patrick.net

tatupu70 says

Sounds like B of A definitely didn’t get its money worth on their contributions, huh?

How much TARP money did BoA get? They (like other big banksters) didn't use TARP to "lend" money out into the market (as our lying politicians claimed) but instead used it to balance off their toxic loans that were on their books. So I guess they didn't do too awful bad now did they?

Duck .... did Obama & the Democrats vote for TARP .... or were did they vote against it (as you obviously think as you paddle around on Fantasy Pond)?

klarek says

Yes, you already said above: the evil Republicans TRICKED them into signing it.

LOL!

RayAmerica says

Sometimes I wish I could be more like you. It must be lots and lots of fun living in a fantasy world of make believe

Who is in the land of make believe exactly? Please find me any expert who believes TARP was not necessary.

tatupu70 says

Who is in the land of make believe exactly? Please find me any expert who believes TARP was not necessary.

Exactly. There really is a Wizzard of Ozz. All you need to do is "follow the yellow brick road."

RayAmerica says

tatupu70 says

Who is in the land of make believe exactly? Please find me any expert who believes TARP was not necessary.

Exactly. There really is a Wizzard of Ozz. All you need to do is “follow the yellow brick road.”

OK--you keep reading Mish and the shadowstats world....

Picture worth a thousand words...

In 2004 he said: "I believe that we, as the federal government, have probably done too little rather than too much to push them to meet the goals of affordable housing." He went further: "I would like to get Fannie and Freddie more deeply into helping low-income housing."

"I did. I saw them on TV," she said. But Barney Frank did not budge. He understood that a good offense is the best defense. He also understands that rewriting history this election year is his best bet for keeping his long political career alive.

thomas.wong1986 says

Picture worth a thousand words…

"If I only had a brain ......"

RayAmerica says

There really is a Wizzard of Ozz. All you need to do is “follow the yellow brick road.”

Tatupu70 asks: "What exactly is “fundamental” value of a house?"

VERY good question.

Let's start with the house itself. The fundamental value would begin with the root cost of labor and materials to actually build it When most people think of a "house", that is the basic thing that pops into their head and also what most people spend their time looking at.

Next, there's the old saying in real estate: location, location, location. This is referred to as the "land" value.

These are both listed in the county assessment public listings. Interestingly enough, the "land" value for my (rented) condo was 80% of the value with the land at 20%. That surely can't be correct since I know I can buy the same place for half that value about 30 miles out in the exoburbs. But it's the same materials and overall probably the same labor that built it.

Of course, these so-called fundamentas are subject to "market" conditions. The labor and land, especially, vary wildly by location while materials less so.

PolishKnight says

Next, there’s the old saying in real estate: location, location, location. This is referred to as the “land” value.

And where land values are low and inexpensive as was the case early on in Silicon Valley business and industry flurish providing income and robust growth to the population.

Housing prices crash and what happens next ? This...

Intel to spend up to $8B on US manufacturing
Intel spending up to $8 billion on US factories as it pushes chip industry's pace

http://finance.yahoo.com/news/Intel-to-spend-up-to-8B-on-US-apf-2298150898.html?x=0

SAN FRANCISCO (AP) -- Intel Corp. on Tuesday revealed the scope of its latest infusion to keep its factories cutting-edge and push the chip industry's pace: an investment of up to $8 billion to build a new factory in Oregon and upgrade four existing plants in Arizona and Oregon.

In all, the projects will create up to 8,000 temporary construction jobs and up to 1,000 permanent positions in Oregon when that factory opens in 2013.

Tatupu asks: "Now that’s funny. Democrats are the party of crony capitalists and wall street? Did I read that correctly?"

Answer to both questions: Yes. And it is funny as hell.

Is George Soros a Republican? How about Steve Jobs? Or Warren Buffet? Or Steven Spielberg? Wall street gives more money to the Democrats than the Republicans.

This is nothing new, really. Nobody, leftist or right wing, goes into politics to hang around with POOR people or to get connections with companies that won't pay their niece well. Bill Clinton didn't throw his daughter a multi-million dollar wedding because his speaking tours to big corporations (that just happen to get corperate welfare) flew them to their events economy class!

All leftism really is just a cheerleading section for a kind of Marxist priesthood and they're the altar boys getting molested. The working and middle class who've fled the socialist democrats are ahead of the curve. Unless you're gay or living in a limosine liberal bubble, that is.

Thomas.Wong observes: "SAN FRANCISCO (AP) — Intel Corp. on Tuesday revealed the scope of its latest infusion to keep its factories cutting-edge and push the chip industry’s pace: an investment of up to $8 billion to build a new factory in Oregon and upgrade four existing plants in Arizona and Oregon."

