From the NY Post (Hat tip Chi):
Obama is setting us up for another housing crash
We learned nothing from the last financial crisis. The housing market is set to collapse, again, and a key culprit, again, is artificial demand created by government policies.
For starters, mortgage-software firm Ellie Mae reports that the average FICO credit score of an approved home loan plunged to 719 in January (the latest month for which data is available) from 731 a year earlier, and well below 2011’s peak of 750.
It’s a dangerous sign lenders are loosening underwriting standards. Lower FICO scores correlate with higher risk of loan default.
The Federal Housing Administration is a big reason for falling credit scores. So are Fannie Mae and Freddie Mac. The government housing agencies have slashed credit requirements under pressure from the Obama administration — like the Clinton administration before it — to qualify more immigrants and minorities with low incomes and “less-than-perfect credit.”
Meanwhile, home lenders are approving more debt-strapped borrowers. According to Ellie Mae, applicants approved for mortgages in January had an average household debt-to-income ratio of 39%, up from 2012’s annual average of 34%. Borrower debt loads have been creeping higher each year since 2012, when Ellie Mae first started tracking such data.
…
A recent report by the Office of the Comptroller of the Currency, a federal agency that regulates the nation’s banks, warns that declines in mortgage underwriting standards are mirroring pre-crisis trends.“Underwriting standards eased at a significant number of banks for the three-year period from 2013 through 2015,” the report said. “This trend reflects broad trends similar to those experienced from 2005 through 2007, before the most recent financial crisis.”
Not since 2006, it noted, have lenders taken on so much credit risk, and it says the hazard will continue to grow this year: “Examiners expect the level of credit risk to increase over the next 12 months.”
…
Today’s relaxation in mortgage-underwriting standards is largely a function of government housing-policy changes at FHA, Fannie Mae and Freddie Mac, which dominate the nation’s mortgage activity.
…
All three agencies have slashed down-payment and other requirements under pressure from Obama regulators, who include, most significantly, former Congressional Black Caucus leader and Obama appointee Mel Watt, head of the new Federal Housing Finance Agency, which now controls Fannie Mae and Freddie Mac.
…
Last year, Fannie Mae launched a new subprime-mortgage product called HomeReady that caters to recent immigrants with weak credit and limited income.The new loan program, which offers “income flexibility,” allows borrowers for the first time to bundle income from roommates and relatives to meet qualifications for income. They only have to put 3% down, and can use gifts from nonprofit groups to subsidize their down payments.
“There is no limit on the number of non-borrower household members who can be present on a single transaction,” Fannie advises originators. And even then there is “documentation flexibility,” a frightening echo of last decade’s “no-doc loans.”
…
Under HomeReady, you can even qualify for a “cash-out refinance” of your mortgage, a type of loan that led to over-leveraging and a wave of defaults during the mortgage crisis.
…
Why would Fannie offer the same kinds of poorly underwritten loans that forced it into bankruptcy? Because HomeReady aligns “with our housing goals” set by Watt, it says in its HomeReady literature. These are the same government affordable-housing quotas that plunged Fannie and Freddie into the subprime market under the Clinton administration.It’s all part of a government campaign to ease access to home loans for recent Hispanic immigrants — including those living here illegally. In fact, HomeReady caters to illegal immigrants by allowing borrowers to waive Social Security documentation.
…
Home-loan approvals hinge on FICO credit scores, which have a strong track record of predicting risk, says Pinto, who formerly worked as chief credit officer at Fannie Mae. They are the bedrock of the modern financial system.But the Obama regime views FICO scoring as too strict, “unfairly locking” millions of low-income minorities and immigrants out of homes. So it’s pressuring Fannie and Freddie, which control 57% of primary-home-purchase loans and set the underwriting standards for the entire mortgage industry, to abandon reliance on FICO for a more accommodating standard for evaluating credit risk.
Good Morning New Jersey
Front page of the Ledger today:
NJ Government workers go to the Supreme Court today to fight for cost of living increase for their pensions.
How many fortune 500 companies get that increase? Or still even get a pension?
I hear part of the NJ Transit negotiation was to provide retroactive raises to retirees such that their pensions would increase.
Good Lord
And they wonder why the rest of us who are not union are angry.
Bojangles Administration tuning up the sausage grinder again.
This all ends in tears.
Re: loosening of underwriting standards – anything to keep the house of cards in the air. There’s going to be a lot more violence the next time it collapses. Both the industry and the buyers are fools, but the buyers who take out those mortgages are the bigger fools.
Problem is, for ever 1 low income family that gets ahead because of something like this, there are probably 3 low income families that get the shaft. None of the actors involved can be trusted, from the lenders to the borrowers to the realtors to the community groups.
We saw shit loans peddled to poor unqualified borrowers in church groups the last go-around, everyone convinced they were doing the lords work.
