Byzantine_Ruins (homepage, profile) wrote on Thu, 6/11/2009 - 12:23 pm
Comrade Alexei Mikhailovich (profile) wrote on Thu, 6/11/2009 - 4:22 pm
OT- For all of Y'all wanting to "go Galt", go right ahead. The world already has massive overcapacity problems so you're doing us a favor.
Just a little note -- the retreat into Confucian poverty in protest is a lot older than Ayn Rand, and can prostrate a state quite effectively.
You can make people dig holes for you with a whip, but you can't make skilled engineers and managers be your mandarins if they'd rather flip you the bird and starve. The Chinese used to have exams for hermit scholars when the Dynasty was on the ropes, to try to draw the talent back into the system.
So all you guys that want to keep working hard and getting fucked, pile in. The state needs a lot of grade-B talent and politicians to fill its ranks. "The worse the better" and all that.
BR hits it right on the head. Before he got pigged
montas ankle, very good! That is a better headline!
Lawyerliz, a few years ago all the young mortgage brokers were telling anyone that would listen that home equity was dead money. Now anyone in the 31.6%without a mortgage looks smart!
Tim waiting for 2012, I just want to keep the Signal-to-noise ratio high during the day - and OT finance and economics comment are great. That is information that people might be interested in. More OT subjects are fine at night (I'm not hard core on this - just a suggestion).
My conclusion was that the market had gone crazy, Tim Waiting. The writer concluded that this
divergence mean that everyone was pricing in a wonderful recovery.
12-18 months ago you published a series of charts showing percent of mortgaged homes currently or projected to be underwater. I found them to be a concise picture of the home equity situation. Can you dredge up and update them?
Edit: What I really mean is to see the change over time rather than a snapshot.
From last thread re hotels: How do the owners make money, I ask you?
The owners themselves aren't going to make money, but the developers sure will. A couple of vanity hotels back home were shelved last fall when the credit markets froze, but once "investors" were found, the construction began anew. I just don't think people understand how modern finance works, especially in the corporate setting.
all the young mortgage brokers were telling anyone that would listen that home equity was dead money.
Yes, the MBAs were saying the exact same thing about retained earnings.
Our income has gone up, but if our house was in the higher ranges in value, I wouldn't want to put 20%
down and buy it. I like not having a big payment.
Virtually everybody in Fla who bought since 05 is underwater.
I wonder how much equity was pulled out to avoid bk due to medical bills? I've been thinking that sort of bk will keep on happening, with the boomers getting older.
"Lawyerliz, a few years ago all the young mortgage brokers were telling anyone that would listen that home equity was dead money. Now anyone in the 31.6%without a mortgage looks smart!"
Tax accountants were saying it, too: "You want to pay off your mortgage?" Voluntarily losing the mortgage deduction made them crazy. We paid it off anyway. In retrospect, best financial move we ever made.
In theory, low interest rates should make it possible to pay off a mortgage sooner. Given the choice to save or pay down debt, most will now choose to pay down debt (imho) and the "consumer" economy will continue to drag.
FWIW - At 1% interest it takes 72 years to double your money.
Actually, if you had a high interest rate mtg, early payments shorten the term more.
The S & L I worked for in the early/mid 80s had a weird system where they rounded
the payment up to the next highest dollar. One borrower got rounded up 99 cents
and his high interest loan would be paid off nearly 3 years sooner than the
standard 30 years. He protested; didn't want to pay that extra 99 cents!
Angry Saver - agree it will go up....but in the long run that is a positive. While the cleaning up indivdual balance sheets is going to make things shitty for a while, in the long run it will be a positive.
The DH and I talked about paying off the mortgage, but prices in Oregon have only dropped 16% IIRC, and that's a long way from the 50% or more that some places have experienced. It's hard for me to put more money into what may be a depreciating asset. (OTOH, I'm getting nervous about our cash, in dollar denominated CDs, MM funds, and Ts.) I'd almost rather invest in overseas RE than pay off here.
Here's the deal for all the Galters out there. Even if you're a one in a million talent(and likely you're not), there's a thousand guys in India and China each who can do your job cheaper than you.
Taking your ball and going home works on a playground, but not in a world where a majority of jobs are fungible. and not location sensitive.
I don't have to work harder and get fucked by "the man", (like being chased by the bear)I just have to be faster than the slowest person.
Golden rule of investing. Buy what you know about.
Do not go elsewhere to buy land. The sharks who invest overseas know a whole lot more
than you do. The Japanese got taken here, royally, buying status buildings and 'way
overpaying.
I am extremely conservative. I'd want the house I live in paid off. Not of course if you are
underwater, but it sounds like Scone is not.
No one is going Galt that is not already in the top 1% anway...most of the Galt talkers are poor white people who are w-2 slaves who can only dream of keeping their checking account from getting overdrawn.
While the cleaning up indivdual balance sheets is going to make things shitty for a while, in the long run it will be a positive.
Most will never recover from the stock and housing bubbles. And I don't see the fortunes of the American middle class turning for the better in the long run. In fact, the negative trends will worsen imo.
That doesn't mean the stock market won't rally or that wall st. won't prosper though. That disconnect IS also the problem.
This exponential credit growth system is out of hand. The senseless credit inflation has financially ruined the majority.
And that's why you're the sucker. For one of you out there, there's a hundred americans declaring bankruptcy so they don't have to pay the debts. A hundred companies dissolving. Guess who's paying for it...you. That's right. Don't need to turn around and look. You know you are paying for it. So no need to scare the people who are going rogue. They know well enough than to be suckered back in.
Tom Stone, no matter how hungry the hungry are here, I guarantee you the hungry in Kenya (etc.) are hungrier and closer to the edge if we really have a system reset.
There was a flurry of stories some months ago showing Chinese who didn't have a job,
and were headed back to their relatives on the farm. Then they went away. Green
shoots in China? Authorities nixing such stories? Employment not falling? But posters
here said they couldn't hide electrical use and that was falling. So, what's up.
I don't think I'm underwater, but there have been so few sales, there's no market. But just to be clear, I'm not really talking about "investing,"as in buying a rental, I'm talking about buying a retirement home a few years earlier than I would have otherwise, in Australia. I'm very comfortable shopping for a home there. Although they aren't having a massively big recession, so there are no huge bargains in nice places.
When I worked 3 and more years ago, I refused to do overtime, the money was not important to me and I didn't have to pay income taxes at the 40% overtime rate. I'm a machinist who actually made hard goods, I wasn't overhead. Let all hard goods be made in foreign countries, see if I care because we will have even less money to spend here. Consumers with no real money of their own to spend in our own country will eventually lead to a collapse in consumer spending which I'm counting on.
You have friends and relatives in Austrailia? Visit often? - LL
Yes, my husband's family, and some music friends. Most of my people are dead, the rest are either military, or global business types-- so all over the world. And my DH is a dual Australian-British citizen, so we can go back anytime.
