Trade Deficit Declines in October
Submitted by
CalculatedRisk on Thu, 12/10/2009 - 6:14am (169 comments)
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But think of all those poor Chinese, wouldya? How are they gonna earn that forty cents an hour if we don't keep buying their consumer crap by the containerload?!
Spend, goshdarnit, SPEND!
i have got to remember that thurs are the many
day.
I would not, could not, in a toxic.
.
I could not, would not, without a prospect.
I will not eat them with a
I will not eat them, but who are we trying to kid?
I will not eat them here or there.
I will not eat them anywhere.
I do not eat Green AIG's n' Ham (pork isn't necessarily the other white meat...)
I do not like them, Uncle Sam-I-am.
more juicy excerpts from the WSJ article
"With an income of about $8,300 a month and a rent of $2,200, Mr. Fernandez says he now has the wherewithal to do things he couldn't when he was stretching to pay the mortgage. He recently went to concerts by Rob Thomas and Mat Kearney. He also kept his black BMW 6 Series coupe, which has payments of about $700 a month."
"Ms. Richey and her family made the move to Club Rancho Drive in August, when she was already several months behind on the mortgage. With Mr. Robbins's help, she recently sold the house on Caspian Drive for $195,000, money that the bank will accept to settle the $430,000 mortgage debt. She's also considering walking away from the mortgages on her two rental properties.
Showing a visitor the personal touches in her new home, including a $1,800 dining set she bought with some of her newly available income, she notes the advantages of being a renter rather than an owner.""
American Dream 2: Default, Then Rent - WSJ.com
I guess this will be the next stimulus package- not good news for FNM/FRE. Is this a great country or what? First we boost economic growth by giving people big mortgages and then we boost it by allowing them to walkaway .
If memory serves, the latest extension of emergency benefits (EUC) runs out on 12/31/09. We're definitely going to need an extension of the extension - again. Same thing for the debt ceiling (currently capped at ~ $12.1 trillion).
Where will the money come from? It's not like it grows on trees or gets created out of thin air. Oh wait......
Lol Rick Santelli just blew this UE report out of the water!
sounds like the demand side is demonstrating a contraction?
rings also true for recent evidence of utilities stock piling coal coupled with less demand as well
if demand is off and headed offer, that's deflationary right?
Same thing for the debt ceiling (currently capped at ~ $12.1 trillion).
Debt has a ceiling? What a quaint notion.
.....Why is this? What would cause this kind of a "sharp drop"? Less people going to work in the POV? People heating less - remaining colder in their homes?
Black Star Ranch wrote:
good god man, get a grip
everything isn't about the survival of Mrs. McAlister.
people are driving less, industry is using less, that's all
nobody's starving
yet
U.S. Foreclosures to Reach Record 3.9 Million in 2009 (Update1) - Bloomberg.com
I'm also surprised that the WSJ ran the story on walkaways.
To some extent the prevailing cultural undercurrent for the last 10 years has been... buy the most home you can afford with as little down as possible, HELOC/refi cash out and use your proceeds to live the lifestyle of the rich and famous.
Will the new attitude be... walk away from all that burdensome debt, live in your defaulted house rent free or rent for a fraction of your mortgage and use your savings to live the lifestyle of the rich and famous?
If so, we're gonna need a bigger TARP.
I agree with the 37 year old neighbor who's critical of the defaulters for sticking him (Joe Taxpayer) with their losses, however with the government clearly bailing out wall st. at the expense of the rest of the economy the morale outrage over walkaways will be muted. Once you let one group game the system, it's hard to criticize others for doing the same. Unintended consequences abound.
matt taibbi says
has turned america into a giant casino and we all know about 'the house' usually wins 
OT: Seasonal Adjustment
Might be interesting to those of you discussing seasonal adjustments in the previous post:
http://stats.bls.gov/osmr/pdf/st060240.pdf
2.1. “A team effort”
The project is being carried out by a team of economists and mathematical statisticians
from across the Bureau, listed at the end of the document and headed by me. Eleven are
official team members and another five have been participating actively. This project is part of
an effort for more sharing of expertise and work across Bureau offices. We report to an
Innovation Board, which charters projects like ours. We provide the Board with quarterly
progress reports and send our products for review. Like most work at BLS, seasonal
adjustment is decentralized. Production work is carried out within individual programs within our
three largest offices, employment and unemployment statistics, prices, and wages. I am in a
small central research office, with no production responsibility. I offer advice on seasonal
adjustment and have participated in several projects with individual programs to address special
issues. Information has been shared across programs through meetings of an informal
“Seasonal Adjusters” group.
Work of the team began in Jan 2005. After initial steps in team functioning, we went
through some preparatory stages.
Education
technical presentations on methodology and diagnostics
presentations on software (X-12-ARIMA, TRAMO/SEATS, STAMP)
Current practices
interviewing individuals involved in seasonal adjustment for seven Bureau programs and
combining information into an internal report
Computing
creating a shared drive for project members
developing programs for putting data into common formats
This step took nine months. The content and the extended amount of time were required
because project members commit to only 5-10% of their time and meetings have been biweekly.