“I’m not a proponent of violence but in a world that has become indifferent to the horrors of inhumanity after 15 years of continuous pre-planned illegal wars paid for by US dollars it is not outside my comfort zone either. If the moment is upon us well so be it. Let’s do what we must to drive the proverbial wooden stake into the black hearts of the sociopathic psychopaths that have transformed America into their own private golden goose of money and mercenaries.
But talk like this makes people nervous and the oligarchs count on the masses’ “better sense”. That is, they have created a system that produces a perpetuity of ill gotten gains they then use to prevent any sort of uprising. But they too have read the history books and so they understand the ancestral instinct to be free. They therefore quietly pass laws that allow “dissident citizens” to be deemed threats to national security simply by uttering those words. “You are a threat to national security”.
If you hear those words directed at you by any government commander it means you no longer have any constitutional rights. A fact that was made law by way of executive order 13528 in Jan 2010 and that will have you placed as a “civilian internee” as described in the follow-on Feb 2010 Operative Manual and solidified by the National Defense Authorization Act, signed Dec 31, 2011 by President Barack Obama from his vacation rental in Kailua, Hawaii. You will have lost your right to due process, Habeas Corpus or any other protections guaranteed you by the Bill of Rights.”
http://www.zerohedge.com/news/2016-03-13/defense-oligarchs-moveonorgs-simple-utter-brutishness
No surprise…
Your new neighbor in the ‘burbs? A millennial. Yes, really
It was only a matter of time. Literally. As millennials grow older, get married, have children, they are seeking out bigger houses and better schools. That means the suburbs. They are also getting tired of paying higher urban rents and watching those rents rise.
Just 17 percent of millennials bought homes in urban or central city areas, according to an annual survey by the National Association of Realtors, which sent out a questionnaire last July to roughly 95,000 homebuyers. That urban share came down from 21 percent in the previous survey.
……
http://www.cnbc.com/2016/03/09/your-new-neighbor-in-the-burbs-a-millennial-yes-really.html
Well if you weren’t such a moronic tool of capitalism, you could have organized a better situation for yourself and the other workers around you that relies less on the crumbs your employer tosses to you. Clearly you’re a lazy idiot who deserves his lot in life. Profits are high and shareholders are doing great and you’d gladly work 80 hour shifts in a coal mine to keep them happy.
Now Spanky, be reasonable says:
March 14, 2016 at 7:08 am
And they wonder why the rest of us who are not union are angry.
Pussies should have locked them out. What political capital could Christie have possibly been trying to salvage by striking a deal.
Yeah I mean, who cares about the fiscal health of the state amirite?
It’s probably all somehow the Republicans fault anyway…right?
Make those commuters and poor people who pay NJ Transit fares pay their fair share.
Ottoman says:
March 14, 2016 at 7:44 am
Well if you weren’t such a moronic tool of capitalism, you could have organized a better situation for yourself and the other workers around you that relies less on the crumbs your employer tosses to you. Clearly you’re a lazy idiot who deserves his lot in life. Profits are high and shareholders are doing great and you’d gladly work 80 hour shifts in a coal mine to keep them happy.
Hold on – the transit system holding commuters hostage to secure a pay raise, threatening the entire NY Metro economy?
This is democracy? No, this is criminal.
I’m sure there were hundreds, if not thousands, of low income NJ residents that would have been significantly impacted from this, the livelihood of their families, food on their tables. Wealthy commuter would have simply drove, an option poor commuters likely wouldn’t have – by the time you add tunnel, bridges, and parking, they would be paying more to get to work than they might make at work. Let’s make the cost to use public transport even higher, that ain’t regressive.
But ok, go on living in your la la land. Having employees on the train that make more than $100,000 a year, with glorious pensions and benefits, while others are taking the train to minimum wage jobs? You don’t see the irony in this?
Profits are high and shareholders are doing great…
And that’s how you make money, baby!
Guess Pumpkin was right in his assessment.
1987 Condo says:
March 14, 2016 at 7:26 am
No surprise…
Your new neighbor in the ‘burbs? A millennial. Yes, really
It was only a matter of time. Literally. As millennials grow older, get married, have children, they are seeking out bigger houses and better schools. That means the suburbs. They are also getting tired of paying higher urban rents and watching those rents rise.
Just 17 percent of millennials bought homes in urban or central city areas, according to an annual survey by the National Association of Realtors, which sent out a questionnaire last July to roughly 95,000 homebuyers. That urban share came down from 21 percent in the previous survey.
……
http://www.cnbc.com/2016/03/09/your-new-neighbor-in-the-burbs-a-millennial-yes-really.html
You are absolutely right. Can’t get mad at people for organizing and coming together for a better life. Suckers fall in line and accept taking on their co-worker’s workload with no further compensation. People need to grow some balls and come together for better working conditions instead of blasting union workers for “having it better” than themselves. If you are going to blast workers for having it too good, surely you must blast executives and shareholders for having it too good. Funny, it never works this way though.
