patrick.net

The real problem here is there are a bunch of condos in downtown San Jose (except for the ones within a 2 block radius of San Jose State University) that are listed for $150k. I've been shopping around in that area. There are even some 2 bed room units listed for around $200kish.

If you're looking for close to $300k, your condo must be at at Paseo Plaza, or The 88.

I'm going to reiterate what sface said. You've got a baby on the way. Depending on where you're at, you're looking at say 6 months with "no baby" and then probably 18 months with a baby who will be in your room regardless. Since the child doesn't move that much, or need much room, the place will be sufficient for you.

You said "2 years ago", which means you've got 3 years to go. That means you've got roughly 4 years covered of the 5, 2 down and 2 more where your space will be adeqate. You could probably swing 1 more year.

At that point, you'll also start to understand what you need in a home. Not just "more space!"

short sale. it will probably ruin your credit, but you said your ready to cut your losses now, if need be the case... so cut them now, and in 5 years you'll be fine (maybe sooner). You'll have saved a LOT of money, renting a nicer bigger place for you and your family...

Congratulations on your marriage and new baby. Not everybody is going to be flattened by this "downturn" and perhaps you'll be in a charmed minority. However, various economic charts on the web illustrate horrors none of us have encountered before. That means typical responses and even deeply held values may need to be jettisoned by the time we're on the other side of this. If these charts are accurate, what we all have deemed essential and necessary for "lifestyle" is going to be ripped from our grasp. I'm reminded of famous presidential quotes which turned out to be famous lies: "I am not a crook" and "I did not have sexual relations with that woman" - and - "The American Way of Life is Not Negotiable". We need to wake up! How much is that lifestyle gone already?? The only chance for resistance is by getting ahead of the curve and trying to minimize the hit on our assets. If we hesitate, we'll end up losing it all and by then, resistance really will be futile. How many people held on to Pets.com all the way down? Only you can decide whether walking away makes sense, this being a non-recourse state, but I'd be very careful when you tie the decision to "values" that may be better suited to a by-gone era rather than basing the decision on numbers and the law. It sounds like you need to open your mind and consider alternatives thoroughly before you reject them out of hand. And not only the "walking away option". You also need to revisit your space requirements. How many families are finding themselves out on the street before they give up the idea they "require" x number of bedrooms and x number of square feet? They're clinging to this "value" and it's destroying their futures. It's one thing to think "it can't happen to me" when the odds are in your favor, but when they're not, it's stupidity.

My solution, which many will ridicule, especially here in this image-is-everything state, is an RV. Before you roll your eyes and consider me "trailer-trash", consider the most obvious advantages: contained expenses, mobility and flexibility to adapt to a changing economic environment, monthly costs that are a fraction of normal "rent". So, if we need to move to another state, we just roll on out, sell it, or put it in storage. While others watch their net worth decline with their houses, I see mine at least hold constant. The RV costs a fraction of a house and its depreciation even when it gets to zero is chump change compared to the 6 month depreciation of a house we looked at in Menlo Park.

And there have been unforeseen advantages: 1) Security. For the first time in my life, I can leave my "house" and feel secure. Previously, I always chose houses by location and always lived in pricey towns. But this also made them "targets". Although mine was never "hit", others were and I never left town without a nagging concern. One friend in Los Gatos actually hires house-sitters. Now, there are a hundred eyes behind tinted windows which see anyone even approach my vehicle and people really look out for us. 2) Community. Forward thinking and like-minded professionals are doing this as well as retirees and just starting out families. You might be surprised to find how many VPs at the major Silicon Valley tech companies are doing this - but of course, never broadcasting it. And young people with newborns who have intelligent people around who can help them. And plenty of dog-walkers. 3) No more moving companies! As I went from house to house or apartment to apartment, I was always having to deal with movers and bulky furniture. It's an expense that no one pays much attention to, but it really adds up. Plus, some moving companies are right out of the Sopranos. Now I control all of that.

Anyway, my point wasn't to argue for RV living but rather to encourage you to get creative and think outside of traditionally accepted alternatives. Focus on your bottom-line net worth and doing whatever is required (within the law) to keep it intact. You don't want to find yourself at the bottom of this cycle with nothing. Whatever you have then will set you up for the rest of your life.

