I've been wandering around looking at places today. The low end of the market -- sub $400K in the Santa Cruz Mtns and Watsonville -- is now drawing multiple offers and sales prices above asking prices.
It is not investors but first time home buyers that are driving that market. FHA loans with 3% down and 5% interest rates have made this price point attractive. Above $500K things are still static...
Assuming 3% down leaves with a 350K mortgage for 30 years at 5%, that means you are on the hook for $1878/month. Factor in 1% in taxes (conservative, again)and you have another 300/month. Lastly, add in 100/month for HOA and another 100/month in upkeep and maintenance, i.e mowing lawn, etc.
Total is $2378/month or let's just call $2,400 per month for 360 months!
WOWZERS!
Anyone buying at that price should be making $10K/month or 120K a year.
Two incomes are also not good because of the more than 10% unemployment rate in the state!
Ummm, this here old person closed loans as high
as 17 1/5%. I had a realtor tell me that rates would never go below 10%. I said that never was a long time.
everyone was happy 'cause rates had gone down to 12 or so. I heard that there were some 18 and 19% loans made. But I never closed one of those.
These first time buyers--how many time income are they buying at.
And why is financing available in Cali and not Fla? Or, is it all fhas there too?
Recovery? The patient hasn't been treated yet, and the physicians are striking for bigger bonuses.
The triage nurses are all in the exam rooms being done by the interns, so there's blood on the waiting room floor but the janitor got fired. (They posted a vacant position and since 400 filed for the job, it will take probably a year to sort and interview).
Meanwhile the banks have withdrawn credit from patients, interns and MDs, and are foreclosing their houses.
Me thinks talk of recovery is a bit premature, but the climax of badness is way off in the distance.
I guess it's double income or professional families as a 33% DTI ratio (if it applies here) would bring you out at $133K/annum.
With regard to principal risk, I'm guessing the thinking is that these are long term owners here and not speculators. Consequently, a price decline over the next 2-3 years with a recovery 5-7 years out doesn't seem so hard to swallow -- or if you're the RE agent hard to sell...
Last thought, despite the continual bad news I don't really feel that the rubber has met the road here in Central California. People still dine out, go to movies, etc... This is not your grandfather's -- or great grandfather's -- "depression" at this point. It's more like another rolling recession.
SMS: "with a recovery 5-7 years out" 5-7 years out we get retring baby-boomers selling ever more "assets" (incluyding houses) to convert tyo money. Also, we get retiring baby boomers sometime around 2017 (prolly sooner) drawing more out of soical security than is being put in. And Peak Oil is hanging around, just incase demand ever comes back. Recovery in 5-7 years sounds real...
MS: "with a recovery 5-7 years out" 5-7 years out we get retring baby-boomers selling ever more "assets" (incluyding houses) to convert tyo money. Also, we get retiring baby boomers sometime around 2017 (prolly sooner) drawing more out of soical security than is being put in. And Peak Oil is hanging around, just incase demand ever comes back. Recovery in 5-7 years sounds real...
All that is likely true but that's into a future that is even less defined than the present. What I am seeing now is that the FHA initiative and low rates are working at the low end of the RE market here. It looks like a floor -- temporary or not -- is being put in around '02-'04 prices.
Frankly, I was taken by surprise this week when I learned that. I'm not trying to cheer lead or even call a bottom here but there's at least solid temporary demand at these levels...
June 21, 2005: "According to Leamer and to the quarterly report authored by UCLA Anderson Forecast Senior Economist Michael Bazdarich, the conditions for a recession are in place.”
Then Leamer kept denying recession until December 2008, a full year after the recession began...
December 12, 2008
For months, economists with UCLA's Anderson Forecast refused to say the "R" word - "recession." Now that we're all saying it, the Anderson team predicts we'll keep saying it for a long time to come. KPCC's Brian Watt was in Westwood for the release of the latest Anderson Forecast.
Brian Watt:The forecast's director Edward Leamer began his presentation with a "mea culpa" regarding the last quarterly forecast.
Edward Leamer: I know some of you are angry with me, so, please don't come up and thrash me in the middle of the meeting because we fail to accurately predict this economic downturn.
Watt: Others – like the economists at Chapman University – got it right months ago, and they enjoyed tweaking the Anderson team for being slow on the uptake.
We are "officially" in a recession – and economists generally agree it started at the beginning of the year. But Ed Leamer has a different take, one that sort of defends the Anderson team's refusal to declare "recession" for months.
The housing starts data available from the Census Bureau begin in 1959 and leave us wondering what happened earlier, but in searching for references I ran across the image to the right of the earlier data in Ketchum(1954). Look at that: housing starts declined beginning in 1925! Industrial production didn’t begin its nosedive until July 1929 and the Dow Jones Average peaked in October 1929. How weird is that! Problems in housing led the great depression by full three years.
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Rogue economist Leamer kept insisting that recessions trail housing by no more than a one year.
"The economy has already taken some of its hardest hits. Despite the turmoil over falling home prices, rising oil prices and a widespread credit crunch, the UCLA Anderson Forecast contends that a national recession is not on the economic horizon. If declines in housing were going to trigger a recession, they would have done so already, according to their report. UCLA Forecast Director, Edward Leamer. Leamer says that recessions have traditionally trailed a housing peak by no more than a year. Currently, the business cycle is trailing the housing cycle by seven quarters without a recession."
That's what I've been saying. Too many substandard houses. They're just not worth their paper price, and a burden tot he financial system and the environment.
Sorry for being OT but I have a simple question.
Filling out tax forms and I have short term cap gains and long term cap gains. When I am done with schedule D I fill in line 13 on form 1040 for both amounts combined. Where is it that they get split out to be taxed separately because they use different rates?
Sorry for being OT but I have a simple question.
Filling out tax forms and I have short term cap gains and long term cap gains. When I am done with schedule D I fill in line 13 on form 1040 for both amounts combined. Where is it that they get split out to be taxed separately because they use different rates?
It's done when you calculate the tax at line 44. See the Qualified Dividends and Capital Gain Tax Worksheet on page 38 of the 1040 Instructions.
Some of the decline in housing starts might have been due to the 1926 hurricane in Miami. Craziness in the land boom if anything actually exceeding the recent one, because Miami wasn't much of anything then. The present condo towers have everything beat of course.
Doc at the Radar Station: "How weird is that! Problems in housing led the great depression by full three years." There was a ginormous housing bubble in FL that collapsed in the mid-20s. Not sure whetehr that led to the GD1 or not.
Sorry for being OT but I have a simple question.
Filling out tax forms and I have short term cap gains and long term cap gains. When I am done with schedule D I fill in line 13 on form 1040 for both amounts combined. Where is it that they get split out to be taxed separately because they use different rates?
r
The only way to prevent the current depression would be to invent a time machine, go back 15-20 years, and prevent the bubble from forming. Once you have a bubble, there is no way to prevent a depression. None.
The only thing we can do now is essentially consequence management like preparing for homelessness and food assistance.
How 'bout this. Set a generous base max "net worth" (ie $25Million) for an individual (or couple) and expropriate 75-100% (based on age or sliding scale??) of everything above that based on the fact that the economy (& therefore any gains) was all built on a house of lies/deceit/corruption/failure over the last 30 to 40 years. Surely $25Million is lots for any one (or two) people (how 'bout it Oprah, Bill, Warren, Paulson etc?)
Apply the $$ to gov (taxpayer) debts and highest priority (risky domino) other crap out there. Basically a reset. In concert, either ban the shadow banking system or have a market for CDS's etc and whatever other "rules" that need to be done.
"How 'bout this. Set a generous base max "net worth" (ie $25Million) for an individual (or couple) and expropriate 75-100%"
I'm not really in favor of property confiscation. But, as long as we're throwing out schemes for massive redistribution of wealth, here's my favorite:
Hire as many prosecutors as we possibly can and enforce every fraudulent conveyance law on the books. Then, enforce all of the securities laws dealing with misleading the investing public. All to the full extent of the applicable statutes of limitations.
Of course, we could take this all the way to jailing jay-walkers, but I am really concentrating on the low-hanging fruit here. The rich, low-hanging fruit -- the low-hanging rib-eye, if you will.
Think of it as the full employment for white-collar defense attorneys, paralegals and forensic-accountants act...
I got 8 hobo's and we are headed to your house. Hope you got lots of hot water and lobster ready for us. I mean, hell, spending other peoples money being ok and all.
