patrick.net

Call it Crazy says

I guess that depends where the bottom is....

Clearly he does not understand which is the correct bottom out of multiple bottoms.

control point says

Suddenly, your tenants can't pay their rent because the company they worked for got caught up, and they can't meet their payroll because credit is frozen at their bank. Then you can't meet your mortgage obligations. You think "Oh, I'll just sell" - but the market is frozen and there is zero qualified demand.

This is gratuitous bullshit. Landlords who can not carry the property on their own for a period of time have no business being landlords. In fact, those marginal landlords should be kicked out of the market place by a good down turn, so the tenants can have more reliable landlords. Good cleansing like that is what makes capitalistic free market work, unlike the socialist dead-weights in bureaucratic costumes managing someone else' property.

bgamall4 says

Here is Murray Rothbard, king of libertarians:

“The parent should not have a legal obligation to feed, clothe, or educate his children, since such obligations would entail positive acts coerced upon the parent and depriving the parent of his rights. … The parent should have the legal right not to feed the child, i.e., to allow it to die.

Isn't that what safe harbor rules are? That new mothers can legally give up their children shortly after birth.

There is no "king of libertarians," in case having your own thought is an alien concept to you.

bgamall4 says

You libertarians deregulated the financial system, enabling it to create a fascist state. It all started in the Square Mile, where the bank of England, controlled by the Rothschilds Zionists, is found.

Liar loans came from England, the Square Mile, where they were called self certified loans.

Do you not realize that you can only enjoy your conspiracy theories in a relatively libertarian society?

In any case, the Square Mile would be much less powerful if there were less power in British government and the US government for it to exercise through. All the trash paper generated would just have been ignored if not for the central banking rules forcing us to use the money that they artificially create.

bgamall4 says

Reality says

Isn't that what safe harbor rules are? That new mothers can legally give up their children shortly after birth.

Yes, give them up to someone who will feed them you idiot.

Do you really think the new parent would likely do otherwise? and those few who do otherwise wouldn't be immunized under "temporary insanity"? What exactly is your point?

Do you live on the same planet as the human race? No, I forgot, libertarians don't live on our planet. They try to satellite around the Zionists.

You have no idea what my view of Zionism is, or even for that matter, who "the chosen people" are, or for what they are "chosen."

bgamall4 says

Reality says

Do you not realize that you can only enjoy your conspiracy theories in a relatively libertarian society?

No, freedom and liberty are not the same as libertarianism. My libertarian ebook is free today on Amazon. You should read it:

So long as you enjoy your own freedom and liberty, and respect the same for others, that's fine. I will pass on your ebook; thanks but no thanks.

1. They can't save for downpayment
2. Even when they can theoretically save for downpayment, they choose to spend money on entertainment/going out and as a result don't save.
3. Student loan death pledge ain't helping matters.
4. Boomers are working longer which is causing ripple effect of younger generation not having the previous access to the prime paying jobs.

In Russia healthcare.com infects you.

New Renter says

No, I think he would say it was one of if not THE greatest buying opportunity in history.

Really if the DOW crashed all the way to Zero, you would consider that a "Buying" opportunity? What you would think that you would be Special, that you would get a heads up call, just minutes before the mass exodus and next crash?

dublin hillz says

4. Boomers are working longer which is causing ripple effect of younger generation not having the previous access to the prime paying jobs.

Orrrrrrrrrrrrrrrrrrrrrrrrrrrr!

It could be the Mark Zuckerberg's of the world, are shifting software from productivity, to prying and spying on a honey trap of useless games and chatter. While there's a shit load of money to be made by the advertisers in that model. There's not even one single penny to be had by the users.

Those Geezers still knows what in the hell, all of the function keys on a full sized keyboard does.

Now run along and play with your Pad doodad thingy, Daddy has work to do on his computer.

Call it Crazy says

With a couple of quick keystrokes, YOUR account balance at your brokerage or bank could be zero too!!!

Well we ARE all only a heartbeat or two away from the great hereafter. Why should our money be any different?

Reality says

Then the issuer of the policy was in violation of margin/reserve requirement . .

Not at all. You know exactly what margin is - it is a percentage of the overall risk. At first, probably there would be available demand for the issuer to liquidate his position should his (new) margin requirement exceed his available capital. At first. Eventually the market seizes - and some counterparty is left holding the bag.

