Here is your open thread for the weekend beginning Friday October 16th, 2009. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
Be sure to also check out the forums, and get your word in the user-driven discussions there!
Scotsman » Oct 16, 2009 at 9:48 am
The data is starting to roll in- the first $16+ billion of the stimulus money has created….. about 30,000 jobs. A little quick math shows that’s about $500,000 per job. Wish I could get one of those, but I’m not a banker any more.
How many jobs will be lost due to the net increase in taxes required to pay for the stimulus jobs? Is there really a net gain? I doubt it.
http://thehill.com/blogs/blog-briefing-room/news/63299-first-hard-stimulus-data-finds-only-30000-jobs-saved-or-created-#
Kary L. Krismer » Oct 16, 2009 at 10:44 am
Well, that’s another thing where I don’t think it’s possible to determine the actual impact.
Scotsman » Oct 16, 2009 at 11:31 am
Hey, those are White House numbers, Kary- they’ve gotta be good! ;-) If anything, too good….
AMS » Oct 16, 2009 at 12:46 pm
Loan losses on the rise? What a surprise!
“CHARLOTTE, N.C. – Bank of America Corp. said Friday it lost more than $2.2 billion in the third quarter as loan losses kept rising, providing more evidence that consumers are still struggling to pay their bills.”
http://news.yahoo.com/s/ap/20091016/ap_on_bi_ge/us_earns_bank_of_america
TJ_98370 » Oct 16, 2009 at 1:14 pm
Test
TJ_98370 » Oct 16, 2009 at 1:23 pm
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I’ll try this again.
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A disturbing Elizabeth Warren interview, text and video -
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Wall Street is Winning!
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softwarengineer » Oct 16, 2009 at 1:26 pm
RE: Scotsman @ 1 –
A Blog from Roubini’s Crew in part:
“…NO JOBS increasing at alarming rates…
There Are Six Unemployed For Every Job Opening
Vincent Fernando|Oct. 15, 2009, 12:43 PM
Yes, there is a vital piece still missing from the recovery equation. The number of unemployed continues to grow faster than job vacancies. As of August data, there were about six unemployed for every potential position according to the Bureau of Labor Statistics.
Macroblog: At the end of August there were estimated to be fewer than 2.4 million job openings, equal to only 1.8 percent of the total filled and unfilled positions—a new record low. This is an especially significant issue given the large number of people who are looking for work.
As shown below, this ratio was well under 2x at the beginning of 2008, and peaked at just 2.8x during 2003. Thus 6x today is truly shocking. Bargaining power clearly rests with employers. Perhaps it’s a good time to start a business and try to become one.
Note the years in the chart below are somewhat tricky to read….”
The rest of the URL:
http://www.rgemonitor.com/roubini-monitor/257827#202313
AMS » Oct 16, 2009 at 1:30 pm
I know I have said this before, but here is a prime example of how two professionals can interpret the same message in two very different ways, and the event happened right here in the Seattle area!
Q: “What do you think would happen if two bakeries received the exact same phone order?”
http://cakewrecks.blogspot.com/2009/09/twas-sweet-starry-night-in-jet-city.html
Every single document signed at closing was drafted by an attorney, yet so many buyers simply sign knowing exactly how they are to be interpreted in the future.
softwarengineer » Oct 16, 2009 at 1:30 pm
RE: Scotsman @ 1 –
More Meat to Support Being Independent Politically Today
And yet there is reportedly a shortage of skilled workers in the US …
At 10% Unemployment America Still Doesn’t Have Enough Workers
http://www.businessinsider.com/at-10-unemployment-america-still-doesnt-have-enough-workers-2009-10
A rebuttal to this NEOCON media article:
OVERPOPULATION BEGETS UNEMPLOYMENT
A three headed monster [reducing consumer spending], getting bigger and bigger everyday is an 85% spike in unemployment affecting college degreed professionals earlier this year alone:
States in part:
“…Electrical Engineers Experience Record Job Losses
The unemployment rage for electrical engineers doubled during the second quarter of 2009….”
the rest of the URL:
http://www.cio.com/article/496960/Electrical_Engineers_Experience_Record_Job_Losses
More degreed unemployment news in part:
“…The total number of unemployed increased by more than 50 percent from January 2008 through last month, but the number of jobless Americans 55 or older jumped 70 percent, according to new Labor Department numbers released Friday.
And for people with college degrees, the number rose even more sharply, by nearly 85 percent.
