• More adverse is the new baseline.
• We are all more adverse now.
OER is the next metric to get adjusted IMO. Falling rents now appear priced in and at roughly a quarter of the CPI the deflationary impact and the "rent v. own" calculations are unacceptable for fiscal policy makers.
The nugget, OER, is the plug that so far enables the authorities to dismiss the cries that we are in the midst of a serious deflation. But the cost of this signage is confidence in these very authorities...like watching a baseball umpire call a bean ball (one that strikes the batter far out of the strike zone) a strike...presuming the fans will just eat up his fine sense of humor.
The lame excuse that it eliminates the volatility thereby providing better long range policy...is lame. There was no will to do it, not even from economists outside government, to adjust it even post hoc when it was clear that housing was crowding out the rest of the consumer items.
It is a convenience stat, and a compiled one that allows for the dishonesty in reporting actual consumer burdens, the underweighting of housing costs and a convenient path to meeting "inflation protected" gov paper.
It might be adjusted further (so easy, just adjust the weighting it receives in the basket) but it is not going away.
A French pole vaulting champion has run naked with his pole through the streets of Paris and posted the video on the Internet, hoping to draw attention to his quest for a new sponsorship deal.
Romain Mesnil, who won a silver medal at the 2007 Athletics World Championships in Osaka, used to be sponsored by U.S. sports brand Nike but says his contract expired last year and was not renewed.
"It was probably for budgetary and strategic reasons. It's the crisis," he wrote on his website (http://www.romain-mesnil.com)
Everything from Treasury depends on the worst case being the "More Adverse" scenario.
A small correction - the stress tests are administered by the Fed and the FDIC, not Treasury. That said, when was the last time the Fed and Treasury disagreed on anything of substance?
The real question is what the final capital adequacy assessment will be based on, if we only have one meaningful data point (with the baseline being irrelevant almost from the get-go)
"If the economy starts underperforming that scenario, I guess we need to hoard food!\"<br/>
----<br/>
Interesting. Even CR is willing to entertain thought of needing squirrel recipes...
if houses are like stocks the from experience I've found that as an occasional bag holder it always goes lower than you could ever have imagined. I find on average worst case scenario is about 20% less than I can stomach. ETF's skew this 20% further....
The same sort of things are happening everywhere. You start with a baseline scenario and an adverse scenario but when the next set of numbers come out you find that the adverse scenario is your current scenario. We had exactly the same experience in my workplace. OK, what will be our next adverse scenario be? [no answer]
<h1 id="post-13891">AIG Financial Group execs were urged to donate to Dodd</h1>
<h4 class="meta" style="font-weight: normal; margin: 0px 0px -7px; padding: 0px;">By Carol Eisenberg</h4>
<div class="singleTimeStamp" style="color: #666;">March 31, 2009 at 10:15am</div>
<div class="entry">
Just how close was Conn. Sen. Christopher Dodd to AIG?
So close that in late 2006, when Democrats were about to regain control of Congress, then-AIG Financial Products CEO Joseph Cassano urged his top executives to donate to the man in line to become chairman of the critical Senate Banking committee. It didn’t hurt that Dodd was also home state senator for the Wilton, CN-based unit. http://news.muckety.com/2009/03/31/aig-financial-group-execs-were-urged-to-donate-to-dodd/13891
Nice little banana republic you folks have here.
</div>
Chris Dodd
Top 5 Industries, 2003-2008
Citigroup Inc $316,494
United Technologies $264,400
SAC Capital Partners $248,500
American International Group $223,478
Royal Bank of Scotland $218,500
Top 5 Contributors, 2003-2008
Securities & Investment $4,242,546
Lawyers/Law Firms $1,942,553
Insurance $1,440,422
Real Estate $1,282,741
Commercial Banks $905,044
Hello CR & thank you for data. In your access to data on house price bubbles, do you have, or know where I can find data on the Hampton Roads Virginia MSA? (It includes Norfolk, Virginia Beach, Portsmouth, Williamsburg, etc.)
I ask, because when I looked at the OFHEO data, that goes back over a 5-year time frame, my HRoads MSA had the 2nd highest house price increases in the nation-- only Honolulu exceeded it.