MLM,I do not deny that kenyans and many others experience a kind of poverty most here can not imagine.I simply said that there are Americans who go hungry.As far as a 'System Reset",you are out of your mind,societies DO NOT RESET, THEY COLLAPSE .And it is a very ugly and messy process whenever and wherever it happens.
If you think there's 100 people going BK for every one worker, you're a fool at a minimum.
Don't let the door hit you in the ass on the way oout. Best of luck trying to get rehired after 5 years because you're too old, and don't have enough years of SS payment to get much of a handout beyond puppy chow.
it was a mere hyperbole, my dear sir. And if you think there will be good-paying jobs or SS payments in 5 years in US, you're also a fool at a minimum.
I am an advisor for a horrible firm for which i have no escape, also a CPA.
Last night met with a prospect, after reviewing her situation, recommended my best advice was to sell some of her stupid equity funds - that she is paying her current FA 1.5% a year to "manage" (insert: ignore) - pay off her mortgage, which resulted in a guaranteed return of 4.9% ( 5.75 rate X .85 after tax cost)...also told her this was my best advice, especially since I make ZERO from this...
Today she called said her "tax preparer" insisted she keep the mtge for the tax benefit and that I am full of BS....
I staked my integrity, my best advice, and money in my pocket - in lieu of continuing the scam that is our current system - and she still told me to go F myself....I think Mr. Scrooge McDuck is onto something.
It's pretty striking how the percent equity barely rose (still falling well within the overall downward trend) even as house values skyrocketed. Seems like for ever normal buyer from pre-2000 along for the ride there were two more bubble buyers and MEW junkies.
Mortgages are a necessary evil in the beginning but are a real drain on ones wealth. Tax right off is trading dollars for pennies. If you owe you don't own it.
It does require a certain lack of connection to friends and family, though I have a couple relatives who've already done it so I guess I could follow them.
I never understood the appeal of being an expat. Grow where your planted. - nova
I'm a Navy brat, and my family has been Navy for centuries. So we've been "planted" all over the world. I'm certainly an expat in Oregon, it's so different in culture from the east coast, it might as well be a foreign country.
The military is a 'tribe' unto itself, a culture, a homeland. In any case, since my friends and family are all over the world, I almost have to be a nomad to hang with them.
sam.2,
You have my respect. If your client exited the funds and paid off the mortgage, they could probably start filing 1040EZ. Wouldn't need a tax preparer then.
"Mortgages are a necessary evil in the beginning but are a real drain on ones wealth. Tax right off is trading dollars for pennies. If you owe you don't own it."
~~~~
Timing is everything ... investments, romance etc ...
Some timing is not your choice ... getting out of college now, in a depression, the generation you were born in ...
It's maddening to be in this stupid business, give people advice that doesn't put a nickel in my pocket - the right advice no less - and they are continually swayed by those who have skin in the game - FA's and CPAs - who are more concerned about their own goddamn bottom line than their clients. So sickening.
It's not that I don't have a desire to make money, but only if the clients personal balance sheet is properly cleared of debt.
I'm all for a flat tax. What ever whereever, you pay X%. nothing else. No deductions. No fancy scheduling. But alas this would create more unemployment.
Based on the "going galt" comments, it looks like I must have missed a discussion in some previous thread... I wonder if perhaps I might qualify as going galt in some way. My wife and I are expecting our first child in a few days, and the idea of me quitting my job to be a stay-at-home dad keeps getting more and more thought. Between taxes and hiring a nanny, my job would net us around $2000 or so a month. It hardly seems worth it considering how much better it would be for our child.
I figure I would be able to do a little freelancing or open source work here and there to stay current on my skills, making it pretty easy to jump back into the job market once junior goes to school.
And if you think there will be good-paying jobs or SS payments in 5 years in US, you're also a fool at a minimum.
The odds of anything resembling business as usual in 10 years (+or - 5) is quite minimal.
Anyone paying attention should be preparing fro what is on the other side of the wall we are about to crash into (I'm making the assumption we will have survivors).
sam.2 - I have an amazng FP for quite some time. He was ruthless* in how he managed me and my dollars - but now I look back and I could not begin to repay him back.
*Eample he insisted on joint bank accounts and if he thought there was too much cash ola in an account he simply transfered into a custodial account...God knows how many times my ATM card would not work!!
I was raised on the idea that paying off your mortgage meant that no-one could come and throw you out of your house. And that debt is a harsh taskmaster...someone once said
"[Debt] never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; ... it is never laid off work; ... it buys no food; it wears no clothes; it is unhoused; ... it has neither weddings nor births nor deaths; it has no love, no sympathy; it is as hard and soulless as a granite cliff.
Once in debt, [it] is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; ... and whenever you get in its way or cross its course or fail to meet its demands, it crushes you."
UGMAs are another scam...they now tax any gains in a minors account in the parents top marginal bracket - up to age 23. Suppose you bought MSFT and saw it run way up, it's not taxed at 15% as ti would be in your cap gain bracket, but as ordinary income...again, it is another scam that screws those of us that were pushed to save within a child TIN to reduce tax liabilty....now I keep my kids UGMA balances in tax free bonds...F the government and the mutual fund / wire house industry ....middle/upper income America left holding the bag...what a country
Back on topic, I wonder what percentage of the Option ARMs and Alt-As will blow up.
Unemployment will blow up any kind of mortgage, but people that are still working may be able to handle their mortgages after a recast. The question is, with all incentives pushing them to walk away, will they walk or continue to pay?
"Back on topic, I wonder what percentage of the Option ARMs and Alt-As will blow up.Unemployment will blow up any kind of mortgage, but people that are still working may be able to handle their mortgages after a recast. The question is, with all incentives pushing them to walk away, will they walk or continue to pay?"
A big part of this question is, how many holders of option-ARM mortgages cannot afford to pay much beyond the minimum-allowed introductory payment?
I suspect quite a number, even if they do keep their jobs.
Now ZeroHedge has pictures of the alleged Treasury bonds seized by the Italian authorities...and the AP has picked up the story(although it is buried). So the authorities have had these guys for a week and haven't dismissed the goods as fakes. Includes "249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each"
Nice how the global financial press corps can ignore a juicy story...
Best to leave the "Fed" where it is. If you get rid of it, they will just do it behind public eye like they did before 1913. Better seeing the devil than not.
@Scrooge McDuck,
My current gig involves a lot of programming work on a custom-designed database engine intended to store data that doesn't really fit well within your standard Oracle, MySQL, etc.
The government should print money and only allow it to be spent rebuilding America's manufacturing base. Then we can raise taxes to soak up the excess and pay down the deficit, then abolish the tax hikes when base is rebuilt.
I'm a CPA in tax and I have to agree that the benefit of the mortgage deduction is vastly overrated. Unless you already have deduction close to the standard amount you're not gaining anything. In other words, you deduct only the interest and property taxes above $10,900.
