There is the usual bad news from the worst hit areas.
-1 in 8 homes in Vegas was in foreclosure. How is it that the MSM has
convinced us that things have gotten better there? They have not.
-Cali and Arizona are looking at ten percent default rates. And this has been going on for a few years now.
-A substantial part of South Florida has one home in ten in default. In
Marco Island/Naples the rate is 6.5%. That blows my mind. I know this
area. It is deep pocket. At least it used to be.
-The real shocker to me was Provo Utah and Boise ID. The default rates
are up 100% from two years ago. This was not supposed to be happening
in places like this.
There is a nationwide problem of defaults. The people in Boise are
feeling the same pain as Stockton. Every time that a default happens it
devalues other properties. I have real estate interests around the
country and I can tell you that things are dead. There was a time when
a buyer would look at a home and ask, “How big is the lot?” Today the question is, “Does the bank have title and are they desperate to sell?”.
There is not going to be a recovery in housing until the defaults have
been stabilized at manageable levels. The broad economy is not going
anywhere either. There is no plan on the table to stop what is surely
coming. The government programs have delayed things by an average of
nine months. That means that most of the millions of government
sponsored ReFi’s from 2009 will blow up this year. We paid a bundle for
those ReFi’s. They cost us last year, we will pay again for them this
year. Little has been accomplished.
I know that there are many out there who will say, “Let price discovery rule!”
You may be right. I don’t know anymore. We are paying a big price in
time and treasure with what we have been doing. However, the policy of,
“Let the chips fall” scares me. It is like a giant sucking noise. It is far away but getting closer.
We bought in 2004. Not so bad, but not so good either.
By the way, I get a hoot out of your avatar Gimp.
Government is layering into the Ponzi losses with growing taxpayer debt and no hesitation.
Homeownership is officially nationalized.
What could possibly go wrong ??
When the USSR collapsed, all housing was government owned; people just kept living in the apartments they always lived in since there was no government left to evict them. The government had also provided kitchen garden plots, where most Russians grew the majority of their own food, so people continued to eat.
Now that the US government has assumed all risk in many areas of the economy, using the former USSR model, perhaps when it falls this present trend will actually benefit the population during the interregnum chaos period?
http://www.dallasobserver.com/content/printVersion/1653972
Now we have "credit terrorism" ...
This guy is no different that the weazels at the top. No wonder we're screwed: everyone is looking to get something for free. I'd like to sue him for abusing our laws (which were meant to help protect HONEST people)!
This should surprise no one.
"Home sales unexpectedly declined last month."
Yeah, what a suprise.
I read a CNBC article in Yahoo Finance yesterday. It said that real estate numbers had "unexpectedly unexpectedly" fallen.
All bad news which does not fit the MSM pro-Obama meme is so unexpected.
That word...does it mean what you think it means?
On whether to crash real estate and get it over or not...I think it would be in general best interest of regular folks to let things crash, or preferably, soften it to a steep slide by doing cram downs, have the banks give the existing homeowner a good portion of the money they would lose in a foreclosure as a principal reduction, so banks, homeowners and neighborhood its better off etc...basically we should un-zombify our real estate market...once things have crashed, debts defaulted, then housing will be quite affordable and people will spread out into these cheap, oversupplied, abundant houses and rental units again.
So said crash would wipe out debt and housing wealth (not much of that anymore) of US population but would be a net gain in reducing the cost of housing that has really weighed on middle class.
However, said crash we wipe out banks. Houses and rental units would massively default quickly, taking out MBS.
I don't think wiping out banks and starting over is bad thing either....its just that short of a populist revolution, our political leaders will not wipe out banks.
However, the markets may give them no choice...there is a very good chance that all efforts to prop up the real estate that is collateral for our entire financial system will fail without the politicians having a choice...that will be ugly, but the future, 10 years from now will be much better for it.
Moneymutt
I suspect your right that the markets won't give them a chance. If foreclosures stay at or near 300,000 per month for the foreseeable future along with non-performing assets being held on the balance sheet at Par, liquidity will dry up. The Mark-to Myth ruling not only sanctioned fraudulent financial statements, but it took out the FDIC's early warning system on large banks who have mortgages spread out all over.
It's easier to get a idea of the extent of overvaluation and it's real capital from a small community bank as it's loans are more or less concentrated in one area. It's much harder on a TBTF. They have 70% +/- of the nations' mortgages not to mention 60% of the 880 Billion in credit card receivables.
I suspect when a TBTF fails, the first the FDIC will hear about it is on CNN.
Marco Island/Naples @ 6.5% default rate was a real shocker when I was down there last month... but the last ten years of prices doubling was also a shocker...
