patrick.net

Remember that spending on the military has a lower multiplier effect than spending on infrastructure, etc.

Generally peaks are when everyone is buying things (faddish peaks). Time to buy is when you know a group likes a product immensely and the general population is likely to follow the group.

Or, for example, a store/brand is local and will likely go national and you know as a local that the brand is awesome.

I think Apple is overloved as both a stock and a fad. I don't see it going the way of beanie babies by any means, but I think the premium people will pay to have an 'iphone' over another smartphone will be much lower in a year or two.

Either way, I'm seeing China bubble and the dollar overhated, so I can see some stock weakness going forward, though I don't think AAPL will get hit as bad as stocks leveraged to China.

clambo says

My Shanghai friend also mentioned in her email to me just now that she saw the pictures of the multitudes in the Apple store in China. “Apple products are very popular in China. Many people love brand name stuff, they save up several months salary to buy one iPhone or iPad.”

The world consumer is drooling and begging to hand over wads of cash to Apple. Apple can’t even keep up with the demand forstuff that they make $300 per unit profit on.

Of course, we can predict that this behavior will suddenly stop for no reason except that it’s “sell in May and go away.” I don’t believe it myself.

But, since the stock market is an auction, no one can predict how it will behave between now and July. That’s why index funds beat most managed funds.

China is a dictatorial ponzi scheme about to break. Here's what the Chinese economy is from what I can tell:

-People are paid $1-$2 an hour. Economy is totally dependent on cheap labor to make us shit that we could probably make better ourselves but it's cheaper to pay some slave to make it and ship it over here.

-China is largely dependent on exporting to Europe which is under severe pressure due to their banks being overleveraged to shit sovereign debt making our banks look responsible during our mortgage lending boom.

-Chinese economy is now also largely dependent on a housing bubble that's bursting at the seems. Families have saved generational money for a downpayment for an overpriced condo because they think it's the right thing to do. This money has trickled its way up to corrupt government officials. There is tons of corruption and government officials make out like bandits off of the housing bubble. Often government officials take that money and gamble it in Macao for shits and giggles creating a Macao bubble (why I think Macao casinos are the best short right now)

-Fundamentally, country is not free and has no middle class. As these things unwind, it's not going to be pretty.

-Contrarian signs abound about China. Every day I see some sitcom making references about how big China is about to be. My idiot friends think China is the next big thing (people that are not political/economic oriented at all). Mom's friends that are always bubble believers think learning Chinese is the way to go.

To continue my China rant, an important point I forgot is that there are a tons of Chinese IPOs right now. Insiders are selling and getting out while the getting is good.

rubyrae says

I was told that what happened was the listing agent was told the other person was going to submit an offer and then last minute decided not to. Whaaaaat? This has happened on more than one occassion. When the buyers don’t create the bidding war the banks try to drum one up artificially. They would get 3 offers all around the same price (what the property was worth) so the bank

G A M E IS R I G G E D.

Tenouncetrout says

CNN also just did an article that health insurance cost 19K a year.
Who want’s to be on the hook for that?

As far as who would want to be "on the hook for that," under ObamaCare, we will be FORCED onto that hook. Once freedom is taken away by a government, it very seldom is returned.

Paralithodes says

This is purely theoretical. You assume that by taking away more from the top, it will somehow flow to the bottom via government transfer payments.

What is needed is to capture rents that are tapping the working people of this country.

Housing. Medical care. Energy. Those are the big 3.

Just raising taxes on higher incomes only gets at this issue indirectly, and penalizes the capital-creators along with the rent-seekers.

To make housing more affordable we need to redirect investment away from naked land value and into the actual housing good.

Canada has a good model for knocking the economic rents out of medical care, and it's encouraging that Vermont is following their example.

Energy has always been a massive loss of public wealth to private interests. Norway was wise to tap that with a severance tax regime (and outright socialization of some of the sector to enforce it), oddly, the socialists up in Alaska have a very similar severance tax, though it only has about half the per-capita equity position that Norway's oil fund has.