"Best to leave the "Fed" where it is. If you get rid of it, they will just do it behind public eye like they did before 1913. Better seeing the devil than not."
~~~~
Wrong on so many levels ....
The fractional reserve banking model is cheapening our money while enriching
the banksters who in turn buy our politicians who in turn look the other way when
the banksters screw up and get trillions in tax payer gifts ...
Two people let go yesterday are fairly guaranteed to lose their houses. One lives paycheck to paycheck, even though she makes six figures, and the other was wondering how to get out of his underwater house - and that's while he had a job.
lawyerliz (profile) wrote on Thu, 6/11/2009 - 6:02 pm
I'm off. Happy glooming everyone.
We can all live on much much less than what we are spending now.
I think the "cheap" spending business model as in exporting jobs, is coming to
the end of the line.
It amazes me how people believe that the oligarchs would survive by moving assets into gold etc as if they are going to cooperate and not turn on each other, and as if that strategy is not obvious. Passive wealth preservation will be a thing of the past, because futures, ETFs, derivatives etc exist on all asset classes and the oligarchs will eat each others' lunch by gaming the system against one another - volatility of commodities and energy will be a side-effect. It will be interesting to watch, and most of us don't have enough at stake that it will affect us to the degree that it will affect the ultra-wealthy as desperation to preserve what they have grows. Once wage arbitrage is no longer profitable, how will they grow their wealth? Where will they put it, and into what?
Way to go, CR. I calculated that average equity was closer to 28 percent, but then I did not make the effort you did to include the other factors. Excellent post.
"The fractional reserve banking model is cheapening our money while enriching
the banksters who in turn buy our politicians who in turn look the other way when"
Yeah, but they did the same thing when they used to try and force people to believe gold had intrinsic value. These guys can change and switch to their hearts contempt.
What does "signal to noise ratio" mean? I was just about to ask lawyerliz a question but that is maybe kinda sorta on topic but I don't know if my post would be signal or noise. Have to run some errands but I'll check back for an answer later.
" it will affect the ultra-wealthy as desperation to preserve what they have grows. Once wage arbitrage is no longer profitable, how will they grow their wealth? Where will they put it, and into what?"
~~~~
That's what politicians are for ... wealth guarantees ...
and so far it's been money good as banksters get trillions
I'll never forget a successful business owner and close friend was chiding me for trying to pay off my mortgage and he pounded on the wall with his fist saying "I don't believe in keeping money in the walls of my home" meaning he took it out of the HOME ATM. Today he has lost one home and the other one he stopped paying on and will eventually loose too. His wife has left him (for other reasons) he is broke and soon to be homeless. This guy had over 1 million in the bank, a boat, 2 homes, benz...........has lost it all..........
"The fractional reserve banking model is cheapening our money while enriching
the banksters who in turn buy our politicians who in turn look the other way when"
Yeah, but they did the same thing when they used to try and force people to believe gold had intrinsic value. These guys can change and switch to their hearts contempt.
~~~~
Not with "Greenbacks" , the currency Lincoln used to pay for the Civil War ... and the prohibition of fractional reserve banking ...
" Once wage arbitrage is no longer profitable, how will they grow their wealth? Where will they put it, and into what?"
Money is the only liquid that flows uphill.
~~~
That is the problem ... there is too much money in too few hands ... all chasing yield ...
We need much higher taxes. First to curb speculation. Second to help pay for the budget deficit ...
mmckinl (profile) wrote on Thu, 6/11/2009 - 7:02 pm
That's what politicians are for ... wealth guarantees ...
and so far it's been money good as banksters get trillions
and the people get peanuts ...
This bears little relevance to the mortgage discussion for which I apologize, but this angle doesn't ever seem to be covered by would-be doomers... It's the nature of the scorpion in the old fable that's being dealt with here. Remember it is all driven by profits and profit expectations. And raw, ruthless economics. Anyone is fair game, especially one another, as the profitability of squeezing the peasants diminishes and there is little left to steal from them, and dwindling economic advantage of shopping around for low-cost labor.
@scrooge
Thanks for the kind words. My main concern is that I may be too demanding on the little guy. I'll be trying to teach him math as soon as he can talk.
It's used in information theory, but IIRC it originally came from early radio. Essentially, the idea is that any information 'flow,' such as a radio broadcast, has a certain amount of information in it -- the signal-- and a certain amount of garbage, such as static -- the noise. So you want a lot of signal and as little noise as possible. The tricky part is when you are listening to the data 'flow' and can't quite distinguish between real noise and stuff that just looks like noise but is not readable for some reason. So how do you know whether you've totally got all the info?
I was very interested to lean that "the value of these paid-off homes is, on average, lower than the mortgaged 68.4%" To me that is counter intuitive. I'm probably wrong but it seesm to be another reflection of the continuing bubble in house prices. It makes the folks without mortgages look even better because their houses being less expensive have less distance yet to fall and are obviously far less prone to foreclosure.
It's used in information theory, but IIRC it originally came from early radio. Essentially, the idea is that any information 'flow,' such as a radio broadcast, has a certain amount of information in it -- the signal-- and a certain amount of garbage, such as static -- the noise. So you want a lot of signal and as little noise as possible. The tricky part is when you are listening to the data 'flow' and can't quite distinguish between real noise and stuff that just looks like noise but is not readable for some reason. So how do you know whether you've totally got all the info?
Information theory concepts like SNR are totally appropriate to the broadcast of a monoculture where there is a single,clear signal you are attempting to move from point A to point B within acceptable tolerances to the application of that information. Surprisingly one of the more effective techniques of real systems is quite the opposite of clear and concise and accurate... it's redundancy and noise around the edges. A neural net for instance gets easily overtrained (will parrot back exactly the responses it is trained to classify) so you deliberately 'fuzzify' the training data to prevent this. It forces the learning process to continue and allows adaptation to unique data, something which an overtrained network can't deal with. In both that sense, and the sense that this is a collaborative learning exercise regulated by the participants themselves, not a broadcast, closed system assumptions have a much more limited rule than they would in a traditional instructional environment. Peoples' educations and jobs resemble this as they take on similar roles in a 'knowledge society'.
mmckinl (profile) wrote on Thu, 6/11/2009 - 7:13 pm
Especially those that are too leveraged ...
Leverage makes or breaks ...
First we'll see who is wearing swimming trunks ...
Leverage also looks like a big wedge. God forbid you're the 0.001% at the top that bet it all on 23 when 23 disappears. The poor folk at the bottom lose their assets, but you lose your ass.
Leverage also looks like a big wedge. God forbid you're the 0.001% at the top that bet it all on 23 when 23 disappears. The poor folk at the bottom lose their assets, but you lose your ass.
~~~~
The poor folk at the bottom go hungry and homeless ...
The poorly positioned rich end up less well off ...
mmckinl (profile) wrote on Thu, 6/11/2009 - 7:30 pm
Until the guillotine reappears, which I doubt ...