Yet nobody ever mentions "my" bubble, so am wondering if I read the data wrong. I know Dean Baker did some work on the HRoads bubble, but that's all the analysis I've ever been able to find-- most media reports & Case Shiller only look at the Washington DC area.
A French pole vaulting champion has run naked with his pole through the streets of Paris and posted the video on the Internet, hoping to draw attention to his quest for a new sponsorship deal.<br/>
----<br/>
I\'m not exactly sure if that would be considered a \'bail out\', but I must admit that the \'2007 Atheltics World Championships\' silver medalist shouldn\'t be left to dramatize his situation to get more money.<br/><br/>
Oh wait...
[This ratio is getting close to normal for LA and Miami (although rents are now falling!)]
This is a key. Deflation is also killing rents and will force another round of liquidations as slumlords with debtloaded structures will be obliterated by new supply that can lay waste to rents on lower cost basis. Happening already.
Houston home prices are not flat, they are falling - transaction volume in particular has declined dramatically - lower end segment hit hardest...a very familiar pattern to the regulars here, we had a commodity price bubble shielding us for an extra little while down here.
""I thought Microsoft was so stable, it wouldn't be touched," he said. Now, as one of the 1,400 employees who received layoff notices in January, Mr. Paladino is worried about making the mortgage payments on his home."
"According to the OCC’s Q4 2008 report, America’s top five commercial banks control 96 percent of the industry’s total derivatives, while the top 25 control 99.78 percent. In other words, for every $100 dollar of derivatives, the big banks have $99.78 … while the rest of the nation’s 7,000-plus banking institutions control a meager 22 cents!"
75% of the tax payers don't care if the PBGC goes bust. What do they care, they don't get a pension anyway. Why should they have to pay their tax money for the people who do? First of all it's Un-Constitutional because the tax for guaranteeing the pensions doesn't benefit everybody. No Tax payer bailout for the PBGC!
This guy needs to pulled out of congress now and hung! Along with Dodd..
How do you begin recall? Who lives in his district, if you voted him how can you look at yourself in the mirror.....
this sob had pissed me off globally..I'm about to global!
ALSO, 7 OF THE 20 AREAS ARE AT OR VERY CLOSE TO 8-YEAR LOW IN NOMINAL TERMS. - Jas
That fits with my thoery that the eCONomic down turn that started with the dot.CON bust in 2000 never ended. It actually got worse as SO many impoverished themselves with housing and other non-productive debt.
Another attempt at "reflation" should really lower living standards for the majority. Sigh.
Inflation or deflation, the baby busters have seen peak prosperity.
Generals gathered in their masses
Just like witches at black masses
Evil minds that plot destruction
Sorcerers of deaths construction
In the fields the bodies burning
As the war machine keeps turning
Death and hatred to mankind
Poisoning their brainwashed minds, oh lord yeah!
Black Sabbath – War Pigs
I heard on the radio this morning that 1/3 of Detroit is vacant, empty, and just sitting there, waiting for developers.
The weed wacker of reality is cutting off households at the sternum now. God help you if you need to sell. Which will be - 30%? of the US in the next 5.4 years?
we used to pump that up loud before paddling out in big waves along with some AC/DC..ironic now that that the war machine is Wall Street..How many have they killed in this ponzi scheme? I know of 6 this Sunday in silicon valley...murder/suicide over money/job loss/debt
r
Book tip for those trying to figure out how the US self-destruct:
<b>Guilt by Association: How Deception and Self-Deceit Took America to War</b> is written by Jeff Gates, a former counsel to the U.S. Senate. His first task is to explain how America lost control of its foreign policy to pro-Israeli elites and extremists.
From press releases:
In an account covering presidencies from Woodrow Wilson to George W. Bush, the author chronicles the influence wielded by pro-Israeli agents operating inside administrations over the past century regardless of party.
Harry Truman, a political product of organized crime from the 1920s, recognized Israel in 1948 over the strenuous objections of Secretary of State George Marshall and the entire U.S. foreign policy and intelligence establishment.
Guilt by Association makes treason transparent. The corruption that plagues American politics is traced to an alliance with elites and extremists loyal to the Land of Israel. Unable to rid politics of campaign finance corruption, the U.S. finds its security imperiled by those skilled at deceiving America into waging wars for the Zionist state.
