I wonder if a lot of them will turn into rentals.

 

I think a large percentage of them will and are.

And the great recovery continues. With all the growing wealth on main street, home prices and rents should continue to shoot to the moon and beyond.

 

Report: Household income below end-of-recession

"The average American household is earning less than when the Great Recession ended four years ago, according to a report released Wednesday.

U.S. median household income, once adjusted for inflation, has fallen 4.4 percent in that time, according to the report from Sentier Research. The report is based on an analysis of Census Bureau data."

http://www.cnbc.com/id/100980411

 

 

I don't want to take too much oxygen from the actual news, but I dislike when they say the "average" American household is earning less when the data says "median."  Either one going down is bad, of course, but conflating the terms is still amateurish.

It appears all that 'new' wealth on Main Street is starting to affect housing and this drop came in the middle of the summer buying season. Also, that median price has a long way to fall before it returns to a historic balance between income and home costs. We would have been much better off, long term, if they had not blown another housing bubble.

 

New-home sales hit lowest rate since October

"WASHINGTON (MarketWatch) — Sales of new homes slumped in July with each region seeing sizeable drops, in a move that raises questions about the recovery in the housing market."

"New-home sales fell 13.4% to a seasonally adjusted annual rate of 394,000 in July, the lowest rate since October, the U.S. Department of Commerce reported Friday."

"Also Friday, the government reported that the median price of new homes ticked down to $257,200 last month. The supply of new homes on the U.S. market in July jumped to 5.2 months at the current sales pace — the highest since January 2012 — from 4.3 months in June."

http://www.marketwatch.com/story/new-home-sales-hit-lowest-rate-since-october-2013-08-23?dist=lcountdown

 

Must have more QE. If not all is lost. America has become the new Japan, without cheap money and QE dumps the economy will return to negative terrority.

 

US durable goods plunge in July, cast shadow over Q3

"Orders for long-lasting U.S. manufactured goods recorded their biggest drop in nearly a year in July and a gauge of planned business spending on capital goods tumbled, casting a shadow over the economy early in the third quarter."

http://www.cnbc.com/id/100987214

 

 

 

Is ‘right-sizing’ government hurting Ohio’s economy?

 

Ohio has lost government jobs at a steeper rate than most of the United States since January 2009, and the cratering public sector is having a negative impact on the state’s overall economic recovery.

 

During the past 4 1/2 years, a period that includes the end of a national recession, Ohio has shed 47,900 federal, state and local government jobs for a 6 percent drop, according to the U.S. Bureau of Labor Statistics.

...

Ohio has added 10,100 net jobs in that time, counting all nonfarming employment.

 

“This phenomenon has certainly taken steam out of the recovery,” said Karl Kuykendall, an economist with IHS Global Insight, who said employment in Ohio would be 16 percent higher had the public sector remained at its mid-2010 level.

 

“Normally I would go along with my professional brethren and say it’s time the public sector took it in the shorts,” said Edward “Ned” Hill, a conservative Cleveland State University economist, talking about the traditional conservative theory that smaller government is better government.

 

“But this recession was different. We faced 1932. It’s the deepest recession we’ve faced since 1936, and the recovery’s been absolutely, brutally painful.”

 

http://www.dispatch.com/content/stories/local/2013/08/26/right-sizing.html

 

Austerity failed in Ohio.  The Democrats' 2009 jobs bill included federal funding for states to keep public workers employed to forestall a deeper recession. That probably prevented double digit unemployment.

 

Note that  Kasich made a tax cut for his buddies, the top earners.

Bootstraps fellas. Bootstraps!

I'm inherently skeptical of anyone who says that if public employment were 6% higher, overall employment would be 16% higher.  That said, the public sector workforce is the least of the burdens of government.  The regulatory state is the worst (actively preventing job creation and capital formation, among a host of lesser pernicious effects on development, the environment, and more), and the entitlement state is a close second.  At least public employees are being paid to do something useful, even if the perverse dynamics of public sector unionism often allow them to suck more wealth out of their communities than is sustainable.

Hey!  Public sector unionism is no more "perverse" than bankruptcy, pal.  Talk about sucking the wealth out of society.