The current system tries to do this redistribution half-assedly through shitty housing projects, Section 8 subsidies, Medicaid/CHIP, heating subsidies etc but it's all too undirected to really work well.

The problems lie at a deeper level.

I find it funny that the Republicans are issuing this debt ceiling ultimatum. It's mainly the Republicans that got us into this mess in the first place. The Federal deficit as a percentage of the GNP has increase every year since Ronald Reagan that a Republican president was in office. It decreased a little when Clinton was in office. 63% of the budget is Medicare, Social Security and the DOD, all of the other federal programs combined only account for 19% of the budget. The only way realistically to reduce spending is to cut money out of the big three.

tatupu70 says

Again. Complete bullshit. Please post a source if you have one

"Clinton's regulations to Carter's "Community Reinvestment Act" came into force 7/1/95. They flat-out REQUIRED banks and S&Ls to make 20% of their home loans to the poorest 20%"

http://www.wtffinance.com/2011/04/why-did-the-housing-market-crash/

"And CRA and its monstrous Clinton-effected 7/1/95 regulations should be repealed"

http://www.businessinsider.com/abolish-fannie-mae-freddie-mac-2010-8

"Clinton and A Cuomo were largely responsible for the home mortgage meltdown, when they instituted the 7/1/95 regulations to CRA that then REQUIRED banks and S&Ls; to give huge fractions of their loans to very poor people!"

http://spectator.org/blog/2010/01/19/barney-frank-deals-potential-d#commentcontainer

"but I stopped when I saw the printed Regulations Clinton enacted and enforced 7/1/95 with his minions. The regulations were to the CRA, and would make the Russian Politburo proud. "

http://theaffordablemortgagedepression.com/2010/03/11/origin-of-the-housing-bubble-the-national-homeownership-strategy.aspx

The primary fault with sbourg's story here is that the banks were making mucho money lending to home debtors 1995-2005. When land values are appreciating 10-20% a year as they did 1998-2005:

http://research.stlouisfed.org/fred2/graph/?g=t5

there was no need to point a gun to the head of any lender. They knew a good thing when they saw it.

There was a great deal of "control fraud" going on, and the little fish at the bottom had their part to play in chumming the waters for the big fish, but the bottom line is the home bubble debt event really happened 2003-2005:

http://research.stlouisfed.org/fred2/series/HHMSDODNS

The Bush team didn't reverse the Clinton stuff, they doubled-down on it, by removing leverage limits, deregulating derivatives, and letting the free market roll.

RayAmerica says

Once freedom is taken away by a government, it very seldom is returned.

What freedom did you lose exactly? The freedom to make others pay for your health care in the most expensive way possible (at ERs) because you are too cheap to get health care coverage?

RayAmerica says

Once freedom is taken away by a government, it very seldom is returned.

It's never returned without a fight. I'm still in certain disbelief that so many people out there think government forcing me to buy private product is good. This takes away my free market choice of not buying it which would lower the price down.

I'm just seeing this turn into a huge bubble, except this one will be in healthcare and that is a lot more painful.

I think ERs are *required* to treat, regardless of insurance status.

Who made that law?

What is up with that?? I had to get rid of two agents (I used to have my license but have not renewed it) because I felt like they were representing the banks, not me. It's like who are you working for????? They would roll over right in the middle of negotiating, turn on a dime. My current agent has represented the banks in a number of transactions and knows that their dealings are shady at best.

I am in the crowd that opposes raising the debt ceiling. Wasn't raised to be a debt slave to special interests, government cronies needs to start cutting the umbilical cords by which they are attached to the lobbyists.

Sean7593 says

I think ERs are *required* to treat, regardless of insurance status.

required to stabilize life-threatening conditions, or forward a case to a hospital that will.

actual treatment, no.

