey move that.
Mostly from the last post
Thanks, and Keep on Keepin' on, CR
Maybe the Fed could put small amounts of depleted uranium in the dollars. Not so much to actually hurt us, mind you...but hot potato could be an effective tool of monetary velocity.
Or they could put pictures of leaders we really hate on the notes..hmm
Savey = not savvy.
Same goes for "Cabrini-Greens"
"To forestall union activity Ford promoted Harry Bennett, a former Navy boxer, to head the Service Department. Bennett employed various intimidation tactics to squash union organizing.[citation needed] The most famous incident, in 1937, was a bloody brawl between company security men and organizers that became known as The Battle of the Overpass."
Nuance, yogi, nuance. Nobody said Ford was a leftie or a philanthropist. But he was a smart businessman. That's why he upped what he was paying his workers when he did. Eventually, like nearly all patriarchs, he lost touch with the times. He hung onto the Model T too long and was slow to adopt independent front suspension and hydraulic brakes after it had become quite clear that these developments were superior. (At the same time he blew people away with the first cheap V-8.) And like all patriarchs he didn't like loosening his hold on power. His personality was sure to resist the unions.
Thanks Schnnapses. I needed that.
Paka
Seems kind of quiet around here, so I'll throw out a poll...
The person that we could put on a Federal Reserve note (say equivalent to $100 US) who is so offensive that people will get rid of the notes as soon as possible (and therefore increase monetary velocity) is....
Michael Jackson (the singer)
He broke the law to maintain power or for greed. That's not so nuanced.
Send LG&M,
Easy. Dwayne Elizondo Mountain Dew Herbert Camacho.
Anyone wagering on GMAC's fate? Maybe Dryfly has some insight since a lot of their financial operation (Residential Funding Corp) is in his hood.
My vote for the C-Note pic would be Greenspend. Maybe Trump. Paris?
Cramer on the $ bill
Kudlow on the $5
Ben Stein on the $20
Bernanke on the front of the $100 and Paulson on the back.
On further consideration for a pic on a C-Note would be a car photo. Italian. Fiat.
While on cars, can someone educate me as to whether Japanese makers share information and resources more than the Detroit 3? (My guess is yes)
Put Greenspan on a $500 note. Soon we will be using them daily in ATMs. It would be good to have his picture on our daily use currency to remind us of how this whole mess got started.
Greenspan belongs on a note that shows $10000 face value, but the zeroes fade out at regular intervals.
Ah, Ross stabs me to the heart with that Fiat comment! But if you live in a snowy climate I can understand the sentiment.
So help me jeebus, help me though the storm...
YouTube - pj harvey down by the water
C
Man, am I ever on the wrong side of the bench (I represent servicers/lenders in REO evictions). I need to be a tenants' right attorney, targeting tenants in these FHLMC or FNMA REO properties.
All I need is a few of these babies with habitability concerns - particuarly in a state like CA, MA, or NY - and I've struck gold.
I know letting renters stay makes for a fuzzy, warm headline. But, there's liability in being a landlord. And, no deeper pockets for a landlord than the federal government - meaning, they'll make a fantastic target for opportunistic tenants' rights attorneys.
I can state with confidence that this move was pretty much politically motivated. This will increase the loss severity on the loans - which is a check you, I, and every other federal taxpayer will be footing (one way or another).
Congratulations on scoring cheap political points. May all your houses belong to us.
@flaminia, good one
OK I threw this out, so here goes, in increasing orders of infamy
(btw, I'm assuming future 'real-world' values)
$1,000,000: me (the whole throwing stones thing, but I wonder, what could I have done? Prolly not much, but I wasn't carrying any signs. I saw it coming, as did a whole lot of smart people, but, unlike Tanta, CR, and many of us, I wasn't really helping empty the bus before it went off the cliff (more like I was playing some random harmonica tunes)
$5,000,000: Ben Stein, Jim Cramer, or Robert Rubin, Maria B. ....
$10,000,000: The 'Dick' and he likes guns
$100,000,000: GW (though, he could use some help counting that high)
$1,000,000,000: Alan Greenspan
$10,000,000,000: the alumni yearbook from Harvard, Yale, and Princeto
Superb, Counterpointer.
Sorry, wasn't trying to copy those of you who posted before. I put on Velvet Underground and started to type, and it took a while, but we are thinking along the same lines.
The scary thing is the theme/meme here.
No it's not scary, it's sanity.
Who pays the fees of those tenants' rights lawyer's, Santa Claus?