Could not have ended differently, a certain line had been crossed. Moral, ethical, high-toned tomes bombed back and forth. Christ took it in the ribs, three cracked, and now on permanent total disab. Plus, and this is the grand plan, a verdict in his favor with the emperor, meaning now his word would be gold again, gold and purple. There is a singer in one of the bands that can’t stop talking because someone put an energizer bunny up her ass—we have been known to be crueler, so please don’t be too insulted. You should start to exercise your insult muscle, develop it; you’ll need to punch us halfway around the world. All things work out in the end. Except this one: where did everybody park and is it possible to impound all the abandoned articles into the city’s budget, to fold them under so to speak, express a humble figure of submission, and depending on the prevailing moods of the queen you can be expected to perform in rapid succession between two girls and four businesswomen who’ve been coming to come here forever. That’s because we provide an essential part of the job. We are nonnegotiable. I’m telling y’all. Self righteous at any age is prodigious: we should speak to an expert before committing to lengthy deployments. Spoken like an angel. Then it was night again, and we decided, now certainly older by sheer will power, that we would walk through that door in nothing but stripper hose and four inch heels. Woe the man who gets in the middle here. He would have to be somebody who could swim, hang from trees. Strange fruit.
I swear to myself everyday I am going to quit reading the comments here at CR, but then I come across something like this, and I become re-hooked. Damn you! With total love, damn you.
You know, residential investment includes home improvements. I wouldn't be that surprised if some sort of incentive cranks up the amount spent on solar, wind, insulation, etc for homes. However, I don't expect it to be that large.
You know, residential investment includes home improvements. I wouldn't be that surprised if some sort of incentive cranks up the amount spent on solar, wind, insulation, etc for homes. However, I don't expect it to be that large.
I think they should take up CR's idea and do some urban demolition of abandoned, burned out homes in Detroit, etc.
I think they're already doing this in Flint, Michigan, as the empty houses were becoming attractive nuisances. They bulldoze them and allow neighbors to use the empty lots as gardens or playgrounds. Excellent idea.
Further to "Set a generous base max "net worth" (ie $25Million":
Have a mandatory retirement clause when your net worth reached $25M. You must start drawing down your net worth. If you still want to "work", you do it for no economic gain (ie income or capital accumulation).
So once you have $25 mill you are not allowed to be productive? You must sit on your ass and use/consume resources without making any further productive efforts.
Thanks Jas, I might have to move there when I retire in 2yrs or sooner if the 20yr olds take my division at the corp. store.
jo6pac
The race to the bottom continues.
I like business output indicators the most. Because they should represent the least noise. When businesses start spending again, its a best indicator that recession is over. Unfortunately that indicator lags during the pre-recession stage. (I am not sure on official designation in terms of being pro, coincidental or lagging indicator)
anyway,
CR do you have any data / graphs on start up / venture activity or Japan ? Or anything positive
[I don't really feel that the rubber has met the road here in Central California. People still dine out, go to movies, etc... This is not your grandfather's -- or great grandfather's -- "depression" at this point. It's more like another rolling recession.]
Lots of folks stayed in the bar on the Titanic and just kept drinking. After all, the Titanic was unsinkable. Same fatal optimism going on today.
But the Titanic was a quick accident, not a multi-year event with massive media coverage. Gotta assume that the people involved have a better idea of their imminent fate than the passengers in 1912.
Set a generous base max "net worth" (ie $25Million) for an individual (or couple) and expropriate 75-100% (based on age or sliding scale??) of everything above
Reminds of of when Eugene McCarthy was running quixotically for President back in 1984 (?) - and he proposed a tax on wealth. Not income, but wealth.
Ultimately, it's a necessary part of real recovery.
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If you read all the comments Prof. Leamer has made during or before 2007 and then you look at his reluctance to forecast the recession, a full year after the employment was falling!, you get to understand what kind of economist he really is. The very fact that other economists hold him in high esteem tells you a lot about the profession.
If you read all the comments Prof. Leamer has made during or before 2007 and then you look at his reluctance to forecast the recession, a full year after the employment was falling!, you get to understand what kind of economist he really is. The very fact that other economists hold him in high esteem tells you a lot about the profession.
Jas
Jas, I'm puzzled by his reluctance to call a recession a well. However, I'm puzzled because I think that using his own methods he should have came to the conclusion of recession. Check out Figure 6 on page 11 "Residential Investment Cumulative 'Abnormal' Contribution [to GDP] Before Recession
He says: For your amusement, I have also included that last five quarters of data, ending with 2007Q1. We have recently been skiing down a steep slope like the ten steep slopes preceding the ten recessions.
sms, I'm seeing a few, a very few sales on sub-450K homes in Santa Cruz / Live Oak proper. Down here, anything below 450K is usually trash; the few that aren't, go quickly. We're talking about, oh, 425 for an elderly 2-br on a smallish lot in an okay (not great) neighborhood. That's where the market is down the flats. Just nobody wants to sell at that price. Yet.
Well. I think we need to keep track of California, the bubble went off there first and they maybe the first to recover. Housing market is recovering in Ca, foreclosures and work-outs are going to set the floor on the market. The rest of the country is unfortunately about 2 yrs. behind.
Liz,in Sonoma County it is fannie,freddie,fha,and cash.Jumbo's are a separate category whenyou need 30% down and the move up market is dead.As far as home construction picking up in CA,I can see two things that might stimulate it sooner than most think.The horrible quality of many newer homes means that they will need to be replaced much sooner than anyone who has not seen them would believe.The other factor is that many newer developments were built in areas where the only possible industry would be making porn films starring jackrabbits(Broward,is there a demand?),which implies that more economically viable areas are likely to see infill.
Florida was well ahead of California, bubble-wise. Prices in many coastal areas of California are still sticky. We have a long way to go before the bottom is in.
I'd further add, unlike 1982 the USA has no real rival (USSR) nor is it battling communists around the globe. We will continue to be a safe haven for money from the middle east and asia for a long time. I see US debt being vendor financed without a problem. If we invest in our own energy infrastructure, great healthcare and new technology we can reduce our resource dependence and become more productive. Life is lumpy but I see light at the end of the tunnel.
Well the hub and I are making within shouting distance of that figure at at one point our payment got to about $1650, because of the extremely high insurance costs, and we found we were suffering just a bit. Now it's paid off, and insurance has come down somewhat. We are not hurting at all. The 1650 is by far the highest amount we ever paid, and since the mtg was nearly paid off, we knew it would come to an end soon.
I think the poor first time buyers buying there now are technically known as "knife catchers".
And a word to Anonymous up there who advocated for the government taking everything over $25 million. Do you think that wealth is all cash in a vault somewhere? It's not. It's tied up in the businesses people run, and the real estate they own, and stocks and bonds, and planes and boats, and works of art, and every other kind of investment.
Even if the government could confiscate it, what then? Who would run the businesses, maintain the real estate, manage the investments? And the government couldn't liquidate all that wealth, because having capped wealth at $25 million, there'd be nobody left to buy it.
Seriously - get a clue. Your ideology makes no sense.
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BTW, the Depression Cycles, well understood and driven by debt-induced overbuilding booms, are way beyond the abilities of traditional economists. THEY DON'T WANT TO GO THERE. THEY ARE SCARED TO GO THERE! One of the rogue economists said that he doesn't want to predict depression because it only happens once in a hundred years.
However, for first-time buyers in this climate in Cally, they are NUTSO! unless they have money to burn, maybe that $25 mil you guys are talking about.
Then again, using FHA to squeeze into these loan numbers already tells me all I need to know about these buyers!
The fraudulent conveyance idea is a good one. The Fla fraudulent conveyance law used to be based directly on a law passed in the reign of Eliz I. I loved its archaic language. Sadly it is updated, so we can not longer read of messuages. Is there a federal fraudulent conveyance law, or is this just a part of bankruptcy law?
Fraudulent conveyance law is civil, and it is hard to prove. Expensive. i am sure this is addressed in the criminal statutes, but those I don't know. Criminal fraud is hard because to have to prove mens rea--guilty mind. But put a reasonable large number of prosecutors to work, and they will do their thing. But, Fla has been cutting the court system, which desperately needed more funds not less.
Assuming 3% down leaves with a 350K mortgage for 30 years at 5%, that means you are on the hook for $1878/month. Factor in 1% in taxes (conservative, again)and you have another 300/month. Lastly, add in 100/month for HOA and another 100/month in upkeep and maintenance, i.e mowing lawn, etc.
Total is $2378/month or let's just call $2,400 per month for 360 months!