There goes the neighborhood!

How many Oregonians does it take to change a lightbulb?

10. 1 to change it and 9 to keep those friggin' Californians from sharing the experience! :-)

PolishKnight says

Of course, these so-called fundamentas are subject to “market” conditions. The labor and land, especially, vary wildly by location while materials less so

That was kind of where I was going. It's really market driven. The house is worth what someone will pay for it. I don't see how "fundamentals" apply.

PolishKnight says

Is George Soros a Republican? How about Steve Jobs? Or Warren Buffet? Or Steven Spielberg? Wall street gives more money to the Democrats than the Republicans.

Is Steven Spielberg a crony capitalist? Does he work on Wall St.? How about Steve Jobs? It's a huge stretch to even portray Warren Buffet as such.

I'm just surprised that someone would seriously argue that the Democrats are the party of Wall St. I thought it was pretty well established that they were firmly Republicans...

Tatupu70 says: "I don’t see how “fundamentals” apply."

Fundamentals are the foundation of a cost beyond what "market" will drive them up from. A tulip costs about a buck to make. Speculation may drive it beyond that price, but the "fundamental" is that the tulip costs a buck.

Regarding crony capitalists. If Warren Buffet isn't a capitalist, who is? I'm amused at you saying "I thought it was pretty well established" So much for thinking for yourself and challenging the status quo, eh? See you in church! :-)

The FACTS is that Wall Street gives more money to Democrats than Republicans, it's democrats who support wall street bailouts more than Republicans (Reagan cut them off during the 80's!) and NYC overall is a leftist stronghold. At best, Wall Street are political moderates on fiscal matters and outright liberals on social ones. This goes even for the Wall Street Journal.

And it's reflected in the anemic sales of the NYT.

PolishKnight says

At best, Wall Street are political moderates on fiscal matters and outright liberals on social ones. This goes even for the Wall Street Journal.

Now you're being funny again. The Journal as a moderate on financial matters? Really?

Warren Buffet is a capitalist, of course. But he supports regulation of the financial markets, which sets him apart from what I would term the crony capitalists.

regarding fundamental home value.--so what is the fundamental cost of land? That's the crux of the issue.

tatupu70 says

so what is the fundamental cost of land?

The actual *cost* of land is unknown, since its Maker hasn't gotten around to invoicing us yet.

The inputs into the *value* of land are simply its zoning and its degree of access to positive externalities like parks, schools, medical care, shopping, and employment. Views, safety, and microclimate also enter what we are willing to pay, which theoretically is relative to the most crappy piece of land on the market -- every positive externality theoretically adds to the price.

The zoning serves as a multiplier, there was a nice 5 acre lot in NW Fresno that I had my eye on, it was big enough to put 100 garden apartment units on, but it was on the market for $1.6M since no way would that project get through planning. Without bribes at least.

http://www.homes.com/property/13565665/5690_N_Forkner_Ave-Fresno-CA-93711

Until we invent antigravity or teleportation devices to break the land monopoly, the value of any given parcel is largely driven by its location within a community and how well that community provides human services and jobs, and how much housing one is allowed to build on it.

PolishKnight says

Regarding crony capitalists. If Warren Buffet isn’t a capitalist, who is?

Confusion of terms. Not all capitalism is bad, or "crony". Warren Buffet deploys his money to find value where others don't, it borders on predatory capitalism but I think he stays on the OK side of that line since he doesn't force people to sell to him.

Crony capitalism can be defined as basically skimming the productive efforts of others through the leveraging of privilege and "guanxi". Steve Jobs and Spielberg do not fall into this category either, they made their billions the old-fashioned way, in the free market with superior consumer products.

Corntrollio,

It is only a few countries like the United States where every transaction is legal, made public and there is plenty of disclosure of "median" stats like income and home prices. Countries like India and China do NOT publish any kind of median price. Even median income is not disclosed. However, not publishing this data does not mean that we cannot estimate median income or median home prices. If you have really been to India or China, you should already know that.

Having said that, just calculating median home prices without considering the type of home, size, features is itself faulty. After all, there are plenty of trailer homes and manufactured homes available for anyone to purchase in America for less than USD 20,000.00. Should those be included in the median home price, since those are available for sale anyway? Is comparing a 4 BR 2000 sqft home with a nice lot and attached garage in America with a 2 BR 1000 sqft apartment in Beijing or Mumbai fair? That is what "median" price comparisons across places seem to do.