I worked for a Civil Court Judge for several years (contained housing court).
At least 90% of the tenants had no legal representation at all. (it is not a right)
More than 90% of landlords had legal representation.
It is a forewarning.
oh and forgot to add....who owns the landlords mortgage paper.....AIG!!!!
yes AIG is not willing to play ball and would rather see another property go into foreclosure....
my guess : this is one of many (thousands) and letting them go to foreclosure means AIG can ask Uncle Sam for more taxpayer dollars
wonderful vicious circle and game of chicken
Japans Tankan Confidence Plunges Most in 34 Years (Update2)
The overseas situation is worsening so quickly and so dramatically; its really getting dangerous, said Tomoko Fujii, head of economics and strategy at Bank of America Corp. in Tokyo. The next few months are going to be a very severe period.
Japan’s Tankan Confidence Plunges Most in 34 Years (Update2) - Bloomberg.com
F the euro, F the Amero.
Give me...Maestros!
Awfully nice of the government who is buying all those worthless MBS's from these nationalized companies with printing press money to do that. Must not want to start a bunch of riots or something right here around Christmas.
People need to remember when they hear any policy being discussed by anyone in a position of power (including Bernanke,Paulson, head of any bank/corporation) it is:
not to help a home owner
not to help a renter
not to help tax paying citizen
not to help a retiree on social security
it is :
to keep the current system going regardless of the long term consequences
to keep those who are currently in power and currently in financial power still in power.
The primary imperative of any being or entity is to perpetuate itself.
Yogi, that's all fine and good, but you're talking about tenants as defendants. I'm talking about tenants as plaintiffs. Apples and oranges.
In the situation I'm talking about, the tenants will have no trouble getting representation, if the right facts exist. The attorneys will be falling all over themselves to find tenants in FNMA REOs - and, they'll do it on contigency if the facts are what they're looking for.
Completely different than tenants as defendants in an eviction action (particularly in housing court - I assume you're in MA or NY, using that terminology - which generally handles no-pay evictions).
Assuming FNMA's knowledge of property management matches their experience doing it (which is to say, none), it will be like taking candy from a baby.
I'm also guessing FNMA hasn't figured out the details. Like, will the raise the rent? If not, they'd better get ready for all manner of goodness (i.e. pre-paid rent for 5 years, rent at $100/month, oral leases paid with all cash, etc.).
Again, this ws clearly a political move. I can assure you FNMA didn't talk with anyone who actually does this work, much less probably even their own REO director.
What do you get from the warranty of habitability other than free rent and court costs?
My vote for the C-Note pic would be Greenspend. Maybe Trump. Paris?
Ross | 12.15.08 - 12:07 am | #
Buy a C-note, buy America.
And, no deeper pockets for a landlord than the federal government - meaning, they'll make a fantastic target for opportunistic tenants' rights attorneys.
Good luck suing. There is no federal landlord law; that's a creature of state law. Good luck suing the federal government in warranty or torts since there is no federal common law.
Well, it looks like MW was telling the truth, and the doubters were all trolls.
WSJ confirms condos up for sale, and high-end pawn shops seeing heavy business over the weekend in Florida due to Madoff.
In Palm Beach, Investors Assume Worst - WSJ.com
I worry about this. What if Fannie and Freddie just become the world's biggest landlords? Without foreclosure sales, where's the market clearing?
yalt and yancey,
Ashland, between Irving and Montrose, here....been a while since I've had a Moody's burger...s.
Detroit is doomed. The Big Three are going to shed most of their pension liabilities, burying the Pension Benefit Guarantee Corporation, resulting in another federal bailout. The direct job loss will be accompanied by much larger indirect losses at the 6000 suppliers that service the carmakers. Then there will be a spreading circle of economic disaster radiating from Michigan in a 600-mile radius. Two million jobs, more or less, will disappear by the end of the first quarter of 2009. And then there are the tens of thousands of dealerships and franchises nationwide, which will have to cut countless jobs, something that state laws dictate will cost the No-Longer-Big-3 billions of dollars.
Nothing Congress can do will stop it. Detroit is built for a nation buying at least 15 million new vehicles a year; sales in 2009 are projected to be half of that and they may well turn out to be overly optimistic. And it's worse than it appears, since it'll be the small, high mileage cars that get sold. The bulk of Detroit's profit margins in the past decade have come from SUVs and taking that out may mean the fifty percent reduction in sales includes a 75% reduction in gross margin on what is sold. View those vehicle sales as Detroit's currency their pay is cut by more than half and oil depletion makes their individual 'coins' worth a quarter of what they were.