Tracing this corruption to criminal syndicates from the 1920s, Guilt by Association reveals how those skilled at displacing facts with beliefs wield clout from the shadows. Both deception and self-deceit play critical roles in enabling this criminality to expand its reach on a global scale. Guilt by Association documents how by operating in the realms of politics, media, academia, think tanks and popular culture corruption came to dominate politics, as shown by presidential candidates John McCain and Barack Obama. Chronicling systemic corruption that predates these candidates by decades, the book explains how organized crime expanded worldwide while the U.S. discredited itself in the eyes of a global public astounded that Americans would tolerate such corruption to their own detriment. Featuring sophisticated analysis presented in layman’s language, Guilt by Association will transform political debate in the U.S. and beyond.
This chronicle of duplicity and trans-generational manipulation describes how dysfunctional personalities are identified and then positioned for elective office. Chronicling systemic corruption that predates the current presidential candidates by decades, Guilt by Association describes how organized crime expanded worldwide in plain view yet with legal impunity.
how much have the national indices been supported by prices on the east coast particularly NY. I have heard that NYC is going through a vicious repricing of jobs. Those that once fetched $300,000 are now in the $100,000 range. If in fact this is correct then the report from Goldman some months ago about a 50% decline in NY prices appears to be on its way to coming true. (they had based their projection on the eminently simple and reasonable proposition that average wages in NYC went from 2X the national average to 3X and if wages were to returen to the 1995 multiple - prior to worst of the financial excess thats the kind of decline you get). Add to that the new york budget and the proposed Federal budget that increases taxes on those earning over $250,000 one could easily somebody earning over $500,000 paying $20,000 more in taxes which is equivalent to interest on a mortgage of $400,000.
If the Bay Area is typical, I believe that the C-S numbers project a more pessimistic future than is justified. All of the recent action here has been in lower priced homes that saw a much bigger bubble than the overall market. While the higher end homes will show lower prices once they do sell, it won't be nearly to the extreme that we've seen on the low end (e.g. homes in East Oakland typically going for 20% of previous sale).
I expect that once the mix in sales gravitates upwards, the C-S numbers will improve since those homes didn't participate nearly so much in the bubble. A 25% price drop from the peak for this group will actually cause the C-S graph to turn up from it's current level.
Let us say that the LA ratio is currently at 1.1 and that at will retrace to the 0.8 level approximately. If rents stay the same that is a drop of about 27 percent from current prices. And if there is an overshoot, which is possible, to say around the 0.7 level, what is the economic scenario then with a 36 percent drop?
What comes after "More Adverse"?
"what comes after more adverse"
Adverser... duh!
This comment thread has been HALO-IZED by CRbot.
http://realize.org/cr/halokit.php?halourl=http://www.haloscan.com/comments/calculatedrisk/6059718790842239081
What comes after "More Adverse"?
More gifts from taxpayers
What comes after "More Adverse"?
REALITY.
Nemo, everything from Treasury depends on the worst case being the "More Adverse" scenario. So far we are tracking (house prices, GDP).
More Adverse is the real "Baseline". If the economy starts underperforming that scenario, I guess we need to hoard food!
best wishes.
• More adverse is the new baseline.
• We are all more adverse now.
OER is the next metric to get adjusted IMO. Falling rents now appear priced in and at roughly a quarter of the CPI the deflationary impact and the "rent v. own" calculations are unacceptable for fiscal policy makers.
The nugget, OER, is the plug that so far enables the authorities to dismiss the cries that we are in the midst of a serious deflation. But the cost of this signage is confidence in these very authorities...like watching a baseball umpire call a bean ball (one that strikes the batter far out of the strike zone) a strike...presuming the fans will just eat up his fine sense of humor.
The lame excuse that it eliminates the volatility thereby providing better long range policy...is lame. There was no will to do it, not even from economists outside government, to adjust it even post hoc when it was clear that housing was crowding out the rest of the consumer items.
It is a convenience stat, and a compiled one that allows for the dishonesty in reporting actual consumer burdens, the underweighting of housing costs and a convenient path to meeting "inflation protected" gov paper.
It might be adjusted further (so easy, just adjust the weighting it receives in the basket) but it is not going away.
