patrick.net

If this country opts for the painful route, i.e. no massive bailouts, I recommend banning / confiscating guns first.

Or else, I will not stay here to live through the painful adjustment period. There's already bank robbery in Saratoga, I won't be surprised that there will be soon more armed robberies or even murders in the best neighborhoods of the Bay Area.

Time to load up some security surveillance stocks.

I'm going to have to side with northernvirginiarenter. I can't speak for Jim Cramer and the like as to what their motivation is for saying such things...

But really, an economic fallout is going to be good for very very few people. Even the people that produce real things. Sure, they might be better off RELATIVE to the paperpusher, but in reality, their quality of life will go down too, just not as much.

Not everyone concerned about doomsday wants a bailout, nor thinks it is a good idea.

The financial system is in a serious crisis of confidence, and may collapse. It would seem to be just that bad.

Like I said a few days ago in another thread, how is that *my* problem, or even a bad thing? I don't owe any bankster anything, nor do I *want* to owe them anything. Our current debt=wealth, grow-or-die, monetize-via-inflation financial system is rotten to the core. It's so badly rigged in favor of the top 2% and rewarding reckless speculation, it may already be beyond salvaging.

Time to hit the "reset" button?

Add Realtwhores to the scare-mongering crowd. They love to use some variation of this line: "You should not _really_ wish for real estate prices to crash, because EVERYONE will feel the pain".

In a complete inversion of cause-effect logic, I have even had one realtwhore tell me that "House prices will crash if people lose jobs. Ergo if prices are crashing, it means there have been huge layoffs. So you better not hope for prices to crash because it means you could lose your job."

According to one of the DOL's papers published that I read while doing stock research, the two categories of employment that consistently benefit from past recessions are:
1) auto mechanics
2) lower-end health care service providers (nurse or below skill level)

The first category booms because people cannot afford to buy new cars during recession. The second category does not really benefit, but the employment goes up because previously unfillable low-pay, labor intensive and frankly health hazardous "health care" positions cannot find enough applicants. During the downturn, people will do any job just to get by.

Just as a point of reference here's a list of individuals that have (and continue) to use "Be careful" as a FIRST line of defense:

NAR (membership alone entitles you to unlimited access to this hackneyed phrase!)

Lawrence "This is a WALL STREET problem!" Yun

Building suppliers/NAHB

Perma-bulls

Home Debtors/FB's (Another Pampered Borrower)

Anyone at the end-of-their-rope and experiencing Peak Debt

Wow! That's a really prestigious crowd! Can't wait to *not be associated with them! :)

Members of some labor unions have been taught to perform repetitive tasks by rote, e.g. auto assemblers. These guys are just as much at risk as the paper-pushers.

Point taken, and no, I don't think the working and middle classes --even people like us, who refused to participate in this massive Ponzi scheme-- are going to get through the next few years with zero pain. Unfortunately, in an economic crisis, the innocent suffer along with the guilty.

However, I try to take the long view, and see that, while we all must swallow some bitter economic medicine short-term, getting back on the path of sustainability, living within your means, and true affordability is much better for us all in the long run (at least for the bottom 98%). And that's good enough for me.

But really, an economic fallout is going to be good for very very few people. Even the people that produce real things. Sure, they might be better off RELATIVE to the paperpusher, but in reality, their quality of life will go down too, just not as much.

The other way of looking at this issue is, we as a nation have been living high on-the-hog off of funny money, MEW, over-leveraged HF's milking out bonuses from funny money deals. It's about time we all started living within our means for a change, instead of hocking the economic health of our future generations to enjoy one more cruise, one more Harley, or one more vacation home filled with granite crap.

SP,

Exactly. Had this been a matter of home prices plummeting due to a nagging recession or massive lay-offs, I'd be singing a different tune. In fact isn't this the 1st time median prices fell off WITHOUT there being a recession? How is this "our" problem?

skibum!

Good to hear from you! I hear we have a HF-a-day going under. (choking back tears) :(

anyone wants to bet on an emergency rate cut on Monday?

Well, 3% to go until we hit 0.

It is very possible we will not see a crash, just a steady decline in prices of houses, stocks, and even commodities.

Renters who lived within thier means and acquired savings will be fine. They will see no change in the conservative standard of living they have been maintaining all along.

People who have a paid-for or nearly paid-for home that is used as a residence will be fine. Even those who bought recently will be fine as long as they did a fixed rate well within their ability to service, and avoided the house ATM.

All that really happened is that house prices fell.

skibum!

Good to hear from you! I hear we have a HF-a-day going under. (choking back tears)

Still lurking around. The recent turn of events has been just too interesting to keep quiet.

Like I said a few days ago in another thread, how is that *my* problem

Do you work for a large company? They'll have massive layoffs.

Are you an independent contractor? There will be much less work as people restrict their spending. Many will go bankrupt, the others will scrape by.

Do you own a small business? Most (yes, most) will go out of business.

I had the opportunity to see what happens when a rich economy contracts, when I was young (the late 70's sucked). Few were unaffected.

