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All lenders should require 25% down.
Given the more prudent lending criteria, wouldn't MBS based on these perform fairly well? Can BAC and others grow themselves out of earlier vintages?
[repost]
Who are they kidding? They cannot re-inflate that bubble for reasons behind their control
Great news! Now prices in the land of delusion (west LA) will never come down! I'm so happy to hear this. >:o
Maybe they figured out who was going to take the most losses by not providing Jumbo financing - and it was BofA in the mirror!
My brother had a $1mil buyer turned down by CW(BofA a few months ago, so he wrote a $1mil check to close the home cash. Was it a liquidity issue? LTV?
Now everybody wants a piece of his refi.
.....FINALLY. A program designed specifically for the hard-pressed credit worthy high-income house poor looky-loos. Whew......
"Given the more prudent lending criteria, wouldn't MBS based on these perform fairly well?"
It can be far more profitable for the bank to keep the loan on its books, especially when there is some reason to believe that it will perform.
Why the hell would anyone want to buy a million dollar home? Nobody cares how big your home is - get over yourself.
$1 million was recently one thousand square feet in W.LA, so that's not that big. Still a waste of $'s.
Why the hell would anyone want to buy a million dollar home? Nobody cares how big your home is - get over yourself.
Obviously you don't hang around with the 'beautiful people'...
Why the hell would anyone want to buy a million dollar home? Nobody cares how big your home is - get over yourself.
$1M buys a 1000 sqft 2 bed 1 bath around here.
Does this mean secutirization is back, or BAC plans to hold on to these loans, or a stunt to show they are trying to help the system so they need bonus?
....I think securitization IS in fact a "masked adversary". It could blanket the localized concerns, interests, and responsibilities a local bank/financing concern should exhibit.
Tanta says:
There is no New Paradigm, there was no New Paradigm, there is not going to be a New Paradigm. The Cs are the Cs. What we “innovated” was our willingness to believe that we had established the Cs with indirect or superficial measures (that are, not coincidentally, cheap and fast compared to direct measures). We looked at FICOs—scores produced by computers—instead of full credit reports and other documents to supplement them. We looked at the borrower’s statement of income or assets, not the documents; when we got docs, we looked at the last paystub or the current balance of an account, not the documentation of a long enough period to establish stability of income or source of account balances. We looked at AVMs instead of full field appraisals. We read the Cliff’s Notes.
I wonder if BofA will be rewarding her estate.
It's amazing how Tanta explained it all to the few who were listening.
If you want to buy a million dollar house, you can put 27% down and get a jumbo conforming loan.
"Before the credit crunch hit in August 2007, jumbo loans, then defined as over $417,000, represented 62 percent of Bay Area purchase loans, compared with just 17.5 percent last month."
Yes, but since then a large number of homes have had their prices drop below the conforming limits. Homes that were $650k are now $400k. Soon, homes that were $900k will make it to $450. Homes that were waaaayyyy over the jumbo conforming limit will come down to around $750k.
Washington Mutual’s holding company is suing federal regulators for billions of dollars, saying the firesale of the bank’s assets to JPMorgan Chase violated its rights. The lawsuit was filed Friday in federal court against the Federal Deposit Insurance Corp., which seized the Seattle-based savings and loan in September. It was the largest bank failure in U.S. history.
Bank of America is a criminal enterprise.
The angst seems to be filtering up - at least around here in DC. At today's Mass at an affluent parish on MacArthur Blvd., aged priest tells story during homily about a retired psychiatrist friend who may have to resume work because of the diminution of his 401k. Then tells story of 'joke' going around that AIG stands for Arrogant Inefficiency and Greed.
OLV parish?
Marc Faber interview with the macalavanys
Financial Truth: Marc Faber interview with the macalavanys
Computers? an executive I talked to from Core Logic said to me "our data was never meant to be used for 100% financing..."
Tanta was pointing out that the computer between your eyes has a much more sophisticated algorithm summed up in a "gut feel" than programmers are currently able to produce.
Gee, BoA now knows what a 12 year old in Kansas knew for years - don't loan money to some one who can't or wont' pay it back. US corporcrap - bonuses for bankruptcy!
It's amazing how Tanta explained it all to the few who were listening.
It was easy to understand too once you got past the industry terminology - it was the mortgage banking equivalent of 'trust but verify'... from about 2002 on they forgot the 'verify' part. Nothing destroys trust faster.
OT... can we just nuke these guys from orbit? They use our bailout money to sue us for taking away their offshore tax shelters:
Why Is A.I.G. Using Our Money To Sue The Government For $306 Million? - The Consumerist
If one wants into the hi end market, now is not the time to buy (commit to 30 yr fixed) but rent and wait out the turmoil - prices are not sustainable in this political economy and certainly are slated more to the downside. The big question is how long can the charade in WDC continue
<<Washington Mutual’s holding company is suing federal regulators for billions of dollars, saying the firesale of the bank’s assets to JPMorgan Chase violated its rights.>>
JPM bought just the "bank" with the FDIC's help.
Now Govt says we don't have the authority to deal with the failure of TBTF institutions. And yet...Paulson just did it.
Not going to make a difference as long as they are still requiring real down payments.
20% - 25% down plus 6 months reserves?
How many people do you know with
1) $300,000 in cash lying around
and
2a) Either don’t already own a home
or
2b) Want to buy a second home or trade up in this economy?
I know plenty of such folks but they won't be buying till the only real estate left in the Jumbo price range are chateaus.
Does this mean secutirization is back, or BAC plans to hold on to these loans
TALF
Borrowers of course need to pay attention to the fourth C, competence. If you've ever had an incompetent lender, it's painful. Late fees when you pay on time, warning notices that they tell you to ignore when you call them, payoff calculations for the wrong amount. I had all of these problems with a student loan firm. Even worse for me, I started with a competent lender and my loan was sold to an incompetent one. They couldn't even pay off and close out the loan properly.
The underwriting criteria are reasonable,and this will restore some movement to the frozen upper end of the market.I actually think that the increase in sales will lead to faster price discovery.DQ News is not a secret and neither are Redfin or zillow,those who are in the market for homes in this price range know that we are in a declining market and are likely to bargain with sellers.There will be quite a few knifecatchers,but considering the # of people who are forced sellers the correction should be reasonably swift.It is a lot easier to self justify your wishing price when nothing is selling...
If one wants into the hi end market, now is not the time to buy (commit to 30 yr fixed) but rent and wait out the turmoil - prices are not sustainable in this political economy and certainly are slated more to the downside.
Also depends on (1) who much money you have and (2) how long you want to wait? If you have more money than God has little green apples do ya care if it goes down another 30%? I mean if you have to ask you probably can't afford it anyway.
Wheat we are talking about really isn't the 'high end' any more... just highish end of middle. And 'yes' they frequently have to ask - HOW MUCH.
It is all relative. I had a buddy who when asked where he lived said 'on an acreage just out side of town'... the follow up was always 'How nice - how many acres?'... His reply was 'About 220'. Most people thought he was jerking their chain - in their mind that was no acreage it was a frickin' FARM. Not him - he came from farm country and knew 220 acres won't support anyone today [unless it includes a hidden grow op]... to him it was no different than having 12 acres or 1.2 acres... neighbors were just a little farther away for him.
Same situation w/ these Jumbos - I'd guess nearly every one of them are 'wage slaves' like everyone else... just a little more wage for their 'slavery' and a little more expensive a dig.
Dryfly - Same situation w/ these Jumbos - I'd guess nearly every one of them are 'wage slaves' like everyone else... just a little more wage for their 'slavery' and a little more expensive a dig.
Hey Dryfly, you're correct. For example, Sonoma county, within 10 miles of the coast, very little is below 1m. We're moving there, renting for 6 months. If we see something, and jumbo rates drop to 5, you bet we'll buy. Moving to rural California right now is exactly contrarian enough for me.
FWIW I am retired and waited the last 10 years for this correction, but can only make a housing mistake once.
Why not just pay cash for something you like. Retired people should not have mortgages hanging over their heads.
NervousRex, why is a retired person considering buying a place at a price that requires them to take out a loan? Being in debt at the start of your retirement seems very imprudent, and typical of the behavior that got us into this mess.
The Latest from Ritholz:
Understanding Lehman & AIG
Wasn't Tanta ultimately wrong? We've got a new paradigm and it's called Bugger Thy Neighbor.
