The Housing Infrastructure Already Exists

1. ‘Why would we destroy irreplaceable wildlife under such ecologically delicate circumstances when luxury apartments have been built faster than trees’

   Because the REIC can’t squeeze a few more billion$ from that irreplaceable wildlife. It comes down to this: these shortage people are lowlife scum. And they’ve been peddling a lie for years.

   1. Irreplaceable? Its a desert with no water and little signs of life – they just took a picture in that one week in spring where the wildflowers bloom and it doesnt look like the moon. The reality is most of socal would look like that if they didnt get (steal) water from someplace else. And the water they do get is nasty, bad to drink and bad to bathe in – makes you look like a cancer patient (a la Jerry Brown) after just a few days. The piece was written by a scumbag that works in “environmental and social justice” – the typical domain of the shylocks. They’re big in the “non profit” homeless industry too – ironically drawing big paychecks while the problem explodes out of control thanks to their nurturing.

      Wanna bet the vampire that wrote this garbage drives a tesla or similar virtue signaling coal powered electric?

      1. That may be true but the question is does Los Angeles need more airboxes and shacks?

         ‘Los Angeles County suffers nation’s worst population outflow: 98,608 more exits than arrivals’

         ‘Historically speaking, last year’s outmigration was up compared with an average 57,136 outflow from 2010 to 2017.’

         https://www.dailynews.com/2019/06/24/la-county-nets-98608-more-departures-than-arrivals-nations-worst-population-outflow/

         You know what’s on the other side of that desert? More desert. What’s not mentioned much is the land grab LA is pulling to get the aquifer to it’s east. Some people in Arizona don’t appreciate it and wish you guys would quit the US and join Mexico already. And take your tesla driving snowflakes with you.

         1. County moving forward with Jamul development, despite neighbors’ wildfire concerns

            ‘Neighbors and environmental advocates opposed to Otay Ranch Village 14 say the county needs to stop piling up hazards. Despite the protest, the county moved Wednesday to move forward with the project.’

            “This is a catastrophe in the making,” Dan Silver, of the Endangered Habitats League, said. “There are tens of thousands of unbuilt units in good village locations, there is no need to put a project in such a dangerous location.”

            https://www.10news.com/news/local-news/county-moving-forward-with-jamul-development-despite-neighbors-wildfire-concerns

         2. “…but the question is does Los Angeles need more airboxes and shacks?”

            Wasn’t it recently reported that there’s something like 100,000 empty apartments in LA?

      2. Preserving deserts can be important to many species. However, today’s environmentalists totally ignore the impact of immigration. Sorry you cannot be for open borders and then try to protect the environment. I stopped supporting the Sierra Club when they sold out on the issue, many good environmentalist were labeled racists etc. when they continued to promote ZPG including limiting immigration into this country. When people are brought in from Somalia they consume probably fifty times the resources they did when they lived in Somalia, they also tend to have far more children than the average American. Protect the desert tortoise, close the border.

2. As the parent of three college students who live with family members to avoid ridiculously overpriced campus housing costs, I predict that the student housing bubble is toast.

   1. PS When I was a college student, I could afford to live with roommates near campus and pay for it out of my part-time employment while completing my degree . Now that the REIC has its greedy fingers into the campus housing market, this is not an option.

      1. $131.25 a month living with three roommates at Football Factory State University. And I worked 1 or 2 part time jobs all the time.

   2. ‘Dallas-based Fountain Residential Partners, which specializes in luxury student housing’

      Specializes in a thing that didn’t exist a few years ago.

      1. And won’t exist a few years from now, either.

         1. Exactly. My daughter lived in one of those complexes her sophomore year at a big SEC school. Looking at how hard those units are used by the frat boy crowd they will be worn-out slum housing in 5 years.

            Those “luxury” student housing complexes are ridden hard and put away wet. That “luxury” veneer will not last long on most of those units.

            1. The builders will tell you the cost to build luxury isn’t much different from regular. The luxury is tied up in the amenities. So the path forward is clear: default, lower cost basis, ditch the amenities (no one uses them much anyway) and lower rents.

            2. at how hard those units are used by the frat boy crowd they will be worn-out slum housing in 5 years ??

               I can attest to that for sure…Current group; “Rugby Players”…

            3. My (sic) alma mater at work…

               8 out-of-control parties that left thousands in damage

               Three University of Michigan fraternity members are still paying for their winter-break festivities in the worst way possible.

               They’ve spent this week appearing in court facing criminal charges for hosting a rager at a northern Michigan ski resort that reportedly caused $430,000 worth of damage and left the place looking like it had been carpet-bombed.

