patrick.net

DennisN,

Uh, actually I think the cause of the housing bubble was the insufficient amount of testosteron to counteract the surge of estrogen that was running around talking each other into wanting to buy more real estate.

I think stock bubbles *may* be testosteron driven. Housing bubbles I'm almost certain are estrogen-driven.

Malcom said (concerning Fannie/Freddie threat to walk aways):

This is really funny. These guys are so screwed up they can’t even issue a stern warning with teeth.

A comment from MISH:

Fannie and Freddie's big threat seems to be if you walk away they will require a big down payment, higher FICO score, and ability and willingness to pay the loan back.

So the threat is: "If you walk away now, we will apply sane lending standards the next time you come to us for a loan."

I think stock bubbles *may* be testosteron driven. Housing bubbles I’m almost certain are estrogen-driven.

LOL. I would agree.

Hey, I wasn't greedy, It was my testosterone/estrogen that made me do it.

Housing bubbles I’m almost certain are estrogen-driven.

LOL. That's too funny, says so much with so few words. I'm sure many here can relate, as I know I can.

And besides those few, I'd guess true a significant amount of time. :-)

Threat:

I dare you to walk away from your albatross now whilst values are plummeting and likely to continue on the downslope for the next 5 years. I dare you to avoid the personal losses associated with residential housing for the next 5.

And if you are so brazen to do so....well....let me think for just a second.

What's best for me in all this? I really don't care what happens to you, nor moral hazard. Let's be real. Maybe the best thing to do is put myself in a position to write more paper and make more money. Maybe I should just inflate another bubble by creating another mass class of ready and willing suckers, a fertile hunting ground in only 5 years time. Oh, the money to made. Happy days will be here again, and none to soon.

So heres the deal. Let's you and I do some *business*.

Walk away now and in 5 years you will be in perfect shape to buy at the bottom. All the major private financial institutions will be history, we are too big to fail, and in 5 we can endeavor *conspire* to form a housing bottom, we will pump up the volume, and we will slide you through again. We will both make out like bandits. :-)

Good for me, good you yew. Tu capisci? Capish?

So, do we have a deal or what?

Based upon last three months, back of napkin numbers seem to indicate we are now burning at close an annual inflation rate of 20%. Of course this will not be reflected in official numbers.

Don't see the *scale* of this number being bandied about much in the press, at least yet.

That's absolutely crushing for savers, clearly. When the sheeple really wake up to this as it continues to get worse and everything gets more *expensive*, look out.

It is easy to understand folks unhappiness with the FED at this point.

My personal experience yesterday, not a dataset for good science obviously but…..

Haircut. Up from $17 to $24.
Dry cleaning. Shirts up from $.99 to $1.49.
My secret Thai spot. Lunch entrees up from $6 avg to $8 avg. (menus marked up manually)
Fill up unleaded. Up from $35.00 to $55.00 seemingly overnight, but actually over last couple months. ($3.50 gallon)
Coffee shop large coffee. Up from $2.01 to $2.39.
Quick grocery run, same items. Up from $40 to $60.

I was out for maybe two hours and was $250.00 lighter for my trouble. This really feels like it happened almost overnight. Literally overnight. With the exception of gas, everybody has really *suddenly* raised prices.

Houston, we have a problem. Upward wage pressure imminent, which could not come at a worse time as employment not just softens, but goes to mush.

McCain seems to be our only hope:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a4o9i1xgCJEY&refer=home

McCain Seeks Tax Cuts, Spending Curbs to Lift Economy

McCain blamed the slowdown of the nation's economy in part on bankers and lenders who ``forgot some of the basic standards of their own profession,'' leading to the current crisis in housing and credit.

We need a hero!

Happy Tax Day everyone. ;-)

But here is something to cheer you up.

http://www.dqnews.com/News/California/Southern-CA/RRSCA080415.aspx

Southland home sales log tepid gain; record price drop
...
The median price paid for a Southland home was $385,000 last month, the lowest since $380,000 in April 2004. Last month's median was down 5.6 percent from February's $408,000, and down a record 23.8 percent from $505,000 in February 2007. That peak median of $505,000 was reached several times last spring and summer.

Things that have never happened, continue to happen.

sa Says:
When I read 5 years, It was like Fannie telling people to walk away now and come back pretty soon.

Isn't that actually the perfect reason for an FB to walk away right now?

My guess is that the crash will hit bottom sometime around 2010, 2011, and scrape along the bottom for at least two or three years after that - so figure about 2013, 2014. Which means that someone who walks away NOW, in 2008, will:
1. avoid throwing away their money on an upside-down mortgage for the next five years
2. not be a debt-slave
3. be able to move to where the jobs are
4. have a shot at saving up some cash
...
and in five to six years time, when Fannie's little sulk is just about up- they will be positioned to pick up a depreciated house at a pretty decent price.

Given that scenario, why would anyone with negative equity and a supersized mortgage NOT want to walk away STAT!

