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Anytime You Have This Much Money Chasing Loans, You Are Going To Have Accidents

A report from the Washington Post. “Federal Reserve Chair Jerome Powell gave a speech a couple of weeks back that showed that financial regulators have learned many lessons from the 2008 financial crisis, but not the most important one, namely: If regulators wait to act until they can say with certainty that a credit bubble is about to burst, they’ve waited too long.”

“That’s particularly true when it comes to the opaque and unregulated ‘shadow’ banking system on Wall Street that has now supplanted regulated banks as the leading source of credit for businesses and consumers. As before, too much of the lending growth is driven by investors’ search for yield rather than borrowers need for new capital. ‘Anytime you have this much money chasing loans, you are going to have accidents,’ a banker told me recently.”

“During the first three months of this year, according to Trepp, a data company, interest-only loans — loans requiring no payback of principal until the loan is due — accounted for three-quarters of all new commercial real estate loans.”

From Illinois Public Media. “If you live in Champaign-Urbana, you may have noticed a surge in new apartment construction in recent years, but this boom is part of a larger pattern of construction happening across the country. A 2016 market research report from Triad Real Estate Partners found that there were a half dozen private apartment projects with more than 100 beds constructed in Champaign-Urbana that year. These new additions to the housing market, which added over 2,000 rooms, and the current projects underway, have led to a rental housing surplus, particularly among students.”

“Ben LeRoy, an associate planner with the city of Champaign, says it’s typically a business decision on the part of the developer whether or not to pursue a project in an oversaturated market, and not up to the city to greenlight most projects. ‘We’ve set the rules, we’ve set the playing field and then it’s a financial decision and a development decision for a developer to come in and say ‘can I work within these rules.'”

The Jamestown Sun on North Dakota. “Property managers in Jamestown are looking for more tenants to fill vacancies that are as high as 20% to 30% for some classifications of apartment units. ‘It seems every one of the properties has some sort of vacancy,’ said Bonnie Etter, owner of Better Homes Property Management, referring to the apartment buildings with vacant units. ‘Right now, two bedroom older units are the toughest to fill.'”

“Etter said Better Homes manages about 550 apartment units and currently has 134 vacancies. ‘When construction was going on at Spiritwood we were full,’ she said. ‘At that time, more applicants than apartments. Now, more apartments than valid applicants.’ Rents have also been decreasing since about 2014, she said.”

From News Bytes on New York. “Would you ever want to buy a luxury apartment worth $85 million? How about if the deal included a Lamborghini, two Rolls Royces, and a space trip for two, all free of charge? So, that apartment that you can’t afford is a 15,000-square-foot property located in the Atelier Building in Manhattan, The New York Times reports.”

“Since the asking price is an outrageous $85mn, nobody has bought it since it went on the market six years ago.”

The Davis Enterprise in California. “On April 7, the Drake Apartments in Davis served residents in nearly a fifth of their apartments eviction notices. Thirty-five tenants, almost all of them Chinese exchange students at UC Davis, were informed they had three days to ‘pay rent or quit.'”

“Guanlin Li, a computer science student from China, was confused and anxious. ‘It was a big shock,’ he says. He had paid his rent in full. So had everyone else. As always, the students didn’t pay the Drake Apartments directly. They paid WeHousing, a company that leases apartments from nine complexes in Davis and rents them out unit by unit, mainly to international students.”

“In April, WeHousing collected rent from the tenants but didn’t pay the apartments, leaving about 100 UC Davis students — and up to 400 tenants across the U.S. — puzzled over eviction notices. According to WeHousing founder Alan Gao, the company had been losing money since September after being unable to fill about a third of the units they leased for 2018-19.”

“To stay afloat, Gao says, WeHousing ‘borrowed money from all sorts of creditors.’ He says the company ran up credit card debt and took loans from multiple banks. Last month, some of those loans came due. ‘For April and May, we used most of the rents collected to pay off loans,’ Gao says.”

“One apartment representative went to Gao’s home and delivered an eviction notice in person, only for Gao to reportedly ‘pretend not to be who he is’ to evade the notice. ‘He’s hiding,’ says Kevin Schultz, the Drake Apartments manager. ‘If he wanted to walk away, he could. Instead, he’s demanding the residents continue to pay him while he doesn’t intend to pay us.'”