      2. Housing Bubble,
         Toil and trouble,
         May thee pop
         And turn to rubble.

   3. Every time I read about luxury student housing, I wonder how many of the young adults boo-hooing about their “crushing student loan burden” spent some of that borrowed money on luxury housing?

   4. “As the parent of three college students…”

      Wow, sounds scary. I’ve got one at WWU Bellingham, the other at our local junior college, and I feel like a Canadian maple tree being bled dry.

      1. Vermont maple syrup is better, just saying.

      2. It completely boggles the mind how something like college could be so damn expensive. What does a student receive from attending college other than a bunch of disjointed information that may or may not have any application in the real world? I’m not saying that it’s without value or a bad experience, but how could anyone justify spending $50,000/year on a college degree? And don’t get me started on textbooks. That is a total scam.

         1. As a parent you have little choice in the matter. Lacking the resources I imagine you could name your son “Sue,” and buy implants for your daughter, but I’m above that league.

3. ‘the lawsuit that ledgers produced by bookkeepers ‘clearly demonstrate that Mr. Saulnier has been embezzling and stealing money from the J&B since its inception’

   Another alleged ponzi scheme. And he was still looking for loans.

   1. “the cost to build luxury isn’t much different from regular.”

      Irrespective of all the yapping and donkey-braying, It’s all the same materials, same labor.

4. “When students are drawn toward these captivating, seemingly-amazing apartment complexes, targeted toward the individuals who continue to act as if college resembles reality TV, who is left with the bill?

   According to the 2020 Democratic presidential contenders, taxpayers should foot the bill. Free everything ain’t free to those who pay the bills.

   1. Also known as a conduit scheme. In this case students and their loan borrowing capacity are the conduit through which the REIC steals money from the government. It went into overdrive after Obama nationalized the student loan business.

      1. A couple of years ago I posted an article on Phoenix. There were 15,000 senior living units under construction. 95% were luxury.

         I followed this whole thing: several years ago we’d see guys say student are “demanding” luxury, or the same about senior living. But it was all made up, stories told to the media and lenders to justify greed and irrational behavior. I’d bet not one single person ever “demanded” luxury in these categories. That’s how widely the REIC lies and gets away with it for years and years.

         1. What’s embarrassing is that people parrot those media talking points. I’ve heard it in my own family and friends.

5. “Luxury student housing” LOL. Then half of them graduate to get a job at Starbucks and sleep in their cars.

   Whatever happened to sacrificing when you’re young to lay the groundwork for a more secure future?

   Jeffrey Lebowski said it best: “it’s all ****ing fake, man.”

   1. I get shocked sometimes at what the building choices are.

   2. Whatever happened to sacrificing ??

      LOL….Delayed gratification went down the sewer long ago…

      1. Long term goals or short term temptation was a saying from my drill sgt. while in line at the mess hall.

   3. The job of students is to service debt… whose ultimate beneficiary was the REIC, football coaches, and university administrators. Students have only received (and not even in all cases) an object of negligible value, a degree. If we are going to solve the student loan debacle, the best option would be to simply transfer debt obligations off the students and back on to the colleges they attended. If the colleges have to declare bankruptcy, so be it. They caused the problem.

      1. If we are going to solve the student loan debacle ??

         All Jr. College free for two years only…Last two years of “State College” free…Thats a start…

         1. Is College Worth It?
            The Economist
            April 5 2014

            “WHEN LaTisha Styles graduated from Kennesaw State University in Georgia in 2006 she had $35,000 of student debt. This obligation would have been easy to discharge if her Spanish degree had helped her land a well-paid job. But there is no shortage of Spanish-speakers in a nation that borders Latin America. So Ms Styles found herself working in a clothes shop and a fast-food restaurant for no more than $11 an hour.”

            “Frustrated, she took the gutsy decision to go back to the same college and study something more pragmatic. She majored in finance, and now has a good job at an investment consulting firm. Her debt has swollen to $65,000, but she will have little trouble paying it off.”

            Hard subjects pay off

            “Unsurprisingly, engineering is a good bet wherever you study it. An engineering graduate from the University of California, Berkeley can expect to be nearly $1.1m better off after 20 years than someone who never went to college. Even the least lucrative engineering courses generated a 20-year return of almost $500,000. Arts and humanities courses are much more varied. All doubtless nourish the soul, but not all fatten the wallet.”

         2. Sorry the post below explains the problem, it is too costly without benefitting society enough. There are many degrees which have too little value to society. We have a shortage of many of the trades so studying them should be free, we also have a need for STEM degrees particularly if we stop corporations from importing cheap help (and we should). I do not want to pay for left wing indoctrination for skills that the country needs I am all for paying for state school education at state school prices. If you are a gringo and want that degree in Spanish, do it on your own dime and if it is in gender studies, I am even more adamant about it.

