Have been trying to educate myself on economic issues by reading Calculated Risk, the WSJ, and other publications. It makes my eyes glaze over, but Krugman pulls this together into a more coherent construct.
Suddenly, things that looked bad individually look even worse in the aggregate. Reps. Brad Miller and Linda Sanchez are discussing this on DKos today — worth dropping in to chat.
– Via Krugman’s blog:
According to the OFHEO data, prices in Houston rose only 26% over the last five years. But prices in Miami rose 115%. That is, the bubbles in the most bubbleicious areas were bigger than anything we’ve ever seen — and there’s every reason to think that the required fall in prices in those areas will be much bigger than anything we’ve seen since the Great Depression.
This reads like Enron for housing markets, doesn’t it?
– Energy prices are still high. Meaning ugly household budgets. Take home heating oil: the recent increase in aid to the poor for winter heating can’t keep pace with increased costs.
– There is a growing consensus that a recession is coming. Folks who are already being squeezed will have to tighten their belts even more — some with no give left.
– OTOH, as Mr. ReddHedd pointed out over coffee, everyone isn’t defaulting, and a whole lot of lower income people have purchased homes due to low rates that wouldn’t have otherwise. (Small consolation to those who are defaulting though.) There is a personal responsibility component: when we were looking at houses, we calculated a payment that didn’t put us too far out on a shaky payment limb and then applied for a loan. We were offered some INSANE loan amounts — and borrowed a lot less because it was better for us. Unfortunately, some folks didn’t second guess those bank offers or catch the fine print in bad loans.
The responsibility for this falls partly on predatory lenders deliberately selling inappropriate products to low information consumers (this isn’t all banks by any means). And on overinflated banking risk rosy scenario calculations. But it also falls in part on those who signed up for loans they couldn’t afford. It’s deception and poor planning in one bundle — and we are all going to pay for it.
According to Krugman, it is going to be a bumpy ride. For everyone.
The costs of loan defaults, of housing value deflation, of increasing rental prices, of increased banking costs to recoup losses, of investment losses in retirement funds…it goes on and on. And that doesn’t begin to touch families losing their homes. As Krugman says, there was a moment where things could have been corrected, a temporary patch that didn’t hold was applied — and then it got worse again. How much worse? Dunno…we are still sliding.
I can’t help but think about those folks on the margins who can least afford to pay for someone else’s bad risks. What a mess.
(H/T Allan, GSD)
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Christy!
zed?
Morning, Christy…
Yes, things look grim.
remeber RTC…..another Bush another bubble….they always get bailed out….others not so much……please tell me how these people get BACK INTO OFFICE?
thats remember!
I bet we’ll go straight into a Depression, especially if the warmongering, lying, stinking, criminal, Thugs in the White House attack Iran.
We are just beginning to see the tip of the iceberg. No one could have predicted… Those of us who can get through it are the lucky ones. There will be increased numbers of homeless and desperate people. I have a loser friend bunking at my house. A friend has another loser living with him. Two more losers are living with my mother. There are millions of them. I call them losers b/c they are people who lost the game. Lost their homes, jobs, etc. Some drug abuse, alcoholism and the inability to maintain a steady job.
I’ve seen sales prices in LA that have already been dropped 25 to 30 percent, and no sign that it will stop there.
Another scary part is that there are a lot of people who still think they can make money quickly in real estate ‘investment’. Speculators is what they should be called – they really aren’t investing, they’re gambling that the market price will go up before they need to pay that money back.
I’ve also heard that real estate salespeople like to find out the maximum you can spend, then they’ll show you nothing below that price. Never tell them the absolute maximum you can afford, adn don’t tell them the maximum the bank will finance. Always tell them less than that. (Remember, the real estate salesperson works for the seller, not the buyer.)
The real meaning of high energy prices is that Bush energy cronies reap obscene record profits year after year. Another mission accomplished.
people living out of cars already…..dayyyyyyyyyyyyyyyyyyum …saw some
Diebold voting machines and fake issues like gay marriage keep Republics in office.
A lot of the players in this debacle were being payed based on a percentage of the action. They had every incentive to say yes and virtually none to say no.
i think there’s more to it than this. looks like a lot of people borrowed money using arms because they expected to be able to refinance after a few years of on time payments and get a decent rate on a fixed loan. this was not a bad plan… except that now 1) there is a credit crunch and 2) if housing prices have tanked, they have no way to refinance a mortgage that is now more than teh house is worth.
neither of these two things are the borrower’s fault. but it is causing people to start to default on their loans when the rate increases kick in. increasing defaults are adding to the credit crunch and forcing housing prices lower in a vicious cycle.
