From the NY Daily News:
Foreclosure crisis builds in New York
While not nearly as bad as the rest of the country, foreclosures are through the roof in New York.
More than 1,700 city homes were in some stage of foreclosure last month, a 44% increase from January, according to data released Thursday by RealtyTrac. But compared with the same period last year, foreclosures in the city declined 14%.
Manhattan saw the biggest surge in foreclosure action, with 331 properties receiving notice, up 549% from January and up 402% from last year. Still, the Manhattan rate and the citywide represented a small fraction of all homes.
Queens led the way with the most foreclosure action, 556. But the borough’s rate of foreclosure filings fell 11% compared with January and fell 42% compared with last year.
Across the country, the housing market looked much more bleak, with foreclosure filings surging 30% compared with a year ago and rising 6% compared with January as the worsening economy overcame efforts to prevent homeowners from losing property.
“The increase in foreclosure activity from January to February is somewhat surprising, given that many of the foreclosure prevention efforts and moratoria in place in January were extended through most of February as well,” RealtyTrac CEO James Saccacio said.
From the NY Times:
74 Are Laid Off at Met Museum; More May Follow
The Metropolitan Museum of Art said Thursday that it would lay off more than a quarter of its merchandising staff, eliminating 74 jobs in addition to 53 already cut over the last year.
It also warned that the worsening economy would most likely force it to shrink its overall work force by 10 percent — as many as 250 full- and part-time jobs in all — before the summer, including some in curatorial and other pivotal departments.
From the Bloomberg:
Six Flags reports doubt that it can continue
Six Flags Inc., the owner of Great Adventure in Jackson and 19 other theme parks, said there is substantial doubt about its ability to continue as a “going concern” unless a successful restructuring occurs.
…
The company may have to seek a pre-packaged or pre-arranged Chapter 11 filing if it can’t negotiate a restructuring agreement with the PIERS holders out of court, it said. That would likely happen “well in advance of” the PIERS maturity date, Six Flags added.
KPMG LLP, the auditors, said there is “substantial doubt” about the company’s ability to continue as a “going concern,” Six Flags said in the filing.
My parents went to the Natural History Museum in NY last month on a week day and were amazed thy were hardly any school groups there. The place was virtually empty of kids.
bail out six flags! tell your congressman to vote “YES” on the 6 flags bailout bill… don’t wait act now
Safe the kids already went to the “virtual” museum of art on line… real thing schmeel thing
cooper,
Reality is so old school.
I went to six flags four years ago and I stated that I would never return, nor would any of my future children. This was a weekday.
Packs of juveniles looking for trouble…..Disney it is not
My son’s kindergarten cancelled their fall trip because when they were contracting with the buses at the end of the school year 2008 gas prices were high. The school felt the transportation to the field trip was prohibitively expensive so they opted out of any field trips in the fall.
(He is at a private religious school.)
Manhattan foreclosure activity up 402% from last year. BIG deal! Call me when it is up 402,000,000,000,000%.
Anything less than 12 zeros is a pittance as we learned from TARP/TARF.
Don’t delude yourself into thinking you will ever buy a 1000+ sqft. 2BR in a doorman building for less than $1 mil in NYC. Manhattan is rock solid because its too close to Manhattan.
/sarcasm off
“Anything less than 12 zeros is a pittance”
so true it’s frightening
Jon Stewart is little more than an attack dog for That One. He has attacked the entire CNBC family in a vain attempt to discredit their work. Guess what? He failed miserably in that attempt yesterday with Cramer. How can one man try to bring down an entire news show without the help of people in the administration? The administration is on the attack against Wall Street and has decided to take down the voice of Wall Street. This is a bunch of bullspit.
Sure, at any point we all can make mistakes and make predictions that are off base. Does that mean we should be summarily executed? No it does not.
I bet Cramer has learned his lesson about how That One operates
How in the hell did this thing become about Cramer and CNBC when it started with criticism of That One?. The answer is right there. There was a damn hand orchestrating the entire attack on Cramer and CNBC and that hand came from the White House. Make no mistake about that.
CNBC family? You make them sound like the Colombo’s or the Genovese.
Cramer was owned, plain and simple.
http://www.thedailyshow.com
As Cramer said last nigh, he hosts an entertainmnet business show. That says its all.
The talk is that rental prices in Manhattan are down 50% from the peak. Any confirmations?
Bullspit. This is an attack on CNBC coordinated from the damn White House. Cramer was just a convenient target. He didn’t get owned. Stop spinning.
Secondary Market says:
March 13, 2009 at 8:04 am
Cramer was owned, plain and simple.
http://www.thedailyshow.com
Why isn’t anyone talking about what the White House did here? Whatsamatter, don’t want to acknowledge their complicity in this whole controversey
The White House is trying to destroy Cramer and CNBC. That’s obvious from this video. How is it that a damn comedian is allowed to do this? The White has its hands all over this.
Why would the White House want people not to watch CNBC? CNBC is their favorite conduit for market manipulation.
is the white house like the voices in your head, re?
Look, you can drink all the damn koolaid you want, but if you look at that damn video, it’s obvious that Stewart is doing what the White House can’t do. Dammit.
Secondary Market says:
March 13, 2009 at 8:34 am
is the white house like the voices in your head, re?
It’s a sad state of affairs when a comedian – on a comedy channel- is the only guy in the media that has a clue.
I think I shall remain long Armageddon and short the markets.
OK, Grim…it’s time to out Mr. Tard.
retard101
I’m no fan of Obama’s and would probably fall in the world is coming to an end camp. Honestly, the white house is out to get Cramer and CNBC. You really have to lay off the crack. The sad thing is this isn’t even the stupidest thing you have ever said, but did you really think it would find traction here.
The only one who has been discrediting Cramer the last few years is Cramer every time he opens his mouth. You sir are just a blowhard and a bufoon.
Grim = tard? I’ve never seen them in the same room together.
China “worried” about US Treasury holdings
BEIJING (AP) – China’s premier expressed concern Friday about its massive holdings of Treasuries and other U.S. debt, appealing to Washington to safeguard their value, and said Beijing is ready to expand its stimulus if the economy worsens.
“We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried,” Wen said at a news conference following the closing of China’s annual legislative session. “I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”
http://apnews.myway.com/article/20090313/D96T37FO0.html
What?? You’re probably like some of these liberals masquerading as conservatives. I’m referring to people like Krauthammer and Geo Will. That One plys a little damn koolaid and your drink it up and want more.
If you can’t see that the White House is behind this, you’re crazy. Look at the entire conversation. Cramer and CNBC have the nerve to criticize That One and look at what happens to them. There’s some damn linkage.
Painhrtz says:
March 13, 2009 at 8:42 am
retard101
I’m no fan of Obama’s and would probably fall in the world is coming to an end camp. Honestly, the white house is out to get Cramer and CNBC. You really have to lay off the crack. The sad thing is this isn’t even the stupidest thing you have ever said, but did you really think it would find traction here.
The only one who has been discrediting Cramer the last few years is Cramer every time he opens his mouth. You sir are just a blowhard and a bufoon.
I am actually selfishly sad about the Cramer whipping. The fade Cramer trade is now gone.
veto (27)-
“I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”
The part of Wen’s statement not reported in the news:
“If they don’t, we will.”
Veto
Veto
from earlier today
veto says:
March 12, 2009 at 4:56 pm
ket, another random question.
Figure 1, prices ran up from 63 to 83 in the 2.5 years 1987-1989 and then we busted but we only busted to a still elevated price of 76 and stayed there for a long time, which makes me wonder (1) if that will happen again this time or (2) if that is partially the result of inflation pushing the median price to a higher level over those 8 years, since i think inflation was pretty high in mid late 80s.
veto says:
March 12, 2009 at 5:20 pm
kettle, yep, take your time, the questions have me scratching my own head.
i will also research more but even if med price shifts up with inflation, thats only half the answer since we still cant ignore that this crisis is significantly bigger than the S&L, and therefore would require a more severe correction. although, we should consider that gov programs aimed to keep prices up might offset some of that or at leeast delay it.
looking forward to hearing your final thoughts on it.
Look at the charts linked below. There are 2 charts, with second 1 being a zoomed in version of the first one.
Your original question was ” does case-schiller account for inflation”. the answer is no.
The way the case-schiller methodology is set up a direct comparison between it ad inflation adjusted information could be misleading.
My short response to both of your questions is that we will go back to 1999 as a best case scenario. In the charts i linked notice the sudden upswing around 1985. My opinion is that the money that caused that run up was the expansion of the banking industry as they began to “innovate”. At the same time and as a related matter debt expansion had already begun. Look at figure 8 in my US Real Estate, Look Out Below document. you will see that debt expansion began to rapidly accelerate in the early 80’s.
A large % of the growth since then has been predicated on debt expansion and this includes home prices. All the while incomes stayed flat!!!!
As we go through this deflationary debt destruction cycle, the question is how far back do we go. the debt level up to the early 80’s were sustainable, but after that its highly questionable.
Ask yourself, if income wasnt going up then how were the values of homes going up? people started by leveraging more and more of their income to buy a home (i.e. 2X, then 3X then 4X) until they had no more money to leverage and then we saw the NINJA’s and Pick-A-Payment loans appear.