We'll have a police state before that happens ...
No need for a police state for quite awhile. Private security forces and gated communities will do just fine for awhile, following the playbook of any good banana republic or failed state.
Every time I read a post from RIF I imagine Spock sitting at a keyboard. That is a compliment. Plus he/she/sentient computer has the whole Borg thing going with the tagline.
20% equity? I miss the good ole days when you could peg the equity number against what the bank was willing to HELOC against.
Scone, fantastic!! Thank you. Not only did you answer my question your answer will probably help me get the job I'm interviewing for with a telecom/satellite company.
Externalized Costs (profile) wrote on Thu, 6/11/2009 - 7:35 pm
Every time I read a post from RIF I imagine Spock sitting at a keyboard. That is a compliment. Plus he/she/sentient computer has the whole Borg thing going with the tagline.
Thanks! - though Spock I'm not A right brain that learned to communicate with a left brain you might say.
Those $134B in "bonds" aren't counterfeit, they're a complete fabrication of something that never existed. This is a REALLY OLD scam, at least a decade old, and this isn't even close to the biggest haul, I believe the record is $2.5 Trillion in one batch.
This is a dead thread, but from the Guardian today, Britain is awash in underwater mortgages.
" the Bank of England announced that up to 1.1 million households have been plunged into negative equity by the property crash. With prices down by 20% from their peak in autumn 2007, research by the Bank published tomorrow suggests that between 700,000 and 1.1 million homeowners now owe more on their mortgage than their house is worth."
Thanks so much for doing this analysis, CR. It's actually better than I thought it would be ... I thought we would be very close to 0% equity at this point. Give it a while, I guess
The market just doesn't seem to care. No one cares about financial institution corruption, bad banks, recession, job loss, hyperinflation. It's just buy buy buy, Thanks to automation technology, outsourcing, in sourcing, free market capitalism/globalization, jobless recoveries are inevitable, sadly, for all future recessions. I predict baseline unemployment will rise from the historical average of 4-5& to 7-8% within the next decade, but the stock market & GDP will keep rising. Higher unemployment will be the new normal. Stocks that benefit from this phase shift are multinationals, high tech, and commodity. Politicians will do noting to impede this transition because they lack the power to restrain hypercapitalism, and because they are often paid off.
Part of the problem is not only the decline, but how long it will take for the equity to recover based on the expected rebound in home values. An analysis on the expended home value rebound can be found at:
Nemo!
Well, my house is without a mtg, but I haven't got the slightest idea what anybody would pay
for it.
Not that I intend to sell it.
At peak, maybe 700k. Now?? 300? 400? 500k?
who knows?
The rest is all meat by product and filler.
This is still an aggregate number (20% equity) - and many homeowners with mortgage have more than 20% equity - and many are underwater!
But this gives a better feel for how ugly it is (than the 41% numbers)
best to all.
considering the number of foreclosures present and ongoing, may I supply an alternate headline:
Mortgages with Households: Approximately 80 percent
that's pretty sad but after buying activity goes dead and prices come down that number may go up!
Sorry CR OT
Good chart of the market yellow line assumes a PE of 16
Market's P/E Ratio Surges: What Does This Mean? -- Seeking Alpha
I went back and realized I hadn't read some CR posts.
None of them cheered me up.
Byzantine_Ruins (homepage, profile) wrote on Thu, 6/11/2009 - 12:23 pm
Comrade Alexei Mikhailovich (profile) wrote on Thu, 6/11/2009 - 4:22 pm
OT- For all of Y'all wanting to "go Galt", go right ahead. The world already has massive overcapacity problems so you're doing us a favor.
Just a little note -- the retreat into Confucian poverty in protest is a lot older than Ayn Rand, and can prostrate a state quite effectively.
You can make people dig holes for you with a whip, but you can't make skilled engineers and managers be your mandarins if they'd rather flip you the bird and starve. The Chinese used to have exams for hermit scholars when the Dynasty was on the ropes, to try to draw the talent back into the system.
So all you guys that want to keep working hard and getting fucked, pile in. The state needs a lot of grade-B talent and politicians to fill its ranks. "The worse the better" and all that.
BR hits it right on the head. Before he got pigged
montas ankle, very good! That is a better headline!
Lawyerliz, a few years ago all the young mortgage brokers were telling anyone that would listen that home equity was dead money. Now anyone in the 31.6%without a mortgage looks smart!
Tim waiting for 2012, I just want to keep the Signal-to-noise ratio high during the day - and OT finance and economics comment are great. That is information that people might be interested in. More OT subjects are fine at night (I'm not hard core on this - just a suggestion).
best wishes
My conclusion was that the market had gone crazy, Tim Waiting. The writer concluded that this
divergence mean that everyone was pricing in a wonderful recovery.
I just don't see it.
You need new glasses.
CR
12-18 months ago you published a series of charts showing percent of mortgaged homes currently or projected to be underwater. I found them to be a concise picture of the home equity situation. Can you dredge up and update them?
Edit: What I really mean is to see the change over time rather than a snapshot.
actually I do need new glasses.
Do you see a wonderful recovery. I thought not!
The money pulled out for trinkets and bling is the dead money now!
Median household income ~ $60K. @2.5 x median household income, too many homes are over-priced. Way too many.
~ $325K income puts one in the top 1% of income earners. Compare that to how many $500K+ houses we have.
I've played around with these numbers for years. Our finances are a train wreck.
Landfill money!
From last thread re hotels: How do the owners make money, I ask you?
The owners themselves aren't going to make money, but the developers sure will. A couple of vanity hotels back home were shelved last fall when the credit markets froze, but once "investors" were found, the construction began anew. I just don't think people understand how modern finance works, especially in the corporate setting.
all the young mortgage brokers were telling anyone that would listen that home equity was dead money.
Yes, the MBAs were saying the exact same thing about retained earnings.
A corrupt system failing always cheers me up
CR-OK
A corrupt system failing always cheers me up
Personally, I'd prefer a system failure that didn't result in people starving.
Our income has gone up, but if our house was in the higher ranges in value, I wouldn't want to put 20%
down and buy it. I like not having a big payment.
Virtually everybody in Fla who bought since 05 is underwater.
Ordinary people are underwater by 100k to 150.
I wonder how much equity was pulled out to avoid bk due to medical bills? I've been thinking that sort of bk will keep on happening, with the boomers getting older.
64% of HH have no mortage or rent...just saying
"Lawyerliz, a few years ago all the young mortgage brokers were telling anyone that would listen that home equity was dead money. Now anyone in the 31.6%without a mortgage looks smart!"
Tax accountants were saying it, too: "You want to pay off your mortgage?" Voluntarily losing the mortgage deduction made them crazy. We paid it off anyway. In retrospect, best financial move we ever made.
Me too, mlm.
I've been tempted to pull out the needle's eye/camel/ rich metaphor/Christ sez poverty is good.
It would be totally hypocritical of course, but most religions are not about getting rich.
