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Friday, November 19, 2010
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46 comments:
Here is an interesting exercise for all those "if I were President" types out there -- how good are you at balancing the budget?
http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?hp
I was able to wipe out the long term debt fairly easily. Surprisingly, the short term was a little harder to get rid of. My reductions were done 87% through cuts in govt spending, and 13% tax hikes.
The Anon, thanks for a very cool link.
Anon's balance budget calculator
It was surprisingly easy for me (I ended up with 41% increases; 59% cuts), but I obviously don't know everything that I should know about the consequences of all of these options.
Realistically, there are some compromise positions not shown on the chart (overly complicated) that I'd be more comfortable with.
I did it with 92% tax work
and less then 10% spending cuts.
Frankly all i did was I rolled back the bush tax cuts to the Clinton level, I added a bank tax and VAT and i put in a tax cap on high end medical plans.
then after that i slashed the afghan war.
What is amusing is you can do it by putting on the opponents hat I did try the slash all spending, but, it got pretty crazy when i did things like increase DoD and cut taxes.
inventory peaked in Arl... no new listings today! ugh!!!
date/Available/Total
11-19/718/1036
11-18/721/1040
11-17/726/1042
11-16/738/1043
11-15/740/1052
11-14/747/1057
11-13/750/1054
MM, is the ugh because you can't find anything new and interesting? If so I'll ad a double ugh!
http://franklymls.com/DC7373765
listed at 350K, Sold at 409K
Asssessed at 449K
I agree it is an interesting calculator. I would be curious on how/if they dealt with the consequences of everything. For example every spending cut/tax increase reduces the amount of money that is spent. This reduces incomes and thus the tax base.
It is possible they put this into the calculator, but I am a little doubtful. Either way it does show how easy it is to at least reduce, if not solve the deficit problem. Obviously it will make a lot of people unhappy to remove their programs/increase taxes but this is just a fact of life.
Does anyone know if builders prefer big plots of land or if they like buying them already divided? and thoughts on high density subdivision?
HB
http://economix.blogs.nytimes.com/2010/11/13/behind-the-timess-deficit-project/
Most whining about tax effects is usually supply siders hoping for magical effects. the reality is you cut taxes, you cut income, you increase taxes, you increase income.
most taxes aren't strong enough to drive any decision.
Pat-
Thanks for the link. Although I am not a supply sider in general most economic arguments have some merit to them.
Cheryl
In regards to the foreclosure mess and robo-signing, all i can say is
Banker 101 is "Perfecting security interest". It's real basic law, how a bank establishes a security interest using UCC and state statute.
It appears to me that the banks breached their security interests.
Which is fine, as you point out they still hold debt, it's just if they breached the security interest they went from secured creditors to unsecured creditors, which means that the debtors who owe lots of money and are underwater can file bankruptcy and get their debts crammed down.
they won't get a free house, but can they get a write down sure.
http://franklymls.com/DC7419992
assessed at 334K
listed 275, sells for 255K
This Zillow analysis of the Case-Shiller data and its seasonal biases is pretty interesting. The cliff notes are that the CS seasonal data is less reliable these days because of the large swings in foreclosures as a percentage of all sales in recent years.
Loqi Depends on where the land is located. Builders are building out lots they have been holding in places like Warrenton so they may go to the expense of buying a big parcel and putting it through subdivision approval. If an owner has already gotten subdivision approval, the lots will sell for more. If you have a big parcel in Fairfax Co. and maybe even Loudoun Co. or Prince William Co. that has not been subdivided, you could talk to the local zoning authority and see what the timing and cost would be to subdivide the property. I have heard that the farther out Maryland counties have not started to sell again, so builders are not actively pursuing land in those locations.
Jeremy-
I think Shiller has also told people not to use the seasonal adjustments, because they are not as accurate as they used to be.