US home prices rise at marginally slower pace: S&P/Case Shiller

http://www.cnbc.com/id/100988918

 

Check out the video interview with Shiller, it worth the time.

"and the entitlement state is a close second."

 

I'd like to amend "entitlement" to include Disability.  Most people are not aware of the extent of the problem that disability payments represent.

 

 

 

 

 

Do you care to elaborate or refine what you mean by disability?

"and the entitlement state is a close second."

 

I'd like to amend "entitlement" to include Disability.  Most people are not aware of the extent of the problem that disability payments represent.

 

 

I was eating at a fast food court in a rural truck stop yesterday and I'd say half the people in there were on disability. They were talking about it too; how they got on it and getting their payments. They were all fat.

I'd say fraud within the safety net system is the problem, not the system itself.  Too many people collecting disability or workers' compensation who are not really disabled or injured.  Too many people claiming to be single parents when they really are not.  Too many people claiming to be unemployed who are really working under the table.  Too many employers using under the table workers to their advantage and profit.

 

And then don't get me started on people (corporations are people too!) who cheat on their taxes by underreporting their income (or not reporting it at all), those not paying sales or other taxes for cash purchases, and those hiding money overseas and then claiming bankruptcy here in the states. 

^Case in point, the Long Island Rail Road disability scandal: http://www.nytimes.com/2013/07/02/nyregion/600-long-island-rail-road-retirees-lose-disability-pay-in-us-inquiry.html?pagewanted=all

Hey!  Public sector unionism is no more "perverse" than bankruptcy, pal.  Talk about sucking the wealth out of society.

 

Hah.  Bankruptcy is an effect of wealth getting sucked out of society, not a cause.  After all, if someone has $1000 but owes $10,000, the wealth is already gone whether the person declares bankruptcy or not.

Not when the other $9,000 is in a Cayman Island bank account, 'gifted' to a business partner's daughter's ex-roommate, or tucked away in some trust fund for the debtor's kid ;)

 

For all these safety nets, including bankruptcy, I just wish we could do a better job of rooting out those who are gaming the system.  The problem is that would require investment and, gasp, government workers.  Unless...... I GOT IT...... we privatize investigation and enforcement, making it a for profit business paid on commission by how much savings result from exposing the fraud.

Gaming the system is harder than you think, at least without direct Congressional help in writing the rules in the first place.  And very few Republicans or Democrats have genuine sympathy for those who attempt to use offshore tax shelters and bankruptcy to hide assets.  That's one of the few times when they can be on the banks' side (which is basically always a given) and still claim the moral high ground.  The U.S. Department of Justice has a separate office dedicated just to rooting out bankruptcy fraud and bankruptcy crimes, and even if you don't get in criminal trouble, they can make sure you don't get the general discharge of your debts that is generally the goal of a bankruptcy filing.

^Case in point, the Long Island Rail Road disability scandal: http://www.nytimes.com/2013/07/02/nyregion/600-long-island-rail-road-retirees-lose-disability-pay-in-us-inquiry.html?pagewanted=all

 

link broak

The Doc who faked the reports got eight years in prison: http://www.nytimes.com/2013/07/02/nyregion/600-long-island-rail-road-retirees-lose-disability-pay-in-us-inquiry.html?

 

People cite these anecdotes about fraud, but my partially disabled brother couldn't get much. When he crushed his arm and was out of work for six months, he only got food stamps to make up for the tiny $1000/month pay that he was missing.

 

About five dollars a day in food stamps

^That link is not working.

 

http://longisland.news12.com/news/600-retired-lirr-workers-lose-disability-pay-due-to-scam-1.5609155

 

Why aren't the 600+ people not in jail????? Not enough room of course. I assume.

^in jail or made to pay back what they received for free. I think simply paying back their ill gotten goods with interest would be a far worse punisher.

Perhaps this article and MAPS got whacked in the Great UO Crash of 2013. If so, I'm resposting it. And damn, the American south is one poor area. It looks like this economic swamp starts about Chillicothe and continues all the way to the Gulf Coast.........

