From the Taipei Times, we have an economist J. Bradley Delong (Berkeley) writing: Three cures for three crises.
The third mode is like the second: A bursting bubble or bad news about future productivity or interest rates drives the fall in asset prices. But the fall is larger. Easing monetary policy won't solve this kind of crisis, because even moderately lower interest rates cannot boost asset prices enough to restore the financial system to solvency.
When this happens, governments have two options. First, they can simply nationalize the broken financial system and have the Treasury sort things out -- and reprivatize the functioning and solvent parts as rapidly as possible. Government is not the best form of organization of a financial system in the long term, and even in the short term it is not very good. It is merely the best organization available.
The second option is simply inflation. Yes, the financial system is insolvent, but it has nominal liabilities and either it or its borrowers have some real assets. Print enough money and boost the price level enough, and the insolvency problem goes away without the risks entailed by putting the government in the investment and commercial banking business.
The inflation may be severe, implying massive unjust redistributions and at least a temporary grave degradation in the price system's capacity to guide resource allocation. But even this is almost surely better than a depression.
Let me state it upfront. These economists are full of shit.
Before we talk about why they are full of shit, let me state the general position. In order to understand macro, you must first understand micro i.e. you need to understand how nuts and bolts work before you can start talking about rocket engines.
The theoretical position is correct. Print enough money and you will boost the nominal price level enough, and the insolvency problem goes away.
Unfortunately, that's not how it works in practice.
Firstly, the Fed doesn't "print" money. What it does do is lower the price of money below the market rate which has an effect similar to but not the same as printing money. This is an exceedingly critical point, and I cannot emphasize it enough.
What that means is that it cannot control the channel in which this money will flow. It could flow into commodities, or it could flow into absurd Internet ventures, or it could flow into gold. They have no control over where it goes.
Everyone with me so far?
Now, where the money goes is a matter of psychology. No banker or trader in their right mind is going to throw money at a clearly collapsing asset (which is what housing currently is.) You'd have to be borderline retarded to do so,
The bankers are in it for the money. They don't give a crap about what economists or central banks desire.
In fact, you can see it in the headlines. Wells Fargo now wants 25% down in California. Whether the Fed likes it or not, this is tightened credit for housing (which means they are balking at loaning money for a collapsing asset.)
In fact it is precisely this reason that no bubble in history has ever failed to collapse, inflation or no inflation, central banks be damned!
Now in order to "cushion" housing prices, the money would have to flow into wages because the borrowers need to make their monthly payment. Anybody who believes that wages will increase in the presence of China and India online also believes in the Tooth Fairy.
Even assuming the Tooth Fairy actually shows up to town, the wages would have to go up right now not 12-18 months later because the borrowers need to make their monthly nut now not 12-18 months later.
Theoretical economists don't worry about time lags. etc. Wave the wand and double the money supply. Yeah, OK.
In what time frame, sir? And what will the borrowers be doing while you're waving the wand?
Finally, we come to the coup de grâce. This is where micro trumps macro every single time.
The credit has been flowing into commodities. Oil at more than $100; wheat prices up 46% in two months. Food and fuel prices are already rising steeply.
The needs of an individual are clear. First air (which is free), then food and fuel (heating, getting to job.) Only after that do they need shelter, and clothing. Everything else may safely be classified as discretionary. (Note if you can't get to your job, you won't be making any money.)
Now, each household has a finite pot of money each month (and this pot will not be increasing as explained above.) If food and fuel costs increase, then the amount of money they can spend on the rest must go down. Since food and fuel are absolute necessities, there is less money left over for shelter. I leave it as any easy exercise to the reader to figure out what happens to home prices in that situation.
So while theoretically inflation solves the problem, it has absolutely no chance of doing so in practice. In fact, it is going to make house prices collapse faster i.e. it will actually have the perverse effect of doing the exact opposite of what is intended.
Put that in your pipes and smoke it, economists!
Thursday, February 28, 2008
Tuesday, February 26, 2008
Instantaneous Contradiction
From Colorado Springs: Upscale homes have upper hand.
Colorado Springs’ upscale housing market remains fit, even as it’s gotten fat.
A slowdown in sales, which mirrors what’s happened nationally, has swelled the inventory of $1 million-and-up homes on the market to a more than four-year supply, according to one estimate.
Fit market? Four year supply?
Is cognitive dissonance dead?
Colorado Springs’ upscale housing market remains fit, even as it’s gotten fat.
A slowdown in sales, which mirrors what’s happened nationally, has swelled the inventory of $1 million-and-up homes on the market to a more than four-year supply, according to one estimate.
Fit market? Four year supply?
Is cognitive dissonance dead?
Monday, February 25, 2008
Till Death Do Us Part
From the Chicago Tribune: This house was a steal.
The new buyers of a rundown graystone on the South Side showed up Jan. 9 to look at the house they won at a foreclosure auction. They took the plywood off the front door and went inside to make sure the utilities had been shut off. Then they called the police.
Sitting upright in the corner of a bedroom off the kitchen was a human skeleton in a red tracksuit. Next to him lay a dead dog. Neighbors told police the corpse was almost certainly Randy Johnson, a middle-age man who lived alone in the North Kenwood house.
The cause of Johnson's death has not yet been determined, but it is just one of the mysteries about 4578 S. Oakenwald Ave. Somehow, Johnson's house was transferred three times to new owners without anyone noticing he was inside. It's a story involving forged deeds, a corrupt title company and a South Side family that has been under investigation for mortgage fraud.
Left holding the bag is Countrywide Home Loans, the nation's largest mortgage lender and a company whose practices are being scrutinized by the Illinois attorney general's office. Countrywide made mortgages of $450,000 on the property. Now it is likely to lose it all because it financed the sale of a home whose rightful owner was in no condition to sell.
Meanwhile the New York Post writes: LET 'EM EAT KOBE STEAK. (yeah! All their front-page articles are all-caps.)
While foreclosed homeowners across America pack cartons of belongings this weekend, a band of junk-mortgage bankers is checking into a lavish Aspen, Colo., lodge to celebrate and dine on $105 steaks - with junk king Countrywide picking up the tab.
The handpicked guests, who'll stay in rooms starting at $750 a night, begin their long weekend with a party at Wolfgang Puck's famed new Spago restaurant at the lodge, where Kobe steak is $105, and Kabocha pumpkin flan is $54.
Death and Taxes? Maybe we should add Fraud to that list!
The new buyers of a rundown graystone on the South Side showed up Jan. 9 to look at the house they won at a foreclosure auction. They took the plywood off the front door and went inside to make sure the utilities had been shut off. Then they called the police.
Sitting upright in the corner of a bedroom off the kitchen was a human skeleton in a red tracksuit. Next to him lay a dead dog. Neighbors told police the corpse was almost certainly Randy Johnson, a middle-age man who lived alone in the North Kenwood house.
The cause of Johnson's death has not yet been determined, but it is just one of the mysteries about 4578 S. Oakenwald Ave. Somehow, Johnson's house was transferred three times to new owners without anyone noticing he was inside. It's a story involving forged deeds, a corrupt title company and a South Side family that has been under investigation for mortgage fraud.
Left holding the bag is Countrywide Home Loans, the nation's largest mortgage lender and a company whose practices are being scrutinized by the Illinois attorney general's office. Countrywide made mortgages of $450,000 on the property. Now it is likely to lose it all because it financed the sale of a home whose rightful owner was in no condition to sell.
Meanwhile the New York Post writes: LET 'EM EAT KOBE STEAK. (yeah! All their front-page articles are all-caps.)
While foreclosed homeowners across America pack cartons of belongings this weekend, a band of junk-mortgage bankers is checking into a lavish Aspen, Colo., lodge to celebrate and dine on $105 steaks - with junk king Countrywide picking up the tab.
The handpicked guests, who'll stay in rooms starting at $750 a night, begin their long weekend with a party at Wolfgang Puck's famed new Spago restaurant at the lodge, where Kobe steak is $105, and Kabocha pumpkin flan is $54.
Death and Taxes? Maybe we should add Fraud to that list!
Desperado
From the Chronicle-Telegram: “I’ll do anything to sell this house”.
The idea seemed simple enough.
Buy a foreclosed home through a sheriff’s sale at a below-market price; fix it up and then resell it making a small profit. It’s called flipping.
Gary Cahill of Elyria knew the plan wouldn’t net him millions, but he and his wife, Janice, were eager to start a new hobby.
I don't know about y'all now but all my hobbies lose me money. They give me a hell of a lot of pleasure but they don't make me any money. Isn't that what a hobby is supposed to do?
“It’s not like this is my only house. I have four mortgage payments to pay plus my business to run,” he said. “I don’t know how long I can keep this up."