You are right. Things went up to quick and it was unsustainable. I was thinking more of how many homes are just being walked away from. The 6.5% means that 1 in 17. That is just the default #. You know there is more behind this. Hard to walk through these nice areas and think that every tenth home/condo is somewhere in the process of going belly up.
I am more shocked by the fall in 2 years than the gain in 10.
Good point! Where are all the people who thought that prices going up like a rocket was shocking? Now that prices are declining everyone is surprised. What maroons.
Haven't you ever lost money on a speculation?? The "catastrophe" of falling RE prices, or even an all-out crash, being the end of civilization is just complete BS.
"Let price discovery rule", indeed--and the sooner the better!
Concur.
America. Get ready to start writing rent checks to the China Man.
"Let price discovery rule", indeed--and the sooner the better!
Right, there are people like myself that would like to buy a house. I have good credit and cash, I won't buy a house because the prices are still artificial. We are vaporizing billions of dollars in an attempt to create the illusion that its getting better for housing. Get on with!
Same here. 800 credit ratings, DINK household with plenty of cash--Just truly finding it a whole lot less worry and hassle to RENT right now.
We thought we would buy a house, but WONT as long as prices remain artificially jacked up and on govt. life support!!
This cannot be sustained!! Wake me up when the banks are finally rewarding people with great credit and plenty of cash to bring to the table with 2% interest rates, and prices that have dropped another 30%....
Some where someone commented on this post and said you could buy a house for less than it would cost to build it. That is crazy.
Sure this was in one small part of the country. But my point is that this is just spinning from state to state. If we get 25% of our RE priced below replacement you can kiss the economy away. The building industry would disappear, the banks would go belly up, the states and local communities would have no taxes to pay for schools and cops. And Uncle Sam would be flat broke. Keep in mind that US tax payers own $7Trillion of mortgage bonds thanks to Fannie and Freddie and FHA. If that comes to 70 cents on the dollar it means a $2T loss. We would implode before they could count that high.
That sucking noise that many of you look forward to is not going to be pleasant for anyone. Beware of what you ask for.
Amen! We are in the same boat. Responsible families who didn't buy overpriced houses are suffering by having to rent and move their kids from house to house and school to school while being made to pay back the banks for the mortgages of those who took out loans they couldn't afford.
You want to make houses more affordable? Let the prices come down. Don't prop them up. We want affordable homes, not affordable loans. People need to realize that these government programs are not helping them keep "their" homes, they are only making them debt-slaves to the banks. Let prices fall in line with incomes.
And to the people afraid of prices falling because they will lose more "wealth" in their homes -- it was all phantom equity. You really weren't rich. Those of you who took out HELOCs -- you weren't "extracting equity", you were taking out a loan. Any money from your home is only yours once you can sell it to a willing buyer. Keep supporting these policies and you will be surrounded by abandoned homes and crime. You can't stop prices from falling. The Ponzi scheme is unwinding despite efforts to prop it up which are doing nothing but making everyone poorer. Wouldn't you rather get it over with? Wouldn't you rather have these homes filled with families who would take care of them? Again, let prices fall to affordable levels.
Youzer.
"You want to make houses more affordable? Let the prices come down. Don't prop them up. We want affordable homes, not affordable loans."
And small businesses need customers. All I hear out of Washington is how we all need to take out more loans, i.e. pay more fees. This is what happens when they own the place.
Sir John Templeton told us all assets correct
the amount they were financed. With 125% LTV
DiTech GMAC loans, we may have a ways to go...
http://www.jubileeprosperity.com/
This will help price discovery:
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=ACBJ...
Tell me this....
If the combined credit and asset based economy was at a $70 Trillion level in 2006....and the combined level now is at a $40 Trillion level....then what else can one expect ?
Another point....What makes for a more normal healthy economy.....what was present in 2006....or one that represents a more sustainable economy ?
.................................
What is the issue now ?
Is the method not yet adopted that will not only return to the 2006 numbers....but broadly excedd them....
How is the question....
...................................
Tax structure change is the solution....
A 15% Consumption tax only....to be split between Fed and State.....is the only possible solution....which would enable the US to exceed 2006 numbers....
The future tax take from this take would dwarf that of the current system....and future numbers would dwarf 2006 numbers....
I challenge any economist or politician to prove otherwise....
Replacing IRS with automated transparent 1%
Transaction Tax with Spending Freeze works
better. 10% spreads of Hedge Funds and IBKs
did not stop the free markets. 1% instead
of special interest group subsidies will grow them...
http://www.jubileeprosperity.com/
Obviously there is no agreement by a majority on how to change our tax code. Whether it is a consumption tax, flat tax, fair tax or whatever. That is why it the tax code will not change. There is no consensus on what to change or how.