All-
Recently I have noticed a ton of new homes for sale where a builder has torn down a house and built a new one without a buyer. Has anyone else noticed a large number of new houses over the last month or so?
"I'm a bit concerned when you say that the property is "worth $450,000" but it's listed at $389,000 and you haven't had an offer. If the property were really worth $450,000 and you were offering it for $389,000, you'd have sold it almost immediately, with a line of buyers out the door.
The fact that you haven't had any offers tells me that your property is worth substantially less than $389,000 in the current market. If it the true market value were $370,000, for example, you'd have probably had at least one or two offers.
You should have a conversation with your agent about what similar homes in the neighborhood have sold for, and then you should go to see a few competing homes that are listed for sale so you can see what you're up against, and at what price point. My best guess is that if you drop the price to a level somewhere close to the sales price of those comparable homes (the so-called "comps"), you'll have a far better chance of selling your property.
If you decide you don't want to sell at that price, then you should pull your home off the market and wait a few months until you can successfully refinance. Use the time to shop around for a quality lender who can help you at the right price. Since your mortgage amount is low, you should look at refinancing to a 15-year loan at 4 percent or even 3.5 percent. You should be able to keep your payments the same, while shaving years off of your mortgage.
"
The columnist has good advice but misses the important part.
If you think its worth 450 because you paid that much in the bubble and you hold a 389 mortgage but it's really worth 330, you may not be able to refinance without putting money down.
If the comps are 330 a FHA 90% may require you to put down 89 K
So you may have to short sell
contrarian & pat-
It is always funny when you see people that think their house is worth so much more than what the market...
It is possible that they have a small mortgage. They may have bought the house a long time ago, they just think it is worth 450K because similar houses sold for this much a few years ago...
HB Where are you seeing this uptick in new spec houses? Builders have been doing spec houses on tear down lots in the older suburbs for years. I know of at least 20 in Arlington. Older apartment buildings have been torn down too and replaced by new rental buildings in the neighborhood of the Quarter Deck (Va Investor's old hangout). There are even some old red brick apartment buildings off Washington Blvd which are being expanded. I knew this had been done to some apartments off Columbia Pike, but I stopped by the site the other day and it is an interesting idea to take older smaller apartment and do additions to them.
reecon-
The largest uptick in spec I have seen is in Falls Church. I have seen smaller upticks in Vienna, Dunn Loring, Arlington.
I don't have any stats, so its possible I am just noticing them now for some reason.
http://franklymls.com/DC7348839
assessed at 421K, sells for 165K.
http://franklymls.com/AR7431742
assessd at 386 sells at 270 but Immunington never goes down.
Contrarian So the seller is the brother of a former president and the real estate agent is the wife of a former senator from Virginia. If you weren't such a contrarian I would tell you where they moved to. Hint it is in Immunington and about three blocks from my humble abode.
HB Maybe builders were able to get foreclosures and short sales in some of the areas at prices low enough so that they could tear down and re-build. Two builders I talk to in Arlington told me that they bought some houses in 2008 and rented them while the market was soft. They are tearing down the houses and starting to build in the spring. Maybe the other builders are seeing enough activity to build some spec houses.
HB
Most economic theories have some argument to them, even if its the barking of dogs or the howling of the wind.
Supply side theory was garbage.
Both Europe and russia had enormous taxation and yet high production, innovation and many measures of progress.
The 50s were high marginal taxes and yet people were prosperous.
Pat-
As I said I am not a big fan of supply side arguments, but if you are going to use the 50s and Europe Russia as an argument against it I could take the other side by saying the 90s and Canada, US, Japan, Australia, and Switzerland and the UK have some of the highest per capita GDPs and they all have very low marginal rates compared to Europe.
So although I think it is not a great theory its hard to say that it has no merit. In reality with macro theories its very difficult to tell what makes countries do well/poorly because there are too many variables to consider.