Until the Big Bad Bankers take it away, baby, until the Big Bad Bankers take it ALL away.
“It’s not as easy as those television shows would make it seem,” said Cahill.
Television lied? Get out!!!
The idea seemed simple enough.
Buy a foreclosed home through a sheriff’s sale at a below-market price; fix it up and then resell it making a small profit. It’s called flipping.
Gary Cahill of Elyria knew the plan wouldn’t net him millions, but he and his wife, Janice, were eager to start a new hobby.
I don't know about y'all now but all my hobbies lose me money. They give me a hell of a lot of pleasure but they don't make me any money. Isn't that what a hobby is supposed to do?
“It’s not like this is my only house. I have four mortgage payments to pay plus my business to run,” he said. “I don’t know how long I can keep this up."
Until the Big Bad Bankers take it away, baby, until the Big Bad Bankers take it ALL away.
“It’s not as easy as those television shows would make it seem,” said Cahill.
Television lied? Get out!!!
Sunday, February 24, 2008
Appetite for Destruction
From ABC News: Even Celebrities Hurt by Housing Slump.
Even Hollywood's rich and famous can't avoid the housing downturn that's sweeping the nation. In Los Angeles, only 4,430 homes were sold in December, down 48% from the previous year. And prices fell 11% to an average $470,000.
Hollywood's rich and famous, of course, are supposed to be immune from Economic Laws just like they are immune from Gravity and Aging.
Young rocker Avril Lavigne has had to reduce the price on her five-bedroom, six-bath house in Beverly Hills from $6.9 million to $5.8 million.
Former Guns N' Roses guitarist Slash (also known as Saul Hudson) feels he overpaid for his Spanish-style Hollywood Hills home, which has a pool, a separate gym and stunning views. He bought the house in January 2006 for $6.2 million. He sold it last December for $5.7 million. Slash is suing his former real estate agent, claiming the house was neither as big nor as private as the agent claimed. The case is ongoing in California Superior Court.
Where do we go? Where do we go now? Where do we go?
Even Hollywood's rich and famous can't avoid the housing downturn that's sweeping the nation. In Los Angeles, only 4,430 homes were sold in December, down 48% from the previous year. And prices fell 11% to an average $470,000.
Hollywood's rich and famous, of course, are supposed to be immune from Economic Laws just like they are immune from Gravity and Aging.
Young rocker Avril Lavigne has had to reduce the price on her five-bedroom, six-bath house in Beverly Hills from $6.9 million to $5.8 million.
Former Guns N' Roses guitarist Slash (also known as Saul Hudson) feels he overpaid for his Spanish-style Hollywood Hills home, which has a pool, a separate gym and stunning views. He bought the house in January 2006 for $6.2 million. He sold it last December for $5.7 million. Slash is suing his former real estate agent, claiming the house was neither as big nor as private as the agent claimed. The case is ongoing in California Superior Court.
Where do we go? Where do we go now? Where do we go?
Thursday, February 21, 2008
Ain't it Grande?
From Philly.com: A family's struggle against great debt.
Anthony and Lisa Grande's house stands out in their Levittown neighborhood.
"It's the big house," Lisa said when giving directions.
The Grandes borrowed more than $100,000 - much of it on credit cards - to double its size four years ago because they wanted enough room for their five children and did not want to move.
But now, the Grandes are fighting to stay there, having repeatedly fallen behind on their mortgage payments, which climbed from $1,841 to $2,487.
When they refinanced in January 2004 from a $113,906 fixed-rate mortgage into a $220,500 adjustable-rate mortgage to pay off credit-card and other debt, they were told - like millions of others - that they could refinance before the interest rate jumped.
Then Anthony's health fell apart, his plans to start a business foundered, and another refinancing did not come through.
"To be quite honest, we were probably foolish also," Lisa said.
Lisa recalled a carpenter on their roof during construction stamping a broom and saying so many people went bankrupt expanding their homes. "I knew it then. It's like he cursed us."
It is hard for the Grandes to grasp how they got to their current state from where they were in early 2003.
That's when Anthony lost his job as the general manager of a used-car dealership because the business closed. He figured it was a good chance to expand the house because he wanted "a place for the kids to come home to."
To pay for the additions, the Grandes used a $40,000 bank loan and credit cards.
In January 2004, they did what millions of Americans did during the housing boom to cope with ballooning credit-card debt: they refinanced, though they didn't get enough to pay off their credit cards.
The new loan - with no income verification, according to Anthony - increased their monthly payment from $950 to $1,841. The introductory interest rate was 7.75 percent for two years.
Anthony's plans for a partnership did not work, so he decided to open his own lot on Route 13 in Levittown and sank in $65,000.
Legal fees and drug-rehabilitation expenses mounted for Anthony's son from a previous marriage, reaching $84,000, Anthony said.
Despite the refinancing in January 2004, the Grandes still had $118,628 of debt on 24 credit cards, according to a bankruptcy filing in October 2005.
"We probably lost track," Lisa said of the number of credit-card checks they used. "They just kept sending us checks."
Last fall, Anthony was granted disability benefits. His monthly benefit is $1,147, less than he used to earn in a week. "I was always a go-getter," Anthony said. "I just feel so whooped."
The whole affair has shattered Anthony's sense of himself. "I was always hustling. I always worked. Now I can't do anything. I feel like a jerk," he said.
We should first amuse ourselves by the thought of the Grandes doing an "expansion". Not to mention that they are mucho grande themselves. And of course, they live in the "big" house.
Any more "grandes" in there and we'd be looking at an ad for Starbucks.
Now, on with the show.
This is like the jackpot of bad decision making.
Expanding your house and taking on debt while you're out a job? 24 credit cards? Lost track of checks? $100K+ in consumer debt? Son in rehab? Opening a used car dealership? Disability?
And the carpenter put a malocchio!
This is like a bad melodramatic 19th-century Italian opera.
In January 2006, the interest rate jumped to more than 10 percent and the payment to $2,220. Six months later, it was up to $2,487, and with Anthony's health problems keeping him out of work, they fell behind.
Pennsylvania's Homeowners Emergency Mortgage Assistance Program helped them get caught up in August 2006. But after spending too much for Christmas in 2006, they fell behind again early last year.
Yeah, the "Emergency Mortgage Assistance". But it was Christmas. What could they do, les pauvres petites?
Lisa, 45, said it's been incredibly hard dealing with Option One. "You could never talk to the same person, and then whoever you had next tried to get more out of you," Lisa said. She recalled how one service representative told her: "I don't want to hear your hard luck story. I want a check."
Oooh, nasty, babykins. Isn't that just nasty?
Tell you what Lisa, honey! Go have a canoli. After that Oprah will bring your some tea and cookies, and give you a day at the spa. Everything will work out just fine.
Anthony and Lisa Grande's house stands out in their Levittown neighborhood.
"It's the big house," Lisa said when giving directions.
The Grandes borrowed more than $100,000 - much of it on credit cards - to double its size four years ago because they wanted enough room for their five children and did not want to move.
But now, the Grandes are fighting to stay there, having repeatedly fallen behind on their mortgage payments, which climbed from $1,841 to $2,487.
When they refinanced in January 2004 from a $113,906 fixed-rate mortgage into a $220,500 adjustable-rate mortgage to pay off credit-card and other debt, they were told - like millions of others - that they could refinance before the interest rate jumped.
Then Anthony's health fell apart, his plans to start a business foundered, and another refinancing did not come through.
"To be quite honest, we were probably foolish also," Lisa said.
Lisa recalled a carpenter on their roof during construction stamping a broom and saying so many people went bankrupt expanding their homes. "I knew it then. It's like he cursed us."
It is hard for the Grandes to grasp how they got to their current state from where they were in early 2003.
That's when Anthony lost his job as the general manager of a used-car dealership because the business closed. He figured it was a good chance to expand the house because he wanted "a place for the kids to come home to."
To pay for the additions, the Grandes used a $40,000 bank loan and credit cards.
In January 2004, they did what millions of Americans did during the housing boom to cope with ballooning credit-card debt: they refinanced, though they didn't get enough to pay off their credit cards.
The new loan - with no income verification, according to Anthony - increased their monthly payment from $950 to $1,841. The introductory interest rate was 7.75 percent for two years.
Anthony's plans for a partnership did not work, so he decided to open his own lot on Route 13 in Levittown and sank in $65,000.
Legal fees and drug-rehabilitation expenses mounted for Anthony's son from a previous marriage, reaching $84,000, Anthony said.
Despite the refinancing in January 2004, the Grandes still had $118,628 of debt on 24 credit cards, according to a bankruptcy filing in October 2005.