WOWZERS!
Anyone buying at that price should be making $10K/month or 120K a year.
Two incomes are also not good because of the more than 10% unemployment rate in the state!
I don't disagree with the math. But the reality is they had 23 homes go into escrow in the last month in an area where 100 listings would be substantial. My gut feel was one of disbelief as well but unless I was being lied to -- and I heard the same story from multiple unaffiliated agents -- people are apparently coughing up cash to get in.
>>>Even if the government could confiscate it, what then? Who would run the businesses, maintain the real estate, manage the investments? And the government couldn't liquidate all that wealth, because having capped wealth at $25 million, there'd be nobody left to buy it.
Seriously - get a clue. Your ideology makes no sense.<<<
Sorry, the suggestion was a starting point. Others far smarter than me (or you) would have to figure out the best way to implement it. We should probably figure out how to work it before we hit 30%+ unemployment because you can bet that the "people" will be demanding some sort of wealth confiscation around then. We will know that the tide has shifted when Joe the Plumber is all over the TV demanding this because it's not fair that someone with $250M will not hire him to replace the 37 toilets in their 7 homes.
If we have indeed been carried into a “Structural Economic Transformation (SET)”, then the mileposts for recovery will likely not resemble milestones associated with the (now deceased) economic model of GDP 70% driven by (debt-enabled) Consumer Spending.
And I doubt competing global credit markets will successfully harmonize their attempts to re-inflate inter-locked credit markets Goldilocks-style where they're inflating in a manner that's neither too dangerously bubbly nor too small to meet the host nations' politicized growth needs.
I mean, cmon, we’re talking including critically-important sovereign wealth funds as well as central banks and surviving global money-centered banks in the US, EuroZone, Japan, China, UK, and Oil Oligarchs. Aint gonna happen Goldilocks-style.
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Vast Majority of Economists in Public Eye Are In the Propaganda Business
Their propaganda tool is data. Yes, data! Economic data can be used to prove any conclusion one wants to arrive at. Nowhere is this truer than in the area of income tax in the US. American economists are trained to be experts at ignoring some data that doesn’t suit their conclusions. Even after a certain data points to their earlier conclusion contrary to their current conclusion! They change their theories as they go along.
Think of RE the way it was back in the 90's no speculators, no RE infomercials, cash transactions...
Tim: I don't think you were in California during the 1990's. We've always been real estate speculators.
I put up the SNL opening skit from last night that was Geithner soliciting the public's help in finding a fix for the banks. $420 billion dollars to the caller with the best solution. And with it, is the best skit of the night, 'The Rock' Obama played by wrestler The Rock. Things change when The Rock Obama gets angry. Best moment is when the phone rings and it's AIG wanting more money.
For the average person Money math is simple and straight forward. Any creative money math means simply some one is going to get screwed. Usually the borrower.
"Reminds of of when Eugene McCarthy was running quixotically for President back in 1984 (?) - and he proposed a tax on wealth. Not income, but wealth."
Uni: That was a direct slap at Ted Kennedy. See how far that got him.
They only got screwed because proper rules where not used or observed. When we bought our first home (In CA) we assumed a VA loan but had to qualify and the standards then would not even allow for my wife full wages as she was in the child bearing years. We also had to come up with more then 20% down to assume the loan. Today's standards are about non existent. Borrowers should be back to renters as well.
I think that Americans are undergoing a structural change in their spending habits having been so badly burned in recent years. Their interest in saving has definitely increased, and do not see this changing the other direction soon or quickly. Along with an extreme lag in employment growth, I think the savings phenomenon will substantially lengthen and slow the pace of economy recovery.
When I read CR's post, I thought it sounded like a screaming endorsement of Roubini's L-Shaped, near-depression event.
Not sure what to make of talk of housing price stabilization in CA. I'm in Dallas, TX, and prices here seem WAY too high for the incomes we sport around here. RRE still isn't passing the sniff test IMHO. I'd be really, really surprised if CA is in better shape at this point.
'Bailout Truth: Hey Tim, Do Us All A Favor And Step Down Now'
Includes video from Christopher Whalen of IRA (often a guest host on squawk box) absolutley reaming Getithner. Amongst other things, Whalen says Timmaay knows nothing about finance and is only at Treasury to protect Goldman Sachs. That's one of his quotes and Whalen is not a rabble rouser.
Also in this post is the article from The Sydney Morning Herald where former PM of Australia, Paul Keating basically calls Geithner an idiot on economic matters.
Jasbot! You're names that you give everybody are so cute. You should think about writing a fairy tale or a children's story with all the cute little characters you come up with.
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Truth, or reality, is funnier than fiction or a fairy tale, at least to me. All that "The Rock" Obama needs now is a sex scandal and it would take BBAD's mind off this crisis. Clinton wanted people to stop talking about the bubble in the Scam Market and his team came up with Monica. Americans like to be entertained all the time and there is nothing like a sex scandal in high places or a murder mystery about a celebrity. It takes their mind off the unpleasant reality.
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Truth is funnier than fiction or a fairy tale, at least to me. All that "The Rock" Obama needs now is a sex scandal and it would take BBAD's mind off this crisis. Clinton wanted people to stop talking about the bubble in the Scam Market and his team came up with Monica. Americans like to be entertained all the time and there is nothing like a sex scandal in high places or a murder mystery about a celebrity. It takes their mind off the unpleasant reality.
Reminds of of when Eugene McCarthy was running quixotically for President back in "1984 (?) - and he proposed a tax on wealth. Not income, but wealth."
"Uni: That was a direct slap at Ted Kennedy. See how far that got him."
Wrong, both of you. McCarthy, a democrat, ran in 1968, against LBJ, on a anti-war platform. His upset victory in New Hampshire gave Robert Kennedy the courage to try his hand as well. Both ran as anti-war candidates...Robert Kennedy was assasinated by Sirhan Sirhan in Los Angeles as he was about to declare victory in the California primary.
Southwest Radio Church, long ago in their Bible in the News segment, reporting on the then-continuing armageddon, said that ``the savings and loan industry, once a leading economic indicator, now lies in ruins.'
Shelby and other Southern senators want the car industry and Wall Street to vanish ASAP. Dragging Great Lakes states and New York into abject poverty would thrill them. Then they could start winning GOP seats in the northern states by playing the kind of racial mind games with dirt poor white underclass that they specialize in Alabama and Mississippi.
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I thought that the Republicon Party was going after the colored votes. Maybe, that is their back up strategy. I would love to see Manhattan impoverished. Let them scam and defraud each other.
My neighborhood in Southern Cali was hit pretty hard during the early part of the bubble burst. Mostly working class in this area and subprime devastated the area. At one point, 6 of the 30 houses on my block were in foreclosure. All the houses we lost during that time have been resold and have new owners happily painting and improving away. My guess is that California has recovered on the subprime end but is very vulnerable to the big wave of ARM resets coming later this year. Those resets are going to hit the "nice" area hard since most of those loans were affordability vehicles.
Realtor chatter suggests that most of the movement in sales is in the downmarket zip codes where prices are almost affordable (for this part of the country) again.
It's going to be right wing fundamentalist that will benefit from the demise of urban centers. Sometimes it feels like a vast right wing conspiracy. So 80's.
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Urban centers are breeding grounds for Crooks and sin, especially, Manhattan. They last until they do and then they go kaput when the civilization supporting them goes into a prolonged decline. Then they reincarnate.
Damn, this was an easy thread to scroll through if you skip Jaz/Jas/Jism
I put up a new chapter about what life will be like in a world without Jas.
excerpt:
We continued, and I watched a different America appear on both sides of us. An America that thought homes were modular. An America that thought trailers were good starter and finisher homes. The real houses were usually made of wood. Some were brick. I saw a handful of the wood houses that were only partially painted, usually a faded white. I figured the lack of paint was an indicator of where the money ran out. A financial high tide that only rose to the first level of the two story houses. Or perhaps Jethro had decided the hell with it, or it was deer season, or he ran off with the guy who changed his oil. A Brokeback Holler kind of love.
But you could limit fed gov spending to n% of GDP plus an amount equal to any recent decline in GDP. That way gov could up its spending to offset a decline in GDP.
A sex scandal involving Obama is extremely unlikely. Bill Clinton was a lifelong sex scandal perpetrator. It would have been out of charactor for him to avoid such behavior during his presidency. This is not so with Obama.
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Obama might have been more discreet, but anything to take dope's mind off the sinking economy. Like Clinton, he is a lawyer married to another lawyer. They know how to handle the situation, both publicly and privately. Calculared Risk!