Also note that the data i used was HOUSEHOLD income, so an expansion of women in the workplace actually did not increase average incomes.
Consider that from a historical perspective, a home loan more then 2,5X household income was not sustainable. If the modern fiat/debt system fully collapses and financial institutions cannot or refuse to leverage debt then we will go back to about 2.5X which suggests an average home price of about 130K.
That sounds extreme, but if incomes are not increasing and debt is not being expanded then how can you NOT go back to a home price that is sustainable based on actual household earnings.
From a historical standpoint you only go over 2.5-3X by leveraging debt. How many banks or families are going to try that with RE anytime soon?
In regards to the government stopping the drop, they cant! They can slow it, but theycannot stop it. As many on the blog have pointed out, if Obama gives every ome owner 100K then any buyers would automatically discount the home price by that!
No government in history has been able to stop the market. I am not a market fanatic, but unless obama nationalizes the entire housing industry (which would only cost about 15-30 trillion) then market forces are at play and like water, will seek the lowest stable level.
In addition, consider that incomes in the NY/NJ area jumped up in the 80’s due to telecom and finance, and stayed up in the 90’s due to pharma and finance. Telecom, pharma, and finance are all ghosts of their former selves and are out or on the way out the door. Without high paying industries in the area, how do you support the higher incomes and associated higher prices?
http://www.scribd.com/doc/13232900/Binder-1
vic (29)-
Naah. It’s been replaced by a better trade:
Short everything, except shiny and Armageddon.
US warships head for South China Sea after standoff
A potential conflict was brewing last night in the South China Sea after President Obama dispatched heavily armed American destroyers to the scene of a naval standoff between the US and China at the weekend.
Washington says that the confrontation occurred in international waters, but Beijing claims nearly all the South China Sea as its own, putting it in conflict with five other nations that have claims over different parts of the waters.
http://www.timesonline.co.uk/tol/news/world/us_and_americas/article5898650.ece
50.5 calling me a liberal is like calling you intelligent neither apply. While Stewart is a card carrying liberal he is smart enough to be an equal opportunity snark. While you on the other hand are so upset with an administration that are:
A) are new to the whole game
B) wouldn’t dirty themselves when they can get the Soros spin machine to do it
C) probably not even smart enough to know or care who Cramer is
D) your still a buffoon
The White House is not out to get Cramer but Overstock.com is…
http://www.deepcapture.com/jim-cramer-is-a-complicated-man/
this is from Take 5 with Patrick (Patrick M. Byrne, Ph.D. CEO of Overstock)
Something tells me when the Eurozone starts to see an uptick in manufacturing, it won’t be in France.
“Workers at a Sony plant in southwestern France detained the chief executive of the Japanese group’s French arm overnight to demand better layoff terms when their factory closes in April.
Serge Foucher and several other Sony executives were released mid-morning on Friday after workers obtained guarantees that they would take part in a new round of negotiations.
Workers had locked up the managers in the plant at Pontonx-sur-l’Adour late on Thursday and blocked the road to the site with tree trunks, local authorities said.
Union representatives said their action had been the only way to revive negotiations on layoff packages that were not generous enough.”
I think Blackwater may have a new business opportunity in the future. Anyone remember Pinkerton’s?
#31 kettle:Without high paying industries in the area, how do you support the higher incomes and associated higher prices?
Meditation??
D) your still a buffoon
What???
How did I come to “own” a buffoon? I didn’t say “your” a liberal. I said “you’re” a liberal. You damn liberals needs to learn the damn difference between possessive terms and contractions. Hell, you should have learned this in high school, but they were probably too busy filling your mind with liberal thought.
Now back to what I was saying. You’re (notice it’s “you’re”)right. The White House doesn’t want to get its hands dirty. That’s why they had Stewart do their dirty work. With all that technology and those whiz kids That One used to get elected, there’s no doubt that this was secretly deployed to assist Stewart. This is a naked power play emanating from the White House. They’ve decided to take down CNBC with Cramer being the sacrificial lamb.
reinvestor is seeing conspiracies in the same place liberals used to see the Vast Right Wing Conspiracy.
It ins’t a conspiracy—that requires concerted action. What it is however is a piling-on effect, and in reality, is simpy a continuation of the culture war that has existed in this country in one form or another since the late 1960’s.
What reinvestor and Jamil and maybe others are reacting to is the fact that liberal condescension, which used to be contained within the ivory towers of academia, and subliminally throughout MSM, has utterly burst out on the internet in the last decade. It has also established a beachhead in the infotainment end of media, which, perhaps to stay relevant and compete with the blogosphere for the liberal viewer, has embraced it. Further, some MSM figures have shed any pretense of objectivity, whether for ratings or personal philosophy or both. When Chris Matthews does more flacking for the WH than the WH press secretary, and the entire MSNBC cast (except for the token conservative, Scarborough) shovels liberal condescension by the bucketload, it starts to get noticed.
Finally, we have Stewart, opening up a new front. Until now, it has been MSNBC and Fox taking shots at one another. CNBC caters to the “wealthy” and certainly doesn’t have a liberal following, so attacking it appeals to the liberals. So, whether for ratings or personal philosophy, Stewart has opened a new front and will ride it for all its worth. What Cramer and CNBC should have done is to ignore Stewart, and dismiss his antics, but they didn’t and they get what they deserve.
This piling on and ratcheting up of the rhetoric is what we are seeing, not a conspiracy orchestrated by the WH; this is what reinvestor is reacting to. And it is not going to stop so long as the economy remains bad.
In fact, if I were in the WH, I would be worried about it as it hurts the Admin’s efforts to foster bipartisanship and advance an agenda.
Because I see it only getting worse, it leads me to some predictions that I won’t get into here because Big Brother is watching and I don’t feel like getting Grim subpoena’ed. If a violent event occurs, infotainment and the blogosphere are going to be reexamined in a way we haven’t seen in awhile.
Why does anyone even acknowledge tards comments? They are beyond retarded and replying to them only gives them credence.
#36 The French are taking back some of their street cred with that story.
kettle, i guess u really dont sleep. lol. thanks for the explanation.
just curious, where are you getting your home price data before 87?
here is graph of nasdaq bubble, it only crashed 75% to the original base as the new median base price became 20% due due to inlation… http://tinyurl.com/df6fcl
“A large % of the growth since 1985 has been predicated on debt expansion and this includes home prices. All the while incomes stayed flat!!!!”
This is good point and leads me to believe that a better ratio would be to divide home prices by (med income + household debt)
i think we can include that in the analysis. i’ll send something over to you.
also can include employment in that ratio…
an index of med income, debt and unemployment rates
http://www.econlib.org/
I’ve been reading many great articles here and thought some might appreciate the link.
Library of Economics and Liberty
Econlog articles by:
Arnold Kling, Bryan Caplan and David Henderson
Dear reinvestor 101: You forgot to include a space after the right parentheses in the first sentence of the last paragraph of your most recent post.
Please turn your attention to your grammar as errors such as these are distracting and dilute the quality of posts on this blog.
Thank you,
The Grammar Police
Hey Larry, long time no see.
[41] silera,
I suppose, but I point to the efforts that cities like Newark, Washington DC, L.A. and others had in trying to bring businesses back to areas hit by riots in 1968.
Most of these areas never recovered. When I was in DC a few years ago, they enjoyed an economic renissance (sp?) (curiously coinciding with the departure of the Luckiest Man Alive), and some buildings empty since the riots found tenants. But the U Street corridor, which was heavily damaged, still did not see the benefit.
Funny thing about chasing “The Man” out of town. He tends to not return.
(14)Secondary Market
Jon Stewart pointed out that unless CNBC planned on doing investigative reporting they should bill themselves as “for entertainment purposes only” instead of a news program.
But the irony is, maybe prosecutors could use some of CNBC’s clips where CEO’s lied on camera to nail the guys.
excuse the long post, i received on email and dont have a link…
The Natural (Gas) Solution To…The Economy, Energy Security, Carbon Mitigation, Foreign Relations, Auto-Industry’s Demise
From: Oil and Gas Investor Magazine
Former President Bill Clinton noted in an address at the Rodman & Renshaw investment conference in New York in November that individuals have wagered against the success of America since the American Revolution. “People have always predicted the demise of America…Everyone who has invested against America has lost…We keep stumbling in the right direction.”
Fortunately, again, the solution is simple and obvious. Work out this economic downcycle while achieving energy independence, which would help assure the U.S. has the strongest economy in the world 10, 20, 30 and 50 years from now, when nations that depend on crude oil but lack sufficient domestic supply vie for the fuel from what have been historically hostile and virulent countries.
The answer to the economy can be energy itself.
Clinton’s idea is a type of make-work program that is a preface to T. Boone Pickens’ plan for natural gas. Simply put, engaging the American workforce in converting existing energy demand to greater efficiency, some innovations being as simple as installing motion-sensor light switches in public buildings.
Suggestions on the dais most often involve conversion to electricity-powered cars, but this requires conversion of high-Btu gas into electricity, and what is not used is wasted. Instead, conversion of the greatest portion of the U.S. transportation system
to compressed natural gas (CNG) puts the high- Btu-content fuel directly into automobiles, and closes the tap until the next fill-up.