 

5 Maps That Show How Divided America Really Is

http://www.theatlanticcities.com/jobs-and-economy/2013/06/5-maps-show-2-different-americas/5824/

As long as the big investment firms keep buying, the housing market will remain above water, but if they stop and these numbers also keep falling, prices will collapse. Maybe household incomes actually needed to rise to sustain the new housing bubble? What a concept.

 

There Is Now No Doubt That Rising Mortgage Rates Are Hitting The Housing Market

"The Mortgage Bankers Association's (MBA) latest weekly survey of mortgage applications showed plunging numbers across the board.

Mortgage applications for the week ending September 6 fell 13.5% from a week ago. This is a five-week low.

Refinancing activity plunged 20% to its lowest level since June 2009."

Read more: http://www.businessinsider.com/mba-mortgage-applications-september-6-2013-9#ixzz2ecUJU4wq

 

Mortgage apps plunge, refinancing hits 4 year low as rates soar

"That puts the index at its lowest since November 2008 and the depths of the financial crisis."

http://www.cnbc.com/id/101025316

 

Home values rise, but millions still drown in debt

"The negative home equity rate fell in the second quarter of this year, the fifth straight quarterly drop, but it is still alarmingly high and continues to hamper the housing recovery.

Currently, 23.8 percent of homeowners with a mortgage, or approximately 12.2 million, owe more than their homes are worth, down from 15.3 million one year ago, according to the report. Some, however, are still so far underwater that even with fast-rising prices, it will take years for them to see any home equity."

http://www.cnbc.com/id/100995592

 

The U.S. attorney’s office in Springfield has been busy the past few years investigating a variety of fraud schemes involving state grants. Thirteen people have been charged so far, six who have pleaded guilty.

 

Two of them have ties to President Barack Obama. One is the daughter of his controversial former pastor, the Rev. Jeremiah Wright. Another was chief of staff to Obama’s longtime friend Eric E. Whitaker when Whitaker was Illinois’ public health chief.

 

In all, prosecutors are alleging a total of $16 million in fraud involving state health or commerce department grants and contracts.

http://www.suntimes.com/22212263-761/watchdogs-tally-in-illinois-grant-fraud-probe-so-far-13-charged-16m-embezzled.html

^The website darkhelmet.com is also reporting that one of those two is The Donald's father's brother's nephew's cousin's former roommate

One is the daughter of his controversial former pastor

Is that the best that you can do?

No way. There must be a mistake.

 

Banks sued for alleged Libor manipulation

"JPMorgan Chase, Barclays, Credit Suisse and 10 other international banks have been sued by a federal credit union regulator on charges they manipulated a financial benchmark used to set rates on trillions of dollars in loans.

The National Credit Union Administration lawsuits charge that the banks conspired to rig Libor, the daily London Interbank Offered Rate that's used to set the rates on mortgages, car loans, student loans, credit cards and complex financial derivatives contracts."

http://www.usatoday.com/story/money/business/2013/09/24/libor-manipulation-lawsuit/2859893/

 

 

Here is a idea, why not let home prices rebalance with income levels? All they did was blow another giant bubble that is unstainable and will continue to cause damage to the housing market for years to come (and the economy). Its amazing how desperate our nation has become to flip or sell houses.

 

Long-feared mortgage meltdown is here

"Atlantic Equities analyst Richard Staite projects a 55 percent year-over-year decline in third-quarter mortgage production revenue for the eight large-cap U.S. banks he covers, which in addition to JPM and Wells Fargo include Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, PNC Financial Services Group and U.S. Bancorp.

That's a huge figure, reflecting in part the spike in refinancing activity in the third quarter of 2012, however, Staite expects mortgage revenue for the group to decline 45 percent quarter-over-quarter."

http://www.cnbc.com/id/101055006

 

Do you live in Colorado, Ragerunner? I hope the floods didn't affect you. In my dreams, I am going to move to the Front Range and be 90 minutes from some great nordic skiing.

Yes, in the Denver region. We had no flooding or issues in our area, but thank you for asking. We love it here, lots of sunshine, quick easy access to just about everything outdoors you can think of and Denver is turning into a great metro area with all of its TOD and transit developments. Hope you get to fulfill your dream one day.

I wonder how many American's got a 12.4% raise in July?