Substantial time on education was important since most participants have limited experience
with time series modeling and a few had no experience with seasonal adjustment. So, an
additional goal has been to expand the knowledge base at the Bureau.
At least we have experts working on the problem.
The vast empty within all of those nearly 4 million foreclosed upon homes this year no longer needs oil or electricity, as in game over for demand.
Wow. I'm impressed the WSJ had the cojones to publish this.
They've got to know that, if this behavior goes mainstream, it will annihilate every major bank left standing. And it isn't going to take much to make that happen - as I said last night - 5% of underwater homeowners would do it. Maybe less.
Am I cynical enough to think that maybe they're trying to fan the flames of "moral hazard" outrage enough to get laws passed that would restrict this sort of behavior? "Now, now, Joe Six-pack. Do what the banks say, not what they do. Run along now."
Debt ceiling sounds so solid and restrictive... it is treated in a much softer, permeable, membrane like manner
Who said ANYTHING about anyone starving? Crimany sakes, volker - go back to bed you grumpy old ugly thing -
The stronger our economy the worse the trade deficit. If we got up to 20% UE perhaps the trade gap would go away.
economic stimulus... bailouts, giveaways, walkaways, TARPons... any way you have to get it, I guess.
Wow, Delta-price up Delta-QD down...amazing....
$32.9b? Rounding error of the FedGov $140b spending deficit. A $140b trade deficit would cause alarm bells across the world but when the "border" is public trading with private... nothing. S'okay. Ben knows about the jobs that will be available "South of The Border" when consequences manifest.
Yeah, they should call it the debt cushion.
26-degrees and it's time to milk..........Hasta luego.
NateTG wrote:
And they should call it enhancing, not increasing-
"go back to bed you grumpy old ugly thing - "
Old bears in winter time get snarly. I'd say pot meet kettle, but that would be redundant.
Poncho Villain, amigo?
Once you let one group game the system, it's hard to criticize others for doing the same. Unintended consequences abound.
Chainsaw,
That's how I see it too. Expediency has long term costs. Bernanke and Paulson panicked. Their claims that they had no other alternatives are wrong.
I have no issue with decisiveness, but you should never destroy the fundamental issues of fairness and accountability with expediency. Bernanke and Paulson threw fairness and trust in the system under the bus. I think the future costs will be enormous.
Of course the future costs of excessive debt are already enormous. With that in mind maybe the system was hopeless anyway and one last banker swindle was icing on the cake.
Bankers have done a fine job in teaching us how to deal with matters financial - we've all taken note and are following their lead. Their "methodology" is out of the bottle and their thinking will increasingly permeate non-bankers in our country. It would be silly to keep playing by the old rules - you'd be a "real sucker."
Juvenal Delinquent wrote:
Tranches? We don' need no stinkin' tranches!
km4 wrote:
we all know about 'the house' always wins
there IFIFY
I was thinking 'pushing', but I guess that or 'fluffing' would work too.
Juvenal Delinquent wrote:
see my earlier post
esp falloff of demand from industrial/mfg sector as reported anecdotal first person
Mook wrote:
Mook- I am cynical too.
IS the WSJ identifying a new trend and therefore trying to stoke the flames of moral hazard outrage before it gets too established. I disagree with an earlier poster- I think people will take greater umbrage at the neighbor gaming the system than they do Wall Street. Most people don't try and keep up with the Wall Streets Jones but they do with the one next door.
Or as is often the case with the MSM media are they reporting about something that is all ready well embedded but still has social stigma so people have been reluctant to talk about it. Perhaps many of those loan modifications for which documents have not been offered falls into this category- people gaming the system for as long as possible before they finally walk away. The article does talk about the person being offered "the best modification permissible by FDIC regulations" and still walking away.
Ms. Richey's family of five used some of the money to buy season tickets to Disneyland,
Do other people here find this as pathetic as I do?
NateTG wrote:
O! I hope they get a pretty one this time.
The only problem with this “cut my losses walk away decision” is that the bank in a foreclosure can go for a deficiency judgment against the debtor. What the bank can do is foreclose on the property and then go sell it at a current market price.
As an example, let’s say that the debtor got a $380,000 mortgage when the house was bought for $400,000 in 2006. Now the house can be sold maybe for $180,000. That would leave a deficiency of around $200,000 the bank would lose in the foreclosure.
The bank could then get a deficiency judgment against the debtor for the $200,000 and record the judgment in the county where the debtor lives or any other county where the bank believes the debtor might own property in the future.
The deficiency judgment would be good for at least 20 years. That means that the debtor could not sell or buy any other real estate he may own in the county until the deficiency is satisfied. If there are other properties with any equity, the bank could have them sold to satisfy the judgment.
