Here in the northeast, we are just starting to really see the impacts of this downturn. The recent sale prices and volume numbers and new permit numbers were the first to show serious declines.

Rates could be 1% will it matter? its all about price....

Oh and a job to have the ability to pay....that does help.

I rarely watch CNBC, but I might make an exception this morning given that it's St. Paddy's day.

I'm thinking .......Erin go bra(less).

The Today Show this morning did a feel good story on Miami condos finally moving. You had to listen closely between all the happy talk to decipher why they are selling - developers have finally started cutting prices (as much as 50%) and many others are foreclosures.

And aren't we moving into selling season. Lots of people think spring it the time to sell and I've seen a lot more new "for sale" signs locally. So low rates, even lower turnover, and more homes entering the market... this could be interesting.

WTF is wrong with these people? Screaming at and throwing dollar bills at a guy with Parkinsons disease? Telling him to get a job? Compassionate Conservatives at their best.

Dispatch Video | The Columbus Dispatch

I can only wish a pox upon the man in the business shirt throwing bills, and may his insurance drop him when that pox arrives. Just pure scumbaggery.

Mish's Global Economic Trend Analysis: HealthCare Premiums Will Decrease 3000%; Obama Needs Remedial Math Lessons; Ron Paul's Campaign For Liberty vs. Organizing For America ObamaCare

Tuesday, March 16, 2010
Basic Math

While prices of goods and services can rise an infinite amount, the most prices fall is 100%, to zero. Of course bids on a piece of property could turn negative if a toxic waste dump was found on a site. However, Obama is discussing HealthCare, not liabilities associated with toxic waste cleanup.

Assume, you pay $5,000 a year for health insurance. To see a 3000% drop, your healthcare provider would have to pay you $145,000 to take the insurance.

This is not FantasyLand, the Twilight Zone, or Bizarro World where health care has a negative cost and providers pay you to take coverage. Therefore, president Obama is either disingenuous or in serious need of remedial math lessons.

That whole 57 states thing is starting to make more sense now

OT question about municipal pension shortfalls...

My understanding is, there's no mechanism for a state to declare BK.

My wee little understanding is, PBGC is responsible for some appreciable fraction of the pension obligation (2/3rds?). PBGC is BK itself, though, right? Does it have an unlimited line of credit with Treasury?

I understand it's another of these quasi-governmental insurance agencies. Is it funded by an act of Congress if there's a shortfall?

Curious what the big plan is for these.

Maury the Credit Responsibility Panda wrote:

Curious what the big plan is for these[?]

Extend and pretend-

Sorry for such a long quote, but it's important to realize what the effect of government intervention in the health care markets has done, and to see that there are no real "savings" to be had from switching everyone over to a Medicare/Medicaid-like program.

From: Where's The Morphine? - The Market Ticker

The NY Times puts forward the following sob story:

FLINT, Mich. — Carol Y. Vliet’s cancer returned with a fury last summer, the tumors metastasizing to her brain, liver, kidneys and throat.

That's very bad, by the way.

As she began a punishing regimen of chemotherapy and radiation, Mrs. Vliet found a measure of comfort in her monthly appointments with her primary care physician, Dr. Saed J. Sahouri, who had been monitoring her health for nearly two years.

She was devastated, therefore, when Dr. Sahouri informed her a few months later that he could no longer see her because, like a growing number of doctors, he had stopped taking patients with Medicaid.

For what purpose was she being put through Chemo and Radiation "therapy"?

Look, I don't mean to sound callous, but there are times we must be objective. This is one of them.

Let's talk about the monetary issue here before we get back to the patient issue. Specifically:

If she takes too many Medicaid patients, she said, she cannot afford overhead expenses like staff salaries, the office mortgage and malpractice insurance that will run $42,800 this year. She also said she feared being sued by Medicaid patients because they might be at higher risk for problem pregnancies, because of underlying health problems.

Do you understand what this means?

Let me explain it to you:

If you are not on Medicaid you are paying part of the Medicaid patient's health care bill every time you walk in that doctor's door.