Quest for Bailout:
A French pole vaulting champion has run naked with his pole through the streets of Paris and posted the video on the Internet, hoping to draw attention to his quest for a new sponsorship deal.
Romain Mesnil, who won a silver medal at the 2007 Athletics World Championships in Osaka, used to be sponsored by U.S. sports brand Nike but says his contract expired last year and was not renewed.
"It was probably for budgetary and strategic reasons. It's the crisis," he wrote on his website (http://www.romain-mesnil.com)
Everything from Treasury depends on the worst case being the "More Adverse" scenario.
A small correction - the stress tests are administered by the Fed and the FDIC, not Treasury. That said, when was the last time the Fed and Treasury disagreed on anything of substance?
The real question is what the final capital adequacy assessment will be based on, if we only have one meaningful data point (with the baseline being irrelevant almost from the get-go)
"If the economy starts underperforming that scenario, I guess we need to hoard food!\"<br/>
----<br/>
Interesting. Even CR is willing to entertain thought of needing squirrel recipes...
I guess we need to hoard food!
I've already started and the garden is looking good to.
The ground's still frozen here-
if houses are like stocks the from experience I've found that as an occasional bag holder it always goes lower than you could ever have imagined. I find on average worst case scenario is about 20% less than I can stomach. ETF's skew this 20% further....
The same sort of things are happening everywhere. You start with a baseline scenario and an adverse scenario but when the next set of numbers come out you find that the adverse scenario is your current scenario. We had exactly the same experience in my workplace. OK, what will be our next adverse scenario be? [no answer]
indeed I remember 1100 on SPX being the bottom..
<h1 id="post-13891">AIG Financial Group execs were urged to donate to Dodd</h1>
<h4 class="meta" style="font-weight: normal; margin: 0px 0px -7px; padding: 0px;">By Carol Eisenberg</h4>
<div class="singleTimeStamp" style="color: #666;">March 31, 2009 at 10:15am</div>
<div class="entry">
Just how close was Conn. Sen. Christopher Dodd to AIG?
So close that in late 2006, when Democrats were about to regain control of Congress, then-AIG Financial Products CEO Joseph Cassano urged his top executives to donate to the man in line to become chairman of the critical Senate Banking committee. It didn’t hurt that Dodd was also home state senator for the Wilton, CN-based unit.
http://news.muckety.com/2009/03/31/aig-financial-group-execs-were-urged-to-donate-to-dodd/13891
Nice little banana republic you folks have here.
</div>
Chris Dodd
Top 5 Industries, 2003-2008
Citigroup Inc $316,494
United Technologies $264,400
SAC Capital Partners $248,500
American International Group $223,478
Royal Bank of Scotland $218,500
Top 5 Contributors, 2003-2008
Securities & Investment $4,242,546
Lawyers/Law Firms $1,942,553
Insurance $1,440,422
Real Estate $1,282,741
Commercial Banks $905,044
The Latest from Ritholz:
Case Shiller Index Falls 19%
It would be nice to see the inflation line (with 2000 set at 100) against these housing prices for the five cities.
from zuzu's petals:
Hello CR & thank you for data. In your access to data on house price bubbles, do you have, or know where I can find data on the Hampton Roads Virginia MSA? (It includes Norfolk, Virginia Beach, Portsmouth, Williamsburg, etc.)
I ask, because when I looked at the OFHEO data, that goes back over a 5-year time frame, my HRoads MSA had the 2nd highest house price increases in the nation-- only Honolulu exceeded it.
Yet nobody ever mentions "my" bubble, so am wondering if I read the data wrong. I know Dean Baker did some work on the HRoads bubble, but that's all the analysis I've ever been able to find-- most media reports & Case Shiller only look at the Washington DC area.
Any thoughts or suggestions from anybody here?
Thank you for any help,
zuzu
Quest for Bailout:<br/><br/>
A French pole vaulting champion has run naked with his pole through the streets of Paris and posted the video on the Internet, hoping to draw attention to his quest for a new sponsorship deal.<br/>
----<br/>
I\'m not exactly sure if that would be considered a \'bail out\', but I must admit that the \'2007 Atheltics World Championships\' silver medalist shouldn\'t be left to dramatize his situation to get more money.<br/><br/>
Oh wait...