Rob Samouce: Deficiency judgment can be filed against walk away debtor» Naples Daily News
Yes, that is Florida.
they should call it the debt cushion
Why don't we just tell it like it is: the sky is the limit
It's an unbounded system.
pavel.chichikov wrote:
Disgusting first and foremost- but I guess pathetic with regard to the lesson that are being taught to the children about what constitutes happiness.
dum luk wrote:
where's Liz?
how much for a tile
and is it easy to crop an image?
If I were the holder of the note of this guy, I would sell the house for a dollar to a homeless guy, and then file a deficiency judgment, and I would bring the article to court with me to prove a point.
BMW and Disney season tickets? Well, at least he didn't abandon a pet in the walk away process...
dum luk wrote:
It is a pretty expensive thing to do- but something that they should be doing and make a visible example of people. I would even be in favor of being able to file a national deficiency judgment rather than the county by county process. If people want to walk away from their debts they should be doing it through the bankruptcy process.
pavel.chichikov wrote:
This was posted last night. All of the people in the article are investors, not typical homeowners, and the notion of a "stealth stimulus" from unpaid mortgages is risible. I have to wonder why the WSJ would choose to print a story like this about such atypical borrowers.
pavel.chichikov (homepage, profile) wrote on Thu, 12/10/2009 - 9:45 am
Ms. Richey's family of five used some of the money to buy season tickets to Disneyland,
Do other people here find this as pathetic as I do?
Well, unlike Cheney and the Bush-era neocons, they can't create their own reality, so buying access to a commercial venue disguised as a fairytale life is somehow appropriate. And we'll see more 'reality creation' (escapism) the worse this gets.
Rob Samouce, a principal attorney in the Naples law firm of Samouce, Murrell, & Gal, P.A., concentrates his practice in the areas of community associations including representing condominium, cooperative and homeowners’ associations in all their legal needs including the procedural governance of their associations, covenant enforcement, assessment collections, contract negotiations and contract litigation, real estate transactions, general business law, construction defect litigation and other general civil litigation matters.
Rob Samouce: Deficiency judgment can be filed against walk away debtor» Naples Daily News
pavel.chichikov wrote:
As a family of five who have season passes to Disneyland, no. Went there Tuesday AAMOF. Was cold but the lines were short. Tremendous entertainment value. Far cheaper than a movie a month for instance.
Can't hang out today, but here's TPC on Japanization via deleveraging:
THE PRAGMATIC CAPITALIST » » THE FLAT LINE MARKET?
Bye!
Whiskey wrote:
care to provide a link or data to prove that these are "such atypical borrowers".
The fact that they are investors just suggest to me that the are perhaps more rational than the average borrower and have arrived at the decision faster.
I think this is true to a point. However, anecdotally I've noted that a lot of people are doing the Jimmy Carter sweater thing. This obviously happens more with increasing unemployment.
Also:
a big problem that I've seen macroeconomically:
when the consumer pulls back then the trade deficit improves
as soon as they start spending the trade deficit widens.
not sure how we're going to get them to spend AND reduce the trade deficit at the same time. Dollar devaluation isn't working in part due to the various pegs.
thx Volker was just trying to keep some of that false hope & change alive for the kool aide drinkers and unwashed masses
,rad pavel,
panem et circenses
SPQA
Every year they add new words to the dictionaries. I think it's time we start dropping some words.
We can start with rectitude.
AS: it's maligned friend and companion, "moral", can be next in line for the chopping block
Another area where the 5% principle applies (i.e. the "tipping point" at which this goes mainstream).
What you reference might be true in theory but ... look at all the gears that are grinding just to deal with the volume of foreclosures and walkaways we have now. Liz has told us the stories - there are judges with 2-3 years' worth of backlogged foreclosures / judgment requests / etc. on their dockets.
Once we hit the tipping point ... there's absolutely no way that any cog in the chain could handle the torrent. Not even close. Banks and lienholders would be hosed. In their best case scenario, they'd make a conscious decision to go after the "big fish" - and I can almost guarantee you that any deficiency judgment for less than, say, six figures would never even be considered. Most likely, any enforcement would be random and shoddy, and probably let 9 of every 10 walkaways off scot-free.
The event horizon approaches.
Bandito of Brothers, senor?
crazyv wrote:
"About 588,000 borrowers defaulted on mortgages last year even though they could afford to pay -- more than double the number in 2007."
Latest Facts About The State Of The Housing Market
NO!
,rad Dawgma,
What do ya reckon it costs you in gas to get to & from the hap, happiest place on the earth?
Mook wrote:
There is also a possibility that the banks could get their Congressional employees to change the law making it easier to file the deficiency judgment- e.g. the judgment is automatic if the borrower can't prove that they have repaid the debt.
Unless we have changed the definition of "atypical" it seems to me that 580,000 can hardly be considered atypical- a minority perhaps but certainly not atypical.
crazyv wrote:
They're investors. Investor properties and second homes comprise roughly 7.5% of securitized first lien homes in CA weighted by original balance.
The article is anecdotal and suggests that ruthless defaulters are widespread, but you simply can't conclude this from an article built around a small, biased sample.
Maybe we'll get to see a steel cage grudge match between Deficiency Judgement and Fraudulent Conveyance.
an unsolicited testimonial
does he do ambulances as well?