Meanwhile, efforts toward installing gas taps, retrofitting existing vehicles and making ready-for-CNG ones going forward represent legislated “make work” but, like American infrastructure improvements of the 1930s, will produce great economic advantage and actually have street value as CNG parts and vehicles become fungible.
Natural gas has a carbon footprint, in that it does contain some carbon, yet it is significantly less than that of crude oil and normal uses of coal, and especially when factoring how little is needed to achieve the
same fuel-supply goal.
In the past, natural gas as a transportation fuel has been rejected by Washington due to its belief that there was too little indigenous
supply, which would merely result in U.S. conversion from relying on a caustic oil cartel that can stronghold supply and prices to relying on a relatively unknown gas cartel that could do the same.
Yet, U.S. natural gas explorationists have proven abundant resources in the Lower 48, where infrastructure is at the ready to take it to markets; in Alaska from which only a pipeline is needed; and from a normally good neighbor, Canada. There are 2,000 trillion cubic feet of known unconventional gas resources in North America, and the number is likely to soon be revised upward, according to Kenderdine.
In summation, the U.S. has abundant natural gas supply. The economy has been crushed in part by US$147 crude oil and US$4-plus pump prices. Relations with foreign oil producers can be toxic. The U.S. auto industry has become a world laggard. And, some Americans are convinced that people can reverse Earth’s warming trend.
The solution? Put the economy to work at converting energy demand to natural gas.
clot, #24
which of the regulars is tard?
Let me in on the joke already!
:)
nice link clot thanks,
reinvestor101 says:
March 13, 2009 at 8:53 am
What?? You’re probably like some of these liberals masquerading as conservatives. I’m referring to people like Krauthammer and Geo Will. That One plys a little damn koolaid and your drink it up and want more.
____________________________________
I would put Painhrtz in the anarchists camp. He sides with no one! :)
Off topic, I will get you my resume today.
OK, Grim…it’s time to out Mr. Tard.
Nooo! Don’t expose the man behind the curtain. I enjoy the whole thing.
Veto
Another interesting point to consider.
In the late 70’s and early 80’s you had a large transition from single income families to duel income families. While there are good arguments that this did not actually improve living standards for the families, it probably did help drive up housing prices in the 80’s
Re 101 voted the best web persona of 2009.
I second Tosh (53). RE is obviously the Stephen Colbert of this blog.
#54 – ket – I think I would argue the exact opposite. Rising housing prices (and general prices in the late 70s) forced single income families into two income families.
“Homeowners are swamping assessors with appeals. Counties across New Jersey got 32,976 appeals last year, 40 percent more than in 2007, according to the State Treasurer’s office.”
http://www.bloomberg.com/apps/news?pid=20601213&sid=aWSD3gPg9s7o&refer=home
Christie ripping Corzine and state employees a new a-hole on NPR.
I think jon stewart made a lot of good points last night to cramer, but I think it is a mistake on his part to go down this road. he apparently has a very strong desire to be taken seriously, which is death to a comedian.
With O’s stimulus, bailouts, and Corzine, we will need to become 3 income families.
Sunoco to trim 20% of salaried jobs
INQUIRER STAFF WRITER
Sunoco Inc. announced today that it will eliminate 20 percent of its salaried workforce as part of a broad effort to remain competitive during a downturn in its oil refining and chemical manufacturing businesses.
Most the 750 job losses will occur in the Philadelphia region, where the company has its headquarters and three refineries, Sunoco’s chairman and chief executive officer, Lynn Elsenhans, said in an interview this morning.
I would agree with Kettle @54. The large influx of duel income families was due in part to the new physcology of the “liberated woman.” “You could have it all” – and were supposed to! You needed to work AND raise a family. It was expected almost. Not so with my mother’s generation.
All Hype just get me your new contact info and I’ll have wifey get this recruiter in touch with you. Rates were similar to contract CRAs, the high end, if your still interested.
Thanks for the defense I think, hope all is well otherwise.
“I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”
I agree with Wen more than BO. 2 out of 3 here.
#31
“As we go through this deflationary debt destruction cycle, the question is how far back do we go. the debt level up to the early 80’s were sustainable, but after that its highly questionable.”
*******
I agree that this is the central question. It seems obvious that people were overlevered recently, but it is not so obvious to me that the debt level of consumers in the late 80s or even mid 90s were unsustainable.
Obviously carrying debt at those levels makes people’s financial situations more precarious than they were prior to the beginning of the consumer debt trend, but it might only mean the economy becomes more volitile as a result, not that it is completely unsustainable.
It is certainly hard for me to imagine that our economy will retreat all the way back to the late 70s given that a couple of generations have grown up understanding that consumer credit is a fact of life, and the people who remember when it was not are now very old. Keep in mind that a simular trend has played out in industrialized countries the world over.
Finally heard back from my congressman on the the letter I sent regarding the pending vote on Derivatives Legislation.
Dear Mr. xxxxxx,
Thank you for contacting me with your support for H.R. 977, the Derivatives Markets Transparency and Accountability Act of 2009. I appreciate hearing from you on this important issue.
As you may know, H.R. 977, introduced by Rep. Collin Peterson (D-MN) would amend the Commodity Exchange Act to bring greater transparency and accountability to commodity markets. Specifically, this bill would expand the authority of the Commodity Futures Trading Commission (CFTC) to regulate transactions and activities of various commodity markets. It would also authorize an increase in staffing for the CFTC. H.R. 977 is currently pending before the House Financial Services Committee.
Please know that I understand your views regarding this matter and rest assured that I will keep your support in mind should H.R. 977 come to a vote before the House of Representatives.
http://www.govtrack.us/congress/bill.xpd?bill=h111-977
Apologies if this has already been posted but this is my first opportunity to chack in and I don’t have time to read the earlier posts:
http://www.nytimes.com/2009/03/14/world/asia/14china.html?_r=1&hp=&pagewanted=print
March 14, 2009
China’s Leader Says He Is ‘Worried’ Over U.S. Treasuries
By MICHAEL WINES and KEITH BRADSHER
BEIJING — The Chinese prime minister, Wen Jiabao, expressed unusually blunt concern on Friday about the safety of China’s $1 trillion investment in American government debt, the world’s largest such holding, and urged the Obama administration to provide assurances that its investment would keep its value in the face of a global financial crisis.
Speaking at a news conference at the end of the Chinese parliament’s annual session, Mr. Wen said he was “worried” about China’s holdings of Treasury bonds and other debt, and that China was watching United States economic developments closely.
“President Obama and his new government have adopted a series of measures to deal with the financial crisis. We have expectations as to the effects of these measures,” Mr. Wen said. “We have lent a huge amount of money to the U.S. Of course we are concerned about the safety of our assets. To be honest, I am definitely a little worried.”
He called on the United States to “maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.”
But he stopped short of any threat to reduce purchases of American bonds, much less sell any of them. Still, it is rare for any world leader to raise questions about the strength of United States treasuries.
[snip]
“US warships head for South China Sea after standoff”
One has to wonder whether this is just another in a longstanding minor incidents or whether there is more afoot. Say, for instance, whether there is anything in international law that allow one nation to repudiate the debt held a belligerent nation.
“Anyone remember Pinkerton’s?”
Of Pullman infamy?
Comrade- excuse me up front if I don’t make any sense.
I think that it’s hard to look at any expansion in areas like Newark or DC or even New York and expect that big business is going to be the force that improves any standard of living or have long term viability. Like everything in life- moderation should be the key and policies shouldnt be driven to benefit only one side.
The first rule of contracts is that they have to be beneficial to both parties agreeing to them in order for either party to feel compelled to honor them. For some reason, we as a society can’t find the happy medium between the “big business” interest and the interests of “regular people”. (I’m using quotes because it’s not that simple and I hate pretending that everyone falls into one or another category.)
Obviously the “big business” factor drives the economy but only to an extent. Places like Newark or DC or Harlem or the Lower East Side (where I grew up) don’t really gain when the people that love the area are driven out because the interests of business have outweighed the interests of the local population.
Once those people are gone, you’re left with a transient population that can move on and the Angry mob that can’t- instead of the stable labor force and consumer base that could have been.
That’s why as of yet, most of the supposed renaissance neighborhoods, towns and cities haven’t had more than 10-20 yrs of continued prosperity from what I can see. You can’t just cart in prosperity and sustained growth, nor can growth start without an initial investment. It takes a little of both.
#54
“the late 70’s and early 80’s you had a large transition from single income families to duel income families. While there are good arguments that this did not actually improve living standards for the families, it probably did help drive up housing prices in the 80’s”
************
this is a good point, but it is mitigated by the fact that male wages have been declining on a real basis since the 70s. So part of the addition of female wages to the household have been offset
“Homeowners are swamping assessors with appeals.”
Now we did it. The assessors will require larger staffs, bigger offices to house said staff, more equipment, money for training and development, etc. Bottom line, budgets will need to grow to deal with the ungrateful residents who want to drive down the cost of government.
this whole John Stewart is exposing CNBC is laughable. His production crew is only scouring youtube for videos that have been exposing this stuff for well over a year. All the clips he played were being spread around last year on youtube. He’s late to the party and simply rehashing old stuff that most people got bored with last year.