“Guanlin Li will fly home to China in mid-June, a few days after he finishes final exams. He paid WeHousing a $2,100 security deposit, which he’s afraid he’ll never get back. ‘We’re students,’ he says. ‘We don’t just want to put this money in the water.’ At the same time, he says he might have to cut his losses.”

The New York Times. “The cracks in the foundation of a Chicago nursing-home business began to appear almost immediately. The owners stopped making mortgage payments on their crown jewel, the Rosewood Care Centers, barely a year after buying it in 2013. Paperwork about the chain’s finances was never filed with the government. Some money meant for the 13 nursing homes and assisted-living facilities went to prop up another investment.”

“In the end, the business defaulted last year on $146 million in government-backed mortgages — the biggest collapse in the history of a little-known loan-guarantee program run by the Department of Housing and Urban Development.”

“By the government’s own admission, the federal agency’s stewardship of the program has been haphazard. Its oversight of nursing homes has been weak. When HUD officials have spotted problems, they often have been slow to respond. Sometimes it has taken years to intervene, allowing the finances at certain facilities to unravel to such an extent that the quality of care was undermined.”

” The nursing home industry is increasingly being run by for-profit operators facing dwindling margins. Some homes — especially those in rural areas — are struggling to stay open, with operators blaming low occupancy and insufficient payments from Medicaid and Medicare.”

“Edward Golding, a former top official with HUD during the Obama administration, defended the loan-guarantee program as essential to helping nursing homes and assisted-living facilities get access to credit. But, he said, the program ‘could benefit from more transparency and public awareness.'”

This Post Has 67 Comments
  1. ‘According to WeHousing founder Alan Gao, the company had been losing money since September after being unable to fill about a third of the units they leased for 2018-19’

    This is a result of the “money grows on trees” attitude we’ve seen the past few years. Sure, I’ll be a middleman on airboxes! Riches galore! Now he’s pretending to not be himself.

    ‘We’re students..We don’t just want to put this money in the water’

    You got schlonged Guanlin.

    1. Credit at the school of hard knocks. Good to get that out of the way when you are young and it is relatively cheap.

    2. Suggested name change: WeBorrowed.

      “To stay afloat, Gao says, WeHousing ‘borrowed money from all sorts of creditors.’ He says the company ran up credit card debt and took loans from multiple banks. Last month, some of those loans came due. ‘For April and May, we used most of the rents collected to pay off loans,’ Gao says.”

      And isn’t check kiting illegal?

  2. Behold:

    ‘A mere eight months ago I called the Chinese electric car startup Nio “a bright, shiny object masquerading as a real company.” This was in reference to its ultimately successful attempt to raise $1 billion in a U.S. initial public offering. Nio was adept at capital collection, marketing, and even automotive design. Yet it had sold only a few cars while losing gobs of money.’

    ‘As time has passed Nio has sold more cars, lost even more money, and, critically, let down the investors who believed its premature promise. Nio’s shares have plunged from an offering price of $6.26 each to $3.24. The shares plunged 10% Thursday alone, the day after Nio announced financial results and a slew of strategic shifts.’

    ‘A weakening Chinese car market, the slow-motion unraveling of its American doppelganger, Tesla, and its own changes are to blame. Nio announced this week it will form a joint venture with a state-controlled company to make down-market cars—the opposite of the high-performance , premium-priced pitch it made to investors last year. Says Breakingviews.com: “ Shareholders who bought one company will end up with another.”

    ‘Nio is square in the middle of what tech investors might call the Great Disillusionment of 2019. An appreciation for value goes in cycles. Sometimes investors are willing to pay up for anything that looks like it will grow, whether or not it will ever make money. Other times, investors come to their senses.’

    ‘Now seems to be one of those times.’

    http://fortune.com/2019/05/31/nio-china-electric-car-tesla-data-sheet/

    1. Good thing all the smart ones invested in Lyft and Uber! Hey, when are those IPO millionaires gonna dump there briefcases of cash to buy up the Bay Area real estate as promised??? Getting hungry here…. —realtor

    2. There is a bigger issue here than just Tesla or Nio. Despite the propaganda out there battery technology has not improved in storage ability or price as quickly as promised. Thus, electric cars are much further from being economically viable than is believed. The same is true for using batteries to store renewable power when available.

      1. “Thus, electric cars are much further from being economically viable than is believed. The same is true for using batteries to store renewable power when available.”