Who made that law?

http://en.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act

rubyrae says

I agree Klarek. I also put an offer in on a house that was listing for 279k extremely distressed home. I offered 220k. Listing agent said her seller wasn’t considering offers under 269k. We had to strong arm (threaten) her to deliver the offer. She said she delivered it and her sellers refused. Just found out yesterday the house went for 210k. WTF. Like I said I see this all day long. I lost a house that was bank owned to a contractor. My offer was 260k His was 230k He won the bid. It was bank owned and he was working with the listing agent.

This is why you have to mail a hardcopy of the offer to the owner. It's not easy and it probably won't land you the sale (you'll probably deter the seller's attention if they think you're arguing with them). But if it results in one scumbag realtor losing their license or even a future commission, you'd be doing God's work.

ChrisLA says

I’m still in certain disbelief that so many people out there think government forcing me to buy private product is good.

This is an incorrect understanding. You are perfectly free to not carry coverage under PPACA. There will be penalty for that, payable to the IRS, something like 1-2% of gross, capped to $2000/yr per family.

Mandated insurance is how the rest of the world operates -- though mostly with a more regulated singe-payer system -- and their health costs are much lower than ours.

The nice thing theoretically about mandated insurance costs is that (as people here might know) I think they come out of rents and land values.

We generally/ideally bid on our housing expense based on our after-tax income not gross, so the more social services we can front-load into taxes the less we have left to bid land values and rents up.

PPACA is a compromise intended to give free market competition a chance. The actual Medicare-for-all ("public option") approach was demagogued all to hell and never got through the Senate's process.

If PPACA doesn't work better than the current system then we can look at further changes, like the public option.

"debt slave to special interests"

again with the talk radio thought-terminating cliches. . .

The cuts that are coming are going to hit the poor and powerless and not the "special interests".

Without 1) raising the debt ceiling or 2) raising taxes, we will be forced to cut from four spending pots:

1) growth in social security payouts

2) medicare/medicaid

3) defense

4) welfare

The front half of the baby boom is aged 55 - 65 now, so social security payouts are going to start skyrocketing.

As are medicare payouts.

Defense is the $900B gorilla in the room that can't be cut.

That leaves the $500B/yr welfare pot.

Some of it is pure fat, like the $70B in housing subsidies.

But there's only $300B or so to cut here, and every dollar you cut is going to be a hit on a community somewhere.

Every $50,000 you cut is going to be somebody's government job gone.

The alternative to being a "debt slave" is to actually raise taxes to cover the cost of government services we are providing to people and the world at large.

In the absence of spending cuts, I consider raising taxes to be essential.

This is why you have to mail a hardcopy of the offer to the owner. It’s not easy and it probably won’t land you the sale (you’ll probably deter the seller’s attention if they think you’re arguing with them). But if it results in one scumbag realtor losing their license or even a future commission, you’d be doing God’s work.

Funny I insisted on doing that at one point and the realtor representing me did not like this idea at all and decided he did not want to work with me. Actually worked out for the best.

ChrisLA says

This takes away my free market choice of not buying it which would lower the price down.

Ah, yes, cite the libertarian economic theory, and ignore the reality.

People have had this choice not to insure for about, I don't know... forever? And they still do. And what's happened to the price of health insurance?

Haha! Based on klarek’s definition, you used to be a scumbag (realtor), and you agreed with what he said. Hmm, wouldn’t that make him a scumbag too since you guys think alike? Interesting

I actually left the business because the way business was being conducted left a bad taste in my mouth and I made more money with my formal education than swindling people out of their money. The day I went to the office I felt like I was "swimming with the sharks" I'd say 95% of them were extremely unethical. So Klarek was right "scumbag" is the correct term.

Hey E-man but you sound like you might be seasoned just by your tood.

N

errc says

Section 8 voucher program for needy individuals
Since when are landlords considered needy individuals?

They're not. The vouchers were intended to go to the needy families, to use for payment to a landlord who's registered under the program to accept those vouchers.