Face it, people have to start losing their jobs! That is only when they realize that they can’t afford their houses.
The bubble has burst already. Those that couldn’t afford it have already foreclosed.
So all that’s left to push the real estate market down are from people losing their jobs. They are a bunch of idiots to spend over half their income on their house.
But it isn’t going to happen when the current administration keeps on filling the pigs trough.
What’s going to happen next is that everyone that has been sitting on the sidelines with pools of money caving in and end up buying thus stabilizing the real estate.
Idiots. I want to see more people lose their jobs.
kettle– taking this a bit further, consider that the mid 80s forward may be a return to a more traditional american economy, whereas the post WWII era up to that point was the aberration.
If you accept this premise, then the problems that have built up during the last 25 yrs are more accurately the result of individuals trying to maintain the unsustainable post WWII stability/prosperity. The mechanism was debt, but this is not in itself the problem.
Looking further back, you can see that there were very frequent boom/bust cycles in American history prior to WWII. Wall St has always played a central role in these cycles, hence americans’ traditional love/hate relationship with the industry. In this sense, the present period can be seen as a return to form.
Can someone explain this to me- What happened to the $65 billion that Madoff stole? What did he have the money in? Was it in the stock market or real estate or what?
“the post WWII era up to that point was the aberration.”
BINGO!! You are singing my tune here, Skep. The worldwide economic conditions tht existed at the end of WWII do not exist anymore, nor are they likely to ever exist again, with much of the rest of the world’s productive capacity destroyed or damaged and our productive capacity humming along ready to serve the needs of a world that saw us as the saviors from tyrany.
“What happened to the $65 billion that Madoff stole?”
As I understand it, there was NEVER that much in his hands at any given time. Wht he did was took in $X and then needed to bring in enough after that to 1) buy himself a nice lifestyle, 2) pay returns to current investors, and 3) redeem cahs-outs that happened from time to time. So, along the way, money came in and went out and was not in his hands for all that long.
Ben (74) –
Can you find another MSM show which has done an expose of this magnitude? His show is not supposed to be an investigative journalism show. It is on Comedy Central for god’s sake! We all know that blogs have been a mile ahead of the MSM this disaster, but CNBC being a purely financial network should have been doing the exposing. That is his whole point.
This interview was the best I have seen on T.V. in exposing the true culprits of this mess. The best line – “You are using our pensions and 401(k)’s to capitalize your adventures”.
Is it a coincidence that instead of Santelli’s multiple opinions against bailouts of banks, the one that got most publicized was against the homeowners?
Comedy Central is the only channel besides 60 minutes which I watch for news. Of course, it is left leaning and I am a liberal, but the main thrust of his show is exposing the coverage of news in mainstream media, and he does an excellent job of it.
It’s a ponzi scheme. You take the money from one investor, then wait for the money from future investors to pay the initial investor.
So that means some investors profited. And they’re sure as hell not going to owe up to say they made money.
Of course Madoff also skimmed off the top but most of it went back to paying the earlier investors.
Thus a ponzi scheme. That’s when you’d bail out and high tail out of it. Too bad he worked for wall street instead of being a con-artist.
jim says:
March 13, 2009 at 11:14 am
Can someone explain this to me- What happened to the $65 billion that Madoff stole?
close to the end of low mortgage rates?
The entire Bond Market took a hit on word that China has expressed concerns over the safety of buying US Treasuries. China has become our government’s largest creditor and now they are asking “the US to maintain its good credit, to honor its promises and to guarantee the safety of China’s assets.” Their feeling is that the new administration may be overly aggressive in its spending which will ultimately lead to inflation…and inflation – the arch enemy of Bonds – would greatly diminish the value of China’s or any other foreign nation’s investment in the US. Like a Rubik’s Cube, the path to economic recovery is not easily resolved due to unintended consequences and ripple effects. It appears finally that the government has realized that their focus should be on fixing our banking system and yesterday’s hearing on mark to market accounting is a great first step. More on that later. This is news worth watching because China has always been an enormous buyer of our debt, both in US Treasuries and Mortgage Bonds. In fact, the enormous buying of Mortgage Bonds by both China and Japan a few years back helped contribute to and prolong the low interest rate environment, and the last refi-boom.
via naked capitalism
#77,
Madoff never had $65 billion. The govt only said that is what his documents to clients totaled to. They are still going through the documents and deconstructing what he was actually paid over time. The issue is that you just can’t trust his accounting at all. I bet for people to actually see any $$ from this they will have to submit wire transfer documents or checking documents showing actual transfer of funds from a legit account into Madoff’s acct. His money could literally be anywhere given he had over two decades to hide the cash. When things got tricky a couple years ago he could have started putting money everywhere in different accounts under different names. If his wife and sons get off they will have to watched closely to ensure they never get near nay of it.
ket, this time i adjusted the inflation target to be inflation + 1% per annum, a generally agreed upon, long terms ustainable appreciation rate of real estate. http://tinyurl.com/bnj8un
The brown line is now the price in pre bubble 1985 ajusted to inflation each year plus 1%.
As a result, the brown inflation adjusted indicator is significantly higher but makes alot more sense and helps to show that the re bust 1991-1997 was bigger than my previous chart suggested.
in short, i agree 1999 price levels by 2015 is one possible outcome, although we probably differ in that i see it as a worst case and you see it as a best case. i guess thats what makes a market.
i’ll get crackin on that income + debt + unemployment index this weekend or next week and will forward to you and post here. it will obviously be a crude measure and wont pick up all the social and political trends but should show a more significant relationship to home prices than just median income.
What I find incredible is that he must have known that he would eventually be found out given the amount of money involved. I guess there were a lucky few who cashed out but most of the others were happy to be making what appeared to be high returns on their money.
[71] silera,
Makes sense, but I think you are overanalyzing the point I made, and your viewing a tangential issue.
The point is, simply, that business will not want to invest in areas that are hostile, not without some guarantee of a return that rewards the risk.
Given France’s recent history, I can foresee employers avoiding the country. Too much labor strife. I posit that this is a rational response. Some may disagree.
Further, since the EU lowers barriers, Sony, or another company, is not penalized if, in the future, it looks to expand in the EU and says no to France and expands in a country with less liklehood of labor strife (and lower costs probably).
Getting back to the hood argument, I am surprised you did not point out that lots of employers set up in bad areas. This happens, and the reason is simple: They will do so if it pays to do so, either for normal econ. reasons (unlikely) or due to heavy tax abatements and other subsidies from governments (likely).
SIlera (71)-
One of the best things I’ve ever read here. Too bad common sense has become such an uncommon thing.
I guess you can’t run a Monte Carlo sim that generates a commonsense result.
#78
Shore– if you apply this idea to the housing market, then the result is that homeownership should plumment. the availability of credit (as kettle points out) masked the fact that homeownership became increasingly unaffordable over the past 25 yrs. But what if the debt itself was not the cause, but rather the result of, the unaffordability?
About Madoff, in his own words:
http://abcnews.go.com/images/TheLaw/Madoff%20Allocution%20Statement.pdf
[80] vic,
“Comedy Central is the only channel besides 60 minutes which I watch for news.”
I can see that I won’t be winning any arguments with you.
#78 – The worldwide economic conditions tht existed at the end of WWII do not exist anymore
This certainly has something to do with, perhaps a lot. However, I don’t think we can ignore the abandonment of Breton-Woods as a contributing factor. Skep points out in #72 male wages have been declining on a real basis since the 70s***; not coincidentally when USD became fully fiat. From the abandonment of BW on we see the rise of massive consumer debt, the slow death of traditional savings, the “boiled frog” death of inflationary pressures. Not that hard currencies are without their own issues, they have problems too. But I’ve come to believe that having the USD as a purely floating currency has added greatly to the economic mess we’re in.
***There’s a BLS study floating around supporting the same, I’m too lazy to find it.
Nom (90) –
I don’t get my news from TV. I get it from the intertubes, where I have the time to read opposing points of view and make my own judgement.
“Can you find another MSM show which has done an expose of this magnitude? His show is not supposed to be an investigative journalism show. It is on Comedy Central for god’s sake! We all know that blogs have been a mile ahead of the MSM this disaster, but CNBC being a purely financial network should have been doing the exposing. That is his whole point.”
Victorian, I’m not disputing the message, or at least some of the message. The point is, Stewart is grabbing videos off youtube that other people posted a long long time ago and pretty much getting credit for it. In academia, we call that plagiarism. But whatever. I have a bunch of issues with the daily show the past month. He’s complaining about snake oil salesmen and dishonesty on CNBC when he publicly slandered the only honest employee on the network, Rick Santelli. Furthermore, he openly issued a challenge for people who’ve been on CNBC to come to debate him. Peter Schiff, who’s been exposing the financial crisis for over 5 years on CNBC contacted his production staff. They have no interest in having him, despite the fact that he’s been on CNBC calling the collapse almost prophetically. There’s no reason for Stewart to legitimately turn him down. An economist who correctly forecasted the entire collapse years ahead who has 2 best selling financial books on the shelves right now. Listening to Stewart last night, you would think that he would want Schiff on ASAP. I’m beginning to wonder if Stewart won’t have him on because Schiff is against most of Obama’s policies. IMO, Stewart isn’t doing us a service. In fact, he’s become almost a propaganda tool to put forth Obama’s agenda. After the initial CNBC hit piece, he had almost everyone rallying in support of a homeowner bailout. This is beyond ludicrous. Each and every bailout comes at the expense of responsible Americans and rewards irresponsible Americans. Stewart, in this past week has proven that he only cares about parts of the story and it appears that he’s content to ignore or hide other parts of the story. Yes, he’s a comedy show, but he does have tremendous influence. Besides, he wasn’t doing comedy last night. He was trying to be serious. CNBC is an awful channel, but there are a few good apples to be heard on it. Cramer isn’t one of them. I would just wish that Stewart and his blind minions that religiously watch the show would at least acknowledge some of those good apples rather than purposely ignore them.