        Yeah, there is some kind of a political racket built around the deceptive claim that renewable power generation is a cheap and economically viable alternative. Green nongovernmental organizations doubtless raise beaucoup buckaroos by deceiving the masses on this point.

        1. But this is a good op-ed from WSJ, which is hardly know nto be drinking the green kool-aid. The economics of EVs just make sense:

          Think Electric Vehicles Are Great Now? Just Wait…
          WSJ
          Dan Neil

          “This is above all a pocketbook issue for me. A gas-powered vehicle would be too expensive. I plan to keep my next vehicle 10 years, at least. Over that time the cost of ownership for an EV, including fuel (on the order of a penny a mile for the electricity), repairs and maintenance would be considerably lower than comparable costs of an IC car.”

          “My other big worry: resale value. In case you haven’t been following the news from the Paris climate talks, most nations of the world have put the IC vehicle under a death sentence. Post-Paris, the International Energy Agency (IEA) estimates that there will be between 125 and 220 million EVs on the road by 2030.”

          “We are living through the S-curve of EV adoption. The total number of EVs on global roads surpassed 3 million in 2018, a 50% increase over 2016, according to the IEA. In November Tesla Model 3 was the best-selling small/midsize luxury sedan in the U.S; and Model S sales (26,700, year to date) outsold Mercedes-Benz S Class, BMW 6- and 7-Series, and Audi A8 combined, according to industry-tracker goodcarbadcar.net.”

      2. Despite the propaganda out there battery technology has not improved in storage ability or price as quickly as promised.

        Average new vehicle price in the US: $37,577
        Tesla model 3 starting price $35,000

        Average amount typical driver will save on fuel in one year: $700-$1000. That is not taking into account savings from brakes, oil changes, time, convenience, etc.

        It’s no contest already.

        1. starting price $35,000

          Let’s call that $50,000, like in your case for example. And it cost $100,000 to build, maybe a lot more. This is unsustainable.

          If what you did/do gets popular, we’ll need a hefty kW tax for on-road use, to maintain the road infrastructure. We’ll also need some big bucks from you to upgrade the entire power grid because it really can’t handle everyone driving electric cars as is. More coal fired power plants.

          Remember, electricity is not an energy source. It’s an inefficient method of energy transmission. You’re leaching off the system like I do cruising on the Erie Canal, but you think you are virtuous, not lucky.

          Wouldn’t pencil out for long commutes for everyone if the vehicle lasted for a century without maintenance.

          1. we’ll need a hefty kW tax for on-road use, to maintain the road infrastructure

            Already happening in my state and many others. EV users are willing to pay an equivalent charge for the upkeep of roads. But what we are not willing to do is to be punished by lobbyists (like the recent secretive lobbying done by Chevron to try and pass punitive fees on EVs in Arizona).

            Besides, most of the damage to roads is caused by large trucks and semis, not EVs like Teslas and Nissan leafs.

            You’re leaching off the system

            No, I am paying for my electricity, just like anyone who plugs in a laptop or a refrigerator does. I suppose once I get rooftop solar and battery storage and no longer have to pay for electricity, then perhaps I will be leaching off the sun though.

            It’s an inefficient method of energy transmission.

            Hardly. It is the most efficient form of transportation barring light rail that is not human powered. Walking and cycling are the most energy efficient if you really want to get right down to it.

            https://imgur.com/a/k1N2X1C

          2. It is the most efficient form of transportation barring light rail

            I wonder why it is that the least costly method of transportation is always the most expensive. We know you can’t walk to work if it is 300 miles. I can walk to work, but you think that’s stupid.

            Now you are going to build a solar array! Good thing you started out with a lot of money. I mean good for you, not good for the rest of us if you waste resources relentlessly. BTW, you’re saying you own the two places where you live now? Where you are the Super and also where you leave the wife and child 300 miles away?

            If you don’t, it is rather a leap from apparent delusion to unvarnished BS.

          3. I can walk to work, but you think that’s stupid.

            No, I think that is brilliant. I wish everyone could walk to work and I commend you for doing it. I walked to work for 2 years when I worked at the hospital. I didn’t even have a car. I had an electric bike. That’s it. So it was bike or walk. I saved a ton over that time period, which is why I chose to splurge for my dream car.

            Where you leave the wife and child 300 miles away?

