Investment adviser Peter Schiff caused quite a stir last year when he predicted in this blog (READ HERE) that O.C. home prices could fall by half in a downturn. Schiff, president of Euro Pacific Capital and author of the hot-selling “Crash Proof: How to Profit from the Coming Economic Collapse,” returns to O.C. — where he worked before moving back east — on Monday to talk to an oversubscribed seminar audience. We figured we’d say “Hi!” again …
Us: O.C. prices are off 20% from the peak. You still sticking to 50%?
Peter: Yes, given the completely nonsensical increases that Orange County experienced between 1998 and 2006, a 50% peak-to-trough drop is likely the best-case scenario. However, if prices ultimately decline by less than that it will only be the result of substantial inflation, which will buoy the nominal price. Under such a scenario, while home price declines would be less pronounced, price increases for consumer goods, such as food, energy, clothing, etc will be that much greater. In other words home prices will decline in real terms … that is relative to everything else. As a result, even as home values decline, the costs associated with owning them, such as mortgage interest rates, maintenance, insurance, utilities, etc, would soar.
Us: Don’t you think the Fed and other federal boosts will slow down the economic/real estate slump?
Peter: Sure, they will slow it down, which is part of the problem. By slowing down the adjustment process they only exacerbate the underlying problems and lengthen the time it will take to resolve the imbalances.
Us: Considering your bearish views, what should a person do with their spare cash in these trying times??
Peter: Americans need to realize that their spare cash is also at risk. The Fed is debasing the value of the dollar in an effort to prop up real estate prices and the U.S. economy. The result is a big increase in the cost of living and lower living standards for most Americans. Therefore, those wishing not to share this fate need to get rid of their dollars now before they lose any more of their value. My advice is to buy precious metals, commodities, as well as non-U.S. stocks and bonds denominated in foreign currencies.
Us: What would signal we’ve hit a bottom in this cycle? Do you think there are things the government or other institutions should be doing to right the ship?
Peter: Currently the bottom is nowhere in sight. When it finally is, things will be so bad that few will be looking for one, let alone be able to spot it. What the government needs to do is to stop making the situation worse under the pretense of trying to help. The Government should be primarily concerned with restoring strength and confidence in the dollar. Unfortunately, that can’t be achieved by simply mouthing the “strong dollar mantra.” Instead real policies that will involve austerity and sacrifice need to be implemented. Although these policies will cause a severe recession, at least it will prevent America from going down the road towards hyper-inflation and financial ruin.
Us: What factors, indexes, trends, etc. might get you to change your outlook?
Peter: What we need is a return to sound money, less consumer spending, less borrowing, more savings, much-higher interest rates, huge reductions in government spending and regulations. We could also use a complete overhaul of our tax system so that it no longer punishes saving and producing and encourages borrowing and spending. If we move in this direction, my outlook will be less dire. However, nothing can stop real home prices from collapsing and the fantasy of wealth accumulation though home ownership from fading away.
What a blowhard! This is the guy who called the bubble to burst in 2000. ( About 150% too early!!!!!!! ) And people make fun of Gary Watts.
Here’s the latest from Steven Thomas, of Remax - THE most relevant real estate news for Orange County:
“Market Time Report: Demand Up 121% Since January 1st
March 20, 2008
Good Afternoon!
Since the beginning of the year, the market has dramatically improved: demand is up, the active inventory is not growing uncontrollably and expected market time has dropped substantially. Let’s dive right into the numbers for further explanation. At the beginning of the year, demand, a snapshot of the last 30 days of escrow activity, was at 944 escrows. Today, demand has increased by an additional 1,139 escrows to 2,083. The change in demand is like being stuck in bumper to bumper traffic and then suddenly, without explanation, everybody is moving at the speed limit. Demand is the real story here. Even with the liquidity issues, buyers are starting to pour back into the market, especially in the lower ranges where buyers are not affected by the financial crunch. It is still really challenging and more expensive to obtain a loan above the $417,000 conventional limit; BUT, that is changing right NOW. Lenders are scrambling in preparation for the new conventional and the FHA loan limits of $729,750, which are just beginning to hit the market. The new loan limits will have a profound impact on demand. At 10% down, the old $417,000 limit only covers 37% of the current active inventory. The new limits now encompass a staggering 75% of the inventory. And, for those consumers with some credit blemishes and/or a small down payment, the FHA allows 3% down, all of which can be a gift. It is important to clarify that the FHA is NOT subprime and has been around for years. The only reason it was not in vogue before is because the Federal Housing Administration refused to adjust the limit beyond its $367,000 level for high cost areas. At that level, only 23% of the current inventory could be purchased with an FHA loan. It took a crisis for everybody to see the light. A lot of this mess could have been avoided with higher FHA loan limits all along. Needless to say, there will be reverberations in the local housing market, which translates to increased demand.
So, how do the numbers look right now? Demand increased by from 1,893 escrows just two weeks ago to 2,083 today. We have not seen demand like this since the beginning of April in 2007. The active inventory increased in two weeks by 205 to 15,617 homes. Expected market time improved from 8.14 months to 7.50 months. It is still a buyer’s market, just not nearly as deep as the 15.60 month market at the beginning of the year. Current demand at 2,083 escrows is just 112 fewer compared to just one year ago. The inventory last year was at 13,373 homes and market time was at 6.09 months. But, the difference is that last year demand was dropping and both the inventory and market time were rapidly climbing due to the subprime meltdown. On the other hand, this year the market has been improving incrementally every day with increased demand and not as many homeowners placing their homes on the market for the first time. It will not be long before year over year comparisons in demand will be better this year. Bank owned foreclosures and short sales, homeowners that owe more on their home than the current value, now account for 33.4% of the active inventory. Lenders remain in the driver’s seat with a 2.11 month market. For buyers looking for a “deal” in purchasing a foreclosure, be prepared to compete with other buyers. Many foreclosures are being sold for their full prices. I just heard from an associate who wrote two offers for one buyer this week and they lost out on both of them because the buyer was unwilling to pay the full asking price. Statistically, short sales have an expected market time of 12.05 months. HOWEVER, I must warn everybody that this figure is grossly understated. The standard practice for Realtors® out in the field is to keep a home on the market as an active listing even though they have an offer that has been accepted by the seller until they have formal lender approval of the deal. Because the lender must take less than what is owed, short sales are “subject to lender approval.” So, when a buyer climbs into a car and finds a short sale home that they want to write an offer on, chances are that the home already has an accepted offer that is somewhere in the “lender approval” process. This process can take anywhere from a couple of weeks to months. These homes are not placed into the Multiple Listing Service as a Pending Sale because the agent and seller are willing to take a look at additional offers that may be more acceptable to a lender, typically a higher offer price.
What’s the difference between the condominium market and the detached home market? The detached home market continues to fare better than the condominium market with a 7.23 month inventory. For condominiums, there is a 7.98 month inventory, the first time below the eight month mark since April of 2007. 31% of the detached home inventory and 38% of the condominium inventory is either a foreclosure or short sale. 67% of all detached homes below $500,000 are either a foreclosure or short sale. For condominiums, 47% below $250,000 are distressed and 43% between $250,000 and $500,000 are distressed.