Here's a great weekend read, The Atlantic Online | April 2009 | China's Way Forward | James Fallows
Latest article by James Fallows in the Atlantic Monthly. He's been living in China for a few years, and is now in Beijing. Nothing new to me, but very comprehensive and well paced without any numbers.
EvilHenryPaulson,
From that Alantic article:
"Through the rest of the winter and early this spring,... [B]ut it was also a sign that fewer factories were running in the heavy-industrial districts upwind of Beijing."
Bingo!
Beijing's air was remarkably clear in January when I was there. I came up with the same conclusion as this writer. The locals confirmed my hunch.
By the way, I spent a week in Tianjin [pronounced ca: tee'yin-gin]--about 75 mi ESE of Beijing, in the industrial coastal region. The air wasn't too bad there either. In the past, you were afraid to leave your hotel room because the air was so painful to breathe.
It may help a little, but I doubt it. What will help a lot is if the 1.5mm homes come down to $500,ooo and fit in the conforming limits.
Who in their right mind would go to market right now? For the jumbo sector, why not wait until prices have actually bottomed?
C
central_scrutinizer says:Today, 1:01:16 PM "
Bank of America is a criminal enterprise."
central_scrutinizer,
I live in NC and that seems to be the concensus of the in-the-know crowd. I was betting on nationalization of this once proud company but, unfortunately, Washington is also a criminal enterprise ....
As some who is tight with a tier 3 BofA exec he would agree that countryfried was a criminal enterprise and in addition that they walked on merrill until being strong armed by the government & fed.
Asides from those two segments BAC is in great shape, you might want to look at insider buying patterns. If citi starts a similar program then the pig is through the python as far as the big bank crisis is concerned. Small banks hasn't even taken off.
Sane lending is returning, but sane lending doesn't support these price points.
Tom Stone says:Today, 10:22:29 AM PDT
The underwriting criteria are reasonable,and this will restore some movement to the frozen upper end of the market.
Agreed to the first, disagree to the second. The number of potential buyers in the high end is far far smaller than can support the number of high end priced houses. Everyone was fooled by the fakers who pretended to be high end buyers. Helped of course by banks who pretended to be high end lenders.
Everyone was fooled by the fakers who pretended to be high end buyers. Helped of course by banks who pretended to be high end lenders. RD
Amen.
Dawg,SOME movement.Not much,but it does not take much to move prices.As dryfly noted the genuine rich can pay cash for $5MM house...all the overpriced middle class stuff can now be financed,and SOME will sell at much lower prices.
Who in their right mind would go to market right now? For the jumbo sector, why not wait until prices have actually bottomed?
You only have so many trips around the sun... if you have the money and can easily afford it and it is the RIGHT place for you [the way you want to live]... then NOW is the RIGHT TIME.
What I can't understand is why those who can't afford these homes would think now is the 'right time' if only I had 'financing'. Never is the right time until affordability improves FOR THEM personally. That is what I can't fathom.
also an article from 1985 by the same guy linked to from the first article, America's Changing Economic Landscape - 85.03
Looks at old-industrial cities like Detroit and new ones like Silicon Valley. It's a trip, at least for me
10,000 employees... at one steel mill? amazing
they also all had pensions, healthcare, and paid time off
Lending Standards Are Back
also an article from 1985 by the same guy linked to from the first article, America's Changing Economic Landscape - 85.03
Looks at old-industrial cities like Detroit and new ones like Silicon Valley. It's a trip, at least for me.
I was in SV about five years ago and thought to myself it looked like 'Greater Detroit' circa early 1970s - before [forgive the pun] the wheels fell off.
BTW I was in Detroit & nearby burbs fairly often over those years because I had family there - they always looked down on the rest of us 'midwesterners' because they were 'better'... that was when UAW ruled and what was good for General Motors was good for the USA. In fact some of them considered themselves to be 'easterners - transplanted' [implying 'blue blood']. It was supposed to be 'different' there... by 1985 most everyone with a pulse knew better.
Critics say it's incongruous for AIG to dish out millions to employees of a unit that lost more than $40 billion last year, especially because the unit is being gradually dissolved. But AIG says it promised the payments to about 400 employees in early 2008 -- before the depth of the financial crisis became known.
At the time, the unit "was expected to have a valuable, ongoing role at AIG," the company said in a five-page memo prepared last week for the Treasury Department. The company contended that it was legally obligated to honor the contracts that call for the bonuses. But some legal experts say the government might have some options to block or reverse the bonuses. :-[
"How many people do you know with
1) $300,000 in cash lying around
and
2a) Either don’t already own a home "
O:-) :-[
OT, but let me be the first to state for the record, that Senator Susan Collins is an idiot....
"Some senators including Maine Republican Susan Collins, say the House version might have gone too far."
10,000 employees... at one steel mill? amazing
I lived near one as a kid - my dad took me there for 'field trips'. That was when we lived near Buffalo NY circa 1965 - it was the Bethlehem Lackawana Works. At least 10K worked there including two of my neighbors dads. The plant is now gone - company gone. Same thing will happen to SV as IT gets increasingly 'commoditized' and the industry 'consolidates'. SV will get hammered.
BTW - there is no law saying the next big thing will 'innovate' in SV. 100 years ago the innovation centered around the Great Lakes as that article suggests. Then it moved 'west'. It will more than likely 'move again'. Where? Who knows - might not even be on this continent.
Dryfly,
Silicon Valley has been busy remaking itself since the dotcom bust.
Many of those who got rich during the dotcom boom have hung around and switched from technical roles to investment roles. They have become angel investors, partnered with venture capitalists, and some have learned new trades.
There is alot of non-IT activity here now - the bulk of it being biotech (which was a minor fraction of activity here 10 years ago but is now significant) and green energy (which didn't exist in industrial strength here a decade ago) and is now all over the Valley.
The reason why Silicon Valley likely won't die any time soon is the nexus between finance, technology, and research. Bootstrapping the ecosystem so it is balanced enough in multiple dimensions is non-trivial. Many locales (in India and China in particular) have tried replicating it without success.
To see why the above is true, consider the fact that you need enough angel investors feeding startups to venture capitalists, enough small companies worth being bought by large companies, enough teaching universities producing cog engineers balanced with research-oriented universities producing innovation, etc.
Getting all that growing continuously in a pipeline is as much a fluke as anything else, so getting it going elsewhere isn't easy. On the other hand, if access to credit continues to remain sparse for long enough, the ecosystem will fail. My best estimate is that venture capitalists who can buffer the credit lapses have reserves that will last another year or two. If the stimuli gushers reach by then, recovery here is in the cards, IMHO.
Silicon Valley has been busy remaking itself since the dotcom bust.
Many of those who got rich during the dotcom boom have hung around and switched from technical roles to investment roles. They have become angel investors, partnered with venture capitalists, and some have learned new trades.
There is alot of non-IT activity here now - the bulk of it being biotech (which was a minor fraction of activity here 10 years ago but is now significant) and green energy (which didn't exist in industrial strength here a decade ago) and is now all over the Valley.
Hymns - read HISTORY... this has all happened before. New England to Great Lakes... Great Lakes to Cali... before that Manchester & Liverpool England to New England.
They all had it ALL in their hey day... finance, superior technology, talent... and they all slid regardless. Cali is no different & will be no different...
Realize Detroit was still the wealthiest part of the US as late as 1960s at the peak US auto culture, peak Motown Mojo... all completely OVER by the mid-80s.
If you went into Detroit in 1969 and told them... it's twilight folks... you'd have been laughed out of the place. Twenty years later not so much.
There are TWO killers: (1) desire to maintain status quo at all cost and (2) the high cost of operations in previously successful locations. I have no idea where the next big thing launches & thrives... but my guess is even if it launches in Cali it doesn't stay there for long. The costs are just too high.
There is a precedent for this as well - the automobile revolution... it started in Europe where almost all the early innovation was done... Daimler, Diesel, etc. around 1880 - 1890. But it thrived in the US after a slow introduction because factors of production were much much less expensive AND the population accepted the auto more readily [a very eager market].
But maybe this time it is different - I however doubt it.
Dryfly,
Your analysis that the next big thing, even if it does arise in Silicon Valley, will move elsewhere is predicated on costs remaining high in the area. The level of deleveraging we are seeing in real estate prices suggests that wage deflation may follow (since employers can pay less if employees can subsist on less). If costs drop, the area may receive another lease of life.