      2. “The job of students is to service debt…”

         My take on the lack of college funding at the state level is that it is due to the baby-boomer retirement crisis since not enough was saved by the pension system for a variety of reasons. At the federal level it is the “entitlement crisis”, the “middle-east crisis” fighting six active conflicts and Wall street’s financial crisis.

6. These are mostly kids in the 2-10% top income families, trying to act as if they are no inferior to the top 1%.

   For every such kid living in these luxury apartments, you can find 8 or 10 or more living in cramped apartments with multiple roommates.

7. ah just in time….Eight people injured in explosion at University of Nevada, Reno dorm
   The residence hall opened in 2015 at a cost of $40.5 million. The seven-floor building houses up to 750 residents. The university’s web page refers to Argenta as a civic engagement-themed residence hall.

   https://www.yahoo.com/news/three-people-injured-explosion-university-215635443.html

8. A possible interesting discussion would be the materials used in the construction of these student housing AND the senior living facilities popping up all over. I suspect most of them are junk..meaning they are built with cheap materials. A local report by a local fire marshall looked into all of the plastic, pressed wood, glues and other cheap materials that most structures are built with. And this includes the furnishings. Bottom line with all of that junk structures now days burn far faster and hotter than in years past. In a fire/explosion sprinklers or not good luck getting our fast enough.

   1. They charge a arm and leg for a designer light fixture.

9. Rural America faces housing shortage. How one town is addressing it.
   Laurent Belsie
   Christian Science Monitor
   6 July 2019

   “In one unfinished house of this cul-de-sac, the drywall is so new you can still smell the joint compound. In another, a carpenter works on beveling the counter of the kitchen island.”

   ““We were desperate,” says Verlin Janssen, a city councilman for Gothenburg, of the mini building boom. There was so little available housing in this community of 3,448 that nurses, factory workers, managers, and others were turning down job offers to relocate here because they couldn’t find houses to live in.”

   ““I have five critical access hospitals in my little legislative district,” says Nebraska state Sen. Matt Williams, whose hometown is Gothenburg. “Every one of them is shorthanded of workforce right now.” One reason, he says, is the lack of housing for workers.”

   https://www.csmonitor.com/Business/2019/0705/Rural-America-faces-housing-shortage.-How-one-town-is-addressing-it

10. Kamala Harris proposes $100B in homeownership assistance
    https://apnews.com/4b1871da31e6483ea6b4b2d0d762a484

    “NEW ORLEANS (AP) — Democratic presidential candidate Kamala Harris is proposing $100 billion in federal grants to pay for down payment and closing costs to help close what she says is a racial wealth gap and address historical discrimination in homeownership against black families.”

    Keeping the hope (and real estate prices) alive.

    1. Booker’s tax credit to renters is a much better idea. Either give a tax credit to renters, or rip away the MID completely.

       1. Just end “trickle down” and corporate welfare and all fraud. Invest in schools and infrastructure. End gov guaranteed loans.
          When do I get less spending and less gov? A good start.

       2. Agree with this wholeheartedly. It’s time for fair tax policies, not ones which favor wealthy asset owners and debt-junkies.

       3. Here’s an idea: put an end to 30 year fixed-rate mortgage loans. The U.S. (and oddly enough, Denmark) is the only country dumb enough to have this financial instrument. Loans of that length should be floating rate, or if fixed rate only 5 or 10 years long. There are many problems with the 30 year fixed-rate instrument that cause all sorts of distortions in the market and make housing artificially expensive.

          1. No, I don’t agree with that, at all.

          2. Japan has fixed rate 30 and 35-year mortgages.

          3. Agree. Ending 30 year loans would crush the demand side of the equation and bring down housing prices along with the removal of gov backed loans. Rates would climng and prices would fall.

             1. Show us all how the math works for that.

             2. I agree with Chino show us the math, Thirty year mortgages have been around a long time and they did not cause the problem. People pay higher interest to obtain them and if corporations can and do issue thirty year bonds when it makes economic sense, ordinary people should have the same ability. Why not really crush demand and not allow people to borrow at all? I am not making that as a serious proposal but to point out that the purpose should not be to crush demand but to achieve a reasonable balance between allowing people to buy a house and preventing speculation in housing with high risk of default.

    2. The inconvenient truth is that people who cannot save up a least a 3.5% down payment will never hang on to the house. They live from paycheck to paycheck and always spend everything they have. Sooner or later, they will have either a reduction in income or an increase in expenses which will cause them to lose the home.