Buyers, what to do? According to a CNN Money article titled “Housing: Best Time to Buy in Four Years,” housing has nearly returned to “long-term norms” and that by the end of 2008 “housing markets could be broadly undervalued.” Slowly but surely, more and more headlines and articles are touching upon the fact that values have come down so rapidly that they are creating excellent buying opportunities not seen in years. Increasing demand in Orange County can definitely be attributed to value. The good news is conditions are perfect to purchase: motivated sellers, a lot of inventory, rates are low, new loan programs are available and there are great values out there right now. Buyers need to understand the local conditions and the price range that they are looking at prior to writing their first offer. In more and more areas, certain price ranges and individual homes can and will attract multiple offers and above asking price offers. Understanding the market conditions is fundamental to isolating a home. Everybody is so focused on price and value that changes in interest rates are almost completely ignored. Buyers rarely focus on a difference in interest rates. Buyers can ask for a seller to pay a point of their loan and their monthly mortgage payment drops for the life of the loan. Also, rates will inevitably increase to stave off inflation. Just as Bernanke and the Federal Reserve are doing everything in their power to increase liquidity in the financial markets, they will just as swiftly and methodically increase rates. Although we have all grown accustomed to rates staying so low, like gasoline, we will get used to rates increased to 7% or 8% or more when the time comes. In 2000, conventional rates were 8% and in 1990 they were at 10%. 71% of distressed properties are below $500,000 and 92% are below $750,000.
Sellers, what to do? So far I am pleased that most homeowners have not been fooled into placing their homes on the market with the anticipation that it is the Spring market. Here’s a dose of perspective, given current demand, there are still 13,534 sellers who will not be successful in selling their homes over the course of the next month. With only 2,083 successes over the past month, that leaves the vast majority waiting another month or months. So, if you do not have to sell your home, DON’T. Placing your home on the market takes a ton of patience, a lot of elbow grease, a very good price, and tip top condition. The more upgrades, the better condition and the better the location, the higher a seller’s chances of successfully selling. If a home does not have the upgrades or is in need of work or does not show well, it must be reflected in the price. With the market flooded with so many foreclosures and short sales, a homeowner can compete and achieve a better price by having the best home in the best condition with upgrades that show beautifully. Be prepared on day 90 with the lights on, music playing in the background and the faint smell of cinnamon cookies in the air. You never know when the buyer that falls in love with your home is going to walk through the door.” ( end of report.)
Now doesn’t THAT sound better than NationalBubble’s hourly posts of doom & gloom? It sure does to me - happy Easter, everyone.
I believe schiff correctly called the dot-com bubble in 2000. He’s been spot-on regarding real estate over the last 3 years. If that is a blowhard, then we need more blowhards.
If you want to come back to fundamentals, i think this would be an accurate view of what it would take to get there.
Someone please explain to me why we have some sort of obsessive need to help\assist homeowners after they make poor choices in buying\investing property. i remember the .com days when i am sure a lot of us lost money, how come we are not getting bailed out from those losses, they were equally irrational, buying ipos of companies with no revenue, etc.
i think all the losers who bought homes they couldnt afford or those that used all the equity to finance their lives rather then working towards building their traditional income deserve to lose their homes, its not like they are going to be on the street, you can rent. From a pure money growth perspective renting the last couple years and investing in foreign markets would have given you a much better return then owning a house anywhere in the US. After all the maintenance expenses, taxes, etc owning a home is not the greatest investment, its a place to live but not something that i would count on making me rich or retire. not even sure why its called the american dream, is a neg am loan really considered owning?? my definition of the american dream is millions in the bank and not having to worry about the basic expenses. maybe i am ignorant, who knows.
Sorry to disappoint you but this man has been pretty consistent in his predictions on the economy and the different markets. Some came to light later than he may have said but you can’t argue that he was way ahead in seeing this trainwreck coming. “Blowhard” , hardly! He calls it as he sees it and lately hes seeing it very clearly.
Score one for Chicken Little. If you keep screaming that the sky is falling, you are bound to get it right at least once. The truth is that people like Peter are benefiting from the fear mongering. Speculators are making a mint beating the drum of financial collapse. The historical truth is that real estate in California is an awesome investment. It runs in cycles and we are in a down cycle. No reason for panic - keep paying the mortgage and relax. Don’t let smucks like our friend Chicken Little force anyone into fear. They aren’t building more land in Southern California, so relax. As for Peter, how about a financial disclosure showing us your investment strategies and current financial holdings - I bet our listners would be surprised….
Some info on Schiff.;
He is known for his extremely bearish views on the United States stock market, bond market, the US dollar, and the United States economy in general for which he has earned the nickname “Dr. Doom.” He is currently an economic adviser for the Ron Paul presidential campaign. He graduated from UC Berkley in 1987. His father is tax protester Irwin Schiff. Schiff also hosts a live internet radio show called “Wall Street Unspun.
OK, no agenda there. Now, Jon, in the interest of fair journalism, please find the most radical bull in the country and publish an extensive interview.
Again, predicting the RE slowdown was a no brainer. Nobody can claim mystical qualities for that one. So take that out of the equation and what do you have?
I am pretty bearish, but this interview of a bearish commentator has no value.
If you meant to plug his financial consulting business, then mission accomplished.
Otherwise, no new information was shared, much like many interviews in the paper (bullish or bearish).
Some of the crap perma-bulls posted in April 2007 (see link above in Jon’s post) is really funny to look back on………….
Here is a little snippet from DonS - Trump wannabe:
“The “perfect storm” of financial problems that caused the 20% drop in OC real estate prices in the early 90’s had at least 4 legs.
1. Closing the defense industry. So CA actually lost population.
2. Bankruptcy of S&L’s, mostly those created in the late 80’s, because of bad lending practices. I remember that appraisals were not necessary to get a loan. “If it sold for that, it must be worth it, and we will make the loan”.
3. A national recession. A bad one that our democratic state govt saw fit to raise taxes right in the middle. Adam Smith would not have approved. I am convinced CA’s recession was extended because of this political move.
4. The end of an “over development” boom caused by changes in Fed tax depreciation deductations from 15 to 27.5 years, grandfathered in, for all property “started” after a late 80’s date. An amazing amount of “new” real estate came on the block in the early 90’s. A flood that saw a deminishing population in the middle of a recession.
Today’s situation, even with the sub prime exposure, is nothing compared to the situation that arose in the early 90’s. And, the loss in value of real estate then was only around 20%. Not 50%.”
LOL@ribsplitter….. you are right DonS it’s nothing like it….. IT’S FAR WORSE !!!
Rants,
OMG, your comment the other day:
“did you know california is a high risk loan state? hell yeah it is”
OMG, ROTFL, LOL@ribsplitter
He’s the best. He has the calls to prove it. Check his videos on youtube. Clearly was way ahead of everyone on this. I’ve made quite a score financially following his no-nonsense advice. To you naysayers here, you’ll get whats coming and you’ll live to learn with it.
Even a broken clock is right twice a day. The stock mkt. made a bottom last week, and gold and oil have started to fall. When the sellers of homes bite the bullet,and accept profits which are good, but not obscene,the housing mkt. will begin to recover. Prices won’t go up, but inventory will begin to clear. Don’t fight the fed.
mav…
I have to compliment you on the accuracy of my previous quote. It must have made an impression on you because you saved it until now.
Don’t forget my latest. “We are at or near the bottom. So CA home prices will bottom around June and turn up by the end of ‘08.”
Copy this one down so you can confirm it happened just like I said.
I recommend Peter’s book. It is very good. Peter has been bearish for a while, but then the stock market has been dead money for eight years, having gone down 15% in real terms and 35% in real terms. That is a negative 5% return each year for nearly a decade. Ouch!!
The call on real estate is just as easy. Look for a decade or more of negative 5% real returns as we get back to the long term values. Sure we could have a median price of $500,000 in 2017, but a gallon of gas will be $7 and the minimum wage will be $15 an hour.
The boom is over and as with all booms, there will be a decade or two of “recovery.” Sideways movement with inflation is the easiest was to accomplish this as it results in fewer bankruptcies.
The question is can the Fed inflate fast enough. They need to be sending a check for $500,000 to every household in the country. That would solve the problem. Otherwise, tough sledding ahead.
Don S has no shame. The guy was very wrong almost a year ago keeps posting predictions.