Based on the comments, 10 million panicked monkeys think deficits don't matter.
Already been an interesting morning here...I have mentioned before we live in a lower middle class neighborhood...our lot is on a small hill with open land behind it. Lots of trees and varmints. This very cold morning (cold for us at least here in DFW) I heard a echoing thud sound coming from out behind our fence. Get my coat and gloves...and mind you the sun isn't up yet...find a guy chopping down a small tree right outside my fence in the dark with a portable lantern. After scaring the guy to death, he explained that he was just getting some cheap firewood. I mentioned that scrub isn't the best thing to be burning in his fireplace, and he told me to mind my own business. I told him he was on private property and my property line actually extended past the fence. He got really mad, but before he blew a gasket I told him he was welcome to some of my already cut firewood if he needed it that bad. He shut up, went and got his truck, and I helped load some into his pickup. As the sun was coming up, and we were both freezing over a cup of coffee...learned he is unemployed. Electricity cut off last week, and he is trying to keep his family warm. Asked him if he has called the power company and the family shelters for assistance... said he hadn't yet because things weren't so bad. I sad if he was out cutting down my trees...things were bad, and to get help. As he left I gave him some cash I had been saving for our annual Salvation Army donation. Guy started crying. Folks, your neighbors may need help...it is going to be cheerless Christmas for many this year.
Yep. The more I think about it, the more I'm convinced that's the WSJ's real endgame here.
If you're trying to drum up any sort of sympathy for the movement, you don't do it by featuring a family who's putting their would-be mortgage payments toward a Beemer and a family trip to Disney.
They realize the black hole that this behavior could become for their friends on Wall Street. They want to fan the flames now and get some sort of Congressional action taken to replace the crazyquilt of mechanisms in place today. Quickly.
I wonder if it's going to work. Part of me wants it to - but another part of me is tired of Wall Street making their bed without being forced to lie in it.
It's not expensive at all, especially for a bank which has its foreclosure legal work done in bulk. Usually, it's easily coupled with the foreclosure if not included in the action. You bring the paper to the clerk's window down the hall.
All judgments recorded with due process must be given full faith and credit in all 50 States.
Whiskey said: "...All of the people in the article are investors, not typical homeowners, and the notion of a "stealth stimulus" from unpaid mortgages is risible. I have to wonder why the WSJ would choose to print a story like this about such atypical borrowers."
Respectfully, are you out of your mind?
This is what the mainstream media does, it's their raison d'etre: Provoke and agitate for the purpose of gaining readership and ratings.
This is the reason why we can't rely on the mainstream media for balanced, objective, straightforward reporting of the news. The "news" they report are the over-the-top exceptions that get people worked-up and (mindlessly) talking.
A guy with an $8,300 income who spends half of it on a house payment and has a BMW with a $700 payment? A family who spends the money they saved on not paying their mortgage to buy tickets to Disneyland, for God's sake?
I know of no one, not a single soul in my social circle who is this irresponsible with their money. The only place I hear about them is in the MSM, or on boards like this one.
Sebastian
Juvenal Delinquent wrote:
Lien on Me. The Last House Left. No Way Out. Housepocalypse Now. The Banker Always Dings Twice. Metropocollapse. American Psycheout. The Incredifails... this is too easy.
Whiskey wrote:
If you would read the rest of my posts on the subject you will note I make no such assumption in fact I concur with Mook that there is the possibility of a hidden agenda. But neither do I make the assumption that it is not and am open to the possibility that the WSJ is reporting on a horse that has already fled the barn.
Given the recent strength in consumer spending - that I am unable to reconcile with the reduction in consumer debt ,lower incomes and job loss- it seems to me that there is a strong possibility that it is coming from people not making payments on their mortgages. Banks can continue to accrue income on those loans through a variety of accounting gimmicks so we wouldn't see the offset in their numbers.
Whiskey wrote:
There were "investors" with 10 or more homes, and according to loan docs each and every one was a primary residence.
I think the 7.5% might actually be a bit higher than what is reported.
Most people would be too ashamed to tell a reporter a story like this, and most wouldn't want their name in the news that they had even walked away. Reporters tend to find the outliers as it makes for better news.
Over the course of 20 years, the banks will dump the deficiency judgment losses on the taxpayer, who won't have the will to strictly enforce them.
I find this shameful. As a working person in finance I see what goes on at the top being imitated by those at the bottom and all in between.
1 currency now -yogi wrote:
sure, then all you need do is establish who has title, deed, or whatever mechanism is employed
and in some extremely securitized packs, this might become problematic, what with all the incomplete documentation, intents to convey, good faith estimates and all that. but sure, let's get started
our grandchildren yet to be born will be sorting out the mess
Yep. The more I think about it, the more I'm convinced that's the WSJ's real endgame here.
Mook,
Turn the tinfoil inside out, it's way more effective that way .
All kidding aside, CONgress suspended the tax liability consequences resulting from mortgage debt forgiveness. That doesn't square with your theory.