Ottoman says:
March 14, 2016 at 7:44 am
Well if you weren’t such a moronic tool of capitalism, you could have organized a better situation for yourself and the other workers around you that relies less on the crumbs your employer tosses to you. Clearly you’re a lazy idiot who deserves his lot in life. Profits are high and shareholders are doing great and you’d gladly work 80 hour shifts in a coal mine to keep them happy.
I’m “going to blast” public workers (union and non-union) all day everyday; the rest … not so much.
Wake me up when the sausage grinder is doing private-label MBS securities again. In 2015 it was only 12 billion. During the peak it was a trillion a year. There is no private market for Alt-A and Subprime, nobody will touch it.
Sustainable wealth depends upon cause and effect. Valuable production is the cause, compensation is the effect. If by some new law everyone was able to negotiate geting paid $50/hr with a pension for doing work that produces economic value of $25/hr, and that economic value doesn’t change, can people really become wealthier? Of course not. The same economic value is being produced – the same number of train seats, the same number of burgers sold, the same amount of accounting work done.
The only way for people to become wealthier sustainably over the long run is to produce more and/or better goods and services.
http://www.bloomberg.com/news/articles/2016-03-14/orthodox-jews-set-sights-on-n-j-town-and-angry-residents-resist
Lakewood approaching max out, begin sprawl into Toms River.
re # 21- It’s already over for them, people are cashing out.
“Michael Mortellito, 50, with two children college-bound, said this was a good time to scale down from a 6,000-square-foot house, with a resort-like in-ground pool, outdoor fireplace and annual property taxes of $17,000. He acted as his own agent, he said, listing for $850,000, and is under contract with an Orthodox couple.
“They’re the only ones buying,” Mortellito said by telephone. “You’re not going to stop them. They’re going to take the town over no matter what.”
Agreed, but the economic system is in no way efficient enough to hand out compensation based on worth. You have people making millions a year and others thousands. There is no way you can justify compensation in the millions based on limited resources. Certain individuals under this situation are taking way too much of the pie and eliminating other’s opportunities to share in this pie because of their dominance of the resources used to produce wealth.
Ragnar says:
March 14, 2016 at 10:22 am
Sustainable wealth depends upon cause and effect. Valuable production is the cause, compensation is the effect. If by some new law everyone was able to negotiate geting paid $50/hr with a pension for doing work that produces economic value of $25/hr, and that economic value doesn’t change, can people really become wealthier? Of course not. The same economic value is being produced – the same number of train seats, the same number of burgers sold, the same amount of accounting work done.
The only way for people to become wealthier sustainably over the long run is to produce more and/or better goods and services.
22
I know next to nothing about Toms River real estate, but a quick search looks like there’s an awful lot of homes for sale in the north section of town.
Dude you have a long way to go. No one has really changed your mind about anything.
The Great Pumpkin says:
March 14, 2016 at 10:52 am
Agreed, but the economic system is in no way efficient enough to hand out compensation based on worth. You have people making millions a year and others thousands. There is no way you can justify compensation in the millions based on limited resources. Certain individuals under this situation are taking way too much of the pie and eliminating other’s opportunities to share in this pie because of their dominance of the resources used to produce wealth.
“The Orthodox dominate Lakewood’s school board. Though most schoolchildren attend private religious school, the township provides free, gender-segregated busing, which helps account for about half of a $12 million budget deficit. Some Toms River residents fear a similar drain.”
What is the etymology of taxes being used for private school busing, not just in Lakewood, but many other school districts in and outside of NJ?
“According to the Press, districts are required “to spend up to $884 on transportation for each student attending a private school, be it on a school bus or a parent driving the child to class.” The state is one of only a handful that pay for private-school busing, with 34 banning all public funding for private schooling.”
http://patch.com/new-jersey/newbrunswick/should-public-school-districts-pay-for-private-school-busing
“the economic system is in no way efficient enough to hand out compensation based on worth.”
Maduro, Castro, and Kim agree with you. They, like you, know the true value of what people’s compensation should be, and don’t let the imperfect capitalist system mess it up.
Looks like my daughter is enrolling at Rutgers Prep for the start of 9th grade in Sept.
So I’m investing even more money to support school teachers.
Papers are getting signed this week, so if you have any insights to offer, please do tell.
My daughters’ public school alternative is Bridgewater.
My mind has been changed. I’m not going back. I’m just pointing out that you can’t attack union workers based on rags argument and at the same time defend the people at the top. How are the union workers any different than the owners of the resources that produce the wealth on this planet?
D-FENS says:
March 14, 2016 at 11:07 am
Dude you have a long way to go. No one has really changed your mind about anything.