You are literally being held up at gunpoint, without even being told, to pay someone else's bill. This happens because you had the temerity to get sick.

This is at the core of what is wrong with so-called "health care" in America. Your price is not my price, for the same procedure performed on the same day in the same clinic or hospital.

If you pay cash, you probably pay the most. If you have a "health insurance plan", it pays something less. And if you are on Medicare or Medicaid, it pays less still.

Now here's the part you're really going to like: If you're an illegal invader or flat broke, you will pay nothing at all.

In each case those who pay less force those above them to pay more. This happens because doctors and hospitals are immune from anti-trust laws, which generally bar this behavior. They lobbied hard for this "right" to screw you blind - literally - rather than acting as every other business in every other profession does.

Oh, and as they did, prior to these changes in the law.

Your "local physician" and "local hospital" is not a "victim" of this. He, she, or it is a willing, intentional malignancy in fomenting this distortion and, unless you're one of the "privileged" (that is, on Medicare, Medicaid, an illegal or broke), is screwing you blind.

This is why your health insurance premiums are going up 20% or more a year. It, along with what comes next, is the precise reason that costs are out of control.

Now let's get to the other part of it.

I feel for Ms. Vliet. But this view of entitlement to medical care and (extremely expensive) treatment, when there is no ability to pay or any reasonable medical chance of a cure (metastatic cancer that has spread to multiple locations is nearly always fatal - we're arguing over time here, not outcome), while the patient does not have the means to provide for that care, is a problem.

The Associated Press: FACT CHECK: Premiums would rise under Obama plan

WASHINGTON — Buyers, beware: President Barack Obama says his health care overhaul will lower premiums by double digits, but check the fine print.

Premiums are likely to keep going up even if the health care bill passes, experts say. If cost controls work as advertised, annual increases would level off with time. But don't look for a rollback. Instead, the main reason premiums would be more affordable is that new government tax credits would help cover the cost for millions of people.

In other words, even if the apparent price of premiums goes down, that's only because we'll be subsidizing them with our tax money. Thus, if you pay taxes, expect the program to cost "A LOT" more....

http://www.morpheustrading.com/charts/2010/100317SPX.gif

Be nice if folks kept their thinly veiled political opinions to themselves.

dum luk wrote:

Be nice if folks kept their thinly veiled political opinions to themselves.

"If I just keep hammering people with the same I'm drinking, they'll have to see it my way."

shill wrote:

Rates could be 1% will it matter? its all about price....
Oh and a job to have the ability to pay....that does help.

Yup; I think that the realization that housing is vastly overpriced and a generally poor "investment" in this economy has sunk in, and we'll likely see low mortgage rates for some time. This will be low due to low demand for mortgages, not a result of further Fed intervention. The effect of high UE at the margins will keep housing prices AND mortgage rates low for some time....

You have to wonder why so many people are paying cash in a low rate environment. Presumably, most of them would have qualified for financing with 20% down. Let me speculate a little about why:

1. They have cash, but do not see similar investment opportunities elsewhere. For this to be true, they are not expecting to get 5% returns elsewhere. For people with enough deductions and a fairly high tax bracket, they are not expecting 3.5% aftertax elsewhere. I am guessing there is a lot of this.
2. They realize how much more a house costs when you factor in interest, origination, title insurance for the lender, mortgage insurance, etc. Some of these would also explain why many people would buy with 20% or more down.
3. A not quite financial calculation. Many people do not want to either be foreclosed on, or to be immobilized by declining home prices.
4. They hate the financial industry, and this is a way to have less money in the financial markets, and no mortgage. Probably a few, but this is a big expenditure for that political statement.
5. They are investors who want to have a lower cost structure than their competitors. This sounds like it will be true for many.

Any other likely ones? Anybody seen a survey on this topic?

Know why there weren't many good jokes about the Jonestown mass-suicide?

...the punchline was too long

some investor guy wrote:

Any other likely ones? Anybody seen a survey on this topic?