I also had the questionable joy to see the aftereffects of a complete economic collapse, in the country of Myanmar (look it up). Formerly wealthy people growing fruit in their backyard to survive retirement, not pretty.

So yeah, doing something about this would be nice. Sadly, the time to do that effectively has long passed. We're now facing either depression or hyperinflation, depending on the gov't response. $8 Trillion is about to go *poof* - a better question would be how on Earth you expect to *not* be effected.

P.S. Great month to have bet on shorting the market. Sadly, I exited my position too soon, since I was worried that the unemployment report would be even more of a fantasy than it was. And on that topic - 640k jobs disappeared LAST MONTH (household report). But the BLS unemployment rate stayed the same - go figure.

Let me repeat that 640k jobs CEASED TO EXIST LAST MONTH. One month. Tell me again how it isn't your problem? And please, show your work as part of the answer.

"All that really happened is that house prices fell"

Since a lot of us have been tracking/researching this for years we're starting to have a vested interest in Max Pyrotechnics. (Just like everyone in the Beltway is working on something that is "of the utmost importance for national security!")

Sure, this is important and unpleasant as it's been, I'd rather have seen it coming and stayed clear to the greatest degree possible than be blind-sided and behind the learning curve? Still that doesn't entitle me to assign whatever measure of apocalypse I see fit.

DinOR Says:
Challenge them. Why is this “my” problem? Explain in detail how this could (or should) affect me or people like me? How did things get to this point? Did “I” benefit from this fallout, whose pain we must now both share? Is it right that I should be affected?

You forgot the most important question: "If I help you now, what are you giving me in exchange?"

I don't mind a bailout where I get the FB's house at a 50% discount on outstanding loan balance. Bank hands over the $1M house, I give them 500K, and the FB gets to walk away. Now that is the sort of all-round deal I can get behind. Unlike some half-assed scheme where the house still costs $1M, the FB gets to keep his Excrelade and the bank gets bailed out with my tax money.

Since it's all a guess anyway I wont provide any proof. But my opinion is the same as Headset's. Cali will probably fare worse than Colorado or Texas but overall I see no depression happening. Of course everyone keeps saying the entire financial system is about to collapse but I'm not buying it, unless I see the GSEs dropping their lending standards to allow I/O, Ninja etc to refinance without at least 10% equity. If that happens, then I give up.

SP,

I mentioned that in one of the recent threads "WIF'M" (what's in it for ME!)

@netdance,

I never said that I/we cannot be affected by the bubble's macroeconomic fallout (see my 11:29 am post). I still maintain that the pain will be a lot more concentrated to the (guilty) financial & REIC sectors than many here seem to think *IF* Congress and the Fed just stop following the f**king Bailout Bandwagon.

The innocent will suffer along with the guilty to some extent --just as they always have. But in the end, the responsible and prudent should end up the better off for it.

640K jobs. Why does that remind me of a Microsoft product?

Add netdance to the chorus of the "Be careful what you wish for" crowd.

There is obviously a big logic problem with the argument "Be careful what you wish for".

As if what I wish matters ! This freaking bubble was going to explode no matter what I wished !

That has always been my response. It's pointless what I wish. I wish long healthy life and endless prosperity for everyone. But what I am pointing out is if you keep blowing all your money in smoking that pot, you are going to have neither healthy life nor prosperity.

It's not what I wish. It's what YOU are doing that is going to land us in a mess.

netdance Says:
Let me repeat that 640k jobs CEASED TO EXIST LAST MONTH. One month. Tell me again how it isn’t your problem?

First, I was not one of the 640K.

Second, that means 640K fewer people competing for a house, a parking space at the mall, table-reservation at Sakae Sushi, etc.

Third, it means 640K fewer households waving their Helocs and reducing the value of my cash offer.

Fourth, I work for a large company and could become one of next month's statistics, but I have no (net) debt and have the equivalent of several years of household expenses in savings (diversified).

Fifth, I own a house that - though small and low on bling - is entirely sufficient for my family's needs. No ARM, no Heloc, nothing.

So, why is a real-estate crash my problem?

http://www.sfgate.com/cgi-bin/article.cgi?file=/g/a/2008/03/07/carollloyd.DTL

Don't worry, the Bay Area is still special.

hey guys,

looks like PPT is at work again for the last half an hour.

How many more last half an hour episodes are we going to endure?

SP

So you better not hope for prices to crash because it means you could lose your job

LOL you speak truth, I think I've heard that also...too funny.

What's the old joke....

A recession is when you lose your job. A depression is when I lose MY job.

SP,

I could think of several ways of how it *might* affect you. But those would just be more conjecture.

I think the real disagreement btw the beware what you wish for crew and the SP crew is about what would be better in the long run.

Some people believe a collapse would be good long term for our country, some believe it will be disastorous.

In the end, I believe both sides would like things to end up for the best for everyone. If that is not the case, and you actually wish for for everyone else to eat it, so you can do better, then I would question your character.

DennisN Says:
A recession is when you lose your job. A depression is when I lose MY job.