#27 I think the school board can do what they want and if they want to provide courtesy busing for all schools, public and private they can, the dollar figure is for cash reimbursement.
re: New Jersey Gov workers and pensions. The Unions are currently organizing after their recent losses in court. They want to amend the constitutional of NJ to secure their pensions on the backs of the taxpayers.
Then there is the COLA lawsuit, which is also headed to the NJ Supreme Court this month. They want their COLA guaranteed too.
What I would like to know is on what planet does 3.5 million workers supporting one million retired government employees actually work?
The difference is, the money used to pay public workers is taken from taxpayers by force. NJ Transit is a publicly subsidized organization. If a taxpayer does not pay their bill, men with guns eventually come to your house and put you in a cage until you pay.
People who depend on mass transit to get to work are also held hostage.
Corporations are different because nobody forces you to buy a pepsi who pays their CEO millions of dollars.
The Great Pumpkin says:
March 14, 2016 at 11:25 am
My mind has been changed. I’m not going back. I’m just pointing out that you can’t attack union workers based on rags argument and at the same time defend the people at the top. How are the union workers any different than the owners of the resources that produce the wealth on this planet?
Looks like my daughter is enrolling at Rutgers Prep for the start of 9th grade in Sept.
So I’m investing even more money to support school teachers.
Papers are getting signed this week, so if you have any insights to offer, please do tell.
My daughters’ public school alternative is Bridgewater.
All the professors at RU send their kids there. I’ve heard a lot of general complaints from them about the rigor of the courses in that a lot of them were sorely lacking. Kids usually made up for it on their own because their parents were scientists with doctorates. IMO, your kid is going to get the same education at Bridgewater. However, admissions looks very favorably on a school like Rutgers Prep.
This is wrong and straight up abuse of the tax payer dollars.
joyce says:
March 14, 2016 at 11:09 am
“The Orthodox dominate Lakewood’s school board. Though most schoolchildren attend private religious school, the township provides free, gender-segregated busing, which helps account for about half of a $12 million budget deficit. Some Toms River residents fear a similar drain.”
What is the etymology of taxes being used for private school busing, not just in Lakewood, but many other school districts in and outside of NJ?
It’s amazing how different cultures impact a town. Whether it be jewish orthodox culture or thug life culture, there is a major reason why people flee these types of cultures. Of course, people cry racism, and all that it demonstrates is their lack of understanding on the issue.
homeboken says:
March 14, 2016 at 10:38 am
http://www.bloomberg.com/news/articles/2016-03-14/orthodox-jews-set-sights-on-n-j-town-and-angry-residents-resist
Lakewood approaching max out, begin sprawl into Toms River.
Insularity makes baby Washington cry.
3
I hear part of the NJ Transit negotiation was to provide retroactive raises to retirees such that their pensions would increase.
Old goats once again only looking out for themselves.
Senior discounts, senior pension raises. Increases in S. Security. Medicare prices thru the roof-Seniors get their meds, drug companies have non-negotiated astronomical drug prices.
Tax breaks. Store discounts. All while Rome burns all around us.
Then you have the moochers that don’t work.
Left is the middle group. Those that work to support those that don’t and those that are getting way more than they paid into the system. Even if it was promised does not mean the money was allocated and put aside so therefore they are a net expenditure.
Read an article the other day how drug companies sell vials of medications in larger amounts here than in other countries. Say you need 1cc of a med, you have to buy 3cc of the med and throw away the waste. 3cc for the biggest possible human, 1 cc for most. They force the USA to buy the large vial when smaller ones are for sale in other countries. Meds that cost 1000’s per cc. Not cheap stuff, thousands of dollars thrown away. All covered by Medicare…
Is that the opposite of redlining?
I think store senior discounts are entirely voluntary. Like the restaurants who give a free chicken sandwich on Veteran’s or Memorial Day; it’s voluntary and more marketing than anything else.
At the same time, corporations take wealth generating resources by force. They are no different than a public worker based on your agument.
Ceo of pepsi is paid millions that comes from taking advantage of millions of people. His pay has to come from somewhere. It doesn’t fall out of the sky. His salary directly impacts his workers and customers. Of course he is only one individual and does not make much of a difference, but when you have a lot of executives and shareholders making millions, it has to come at someone’s expense. In theory, growth is supposed to help increase the pie and increase the ability of this pie to be shared. Problem is, the growth (new profit) has not been going to anyone except the shareholders and executives (This is how the salaries have reached obscene levels at the top). The customer pays more or the worker takes a hit in compensation when there is no growth, and when there is growth, it all goes to the shareholders and executives. How long can this last before it destroys the economy?
P.S. I am not for social!sm or anything of the like. So please do not take it that way. I’m basically advocating for a “real” free market that has gas pedals in place when an individual or entity gets too powerful and brings harm to the overall system. I love the wealthy, but just understand that there needs to be check and balances at the top if you want the economy to be run the right way. It’s not a good thing when money becomes too concentrated in too few hands, it really does a bunch of harm to the economy.
