patrick.net

Financial Literacy and Mortgage Outcomes
http://www.aeaweb.org/annual_mtg_papers/2009/retrieve.php?pdfid=524

A paper by Kris Gerardi of the Federal Reserve Bank of Atlanta, Lorenz Goette of the University of Geneva and Stephan Meier of Columbia University asked a battery of simple financial literacy questions of recent homebuyers. Many of the respondents could not correctly answer even simple questions, like this one: What will a $300 item cost after it goes on a “50 percent off” sale? (The answer is $150.) They found that people who scored poorly on the financial literacy test also tended to make serious investment mistakes, like borrowing too much, and failing to collect information and shop for a mortgage.

Payday Loans, Uncertainty, and Discounting: Explaining Patterns of Borrowing, Repayment, and Default
http://www.aeaweb.org/annual_mtg_papers/2009/retrieve.php?pdfid=15

Abstract

Ten million American households borrowed on payday loans in
2002. Typically, to receive two weeks of liquidity from these loans
households paid annualized (compounded) interest rates over 7000%.
Using an administrative dataset from a payday lender, we seek to ex-
plain demand-side behavior in the payday loan market. We estimate
a structural dynamic programming model that includes standard fea-
tures like liquidity constraints and stochastic income, and we also in-
corporate institutionally realistic payday loans, default opportunities,
and generalizations of the discount function. Method of Simulated Mo-
ments estimates of the key parameters are identiÂ…ed by two novel pieces
of evidence. First, over half of payday borrowers default on a payday
loan within one year of their Â…rst loans. Second, defaulting borrowers
have on average already repaid or serviced Â…ve payday loans, making
interest payments of 90% of their original loanÂ’s principal. Such costly
delay of default, we Â…nd, is most consistent with partially naive quasi-
hyperbolic discounting, and we statistically reject nested benchmark
alternatives.

Liquidity Constraints and Imperfect Information in Subprime Lending
http://www.stanford.edu/~leinav/pubs/AER2009.pdf

A paper by Liran Einav and Jonathan Levin, both of Stanford, reporting on work with William Adams of Citigroup, shows how sophisticated automobile lenders can be in their loan technology. They use complicated statistical models not only to approve people for credit, but also to fine-tune the down payment and even to suggest what kind of car individuals can buy. This suggests to me that many borrowers can’t match the expertise of lenders.

Our data come from an auto sales company that operates used car dealerships in the United States. Each potential customer fills out a loan application and is assigned a credit category that determines the possible financing terms. Almost all buyers finance a large fraction of their
purchase with a loan that extends over a period of several years. What makes the company an unusual window into consumer borrowing is its customer population. Customers are primarily low-income workers and a great majority are subprime borrowers. In the United States, Fair
Isaac (FICO) scores are the most-used measure of creditworthiness. They range from 350 to 800, with the national median between 700 and 750. Less than half of the company’s applicants have a FICO score above 500, the second percentile of the national FICO score distribution. This kind
of low credit score indicates either a sparse or, more often, checkered credit record. The principal characteristics of subprime lending are high interest rates and high default rates. A typical loan in our data has an annual interest rate on the order of 25–30 percent. The flip side
of high interest rates is high default rates. Over half of the company’s loans end in default. With such a high probability of default, screening the good risks from the bad, and monitoring loan payments, is extremely important. The company has invested significantly in proprietary credit
scoring technology.

California

· Adobe Systems Inc. is laying off 75 employees at 601 Townsend St. in San Francisco on Feb. 3.

· Advanced Medical Optics is laying off 61 employees at 510 Cottonwood Drive in Milpitas on Jan. 17.

· Belkin International Inc. is laying off 84 employees at 501 West Walnut St. in Compton on Jan. 16.

· Castaic Brick is laying off 77 employees at 32201 Castaic Brick in Castaic on Jan. 7.