HB, I hesitate to get into your discussion of SSE (since there is controlled research on the topic, and I am not an economist), but if you look at the list of GDP per capital (controlling for cost of living), you have quite a few high tax countries and oil-rich countries (allowing for lower taxes) among the leaders also.
GDP
"per capita", that is.
Contrarian Yes, that is why we are trying to dispose of the remaining family properties this year. We are probably going to hold my wife's family farm in Fairfax as it is small with low taxes and near George Mason Univ. There is always a chance that the university might buy it. They have some very wealthy benefactors who would like to have some more sports facilities at the campus.
Ace-
I agree my point was not that low taxes are necessarily good for GDP/capita instead I was trying to show that its not necessarily a bad thing. Pat made it sound like SSE clearly doesn't work and its bad to have low taxes and I just don't think the data is clear. Like most macro theories you can not control for all of the other variables so the data is mediocre at best. There are clearly people who are strong believers and disbelievers of SSE, because depending how you look at the data you can support either side.
Hey reecon,
Did you ever go to Whitey's in Arlington? Famous for it's broasted chicken?
Now that was a regular hangout. It had a nice bar, cheap pitchers, band in the front window, all comfy booths and a backroom with pool tables.
Once the Post reviewed it. They called it "breasted" chicken throughout the article (HAHA) and it was packed ever since with lines down the block. We were stunned and more than aggravated. This was our place and now overrun with strangers.
We had to move on.
p.s. early to mid 80's.
"contrarian said...We are still in the early phases of the housing collapse."
Right, right. I wish the blogs had been around for longer. I could see older versions of permabears like Contrarian saying the same thing for decades:
1970 Price = 47K
OldContrarian said -- "we are still in the early phases of the housing collapse"
1980 Price = 89K
OldContrarian said -- "we are still in the early phases of the housing collapse"
1990 Price = 168K
OldContrarian said -- "we are still in the early phases of the housing collapse"
2000 Price = 181K
OldContrarian said -- "we are still in the early phases of the housing collapse"
2010 Price = 302K
OldContrarian said -- Nothing -- he died of old age, with prices 255K higher than they were when he first started warning of "collapse".
I have a funny feeling that history will be repeating itself here.
"Contrarian said...The 2005 price was $500K, so now it was dropped from $500K in 2005 to your alleged $302K in 2010. That is a 40% drop in five years!"
Yep, and like all permabears, you saw that historic, once in a lifetime sized drop and concluded "nope, we are nowhere near the bottom yet".
The same happened to your permabear predecessors. As the 1990 price of 168K bottomed 6 years later at 157K, the permabears at the time said, "its still early -- we have much further to fall". They passed on those once in a lifetime prices and are still waiting, 14 years later, convinced its still "early".
That right there is the difference between bears and permabears. Permabears "know" they are right and think if they wait long enough, they will be proven as such. Bears dont ignore facts when they dont go their way. Bears "think" prices will go to X, but if they dont get all the way down, they admit they could be wrong and turn bullish (i.e. they buy), forming a bottom.
Why do you think it is that 90% of the bears who used to regularly comment here no longer post? The vast majority of them bought, and among those that didnt, they realize now that the writing was on the wall, and they have moved on. As they have in the past, they create bottoms, thereby thwarting other more pessimistic people such as yourself.
If 100 people want something, and only 85 of those things exist, the 15 most pessimistic people will be priced out by the other 85. Still, im sure its different this time. Im sure it is still "early" and prices will drop the full 90% that you know will happen. Remember, all those other bears who bought are wrong and you are right -- and dont let anyone else tell you otherwise!!!
contrarian,
You have consistently been the most negative of all the negative posters on the blog. I think you need the reality check. You are not "just a bear."
"Contrarian said...I'm just a "bear," Anon."
Like hell you are. Bubble blogs are (or were) by their nature, bearish. Yet even when we ran 100+ comments a day, nobody, and I mean NOBODY could hold a candle to you.