The numbers confirmed a trend that job cuts are moving up the age and educational ladders, said Andrew Stettner, deputy director of the National Employment Law Project….”
the rest of the URL:
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/02/06/national/a152330S41.DTL
How about nursing? In part:
“….More hospitals have recorded mass layoffs in 2008 than in any year in the past decade. More than 9,700 hospital employees will have filed initial claims for unemployment compensation in 2008 as a result of mass layoffs. That would be highest such number since 2005, which saw nearly 13,300 laid off, and 28% more than the 10-year average. The news comes despite the relative optimism in healthcare as compared to the rest of the economy, where most other major sectors of employment have posted net losses of jobs for the year….”
The rest of the URL:
http://www.uannurse.org/research/pdfs/The-Hospital-Industry-2009.pdf
I’d add most of the layoffs are related to overpopulation and the surge in Uncompensated care, see surge chart in article above. The article above also states in part:
“…Uncompensated care is defined as the overall measure of hospital care provided for which no payment was received from the patient or employer. It is the sum of a hospital’s “bad debt” and the charity care it provides. Uncompensated care excludes other unfunded costs of care, such as underpayment from Medicaid and Medicare…”
How about teachers? See the California news and believe me, its coming to a theater near you too very soon:
“….California law requires local school districts to inform teachers, counselors, nurses and other school employees by March 15 that they could be laid off at the end of the school semester. The across-the-board budget cuts have pushed districts to issue layoff notices to more than 26,000 teachers….”
The rest of the URL:
http://www.cftl.org/centerviews/april09.html
I’d add
etc, etc…. LOL
Scotsman » Oct 17, 2009 at 2:45 am
“The problem right now is that defaults are happening much faster than liquidations, so the overhang is growing. See chart, which divides by loan type. Subprime are past their peak defaults, and the liquidation has caught up. AltA and OptionARMs are close. The problem is now in the Prime loans.
They conclude with an analysis why prices and sales seems to have bottomed: seasonal factors have given a temporary plateau. But the seasonal buoyant period is over, and both prices and sales should now resume a slump”
http://yelnick.typepad.com/yelnick/2009/10/before-you-jump-back-into-real-estate-read-this.html
AMS » Oct 17, 2009 at 10:36 am
RE: Scotsman @ 10 – From the link, “Commentary on politics, technology and stock markets guided by Elliott Wave principles.” I know many people laugh about Elliott’s Fibonacci theory, yet it has plenty of supporters.
Scotsman » Oct 17, 2009 at 11:15 am
RE: AMS @ 11 –
Elliot Wave Theory is one of those things that always seems to work perfectly in hindsight, but is very hard to define in the present or as a predictive model. It’s too complicated. There are plenty of other long wave models that work just as well without all the noise and complication.
Ira Sacharoff » Oct 17, 2009 at 12:07 pm
RE: Scotsman @ 12 –
I studied the Kondratiev Wave Theory and also found that you can always justify it after the fact, but it was not real helpful as a predictive model. Kondratiev was a Soviet economist. Stalin wasn’t exactly thrilled with Kondratiev’s theories. First he was sentenced to the Gulag, and later executed.
AMS » Oct 17, 2009 at 12:35 pm
RE: Ira Sacharoff @ 13 –
RE: Scotsman @ 12 –
Once again, we have the Efficient Market Hypothesis against some form of Trend Analysis. If the Efficient Market Hypothesis is correct, all Trend Analysis is junk.
Angie » Oct 17, 2009 at 4:11 pm
Just popping in again with an anecdote about my recent home sale in Seattle. Y’all might remember that I moved out of state for my job. Home sales assistance was part of my relocation package.
We put the house up for sale in early August and found eager buyers right away. Closing was scheduled for mid-September. As part of the relocation, the relocation co. was to buy the house from us and essentially sell it immediately to the buyers. So, in early September we transferred the house to the relo co. and they sent us the calculated equity. So far so good? Not quite.
Closing date came and went…no closing. Pushed back a week, then two, then four. Turns out that the buyers were having trouble getting their financing lined up. I still don’t know all the details, but heard that at one point the hangup was getting the PMI provider to agree to the loan.
All the while, the home loan was still in our name–DH and I were getting rather nervous. Leaned a little bit on the relo company and they agreed to pay off our loan in the meantime til the buyers fish or cut bait. Now if the buyers can’t get their act together it’s the relo co’s (and probably my employers…) problem.
This is the first time we’ve sold a house and it’s definitely been weirder this time than any of the times we bought or refinanced in the past. I feel pretty lucky that my relocation package made it so that we actually can be cut loose from this sticky transaction, instead of having to wait it out , keep paying the mortgage, and perhaps/probably list the place again.