Ledger games, accounting forbearance and central bank "liquidity" operations are the paths of least resistance.
Juvenal Delinquent wrote:
78.3 miles @ 31.4 mpg & $2.89.9.gal. Call it $15.
Rob Dawg wrote:
The Flight Club.
crazyv wrote:
There are any number of possibilities. One is debt reduction, which is not the same as ruthless default. Another possibility is that people are spending less (the savings rate is up). A third possibility is that job loss is not measured accurately.
volker the viking wrote:
Switching gears- this is what has made rebuilding in New Orleans so very complicated. Many of the families have been living in homes destroyed by Katrina for generations. It is hard to exercise eminent domain if you don't even know who owns the property.It can cost $1,000 to straighten the title out - on 50,000 homes that $50,000,000 even before you begin anything. They are then left with much slower and complicated mechanisms like abandonment and failure to cut the grass.
CaptainMorgan wrote:
The 7.5% comes from yours truly, and you can take it to the bank. I only said properties as a percentage of balance. A typical investor will own more than one property, and so weighted by individual, the percentage of investors is far less than 7.5% of the population.
Oh, really? And how, pray tell, do they know that?
A quick web search revealed at least a dozen MSM articles referencing the 588K number - but not a single one that linked to the study itself or provided any data or means by which this number could have been calculated. Why do I think Oliver Wyman didn't exactly bother going through the millions of tax returns of those who defaulted looking to see if they had sufficient income to make the payments?
My guess: It's nothing more than an estimate pulled out of thin air by - surprise! - heads of mortgage finance at one or more TBTF banks.
Whiskey wrote:
Not at all. I think this is likely to be the primary way that bank bailout money leaks out into the real economy.
Whiskey wrote:
how does that help with reconciling increased spending with lower income and credit availability. In fact it would just add to the puzzle. Sure it is possible that the government is over estimating unemployment and that we actually haven't lost any jobs- just don't think that is very probable.
The past is not the future. If taxpayers 19 years from now really want to make today's deadbeats pay, they will easily be able to find who defaulted on what with pedaflop processing.
Just game theory. If 55% of taxpayers cheat, how can you expect a flat tax with easy, accurate reporting of all financial transactions. Nixon was a dirty crook. So Americans voted him in.
,rad Dawgma,
Why do you reckon the gas stations still do the .9?
Vonbek777 wrote:
If Nova had written this, I wouldn't have thought it real.
FWIW, pallets are usually free if you ask nice. Went through them by the truckload on the beach as a teen.
Mook,
It's not paranoia if they really are out to get you.
umop apisdn wrote:
The first rule of Flight Club is that... there is no flight.
Rob Dawg wrote:
Or five people transported = 391.5 miles, 157 MPG or $3.00 per person unit cost. Cheap deal.
Mook wrote:
Most "news" is regurgitated Rueters articles, so that is usually a good place to start when looking for the source of data. If that fails, maybe a job for CR or somebody with time on their hands. NAR data IMHO is very reliable as long as you ignore their cheer leading.
Actually I am a very selfish person. Epicureans are for the most part, but it is hard to enjoy your garden when need shows up on your doorstep. People in need just seem to flock to me just like women who need a shoulder to cry on. My wife said I need to open a Lucy stand and start charging people a quarter. Someone here said it must be my face, I must have a very trusting face...well I am in full beard mode now...untrimmed wild political philosopher beard mode...and I still can't scare people away. I try to sing the 'I hate people' song from the musical scrooge too, doesn't work. I think in another life I was a Saint Bernard. In all seriousness though, people are hurting. Even half closed eyes can see that now.
Mook wrote:
I couldn't find it, either. If I were to guess, I'd say they inferred it by taking the difference of the number of defaults and the number of newly unemployed borrowers as inferred from the difference in the unemployment rate. As a rule, I don't trust the results of studies I'm not able to read, and the method I threw out is dubious because you ignore problems with undocumented incomes, ARM's, unexpected expenses, etc.
Idjit Timmay is needs more time (but not more money) because the TARP isn't working for the general economy. What part of not working are these clowns missing? Of course it is working famously for the financial industry so the question is irrelevant to the actual intent.
Vonbek777 wrote:
This is a moving story, and probably not uncommon these days.
crazyv wrote:
I said it when Nagin announced the development plans
this is the biggest land grab in hundreds of years
broward +1 ... the second rule might be: there is no where to escape TO.
Lobbyist Ben Dover wrote:
Unfortunately don't see many of those cars with 5 people in them on California highways.
http://www.silverbearcafe.com/private/12.09/images/fantasyland.jpg
Apples and oranges.
Banks couldn't care less whether the IRS gets a cut or not as long as they get theirs. Besides, I believe the tax changes apply only to cramdowns (whether in or out of bankruptcy) - not to walkaways.
Now excuse me while I readjust my
here ... there, much better. 
Whiskey wrote:
I'll trust you on it, but I'm not following how you know how many homes each investor owns, especially if their was document fraud going on. I think the difference would be small anyway, as people that bought 10 homes isn't the norm.