"We probably lost track," Lisa said of the number of credit-card checks they used. "They just kept sending us checks."
Last fall, Anthony was granted disability benefits. His monthly benefit is $1,147, less than he used to earn in a week. "I was always a go-getter," Anthony said. "I just feel so whooped."
The whole affair has shattered Anthony's sense of himself. "I was always hustling. I always worked. Now I can't do anything. I feel like a jerk," he said.
We should first amuse ourselves by the thought of the Grandes doing an "expansion". Not to mention that they are mucho grande themselves. And of course, they live in the "big" house.
Any more "grandes" in there and we'd be looking at an ad for Starbucks.
Now, on with the show.
This is like the jackpot of bad decision making.
Expanding your house and taking on debt while you're out a job? 24 credit cards? Lost track of checks? $100K+ in consumer debt? Son in rehab? Opening a used car dealership? Disability?
And the carpenter put a malocchio!
This is like a bad melodramatic 19th-century Italian opera.
In January 2006, the interest rate jumped to more than 10 percent and the payment to $2,220. Six months later, it was up to $2,487, and with Anthony's health problems keeping him out of work, they fell behind.
Pennsylvania's Homeowners Emergency Mortgage Assistance Program helped them get caught up in August 2006. But after spending too much for Christmas in 2006, they fell behind again early last year.
Yeah, the "Emergency Mortgage Assistance". But it was Christmas. What could they do, les pauvres petites?
Lisa, 45, said it's been incredibly hard dealing with Option One. "You could never talk to the same person, and then whoever you had next tried to get more out of you," Lisa said. She recalled how one service representative told her: "I don't want to hear your hard luck story. I want a check."
Oooh, nasty, babykins. Isn't that just nasty?
Tell you what Lisa, honey! Go have a canoli. After that Oprah will bring your some tea and cookies, and give you a day at the spa. Everything will work out just fine.
Wednesday, February 20, 2008
HELOC Hell
From Reuters: Sharper Image files for Chapter 11 bankruptcy.
Retailer Sharper Image Corp has filed for Chapter 11 bankruptcy protection, citing declining sales, three straight years of losses and litigation involving its Ionic Breeze air purifiers.
The San Francisco-based company filed for protection late Tuesday in U.S. bankruptcy court in Wilmington, Delaware. Sharper Image said it had $251.5 million in assets and $199 million in debt as of January 31, according to the filing. Cash on hand totaled about $700,000.
Its shares plunged 92 cents, or 64 percent, to 52 cents on Nasdaq.
"Sharper Image is in a severe liquidity crisis," Chief Financial Officer Rebecca Roedell said in a separate filing.
She said the company has suffered from increased competition, narrowing margins, litigation, lower consumer and market confidence, tighter credit from suppliers, and poorly performing stores.
No more HELOC. No more Sharper Image.
Consumer crap at larcenious prices.
Can Brookstone be far behind?
Retailer Sharper Image Corp has filed for Chapter 11 bankruptcy protection, citing declining sales, three straight years of losses and litigation involving its Ionic Breeze air purifiers.
The San Francisco-based company filed for protection late Tuesday in U.S. bankruptcy court in Wilmington, Delaware. Sharper Image said it had $251.5 million in assets and $199 million in debt as of January 31, according to the filing. Cash on hand totaled about $700,000.
Its shares plunged 92 cents, or 64 percent, to 52 cents on Nasdaq.
"Sharper Image is in a severe liquidity crisis," Chief Financial Officer Rebecca Roedell said in a separate filing.
She said the company has suffered from increased competition, narrowing margins, litigation, lower consumer and market confidence, tighter credit from suppliers, and poorly performing stores.
No more HELOC. No more Sharper Image.
Consumer crap at larcenious prices.
Can Brookstone be far behind?
Tuesday, February 19, 2008
WWF
From Reuters: US mortgage rates post record daily move.
The average rate on a 30-year U.S. mortgage with no upfront points jumped 3/8 percentage point on Tuesday to 6-5/8 percent, in the biggest one-day move in the ten years that BestInfo Inc. has tracked the rates.
A 75 basis point move in a bond market is the equivalent of an atomic bomb being casually tossed into the fray.
Body Slam!
The average rate on a 30-year U.S. mortgage with no upfront points jumped 3/8 percentage point on Tuesday to 6-5/8 percent, in the biggest one-day move in the ten years that BestInfo Inc. has tracked the rates.
A 75 basis point move in a bond market is the equivalent of an atomic bomb being casually tossed into the fray.
Body Slam!
First Man Down, How Many to Go?
From NBC in San Francisco: Vallejo On Brink Of Bankruptcy.
The city of Vallejo is on the brink of becoming the first California city ever to declare bankruptcy, City Council members said Tuesday.
Vallejo may run out of cash as early as March, council member Stephanie Gomes said.
"Not only that, but now we have 20 police and fire employees retiring because they are afraid of not getting their payouts," Gomes said. "That means we have another few million dollars in payouts that we had not expected. So the situation is quite dire."
Gomes said the situation has been building for more than a decade.
"This has been happening for quite a while. For 15 years the city council has been putting Band-Aids on the problem. (It has been) extending contracts and deferring payments for public safety to the next years as a way of balancing the current budget."
This is the norm not the exception. There is no way all those pensions are going to get paid. The pensioners are pretty much screwed.
The city of Vallejo is on the brink of becoming the first California city ever to declare bankruptcy, City Council members said Tuesday.
Vallejo may run out of cash as early as March, council member Stephanie Gomes said.
"Not only that, but now we have 20 police and fire employees retiring because they are afraid of not getting their payouts," Gomes said. "That means we have another few million dollars in payouts that we had not expected. So the situation is quite dire."
Gomes said the situation has been building for more than a decade.
"This has been happening for quite a while. For 15 years the city council has been putting Band-Aids on the problem. (It has been) extending contracts and deferring payments for public safety to the next years as a way of balancing the current budget."
This is the norm not the exception. There is no way all those pensions are going to get paid. The pensioners are pretty much screwed.
Monday, February 18, 2008
How many Ph.D.'s does it take?
From the Modesto Bee: Housing sales continue steep fall.
One, the drop in prices and interest rates means a buyer could more easily afford a median priced house, based on a 30-year fixed mortgage with a 10 percent down payment, Lewis said.
"Local people can now qualify to buy that same home," he said.
One does not, in general, "qualify" for a house. All you need to do is pay the owner money.
That's how capitalism works. You don't have to "qualify" for anything. Just bring money and preferably lots of it. You'll "qualify" for everything with the right amount of dough. They'll even take dollars!
Presumably one may "qualify" or "not qualify" for a mortgage but a house is not a degree. Only in the Land of the McCrapBox populated with McMillionaires would a house be a "qualification".
One, the drop in prices and interest rates means a buyer could more easily afford a median priced house, based on a 30-year fixed mortgage with a 10 percent down payment, Lewis said.
"Local people can now qualify to buy that same home," he said.
One does not, in general, "qualify" for a house. All you need to do is pay the owner money.
That's how capitalism works. You don't have to "qualify" for anything. Just bring money and preferably lots of it. You'll "qualify" for everything with the right amount of dough. They'll even take dollars!
Presumably one may "qualify" or "not qualify" for a mortgage but a house is not a degree. Only in the Land of the McCrapBox populated with McMillionaires would a house be a "qualification".
Homeless not Helpless
From USA Today: Some homeless turn to foreclosed homes.
The nation's foreclosure crisis has led to a painful irony for homeless people: On any given night they are outnumbered in some cities by vacant houses. Some street people are taking advantage of the opportunity by becoming squatters.
Foreclosed homes often have an advantage over boarded-up and dilapidated houses that have been abandoned because of rundown conditions: Sometimes the heat, lights and water are still working.
"That's what you call convenient," said James Bertan, 41, an ex-convict and self-described "bando," or someone who lives in abandoned houses.
There you go; that takes care of the homeless "problem".
They're probably eating and living better than the "home moaners" who are currently forced to eat ramen. Hey! but at least they have stainless steel appliances and granite countertops!!!
The nation's foreclosure crisis has led to a painful irony for homeless people: On any given night they are outnumbered in some cities by vacant houses. Some street people are taking advantage of the opportunity by becoming squatters.
Foreclosed homes often have an advantage over boarded-up and dilapidated houses that have been abandoned because of rundown conditions: Sometimes the heat, lights and water are still working.
"That's what you call convenient," said James Bertan, 41, an ex-convict and self-described "bando," or someone who lives in abandoned houses.
There you go; that takes care of the homeless "problem".
They're probably eating and living better than the "home moaners" who are currently forced to eat ramen. Hey! but at least they have stainless steel appliances and granite countertops!!!