· Downey Ford is closing down and laying off 63 employees at 9500/9207 Lakewood Blvd. in Downey on Jan. 18.

· Exelixis Inc. is laying off 76 employees at 249 East Grand Ave. in South San Francisco on Jan. 5.

· Gregg Industries Inc. is laying off 81 employees at 10460 Hickson St. in El Monte on Feb. 11.

· Health Research Association is laying off 79 employees at 1640 Marengo St., 7th Floor in Los Angeles on Jan. 30.

· Irvine Regional Hospital and Medical Center is closing down and laying off 510 employees at 16200 Sand Canyon Ave. in Irvine on Jan. 15.

· KLA-Tencor Corp. is laying off 153 employees at One Technology Drive in Milpitas and 81 employees at 160 Rio Robles in San Jose on Jan. 19.

· Lam Research Corp. is laying off 149 employees at 4300-4650 Cushing Parkway in Fremont on Jan. 20.

· Naked Juice Plant is closing down and laying off 52 employees at 533 West Foothills Blvd. in Glendora on Jan. 30.

· National Semiconductor Corp. is laying off 151 employees at 2900 Semiconductor Drive in Santa Clara on Jan. 13.

· Palm Inc. is laying off 107 employees at 950 W Maude Ave. in Sunnyvale on Jan. 19.

· Pearson Ford is closing down and laying off 130 employees at 4300 El Cajon Blvd. in San Diego on Jan. 19.

· Qualex Inc. is laying off 68 employees at 18250 Euclid St. in Fountain Valley on Jan. 16.

· Riverside Cement Co. is laying off 84 employees at 19409 National Trail Hwy in Oro Grande on Jan. 30.

· Seagate Technology LLC is closing down and laying off 43 employees at 155 & 195 S. Milpitas Blvd. & 311 Turquoise Drive in Milpitas on April 3.

· Shutterfly Inc. is laying off 70 employees at 3157 Corporate Place in Hayward on Jan. 16.

· Starwood Vacation Ownership Inc. is closing down and laying off 218 employees at 190 Carousel Mall in San Bernardino on Jan. 19.

· Symantec is laying off 38 employees at 350 Ellis St. in Mountain View on Jan. 13.

· Symantec is laying off 55 employees at 20330 Stevens Creek Blvd. in Cupertino on Jan. 19.

· United Industries Corp. is closing down and laying off 50 employees at 4139 Bandini Road in Los Angeles on Jan. 15.

· Vertis Communications is closing down and laying off 88 employees at 1345 Doolittle Drive in San Leandro on April 5.

· Vishay Siliconix is laying off 97 employees at 2201 Laurelwood Road in Santa Clara on Feb. 6.

http://www.costar.com/News/Article.aspx?id=85252C69E5E8E82526A5025799B66AF3

2009 LAYOFF Data

Employment Development Department
Worker Adjustment and Retraining Notification
(WARN) Act Notices

Detailed Listing of WARN Information by Company Name (1-A) - 2009

http://www.edd.ca.gov/Jobs_and_Training/warn/eddwarncnda09.pdf

Posted by Jack Davis on September 8th, 2008 at 3:43 pm

Ditech Networks, the Mountain View maker of equipment used to enhance voice quality and cancel echo in phone calls, “undertook a reduction in force” as it tried to “further reduce its operating expenses”, the company revealed Monday when it filed financial results for its fiscal 2009 first quarter.

The company provided no details about how many workers were let go, but in early August, when the company first warned that its first quarter results would be weaker than expected, the company said it was taking steps to reduce expenses by about 20 percent.

This would be the second round of layoffs in the last year. Ditech let go of about 23 percent of its workers in the fiscal 2008 second quarter ended Oct. 31 and finished its fiscal year on April 30 with 148 employees, down by about a third from the year before.

The company reported sales of $4.5 million for its most recent quarter ended July 31, down by more than two-thirds from the year-before quarter. The drop was blamed partly lower sales to its biggest customer, Verizon, which is “shifting focus away from their traditional wireless network deployments, where our product has historically been installed, to newer 3G networks.”