What she did was register the property as section 8 housing, and then gamed the system so that instead of obtianing tenants and accepting their voucher from HUD as rent, she had HUD send her the payments directly, and then without getting any tenants, used the HUD money to pay the mortgage on the property.

She basically set herself up to receive subsidies based on her providing low-income families housing....took the money, and didn't provide housing to anyone. Class act. I hope she gets throttled in prison.

vain says

Guilty of fraud and I bet all she got was a 3 month suspension with the NAR and after that, she must meet some education requirements to stay in the clan.

The irony here is that she'll probably go into the binder for NAr's next "ethics" seminar, as a case-study in "what not to do". Of course, more than half the assholes in that class will be sitting there like, "Damn...that's a good idea." Kinda like they tried to get us to "Just Say No" in grade school by explaining the horrors of cocaine by telling us side effects include, Euphoria, Feeling of Power/Invulnerability, Mental Alertness, Increased Energy, Increased Sexual Appetite, Weight-Loss, Decreased Appetite, Hallucinations.

rubyrae says

I actually left the business because the way business was being conducted left a bad taste in my mouth and I made more money with my formal education than swindling people out of their money. The day I went to the office I felt like I was “swimming with the sharks” I’d say 95% of them were extremely unethical. So Klarek was right “scumbag” is the correct term.

The cartel by design chases away most people who have honesty and competence. I would never have the patience or the ability to restrain myself were I to be in that line of work. Good for you for getting out.

E-man says

Haha! Based on klarek’s definition, you used to be a scumbag (realtor), and you agreed with what he said. Hmm, wouldn’t that make him a scumbag too since you guys think alike? Interesting :)

Not sure I'm getting the joke here, but a lot of people think that realtors are scumbags. Not sure what kind of circular logic makes those who think (realtors are scumbags) scumbags themselves.

Scumbag is a pretty strong term. I had one friend in the business who was a sweetheart and very ethical, he had a lot of repeat business with people who took choosing a realtor very seriously. However his business was slow to build and you could tell the other sales people were definitely not in agreement with his philosophy. It's driven by the industry itself. One of our top salespeople was extremely unethical but she dragged in huge commissions so she was the belle of the ball and was put on a pedestal for everyone to emulate. That's about when I cut my losses. It seemed like the value system was completely upside down. I found that to be the general consensus.

klarek says

Not sure I’m getting the joke here, but a lot of people think that realtors are scumbags. Not sure what kind of circular logic makes those who think (realtors are scumbags) scumbags themselves.

I believe the message is, "Klarek agreed with someone who turned out to be a realtor. Since realtors are "scumbags" in his opinion, ageeing with one makes klarek a scumbag too."

Kind of like how Schizlor is a Nazi, because he agrees with this statement:

How fortunate for governments that the people they administer don't think.

-Adolf Hitler

rubyrae says

Scumbag is a pretty strong term.

Their level of scum is stronger.

rubyrae says

Scumbag is a pretty strong term. I had one friend in the business who was a sweetheart and very ethical, he had a lot of repeat business with people who took choosing a realtor very seriously.

The REA industry is broken and has not much transparency when dealing with the public.
They base their interaction on misinformtion and speculation with the public. Much the same way
Wall Street operated pre-1929 crash. People bought and sold shares in companies which never disclosed their revenues and earnings.

Your friend like many other REA may well be the most honest people, but the industry isnt overall honest.

Oldy but Goodie... There is no RE bubble...

"The market is much better than you might hear or read," says Tom Stevens, NAR's president. "Consumers should take advantage of this perfect alignment of low rates and extraordinary inventory before market conditions change," November 3, 2006

"This email is in response to the many inquiries that NAR Research has received from state/local associations since I delivered my presentation at the Leadership Summit in Chicago last week. As promised, NAR Research will be distributing anti-bubble reports for many of the metros across the nation to all state and local associations."

klarek says

rubyrae says

Scumbag is a pretty strong term.

Their level of scum is stronger.