Sunday, February 17, 2008
Friday, February 15, 2008
Downbeat Downpayment
From the San Jose Mercury News: From bad to 'worst' for Santa Clara County home sales.
For the first time since the housing downturn began in late 2005, housing prices in Santa Clara County dropped last month compared with a year earlier. And, in the aftermath of the credit crunch that sent rates for large mortgages soaring and Silicon Valley home sales sliding, fewer homes sold in January than during any month in 20 years.
Despite excellent credit and no debts other than the home loan she planned to get, the biggest challenge she faced was actually securing that jumbo mortgage.
"Basically every mortgage company says I'm their dream client," said Abramowitz, a management consultant who saved for years to amass a 20 percent down payment for a home in the $1 million range. But right after she agreed to buy the five-bedroom house late last month, the stock market took a steep dive, and lenders began saying her down payment wasn't high enough. "Suddenly everyone was going, '45 percent down.' "
45%!!!
Vampire. Garlic. Stake. Heart.
For the first time since the housing downturn began in late 2005, housing prices in Santa Clara County dropped last month compared with a year earlier. And, in the aftermath of the credit crunch that sent rates for large mortgages soaring and Silicon Valley home sales sliding, fewer homes sold in January than during any month in 20 years.
Despite excellent credit and no debts other than the home loan she planned to get, the biggest challenge she faced was actually securing that jumbo mortgage.
"Basically every mortgage company says I'm their dream client," said Abramowitz, a management consultant who saved for years to amass a 20 percent down payment for a home in the $1 million range. But right after she agreed to buy the five-bedroom house late last month, the stock market took a steep dive, and lenders began saying her down payment wasn't high enough. "Suddenly everyone was going, '45 percent down.' "
45%!!!
Vampire. Garlic. Stake. Heart.
The Audacity of Hope
The Hartford Courant reports: Mortgage Relief Plan Leaves Lots Of Pain.
A new, highly touted state program designed to aid first-time homeowners facing exploding mortgage costs has such strict standards that the vast majority of those seeking help don't qualify — a stark reality for financially troubled Connecticut residents looking for a mortgage bailout.
More than 1,000 homeowners have flooded the Connecticut Housing Finance Authority with calls as they sought to qualify for the new loans, which were announced in November and funded by $50 million in state bond money.
The loans are intended to help people refinance adjustable-rate mortgages at fixed rates.
But so far, eight weeks into the program, only 25 loans have been approved. At one of the three mortgage lenders participating, more than 300 inquiries resulted in just three loan approvals.
MISSION ACCOMPLISHED!!!
A new, highly touted state program designed to aid first-time homeowners facing exploding mortgage costs has such strict standards that the vast majority of those seeking help don't qualify — a stark reality for financially troubled Connecticut residents looking for a mortgage bailout.
More than 1,000 homeowners have flooded the Connecticut Housing Finance Authority with calls as they sought to qualify for the new loans, which were announced in November and funded by $50 million in state bond money.
The loans are intended to help people refinance adjustable-rate mortgages at fixed rates.
But so far, eight weeks into the program, only 25 loans have been approved. At one of the three mortgage lenders participating, more than 300 inquiries resulted in just three loan approvals.
MISSION ACCOMPLISHED!!!
Thursday, February 14, 2008
La Muerta
We regret to inform the readers of this blog that Goldilocks was shot this morning. The footage was captured on national television. She was declared dead around 10:15am.
Various members of Congress have called for an investigation into the nature of her death. No further details are known.
Various members of Congress have called for an investigation into the nature of her death. No further details are known.
Nose Candy
From the Houston Chronicle: Growers' profits wilt.
Valentine's Day is the one day in the middle of the winter when everyone wants roses, and the 150 laborers on this 35-acre rose plantation are working overtime to sell American customers fresh, fragrant flowers.
But for all the bustle and fuss of the peak season, growers in Colombia, the world's second-largest exporter of cut flowers, say they are being squeezed.
Prices for flowers remain flat. The falling value of the U.S. dollar has turned profits into losses. Several farms have closed, laying off thousands of employees. And a trade deal that would give Colombian flowers permanent duty-free entry into the United States may be rejected by the U.S. Congress.
"The business has always faced difficulties, but never more than now," said Augusto Solano, president of the Colombian Association of Flower Exporters, a trade group in Bogotá.
Part of the problem is heavy reliance on the United States, where nearly six of every 10 flowers sold are imported from Colombia.
Amid an economic slowdown, the U.S. dollar has lost more than one-third of its value against the Colombian peso.
Guess it's time to go back to your original cash crop, Colombia!
Valentine's Day is the one day in the middle of the winter when everyone wants roses, and the 150 laborers on this 35-acre rose plantation are working overtime to sell American customers fresh, fragrant flowers.
But for all the bustle and fuss of the peak season, growers in Colombia, the world's second-largest exporter of cut flowers, say they are being squeezed.
Prices for flowers remain flat. The falling value of the U.S. dollar has turned profits into losses. Several farms have closed, laying off thousands of employees. And a trade deal that would give Colombian flowers permanent duty-free entry into the United States may be rejected by the U.S. Congress.
"The business has always faced difficulties, but never more than now," said Augusto Solano, president of the Colombian Association of Flower Exporters, a trade group in Bogotá.
Part of the problem is heavy reliance on the United States, where nearly six of every 10 flowers sold are imported from Colombia.
Amid an economic slowdown, the U.S. dollar has lost more than one-third of its value against the Colombian peso.
Guess it's time to go back to your original cash crop, Colombia!
Credit Enhancement
UBS is offering super-duper bonds.
"Many investors are reluctant to buy MBS backed by Alt-A collateral including super senior paper, as they fear credit losses," UBS analysts wrote.
In a hypothetical super duper triple-A deal, the bonds have twice the credit enhancement of the super senior triple-A bond and four times the credit support of the straight triple-A bond. After running the structure through hypothetical scenarios, UBS determined that the super duper senior Alt-A hybrids offer great value relative to prime jumbo super senior hybrids and agency hybrids, and virtually eliminate the credit component.
Super duper senior Alt-A hybrids?
Mamma mia!
How about the Itsy-Bitsy-Teenie-Weenie-Yellow-Polka-Dot-Bikini-Shrinking-Mortgage-Collateral bonds? Is there any market for those?
And if you actually want to eliminate the credit component, as opposed to "virtually" eliminate the credit component, couldn't you just stick with US T-bonds?
"Many investors are reluctant to buy MBS backed by Alt-A collateral including super senior paper, as they fear credit losses," UBS analysts wrote.
In a hypothetical super duper triple-A deal, the bonds have twice the credit enhancement of the super senior triple-A bond and four times the credit support of the straight triple-A bond. After running the structure through hypothetical scenarios, UBS determined that the super duper senior Alt-A hybrids offer great value relative to prime jumbo super senior hybrids and agency hybrids, and virtually eliminate the credit component.
Super duper senior Alt-A hybrids?
Mamma mia!
How about the Itsy-Bitsy-Teenie-Weenie-Yellow-Polka-Dot-Bikini-Shrinking-Mortgage-Collateral bonds? Is there any market for those?
And if you actually want to eliminate the credit component, as opposed to "virtually" eliminate the credit component, couldn't you just stick with US T-bonds?
Stake Through Vampire's Heart. News at 11.
From South Florida: BankUnited blacklists 191 condo projects.
Interested buyers looking for mortgages to buy units in Miami's Opera Tower, Everglades on the Bay or Four Ambassadors shouldn't bother approaching BankUnited. The Miami-based bank has included them on a list of 191 condo projects it won't write loans for.
The Business Journal obtained a list of "non-permissible" projects used internally at BankUnited and updated as of Jan. 14. Most of the forbidden properties were in Miami and were added at the last update. It wasn't clear who at the bank wrote the list, but the author stated a reason for almost every project declared off-limits.
Declining market value was the biggest culprit, followed by high investor concentration -- as much as 70 percent in one case. BankUnited also cited numerous foreclosures, delinquent homeowners association dues, structural-based litigation and the bank's existing exposure in the buildings.
Interested buyers looking for mortgages to buy units in Miami's Opera Tower, Everglades on the Bay or Four Ambassadors shouldn't bother approaching BankUnited. The Miami-based bank has included them on a list of 191 condo projects it won't write loans for.
The Business Journal obtained a list of "non-permissible" projects used internally at BankUnited and updated as of Jan. 14. Most of the forbidden properties were in Miami and were added at the last update. It wasn't clear who at the bank wrote the list, but the author stated a reason for almost every project declared off-limits.
