Awesome charts!

I’m trying to brace for the recession and understand how the massive stimulus is going to boost the economy. Does anyone know if I can buy stock with food stamps? If not, one way of getting out of this mess would be a massive food stamp for stock program. You could survive on Top Raman and use the surplus food stamps to get rich in the process. This is going to work!

I think you’re confusing the health of the stock market with the health of the economy. One reflects the other, but you’re not going to improve the economy much by pumping up the stock market. You could make a similar analysis with real estate, but the difference is with real estate the health of the market affects the banks, and the banks’ health effects the economy.

In the distant past I’d seen that with people moving here from other states. They’d owned multiple properties and ended up upside down. What’s surprising about the local situation is I think the rental market for houses is still fairly decent, but maybe they’re trying to get too much and end up with nothing.

1. One ‘investor’ has at least *12* homes in Greenlake ish and West Seattle areas going NTS within the year. Looks like they bought them recently, rented them out, and are walking away with the decline. A number of these are above $500,000.

2. Another ‘investor’ has three properties NTS, where one was purchased a while ago for $120k, but now owes $340k in foreclosure. Rental property as a ATM machine.

I’ll guess that ‘investors’ are the first to walk away with declining property values. I wonder what percentage of local current foreclosures are not owner occupied. I saw a news item from almost a year ago saying the national average was 1 in 3.

I’m trying to brace for the recession and understand how the massive stimulus is going to boost the economy. Does anyone know if I can buy stock with food stamps? If not, one way of getting out of this mess would be a massive food stamp for stock program. You could survive on Top Raman and use the surplus food stamps to get rich in the process. This is going to work!

Anyway, looking at the records for a lot of the ones that filed, they lived off the appreciation of their home. Just pulling some numbers out of the air, a fact pattern like this would be typical:

1. Bought house in 2003 for $320,000.
2. Encumbered house in 2004 for $350,000.
3. Encumbered house in 2005 for $390,000.
4. Encumbers house in 2007 for $420,000.
5. Assessed value in 2008, $370,000.

Now the percentage of people that file Chapter 7 is quite low, but that’s a lot of spending that was based on houses appreciating.

What’s interesting is it’s not the zero downs necessarily getting into trouble. It’s the people with spending problems on things other than housing. Although there are a few houses over $500,000, but that’s rare.

Recessions are periodic slow downs of the normal business cycle.
Depressions are discontinuous breaks in the normal business cycle.

The problem here is not a slow down in spending. The problem is a threat to the financial system as a whole. The problem now is a titanic bubble of bad debt that was created and now needs to dissipate. This is not a bad recession – it is very much different.

Just last night on the News Hour, Krugman and an economist from Harvard and some Wall Street guy were causally discussing the fact that our largest banks are probably insolvent and will need another $2T to restore them… There was not debate or questioning this assessment.

Talking about jobs and stimulus plans is fine but its kind of missing the giant elephant in the room — how will we unwind the credit default swaps and mortgage-backed securities we created since 2001.

The charts are interesting but they dont do much to illuminate the problem. This is the biggest financial problem in a century and it is global.

If there were a big runup or bubble preceeding the decline, you might say that one could Rip Van Winkle one’s way through it and not feel a thing. Whereas if that same decline came off of the norm, Rip might just swallow a bottle of sleeping pills when he realizes what’s happened.

So, while decline from peak seems like a good seismograph of how severely the economy is “lurching”, decline relative to the norm seems to me to be a better barometer of the intrinsic economy.

And if you know you are going through a transition, you might behave differently that if the fundamentals are truly f*@#ed.

Thoughts?

RE: DaveyDave @ 31 –

I’m running out of shirts and the Show hasn’t started. I have alot of size Mediums.

Well, I do about 3 situps a day, but that’s just to get out of bed. I’ll see what I can do to get down to a medium… I hope the investment works out for you.

I’m running out of shirts and the Show hasn’t started. I have alot of size Mediums.

Dave I watch odd options activity. The entire market is a gamble right now… But it appears I’m not the only one who is noticing. It ran from 1-10.00 about 7 months ago…I’m 26k long at 1.11

http://www.cnbc.com/id/29057006?__source=RSS*blog*&par=RSS

One thing to think about is how a rise in the number of two-income families might have played a role in increasing housing prices.

I mention that all the time as to why historical pricing isn’t that relevant if you go back too far. When you have a second income, a lot of that can be spent on discretionary items, and housing becomes such an item, forcing prices up. That probably explains why in the 50s most houses had only one bathroom. I think they knew how to have more than one toilet in a house, but people didn’t want to spend money on such a thing. Add in a second income, and suddenly they do.

Not quite a chart, but an interesting read:

“The Two-Income Trap”

One thing to think about is how a rise in the number of two-income families might have played a role in increasing housing prices.

PTL = Praise the Lord.

TheMightyQuinn-
Wow. you sound just like the lady I talked to who blamed Democrats for her stock portfolio losing 40% since 2006 elections. The lack of comprehension was amazing. And what’s even scarier is that a lot of people share your opinion. Revolting.

