I wonder if UK mortgages are different in that any additional paid down this month reduces future amounts due?
I mean, here if you have a 30-yr mortgage and send an extra $100/mo., your payment stays the same and ratio of pricipal to interest goes up, and the length of the mortgage goes down.
What if sending $100 extra meant all future payments fell $2 or something?
I was "PIGGED" aon the last thread, so I will present my question again, to be ignored if so desired, for those in denial!
Some of you might believe that I am OT, however, one question that no one that I am aware of has answered this question...
Why is it important that efficiency and productiveity so critical, when it leads to less employees necessary to work to provide for everyone;s basic needs? What is the the logical conclusion, when everything is either outsourced to cheaper labor markets/robotics and improvements in software...
Is it inevitable that less and less people will be necessary to work to provide the goods and services that we desire?
Stupid question, I know, however, I think it is one that needs to be answered..As the unemployed people increases, what is be done to them or for them, so that they do not revolt..against society?.
lost-confused, I think as fewer workers are required to produce what we consume, we find new "needs" of things to consume.
200 years ago, half the population had to farm to produce enough food, now it's like 3%. But in those days, they had no one producing cell phones (lucky bastards.)
your question is not OT, but it has been discussed here before.
there is no "answer" to your question, it is a rhetorical question IMO.
it reminds me of a tale I heard many years ago. My apologies as I am about to butcher the story but the meaning remains.
A senator visited rural China and noted that there were hundreds of rural chinese peasants doing backbreaking labor in the fields. He said "In America we've developed technology that allows 5 people to grow more food than 500 can grow here!"
The Chinese diplomat responded: "Well in China we've figured out how to give 500 people a job".
"In addition, ever lower savings rates have made it increasingly more attractive for many people to use any spare funds that they have to reduce their mortgages," he added.
Interesting comment. This is an instance where a zero interest rate environment, rather than encouraging borrowing, instead provides the incentive to reduce borrowing, since the benefits of saving has been so devalued.
I don't think this is what Ben Bernanke has in mind with his zero interest rate policy.
I was doing a data pull for Ventura and decided to throw Orange County in as well. The Ventura county charts will be up later today for those interested.
My guess is that theirs might be variable and ready to rise, and they definitely are recourse from what I know (IANAL). Many probably want to stay in them and avoid losing them.
Here in Europe there are a lot of factors in play for many folks, In Greece, where I live they continue to offer mortgages denominated in Swiss Francs at low interest initially. I wonder how the average home buyer has any way of knowing what the exchange rate will be a few years or many years from now.
my connection borked out so continued from last thread...
poic (profile) wrote on Fri, 7/3/2009 - 9:54 am
What I hear from those against government run health-care is inevitably "it will cost more because the government wastes".
Despite concrete proof that every 1st nation socialized health-care system in the world spends half as much on beurocratic overhead as the private health-care system in the US.
I'm still trying to understand the difference between our system and socialized medicine other than the for-profit characteristic.
I completely agree however I do think the major reason why socialized medicine isn't being explored vigorously in this country currently is that we need those redundant jobs. Take away the ins billing and healthcare admin jobs and see what happens to our unemployment ratios.
I would argue that I would rather loose those jobs and instead use those FTEs (requiring retraining etc) toward better patient care, more wellness and preventative programs etc but medical high tech isn't ready to make that shift. Everyone connected with healthcare is too invested in protecting their turf.
Well, I presented my question about efficency and productivity.....I guess that I have nothing more to say until that question is answered one way or another...
This is the ultimate question that has yet to be dealt with by our society....What is more important, the public or the elites?
as a luker on the website...which may explain why all of the other lukers have not participated...
I just came back from the grocery store. My checker is a women in her late 50;s who started a couple years ago. I remember talking to her then. She had lost her previous job and was unhappy about Safeways pay (minimum) and benefits - but it was a job. Today we were talking and she told me "You know what my greatest fear is? Being hungry and homeless." She wasn't kidding. Oh, BTW. Safeway monitors how long it takes them to ring up each item. Pay an employment being based upon that, and I am sure other things.
A nice place to start on the wages of technological advancement ; )
Jane, I am not a luddite, however, what is important to you in this life? Accummulation of more or to spend less time worrying about what your next door neighbor has?
Somewhere in this argument, there must be a child that wanted a happy home life and good friends...I maybe wrong here, however I suspect that I am not....
JMHO
EDIT: I am not talking about you personally, since I do not know you...Just a general statement about society...
I'm not near my 50s yet but that has long been my fear since I was in my late 20s. I call it the "sitting on a curb eating beans out of a can dreads".
I think this downturn has freaked out younger people less. They haven't hit there peak earning years so there is still have hope to 'make it up' latter. They have a fall back position in their families and extended circles of friends. Contrast that with myself- I have no children (I couldn't afford to have any until too late in life), no siblings, mother is becoming dependent on me and all but 1 of my aunts and uncles have passed away. In other words, I have zero to fall back on besides my personal tenacity, resources and in a dire pinch, the gov social network. It's been that way most of my life.
What has really hit me over the head is how people above 40 are handling the changes and how the changes are handling them, particularly men. I see my 30s counterparts finding new, although much less paying, positions. The men I know in their early to late 40s are struggling to get even second interviews for fairly entry level jobs. Those that I am close with have been out of work for more then 26 weeks and their spirits are being crushed. I have much to say on the subject of hiring subjectivity, employee / employer expectations, and economic hardship but I find I can't do it justice without charts, diagrams, a whiteboard, and a bottle of tequilla >; )
I suspect that those that are unemployed, will remain unemployed for the foreseeable future....Those that are employed, do what ever it takes to hang on to your job....