Declining market value was the biggest culprit, followed by high investor concentration -- as much as 70 percent in one case. BankUnited also cited numerous foreclosures, delinquent homeowners association dues, structural-based litigation and the bank's existing exposure in the buildings.
Wednesday, February 13, 2008
Profound Ignorance
From Reuters: Depression risk might force U.S. to buy assets.
Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.
That extreme scenario, which would aim to stave off deflation and stabilize the economy, is evolving as the base case for Bernard Connolly, global strategist at Banque AIG in London.
"Avoiding a depression is, unfortunately, going to have to involve either a large, quasi-permanent increase in the budget deficit -- preferably tax cuts -- or restoring overvaluation of equity prices," Connolly said on Monday.
"If conventional monetary policy is not enough to produce that result, the government may have to buy equities, financed by the Fed," Connolly said.
Let's say the obvious thing first. Mr. Connolly is a complete and utter fool.
That's right! I'm claiming that the global strategist of Banque AIG who worked for the EU quite literally doesn't understand elementary finance.
Let us avoid all the legal nitpicking about having to get Congressional permission and all that jazz, and let's stick to just the economics.
The short reason for why something like this can't work is that there isn't enough money to do so. You are talking about assets that are a significant fraction of World GDP.
So just "print the money" you say?
That would send the dollar into a tailspin; furious capital flight à l'Argentina; and long bond rates soaring to unheard heights.
This is turn would cause more foreclosures, cause a complete meltdown of the global financial system, and morph into a Financial Mad Max scenario.
You won't need land or gold then; you will need guns. And ammo. Lots of ammo.
Is this "possible"? Certainly.
In the same way that you might read in tomorrow's news about a homicidal killer on a unicycle who decapitated exactly 17 children while nibbling on a decomposing rabbit.
It's definitely "possible".
However if you think it is "likely", I suggest you send your resumé to Banque AIG pronto!
Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.
That extreme scenario, which would aim to stave off deflation and stabilize the economy, is evolving as the base case for Bernard Connolly, global strategist at Banque AIG in London.
"Avoiding a depression is, unfortunately, going to have to involve either a large, quasi-permanent increase in the budget deficit -- preferably tax cuts -- or restoring overvaluation of equity prices," Connolly said on Monday.
"If conventional monetary policy is not enough to produce that result, the government may have to buy equities, financed by the Fed," Connolly said.
Let's say the obvious thing first. Mr. Connolly is a complete and utter fool.
That's right! I'm claiming that the global strategist of Banque AIG who worked for the EU quite literally doesn't understand elementary finance.
Let us avoid all the legal nitpicking about having to get Congressional permission and all that jazz, and let's stick to just the economics.
The short reason for why something like this can't work is that there isn't enough money to do so. You are talking about assets that are a significant fraction of World GDP.
So just "print the money" you say?
That would send the dollar into a tailspin; furious capital flight à l'Argentina; and long bond rates soaring to unheard heights.
This is turn would cause more foreclosures, cause a complete meltdown of the global financial system, and morph into a Financial Mad Max scenario.
You won't need land or gold then; you will need guns. And ammo. Lots of ammo.
Is this "possible"? Certainly.
In the same way that you might read in tomorrow's news about a homicidal killer on a unicycle who decapitated exactly 17 children while nibbling on a decomposing rabbit.
It's definitely "possible".
However if you think it is "likely", I suggest you send your resumé to Banque AIG pronto!
Tuesday, February 12, 2008
"The Worst is Just Beginning"
The blog's first YouTube video features the Spinning Jenny who having been bitch-slapped by the Invisible Hand is spinning downwards again.
Guess it's not "all contained", huh? And what happened to the "strongest economy in my lifetime"? Morphed into the worst in a few months. That's not very strong, innit?!?
On a side note, worst poker player EVER. The buzzwords, the shifty eyes, the stutter. You couldn't do a worse bluffjob if you tried.
Asswipery
From All the Asswipe That's Fit to Print: Mortgage Crisis Spreads Past Subprime Loans..
The credit crisis is no longer just a subprime mortgage problem.
Word, son, word.
Home prices in the North Las Vegas neighborhood of Brenda Harris, a technology analyst at a casino company, have fallen 20 percent to 30 percent. The builder who sold her a new three-bedroom home on Pink Flamingos Place for about $392,000 in 2006 is now listing similar properties for $314,000. A larger house a block down from Ms. Harris was recently listed online for $310,000.
But Ms. Harris does not want to leave her home. She estimates that she has spent close to $40,000 on her property, about half for a down payment and much of the rest on a deck and landscaping.
“I’m not behind in my payments, but I’m trying to prevent getting behind,” Ms. Harris said. “I don’t want to ruin my credit.”
In addition to the declining value of her home, Ms. Harris, 53, will soon be hit with a sharply higher house payment. She has an option adjustable-rate mortgage, a loan that allows borrowers to pay less than the interest and principal due every month. The unpaid interest gets added to the principal balance. She is making the minimum monthly payments due on her loan, about $2,400.
But she knows she will not be able to pay the $3,400 needed to cover her interest and principal, which she will be required to pay once her loan balance reaches 115 percent of her starting balance. And under the terms of her loan, which was made by Countrywide Financial, she would have to pay a prepayment penalty of about $40,000 if she chose to refinance or sell her home before May 2009.
She said that she now wishes she had taken a traditional fixed-rate loan when she bought the home.
Let's see:
She can't afford a traditional loan that covers income and principal.
However, she wishes she had taken a traditional loan.
Even accounting for the difference in interest rates (miniscule), she can't afford it. Hence, it is not possible.
Somewhere out there the world's smallest violin is playing a sad melody for this woman's "dreams"!
The credit crisis is no longer just a subprime mortgage problem.
Word, son, word.
Home prices in the North Las Vegas neighborhood of Brenda Harris, a technology analyst at a casino company, have fallen 20 percent to 30 percent. The builder who sold her a new three-bedroom home on Pink Flamingos Place for about $392,000 in 2006 is now listing similar properties for $314,000. A larger house a block down from Ms. Harris was recently listed online for $310,000.
But Ms. Harris does not want to leave her home. She estimates that she has spent close to $40,000 on her property, about half for a down payment and much of the rest on a deck and landscaping.
“I’m not behind in my payments, but I’m trying to prevent getting behind,” Ms. Harris said. “I don’t want to ruin my credit.”
In addition to the declining value of her home, Ms. Harris, 53, will soon be hit with a sharply higher house payment. She has an option adjustable-rate mortgage, a loan that allows borrowers to pay less than the interest and principal due every month. The unpaid interest gets added to the principal balance. She is making the minimum monthly payments due on her loan, about $2,400.
But she knows she will not be able to pay the $3,400 needed to cover her interest and principal, which she will be required to pay once her loan balance reaches 115 percent of her starting balance. And under the terms of her loan, which was made by Countrywide Financial, she would have to pay a prepayment penalty of about $40,000 if she chose to refinance or sell her home before May 2009.
She said that she now wishes she had taken a traditional fixed-rate loan when she bought the home.
Let's see:
She can't afford a traditional loan that covers income and principal.
However, she wishes she had taken a traditional loan.
Even accounting for the difference in interest rates (miniscule), she can't afford it. Hence, it is not possible.
Somewhere out there the world's smallest violin is playing a sad melody for this woman's "dreams"!
Saturday, February 09, 2008
FIRE Economy to the Rescue
From Wate: Suspicious fire destroys Knox County home.
An abandoned house went up in flames in the early hours of Friday morning.
Firefighters say the home had not been occupied for several years and that electrical service had been disconnected.
From Daily News: Suspicious fire burns Westwood home.
A fire that roared through a Weatherbee Drive home yesterday afternoon, requiring the efforts of crews from six area towns to extinguish, is being labeled suspicious. The 28 year-old son of the homeowners was arrested for arson.
From Toledo: Suspicious fire damages North Toledo home
A suspicious fire damaged a two-story wood frame house in North Toledo early Wednesday, authorities said.
Firefighters were called to 447 West Manhattan Blvd. about 1:50 a.m. and found heavy fire in a dining room, authorities said. No one was home at the time of the fire.
Firefighters said there was a strong odor of gasoline inside the home prompting them to call Toledo fire investigator Mike Smith to the scene.
From Jackson, TN: Fire destroys vacant building in Trenton.
A fire in Trenton on Friday night destroyed a vacant building that had once housed a car dealership and a bus station.
From Yakima, WA: Suspicious Fire Devours Wapato House.
Fire devoured a house in Wapato, and firefighters think it’s arson. It happened late Monday night on Acacia Lane.
An abandoned garage and mobile home caught fire and lit up in flames.