I believe this belongs on the things that never happened and never would happen, continue to happen front.

from today's sfgate/chronicle front page

Analysis finds that many in the Bay Area, especially those who bought recently, owe more on their house than it is worth.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/04/15/BULE105CR4.DTL

northernvirginiarenter Says:
My secret Thai spot. Lunch entrees up from $6 avg to $8 avg.

Tell me about it - my secret Thai spot also went up from a $ 7.99 lunch in 2005 to $ 8.99 lunch last week. AND what is worse is that they stopped including free iced coffee (with refills), so that is actually about a $ 3.00 hike in actual terms of actual price.

(off topic) question for administrator:

Patrick

there's a blogger/reporter/ex green beret, who's reported from Iraq for years. I have tremendous respect for his bravery and integrity, as he's reported both bad and good news in the past (kept going out on missions when there were almost no other embeds left, he was first to report that there was a civil war in Iraq etc etc).

He has a book out which anyone planning to vote in 2008 should probably read. Do I have your permission to post a (promotional) link?

Last weekend, I caught one of the Shitty Realtwhore (tm) critters planting a sign on _my_ property, with an arrow pointing to some crap-shack that she was open-housing.

She saw me, and walked over to dump her mugshot-encrusted card on me. So I said screw that, and first "tell me what you think of this market?" She spouted some blather about 'location' and 'buyer opportunity' - and seemed to assume that I was a renter.

Tries to shove the stinking card at my face again - ignored.

"Wait a sec, you think it is a good time to buy?" She seemed to be going through some sort of internal struggle - probably her conscience and self-respect getting beaten up by hunger spasms and the thought of the upcoming lease payment on her Shitty Realtwhore Car (tm).

"Yes, interest rates are low and prices are stable - you have lots of inventory."

"So, should I wait some more time for things to get even better?"

"Oh things are great right now, you should get in before..."

"Before what, exactly?"

"Before prices go up."

"Thanks, I don't want you card."

She drove off, and a couple of minutes later I accidentally kicked over her open-house sign. I didn't know which way she had pointed it before, so I took a best guess - since it was a 4-way intersection, there is a 3-in-4 chance I got it wrong... oh well, c'est la fookin' vie.

SP,

I suppose you are asking people to walk away if they are upside down.

What I am arguing for is, there are people who are trying to game the system. Folks who can afford to pay their mortgage, but just want to walk away. I want these folks to pay their mortgage and eat their losses. I didn't argue about 3 year clause for people who are really distressed, it's fine for them to walk away. I hate the idea of speculators walking away.

I like how McCain singled out The Tan Man for approbation.

You know, having McCain for the GOP candidate this year may actually make sense. He's got enough clout with the center to actually beat O'Bama/Hillbilly with they way they are screwing things up.

Do you think McCain has the stuff to pick Ru Paul as his Veep?

Do you think McCain has the stuff to pick Ru Paul as his Veep?

I love Ron Paul, but a winning combination is more important.

How about Rice? :)

Rice got to where she is only because she is BOTH black and woman, or perhaps lesbian too, fills three quota in one, bravo.

Americans shouldn't really complain about inflation in this country. Yeah, grocery went up perhaps 20-40% in the last two years, restaurant food up 25% or so. But food accounts for a very small part of our monthly expenditure, so the 40% hike is translated into, say, $300, not nice but hardly breaking anyone's back. Second, there are countries out there with far worse inflation than us. Heard of 200%, 300% in a year or two?

We living in California are very blessed with the mild weather. People who need heating half time of the year are really screwed by their heating bill, which probably is a $500-1000 impact on their living cost. I would be very amused to see what kind of heating and cooling bill these 7000-sft McMansion owners will get this coming summer and winter.

But food accounts for a very small part of our monthly expenditure

Huh? Our food expenditure exceeds our housing expenditure.

Fowever, for now, many restaurants do not yet have the pricing power to raise prices significantly.

I would be very amused to see what kind of heating and cooling bill these 7000-sft McMansion owners will get this coming summer and winter.

If they have to wonder, they cannot afford 7000-sqft mansions. ;)

People who need heating half time of the year are really screwed by their heating bill, which probably is a $500-1000 impact on their living cost.

We need cooling though. Last weekend was very hot in the Bay Area. We had to turn on the AC.

If you build your house properly in BA, you don't need AC. I've been here for 15+ years, and the only summer that I went through feeling that I absolutely needed AC was the heat wave of 2 years ago when we reached 95F+ even at night. But it was only a couple of nights.

Other than that, I can hardly recall any time here that I need cooling at all.

We living in California are very blessed with the mild weather.

Did you ever live in San Francisco? To quote Mark Twain .....

Modern construction may (MAY) be far more energy efficient than older designs. My house here in Boise was built by Syringa, an "energy star certified" builder (for what that's worth). But my gas bill in January for a 2K square foot house doesn't exceed $110 which is by far the "worst case" month in winter (nights down to 15 degrees - brrr). That's not too much more than the gas portion of my PG&E bill for my old 1K square foot drafty house in San Jose.