Time to put FEMA trailers on the Bush Brush Ranch and get some use out of two useless things.
The worst part about this is not knowing how much further things are going to sink or how quickly. And knowing so many people who live close to the edge already, it’s really difficult to watch this happen to them. How anyone could see all of this and remain detached from it somehow is beyond me — reading up on a lot of this while watching the Krugman video last night, I was struck by the “social darwinism” tone of so much of the writing even on predatory lending practices. It boggles my mind the level of callousness that would take.
CHS, I will watch the tape but I have been preparing for this day by locking home loan in at 6% with a payment of 369 per month, own no credit cards, pay as you go, and a monthly outflow of less than $1200 for home, energy, and basics. No satellite TV, we use public parks, read at the library, and live without many frills. We throw out less than two garbage bags and recycle all else per month. I consider myself a self taught third-worlder,preferring to consume less so my kids will have more.(I have three under 12)
My Historical specialty is 1930’s and 1940’s America. The depression will hit next March.
And so the Milton Friedman school of unfettered markets say the market has spoken. As Clusterfu#k said this mornin ” I bought in Paraguay, FU
Pay for someone else’s bad risks, yes, but the predatory lender side is the area we can most effect, by demanding sensible regulations for all financials. There’s a whole class of vampires out there, and they’re sucking the lifeblood out of the American middle and poorer classes–and democracy itself–while they’re dancin’ together with their pearls on.
I’m just reading up on something called Viaticals. If you think they’re vampires in the housing industry, that’s another sickening bunch of predators in life insurance.
Government is us, it should protect the power-less from the power-full. It can’t solve each individual situation, but it can act in the people’s best interest in common sense regulations. You know, rule of law, not lawless rule…. Failure to exercise sensible oversight and regulation of the unseen hand just invites ‘em to stick it you know where.
Just one more example of the cynical, corrupt world o’BushCo. Some legacy.
Prairie Sunshine, welcoming you to stop by Prairie Country from time to time
something else that has contributed to teh problem is unscrupulous mortgage brokers who, instead of getting people the best rate they qualified for, got them into some really fucked up loans.
most people didn’t know that their broker may be out to rip them off. brokers sell themselves as the people who will get the best rates and best loan by shopping around for the home buyer… but in far too many cases, that’s not what happened.
Given the current makeup of Congress and with Cheney still in control of the WH, nothing will change unless and until a real change election happens.
the churches….poor peeps=bad peeps
Good thread, Christy. And, as always, the plan is for bushCo to hold on long enough to get out of town and hang the turd-lei they’ve so lovingly crafted, around the democrats necks.
A few months from now, bush and the goopers will be desperately trying to fend all this off, until 2008, when they can miraculously transfer it to the donkeys. They will be pushing for preventive-for-one-year legislation that will look like bits and pieces of Roosevelt’s New Deal, only it will be short-term, to fit in with the end of the democratic “honeymoon”. (It’s going to be a really short, and shitty, honeymoon, for the next occupant of the white house.)
I still believe time is on the democrats side, ‘though. A couple more U.S. sanctioned and U.S. sat-intel-supplied raids on the Kurdish north by the Turks, and there could be wholesale withdrawal of Peshmerga units from the “Iraqi army”, along with their MP’s bailing out of the parliament.
All that’s happened is that bush has smeared 30,000 troops worth of clearasil on the pulsating, infected, zit of Iraq, and has paid the Sunni insurgents huge sums of money to temporarily switch their attention from our troops to what’s left of Al Queada there. The problem is, of course, that that’s like giving the mob protection money; what happens when you stop?
At some point, the idiocy of talking about “wasteful government spending on social programs that don’t work” will become apparent (If it hasn’t already) to lots of voters who can read that we’re pissing $2.5 billion a week down the Mesopotamian urinal, in the effort to cover bush and the GOP’s asses long enough to let them get out of town.
Glad you’re studying all this. We’re all about to go to Econ 101 class, largely due to george bush and his “war that will pay for itself”.
:o)
yeah, i remember when krugman wrote his column telling everyone to lock in a fixed mortage now. he was almost perfect in his timing.
Fallout from subprime mortgage foreclosures:
These multinational banks will just write off the losses. And Morgan Stanley’s making sure we owe China more money. China set up that Chinese investment fund with its US dollar reserves to begin with, for the purpose of investments in the US and within China. Swell, eh?