The derivatives market total contract value was many times world GDP. This fact alone implies that whatever margin requirement existed it was not sufficient. Was it overleveraged? Yes most probably but this implies a lack of regulation.

Reality says

This is gratuitous bullshit. Landlords who can not carry the property on their
own for a period of time

What is the period of time acceptable? For any length you may speculate, there is positive probability of a black swan event that will wipe you out.

CaptainShuddup says

New Renter says

No, I think he would say it was one of if not THE greatest buying opportunity in history.

Really if the DOW crashed all the way to Zero, you would consider that a "Buying" opportunity? What you would think that you would be Special, that you would get a heads up call, just minutes before the mass exodus and next crash?

In my historical example the DOW did not crash all the way to zero, it did however lose 50% of it value and took several years to climb back to its previous value making money for anyone who bought in along the way.

So yes, that was a buying opportunity. Maybe even a bear trap.

Yeah Lucky you! But what about those who were retiring in 2007, and spite all of their pleas, couldn't get a Mulligan?

Who's to say there wont be repeat of 2007, right as you're being fitted for that Gold watch?

control point says

Reality says

Then the issuer of the policy was in violation of margin/reserve requirement . .

Not at all. You know exactly what margin is - it is a percentage of the overall risk. At first, probably there would be available demand for the issuer to liquidate his position should his (new) margin requirement exceed his available capital. At first. Eventually the market seizes - and some counterparty is left holding the bag.

That's counter-party risk. Those who enter into contracts should assume counter-party risks, not the rest of us innocent by standers. If tenants don't pay rent, can I collect from you instead? If that were the case, I can easily find a shill to rent one of my apartments for $1Mil/mo! he will be a deadbeat before the ink is dry on the contract, and both of us will fully expect to split what you will pay me.

control point says

The derivatives market total contract value was many times world GDP. This fact alone implies that whatever margin requirement existed it was not sufficient. Was it overleveraged? Yes most probably but this implies a lack of regulation.

Most derivatives are mutually offsetting in a normal free market place. What I was talking about was a one-way bet, that nobody expected AIG being able to pay up. The counter-party risk alone should have ensured that nobody should have been dumb enough to buy so many contracts, unless the government was expected to pay up where AIG couldn't.

control point says

This is gratuitous bullshit. Landlords who can not carry the property on their

own for a period of time

What is the period of time acceptable? For any length you may speculate, there is positive probability of a black swan event that will wipe you out.

Black swan events do not last for years or even many months. However, your bailouts are actually prolonging the suffering.

When government prints too much money, how can anyone save enough?

It's not good when prices are going up, and jobs are leaving overseas to some cheap labor. We are as a nation stuck between rock and a hard place. Now houses aren't that expensive, it's just people aren't making the money. If you want to make a competitive salary I guess you have to go to either China or India these days.

dublin hillz says

1. They can't save for downpayment

Because there are few jobs, and even for those with jobs, it takes a two income house to qualify for a home. Rents are so high, that even if a person only bought necessities, they would not save enough to possibly buy a home in a market so inflated until they were well into their sixties. My parents bought into the houseing market when an average home cost no more than twice the median income. The majority of my parents friends did it on one income. My dad purchased his home for less than twice his income and still paying his loan off to Berkeley. His story was common. Naturally, he still owns that home and it is now worth two million.

2. Even when they can theoretically save for downpayment, they choose to spend money on entertainment/going out and as a result don't save.

Some do, but the majority don't. The biggest spenders I know, especially on frivolous entertainment and eating out are over 55.

3. Student loan death pledge ain't helping matters.

That's not at all the problem. My sister's loan is not what is squeezing her out of a market that is thirteen times the median income.

4. Boomers are working longer which is causing ripple effect of younger generation not having the previous access to the prime paying jobs

Maybe, but what prime paying jobs?
There seems to be a few people in tech who are paid outrageous amounts, firefighters and police officers make six figures, but there is an age limit on those, and for everyone else, they are lucky to find a job paying the median income, and that will not buy a home.

Reality says

2. "Loaning" someone $1T at 0.25% then pay the same entity 3.25% each year when they flip the money around to "loan" it back.