Ha, we’ll save that one again and try to humiliate you again, but it won’t work since Don S has no scruples and cannot be shamed.
DonS,
Actually, all I had to do was click on Jon’s link above to the April 2007 post.
I give you a lot of credit in that you keep the same name….. unlike most of the perma-bulls.
June 2008 Bottom…. turning up by December 2008….. that’s a good one.
Do you think California is a high risk loan state? It doesn’t really matter, because those that matter do………
2008? Try 2012 and that if we are lucky. If the dollar keeps falling, oil could easily go to $200. Then we are looking at $5.50 gasoline and this could really get ugly. Maybe a 75% drop in home prices.
The median earner takes home $2,500. Subtract another $300 in gas and people are going to have real problems making rent or paying the mortgage.
The vicious cycle continues, lower dollar, higher oil prices, trade deficit remains the same. Dollar goes even lower. Where is the equilibrium? When you don’t export anything, you have to live on the charity or loans of others. As some point, the benefactors stop giving and the lenders stop lending.
Garbage. He should move to Singapore to be with his soulmate, Jim Rogers.
ocregister:
this guy is over the top. register prints this bunk to try to scare us that depression is here. this is not professional reporting. please get this bunk off. you are causing people to put cash in home. this is dangerous.
“Of the more than 1,000 American adults surveyed in the poll, conducted March 14-16, 83% said they are “confident” that they will be able to maintain their standards of living next year, and 85% are “confident” they will keep their jobs over the next six months.”
“Americans also showed faith that they would be able to pay off their future debts, with 90% of respondents demonstrating confidence they would be able to meet their monthly mortgage payments for the duration of the mortgage.”
“Nearly as many Americans - 83% - said they could pay off college loans, car payments, and credit cards in the future. The average amount of credit card debt of those polled was $4,000.”
VOR: “Again, predicting the RE slowdown was a no brainer. Nobody can claim mystical qualities for that one.”
Then why did Gary Watts not lay down such a prediction? Last time I checked, you gave Gary props or at least used his prior correct (and no-brainer) predictions as a reason for “turning the other cheek” on his more recent false claims.
It goes both ways. I agree, this guy sounds a bit radical on the bearish side for me. I’d be surprised to see that kind of drop - especially given the fact we already have had enough inflationary push on pricing in all areas to prevent such a drop - in my opinion.
But let’s be real. I run a professional services corporation - I know what it takes for these young professionals to live a life they worked so hard to achieve. It is very hard in the OC simply due to the cost of housing. Renting is just over half of what it takes to own the same place. Throw in the tax benefit, and you get maybe 7%-15% closer to being equal, depending on how much they earn annually. We’ve LOST more educated professionals - by the tune of over 13%!!! That fact is in the record books, reported several times by this paper. It is not easy to hire and retain when you have to compete nationally. Competing globally means paying 25%- 30% higher wages and asking worker s to work overtime every week. Those buying right now either have the income to ignore any price depreciation, especially if they’re renting, or choose to ignore or deny it, or simply enjoy risk taking. I’m sure there are others that choose not to do any research and simply rely on what they’re being told by RE professionals - many of which will wrongly tell you with a straight face that we have DEFINITIVELY (not maybe) hit bottom and they had better get in before its too late. Yeah - use up those short term rate programs and watch what happens when the rates are reigned in. Look at history - when in the past has an inflationary period not been met with higher interest rates? (if you only look at CPI - then you are an even bigger idiot than these predictors) Now consider the fact that these recent events are coupled with one of the worse illiquid credit marekts in history - investors won’t touch this paper. A month of closed sales that have, what? - a couple hundred more homes sold (if that) is nowhere near the definition of a bottom. Job numbers are bad, they are not even close to average and cannot be ignored. Losing more jobs than gaining is not good. If you think its something that can be overlooked than you need to get your head examined. As long as sales remain below 2500 per month - you will never see an end to this carnage. Given current inventory and population - we should be closer to 4K per month sometime in the spring to see bottom. 1500 sales in one month is sad - plain sad.
When these folks predicting the future of our local economy become directly responsible for siging the paychecks of over 70 people, then maybe, just maybe, I’ll start to listen. Until then, they have no credibility with me. Just my long 2 cents to get my morning started. Time to go for a drive. No replacement for the feel of 550HP and the sun in your face. Later…
Just saw this when I was about to leave — Thoughtful: THOSE METRICS STINK!!! 85% is hideously bad!!!
That means 15% of the US thinks there is a chance may lose their jobs. And how many of that 85% may have no idea how to read the signs that their jobs are in trouble?
How many people do you know ever been layed off and wee surprised about it? I’m sure at least one. If not, then you are truly a liar.
And 10% admit they may not be able to pay off the house they bought. And you think that’s good? You must have smoked some crack this AM. Come on man - read the frickin’ numbers.
And less than 30% is saving satisfactorily for retirement!!!
This survey shows a few things: consumers will consume like crack addicts. Consumers really don’t put their families’ financial well being as first priority before everything else. And only the rich and intelligent will be going to college. There’s a few more conclusions that can be drawn - but be real, man. Go get a job and put some money in other peoples’ pockets.
NBI: out!!
Yes, it’s very fashionable to ridicule Americans as out of touch lowlifes. I don’t “buy” what you are proselitizing. When 90% of people express confidence they will be able to payoff their mortgage, I find that an enormous number. The question is forward looking by quite a lot and to see 10% admit not knowing the future is quite low in my opinion. You are entitled to your glass is empty mindset.
THE SAD NEW OUT OUR COUNTRY AND OUR COUNTY IS THAT SO MANY SELFISH PEOPLE AROUND.
THEY ARE GOOD AT PRETENDING FOR THEIR OWN SELFISH
MONEY AND SELFISH EVERYTHING….
THEY WROTE UP SOMETHING TALKING DOWN THE HOUSING
MARKET “BY SAYING IT WILL BE 50%OFF” YOU MUST UNDERSTAND HIS EVIL INTENTIONS
“HE SOLD HIS HOUSES MANY HOUSES - NOW HE LIES TO GET PEOPLE PANIC AND CAUSE THE HOUSES DROP SO HE CAN BUY AGAIN!!!!!!” THE AUTHOUR OF THE Q&A AND MANY PEOPLE LIKE HIM AROUND CAUSES THE OC MARKET CRASH
Home prices need to come down to affordability levels. Will it be 20% or 0%, I don’t know. Median income levels are not good predictors because we live in a society that has multiple income earners in every household.
No one has a clue where rates are going. I think they will still go down.
The economy is tanking. Jobs are being lost, the financial system is in chaos, and we are following the same course as 1925.
As far as inflation, the commodities are unwinding and will do so as margin calls hit oil, gold, silver, and the grains. Supply/demand economics do NOT fully explain the steep rise in Commodity prices. Did you watch gold this week? Down 7.5% It is another bubble waiting to blowup. Do you know that hedge funds bid them up and they will come back down as margin calls get them unwound also. Real wages, which is 75% of the cost of anything, are still in check. Food and gas prices will go down as gas prices retreat. IMHO, rates will still go down.
But what do I know? If this expert, or myself, really knew where rates are going, we would be in the caribbean drinking MaiTais.
As Bill Gross said in an interview Friday, we should be worried about deflation. Huh? Yeah our home equity is deflating before our eyes, a thousandfold more than the gas and food prices. Think about it.
Rants and Bubble…I am curious: Do you wish for the US economy to falter? Do you relish foreclosures? Layoffs? You seem to post with such glee with respect to negative information. LIke the media, blood sells…as I always say: nobody will pay to see a kissing contest…but an ultimate fighting championship? Well, they will pack Staples twice on Sunday. It is clear to me: the left and media in this country are dieing for a democrat to hold office. They will stop at nothing to do their best to ensure that happens.