Regardless, you have a broader and deeper range of experiences and reading than I do, so it's always interesting to hear your perspective. I'm not sure I'll be around to see the transition you predict but it will be interesting to watch the are over the next few years. I suspect we'll know the direction of the next 20 years after the next 5 elapse.
EHP: great read! Cogent and will probably play out to be true in many of the predictions.
BTW - there is no law saying the next big thing will 'innovate' in SV. 100 years ago the innovation centered around the Great Lakes as that article suggests. Then it moved 'west'. It will more than likely 'move again'. Where? Who knows - might not even be on this continent.
Government at every level in this country seems to be pushing innovation out.
Rob Dawg:
"Government at every level in this country seems to be pushing innovation out."
Innovation is for the Chinese, we're just consumers. Get ot the mall and spend dammit !
Jumbo loans? Dumbo loans. The bigger they are, the harder they fall. Unless they can comfortably be afforded of course, which I suspect is rare.
Jumbo loans should be as rare as the affordability of those who use them. And beyond that, housing prices should shrink to loan size, and not vice versa.
it sounds like a sound program.
problem is, how many in LaLaLand can afford to put 25% down and pay an amortizing payment, even at 5.75%? this is the land of "cash flow", not prudent borrowing.
dryfly,
I'm not picking sides, it's just oddly surprising to me (the article was written before I was born, and spends most of the time in the 1970s)
volker the viking, glad you liked it. first stumbled on to his writings when I read his June 2007 (?) feature on the boom in Shanghai at ground level (more than the government intervention, more than low wages... the legitimate innovation)
Have you signed your loyalty oath yet?
"Volunteers met in 1,200 to 1,300 locations across the country, organizers said -- from a library in Arlington, Virginia, to a park in Brooklyn, New York, to homes and restaurants in California..........asking people to sign forms in which they pledge support for "President Obama's bold approach for renewing America's economy".
Blogger: Blog not found
Didn't they try this in Germany a while back?......
organizing people to support a political issue and to press their congressmen to do so is not signing a loyalty oath. Silly comparison
On their website BofA recently used to quote prices for conforming jumbo with 10% down.. Now they only quote prices for conforming jumbo with 20% down. Wells is at 25% down I believe.
If BofA gets into the jumbo space and require major down payments it won't matter that they are reducing the current spread a percentage point ot two.
Here is a Loan to Value chart for Ventura County for December 2008, you can see the activity (somewhat, I cap the graph at 1 million) in the jumbo space. If they require documented income and significant down payments it is merely a marginal improvement to the market.
Effective Demand: Ventura County December 2008 Loan To Value chart
The problem is... with a lack of job security, income and an ability to find work it won't matter what the interest rate is when the buyer can't actually pay any of it back. The 30 year fixed would need to be replaced with a 30 year, 'whenever-you-can'.
If you can't pay the 20% on a $1.5mill home, I'm going to go out on a limb here and say 'YOU CAN'T F*****G AFFORD IT'.
I am a bit confused as to why anyone thinks this will restart the upper end housing market.
If the prospective borrower needs 20% for down payment, chances are they will need to sell their present home in order to come up with the down. And this isn't a great time to count on a quick sale. And most folks in the higher end housing market are not too anxious to cash in $200,000 from their non-retirement brokerage account as they are probably down 20% to 50% and not willing to realize that amount of loss.
Prices will keep going down until they are affordable and not amount of loose money or government interference will change that. The psychology has changed.
<<Who in their right mind would go to market right now? For the jumbo sector, why not wait until prices have actually bottomed? >>
Location, location, location.
There are no for sale signs in some areas for a reason. When they appear, they are gone quickly with price a secondary consideration.
<<Who in their right mind would go to market right now? For the jumbo sector, why not wait until prices have actually bottomed? >>
Location, location, location.
There are no for sale signs in some areas for a reason. When they appear, they are gone quickly with price a secondary consideration.
JLR says:
And where would that be? I live in Manhattan Beach and around here that isn't the case anywhere but for very select homes.
\t
If banks enforced a 3x income limit on house price to get a mortgage, and had been for the last then years, the whole McMansion thing (and huge metro sprawl) could have been avoided.
But nobody has ever figured out how to put Humpty Dumpy back together after sitting on the wall and having a great fall.
Even with a return to the approx. 5% housing price appreciation of earlier decades, we no longer have the productive capacity to sustain that. So who are we kidding? An economy that is 2/3 or 3/4 consumer spending is not going to be first world in the future.
Re: asking people to sign forms in which they pledge support for "President Obama's bold approach for renewing America's economy".
You know what they say: When fascism comes to America it will go on Leno and talk about bowling.
"There are no for sale signs in some areas for a reason. When they appear, they are gone quickly with price a secondary consideration."
Ahh, the vaunted fortress area argument. Where fortress is defined as the small and vanishing areas that don't have concrete sales data disputing the above notion.
The following are previously fortress areas that are now showing > 20% house prices in the last few months.
Southern California
Beverly Hills
West LA
Santa Monica
Northern California
Piedmont
Alamo
Montclair
Danville
This is a publicity stunt. Moreover, people who have 200K and renting are probably waiting for better deals.
"This is a publicity stunt. Moreover, people who have 200K and renting are probably waiting for better deals."
I know many of these types of people up in Silicon Valley. All of them were seriously looking to buy until roughly October. None of them are looking now due to a belief that housing has further to fall and/or worries about their job situation.
It looks like TPTB are going to push through the TALF tarp with the American tax payer holding the bag for another 700b in loses. As much as I would like to see the new program not be implemented, I suppose the American tax payer deserves to be scalped again for being such pure born-n-bred dopes. Another reason I don't mind seeing the TALF tarp is because it will hasted America's economic destruction that much more quickly. Let the bastards keep looting I say, I don't care if nobody else does.
"Ahh, the vaunted fortress area argument."
Piedmont surprised me a little. The others, not so much. Have you seen the same sort of decline in house prices in towns like Atherton, Portola Valley, Woodside or Hillsborough? Those are the Bay Area neighborhoods I would have called "fortresses."
Add Sebastopol,down 28%.
Have you seen the same sort of decline in house prices in towns like Atherton, Portola Valley, Woodside or Hillsborough? Those are the Bay Area neighborhoods I would have called "fortresses."
Exactly and no.
TALF had request for 4.8B in funds out of the first tranche available. A horrible start to the program.
Because of most of the crap on the banks' books doesn't qualify for the TALF. Don't worry, Bernanke and company will water down the criteria enough to be able to buy junk to their heart's content. Just give it time and watch.
$1 million was recently one thousand square feet in W.LA, so that's not that big.
630 sq ft 57th and 8th ave, nyc
You are seeing the same numbers on the high end pretty much regardless of market, YEARS worth of supply. Right now with the massive goverment subsidization of the low end, combined with low rates it has a lot of demand. Over 500k.. not much at all. This will be the year of massive declines in the upper end market.
I predict we will soon (mid to late this year) see sales slow (due to constricted supply of REO) and median rise (low end sales slow somewhat, high end prices adjust downward and some more start selling, mix shift).
You can see a graph of demand versus inventory here:
Effective Demand: Ventura County Housing Inventory vs Demand
You see pretty much the exact same breakdown in different market on Jim the Realtors blog for San Diego (bubbleinfo.com) and Lansner (Page not found - Lansner on Real Estate : The Orange County Register reporting on Steve Thomas's numbers for the OC market.
My zip code, 97053, is pretty much jumbo-loan territory. I don't have a good explanation for the high prices here, just a hypothesis that the born-agains, Jehovah's Witness, 7th Day Adventists, Mormons, Pentacostals, etc. are forming a community out here, because it's home-school friendly. We still get a few of these escaping from Cali-- they seem to have some considerable spare change, for sure. But that's a 'pocket' phenomenon, and not typical of Portland as a whole.
there goes the neighborhood
Off topic question. Could someone suggest the best/simple way to purchase gold, i.e. index fund, coins, etc? Thinking to invest some $'s in gold for a year or so as a hedge on inflation.
so...bailout the banks, pay the bankers phat, then start a sweetheart jumbo loan program so they can buy their greenwich, ross, la jolla, bloomfield hills, westchester, west hampton, jupiter, etc,et al, yada yada yada dream home on the taxpayer(whoever is left of them) dime.
what a country!
dryfly,
I'm not picking sides, it's just oddly surprising to me (the article was written before I was born, and spends most of the time in the 1970s)
I'm not suggesting you are picking sides - I LIVED that period, read the article when it was new [can't remember what I thought about it then as we were all enamored w/ SV at the time - it was MAGIC unlike rust belt... until dot.bomb that is... then it was 'where have I seen this before?'].