"Contrarian said...But, I look at the facts. And, the facts are: eighteen months ago, there was 200 banks on the list of risky banks. Today, there are more than 900."
You look only at the facts that suit you, and ignore ones that dont (like rising prices and slowly rising inflation). So early on we had 200 risky banks and falling prices. Now we have 900 risky banks and rising prices. How much more do prices have to rise before you conclude that an increasing # of risky banks does NOT NECESSARILY = falling home prices?
"Contrarian said...And you think the worst is over. You, just like "'The bottom is in' CRT" and Robert, are simply in denial. Completely ignorant of the facts - facts published in the media every day. Totally delusional. Diagnosis: RDD - Reality Detachment Disorder."
Really, I am delusional??? Remember when you chastized me, MM, & a few others for being members of "ADD Assets deflate daily anonymous" and wondered when, if ever we would liquidate everything like you did? Remember how you said this 1 day before the March 09 stock market bottom and one of the biggest runups in history?
Remember when in Sept/Oct 09, you said I was "naive" for thinking that the dow would not be below 6600 by Oct 2010?
Do you want me to find the exact quotes and publicly embarass you once more?
Contrarian-
There are a lot of banks on the problem list, but they are all small. The total assets of all 900 banks are smaller than Lehman and way less than the combination of Lehman, Bears, WaMu, Indimac... Smaller banks just don't mark to market their loan portfolio so they continue to weaken as the losses slowly occur.
So the list will likely continue to grow, but it is a bunch of small banks that are fairly insignificant to the economy. Unless we start seeing weakness in the top 10-20 banks that control 90+% of assets the problems are manageable.
I am sure that you can find sites, that claim these banks are insolvent, but if you use any standard banking metric these banks have the strongest balance sheets they have had in years.
"Contrarian said...Only the most delusional people would think the worst is behind us when the facts state otherwise."
OK so again, 2 years ago there were 200 risky banks and falling prices. Now there are 900 risky banks and rising prices. Based on that, we can see the corelation between the # of failing banks and price direction is (a) either inverse or (b) nonexistent.
Still, you continue to insist there is a corelation, that will eventually reassert itself, but cannot tell us (a) what will cause it, or (b) when it will happen.
Add to this your miserable track record of calling stock market peaks and bottoms, why should any of us put any stock into anything you say?
Put another way, you have been wrong about the timing and severity of things again, and again and again -- what makes it "different this time"?
"contrarian said...
I never said we were going lower in March 2009, in fact I knew we were near a bottom. But, I also knew it was only a temporary bottom in a much larger collapse. Your claim that I said we were going lower in 2009 is a complete fabrication of the facts.
11/22/10 3:53 PM"
Contrarian, did you say this:
___________________________________
"Contrarian said...
The Anonymous, are you naive enough to believe that at this time next year the market will not be lower than it was back in March (2009)?
9/30/09 11:33 AM"
http://novabubblefallout.blogspot.com/2009/09/northern-virginia-bits-bucket-9282009.html#comment-2463858820118826913
___________________________________
Did you say this, yes or no?
By the way, I do expect an answer.
Your usual M.O. is to rely on your history of deletions and say "thats not what I said" and then when cornered, with no other answer, you just run away and go silent.
If you think I am contemptouous of you now, I urge you, for the sake of everyone else on this blog who has to suffer through our assinine back and forth, please answer the question.
So again, regarding the post directly above, did you say this, yes or no???
Contrarian-
I know that half of GE is a banks, but I think you are mistaken if you think banks are in worse shape than before. Over the last 2 years most of the major banks have raised billions in capital, earned billions to increase their capital, reduced their loan obligations, and taken on less risky loans (e.g. sell loans made in 2006 and loan people who put 20% down and have jobs money instead)..
Anon-
Yes he said the market was going lower in march 09 he also has said it almost every week since then. He claimed that European sovereign failures would tank the market. Two weeks ago the market passed its post Lehman highs.
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