Don't know what Original Bankster's comments about the international situation have to do with this thread, but the sooner we kick Israel in line and get negotiations going with the people who originally lived in that area for hundreds of years, the better.
Behaving like Nazis because the Bush Crime Family gives you permission ain't acceptable.

@The Original Bankster

My take on these highly militant and closed minded societies is that there is too much inbreeding. If their genetic pool was more diluted, it might tone down the violent tendencies that have plagued this part of the world since the beginning of time.

I heard through the grapevine of some people getting principal reductions as well as 30 year fixed refinance rates in the 2.5% range as a loan modification.

Has anyone heard of this? It sounds too far fetched.

Happy King day.

FuzzyMath - I would not be surprised. The main goal of all this is to fuck the savers/renters and reward the speculators. The end solution is for everyone to be piss poor and in debt upto their eyeballs. This is what will guarantee revenue and propped up markets (equity/housing) in our bailout nation. All this is working towards that end solution.

Coretexity,

Very ugly scenario but not all that far fetched. Basically, the powers that be will do anything to get the peons into line. I'm just trying to decide when not to be a peon anymore.

Belkin's Business Development Representative, Michael Bayard, was caught offering money for 100% good reviews about Belkin products at Amazon.com and other e-tailing sites. The Daily Background uncovered this news from Amazon's Mechanical Turk website. After the buzz created on the web, Belkin acted swiftly and removed the postings and reviews. Also, Mark Reynoso, Belkin's President reacted to the incident by writing a letter in which he apologized for the unethical practice.

If you read user reviews of a particular Belkin router at Amazon (NSDQ: AMZN).com recently, chances are it could have been a fake review that was written for money.

This is where the Internet goes bad. Some Belkin employee actually advertised in hopes of finding real-world people to write fake product reviews for money. The advertisement asked for the highest possible review (five stars) and plenty of good comments about the router. The ad also suggested that the fake reviewers mark legit reviews as "unhelpful".

The Belkin employee in question, Michael Bayard, was a business development representative. Mr. Bayard asked reviewers to write reviews even if they didn't own the product, and to make up a narrative about why they bought it and how it was performing. Obviously, this is pretty bad business.

The bad publicity machine reared its head over the weekend as tech blogs all over started reporting on the matter. Good thing for Belkin, management was paying attention and started the spin control machine quickly.

http://www.belkin.com/pressroom/letter.html

http://www.thedailybackground.com/2009/01/16/exclusive-belkins-development-rep-is-hiring-people-to-write-fake-positive-amazon-reviews/

Exclusive: Belkin’s Development Rep is Hiring People to Write Fake Positive Amazon Reviews

80 Thousand South Floridians To Lose Jobs In 2009

According to an IHS Global report, commissioned by the U.S. Conference of Mayors, the Miami area will lose 85 thousand jobs and have an unemployment rate of more than 8 percent by the end of 2009. More than 80 thousand jobs will be cut in Chicago and more than 164 thousand workers are expected to receive pink slips in Los Angeles 2009; in part because of the huge drop in home prices which has put a major hole in California's economy.

New York is expected to take the biggest jobs hit in 2009. As Wall Street firms slash their payrolls, the study found more than 181 thousand workers in the Big Apple could be out of a job by year's end.

The study also found that 70 cities, including Detroit and Cleveland which have already been stung by the struggling economy, could very well see their unemployment rates top 10 percent. Cities like Denver and St. Louis are expected to see unemployment rise above 9 percent.

The only bright spot in the report was that cities like Ithaca, N.Y.; Fairbanks, Alaska; and St. George, Utah, are among the handful of cities whose employment rate will remain flat or may actually increase slightly.