Some of the fundamental problems with the housing market at the moment:
o Supply widely outstrips demand.
o Housing costs in too many areas are wildly above affordable levels for all but the most wealthy.
o In many places it is much cheaper to rent than it is to buy.
o Banks are becoming increasingly reluctant to loan money to any but the most highly credit-worthy borrowers.
the recession has been here for quite some time now, they’ve been juggling numbers so they can make believe there is growth, that growth is to corporations and the wealthiest among us, not the middle class
Christy, Entry level homes in CA or the Northeast are so costly as to exclude even most middle income earners unless they assume much larger debt than you or I would be willing to risk.
This wasn’t about getting poor folks into homes. If it were, the brokers would have been matching people with the most favorable loan their circumstances warranted and we hear that many who would have qualified for a traditional loan got steered to the junk.
Rather, as was pointed out at TPM yesterday by Reps Miller and Sanchez, the deal was to push buyers into these junk loans with high fees and prepayment penalties so that when the rates reset and they tried to refinance, the expected equity increase would actually inure to the lenders, not the homeowners who may have thought they’d get in on the low rates and turn around a profit before the reset but who were in reality just a vehicle for the banks’ profit from the housing bubble.
As the title of Christy’s post suggests, it’s a BIG BUBBLE right now and that means ONE PRICK (no pun intended LOL) can pop it. Right straight into a Depression for America! I don’t see it as happening gradually. Right now here in Maine, it costs for the staples: $3.13/lb for hamburger, $4.85 for a gallon of milk, and $3 for a carton of eggs. The poor has to 2 hours a week just to buy these things and don’t get me started on the price of gas for the cars to get to work each day. ;-)
America needs an infrastructure-fixin’ and energy, medical, scientific-innovative economy, not a war machine.
our liberal media has sold this tale lock stock/step and barrel to the rubes,and Britts sister is 1 million dollarz preggars..imagine that/
yup
I’ve been following these developments for some time.
We moved from MD to northern NM in ‘99. Our house took almost a year to sell, and when it did, we realized an appreciation of less than one percent for the 12 years we’d owned the house. THIS WAS NORMAL. Everything that happened since 2000 was orchestrated by the Republicans, who successfully kept the citizenry distracted with equity withdrawals while the real crooks stole all the money.
I was an Air Force brat. We moved over 40 times before I graduated from high school. Sometimes my parents bought homes when we were transferred, especially in situations where base housing sucked. As far as I know, they never once made a profit on a sale. That’s the way housing always was, until recently: not an “investment,” but a place to live.
The hysteria of the last few years has been absurd. Anyone with half an once of sense could see this coming. When prices fall far enough, my wife and I will own a house again. Count on it! But when we do, we’ll never sell.
Many people were led to believe that if they maxed out their loan and then bought a McMansion they really didn’t need that they could borrow again on the equity, sell that house for a bundle, and get another place…without really making many payments at all (or buying it outright). So when the bubble burst they were screwed…
Others were tempted to become “investors” (actually speculators) and acquired a second house with the ARM’s available. Again told that the equity on the first house would be enough to protect them from rapacious interest rates.
These are not the ideas of people who are middle class workers…these are the same ideas as promoted by the charlatans that say you don’t legally have to pay income taxes, or that one can homestead in the National Parks.
something else… a lot of people get 5 or 7 year arms because they don’t plan on living in the house for more than a few years. that’s a good plan… until prices tank and they can’t sell their home without taking a major loss – a loss they don’t have the money to cover.
so they get hit by a double whammy – they can’t move to get the better paying job and they can’t refinance (for reasons i described above) and then they are faced with dramatically increasing payments that they reasonably never expected to have to pay.
… the point i’m trying to make is that this problem is NOT primarily one of home buyers making irresponsible choices. it’s a problem that has been created by fucked up national economic policies (that as far as i can tell started with clinton).
JOHN EDWARDS gets it 2 americas
Interestingly the first primary results will be rolling in around the time that the results of the Christmas shopping season will be rolling in.
Let’s remember that the always wrong Dick Morris has made one prediction that will likely come to fruition.
The results of the primary’s will coincide with a drop in the markets.
So we will be hearing the shouts from Kudlow and Company that the markets are collapsing because “Hillary” is winning.
-G
“wasteful government spending on social programs that don’t work” sounds like a GOP talking point used against the social programs they detest. The ones they like that don’t work are a-ok.