D-FENS says:
March 14, 2016 at 11:43 am
The difference is, the money used to pay public workers is taken from taxpayers by force. NJ Transit is a publicly subsidized organization. If a taxpayer does not pay their bill, men with guns eventually come to your house and put you in a cage until you pay.
People who depend on mass transit to get to work are also held hostage.
Corporations are different because nobody forces you to buy a pepsi who pays their CEO millions of dollars.
The Great Pumpkin says:
March 14, 2016 at 11:25 am
My mind has been changed. I’m not going back. I’m just pointing out that you can’t attack union workers based on rags argument and at the same time defend the people at the top. How are the union workers any different than the owners of the resources that produce the wealth on this planet?
You can’t have a conversation with someone who either doesn’t know the definitions of certain words or makes up their own.
“This month Tesla will unveil its Model 3, its car for the middle class, retailing for $35,000—or considerably less than the value of its explicit and implicit subsidies in many states. And don’t kid yourself that Elon Musk, Tesla’s billionaire impresario, doesn’t price his cars to make sure the full value of these handouts flows through the buyer’s pocket to Tesla’s top line.
One sales prediction we can make with confidence. Tesla is expected to sell its 200,000th U.S. car sometime in 2018, and that sale will fall on or very near the first day of a calendar quarter. How do we know? Under current law, federal tax credits for a given manufacturer begin phasing out two calendar quarters after the quarter in which eligible output tops 200,000.”
I should have worded it differently. There are inefficiencies in our current economic system that prevent compensation from being based on worth. Meaning, if you are overpaying an individual in one part of the economy, it’s inevitable that someone will be underpaid in another part of the economic system to make up for it.
Ragnar says:
March 14, 2016 at 11:20 am
“the economic system is in no way efficient enough to hand out compensation based on worth.”
Maduro, Castro, and Kim agree with you. They, like you, know the true value of what people’s compensation should be, and don’t let the imperfect capitalist system mess it up.
I’m not being snarky, so why do you resort to this type of behavior? You can state that I’m wrong and point out how I’m wrong. You don’t have to resort to putting your intellect on a pedestal in order to point out that I’m wrong. I’m trying to learn, if you can help, that would be great.
joyce says:
March 14, 2016 at 1:21 pm
You can’t have a conversation with someone who either doesn’t know the definitions of certain words or makes up their own.
Ceo of pepsi is paid millions that comes from taking advantage of millions of people.
Says it all…
You do know who the CEO of Pepsi is … right?
How does one make millions in compensation in a year without taking advantage of anyone? Please explain.
grim says:
March 14, 2016 at 1:38 pm
Ceo of pepsi is paid millions that comes from taking advantage of millions of people.
Says it all…
http://desiceo.com/shinning-star-indra-nooyi/
Born and brought up in India, she hails from Chennai, Tamil Nadu. She was educated at Holy Angels Anglo Indian Higher Secondary School in Madras, before getting a Bachelor’s degree in Physics, Chemistry and Mathematics from Madras Christian College in 1974. She did her Post Graduate Diploma in Management (MBA) from Indian Institute of Management Calcutta in 1976 and started her professional career as a product manager at Johnson & Johnson. After a couple of years of work experience in India, she decided to head to Yale School of Management in 1978 and get a Master’s degree in Public and Private Management.
Pepsi did not happen on day one after Yale for Noori, it was a long journey before this dream came true. Indra’s story is that of a determined girl who did not have things on a platter. She worked as a receptionist from midnight to sunrise to earn money and struggled to put together US$50 to get a western suit for her first job interview out of Yale. In the 1980’s, she wasn’t just a woman, but also an outsider on a visa, trying to make it in a male centric world. One of the biggest learning that has stayed with her since those days is that she wasn’t comfortable with formal western outfit and wore a trouser that reached down only till her ankles in her first interview. When she got rejected, she turned to her professor at school who advised her to wear what she is comfortable in and would wear if she was in India. Basically, her professor told her “be yourself”. She wore a sari for her next interview and got the job. She has followed this philosophy for the rest of her career.
Talking about Global citizen, deep inside her heart, she is still very much an Indian wife, a responsible mother and a caring homemaker – no matter how much she moves up the American Corporate ladder. Nooyi has mastered the vital art of balancing her family life with the corporate life and is equally adept in meeting the various needs and demands of her two daughters at home as she handles the different issues raised by her peers, subordinates, customers and shareholders in her office chamber. She says that she might not be like the typical mother going to every event that her kid takes part in or being there for everything like some other mothers, but she hopes that her kids appreciate her for who she is and like her for the mother she has been.
Pumpkin Seed,
Your turn.
Read about Nooyi’s (who is a vegetarian) push for Pepsi to move into healthier foods.