Firefighters say the fire is suspicious in nature. They say it is the second or third time they have responded to that area in the past year, to put out other fires that were ruled arson.
From Lubbock, TX: Fifth blaze since late December ruled arson by investigators.
A Central Lubbock neighborhood was marred by arson Wednesday night for the fifth time in a little more than a month.
And fire investigators don't have much to go on, despite a $1,000 reward being offered for information leading to an arrest.
Looks like the FIRE economy is going gangbusters!
An abandoned house went up in flames in the early hours of Friday morning.
Firefighters say the home had not been occupied for several years and that electrical service had been disconnected.
From Daily News: Suspicious fire burns Westwood home.
A fire that roared through a Weatherbee Drive home yesterday afternoon, requiring the efforts of crews from six area towns to extinguish, is being labeled suspicious. The 28 year-old son of the homeowners was arrested for arson.
From Toledo: Suspicious fire damages North Toledo home
A suspicious fire damaged a two-story wood frame house in North Toledo early Wednesday, authorities said.
Firefighters were called to 447 West Manhattan Blvd. about 1:50 a.m. and found heavy fire in a dining room, authorities said. No one was home at the time of the fire.
Firefighters said there was a strong odor of gasoline inside the home prompting them to call Toledo fire investigator Mike Smith to the scene.
From Jackson, TN: Fire destroys vacant building in Trenton.
A fire in Trenton on Friday night destroyed a vacant building that had once housed a car dealership and a bus station.
From Yakima, WA: Suspicious Fire Devours Wapato House.
Fire devoured a house in Wapato, and firefighters think it’s arson. It happened late Monday night on Acacia Lane.
An abandoned garage and mobile home caught fire and lit up in flames.
Firefighters say the fire is suspicious in nature. They say it is the second or third time they have responded to that area in the past year, to put out other fires that were ruled arson.
From Lubbock, TX: Fifth blaze since late December ruled arson by investigators.
A Central Lubbock neighborhood was marred by arson Wednesday night for the fifth time in a little more than a month.
And fire investigators don't have much to go on, despite a $1,000 reward being offered for information leading to an arrest.
Looks like the FIRE economy is going gangbusters!
Bait and Switch
From Yahoo!: A Credit Card You Want to Toss.
Credit-card issuers have drawn fire for jacking up interest rates on cardholders who aren't behind on payments, but whose credit score has fallen for another reason. Now, some consumers complain, Bank of America is hiking rates based on no apparent deterioration in their credit scores at all.
The major credit-card lender in mid-January sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving an explanation for the increase, according to copies of five letters obtained by BusinessWeek. Fine print at the end of the letter -- headed "Important Amendment to Your Credit Card Agreement" -- advised calling an 800-number for the reason, but consumers who called say they were unable to get a clear answer. "No one could give me an explanation," says Eric Fresch, a Huron (Ohio) engineer who is on time with his Bank of America card payments and knows of no decline in the status of his overall credit.
Analysts also say they are surprised by the magnitude of the rate raises Bank of America is imposing on affected cardholders. Michael Jordan, 25, a software developer who lives in Higganum, Conn., says he received a letter from Bank of America in late January advising him that his card rate would rise from 9.99% to 24.99%. The software developer, who earns $80,000 per year, says he was "shocked" because his payments had been on time and his credit score hadn't changed in the last year. In fact, Jordan says, he has only $4,500 in overall outstanding credit-card debt on two cards and that, on the Bank of America card in question, he had paid down his balance to $3,000 from $3,700 last August.
Firstly, the rates are going up because that's what happens in a "credit crunch". However, individuals do not care about the "larger macroeconomic picture". They care about what happens to them.
From the "micro" perspective, they are morons.
Why would you be at the mercy of an industry where in sharp contrast with all the principles of contract law, all rules can be changed retroactively and unilaterally?
However, that's what credit cards do, and legally!
However, people take on debt voluntarily, and the credit cards change the rules on them once they are in no position to negotiate. What's not to understand?
For this, one must call the sheeple for what they are -- imbecilic retarded morons.
Credit-card issuers have drawn fire for jacking up interest rates on cardholders who aren't behind on payments, but whose credit score has fallen for another reason. Now, some consumers complain, Bank of America is hiking rates based on no apparent deterioration in their credit scores at all.
The major credit-card lender in mid-January sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving an explanation for the increase, according to copies of five letters obtained by BusinessWeek. Fine print at the end of the letter -- headed "Important Amendment to Your Credit Card Agreement" -- advised calling an 800-number for the reason, but consumers who called say they were unable to get a clear answer. "No one could give me an explanation," says Eric Fresch, a Huron (Ohio) engineer who is on time with his Bank of America card payments and knows of no decline in the status of his overall credit.
Analysts also say they are surprised by the magnitude of the rate raises Bank of America is imposing on affected cardholders. Michael Jordan, 25, a software developer who lives in Higganum, Conn., says he received a letter from Bank of America in late January advising him that his card rate would rise from 9.99% to 24.99%. The software developer, who earns $80,000 per year, says he was "shocked" because his payments had been on time and his credit score hadn't changed in the last year. In fact, Jordan says, he has only $4,500 in overall outstanding credit-card debt on two cards and that, on the Bank of America card in question, he had paid down his balance to $3,000 from $3,700 last August.
Firstly, the rates are going up because that's what happens in a "credit crunch". However, individuals do not care about the "larger macroeconomic picture". They care about what happens to them.
From the "micro" perspective, they are morons.
Why would you be at the mercy of an industry where in sharp contrast with all the principles of contract law, all rules can be changed retroactively and unilaterally?
However, that's what credit cards do, and legally!
However, people take on debt voluntarily, and the credit cards change the rules on them once they are in no position to negotiate. What's not to understand?
For this, one must call the sheeple for what they are -- imbecilic retarded morons.
Friday, February 08, 2008
The Economics of Pop Culture
From CNN Finance: The economics of Britney Spears.
In the days after the Britney Spears soap opera rode a police-escorted gurney to its apex, celeb-mag sales spiked, traffic jammed gossip Web sites, tabloid TV ratings rose and paparazzi photo prices surged.
For a growing number of people and businesses, Britney's saga is about money: every time she sinks to new lows, cash flows. And these days, no one is above the fray.
Any time a magazine can boost newsstand sales past its average, the revenue is booked nearly entirely as profit, Harrington said: "People prints 2.5 million copies and sells about an average of 1.5 million. If they have an issue that sells 2 million, the extra half million goes to the bottom line."
Yep, any time you boost the average, it flows to the bottom line. Most importantly, it flows to the CEO's bonus.
Spears is just one of many stars driving the growing multibillion dollar celebrity news industry. But the Spears story in particular, with a new twist nearly every week, has become a very profitable sub-sector unto itself.
"Britney is the most bankable celebrity out there right now, and she has been for the past year," said Francois Navarre, founder of the paparazzi agency X17.
X17, which owns the infamous picture of a bald Spears taken in February, has a team of photographers tracking her at all times. "For us, she's the star No. 1," Navarre said.
On the flipside, the Spears story isn't making money for everyone. There are costs involved, too. For instance, the increased scrutiny puts a burden on Los Angeles civil service units, which have to keep Spears safe and public spaces uncluttered.
The L.A. Police Department wouldn't estimate the extra costs Spears generates. Her ambulance incident last week was handled by officers already on duty. The fire department said it was considering charging Spears for the ambulance ride, but did not disclose how much.
Oldest rule of capitalism: privatize the profits; socialize the losses.
Now that she's back in focus for offstage drama, her music is an afterthought. And at some point, most industry experts agree, the public will grow tired of the Spears story.
That doesn't mean the economy that sprouted around her will wilt.
"If it's not Britney, then it'll be Lindsay or Paris or some other person we haven't heard of yet," Smith said.
BINGO!!!
Nobody gives a crap about her, or Princess Diana, or Anna-Nicole Smith, or Lindsay Lohan, or Paris Hilton, or Amy Winehouse. They are only as good as they generate controversy and sales. If not, new candidates will arise. If none arise, new candidates will be created.
Does anyone in their right mind genuinely believe anything Ann Coulter says? She will say anything to generate "controversy" because the controversy fuels sales. That's all that matters.
I'm quite surprised to see this so nakedly in print. I guess the sheeple don't read CNNfn.
They are basically disposable which is the job of pop culture. It takes an extraordinary amount of foolishness not to see the flow of money.
In the days after the Britney Spears soap opera rode a police-escorted gurney to its apex, celeb-mag sales spiked, traffic jammed gossip Web sites, tabloid TV ratings rose and paparazzi photo prices surged.
For a growing number of people and businesses, Britney's saga is about money: every time she sinks to new lows, cash flows. And these days, no one is above the fray.