Hi all,
We live in Orlando, Fl and most of you know the housing price now is about less than 50% from peak. We do not own any house now, but we consider to buy a townhouse (I mean real townhouse with small backyard).

The townhouse we focus on is 3/2/2 (1600sqft), HOA=200$/mo, asking price is about 150K. But you can get for 140K. The rent of such home is now about 1200$/mo. Tendency falling.

My unexperienced rough calculation shows that the cost of ownership will cost me about 1400$ (all included). Any correction about this # is well come.

The problem is, I am unemployed now and I do not want to make more then 40% down payment.

My questions are:
a) It is a good condition to buy now? (To beat the soon coming inflation).
b) It is possible to get reasonable financing, based on my unemployed situation?

Thanks

hooch-raider said: "you brought it on yourself. Take responsibility for your decision."
Making the best financial decision for himself and his family is "taking responsibility". "Walking away" from a secured loan - may - meet that criteria. (See a lawyer!) That's the point of a non-recourse loan and why bankers are trying to eliminate them.

"Also, we don’t know how the law regarding bankruptcy or lending will change in the years to come."
How does that affect a current contract? This could be an argument from getting out now before laws are changed. If he believes prices will continue down for some time to come, are you advising him to continue depleting his assets? This in some way makes him more of a "man"?

"Walking away could be financial suicide. Beyond obtaining loans, you many lose your ability to maintain or get credit cards, accounts with any kind of financial institution. Frankly, you will have trouble renting with a terrible credit rating."
These kinds of things tend to be affected by cycle. If banks want to lend, they'll overlook flaws, particularly if those flaws are common and widespread. Millions of people are losing their homes. As soon as this cycle changes or another government handout is made, banks are going to lend to them. If the cycle is such banks don't want to lend, you'll need to be so squeaky clean, you probably won't need or want to borrow.

Can you refi? You'll get a better interest rate - especially if you go for a 15 year loan - and all fees can be rolled into new loan. You can get 3.875% 15 year loans for 0 points. This will allow you to pay down the loan much quicker. You don't need a big place with a new born - you'll have a crib for the first 2 years before the little monkey figures out how to climb out. By then you're at 5 years and can rent it out, or sell it in an improved market. With a 15 year loan of 260k you pay $750 interest per month. You get one third back on taxes - so you are effectively renting for 500+350HOA = 850/month which is a good deal. Enjoy the new few years - it's a heap of fun - you bought the place for a good reason - money comes and goes and isn't the most important thing in life.

Father_of_two says

Hi all,
We live in Orlando, Fl and most of you know the housing price now is about less than 50% from peak. We do not own any house now, but we consider to buy a townhouse (I mean real townhouse with small backyard).
The townhouse we focus on is 3/2/2 (1600sqft), HOA=200$/mo, asking price is about 150K. But you can get for 140K. The rent of such home is now about 1200$/mo. Tendency falling.
My unexperienced rough calculation shows that the cost of ownership will cost me about 1400$ (all included). Any correction about this # is well come.
The problem is, I am unemployed now and I do not want to make more then 40% down payment.
My questions are:
a) It is a good condition to buy now? (To beat the soon coming inflation).
b) It is possible to get reasonable financing, based on my unemployed situation?
Thanks

You live in a relatively low cost RE market so the price to rent cap rate at $140K to $14,400 in annual rent is fairly well in line 9-10%... of course no telling how HOA fees will end up.

That all said, isn't your RE market still declining in value? And you do point out rents are falling. So what's the rush to buy? In many ways a townhome is just a glorified condo which is an apartment with a shorter name. And townhomes are a commodity, not much more. Check around also to see if many of the nearby units are owned by the dweller or a rental... this will impact re-sale value, if any, downstream.

Lastly you are unemployed and about to plunk down $60K+ plus transaction costs... what happens if your unemployment is quite extended... do you have a safety net of 6 months of full living expenses in the bank on top of the purchase price? And what if you need to take a job in another city and your equity is tied up in Orlando in a hard to sell commodity?

I realize that part of why you are interested in buying is a combination of stability for your family and, probably, lower monthly costs (5% 30 yr on, say, $90K is around $500 PI, add another $400 for TI and assn fees you are at $900/month).

But you will pay a price for that stability... trading current uncertainty for sleepless nights with your cash tied up in your home.