Speaking as one person close to retirement, with some retirement savings in an IRA , cat food and squirrel on the menu....I should survive and I will not starve...though It will not be pleasant.
Deflationary Jane (profile) wrote on Fri, 7/3/2009 - 3:28 pm
Deflationary Jane (profile) wrote on Fri, 7/3/2009 - 3:28 pm
I think this downturn has freaked out younger people less. They haven't hit there peak earning years so there is still have hope to 'make it up' latter. They have a fall back position in their families and extended circles of friends.
Contrast that with myself- I have no children (I couldn't afford to have any until too late in life), no siblings, mother is becoming dependent on me and all but 1 of my aunts and uncles have passed away. In other words, I have zero to fall back on besides my personal tenacity, resources and in a dire pinch, the gov social network. It's been that way most of my life.
The contrast I'd draw would be, young people have extended social networks of friends but you don't. At least not from what you wrote.
Time to get out and find some peeps.
The young fir that falls and rots
Having neither needles nor bark,
So is the fate of the friendless man:
Why should he live long?
Kin die, possessions can be stolen or lost, but a friend is something you can acquire every time you meet another person.
Krugman, in his op-ed, states that Republicans are "settled on a strategy of total opposition, unconstrained by facts or logic. Indeed, these leaders responded to the latest job numbers by proclaiming the failure of the Obama economic plan. That’s ludicrous, of course. The administration warned from the beginning that it would be several quarters before the plan had any major positive effects."
Oh really? Then why did the White House's own projections show an immediate dislocation in the employment numbers if the stimulus was passed? Anyone remember this graph? Sure seems like Krugman doesn't seem to be bothered by facts or logic, either. And this guy won a Nobel Prize?
This talk about czars...maybe this will not be GD II or even Weimar hyperinflation but somekind of weird repetition of 1917 Russian revolution in the end? Wall Street bankers are not going to stop until somebody stops them. They own the US government very much like Russian Czars and party goes on and on...
No worries Bz, I have a huge social network and a very close group of friends including a houseful now (6 roommates). Those of us who didn't own property decided to weather all this together. Plus I'm a smart cookie, very adaptable, I have savings, almost no debt, yada yada yada.
I was more remarking on the social stigma of asking for help and the ability to except change as a constraint of age, and in some respects, sex.
I think the other thing it tells is that the market is basically being completely supported by the FHA and GSEs. Those parabolic lines going to the left from the 80% LTV line are the conforming loan limit and jumbo conforming limit respectively. And then of course the high LTV market is FHA and nothing else. If it wasn't for ultra low rates, a tax credit and FHA & GSEs the market would be at a much lower price point than it currently is at.
This is the ultimate question that has yet to be dealt with by our society....What is more important, the public or the elites?
The elite don't care what you think the answer may be. The elite don't even care that you are asking the question. All this tipping point stuff is way overblown. We can't even work up a lather over $20b in GS bonuses using taxpayer money. That's because the US has so far to fall before there is appreciable deprivation. Without deprivation there won't be the desperation necessary to spur action. This is actually one reason I believe the administration is pushing health care. It is a reasonable prognosis that it is there that the first privations will show up as directly and immediately impacting the masses. No revolt as long as descent in socialism remains viable.
When Jim the Realtor and I were hashing out this phase of the great reckoning 3 years ago he called it "The Great Squishdown" and I called it "The Slinky Effect." Your time series graphs show it in stark relief. That said, don't read too much into "conforming." Yes, very important but also understand "the rich" seek out and create optimum value. They'll buy down a mortgage to conform and save 60bps while at the same time talking down the seller with stories of needing a conforming price.
Excellent work and don't let the know-nothings at the "Star" off the hook.
We, as a society, do not know where the tipping point is....During the French Revolution, it was not at the low point that Revolution occurred....During the Russian Revolution, I am not an expert on the topic...
No one knows the future, too many variables, and you are dealing with people...god only knows if and when they decide...
My only comment is that things can not continue on the current path, before the dam breaks (mixed metaphors).
No one knows the future, all we have is review mirror, and there is no guarantee that the future will be the same...
My only comment, strap on your seat belt, this will be a hell of a ride....
Deflationary Jane (profile) wrote on Fri, 7/3/2009 - 3:45 pm
No worries Bz, I have a huge social network and a very close group of friends including a houseful now (6 roommates). Those of us who didn't own property decided to weather all this together. Plus I'm a smart cookie, very adaptable, I have savings, almost no debt, yada yada yada.
Okay, that's very cool. Friends are the #1 asset you can have in uncertain time and what I try to recommend to people a-fearin, so please don't take it the wrong way.
I was more remarking on the social stigma of asking for help and the ability to except change as a constraint of age, and in some respects, sex.
It's really a problem for men, but, I think that is something that you will see spreading to women as it is no longer socially "done" to be working for "pin money". I can think of several women I know from professional circumstances who will not be trading their Williams-Sonoma bags for a place behind the cash register at Williams-Sonoma while they still draw breath.
It's not the lower pay, it's the clipping of the social status wings, and also to a certain extent, age-related discrimination. My invisibility as a menial contractor is a genuine marvel, and for guys who are really tied into their position and the way it makes people interact with them, I can see why it's a problem to go "back to the ranks".