Most people that own a large number of homes form an LLC, so how does that play into it?
,rad V777,
When all of the sudden there is no safety net, this guy's first thought of survival was to cut down your trees, because he and his was about to freeze.
This is what I fear the most about the future, no respect for people or property, a mad world of smash & grab, possession being 9/10's of the law.
Vonbek777 (profile) wrote (in reply to...) on Thu, 12/10/2009 - 10:20 am
In all seriousness though, people are hurting. Even half closed eyes can see that now.
The tears will stop bothering you after your first million. If you're still breaking down by that point, there's always hookers and cocaine to fall back on. No one said life without a soul was going to be easy!
Here is a question I am having a hard time getting my head around.
when considering a mortgage - should one only consider total payments (mortgage, taxes and insurance) as percentage of income or does the total level of debt as a multiple of income still matter. Is it only because my reference point is much higher interest rates that I believe 3X income is the max one should go?
crazyv wrote:
The average occupancy is 1.58 persons. The trip would be a real bitch were it not for the carpool lanes. The level of underinvestment in roads in Los Angeles is criminal. There's a reason they are dead last in surface repair conditions.
Mook wrote:
No taxable income from Forclosures or Short Sales, the walk aways will become forclosures.
So if we improve about 3b a month in a year we will be even?
I think 2 1/2 times is too much. We never even went that high.
We like spending money are other stuff to much.
Or, for the stay-theres!! Don't move til you see the whites of their eyes.
Must get back to werk.
Juvenal Delinquent (profile) wrote (in reply to...) on Thu, 12/10/2009 - 10:26 am
This is what I fear the most about the future, no respect for people or property, a mad world of smash & grab, possession being 9/10's of the law.
I thought protection from that state of anarchy is what we had laws for in the first place... not creating a privileged class of super-citizens.
ResistanceIsFeudal wrote:
It is a real moral dilemma for me- one hand I feel for the people suffering and give money to the food bank on the other hand I say to myself this is a representational democracy- while there is much blame that can be placed on politicians and the MSM people have to accept responsibility for themselves and the people they vote for or choose not to vote for? The conditions that they find themselves in are in part their own making- so I give money to the public library and NPR.
And forgiveness on 2nd mtges spent on bling or other houses is taxable;
not 2nds spent on fixing up the same house. Werk. . . . .
Wow! Nat. Gas finally shows a drawdown for the week....showing a net decline of 64 BCF! The seasonal drawdown begins...
CaptainMorgan wrote:
I don't know it. It's a pure guess. These investors weren't LLC's, I presume, and so the more LLC's there are, the less individual investors there are.
Fear and desperation make for that world Hume tried to illuminate for us. More recently...Cinderella Man...how many of you with your family starving would take the meat back to the butcher your son stole? I ask myself this question often. In the man's defense, he did think he was chopping down a tree from someone's unused land, and not my property. Probably thought it belonged to the builder. Regardless, the days of the roaming hordes of vegetable thieves and garden gangs aren't that far away methinks.
Rob Dawg wrote:
People always want new roads and often there is money to pay for them from external sources but nobody wants the higher taxes to maintain them. I have alluded to this in my city. The spending for sidewalks is only sufficient to replace them every 67 years even though their life is only 50years. The logical answer would be rationalize the sidewalk and reduce the foot print but instead we get petitions to build more.
I don't see how the IRS sorts out how much of the 2nd each person spent on what.
If that starts happenig won't people just file BK?
People are waking up belatedly to the fact that debt is bad, if you allow it to get out of hand. This is not a complex concept.
Interesting article from Yahoo:
Living on a cash-only diet - William Hazelgrove (1) - CNNMoney.com
In an atmosphere where others like you are paying down debt, it is going to make no sense to carry mortgage debt wildly in excess of the current value of that house.
If it threatens the viability of your family, you will walk away, and rent something cheaper.
The WSJ article highlights a family who would be stupid to keep paying. There are lots more people like them.
crazyv wrote:
It's still not entirely clear to me what the puzzle is. A "stealth stimulus" of $5B could easily fall within the margin of error for estimates of consumer spending and unemployment. In addition, according to the WSJ, the "black" economy is growing, which is expected in a recession.
Congrats go out to the latest investor in the barbarous, only a token amount of about 5 troy ounces, but it's a start.
crazyv wrote:
Or do what my town does. Make it the responsibility of the property owner. Any sidewalk not meeting code is subject to repair by the town at their contracted rates. This just happened to me and my neighbor - some sections were lifted due to trees planted by the town. I replaced 34 flags at $100 per. My neighbor had 43 flags. The towns contracted rate was around $135/flag but they offer a payment plan where they add the cost to your tax bill spread over 5 years.
Yeah - I was not happy about spending that money...
Whiskey,
Found your comment on the previous thread spot on - my preferred approach to examining times series data with significant seasonal components...