I recommend waiting until your work situation is settled.

And, in all honesty, you are going to have trouble finding a loan with no job... even with your large down payment.

Hold off so as to not get too disappointed downstream.

Just rent it out under the table. Who's going to know? After all, it will be worth $1 million dollars in just a few years. ;)

Father-or-two
You haven't given enough data to answer your question. 1) Do you have a down payment? 2)Is your line of work such that you're confident (like 100% sure) your income will shortly resume? 3) Have you met with a lender to see what you might qualify for in terms of a mortgage? If not, and your only concern is "to beat the coming inflation", I advise you to know the answers to the three questions above and spend a couple of weeks reading Mish's Global Economic Trend blog (Google it) before you make any decision. Mish may be wrong, but what if he isn't? Position yourself so it won't matter. Even though you're looking at a 50% off fire sale in Orlando right now, nothing says it can't go down further. What if it goes down another 20% and then flat lines for 10 years? Will you be happy you bought? What if more and more people keep foreclosing? Will your townhouse still be located in a safe place? Will your neighbors pay their HOA fees? How long can you go on if your own income doesn't materialize? And finally, what's the down side of not buying? You believe you will miss out on inflation and price appreciation? Millions of people are broke now because they heard that siren song.

krndmg says

hooch-raider said: “you brought it on yourself. Take responsibility for your decision.”

Making the best financial decision for himself and his family is “taking responsibility”. “Walking away” from a secured loan - may - meet that criteria. (See a lawyer!) That’s the point of a non-recourse loan and why bankers are trying to eliminate them.
“Also, we don’t know how the law regarding bankruptcy or lending will change in the years to come.”

How does that affect a current contract? This could be an argument from getting out now before laws are changed. If he believes prices will continue down for some time to come, are you advising him to continue depleting his assets? This in some way makes him more of a “man”?
“Walking away could be financial suicide. Beyond obtaining loans, you many lose your ability to maintain or get credit cards, accounts with any kind of financial institution. Frankly, you will have trouble renting with a terrible credit rating.”

These kinds of things tend to be affected by cycle. If banks want to lend, they’ll overlook flaws, particularly if those flaws are common and widespread. Millions of people are losing their homes. As soon as this cycle changes or another government handout is made, banks are going to lend to them. If the cycle is such banks don’t want to lend, you’ll need to be so squeaky clean, you probably won’t need or want to borrow.

krndmg,

Enjoyed your initial post. Can't argue with it, especially the lawyer part. As for your second, I think you are making some pretty big assumptions about cycles, etc. But hey, you could be right. Maybe nothing will change.

As for my "being a man comment", a man takes 100% responsibility for his actions. I read a lot of posters on this site and others that encourage others to "walk away" in some kind of effort to stick it to the banks, government, etc. I was simply encouraging my fellow married man with a child on the way to remember to be responsible. No one made him enter into the various loan agreements. He did that. Moreover, now is not the time for him or any other man with a family to do something high risk, whatever that may look like.

-Hooch

Congratulations and condolences,

As far as space goes, it's all relative. When my son was born 4.5 years ago we lived on a 30 ft sailboat. It worked out great for about 14 months. Babies don't need much stuff, a little basket of toys/books, a few piles of clothes. All that crap they sell at Baybees-R-Us is superfluous. If anything it was a great excuse for friends and family not to buy us any extra junk, "we don't have room for it!" We were even washing cotton diapers at the marina/laundromat, a hassle but it worked out. I hope you have a washer/drier in unit, even without cloth diapers, kids create a lot of dirty clothes.

Once my son started climbing up the companionway we decided it was over, sold the boat and got a 1 bedroom apartment which felt huge! Now with two kids we rent a large 2bd townhouse/condo and it works pretty well, we just wish we had a small yard and more garage space for projects.

The rent it out option sounds appealing too. I'll bet the City of SJ would rather you rent it out (especially to your brother) than walk away and:
1) create a deficiency they have to try to collect
2) create an empty housing unit that hurts the HOA and property values
Hopefully bureaucratic pig-headed-ness wouldn't get in the way of them working with you.