            Thankfully my job is flexible. That is the main reason I took a job outside of healthcare. My RN skills are atrophying. But I have been at home for the past 4 weeks with my son and wife working remotely. I have an assistant who can handle some of the short-term rental stuff when I am away. A lot of what I’ve spent the past half of a year building out is now running pretty smoothly, so it gives me more free time at my home base. So it’s a bit like MGSpiffy’s work. I can do it remotely, but I have to do site visits on occasion. But since wife is a teacher, they will be joining me all summer.

            By the way, I didn’t start out with a lot of money. I’ve just been able to save thanks to good circumstances and help along the way. I started out dirt poor. Yes, really poor. We weren’t the reduced lunch school kids. We were the free school lunch kids. Hand-me-downs and survived by the charity of church members and family as parents’ businesses flourished then failed. My father knocked out out of the park, but that was long after I had already graduated from university. It’s weird when you go from being really poor to being above average. I still think in the scarcity mentality.

          4. Yes, really poor. We were the free school lunch kids

            There was no free school lunch back when we were really poor. Lunch was two pieces of buttered bread with a little sugar sprinkled between. For real. And an apple.

            OK, so you don’t own the place and therefore cannot help destroy the planet by installing a solar array.

            Wife and son visiting for the summer, good on you, a little.

          5. “so you don’t own the place”

            One thing we both agree on is that when you buy something, you should buy it with cash. No financing stuff. We save up to buy things, whether it’s a car, house, or a solar array.

        2. Does that price work without massive Obama-era government subsidies?

          Tesla Posts Big Losses as Government Subsidies Wane
          May 29, 2019
          By H. Sterling Burnett

          Tesla reported losses of $702 million during the first quarter of 2019, breaking a streak of two straight quarters posting a profit.

          Tesla CEO Elon Musk announced he expected Tesla would lose money again in the second quarter on slower than expected deliveries and sales of its newest vehicles, but also said he expected the company to return to profitability by the third quarter.

          1. breaking a streak of two straight quarters posting a profit

            breaking a streak of accounting fraud to show two straight quarters posting a profit

          1. Old article. There have been plenty of people receiving the $35k base Tesla. You have to call in to order or go into a dealership to get the base model. Makes sense since Tesla is trying to upsell to a more expensive vehicle. Most buyers have opted for the $39k Standard+ though since it has a bit more range than the $35k standard.

    3. Interesting; I caught the most recent ’60 minutes’ where they interviewed the Nio CEO; I got a weird vibe from his demeanor. Could not tell if it was a real thing or lots of smoke and mirrors.

      I would caution us on our expectation that this ‘bubble of everything’ will collapse. When the fed and other central bankers lower interest rates, Nio and all of the other unicorns are the kinds of places that even more money is going to flow.

      1. the kinds of places that even more money is going to flow.

        Which will cause even more defaults. Easy money is like an artillery barrage.

      2. I would caution us on our expectation that this ‘bubble of everything’ will collapse.

        Caution noted. Caution ignored.

        The implosion of the Everything Bubble will be epic, but the wipeout of all that fake wealth created by fake Yellen Bux will usher in true price discovery at long last. The associated Great Muppet Reaping will also red-pill tens of millions of former sheeple who up till now have been grazing obliviously on the green shoots sprouting from the manure the corporate media flings around their pasture.

    4. I tried to find Nio sales numbers. They are a very new company and the numbers I found said they have sold just 15,000 vehicles in total. Tesla has sold over half a million worldwide, but their ramp is just starting. Tesla’s gigafactory is almost ready in China and they will start ramping up their model 3 for domestic consumption and it will not face tariffs since it will be produced in China intended for Chinese consumption.

      Nio could bleed for a long time if the Chinese communist party anoints it a strategic company that they must prop up because they see it as vital. I imagine they will do this. They are not going to cede ground to Tesla, which is the most American auto manufacturer in the world.

      1. They [Chinese communist party] are not going to cede ground to Tesla, which is the most American auto manufacturer in the world.

        I was under the impression the the Chinese loaned Tesla the money to build the plant in China. I’m thinking he who loans money owns it all if promises can’t be kept (definition of Tesla). As Tesla ramps down in the US (have you seen the 50% slide in their stock over the past six months?) and gambles large with borrowed money in the China Casino, they may actually be soon the most Chinese car manufacturer in the world. Just wondering!