--Stranded Wind
Someguy writes:
Well, it looks like MW was telling the truth, and the doubters were all trolls.
WSJ confirms condos up for sale, and high-end pawn shops seeing heavy business over the weekend in Florida due to Madoff.
This wall street article shows that there is increased activity in pawn shops, not that MW is some super-millionare-ultra-rich mogul who is first on his super-connected-wealthy-circle's speed dial for pawning their yachts.
In these circules where status is everything, your first impulse upon discovering that you're broke and about to "fall from grace" out of this circle in friends is not to CALL AROUND AND ASK TO PAWN YOUR SHIT TO YOUR OTHER RICH FRIENDS.
This article also says nothing about his other claims, that one of the most well known "jewish businessmen" in america referred to the fund collapse as the worst thing to happen to jews since the holocaust.
MW smells about as legit as chinatown electronics.
Those that questioned the veracity of MW's report should now eat some crow.
Again, thanks for the insights MW!
Electricity output fell by 9.6 percent from a year earlier.
citizen energyecon 12.14.08 - 9:44 pm
Actually I've been seeing a lot of dark buildings in China all year. Anywhere inland (not Shanghai Beijing or HK territories) and they don't run the office lights during the day. Only run full lighting on the assembly lines. The only way they're saving electricity is the way we're saving gas, no production!
In town you can tell where the tourists are staying, because they have all the lights on, but the residentials don't. I couldn't quite tell if it was an energy saving or social enforcement (it's kind of obvious if you flout the gov's new electricity initiative by lighting your windows?).
This was in Fuzhou and Quanzhou specifically, but also near Guangzhou and outside of Shanghai. This was as early as January last year. I couldn't get any good response to why the lights were out. At the time I couldn't tell if my warnings (over drinks) of coming banking trouble were merely politely listened too, or actually filed away... it turns out they remembered when I was back recently. Not that it helped... and the higher end electronics firms are still pumping away, but toys are dead.
Hoop, give it up. He was telling the truth.
more good news...
Goldman faces $2bn loss its first since 1929
As the banking giant prepares to unveil shock figures, Morgan Stanley braces itself to add its own bad news
By Simon Evans
Sunday, 14 December 2008
Goldman Sachs, the US investment bank, is this week expected to post its first loss since the Wall Street crash of 1929 when it unveils full-year results on Tuesday.
In the week when many Square Mile bank staff find out if they have scooped a bonus this year, Morgan Stanley is expected to complete a miserable Christmas picture when it also reports a loss, one day later.
Goldman faces $2bn loss – its first since 1929 -
Business News, Business - The Independent
Pissed Off In California-
Cramer on the $ bill
Kudlow on the $5
Ben Stein on the $20
Bernanke on the front of the $100 and Paulson on the back.
Pissed Off In California
Aren't you missing 9 zeros?
I assume there will be deflation, but I really don't see an endgame where Ben doesn't try re/devaluation.
http://humorland.wordmess.net/files/2008/10/zw018.jpg
I think I'll start paying for my lunch in pico-TARPs, and give up when I have to spend a full TARP just to get a beer.
http://humorland.wordmess.net/files/2008/10/zw020.jpg
Hoop-
Your post last thread about the futility of fighting the system got to me. Here's my small prayer for the moments I feel powerless.
I am only one,
But still I am one.
I cannot do everything,
But still I can do something;
And because I cannot do everything
I will not refuse to do the something that I can do.
Edward Everett Hale
Just a FYI, you can see some the concentration of foreclosures and short sales relative to short sales in the San Fernando Valley and Ventura County here:
Effective Demand: Short Sale & Foreclosure for San Fernando Valley & Ventura County - Novemeber 2008
Also mortgage insurers are tightening max LTV for loans above $417k to 85% LTV and 720 FICO in California. Combining with the conforming limit drop on January 1st this should put a lot of pressure on the higher end markets:
Effective Demand: Mortgage Insurers tighten underwriting again.
"of foreclosures and short sales relative to short sales "
should be
"of foreclosures and short sales relative to closed sales "
People ought to gain equity in the homes they rent. In each country the government could maintain a database to handle the intricacies of such a plan. In our current search for better, more open and more equitable financial systems which are so vital to the well-being of all we should encourage the development of a new consciousness as regards real estate ownership.
Right now we rally, we always rally before the start of a war .... buy these at some point however.