Take a serious look at the option of walking away though. It seems very possible that we are headed down a deflationary-spiral/depression. Free rent for a few years and big lump of cash in the bank would be a major benefit. I think 5+ years down the line will be a much better time to buy anyway. Come up with a really good accounting of the full costs of selling (fees, commissions, etc) at different price points and extend out a spreadsheet to estimate your future financial situation under different scenarios. Heck, if the stock market craters like the Elliot waver's are saying, it may be the buy-low opportunity of a lifetime (if you have cash).

Vain says

Just rent it out under the table. Who’s going to know?

The wall has ears, and this often happens.

He probabaly is able to get away with under the table thing though, it's goverment loan with string attached. He need to figure out what can and can't be done with it, try to get the string removed first before attempting anything.

I am with SF ace for this matter.
He has 3 years to go.

therapy, sorry to hear your situation, and congrat to marriage and baby. I guess you learned couple lessions by this condo thing. You overextended little bit thinking you can manage it, hoping the housing market is going to be ok. Too bad it didn't turn out that way. 1 bed is ok for singles, big no no for families. The same goes to renting too.

bert said: "Can you refi?"

CA is a non-recourse mortgage loan state which means if you fail meeting your mortgage, the house is the only security for the loan and the bank has no further recourse. They can't attach your other assets to pay for the money still owing on the mortgage. This holds true only for original mortgages. The safety net disappears if you refinance so base your refinancing decision on more than just monthly payment amounts. (Verify this with your own lawyer - your contracts and situation may vary.)

Hey Therapy,

How would anyone find out you were renting the place out? Is the city really gonna come knocking on your door? Don't they have bigger fish to fry... I'd "sublet" it quietly... let the renter know you want to keep it on the down low that you don't live there. Maybe keep having your mail delivered there ect....

anyway.. you are kinda stuck between a rock and a hard place. You'll take a big loss to sell it now... But then again, maybe even a bigger loss in a few years. I don't see condos increasing in demand anytime soon.. Most of my friends that moved into condos with HOAs tell me NEVER buy a condo... just rent until you can afford a stand-alone home. They say HOAs are a nightmare.. Who needs that stress when you can rent for less and say screw you to the landlord when your month to month lease kicks in.

Hooch_raider said: "As for my “being a man comment”, a man takes 100% responsibility for his actions."

Beam me up. I want to live in your world.

hooch_raider says

man comment

Hooch... your comment is really quite well stated... walking away now does not bode well for his parenthood.

In saying that... our nation's willingness to dump it's individuals' problems back on the rest of us is really what caused this situation ... moral hazard... and you make a good point that it has to stop.

I rescind my walk away recommedation.

don't be SCARED BY THE CREDIT_RATING BOOGEY MAN!

Seriously, I think all of us are 'programmed' to worship at the altar of FICO score. Circumstances where credit matters is when you get a loan for a car / house ..etc. You can certainly 'work the system'.

Like some body said, if you need a car get one now.

One of my buddy in Sacramento, he stopped paying and went through foreclosure. The builder / bank tried to scare him with 'your credit will be ruined for 7 years'. The guy lived in his house for 15 months... rent free before getting booted out.

When he moved out, he found a rental house he liked and told the land lord that he has a foreclosure on the record. What then offered $50 more than asking for rent. And put 1 year worth of rent in an escrow account (remember he had been saving mortgage for 15 months) - the escrow company mails the rent check to the landlord every month. Land lord is happy as a clam.

I told you this story, b/c there are ways to deal with credit ratings.... you don't have to be a slave for a bloody number.

permanent_marker says

Seriously, I think all of us are ‘programmed’ to worship at the altar of FICO score. Circumstances where credit matters is when you get a loan for a car / house ..etc. You can certainly ‘work the system’.

The Credit rating agencies are selling their services to every facet of American life.
Even for those of us that wish to never partake in the credtor/debtor system.
You can't get a job, you can't rent a house, you can't rent a car, you can't run for office, you can't "can't".

permanent_marker says

I told you this story, b/c there are ways to deal with credit ratings…. you don’t have to be a slave for a bloody number.

They are working on it PM, don't worry Dictatorships and Fascism is what happens when we just live and let live. The Numb Nutz on the Hill will invoke their right to revoke yours.

This economy can't collapse quick enough for me. I'm dancing a jig in the ashes as this incarnation of the "BEST SYSTEM IN THE WORLD" burns in Rome's embers.