Reading at or above elementary school level = intellect on a pedestal according to some
#42,
So d-bag, just catching up on weekend posts. When was last time you shopped for house to lay blame at Eddie and myself for failing to understand your house pricing theories? Sellers base their pricing on comps, buyers base their offer on comps and appraisers base their analysis on comps. Problem is that comp searches are often pliant based what someone is willing to pay. Could I have paid $650k for $570k house..very easily and I have no doubt that all comps would have backed it even your precious bank appraisal. The frustration is the number of homes trying to get insane price and a buyer waiting for reality to set in. It takes months and usually the nicer the house, the more time it takes. I use bubble pricing as that reality gauge. Bought a home in 2005 then don’t expect a profit for doing nothing. Buying in 2011 or 2012 means nothing. You have not won anything. The sellers is my transaction lost big time because they thought this and grossly overpriced by 22%. I am sure the realtor told everyone how fairly priced it was. Lastly, I thought roaring 2020s are coming so I should prepare to make triple. If I wait 20-30 years then I miss it, right? Just like big wage increases next year and that great Newark housing investment. How many homes did buy again? Thought so..unless Granny is selling at a discount.
Sorry that was for blumpkin #41.
49- Grim, good for her and I’m proud of her. Still does not address the fact that she is way overcompensated for what she does. There is nothing an individual can do in a year to justify that kind of compensation.
All I’m saying is that anyone making 19 million a year is hard to justify. That’s a lot of money in one year and it’s really hard to justify. No one impacts a company in such a way that they deserve this type of compensation. No one. No company success is the result of one individual and compensation should not reflect this.
This is not an attack on the wealthy, it’s just acknowledgement that the top compensation levels make no sense whatsoever.
55- Let’s take sports for example. How do you justify the compensation of the nfl ceo? You can’t. You can’t even justify the player salaries. They are so overcompensated it’s ludicrous. The new houston qb just hit the lottery with that contract, it makes no sense. But yes, everyone still purchases the overpriced product due to their addiction to sports. Nothing productive comes from sports, yet people make millions off that industry. So where does this money come from? Because people love sports, salaries in that industry should reflect winning the lottery?
Who are you to be able to justify prices better than the market? You have no understanding of how pricing works. Pricing is always what the market dictates, not what the individual thinks it should be. You are one of these people that think a home has a set value, and in doing so, completely ignore market fundamentals.
“Sellers base their pricing on comps, buyers base their offer on comps and appraisers base their analysis on comps. Problem is that comp searches are often pliant based what someone is willing to pay. Could I have paid $650k for $570k house”
Grim, was there something wrong with my comment?
re # 56 -“The new houston qb just hit the lottery with that contract, it makes no sense”
Eli Manning is paid more. 21 million a year with 65 million guaranteed and he is 35 years old now.
Here you go, Pumpkin. Try to read and think at the same time:
http://fee.org/articles/were-still-haunted-by-the-labor-theory-of-value/
57- If you think the current market is overpriced, you wait. Using unrealistic overpriced listings that will never sell as a barometer for housing is useless. Just like using OLP as a barometer for housing is useless. Who cares what the OLP was when the individual clearly didn’t base the price on current market value?
Thanks, I’ll take some time to read it and hopefully will understand what you are saying.
Ragnar says:
March 14, 2016 at 2:38 pm
Here you go, Pumpkin. Try to read and think at the same time:
http://fee.org/articles/were-still-haunted-by-the-labor-theory-of-value/
Michael, You do understand, there isn’t a “limited pie” of money right?
Also, pensioners and 401k plan holders are “owners” and “shareholders” of corporations…you get that right?
https://www.youtube.com/watch?v=JG5c8nhR3LE
The Great Pumpkin says:
March 14, 2016 at 10:52 am
Agreed, but the economic system is in no way efficient enough to hand out compensation based on worth. You have people making millions a year and others thousands. There is no way you can justify compensation in the millions based on limited resources. Certain individuals under this situation are taking way too much of the pie and eliminating other’s opportunities to share in this pie because of their dominance of the resources used to produce wealth
Thanks Ben,
Close to what I thought. She will definitely get smaller class sizes at RPS and more college prep handholding when that time comes vs BWater, so more service, but not necessarily a better education.
What I really dislike about them is that their language program offers Arabic but not Chinese, claiming that’s what the world needs, and that this is more important than what students and parents want.
More relevant life skills can probably be learned in Weequahic High.
Grim is my comment stuck in moderation?
In the 80’s Japanese was the hot language…Theory Z and all that…
I don’t see it, went straight to blacklist
Fool, you complain that the CEO market price for a mega conglomerate is grossly overvalued while telling me the housing is always fair market value. Continue j*rking it to Keynes. Some of us believe all “fair” pricing has been distorted by corrupt, government intervention. Speculation is the anticipation of price that does not exist. It is rampant in housing and OLP is very telling component of the cycle. Look at the lead article. When govt. starts dictating the market by destroying fundamentals then don’t be surprised when value of everything is disrupted. Allowing people to get mortgages with 3% down or 600 FICOs will distort pricing ala 2003 – 2007. Likewise, don’t be surprised when CEOs continue to get multimillion packages when government has handed free money out to them for years and created a stock bubble to end times.