We will continue to live with the Federal Reserve for the same reason as well. There is no consensus on what to replace it with. Gold standard, Greenbacks, free market, a basket of commodities; no agreement so the Federal Reserve stays.
Frankly I think money should set the price for goods and commodities rather than goods and commodities set the price for money. The latter means money remains "debt" rather than a symbol of wealth.
The problem with a consumption tax is that it sticks it to the poor (regressive.) That makes such a tax politically unappealing, especially in today's economic climate.
Agreed 100% with this. On a percentage basis, the wealthy consume far less of their income/assets than the middle/lower class does. Warren Buffet is the extreme example of this. The guy is worth billions but drives around in a pickup truck and has lived in the same house since the 1950s. He would pay about as much VAT as the average working stiff.
How exactly does Warren Buffet keep his net worth? It is in cash (physical dollar bills)? Do you realize what you are saying?
Warren Buffet's net worth employs more people than you realize.
Make certain things tax-free.
Every other transaction has to pay.
Make everyone have skin in the game and much of the overriding nonsense will stop.
No voting yourself a raise.
It has to cost everyone something- even if that something is a small amount.
Except that it's not - necessarily. I'm a big fan of the FairTax, which provides for a monthly "prebate" of the tax that would be paid on goods up to the poverty level - in other words, if you are at or below poverty level, you have 0 tax liability, including SS, Medicare, et al.
Fairtax.org.
Haters say the rate is 30%. Whatever. That's what we pay now.
Why not a progressive consumption tax? Tax diamonds at a higher rate than food.
Of course the diamond industry lobbyists come out in force to convince pols that every one 'needs' a diamond.
Imagine an IRS free world. ...and no religion too.
I hate the "fair" tax because it is a continuation of the war on savers. I've already paid taxes on my income. Now you want me to pay another 27% when I spend it! NO WAY!
A flat tax of say no more than 10% that EVERYONE pays is the fairest. Since everyone is paying, no one is getting a free ride, everyone has an incentive to make sure that their tax dollars are being spent wisely, and, since it is a flat percentage, there is no punishment for working harder.
Well, there would be no tax on income at all going forward. Yes, it would hit current savers to the extent they have savings, but most people in this country DON'T have significant savings.
It encourages savings because rather than taxing production (bad incentive), it taxes consumption, encouraging savings. No IRAs necessary anymore. No cap gains tax!
Imagine how competitive we would become in this country if there was no taxation of businesses...
Sounds like someone doesn't have any savings. Why punish savers? Haven't they been punished enough?
The flat tax that I've described would replace all other taxes. Since it would be applied across the board, it wouldn't punish anyone. It would be written with an absolute limit of 10% of income (no exemptions/ no loopholes) and the government would have to operate with only the funds it takes in. Because no one would be punished for working harder to get ahead, competition would flourish. It would also be easy to understand and implement.
Dick Armey tried to introduce the flat tax and found at the time that 10% would have been enough. Unfortunately, they started playing the games with special interests to exempt the poor, etc. and ended up saying that they would tax 17% of income over a certain amount. I say no exemptions. Everyone pays 10%. It doesn't punish anyone and everyone has a stake.
What basic principal of good government says that we should have income taxes?
At its most basic level, income tax is no more than theft by the majority from the minority under threat of force, i.e. it is mob rule. It is not based on any principal of good government. It violates all concepts of individual human rights.
I suggest you reconsider the principals presented in the Declaration of Independence before advocating any particular tax policy.
Tariffs, duties, sales tax (maybe) are alternatives that do not directly steal the productivity of individuals.
I don't mean to interrupt, or rude, but before we talk about taxes we have to repeal the 16th Amendment and shut down the Federal Reserve system, forever. Until then it is a completely useless subject.
Carry a rifle and pay no tax. You out there know what I'm talking about.
Shutting down the Federal Reserve and all forms of central banking is the first and biggest step in forging national financial security.
And if you carry a rifle you had better know how to use it.
About half the filers in '09 will have no federal tax liability, so if your 'fairtax' is implemented, millions of people above the poverty line that currently have no liability will be paying taxes.
When people pay taxes they become a lot more interested in how those taxes are spend and who is doing the spending. Every one should pay some tax ... lets keep everyone engaged.
And that's bad because....
Actually, they DO have tax liability - 15% for FICA and Medicare. But they don't "see" that. They also probably pay some capital gains taxes, albeit minimal for the lowest of that tranche.
FICA/SECA are just intergenerational taxes. They do nothing for current spending and the budget.
Think of them as a wierd IRA if you like, but not taxes in the form that the Gvmt. can use.
So in your plan one would pay a flat tax plus SS?? That would be a tough sale. Probably would cripple the economy.