Further to my 24:
In other words, China is using its US dollar reserves noy only to buy up property in the US, but also to make more money. Again: swell, eh?
bingo.
liberal media….great cheerleaderzzzzzzzz…just think Glenn idiot Beck makes 10 million smakers a year
Too bad there will be no one to shout that it’s because the Huckster is winning.
and when we get it, we fund it NOT with “tax increases” but with REVENUE RECOVERY!
the infrastructure funding was given to the wealthiest people on the planet, recovering those assets will NOT be ‘tax increase’ and the democrats need to use differant terms then “raising taxes”, we aren’t going to, we aer going to “recover funds that were stolen”
Yep. And don’t forget education and technology. We’re supposedly falling behind in the latter at the moment.
Win/Win for them.
Lose/Lose for us.
Shall I sign up for Chinese language lessons?
You don’t think David Broder will claim the markets are dropping because Jesus’ handpicked candidate is doing well?
-G
That’s why Edwards resonates here in NE Iowa(rural)
Anyone with an historical perspective can see that the first act of Reagan was to cut the capital gains tax from 38 to 32%, and in the last 27-35 years(See Blue Texan Earlier) the rich have gotten richer and the the rest of us have run increasingly to maintain the American Dream(See FDR)
i was always worried when we had a surplus….thats why the PUKES had to steal the election…they wanted it!balanced budget fine…no more surpluses thank you
this is actually great, democrats will simply say;
“then we agree, our programs are not programs that are wasteful and don’t work, they are productive and they do work…so we agree”
The bubble really got going when the Fed lowered interest rates to obscenely low levels. This provided a huge disincentive to those who saved money. It was not possible to get a decent rate of return from banks or T-bills. So, many people turned to real estate as an investment. Low rates combined with a near total lack of regulation have brought us to the point where we are today.
i used to read ian when he and stirling and oldman wrote on matt stoller’s old blog bopnews. they were warning of big trouble brewing 4 years ago.
Ni buhui shuo Zhongguohua ma? Tai daomei.
Hai la.
As eCAHN explained the other day, the net effect of all these fallouts in worldwide economic market is a shortfall in the overall growth of global economy. Maybe that’s even a good thing: stalling massive globalization. But I don’t know. If you’re at the Lake, eCAHN?
yup…used to live in S. Fl…it was palpably out of control
that was the housing bubble – but wasn’t it created as a way to delay taking the hit from the stockmarket (especially tech) bubble?
ah, where’s eCHAN when we need her?
and the tech bubble result of Y2K
nide hululi you shema yao?
Not yet. But if the Chinese had been more adventurous with imperial ambitions and intentions in the old days–rather than leaving escapades to the Spanish, Portuguese, French, and the Brits, we might all be speaking Chinese these days, if you catch my drift.
Posted this on the last topic but it’s more relevant here.
European Central Bank injects $500 Billion to protect the stagnating lending market as the fallout from the sub-prime sector hits the European Markets.
“Liquidity palliatives and Band-Aids will not work. This severe liquidity crunch is due to insolvency and widespread lack of trust. The failure of the Central Banks to provide the appropriate diagnosis of the crisis and now their failure to provide enough monetary policy easing to reduce the damage on the REAL Economies is worrisome”. ~ Nouriel Roubini New York University
“The ECB’s unlimited liquidity is a sign of emergency. People who think this is just end-of-year housekeeping have lost touch with reality.” ~ Hans Redekker, BNP Paribas
eCHAN? Even eCAHN has gone chinese.
Lurking for 3 reasons.
1. Listening to torture tapes on C-SPAN.
2. Don’t feel like getting involved when everyone has their own anecdotes to vent.
3. As I said yesterday, I haven’t done the detailed work necessary to have an informed forecast.
This whole housing bubble/sub-prime lending crisis truly is pathetic. I bought my house in 2003, and I really didn’t like the terms of the loan, but it was all I could get at the time. I had my house appraised for a refi to a lower interest rate/fixed interest loan at the earliest possible time (three years after I got my mortgage, due to a heavy prepayment penalty, which some folks don’t even know that they have!) Last year my house value was $170K, as compared to the $93,500 I bought it for just three years earlier.
Now the house had been pretty completely remodeled due to an electrical fire (aluminum wiring, which is now up to current codes), but the price increase is still around 81%. I think the Phoenix market will do okay because the houses here were probably a little low. We have people moving here from CA all the time due to the extreme housing prices in CA, and prices are still about half of what asking prices are in CA. I figure my house may now be worth more like $150K (I am a realtor, although I am in inactive status, so you could say I’m a little more sophisticated than the average bear.)