Garry Watts is the epitome of a clock being right twicw a day. I do not know whether Schiff has an agenda or not, but I do know these facts:
Unemployment and underemployment is an ongoing problem in OC (Remember, a lot of real estate professionals were technically self employed, and are not eligible to be reported in the unemployment figures.)
Foreclosures and NOD’s are increasing.
Inventory is not abating
Affordability is still an issue. Most residents of OC cann not afford to own without the assistance of some risky, exotic program (which, ironically, they can not afford upon reset).
Right now we are about 22% off (peak to trough). Given the above problems, I think that I can safely project another 15-20%, which would put us around 40% loss trough to peak. Now, I happen to think that these are conservative numbers.
If the economy truly goes bad (say a couple more runs on banks, followed by a true credit freeze), then we could be looking at another 20%.
Peter Schiff stood by his beliefs when everyone else was joining the bandwagon. I give Schiff a lot of respect not only for his correct market calls, but his ability to go onto CNBS and tell it like it is. He put his firm at risk if he was wrong. He told everyone about our problems in 2002 and if idiots like Bush, Bernanke, Paulson, the entire US Congress would have listened we wouldn’t be facing complete economic collapse. Good job Mr. Schiff, I understand and admire your courage.
Mulliganville Says: “Do you wish for the US economy to falter? Do you relish foreclosures? Layoffs? ”
Those are fair questions. No, I don’t.
I live here and I own a home here so a total financial collapse will impact me too.
What I do want though is to wake people up and to stop that consumerism mentality we have. We’ve been spending way more than we make for the past 30 years and that shows in the huge national debt we currently have. I feel the baby boomers generation has been very selfish and they are just passing their bills to the next generation (my generation unfortunately) We have been maxing out the country’s credit card for way too long.
I’m tired of people buying Hummers when we depend on some of the most unstable parts of the world for our supply of oil. I’m tired of politician telling me to shop to revive the economy when excessive spending is what got us in this problem to begin with. I’m tired of people always looking for the easy way out assuming that we don’t have to pay for our mistakes. The housing bubble is just another symptom of this mentality. At least during the dotcom bubble there was something positive that came out (the internet revolution)
When you look at the housing bubble, you can see that it was all about speculation. No real assets were created, real salaries have not substantially increased since 2000 but yet home prices have more than double. There is obviously something wrong there. If being realistic and responsible makes me a “doom and gloom” blogger, I guess I am one.
NBI, I think you have me confused with someone else. I don’t think I’ve ever used Gary Watts name in a post. But, in any case, my point was that 2 years ago, it was becoming obvious that prices could not continue to rise, especially at those rates. I think we all agree that prices rose too fast fueled by easy money. The “discussion” is really just how long and how low.
Mulliganville,
I agree with NationalBubble. I want the country to do well, but i think that we have to get away from the frenzy of consumerism.
Our problem is that we want to have what we can;t afford - and btw, if you can afford it, by all means, have it.
We have people who have become consumed with keeping up with the Joneses, instead of worrying about whether they can afford the obligations that they have signed up for.
Most Americans manage their finances just fine, which is why FICO scores in the US are extremely high, and defaults on mortgages and other types of debt are very low. All this talk of everyone living well beyond their means is just the human tendancy to want to judge others to make oneself feel superior.
Being born and raised in this County for 44 years and seeing what is happening with the low savings rate and high prices of real estate inclusing inflation Mr. Schiff seems to summarize how the American people have been living for the past 10 years. I always knew something big was going to happen when real estate prices went wild, consumption on CREDIT flew off the handle and savings means nothing anymore. Especiallly now that out $ is in the tank. I agree with him 100 prcent. Until we get back to savings and work off cash and not credit the Fed will coniinue to BAIL OUT Banks Consumers with our TAX money to please the market. Not a way to run a strong Country. We certainly will not stay stong with China and India catching up to us while we spend ourselves to death.
cdm and bubble, gee, thanks for that sage advise on how we should all run our lives according to you. Especially from a guy who uses a blog to advertise his website. HA. “Oh, I feel so sorry for the consumers out there. They know not what they do.” Give me a break.
And who, apparently, doesn’t understand the definition of “national debt”.
Thoughtful: Just got in. I feel positive today. IT’S GORGEOUS OUTSIDE!! You are exactly correct - having a positive outlook is important. It’s what empowers people to take challenges. This country was founded on the belief that regardless of the huge risk of going it alone - it is worth the challenge to fight a virtually unwinnable war to achieve our freedom.
However, there is a time place for taking such challenges. “What are the alternatives?” is what people should be asking themselves. For our forefathers, it was losing their natural, unalienable liberties. For renters and people forging a life currently in some abode and considering the risk of buying large - not the same sport.
Is renting that bad for those renters right now to discount the risk and take up the challenge of levying upon themselves a financial burden that many fail to fully calculate properly? 10% is how many people - nationwide? Millions upon millions - yes? Theoretically of course and I agree the std. deviation on that survey is probably piss poor. But still. When someone tells me that they have no idea if, even after keeping their job, they may not be able to afford their home tells me that many have little understanding of contingencies and planning or maybe they don’t comprehend the question very well. Who knows?
But in light of the number of people in our county - near our homes - that purchased homes with little disregard for risk is astounding. Those same people are what contributed to the 180% of the 230% of the price run-up we’ve seen - (figurativley speaking of course). I for one am looking forward to my home being revalued to a level that is accurate, that is healthy, that is indicative of its real worth so that if I decided to sell in the open marketplace, I will be able to without having to wait 9 months or a year. You do realize that by not being able to sell - WE ALL SHARE THE RISK.
So many are simply shortsighted on money - the bottom line of one asset. What gives with this? Open your mind. What is truly healthy for this nation? Our Commander in Chief even mentioned something along these lines. The sooner this mess is over, the sooner the correction is made, the faster the world’s investors will look upon our contry’s main assets as something worth investing in.
People should be inspired to make the best choices for themselves - not encouraged out of fear to discount risks they have no idea to face if they were to occur. Unnecessary risks.
NBI’s ranting turned off!!! OUTTA HERE!!
Oops: I should have mentioned that I do not think for a split second we’ll see the carnage Schiff may be suggesting.
I’m just stating one: my position has always been a 20%-30% decline in pricing is nothing to sneeze at and is very possible.
I’m just about there on that 20%. By some figures, my prediction already came through.
To insinuate that I may be wishing for a collapse is ridiculous and completely false. I have spent my life building a future for more people than myself and my family - with their hardwork as well. I have no intention of watching it sink down the drain.
I just want this crap over with.
Lastly: only 30% of Americans saving for retriement is not managing finances just fine. Maybe if we were just becoming a super power.
We’ve been a superpower for how long? Ever heard of continuous improvement?
The savings rates (as a percentage of income) of our parents and their parents was hell of alot better than what it is today.
And the wars we fought then - the lives they led - were more difficult than what it is today. Think about it. Everyone should be thankful and concerned at the same time. I, for one, am quite humble.
Thoughtful said, “When 90% of people express confidence they will be able to payoff their mortgage, I find that an enormous number.”
I think Thoughtful is right, but in an overleveraged market depending on overleveraged people, ithe marginal cases — not the “normal” and responsible people — can indeed have a real effect on the economy.
I agree with what some of the others wrote: he seemed to have made some correct calls, but some of what he says sounds generic (see his blurb on the strengthening the dollar).
I’m outta here myself — time for a nice afternoon walk and trip to the park with the familia.
Thoughtful:
“That is my biggest problem with our government…when they think they know better than me as to where to put my money: one of the basic fundamental differences between republicans and democrats. We may disagree on where housing values will or will not be in parts of the OC.”
Go ahead and do tell us something truthful about the basic fundamental between tweedle dee and tweedle dum when there is none. Otherwise, keep your biased political opinion out of the discussion.