Relax, it was a joke. However I do blame the Democrats for the spike in gas prices almost immediately after they took control. Oh, and the dot com crash and 911 were Bush’s fault. :)

This is not surprising. The house version of the bill was much stronger than the senate version.

PTL

“Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said. ”

http://finance.yahoo.com/news/Stimulus-pared-to-789-billion-apf-14325858.html;_ylt=Atrsh.bJ3wY7OXggLtjuaX27YWsA

Not that I am predicting this – perhaps it will go on another year but at some point it will end and people will still be talking about how bad things are. I see that people have a tendency to project forward whatever the current trend is forever – on both the upside and the downside.

There is a reason they call it the “economic cycle”.

So, it is at crisis proportions, or isn’t it?

Here is the chart I wanna see go up. I’m loaded to the gills at 1.11

March 2.5 calls priced in.

http://www.google.com/finance?client=ob&q=NYSE:ABK

Ray! You’re a gambler! -1900% ROE last quarter? It’s a risky equity environment out there for this sector. Unless you know something… Hmmm. I hope you make a fortune.
ps – I wear an XL

Since she has been at the helm she has done squat…

What are you talking about? Pelosi and the gang took over in 2006. From the look of those charts, I she’s she’s done quite a bit to the country.

This is for the Tim and others in the know: how difficult is it to compare the data when the methodology for calculating unemployment rates/data has changed over time?

I was wondering the same thing.

But we’re beyond that now in terms or policy priority. If someone is facing foreclosure, but still has a job, then there’s an economic solution out there for them somewhere — like a cheap rental. But if you do not have a job then you’re looking at a whole different magnitude of problem — like trying to feed your family.

Btw, here’s a good Michael Lewis Op-Ed piece from the NYTimes about the stock market crash if you’re interested:
http://www.nytimes.com/2009/01/04/opinion/04lewiseinhorn.html?pagewanted=1&_r=2

There are articles floating around that attempt to compare the current U-3/U-6 unemployment statistics to past metrics. It’s especially difficult to compare with the great depression because of changes in workforce demographics (notably that more women work today).

http://blogs.wsj.com/economics/2009/02/06/the-other-unemployment-rate-139/

http://www.opednews.com/populum/diarypage.php?did=12004

YMMV.

I agree about the alarmism, but you must admit Tim that the Dow chart shows that our curent market is second only the Great Depression, or am I wrong? I’m sure there are many ways to interpret the chart, but based solely on where we are now in comparison to other recessions, this one looks pretty dire.

Check this out from the Economist:

http://www.economist.com/finance/displaystory.cfm?story_id=13062194

You know that by the time it appears in print publication it’s all ready baked in the cake. We’re all playing with fire and we’re all going to get burned.

Being the first at something is great and all but you really need to do something with it eventually. Since she has been at the helm she has done squat…

Hmmmmmmm. Interesting.

What?

Nancy Pelosi has a consistent track record of ignoring her constituents on a personal moral crusade. You live in Washington, so it’s easy to say that what she does is fine because it doesn’t affect you.

I’ll tell you what. When you live in her district, we’ll treat your comments about Pelosi as worthwhile. Trust me, if you lived here, you wouldn’t feel so satisfied with her.

Chuck Ponzi

I am not trying to start a political flamewar here, just pointing out that the Pelosi chart is misleading in the data that was selected and the way it was presented.

I do find it ironic that a politician who has spent the last eight years accusing the other side of resorting to the “politics of fear” is now putting out alarmist charts like this and making claims such as “every month that we do not have an economic recovery package, 500 million Americans lose their jobs.”

Politicians of all stripes have no problems resorting to fear and alarmism to push their agendas. Big surprise.

It’s a really good point that we don’t remember what a typical recession feels like. We’ve had remarkably good luck for a quarter century with few and short recessions.

Because it feels deeper that the recessions we recall, we wonder if it’s a Depression. (jury’s still not out on that one, according to the stock chart)

Nancy Pelosi’s my girl. Y’all should stop listening to Rush and realize that she is a terrific lawmaker, and a historic figure (first woman SOTH). It’s more or less the same type of doo doo the right smears all over Hillary.

As to the first chart, what a shock that something Nancy Pelosi did would be biased!

Grow up, DLS.

I think the thing that is disconcerting about it is how quickly the bottoms happened on all but the 2001 recession.

Could be argued that either the 2001 job recovery took longer because of fed intervention, or that it should’ve been more drastic.

March 2.5 calls priced in.

http://www.google.com/finance?client=ob&q=NYSE:ABK

Why do “mature thinking people” such as yourself need to resort to the “immaturity” of childish insults?

Are we all suppose to be shocked that Democratics are no better then Republicans when it come to the true. I never made that assumption and I’m a liberal.

Hey, I have a proposal for you. Next time you can say something about liberal’s mothers sex life. Then we’ll all know that your the most mature student in class.

P.S. Stay away from the generalizations it’s safer. When you show your contempt for others your telling the world more about yourself than you want them to know.

The way it looks to me we have had twenty years of unprecedented economic growth. Technology changed busines, we all had to have it, we used it to increase our respective business models, and now there seems to be technology everywhere.

A contraction makes sense to me until the global economies are redirected.