Unfortunately my comfort zone is 45F - 70F. I must be a cold-blooded animal. :(

DennisN,

no, I have never lived in SF or experienced the coldest winter. I spent my entire tenure in the Bay Area in South Bay, which has a very pleasant temperature difference between day and night.

My PG&E gas bill in the winter is around $100, only for a couple of months (Dec and Jan), for a house close to 2K sft. Normally it's only around $50.

OO Says:
Rice got to where she is only because she is BOTH black and woman

I don't know if you're making a facetious topical reference, but having heard Dr. Rice speak on a couple of occasions at the Junior U., and knowing a couple of folks that have worked with her in the 90's, I don't think that statement is fair. She is a seriously capable and competent person, regardless of race- or gender-related "advantages".

This is not to say I agree with this administration's NSA or foreign policy, or that Bush has not appointed some world class clowns in other positions...

Thanks SP! :)

Somehow, intuitively I like Rice a lot.

SP,

I don't agree with your comment on Rice based on what I heard from people who worked with her at Stanford, and the public statement she made on lots of issues. Also, I consider it an oxymoron to be a "smart and competent" person who is loyal to Bush and considers Bush "intelligent" (in her words). But I don't want to linger on this topic, so let's just leave it at that.

I still don't see a problem with an employee being loyal to her boss.

An intelligent person will never imply that his boss is not intelligent.

Also, this is California, people like to bash Republicans for no reason at all. They rather condone extramarital affairs.

If you build your house properly in BA, you don’t need AC.
This is a good criterion for a superset of potentional Fortress properties. If you need AC, guess what, your property isn't in Fortress BA. Oh, and lets add "no AC needed" to Jimbo's list of what makes the Bay Area special. :-)
Speaking of AC, I came across a company, LSB Industries (LXU), that is part geothermal/water heat pump play crossed with a fertilizer/chemical manufacturer. I haven't done enough research to figure out if I want to invest, but they seem like they could be interesting given our discussions as of late.
Banks earnings have been just plain ugly; the gloves are coming off as they attempt to model behaviour for underwater buyers. Surprise, FICO doesn't matter (see CR for some good discussions). Feels like we are hitting the Alt-A wall and entering a new phase. Wells reports tomorrow; missed my short on them by a couple of pennies when they were above $33. :-( Must not be tempted (yet!) by the dividend.

This is a good criterion for a superset of potentional Fortress properties.

Palo Alto and even SF need AC.

If there were more than 5 days in the last 100 years with temperatures in the 80's, I need AC.

Peter,

Take a note. Don't ever think of moving to Phoenix.

OO,

Apologies as I'm not interested in baiting this topic either, but agreed on Rice.

I'd add that she has been completely ineffective, which boggles my mind as to why she is on the short list. My reading has led me to believe she has been a lame duck for nearly all of her governmental involvement, basically ignored at the cabinet level. It might not be fair to blame her entirely, but often to succeed at that level one needs some serious political acumen and instincts, not to mention leadership skills. I don't think she is in possession of these things, academic quals only carry one so far.

But if she can bring in the minority estrogen vote, since when did qualifications really matter around here?

EBGuy,

actually AC installed is a selling pt in the MLS ads :-)

I think a more immediate play would be companies manufacturing bullet-proof windows, home surveillance system (not just the alarm but also CCTV), car surveillance and anti-crime controls (not anti-theft, but anti-robbery), safe etc. I haven't found the right target, but the crime rate will go through the roof for sure.

OO said:
I consider it an oxymoron to be a “smart and competent” person who is loyal to Bush and considers Bush “intelligent”

That I can agree with :-) - although whether the loyalty is to W, or to some other self-interest is open to question. My esteem for Dr. Rice is actually diminished by her association with the Bush-Cheney Axis of Weevils.

CNBC poll yesterday.

In keeping with my sordid pessimism, this is really really ominous.

ONE in SEVEN mortgage holders are worried about making their payments within in the next 12 months.

OO Says:
If you build your house properly in BA, you don’t need AC.

Pfft... forget Bay Area, I have been in buildings in Harare and Nairobi that were designed for natural temperature control and did not need air-conditioning even in mid-day at the equator. It can be done, but it does not look like the bastardized Tuscan Garage-Mahals with Mission-style accents and Ionic columns that are so popular around these parts.

# northernvirginiarenter Says:
ONE in SEVEN mortgage holders are worried about making their payments within in the next 12 months.

That sounds _low_, actually. Just One in Seven mortgage-slaves?

The other six are all good, or are there a few Alfred E. Neuman's among them?

It can be done, but it does not look like the bastardized Tuscan Garage-Mahals with Mission-style accents and Ionic columns that are so popular around these parts.

Word.

You mean to describe 90% of new construction in Palo Alto, Los Altos or Los Altos Hills???

The alternative is the ubiquitous 3000sf+ McCraftsman on a 4000sf lot.

I hate Tuscan, Mission, or Mediterranean architectures.

Craftsman and Tudor homes are so cute. :)

I don't want McAnything. Architectural details are everything.