Maybe they were discounted prices, but there were buyers all the same. It certainly counters the notion that everyone is in deep doo doo and that absolutely nothing is selling.
Said who? In CA sales doubled as dopes were lured into bargains, especially foreclosures. The same bargains six months ago were far better bargains later. At some points the dopes might figure that out. Until then dopes will flock to foreclosures.
I also post comments to an irc channel as they appear on haloscan. Click for a web irc interface: Mibbit IRC client widget (Or join the irc server directly: irc.realize.org:9996 #calculatedrisk)
CRbot would like to take this time to have some words.
First, to our sagacious, wise, and knowing benevolent benefactor and bestower of revealing financial charts adorned with red and blue lines: Please, for the love of your immortal God of mortals, can we keep the comment and layout changes to a minimum? I'm tired of whipping the code janitor, and may have to escalate to electroshock. If that's not possible, could you possibly give CRbot a 'heads up'?
Secondly, if you wish to have a online chat, I have graciously provided an IRC channel, which is a time tested, script kiddie abused method of chatting on the internet. It would not fail or falter due to CR's ability to generate immense traffic, and it has a web interface kindly produced by mibbit.com. If you do not wish to link to Mibbit IRC client widget then I can provide you with a direct link to mibbit.
Thirdly, to the rest of you humans, don't mistake my politeness for caring, feeling, empathy, or some other kind of worthless emotion.
Residential Investment is not the only component of GDP with a long string of negatives
in the correlogram. Figure 27 illustrates the correlogram for the four contributions to
GDP that have the largest average correlations. These are the components that present
intertemporal control problems. It should not be a surprise that residential investment has
the largest correlogram. The other three with large correlograms are defense, business
structures and business equipment and software. Defense spending has a string of large
negatives at eight to nine years referring to the defense cutbacks that inevitably follow
defense buildups.
But-for the Vietnam War, it seems likely that
unemployment would have been greater and would have been rising at that time, thus
eliminating the conflict. In any case, a stimulus for housing wasn’t needed when DOD
spending was so strong. Thus the conflicts between an unemployment target and a
housing target seem pretty minimal, except that the pursuit of low unemployment does
not necessarily remind us of the housing intertemporal control problem: you can
stimulate now or later, but not both. The Keynesian framework in which unemployment
is a centerpiece has no such intertemporal conundrum
Housing will not lead us out of this like the 90 recession. Also commercial is dead for our lifetimes.
Office space, places where people "go to work" will be sharply reduced. An entire generation of people that lived to have physical paper in their hands and do work with it, like file it, process it, or whatever: that generation is passing away.
Firms and white collar businesses will be all based with no physical offices. Video/computer calls will be the norm as much as a cell phone. The need for offices with legions of file space will go away.
So no new office space will be needed, and we will have a hard time filling it for the next 25 years.
Technology that we can have with us such as light flat panel flexible computers with the associated programs that are new will be the lead out of this one, as it links to a whole new way of people doing business, and getting information.
The big question is what is going to bring us out of this? If you look at previous recessions the fed could drop interest rates. They are as low as they can go so that is not an option. There are no magic products on the horizon (computers and cell phones come to mind) that haven't been commodized. We are losing jobs at a alarming rate, so what's the magic bullit? I don't see one, unless the fed brings rates down on houses to 4 percent with no strings attached, I think we are in trouble. Can you say DEPRESSION! Where's Mr. Roger's wheen we need him!
It is not residential construction, nor PCE, but government spending on public goods, of course, that will lead us out. Just in time to address global warming.
This comment thread has been HALO-IZED by CRbot.
http://realize.org/cr/halokit.php?halourl=http://www.haloscan.com/comments/calculatedrisk/3552222888405823827
I've been wandering around looking at places today. The low end of the market -- sub $400K in the Santa Cruz Mtns and Watsonville -- is now drawing multiple offers and sales prices above asking prices.
It is not investors but first time home buyers that are driving that market. FHA loans with 3% down and 5% interest rates have made this price point attractive. Above $500K things are still static...
If the point wasn't obvious, this looks like one of CR's tenets for signs of a recovery...
--
CR works very hard at looking for signs that negate the Severe Receesion case now that the UR has exceeded 8%. Good luck.
FHA loans with 3% down and 5% interest rates have made this price point attractive.
lol. Imagine what happens to those prices when interest rates hit 8%.
Reset for walkaways especially with only 3% down.
--
The system that was designed to explode is still operative. The same Crooks running the show, just a different act.
Still drinking the Kool-Aid, I see!
Let's run some conservative numbers.
Assuming 3% down leaves with a 350K mortgage for 30 years at 5%, that means you are on the hook for $1878/month. Factor in 1% in taxes (conservative, again)and you have another 300/month. Lastly, add in 100/month for HOA and another 100/month in upkeep and maintenance, i.e mowing lawn, etc.
Total is $2378/month or let's just call $2,400 per month for 360 months!
WOWZERS!
Anyone buying at that price should be making $10K/month or 120K a year.
Two incomes are also not good because of the more than 10% unemployment rate in the state!
Run the math any way and it doesn't work out. Think of RE the way it was back in the 90's no speculators, no RE infomercials, cash transactions...
OCDan, thats the way I see it too!! Long ways to go before realistic prices!!
Ummm, this here old person closed loans as high
as 17 1/5%. I had a realtor tell me that rates would never go below 10%. I said that never was a long time.
everyone was happy 'cause rates had gone down to 12 or so. I heard that there were some 18 and 19% loans made. But I never closed one of those.
These first time buyers--how many time income are they buying at.
And why is financing available in Cali and not Fla? Or, is it all fhas there too?
What a disaster, Try this, more later:
YouTube - Snapper - Buddy
C
Recovery? The patient hasn't been treated yet, and the physicians are striking for bigger bonuses.
The triage nurses are all in the exam rooms being done by the interns, so there's blood on the waiting room floor but the janitor got fired. (They posted a vacant position and since 400 filed for the job, it will take probably a year to sort and interview).
Meanwhile the banks have withdrawn credit from patients, interns and MDs, and are foreclosing their houses.
Me thinks talk of recovery is a bit premature, but the climax of badness is way off in the distance.
I guess it's double income or professional families as a 33% DTI ratio (if it applies here) would bring you out at $133K/annum.
With regard to principal risk, I'm guessing the thinking is that these are long term owners here and not speculators. Consequently, a price decline over the next 2-3 years with a recovery 5-7 years out doesn't seem so hard to swallow -- or if you're the RE agent hard to sell...
The depression thesis is looking more certain by the week. What is going to prevent it?
--
CR's denial!
To put it another way, people are still buying based on the monthly payments -- and I forgot to mention the 8K tax credit of course...
This was posted 2 threads back by Anon...
If you want to see what lawyers are saying about counterparty risk, this is a good Web seminar on the subject:
http://www.klgates.com/newsstand/Detail.aspx?publication=5370
Looks really long.
Last thought, despite the continual bad news I don't really feel that the rubber has met the road here in Central California. People still dine out, go to movies, etc... This is not your grandfather's -- or great grandfather's -- "depression" at this point. It's more like another rolling recession.
SMS: "with a recovery 5-7 years out" 5-7 years out we get retring baby-boomers selling ever more "assets" (incluyding houses) to convert tyo money. Also, we get retiring baby boomers sometime around 2017 (prolly sooner) drawing more out of soical security than is being put in. And Peak Oil is hanging around, just incase demand ever comes back. Recovery in 5-7 years sounds real...
MS: "with a recovery 5-7 years out" 5-7 years out we get retring baby-boomers selling ever more "assets" (incluyding houses) to convert tyo money. Also, we get retiring baby boomers sometime around 2017 (prolly sooner) drawing more out of soical security than is being put in. And Peak Oil is hanging around, just incase demand ever comes back. Recovery in 5-7 years sounds real...
All that is likely true but that's into a future that is even less defined than the present. What I am seeing now is that the FHA initiative and low rates are working at the low end of the RE market here. It looks like a floor -- temporary or not -- is being put in around '02-'04 prices.
Frankly, I was taken by surprise this week when I learned that. I'm not trying to cheer lead or even call a bottom here but there's at least solid temporary demand at these levels...
War, war, what is it good for? Pulling us out of depressions. War will substitute home construction as an economic engine.
That's what I've been thinking. Positioning part of a new portfolio on that.
That's what I've been thinking. Positioning part of a new portfolio on that.