The condo value will be cut at least in half (likely 70%) of current values in 3-4 years, and values will take minimum 20 years to get back to 2008 levels. Bail now.

http://www.marketoracle.co.uk/UserInfo-Steve_Moyer.html

Steve Moyer

rmm221 says

Hey Therapy,

How would anyone find out you were renting the place out? Is the city really gonna come knocking on your door? Don’t they have bigger fish to fry… I’d “sublet” it quietly… let the renter know you want to keep it on the down low that you don’t live there. Maybe keep having your mail delivered there ect….

Dunno what it's like in San Jose, but in NYC and environs any condo board would attempt to make an example out you for that... will send the owners and renters miserable threatening letters, warn of legal action. Then the renters will go after the owner for moving fees, expenses, all the other nonsense. Don't people have other stuff to do? Sadly, a lot don't. Hell, my neighbors know when someone comes in to water my freaking plants.

E-man says

Note: Therapy either works for the City of San Jose or Santa Clara County. So he has to repay the $30k immediately when he sells. He can’t default on this $30k loan.

If this is so he should have told us... my guess there is no way he can walk... unless as a government employee he has special immunity from collections action from money he accepted from his own employer... heaven only knows, but that may well be the case in San Jose. I am sure in SF he'd be home free.

Liz Pendens says

Dunno what it’s like in San Jose, but in NYC and environs any condo board would attempt to make an example out you for that… will send the owners and renters miserable threatening letters, warn of legal action. Then the renters will go after the owner for moving fees, expenses, all the other nonsense. Don’t people have other stuff to do? Sadly, a lot don’t. Hell, my neighbors know when someone comes in to water my freaking plants.

I don't see the problem.

I spent most of my adult life with out credit or a credit score, it didn't matter to me, because I was responsible enough to know that is a responsibility.
The worm turns on all of the high score morons that out Spent their means in Debt, then they walk away. These are the same bastards that lambasted me, for not being able to pay my piddly debt in 2002 when I found my self out of work and refused to pay the Bill Collection predators like "Sherman Acquisitions".
These bastards busted my balls for 200 and 300 dollar loans.

Now more than half of America wants to just walk away from 3 and 4 hundred thousand dollar loans, and all of a sudden that's prudent?

Not only have we turned into a whining society of Entitleists, we're a freaking nation of selective Virtues.

You're only expected to follow the rules and pay your way, when its the other Son of a bitches not paying an unjust $30 fee that makes its way to collection that then festers into a $1200 judgment.

But WOAH! those same phucksticks, criticizing the Cretins, hit the first obstacle they are the first to bail on their Obligations.

@E-man

It doesn't seem like an over extended issue, it's more of a "more space! baby on the way!" issue. 3 more years is nothing to wait. That takes care of the 30K. Renting out at that point is possible.

Parents start to think differently about things. Before baby it seems to be "SPACE!", after it's schools, parks, safety, neighbours, etc. It likely won't get much worse at this point. So holding the place for a few more years won't cost him anything really. He might as well wait it out, enjoy the condo for what it is and wait for the entire market to stabilize and also for his views on what he really needs to set in. He could end up with kid #2 in 3 years and then his space issues might change again!

A relative was in the same situation with a condo in San Diego. He managed to do a short-refinance/short-sale and walked away from the condo. He was worried he wouldn't be able to buy for ~7 years, but was able to buy a house about 2 years later. YMMV, but he was definitely glad to be free of the condo.

pkennedy says

Parents start to think differently about things.

Agreed. After my original post, i realized i should have said that too. People make decisions while in the "nesting" phase, but after the baby is born it's rarely as important as you think it would be. e.g. we thought we would need a bigger car in our nesting phase, but in retrospect i'd rather have saved the money. You'll probably end up in the same thunk ... wishing that you'd stayed in the smaller place and kept the money. So my advice is save as much money as you can. (BTW - also agree with the boat comment ...we also didn't have much room and it really helps limit the junk you will buy).

Thanks cevansnh and krndmg for your advice.

It is true with the HOA issue, it can drag down the whole community if more foreclosures happen.

I agree, that the housing situation can get worst than where we are right now. And I am very glad that we did not buy a home in the past few years. We are just scared about our small savings losing value through inflation.