Tax consequences, Starker exchanges, Prop 8, etc.

Anonymous Bosch wrote:

The time to buy is now. Rates aren't going any lower.

......prices are though.......be careful - a bath could be the result.

Mr Slippery wrote:

Yes. I don't expect to see a federal bailout of state pensions, but who knows.

Fannie & Freddie know.

CounterPunch: Tells the Facts, Names the Names

lehman stuff

some investor guy wrote:

You have to wonder why so many people are paying cash in a low rate environment. Presumably, most of them would have qualified for financing with 20% down. Let me speculate a little about why:
[1....5]
Any other likely ones? Anybody seen a survey on this topic?

A biggie is that if you're buying at an auction, you're usually expected to pay the whole price at the time of the sale, or at least by the end of the business day. Additionally, IIRC, banks in the past required more than 20% for investment properties; the last time I looked which was more than 20 years ago, it was 50%. Furthermore, if you're buying an investment property, you're not allowed to use all of the potential rental income as your "actual income" on a loan application, and as such, investors planning to flip or use these purchases for rental income probably won't qualify for loans, even at 50% down....

some investor guy wrote:

Let me speculate a little about why:

1) They can't qualify for a mortgage (no more NINJA loans)
2) They want to close quickly, and will mortgage later at their leisure

Maury the Credit Responsibility Panda wrote:

My understanding is, there's no mechanism for a state to declare BK.
My wee little understanding is, PBGC is responsible for some appreciable fraction of the pension obligation (2/3rds?). PBGC is BK itself, though, right? Does it have an unlimited line of credit with Treasury?

Public sector pension funds do not qualify for the pbgc.

Anonymous Bosch wrote:

Cinco, try to focus, man. Mort-gage Ap-pli-ca-tions De-crease, Mort-gage Rates Fall
How about you redirect your ire to the impossible RE situation. I'm sure Obama deserves plenty of spittle there too.

Says it all: Comment by Cinco-X from thread 'MBA: Mortgage Applications Decrease, Mortgage Rates Fall'
It's all about supply and demand.
Every morning I go through my list of sites I like:
Mish
KD
RealClearMarkets
Mises
etc,
and post links to what I think is relevant economically. Regrettably, this version of health care or insurance reform is a pending economic disaster, right up there with the Chinese bubble, the Housing Bubble, and the S&L Crisis. Hiding your head in the sand won't change that...

AIG back at the trough...

AIG Draws $2.2 Billion More From Treasury to Bolster Units - Bloomberg.com

ECONOMIC SCENE; The Perils of Pay Less, Get More - NY Times

As a society gets richer, its tax rates tend to rise................
.............the United States followed this path for most of the last century. In 1900, federal taxes amounted to just 2 percent of gross domestic product. By 2000, the share had risen to 21 percent.

More:

What needs to happen? Spending will need to be cut, and taxes will need to rise. They won’t need to rise just on households making more than $250,000, as Mr. Obama has suggested. They will probably need to rise on your household, however much you make.
A solution that relied only on spending cuts would dismantle some bedrock parts of modern American society. Paul Ryan, the ranking Republican on the House Budget Committee, recently released such a plan, and it got rid of Medicare for everyone now under 55.
A solution that relied only on taxes would muzzle economic growth. To cover the costs of future spending — the retirement of the baby boomers and everything else — federal taxes would have to rise by almost 50 percent, immediately and permanently, according to a recent analysis by the economists Alan Auerbach and William Gale.
A solution that combined spending cuts and tax increases would not need to be ruinous — or start in the next couple of years, when unemployment is likely to remain high. But the federal government does have a decent amount of fat in it. And, just as Wagner pointed out, tax increases are not inherently bad. Done right, they do not even have to reduce economic growth by much.

Comrade Kristina (profile) wrote on Wed, 3/17/2010 - 5:26 am
AIG back at the trough...
AIG Draws $2.2 Billion More From Treasury to Bolster Units - Bloomberg.com

I gotta find that window everyone keeps talking about.
My, um, units need some bolstering too, ya know.

