patrick.net

"UK? I really can’t seem to find anything the Brits can do that the rest of the world cannot, except for being the money laundry center for the Eastern European drug lords."

Funny - at work today we were talking about the thousands of airline puts bought before 9/11 and how that profit just went over to Europe with no trace of where it went.

"Stocks Surge on Positive Housing Report...The National Association of Realtors' index for pending sales of existing homes rose in February at a seasonally adjusted annual rate of 0.7 percent...That says people are getting mortgages, people are buying houses, people have incomes, jobs, all that good stuff," said Kim Caughey, equity research analyst at Fort Pitt Capital Group. "You'd never go out and buy a house if you think you're going to get laid off. Consumers are optimistic about the future, and as we all know, the consumer drives this economy."

Looks like we'll hear calls for "bottom" from the you know who's....

Peter P,

Interesting about worldwide taxation. Is the US in a minority on this, or is the practice fairly common?

Every year, 200K+ Brits are emigrating (not to be confused with immigrating) to other countries.

With a strong GBP I am not surprised.

My parents live among many British retirees in Oz, and the #1 reason they departed UK was to evade the death tax.

I should have said "worldwide income taxation for residents not domiciled in the UK."

Interesting about worldwide taxation. Is the US in a minority on this, or is the practice fairly common?

Many countries tax their residents on a worldwide basis. I think US is one of the few countries that also tax their citizens regardless of residency.

apparently the brits are NOT coming to CA. Never met one here, but 1000’s of asians of every type.

I have several friends from the UK.

#1 destination for British seniors: Spain
#1 destination for British younger than 40: Australia

I have had two British colleagues before, there are 2-3 British stores selling Marmite, Maltesers, etc in the Bay Area.

It is relatively harder for Brits to come to CA, because most of them emigrate to enhance their lifestyle. With their home equity, they can buy a big house in a decent Aussie suburb all-cash. If they come to CA, they don't get half as much upward mobility with lifestyle.

US is the ONLY country on earth that taxes its citizens AND permanent citizens on a worldwide basis regardless of their residency. Other countries don't even dare to think about the concept of taxing their PRs when the PRs are out of the country.

Gotta luv Uncle Sam.

Peter P,

I'm a little startled, then, having friends who've moved to Nice and other Mediterranean locations. It must have been a headache for them to move assets offshore (Monaco bank) - and from what you say, an annual tax burden as well.

Certainly helps to keep us at home and xenophobic... :neutral:

Now the pool of cash required to spend the first night in a new house—frequently $20,000 to $30,000—has made this sacrifice of independence a matter of necessity rather than choice.

Pretty sad that in current times most buyers can't even come up with a 1977 downpayment. What does that tell you?

It must have been a headache for them to move assets offshore (Monaco bank) - and from what you say, an annual tax burden as well.

I believe a competent tax-accountant can work to minimize the liability.

What does that tell you?

We are f#$ked.

It is going to be bumpy but the market will survive. I hope policy makers have the will and “heart” to let people fail. Destruction is part of the creation process.

This is a foreign concept to most people Peter.

This is a foreign concept to most people Peter.

I know. :(

It is going to be bumpy but the market will survive. I hope policy makers have the will and “heart” to let people fail. Destruction is part of the creation process.

This is a foreign concept to most people Peter.

I agree! The price of tulips fell, but the world didn't end....

"can't even come up with a 1977 downpayment. What does that tell you?"

What's worse is that those homes should have been paid for. As a matter of fact, this year! They're not. They've probably been flipped, fi'd, re-fi'd and re-fried at least 8-10 times since then.

My friend in MV just got turned down for a HELOC. That's a first...

My friend in MV just got turned down for a HELOC.

Is he a renter?

lunarpark,

Based on what? Not enough income? Appraisal too low? Getting laid off? Not to be nosy but myself and Mr. skibum would like to know. Our position has been that even lower rates may not be the salvation people are praying for. Low rates of course don't help if you got no job!

Just curious. :)

The "burn card" is left for those that have a decent income, house appraised fine BUT..... DTI.... too HIGH!

I've got your "burn card" right here bunky!

For those that don't play cards, Spades, Pinochle etc. the "burn card" is something you hold in an otherwise WORTHLESS hand that keeps your opponent/s from running the board or having a perfect hand.

But they think they got it all wrapped up, so they bid (and bid big) never suspecting this lowly deuce of clubs will leave them talking to themselves... all the way back to the ATM! Oh and get me a pizza on the way back!

LOL@Peter P - SHE is not a renter, haha, you made me laugh.

DinOR -

I'm getting this secondhand from a mutual friend - my understanding is that her credit is poor and the HELOC was turned down based on that. She has been taking money out of her place over the last few years. It's never been a problem until now. She has called her realtor and is going (try) to sell asap.

Jon,

Well I can't imagine taking THAT lecture sitting down but that's where so many boomers grossly miscalculated. They generalized too much, and not just about finance.

In order to have 1) bought at the absolute perfect time 2) landed lifetime employment 3) cashed out without a hitch AND 4) had a very optimal and cooperative stk. mkt along with 5) a birthday (birthright actually) to assure maximum retirement and health benefits.

Oh... along w/perfect health, NO divorce and model/self supporting children. Is THAT so much to ask!?!

lunarpark,

She's your friend so I'm going to tread lightly here. Just saying her credit is poor may not necessarily explain everything. No change in employment or marital status? It's always worked for her/him before, right? Why not now?