That was Mulli, not me, Bad Tider. And it IS beautiful today! Wish we could keep it right there, and not be a slave to Edision.
What’s neat is that the wage inflation that would be necessary to raise general prices enough to prop up house values in nominal terms is actually not going to happen, unless you really believe that California wage earners are going to win 20% or higher wage increases over the next few years. In a recession, no less. Not gonna happen, and even if in some parallel universe it could, housing would still be a lousy investment because it would be flat in nominal terms, hence falling hard in real terms.
Price, feel free to throw your weight around if you wish. Unless you host this site, charge for admission, and begin to monitor a strict discussion, I will go ahead and exercise my freedom of speech. You can choose to ignore it. If you are naive enough to not understand that one party wishes to raise taxes and the other does not, may I suggest a remedial political science class from your alma mater…that is your high school alma mater.
Enjoy your tax increases from Obama or Billar. As if we do not pay enough already…
The nations top 5% of wage earners pay over 55% of this nations taxes. Why should they bear the burden of the rest? Makes no sense. You want to fix this problem here? A consumption tax is the only solution. This would really make people think before they purchased. By the way, the top 1% of wage earners pay 1/3 of all taxes in this country.
“Thoughtful Says:
March 22nd, 2008 at 5:47 pm
That was Mulli, not me, Bad Tider. And it IS beautiful today! Wish we could keep it right there, and not be a slave to Edision.”
Sorry, my bad.
“Mulliganville Says:
March 22nd, 2008 at 8:25 pm
Price, feel free to throw your weight around if you wish. Unless you host this site, charge for admission, and begin to monitor a strict discussion, I will go ahead and exercise my freedom of speech. You can choose to ignore it. If you are naive enough to not understand that one party wishes to raise taxes and the other does not, may I suggest a remedial political science class from your alma mater…that is your high school alma mater.”
Mulli, I don’t mind a political debate as long as it is fair and productive. However, your political arguments are nothing but mere repetition of Republican talking points. The same Republican party, along with the Democrats, were accomplices to the current RE mess. Save yourself the effort and use the Republican party website in your signature.
“Enjoy your tax increases from Obama or Billar. As if we do not pay enough already…”
Wooo, did Rush tell you that? Did he forget to tell you that both parties have flooded this country with huge debts that don’t magically disappear? Did he also tell ya that the Iraqi occupation will pay for itself?
“Mulliganville Says:
March 22nd, 2008 at 8:44 pm
The nations top 5% of wage earners pay over 55% of this nations taxes. Why should they bear the burden of the rest? Makes no sense. You want to fix this problem here? A consumption tax is the only solution. This would really make people think before they purchased. By the way, the top 1% of wage earners pay 1/3 of all taxes in this country.”
What Rush Limbaugh conveniently left out was that the richest 5% have owned close to 60% (and rising) of the country’s wealth, or more than the remaining 95% of the population have, since 1998. At the same time, the top 1% also owned 38% of all wealth. Even Warren Buffet admitted that, as a percentage of wealth, his secretary paid more in taxes than he did.
Notice not only the disparity in taxation but also the disparity in shared burden. It is mostly the lower classes who have to fight wars (see the military deferments/national guard service of Bush Jr., Clinton, and Cheney). Meanwhile, the military industrial complex (Halliburton, Blackwater, etc.) profit from the blood and treasure of Americans. Oh yes, the elite are the ones who have the most money to bribe our politicians and write this nation’s laws.
Price: the current RE mess and every mess, starts and stops at the top. It is not the would be homebuyer/flipper/investor/realtor/loan officer/etc. The basic problem would be that Wall St. packaged prime/sub-prime/alt-a etc. TOGETHER when they were sold on the open market. The buyer and seller of that mortgage backed security are the true culprits here. Before you grab the duck tape to keep your head from exploding off your shoulders, hear me out.
When you invest in a mutual fund, these funds are categorized regarding risk and the stocks they feature. A large cap growth fund featuring KO or GOOG will not feature higher risk plays such as JRJC STV and many other volatile China stocks. They know to separate them as their performance could skew the desired results. Why would the seller and buyer of mortgage backed securities not do/demand the very same care? That is the prime factor as to why we are in this situation. Without the top demanding that level of care, as they are doing now, the result is a greed driven black hole which will eventually fill itself, once sanity takes over and they realize that 93% of borrowers pay their mortgages on time.
With respect to Rush/the left/Fox/whomever else you wish to bring into this debate: historically the Republicans keep more dollars in your pockets. I do not trust our government to handle my money…you can if you wish.
By the way, that Rush quote you have above, came from the NY Times. The top pay way more than their fair share, and I am not a member of the top 1%. I can assure you of that. But if they already pay a disproportionate share of the tax burden, then I would suggest they deserve a heftier portion of any tax break. A flat tax system would solve the Buffet problem. More tax laws equate to higher priced tax attorneys working for their client. If we all paid 20% of our income period…we would solve alot of problems. Why does the guy making $499,000 annually pay a higher % of his income? How is this logical? The system is antiquated and needs to be put out of its misery. The IRS are held in the same regard as the airlines…actually the IRS might fare better!
CathyG Says:
March 22nd, 2008 at 8:30 pm
“There is nothing wrong with the American worker, nothing wrong with the middle class. There is something terribly wrong with a democracy that allows a tiny but increasingly powerful, privileged elite to take for itself such a disproportionate share of the nation’s wealth”
Too true. Real income growth for the middle class has been the weakest in several years thanks to globalization and technology. The artificial wealth effect from the RE bubble helped to sustain high consumer spending.
The country needs to reconsider its economic and political priorities. We need to stop clinging to old, unproductive industries in favor of investing in new and innovative ones. Unfortunately, the American worker continues to vote against their own self-interest.
price: shoot me an email anytime…I enjoy debate and frankly we probably would get along far more than you or I realize.
mulliganville@gmail.com
Mulliganville said:
“With respect to Rush/the left/Fox/whomever else you wish to bring into this debate: historically the Republicans keep more dollars in your pockets. I do not trust our government to handle my money…you can if you wish.”
Mulli, historically Republicans run the biggest deficits and enact economic policies that put more fiscal burden on the middle and lower classes. Tax cuts without consumerate spending cuts don’t magically pay for themselves. Supply side economics, as espoused by Reagan and the Bushes, are the biggest fraud. The Democrats fare only slightly better. You choosing tweedle dee over tweedle dum is sheer insanity.
BTW, you admitted and confirmed my point that this RE mess was above any political party. That’s why I pointed that your shilliing for the Republican party was useless and shameless.
If I have to choose one or the other, I will go with pro-defense, lower taxes each and every time. Regarding the 3 candidates we have…I do not like any of them. I also do not recall indicating that one party or the other was responsible for the RE mess. I am not sure how Bush or Reagan put more fiscal responsibility on the lower and middle classes. The top 50% pay 85% of the taxes in this country. I am truly tired of a tax system that penalizes you as you earn more.
Mulliganville Says:
March 22nd, 2008 at 9:38 pm
“By the way, that Rush quote you have above, came from the NY Times. The top pay way more than their fair share, and I am not a member of the top 1%. I can assure you of that. But if they already pay a disproportionate share of the tax burden, then I would suggest they deserve a heftier portion of any tax break.”
Mulli, facts are facts. I didn’t deny how much the wealthy pay in income taxes. However, income is only a subset of wealth (investments, holdings, etc.). The rich can shelter much of their wealth from taxation. Because the middle class can not shelter their income, they pay more of their wealth in taxes.
In essence, it is undeinable that the rich enjoy far more benefits from this country than the majority of us do. CathyG was right; wealth continues to be redistributed towards the top. Meanwhile, What perplexes me is that the middle class, such as you, continues to vote against their own self-interest.