What would you guys doing with your savings if the inflation kicks in? Please advice.

Thanks

The housing market is going to tumble and you will regret not selling or defaulting on your condo. I would get out ASAP and rent for a few years.

Father_of_two says

b) It is possible to get reasonable financing, based on my unemployed situation?

god i hope not.

no income. no house. simple.

It sounds like sitting tight and not doing anything is in your best financial interest. I don't think thats such a bad proposition and you can probably live happily with the space you have if you reconsider your lifestyle.

Mankind kind did without 800 sqft condos for hundreds of thousands of years just fine. An 800 sqft place would be considered palatial in places like Tokyo and Taiwan (and not too shabby for NY). There are people living happily in 150 sqft and less here in the US.

Take a good hard look at all the junk you've probably acquired over the years and ask yourself if you really need it. If you desperately do, go rent a storage space and keep it there. If not, get rid of it. Strongly consider downsizing your furniture. Ever consider a Japanese style futon for sleeping? They fold away during the day leaving leaving you more space.

There is a lot you can do by changing your mindset on what your living space is and how you use it.

I'm surprised no one is mentioning that this price is delusional. What the developer is trying to sell for is irrelevant.
I know this market well and at least another $100k needs to come off the price if you want to even try and compete with units that are actually selling in San Jose. The lack of any standard condo amenities is not exactly going to help either.
There is always demand if the price is right.
You only have two options. Suck it up and keep paying way more than you can rent an identical unit for or default.
BTW, be careful with comps for your individual property as foreclosures can look like sales on sites like Zillow. Knock on the doors of any recently sold places and make sure there is actually a new owner and find out what they paid. Comps that are the total mortgage owed to the bank are useless.

I was in a similar situation, except it was a house. I rented it out to cover the costs, and was worried about the bank finding out. The value kept dropping and I couldn't sell it because I was tied into the rental lease agreement. Two years later now that the tenants are gone the value is 1/3 underwater and my entire 30% downpayment is lost. I am working on a short sale and will lose all my equity. If I had sold two years ago I would have come out with some cash and salvaged my credit. Be aware that:

1) the market is still dropping and all signs are that it will for at least two more years.
2) having tenants means you can't sell
3) renting is cheaper than owning
4) many people will have credit hits by the time this recession/depression is over, and the banks will have to lower their standards if they want to lend new mortgages.
5) a short sale is less of a hit to your credit than a foreclosure. So is a deed in lieu. Think about one of these options. You will need to stop paying your mortgage for the bank to pay attention to you to get a short sale approved. The bank may do a deed in lieu without you stopping payments (though they may not take you seriously unless you stop).

Read Professor Brent White's articles and see if you still don't think walking away is the best option for you and your new family's future. If you decide on this, educate yourself thoroughly like I did, or use a good service (the only one I found wasn't a scam is youwalkaway.com - they really are legit)

Best of luck. I hope it turns out better for you than it did for me.

Father_of_two says

We are just scared about our small savings losing value through inflation.
What would you guys doing with your savings if the inflation kicks in? Please advice.
Thanks

Don't worry about inflation - all signs point toward deflation (in which case cash is king). This from many of the best unbiased economic minds (David Rosenberg, Nouriel Roubini etc.) Unemployment continues to rise, wages are dropping, prices on pretty much everything are dropping, etc. despite the government trying to pump up the money supply. It's all going into the black hole of debt destruction. Save your cash, put it in a (safe) bank and don't worry about the interest rate it earns. 5 years from now it will be worth more in real terms than if you bought a house now with it.

common_sense says

Unemployment continues to rise, wages are dropping, prices on pretty much everything are dropping, etc. despite the government trying to pump up the money supply

I don't know what is going to happen in the future but unemployment is holding steady or dropping slightly, wages are rising, and prices are rising (very moderately). Check your facts.

common_sense says

Father_of_two says

We are just scared about our small savings losing value through inflation.

What would you guys doing with your savings if the inflation kicks in? Please advice.

Thanks

Don’t worry about inflation - all signs point toward deflation (in which case cash is king). This from many of the best unbiased economic minds (David Rosenberg, Nouriel Roubini etc.) Unemployment continues to rise, wages are dropping, prices on pretty much everything are dropping, etc. despite the government trying to pump up the money supply. It’s all going into the black hole of debt destruction. Save your cash, put it in a (safe) bank and don’t worry about the interest rate it earns. 5 years from now it will be worth more in real terms than if you bought a house now with it.