Though they might serve for opiate of masses purposes.
I don't know...when I was in Hawaii a month ago, the homeless people on the beach looked pretty happy and healthy.
I would love to watch the fake celebrities/life coaches/dog walkers/octomom/financial engineers/bankers/senators die of hunger though.
In theory, low interest rates should make it possible to pay off a mortgage sooner. Given the choice to save or pay down debt, most will now choose to pay down debt (imho) and the "consumer" economy will continue to drag.
FWIW - At 1% interest it takes 72 years to double your money.
Guesstimate - 80% have no mortage, rent or have more than 50% equity in their home...
My mom got yelled at by her tax accountant when she paid off her mtg many years ago.
She didn't owe much anyway.
I have known tax accts who thought neg-am mtges were just wonderful.
Wow. Disturbing.
Scrooge - I was thinking more about the homeless people in Kenya.
64% of HH have no mortage or rent...just saying
Crispy,
That % is going to rise. It won't be going up due to people paying off mortgages either. Think defaults.
And that IS the problem.
I don't think their government is doing qualitative easing though.
Actually, if you had a high interest rate mtg, early payments shorten the term more.
The S & L I worked for in the early/mid 80s had a weird system where they rounded
the payment up to the next highest dollar. One borrower got rounded up 99 cents
and his high interest loan would be paid off nearly 3 years sooner than the
standard 30 years. He protested; didn't want to pay that extra 99 cents!
No, but they will most certainly be affected by any system reset.
MLM,there are plenty of people going hungry in the USA,the "2001 Recovery" skipped the bottom quintile even in nominal terms.
Angry Saver - agree it will go up....but in the long run that is a positive. While the cleaning up indivdual balance sheets is going to make things shitty for a while, in the long run it will be a positive.
I tell you what, and I am sure I am not the only one(but I like to state the obvious), but I sure do see a long term trend in that there chart.
Leverage, it's the new black.®
I want to live at a quality ease.
The DH and I talked about paying off the mortgage, but prices in Oregon have only dropped 16% IIRC, and that's a long way from the 50% or more that some places have experienced. It's hard for me to put more money into what may be a depreciating asset. (OTOH, I'm getting nervous about our cash, in dollar denominated CDs, MM funds, and Ts.) I'd almost rather invest in overseas RE than pay off here.
Here's the deal for all the Galters out there. Even if you're a one in a million talent(and likely you're not), there's a thousand guys in India and China each who can do your job cheaper than you.
Taking your ball and going home works on a playground, but not in a world where a majority of jobs are fungible. and not location sensitive.
I don't have to work harder and get fucked by "the man", (like being chased by the bear)I just have to be faster than the slowest person.
Golden rule of investing. Buy what you know about.
Do not go elsewhere to buy land. The sharks who invest overseas know a whole lot more
than you do. The Japanese got taken here, royally, buying status buildings and 'way
overpaying.
I am extremely conservative. I'd want the house I live in paid off. Not of course if you are
underwater, but it sounds like Scone is not.
Perhaps it will become fashionable not to export jobs.
No one is going Galt that is not already in the top 1% anway...most of the Galt talkers are poor white people who are w-2 slaves who can only dream of keeping their checking account from getting overdrawn.
While the cleaning up indivdual balance sheets is going to make things shitty for a while, in the long run it will be a positive.
Most will never recover from the stock and housing bubbles. And I don't see the fortunes of the American middle class turning for the better in the long run. In fact, the negative trends will worsen imo.
That doesn't mean the stock market won't rally or that wall st. won't prosper though. That disconnect IS also the problem.
This exponential credit growth system is out of hand. The senseless credit inflation has financially ruined the majority.
And that's why you're the sucker. For one of you out there, there's a hundred americans declaring bankruptcy so they don't have to pay the debts. A hundred companies dissolving. Guess who's paying for it...you. That's right. Don't need to turn around and look. You know you are paying for it. So no need to scare the people who are going rogue. They know well enough than to be suckered back in.
Wow, we are back to be a county of indentured servitude.
Tom Stone, no matter how hungry the hungry are here, I guarantee you the hungry in Kenya (etc.) are hungrier and closer to the edge if we really have a system reset.
There was a flurry of stories some months ago showing Chinese who didn't have a job,
and were headed back to their relatives on the farm. Then they went away. Green
shoots in China? Authorities nixing such stories? Employment not falling? But posters
here said they couldn't hide electrical use and that was falling. So, what's up.
@ LawyerLiz
I don't think I'm underwater, but there have been so few sales, there's no market. But just to be clear, I'm not really talking about "investing,"as in buying a rental, I'm talking about buying a retirement home a few years earlier than I would have otherwise, in Australia. I'm very comfortable shopping for a home there. Although they aren't having a massively big recession, so there are no huge bargains in nice places.
You have friends and relatives in Austrailia? Visit often?
When I worked 3 and more years ago, I refused to do overtime, the money was not important to me and I didn't have to pay income taxes at the 40% overtime rate. I'm a machinist who actually made hard goods, I wasn't overhead. Let all hard goods be made in foreign countries, see if I care because we will have even less money to spend here. Consumers with no real money of their own to spend in our own country will eventually lead to a collapse in consumer spending which I'm counting on.
You have friends and relatives in Austrailia? Visit often? - LL
Yes, my husband's family, and some music friends. Most of my people are dead, the rest are either military, or global business types-- so all over the world. And my DH is a dual Australian-British citizen, so we can go back anytime.
MLM,I do not deny that kenyans and many others experience a kind of poverty most here can not imagine.I simply said that there are Americans who go hungry.As far as a 'System Reset",you are out of your mind,societies DO NOT RESET, THEY COLLAPSE .And it is a very ugly and messy process whenever and wherever it happens.
I'm off. Happy glooming everyone.
We can all live on much much less than what we are spending now.
I think the "cheap" spending business model as in exporting jobs, is coming to
the end of the line.
However, the consumers are getting cheaper faster than one would have
thought. Even big wage increases might not get them to spending much.
Not that that's gonna happen!
And it is a very ugly and messy process whenever and wherever it happens.
Thus my desire to not see it happen. Out of my mind or not.
If you think there's 100 people going BK for every one worker, you're a fool at a minimum.
Don't let the door hit you in the ass on the way oout. Best of luck trying to get rehired after 5 years because you're too old, and don't have enough years of SS payment to get much of a handout beyond puppy chow.
it was a mere hyperbole, my dear sir. And if you think there will be good-paying jobs or SS payments in 5 years in US, you're also a fool at a minimum.
I have to second Bod Dobbs's comments.
I am an advisor for a horrible firm for which i have no escape, also a CPA.
Last night met with a prospect, after reviewing her situation, recommended my best advice was to sell some of her stupid equity funds - that she is paying her current FA 1.5% a year to "manage" (insert: ignore) - pay off her mortgage, which resulted in a guaranteed return of 4.9% ( 5.75 rate X .85 after tax cost)...also told her this was my best advice, especially since I make ZERO from this...