Byzantine_Ruins (homepage, profile) wrote on Fri, 7/3/2009 - 1:03 pm
I can think of several women I know from professional circumstances who will not be trading their Williams-Sonoma bags for a place behind the cash register at Williams-Sonoma while they still draw breath.
Ahh good. A possible solution to the wage deflation cycle caused by too many people pursing too few jobs.
Me, if it's the choice between eating and not eating, retail looks pretty damn good. I did it after the dot.com bust and I can do it again if I can find anyone to hire me.
The trick is there is a shift in perception that triggers once a person hits their mid 40s to 50s. There is an assumption that the applicant has indeed 'had it all' and a younger, less experienced, supervisor will have the tendency to see you as threat so you're resume goes to the bottom of the pile. It's ageism but it's inevitable.
A case in point: a friend who is a former QA engineer for AAPL was called in for an interview for an entry level testing position. Probably one of the easiest to get along with people I know. shows well, and pretty freaking smart. The interviewing panel was all guys in their late 20s to 30s. During the interview, that asked him several times "you know this isn't a management position right?"
He needs to find a way to camouflage. I told him it's time to dumb down the resume and buy some cheap clothes from costco to interview in. I did this in 2001. I literally had to remove 2 degrees and list my 4 yrs consulting as admin asst temp jobs to get hired and I was a lot younger then.
ps. Williams-Sonoma markets overpriced kitchenware. They make handbags?
//I can think of several women I know from professional circumstances who will not be trading their Williams-Sonoma bags for a place behind the cash register at Williams-Sonoma while they still draw breath.//
I may be wrong here, but are you saying that when the burden becomes unbearable, then revolt?
Well, my attitude is more metaphysical than that. But the question is merely one of power - which group has more power, the "public" or the "elites". If man hasn't come to a definite answer by now, then it's a pointless question. Those who have power have it until the lose it.
Personally, I think the "public" in this country gladly handed over power to monied interests without much of a fight - and the public likes it that way. The general attitude since the beginning of the Industrial age has been one of entitlements and efficiency rather than self-suffciency. I think that lack of self-sufficiency leaves a spiritual void in some people's lives which religion and political life are incapable of filling.
Those with money pay off loans early in response to stingy interest rates on banks savings, those without don't pay at all.
US Fed ZIRP has another side of the coin. It drives out honest deposits. This is exactly like the recent credit card company efforts to accelerate repayments. Disincenting debt behavior is going to have the predictable consequence of reducing debt by scaring off good borrowers and pushing marginal borrowers into ruthless defaults. Idiots.
And it works (or worked) when a captive work force is required.
Now that we have more workers than we need, self-sufficiency is the new black.
Unfortunately, that might not create the consumption that a lot of companies are counting on.
Charles Kiting (profile) wrote on Fri, 7/3/2009 - 3:38 pm
Personally, I think the "public" in this country gladly handed over power to monied interests without much of a fight - and the public likes it that way. The general attitude since the beginning of the Industrial age has been one of entitlements and efficiency rather than self-suffciency. I think that lack of self-sufficiency leaves a spiritual void in some people's lives which religion and political life are incapable of filling.
The perception (enforced by good propaganda) is that those folks are better and more responsible in handling power than J6P himself. We cede our "personal power" or whatever you call it to specialists on a daily basis, from experts on teevee to medical doctors, to accountants and salesmen... all of whom can do something better than I can. The paradox of specialization as the basis of economic reward. It's not just an attitude of entitlement but learned helplessness and a sense of genuine inferiority.
sm_landlord (profile) wrote (in reply to...) on Fri, 7/3/2009 - 1:44 pm
Now that we have more workers than we need, self-sufficiency is the new black.
Unfortunately, that might not create the consumption that a lot of companies are counting on.
Excellent observation. When I left W-2 an office and all that went with it were important affectations. These days the fact that my work shed has a couch is considered Class A workspace.
ResistanceIsFeudal (profile) wrote on Fri, 7/3/2009 - 1:47 pm
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* Ignore user
Charles Kiting (profile) wrote on Fri, 7/3/2009 - 3:38 pm
Personally, I think the "public" in this country gladly handed over power to monied interests without much of a fight - and the public likes it that way. The general attitude since the beginning of the Industrial age has been one of entitlements and efficiency rather than self-suffciency. I think that lack of self-sufficiency leaves a spiritual void in some people's lives which religion and political life are incapable of filling.
The perception (enforced by good propaganda) is that those folks are better and more responsible in handling power than J6P himself. We cede our "personal power" or whatever you call it to specialists on a daily basis, from experts on teevee to medical doctors, to accountants and salesmen... all of whom can do something better than I can. The paradox of specialization as the basis of economic reward. It's not just an attitude of entitlement but learned helplessness and a sense of genuine inferiority.
I'm watching a video interview with Stephen Leeb right now.
He's coming down on the inflation side.
I don't know if non-subscribers can access the video or not, but if anyone is interested go to Urgent Investor Briefing and try entering an email address.
1] pay people enough to support a reasonable minimum level of consumption (job or no job). What you make in a job is extra... (basic levels are not adjusted).
2] create money by means other than debt.
Some of my deposit money will soon be used to buy a couple more rental properties. Still need to crunch some numbers on property depreciation. The depreciation will probably benefit me better plus the money saved on no financing cost plus the income.