Next, how do you define your "prime" area or "city center"? If I give you a link to the high prices in the outskirts of Mumbai, you may still claim that it is the "city center", and say that a high price is justified. What areas constitute "prime" in Los Angeles, San Francisco or New York? In any case, just look up Mumbai or Beijing or other Indian and Chinese metros on Google Maps, then find your own reasonable non-prime area, and then look up that area on that city's CraigsList. Look for apartments and land/single family residences. Here is an example. In the suburb of Andheri in Mumbai, a 600 sqft, 20 year old 14th floor apartment is selling for close to USD 200,000.00 : http://mumbai.craigslist.co.in/reb/2001803047.html . Or this one in the suburb of Goregaon, for close to USD 500,000.00. You will find plenty of such examples. Good luck finding a private single family home cheaper than a few million USD.
Again, do this for Beijing, Shanghai, whatever.

You and I made similar observations though. If you read all my previous posts, I have repeatedly called the prices in India and China the most ABSURD bubbles in the world. Even before you said it, I already have stated that majority of the local population in the metros of these countries has no hope whatsoever of buying even an apartment and so live in slums on illegal land, in makeshift tents. Affordability is almost non-existent, and yet prices have been doubling in India and China every 2 to 3 years. Like you, I am also astounded at the prices in these places, and wonder how this is even possible. However, this impossibly ABSURD ponzi game has been going on for 20-30 years, and shows no signs of stopping. Folks that have bought anything in the last 20-30 years are now extremely affluent, and even folks who bought recently are still sitting on huge gains. If the expectation is that prices will always go up double digits every year, the upper class and the upper middle class speculates and rides this ponzi game all the way and gets richer and richer with every flipped apartment.

Link to the one in Goregaon that I referenced above : http://mumbai.craigslist.co.in/reb/1993305226.html

"Corntrollio" ... sorry, but that name made me laugh alot ... I can just see Ace Ventura calling it out .... lol

clayfire23 says

Corntrollio,
It is only a few countries like the United States where every transaction is legal, made public and there is plenty of disclosure of “median” stats like income and home prices.

Hmmm... not really true. "Every transaction is legal"? Not even close. There are inside deals, secret payments on the side to sellers, and "floppers" who defraud banks into short sales at below market value, then turn around and sell to another buyer who was already lined up, just to name a few of the illegal scams going on. Every transaction made public? Not really. That info was a closely guarded secret, available only to realtors. The only reason we can get that info now is due to some enterprising people who sleuth out the information from tax rolls and make it available to the public. It is not officially "published".

wow... truly depressing thread - if so many people still believe "TARP saved the economy", there is no hope for this country. The banksters have won.

native94027 says

if so many people still believe “TARP saved the economy”

I'm still in the camp that the financial system is the cardio-pulmonary system of the debt-based economy.

If companies didn't need credit we wouldn't need banks, just check-clearing facilities. Every company I've worked for save one was utterly reliant on credit to keep the lights on.

"Warren Buffet is a capitalist, of course. But he supports regulation of the financial markets, which sets him apart from what I would term the crony capitalists."

From: http://www.nndb.com/people/445/000022379/

Warren Buffett, classified Democrat, associations:
Hillary Clinton for President
Hillary Rodham Clinton for US Senate Committee
John Kerry for President
Obama for America

He was apparently in the young republicans and may have swung over to the left later, but he is a wealthy capitalist.

And indeed, like with Bill Gates Sr, he probably supports "regulations" provided he has a way out of them. :-)

Troy says: "Confusion of terms. Not all capitalism is bad, or “crony”. Warren Buffet deploys his money to find value where others don’t, it borders on predatory capitalism but I think he stays on the OK side of that line since he doesn’t force people to sell to him.
Crony capitalism can be defined as basically skimming the productive efforts of others through the leveraging of privilege and “guanxi”. Steve Jobs and Spielberg do not fall into this category either, they made their billions the old-fashioned way, in the free market with superior consumer products."

Apparently, not all capitalists are bad "cronies" just as not all cars and private jets destroy the planet. When the cars and private jets are driven/flown by Al Gore, respectively, then it's ok.

Sheesh, television evanglists are less hypocritical! :-)

I prefer Catholic church and drinking the wine and eating the wafers. Make a lot more sense than leftism...

"Hmmm… not really true. “Every transaction is legal”? Not even close. There are inside deals, secret payments on the side to sellers, and “floppers” who defraud banks into short sales at below market value, then turn around and sell to another buyer who was already lined up, just to name a few of the illegal scams going on."

And you gotta love those ethanol subsidies too. Corporate welfare! The BEST welfare by the socialists. How about that new Airbus and the Concorde?!?!

PolishKnight says

not all capitalists are bad “cronies” just as not all cars and private jets destroy the planet. When the cars and private jets are driven/flown by Al Gore, respectively, then it’s ok

I look at the wealth -- goods and services that satisfy human needs and wants -- created in competition with other wealth creators. That's "good" capitalism. "Bad" capitalism can be defined as rentierism in all its forms.