The banks are lending the money back to the FED?

My understanding was that the FED paid the banks .25% supposedly to stimulate the economy. And that they weren't because making loans in this environment was too risky.

I would like to understand this better.

Call it Crazy says

This entire contrived episode has been designed to lure dupes back into the market, artificially inflate the insolvent balance sheets of the Too Big To Trust banks, enrich the feudal overlords who have easy preferred access to the Federal Reserve easy money, and provide the propaganda peddling legacy media with a recovery storyline to flog to the willingly ignorant public.

It has been working. Word among the ignorant is buy at all costs. Just this very morning I got news that a close friend if mine bought a house for 18 times her income with the help of her parents as co signers and some cash from granny. I asked her if she felt this was risky. Her answer included a speech on how the market will only go up and how her real estate officer assured her that if she didn't buy now she would be left out in the cold by the soaring spring markets. Funny, I had this same conversation with my friend Cara right before the bubble. Of course, her home went into foreclosure, she ended up with some government assistance to save her 900,000 dollar home and some more money from her husband's grandma, but she was one of the stories with a happier ending. Will my friend have the same bail-outs, or will she be risking everything? It's not safe, and I doubt everyone will say this group was tricked, like they did in the last crash. It's a risk, a terrible risk, and I doubt everyone will be there to save them this time. At least I cannot guess what the justification will be for assistance this time for their poor choices and risk taking.

hrhjuliet says

This is an extremely important chart and everyone should take a real good look at it, but the constant posting may be defeating that purpose. What we should do is all post it to social media sites with a short explanation of its ramifications. Get it out there in the public.

Hi hrhjuliet,
Please note that at the bottom of the thread, above the first listed Comment, you can click on
Last >>
to show the most recent Comment.

indigenous says

The banks are lending the money back to the FED?

They were buying treasuries shortly after the meltdown. This is what he was referring to.

bgamall4 says

So, zzyzzx, what is the point of the picture of the black kids?

It's a common meme. In this case it's mocking the poor performance of the Denver Broncos in the Super Bowl. Nobody want's to buy Bronco's T-Shirts now, so they get shipped off to poor people in Africa.

Last year, 49'ers T-shirts were shipped to Africa after the super bowl.

Call it Crazy says

The report from RealtyTrac last week proves beyond the shadow of a doubt the supposed housing market recovery is a complete and utter fraud. The corporate mainstream media did their usual spin job on the report by focusing on the fact foreclosure starts in 2013 were the lowest since 2007.

The talking heads reading their teleprompter propaganda machines failed to mention that distressed sales (short sales & foreclosure sales) rose to a three year high of 16.2% of all U.S. residential sales, up from 14.5% in 2012.

The economy has been supposedly advancing for over four years and sales of distressed homes are at 16.2% and rising. The bubble headed bimbos on CNBC don’t find it worthwhile to mention that prior to 2007 the normal percentage of distressed home sales was less than 3%.

The problem is how many people believe the propaganda. The thinking minority cannot help them; the ignorant majority only believe what thet are fed from their TV.

control point says

indigenous says

The banks are lending the money back to the FED?

They were buying treasuries shortly after the meltdown. This is what he was referring to.

So the money went to finance government debt. The idea that it was to stimulate the economy was a myth?

indigenous says

So the money went to finance government debt. The idea that it was to
stimulate the economy was a myth?

Its called a liquidity trap. Fear caused the banks flight to safety. The FED loaned the money without requirements of what the banks would do with it.

They took essentially an arbitrage opportunity.

Single income family below 100K in SFBA is likely to be shut out of the housing market all together. Most likely, it will take close to 130K to have a realistic shot. SFBA is not the type of place where on can lead a 1950's lifestyle where 1 person works and support a spouse with 2 kids on one salary while carrying the entire mortgage on their own. If that's the lifestyle that one desires around here, then 150K is a minimum and perhaps closer to 200K.

hrhjuliet says

Some do, but the majority don't. The biggest spenders I know, especially on
frivolous entertainment and eating out are over 55.

Sure, 55+ spends money on discretionary items, but it could be argued that they are in better position to do that if they already own a home and have amassed greater savings in general vs a 20s/30s something who is still renting and have not saved the requisite down payment amount. There's a time and place for everything in this world.