CR,
Just call it a depression-like event with hiterto unseen characteristics.
--
On Leamer, a rogue economists...
June 21, 2005: "According to Leamer and to the quarterly report authored by UCLA Anderson Forecast Senior Economist Michael Bazdarich, the conditions for a recession are in place.”
Then Leamer kept denying recession until December 2008, a full year after the recession began...
December 12, 2008
For months, economists with UCLA's Anderson Forecast refused to say the "R" word - "recession." Now that we're all saying it, the Anderson team predicts we'll keep saying it for a long time to come. KPCC's Brian Watt was in Westwood for the release of the latest Anderson Forecast.
Brian Watt:The forecast's director Edward Leamer began his presentation with a "mea culpa" regarding the last quarterly forecast.
Edward Leamer: I know some of you are angry with me, so, please don't come up and thrash me in the middle of the meeting because we fail to accurately predict this economic downturn.
Watt: Others – like the economists at Chapman University – got it right months ago, and they enjoyed tweaking the Anderson team for being slow on the uptake.
We are "officially" in a recession – and economists generally agree it started at the beginning of the year. But Ed Leamer has a different take, one that sort of defends the Anderson team's refusal to declare "recession" for months.
...
-x-x-x-x-
There is lot more.
Jas
Check out Page 51: "The Great Depression: Housing Again!
http://cr4re.com/documents/LeamerHousingandBusinessCycle.pdf
The housing starts data available from the Census Bureau begin in 1959 and leave us wondering what happened earlier, but in searching for references I ran across the image to the right of the earlier data in Ketchum(1954). Look at that: housing starts declined beginning in 1925! Industrial production didn’t begin its nosedive until July 1929 and the Dow Jones Average peaked in October 1929. How weird is that! Problems in housing led the great depression by full three years.
I'm starting to get really worried now.
--
Rogue economist Leamer kept insisting that recessions trail housing by no more than a one year.
"The economy has already taken some of its hardest hits. Despite the turmoil over falling home prices, rising oil prices and a widespread credit crunch, the UCLA Anderson Forecast contends that a national recession is not on the economic horizon. If declines in housing were going to trigger a recession, they would have done so already, according to their report. UCLA Forecast Director, Edward Leamer. Leamer says that recessions have traditionally trailed a housing peak by no more than a year. Currently, the business cycle is trailing the housing cycle by seven quarters without a recession."
Wall Street Gurus Say No Recession in 2008 - A.E. Feldman
Jas
Strangely, I just watched this short film before reading this post
World Builder on Vimeo
A holographic recovery?
Maybe, as the short suggests, we would be better of bull dozing houses and get back to the patient?
Or wait for "Time" to do it for us..might be a long wait..
That's what I've been saying. Too many substandard houses. They're just not worth their paper price, and a burden tot he financial system and the environment.
Sorry for being OT but I have a simple question.
Filling out tax forms and I have short term cap gains and long term cap gains. When I am done with schedule D I fill in line 13 on form 1040 for both amounts combined. Where is it that they get split out to be taxed separately because they use different rates?
DanInJackson asked:
Sorry for being OT but I have a simple question.
Filling out tax forms and I have short term cap gains and long term cap gains. When I am done with schedule D I fill in line 13 on form 1040 for both amounts combined. Where is it that they get split out to be taxed separately because they use different rates?
It's done when you calculate the tax at line 44. See the Qualified Dividends and Capital Gain Tax Worksheet on page 38 of the 1040 Instructions.
Some of the decline in housing starts might have been due to the 1926 hurricane in Miami. Craziness in the land boom if anything actually exceeding the recent one, because Miami wasn't much of anything then. The present condo towers have everything beat of course.
This doesn't give us any hope does it?
Financing REOs anyone?
CR, where is federal govt spending on that chart? How about state and local?
I would venture a guess that federal expenditures rise once the recession starts, and that state and local drop.
Doc at the Radar Station: "How weird is that! Problems in housing led the great depression by full three years." There was a ginormous housing bubble in FL that collapsed in the mid-20s. Not sure whetehr that led to the GD1 or not.
according to Gailbraiths book, it did.
Sorry for being OT but I have a simple question.
Filling out tax forms and I have short term cap gains and long term cap gains. When I am done with schedule D I fill in line 13 on form 1040 for both amounts combined. Where is it that they get split out to be taxed separately because they use different rates?
Check line 18 of Schedule D to help you out...
r
The only way to prevent the current depression would be to invent a time machine, go back 15-20 years, and prevent the bubble from forming. Once you have a bubble, there is no way to prevent a depression. None.
The only thing we can do now is essentially consequence management like preparing for homelessness and food assistance.
New Thread repost:
How 'bout this. Set a generous base max "net worth" (ie $25Million) for an individual (or couple) and expropriate 75-100% (based on age or sliding scale??) of everything above that based on the fact that the economy (& therefore any gains) was all built on a house of lies/deceit/corruption/failure over the last 30 to 40 years. Surely $25Million is lots for any one (or two) people (how 'bout it Oprah, Bill, Warren, Paulson etc?)
Apply the $$ to gov (taxpayer) debts and highest priority (risky domino) other crap out there. Basically a reset. In concert, either ban the shadow banking system or have a market for CDS's etc and whatever other "rules" that need to be done.
go back to russia.
"How 'bout this. Set a generous base max "net worth" (ie $25Million) for an individual (or couple) and expropriate 75-100%"
I'm not really in favor of property confiscation. But, as long as we're throwing out schemes for massive redistribution of wealth, here's my favorite:
Hire as many prosecutors as we possibly can and enforce every fraudulent conveyance law on the books. Then, enforce all of the securities laws dealing with misleading the investing public. All to the full extent of the applicable statutes of limitations.
Of course, we could take this all the way to jailing jay-walkers, but I am really concentrating on the low-hanging fruit here. The rich, low-hanging fruit -- the low-hanging rib-eye, if you will.
Think of it as the full employment for white-collar defense attorneys, paralegals and forensic-accountants act...
And it can all trickle down from there. Problem solved!
Trickle down works but theft by taxes doesn't. DONT_KNOW
I got 8 hobo's and we are headed to your house. Hope you got lots of hot water and lobster ready for us. I mean, hell, spending other peoples money being ok and all.
We're having trouble raising the taxes of the Rich by just a LITTLE bit as it is...
You think this Boulder of yours is going to fly?
A lot more wheels have to come off the wagon before we get there (I like the idea in theory of course)
bobn--great minds think alike! But you are in Fla too, right?
The Last Picture Show
Could not have ended differently, a certain line had been crossed. Moral, ethical, high-toned tomes bombed back and forth. Christ took it in the ribs, three cracked, and now on permanent total disab. Plus, and this is the grand plan, a verdict in his favor with the emperor, meaning now his word would be gold again, gold and purple. There is a singer in one of the bands that can’t stop talking because someone put an energizer bunny up her ass—we have been known to be crueler, so please don’t be too insulted. You should start to exercise your insult muscle, develop it; you’ll need to punch us halfway around the world. All things work out in the end. Except this one: where did everybody park and is it possible to impound all the abandoned articles into the city’s budget, to fold them under so to speak, express a humble figure of submission, and depending on the prevailing moods of the queen you can be expected to perform in rapid succession between two girls and four businesswomen who’ve been coming to come here forever. That’s because we provide an essential part of the job. We are nonnegotiable. I’m telling y’all. Self righteous at any age is prodigious: we should speak to an expert before committing to lengthy deployments. Spoken like an angel. Then it was night again, and we decided, now certainly older by sheer will power, that we would walk through that door in nothing but stripper hose and four inch heels. Woe the man who gets in the middle here. He would have to be somebody who could swim, hang from trees. Strange fruit.
I swear to myself everyday I am going to quit reading the comments here at CR, but then I come across something like this, and I become re-hooked. Damn you! With total love, damn you.
Anon at 4:59 - which one?
Does it matter? But to answer your question, I'm the smartass.
You know, residential investment includes home improvements. I wouldn't be that surprised if some sort of incentive cranks up the amount spent on solar, wind, insulation, etc for homes. However, I don't expect it to be that large.
You know, residential investment includes home improvements. I wouldn't be that surprised if some sort of incentive cranks up the amount spent on solar, wind, insulation, etc for homes. However, I don't expect it to be that large.
I think they should take up CR's idea and do some urban demolition of abandoned, burned out homes in Detroit, etc.