What the FED wants, it will get. Inflation/hyperinflation will take hold of this country.

For all the deflationists out there, can someone explain to me why the UN, Russia and China are working to remove the US dollar as the world reserve currency???? If we are going to have massive deflation (and not inflation), wouldn't that mean that the US dollar and T-Bills are going to be very strong? Why would they want to get rid of the US dollar if it's very strong and stable?

tatupu70 says

common_sense says
Unemployment continues to rise, wages are dropping, prices on pretty much everything are dropping, etc. despite the government trying to pump up the money supply
I don’t know what is going to happen in the future but unemployment is holding steady or dropping slightly, wages are rising, and prices are rising (very moderately). Check your facts.

Thats right Common listen to tatu and walk the other way.....

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The median pay package the valley's boards of directors awarded their chief executives dropped 5.6 percent, to $2.2 million, while overall pay among the Standard & Poor's group of 500 companies fell even more, 7.5 percent, to $8 million.

And though the recession hasn't spared the valley's CEOs, it did far worse damage to Wall Street, where CEO paychecks were down in the financial services industry by 38.5 percent as major companies vanished, zeroing out their leaders' pay.

But bonuses awarded to the valley's chief executives dropped sharply, falling 31 percent to a median of $242,000. That drop was bigger than what was seen among the S&P 500 group of companies, where bonuses were down 22.2 percent, said Alexander Cwirko-Godycki, research manager at Equilar, an information services firm specializing in executive compensation research that supplied CEO compensation data to the Mercury News.

The percentage of valley CEOs receiving bonuses, which are slightly more indicative than salaries of how boards view their CEOs' performance, fell from 87.3 percent to 73.6 percent

Hewlett-Packard’s pay cuts are a further sign that the economic crisis that roiled Wall Street last year has spread to Silicon Valley. The decision, following Hurd’s announcement of about 24,700 job cuts in September, is part of a cost- containment effort among companies dealing with the worst economic crisis since the Great Depression.

Hewlett-Packard, based in Palo Alto, California, fell $2.69, or 7.9 percent, to $31.39 at 4 p.m. in New York Stock Exchange composite trading. That was the biggest drop since August 2004.

Since June 2008, at least 106 companies have reduced their executives’ pay, according to Equilar Inc., an executive- compensation firm in Redwood City, California. Out of 106 companies tracked, 39 percent are in the technology industry, making it the largest industry undertaking executive pay cuts.

‘More Egalitarian’

“Technology companies tend to have a more egalitarian culture,” said Alexander Cwirko-Godycki, research manager at Equilar. “CEOs are trying to share the pain with the rank and file. Mark Hurd’s 20 percent reduction is pretty consistent with what we’re seeing.”

The rest of Silicon Valley is feeling the pain. Intel Corp., the world’s largest semiconductor maker, has eliminated its budget for merit pay or promotions, CEO Paul Otellini said last month in a memo to employees. He said he received e-mails from employees saying they would rather take pay cuts than lose a job or see co-workers terminated.

Applied Materials Inc., the largest maker of machinery used to manufacture semiconductors, announced pay cuts of 10 percent for senior executives effective Feb 9., adding to an earlier reduction of 10 percent. That news came after CEO Mike Splinter reported Applied’s first net loss in more than five years.

Freezing Pay

“Across America and American industry, executive pay is going to be a hot topic for at least the next year,” said Alan Johnson, founder of Johnson Associates Inc., a New York-based compensation consultant. “There’s certainly a fervor when one company does it that others may have to match.”

Yahoo! Inc., owner of the second-most popular U.S. search engine, froze annual pay raises for 2009, while its larger rival Google Inc. has curbed hiring and gave most workers a G1 mobile phone in place of a $1,000 cash gift for the holidays.

Are we talking about the Silicon Valley tech market? If so, then you are right Thomas. I was referring to median US wages.

Everyone is feeling the pinch!

Thomas, that was old news when 600K jobs are lost monthly over 18 months or so, 2010 is a little different. Headcount dump is mostly over and 2010 will be raise year. My spouse got 15% recently vs. 3% last year.