I miss Seattle and our old house like crazy, though. It snowed yesterday, and there is absolutely no place around here to have a garden. Y’all go to the Book Fair down in Columbia City next weekend and give Paul Doyle and Knute Berger my warm regards.
David Losh » Oct 17, 2009 at 5:35 pm
I just finished an analysis for the sale of a condo unit. After 19 years of the owner paying a mortgage the sales price will be the original purchase price plus the total of the mortgage payments made to date. The mortgage payments ended up being less than the rent would have been for a savings of about $46K.
19 years of mortgages payments netted the owner about $46K. Yes the owner can now rent out the property for a positive cash flow, but had they sold in 2007 the net would have been 30% more than it is today. Next year I expect the property to be worth another 20% less.
This example is irrelevant to what I am just now seeing in the Real Estate community. The Mastro article really started me thinking and the people I know in the Real Estate business are much more to the point I would like to make.
I buy, sell, and trade. i usually trade labor or supervise labor in trade for a payment on a project property. Most of the people I have known over the years have made fun of me for not holding onto properties. I hate renters. Properties that I have held that renters have trashed make me sick.
So today I have a little vindication in that my business still nets a profit every week while land lords are losing equity, fighting with renters who want to pay less, and all of the dreams of retirement are put on hold for them.
The larger issue is that this is the same across the country. Land lords are losing equity, and cash flow. There may be a sense of glee about that, banks may be taking back foreclosures, but there will be a point when net losses spill over into the economy.
Here’s a perfect example: two agents have approached me about restaurant listings they have. One has seven and the other has four. The one with the four listings of restaurants for sale are all the same land lord, one place is a prime location and has been vacant for about a year. He can rent for less, but over time he will be behind anyway from a negative cash flow. If he signs a five year lease of negative cash flow he might as well throw in the towel now.
If you look at strip malls, regular malls, large or small developments, and add it up that’s a lot of lost revenue in our system today.
So there is a sense of glee, and I told you so, but the reality is that this drain on the economy is from what was a secure sector. Real Estate has been traditionally a safer haven.
When the banks get done repossessing the heck out of everything what will be the up swing again to a stronger economy?
Poetrywater » Oct 18, 2009 at 6:15 am
Okay, after my last post, we CHICKENED OUT! Yep, we are not buying right now afterall! We love the house, but we just couldn’t jump at the 2009 price, even though our life will be disconnected for a few months (or possibly another year or two) until we figure this all out.
I blame all of you! (with a smile)
Oh and my friend works in the mortgage default industry and told me not to buy, but just wait until November 8th. She couldn’t tell me exactly what because of the company she works for. Any thoughts on this date?
Scotsman » Oct 18, 2009 at 9:49 am
RE: Poetrywater @ 17 –
I doubt you’ll regret this decision. While I’m not sure what’s so magical about 11/8, the idea of waiting until at least next spring has a great deal of merit. We should have a much clearer picture of the economic future by then- earnings reports for the year will be out, more of the stimulus funds released, and most importantly a better idea of where the bond market and interest rates are headed.
AMS » Oct 18, 2009 at 9:58 am
RE: David Losh @ 16 – You sound like a life insurance salesman!
“After 19 years of the owner paying a mortgage the sales price will be the original purchase price plus the total of the mortgage payments made to date. The mortgage payments ended up being less than the rent would have been for a savings of about $46K.
19 years of mortgages payments netted the owner about $46K.”
What is this, paid up life insurance, where you over-pay for many years, and the insurance carrier suggests that you are covered for free?
It took 19 years to break even? That’s not a good investment!
Aside from that issue, I bet he forgot some of the expenses over the years. I have to believe that he lost a receipt or two, and possibly forgot about a water heater replacement.
I’d like to see audited numbers by an excellent auditor! If you can get the numbers audited, I’ll pop the popcorn!
(Think of how much money he would have had he rented for all those years and saved, invested!)
Scotsman » Oct 18, 2009 at 10:24 am
“She also pointed to skimpy regulation of mortgage brokers as a problem, noting that 25 percent of Ohio mortgage brokers in 2006 had felony records. ”
No! How could that be?! Thank goodness Seattle is different!
http://www.cleveland.com/business/index.ssf/2009/10/keycorp_executive_beth_mooney.html
AMS » Oct 18, 2009 at 10:30 am
RE: Scotsman @ 20 – …and the other 75 percent were not convicted (self defense, not enough evidence, and so on.), and 50 percent had a current drug problem; the other 50% had a past drug problem.