Houston is certainly in some of the best shape, so there are still some deals out there. But I wonder how many people realize just how basic housing is to the economy. It has a ripple effect throughout because they are currently laying off thousands of title company employees, realtors, construction people who build the new homes… The list just goes on and on. Pitiful!
Yes, that’s what I’ve read.
Republicans will continue to be reelected by a dumbed down plurality that haven’t a clue what is in their best economic self-interest. It took the Great Depression for the U.S. to begin moving in a more progressive direction. Sadly it will likely take something as catastrophic for Americans to realize the Republican Party is a far greater threat to their survival than any cave dwelling terrorists.
Nihao ma! Shema?
nide hululi you shema yao?
Duibuqi, wo budong “hululi.” Wo tai duo nian meiyou lianxi, suoyi Zhongguohyua chengle buhao.
you may have bluetoes ,but you are right on the $$$$$
Bucuo, bucuo. Ni nali xuele Zhongguohua?
eCAHN… And it’s not Chinese. It’s…oh, never mind.
Okay, guys, I’ll postpone those particular lessons.
Badwater, EDP and Biodun will have to be my translators.
Prolly easier to translate from Chinese that to interpret the humongous jumble of a mess our government has handed us.
i second christy’s suggestion of the blog calculated risk. 90 percent (especially in the comments) goes over my head, but the 10% i get is really helpful. some others i like are The Big Picture, RGE – Nouriel Roubini’s Global EconoMonitor, stiglitz’s column (who’s also been warning us for a long time)
Ever modest, eh? But we understand…*g*
Okay, guys, I’ll postpone those particular lessons.
Badwater, EDP and Biodun will have to be my translators.
Prolly easier to translate from Chinese that to interpret the humongous jumble of a mess our government has handed us.
Almost certainly!
gourd
What medicine do you have in your gourd?
I still blame the Congress for that whole RTC business. What were they thinking! We should have known when they started meddling in letting banks go into partnerships with developers so that they could reap some of the profits rather than just be the financiers and reap the interest $ that there was a method to their madness. They were in the pockets of business then (that’s why they deregulated stuff) and they still are. Further, I have yet to hear them admit their mistake. Yes, the Bush I admin may be partially to blame, but I believe Dems were in the majority in Congress at that time.
Gotcha. This gets tricky when one has neither characters nor tone marking on one’s Pinyin.
i was talking bout Neal
They’re talking about torture on c-span right now. It says “Today” not “Live”. Is it live?
Sorry to be OT but this is important. David Rivkin is on there, slithering around getting slime all over everyone.
Neil?
It appears that lots of foreign investment banks are hurt very bad from their “overly trusting” investment in the sub-prime market. There are lots of Foreign Investors grabbing up banks that have been hit badly. After Europe’s largest bank (by assets) UBS had to write down $10 billion in US based sub-prime mortgage investments, Singapore Investment Corporation swung in and bought a 9% stake…UBS is the the Swiss National Bank, and its VP Phillippe Hildebrande predicted SIG “will in all likelihood become the largest investor in UBS.” He assured other investors that GIC had a reliable “apolitical” reputation, and that “in uncertain times, a solid capital cushion provides insurance against a further potential deterioration in the global macroeconomic environment.”
Further to my 58:
The Chinese certainly had the means in the old days to be more adventurous on the imperial front, but for reasons that are still being unpacked by historians, especially cultural historians, they didn’t. When I was teaching in China, my Chinese colleagues simply told me that world imperial designs were simply not part of their cultural DNA. Given what they’re doing now in Africa and the West, one has to wonder about that claim.
Just for starters, stop the war and raise taxes.
Bushies
http://rationalrevolution.net/….._the_s.htm
Not live. Think it started during W’s presser, which was live on C-SPAN, so broadcast of torture tape tesimony was delayed until presser was over.
fair enough. of course, not being informed enough doesn’t stop me.. *g* but i’m also looking to be corrected where my thinking is wrong. if you were to opine, we’d all pay alot of attention and give it great weight in our thinking. that’s a bigger responsibility than just being some random commenter throwing ideas into the mix.
p.s. wrt to my thinking being wrong and getting corrected (thanks eCAHN!), i though of your warning about my misunderstanding on inflation when i read this from roubini, “Why monetary policy easing is warranted even in the current insolvency crisis”
p.p.s. i’m recording the torture hearing for later (i missed the first 30 minutes though – the power keeps going out at my house).
You got it… There are five ways of saying ma, for instance, and they all have different meanings…
Roger that. wode pengyou who taught me what little Chinese I know (he did his Masters in Oriental studies) claims he used to accost waitresses in Taiwanese bars with “T’o nide fu” which he claimed, in addition to its common meaning, meant “Your presence makes everything fine”. Same tones, different characters, of course. Fun stuff.