        1. Tesla stock is down sure. Probably never should have been that high. But vehicle deliveries are way up! Tesla isn’t ramping down, they are expanding in the US. GM is ramping down in the US (haven’t you seen DJT’s tweets at Marry Barra) and Ford is moving production to Mexico, but now that might backfire.

          1. “But vehicle deliveries are way up!”

            How long can that continue with corporate losses piling up?

          2. Ford is not “moving production to Mexico”. Stop posting bullshit you have no clue about.

          3. Honestly, Tesla I think Tesla is completely fine. Their balance sheet is fine. They are spending a lot on lots of projects (Model Y, truck, semi, Gigafactory in China) and their Solar City acquisition has not been good. If their stock falls far enough, then maybe they get acquired by Google, Apple, or Amazon. Deliveries will continue. Even if Tesla doesn’t deliver 360k cars this year, not a big deal. Tesla doesn’t even advertise or run traditional leases. The entire auto segment is suffering. They are probably launching an insurance product soon and could monetize their customer base in an entirely different way. They could raise the price of their EV charging or even open up EVs to ride-sharing fleets. Maybe autonomous taxis are really on their way. Their brand is strong and they have a lot of ways to monetize it. The stock holders may not get the ROI they were hoping for, but Tesla will keep moving forward attracting tons of ill-will because they are an existential threat to so many industries. There is so much misinformation out there. It doesn’t help that Elon is eccentric and polarizing.

          4. “Ford is not “moving production to Mexico”.”

            Thanks for correcting me. They were going to move more production to Mexico (they already produce the Fiesta, Fusion, and the Lincoln MKZ in Mexico). Then DJT threatened them with a tweet a couple of years ago. In the end I think they did move all of their car manufacturing to Mexico. They were also going to move their autonomous EV efforts to Mexico too, but it looks now it looks like it will be in Michigan. DJT even tweeted about this success this year, which is funny because he’s on the record as saying these autonomous cars will drive us into walls!

            But yes, Ford was intending to move its manufacturing for the Ford Focus out of Michigan to Hermosillo (Mexico). Ford is now going to make it in China now instead of Mexico.

            Ford to move production of US Focus to China
            BBC
            June 20, 2017

          5. Tesla I think Tesla is completely fine. Their balance sheet is fine

            Their balance sheet is a disaster. Their’s is a Vision venture without any real innovation. We’ve had electric vehicles for many decades and they make sense in some small niches which are not at all luxury. Luxury saving resources is a delusion.

      2. They don’t need to worry about Tesla — the wheels have been coming off of their go-kart for some time now. And they’re about to face the onslaught of competition in this segment from companies who have been manufacturing vehicles for a lot longer than they have.

        One more thing to consider: where are you going to take that Tesla when it needs service or repair?

        https://www.sfgate.com/cars/article/tesla-repair-wait-time-complaints-electric-car-13796037.php

        1. I’ll let you know when I actually need something repaired. It is well-known that EVs have fewer repairs over all because of less moving parts. My father’s Model S is well over 100k in miles and has never needed anything except for body work on the rear bumper because someone backed into him in a parking lot.

          But in case you are interested, there are some independent specialists cropping up. Check out “The Electrified Garage” or “Rich Rebuilds” YouTube channel.

          1. EVs have fewer repairs over

            It’s just a chassis and drive train with an electric motor. This is not new technology so yes you can get it fixed up by any shade tree mechanic or sparky, easier if OEM parts are available. Well, there is the computer and instrumentation for the sleeping while driving part.

          2. Well, there is the computer and instrumentation for the sleeping while driving part.
            By far the majority of difficult to diagnose and fix problems on my vehicles, going back 20-30 years has been electrical / instrumentation / coding problems. These often require custom OEM parts, which may or may not be available when the OEM goes OOB.

          3. These often require custom OEM parts, which may or may not be available when the OEM goes OOB.

            This is a risk. I see it as a very small risk. There will always be people trained and willing to replace things for the right price. So cost and location could be an issue. It’s not too different from buying a European car in a small town where the mechanics don’t know how to work on them.

            I would say the same thing about buying a used car from the big 3 right now. So many of them are phasing out their car businesses in favor of SUVs/trucks. Even if a manufacturer is still in business but they’ve discontinued a model (or an entire vehicle segment in the case of small cars), there is little incentive to keep maintaining the customer base who drives those vehicles.