(Of course I have no data to support this extreme and absurd claim)
There are some good people in the industry, both now and then, but there were, and are, plenty of bad ones too.
Poetrywater » Oct 18, 2009 at 10:32 am
RE: Scotsman @ 18 –
So true… Ahhhhh, but sometimes I hate myself for being so dang responsible!
Sometimes I wish I could just spend everything and live the high life like a bliss-ninny :)
Off to find a rental…
Trigger » Oct 18, 2009 at 10:33 am
RE: Scotsman @ 1 – Scotsman – as long as China keeps on supporting US economy things will be just fine. Maybe a 12% unemployment rate but it will be ok. Chinese need to produce new toys for Americans – otherwise they will have unrest. So China will be ok with subsidizing US economy and consumption that is out of control.
Even if the US deficit keeps going like a rocket – if China is cool – then they should just cough up the bill. At some point US consumers should transfer the debt to Chinese consumers and Chinese banks should take all the risk and American banks should simply reap the rewards. It is a very simple model.
AMS » Oct 18, 2009 at 10:41 am
RE: Trigger @ 23 – “as long as China keeps on supporting US economy things will be just fine.”
It’s not a question of if but rather when the Chinese shift. I suppose they are big enough that it could be several generations away, and China has a long history of sudden revolution.
AMS » Oct 18, 2009 at 10:43 am
RE: Poetrywater @ 22 – Think in terms of net present value. You give up consumption today for a benefit in the future. The net present value of the delay is positive, given your set of circumstances. Based on life expectancy, baby boomers cannot delay, as least not as much.
Trigger » Oct 18, 2009 at 11:04 am
RE: AMS @ 24 – AMS – Exactly. If this happens in 80 years time what do we care? We will not be dealing with the issue anyways. So I think we will just stagnate for a bit. If some new tech revolution happens like Artificial Intelligence then this will propel us. If not then there will be Obamomania and 12-15% unemployment.
If China decides to turn the plug – it will first turn the plug in its own backyard and this will mean jail time for the current administration in China.
So basically I would just keep Obamomania strong. I would pray to bankers. And do some hiking. And I would also wait for the snow so that the skiing season can begin. Basically take it easy, go for Obamomania and count on China for bailout.
Ira Sacharoff » Oct 18, 2009 at 11:04 am
RE: Poetrywater @ 17 –
Some houses stay on the market a long time. So you’ll probably still love the house, even more at it’s 2010 price than it’s 2009 price. ….And you’ll know when it’s time, whether it’s from empirical data or emotions.
AMS » Oct 18, 2009 at 11:23 am
RE: Trigger @ 26 – I am not so sure that it will take 80 years. I know people who suggested that the housing bubble could go on for 80 years, or more.
I also am not sure what we have to offer China in exchange for all those dollars. Manufactured goods? Mined Goods? Food? Intellectual Property/Technology? Starbucks?
(maybe the Chinese will download all those iTunes songs at 99 cents each?)
Trigger » Oct 18, 2009 at 12:37 pm
RE: AMS @ 28 – AMS – I can tell you what we can offer. We can offer the govt officials in China – some nice retirement homes in Hawaii and a guarantee that if they become wanted criminals in China – then the US will never deport them to their homeland. Furthermore the US can offer the same deal to their family members.
Plus a nice bank account here in Hawaii. Nice jet etc.
This is sthg that the US can easily offer. And Chinese regime can accept it. I am not saying that we should move to a crime ourselves – but this is also an option. The US govt was able to kill dictators in different countries at will without any issues – that is if the dictator did not conform to US policies. So why would the US govt change now? Because it cares for the Chinese worker and his purchasing power? Look at Iraq. We went there because THERE WERE NO weapons of mass destruction. I think this is probably managed at the CIA, govt level. So not a biggie.
David Losh » Oct 18, 2009 at 1:22 pm
RE: AMS @ 28 – RE: AMS @ 25 – RE: AMS @ 24 – RE: AMS @ 21 – RE: AMS @ 19 –
The example of the condo is to illustrate that the purchase was not a good investment. It has lost more than 30% of value in two years and probably more in the next year.
In 19 years at $201 per month that adds up to the $46K and it’s a condo so there are other expenses or special assessment or whatever.
That takes Real Estate from a safe haven to a net loss.
Sheesh?!
AMS » Oct 18, 2009 at 1:28 pm
RE: David Losh @ 30 – How much did it cost over the 19 year period?
AMS » Oct 18, 2009 at 11:33 pm
.