"The depreciation will probably benefit me better "
I would not count on depreciation in a Calvinball environment. The Reagan tax changes in 86 or so changed the depreciation rules, which resulted in a commercial property crash. In this environment, something similar could happen.
"Glod suffers from too many competing interests to make logical investments."
Glod is manipulated, but what isn't?
I'm actually thinking that glod may go down in dollars for a while - I just read an argument that the dollar is currently underpriced on a purchasing power basis compared to the Euro, for example.
But I'm also convinced that the only way out of the situation we're in is to further debase the dollar, so glod looks to me like a buy on weakness. If it drops back to $650 I'll have no problem figuring out where to park spare cash.
Have you noticed that the long time bloggers do not to respond to the ultimate result of efficiency and automation...
Its their buggy man...Even those astute bloggers on this site are aware where this is going to end....they are not stupid....The employment level will be much lower thereby having in the future higher unemployment rate...
I am sorry to say, but some of the bloggers only want get there's out before the collapse....I wish you all the best....better you make it than Gold-Sachs, though I wouldn't bet on you winning that bet...
Sure was getting boring around here with Byz R on hiatus. I'm glad he's back.
Environmental degradation has to stop and be reversed if possible. Can the same group of monkeys fix the problems they've caused while looking out for their selfish interests....probably not. Is there a plan B being postulated? Doing something is necessary to start a movement towards living in balance with our surroundings. This is a pipe dream but you only get one shot at living and destroying the natural world so we can have more shiny stuff seems to be a slow suicide for the higher life forms on this planet.
Our closed system with an out of control top predator will be limited by some event. Disease, famine, war, lack of resources will ensure that we will see a population reduction. Seems as inevitable as the melting glaciers and ice caps having some lasting impacts on our coast lines and weather patterns.
Don't give up hope. This guy is making a difference. Many more like him out there doing what they can locally and letting the macro scene take care of itself.
Sarah Palin is running for President in 2012....She has the star power in the Republican party, ...She and the Repubs expect that the dems will be driven out of office in the 2010 congressional elections and the 2012 presidential elections...
My personal opinion is that a third party and their candidate will make a serious challenge....
Disincenting debt behavior is going to have the predictable consequence of reducing debt by scaring off good borrowers and pushing marginal borrowers into ruthless defaults. Idiots. ..
Also, disincenting savings lowers both bank income when loans are paid early as well as disinflating by reducing lender's capital base when funds are taken from low yielding accounts to pay down fractionally lended debts.
nemone
Et Tu Nemo?
Even with the buydowns they aren't catching up with equity evaporation. Remember also that a default looks like a reduction in homeowner debt.
More importantly why would United sign Owen ?
I wonder if UK mortgages are different in that any additional paid down this month reduces future amounts due?
I mean, here if you have a 30-yr mortgage and send an extra $100/mo., your payment stays the same and ratio of pricipal to interest goes up, and the length of the mortgage goes down.
What if sending $100 extra meant all future payments fell $2 or something?
I was "PIGGED" aon the last thread, so I will present my question again, to be ignored if so desired, for those in denial!
Some of you might believe that I am OT, however, one question that no one that I am aware of has answered this question...
Why is it important that efficiency and productiveity so critical, when it leads to less employees necessary to work to provide for everyone;s basic needs? What is the the logical conclusion, when everything is either outsourced to cheaper labor markets/robotics and improvements in software...
Is it inevitable that less and less people will be necessary to work to provide the goods and services that we desire?
Stupid question, I know, however, I think it is one that needs to be answered..As the unemployed people increases, what is be done to them or for them, so that they do not revolt..against society?.
EDIT
I guess people could be doing cash-IN refinancing, that would make more sense.
Wow. Are they ahead of us in this?
There's no funny figures at play here, is there? Like when foreclosure happens and the mortgage gets closed, so that it looks like it's been paid off?
lost-confused, I think as fewer workers are required to produce what we consume, we find new "needs" of things to consume.
200 years ago, half the population had to farm to produce enough food, now it's like 3%. But in those days, they had no one producing cell phones (lucky bastards.)
lost-confused,
I have pointed that out a long time ago. We will have to pay people to consume, otherwise it will end in a disaster.
Tell me if I'm mistaken. That chart looks like admission of an error and a prudent response.
Maybe 'investment' money previously taken out via home ATM being returned to rightful owner ? Sales of 2nd home etc
Long chip butties, mushy peas and warm beer!
C
(sorry, may be repost)
lost/confused:
your question is not OT, but it has been discussed here before.
there is no "answer" to your question, it is a rhetorical question IMO.
it reminds me of a tale I heard many years ago. My apologies as I am about to butcher the story but the meaning remains.
A senator visited rural China and noted that there were hundreds of rural chinese peasants doing backbreaking labor in the fields. He said "In America we've developed technology that allows 5 people to grow more food than 500 can grow here!"
The Chinese diplomat responded: "Well in China we've figured out how to give 500 people a job".
Idle hands in developing countries = social upheaval.
"In addition, ever lower savings rates have made it increasingly more attractive for many people to use any spare funds that they have to reduce their mortgages," he added.
Interesting comment. This is an instance where a zero interest rate environment, rather than encouraging borrowing, instead provides the incentive to reduce borrowing, since the benefits of saving has been so devalued.
I don't think this is what Ben Bernanke has in mind with his zero interest rate policy.
iceman, I expect it isn't. But our own metrics reflect that precise effect.