Interesting article on Social Security.

Daily Kos: Who Is Our Biggest Creditor? Hint: It's Not Japan or China

ac wrote:

I guess the equity bubble isn't spilling over to housing yet.

Why would it? If you assumed that the average individual owned substantial equity outside of a tax deferred retirement plan, a trend of pulling money out to buy a house would deflate the equity bubble. Additionally, with the excess supply of houses in the US, there's no reason at this point to think that returns on housing will be a good investment, even with a time horizon of 5 years.

Comrade Kristina wrote:

Daily Kos: Who Is Our Biggest Creditor? Hint: It's Not Japan or China

I hope they didn;t buy any of these:

In January the U.S. Treasurer, Rosie Rios, traveled to Dallas to join local officials at the construction site of a new convention hotel being built with money raised through Build America Bonds. The purpose was to celebrate the success of the so-called BABs, which are federally-subsidized bonds created by the 2009 stimulus package.

Of course, what no one at the Dallas "celebration" pointed out is that the $388 million in BABs that the city floated with federal aid were necessary because no private developer would cough up the money for the risky project

From: RealClearMarkets - Bankrupting of the United States Bonds

collateral damage

Dave Lindorff: Another U. S. Atrocity in Afghanistan

dum luk wrote:

....third Friday ..... in the third month ..... trippple witching - - think that's an omen ?
Options FAQ: Expiration

I mentioned that yesterday, and someone predicted a 200pt gain for the DJIA on Friday. We'll see.......
BTW, though you might think that the word triple would have 3 "P's", it in fact has only one

Cinco-X wrote:

because no private developer would cough up the money for the risky project...

Well it IS a jobs program. One would hope though that they could think of something more productive than yet another hotel. I guess someone's BIL is in hotel construction...

I see Ben is speaking today at 2pm.

While we await enactment of comprehensive financial reform legislation, we have undertaken an intensive self-examination of our regulatory and supervisory performance. We are strengthening regulation and overhauling our supervisory framework to improve consolidated supervision as well as our ability to identify potential threats to the stability of the financial system. And we are taking steps to strengthen the oversight and effectiveness of our supervisory activities."

Part of his prepared comments.

I've got an idea Ben. If you really want to improve your ability to identify potential threats to the financial system you might think about removing the tentacles from your eyes.

shill wrote:

Oil 82.59 +0.89 +1.09%

Congrats Ben!

They've been blowing bubbles since 1927. No reason to think they're suddenly going to stop now.

The Fed is "done" buying mortgages.

2003 1980 Loanshark The
rates rates rates new
"norm"
|----X------------------------------------------------|----------------------------------|---------------------|
you
are
here

momentum-------------------->

Edit:

my post formatting got mangled....but you all get the point....

traderwalt wrote:

Only in America can being poor be a capital offense!

Nonsense! It's perfectly fair... Why, rich and poor alike are equally forbidden to steal bread and sleep under bridges.

ac wrote:

I guess it's the people without jobs that are really keeping things depressed.

Their inability to help drive the housing market help keep prices (and effective returns) low and in that sense they are helping to keep the stock "bubble" from spilling over into housing. I'm sure there are other factors as well....

Emerging markets beginning to bust out again.

some investor guy wrote:

I first started seeing this kind of calculation in Ca initiative political ads in the 90s. For a $100 expense, if it drops to $3, it's called a 3000% decline. Still, someone must have moved a decimal point.

How is it not 97%?

Mike in Long Island wrote:

How is it not 97%?

It is. But 3000% sells better. And Joe Sixpack doesn't do math.

Comrade Kristina wrote:

If you really want to improve your ability to identify potential threats to the financial system you might think about removing the tentacles from your eyes.

Additionally, can banking oversight ever be effectively done by the Fed? It's a private entity, not a regulatory agency.

Blockbuster shares plunge more than 30% on bankruptcy-filing speculation

OT question about municipal pension shortfalls...

PBGC does not cover any public (state, county, city) pension plans. Only private.