Where was I in 1985? Probably calling on John Deere in the early daze of the farm crisis when we wondered if John Deere would even survive and who would grow the corn... At that same time just north west of Waterloo a couple hundred miles in N Sioux City the NEW economy was also taking root... called it 'Silicon Prairie' or something equally stupid - anyway that was 'the future' where Gateway was taking off. Why would anyone want to grow corn or make farm machinery when they could make the big money designing & assembling 'personal computers' instead?
Fast forward to today - what are they doing around N Sioux City now? Growing corn & making farm machinery. Gateway is only a brand at Best Buy.
Nothing much really changes in the human condition... the toys and tools change but the people really don't.
Thanks for the nostalgia.
dryfly
I appreciate you sharing your experience
It's something I can only read about because so much has changed. A big employer in my city probably has 500 workers, 100 them being temps/contractors. I have some more perspective when it comes to say the logging industry, but what I think of as the boom times were already after it had declined by half
The Quebec provincial govt was subsidizing an aluminum smelter a few years ago and I thought it was crazy. Employed about 2000 people and the subsidy was like $150,000 up front while the govt had/has a deficit+debt problem. 50 years ago it probably employed 20000 workers at better wages and the politicians must have been acting on nostalgia, unaware the world had kept spinning
I should have been more clear; ~$150,000 per worker subsidy
The Latest from Mish:
How Citigroup Incompetence Squanders Taxpayer Money
None of them are looking now due to a belief that housing has further to fall and/or worries about their job situation.
My anecdotal evidence is that the wheels are falling off in SV. I now know a bunch of people where both husband and wife have been laid off or given notice.
If the unemployment rate is 10%, then only 1 in a 100 couples should have both laid off (treating each as an uncorrelated 10%-weighted coin toss.) My numbers are way above that probability.
My other favorite bubble area is Boulder: It is running 21 months of inventory according to the Feb report.
Batten down the hatches.
I've heard of scores of people who were laid off recently (in the last year). But all of them have found other options within weeks or months. Even those who were being picky about what they wanted to do work-wise. What fraction of the laid off folks are still unemployed 3 months later?
fwiw: @ 2:51:15 is me
There are no for sale signs in some areas for a reason. When they appear, they are gone quickly with price a secondary consideration.
As I said above - "if you have to ask the price you probably can't afford it." That separates the real high end from the wannabes. You don't want to get in a bidding war with them if you are a wannabe.
Anyone read last weeks Sunday NYT? There was an article on the Hamptons. Prices are falling pretty hard there now especially in the high-end aka "if you have to ask the price you can't afford it" areas.
KEY | SPRING 2009; Key | Spring 2009 | A Cold season in theHamptons - NY Times
Samdog - great to hear Beijing's industrial pollutants are reducing, but the place still has colossall amounts of airborne particulate from the loess plateaux. I remember being caught out in a dust/rain storm in about spring 98 and basically getting globs of mud all over me.
Good for the dry cleaning industry...
C
I'm glad Chuck Schumer has straightened out Barrack Obama. This letting Wall Street fail talk was gaining too much strength. Obama is smart to listen to his corporate masters. Bonuses back on! Pelosi will straighten him out on immigration next. California agriculture, the restaurants and Silicon Valley need their subsidies too!
"I remember in the REAL smoggy days in San Gabriel Valley in SoCal back in the 60s, smog was WORST in summer. We never had any problems with breathing during the fall thru spring - just summer. Could that also play into Chinese clean air?"
How about Upland Fontana area with the Kaiser steel mill. That was a mess.
Lobbyi$t Ben Dover,
Not in my experience. I've mainly been there in winter. Cities in the river valleys are the worst (eg, Lanzhou in western China).
Counterpointer,
I hear you! Evironmental damage the Chinese have done to the land & water is another story ....
Wait, is this an attempt to use jumbo debt to cure a jumbo problem? In which case, FAIL. At least according to the expert that sold his house to a buyer at 273 times rent - a buyer who undoubtedly also used a bank loan, not that it troubled the seller at the time - he made his money, and the debt wasn't his problem. Which is the American Way, after all. Because at least one form of innovation was not in any sense impeded by any level of government for more than 8 years.
Look in the mirror people - it wasn't the greedy banks, the criminally lax Bush Administration chain saw wielding regulators, or even the fraudulent borrowers - it was everybody that willingly participated in what happened, in part because they thought their personal profit had nothing to do with the larger society around them.
If only a way to monetize hypocrisy could be found, the American Dream could be rescued in another bubble of blissful ignorance. Though one component is missing - the next time, the world's 'savings glut' is not going into the jumbo recycler created by the world's finest financial engineers.
The worst smog I've ever seen was in Beijing. Summer came, the great pot lid of the inversion layer would be clamped down over the city, no breeze, and I'd look out and see the smog and conclude that it must be cool-ish out, because that's what it looks like where I come from. Get outside, turns out it's almost 40 celsius, and the junk starts building up in your nostrils so fast that in 20 minutes' time your blowing grey into a tissue. Frankly disgusting.
C
Krugman is on a roll against the latest bankster subsidy.
This 'change' thing is a lot easier said than done.
This 'change' thing is a lot easier said than done.
The French have a saying for that... 'plus ça change, plus c'est la meme chose'... So did Yogi B: 'deja vu all over again'. Both work.
Counterpointer,
You should see our photographs from our visit to Beijing in 2004. All the pictures of lakes/old bridges have that early morning, foggy, romantic look to them. But it's actually smog and 2pm in the afternoon.
I wonder if the German government might extend support to the major foreign owned employer Daimler of Abu Dhabi
The Quebec provincial govt was subsidizing an aluminum smelter a few years ago and I thought it was crazy. Employed about 2000 people and the subsidy was like $150,000 up front while the govt had/has a deficit+debt problem. 50 years ago it probably employed 20000 workers at better wages and the politicians must have been acting on nostalgia, unaware the world had kept spinning
I can tell you 100% what they were doing & thinking and it wasn't about metal working jobs - they were trying to lock in an alternative 'outlet' for provincial hydro power... They really only have three options (1) sell to locals and there is only so much power each Quebecer can use - probably subsidized to boot... (2) sell to the USA at whatever dollars are worth... or (3) use the 'excess' power to produce something that stores at least SOME of the value... smelting aluminum & magnesium fit the bill perfectly. There is a ton of cheap ore worldwide and the finished metal stays good almost forever. Saying it will 'produce jobs' is just to win political support.
Remember they can only store so much water up there then they have to let it out... so at that point the electricity is almost free. Use it or lose it.
poic - that's kinda depressing, because I keep wondering about going back, but I'm not that keen if it's gonna be like the grisly grimy 90s.
C
Comrade alexei mikhailovich says:Today, 11:58:19 AM PDT
Asides from those two segments BAC is in great shape, you might want to look at insider buying patterns. If citi starts a similar program then the pig is through the python as far as the big bank crisis is concerned.
You mean like Roberto Hernandez? Exurban Nation: Better To Be Lucky
"How about Upland Fontana area with the Kaiser steel mill."
.....as a kid watching Kaiser-Steel belch out its smoke and riding down old Milliken with all the dairies thru to Chino - I'm surprised my lungs aren't worse.
Prices are falling pretty hard there now especially in the high-end aka "if you have to ask the price you can't afford it" areas.
Lesson: most all of us really are wage slaves [smacks forehead...'whoocoodanode'?].
Oooh. Looks like NH's very own Judd Gregg is warning that the US is headed for bankruptcy.
We call em like we sees em around here.
If you're good enough to use the c cedille, why not the circonflexe for meme?
If you're good enough to use the c cedille, why not the circonflexe for meme?
Cut and paste. I can 'say it' but I can never spell it right so quick google-cut-paste. Hell I can't spell in English - what little French I know is way worse.
Hope that 'splains everything.
There are many examples of high-end real estate getting hit hard due to changing financial fortunes.