Comment by Whiskey from thread 'Weekly Initial Unemployment Claims Increase to 474,000'
The standard DTI Ratios for conventional loans are 36% (Mortgage Debt Ratio) and 28% (Housing Ratio).
mortgage debt to income ratio = (monthly debt payment)/(gross monthly income)
Housing Expense Ratio = Monthly Housing Expense / Monthly Gross Income
Mortgage Debt Ratio (DTI ratio) Calculator
tncubsfan wrote:
And the price jumps 8% on the news. This is truly bizarre. 64bcf of an historic 500bcf oversupply. At this rate of draw down we'll be back to recent trend storage in... well never. massive over supply continues to be massive over supply and theprice spikes. This just proves the market is a million idiots making their own village.
Vonbek 777, this was very moving to me. I'm afraid we have raised generations who have no idea how to survive without the system. The system being a job and I'm afraid its gonna be years before any jobs for the mass's. Hope to hell O's tractor cranks and he doesn't have to call Hu for parts to get him back to the US.
OK, on topic for a moment here - from the Census Bureau report link in CR's post:
Which elements constitute the retail supply chain - consumer goods? And what has the YoY trend been for just that element, which would seem to be a harbinger of the holiday shopping season, no?
ResistanceIsFeudal wrote:
What?! There go my hobo hopes...
Vonbek777 (profile) wrote (in reply to...) on Thu, 12/10/2009 - 10:34 am
Regardless, the days of the roaming hordes of vegetable thieves and garden gangs aren't that far away methinks.
Civilization is a veneer thrown over primitive drives and biological needs. If and when that system of inhibitions and implied threats collapses, watch out.
A maddened crowd is something to behold, the roaming empire.
Rob Dawg wrote:
LOL. But you knew that.
It doesn't matter ... that is, until you go to sell.
If I'm earning $50k, I can afford, say, a $187k mortgage (at 10% down, that's a $208k house, or 4.1x income) at 7% - since it makes my P&I $1,244 a month (let's be generous and say you can "afford" 33% of income going to PITI, though I think that's high).
If rates go to 5%, now I can afford a $232k mortgage ($258k house, or 5.2x income), for the same monthly PITI. No problem, right?
Well, if both houses drop 15% in value by the time I sell, I'm out $31k on the first house but $39k on the second one. That $8k difference is probably two years' worth of savings for your average American household ... and that's with a modest 15% drop.
In conclusion, total debt-to-income doesn't matter because RE prices only go up.
I don't like marginalizing people....as an individual first kind of person...I hate lumping anyone together....but the pursuit of wealth is a unique phenomenon. I understand now what Dickens was trying to get across to the middle class. The wealthy born to it, exist in another world already...but those who build their own personal mountains of wealth...from nothing...they are an interesting bunch. I have one in my family...money comes first, no matter what. Now this individual is very giving, very well thought of, but still at several crisis periods in his lifetime...money was more important than all other concerns. I can't dwell there, one of the reasons I am not wealthy. My wife is stuck between worlds, she is being pulled very strongly in that direction. I often tease her that she likes to count money in her counting house (this case excel spreadsheets that chart everything imaginable, our budget sessions to say the least are exhaustive) but the truth is we wouldn't be where we are without that part of her, so I am thankful for it too. I bring the Vonbek family luck, a bard's song, and an absent minded philosopher's perspective to the equation...which for the most part nullifies all her planning much to her frustration. Moderation in all things (including moderation
)
crazyv wrote:
They all matter. It used to be that the ratio of prices to incomes was just above 2x. The ratio trended upward, starting in the 1980's, and my suspicion is that it is due to interest rates being too low. Long term, home prices grow with inflation, which is why cost to own vs. rent also matters. The typical ratio there is about 1.2, which is reasonable historically given that a fixed rate mortgage is an inflation hedge and most people expected incomes to rise with inflation.
Nor will tne system (local laws) allow you to live outside of the system. Most areas in the city don't allow chickens, burning wood on polution days, letting someone live in a trailer in the back yard. Even if you know how, you are not allowed.
Whiskey wrote:
I find it ironic that one had you are dismissing the WSJ as a source and then use it as a source .
CaptainMorgan wrote:
I don't know how. They need to sell @ Trustee sale and there are always bidders that will run it up to market less ~20%
*Well, at least he didn't abandon a pet in the walk away process... *
We can't really be sure can we. I mean after all pets can be such a headache sometimes.
NateTG wrote:
Fluffing the debt cushion- I like it
count de money
YouTube - The French Revolution (from The History of The World Part 1)
crazyv wrote:
Hey, I'm flexible. To make matters worse, the sourced WSJ was an op-ed posted by someone else that I then proceeded to trash.
Not everything from the WSJ has the same quality, even within the same article on op-ed. A growth in the underground economy sounds perfectly reasonable to me, and I fully admit this could be a cognitive bias on my part, given that I have recently interacted with people doing odd jobs for extra cash.
EDIT: I think I was mistaken. The op-ed was from the Washington Times, not the WSJ.
I heard on the radio news flash this morning, McDonald's is going to expand their dollar menu to breakfast items...a growing trend in fast food pricing war....would this be a sign of deflation for you market experts?