 

U.S. Home Prices Climb at Fastest Clip in 7 Years

"Index Shows 12.4% Annual Increase in July, but Signs Emerge of Moderating Gains"

http://online.wsj.com/article/SB10001424052702303759604579094982298639724.html

I have friends from way back from Evergreen, CO. I haven't heard of any problems. I haven't heard from them at all, actually.

WOW, the NAR finally said it, prices are just to high to support the housing market.  :drunk:  You think!!! Sales have now fall in June, July, and Aug three of the four main selling months of the year.

 

Pending home sales fall 1.6% in August

"WASHINGTON (MarketWatch) -- Sales contracts on homes fell 1.6% in August -- a third month of declines -- led by drops in three of four U.S. regions, according to data released Thursday by the National Association of Realtors. NAR cited higher interest rates and prices, among other factors."

http://www.marketwatch.com/story/pending-home-sales-fall-16-in-august-2013-09-26-1091014

We just keep kicking the can and sticking our heads in the sand, hoping magic will save us.

 

The Fed's 'hidden agenda' behind money-printing

"I believe that one of the most important reasons the Fed is determined to keep interest rates low is one that is rarely talked about, and which comprises a dark economic foreboding that should frighten us all."

"Thanks to the Fed, the interest rate paid on our national debt is at an historic low of 2.4 percent, according to the Congressional Budget Office."

"But isn't it fair to ask what the interest cost of our debt would be if interest rates returned to a more normal level? What's a normal level? How about the average interest rate the Treasury paid on U.S. debt over the last 20 years?"

"The CBO estimates that by 2020 total debt held by the public will be $16.6 trillion as a result of the rising accumulated debt.

Do the math: If we were to pay an average interest rate on our debt of 5.7 percent, rather than the 2.4 percent we pay today, in 2020 our debt service cost will be about $930 billion."

"In 2012, that amount was $1.1 trillion, meaning that if interest rates went back to a more normal level of, say, 5.7 percent, 85 percent of all personal income taxes collected would go to servicing the debt. No wonder the Fed is worried."

http://www.cnbc.com/id/101062461

^Believe it or not, vindication might actually be just around the corner  :clap:

This has been discussed in the past, but if the US ever loses its reserve status the game is up.

 

China's State Press Calls for 'Building a de-Americanized World'

“It is perhaps a good time for the befuddled world to start considering building a de-Americanized world.” As nations around the world fret over the U.S. budget impasse, that is the conclusion of a not-so-subtle commentary published by China’s official Xinhua News Agency on Oct. 14.

Key among its proposals: the creation of a new international reserve currency to replace the present reliance on U.S. dollars, a necessary step to prevent American bumbling from further afflicting the world, the commentary suggests.

“The cyclical stagnation in Washington for a viable bipartisan solution over a federal budget and an approval for raising the debt ceiling has again left many nations’ tremendous dollar assets in jeopardy and the international community highly agonized,” says Xinhua. “The world is still crawling its way out of an economic disaster thanks to the voracious Wall Street elites,” it adds."

http://www.businessweek.com/articles/2013-10-14/chinas-state-press-calls-for-building-a-de-americanized-world

The thing of it is, in the world of fiat currencies, any half-baked government can create a currency.  Getting buy-in from commercial parties and other governments takes a few more carrots and a few more sticks than that.

 

Even China doesn't have those carrots and sticks.  It has lots of carrots and lots of sticks for other purposes, but grounding an international reserve currency isn't one of them, because the single greatest threat to any currency is its issuing authority.  This was true even in the old days when there were such things as private currencies, and it's true even of nascent attempts at private currencies today like BitCoin.  The two things that can truly collapse a currency are the collapse of the issuing authority and the self-interest of the issuing authority.  China is safe on the former, but even the inflationary antics of the Federal Reserve are nothing next to the level of politicization of monetary policy in China.  And we know what the rule of law is like in China.  The notion that China would develop the discipline necessary to underpin a reserve currency, even a blended one (i.e., not just the renminbi in disguise) is preposterous, notwithstanding all that China has done in the past generation to shed its communist trappings.