Silicon Valley 2000/2002, ultra high-end sections of Michigan 2008, NYC early 90s and starting to see it again, Hamptons 2009, Tokyo through the 90s
The 5M++ real-estate can and does get impacted when the ultra-rich take a bath on their investments.
This changes nothing, as a few have mentioned, the pool of buyers who fit this profile is, well, almost as tiny as the amount of folks buying now...
how many of these median jumbo zip codes have seen less than 1 sale per thousand residents in recent months in the higher priced parts of CA? hint: almost all of them.
charlie Rose hit job
CHARLIE ROSE 'WHACK JOB' - NYPOST.com
puditry “charlie Rose hit job
CHARLIE ROSE 'WHACK JOB' - NYPOST.com
Make sure your pop-up blocker is turned on before you click on this link ... Sheesh!
For anyone who doubts the very rich are different I've done a redfin search of a nearby area for $10m plus houses:
Redfin
For the record I think these are almost all worth exactly 1/10 their wishing prices.
I clicked on the 11k per square foot one; the picture was cut off to one side, and the first thought in my head was that hey, this is a trailer!!
there is a book called Class, published some time ago.
It describes the classes, the extremes of which were bottom out of sight--so poor you almost never saw them, as they slinked around trying to stay alive. On the opposite end, there was top out of sight. You never saw them either, because they were hidden away at various retreats and scorned to rub elbows with us mere mortals. I suspect the top out of sight do not list their homes where we can see. You are talking about a really rarified stratus.
>there is a book called Class, published some time ago.
It was by Paul Fussell. Very funny and painfully true.
"How about Upland Fontana area with the Kaiser steel mill."
In the sixties I lived in Upland and was sick with a sinus infection all the time. The smog was like a fog bank. Very happy to move to Santa Monica after that.
Where is everybody?
Where is everybody?
Can't speak for others but I've been out raking up six months worth of what was frozen dog poop... until I can't handle it anymore and take a break to 'post'.
Yes the snow has finally melted. If I didn't know by looking my nose would tell me anyway. It is supposed to rain to beat hell tomorrow and what remains unraked should be well on its way to the Gulf of Mexico.
There is probably a financial allegory there somewhere for the OT police - if they care.
the big dance was o
Great smog stories, people. I just have one more, about a year ago driving from DC to Niagara, I bushwhacked my way up through central PA just east of the Alleghenies. Pretty miserably towns, but krist on a stick came out at a place. think it was Bradford. Talk about dark satanic mills. Looked like the industrial revolution was in full swing.
C
Dryfly @ X:30:18 PM,
Thanks for sharing that insight. It is posts like that that continue to make it worth plowing through the comments.
This was an interesting CNN interview with Eliot Spitzer re: AIG.
Video - Breaking News Videos from CNN.com
Oops, that Spitzer link is a little detached, but you can click on the Spitzer story beneath that neat national rube contest story about taking 300 steps to change a light bulb, which is another story we've covered here in some ways before.
Dare I ask, why do you have 6 months of frozen dog poop? I planted a yellow rose and mowed around the edges where the lawn guys are scared to go, and a couple of blue plants for the blue garden and a couple of sunflower seeds, and then my watering made it rain.
Beats dog poop. But the kitchen needs cleaning.
Why oh why has our science focused on the internet, when it could have been inventing kitchen slaves? Heinlein, where are your Door into Summer engineers.
LIz, did you see Cher's Mediterranian "villa?" $45m on a palatial 1.3 acreas and no, not on the beach but right up against the highway.
As to what I've been doing; mowing the driveway (yes, driveway) and trimming the palms.
I think that we will hit affordibility at the point where we could all afford our own houses. We certainly couldn't, even at today's reduced prices. My mother couldn't either, again at a very reduced price.
Our driveway is crushed sand/shells and we drive on it enough that it doesn't have any grass. Nope, is Cher's house for sale? even up against the highway, there should be enough foiliage to cover up a bit.
Bleccch. I guess I'd better clean the kitchen.
Grumble, grumble.
Tom Stone,
Any recs for clear headed agents in the Sebastopol / west county market?
I am a licensed Real Estate Broker,and reasonably clear headed after 2 cups of coffee.The west county market is actually pretty segmented,Russian River,Bodega bay and environs,Sebastopol and Surroundings,and vineyard properties or dairies.I would also recommend different people depending on whether you are looking for a listing agent or a Buyer's agent.If you are looking for anything except a truly exceptional high end property that you can not come close to duplicating it is too early to buy.
"There are no for sale signs in some areas for a reason. When they appear, they are gone quickly with price a secondary consideration."
Ahh, the vaunted fortress area argument. Where fortress is defined as the small and vanishing areas that don't have concrete sales data disputing the above notion.
Actually I was speaking of areas where the desire to live there is well established and the neighborhood stable. Price is secondary for many who wish to live there and $1M+ not required.
Long term residents/neighbors, local owned shops, schools with high parent participation, open space...
(Btw, anyone who hasn't lopped 20% off their peak bubble price is delushional.)
The new money and guidelines will make it easier for a guy with 45 percent down to get financing on a $2 mil home in Palo Alto or Woodside. And there are a few like that who've been turned down.
But I don't see it making a difference for most of us. Old-school credit and down payment requirements for a jumbo? Makes my cockles warm. But not too many who want a $600K home in California can swing that.
And Dryfly says:
"BTW - there is no law saying the next big thing will 'innovate' in SV. 100 years ago the innovation centered around the Great Lakes as that article suggests. Then it moved 'west'. It will more than likely 'move again'. Where? Who knows - might not even be on this continent."
This is all true. That said, the Valley's emphasis has changed many times over the last 30 years as it grabbed hold of new technologies not necessarily invented there. At times you could have called it PC Valley, Disk Drive Valley, Software Valley, Network Valley, and more. In a couple of years it might even be Photovoltaic Valley, for the number of firms currently working on "printable" solar cells using production techniques derived from semiconductor manufacture. And they're actually building the plants there.
That last example picks out Silicon Valley's one key strength for innovation: it's got a deep bench. All the resources an entreupreneur needs to start an enterprise, hire the right people, knock together a prototype and even get funding are right here. As long as the deep bench, the infrastructure for product development, remains intact, the Silicon Valley will remain in the game. And the major Bay Area universities that have fed the valley with fresh meat, fresh tech, and fresh ideas, are still there as well.
Will SV always be the leader? Not necessarily, nor necessarily as rich as it is now. But unless the locals make a lot of bad policy decisions, it'll always be a player. It'll never be Detroit -- and not only because of the weather.
Will SV always be the leader? Not necessarily, nor necessarily as rich as it is now. But unless the locals make a lot of bad policy decisions, it'll always be a player. It'll never be Detroit -- and not only because of the weather.
Just wait - I am reminded by my sister [once a hot shot prosecutor turned econ historian] that the Detroit-Cleveland corridor was the wealthiest & most innovative region of the US... from about 1900 to 1950. Prior to that it was the Mohawk & Allegheny river vallies of NY & PA and also into the Berkshires of Mass... 'the armory of the republic' in the civil war.
All the best universities of the time were located there too... Carnegie Mellon, Lehigh, Case & Western Reserve, RPI, plus of course the 'Ivies'. They were the Caltechs & Stanfords of their day.
Yet the region still slid into decline.
The hot spots move around. SV will be no different. I truly think its run of 30-40 years is in twilight now... partially bad policy & partially due to high cost. The later is what killed Detroit forty years ago - who would launch a garage start up biz there when everything from taxes to 'operating cost' costs an arm & leg? So they look elsewhere.
Oh I forget - California is different - VC white knights will pay for all of it & there will be no need to sacrifice. Not in the tail end of a Schumpeter wave... then there isn't enough capital for VC & what will be available will be dearly expensive. In the lean years coming up it will be the 'boot strappers' who succeed... not those funded by evaporating VC. In such a world low cost matters most and Cali is currently too expensive by an order of magnitude.
JMHO - but I bet I'm closer to the truth than 'SV has always been innovative and will always remain innovative because XXXX' [fill in with reason du jour].
How much is California's deficit up to now, over 50B yet? I need more tax revenue horror shows.
I've got some good fodder,
http://www.journalgazette.net/article/20090322/LOCAL/303229940/-1/LOCAL11
Indiana County's officers are seizing money on sight to raise funds
$26k in your jeep? Must be proceeds of crime and therefore mine to spend as I wish
What genius wrote that law?