In my neck of the woods our local mr potter is buying houses at $49/sq.ft.
During the boom the minimum was $125/sq. ft.
That's inflationary, right?
[This ratio is getting close to normal for LA and Miami (although rents are now falling!)]
This is a key. Deflation is also killing rents and will force another round of liquidations as slumlords with debtloaded structures will be obliterated by new supply that can lay waste to rents on lower cost basis. Happening already.
We should make the Bankers run naked thru Manhattan if they want Tarp money.
For Travis Eickehhorst from last thread,
Houston home prices are not flat, they are falling - transaction volume in particular has declined dramatically - lower end segment hit hardest...a very familiar pattern to the regulars here, we had a commodity price bubble shielding us for an extra little while down here.
""I thought Microsoft was so stable, it wouldn't be touched," he said. Now, as one of the 1,400 employees who received layoff notices in January, Mr. Paladino is worried about making the mortgage payments on his home."
From the article Comrade Kristina posted earlier:
, America’s top five commercial banks control 96 percent of the industry’s total derivatives, while the top 25 control 99.78 percent. In other words, for every $100 dollar of derivatives, the big banks have $99.78 … while the rest of the nation’s 7,000-plus banking institutions control a meager 22 cents!"
"According to the OCC’s Q4 2008 report
Alarming News: Bank Losses Spreading! | Money and Markets: Free Investment Email Newsletter
--
The most important development is that the price decline has spread to all areas and not just limited to 5-6 states as was the case last year.
ALSO, 7 OF THE 20 AREAS ARE AT OR VERY CLOSE TO 8-YEAR LOW IN NOMINAL TERMS. AND SAN FRANCISCO IS ONE OF THEM (PRICE DOWN 5% FROM 8 YEARS AGO)!
Jas
WooHoo - Already blowing through the stress test numbers? More and more trillionns for the banksters!
75% of the tax payers don't care if the PBGC goes bust. What do they care, they don't get a pension anyway. Why should they have to pay their tax money for the people who do? First of all it's Un-Constitutional because the tax for guaranteeing the pensions doesn't benefit everybody. No Tax payer bailout for the PBGC!
Black Hole Alert: The Last Sucker Into The Stock Market Was The Pension Guaranty Corporation
http://www.nakedcapitalism.com/2009/03/black-hole-alert-last-sucker-into-stock.html
GM & C leaving DJIA. Can we add GS ? Please.
What else could better represent the legacy of graft & corruption ?
B Frank or mr evil lisp is proposing mtom retroactive....
http://www.marketwatch.com/news/story/Frank-Axe-mark-market-retroactively/story.aspx?guid=%7BDCED1D7A%2D8111%2D47D4%2DADC6%2D7763C357434C%7D&dist=hplatest
This guy needs to pulled out of congress now and hung! Along with Dodd..
How do you begin recall? Who lives in his district, if you voted him how can you look at yourself in the mirror.....
this sob had pissed me off globally..I'm about to global!
cd wrote;
"How do you begin recall? "
I'll do a little research on the subject.
Surely there must be a way for the electorate to remove their elected representative.
Perhaps they should add some congressmen's homes to the AIG tour
ALSO, 7 OF THE 20 AREAS ARE AT OR VERY CLOSE TO 8-YEAR LOW IN NOMINAL TERMS. - Jas
That fits with my thoery that the eCONomic down turn that started with the dot.CON bust in 2000 never ended. It actually got worse as SO many impoverished themselves with housing and other non-productive debt.
Another attempt at "reflation" should really lower living standards for the majority. Sigh.
Inflation or deflation, the baby busters have seen peak prosperity.
Generals gathered in their masses
Just like witches at black masses
Evil minds that plot destruction
Sorcerers of deaths construction
In the fields the bodies burning
As the war machine keeps turning
Death and hatred to mankind
Poisoning their brainwashed minds, oh lord yeah!
Black Sabbath – War Pigs
The Cost of Running a Global Empire :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website
Please. That (War Pigs) was much much more dramatic than it was relevant.
I heard on the radio this morning that 1/3 of Detroit is vacant, empty, and just sitting there, waiting for developers.