Well, I know that ”anecdote” doesn’t equal ”data” but here’s my depressing story WRT housing costs. A friend of mine bought an expensive ’row house’ in Reston, Virginia. He and his money-burning spouse invited his mother to live with them.
Recently the spouse decided that she didn’t like having her mother-in-law living with them, so the mother-in-law moved out — taking one of the household’s income-streams with her. Now the couple in question are going to lose the house because they have an ARM — and it just reset.
They’re now hunting for a place to rent. And the only party I really feel sorry for is the couple’s cat. They’re not going to have an easy time finding a rental property that will allow pets…
I’ll wait until Mr. Gnome is available and then watch Krugman with him. The Houston housing market is one of our interests, so it was encouraging to see that it hadn’t soared with the rest. (Why would it? Have you ever been there and smelled the air?) I won’t bore you guys with my own anecdotes, but once again I am pleased with the real estate situation and position I have put the Plume family in. Mr. Gnome is one of those consultants who gets called in when things go south, so this is sadly, good news for us.
ah, live at hjc webstream (that’s what i’m recording).
That’s not always true anymore, at least not here in AZ. One should always be cognizant, though, that realtors work off of a commission, which means more money for a higher price home.
You got it… There are five ways of saying ma, for instance, and they all have different meanings…
Good thing I wasn’t trying to ask whether your mother was a hemp-smoking horse, isn’t it?
What the rich hated about Bill Clinton is that he made them pay taxes. One millionaire told me that Bill Clinton cost him $100,000 in one year. He was really pissed about that. That’s why they hate Clinton(s).
.
eCAHN did a lot of substantial opining in the late 1990 on TeeVee. And I’m sure a lot of us listened. Don’t worry, eCAHN. I say no more…
707.
this is MY biggest worry…doggies and kitties will be thrown into the street,or taken to shelters…i shudder to think about how this will affect them
Jane has a new thread upstairs.
I’ve been reading Krugman long before it was cool. Nice to see the man is getting the recognition he deserves. The thing that strikes me over the years about Krugman, is that he as a fantastic ability to put economics in the context of politics and politicians.
Need my edit button back! I had the comment loaded and thought I had sent it, but sadlyyes @ 77 got attached to it by mistake. My comment to Saddlyes was: Oh.
Sorry for the mistake!
I clicked on an internet ad advertising 4.something to see if I could get a better rate on an equity line. Guy says no, no better rate, but let me put you in touch with gal #1. She does a hard sale on a reverse equity. Then she calls back and does a harder sale, we’re literally yelling at each other. Then I decided to play along to see how far it will go. Gal #1 puts me in touch with gal #2 who is going to show me how I can get so rich I’ll need to start my own foundation. #2 came to my house Tuesday, #1 calls twice yesterday, the original guy calls, and gal #2 will come again today. During one of yesterday’s calls with Gal #1, she tells me she has a preliminary appraisal which is about $300,000 over the value I figure, and that he is claiming I have about one quarter acre land than I have.
I haven’t watched the DVD yet, which came in a very slick package. Look forward to Gal #2 today.
I did contact the District Attorney to see if they would be interested in following this with me. What an eye opener! These people are vultures of the first order.
One other interesting fact. The gal that came on Tuesday was driving a late 90’s van and clothes from a mid to low cost outlet. If she’s so damn smart with money, why? Why are they all even working if they know the secret to great wealth with no work???
I agree this is really complicated. Straightforward mortgage lending regulations could have prevented essentially all of it but the Bush Administration had as much of a plan for this as they did for Iraq. Housing prices would always go up, nobody would ever default, everyone could borrow more and more against their increasingly valuable home. All it lacked was someone to throw rose petals.
Now we have Paulson and Bernanke trying to prop up housing prices to prop up investors but the bubble will not correct until housing prices return to more normal levels. This decline will affect not just the subprime market but the housing market generally. Homeowners may have negative equity for a while and they will not be able to borrow against their mortgages. An authority should be set up for those with bad loans. Most should be converted to longer term fixed interest loans. Most speculators could be weeded out simply by applying the program to those actually living in their own home. Some will not be able to keep their present home but it might be possible to finance a more affordable house and carry over a portion of the debt from the first house as a stupidity penalty.
lol the intro to the vid is funny :)
Central California, Floriad and Ohio appear to be the worst hot regions in terms of % of homes placed into foreclosure. The fascinating thing is to look at how the burst of the bubble changed things in one year.