Whiskey wrote:
Credit cycle - as debt increases, interest rates go down... until you reach the default stage.
The false promises have to go somewhere.
The transition from gov't printing to gov't borrowing money was Reagan, from the 1979 gold spike to 1982, the start of the credit bubble & stock bull market.
Vonbek777 (profile) wrote (in reply to...) on Thu, 12/10/2009 - 10:50 am
the pursuit of wealth is a unique phenomenon. I understand now what Dickens was trying to get across to the middle class. The wealthy born to it, exist in another world already...but those who build their own personal mountains of wealth...from nothing...they are an interesting bunch.
Money is its own world and runs by its own laws. Presently, in a not-entirely-metaphoric sense, it is far along in its ancient campaign of trying to take over and control the physical world and the people who live in it.
count de money "You look like the piss boy"
The King "And you look like a bucket of shit"
from The History of The World Part 1
I don't recall laughing more and harder from any other movie
Vonbek777 wrote:
I'd say so.
You might remember that McDonald's hit a bumpy patch after the Dot Com bubble
They appeared to recover over the past couple of years but like the IT stocks after 2003, they stagnated after the RE bubble peaked.
Quotes for MCD - Yahoo! Finance
The exponential growth function is so clear, with the big break after the 2001 crash.
You can see it trying to re-adjust the paper growth curve to reality curve.
Angry Saver wrote:
Rectitude hell....it killed 'em-
Wells Fargo Cuts as Much as 30 Percent in Principal (Update1) - Bloomberg.com
energycon- Presumably the consumer goods imported are the bulk of what makes it onto the shelves in November and December. The orders for October 08 would have been placed well before the financial crisis broke. This year we are down only 3.7billion from that level !! Even if one were to annualize that and triple it that is about 130 billion in consumer sales. Thats about a 3% change from the pre crash 2008 level.
BTW, in doing the math for my post above, I was blown away by the debt-to-income multiples that fell out of what were pretty conservative affordability estimates, at least by modern lending standards.
I always heard of 3x income being "the benchmark" (too young to remember 2x, I guess). But if you went old-school today - for 3x income and 20% down - in a state with reasonable property taxes, your PITI at 4.75% would be under 20 percent of your income.
And yet three years ago you could get a loan at a DTI of more than twice that. No wonder prices went so nuts.
energyecon wrote:
Danke. Times series analysis is new to me, but this method appears to be the most parsimonious way to account for seasonality. If anyone knows of a better way to approach it, I'm all ears.
ResistanceIsFeudal wrote:
You must have missed the final lecture in Civics. It was all about super-citizens and what they deserve.
U.S. Homeowners Lost $5.9 Trillion Since 2006 Peak (Update1) - Bloomberg.com
ResistanceIsFeudal wrote:
So true. I've see it fray first hand during the Great Northeast blackout. It comes apart fast!
Mook wrote:
thats exactly my problem- the 3x is stuck in my head and perhaps it shouldn't be as it was just a short hand back then for the level of interest rates and all that really matters is what percentage of your income you are spending on your mortgage payment.
Thank you for brining that up. I don't think it would take much at this point to cause serious disruptions in the US... any kind of prolonged stress on the electrical grid is a major worry for me. The public is not equipped to operate in the dark anymore. Go long candle makers. Or make your own
.
The Basics Another financial score that can hurt you We all know about credit scores, but there's another figure lenders watch:
Mr Slippery wrote:
Folks were well behaved during our 12 day blackout last Dec. here in NE. Driving at night was actually very calming, and for the first time in a long, long time, one could really enjoy the night sky without a bunch of light pollution. But then, I live in the country anyway (sorta).
crazyv wrote:
Mook wrote:
http://media.bloomberg.com/bb/avfile/rkt5pqJYr5tM
Bloomberg poll on the economy
crazyv wrote:
One issue with using the mortgage payment is that it is tied to interest rates, and if rates are very low, it suggests you spend more, but it ignores the inherent interest rate risk. Going forward, you expect interest rates will suppress price growth, not support it.
pavel.chichikov wrote:
The pathetic part is the people profiled were public employees who didn't pay their property taxes. Putting the mock in democracy.
Vonbek777 wrote:
Candle Making
I would imagine things would be better in a blackout in the winter. People tend to moderate behavior and stay warm and fed in cold weather. You guys up north are prepared for that for the most part. Down here, hardly anyone knows what cold is...having read a lot of history about the cattle trails, this part of the country had a wee bit cooler weather once upon a time...that comes back...going to be a shock for a lot of people.
The WSJ has an exellent news division, as opposed to their op-eds
Rob Dawg wrote:
Spot on, Dawg. Also, the nature of the unconventional gas supply will keep the fundamentals bearish for an extended period of time as well, there are significant volumes that will come on virtually instantaneously with any price spike - completed wells currently shut in and just behind them drilled wells lacking only a completion - that supply response to the chilly October was a big part of why we were injecting a month into the historical draw down season.