“When 90% of people express confidence they will be able to payoff their mortgage, I find that an enormous number.”
Unfortunately financial institutions and our credit markets rely on this number to be greater than 99%
90% is awesome in horeshoes though, oh yeah….. 90% is pretty good in hand grenading too
heck….. do you think a 5% default rate is bad on a loan? hell yeah it is
Price…i think my greatest problem with the left, and not the far left (they are as looney as the far right), is that they continue to promise more social programs as if they know what is best for society. If we privatized social security for example, the power would be back in the private investors’ hands. Obama wants to erase the tax cap on SS…right now it is somewhere around $97K. If you make $200,000 per year for example…that is another $10,000 in taxes you will pay as an individual. If this were privatized, perhaps then I would not care as much as it would come to me one day…but right now it will not even come close to making it to my bank account when I am 60ish. Medicare is a disaster and SS will be too. Only a matter of time. I do believe a consumption tax on everything is the only way to go.
Mulliganville-
I’m so sorry but Warren Buffet disagrees with you heartily. He thinks it is a really bad idea for him to pay less in taxes on a discretionary basis than his secretary.
In case you missed your econ class that day, a consumption tax is regressive. Warren Buffet has even gone on record with that opinion. I happen to trust Warren Buffet’s take on this more than yours.
I feel what we need are targeted tax cuts…instead of tax cuts, you would get $1-for-$1 or even $1.25-for-$1 tax credits for adopting an inner city school for example. In this way, the govt could direct dollars to go where it is needed most, without having to “force” anyone. And, because our own self-interest being so dependable, we would jump at the chance to “help” those schools, not because we think it is the socially correct thing to do, but because we will pay less in taxes.
How about that?
All you bulls make sure you note that I’ve been saying that OC real estate still has plenty to fall. I’ve been correct for a year straight and will continue to be so for quite some time. So sigburdood, thoughtless, shockg, and all your other alter-egos make sure to come on here every few weeks and tell me that I’m still correct. And admit that you’re wrong over and over and over. Just be honest is basically what I’m saying.
By the way, I put in an offer to own my first piece of real estate just outside OC. It’s down almost 50% from peak. However, anyone with half a brain is not buying in OC right now or anytime in 08 for that matter. Maybe not in 09 either.
Marcia-
I would prefer a flat tax regarding income. A fair portion for all…regardless of your income level. I would venture to guess Mr. Buffet’s tax accountant is a little more savvy than his secretary’s. If Mr. Buffet is so concerned about this, he is free to pay MORE. Yet, somehow I reckon he has never OFFERED UP more than is required of the bottom line. So while I appreciate his concern for his fellow citizens, donating the majority of his fortune to the Gates Foundation, indicates to me that he is more concerned with other nations on this earth than his own. As I am sure you are aware, the Gates Foundation primarily focuses on poorer nations. The US already bears the burden of most worldwide tragedies…we are first in line and usually the last to leave.
Poggi—
So I suppose there are 1500 half brains on a monthly basis here in the OC.
You need to open up and smell the roses and life as it is. Tent cities blooming, foreclosures up, inventory up, Redfin and Zillow taking away work from realtors, unemployment up (their numbers are way off), lack of good jobs up, the value of our dollar down, the stock market being manipulated by the plunge protection team, the State of California is in a financial crisis (and OC could file bankruptcy again), real estate auctions growing by the minute, hedge funds and derivatives in a nightmare, gas up, gold up, and savings down. What does that spell? It almost feels like the government and the federal reserve did this on purpose.
No, I don’t wish harm on anyone, but this is a mess, in no short terms. A 50 percent drop in prices is a great possibility. Anyone who is on the edge should get out now…. actually you should have already. The government and banks have gotten what they can and now it’s your turn to survive. Who would have thought that the banks would have opened up their pearly gates to anyone that could fog a mirror? That’s why the housing bust was predicted years ago. No one predicted the restlessness of our banks and government. Is the dollar going away? Is the Amero here? Just protect yourself in any way you can.
If you have Comcast, they are putting cameras in their boxes. So much for freedom. All I’m saying is open your eyes and look around. Google what you wish and stay safe.
After that said, go and buy a house but try not to get cut with the falling knife.
All you perma-bulls classifying Schiff as Dr. Doom:
Yes he is negative about the US however is very bullish on Gold, Commodities, and overseas stocks with large dividends. So as the Fed continues to print, inflate, and devalue the dollar, the more $ his clients rake in.
If I were you I’d cash out of all dollar assets while the going is still good.
By the way his “Crash Proof” book is great and I’ve read it cover to cover. I can’t wait to meet Peter Schiff this week!
The beatings will continue until morale improves…………….
May 1, 1930
“While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States - that is, prosperity.” - President Hoover
June 29, 1930
“The worst is over without a doubt.” - James J. Davis, Secretary of Labor.
mav, as one Arthur Jensen likes to say: “The point has eluded you”.
When I said:
““When 90% of people express confidence they will be able to payoff their mortgage, I find that an enormous number.”
You didn’t grasp the nuance of the word “payoff”. There is quite a big difference in someone looking forward 2,3,5 years and feeling they could make it through that horizon, and someone looking forward up to 30 years and feeling they could PAYOFF their mortgage. I repeat: anyone who expresses with 90% certainty that they will be able to PAYOFF their home is an astronomically large number.
Like my word says: scHuLed2
And you’re wrong about the 99%. All mortgage investors presume that a percentage will default, and it’s not 1%.
First, Happy Easter everyone…
Secondly: Gold plummeted by 10% last week. The biggest sign I would watch for is for a commodity sell-off. If that happens, the real trouble has begun. Moreover, I would watch copper as it has the broadest use from homes, construction, and plumbing to computers: if copper tanks, a very real worldwide economic slowdown will be evident. So, all of you commodity players out there, you may want to ring the bell sooner rather than later. Nobody has the crystal ball. But 10% drops in oil, copper, and gold signal that investors are not as certain as they were that the US dollar will continue its megaslide.
Interesting article today from NY Times on the complex financial instruments that are behind the recent events, titled “What Created this Monster?”
Props to Michael Snyder from L.A. Land for providing the original reference.
A few thoughts: 1) Anyone who claims that he or she knows how this financial morass will work out is either very smart or incredibly deluded. 2) “Affordability” is a secondary issue to the solvency of the financial system in the determination of RE prices. 3) I’m ready to burn a few people at the stake (figuratively, of course) after reading this, and you should too, whether you are bearish on the market or not. 4) Schiff’s lines about consumer spending seems incredibly off the mark.
5) It’s a beautiful day in socal — time to take the family out for an Easter picnic!
Just got in - ANOTHER GORGEOUS DAY!!!
I see we’ve left the RE discussion and entered into a little political debate.
My 2 cents: Republicans are usually for less spending and more tax cutting. The premise: the wealthy will “filter” down the money to the lower classes as they see fit. It’s quite simple - they had the wherewithal to earn that money - they probably know best how to keep it growing while helping those in need. The problem is that the Democrats will not allow all the spending cuts - aside from those that would put this country at greater risk to all enemies - foreign and domestic.
Here’s an interesting tidbit for people to swallow. The population of this country is growing. But the size of the typical family unit is smaller. And NOW GET THIS!!! The function of the average size of the family unit is inversely proportional to family income. What does that mean? The wealthier are WAY WAY WAY MORE fiscally responsible than the poorer families. Go to a Walmart in Santa Ana - what will you see? HUGE FRICKIN’ FAMILIES PINCHING PENNIES!!! Go to the WalMart in Laguna Niguel or check out Fashion Island. What do you see? Wealthy individuals with one or two children.
I am sick and tired for having to pay for other families to have some semblance of a standard of living similar to my own. I did not help make their numerous kids!!! The welfare system and the social system of this state is desperately in need of alteration.