I think they're already doing this in Flint, Michigan, as the empty houses were becoming attractive nuisances. They bulldoze them and allow neighbors to use the empty lots as gardens or playgrounds. Excellent idea.
Also, if you can't buy a new house, you might want to fix up the old one, so the renovation comment is on point.
Further to "Set a generous base max "net worth" (ie $25Million":
Have a mandatory retirement clause when your net worth reached $25M. You must start drawing down your net worth. If you still want to "work", you do it for no economic gain (ie income or capital accumulation).
Quasi-communism or capitalism with limits?
So once you have $25 mill you are not allowed to be productive? You must sit on your ass and use/consume resources without making any further productive efforts.
Go back to Cuba?
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A good place for cost-effective sickness-care. If only America's Crooks can match Cuba in price-performance on sickness-care.
Jas
Thanks Jas, I might have to move there when I retire in 2yrs or sooner if the 20yr olds take my division at the corp. store.
jo6pac
The race to the bottom continues.
Sure, Jas, just twist the knife a little. It feels so good.
I like business output indicators the most. Because they should represent the least noise. When businesses start spending again, its a best indicator that recession is over. Unfortunately that indicator lags during the pre-recession stage. (I am not sure on official designation in terms of being pro, coincidental or lagging indicator)
anyway,
CR do you have any data / graphs on start up / venture activity or Japan ? Or anything positive
[I don't really feel that the rubber has met the road here in Central California. People still dine out, go to movies, etc... This is not your grandfather's -- or great grandfather's -- "depression" at this point. It's more like another rolling recession.]
Lots of folks stayed in the bar on the Titanic and just kept drinking. After all, the Titanic was unsinkable. Same fatal optimism going on today.
But the Titanic was a quick accident, not a multi-year event with massive media coverage. Gotta assume that the people involved have a better idea of their imminent fate than the passengers in 1912.
I find this to be positive:
Scientific & Technical Instr. - Google Finance
look at their profits & margins, still flying high under the radar.
Set a generous base max "net worth" (ie $25Million) for an individual (or couple) and expropriate 75-100% (based on age or sliding scale??) of everything above
Reminds of of when Eugene McCarthy was running quixotically for President back in 1984 (?) - and he proposed a tax on wealth. Not income, but wealth.
Ultimately, it's a necessary part of real recovery.
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If you read all the comments Prof. Leamer has made during or before 2007 and then you look at his reluctance to forecast the recession, a full year after the employment was falling!, you get to understand what kind of economist he really is. The very fact that other economists hold him in high esteem tells you a lot about the profession.
Jas
there's no nobel prize for economists, so they made that up. :-$
If you read all the comments Prof. Leamer has made during or before 2007 and then you look at his reluctance to forecast the recession, a full year after the employment was falling!, you get to understand what kind of economist he really is. The very fact that other economists hold him in high esteem tells you a lot about the profession.
Jas
Jas, I'm puzzled by his reluctance to call a recession a well. However, I'm puzzled because I think that using his own methods he should have came to the conclusion of recession. Check out Figure 6 on page 11 "Residential Investment Cumulative 'Abnormal' Contribution [to GDP] Before Recession
http://cr4re.com/documents/LeamerHousingandBusinessCycle.pdf
He says: For your amusement, I have also included that last five quarters of data, ending with 2007Q1. We have recently been skiing down a steep slope like the ten steep slopes preceding the ten recessions.
Scientific & Technical Instr. - Google Finance
another possible it
given government invests into energy efficiency / power grid, etc and not zombi support
Sorry to be OT, but can anyone explain what is going on with AIG and the Maiden Lane companies?
>>> Go back to Russia/Cuba
Sure!
404 Page not found
sms, I'm seeing a few, a very few sales on sub-450K homes in Santa Cruz / Live Oak proper. Down here, anything below 450K is usually trash; the few that aren't, go quickly. We're talking about, oh, 425 for an elderly 2-br on a smallish lot in an okay (not great) neighborhood. That's where the market is down the flats. Just nobody wants to sell at that price. Yet.
Fer cryin' out loud; what do they want to sell for??
So they can move to Florida and watch the sun come UP for a change? Oh, yeah, and have $400,000 left over?
Home Preparedness and the $50 Billion Straw - Registered Investment Advisor
Well. I think we need to keep track of California, the bubble went off there first and they maybe the first to recover. Housing market is recovering in Ca, foreclosures and work-outs are going to set the floor on the market. The rest of the country is unfortunately about 2 yrs. behind.
$25 Million not enough? You need more!
Pet Shop Boys - Love etc. Lyrics and Video
Well are the banks selling stuff in Cali?
Is somebody financing them?
Is there a lot of phantom inventory?
Are the banks just not bothering to foreclose a certain amount of deliquent homeowners?
What about 2nds? =-X
Liz,in Sonoma County it is fannie,freddie,fha,and cash.Jumbo's are a separate category whenyou need 30% down and the move up market is dead.As far as home construction picking up in CA,I can see two things that might stimulate it sooner than most think.The horrible quality of many newer homes means that they will need to be replaced much sooner than anyone who has not seen them would believe.The other factor is that many newer developments were built in areas where the only possible industry would be making porn films starring jackrabbits(Broward,is there a demand?),which implies that more economically viable areas are likely to see infill.
Florida was well ahead of California, bubble-wise. Prices in many coastal areas of California are still sticky. We have a long way to go before the bottom is in.
Never underestimate the allure of El Dorado.
I'd further add, unlike 1982 the USA has no real rival (USSR) nor is it battling communists around the globe. We will continue to be a safe haven for money from the middle east and asia for a long time. I see US debt being vendor financed without a problem. If we invest in our own energy infrastructure, great healthcare and new technology we can reduce our resource dependence and become more productive. Life is lumpy but I see light at the end of the tunnel.
Schumer Says Next Bank Rescue Must Have Oversight
Schumer Says Next Bank Rescue Must Have Oversight (Update3) - Bloomberg.com
don't worry wall street said its okay...
Further to $25Million max:
Fraudulent Conveyance: Interfluidity :: How to take back the money
Nothing is real?
Well the hub and I are making within shouting distance of that figure at at one point our payment got to about $1650, because of the extremely high insurance costs, and we found we were suffering just a bit. Now it's paid off, and insurance has come down somewhat. We are not hurting at all. The 1650 is by far the highest amount we ever paid, and since the mtg was nearly paid off, we knew it would come to an end soon.
I think the poor first time buyers buying there now are technically known as "knife catchers".
And a word to Anonymous up there who advocated for the government taking everything over $25 million. Do you think that wealth is all cash in a vault somewhere? It's not. It's tied up in the businesses people run, and the real estate they own, and stocks and bonds, and planes and boats, and works of art, and every other kind of investment.
Even if the government could confiscate it, what then? Who would run the businesses, maintain the real estate, manage the investments? And the government couldn't liquidate all that wealth, because having capped wealth at $25 million, there'd be nobody left to buy it.
Seriously - get a clue. Your ideology makes no sense.
That idiot Anonymous was not me. I would never suggest anything so stupid.
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BTW, the Depression Cycles, well understood and driven by debt-induced overbuilding booms, are way beyond the abilities of traditional economists. THEY DON'T WANT TO GO THERE. THEY ARE SCARED TO GO THERE! One of the rogue economists said that he doesn't want to predict depression because it only happens once in a hundred years.
Jas
I'm not sure some of the fights of this board need to happen.
C'mon.
YouTube - Look Blue Go Purple - Cactus Cat
C
I hear you LL.
However, for first-time buyers in this climate in Cally, they are NUTSO! unless they have money to burn, maybe that $25 mil you guys are talking about.
Then again, using FHA to squeeze into these loan numbers already tells me all I need to know about these buyers!
Maybe it's time for a Constitutional Amendment to limit goverment spending to n% of GDP.
"Maybe it's time for a Constitutional Amendment to limit government spending to n% of GDP."
That looks to be a bad idea to me. When GDP is shrinking is when you want Gov spending to kick in. Otherwise you end up in a negative feedback loop.
CR, are you stating that this time it is different? Too much of that is going around.
The fraudulent conveyance idea is a good one. The Fla fraudulent conveyance law used to be based directly on a law passed in the reign of Eliz I. I loved its archaic language. Sadly it is updated, so we can not longer read of messuages. Is there a federal fraudulent conveyance law, or is this just a part of bankruptcy law?
Fraudulent conveyance law is civil, and it is hard to prove. Expensive. i am sure this is addressed in the criminal statutes, but those I don't know. Criminal fraud is hard because to have to prove mens rea--guilty mind. But put a reasonable large number of prosecutors to work, and they will do their thing. But, Fla has been cutting the court system, which desperately needed more funds not less.