Today:
#1 Stockton, Calif. that’s 1/31 households +32% from the second quarter (>5 times the rate of last year’ s third quarter).
#2 Detroit/Dearborn +92 percent from the second quarter of this year;
#3 Riverside-San Bernardino area rose 39 percent.
Cities in California, Florida and Ohio accounted for 17 of the top 25 metro area foreclosure rates, according to RealtyTrac. Phoenix was #15, Houston was #25.
Generally the Northern California Coastal areas did better…it was the Central Valley and Southern California (including Orange, Riverside and East LA County) that were hit hardest. These are traditionally the “Red” areas of California.
http://www.realtytrac.com/Cont…..temID=3609
http://www.msnbc.msn.com/id/21773741/
Last year 3rd Quarter
Detroit, Fort Lauderdale, Fla., and Denver posted the nation’s three highest foreclosure rates for the third quarter of 2006, replacing Indianapolis, Atlanta and Dallas (still at #5), which had been the top three markets for the two previous quarters.
Florida markets posted the biggest jumps for the quarter: Fort Lauderdale and Miami saw 87% and 97% jump. Fort Worth was then ranked #7.
http://realestate.msn.com/buyi…..id=1349839
But a lot of this is illusory as the rates are still very high in all of these areas. It’s simply that the California rates of foreclosures in the Central Valley have skyrocketed.
FWIW, I’ve lived all voer and always been a renter. I have not had a lot of problems finding places but when there has been no stated policy on pets/cats, I have been able to negotiate a small “pet fee” as part of the deposit.
I’ve also used the online resources and set the parameters to include small pets.
What I’m worried about is the rents in the area in which my friend lives– they’ll be looking at Northern Virginia, and any housing there is insanely expensive.
At the very least, money-burning spouse is going to have to get a full time job (she works part-time now) — which means the elderly kitty will be spending more time by himself…
I have no sympathy for the spouse (denying a relative shelter, even if they’re an in-law, is a open invitation to the Law of Threefold Return), and I’ve refrained from asking my friend why he took such a risky way of financing the house; but logic tells me this has to be happening all over the place…and that it amounts to bad news for everyone.
See my post at #103…Phoenix isn’t doing very well (it’s ranked #15). Lots of foreclosures there, which may make the market available and keep prices down.Houston is doing better than other Texas cities, but that’s not saying much. I think that the impact on homebuyers at the lower end of the market, people that COULD HAVE obtained mortgages for lower scale homes rather than McMansions is going to hit the market hard. A lot of these folks are now going to be completely eliminated from the market, either due to horrific impacts on their credit ratings, or bankruptcies, or both.
Other impacts~ Construction of new homes will fall. There will be lots of bargains out there for those that do have good credit and weren’t suckered in. But these are going to be in already constructed subdivisions or refurbs.
~Tax rates in many areas will fall…as home values decline. That means that cities and counties will be in a real jam as their revenues decline. Expect some real deterioration of services, layoff of teachers, city workers, police, fire.
~Businesses serving “ghost town” subdivisions will likely have to shutter or lay off staff.
Selise – I also read Ian, Sterling and Oldman. I took their advice as best I could four years ago and adjusted what funds I had (I’m retired) to try to position myself for the debacle. Now we’ll all see (and suffer).
GregB@36; If Hillary doesn’t win, they won’t be able to say that the markets are going down because of her. :o)
I’d rather them hold Edwards responsible for Wall Street wetfarting it’s britches. :ol)
I’ll bet he will gladly accept their opprobrium. :o)
Christy,
Great post. I was just discussing this issue with a group of non-profit directors a few weeks ago. Explained the forecast is quite grim and will be quite difficult for non-profits serving the community (especially at-risk populations services) and even more difficult for arts/cultural organizations.
Any chance of a New Deal? No way. All our $$$ just went to Iraq.
Bush is true to form. I continually argued during both elections to look at his leadership record in terms of his constant pattern of his fiscal failures . With evangelicals, I made the point that stewardship should be the highest priority… No one cared. Now evangelicals are saying stewardship is the highest priority. GRREAT, untimely response…
Want to win the next election? Come up with a plan yesterday that will save the economy and devote your time to working on IT, not campaigning. It would be the best campaign strategy.
BTW, while you were on vacation, I recommended the Dems come up with a party platform to run on that was problem-solving centered. For example, meet with Gore and come up with an environmental/sustainable/energy policy-plan and that no matter who ends up the candidate, “that group formed policy” would go on to serve the country.