Any time a magazine can boost newsstand sales past its average, the revenue is booked nearly entirely as profit, Harrington said: "People prints 2.5 million copies and sells about an average of 1.5 million. If they have an issue that sells 2 million, the extra half million goes to the bottom line."
Yep, any time you boost the average, it flows to the bottom line. Most importantly, it flows to the CEO's bonus.
Spears is just one of many stars driving the growing multibillion dollar celebrity news industry. But the Spears story in particular, with a new twist nearly every week, has become a very profitable sub-sector unto itself.
"Britney is the most bankable celebrity out there right now, and she has been for the past year," said Francois Navarre, founder of the paparazzi agency X17.
X17, which owns the infamous picture of a bald Spears taken in February, has a team of photographers tracking her at all times. "For us, she's the star No. 1," Navarre said.
On the flipside, the Spears story isn't making money for everyone. There are costs involved, too. For instance, the increased scrutiny puts a burden on Los Angeles civil service units, which have to keep Spears safe and public spaces uncluttered.
The L.A. Police Department wouldn't estimate the extra costs Spears generates. Her ambulance incident last week was handled by officers already on duty. The fire department said it was considering charging Spears for the ambulance ride, but did not disclose how much.
Oldest rule of capitalism: privatize the profits; socialize the losses.
Now that she's back in focus for offstage drama, her music is an afterthought. And at some point, most industry experts agree, the public will grow tired of the Spears story.
That doesn't mean the economy that sprouted around her will wilt.
"If it's not Britney, then it'll be Lindsay or Paris or some other person we haven't heard of yet," Smith said.
BINGO!!!
Nobody gives a crap about her, or Princess Diana, or Anna-Nicole Smith, or Lindsay Lohan, or Paris Hilton, or Amy Winehouse. They are only as good as they generate controversy and sales. If not, new candidates will arise. If none arise, new candidates will be created.
Does anyone in their right mind genuinely believe anything Ann Coulter says? She will say anything to generate "controversy" because the controversy fuels sales. That's all that matters.
I'm quite surprised to see this so nakedly in print. I guess the sheeple don't read CNNfn.
They are basically disposable which is the job of pop culture. It takes an extraordinary amount of foolishness not to see the flow of money.
Thursday, February 07, 2008
Top Ten
... bullshit "professions" enabled by the housing bubble. (If you haven't heard of them, don't worry. They won't be around for long.)
10. aromatherapy
9. house staging
8. feng shui "expert"
7. scrapbooking
6. make-your-own-candleshop
5. yoga studio
4. doggie spas
3. koi pond "experts", koi breeders, etc.
2. sign twirlers
And the top candidate:
1. life coach.
10. aromatherapy
9. house staging
8. feng shui "expert"
7. scrapbooking
6. make-your-own-candleshop
5. yoga studio
4. doggie spas
3. koi pond "experts", koi breeders, etc.
2. sign twirlers
And the top candidate:
1. life coach.
Wednesday, February 06, 2008
Mixed Metaphors
From Bloomberg: Toll Has Seventh Straight Drop in Quarterly Revenue.
``It's like driving the Titanic, things don't turn on a dime,'' said Dave Crossman, an analyst at Kirr Marbach & Co. in Columbus, Indiana.
When the going gets tough, the weak must go to their desks to mix their metaphors in a now half-empty glass. However, make sure you don't bite the hand that rocks the cradle.
Where was I going with that?
Oh, this is as much fun as shooting monkeys in a barrel.
``It's like driving the Titanic, things don't turn on a dime,'' said Dave Crossman, an analyst at Kirr Marbach & Co. in Columbus, Indiana.
When the going gets tough, the weak must go to their desks to mix their metaphors in a now half-empty glass. However, make sure you don't bite the hand that rocks the cradle.
Where was I going with that?
Oh, this is as much fun as shooting monkeys in a barrel.
Tuesday, February 05, 2008
Bank Reserves
(Source: Federal Reserve.)If that graph doesn't scare the bleepin' bejeesus out of you, nothing will!
Bling Bling
From CBS5: Auto Loan Defaults Newest Financial Meltdown.
According to Power Information Network, 1.85 of the 9.6 million customers in 2006 who leased or financed a new car were subprime borrowers or consumers with weak credit.
Vivian Snyder has strong credit and is not classified as subprime, but she is one of many consumers who can't afford the car she leased. Snyder drives a brand new convertible BMW with a MSRP listed at approximately $100,000.
Most consumers can't afford it, and neither can Vivian. That's because the monthly lease payment is $1,300. It eats up half her income which is a $2,500 disability check.
But, it's bling, baby, bling!
She got it at BMW of Fremont without showing a drivers license, pay stub, or any proof of income.
How did this happen? Apparently, her income was inflated by nearly 150%.
Vivian has only a few options. She can plead with the finance company to release her from the lease or have the car repossessed, losing her good credit and a $30,000 down payment which consisted of her entire retirement savings.
She cashed out her "entire" retirement for a depreciating object; a glorified metal cage that gets you from Point A to Point B. Even if the income were not inflated, this is lunacy. The people who can afford a $100K car don't need financing; if you need financing, you can't afford a $100K car.
It's really freakin' extraordinary, isn't it? This is basic decision making. Cashing retirement for bling car = bad.
There is something really really wrong with people, and all that this bubble has done is reveal the rot underneath that was always present.
But, it's all good, baby, it's all good!
According to Power Information Network, 1.85 of the 9.6 million customers in 2006 who leased or financed a new car were subprime borrowers or consumers with weak credit.
Vivian Snyder has strong credit and is not classified as subprime, but she is one of many consumers who can't afford the car she leased. Snyder drives a brand new convertible BMW with a MSRP listed at approximately $100,000.
Most consumers can't afford it, and neither can Vivian. That's because the monthly lease payment is $1,300. It eats up half her income which is a $2,500 disability check.
But, it's bling, baby, bling!
She got it at BMW of Fremont without showing a drivers license, pay stub, or any proof of income.
How did this happen? Apparently, her income was inflated by nearly 150%.
Vivian has only a few options. She can plead with the finance company to release her from the lease or have the car repossessed, losing her good credit and a $30,000 down payment which consisted of her entire retirement savings.
She cashed out her "entire" retirement for a depreciating object; a glorified metal cage that gets you from Point A to Point B. Even if the income were not inflated, this is lunacy. The people who can afford a $100K car don't need financing; if you need financing, you can't afford a $100K car.
It's really freakin' extraordinary, isn't it? This is basic decision making. Cashing retirement for bling car = bad.
There is something really really wrong with people, and all that this bubble has done is reveal the rot underneath that was always present.
But, it's all good, baby, it's all good!
Pissing in a Thunder$torm
From the Washington Post: Housing Crisis Casts a Cloud Over Sun Belt.
Formerly booming Sun Belt cities are the epicenters of this economic downturn. Many economists believe that the likes of Phoenix, Las Vegas, Miami and San Diego are already in recession.
Within these regions, the pain is concentrated among people who overextended themselves on mortgage debt to take advantage of housing prices that seemingly did nothing but rise. Because many of those people are facing massive debt, the tax rebates of $500 to $600 per person contemplated by Congress would offer little solace.
"We're in so deep that it doesn't seem like anything will help," said Rebekah Ao, 33, a pregnant homemaker who lives in a new four-bedroom home in Avondale with her husband, Otto, a truck driver. The Aos, with $50,000 in income, owe a total of $607,000 on mortgages for two houses they bought since they moved to the Phoenix area about two years ago.
Of course, nothing will help. You've borrowed more than 12X income.
3X is the limit if, I don't know, you want to eat or some such.
And there's a bun in the oven too. Maybe you can put the placenta on the barbeque! That'll save you a trip to McD's. I've heard it's quite delicious.
Within these regions, the pain is concentrated among people who overextended themselves on mortgage debt to take advantage of housing prices that seemingly did nothing but rise. Because many of those people are facing massive debt, the tax rebates of $500 to $600 per person contemplated by Congress would offer little solace.
Rival stimulus plans being considered in Congress promise a cash infusion of as much as $1,200 per couple and $300 per child.
Whatever. This is all grandstanding.
Pissing in front of the Niagara Falls, and saying, "Mine is bigger."
Formerly booming Sun Belt cities are the epicenters of this economic downturn. Many economists believe that the likes of Phoenix, Las Vegas, Miami and San Diego are already in recession.
Within these regions, the pain is concentrated among people who overextended themselves on mortgage debt to take advantage of housing prices that seemingly did nothing but rise. Because many of those people are facing massive debt, the tax rebates of $500 to $600 per person contemplated by Congress would offer little solace.