They teach girls Arabic too? They expect them to use that as part of global business? Given the pace of social change in the Middle East, they may be dead before they get to use it.
Grim,
After oil gets increasingly substituted by other energy sources over the next 25 years, I fear the Middle East will collapse, economically and politically. And they have no serious backup plan.
So she’ll do Spanish or French, sadly, and have to study Chinese at home.
60- Rags, this sums up my position as to why I don’t buy it. What justification can your theory have for stagnating wages with all time high profits? Just doesn’t add up.
“Being a major area of Austrian economics, the idea of subjective value is regularly used by libertarians to disprove labour theory of value and subsequently believe they’ve refuted anti-capitalist arguments[1]. Frankly it’s all fanciful word games. Little evidence is really produced out of this, outside a thin justification for modern capitalist economies (which is ironic coming from supposed anarchist capitalists). However, the LTV crowd don’t exactly help their cause, holding to Marxian arguments that provide little evidence themselves. Rather, subjective theory of value is simply a lens to understand multiplicitous decisions in heterogeneous circumstances, thus subsuming different forms of valuation made by autonomous individuals and institutions. Further, empirical evidence shows continued increases in profits and capital gains and the continued stagnation of wages (particularly in the United States). In the end, taking subjective theory of value to its ultimate conclusion, we see the ability for price arrangements to develop in a multitude of different institutional settings, including planned economic relations, moral economies and markets.
Solow has documented in the United States the continued stagnation of wages, combined with significant increases in profit margins and capital gains[2]. Now the subjectivists of the Austrian school would say this is because capital investors and entrepreneurs have contributed more to the deal than labour has. However, productivity has increased overall, and this cannot be pinned down to simple investment. Further, global growth since that time has fallen overall, and governments have continually been running deficits and high debts to simply cope with the capital misallocation and surplus product created by globalised industries and sectors[3]. Modern globalisation has in fact relied on forms militarism by the United States as well as dictators in the developing world. Cheap labour isn’t available due to the choices of the workers who have become reliant upon it. Rather the expropriation and privatisation of community services and the stealing of land by governments has simply created a landless proletariat, who have no other source of income than that of sweatshop wage labour[4]. In the West, the increasingly post-industrial character of the economy has meant labour is used in a temporary manner, with little job security or permanency. Opportunities outside of this are usually reliant on very high skill. Thus university applications have increased massively, leading to an oversupply of skilled labour in certain sectors and a lack of jobs or opportunities to take this labour surplus. Wages can be easily compressed as workers are competing for jobs.
The productivity increases that have resulted have then been blatantly expropriated by managers and investors. To put it in Marxian language, the surplus of workers has been used as profit for capitalists. And as can be seen, its being perpetrated by governments in collusion with corporations. Thus the idea of surplus expropriation and labour exploitation is not simply disproven by STV. Labour-capital relations are massively skewed toward the latter, with surplus used for increasingly higher profits and capital being reliant on massive subsidisation. The real question then becomes not what theory of value is correct, but rather under truly free market conditions what forms of economic organisation come to the fore relative to subjective valuation.”
https://thelibertarianideal.wordpress.com/2016/02/15/sneering-libertarians-and-the-labour-theory-of-value/
69
Bystander,
The current market clearing price for housing (whether distorted or not) = good
The current market clearing price for NFL talent (on the field and in the front office) = bad
How much of workers deserved profits are consumed by increased regulatory and compliance over the last 5o years?
I agree with all of this.
So based on your knowledge of market pricing, why do you continue to use useless barometers to measure housing pricing? Calling a market overinflated and a house overpriced are two different things. Selling price is always market dictated, whether or not it’s a high market is another thing. So you can carry the opinion that someone shouldn’t have bought in an overinflated market, but you can never call a price based on current market comps as overpriced.
Bystander says:
March 14, 2016 at 3:36 pm
Fool, you complain that the CEO market price for a mega conglomerate is grossly overvalued while telling me the housing is always fair market value. Continue j*rking it to Keynes. Some of us believe all “fair” pricing has been distorted by corrupt, government intervention. Speculation is the anticipation of price that does not exist. It is rampant in housing and OLP is very telling component of the cycle. Look at the lead article. When govt. starts dictating the market by destroying fundamentals then don’t be surprised when value of everything is disrupted. Allowing people to get mortgages with 3% down or 600 FICOs will distort pricing ala 2003 – 2007. Likewise, don’t be surprised when CEOs continue to get multimillion packages when government has handed free money out to them for years and created a stock bubble to end times.
Why do you assume that increased productivity over the last 50 years has anything to do with workers?