CaptainShuddup says

Yeah Lucky you! But what about those who were retiring in 2007, and spite all of their pleas, couldn't get a Mulligan?

Who's to say there wont be repeat of 2007, right as you're being fitted for that Gold watch?

How many people on the verge of retirement have all their assets in high risk investments, or worse have leveraged themselves into high risk investments?

control point says

indigenous says

So the money went to finance government debt. The idea that it was to

stimulate the economy was a myth?

Its called a liquidity trap. Fear caused the banks flight to safety. The FED loaned the money without requirements of what the banks would do with it.

They took essentially an arbitrage opportunity.

Am I the only one who heard this was intended to stimulate the economy?

Nice to know the poor bankers were not only saved from loosing their bonuses but also able to take advantage of the arbitrage.

Call it Crazy says

New Renter says

How many people on the verge of retirement have all their assets in high risk investments, or worse have leveraged themselves into high risk investments?

Does cash out refi's and HELOCs count??

Yes.

hrhjuliet says

Just this very morning I got news that a close friend if mine bought a house
for 18 times her income

Damn, what was I thinking. My house only cost about 2.25 times my annual income - well, that's what comes from refusing to think insane.

hrhjuliet says

The problem is how many people believe the propaganda. The thinking minority
cannot help them; the ignorant majority only believe what thet are fed from
their TV.

I could only LIKE this comment. I wish I could LOVE it or GUSH over it. Man this is tooooo true.

dublin hillz says

Single income family below 100K in SFBA is likely to be shut out of the housing market all together. Most likely, it will take close to 130K to have a realistic shot. SFBA is not the type of place where on can lead a 1950's lifestyle where 1 person works and support a spouse with 2 kids on one salary while carrying the entire mortgage on their own. If that's the lifestyle that one desires around here, then 150K is a minimum and perhaps closer to 200K.

That assumes said young family does not inheret a house or enough money to pay off enough of the mortgage to bring the payments within a comfortable single income level.

bgamall4 says

Why do I get voted down for saying we are in a mortgage depression? We are in a mortgage depression. http://www.ritholtz.com/blog/2012/02/current-housing-bust-much-worse-than-great-depression/

All the dislikes are from the people hoping to retire by selling their 2 bedroom shack for a cool 1 million sheets of funny paper.

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

Say hey! This was in the Wall Street Journal on March 30, 1999. Note "... how much it will buy."

Holy cow/interesting/compelling ...!

And where is it up to date??? Right here ... see the first chart shown in this thread.
Recent Dow day is Tuesday, February 4, 2014 __ Level is 99.0

WOW! It is hideous that this is hidden! Is there any such "Homes, Inflation Adjusted"? Yes! This was in the New York Times on August 27, 2006:

And up to date (by me) is here:
http://patrick.net/?p=1219038&c=999083#comment-999083

WOW! The UNtrustworthy are certainly in control of what information is apparent to the people!

And http://patrick.net/?p=1230886

dublin hillz says

1. They can't save for downpayment

2. Even when they can theoretically save for downpayment, they choose to spend money on entertainment/going out and as a result don't save.

3. Student loan death pledge ain't helping matters.

4. Boomers are working longer which is causing ripple effect of younger generation not having the previous access to the prime paying jobs.

You're missing the key point which is that housing prices have risen faster than wages for several decades. As it happened, most people who bought a house during that time saw their equity increase and therefore were able to upgrade to more expensive homes. That's especially true for boomers.

The obvious flaw in this picture is that new entrants didn't profit from the way up, but have to pay the full price upfront (i.e. the profits of their elders). They have to pay for everyone that came before them. It's no surprise then that they are priced out, decide to live in their parents's basements - or in their cars.

If you own a house and profited these past few years, the question for you is: why do you hate young people?

The way this system works is very immoral.

Heraclitusstudent says

They have to pay for everyone that came before them.

One solution to this is to buy new construction directly from a builder if possible. That way a buyer does not have to feel as though they are being taken to the cleaners by a boomer.

dublin hillz says

One solution to this is to buy new construction directly from a builder if
possible.

LOL, like they wouldn't, or don't pocket the chunk of cash that would've went to the real estate agent/broker.