State law varies widely in terms of what stands behind public pensions. NCPERS has a full analysis on their site. Go to NCPERS.org and then Resource Center and State Protections for Retirement Benefits. You will see that some states offer full contract status protection (strongest), others offer case law protection, and others "gratuity" protection (weakest).

To see an evaluation of state-by-state unfunded pension and retiree health care liabilities, see the Pew Center on the States recent report "The Trillion Dollar Gap."

States are in worse shape than people think because they now have to fill the shortfalls temporarily plugged by massive federal transfers/stimulus. I recently did an analysis of which states are in worst shape. They would include NJ, IL, CT, PA, CA, NY. Yesterday, the sh*t hit the fan in NJ. Basically, the new gov. is just dumping the state's deficit downward onto local school districts and municipalities. Maybe, the first big wave of defaults will hit NJ local govts in 2-3 years.

New Jersey Governor Proposes Deep Spending Cuts - NY Times

Blockbuster picked up the slack of quite a few former retail bank buildings in many a Big Smoke across the land, and now they'll be empty again soon...

Rob Dawg wrote:

shill wrote:
Oil 82.59 +0.89 +1.09%
NatGas $4.290 -0.047
Bizarro world.

That takes us to a 19.3x multiple, the convention for energy equivalence in the industry is 6:1, the hard science number is closer to 5.6:1...I think we peaked out in the mid to low 20'sx when gas got down to ~$3/mcf not too long ago...

Something is very different than in the past. Places that it can occur are financial gaming of the futures markets (oil up, gas down, or both) or structural changes in global demand for crude vs. regional markets for gas, or some combination thereof...

We're going to be Generation Bailout.
Just think about the government programs that will need a bailout:
PBGC, FHA, Social Security, state governments, Fannie, Freddie, FDIC...
What happens when they all beg the uncle for money at once?

goldman sachs does own a lot of uso....

Is the private securitization market still dead as well?

Mike in Long Island wrote:

Nothing like preying on the less savvy and often gambling addicted segment of the population to balance the budget.

A little bit of the big gamblers eating the young, in that example.

Perhaps in lieu of having old age pensioners getting their Social Security check from Big Gov, we could streamline the process and just have it sent to casinos instead?

traderwalt wrote:

Mook, I think the average American moves every 11 years or so. And when she moves, she buys another house, gets another mortgage and in doing so, pays off the old mortgage. So in effect, I think the average 30 year mortgage gets paid off in about 11 years. Maybe things will change now or maybe not...

But you, as the lender, don't get to control that.

You bear all the prepayment risk, in addition to the credit risk, inflation risk, and so on. And prepayment risk is a one-way bet, too ... if for some reason rates went to 3%, you'd probably get refi'd out of your 4.875% loan, but if they went to 10%, you'd be stuck.

If anything, that argues for higher rates, not lower ones.

The way I see it: we're getting to the end of the winter heating season so natural gas demand for heating is declining and supplies are adequate. Also, refineries are cracking crude oil to build gasoline stocks for the upcoming summer driving season.

And OPEC is still a cartel...

LA Times: More 'strategic defaults'

You have to wonder why so many people are paying cash

I've read where investor groups have borrowed a lot of money and turned around and paid cash for houses.

traderwalt wrote:

The way I see it: we're getting to the end of the winter heating season so natural gas demand for heating is declining and supplies are adequate. Also, refineries are cracking crude oil to build gasoline stocks for the upcoming summer driving season.
And OPEC is still a cartel...

All the same for the last thirty years, tw - never saw those multiples before - but it's just BAU? Really?

energyecon wrote:

All the same for the last thirty years, tw - never saw those multiples before

These spreads remind me of discussions that grain traders used to have. "High soybean prices will cause cotton farmers to switch to soybeans," some argued. ABut only alittle of that happens because often times farmers don't have the machinery or storage capacity to switch or have already ordered seed, fertilizer, and insecticides.

People can't easily switch from NG to heating oil or electricity very easily or cheaply as relative prices change. Change comes slowly.