The weed wacker of reality is cutting off households at the sternum now. God help you if you need to sell. Which will be - 30%? of the US in the next 5.4 years?
Warpigs,
we used to pump that up loud before paddling out in big waves along with some AC/DC..ironic now that that the war machine is Wall Street..How many have they killed in this ponzi scheme? I know of 6 this Sunday in silicon valley...murder/suicide over money/job loss/debt
r
Book tip for those trying to figure out how the US self-destruct:
<b>Guilt by Association: How Deception and Self-Deceit Took America to War</b> is written by Jeff Gates, a former counsel to the U.S. Senate. His first task is to explain how America lost control of its foreign policy to pro-Israeli elites and extremists.
From press releases:
In an account covering presidencies from Woodrow Wilson to George W. Bush, the author chronicles the influence wielded by pro-Israeli agents operating inside administrations over the past century regardless of party.
Harry Truman, a political product of organized crime from the 1920s, recognized Israel in 1948 over the strenuous objections of Secretary of State George Marshall and the entire U.S. foreign policy and intelligence establishment.
Guilt by Association makes treason transparent. The corruption that plagues American politics is traced to an alliance with elites and extremists loyal to the Land of Israel. Unable to rid politics of campaign finance corruption, the U.S. finds its security imperiled by those skilled at deceiving America into waging wars for the Zionist state.
Tracing this corruption to criminal syndicates from the 1920s, Guilt by Association reveals how those skilled at displacing facts with beliefs wield clout from the shadows. Both deception and self-deceit play critical roles in enabling this criminality to expand its reach on a global scale. Guilt by Association documents how by operating in the realms of politics, media, academia, think tanks and popular culture corruption came to dominate politics, as shown by presidential candidates John McCain and Barack Obama. Chronicling systemic corruption that predates these candidates by decades, the book explains how organized crime expanded worldwide while the U.S. discredited itself in the eyes of a global public astounded that Americans would tolerate such corruption to their own detriment. Featuring sophisticated analysis presented in layman’s language, Guilt by Association will transform political debate in the U.S. and beyond.
This chronicle of duplicity and trans-generational manipulation describes how dysfunctional personalities are identified and then positioned for elective office. Chronicling systemic corruption that predates the current presidential candidates by decades, Guilt by Association describes how organized crime expanded worldwide in plain view yet with legal impunity.
Criminal State
O/T
After a day of bloodletting, one of the bosses cornered me in the hallway. Did I get a sexual thrill out of firing people, he wanted to know, because it had always worked for him, big time.
War Pigs. What a song. What a band. What a cloud of smoke.
I propose that we stop accounting for home values by sales data, and make up whatever number keeps banks solvent.
how much have the national indices been supported by prices on the east coast particularly NY. I have heard that NYC is going through a vicious repricing of jobs. Those that once fetched $300,000 are now in the $100,000 range. If in fact this is correct then the report from Goldman some months ago about a 50% decline in NY prices appears to be on its way to coming true. (they had based their projection on the eminently simple and reasonable proposition that average wages in NYC went from 2X the national average to 3X and if wages were to returen to the 1995 multiple - prior to worst of the financial excess thats the kind of decline you get). Add to that the new york budget and the proposed Federal budget that increases taxes on those earning over $250,000 one could easily somebody earning over $500,000 paying $20,000 more in taxes which is equivalent to interest on a mortgage of $400,000.
If the Bay Area is typical, I believe that the C-S numbers project a more pessimistic future than is justified. All of the recent action here has been in lower priced homes that saw a much bigger bubble than the overall market. While the higher end homes will show lower prices once they do sell, it won't be nearly to the extreme that we've seen on the low end (e.g. homes in East Oakland typically going for 20% of previous sale).
I expect that once the mix in sales gravitates upwards, the C-S numbers will improve since those homes didn't participate nearly so much in the bubble. A 25% price drop from the peak for this group will actually cause the C-S graph to turn up from it's current level.
Let us say that the LA ratio is currently at 1.1 and that at will retrace to the 0.8 level approximately. If rents stay the same that is a drop of about 27 percent from current prices. And if there is an overshoot, which is possible, to say around the 0.7 level, what is the economic scenario then with a 36 percent drop?
Am I thinking staight?
it