Actually, even my losing my job in a depression would still be an improvement over a bailout that avoids the depression. That is how badly whacked out this is.

# FuzzyMath Says:
If that is not the case, and you actually wish for for everyone else to eat it, so you can do better, then I would question your character.

And if that is what you actually infer from what I wrote, I would suggest you go copulate with yourself.

Two previous best sellers:

"Great Depression of 1990" by Ravi Batra

"Bankruptcy 1995: The Coming Collapse of America and How to Stop It" by Harry E. Figgie and Gerald J. Swanson

Both books preached an imminent doom caused by wreckless debt. Both books were convincing in their day. Both books were dead wrong.

OO :

I think we will see a big cut at the meeting, and even a "surprise" cut before the meeting if the markets continue to explode all around the world.

Problem is neither the cuts, nor the TAF is working. Heck, even those Ambac rumors are not working. How can we live in a world where rumors are no longer dependable ?

Time to hit the “reset” button?

This is a really interesting perspective. Do we really want to save the status quo? Are we ready to accept the pain suffering torture and death that would inevitably result in a transition to a new order?

That's always a conversation worth having, but what do we end up with on the other side? There are those that would argue a 90% decrease in homo sapiens on Earth would be a very good thing. For some, sure. Obviously not for all.

I'd also argue there is very little way to predict winners and losers in a financial meltdown endgame. Chances are the predators among us will again find themselves in positions of advantage. The realization of some justice through a "hands off" collaspe is an impossibility.

I don't know if I've really examined my own beliefs deep enough, but I think I'd rather see the system "saved" somehow. I care about total meltdown because I know that peace and stability brings greater contentment and happiness to a larger measure of humanity. In a total financial meltdown and collaspe, violence and suffering will occur on a grand scale.

You speak of revolution HARM, they are watching you closely! ;-)

BA is special. Yes.

Inventory based on ZipRealty :
Gilroy very close to 600.
Morgan Hill over 400.
Evergreen nearing 500.

Can someone please remind me that this will not have any effect on the Fortress ? At least please tell me that it will have *only some* effect. I love the reasoning. Please. Please say it again.

If that is not the case, and you actually wish for for everyone else to eat it, so you can do better, then I would question your character.

Yep, I want those who ran up prices by running up debts to pay the bill. I will see joy when a FB loses his $1 million home to forclosure, and a saver picks it up for the $450k it should have sold for in the first place.

Deflation is good for those with stable income, cash and no assets. Like myself (unless the state of California becomes insolvent).

The problem I see is the economic fallout of hundreds of thousands of unemployed debt-security brokers. These people were all making over 100k a year and essentially have no transferable skills. HR departments don't even want to hire them.

So yeah, even if you are the best small business man in the world, odds are lots of your customers were paying for your services with bubble money.

Headset,

.... not entirely. Harry Figgie (former CEO of Spaulding Sporting Goods) was on Reagan's "Grace Commission". While none of their rec's were actually followed, it did bring the deficit front and center making it a top priority for Clinton. So a 'cautionary tale'.

I'll be your Huckleberry..

Those stats will have no effect on Fortress because it is special (see chronicle for details or ask the nearest realtor - they'll be glad to enlighten you). In addition, people who buy in the fortress have millions in stock options which they exercise and buy in cash. They don't even need a mortgage most times. They just bulldoze the $1M shack and build a mansion for $2M. Then they go back to work for $300K/yr. People who buy in Gilroy etc are dyslexics and others with hard to pronounce names who have no idea what they're doing. We were bound to run out of them sooner or later.

northernvirginiarenter Says:
I don’t know if I’ve really examined my own beliefs deep enough, but I think I’d rather see the system “saved” somehow. I care about total meltdown because I know that peace and stability brings greater contentment and happiness to a larger measure of humanity.

Holy Krap - you are thinking way too deeply about this. A real estate crash with a side-order of credit-deflationary collapse is not the end of the world. Don't buy into the 'doom-and-gloomers' who insist that:
1. it will hurt you personally if Joe McDebtor gets into trouble
2. you are evil for not volunteering all your savings to help Joe

Examining your beliefs?! Good grief, relax!

Honestly what I fear in a fallout situation is escalating crime rate.

We are able to contain the crime rate in certain armpits and pockets of the more desirable areas (e.g. BA) because we have robbed enough of the world's resources to keep these people at home munching potatoes watching American Idol.

Now if some of those who were making $100Ks above worker bees who were living a self-disillusioned upper middle class lifestyle in decent neighbrohoods suddenly find themselves in the same shoes as those we were able to isolate in, well, East Palo Alto, then we have a very very big problem. As the bottom class of the society swells, I think we all have a good reason to fear.

This is not Japan, this is America. Bankrupt people don't kill themselves and their immediate families out of shame, we American heroes come out with a rifle to randomly whack people out. The pattern of mass murder is very distinctive here, the murderer will take out as many people as possible before he kills himself simply because he went through a divorce or lost a job. Well, it usually doesn't operate this way elsewhere in the world. People in Hong Kong or Japan just kill themselves, and I have no problem with absolutely no bailout in that sort of society.