patrick.net

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.

Call it Crazy says

Instead of having diarrhea of the keyboard, why don't you disprove the DATA
in the story with your own charts and facts!!

Here, I'll even help you. You can start with the conspiracy site
RealtyTrac:

Where do I begin with your source and or the daily hysterical rants of the end times or how any positive signs of movement in the housing sector is somehow fake or the numbers are lies, distorted, under-reported, etc., etc.,...............And then you want to use realytrac as your source of all-inclusive data, that's an intenet only source of info that's derived from publicly sourced sites, or more likely from public sources that HAVE a website.

Sorry if I don't share the same distorted views of reality. But, by any and all means, put all the assets and money of YOURS at stake based upon the info from that site.

bgamall4 says

I never would have guessed that. But I guess the shirts have to go somewhere.

The meme is called the African Success Kid and you can search the internet for it:

Whole bunch of them here:
http://molempire.com/2011/11/29/internet-meme-third-world-success/

It's all Obama's fault!!!

Call it Crazy says

mmmarvel says

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.

Crap, I'm only at 2.2 times..... We must be doing something wrong here....

I'm going back to my mortgage company and demanding I want approval for 20 times my income.... It just isn't fair!!!

This is America, after all!!

They should be able to set you up with a Heloc for 20X your income.

RentingForHalfTheCost says

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.

Not true, I refuse to sell until the offers top $3 million; hey I made the first mistake of only buying 2.25 times my annual income, I won't make two mistakes in a row.

Call it Crazy says

Then show us some REAL numbers that dispute the ones in the OP...

This is the third time I've asked you and all that you have provided is more
diarrhea of the keyboard....

Stop bloviating and provide facts that dispute the ones in the article!!

Why, I'm not the one pushing some sort of ideological based narrative that's good, bad, or the other. Besides, it's irrelevant to anybody's area just as your's is to mine. It's pointless, not to mention the fact that the weather is pretty extreme and abnormal to say the least, and that along with the time of the year makes the whole issue moot. I think the weather has hindered movement more than anything, IF there's even a lack of movement to begin with.

I follow the local market, although not on a daily basis(why?) or even a weekly basis(again, why?)and things just aren't as dire as TBP implies.

The onus is not on me anyway.*

*I'll get right on it about the same time that you supply the data on natural gas versus propane usage/utiliztion rates in New Jersey. LOL

APOCALYPSEFUCKisShostikovitch says

Their only purpose is to pay 100x what boomers paid for their shacks so they can live Caligulan lifestyles on their slave ranches in Central America.

Ugh!, the very idea of ANY retiree living a Caligulan lifestyle, UGH!

OH GOD, make these visions go away!!!

Call it Crazy says

upisdown
says

It's pointless, not to mention the fact that the weather is pretty extreme
and abnormal to say the least

Wow, where was the weather reference posted any place in the original
article??

AGAIN, local relevance over some national level BS that you allude to. Don't think for 1 minute that weather hasn't played a factor in MANY things this winter(of which it is snowing again and as soon as there's roughly 1" of accumulation, you're back to arguing with yourself). Maybe not in 'the Bay area', but it sure as hell has in the Midwest.

Call it Crazy says

Wow, where was the weather reference posted any place in the original article??

No, just a bunch of baseless BS. Here, I'll give you an example:

Call it Crazy says

WARPED, DISTORTED, MANIPULATED, FLIPPED HOUSING MARKET

and another huge stinker:

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.

It's time for you to back up your usual BS and prove both of those sentences true that YOU wrote and posted. Stop changing the subject, using distraction as a way to cover for your lack of knowledge and incompetence, and prove beyond a doubt those two statements that you made, to be true. Again, the onus IS NOT on me, it's you who posted the OP and made the claims.

Somehow I don't think that'll ever happen.

Call it Crazy says

You're back talking about snow, (how much snow did the country have last
summer?) when the original article above was about the NATIONAL housing market
LAST YEAR

LOL, I guess that proves how stupid that I think your rant AND source are, I didn't even bother to read the link.

Seriously, why bother when the author is about as bright as what I think you are, and that's not saying much. Not to mention the f-n irrelevance of LAST YEAR'S market to NOW.

bubblesitter says

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.

or maybe it's you who has difficulty grasping the basic rule of supply and demand

Heraclitusstudent says

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.

Exactly.

errc says

Our entire exchange occurred this morning because you claimed that the bailouts were necessary. I'm glad to see that you've retracted that false statement. We don't want to go on pretending that we know that the bailouts were necessary

You read about as well as Reality. My position is now, and always has been, that nobody can know whether the bailouts were necessary. Because it's IMPOSSIBLE to know.

Given that, and that the consequences of no bailouts was so dire, I think it's very naive of you guys to pretend that the bailouts were a horrible idea and that things would have been fine without them.

tatupu70 says

errc says

Our entire exchange occurred this morning because you claimed that the bailouts were necessary. I'm glad to see that you've retracted that false statement. We don't want to go on pretending that we know that the bailouts were necessary

You read about as well as Reality. My position is now, and always has been, that nobody can know whether the bailouts were necessary. Because it's IMPOSSIBLE to know.

Given that, and that the consequences of no bailouts was so dire, I think it's very naive of you guys to pretend that the bailouts were a horrible idea and that things would have been fine without them.

Ok, I don't get you. You're screaming for a fix in inequality but you also believe that banks are part of the problem to inequality. BUT you support the government bailout of the banks?

I mean wtf is it? Who is your enemy? If you don't like what the Banks and Wall Street are doing to our lives why the hell would you favor a government bailout? So we could continue this false economic prosperity which is really enslavement by the government and wall street?

I don't get you.

Yeah things wouldn't of been fine without the bailouts initially but the only way to get out of this mess would of let the banking system collapse, have the government get out of the way. But no here we are still drinking the poisoned well thanks to big brother helping out his mafia buddies, all because we're too scared to face our consequences by letting the banks fail.

And yet you scream for more equality but failed to realize that the government has already made their bed with wall street and the banks. Do you really think they're going to help you or us?