"The scum is strong with this one"

I was not extolling the virtues of China. I have been there on business and I will stop here.
I only mention that Apple products are coveted anywhere.
I was also in a small city in Mexico last December. In the Starbuck's I saw iPods, iPads, Apple laptops.
In airports last fall I saw Macbook airs all over the place.
I think Apple has sold about 59 million iPhones so far, but I am not sure.
Either way, I do not really have the strength of my convictions, I have the vast majority of my financial investments in mutual funds, and I hope to leave them alone for 15+ years.

clambo says

I was not extolling the virtues of China. I have been there on business and I will stop here.

I only mention that Apple products are coveted anywhere.

I was also in a small city in Mexico last December. In the Starbuck’s I saw iPods, iPads, Apple laptops.

In airports last fall I saw Macbook airs all over the place.

I think Apple has sold about 59 million iPhones so far, but I am not sure.

Either way, I do not really have the strength of my convictions, I have the vast majority of my financial investments in mutual funds, and I hope to leave them alone for 15+ years.

I understand. I just kinda was ranting about China anyways to someone else while I stumbled on this thread again ;)

I just did. In fact, the same source one of your Liberal govt-loving peers referenced, but didn't read it correctly. He referred to Whitney Ross's excellent site: www.theaffordablemortgagedepression.com but did not read it as carefully as I have for the past 2 1/2 years. The orchestrated program by BJClinton and his ilk like Barney Frank who railed on banks for 20 years before, was a program designed to increase home-ownership to poor people, by 8million or actually more, using requirements for banks and backstops by Freddie and Fannie. Thanks boys, for starting the housing bubble with all your directives and programs!! Thks for doing so much 'good' !

sbourg says

Until the mid-1990s, lenders did not make loans to people with bad credit in large numbers because such borrowers were unlikely or unable to repay those loans. Why suddenly during the mid-90s did lenders begin to ramp up subprime mortgages in a large and growing capacity?

No--the obvious answer is that the MBS market emerged allowing them to sell these loans as AAA rated securities.

Listen--you can believe whatever you want. If you look dispassionately at the data, there is absolutely no way to conclude that the CRA had any more than a VERY minor effect. If anything it probably helped mitigate the crisis:

1. Loans in CRA approved areas actually defaulted at lower rates than the rest of the market.
2. As Mark showed earlier, the major players in the subprime market were not regulated by the CRA
3. Freddie and Fannie were actually very late into the subprime game

I know the CRA theory is Fox News wet dream, but it's just not true...

Maybe you all should read Whitney Ross's excellent website just a littttttle bit more carefully. And why don't you do your OWN research like I did in early '09 to find the ACTUAL regulations to the CRA, regulations that were effective 7/1/95 and I READ THEM in '09 and they were TOUGH on banks, requiring them to lend to poor people for home loans. FIND THEM YOURSELF BEFORE YOU CALL ME A LIAR. I read the exact regs.

Better yet, why don't you pontificate your navel a little more, and maybe design new and better ways to tax 'the rich' to turn our economy into nirvana. Maybe you can send your ideas to Paul Krugman -- he'll love it if you're creative and it won't matter to him that it won't actually help the economy. Oh, wait, you all actually think taxing the 'rich' more and more has some way of helping the economy because somehow it gets into the paychecks of lower-paids, or lowers rents, or some such nonsensical hypothesis.

Go bash another Republican. It's time for you to squabble amongst yourselves, who has the best ideas for your magic formula of more and more federal govt interference into everything and more and more money to them, for, as Democrats believe, for the 'common-good'. Argue amongst yourselves. Clearly you started bashing me again before you actually read Whitney's website theaffordablemortgagedepression.com that you quoted to disprove me, but it turns out I knew her writings much better than you all, and she knows that I know what she's describing and I agree with her. So study up chums. And happily pull the lever for Obama in '12 as I know you will -- lemmings, all of you. Towards the economic cliff. But you're dragging your children too.

Why suddenly during the mid-90s did lenders begin to ramp up subprime mortgages in a large and growing capacity?