President Ronald Reagan.
Indiana County's officers are seizing money on sight to raise funds
$26k in your jeep? Must be proceeds of crime and therefore mine to spend as I wish
What genius wrote that law?
You've got your head buried in the sand. Every county in America does it. Some places in Texas make you sign your car over to them too.
buying a 1.2M home with 25% down one needs 300K income and not much debt.
Wall Street is gang-raping the American Dream...., and we like it.
Rollingstone.com
The Big Takeover
The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution
MATT TAIBBI
Mar 19, 2009 12:49 PM
It's over -- we're officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline -- a corporation that got rich insuring the concrete and steel of American industry in the country's heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
The latest bailout came as AIG admitted to having just posted the largest quarterly loss in American corporate history -- some $61.7 billion. In the final three months of last year, the company lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).
So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial -- we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street whom we allowed to gang-rape the American Dream.
...
The Big Takeover : Rolling Stone
Ok. Read the AM piece on China. Good observations, good historical comparisons and references, well written. All wrong.
The problem of finite resources, a compromised environment, soil depletion, water shortages, exponential population growth, and the simple truth that we all can't have the way of life the USA has enjoyed. No one can anymore.
China can't simply change their export economy to a domestic demand/production economy. The Chinese people don't have the money and currently the jobs. China is undertaking huge infrastructure building but from what I have read it is focused on transportation to ensure supplies of commodities. The statement that the stimulus will have a larger effect because their economy is smaller is ludicrous. Millions of people switching over to government jobs will rapidly eat through the vaunted 2 trillion in foreign reserves they hold. Then what? The rest of the world will have reached equilibrium and return to buying the discretionary income based materials China has been producing? The rest of the world will cede all manufacturing to China and do what with their population? China's military will set up a sphere of influence that will ensure their agenda reaches ascendancy? Russia and India will have some qualms about allowing China free reign over areas they share. Empire building is fraught with turmoil and in the nuclear age no longer can a conventional force be the final say in who wins a resource war.
The game is shifting with new rules and new goals. The players will be those with the existing infrastructure and political stability. We might all be surprised how quickly Americans can retarget their rage outside our borders. This story has been written over and over with the same ending. We might lose this time but we won't go quietly into the night. Take away the dollar hegemony. Take away a viable financial system. Take away the farce of the two party system. What you leave is a very proud, very well armed, well educated, good infrastructure support and the ability to feed ourselves. I don't know the future and the benefits of researching history for comparisons leaves much for personal bias interpretation. My bias is we will hold together longer then everyone else and be there to pick up the pieces. Maybe, maybe not. It is an interesting time to be alive.
"What genius wrote that law?"
Isn't that just the law of the jungle? Or is it street justice? In any event, if person A has $26k in cash and person B has a gun, person A probably doesn't get to keep the cash...
I'd lend too - spreads are good even though collateral values still have a lot more to fall. If things work out - you make a great spread. If things fall further, the government injects more money. All mortgages should be 50% down - like buying equities on margin.
"What you leave is a very proud, very well armed, well educated, good infrastructure support and the ability to feed ourselves. I don't know the future and the benefits of researching history for comparisons leaves much for personal bias interpretation. My bias is we will hold together longer then everyone else and be there to pick up the pieces. Maybe, maybe not. It is an interesting time to be alive."
At any rate, a possible future. I don't know if I believe in the plausibility of a last country left standing. But if it should happen, the US will not remain unchanged. You will not be able to recognize it.
The future of the Great Lakes region is probably stronger than recognized because they have all the fresh water. And that is going to be a big deal in a generation.
The future of the Great Lakes region is probably stronger than recognized because they have all the fresh water. And that is going to be a big deal in a generation.
The 3 largest lakes in Africa hold somewhere around 25% of the worlds fresh water. The Great Lakes contain another 20-25% of it.
It looks like China is focusing on locking up Africa first. I wonder what the rest of Asia and Europe is going to do in a few decades.
Hey Dryfly, you're correct. For example, Sonoma county, within 10 miles of the coast, very little is below 1m. "We're moving there, renting for 6 months. If we see something, and jumbo rates drop to 5, you bet we'll buy. Moving to rural California right now is exactly contrarian enough for me. "
First of all Sonoma county is not rural, a few area's west of Petaluma around the dairy industry have some larger spreads but otherwise its pretty much a urban landscape. You will find many many willing sellers if you want a jumbo in Sonoma county, lots of stranded high end flippers counting the days. I moved here back in 2005 after selling in Woodside was only going to rent for a year then buy, still renting, still watching the housing prices drop. They have a long way to travel.
Counterpointer,
Even here in the flat land, the little valley where the rail yard is gets a inversion layer of diesel smog on ocassion. Great progress has been made in the US. Al Gore should show his film in China! =-X
This move by BoA may be portrayed as a return to sensible lending statndards, but it's not intended to be. Ben B,d Sheila B, Barney F, Chris D, and other key policy makers have said very clearly that they intend to do whatever it takes to prevent house prices getting close to their free market value. If this BoA move ends up being too sensible, they will layer on other measures to make it less sensible. They are not calibrating to "sensible", they are calibrating to near-peak home prices.
Lawyerliz said: "Where is everybody?"
It's another Pleasant Valley Sunday here in Status Symbol Land. Myself, I was out weeding and mulching, and the neighbors were mowing, trimming trees and shrubs, and doing some do-it-yourself exterior home repair.
Sebastia
Michael says:
“Why not just pay cash for something you like. Retired people should not have mortgages hanging over their heads."
I totally agree MSM is always playing grandma getting foreclosed. TV today had one must have been about 70. If you can't pay for one when working how the hell can they pay on their retirement? I don't, even sold my second house.
Back to work gardening!
"What you leave is a very proud, very well armed, well educated, good infrastructure support and the ability to feed ourselves. ..."
I think that ability to feed ourselves depends on a hella lot of oil, or if you prefer, energy. Though I could certainly be mistaken.
Lawyerliz - not sure if this qualifies for super rich but it is certainly a nice house and listed on MLS no less!
Hamptons House For Sale
Now the more exclusive listings won't be on MLS. You'll have to go to Sotheby's Real Estate to see gems like this one 25,000 Sq Foot - 60 acres Price Upon Request If I had to guess I'd say its in the $25million range.
Lawyerliz said: "Where is everybody?"
I'm reading 'The Fatal Shore' by Robert Hughes and nursing the DH, who caught a cold coming back from Australia.
As for Sonoma County, try Rohnert Park, they have condos there at less than 150k. I used to live there, it's not wildly fashionable, but nice, nonetheless.
So there is urgent demand for 1 million homes from people able to make 25% down payments, like spigot-like. There is even credit to be had! Sounds like the economic downturn has not been severe enough in the well-off quarters.
and doing some do-it-yourself exterior home repair.
Speaking of Do It Yourself. The paint on our ceiling in living room/dining room has started to peel. Turns out that a very light texture was applied over bare drywall when they built the house in the 60's.
How do I know there's bare drywall beneath the texture? Because I spent yesterday and today scraping off the texture. I got a coat of primer on today so I can see the areas needing some spackle. A trip to the Home Depot was in order to obtain said primer and the ceiling paint. At 11:30am Home Depot was a ghost town. Plenty of day laborers in the parking lot - and lots of help who were almost annoying in their repeated attempts to see if I needed help.
Quite a difference from a year ago when you needed to use hound dogs find an associate before tackling them to get help.
Funny thing about oil is how we are finding large fields all around NA. Cuba, Brazil, Mexico, Alaska, North Dakota and Canadian oil sands have all been touted as huge oil finds. Wouldn't surprise me either if some wonderful new technologies happened to pop up shortly after the dollar collapses/ loses reserve status.
Rationing fuel/oil for farming and critical services would stretch what we have and lessen our import demand. Anything is possible when the choices become dire enough. Nothing will be easy but the necessary shift in our economy and fossil fuel dependence is crucial for our future. I would personally live a subsistence lifestyle if I could see we were heading toward a sustainable future. Everything I own has ended up owning me and dictating how I live my life. I am past ready for that to change even more then I have managed to this point.
“A lot of Bay Area activity is basically on hold, waiting for the jumbo mortgage spigot to reopen.”