Crony capitalism is defined by inside "old-boy-network" dealing, especially as it relates to gaining access and control over government policy, and industry collusion to support abusive pricing margins.

Is this a rhetorical question?

Simple answer: "When average people can afford an average home in an area (i.e. 3-4x income) AND banks are willing to lend to these average people. "

All property is relative on the area, (i.e. jobs and location)

LOL !

Unemployment over 10% is going to give the Fed more ammo to do even more quantitative easing. 3% 15-yr mortgages are coming soon.

ch_tah says

3% 15-yr mortgages are coming soon

If you're behind on your mortgage and go to a NACA event you can get 3.35%. I was talking with the secretary at the doctors office today and she went all the way up to the Sacramento NACA gathering and was modified from a 7% loan to a 3.35% fixed 30 year loan....... I refied the old fashioned way a little over a month ago...not behind on payments, 100K+ in equity in that particular piece of property and an 803 FICO but I could only get 4.375% (no fees/points). Go figure.

PolishKnight says

“Hmmm… not really true. “Every transaction is legal”? Not even close. There are inside deals, secret payments on the side to sellers, and “floppers” who defraud banks into short sales at below market value, then turn around and sell to another buyer who was already lined up, just to name a few of the illegal scams going on.”
And you gotta love those ethanol subsidies too. Corporate welfare! The BEST welfare by the socialists. How about that new Airbus and the Concorde?!?!

Jesus Christ, did you ever miss the point.

Let us not conflate prices with values. Excepting maybe rare collectibles, the intrinsic value of a thing is not dictated by what someone is willing to pay for it or how much debt they're willing to service in order to attain it, especially when said debt is facilitated through fraudulent lending. If the opposite were true, and sentiment was the primary dictate for the value of things, then most commodities for sale to the public would be sold at auction. Some key elements that figure into the actual value of a good include base/production cost, availability, utility - and in the case of housing/land - location, condition, size and situation. Everything else is just perception and sentiment - two highly manipulatable factors, around which a whole industry revolves.

Austinhousingbubble says

Let us not conflate prices with values. Excepting maybe rare collectibles, the intrinsic value of a thing is not dictated by what someone is willing to pay for it or how much debt they’re willing to service in order to attain it, especially when said debt is facilitated through fraudulent lending. If the opposite were true, and sentiment was the primary dictate for the value of things, then most commodities for sale to the public would be sold at auction. Some key elements that figure into the actual value of a good include base/production cost, availability, utility - and in the case of housing/land - location, condition, size and situation. Everything else is just perception and sentiment - two highly manipulatable factors, around which a whole industry revolves.

I'd have to disagree with this. Basic supply and demand says that something is worth whatever people will pay for it. Value should be independent of the base/production cost.

The value of a house does depend on interest rates, perception, and sentiment. As well as location, condition, size, etc.

tatupu70 says

I’d have to disagree with this. Basic supply and demand says that something is worth whatever people will pay for it. Value should be independent of the base/production cost.
The value of a house does depend on interest rates, perception, and sentiment. As well as location, condition, size, etc.

The price of a house depends on all that. However, when the price is expressed in terms of a fiat currency of dubious or declining strength, using price as a reliable indicator of value is inherently misleading.

native94027 says

tatupu70 says

I’d have to disagree with this. Basic supply and demand says that something is worth whatever people will pay for it. Value should be independent of the base/production cost.
The value of a house does depend on interest rates, perception, and sentiment. As well as location, condition, size, etc.

The price of a house depends on all that. However, when the price is expressed in terms of a fiat currency of dubious or declining strength, using price as a reliable indicator of value is inherently misleading.

I don't quite understand that point. Eventually, when you buy a house, aren't you going to buy in US dollars? If so, and if you think the value of the US dollar is declining, doesn't that make the point that you might as well buy now since your dollars are becoming worth less? Or more directly to your point, the value of a house in US dollars should be infinite assuming the value of the dollar is going to 0 (taking an extreme example).

tatupu70 says

Basic supply and demand says that something is worth whatever people will pay for it. Value should be independent of the base/production cost.

Prices are very much influenced by mortgages and their availability. If it weren't for NINJA 0% jumbo loans the last 10 years, housing values wouldn't have shot up so quickly. People can--and do--opt out altogether by renting, instead.

Value is independent of cost, but the supplier will quit making the product if the market only values it at a price that returns low or negative profit margin.

What do you think of this Larry?

(Warning: more evidence that the housing bottom was not reached in 2009)

http://blogs.forbes.com/investor/2010/10/19/where-is-the-housing-recovery/?source=patrick.net#socialvotestarget