            This is basically what deterred us from trading in my wife’s Chevy Sparq for the Chevy Volt even when GM announced 20% off last month as they discontinue that vehicle. We’re now going to wait for a <$25k used model 3.

            The Chevy Volt It is a very good PHEV, but I wondered how much the manufacturer really wanted to support it down the road. I talk to first-gen Volt drivers and they gush about their car. They absolutely love it. But no more software updates and questionable parts might be hard on a discontinued model. This would apply to gas cars that have been discontinued in my mind even if manufacturer is technically still around.

          4. buying a used car from the big 3 right now

            Ironically, I can still get any part I want for my 50 year old twin Chrysler Marine engines. Any part. As for my 8 year old phased array sonar, leading edge electronics at the time, I had to scrap the whole system this year for the failure of one component. The manufacturer is OOB and the stuff was proprietary. Absorbed by Garmin and Discontinued. The tech is still available, but in a new package only.

        2. With a globe awash in crude with more formed everyday as demand plummets and prices fall, the sun already set on the electric car nonsense.

      3. Most of the electric cars are in China due to massive subsidies and the fact that in large cities it is impossible to register a non-electric car. If you look at the reserves of cobalt presently essential to make a lithium-ion battery there are less than 80 years left. It is very similar to the estimated reserves of oil. For oil, I think that estimate is a little high but that is a discussion for another day. But both of us believe in peak oil but you are ignoring we are near peak cobalt production and electric car sales are less than 2% of sales right now. Increase the sales to 10% of the market and cobalt prices will shoot through the roof meaning electric batteries will never be cheap. Yes, there are less things to go wrong with an electric car but when the batteries go, it a huge cost. Similarly, we hear how cheap electric and wind power is but whether you look at countries or states, a simple rule is apparent, the more “green power” they use the higher the cost of electricity. Clearly, the green advocates are ignoring costs in the system: https://www.chooseenergy.com/electricity-rates-by-state/

  3. the loan-guarantee program “…as essential to helping nursing homes and assisted-living facilities get access to credit…”

    I’m fine with loan guarantees, provided that they are privately provided and the premiums are paid for by the people who benefit from them.

    1. “Surprise announcement likely to result in at least a dozen employees losing their jobs”

      They’re getting more than 15-minutes over a dozen jobs?

  4. “Federal Reserve Chair Jerome Powell gave a speech a couple of weeks back that showed that financial regulators have learned many lessons from the 2008 financial crisis, but not the most important one, namely: If regulators wait to act until they can say with certainty that a credit bubble is about to burst, they’ve waited too long.

    Wait a minute. How did said credit bubble get inflated in the first place (rhetorical)? Nobody in the media is talking about that. Bubble-blowing is a destructive economic policy, esp. for housing, but yet again, here we are. The blame falls squarely ate the feet of the Fed. It’s in the record:

    http://www.washingtonpost.com/wp-dyn/content/article/2010/11/03/AR2010110307372.html
    What the Fed did and why: supporting the recovery and sustaining price stability
    By Ben S. Bernanke
    Thursday, November 4, 2010
    “This approach eased financial conditions in the past and, so far, looks to be effective again. Stock prices rose and long-term interest rates fell when investors began to anticipate the most recent action. Easier financial conditions will promote economic growth. For example, lower mortgage rates will make housing more affordable and allow more homeowners to refinance. Lower corporate bond rates will encourage investment. And higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending. Increased spending will lead to higher incomes and profits that, in a virtuous circle, will further support economic expansion.”

    “An ounce of prevention is worth a pound of cure.” – Benjamin Franklin

    “The popularity of inflation and credit expansion, the ultimate source of the repeated attempts to render people prosperous by credit expansion, and thus the cause of the cyclical fluctuations of business, manifests itself clearly in the customary terminology. The boom is called good business, prosperity, and upswing. Its unavoidable aftermath, the readjustment of conditions to the real data of the market, is called crisis, slump, bad business, depression. People rebel against the insight that the disturbing element is to be seen in the malinvestment and the overconsumption of the boom period and that such an artificially induced boom is doomed. They are looking for the philosophers’ stone to make it last.” — Ludwig von Mises (1940)

    Instead of a single asset class, this time it’s “The Everything Bubble”, stocks, corp. bonds, housing, to name a few.