Just a silly thought, but maybe jumbo loan initiations were down because buyers were too smart to buy falling knives.
Could someone suggest the best/simple way to purchase gold
Depends upon your goals.
Comrade alexei mikhailovich says:
As some who is tight with a tier 3 BofA exec he would agree that countryfried was a criminal enterprise and in addition that they walked on merrill until being strong armed by the government & fed.
Confirmation of what we all suspected.
Asides from those two segments BAC is in great shape, you might want to look at insider buying patterns. If citi starts a similar program then the pig is through the python as far as the big bank crisis is concerned. Small banks hasn't even taken off.
What's BAC's exposure to CRE? I'd say consumer credit issues are far from peaking, too.
Sane lending is returning, but sane lending doesn't support these price points.
Absolutely.
BAC exposure to CRE is not mega, but they have some. Their major exposure are the BofA towers springing up in various cities; they would provide financing to developers, lease 10-12 floors for themselves and strongly suggest to firms that wanted to get $$$ from BofA to lease space as well to make a literal vertically intergrated operation. Maybe not the best idea now but survivors will want to flock to the stronger operators.
Hey, Geithner's new plan now has a name: Public Investment Corp. (Really!) PIC is to pick your pocket of benjamins and hand them to the Goldman. It will be super efficient. Your family won't mind at all. Just ask them.
Sometimes reality is way too much for parody.
Scone, a 3/2 sfr near the jc in Rohnert park is $175k-$200k.Sebastopol is down about 30% YoY and about to dive off a cliff from the indications.
“A lot of Bay Area activity is basically on hold, waiting for the jumbo mortgage spigot to reopen.”
The jumbo spigot will re-open as minimum 20% down, documented income, valid DTI levels.
I was looking at houses in Berkeley Hills a few months ago and the common refrain I overheard at open houses was "who can afford 20% down". And this was from people in their 50s, the segment of the population up here who should have been saving up.
Even in the Bay Area there are a finite number of buyers with the income level and the 20%-25% down payment available to be able to afford higher end homes.
It is really going to come down to supply/demand. If the VC and IPO pipeline doesn't open up soon the supply will be even tighter.
We must sustain.. the unsustainable.
grrr... march madness now decides to get interesting.
I tried clicking on that mansion porn but it never came
up.
BAC exposure to CRE is not mega, but they have some.
BAC is in the enviable position of being somewhat "late to the party," which is not surprising given its geographic area.
When will the rampant homosexuality of the republican party be a topic of conversation?
Dixie mansion porn:
LUXURY HOME - SANDHURST ESTATE
In some ways, I am tempted to buy now.
I sold in Los Gatos in 2005, and I still believe house prices in the Bay Area's Jumbo neighborhoods have a good ways to fall. I have no illusions that buying now would mean a loss of equity in the next few years.
That being said, some sellers are dropping their prices, and we might find a mild bargain (compared to the peak). But what is most enticing is the possibility of financing most of the purchase at 5% over 30 years. I like the idea of future inflation wiping out my debt for me.
On the other hand, I wonder if deflation might not be settling in for a nice long stay. Another consideration is that the government might solve its budget problems by taxing the hell out of property in the future.
Ah, if only my crystal ball were working…
When will the rampant homosexuality of the republican party be a topic of conversation?
This is the era of Don't Ask, Don't Tell. Just don't open their closets or they will say you are mean, a traitor, and a commie.
The second house did come up. I liked the lot and the gardens, but as a house, where could you actually live in it? Even with a fleet of servants? You couldn't sit or make love on the window seat. I for one like a glass of something and the ability to lean against something or lounge when reading a book, and I would inevitably spill stuff on it. You couldn't lean again the pillow. The bathroom is dark and gloomy. Nobody would be comfy with a bowl of salsa & chips (if people that rich eat salsa & chips) anywhere in the living areas. Ok, caviar and toast points. Betcha roe eggs make a nice stain. Comfort and beauty and friendliness are the ultimate comfort and that place just isn't comfy. I guess it's not supposed to be. I guess it's just supposed to impress people.
Futures are positive. Promises to be an interesting week for Kermie.
That is, the ultimate luxury. :-[
It appears tat there are several people who are interested in Western Sonoma County property.I have been following this area since 2004,and am a licensed broker.I am NOT a listing broker,but can refer you to a good one.If you are considering buying,this fall is probably the earliest that makes sense.If you would like to talk to me I am in the phone book,or you can get my address through CA DRE.I will always give you an informed opinion,which may be wrong,but it will always be honest.
Just to clarify my last comment, what is tempting me to buy now (with lots of cheap financing) is essentially the possibility of the utter collapse of the dollar, and the wonderful things that this collapse would do for debtors.
As the government continues to pretend it has infinite sources of funds, I become more and more tempted.
But my plan is still unchanged: wait until late 2010 (at the earliest) before shopping for our next home. Temptation grows daily though. The government is so determined to redirect wealth to homeowners and their creditors...
Try this link
Hamptons House For Sale
If that doesn't work go to http://www.mlsli.com and search for MLS number 2068150
Post modern 6 bed 6 bath on 3.6 acres for $5.5 million.
Nice views.
that sandhurst pad is a tear down. jus sayi
that sandhurst pad is a tear down. jus sayin
It makes me want to scream... "I'll never be poor again!!!"
Besides it is only on 5 acres. Can't grow much cotton on that - what are their slaves gonna do?
[/snark]
Oh and the taxes on the $5.5 million 7800 sq ft post modern beauty are a mere $49,000/yr.
LOL!
Actually, I remember the place before it became an item - it was always enormous, but genuinely welcoming and comfortable. Dogs. Lap rugs. Catcher's mitt in your chair.
Is there any way to stop Geithner's plan, or is it structured in such a way that it bypasses congressional approval?
This is great news. These banks are going to make a killing. Within a couple of years, IMO inflation will be at least 15%.
main street recession is still fresh, Q408, give this another year and the idea of Jumbo market as a hold for investment vehicle by the banks will be another bad idea gone very bad.
Tom Stone says:
“Scone, a 3/2 sfr near the jc in Rohnert park is $175k-$200k.Sebastopol is down about 30% YoY and about to dive off a cliff from the indications."
Sebastopol was always the cute one, and RP was the smart one.
Way, way back in the day, I used to work for Sonoma State. When the DH and I got married, we skipped the expensive wedding and made a down payment on a condo in Racquet Club Circle, overlooking the golf course. There are definitely worse places in the world.
Even in the Bay Area there are a finite number of buyers with the income level and the 20%-25% down payment available to be able to afford higher end homes.
Among those that truly need to finance a "higher end" home, DP's come from pre-existing equity or cashing in stocks/bonds. Not likely these days.
dryfly: VC funding is all about the IPO market which we all know has been lean for a bit. Don't expect much out of VC,SV other then wishful thinking.
President Barack Obama said on Sunday the U.S. dollar is still strong but warned that excessive borrowing and high deficits could weaken Treasury bill demand.
U.S. dollar still strong, Obama says in CBS interview
| Reuters
This bastard is truly ate up.
Dryfly,I agree with you on SV,and California.Family and friends keep me here or I would have been gone a dozen years ago.Is it time for the PNW?
The Latest from Yves:
Guest Post: Geithner’s Faustian bargain, the general interest, Jean-Jacques Rousseau and Uncle Sam’s lost inner compass
"There is alot of non-IT activity here now - the bulk of it being biotech"
I worked in biotech for 7 years at 3 separate companies. My wife is still in biotech. Biotech is hurting right now. 80% of private biotech companies have less than 6 months of cash left.
@Tom Stone
I live outside Portland now. A lot of people seem to think the PNW is some sort of 'refuge,' but it's going down pretty hard. The economy is largely dependent on products used by the housing industry, and our local bubble is breaking, so the builders and tradespeople are going bk. Double digit unemployment and climbing.
ShortCourage,
Patience!
Anything short of Weimar/Zimbabwe style hyperinflation will do nothing to stop housing deflation. In fact, it will probably accelerate it, as the more money people have to spend on food & energy the less that'll be available for housing.
OTOH, when monetization-driven inflation does kick in long rates will skyrocket, absolutely destroying housing prices.
You do NOT want to buy now.
"Open the spigots, open the spigots, more credit, more credit." Yeahhaha. More credit is what America needs !
(Idiots!)