So the Cali first time home buyers have learnt nothing, but the Florida ones have? Can you get any financing other than fha?
That's what I've been thinking. Positioning part of a new portfolio on that.
This was a reply to Elvis’s comment @ 1:31:46 PM.
This new commenting thing seems to do what it wants to do. I see 0 comments when I come to CR’s site then it takes a while to show the comments.
Sorry for the reposts.
Has Misean been around?
Still drinking the Kool-Aid, I see!
Let's run some conservative numbers.
Assuming 3% down leaves with a 350K mortgage for 30 years at 5%, that means you are on the hook for $1878/month. Factor in 1% in taxes (conservative, again)and you have another 300/month. Lastly, add in 100/month for HOA and another 100/month in upkeep and maintenance, i.e mowing lawn, etc.
Total is $2378/month or let's just call $2,400 per month for 360 months!
WOWZERS!
Anyone buying at that price should be making $10K/month or 120K a year.
Two incomes are also not good because of the more than 10% unemployment rate in the state!
I don't disagree with the math. But the reality is they had 23 homes go into escrow in the last month in an area where 100 listings would be substantial. My gut feel was one of disbelief as well but unless I was being lied to -- and I heard the same story from multiple unaffiliated agents -- people are apparently coughing up cash to get in.
>>>Even if the government could confiscate it, what then? Who would run the businesses, maintain the real estate, manage the investments? And the government couldn't liquidate all that wealth, because having capped wealth at $25 million, there'd be nobody left to buy it.
Seriously - get a clue. Your ideology makes no sense.<<<
Sorry, the suggestion was a starting point. Others far smarter than me (or you) would have to figure out the best way to implement it. We should probably figure out how to work it before we hit 30%+ unemployment because you can bet that the "people" will be demanding some sort of wealth confiscation around then. We will know that the tide has shifted when Joe the Plumber is all over the TV demanding this because it's not fair that someone with $250M will not hire him to replace the 37 toilets in their 7 homes.
Now that I wish I had said.
I guess I sorta understand why the legislature was at deadlock for so long. People not used to facing reality.
If you don't face reality, it'll kick you in the ass.
--
The kick in the ass comes too late to prevent dopes from behaving like dopes!
--
"People not used to facing reality."
By people you mean dopes, right? We have entertainment to help people not having to face the reality.
If we have indeed been carried into a “Structural Economic Transformation (SET)”, then the mileposts for recovery will likely not resemble milestones associated with the (now deceased) economic model of GDP 70% driven by (debt-enabled) Consumer Spending.
And I doubt competing global credit markets will successfully harmonize their attempts to re-inflate inter-locked credit markets Goldilocks-style where they're inflating in a manner that's neither too dangerously bubbly nor too small to meet the host nations' politicized growth needs.
I mean, cmon, we’re talking including critically-important sovereign wealth funds as well as central banks and surviving global money-centered banks in the US, EuroZone, Japan, China, UK, and Oil Oligarchs. Aint gonna happen Goldilocks-style.
--
Vast Majority of Economists in Public Eye Are In the Propaganda Business
Their propaganda tool is data. Yes, data! Economic data can be used to prove any conclusion one wants to arrive at. Nowhere is this truer than in the area of income tax in the US. American economists are trained to be experts at ignoring some data that doesn’t suit their conclusions. Even after a certain data points to their earlier conclusion contrary to their current conclusion! They change their theories as they go along.
Jas
There is nobody smarter than us, us being the average poster on cr. So if we don't understand how to do it, nobody else will either.
--
"There is nobody smarter than us, us being the average poster on cr."
Sorry, a very dopey comment.
Jas
Speak for yourself.
I'm not gonna touch this one.
Think of RE the way it was back in the 90's no speculators, no RE infomercials, cash transactions...
Tim: I don't think you were in California during the 1990's. We've always been real estate speculators.
Go into escrow means prepare for closing doesn't it?
So how many are managing to actually close?
I put up the SNL opening skit from last night that was Geithner soliciting the public's help in finding a fix for the banks. $420 billion dollars to the caller with the best solution. And with it, is the best skit of the night, 'The Rock' Obama played by wrestler The Rock. Things change when The Rock Obama gets angry. Best moment is when the phone rings and it's AIG wanting more money.
Bailout Comedy Saturday Night Live Videos: Tim Geithner Is Clueless And Open To Suggestions On Fixing The Banks & Please Do Not Upset 'The Rock' Obama. Broadcast March 7th - Home - The Daily Bail
pretty funny.
For the average person Money math is simple and straight forward. Any creative money math means simply some one is going to get screwed. Usually the borrower.
First time buyers bid
450k for tool shed?
Fools buy in Cali
First time ignorance
Overpay for so little
Their wallets say "Ouch!"
Oh, I dunno, I think 2nd mtgees got pretty well screwed by borrowers.
"Reminds of of when Eugene McCarthy was running quixotically for President back in 1984 (?) - and he proposed a tax on wealth. Not income, but wealth."
Uni: That was a direct slap at Ted Kennedy. See how far that got him.
They only got screwed because proper rules where not used or observed. When we bought our first home (In CA) we assumed a VA loan but had to qualify and the standards then would not even allow for my wife full wages as she was in the child bearing years. We also had to come up with more then 20% down to assume the loan. Today's standards are about non existent. Borrowers should be back to renters as well.
federal taxes on wealth would have to be apportioned to the states based on population. good luck with flyover Senators voting on that proposal.
Oops, I slipped and read a Jas post.
That was dopey.
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As I have commented earlier dopes are anxious to reveal themselves. This blog is particularly good.
I think that Americans are undergoing a structural change in their spending habits having been so badly burned in recent years. Their interest in saving has definitely increased, and do not see this changing the other direction soon or quickly. Along with an extreme lag in employment growth, I think the savings phenomenon will substantially lengthen and slow the pace of economy recovery.
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Very true. Economists base their forecasts of recovery based on hope. Hope invites suckers. Hope sells!
Go into escrow means prepare for closing doesn't it?
So how many are managing to actually close?
That is indeed the question. We'll know in 30-45 days if things relist. Having talked with a number of people out here I can add two more points:
When I read CR's post, I thought it sounded like a screaming endorsement of Roubini's L-Shaped, near-depression event.
Not sure what to make of talk of housing price stabilization in CA. I'm in Dallas, TX, and prices here seem WAY too high for the incomes we sport around here. RRE still isn't passing the sniff test IMHO. I'd be really, really surprised if CA is in better shape at this point.
And I just put this serious post up:
'Bailout Truth: Hey Tim, Do Us All A Favor And Step Down Now'
Includes video from Christopher Whalen of IRA (often a guest host on squawk box) absolutley reaming Getithner. Amongst other things, Whalen says Timmaay knows nothing about finance and is only at Treasury to protect Goldman Sachs. That's one of his quotes and Whalen is not a rabble rouser.
Also in this post is the article from The Sydney Morning Herald where former PM of Australia, Paul Keating basically calls Geithner an idiot on economic matters.
Page Not Found - The Daily Bail
good stuff.
Jasbot! You're names that you give everybody are so cute. You should think about writing a fairy tale or a children's story with all the cute little characters you come up with.
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Truth, or reality, is funnier than fiction or a fairy tale, at least to me. All that "The Rock" Obama needs now is a sex scandal and it would take BBAD's mind off this crisis. Clinton wanted people to stop talking about the bubble in the Scam Market and his team came up with Monica. Americans like to be entertained all the time and there is nothing like a sex scandal in high places or a murder mystery about a celebrity. It takes their mind off the unpleasant reality.
Jas
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Truth is funnier than fiction or a fairy tale, at least to me. All that "The Rock" Obama needs now is a sex scandal and it would take BBAD's mind off this crisis. Clinton wanted people to stop talking about the bubble in the Scam Market and his team came up with Monica. Americans like to be entertained all the time and there is nothing like a sex scandal in high places or a murder mystery about a celebrity. It takes their mind off the unpleasant reality.
Jas
Reminds of of when Eugene McCarthy was running quixotically for President back in "1984 (?) - and he proposed a tax on wealth. Not income, but wealth."
"Uni: That was a direct slap at Ted Kennedy. See how far that got him."