Back to topic: Investors do expect some percentage to default. I agree. Do you think they expected what happened in the last two years?
Do you think they have every right to discredit any poll that shows that only 10% of Americans believe they are at risk of defaulting? I sure do. In fact, I do discredit it. Do you honestly believe everything you read or hear? Is it just because it shows the future of RE in a positive light that it must be true?
I have discredited plenty of bearish statements from those interviewed concerning RE on this very blog. I have not seen one BULL discredit one bullish statement made by those interviewed by our blogger - simply because they choose to be positive. I don’t get the reasoning one bit. Talk about predictability. You do realize the more predictable one is - the less credible they become. At that point - nothing is being shared or learned.
Lastly, 10% is not what investors would consider to be great odds given the fact they are not EARNING 10% on their frickin’ money!!! At least not yet.
Happy Easter to everyone. I wish all a lovely, sunny day.
NBI said:
“My 2 cents: Republicans are usually for less spending and more tax cutting. The premise: the wealthy will “filter” down the money to the lower classes as they see fit. It’s quite simple - they had the wherewithal to earn that money - they probably know best how to keep it growing while helping those in need. The problem is that the Democrats will not allow all the spending cuts - aside from those that would put this country at greater risk to all enemies - foreign and domestic”
There is no difference between the Republicans and Democrats. When the Republicans dominated all 3 branches of the government under Bush, Jr., spending soared while useless tax cuts were directed towards the rich. This resulted in record deficits. Republicans or Democrats growing the economy is just a myth. In fact, Bush should be blamed for hindering the American biotech industry by restricting stem cell research because of his radical religious views. The business cycle is greater than any short term political policies. The RE debacle is a good example of that. Fed and government bailouts will not stop market forces from driving prices and sales back down to equilibrium.
Everytime you blame the other party, you forgive your own party’s transgressions and complicity in this whole mess that is our government. Democrats and Republicans simply love to set Americans against one another.
“The wealthier are WAY WAY WAY MORE fiscally responsible than the poorer families. Go to a Walmart in Santa Ana - what will you see? HUGE FRICKIN’ FAMILIES PINCHING PENNIES!!! Go to the WalMart in Laguna Niguel or check out Fashion Island. What do you see? Wealthy individuals with one or two children.”
Did you notice which economic class runs our fiscally irresponsible government? Who ran Enron, Bear Sterns, New Century, etc.? Was it the poor?
“I am sick and tired for having to pay for other families to have some semblance of a standard of living similar to my own. I did not help make their numerous kids!!! The welfare system and the social system of this state is desperately in need of alteration.”
The biggest welfare queens are the rich. Many huge multinational corporations do not even pay taxes. As I have stated before, the rich pay less in taxes as a proportion of their wealth than you and I do. Federal laws are written by the rich for their own benefit. Whom does the mortgage bailouts benefit?
Besides, you and I have at one time or another have benfitted from social welfare and services: medical care, public schools, police, fire, etc.
its because of narrow minded selfish arrogant
idiots like thoughtless and sighburdoody that
our country is headed to hell in a handbasket
thanks oh real men of genius
Happy Easter to you too, Rants. Yes, I am way more selfish than you, and I am also way more responsible than you for the bad in our society. I whipped up hurricane Katrina too. Did you like my handiwork? What a jerk you are!
Hey Rants, I usually write you off as the nutcase that you are, but you have stepped over the line once too often. You sold your home in 2005 to lock in your profits. When you did that, you established a comp that helped support the market. (Both buyers AND sellers establish comps). You slunk back into the shadows with your profits, and have been trying desperately to drive down the market ever since, so that you can buy back and lock in yet more profits. Please explain to us all how I, a taxpaying citizen, am greedier than you. You are nothing more than an no-class windbag.
100% agree with Peter Schiff.
We’ll see credit-dependent assets depreciate while the non-credit products such as food and energy will continue to experience inflation. A honest, sound forecast always hurts more than the non-sense forever bull stuff we had to endure…
I guess the majority of people prefer to listen to and take their advice from all the Irving Fisher’s out there…
Price of Bad Tidings: agreed - but that’s one president - not all republicans. He picked a war he should have not started. Take away the cost of the war and what do you have - a hell of alot more money in our pockets.
I’m behind you 100% on research.
I ain’t forgiving anyone. I just want to see change and quickly.
Also- great points. Not all the wealthy are fiscally responsible when it comes to spending OTHER PEOPLE’S MONEY.
Great point.
Still going thru your post.
Thoughtful: now that was funny.
Yes - you are correct about the multinational corporations. One reason we have an offshore presence for competing globally as well.
But we still pay a hell of alot of taxes as individuals. The wealthy still take paychecks and those paychecks are still quite large. And the taxes are quite large. I don’t consider myself wealthy - Trump style wealthy - by any means. But I am very comfortable. You’re mixing corporate taxes from individuals.
Most wealthy individuals still pay the majority of taxes in this country.
The US is in the top 4 of all nations in the world for the highest corporate tax rates. Our companies pay - yes there are loopholes - but we still pay alot.
As individuals earning over $400K a year - you have any idea what it’s like paying 35% in Fed taxes alone?
You mentioned the wealthy use social medical care like the poor do? I don’t get it. I go to the emergency room - I pay. I have no idea what you are referring to there. Haven’t you read of hospitals shutting down because illegals can go in and use their services and not pay a dime? And this includes having babies, and all the medical costs associated with raising large families. Please explain your reasoning.
The bottom line. My point had nothing to do with whose paying more in taxes - and we all know the wealthy pay the majority on a per capita basis. I am simply pointing out the fact that it takes money to raise families. If those families cannot afford to have more than one child - they should not. They are saddling the bills on the taxpayers and squeezing our social welfare system. Some should not even be bringing children into this world if they cannot afford the costs associated to it. But they do anyway. Why is that?
It costs money to live - it costs money to raise a family. People should consider the fact thay they must be able to provide for their own before having them. Yes? No? What’s your thoughts on that?
And what about the size fo the family unit? Your thoughts on that?
Rich had this to say: “By the way his “Crash Proof” book is great and I’ve read it cover to cover. I can’t wait to meet Peter Schiff this week!”
Just be careful where you tread! You just might step into a hot steaming pile of Bear Schiff.
Tell him Sighburrdood bought a nice house in South O.C. in 2001, a year AFTER he called the bubble to burst - and that property is still worth about twice what I paid for it. ( In fact, the poor doofuss who sold it to me, was probably a Schiff follower - he went out to rent somewhere to be in a good position to buy when THAT bubble-burst hit bottom. He EASILY lost out on an extra $500,000..)
When folks said our homes could decline 20% we thought they were crazy. A year later we are here, my house may be down a little more than 20%, the trend is set and is picking up steam while overall conditions continue to get worse.
Another 10%, your crazy…another 20% I’ll go crazy.
Monday morning quarterbacking is so easy to do. So let’s say the buck stops with the president on the war. Here is what his democratic counterparts had to say about Saddam in the years leading up to the war:
“If Saddam rejects peace and we have to use force, our purpose is clear. We want to seriously diminish the threat posed by Iraq’s weapons of mass destruction program.”
- President Bill Clinton, Feb. 17, 1998
“Saddam Hussein has been engaged in the development of weapons of mass destruction technology which is a threat to countries in the region and he has made a mockery of the weapons inspection process.”
- Rep. Nancy Pelosi (D, CA), Dec. 16, 1998
“Iraq’s search for weapons of mass destruction has proven impossible to deter and we should assume that it will continue for as long as Saddam is in power.”
- Al Gore, Sept. 23, 2002
“We have known for many years that Saddam Hussein is seeking and developing weapons of mass destruction.”