Skeptic 88
I agree 100%. The consequence of that is that wall street and the whole joe schmo day trader/401K paradigm doesnt work in the choppy boom bust cycle of pre WWII.
A pre WWII system requires savings for growth as credit will always be restricted compared to the levels seem for the last 20 years.
To me that would also suggest that 1999 is best case.
The US doesnt have enough of an industrial base and no personal savings on which to maintain its current lifestyle. An equilibrium will be reached but it will be lower then we are now and could be driven lower if large scale globalization is maintained in any form as then the american worker is commoditized and competes against a chinese worker that works for 1$/day under nonexistant environmental or safety regulations
Veto:
Great! look forward to it. Thanks for sharing the data! maybe we make it a collaborative effort…
Wow,
if you look at the depth of the posts on this block we could have our own Davos summit have a more productive meeting then the real thing by an order of magnitude.
“I don’t think we can ignore the abandonment of Breton-Woods as a contributing factor.”
**********
I know many people here know a lot more about money than me, but my understanding is that debt expansion is much easier without hard currency, so it would seem to me that abandonment of BW would go hand in hand with the mountain of debt that has resulted since.
Sorry if this is a repost but someone passed it on to me through my email
http://www.stimuluswatch.org/
I have noticed an interesting trend in t he last few months. Around early winter a lot of the commentary here seemed to shift from “we know housing is toast” to “the end is in sight”.
This isnt a negative critique. But i think its interesting for its psychology. its almost like a wave pattern i n the sentiment on the blog. The blog started out that with a contingent that held “there was no bubble housing is fine”. then that contingent faded and we heard “how far do we go” and there now seems to be a return of some level of optimism.
The tone of the debate here seems to mimic the general movements of the market, both housing and financial
“Getting back to the hood argument, I am surprised you did not point out that lots of employers set up in bad areas. This happens, and the reason is simple: They will do so if it pays to do so, either for normal econ. reasons (unlikely) or due to heavy tax abatements and other subsidies from governments (likely).”
With regards to the French and the ‘hood (I never thought I’d say those two in the same sentence)- I think my point is that I do not think we do either business or people any justice by over estimating either’s weight in the equation. Workers need a place to work but Business needs workers and consumers equally.
If Sony sets up somewhere else in Europe- which they most likely will, I wonder will that area end up like Detroit? France may suck and be full of tools but I like a country where the “serfs” do not underestimate their importance.
“not coincidentally when USD became fully fiat.”
Tosh,
This is also the time when the rest of the industrial world had finally and fully rebuilt and recovered and our failure to continue to upgrade our productive capacity, our inattention to quality, and the weight of the debt to finance Viet Nam and then the oil shocks (magnified by our fetish for HUGE vehicles) took their toll on our competitive advantage. Goint to fiat currency was likely okay, as long as we keep our public debt very low.
Skep 96,
exactly. You need to have a free floating highly fiat currency in order to expand debt at anything close to the rate we have.
If our currency had been tied to anything in any real manner we would have bumped up against practical limits long before our current level of leverage was reached.
Madoff couldn’t have acted alone. There’s no way his wife and sons didn’t know, no way.
They had to have an idea; he’s just trying to protect them.
“The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments. In the face of increasing financial strain, the system collapsed in 1971, after the United States unilaterally terminated convertibility of the dollars to gold. This action caused considerable financial stress in the world economy and created the unique situation whereby the United States dollar became the “reserve currency” for the states which had signed the agreement.
http://en.wikipedia.org/wiki/Bretton_Woods_system
(only posted cuz I’m the dolt who wasn’t sure what it was…remember: I just make bologna sandwiches for pimply faced kids…)
sl
“some level of optimism”
If THIS is an optimistic group, at least with respect to housing prices, the rest of the world is in deep trouble — and should have their shoe laces and sharp objects taken from them.
#97 – Thanks for the link…. Does anyone know how the estimates for the number of jobs created per project are derived, `cause it looks like they’re just making them up.
shore 100
i disagree. Once the banks and full freedom to print money through a riducles level of fractional reserve banking the control of the situation was out of the hands of the government.
For all intents and purposes we have a 0% reserve requirement banking system. Of course the GOV loved that as they reaped massive amounts of money in the form of taxing economic expansion and the politicinas loved it as it helped expanded the special interest sector.
Dont forget that with our current banking system, even large corporations can effectively “print” money by issuing and trading debt, as long as they are considered credit worthy.
What??? A guy who likes to “pack peanut butter” has the nerve to question my credibilty?
Look, don’t try to hurt the credibility of conservatives with your behavior. Move to the liberal side.
Larry Craig says:
March 13, 2009 at 9:31 am
Why does anyone even acknowledge tards comments? They are beyond retarded and replying to them only gives them credence.
Mike,
I spoke to a guy last night to hinted that he had manufactured some of the fake statements that madoof sent him and instead of 250K he had with him he’s trying to get the whole 500K from US.
He said everyone was doing it and his lawyer actually encouraged it.
I asked him this “Is that why the number went from 50 billion to 65?
He smiled and said “I think it’s time to change the subject”
We proceeded to talk about shiny and the Knicks playoff push.
” it looks like they’re just making them up.”Making them up? Making them up! I will have you know they are based on economic analysis and represent the considered opinion of leading economic experts within the B.O. Administration. In otherwords, they are just making it up.
vodka (95)-
We could also drink ourselves silly, shoot guns and have a much better time than those stiffs ever could.
here is the thing that really scares me. it seems to me that the choppy boom/bust pre WWII economy is real capitalism. real winners and losers. I don’t think the USA can tolerate that anymore. But if the post WWII era that everyone wants to reestablish is simply not possible, then what is the alternative?
Silera (99)-
“Workers need a place to work but Business needs workers and consumers equally.”
Nicely put. You should post more often.
<>>
I’d like to thank my producers and all those folks who are behind the scenes that make this all possible. You can’t believe how much hard work this is to come here and post everyday while churning out graduates from my Trolling Academy. It’s hard to keep fresh material and stay abreast of the financial markets at the same time! Trolling is truly an art as well as a science.
I thank you for this award from the bottom of my heart!
DL says:
March 13, 2009 at 10:15 am
Re 101 voted the best web persona of 2009
#100 – shore – This is also the time when the rest of the industrial world had finally and fully rebuilt
No argument there. My supposition is that this, coupled with purely fiat currency has led to the situation we are in. Kettle1 sums up a bit of my position in his comments in #106. I’d just add that a floating USD really killed the traditional savings systems, forcing investment into ever riskier avenues to get any sort of return, leading (or at least contributing) to credit bubbles.
A funny, well not so funny story of which I am aware:
I guy entered a message on a Web site. It happened that a law enforcement entity the Web site. An administrative subpoena backed by the threat of a court-ordered subpoena allowed a review of the server logs, which provided IP addresss, which that then provided a user account. This led to a user phone number and an administrative subpoena led to a record of the guy’s telephone calls, which led to the identities of all of those people.
Ben (93)-
I think we can all assume that the minute you turn on a TV, a wave of shit comes cascading out…no matter what the channel.
The only distinction to be made is among the shit that entertains, the shit you agree with, and the shit you don’t agree with. As with any 3-part choice, the opportunity for a Venn-like crossover among categories exists.
But if the post WWII era that everyone wants to reestablish is simply not possible, then what is the alternative?
We admit we have become an oligarchy… and hope they remember noblese oblige.
skep (111)-
Anarchy. It’s easy, and it’s a logical consequence of today’s madness. That’s why I’m such a big advocate.
http://www.wsoctv.com/family/18923894/detail.html
FOr the parents or grandparents in the room.
on the subject of what comes after a society is swamped in debt, this occured to me this morning.
I am right now reading a book about the mafia in Naples. One of the businesses they are in is lending money to small businesses and individuals (probably happens in most other countries as well). They generally offer better terms than banks and don’t question what the money will be used for. Another difference between them and banks is that when you default, the mafia doesn’t foreclose. What they do instead is take over your business and make you their employee. Now you work for a salary, but they take all of the profit. In this way, they have basically taken over the economy of Naples. It is actually not very disruptive since peoples’ lives go on day to day in pretty much the same way as they always have.
What is frightening to me is that the above scenario sounds exactly what the U.S. gov’t is doing right now.
#120 – speaking of Italian gangs. I saw Gomorra last weekend, very good and recommended.