For CR since I know you are down in OC, I added a loan to value comparison from April 2009 to July 2006 for the OC area:
Effective Demand: Orange County Loan To Value comparison, July 2006 to April 2009
I was doing a data pull for Ventura and decided to throw Orange County in as well. The Ventura county charts will be up later today for those interested.
Idle hands in developing countries = social upheaval.
and/or a population boom
Rob Dawg (homepage, profile) wrote on Fri, 7/3/2009 - 2:05 pm
Remember also that a default looks like a reduction in homeowner debt.
Thanks for that perspective Dawg; it makes a big difference when you factor that into the formula ....
My guess is that theirs might be variable and ready to rise, and they definitely are recourse from what I know (IANAL). Many probably want to stay in them and avoid losing them.
Here in Europe there are a lot of factors in play for many folks, In Greece, where I live they continue to offer mortgages denominated in Swiss Francs at low interest initially. I wonder how the average home buyer has any way of knowing what the exchange rate will be a few years or many years from now.
My quick and inexpert thoughts.
Bob_in_MA,
God, I hope so, otherwise there will be a lot of hunger irate people living on the street...
Effective Demand, cool. thanks!
my connection borked out so continued from last thread...
poic (profile) wrote on Fri, 7/3/2009 - 9:54 am
What I hear from those against government run health-care is inevitably "it will cost more because the government wastes".
Despite concrete proof that every 1st nation socialized health-care system in the world spends half as much on beurocratic overhead as the private health-care system in the US.
I'm still trying to understand the difference between our system and socialized medicine other than the for-profit characteristic.
I completely agree however I do think the major reason why socialized medicine isn't being explored vigorously in this country currently is that we need those redundant jobs. Take away the ins billing and healthcare admin jobs and see what happens to our unemployment ratios.
I would argue that I would rather loose those jobs and instead use those FTEs (requiring retraining etc) toward better patient care, more wellness and preventative programs etc but medical high tech isn't ready to make that shift. Everyone connected with healthcare is too invested in protecting their turf.
Well, I presented my question about efficency and productivity.....I guess that I have nothing more to say until that question is answered one way or another...
This is the ultimate question that has yet to be dealt with by our society....What is more important, the public or the elites?
as a luker on the website...which may explain why all of the other lukers have not participated...
EDIT
Lost/confused
Luddite - Wikipedia, the free encyclopedia
A nice place to start on the wages of technological advancement ; )
I just came back from the grocery store. My checker is a women in her late 50;s who started a couple years ago. I remember talking to her then. She had lost her previous job and was unhappy about Safeways pay (minimum) and benefits - but it was a job. Today we were talking and she told me "You know what my greatest fear is? Being hungry and homeless." She wasn't kidding. Oh, BTW. Safeway monitors how long it takes them to ring up each item. Pay an employment being based upon that, and I am sure other things.
Deflationary Jane (profile) wrote on Fri, 7/3/2009 - 11:56 am
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Lost/confused
Luddite - Wikipedia, the free encyclopedia
A nice place to start on the wages of technological advancement ; )
Jane, I am not a luddite, however, what is important to you in this life? Accummulation of more or to spend less time worrying about what your next door neighbor has?
Somewhere in this argument, there must be a child that wanted a happy home life and good friends...I maybe wrong here, however I suspect that I am not....
JMHO
EDIT: I am not talking about you personally, since I do not know you...Just a general statement about society...
I fully expect younger people to turn on technology once that can't afford it anymore...
the Junior Luddite League.
good afternoon. anyone here?
Nova,
I'm not near my 50s yet but that has long been my fear since I was in my late 20s. I call it the "sitting on a curb eating beans out of a can dreads".
I think this downturn has freaked out younger people less. They haven't hit there peak earning years so there is still have hope to 'make it up' latter. They have a fall back position in their families and extended circles of friends. Contrast that with myself- I have no children (I couldn't afford to have any until too late in life), no siblings, mother is becoming dependent on me and all but 1 of my aunts and uncles have passed away. In other words, I have zero to fall back on besides my personal tenacity, resources and in a dire pinch, the gov social network. It's been that way most of my life.
What has really hit me over the head is how people above 40 are handling the changes and how the changes are handling them, particularly men. I see my 30s counterparts finding new, although much less paying, positions. The men I know in their early to late 40s are struggling to get even second interviews for fairly entry level jobs. Those that I am close with have been out of work for more then 26 weeks and their spirits are being crushed. I have much to say on the subject of hiring subjectivity, employee / employer expectations, and economic hardship but I find I can't do it justice without charts, diagrams, a whiteboard, and a bottle of tequilla >; )
Effective Demand - Those graphs tell a very interesting story. There is a big empty space in the 1+million and 80 - 100% LTV space.
I suspect that those that are unemployed, will remain unemployed for the foreseeable future....Those that are employed, do what ever it takes to hang on to your job....
Speaking as one person close to retirement, with some retirement savings in an IRA , cat food and squirrel on the menu....I should survive and I will not starve...though It will not be pleasant.
JMHO
EDIT
Deflationary Jane (profile) wrote on Fri, 7/3/2009 - 3:28 pm
Deflationary Jane (profile) wrote on Fri, 7/3/2009 - 3:28 pm
I think this downturn has freaked out younger people less. They haven't hit there peak earning years so there is still have hope to 'make it up' latter. They have a fall back position in their families and extended circles of friends.