- Sen. Ted Kennedy (D, MA), Sept. 27, 2002
“There is unmistakable evidence that Saddam Hussein is working aggressively to develop nuclear weapons and will likely have nuclear weapons within the next five years … We also should remember we have always underestimated the progress Saddam has made in development of weapons of mass destruction.”
- Sen. Jay Rockefeller (D, WV), Oct 10, 2002
“Without question, we need to disarm Saddam Hussein. He is a brutal, murderous dictator, leading an oppressive regime … He presents a particularly grievous threat because he is so consistently prone to miscalculation … And now he is miscalculating America’s response to his continued deceit and his consistent grasp for weapons of mass destruction … So the threat of Saddam Hussein with weapons of mass destruction is real…”
- Sen. John F. Kerry (D, MA), Jan. 23. 2003
I could go on and on and on and on with hundreds of quotes. You see, they start to end in 2004 when, what was happening then? Oh yes, an election…the hunger for power to thwart the president and undermine the US military is about as selfish as it gets.
I do not care if people hate on Bush for poor speaking abilities (which is what most people bring up…can we please have a president that can speak eloquently?).
I do not think the US government just threw away the intelligence from 8 years under the Clinton administration when they made the decision to go after Saddam and his murderous sons. It wasn’t just concocted on the ranch in Texas…but I know that is what many of you here in SoCal might want to believe. This was not a unilateral case for war…it takes cooperation from the House and Senate, which is usually evenly divided. And while formal declarations of war are virtually non-existent these days, the “authorization of force” has been the format of recent choice by our government. And it was granted for Iraq.
I have always wondered why that Boeing fuselage sat in the Iraqi desert without wings amidst camouflage…much like the line of big rigs which were headed for the Syrian border when the conflict began. Coincidence? I think not…
All this resentment of corporations and the rich is just self-defeating nonsense. You want to see basket case economies, it is the neo-Marxists we have in places like Venezuela. You don’t like where you are in life, take a long look in the mirror. The bad news is you have yourself to blame. The good news is, if you get off your hind portion and do something about it, you might just become one of those greedy rich people who you despise.
Good comeback, noclass. You really convinced me that you’re not a greedy bastard.
thats it? thats your reply? figures that when confronted
with the truth your response would be so shallow… hurry
up you can still catch wheel of fortune
Actually Rants, I think Thoughful called you out about your home sale and you TOTALLY AVOIDED his comment. No refute from you there…so I would not be so quick to claim victory here.
i guess it was an easy transition for Mulliganville….
going from appraising houses
to appraising blogging fights
well, truthi got to cross off 2 mandatory open houses off her list this weekend… in this beautiful weather….. so i’ll call that victory
mav, you have to give it to Thoughtful on this one…sorry. Rants sold in 2005 and helped establish the comps, which most of this bears den loathe on a daily basis. Yet, when this little nugget of information is brought to light…..crickets.
I will be happy to venture into any appraisal/valuation debate with you anytime. Funny thing about our society…the customer ALWAYS thinks they are right. So, test your theory…next time you wish to combat the taxman on valuation, go ahead and submit a condo or townhome to dispute your valuation on your SFR. Once the chuckles subside in the room, the case will be dismissed. On the same token, the townhome owner will not be exposed to SFR sales in his/her area. Make sense?
“You mentioned the wealthy use social medical care like the poor do? I don’t get it.”
No, I said that the rich are the biggest “welfare queens”. As in drawing more benefits without paying for it: tax loopholes, paying a smaller share of their wealth than we do, writing one-sided laws that affect the majority of us, etc.
“Haven’t you read of hospitals shutting down because illegals can go in and use their services and not pay a dime? And this includes having babies, and all the medical costs associated with raising large families. Please explain your reasoning.”
I just explained my reasoning about welfare for the rich. I don’t deny that social services are strained because of greater demand. Illegals are only part of the problem; our population is getting older and sicker. Look at the obesity rate for Americans. Meanwhile, our government is more concerned about Iraq and mortgage bailouts — 2 actions that benefit the wealthy.
“The bottom line. My point had nothing to do with whose paying more in taxes - and we all know the wealthy pay the majority on a per capita basis.”
As I pointed out repeatedly, they don’t pay as much as we do percentage wise. Thus, more of the tax burden shifts to us, and wealth continues to be redistributed upwards.
“It costs money to live - it costs money to raise a family. People should consider the fact thay they must be able to provide for their own before having them. Yes? No? What’s your thoughts on that?
And what about the size fo the family unit? Your thoughts on that?”
I don’t approve of having kids when it is beyond your financial means. However, realize that this is trivial compared to the rampant government corruption that threatens our infrastructure and future. For example, you rail against illegal immigrants. But who provides the magnet for cheap labor? Corporations, the politicians, and the American consumer. What about the billions of taxpayer dollars lost in Iraq? These mere two examples aren’t media darlings.
“It takes money to make money…the developer makes more than the homeowner…as he should…he has endured way more risk.”
If this were true, every failed restauranteur would be a multimillionaire.
Talk about taxes all you want, but don’t come up with crap like that.
Tell you what waiting: Go buy 40-100 dividable acres of land…pay for the permitting, zoning ordinances, more permitting, tax payments, infrastructure, utilities, etc….and then come back and tell me if you endured more risk than Johnny Homeowner buying ONE home in the community.
Think of it as a Real Estate IPO…you get the best deal before the public, but not every IPO is Google you know. Now, not every developer makes it…just as every owner of your example of a restaurant is not a millionaire. However, the owner has the overall initial risk, not the patron or employee.
Why is this a surpise? OC home prices are way out of wack and unaffordable to most people that live in OC. They were more than 50% overpriced so what would one expect now that the insanity bubble has been popped?
My apartments are still flowing good cash. My rents are going up. My house is still paid for. Life is good.
Comparing now to the early 90’s when real estate in OC TRULY crashed is rediculious. In 94, real estate was selling at below building replacement cost. Rents were down 20% and landlords were giving away one free month to anyone who would sign a 6 month lease.
That 20% drop in house prices was accross the board and banks and builders were auctioning off property for whatever it would bring.
I remember when that time was finally over. I told a complaining tenant about landlords: “Now it’s our turn!”
“The end is near!”
My post from Friday, about GOOD news for Orange County, has FINALLY been released by the moderator. You have to scroll up to the top to read it.
I think that Schiff is the man, if you watch some of the videos on youtube talking to real estate fanatics last year, they were all laughing at him. Now you can see how inaccurate they were and how spot on he was.
I think that the bulls here that supposedly own multiple properties should really converse with one another. You guys can package together some materials and go on a talking tour. Get others to become local RE moguls as well. Its what you are already trying to do on this blog. But the audience here is too small, and we bears aren’t buying what you’re selling. Maybe some sheeple out there will. If you guys do this, then I want 5% of your first year’s profit for coming up with the idea.
“Why is this a surpise? OC home prices are way out of wack and unaffordable to most people that live in OC. They were more than 50% overpriced so what would one expect now that the insanity bubble has been popped?”
some people still don’t get it… they may never, until that 40-50% is here and prices are languishing (flat) for the few years in the aftermath.
“Rants sold in 2005 and helped establish the comps, which most of this bears den loathe on a daily basis. Yet, when this little nugget of information is brought to light…..crickets”
smart guy. new comps are being established daily, and they’re not pretty. why harp over old data which is completely irrelevant
To anyone who thinks that NB and CDM families only have 1 child, you must not know any of these people. Our school is mostly families with 3-4 kids each. Some have 2.
I have 3 kids, and I can tell you it sucks to have such a large chunk of our income to pay for others to live off of. My husband works 12+ hours a day, so they can take 30+% of his money so we can bail consumers out who want to live beyond their means, illegals who shouldn’t be here,etc. My husbands’ hard earned money should not be paying for this.
It’s hard to get wealthy when your paying for others’ mistakes!
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