Today she called said her "tax preparer" insisted she keep the mtge for the tax benefit and that I am full of BS....
I staked my integrity, my best advice, and money in my pocket - in lieu of continuing the scam that is our current system - and she still told me to go F myself....I think Mr. Scrooge McDuck is onto something.
Apparently, Ron Paul's "Audit the Fed" Bill just passed 218 sponsors.
It's pretty striking how the percent equity barely rose (still falling well within the overall downward trend) even as house values skyrocketed. Seems like for ever normal buyer from pre-2000 along for the ride there were two more bubble buyers and MEW junkies.
Mortgages are a necessary evil in the beginning but are a real drain on ones wealth. Tax right off is trading dollars for pennies. If you owe you don't own it.
I signed online, but it's hard to imagine anything but a slow death in the Senate for this.
I never understood the appeal of being an expat. Grow where your planted.
@ Incident Commander Coinz
You have a link for us?
It does require a certain lack of connection to friends and family, though I have a couple relatives who've already done it so I guess I could follow them.
Here is link to the Audit the Fed news
I never understood the appeal of being an expat. Grow where your planted. - nova
I'm a Navy brat, and my family has been Navy for centuries. So we've been "planted" all over the world. I'm certainly an expat in Oregon, it's so different in culture from the east coast, it might as well be a foreign country.
The military is a 'tribe' unto itself, a culture, a homeland. In any case, since my friends and family are all over the world, I almost have to be a nomad to hang with them.
sam.2,
You have my respect. If your client exited the funds and paid off the mortgage, they could probably start filing 1040EZ. Wouldn't need a tax preparer then.
Thank you Incident Commander Coinz
Overtime for you.
"Mortgages are a necessary evil in the beginning but are a real drain on ones wealth. Tax right off is trading dollars for pennies. If you owe you don't own it."
~~~~
Timing is everything ... investments, romance etc ...
Some timing is not your choice ... getting out of college now, in a depression, the generation you were born in ...
Wouldn't need a tax preparer then.
Ding ding ding...
nova - it can be very lucrative being an expat.
MLM
+1
" it can be very lucrative being an expat."
~~~~
Lot of retirees doing this to stretch their dollars ...
It's maddening to be in this stupid business, give people advice that doesn't put a nickel in my pocket - the right advice no less - and they are continually swayed by those who have skin in the game - FA's and CPAs - who are more concerned about their own goddamn bottom line than their clients. So sickening.
It's not that I don't have a desire to make money, but only if the clients personal balance sheet is properly cleared of debt.
Debt sucks and is the downfall of our society.
I'm all for a flat tax. What ever whereever, you pay X%. nothing else. No deductions. No fancy scheduling. But alas this would create more unemployment.
O.T from last thread ,
Nades , While in Chicago go to
the "Rock and Roll McDonalds"
Within walking distance of The Palmer House' '
it pre-dates Hard-Rock.
Get some MickeyD , and see the mementos !
I also like the museums.
Based on the "going galt" comments, it looks like I must have missed a discussion in some previous thread... I wonder if perhaps I might qualify as going galt in some way. My wife and I are expecting our first child in a few days, and the idea of me quitting my job to be a stay-at-home dad keeps getting more and more thought. Between taxes and hiring a nanny, my job would net us around $2000 or so a month. It hardly seems worth it considering how much better it would be for our child.
I figure I would be able to do a little freelancing or open source work here and there to stay current on my skills, making it pretty easy to jump back into the job market once junior goes to school.
"I'm all for a flat tax"
~~~~
Much too regressive ...
The simple way ...
Steeply progressive tax with no deductions ...
And if you think there will be good-paying jobs or SS payments in 5 years in US, you're also a fool at a minimum.
The odds of anything resembling business as usual in 10 years (+or - 5) is quite minimal.
Anyone paying attention should be preparing fro what is on the other side of the wall we are about to crash into (I'm making the assumption we will have survivors).
How about cutting spending at all levels of government instead?
sam.2 - I have an amazng FP for quite some time. He was ruthless* in how he managed me and my dollars - but now I look back and I could not begin to repay him back.
*Eample he insisted on joint bank accounts and if he thought there was too much cash ola in an account he simply transfered into a custodial account...God knows how many times my ATM card would not work!!
Sam.2,
The real down fall is we do not teach simple money math in our schools. A little math and see would be calling her account an idiot.
CC, you just made my day!
I was raised on the idea that paying off your mortgage meant that no-one could come and throw you out of your house. And that debt is a harsh taskmaster...someone once said
"[Debt] never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; ... it is never laid off work; ... it buys no food; it wears no clothes; it is unhoused; ... it has neither weddings nor births nor deaths; it has no love, no sympathy; it is as hard and soulless as a granite cliff.
Once in debt, [it] is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; ... and whenever you get in its way or cross its course or fail to meet its demands, it crushes you."
Having a roof overhead is a good thing
Very nice analytical work, CR!
UGMAs are another scam...they now tax any gains in a minors account in the parents top marginal bracket - up to age 23. Suppose you bought MSFT and saw it run way up, it's not taxed at 15% as ti would be in your cap gain bracket, but as ordinary income...again, it is another scam that screws those of us that were pushed to save within a child TIN to reduce tax liabilty....now I keep my kids UGMA balances in tax free bonds...F the government and the mutual fund / wire house industry ....middle/upper income America left holding the bag...what a country
Back on topic, I wonder what percentage of the Option ARMs and Alt-As will blow up.
Unemployment will blow up any kind of mortgage, but people that are still working may be able to handle their mortgages after a recast. The question is, with all incentives pushing them to walk away, will they walk or continue to pay?
@Chicago Dude
I think that's a great idea. What line of work are you in?
When is Obama going to get the high rail transet system to start building?
What a cowardly man.
With Kucinich as number218, I can support it without much reservation.
"Christ sez poverty is good."
He didn't say poverty is good. He defined real wealth.
"Back on topic, I wonder what percentage of the Option ARMs and Alt-As will blow up.Unemployment will blow up any kind of mortgage, but people that are still working may be able to handle their mortgages after a recast. The question is, with all incentives pushing them to walk away, will they walk or continue to pay?"
A big part of this question is, how many holders of option-ARM mortgages cannot afford to pay much beyond the minimum-allowed introductory payment?
I suspect quite a number, even if they do keep their jobs.
Now ZeroHedge has pictures of the alleged Treasury bonds seized by the Italian authorities...and the AP has picked up the story(although it is buried). So the authorities have had these guys for a week and haven't dismissed the goods as fakes. Includes "249 US Federal Reserve bonds worth US$ 500 million each, plus ten Kennedy bonds and other US government securities worth a billion dollar each"
Nice how the global financial press corps can ignore a juicy story...
Best to leave the "Fed" where it is. If you get rid of it, they will just do it behind public eye like they did before 1913. Better seeing the devil than not.