    1. I’m finally getting around to reading “Thirteen Bankers” by Simon Johnson. While not a tome it’s a real slog through congressional and financial corruption…the venality evokes despair.

  5. Ladera Ranch a master planned family community in Orange county that got destroyed in the last mortgage melt down has a 68% increase in listings, which is common in OC. But huge warning sign of a collapse is that the one year average to sell a home has gone from 35 days to over 160. Yet prices have only decreased by 1%. Oh Oh. https://www.movoto.com/ladera-ranch-ca/market-trends/

  6. Just did a search of the outer commuter areas around LA and see that the entire commuter belt seems to be looking at a +100% or more increase in inventory with homes languishing for more than 100-150 days on the market. A sharp increase from 35 days this time last year, when multiple offers were rampant. All this with interest rates lower by -1% and lending terms loosened. So Cal is officially tapped out!

    1. “the outer commuter areas around LA”

      This is actually a thing, what a horrible way to live…

      1. Yup. Those willing to drive 90 minutes to two hours each way to go to work. But hey the beach is nice on weekends if you’re ready to jump in the car again.

        1. But hey the beach is nice

          I have a beach here that is a 10 minute walk. There isn’t anything in the lake that wants to eat you and it is never very crowded.

          1. When I drive 8 hours every other week (4 hours one-way), that is actually less of a total drive than many “drive ’till you qualify” commuters like the ones you mention above.

          2. When I drive 8 hours every other week

            OK, I’ll say it. That is not a good choice. You see your family once or twice a month. For a little more money, which you wasted on something ridiculous. Daddy, why didn’t you live with me when I was growing up? Oh I had a Tesla, you wouldn’t know what that is.

          3. OK, I’ll say it. That is not a good choice. You see your family once or twice a month.

            It is a completely amazing choice. You have it completely backwards. I am away from my family about 6-7 days a month. The rest of the time I am home. But not just at home passively as a stranger at night. The difference is that I am home and I am completely involved and actually raising my son. We are playing Legos, reading, going to the park, exploring, going to the library, children’s museum, etc. I may not be in the 1% of the income distribution, but I am definitely in the 1% when it comes to the amount of time I get to spend with my family.

            I am so lucky I’ve been able to raise my son and spend enormous amount of time with him. It’s the only reason I am doing what I’m doing because of the flexibility. I thought I would have that flexibility working as an RN at the hospital, but 3 12-hour shifts (which were actually about 14 when charting is done) meant I was up before he woke up and when I came home he was already asleep.

            Some fathers work 60-70 hours a week and sleep at home all the time but never really raise their children. I don’t fault them, it’s just a function of housing prices mostly. But I was a stay-at-home dad for 2 years with my son. I taught him how to read, ride his bike, changed his diapers, fed him during the night, played Legos, marble run, hotwheels, sang, dance, you name it. Even this past year when I am on my two week stretches at my home base in between site visits, I end up taking watching my son and the other 4-yo boy who attends the same preschool (my wife’s teacher friend’s son) because pre-school sometimes doesn’t match my wife’s school schedule. It’s been hard on this woman because her husband has to work in a different state (he works on high-end yachts or something, I don’t know for sure). Her son has really grown fond of spending time with me and asks when he is going to be able to do with his dad what my son gets to do with me.

            And he loves to drive in the Tesla. He loves fast cars, probably because of too much Lightning McQueen Disney movies.

  7. Business
    Some home shoppers are calling it quits, convinced that prices have peaked
    By Andrew Khouri
    Jan 18, 2019 | 12:10 PM
    Some home shoppers are calling it quits, convinced that prices have peaked

    “We don’t have a debt problem. We don’t have an overbuilding problem. We don’t have an economic problem — prices are not going to fall,” said Christopher Thornberg, founding partner of Beacon Economics, who called last decade’s housing crash.

    1. The trouble with news articles on the internet is that they pretty much stay there forever.

      1. Some home shoppers are calling it quits

        To be fair, we never really were shoppers in the first place.

    1. Cryptocurrencies are surging this morning as desperate Chinese try to get their money, then themselves, out of China before the bottom drops out and the vengeful ant tribes and jobless factory workers come looking for the “comrades of proven worth” who sold them down the river.

      https://www.marketwatch.com/investing/fund/tvix

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