SRS below 70
SKF below 95
QID below 61
The real selloff starts in Feb.
Fridays call ... note time:
HaloScan.com - Comments
In most provinces in Canada as far as I know, a change in ownership (including foreclosure) does not affect terms of an existing tenancy. Thus foreclosure does not mean eviction for tenants. A new owner (human being not body corporate) does however have the right to occupy the property after giving the tenant fair notice or at the end of an existing lease term.
Surprising this is not the case in the US. A lease (either written or implied) is a lien on the property just as property taxes or constructions liens are, and should not be extinguished just because of a change of ownership.
Link on "MW"? TIA
If they bail out some restaurants that will mean banking, insurance, cars, housing and food.
THEY LOVE US
Japans Tankan Confidence Plunges Most in 34 Years...
Nikkei up 5% on the news....weeeee!
I read through half the comments, then skipped to here cause it's near bedtime and I saw nothing on the topic of HEL's and 2nds.
The plan to rent foreclosed homes makes great sense, but understand that any lenders other than the first are still going to get NOTHING back.
Very calm, measured, restrained discussion here. Tentative, careful, on topic, and de-politisized. No real sense of urgency...light hearted. Analysis of the headlines. Comraderie and chat. National and regional focus primarily. Brief comments. A sense of playfulness. Carry on. Minimum emotionalism & intensity. Friendly disagreement but mostly consensus building.
Basically kind of a detached blog to the events unfolding. Emphasis on 'official' stats from Fed and govt. and a play by play reporting of the data. Trader angles shared.
Link on "MW"? TIA
\t hong konger | \t \t \t \t12.15.08 - 2:46 am | #Couple days ago, claimed that CR knew who he was and said this to a disbelieving crowd:
MW(Unrated) writes:
\tYou have no idea how utterly destructive the Madoff bust is.
I am hearing stories this morning out of Palm Beach and London that are horrific.
Older folks in their 80's pawning their diamonds on Worth Ave, walking into real estate office saying "sell my house for anything you can get."
I have received three calls this morning from friends offering me their jewels, boats, houses, cars.
This cuts deep into heart of major cities. London, Miami, Palm Beach, L.A, NYC, Tel Aviv.
Do not for a second underestimate the consequences of what has transpired.
\t MW | \t \t \t \t12.13.08 - 12:26 pm | #
At least there's no 'sign in' like the Mish & Roubini blogs. We will see if the calm remains here as things deteriorate...
Mr Equation-
Is that Conjure's time?
What is the war? (pretext or place)
Why only use Oct lows as an entry point?
When do you go into GLD?
When do you buy fertilizer and lead?
Madoff ran a ponzi...like the Fed bubble but way smaller.
stdfs-
Thanks... saw references to it, didn't seem like folks believed it, but then later it got backup in the "media".
Hard to believe that even $50B could be that big, but BMIS' enormous quirk was stability.
Throwing Ponzi's name around doesn't make people feel exactly calm though...
Mr Equation-
Note for the lows I'm referring to the inverses you quoted not the general market.
...And if they want to move out, in many cases well help them pay for the move."
Yeah, why not? After all, the mortgage was such a winner they must be swimming in profit and so can afford to be generous.
I'm not a psychic, but I too think the Madoff story is underappreciated. If for no other reason than a lot of people will be wondering about their own assets held in these so-called "funds".
A 50 billion dollar loss by a company makes for front page material even when it's a semi-legitimate loss. But a Ponzi scheme? That's just nuts.
I mean, a run on the hedge funds was already underway. And some are denying clients timely sales of their held assets.
So the question remains, how many other cockroaches are there?
Dollar Staggers as U.S. Unleashes Cash Flood, Deficit (Update1)
Dollar Staggers as U.S. Unleashes Cash Flood, Deficit (Update3) - Bloomberg.com
Dec. 15 (Bloomberg) -- The biggest foreign-exchange strategists and investors say the best may be over for the dollar after a four-month, 24 percent rally.
Very quiet.
Building shitboxes on good farmland is an obscene thing to do.
Without heavy government water subsidies, that is, heavy misallocation of capital, how much of California or AZ is good farmland?
More crises and more leviathan, please.
Futures down to about breakeven now. Japanese Tankan was pretty awful, but the Nikkei rallied anyway. Gonna be an interesting day here.
I expect social unrest in China in 2009.
Not likely. They've had how many millennia head start on us and they've yet to produce even one Washington or Jefferson?