I suggested they meet with the Concord Coalition to form and economic policy and to start working on it as a group before the election because of how bad things are going to be soon.
Crazy. Maybe. Novel? Workable? Yes! It would rally my vote ASAP to actually see the Dem candidates roll up their sleeves and start serving our country as leaders NOW instead of talking about it on the campaign trail.The actions of preservation would echo across the country.
I know, a pipe dream…Unfortunately, it’s going to take a pipe dream to fix and preserve our nation.
Danny Schechter (News Dissector blog) put out a film called “In Debt we Trust” almost two years ago.
http://www.indebtwetrust.org/trailer.php
Thanks for the indepth article
This is exactly the situation I am in right now. I was told that two years of on time payments and we will be able to refinance. My refi is approved and set for a Feb closing but I have been paying $220 a month more since September. Somebody knew this was comming and is going to be the eventual winner. My question is, who is aquiring all of the foreclosed on property, at what percentage of the real value are they aquiring it at and when is the government regulation (or deregulation)comming that will make the end game work the planners.
Here’s something to think about. Around the nation (and certainly right here in Minnesota) ideologically bound governors like our Tim Pawlenty have been resisting raising taxes. Instead, costs are being pushed off on municipal taxes, which are rising rapidly nationwide.
But those municipal taxes are based on property values. When the housing market drops and values drop, taxes drop. And since much government funding has been shunted to municipal property taxes, overall state revenues will drop.
It’s more Grover Norquist ideology, and the end result will be an increase in slums, as cities are forced to cut back on basic services, leading to a downward spiral.
All the while Putin smiles at “winning” the hidden Cold War that never ended!
And, if no one else has said it, just wait until your job requires you to move… or, to get a job you need to move, and then try to sell the home you have. The “fun” in this is really, truly just beginning.
‘The Money Masters’
http://preview.tinyurl.com/3xx3pe
(Part 2 starts with the 1907 crash.
Ann in AZ has at least a point here. Congress, with the Dems contributing significantly, had a lot to do with the length of time it took to begin addressing the S&L/bank crisis as a serious issue; during that extra time, the really bad actors among the S&Ls shovelled more billions down the hole and increased the risks to the entire system unnecessarily. Of special note were the dilatory and uninformed actions of Speaker Jim Wright. The silly book thing that seemed to be his downfall to me might well have been part of a cover agreement that by his actions he backed himself into. And don’t forget that several of the Keating 5 were Democrats. The whole Congressional culture of favors and donations was at the root of the scandal’s being allowed to grow, and both parties did participate in that.
Because of these and other ways in which Dems abetted the crisis, it was never allowed to become an issue in the 1988 Presidential campaign, despite the fact that the problems were still multiplying (and would continue to do so until at least 1990). This no doubt was another factor in GHW Bush’s win over Dukakis; one was tangled up in the S&L crisis in multiple ways, and one wasn’t …
It’s good to see that this time, there are Democratic members of Congress who are trying to address the current credit crisis, whose impact on ordinary Americans has the potential to be far worse than the 1980s crisis was. It would be good to see several of the Presidential candidates give this matter some focussed attention as well.
Maybe Bush is trying to take us back to a preindustrial economy where we all work the land. Big Brother held a press conference this morning, and I ran screaming from the house.
It was the job of government to uh, govern these financial institutions, so they didn’t go so far as to destroy the economy and people’s lives. The corporate politicians didn’t do it. Many didn’t want to because they were getting paid not to. Some didn’t because they weren’t in ‘leadership’ positions in Congress. Some didn’t even know which end was up. Some who realized there was a problem were ignored.
Just like the Halliburton rape stories, all these folks think it’s fine to rape America because it’s strong and can take it. That’s the modern corporation for ya. But, government has a job to limit the damage and it didn’t. So much for ’small government’. What we needed (and still need) is enough government.
We need ‘big bold change’ mostly because Republican-led government has been ignoring problems, letting them pile up.
Edwards for President — Leadership America desperately needs!
I have to agree that Clinton helped by signing the Banking Modernization Act which repealed parts of the Glass-Steagall Act. G-S regulated banks and when it was repealed they got into these mortgage loan packages which are now causing them problems.
Deregulating sounds good in some things, but you should really consider why the regulating was done in the first place.
Think about who has extra cash to throw around.
Cash from the Iraq war profiteering and theft.
Cash from the drug business.
Cash from Asia.
None of it has to do with Americans buying homes to live in.
Prices need to come down to levels Americans can pay.