Because they were MAKING TONS OF MONEY DOING THIS.

Why is this hard for you to understand? In an up market, home mortgages are just printing money for the banks with literally zero risk to them. Defaults/short-sales were impossible because a year down the road even a 100% loan would have 90% LTV or more.

Here's a graph of the bubble:

http://research.stlouisfed.org/fred2/graph/?g=to

The red line is total national real estate valuation. Up, up, & away!

Blue line is total household real estate borrowing.

Green line is 30 year mortgage rates, which is somewhat deceptive since in the 2003-2006 period negative-am became common so the downward trend of interest rates actually continued from 1990-2007, with only two brief checks in 1994 and 1999.

Additionally, employment was booming in the 1990s:

http://research.stlouisfed.org/fred2/graph/?g=tp

greatly expanding the pool of borrowers who had capacity to pay but perhaps had shitty credit.

This CRA bullshit is one of the bigger lies of the right, and it's really quite odious in both its ignorance of the true perpetrators of this financial disaster (rich white wallstreeters, real estate industry pumpers -- agents, loan brokers, appraisers, everyone -- and the Republican regulators running the whole scam 2001-2008) and pegging poor minority people as a cause of the problem.

Blaming Clinton/CRA is just a naked attempt at CYA, and shame on you for pushing this utter pack of lies.

It was the entirety of the US -- everyone -- who bought into the housing bubble boom/bust. CRA/subprime were caught up in it, but not drivers. The core driver was the suicide lending that was allowed to go on 2002-2006.

Negative-am, interest-only, stated-income -- these are the products that killed us and are banned now.

CRA lending and subprime were & are different in nature to that.

sbourg says

And happily pull the lever for Obama in ‘12 as I know you will — lemmings, all of you.

LOL. This is kinda like the ink a squid leaves as he's trying to slip away from the argument.

You're wrong regarding the 'chicken and the egg" debate. The requirement to lend to basically non-qualified buyers came first, in 1995 due to the CRA Regulations. Then the realization by lenders that they could off-load the crap to GSEs and other creative loan selling, ESPECIALLY because it was seen by everyone that property-values were skyrocketing, and everyone was 'winning'. So the loans multiplied. But the start, the 'impetus' was the govt-edict requirement to lend to non-qualified buyers. So the lenders also figured how to make money off it and then offload the junk.

sbourg says

Maybe you all should read Whitney Ross’s excellent website just a littttttle bit more carefully. And why don’t you do your OWN research like I did in early ‘09 to find the ACTUAL regulations to the CRA, regulations that were effective 7/1/95 and I READ THEM in ‘09 and they were TOUGH on banks, requiring them to lend to poor people for home loans. FIND THEM YOURSELF BEFORE YOU CALL ME A LIAR. I read the exact regs.

Or you could just post the regs yourself since you are so familiar with them.

Of course you won't though because you are full of shit.

I can't post the 7/1/95 Regulations cuz it wasn't easy to find in '09 when I was researching this issue profusely. But I read the thing -- it was only 30 pages or so and it was HARD-BALL. It was not playing around.
Listen fellas -- you quoted Whitney Ross's website yourselves -- I've been reading that site since '09 when the S_IT was hitting the fan, and in all my researching I found the Regulations. Whitney thought it was Congressional action to put teeth in the CRA, but it was not. It was an amendment by regulation.
To read the entire, pretty darn good story by Whitney, read her site, many of her chapters:
www.theaffordablemortgagedepression.com and you'll see that the Clinton/Frank/Cisneros/Cuomo edict by the govt 7/1/95 took on a life of its own that had all the effects that you all describe, including GSEs who were also required to take on the 'junk', and the creative buying/selling/insuring/collateralizing of the poisonous loans -- loans that weren't so poisonous as long as the home values were rising. As long as they would rise, the problem was nonexistent -- all the sharks and even homeowners who were re-selling, were making money. But it was a house of cards.