They'll take their thin gruel and like it.
1 currency soon [yogi] writes:
While on cars, can someone educate me as to whether Japanese makers share information and resources more than the Detroit 3? (My guess is yes)
1 currency soon [yogi] | 12.15.08 - 12:10 am | #
I don't know much about autos, but I read about the development team that engineered the Prius. They were a group of Toyota employees, not just engineers, according the author. The team learned to get information anywhere: from other engineers at other companies anywhere in the world,on the internet, anywhere. Few rules, incredible pressure and deadlines.
Were not in the business of managing rental properties, and were not in the business of being a landlord, said Thomas Kelly, a spokesman for JPMorgan Chase
Just another example how the business model for banking is changing dramatically. Many of those regs Rubin and friends were fighting off will slowly be put into place.
Uh. China has a long history of violent social unrest and regime change. Every dynasty has been followed by a period of violence, leading to the emergence of the next. There's already been quite a number of protests, some violent. It will only get worse, and there is a probability of systemic collapse, although unlikely.
Thanks for the information, it's very useful and give me new knowledge.
Please keep to give more information..we need people like you.
Once more, thank you very much for the posting.
=)
Jokos blog :
http://top-finance-solution.blogspot.com/ powered by blogger
There was a man named Mao. Owned no slaves.
Dawg, you're right on the viability of public housing. My family lived in some once. It made me understand at an early age that poverty doesn't cause crime - crime causes poverty. One could substitute "misbehavior" or "self-distructive behavior," for "crime," and reach the same result.
If you don't believe bad behavior causes poverty just look at the behavior of our last two Fed chairmen.
Thursday, June 21, 2007
Slavery
Last week Chinese authorities rescued 500 people--many of them children--from brick factories in Shanxi. The workers had been sold to these kilns by unscrupulous labor agencies and then kept there against their will as slaves, working 18 hours a day under the constant threat of physical abuse. All the while, authorities in the province turned a blind eye to the goings-on at the kilns.
Earlier this month, a group of distraught parents stormed the kilns trying desperately to rescue their children, only to meet stiff resistance from the usual suspects--thugs hired by the kiln owners with support from corrupt local officials.
Frustrated and frantic, the parents went online, writing an open letter and posting it on Dahe. Eventually the letter ended up on the popular Chinese website Tianya and the subsequent internet frenzy forced the government's hand. Police raided the kilns and freed the workers. As of this week, 168 people have been arrested in connection with the incident.
1 currency soon [yogi] writes:
STOP
REBear writes:
So what happens if the heater or any other appliance breaks down? Call Fannie Mae?
You take rent money and fix it! If they complain, they may go to STATE or LOCAL court. If you are justified, your local judge may order them to pay you for your wasted time.
Well, what if they had the rent set up to debit your account?
ille_vir writes:
Uh. China has a long history of violent social unrest and regime change. Every dynasty has been followed by a period of violence, leading to the emergence of the next. There's already been quite a number of protests, some violent. It will only get worse, and there is a probability of systemic collapse, although unlikely.
As of yet unlikely, the outcome still in doubt.
If you don't believe bad behavior causes poverty just look at the behavior of our last two Fed chairmen.
kidbuck | 12.15.08 - 7:13 am | #
I don't mean to pick on you, but what does this mean? By last two, you are excluding the current one? Volker and Greenspan then? Have they behaved badly? And ended up poor? This relates somehow to public housing? Just wondering.
## As of yet unlikely, the outcome still in doubt.
\t Volker the Viking | \t \t \t \t12.15.08 - 7:35 am |
Yeah, must admit looking likelier and likelier with every piece of data that comes out.
Interesting observation above by Pissed off in California, I think.
Seems this person must be from China with friends and relatives still there. The real unrest is purportedly in the Pearl River/City area with scant awareness in places like Beijing.
Meanwhile, some slaves have been repatriated with families from some sort of manufacturing/mining racket. The internet is what saved them, not the authorities, not the MSM.
What do we take from all this boys and grils? God help us if this system of tubes ever shuts down.
volker the viking
we would be so lost without it. we'ld be mushrooms.
good morning y'll
Rob Dawg writes:
Cabrini Greens. Ever heard of it? Still want to challenge my assertion that public housing is an unqualified disaster?
George W. Bush. Ever heard of him? Still want to challenge my assertion that democracy is an unqualified disaster?
They've had how many millennia head start on us and they've yet to produce even one Washington or Jefferson?
Say what?