Anyone know if The Baader Meinhoff Complex is playing in the US yet?
cindy, #63
re dual income couples …
There’s an interesting question. What if more couples become single wage earner, simply because fewer jobs are available. It might be the husband, or it might be the wife, who is the breadwinner …
There’s a lot of pressure on women now to get back to the job in 6 weeks or 6 months.
What’s more logical is if one partner or the other can take a serious time-out and resume his/her career later.
One of my brothers had the flexibility to stay home as a “Mr. Mom.”
But it can easily be too much to have both parents working full-time when there are young children.
“Gomorra”
that is the book I am reading. really want to see the movie as well.
#84 veto: There was a decnt 4 bed/2 bath cape in my blue ribbon train town, that wnet under contract at a 2000 price.
I think we go back to 99 levels, and I do not think it will take to 2015.
Different markets and all, but no one expected the stock markets to go back 10 11996/97 levels and they did;quickly.
This bust is much different than last time around. To cite just one example, there were thousands who never should have bought nor would hav been abe to buy during the last boom/bust.
They drove prices to artifically high and unsustainable levels.
make,
re Madoff
I’ve seen several stories on ABC News that talk about $1 billion in an account, and the possibility of another off-shore account with $10 billion.
What’s odd – haven’t seen the same story anywhere else.
Maybe I missed it?
But supposedly Madoff opened accounts in the names of two clients who were deceased.
So there might still be a good amount of money they can retrieve.
A question:
If China is expressing concerns about the amount of U.S. debt it holds, is it reasonable to expect to see them start to pull back purchases in such debt? If that occurs, what happens with respect to housing values and financing?
They should offer him a few years time if he helped them recover in excess of $10B and then cap him as soon as he steps out. The hit can’t cost that much, just post up on a rooftop on the UES.
zieba,
I am shocked one of his still wealthy clients who lost a large chunk hasnt had him assassinated yet…
Those damn NY rich people have no taste for wet wok apparently.
#128 – Those damn NY rich people have no taste for wet wok apparently.
It was his South American clients that I thought would have liked to settle up.
[92] vic
Sorry if I misunderstood your statement that you only watch CC and 60 for news. I thought it meant you only watch CC and 60 for news.
Veto,
This is good point and leads me to believe that a better ratio would be to divide home prices by (med income + household debt)
did you mean median income “minus” household debt as opposed to “plus”?
(Median home price)/ (med income – household debt)
PS I got my pre 87 housing data from the US census
[117] tosh
Well, if I am gonna be noblesse obliged to take care of the serfs, I want my oligarchical privileges, dammit.
Where’s my fcuking castle already?
#126 Shore Guy
I think rates would go up and prices drop.
But who knows in this world where home owners with no money down are entitled for help and companies get downgraded and their stock goes up.
A deal for Madoff? If he helps recover enough money I would give him his own cell. If not, well the more cellmates the better.
Where’s my fcuking castle already?
Does White Castle count?
“I think we go back to 99 levels, and I do not think it will take to 2015.”
3B
Here is my reasoning for 1999 price levels by 2015. The metro ny CS index is 183 today. The 1999 levels were at 95. Thats lmost another 50% price drop to get there. According to CS, we are dropping about 9% per year. Doing the simple multiplication, we have about 5 years until we see 1999 levels.
Maybe the pace of decline picks up but i dont see 30% yoy declines anytime soon.
am shocked one of his still wealthy clients who lost a large chunk hasnt had him assassinated yet…
Zieba,
Most of his clients were crooks who ran some sort of skiems themselves. A good Criminal will respect another good criminal even though he took from him.
I’m actually thinking of naming my son Bernard. Out of respect to someone who ran a ponzi scheme for 25 yrs. Took care of his family and his “friends” and didn’t rat on his way out.
That’s a “Goodfellow” in my opinion.
You play by the rules in this country nowdays you get a death sentence.
“According to CS, we are dropping about 9% per year. Doing the simple multiplication, we have about 5 years until we see 1999 levels.
Maybe the pace of decline picks up but i dont see 30% yoy declines anytime soon.”
Veto, forget “maybe”. The pace of decline has accelerated according to CS and will likely continue to do so.
#136
“Maybe the pace of decline picks up but i dont see 30% yoy declines anytime soon.”
I actually wouldn’t be surprised to see a 20% decline this year. I think 15% off is an easy bet
[99] silera,
Your point is correct, that a business needs consumers, but how do you get “business” to buy into the idea that it has an oligation help create the consumer class? A corporation is an artificial construct, devoid of soul and ethos. A business is in business to maximize income, and while there is a benefit to all in a closed economy that simply recycles dollars, there is little benefit to investors. Further, we don’t have that system in this age of globalization. Rather, we have asymetries that can be exploited, and into which capital will flow because the return is better than if invested in a business that is simply recycling dollars and permitting participants in the venture (i.e., employees) to convert goods and services into a medium of exchange to purchase other goods and services, at a level that produces no assymetries (which is de facto wage control). It works well on a subsistence level in a closed economy but don’t look for a lot of investment when an asymetrical economic system exists.
In the french example, how do you convince Sony, et al. that they should build plants in France in order to create jobs so that people will buy their product? The answer is to create a closed system (i.e., protectionism) so that Sony, if it can be assured of a return on investment, will certainly enter that market (and if no assurance, they will leave it to others).
Thus, if I understand you correctly, you want what the unions want: Either an end to global free trade in order to prevent businesses from taking advantage of asymetries in the economic system, or the imposition of like conditions on other nations and their industries to make the system symetrical (or some combination of the two).
did you mean median income “minus” household debt as opposed to “plus”?
ket, debt is money so im thinking we add to income.
if u made 200k in 1999 and debt levels increased 10k in same year, u had more money to spend on housing. since debt levels decreased over these last 5 months in 2008, i’d say we would subtract that value from index since house buying power is less.
similarly, if unemployment rate went up, i think we sould subtract that value from our “house buying power” index since it likely translates to less buyers and less buying power in the system to sustain housing demand.
let me know if that doesnt sound right.
[135] tosh
No. Not enough noblesse for all of my oblige.
[54] kettle,
Careful dude, that very same argument was made by Rick Santorum, and look where it got him?
In the New World Order, that’s a potential thoughtcrime. Kinda like suggesting ol’ Adolph was good (very temporarily) for the german economy before the outbreak of the war.
Schivo, i agree declines will likely pick up but not that much unless something catastrophic and equally unlikely occurs.
Skeptic, 20% yoy declines in 2009 is highly doubtful unless you know something woefully depressing that we dont.
Geez, i thought i was a bear. You guys make me look like a cnbc cheerleader and im already in the basement hoarding canned goods.
Look at the CS Metro NY monthly changes below. It took a full year to go from -5.5% yoy to -9% yoy. If the declines keep increasing at this rate, we will see -14% yoy by end of year.
NY Metro YOY % Change
November 2006 214.24 1.87%
December 2006 213.79 0.52%
January 2007 212.78 -0.34%
February 2007 212.51 -0.91%
March 2007 212.39 -0.91%
April 2007 211.61 -1.56%
May 2007 210.51 -2.35%
June 2007 209.49 -2.94%
July 2007 208.36 -3.20%
August 2007 207.17 -3.35%
September 2007 206.37 -3.60%
October 2007 205.52 -4.09%
November 2007 204.36 -4.61%
December 2007 202.08 -5.48%
January 2008 200.44 -5.80%
February 2008 198.29 -6.69%
March 2008 196.51 -7.48%
April 2008 194.73 -7.98%
May 2008 194.22 -7.74%
June 2008 194.74 -7.04%
July 2008 193.71 -7.03%
August 2008 193.49 -6.60%
September 2008 191.67 -7.12%
October 2008 189.75 -7.67%
November 2008 186.72 -8.63%
December 2008 183.50 -9.19%
CNBC (cramer) has been taken to the woodshed today and is getting slaughtered.
Should have happened a long time ago, but unfortunately you need a bad bear market (recession) to reveal all of the hacks.
As someone once said
“Its almost worth a great depression to see how little our great men know”
“Skeptic, 20% yoy declines in 2009 is highly doubtful unless you know something woefully depressing that we dont. ”
********
veto– not saying I know anything you don’t, but the lynchpin in NYC area is employment which has gotten crushed in the last 2 quarters. Therefore, I expect declines will accelerate this year compared to last. Not only because of people who are forced to sell, but because of reluctance of people to buy when they don’t know whether they will have a job in 6 months. This is another leg of support for the market which is not really reflected in the 2008 numbers, which were pretty bad even before the big Wall St layoffs
put differently, it’s hard for me to understand how the NY CS number for 2009 could NOT be substantially worse than 2008 given the substantially worse employment picture
Veto
Geez, i thought i was a bear. You guys make me look like a cnbc cheerleader and im already in the basement hoarding canned goods.
A large # of people are living on borrowed time. Unemployment is growing at historical rates, median incomes appear to be dropping and access to revolving credit is rapidly disappearing.
The average joe lives day to day by shifting some portion of their daily expenses to revolving credit. As rates increase and as access is restricted, they are going to be forced to cover those daily expenses out of pocket. This will force many people into foreclosure, bankruptcy, and a general downgrade of living standard.
that is why many of us expect to see a pronounced acceleration of the decline.