Asked whether there was a limit to the amount of money the United States could spend or print to solve the economic crisis Obama added: "If we don't get a handle on this, and also start looking at our long-term deficit projections, at a certain point people will stop buy those Treasury Bills."
Too late.
....what are the possibilities that some of the BIG CDS' counter-parties are in fact our creditors: China, Japan, Germany, Saudi, AUE, etc.??
tj and the bear,
Yeah, I'm still in the deflation camp for home prices. But the gubmint is really pushing the envelope...gonna keep an eye open for a dramatic increase in freshly-printed currency when I receive change at the grocery store!
ponziMCC says:Today, 7:54:22 AM“Anybody know what the odds are this week that we get the
"we support a strong dollar" statement?
U.S. dollar still strong, Obama says in CBS interview
| Reuters
U.S. dollar still strong, Obama says in CBS interview
Sun Mar 22, 2009 7:00pm EDT
ok... for a short time only, i'm offering my stock market picks to a handful of select first come callers...
for only $1250, you get my top pick for monday morning
call now/ 1-212-902-1000
Comrade Bear (tj and the bear) says:Today, 4:54:54 PM PDT
OTOH, when monetization-driven inflation does kick in long rates will skyrocket, absolutely destroying housing prices.
You do NOT want to buy now.
Testify "Comrage."
If you have a down payment you want rates to jump as it will make your cash go further.
I'm working under the assumption that while mortgages will remain cheap due to 10yr linkage, the yield on the 30 year will explode due to debasement of the currency.
So even if one has high net worth, one would rather borrow based on the government is now giving you cheap money over a longer term while keeping the bulk of you free cash in longer term paper paying windfall yields tax free. Does this make sense?
BTW, in my side project VC is hard to come by and terms would violate sodomy laws. Test market is generating positive cash flow and cities are beating down our doors but it's a chicken and egg scenario with advertisers. That and politics in our potentially biggest market: city wants it done, tech firm wants to bill us low 6 digits for a feasiblity study(is reverse engineer or patent applied for process) even though their engineers told us it already works. So we have to have our political heavies stomp a mudhole in them
Dry,
VC dollar deal flow was reported to be about 15% off in November compared to 2007. They indicated in the VC meet and greet that they were financing some more biotech, but there was no absolute trend toward one industry. I noticed green energy increased on one of the charts, but the speaker didn't even call it out (I think it was a passing fancy).
He did mention the VC money was requiring a more solid business plan and performance than before, so that was a novel concept.
Without a strong IPO market the VC climate is chilling.
Without a strong IPO market the VC climate is chilling.
VC are late-phase phenomenon... looking for extensions of already existing technology to quickly flip via IPO or big corp buy out. Most big new thing innovation waves require extensive bootstrapping & years and years of 'garage start up' operation. They need talent and VERY low cost. Look where those intersect & you will find the list of candidates for where the next big thing will thrive. Just sayin'...
SC,
What I'm trying to say is that there is no scenario in which I can foresee housing prices increasing, therefore low rate financing is of absolutely no consequence.
If your grocery bill suddenly doubles, will that leave you with more or less money available for a mortgage?
Testify "Comrage."
Heh heh... you're not going to let that one go, are you?
New Thread: Geithner to Announce "Toxic" Plan before 9:30 AM ET
http://www.calculatedriskblog.com/2009/03/geithner-to-announce-toxic-plan-before.html ( 0 comments ...You could be FIRST! )
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It won't be a ... stylish marriage.
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Patents are going to be the downfall of SV. Patenting everything a small startup could manage to get through the USPTO starting gaining steam in the late 90s and the VCs made a huge strategic mistake handling them. The VC birth/death model in Silicon Valley has always focused on short lifespans. If the company doesn't show signs of breaking out or getting bought within 2 years, it's left to die on the vine. The venture capitalists quickly caught on to the fact that patents could be used to make a startup look more valuable to an acquiring company, but they apparently never thought about the fact that the patents do not die when an unsuccessful startup dies. In fact all of these patents get bought up at the same time the old furniture and servers get sold as surplus.
The people buying the patents do so for the express purpose of suing anyone they can to get a cash payment from them. The number of cases has been increasing every year for the last decade and shows no sign of letting up. SV tech firms are spending tons of money fighting the patents, most of which are garbage.
Problem #2 is the legal community in San Francisco and Silicon Valley. They don't like outsiders, but at the same time the local schools aren't coming anywhere close to turning out the kind of attorneys that can defend these lawsuits. The highly ranked law schools in the midwest and east coast (which is to say almost ALL of the highly ranked law schools) have a steady stream of very smart and very qualified engineers and scientists that have been so bummed about getting laid off for the third or fourth time that they say "F it, I'm going to law school." The local law firms simply don't have the staff to accommodate the increase in case load and at the same time law firms in the rest of the country are hiring tons of lawyers with outstanding technology backgrounds that can look at a patent that the patent office didn't even understand and say "Oh yeah, I use to work with stuff like this. It's not new, I can find 10 examples of prior art in 20 minutes."
You can see where I'm going. SV tech firms are sending huge amounts of money to other parts of the country. Money that, 10 years ago, would have gone towards R&D.
RE: Sebastopol
I agree that its too early, I'm still waiting for foreclosures to force some capitulation on prices a la Rohnert Park (with a higher floor). I've been impressed with how long Sebastopol has held on price-wise. For those foreign to Sonoma County RE: A neighboring community, Rohnert Park, was at the front of the decline. It saw its median price peak in fall of 2005. Sebastopol peaked in 2008. I expected Sebastopol would lag Rohnert Park by 1 year, but its shaping up to be 3. Rohnert Park is now near bottom. From Peak to trough, RP has seen a 50%-65% drop over 3 years. There may be more down on those prices, but that's getting near bottom and it pencils out for SFR if prevailing rents don’t drop too far. (Prices are back to what they were in the 90s).
As for Sebastopol, prices are starting to drop, but haven't seen nearly the kind of adjustment necessary to get back in line with median incomes. Sebastopol is an artsy-liberal-bohemian formerly agricultural town in Sonoma County. It saw big money enter the market at the end of the 90’s from dotcom money flooding rural properties for wineries, commutable hobby farms, and walkable bungalows. The "irrational exuberance" continued long past 2005, and saw seriously batshit crazy prices relative to median income. Fixer houses still sold for 650-750k+ last year. Peak median was around 750K while median household income was at 65k (11.5X). Comparable rents are around 1800/mo and dropping. Since the top, median is down about 25%. But I expect to see 60% down before this is over (300-350K). The question now is timing.
So Fall 2010?
Tom, I left you a private message.
Agree,
We've been in the market before, rehabilitated a well and septic in rural SoCo and exited in 2005. We're looking for in town this time, with a reasonable lot for a Russian style victory garden. A Post peak home to hunker in until the kids are out of school. Tom's reference to PNW was/is our other option, but job/school and family/friends keep us here. Its a great place to live, until global temps rise 3C or California goes Mexican Drug war (consider me a strong advocate to legalize illicit industries to prevent enriched black market paramilitary companies (i.e. drug gangs) from challenging the rule of law and civil society due to the enormity of their capital flow)
I have no idea how to access a private message on js-kit.As far as Sebastopol all of your points are cogent,but I expect a sudden and sharp price correction based on a lack of qualified buyers and the number of people I know who have been holding on by their fingertips and are ready to let go.That said,2010 though 2014-15 is likely to be the best time to buy.And watch out for things like the Blucher Valley slump in addition to well and septic.Sending a couple hundred bucks to the volunteer fire department is a good idea too if you can't volunteer some time.It helps when they know your face...
Sorry, I meant to say that Stanford and the others are not turning out tech-oriented lawyers in the QUANTITY that Silicon Valley needs.
RE: Sebastopol:
also median income is in the mid 60K range so locals are not a factor in buying property locally, its all about SV and inner bay area buyers cash out and come North.
Good Luck on your search, I am beginning to think more like 2012-13 if at all for Sonoma. The wife retires in 3 years if it hasn't improved significantly then we will move up the coast.
Sweet!..."McMansions R Us" is a new start up I'm working on. We will be handing out mortgages to everyone who HAS held a job within the last 5 years or HOPE to have in the next 5 years. We are trying to get the monthly payments taxpayer subsidized. Imagine the profit to the taxpayer when this thing gets rolling again! :-$
Hymns.check DQNews for a monthly city chart of prices.