Contrast that with myself- I have no children (I couldn't afford to have any until too late in life), no siblings, mother is becoming dependent on me and all but 1 of my aunts and uncles have passed away. In other words, I have zero to fall back on besides my personal tenacity, resources and in a dire pinch, the gov social network. It's been that way most of my life.
The contrast I'd draw would be, young people have extended social networks of friends but you don't. At least not from what you wrote.
Time to get out and find some peeps.
The young fir that falls and rots
Having neither needles nor bark,
So is the fate of the friendless man:
Why should he live long?
Kin die, possessions can be stolen or lost, but a friend is something you can acquire every time you meet another person.
Krugman, in his op-ed, states that Republicans are "settled on a strategy of total opposition, unconstrained by facts or logic. Indeed, these leaders responded to the latest job numbers by proclaiming the failure of the Obama economic plan. That’s ludicrous, of course. The administration warned from the beginning that it would be several quarters before the plan had any major positive effects."
Oh really? Then why did the White House's own projections show an immediate dislocation in the employment numbers if the stimulus was passed? Anyone remember this graph? Sure seems like Krugman doesn't seem to be bothered by facts or logic, either. And this guy won a Nobel Prize?
http://jasonpye.sycks.com/images/stimulus-vs-unemployment-may2.gif
This is the ultimate question that has yet to be dealt with by our society....What is more important, the public or the elites?
The question has been answered by every society throughout history: Neither.
This talk about czars...maybe this will not be GD II or even Weimar hyperinflation but somekind of weird repetition of 1917 Russian revolution in the end? Wall Street bankers are not going to stop until somebody stops them. They own the US government very much like Russian Czars and party goes on and on...
Charles Kiting (profile) wrote on Fri, 7/3/2009 - 12:40 pm
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This is the ultimate question that has yet to be dealt with by our society....What is more important, the public or the elites?
The question has been answered by every society throughout history: Neither.
I may be wrong here, but are you saying that when the burden becomes unbearable, then revolt?
No worries Bz, I have a huge social network and a very close group of friends including a houseful now (6 roommates). Those of us who didn't own property decided to weather all this together. Plus I'm a smart cookie, very adaptable, I have savings, almost no debt, yada yada yada.
I was more remarking on the social stigma of asking for help and the ability to except change as a constraint of age, and in some respects, sex.
I think the other thing it tells is that the market is basically being completely supported by the FHA and GSEs. Those parabolic lines going to the left from the 80% LTV line are the conforming loan limit and jumbo conforming limit respectively. And then of course the high LTV market is FHA and nothing else. If it wasn't for ultra low rates, a tax credit and FHA & GSEs the market would be at a much lower price point than it currently is at.
FYI, I just finished the Ventura County charts:
Effective Demand: Ventura County Loan To Value comparison - March 2006 vs March 2009
This is the ultimate question that has yet to be dealt with by our society....What is more important, the public or the elites?
The elite don't care what you think the answer may be. The elite don't even care that you are asking the question. All this tipping point stuff is way overblown. We can't even work up a lather over $20b in GS bonuses using taxpayer money. That's because the US has so far to fall before there is appreciable deprivation. Without deprivation there won't be the desperation necessary to spur action. This is actually one reason I believe the administration is pushing health care. It is a reasonable prognosis that it is there that the first privations will show up as directly and immediately impacting the masses. No revolt as long as descent in socialism remains viable.
ED - The red dots did look ominous
It's clear this market would be dead in the water without FHA and GSE.
Effective Demand,
You have a nice way of answering questions we weren't quite sure we should ask. Noticed the parabolas and wouldn't have asked. So, thanks!
E.D.
You don't mind if I call you E.D.?
[hat tip JtR]
When Jim the Realtor and I were hashing out this phase of the great reckoning 3 years ago he called it "The Great Squishdown" and I called it "The Slinky Effect." Your time series graphs show it in stark relief. That said, don't read too much into "conforming." Yes, very important but also understand "the rich" seek out and create optimum value. They'll buy down a mortgage to conform and save 60bps while at the same time talking down the seller with stories of needing a conforming price.
Excellent work and don't let the know-nothings at the "Star" off the hook.
ED, I've been seeing your charts lately and they're awesome. keep up the good work. thanks!!
Rob Dawg ,
We, as a society, do not know where the tipping point is....During the French Revolution, it was not at the low point that Revolution occurred....During the Russian Revolution, I am not an expert on the topic...
No one knows the future, too many variables, and you are dealing with people...god only knows if and when they decide...
My only comment is that things can not continue on the current path, before the dam breaks (mixed metaphors).
No one knows the future, all we have is review mirror, and there is no guarantee that the future will be the same...
My only comment, strap on your seat belt, this will be a hell of a ride....
Deflationary Jane (profile) wrote on Fri, 7/3/2009 - 3:45 pm
No worries Bz, I have a huge social network and a very close group of friends including a houseful now (6 roommates). Those of us who didn't own property decided to weather all this together. Plus I'm a smart cookie, very adaptable, I have savings, almost no debt, yada yada yada.
Okay, that's very cool. Friends are the #1 asset you can have in uncertain time and what I try to recommend to people a-fearin, so please don't take it the wrong way.
I was more remarking on the social stigma of asking for help and the ability to except change as a constraint of age, and in some respects, sex.