The catch is that the more the government tries to prop the system up, the more sudden and severe the decline will be. if the government let the system be, if would adjust down at a given rate. But by propping it up, the underlying support disappears as deflation continues yet the government is supporting them. When the government support is removed these people and businesses then suddenly fall through the floor as the underlying support already disappeared.
Such a collapse is more severe because the were artificially propped up instead of sliding down the curve at the same time their support base evaporated.
Nom,
you’ve got mail
skep, ket,
i agree that this will get worse, in both housing and the rest of economy. Heck, we may even see 20% yoy declines in cs ny metro as early as 2010 and that is pretty bearish but i also think the pace of declines will slowly stabilize and then we’ll slog through a swamp of low growth and low returns for a decade, maybe more. People will go on unemployment, back to school, burn through their 401ks, move in with in laws, taxes will skyrocket and it will get ugly, probably worse than anything we’ve ever seen but eventually i think we’ll simply adjust to lower incomes and less consumption.
While a fireworks display finale of 30% yoy price correction seems like a great ending to a neatly wrapped asset bubble crash, i dont think we’ll get that. imo, this is it, welcome to the great repression. its a slow, boring, un-eventful and painful deflationary process that goes on for a decade until we can think of the next bubble to exploit.
just my take, im often wrong and maybe you are opening my eyes to something more realistic, we will find out soon enough. if you guys are right i wont complain as we would then be able to buy our first house outright in cash, but im not expecting that.
“Sunoco to trim 20% of salaried jobs”
http://www.tradingmarkets.com/.site/news/Stock%2520News/2222098/
veto– Obviously my view is nothing more than a total guess, but I think we’ll be down 15%+ for 2009 (with -20% more likely than -10%) and then slow, agonizing deterioration for many years afterward.
I base this on my feeling that the past 6 months have been a sea change in the employment picture in the NYC area.
You can already see a rapid response in NYC real estate– the same thing, I believe, is occurring in the suburbs but is not yet registering on a price level. For example, transactions in many fairfield county towns are down by 75% so far this year compared to last. Compared to peak sales volume, they are down 90%. This is a market collapse which will be seen in prices soon enough
WTF is Stu?
Stu! Don’t do it!
The twins will come back! (SRS/FAZ)
found this in my inbox.
I found the subject line rather amusing.
“PLI eNewsletters – because 24,000 lawyers can’t be wrong.
Wanna bet?
Maybe Gator has him tied up in the basement to keep him from spending any downpayment money on stocks.
Where is gator?
Saw an audi at the train station in brigadoon this morning with a UF plateholder, and the NJ plate read “G8RVET”
Another road block for both housing and the economy. If seniors are having to get roommates to stay afloat, then what effect does that have on housing. it certainly doesnt help it.
The other front is we are going to see the boomers, who were big spenders tighten their belt. This will only get worse as 401K’s continue to evaporate and as we start to see pensions get reduced.
All of this drives consumerism out of the market place and the remaining expenditures into basic necessities,which doesnt help the economy.
This will also drive a huge increase in the cost of medicare and medicaid as these same boomers who have lost their nest egg will now shift their medical costs onto public programs.
i am not judging, just observing. either way we will soon see medicare/caid ballon while tax recipets decrease and deficits grow.
fun fun, what gives first?
From a week ago,
Is the Future Going Down the Drain? Baby Boomers Going Bust:
“In the last few months we’ve experienced explosive growth in interest by homeowners age 50-plus to find rooms and roommates,” says Jacqueline Grossmann, Chicago coordinator for the National Shared Housing Resource Center. “The trend now is getting younger and younger. People in their 50s and 60s are losing their nest eggs and increasingly willing to give up their privacy in exchange for rents of $500, $600 a month.”
Yep but most people live close to their edge spending an unhealthy percentage of their take home income to mortgages.
So switching to a single income is impossible.
Instead of treating the second income as a bonus money it has become part of essentials. It’s now impossible to reverse.
These people aren’t the brightest anyways which is why they’re in the mess in the first place. But the current administration is set and poised to make sure they are the first ones to be saved.
I’d say screw them, make the banks foreclose their ass and put the houses on the market. They can go back to renting again. Right now the banks are holding on to the foreclosed houses. The banks are holding on to the houses instead of selling at a loss because they are waiting for the payout from the government.
scribe says:
March 13, 2009 at 12:17 pm
cindy, #63
re dual income couples …
There’s an interesting question. What if more couples become single wage earner, simply because fewer jobs are available. It might be the husband, or it might be the wife, who is the breadwinner …
200Kplus,
were you a former IB? its not just the guy at mcdonalds that spends to much of his income on housing and frivolities. most americans do it, from janitors to CEO’s.
Unfortunately the us government and us culture have idolized consumerism and “bling”. the credit craze of the last 10 years included 99% of people from PhD’s to welfare queens. its a cultural problem and one that is NOT in the governments interest to solve.
To all:
has anyone really thought about that? That people approaching their personal finances in a responsible manner is in the disinterest of the US government and big business? Yet we continue to turn to them for the solution and are surprised to hear ” buy this it will make you happier, prettier, faster, smarter….”. Every time the government is questioned about this all you hear is people must spend because its good for business, which is good for people. To bad that business wont be there to help you out when you go broke and are homeless due to unexpected medical costs or jobloss, when that could have been mitigated by approaching finances responsibly.
We are asking the fox to guard then hen house.
Is it me, or does everything 200K post read like utter nonsense?
Veto,
you might find this interesting:
Wealth of the Baby Boom Cohorts After the Collapse of the Housing Bubble
http://globaleconomicanalysis.blogspot.com/2009/03/boomers-future-went-down-drain.html
Grim
help 159 in moderation
clot 160,
yes
clot 160,
yes, i think he/she may be re101’s protege
Kettle, Carousel?
Could that be the only way out of the future liabilities? What is the means testing for age though.
Worldwide obligations look like they are taking their toll on all developed nations. Scaling back and retrenching the gains of the last decades of excess may not be such a bad thing. Although I don’t see those of us who are still gainfully employed giving back large portions of our salary in line with deflation of goods in services.
Dont know if this was discussed but what are people thinking about…. Housing ETFS
http://www.indexuniverse.com/sections/newsinfocus/4202-macroshares-housing-.html
Thoughts?
BankUnited near death?
Online savings rates going down the drain:
Emigrant Direct: 1.8% APY
Dollar Savings Direct: 2.25% APY
ING Direct: 1.65% APY
HSBC Direct: 1.85% APY
Just 6 months ago things were at 4-5%.
Qwerty,
I have noticed big time as my CD’s at 4.25% from 8 months ago mature this month. I have been opening accounts all over in search of yield. GMAC bank has a 2.5% savings account however all of these rates change so fast you have to check them every day.
from the link at #160:
“Buying real estate may have helped one to accumulate wealth if one paid off the mortgage rather than continually borrowing against the equity to take vacations, buy cars, or to “put the money to work”.
Nearly everyone attempting to put that money to work has gotten clobbered doing so.”
************
I am increasingly inclined to think the best strategy for retirement is not to attempt to get capital gains on stocks, real estate, etc, but rather to first own your sh*t outright and then to build extremely safe, liquid nest egg.
Mike NJ, remember that FDIC coverage drops from $250K to $100K on December 31, 2009.
http://www.fdic.gov/deposit/deposits/insured/
#136 veto:Maybe the pace of decline picks up but i dont see 30% yoy declines anytime soon.
I would not bet on that. I think we see it sooner rather than later. The Wall St collapse is less than a year old, and this recession is far wrose than the early 90’s.
#146 skeptic:Not only because of people who are forced to sell, but because of reluctance of people to buy when they don’t know whether they will have a job in 6 months. This is another leg of support for the market which is not really reflected in the 2008 numbers, which were pretty bad even before the big Wall St layoffs.
Agreed.
Thanks Qwerty. Hopefully they make the coverage increase permanent this year but of course I will keep an eye on it.
Just watched that CBS news clip you have linked to and it is eye opening.
I don’t see what the big deal is about baby boomers losing their retirement fund. It’s not as if they made all that money in the first place. So what if you saw a million dollars drop down to the 500k that you saw in 2000? The gains the past ten years were incredible. People were seeing 6-8% in annual gains that were unbelievable. It is what we call a correction. It wasn’t worth that much in the first place. So now what you’re left is what you should have made through a more reasonable rate of increase. Nobody lost all their wealth, they just had it corrected to what they should have reasonably assumed what they would have made, unless, of course you put banked it all on Madoff.
From Google News front page
“Summers Stresses Country Must Summon Confidence to Stop Recession
ABC News – 35 minutes ago
By MATT JAFFE Larry Summers, the top economic adviser to President Obama, said today that even though the country’s recent excessive optimism may have helped trigger the current recession, the resulting lack of confidence is now hurting its chances of …”
I get it now. If B.O.’s administration fails to pul the nation out of recession, it is OUR falut for lacking confidence to buy.
“I am increasingly inclined to think the best strategy for retirement is not to attempt to get capital gains on stocks, real estate, etc, but rather to first own your sh*t outright and then to build extremely safe, liquid nest egg.”
