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LA_Renter
ParticipantAugust jobs data extremely weak
“Job losses in construction, manufacturing, transportation and government swamped gains in education and health care, leisure and hospitality, and retail. Employment in financial services was flat. The weakness in payrolls reflected fallout from the deepening housing slump, a credit crisis and financial turbulence that has made businesses more cautious in their hiring.
The report was much weaker than economists were expecting. They were forecasting payrolls to grow by 110,000.
The drop of 4,000 jobs in August was the first decline since August 2003.”
Now the question is will it be a 25 bps or 50 bps cut and does it even matter. There are many things screaming recession here.
September 6, 2007 at 10:10 AM in reply to: San Diego Inventories flat year over year . . . other southwest/Calif. markets all higher. Why? Is SD near a bottom? #83567Participant“I’m amazed at the number of people who say that they will wait until the market gets better.
The question is, how long can they afford to wait until they list or go into foreclosure.
Some people are bleeding their savings and retirement accounts to continue making their payments but will end up losing their homes anyway, and be near broke when they do.”That is called chasing the rabbit into the the hole!
Participant“Three-month US Libor set at 5.72375 per cent on Thursday, a new peak in the floating rate benchmark since the credit crunch emerged early last month.”
Has anyone else noticed that Gold is up about $14 to $704??
ParticipantI agree with JWM, no V shape recovery and definitely not 2008. The argument is somewhat subjective. I’m sure people will grow tired of renting and take steps into home ownership, the 4th quarter of 2008 looks promising because the market will begin to reflect the full effects of the credit crunch. I guess the real question is when is it safe? My own personal objectives are just to not over pay and get hit with 150 to 200k hit on my equity and find myself in a situation where I have to sell. Here is my thinking right now…How bad of an economic downturn are we talking here??…..Thats first and foremost…in other words I will not buy if we are in a recession and I don’t feel secure in my job regardless of great deals on RE….That will be a biggie in 2008 and 2009 not just for me but anybody that is dependent on income for a living. If we get to a point where it appears the worst has passed and I have maintained a two income household then I’ll jump in even if there is more down side on prices. I am not trying to time the market perfectly. I anticipate sometime in 2009 right now. Thats my 2 cents.
ParticipantGood article! Since we are piling on I thought I would add this to the mix. Here are some of the debates occurring a Jackson Hole this weekend.
“News from Jackson Hole: Saddle up ma, it’s a shadow banking run”
“According to Axel Weber, the German Bundesbank chief, the current financial crisis bears all the hallmarks of a bank-run. You know the kind of thing – frustrated savers scrambling to cash in their flimflam paper at the Western Union for its value in gold. Something like that anyway. Weber told an audience at Jackson Hole:
What we are seeing is basically what we see underlying all banking crises
In his analysis, markets, just as in the 19th century, are currently prey to a spiralling liquidity crisis created as investor confidence drops and everyone rushes to get their chips off the table.
The difference is that this time, it’s not a run on the banks. Instead, noted Weber, the current liquidity storm is being weathered by unregulated financial institutions – hedge funds, banking conduits, SIVs and such like. It is what Paul McCulley, managing director of Pimco, has termed a “run on the shadow banking system”.This is problematic then, for regulators like the Fed, which were created in the 19th century to deal with liquidity crises in the actual banking sector. Whereas banking crises in the past could be cooled by – in Ben Bernanke’s subtly crafted words – “a helicopter load of money”, that avenue is closed, because central banks are prohibited from lending to the unregulated institutions behind the current storm. The liquidity central bankers have injected into the system so far has been poorly targeted and hasn’t run to where it’s actually needed.”
So what we are experiencing is a good old fashioned 19th Century Bank Run. Great!
September 4, 2007 at 12:03 PM in reply to: Is the U.S. Gov going to BailOut documented FRAUD?? #83295Participantbsrsharma,
It is never too early, in fact right now is the prime time to let your feelings be known. Politicians have to know the consequences before they move forward. Here is an excellent Op-Ed from the LA Times on this subject
“Is America really pro-bailout?”
Politicians are sorely misreading public opinion of imperiled homeowners who bought into the bubble.