Very nice analytical work, CR!
Word.
"The military is a 'tribe' unto itself"
Especially US Marines.
"Auditing the privately owned and operated Federal Reserve .... "
That's a good thing !
Chances they'll actually get to audit the Fed ...
not very good ...
As Durbin said about the banksters and the Senate ...
" Quite frankly, they own the place!"
That's what the bill is about, seeing. Did you miss all the calls for transparency during the campaign?
@Scrooge McDuck,
My current gig involves a lot of programming work on a custom-designed database engine intended to store data that doesn't really fit well within your standard Oracle, MySQL, etc.
The government should print money and only allow it to be spent rebuilding America's manufacturing base. Then we can raise taxes to soak up the excess and pay down the deficit, then abolish the tax hikes when base is rebuilt.
I'm a CPA in tax and I have to agree that the benefit of the mortgage deduction is vastly overrated. Unless you already have deduction close to the standard amount you're not gaining anything. In other words, you deduct only the interest and property taxes above $10,900.
what, like a data warehouse, or column based table? sounds like you'll be fine
that's pretty specific knowledge you'll have.
Who knows, you can strike it rich like some of those guys writing iPhone apps.
Either way...as the biggest counterfeiting bust in history, or as the biggest money smuggling bust in history...it ought to be getting more coverage.
"Best to leave the "Fed" where it is. If you get rid of it, they will just do it behind public eye like they did before 1913. Better seeing the devil than not."
~~~~
Wrong on so many levels ....
The fractional reserve banking model is cheapening our money while enriching
the banksters who in turn buy our politicians who in turn look the other way when
the banksters screw up and get trillions in tax payer gifts ...
134 billion sounds like real money even in dollars.
Two people let go yesterday are fairly guaranteed to lose their houses. One lives paycheck to paycheck, even though she makes six figures, and the other was wondering how to get out of his underwater house - and that's while he had a job.
And that's only 2 of the 20 I know about.
lawyerliz (profile) wrote on Thu, 6/11/2009 - 6:02 pm
I'm off. Happy glooming everyone.
We can all live on much much less than what we are spending now.
I think the "cheap" spending business model as in exporting jobs, is coming to
the end of the line.
It amazes me how people believe that the oligarchs would survive by moving assets into gold etc as if they are going to cooperate and not turn on each other, and as if that strategy is not obvious. Passive wealth preservation will be a thing of the past, because futures, ETFs, derivatives etc exist on all asset classes and the oligarchs will eat each others' lunch by gaming the system against one another - volatility of commodities and energy will be a side-effect. It will be interesting to watch, and most of us don't have enough at stake that it will affect us to the degree that it will affect the ultra-wealthy as desperation to preserve what they have grows. Once wage arbitrage is no longer profitable, how will they grow their wealth? Where will they put it, and into what?
Way to go, CR. I calculated that average equity was closer to 28 percent, but then I did not make the effort you did to include the other factors. Excellent post.
"The fractional reserve banking model is cheapening our money while enriching
the banksters who in turn buy our politicians who in turn look the other way when"
Yeah, but they did the same thing when they used to try and force people to believe gold had intrinsic value. These guys can change and switch to their hearts contempt.
It is a bit surprising that this isn't a bigger story. I suppose there are reasons for that behind the scenes.
CR or someone--
What does "signal to noise ratio" mean? I was just about to ask lawyerliz a question but that is maybe kinda sorta on topic but I don't know if my post would be signal or noise. Have to run some errands but I'll check back for an answer later.
Thanks!!
" Once wage arbitrage is no longer profitable, how will they grow their wealth? Where will they put it, and into what?"
Money is the only liquid that flows uphill.
" it will affect the ultra-wealthy as desperation to preserve what they have grows. Once wage arbitrage is no longer profitable, how will they grow their wealth? Where will they put it, and into what?"
~~~~
That's what politicians are for ... wealth guarantees ...
and so far it's been money good as banksters get trillions
and the people get peanuts ...
I'll never forget a successful business owner and close friend was chiding me for trying to pay off my mortgage and he pounded on the wall with his fist saying "I don't believe in keeping money in the walls of my home" meaning he took it out of the HOME ATM. Today he has lost one home and the other one he stopped paying on and will eventually loose too. His wife has left him (for other reasons) he is broke and soon to be homeless. This guy had over 1 million in the bank, a boat, 2 homes, benz...........has lost it all..........
Eras End
"The fractional reserve banking model is cheapening our money while enriching
the banksters who in turn buy our politicians who in turn look the other way when"
Yeah, but they did the same thing when they used to try and force people to believe gold had intrinsic value. These guys can change and switch to their hearts contempt.
~~~~
Not with "Greenbacks" , the currency Lincoln used to pay for the Civil War ... and the prohibition of fractional reserve banking ...
Try this post and read her blog ...
Out Of The Ashes Of Gm: The Phoenix Of Renewable Energy by Dr. Ellen Brown « Dandelion Salad
pavel.chichikov
" Once wage arbitrage is no longer profitable, how will they grow their wealth? Where will they put it, and into what?"
Money is the only liquid that flows uphill.
~~~
That is the problem ... there is too much money in too few hands ... all chasing yield ...
We need much higher taxes. First to curb speculation. Second to help pay for the budget deficit ...
mmckinl (profile) wrote on Thu, 6/11/2009 - 7:02 pm
That's what politicians are for ... wealth guarantees ...
and so far it's been money good as banksters get trillions
and the people get peanuts ...
This bears little relevance to the mortgage discussion for which I apologize, but this angle doesn't ever seem to be covered by would-be doomers... It's the nature of the scorpion in the old fable that's being dealt with here. Remember it is all driven by profits and profit expectations. And raw, ruthless economics. Anyone is fair game, especially one another, as the profitability of squeezing the peasants diminishes and there is little left to steal from them, and dwindling economic advantage of shopping around for low-cost labor.
@scrooge
Thanks for the kind words. My main concern is that I may be too demanding on the little guy. I'll be trying to teach him math as soon as he can talk.
"What does "signal to noise ratio" mean?"
A lot of people used to call Hendrix guitar solos "noise". I suppose it's the ear of the beholder. Behold:
YouTube - Jimi Hendrix - Red House (Live)
(Sorry, CR, but you day owls deserve some joy, too)
What does "signal to noise ratio" mean? - SD
It's used in information theory, but IIRC it originally came from early radio. Essentially, the idea is that any information 'flow,' such as a radio broadcast, has a certain amount of information in it -- the signal-- and a certain amount of garbage, such as static -- the noise. So you want a lot of signal and as little noise as possible. The tricky part is when you are listening to the data 'flow' and can't quite distinguish between real noise and stuff that just looks like noise but is not readable for some reason. So how do you know whether you've totally got all the info?