Bingo.
147~200K
But it also the boomers fault that they did not take some of that off the table.
#169
skep,
utter nonsense, leverage up to the hilt, party like a rock star, and have the gubmint take care of the rest.
Sniveling pr-ic-k. Bernie must have thought he was going to the jail run by The Plaza.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aJ70fFRU496U&refer=home
It must be a real education going from 5th Ave penthouse apt to 8X5 with a roommate who probably in his life never earned whay Bernie tipped his doorman.
[176] Shore, et al.
And for those who do have a decent retirement nest egg, here’s a thought: If the O-man and the dems introduce means testing, the best thing to be is poor (or at least poor looking).
So, prior to collecting social security, it may make sense to (1) retire in Year 1, (2) pull everything out of 401(k)s, IRAs, Roths in Year 2(presumably at lower taxes and no 10% penalty) and put it in the mattress or offshore, apply for soc. sec. in Year 2 or 3. Going forward, you will qualify for gov benefits because you have no other appreciable income.
About all that money that you pulled out of accounts??? Blew it at the track!
What about all your other property? At least 5 years prior to retirement, give it to a trust or your kids or something to get it out of your estate, then rent it.
The whole idea is to appear poor. It’s easy if you try. I plan to become “poor” before the young’uns go off to college. Should make financial aid a lot easier.
Tovarish,
By the time we get to retirement, the Dems will may well instituted a 25 year lookback and anyone who EVER earned $250k a year will be excluded from any benefits thinking “Hey, you were once Rich.”
Who wants to go visit Bernie?
Geezus shore dude…you sure whine a lot bro….no offense. Making that kind of cash is not bad…being able to buy things…..also not bad.
A lot of people just don’t have a shot at that at all…and a whole lot of dough has been made over the past decades by many, many people.
Come on man. Have a little compassion.
Currently pumping cash back into the economy. Step One: Sushi lunch at local joint…..Step Two: Home improvement projects that just kick @ss….and will enhance the enjoyment of our home….used same excellent contractor for our kitchen….got him at least four other jobs over the year and he took care of us on this one….step three: Four new tires and rims for the 3 series….Lesson: Support Good Businesses.
#181 nom
You won’t need to plan, there are alot of people hard at work to make sure everything we have becomes worthless.
#184
Yes, 250k is plenty but I think the point is really that if one was disciplined enough to save, save, save money in their 401k while others were not saving then why should the savers be penalized and have to support the non-savers in their retirement. Means testing would be patently unfair. My spouse swears if they do that to us he is leaving the country but then I would have to teach him Spanish.
Zeiba,
And others conerned. The Gator family is enjoying a Disney vacation. Yesterday was the Magic Kingdom and today was the Animal Kingdom. Me not worried about SRS/FXP one iota. Bear market rallies are a dime a dozen. Wake me up when the Dow hits 8K. Oil is up, gold is moving up and I’m hoping to buy a bit more short. We’ll see. Otherwise, we’ll check back in on Tuesday morning when we get back home.
skep, fair enough, everyone’s entitled to their opinon, thats what keeps me coming back here. and i’d be lying if i said the wall st/pharma ticking time-bomb layoff nightmare doesnt keep me up at night.
reading a recent boa merrill research report entitled “not your fathers recession, but maybe your grandfathers”, “this is a balance sheet recession, not a garden variety manufacturing/fed/inflation induced recession.”
they mention that negative nominal rates will be good for bonds and gold.
They show the tightest mortgage lending standards by a mile since 1990 according to fed’s senior loan officer survey.
Some of these charts are pretty depressing.
Surprisingly, they show nar housing affordability index at all time high, even more affordable than 1970, but then again 2006 doesnt look that expensive by whatever method they are using so i will just discount their fuzzy numbers as they are not a trustworthy source anyway.
401k? A disciplined investor at a late stage of life that is in all stock takes a big risk. Duh.
In mod, not sure why
#189 veto:Surprisingly, they show nar housing affordability index at all time high, even more affordable than 1970,
That number is I would have to guess computed on a national level.
And on a national level, housing is more affordable than 2 years ago. The most afforable? I am extremely skeptical on that comment.
But either way in our area it is not yet affordable, but it will be.
As far as the wall st/pharma ticking time bomb, well that has already exploded. It’s time now for the fallout.
[182] shore
Don’t think something like that doesn’t enter into my thinking. I am seeing moves by Congress now, mostly by that champion of the lumpenproletariat, Levin, that will make expropriation far easier in the future.
Also, IRS already uses forensic accounting techniques to bust tax evaders, and these techniques are useful for “imputing” assets to a taxpayer. Bottom line is that if you are going to look poor, look poor and don’t be showing up for your audit in a new G class.
Personally, my line will be “I blew it all on illegal offshore sports betting and p-orn” and have the paper trail to prove it. BTW, who wants to start a front company in the Caymans that will, among other things, make some book?
Es-se-x,
I am full of compa$$ion. Mrs. Shore and I give away lots of money each year, we volunteer in our communities, etc. We busted our tails to get in a position to have a chance to EARN some decent money. I would guess that in a normal year 95% or more of our income is from the sweat of our brow and the product of our brains, and is not investment/p@$sive income.
Consequently, I reserve the right, and have bloody-well paid Uncle Sam, and a good 15-20 states enough taxes, not to mention the foreign countries, to stand on my soapbox and denounce wasteful spending, poorly-thought-out “stimulus” plans, debt forgiveness for people who made really bad economic decisions that now cost me and my kids money. Heck, my daughter (who is many years away from being able to vote) pays more taxes than many adults and she is rightfully ticked-off too.
I don’t buy your a$$eSSment that “A lot of people just don’t have a shot at that at all….” I grew up poor, I was poor as an adult, and lived for awhile largely on saltines with ketchup and relish on them. They were free and supplemented the half a packet of r@men in the morning and at night. I worked and went to school and had no social life for nearly 10 years. I know struggle. I have paid my dues and taken my lumps and i have no patience for those who want to be bailed out when they invest unwisely.
Likewise, I have no patience for the likes of Bernie. He committed a huge crime, he admitted to doing so in open court and with the benefit of counsel. What, we should leave him out on bail until sentencing? Gimme a break. Time to confiscate all his property and sell it off to repay the victims of his fraud.
I do not hate the man, nor do I wish him ill. That said, he earned his current living conditions and whatever happens to him from here on out, he has earned
[187] house whine
All the better reason to restructure your finances so that you appear poor and have for some time. I don’t think that the feds can realistically go much beyond a 5 year lookback when it comes to divestitures, but I plan to have assets divested or encumbered, or held in trust in such a way as to look poor.
I am perplexed as to what in my 5:25 post would stick it in mod.
Es-se-x,
I am full of compa$$ion. Mrs. Shore and I give away lots of money each year, we volunteer in our communities, etc. We busted our tails to get in a position to have a chance to EARN some decent money. I would guess that in a normal year 95% or more of our income is from the sweat of our brow and the product of our brains, and is not investment/p@$sive income.
Consequently, I reserve the right, and have certainly paid Uncle Sam, and a good 15-20 states enough taxes, not to mention the foreign countries, to stand on my soapbox and denounce wasteful spending, poorly-thought-out “stimulus” plans, debt forgiveness for people who made really bad economic decisions that now cost me and my kids money. Heck, my daughter (who is many years away from being able to vote) pays more taxes than many adults and she is rightfully ticked-off too.
I don’t buy your statement that “A lot of people just don’t have a shot at that at all….” I grew up poor, I was poor as an adult, and lived for awhile largely on saltines with ketchup and relish on them. They were free and supplemented the half a packet of r@men in the morning and at night. I worked and went to school and had no social life for nearly 10 years. I know struggle. I have paid my dues and taken my lumps and i have no patience for those who want to be bailed out when they invest unwisely.
Likewise, I have no patience for the likes of Bernie. He committed a huge crime, he admitted to doing so in open court and with the benefit of counsel. What, we should leave him out on bail until sentencing? Gimme a break. Time to sell-off all his a$$ets to repay the victims of his crime.
I do not hate the man, nor do I wish him ill. That said, he earned his current living conditions and whatever happens to him from here on out, he has earned
It is like You Bet Your Life from the 50s, “guess the magic word and get past the filters.”
I am not sure why you believe that housing prices will go back to 1999 even under your reasoning. If NY CS index is 183 and you believe that it will go down to 90 then you don’t take into account inflation. You said that inflation adjusted income is flat so one should expect that the 1999 housing prices should be inflation adjusted. The inflation adjusted CS level you are looking now is 114, higher of course later.
putting the Bailout in perspective:
http://jalopnik.com/5159016/the-bailout-in-perspective-how-many-bugatti-veyrons-is-700-billion-dollars
Clot
You still have that deathpool? I want in. I say Madoff. He’s in the tombs. I’d be very surprised if no one tries to get to him.
#146
and what about the reluctance of sellers? It seems to me market is not guided by reluctant parties.
#198
You did achieve your American Dream and I totally understand why you don’t want it taken away from you. I remember being amazed when I graduated college that people could actually afford to buy a soda every day from a vending machine at work. I thought water (in those days we didn’t buy the bottled water) was the only option.
New thread, up up up!