 

The U.S. has its problems.  That fact alone isn't going to make the world jump into China's arms.  And the places that *are* embracing Chinese influence tend to be Third World basket-case countries that don't particularly like the fact that the U.S. occasionally allows Western noneconomic values to influence its international relations.  That may cost us access to African conflict diamonds and such natural resources, but whatthef***ever.  The EU may grumble about us, and they even set up their own currency to try to have some more monetary heft vis-a-vis us and globally, but even if they dump the euro, they're not going to shack up with China to bump us out of bed.

The problem with China (for themselves at least) is that each time they institute quality-of-living improvements such as wage increases, first-world environmental protection laws and other regulations it decreases interest by Western nations and even Japan to some degree in continuing production there.

The problem with China (for themselves at least) is that each time they institute quality-of-living improvements such as wage increases, first-world environmental protection laws and other regulations it decreases interest by Western nations and even Japan to some degree in continuing production there.

 

China, like most have more than their share of problems. One of the reason the US has been able to continue it current debt binge is because most of the big boys, Europe, Japan, etc. are in the same mess.

Even with a budget impasse fixed or kicked down the road, look at what Dimon has to say about the bond market. It's going to turn on the US sooner than later.

 

Dimon Says Bond Market Turn Assured on Budget Impasse

"He was asked today whether bond markets would turn against the U.S., which has been able to borrow at near-record-low rates.

“I can’t honestly tell you I know it’s going to be two years or five years, but it will happen,” Dimon said. “It is a matter of time and the United States can’t borrow indefinitely.”

Dimon joins Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co., in raising alarms about the effects of government debt on bond rates."

http://www.bloomberg.com/news/2012-10-10/dimon-says-bond-markets-to-spurn-u-s-if-deficit-is-unresolved.html

 

Shiller's Lesson: Housing Was Never a Great Investment

"You have probably heard it a million times: Buying housing is better than renting because renters forgo the opportunity to accumulate equity in real estate. There was even a time when people thought that it was worth promoting homeownership because it reduced crime, although more recent research has found that areas with high rates of homeownership have less flexible labor markets and lower rates of entrepreneurship. Yet the biggest problem with the conventional wisdom is that home equity just isn’t a great place to put your money -- especially if the tax code ever gets fixed. This doesn’t mean that buying is inherently inferior to renting, but it does mean that many prospective buyers might be better off renting and accumulating wealth in other ways."

http://www.bloomberg.com/news/2013-10-16/shiller-s-lesson-housing-was-never-a-great-investment.html

^ A lesson that is still very much in my mind even though I've recently joined the ranks of homeowners.

 

Then again, Akron was just mentioned on Trulia and in the HuffPo (which ran with the Trulia ranking) as the <a href="http://www.huffingtonpost.com/jed-kolko/where-americas-middle-cla_b_4078847.html">most affordable metro area</a> for homeownership in the country, so we admittedly got a pretty decent house for a fraction of what we'd have paid elsewhere.  And, by contrast, the rental market for houses (as opposed to apartments) is very thin in Akron.  For most people, I feel comfortable continuing to give the same advice I've always given, even if I've ignored it myself because of the local market.

I guess someone has to step in to update this thread with tidbits of news that the sky might actually not be falling....

 

According to the BLS household survey, part-time jobs fell 594,000 in September while full-time workers were up 691,000.

 

http://finance.yahoo.com/news/myth-obamacare-causing-part-time-135441398.html

 

 

 

 

The thing of it is, in the world of fiat currencies, any half-baked government can create a currency.  Getting buy-in from commercial parties and other governments takes a few more carrots and a few more sticks than that.

 

Even China doesn't have those carrots and sticks.  It has lots of carrots and lots of sticks for other purposes, but grounding an international reserve currency isn't one of them, because the single greatest threat to any currency is its issuing authority.  This was true even in the old days when there were such things as private currencies, and it's true even of nascent attempts at private currencies today like BitCoin.  The two things that can truly collapse a currency are the collapse of the issuing authority and the self-interest of the issuing authority.  China is safe on the former, but even the inflationary antics of the Federal Reserve are nothing next to the level of politicization of monetary policy in China.  And we know what the rule of law is like in China.  The notion that China would develop the discipline necessary to underpin a reserve currency, even a blended one (i.e., not just the renminbi in disguise) is preposterous, notwithstanding all that China has done in the past generation to shed its communist trappings.