By Peter Viles
September 4, 2007
President Bush announced his intention last week to reach out a hand to the “many Americans” who “may have been misled” in the sub-prime mortgage market. Two days earlier, presidential hopeful Barack Obama called for fining “predatory lenders” to bail out “hoodwinked” families. L.A. City Councilman Richard Alarcon wants a $5-million revolving fund to “help homeowners on the verge of foreclosure.” The news media report on families losing homes, disabled owners facing foreclosure and newlyweds being tossed into the street.Here’s one tale of sub-prime woe you may not have heard. Casey Serin, a twentysomething real estate investor in Sacramento, bought eight houses in four states with little or no money down, couldn’t sell them and couldn’t pay the mortgages, and so naturally began losing them to foreclosure. He then began keeping a self-pitying online diary he called Iamfacingforeclosure.com.
Serin hasn’t drawn much notice from politicians or the media, but real estate bloggers have so vilified him that CNet’s news.com granted him the title “world’s most hated blogger.” And cases like his help explain the disconnect between public opinion and bailout-happy politicians and the elite media: According to a recent Fox News poll conducted by Opinion Dynamics, there’s 70% opposition to a taxpayer sub-prime bailout.”
http://www.latimes.com/news/opinion/la-oe-viles4sep04,0,7874701.story?coll=la-opinion-center
CONTACT YOUR CONGRESSMAN TODAY!
ParticipantI think what you get on sites like Piggington is a more forward looking bias. The mainstream media especially as it pertains to the economy is confined to the rear view mirror. They can only report what has happened. The most frustrating time was right at the peak and post peak when Piggingtons and ther bubble bloggers were accurately predicting and discussing the downturn due to the total disconnect from traditional fundamentals and the extreme lax lending while the mainstream media was still reporting on the good times of the boom. Also many journalist that report on RE are not economist or have much interest in the analytical side of economics and they are lazy, they totally rely on the views of their sources who are usually tied to the RE industry and have a vested interest to paint a positive picture. The past year has seen much improved reporting from UT, NC Times, OC Reg, and LA Times…why? because the first signs of the slow down appeared in the rearview mirror. I do think there is a conflict of interest due to the amount of advertising of RE and mortgage companies in the media especially when we are in a gray area like at the peak and post peak. The editors took a long time to allow some critical reporting of the market IMO.
I think many journalist use these web sites as a way to follow RE trends and probably agree with many of the posters on this board from a strict data and analysis point of view. I always wondered how much tension there was behind the scenes with a reporter and their editor of what they could say?? It has definitely been fun to participate in these forums especially when the predictions and forecast of these blogs are proving to be “DEAD ON’ right…for the most part.
ParticipantMartin Feldstein is one of the most prominent economist in the country. He was actually Greenspan’s first pick for Fed Chairman and judging from the comments in his speech I wonder why??
“Feldstein Speech From Jackson Hole”
http://online.wsj.com/article/SB118870740032215760.html?mod=googlenews_wsj
“Even with the best of policies to increase liquidity, future aggregate demand is likely to be depressed by weak housing construction, depressed consumer spending and the impaired credit markets. Lower interest rates now would help by stimulating the demand for housing, autos and other consumer durables, by encouraging a more competitive dollar to stimulate increased net exports, by raising share prices that increased both business investment and consumer spending, and by freeing up spendable cash for homeowners with adjustable rate mortgages.”
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“But what if the outcome in the absence of a substantial rate cut would be more benign and yet the Fed nevertheless cuts the federal funds rate? The result would be a stronger economy with higher inflation than the Fed desires, an unwelcome outcome but the lesser of two evils. If that happens, the Fed would have to engineer a longer period of slower growth to bring the inflation rate back to its desired level. How well it succeeds in doing this will depend on its ability to persuade the market that a risk-based approach in the current context is not an abrogation of its fundamental pursuit of price stability.”
In other words….Yea I know its a bubble but its a hell of alot better than having a correction…..I mean people love bubbles, think how popular you’ll be Ben. C’mon play ball, forget about tomorrow we’ll worry about that when we get there.
That is what is transpiring at Jackson Hole this weekend.
ParticipantThe interesting thing about this article is that it was written by Diane (hurry up and buy now or you will be priced out forever, Cal RE never goes down) Wedner. Most of her reporting has had very permabullish themes. Interesting that the format was in a question…answer form. This is probably one of the hardest hitting straight forward pieces I’ve seen from the Times and it came from Diane. Way to go Diane…welcome to reality.