Sun Tzu - Wikipedia, the free encyclopedia
Laozi - Wikipedia, the free encyclopedia
Redeeeeemmmption Song. It's all I ever had. This song of freedom...
Futures slightly off Dow, Nikki. Stoxx50 slightly up but whipsaw in the room.
What tha?! I was expecting bloodbath.
Ah well, if we can't do red, at least there's black - kaboomberger reports "massive paranoia":
Treasury Benefits From Massive Paranoia as Rates Fall (Update3) - Bloomberg.com
C
Futures slightly off Dow, Nikki. Stoxx50 slightly up but whipsaw in the room.
What tha?! I was expecting bloodbath.
Counterpointer | 12.15.08 - 8:05 am | #
Might stil be down today. At this point Friday, they were still down big. Look how well that turned out.
Madoff:
BBC NEWS | Business | Banks hit worldwide by US 'fraud'
Still feels like Black Snake Moan Monday in the markets:
From Blin' Lemon -
YouTube - Black Snake Moan - Blind Lemon Jefferson
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Capital One Financial Corp , one of the largest issuers of MasterCard and Visa credit cards, said on Monday credit quality deteriorated in several areas of lending in November, as unemployment grew and the economy eroded.
In a regulatory filing, the company said the annual net charge-off rate for U.S. credit cards increased to 6.98 percent in November from 6.54 percent in October, while the rate for loans at least 30 days delinquent rose to 4.70 percent to 4.48 percent.
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
Uh-Oh plastics tapped out baby.
Aching for a new thread here... Let's see what's on tap today.
Empire State Manufacturing Survey 0830.
Industrial Production at 0915
Housing Market Index at 1300.
Wonder which ones will be worthy of a new post.
They've had how many millennia head start on us and they've yet to produce even one Washington or Jefferson?
Mao ZeDong
Zhou EnLai
At least they were not slave owners
Madoff: seeking alpha letter to sec in 2000 saying he was running a ponzi.
The Madoff Affair: What Else Is the SEC Ignoring? -- Seeking Alpha
max keiser video 2005 rigged markets
YouTube - People & Power - Rigged Markets - 20 May 07 - Part 1
Comrade JoeBlo
Is that Conjure's time? Dunno
What is the war? Well if you followed, the Mumbai attacks had a very similar resonance to a failed terrorist hijacking of New York hotels in 1993. Again every signifant act of terrorism that coincides with market debasement is followed by acts of war. Why a war and why now? My assumption is that it is a resource led war, and probably be between US and China in Africa and US and Russia for the arctic riches. To undertake the largest public works project this world has ever seen, infrastructure will have to be turned into ruble. Cheaper to rebuild from ruble, than have contractors trash and rebuild. Plus defence companies worldwide are seeing record levels of business. This to me implies some level of war evel planning.
Why only use Oct lows as an entry point? Because we most likely are going to Dow 2100. But before we go there, we have to rally. Paul Kedrovsky has a really good chart regards to ETF's both inverse and regular. Have a look at it.
When do you go into GLD? I went into gold since I was a late 2005. I never invest in gold for speculation. My philosophy is that gold is a store of value. Fiat money has been in existence for less than a 100 years. Regardless of the fluctuations in gold prices, I buy in small quantities every month. Hopefully I will get the best price that way, but I doubt it. One thing though, I sleep peacefully every time I have bought gold. I like the value aspect, that is what I was taught since childhood.
When do you buy fertilizer and lead? Lead I don't know anything about. Fertilizer is going to be needed, but I prefer the organic methods of crop cultivation, and where I stay (Kenya) I use elephant dung for fertilizer. Why? It is abundant and FREE. Most of the zoos are happy to let me have it, saves them the disposable aspect.
Hopefully I have addressed a portion of your thoughts, maybe I haven't.
you could argue they enslaved the whole country.
What do you propose Dawg, to get the banks actually selling property for prices well below the mtg amounts and thus displaying/ acknowledging their losses?
And who is going to finance the purchases?
Suppose I find a property for 100k that used to be 300k. I have 10k and a 699 credit rating. Who, besides FHA is going to finance me in Florida: answer: hard equity lenders or FHA. There is NO OTHER LENDING GOING ON.
I gather Dawg doesn't approve of FHA.
And at 12% interest, say, I am not making enough rent to pay the nut!!
And, Dawg, you don't really have your mind wrapped around the scale of the thing.
Defaults about to rise again. From the Big Picture...
The Mortgage Meltdown | The Big Picture