"We're in so deep that it doesn't seem like anything will help," said Rebekah Ao, 33, a pregnant homemaker who lives in a new four-bedroom home in Avondale with her husband, Otto, a truck driver. The Aos, with $50,000 in income, owe a total of $607,000 on mortgages for two houses they bought since they moved to the Phoenix area about two years ago.
Of course, nothing will help. You've borrowed more than 12X income.
3X is the limit if, I don't know, you want to eat or some such.
And there's a bun in the oven too. Maybe you can put the placenta on the barbeque! That'll save you a trip to McD's. I've heard it's quite delicious.
Within these regions, the pain is concentrated among people who overextended themselves on mortgage debt to take advantage of housing prices that seemingly did nothing but rise. Because many of those people are facing massive debt, the tax rebates of $500 to $600 per person contemplated by Congress would offer little solace.
Rival stimulus plans being considered in Congress promise a cash infusion of as much as $1,200 per couple and $300 per child.
Whatever. This is all grandstanding.
Pissing in front of the Niagara Falls, and saying, "Mine is bigger."
$cared $hitle$$
From the New York Times: Economy Fitful, Americans Start to Pay as They Go.
For more than half a century, Americans have proved staggeringly resourceful at finding new ways to spend money.
For the 34 million households who took money out of their homes over the last four years by refinancing or borrowing against their equity — roughly one-third of the nation — the savings rate was running at a negative 13 percent in the middle of 2006, according to Moody’s Economy.com. That means they were borrowing heavily against their assets to finance their day-to-day lives.
By late last year, the savings rate for this group had improved, but just to negative 7 percent and mostly because tightened standards made loans harder to get.
Only in America would a change in savings rate from -13% to -7% be viewed as a "good thing".
Fran Barbaro has an M.B.A. and a résumé of computer industry jobs with salaries reaching $150,000 a year. She used to have a stock portfolio worth about $1 million. She hung original art on the walls of her three-bedroom house in Boston.
But divorce, illness and motherhood drained her savings. Her home is worth less than she owes, and she owes another $200,000 to credit card companies, banks and tax collectors.
Ms. Barbaro, 50, said she knew she was living beyond her means. But her house demanded work. Her two boys needed after-school programs running $25,000 a year. Medical bills multiplied.
“These were simple day-to-day expenses,” she said. “The money was always there.”
Until it wasn’t. Her take-home pay is $5,200 a month, but her debt payments reach $4,400.
Ms. Barbaro has rented out her house while negotiating to lower her mortgage. She has moved to an apartment, where her sons sleep in the lone bedroom while she sleeps on a pull-out sofa.
“It’s the worst,” Ms. Barbaro said. “How do you salvage what you have and hopefully go back?”
You don't. You're screwed, bee-yatch!
“People have come to view credit as savings,” said Michelle Jones, a vice president at the Consumer Credit Counseling Service of Greater Atlanta.
And this, of course, is the problem. When did the debit side of the balance sheet be seen as a "good thing"?
For more than half a century, Americans have proved staggeringly resourceful at finding new ways to spend money.
For the 34 million households who took money out of their homes over the last four years by refinancing or borrowing against their equity — roughly one-third of the nation — the savings rate was running at a negative 13 percent in the middle of 2006, according to Moody’s Economy.com. That means they were borrowing heavily against their assets to finance their day-to-day lives.
By late last year, the savings rate for this group had improved, but just to negative 7 percent and mostly because tightened standards made loans harder to get.
Only in America would a change in savings rate from -13% to -7% be viewed as a "good thing".
Fran Barbaro has an M.B.A. and a résumé of computer industry jobs with salaries reaching $150,000 a year. She used to have a stock portfolio worth about $1 million. She hung original art on the walls of her three-bedroom house in Boston.
But divorce, illness and motherhood drained her savings. Her home is worth less than she owes, and she owes another $200,000 to credit card companies, banks and tax collectors.
Ms. Barbaro, 50, said she knew she was living beyond her means. But her house demanded work. Her two boys needed after-school programs running $25,000 a year. Medical bills multiplied.
“These were simple day-to-day expenses,” she said. “The money was always there.”
Until it wasn’t. Her take-home pay is $5,200 a month, but her debt payments reach $4,400.
Ms. Barbaro has rented out her house while negotiating to lower her mortgage. She has moved to an apartment, where her sons sleep in the lone bedroom while she sleeps on a pull-out sofa.
“It’s the worst,” Ms. Barbaro said. “How do you salvage what you have and hopefully go back?”
You don't. You're screwed, bee-yatch!
“People have come to view credit as savings,” said Michelle Jones, a vice president at the Consumer Credit Counseling Service of Greater Atlanta.
And this, of course, is the problem. When did the debit side of the balance sheet be seen as a "good thing"?
Sunday, February 03, 2008
Money v/s Money Substitutes
From the NC Times: Lenders freeze equity lines in response to tumbling property values.
Several banks issued statements this week saying they were temporarily suspending withdrawals from open home equity lines out of concern that borrowers could owe more than the house is worth.
Historic declines in property values have stripped many local homeowners of their safety nets as lenders freeze lines of credit ---- even on people who are current on their mortgage payments.
Those lines are drying up as Countrywide Financial announced Thursday that it has cut off 122,000 borrowers from pulling any more equity out of their homes. Wells Fargo, Washington Mutual and JPMorgan Chase released statements Friday saying they have also started halting equity lines because of tumbling home values but declined to provide numbers of suspended equity lines.
The Home ATM™ is closed. Thank you, come again!
"It's an emotional hardship," said Patti Lien of Menifee. "We kept our credit good. We've done everything right, and this is what we get because Countrywide made all these crappy loans."
The Home ATM™ is closed. Thank you, come again!
"It really wreaked havoc for me," said Dan Holbrook, a Fallbrook homeowner. Working in the real estate industry, he is often paid in lump sums.
At the end of the year, Holbrook paid off his equity line with a $50,000 payment. Four days later, Bank of America froze his equity line, he said.
"I'm scrambling right now," he said. "It has created a tremendous amount of stress because that was money to live on for me."
The Home ATM™ is closed. Thank you, come again!
Holbrook, a real estate consultant, said most people view such loans as emergency-only money. That is how he viewed it until the housing market slowed, he said.
"A lot of people figured these equity lines were safety nets," he said. "The problem is many of us are on a high-wire act right now. And you think the net is there, and you fall and it's not."
The Home ATM™ is closed. Thank you, come again!
Lien said she knew of the language, but thought it only applied to homeowners who encountered credit problems and did not know an external factor such as declining property values could put a stop to the loan.
"It's a hardship. It's money that we thought was there and it's not," she said. "We didn't go on a cruise, we didn't buy new cars but we're still suffering because of others."
The Home ATM™ is closed. Thank you, come again!
Several banks issued statements this week saying they were temporarily suspending withdrawals from open home equity lines out of concern that borrowers could owe more than the house is worth.
Historic declines in property values have stripped many local homeowners of their safety nets as lenders freeze lines of credit ---- even on people who are current on their mortgage payments.
Those lines are drying up as Countrywide Financial announced Thursday that it has cut off 122,000 borrowers from pulling any more equity out of their homes. Wells Fargo, Washington Mutual and JPMorgan Chase released statements Friday saying they have also started halting equity lines because of tumbling home values but declined to provide numbers of suspended equity lines.
The Home ATM™ is closed. Thank you, come again!
"It's an emotional hardship," said Patti Lien of Menifee. "We kept our credit good. We've done everything right, and this is what we get because Countrywide made all these crappy loans."
The Home ATM™ is closed. Thank you, come again!
"It really wreaked havoc for me," said Dan Holbrook, a Fallbrook homeowner. Working in the real estate industry, he is often paid in lump sums.
At the end of the year, Holbrook paid off his equity line with a $50,000 payment. Four days later, Bank of America froze his equity line, he said.
"I'm scrambling right now," he said. "It has created a tremendous amount of stress because that was money to live on for me."
The Home ATM™ is closed. Thank you, come again!
Holbrook, a real estate consultant, said most people view such loans as emergency-only money. That is how he viewed it until the housing market slowed, he said.
"A lot of people figured these equity lines were safety nets," he said. "The problem is many of us are on a high-wire act right now. And you think the net is there, and you fall and it's not."
The Home ATM™ is closed. Thank you, come again!
Lien said she knew of the language, but thought it only applied to homeowners who encountered credit problems and did not know an external factor such as declining property values could put a stop to the loan.
"It's a hardship. It's money that we thought was there and it's not," she said. "We didn't go on a cruise, we didn't buy new cars but we're still suffering because of others."
The Home ATM™ is closed. Thank you, come again!
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