 

The U.S. has its problems.  That fact alone isn't going to make the world jump into China's arms.  And the places that *are* embracing Chinese influence tend to be Third World basket-case countries that don't particularly like the fact that the U.S. occasionally allows Western noneconomic values to influence its international relations.  That may cost us access to African conflict diamonds and such natural resources, but whatthef***ever.  The EU may grumble about us, and they even set up their own currency to try to have some more monetary heft vis-a-vis us and globally, but even if they dump the euro, they're not going to shack up with China to bump us out of bed.

 

Don't be so sure that the Chinese government can't collapse.  The nation itself is an order of magnitude more sectionalized than the USA. 

 

But the main thing to recall about China is the powers that be are quite actively opposed to general prosperity.  They're more interested in maintaining the pyramidal society that China has always been.  That's why they spend money on infrastructure, and international loans and influence buying.  They don't want it trickling down to their masses.

Speaking of how the big investors have been driving the housing 'recovery'.

 

Blackstone Funding Largest U.S. Single-Family Rentals

"Blackstone has led hedge funds, private-equity firms and real estate investment trusts raising about $20 billion to purchase as many as 200,000 homes to rent after prices plunged 35 percent from the 2006 peak. The largest investors, seeking to profit from rebounding prices and rising demand for rentals among millions of Americans who went through foreclosure or can’t qualify for a mortgage, are looking to the bond market for capital to buy more properties and increase returns with borrowed money."

http://www.bloomberg.com/news/2013-10-23/blackstone-creating-rental-home-bonds-after-buying-spree.html

Brent Crude Traders Claim Proof BFOE Boys Rigged Market

"Some of the world’s biggest oil companies including BP Plc (BP/), Statoil ASA (STL), and Royal Dutch Shell Plc conspired with Morgan Stanley and energy traders including Vitol Group to manipulate the closely watched spot prices for Brent crude oil for more than a decade, they allege. The North Sea benchmark is used to price more than half the world’s crude and helps determine where costs are headed for fuels including gasoline and heating oil."

http://www.bloomberg.com/news/2013-11-06/brent-crude-traders-claim-proof-bfoe-boys-rigged-market.html

But the main thing to recall about China is the powers that be are quite actively opposed to general prosperity.  They're more interested in maintaining the pyramidal society that China has always been.  That's why they spend money on infrastructure, and international loans and influence buying.  They don't want it trickling down to their masses.[/color]

 

Yes. Like pre-Trustbust and post-2000 us.

But the main thing to recall about China is the powers that be are quite actively opposed to general prosperity.  They're more interested in maintaining the pyramidal society that China has always been.  That's why they spend money on infrastructure, and international loans and influence buying.  They don't want it trickling down to their masses.[/color]

 

Yes. Like pre-Trustbust and post-2000 us.

 

Oh, way more than that.  At its worst, that's people with an agenda not caring all that much about the consequences.

 

This is intentional.  A matter of social policy.

Andrew Huszar: Confessions of a Quantitative Easer

"We went on a bond-buying spree that was supposed to help Main Street. Instead, it was a feast for Wall Street."

 

"I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time."

"In its almost 100-year history, the Fed had never bought one mortgage bond. Now my program was buying so many each day through active, unscripted trading that we constantly risked driving bond prices too high and crashing global confidence in key financial markets. We were working feverishly to preserve the impression that the Fed knew what it was doing."

http://online.wsj.com/news/articles/SB10001424052702303763804579183680751473884

 

 

Warren: End 'too big to fail'

Author: By CNN's Bryan Koenig

"Five years after the financial crisis, there remain banks that are "too big to fail," Warren warned. She called for sharper regulation of banking institutions and, more specifically, a revised version of the Glass-Steagall Act, the Depression-era law which restricted the role of certain financial institutions.

"The last thing we should do is wait for more crises" before doing something to prevent them, the senator said in her prepared remarks."

http://www.kxly.com/news/politics/Warren-End-too-big-to-fail/-/116124/22935698/-/op06ptz/-/index.html