(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)

So mass murder is OK as long as Muslims or other "undesirables" are being murdered?
BTW, Israeli forces are reported to have continued killing after the "ceasefire" was declared. No doubt that's OK too, eh??
Better stick to real estate, about international affairs you are delusional.

All they have to do is stop attacking Israel. I am baffled by a group of people who clearly start a conflict and then claim to be victims because of a defensive counterstrike.

I'm told that solar water heating is very common in Israel. They come over here and are amazed that hardly anyone uses it here.

Coretexity said...

"The main goal of all this is to fuck the savers/renters and reward the speculators."

Yes sir. I think any modifications the banks are doing is to sucker people into a recourse loan. I would guess that very few, if any loans that were originally recourse are getting modified.

I wonder if there are stats on this? Anyone?

Great point Fuzzy, I hadn't thought of that. What a great scam.

I would say the most valuable asset an underwater homeowner has at this point is the "non" in their non-recourse loan.

The difference could mean several hundred thousand dollars and/or bankruptcy.

Patrick had this article posted yesterday... http://www.washingtonpost.com/wp-dyn/content/article/2009/01/16/AR2009011604724.html?referrer=emailarticle&ref=patrick.net

This to me is going to be the theme of 2009, and perhaps the biggest tragedy. There are going to be alot of middle class families completely wiped out by the end of this.

Welcome to serfdom.

All they have to do is stop attacking Israel. I am baffled by a group of people who clearly start a conflict and then claim to be victims because of a defensive counterstrike.

Absolutely. I doubt Israel has a desire for war except for self defense. It is just that sometimes a good offense is the best defense.

The civilized world must unite against terrorists.

Israel does not have a desire for war, but (some of ) the israelis have an unfortunate desire for land and settlements, which is distinctly not helping on the situation.

It is like Bay Area Fortress real estate, but with lots of guns and religion added into the mix.

Hail to the Chief.

I just went off the gold standard (perhaps too early?). Still have some SLV if the banks get nationalized and Ben starts printing...

And speaking of deflation:
But there's a new twist on the layoff leviathan that hasn't been seen in a major way in America since the 1930s: In addition to laying off workers, some corporations are asking remaining employees to take a pay cuts, and fairly large ones in some cases.

some corporations are asking remaining employees to take a pay cuts, and fairly large ones in some cases.

Less pay to go round after the credit part of "money and credit" dried up. But as a mitigating note, falling prices will take some sting out of the lower nominal pay . We know about housing costs in free fall, now watch other big ticket items follow suit, even cars. From the MISH article on the Patrick reading list:

Cars are going to get cheaper, much cheaper. Auto prices will crash. Liquidation sales later this year after the 2010 models come out are going to be fabulous.

This to me is going to be the theme of 2009, and perhaps the biggest tragedy. There are going to be alot of middle class families completely wiped out by the end of this.

Stories like this *kill* me.

Only in America could someone with a million-dollar home be considered a hard luck story.

Screw them. I hope they lose everything in bankruptcy court.

Yeah screw them! Asshole selling police supplies! They fucking deserve to starve!

Are you fucking retarded?

It really becomes obvious how the ruling class stays in power when idiots like you open your mouth.

@ kewp,

I'm with you - here is the real hard luck story!

" Oxfam provides food rations as Zimbabwe's hunger crisis is nearing a peak, millions of people see their food from last year's harvest run out months before the next crop will come in Photo: AFP"

http://www.telegraph.co.uk/news/worldnews/africaandindianocean/zimbabwe/4269695/Zimbabwe-introduces-100-trillion-banknote.html

Who gives a shit who they thought they were. I'm not sobbing into my pillow because of Mr. and Mrs. McDouchebag.

What I am concerned about is that the entire middle class of this country is going to get wiped out. There there will be the pigmen, and everyone else, with nothing in between to slow them down.

And if you think Mr and Mrs McDouchebag ARE the pigmen, then open your fucking eyes.