I was very interested to lean that "the value of these paid-off homes is, on average, lower than the mortgaged 68.4%" To me that is counter intuitive. I'm probably wrong but it seesm to be another reflection of the continuing bubble in house prices. It makes the folks without mortgages look even better because their houses being less expensive have less distance yet to fall and are obviously far less prone to foreclosure.
pavel.chichikov (homepage, profile) wrote on Thu, 6/11/2009 - 7:01 pm
" Once wage arbitrage is no longer profitable, how will they grow their wealth? Where will they put it, and into what?"
Money is the only liquid that flows uphill.
Thanks pavel. This one took me a little while!
Here's the wiki on STNR
Signal-to-noise ratio - Wikipedia, the free encyclopedia
ResistanceIsFeudal
Yep, the law of diminishing returns ...
The less rich are being eaten alive right now ...
Especially those that are too leveraged ...
Leverage makes or breaks ...
First we'll see who is wearing swimming trunks ...
scone (profile) wrote on Thu, 6/11/2009 - 7:10 pm
What does "signal to noise ratio" mean? - SD
It's used in information theory, but IIRC it originally came from early radio. Essentially, the idea is that any information 'flow,' such as a radio broadcast, has a certain amount of information in it -- the signal-- and a certain amount of garbage, such as static -- the noise. So you want a lot of signal and as little noise as possible. The tricky part is when you are listening to the data 'flow' and can't quite distinguish between real noise and stuff that just looks like noise but is not readable for some reason. So how do you know whether you've totally got all the info?
Information theory concepts like SNR are totally appropriate to the broadcast of a monoculture where there is a single,clear signal you are attempting to move from point A to point B within acceptable tolerances to the application of that information. Surprisingly one of the more effective techniques of real systems is quite the opposite of clear and concise and accurate... it's redundancy and noise around the edges. A neural net for instance gets easily overtrained (will parrot back exactly the responses it is trained to classify) so you deliberately 'fuzzify' the training data to prevent this. It forces the learning process to continue and allows adaptation to unique data, something which an overtrained network can't deal with. In both that sense, and the sense that this is a collaborative learning exercise regulated by the participants themselves, not a broadcast, closed system assumptions have a much more limited rule than they would in a traditional instructional environment. Peoples' educations and jobs resemble this as they take on similar roles in a 'knowledge society'.
the value of these paid-off homes is, on average, lower than the mortgaged
if i'm not using the house as collateral, what do i care what the value is? in fact, for tax purposes , i would want as low a valuation as possible.
mmckinl (profile) wrote on Thu, 6/11/2009 - 7:13 pm
Especially those that are too leveraged ...
Leverage makes or breaks ...
First we'll see who is wearing swimming trunks ...
Leverage also looks like a big wedge. God forbid you're the 0.001% at the top that bet it all on 23 when 23 disappears. The poor folk at the bottom lose their assets, but you lose your ass.
Basel Too
Good points ... but everybody isn't in your position ...
People were trying to get ready to retire ...
Leverage also looks like a big wedge. God forbid you're the 0.001% at the top that bet it all on 23 when 23 disappears. The poor folk at the bottom lose their assets, but you lose your ass.
~~~~
The poor folk at the bottom go hungry and homeless ...
The poorly positioned rich end up less well off ...
The well positioned rich make fortunes ...
Until the guillotine reappears, which I doubt ...
We'll have a police state before that happens ...
@ RIF
I know, but I think this guy was looking for a simple explanation.
mmckinl (profile) wrote on Thu, 6/11/2009 - 7:30 pm
Until the guillotine reappears, which I doubt ...
We'll have a police state before that happens ...
No need for a police state for quite awhile. Private security forces and gated communities will do just fine for awhile, following the playbook of any good banana republic or failed state.
scone (profile) wrote on Thu, 6/11/2009 - 7:31 pm
@ RIF
I know, but I think this guy was looking for a simple explanation.
I hoped some would find it interesting. Should I repost in the next thread since we just felt the wrath of the pig?
Every time I read a post from RIF I imagine Spock sitting at a keyboard. That is a compliment. Plus he/she/sentient computer has the whole Borg thing going with the tagline.
20% equity? I miss the good ole days when you could peg the equity number against what the bank was willing to HELOC against.
@ RIF Entirely up to you. Although I must warn you, many posters here are old-school geeks with many decades of experience...
scone (profile) wrote on Thu, 6/11/2009 - 7:36 pm
@ RIF Entirely up to you. Although I must warn you, many posters here are old-school geeks with many decades of experience...
I only know enough to be dangerous, but in so many different areas that oftentimes when I throw something against the wall it sticks.
What does "signal to noise ratio" mean?
Scone, fantastic!! Thank you. Not only did you answer my question your answer will probably help me get the job I'm interviewing for with a telecom/satellite company.
Cheers!!
Externalized Costs (profile) wrote on Thu, 6/11/2009 - 7:35 pm
Every time I read a post from RIF I imagine Spock sitting at a keyboard. That is a compliment. Plus he/she/sentient computer has the whole Borg thing going with the tagline.
A right brain that learned to communicate with a left brain you might say.
Thanks! - though Spock I'm not
I was raised on the idea that paying off your mortgage meant that no-one could come and throw you out of your house.
====
Except for the tax man if you don't pay your taxes.
No such thing as free and clear, you will always owe property tax.
Not to take away from your point that debt is bad.
Those $134B in "bonds" aren't counterfeit, they're a complete fabrication of something that never existed. This is a REALLY OLD scam, at least a decade old, and this isn't even close to the biggest haul, I believe the record is $2.5 Trillion in one batch.
All y'all can put the tin foil hats away now.
This is a dead thread, but from the Guardian today, Britain is awash in underwater mortgages.
" the Bank of England announced that up to 1.1 million households have been plunged into negative equity by the property crash. With prices down by 20% from their peak in autumn 2007, research by the Bank published tomorrow suggests that between 700,000 and 1.1 million homeowners now owe more on their mortgage than their house is worth."
Thanks so much for doing this analysis, CR. It's actually better than I thought it would be ... I thought we would be very close to 0% equity at this point. Give it a while, I guess
The market just doesn't seem to care. No one cares about financial institution corruption, bad banks, recession, job loss, hyperinflation. It's just buy buy buy, Thanks to automation technology, outsourcing, in sourcing, free market capitalism/globalization, jobless recoveries are inevitable, sadly, for all future recessions. I predict baseline unemployment will rise from the historical average of 4-5& to 7-8% within the next decade, but the stock market & GDP will keep rising. Higher unemployment will be the new normal. Stocks that benefit from this phase shift are multinationals, high tech, and commodity. Politicians will do noting to impede this transition because they lack the power to restrain hypercapitalism, and because they are often paid off.
Good reading, folks interesting finance articles
Part of the problem is not only the decline, but how long it will take for the equity to recover based on the expected rebound in home values. An analysis on the expended home value rebound can be found at:
When is George’s House Going to be Worth $500,000 Again? « Southern Real Estate Opportunities