DinOR,

Sometimes I think I'm unmarried, don't want kids, saving half of my income, paranoid about job security, constantly going on and on about immigrating to Australia, etc...just so I can be different.

I suppose if that doesn't work out, I could get some cyanide capsules in case things get really bad.

DinOR -

No changes in employment or marital status. I know she's taken A LOT of money out in the past and it's never been a problem. I don't know anything else - just that she is very upset. Personally I think it's good that she is FINALLY going to sell. Her payments were ridiculous vs her income. Her realtor thinks if she sells now she can still walk away with $50k.

The bailout has begun

In my neck of the woods, Spitzer is making a lender payout $6M to the victims. I'm glad this lender is still around to fund it, but when it all hits the fan and all those ARM's reset, I think the taxpayers will ultimately be stuck paying in the long run when the majority of lenders go under.

Allah,

That's not so much a bailout but a fine against predatory lending. If you read the story, those guys had people's interest rates up to 13+% with the fees for the loan at 10% of the loan value. It's fairly obvious they were not just 'rose glassing' the housing picture and making unwise loans, they were actively making loans with the intention of foreclosing on the house after they squeezed as much out of those guys as they could.

Also, the total 'bailout' comes to 6k per person. Hardly a home saving bailout. And since it doesn't come from taxpayers, but rather a shady loan company, it's no skin off my nose.

As long as I can remember people have been complaining that housing costs too much here. Some of them leave, but new ones come in.

And much of that timewas before all the new rich from Asia had their sights on moving to the cities along the West Coast.

Crap, I missed that. Good eye, Jojo. :D

theOtherside

Thanks for the laughs. It's been a tough day, but you've helped me to end it well.

I recommend you pick up a copy of Mankiw as it will answer #3 for you, and it may help you with your weak understanding of inflation dynamics as expressed in your point (2).

#4 - CA has had 2 major corrections in housing post 1977, and 1-3 minor ones depending upon which metro area. San Diego/OC is the only area to suffer all 5.

#2 - Aren't you the one continually citing an MIT economic report? Well golly willikers if they didn't recently collaborate with the Federal Reserve in an extrapolative model that predicted upwards of 30-50 years of real housing price declines. If your reference isn't too optimistic, then this one isn't too pessimistic.

#1 - It would cost about 12% more than it would have in 1900, up from 5% LESS that it would have cost in 1948, and a measly 5% more in 1970.

Gosh. Inflation is a cruel master, isn't it.

How many crashed did CA experience between 1977 and 2007

Well the reale questin is hows many uped? Not how many crashed did CA experience. Learn how to write you fat assed troll maggot.

#1 - It would cost about 12% more than it would have in 1900, up from 5% LESS that it would have cost in 1948, and a measly 5% more in 1970.

I didn't crunch the numbers but until recently I was going to guess inflation pretty much made the gains a push. Remember though the power of leverage, so even a small positive margin translates into a great return on initial investment (the downpayment). Over the really long run, it was a push until scarcity and other factors pushed the new construction rate up causing upward pressure on old home prices. Think about this as Patrick says in his treatise; a house is a depreciating asset. What goes up is actually the land value, and like I said wage inflation, and increasing raw materials costs. The recent bubble defied these fundamentals which is why it was so easy for us to spot.

Jon,

yeh, a cent above the 255K pound threshold which includes your main residence, you get taxed at 40%. The problem is, almost every single retiree in the southern part of England will have more than that, simply because of the wild asset bubble going on there.

Before long, our seniors will start to flee the US for death tax as well, since all of us will be living in multi-million-dollar homes before long :-) On top of that we have a more broken Medicare system.

Inflation is your friend, don't you wanna drive a hundred grand car and live in a million-dollar home?

People in NYC are sending kids to public schools again not because they have confidence in the crappy public school system, but because they cannot afford to send kids to private school, after buying a $2M condo.

Not all the schools are crappy in NYC. If you can get into Stuy, you're in pretty good shape.

Of course, that means you kid may have a daily commute that's longer than your daily commute (or, you can commute together in the morning!)

It's so cool to see 9 year olds commuting via subway to school (they were not going to Stuy) by themselves. Unlike counting on "Mom's Taxi" like here in the Bay Area or any other suburbanland.

Fuck FC Liverpool. Fuck Benitez, Crouch, Gerard, Belammy, Riise. Go Arsenal, go PSV.

12 September 2037, Florida gators will still be the champions, Dolphins rule football, Marlins dominate baseball. And the Heat, well if you can't stand the Heat get ot of the kitchen. LoL. In the EU Arsenal kicks ass.

One big BooYaa

lunarpark,

Of course without any of the particulars it's hard for us to say but if you're like me you have doubts about your friend "walking away with 50k".

Sounds like more realtwhore (TM) BS to get the listing. Secretly the realtor may even be thinking, "finally... a MOTIVATED seller!" My guess is that if she has tapped out the place (really any place) to the point to where she can no longer make the payments it's doubtful there is any equity beyond the realtor's 6% commission.

astrid,

I'll never fault ANYONE for wanting their life to turn out different. You can only imagine the looks anyone attempting to leave the "paradise" of Cicero, IL gets when attempting to leave! Like, WHAT? Are you STUPID? Why would anyone want to leave here? We got it MADE! :)