It's really a problem for men, but, I think that is something that you will see spreading to women as it is no longer socially "done" to be working for "pin money". I can think of several women I know from professional circumstances who will not be trading their Williams-Sonoma bags for a place behind the cash register at Williams-Sonoma while they still draw breath.
It's not the lower pay, it's the clipping of the social status wings, and also to a certain extent, age-related discrimination. My invisibility as a menial contractor is a genuine marvel, and for guys who are really tied into their position and the way it makes people interact with them, I can see why it's a problem to go "back to the ranks".
lost-confused (profile) wrote on Fri, 7/3/2009 - 1:02 pm
We, as a society, do not know where the tipping point is.......
Of course not. If everyone knew it wouldn't be valuable information. If you find out too don't tell anyone.
Byzantine_Ruins (homepage, profile) wrote on Fri, 7/3/2009 - 1:03 pm
I can think of several women I know from professional circumstances who will not be trading their Williams-Sonoma bags for a place behind the cash register at Williams-Sonoma while they still draw breath.
Ahh good. A possible solution to the wage deflation cycle caused by too many people pursing too few jobs.
Bz,
Me, if it's the choice between eating and not eating, retail looks pretty damn good. I did it after the dot.com bust and I can do it again if I can find anyone to hire me.
The trick is there is a shift in perception that triggers once a person hits their mid 40s to 50s. There is an assumption that the applicant has indeed 'had it all' and a younger, less experienced, supervisor will have the tendency to see you as threat so you're resume goes to the bottom of the pile. It's ageism but it's inevitable.
A case in point: a friend who is a former QA engineer for AAPL was called in for an interview for an entry level testing position. Probably one of the easiest to get along with people I know. shows well, and pretty freaking smart. The interviewing panel was all guys in their late 20s to 30s. During the interview, that asked him several times "you know this isn't a management position right?"
He needs to find a way to camouflage. I told him it's time to dumb down the resume and buy some cheap clothes from costco to interview in. I did this in 2001. I literally had to remove 2 degrees and list my 4 yrs consulting as admin asst temp jobs to get hired and I was a lot younger then.
ps. Williams-Sonoma markets overpriced kitchenware. They make handbags?
Double whammy for banks. Those with money pay off loans early in response to stingy interest rates on banks savings, those without don't pay at all.
Hmm.. If they have the right attitude..
//I can think of several women I know from professional circumstances who will not be trading their Williams-Sonoma bags for a place behind the cash register at Williams-Sonoma while they still draw breath.//
I may be wrong here, but are you saying that when the burden becomes unbearable, then revolt?
Well, my attitude is more metaphysical than that. But the question is merely one of power - which group has more power, the "public" or the "elites". If man hasn't come to a definite answer by now, then it's a pointless question. Those who have power have it until the lose it.
Personally, I think the "public" in this country gladly handed over power to monied interests without much of a fight - and the public likes it that way. The general attitude since the beginning of the Industrial age has been one of entitlements and efficiency rather than self-suffciency. I think that lack of self-sufficiency leaves a spiritual void in some people's lives which religion and political life are incapable of filling.
It works until the managers f**k up.
//The general attitude since the beginning of the Industrial age has been one of entitlements and efficiency rather than self-suffciency.//
Is Madoff Really Worse Than Fuld?
Is Madoff Really Worse Than Fuld? - Forbes.com
Michael M. Thomas, 07.02.09, 10:07 AM EDT
Bilkers, suckers and Wall Street atrocities.
Those with money pay off loans early in response to stingy interest rates on banks savings, those without don't pay at all.
US Fed ZIRP has another side of the coin. It drives out honest deposits. This is exactly like the recent credit card company efforts to accelerate repayments. Disincenting debt behavior is going to have the predictable consequence of reducing debt by scaring off good borrowers and pushing marginal borrowers into ruthless defaults. Idiots.
"It works until the managers f**k up."
And it works (or worked) when a captive work force is required.
Now that we have more workers than we need, self-sufficiency is the new black.
Unfortunately, that might not create the consumption that a lot of companies are counting on.
"It drives out honest deposits."
So the question would be, where will honest deposits go?
I'm becoming convinced that money is available to feed another bubble, but the target is not clear yet.
Charles Kiting (profile) wrote on Fri, 7/3/2009 - 3:38 pm
Personally, I think the "public" in this country gladly handed over power to monied interests without much of a fight - and the public likes it that way. The general attitude since the beginning of the Industrial age has been one of entitlements and efficiency rather than self-suffciency. I think that lack of self-sufficiency leaves a spiritual void in some people's lives which religion and political life are incapable of filling.
The perception (enforced by good propaganda) is that those folks are better and more responsible in handling power than J6P himself. We cede our "personal power" or whatever you call it to specialists on a daily basis, from experts on teevee to medical doctors, to accountants and salesmen... all of whom can do something better than I can. The paradox of specialization as the basis of economic reward. It's not just an attitude of entitlement but learned helplessness and a sense of genuine inferiority.
sm_landlord (profile) wrote (in reply to...) on Fri, 7/3/2009 - 1:44 pm
Now that we have more workers than we need, self-sufficiency is the new black.
Unfortunately, that might not create the consumption that a lot of companies are counting on.
Excellent observation. When I left W-2 an office and all that went with it were important affectations. These days the fact that my work shed has a couch is considered Class A workspace.