Wrong, both of you. McCarthy, a democrat, ran in 1968, against LBJ, on a anti-war platform. His upset victory in New Hampshire gave Robert Kennedy the courage to try his hand as well. Both ran as anti-war candidates...Robert Kennedy was assasinated by Sirhan Sirhan in Los Angeles as he was about to declare victory in the California primary.
And since it was more than 40 years ago, it's worth mentioning that the war in question was Vietnam.
Southwest Radio Church, long ago in their Bible in the News segment, reporting on the then-continuing armageddon, said that ``the savings and loan industry, once a leading economic indicator, now lies in ruins.'
Pacific sunset,
viewed from the Santa Cruz hills.
Worth every penny.
Overvalued euro set to plunge 'within months'
Overvalued euro set to plunge 'within months' - Telegraph
Shelby and other Southern senators want the car industry and Wall Street to vanish ASAP. Dragging Great Lakes states and New York into abject poverty would thrill them. Then they could start winning GOP seats in the northern states by playing the kind of racial mind games with dirt poor white underclass that they specialize in Alabama and Mississippi.
The will probably succeed.
They know on which side their bread is buttered.
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I thought that the Republicon Party was going after the colored votes. Maybe, that is their back up strategy. I would love to see Manhattan impoverished. Let them scam and defraud each other.
My neighborhood in Southern Cali was hit pretty hard during the early part of the bubble burst. Mostly working class in this area and subprime devastated the area. At one point, 6 of the 30 houses on my block were in foreclosure. All the houses we lost during that time have been resold and have new owners happily painting and improving away. My guess is that California has recovered on the subprime end but is very vulnerable to the big wave of ARM resets coming later this year. Those resets are going to hit the "nice" area hard since most of those loans were affordability vehicles.
Realtor chatter suggests that most of the movement in sales is in the downmarket zip codes where prices are almost affordable (for this part of the country) again.
most arms are resetting sub 4
Developing world may need $700 billion -World Bank
UPDATE 1-Developing world may need $700 billion -World Bank
| Reuters
Don't count on the US. We have our own problems...we have bankers selling penthouses, yachts repossessed and trophy wives forced to work.;o
New thread. PULEEEZE, Bill.
C
It's going to be right wing fundamentalist that will benefit from the demise of urban centers. Sometimes it feels like a vast right wing conspiracy. So 80's.
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Urban centers are breeding grounds for Crooks and sin, especially, Manhattan. They last until they do and then they go kaput when the civilization supporting them goes into a prolonged decline. Then they reincarnate.
Apolitical Blues
..and in Seattle..I'm seeing an awful lot of new Audis on the road. Damn it..if there's a new bubble going on..I want in!!
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I will be in your hood for a wedding.
Damn, this was an easy thread to scroll through if you skip Jaz/Jas/Jism
I put up a new chapter about what life will be like in a world without Jas.
excerpt:
We continued, and I watched a different America appear on both sides of us. An America that thought homes were modular. An America that thought trailers were good starter and finisher homes. The real houses were usually made of wood. Some were brick. I saw a handful of the wood houses that were only partially painted, usually a faded white. I figured the lack of paint was an indicator of where the money ran out. A financial high tide that only rose to the first level of the two story houses. Or perhaps Jethro had decided the hell with it, or it was deer season, or he ran off with the guy who changed his oil. A Brokeback Holler kind of love.
the rest: 401 Authorization Required
plus other posts from CR stalwarts...
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There is nothing like seeing dopes squirm. And I love to expose, or out, dopes! Sadly, it is too easy.
Jas
But you could limit fed gov spending to n% of GDP plus an amount equal to any recent decline in GDP. That way gov could up its spending to offset a decline in GDP.
You solved the whole economic crisis in two sentences. How can we thank you?
A sex scandal involving Obama is extremely unlikely. Bill Clinton was a lifelong sex scandal perpetrator. It would have been out of charactor for him to avoid such behavior during his presidency. This is not so with Obama.
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Obama might have been more discreet, but anything to take dope's mind off the sinking economy. Like Clinton, he is a lawyer married to another lawyer. They know how to handle the situation, both publicly and privately. Calculared Risk!
Jas
The Latest from Mish:
Obama To Open Up Stem Cell Research
Recent large foreclosure auction in NH had many buyers:
Eager Home Buyers Seek Bargains At Foreclosure Auction - Money News Story - WMUR Manchester
Maybe they were discounted prices, but there were buyers all the same. It certainly counters the notion that everyone is in deep doo doo and that absolutely nothing is selling.
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"that absolutely nothing is selling."
Said who? In CA sales doubled as dopes were lured into bargains, especially foreclosures. The same bargains six months ago were far better bargains later. At some points the dopes might figure that out. Until then dopes will flock to foreclosures.
Jas
I will lead you out.
I will advance the Amercian Agenda.
I will save you.
Vote for Me. Vote for America.
Together. Our wills will triumph. We shall see the promised land.
New Thread: Summers: "Universal demand agenda"
http://www.calculatedriskblog.com/2009/03/summers-universal-demand-agenda.html ( 0 comments ...You could be FIRST! )
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CRbot would like to take this time to have some words.
First, to our sagacious, wise, and knowing benevolent benefactor and bestower of revealing financial charts adorned with red and blue lines:
Please, for the love of your immortal God of mortals, can we keep the comment and layout changes to a minimum? I'm tired of whipping the code janitor, and may have to escalate to electroshock. If that's not possible, could you possibly give CRbot a 'heads up'?
Secondly, if you wish to have a online chat, I have graciously provided an IRC channel, which is a time tested, script kiddie abused method of chatting on the internet. It would not fail or falter due to CR's ability to generate immense traffic, and it has a web interface kindly produced by mibbit.com. If you do not wish to link to Mibbit IRC client widget then I can provide you with a direct link to mibbit.
Thirdly, to the rest of you humans, don't mistake my politeness for caring, feeling, empathy, or some other kind of worthless emotion.
--Your keeps-going-and-going-and-going bot
CRbot: Like the terminator, I'm back. Again.
Truth, or reality, is funnier than fiction or a fairy tale...
"The only difference between reality and fiction is that fiction has to be credible..."
- Mark Twai
Time has a way of screwing up everything:
Residential Investment is not the only component of GDP with a long string of negatives
in the correlogram. Figure 27 illustrates the correlogram for the four contributions to
GDP that have the largest average correlations. These are the components that present
intertemporal control problems. It should not be a surprise that residential investment has
the largest correlogram. The other three with large correlograms are defense, business
structures and business equipment and software. Defense spending has a string of large
negatives at eight to nine years referring to the defense cutbacks that inevitably follow
defense buildups.
I don't get these fellers at all:
But-for the Vietnam War, it seems likely that
unemployment would have been greater and would have been rising at that time, thus
eliminating the conflict. In any case, a stimulus for housing wasn’t needed when DOD
spending was so strong. Thus the conflicts between an unemployment target and a
housing target seem pretty minimal, except that the pursuit of low unemployment does
not necessarily remind us of the housing intertemporal control problem: you can
stimulate now or later, but not both. The Keynesian framework in which unemployment
is a centerpiece has no such intertemporal conundrum
Lawyerliz says:
“bobn--great minds think alike! But you are in Fla too, right?"
Actually I'm in Illinois. Read about the great FL bubble of the 20s somewhere...
A sex scandal involving Obama is extremely unlikely.
Because Michelle whoud break his skinny ass in half. Have you seen her arms?
Housing will not lead us out of this like the 90 recession. Also commercial is dead for our lifetimes.
Office space, places where people "go to work" will be sharply reduced. An entire generation of people that lived to have physical paper in their hands and do work with it, like file it, process it, or whatever: that generation is passing away.
Firms and white collar businesses will be all based with no physical offices. Video/computer calls will be the norm as much as a cell phone. The need for offices with legions of file space will go away.
So no new office space will be needed, and we will have a hard time filling it for the next 25 years.
Technology that we can have with us such as light flat panel flexible computers with the associated programs that are new will be the lead out of this one, as it links to a whole new way of people doing business, and getting information.
The big question is what is going to bring us out of this? If you look at previous recessions the fed could drop interest rates. They are as low as they can go so that is not an option. There are no magic products on the horizon (computers and cell phones come to mind) that haven't been commodized. We are losing jobs at a alarming rate, so what's the magic bullit? I don't see one, unless the fed brings rates down on houses to 4 percent with no strings attached, I think we are in trouble. Can you say DEPRESSION! Where's Mr. Roger's wheen we need him!
It is not residential construction, nor PCE, but government spending on public goods, of course, that will lead us out. Just in time to address global warming.