They cannot afford their $6,400 monthly payment...
Fuzzy, I have to admit, I am with kewp and TOB on this one. I mean, that's just their mortgage payment and doesn't include taxes and maintenance ( and HOA fees to pay for the guard at their gated community). I mean, he was a salesmen for cryin' out loud.

For some reason you guys think I feel sorry for them. I don't.

Anyhow, when it's 2011, the unemployment rate is 17%, and the middle class has evaporated, then you will understand my point.

I have seen plenty of Mr. Million-in-debt, they all share the same blind optimism thinking the good days will always be here to stay.

Another blunder I see too often is buying before selling. Why would anyone be so optimistic that he thinks there will always be a fool in the market ready to take over his home at whatever he is asking for to cover the next mortgage? The simple rule that I was taught by my parents was, always sell first and then buy, even if it means you will have to rent for two months to make the schedule, because that way you will never be caught in a downturn, and you won't be stuck with two mortgages.

Fuzzy, the thing is, middle class has LONG evaporated, this crisis just makes it blatantly clear. There are already very few true middle class left (the former middle class are now known as the upper middle class or marginally rich). How many families can afford to have one working parent to carry the mortgage? How many families have enough savings to last 2 years of expenses? How many people approaching retirement age have enough nest eggs saved up? The evaporation of middle class was masked over in the last few years through their "asset appreciation" in terms of housing and stock price, once that is gone, the credit hole they are in, the ongoing negative cash flow they are enduring will just get acutely, painfully in their face. Today's American "middle class" are one or few paychecks away from defaulting on their financial obligations, and that was typical of working stiff less than a century ago.

This country is made up of a very small number of elite class, few middle upper class, mostly still-in-dream, self-proclaimed, self-disillusioned "middle class", and a substantial number of already hopeless already given-up underclass.

Obama's inauguration speech is just so Obama, you feel like you are taking an American literature class, but there are really no concrete action plans. None whatsoever. I am not really complaining, at least we've got a President who can speak eloquently as opposed to a mentally challenged shrub.

I also find it ominous that he is drawing so much from Lincoln's speech, not a good sign, for himself and his family to say the least. I understand why he thinks drawing a parallel to Lincoln will make sense, but if I were him, I would rather borrow a few encouraging words from Reagan's speech, at least Reagan lived till late 80s.

Yeah screw them! Asshole selling police supplies! They fucking deserve to starve!

It really becomes obvious how the ruling class stays in power when idiots like you open your mouth.

Classy!

Do you really think anyone in that article is going to starve? Or simply be forced to *gasp*; downsize their lifestyle?

Speaking of middle class, know what the median US household income is? About 50k (for now at least). Nobody in that article is 'middle class'. They are all rich people that bankrupted themselves pretending to be even richer people.

Fuck. Them. All.

Every single one of those people bought more house than they could afford. The end game of this deflationary debt-collapse is that real middle class folk (like myself) will be able to purchase affordable real-estate.

My life gets better. Theirs gets worse. Sucks to be them.

How many families can afford to have one working parent to carry the mortgage? How many families have enough savings to last 2 years of expenses? How many people approaching retirement age have enough nest eggs saved up?

This not necessarily a "middle class" concept. Plenty of modestly living blue collars have a paid-for home by age 45, with plenty of time to set up a modest retirement. Remember, even post bubble, one-third of US homes have no mortgage. It used to be one-half.

"Middle Class" used to be a Buick and a 1500 ft home. Every husbands favorite meal was meatloaf. Appetite for consumption did not exceed income. We will see this again when the attitudes change to value a paid for (albeit modest) house and car over luxury items with perpetual payments.

The end game of this deflationary debt-collapse is that real middle class folk (like myself) will be able to purchase affordable real-estate.

Amen!!

Blue collars will also benefit from lower housing costs. It may be a Clayton Home on a rural or small town lot, but it will be his. Or maybe a older home he bought cheap and fixed up over the years.