Participantbsrsharma
I hear ya but they can still screw this up. I was looking at the LA Times article in the context of what was said in the Barons article
“Now that the president, however tentatively, is officially on board, the bailout bandwagon is sure to pick up speed, volume and passengers, particularly with an election year looming. That could mean, as the sharp rise in the price of gold, up over $7 an ounce on Friday, gives fair warning, a rash of fiscal fecklessness, fresh debasement of the dollar and that most unenviable of economic combinations — no growth and inflation.”
The media is getting on board with the bailout manifesto and they are going to march us into a much bigger mess. I agree with your stagflation repeat 1974-1982 all over. Sweeping this problem under the rug will not help. The only solution is to let the markets clean it up but that is going to take a while 18-36 months. Politically speaking Stagflation, while being horrible and the wrong choice, is the easy way out. Things are going to suck for a long time. With that said I’m going to the beach and enjoy the rest of my Labor Day weekend 🙂
ParticipantMore commentary from the LA Times:
Tom Petruno:
Market Beat
Big bailout might be inevitable
9:40 PM PDT, August 31, 2007One view of the Bush administration’s mortgage-crisis action plan, outlined by the president Friday, is that it’s a Republican attempt to avoid a larger-scale federal intervention.
But history suggests that a larger-scale government intervention is exactly what we’re going to get.
http://www.latimes.com/business/la-fi-petruno1sep01,0,4210469.column?coll=la-home-center
Full disclosure…I am a dare say a social progressive…and strong fiscal conservative which makes me what they call Liberatarian, I just consider myself an Independent. With that said I am in the 66% to 71% of Americans that disapprove (strongly I might add) of Bush. I will say this…I am glad we have a conservative (not so much Bush just the long ago forgotten and rarely implemented idea of fiscal conservative ideology) as president at this moment on this issue. Sure he is going to f*#k this up, but if we had the opposite end of the spectrum in power on this issue at this moment your tax dollars would already be hard at work attempting to bail this situation out. Keep a little perspective here.
Participant“To not permit losses now would be a direct violation of the free-market ideals at the foundation of our economy.”
One might even call it Socialism!
ParticipantHere is some more commentary from Barons via BigPicture
“THE IRONY IS THAT MR. BUSH’S proposals may have served a function in goosing a very nervous stock market but aren’t likely to yield much else than disillusionment.
A hedge-fund manager quoted by Barry sums it up rather persuasively: “I don’t see anything in Bush’s plan that will change the insolvency of the home buyer. The ‘system’ is illiquid (and that ‘problem’ was addressed by the central banks two weeks ago), but the ‘borrowers’ are insolvent. Nothing I’ve seen yet changes that fact. Nothing. Besides, has this administration, which doesn’t believe in government programs, ever done anything well bureaucratically?”
Softening the tax bite on mortgage write downs and allowing homeowners who are delinquent by more than three months and who have a decent credit history to switch into a Federal Housing Administration loan carrying a lower interest rate will effect modest fixes, but are no big deal. Certainly, given the wretched condition of housing, the inexorable decline in home prices and the prospect of a huge resetting upwards of adjustable-rate mortgages over the next 12 months, with a big spike in March ’08, we’re talking Band-Aids rather than serious relief.
Now that the president, however tentatively, is officially on board, the bailout bandwagon is sure to pick up speed, volume and passengers, particularly with an election year looming. That could mean, as the sharp rise in the price of gold, up over $7 an ounce on Friday, gives fair warning, a rash of fiscal fecklessness, fresh debasement of the dollar and that most unenviable of economic combinations — no growth and inflation.
What it doesn’t mean is a return to the good old days of easy and just about free credit and all the nice bubbly things that went with it. Nor, we fear, does it portend even a modest rebound in housing in the next 12 months. The party’s definitely over and no one’s sorrier than we are. It sure was fun to watch.”
http://bigpicture.typepad.com/comments/2007/09/bailout-bandwag.html
One of the things most people on the bearish housing blogs fear the most is a bailout of the credit/housing bubble and it’s restoration. At this point that is beyond the laws of physics per se. What most astute observers are correctly pointing out is that the most likely outcome of any bailout will be that 70’s retro classic STAGFLATION. The double knit polyester leisure suit of economic conditions.
ParticipantI agree bsrsharma, the Fed doesn’t really have the luxury to do what it takes to prop this thing up. They will probably be more responsible than the government because they really have no other choice. The $ has reached its limit.
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