ResistanceIsFeudal (profile) wrote on Fri, 7/3/2009 - 1:47 pm
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Charles Kiting (profile) wrote on Fri, 7/3/2009 - 3:38 pm
Personally, I think the "public" in this country gladly handed over power to monied interests without much of a fight - and the public likes it that way. The general attitude since the beginning of the Industrial age has been one of entitlements and efficiency rather than self-suffciency. I think that lack of self-sufficiency leaves a spiritual void in some people's lives which religion and political life are incapable of filling.
The perception (enforced by good propaganda) is that those folks are better and more responsible in handling power than J6P himself. We cede our "personal power" or whatever you call it to specialists on a daily basis, from experts on teevee to medical doctors, to accountants and salesmen... all of whom can do something better than I can. The paradox of specialization as the basis of economic reward. It's not just an attitude of entitlement but learned helplessness and a sense of genuine inferiority.
Things will remain the same, until it wont!
I'm watching a video interview with Stephen Leeb right now.
He's coming down on the inflation side.
I don't know if non-subscribers can access the video or not, but if anyone is interested go to Urgent Investor Briefing and try entering an email address.
I think we have to-
1] pay people enough to support a reasonable minimum level of consumption (job or no job). What you make in a job is extra... (basic levels are not adjusted).
2] create money by means other than debt.
Otherwise we are all screwed.
sm_landlord,
Check out the 20 year gold price chart here (Looking for gold sure looks like a bubble.
Some of my deposit money will soon be used to buy a couple more rental properties. Still need to crunch some numbers on property depreciation. The depreciation will probably benefit me better plus the money saved on no financing cost plus the income.
"Check out the 20 year gold price chart here (Looking for gold sure looks like a bubble."
That looks like dollar debasement to me.
Gold at $5000 would be a bubble, unless the dollar were sufficiently debased for it to happen naturally.
Kung.Fu.Panda (homepage, profile) wrote on Fri, 7/3/2009 - 1:58 pm
Check out the 20 year gold price chart ...that sure looks like a bubble.
Look at the 5yr and tell me that isn't a classic Pig™. Glod suffers from too many competing interests to make logical investments.
"The depreciation will probably benefit me better "
I would not count on depreciation in a Calvinball environment. The Reagan tax changes in 86 or so changed the depreciation rules, which resulted in a commercial property crash. In this environment, something similar could happen.
Sara Palin, AK governor resigns...
Shannyn Moore: Sarah Palin Resigning as Alaska's Governor (VIDEO)
EDIT
"Glod suffers from too many competing interests to make logical investments."
Glod is manipulated, but what isn't?
I'm actually thinking that glod may go down in dollars for a while - I just read an argument that the dollar is currently underpriced on a purchasing power basis compared to the Euro, for example.
But I'm also convinced that the only way out of the situation we're in is to further debase the dollar, so glod looks to me like a buy on weakness. If it drops back to $650 I'll have no problem figuring out where to park spare cash.
If Sarah Palin resigned, would anyone notice?
Have you noticed that the long time bloggers do not to respond to the ultimate result of efficiency and automation...
Its their buggy man...Even those astute bloggers on this site are aware where this is going to end....they are not stupid....The employment level will be much lower thereby having in the future higher unemployment rate...
I am sorry to say, but some of the bloggers only want get there's out before the collapse....I wish you all the best....better you make it than Gold-Sachs, though I wouldn't bet on you winning that bet...
EDIT
"If Sarah Palin resigned, would anyone notice?"
Folks in Alaska might. State revenues are tanking, and she's decided to walk away with a year and a half left to her term.
Sure was getting boring around here with Byz R on hiatus. I'm glad he's back.
Environmental degradation has to stop and be reversed if possible. Can the same group of monkeys fix the problems they've caused while looking out for their selfish interests....probably not. Is there a plan B being postulated? Doing something is necessary to start a movement towards living in balance with our surroundings. This is a pipe dream but you only get one shot at living and destroying the natural world so we can have more shiny stuff seems to be a slow suicide for the higher life forms on this planet.
Our closed system with an out of control top predator will be limited by some event. Disease, famine, war, lack of resources will ensure that we will see a population reduction. Seems as inevitable as the melting glaciers and ice caps having some lasting impacts on our coast lines and weather patterns.
Don't give up hope. This guy is making a difference. Many more like him out there doing what they can locally and letting the macro scene take care of itself.
Street Farmer - NY Times
She's a joke. They're better off without her.
Sarah Palin is running for President in 2012....She has the star power in the Republican party, ...She and the Repubs expect that the dems will be driven out of office in the 2010 congressional elections and the 2012 presidential elections...
My personal opinion is that a third party and their candidate will make a serious challenge....
Hoping it's some king-hell scandal, like maybe she was one of Sanford's hiking buddies.
fried (profile) wrote on Fri, 7/3/2009 - 4:27 pm
"If Sarah Palin resigned, would anyone notice?"
Folks in Alaska might. State revenues are tanking, and she's decided to walk away with a year and a half left to her term.
walking away is the new black. responsibility, consequences and obligation are for suckers.
Palin "passes the ball for victory", in her resignation speech. Huh?
I'll never figure out this country.
C
You are most welcome!
Disincenting debt behavior is going to have the predictable consequence of reducing debt by scaring off good borrowers and pushing marginal borrowers into ruthless defaults. Idiots. ..
Also, disincenting savings lowers both bank income when loans are paid early as well as disinflating by reducing lender's capital base when funds are taken from low yielding accounts to pay down fractionally lended debts.