If I have a technology, and deploy that into your factory which doubles your productivity, and you require half the workers to do the same business, why should the worker be compensated for my innovation?
[74] grim
“How much of workers deserved profits are consumed by increased regulatory and compliance costs over the last 50 years?”
Not Nearly Enough!!!
I LOVE excess regulation and arcane tax policy
Well that’s the whole problem. How are we going to rely on our current economic system, in which you must work to survive, without jobs? The consumer needs the ability to participate in the economy which can only be done with money. The consumer can only get money by working. How will this consumer send the signal for the economy to grow with stagnating (if you are lucky to have a job) and disappearing (elimination of jobs) purchase power(aka economic participation)?
grim says:
March 14, 2016 at 4:49 pm
Why do you assume that increased productivity over the last 50 years has anything to do with workers?
If I have a technology, and deploy that into your factory which doubles your productivity, and you require half the workers to do the same business, why should the worker be compensated for my innovation?
Reminds me of when JJ used to say god bless free markets.
Comrade Nom Deplume, Newspeak Editor says:
March 14, 2016 at 4:51 pm
[74] grim
“How much of workers deserved profits are consumed by increased regulatory and compliance costs over the last 50 years?”
Not Nearly Enough!!!
I LOVE excess regulation and arcane tax policy
[79] Joyce
In a bankruptcy, the lawyers get paid first.
I wonder who wrote that law, or did they interpret it :-)
I’d love to see The Donald get into an old fashioned insult hurling contest. Two Noo Yawkers slinging the mud at each other. I want to hear The Donald yell “Hey Bernie! Redistribute This!”
[81] Joyce
Does it matter?
The Great Pumpkin says:
55- Let’s take sports for example. How do you justify the compensation of the nfl ceo? You can’t. You can’t even justify the player salaries. They are so overcompensated it’s ludicrous. The new houston qb just hit the lottery with that contract, it makes no sense. But yes, everyone still purchases the overpriced product due to their addiction to sports. Nothing productive comes from sports, yet people make millions off that industry. So where does this money come from? Because people love sports, salaries in that industry should reflect winning the lottery?
Followed by The Great Pumpkin says:
Who are you to be able to justify prices better than the market? You have no understanding of how pricing works. Pricing is always what the market dictates, not what the individual thinks it should be. You are one of these people that think a home has a set value, and in doing so, completely ignore market fundamentals.
At least the NFL isn’t subsidized by the federal reserve and federal government.
If someone is trying to improve upon the current state of things, it is very useful knowing the history behind current practices.
Comrade Nom Deplume, Newspeak Editor says:
March 14, 2016 at 5:19 pm
[81] Joyce
Does it matter?
Ben,
Shockingly contradictory and illogical.
78. the gig economy
I know someone who went to the NFL. Played the O-line for about 2 years. Barely left with a moderate house in Bergen County.
I was using the top passage as an example of how the value of compensation at the upper levels is out of control and difficult to justify. I understand very well why the Houston qb is getting paid what he is. Although I think it’s not justifiable, I know these compensation levels will only rise. Now apply the same thing with housing. Prices might not be justifiable, but that won’t stop them from going up.
Ben says:
March 14, 2016 at 5:30 pm
The Great Pumpkin says:
55- Let’s take sports for example. How do you justify the compensation of the nfl ceo? You can’t. You can’t even justify the player salaries. They are so overcompensated it’s ludicrous. The new houston qb just hit the lottery with that contract, it makes no sense. But yes, everyone still purchases the overpriced product due to their addiction to sports. Nothing productive comes from sports, yet people make millions off that industry. So where does this money come from? Because people love sports, salaries in that industry should reflect winning the lottery?
Followed by The Great Pumpkin says:
Who are you to be able to justify prices better than the market? You have no understanding of how pricing works. Pricing is always what the market dictates, not what the individual thinks it should be. You are one of these people that think a home has a set value, and in doing so, completely ignore market fundamentals.
At least the NFL isn’t subsidized by the federal reserve and federal government.
Then you love the solar energy industry……
Comrade Nom Deplume, Newspeak Editor says:
March 14, 2016 at 4:51 pm
[74] grim “How much of workers deserved profits are consumed by increased regulatory and compliance costs over the last 50 years?” Not Nearly Enough!!!
I LOVE excess regulation and arcane tax policy
Tomorrow: an explanation of how to find the justifiable price of everything, by consulting the feelings of a nincompoop.
[85] Joyce
I never said I didn’t know. I questioned why it matters
I was just going for a sarcastic comment that lawyers (politicians and judges) made sure that lawyers got paid first during that process.
National Football League (NFL) continues to enjoy status as a non-profit organization — meaning it doesn’t have to pay federal corporate taxes.
to #89 At least the NFL isn’t subsidized by the federal reserve and federal government.
Save your money, Rags. Bridgewater might be a better school than Rutgers Prep.