       1. The inconvenient truth is that people who cannot save up a least a 3.5% down payment will never hang on to the house ??

          Veterans put “zero” down…

          1. Veterans do not have to, it is one of their benefits. Now, if they had to but could not, I stand by my statement.

             1. I stand by my statement ??

                Well sure you do…As always…

                It still fly’s in the face of what you said now doesn’t it;

                “Sooner or later, they will have either a reduction in income or an increase in expenses which will cause them to lose the home.”

                So why did you not include “veteran” home buyers in your conclusion ??

                So, if your going to disparage the 3.5% (percenters) then you must also disparage the “zero” downers…

             2. Let me break it down for scdave point by point:
                1. The gold standard for down payments is 20%, anything less certainly raises the risk for a default.
                2. Veterans’ home benefits have existed for many decades even when the gold standard was in place and thus the benefit was much greater, they are earned not a welfare program. There exists a prescreening to get them, you have to successfully complete your military service which reduces the risk since you have shown you are responsible. Nevertheless, low down payments do raise the risk of default
                3. Last time near the peak of the housing cycle subprime mortgages appeared and were targeted at minorities. this assured that they bought at the top and we all know what happened. All this program will do is drive up prices and assure that it happens again.
                4. The purpose of the twenty percent down payment was to assure that if a house dropped in value, the buyer would still have sufficient capital in the house to make the payment or sell if necessary. 3.5 percent is not sufficient to do that it does not even cover the real estate agent’s fee. However, at least it shows that the buyer can at least live within his or her means and save a little money. We already have 3.5% programs available for the general public, we do not and should not go any lower unless the benefit is earned.
                5. Finally, we do not know whether a veteran can or cannot save 3.5%. The program does not require it but it is likely most can within a few years, the benefit is that they can get into a house a few years earlier. However, it the veteran cannot, I think it is highly likely the veteran will default. The program was created when the minimum was 20% and the higher default rate under the program was offset by being considered compensation for the service to the country. That said once again I stand by my statement anyone who cannot save 3.5% of the cost of a house cannot afford that house and is a very high risk of losing the house. Thus, it is actually a disservice to the person to allow the mortgage and it is certainly costly to the taxpayers. While veterans make up around 7 to 8% of the population the program already is baked into the market. The total minority population is around a third, thus with the new program with under a 3.5% interest rate we are going to inflate housing prices with people who are then likely to default. I do not know anyone who understands the housing market, which should be anyone who has read this blog for a protracted period of time can think that this program is good for anyone. Not the buyer, not the taxpayer nor for the economy in the long term.

       2. “…people who cannot save up a least a 3.5% down payment…”

          Many young adults today know that savings accounts pay little interest, so why bother saving?

          1. I do not care whether they put it into a bank or into stocks or find another investment. However, I am very interested in whether they can live below their income. Most of the time the best savings is to pay off credit cards etc. Moreover since the time it should take to save 3.5% should be short, the low interest is less of a factor. I agree that we need to move back to a world where saving accounts pay more. However remember when saving accounts paid 5%, mortgages were 7.5%. If people are able to save 10.5% of their incomes per year than if they are buying a house, 3 times their incomes, it should take one year to save for a down payment. That is hardly asking too much. Of course, if you have 0% down payment, people will try to buy 5 or more times their incomes and that just drives the bubble. We need to be moving to a situation with lower home prices compared to incomes and higher down payments not moving to the opposite.

             1. Agree wholeheartedly with this post Dan. I wish the government would create some sort of instrument that would allow a fixed rate of return 200 points above the CPI and was limited to some small amount each year (e.g. $3k, $5k, etc.). Something like iBonds but which actually outpaced inflation. The goal would just be to increase the savings rate and capping it would allow the benefits to be spread along all Americans rather than creating an asset class the wealthy could dump their capital gains returns into.

       3. This is language from a link I posted below. These are the people which I do not want in a house when as a taxpayer I will have to pick up the cost of their default:

          Millennials, people who are currently between the age of 22 and 37, are even more likely to lack a financial plan for retirement.
          In fact, a staggering 59% of millennials said winning a lottery jackpot is a reasonable way to retire.
          Additionally, more than three-quarters of millennials said they live paycheck to paycheck. That means they also haven’t built up an emergency fund that can help cushion the blow for unexpected life events that cost money, such as unexpected medical care, car repairs, or even a layoff.
          “Playing the lottery may be fun, but it’s the opposite of a safe bet,” Brandon Krieg, the co-founder and chief executive officer of Stash, said in a statement. “Instead of crossing their fingers and hoping their lottery jackpot dreams come true, people can take concrete steps to improve their finances. And we’ve created a tool to help them do just that.”

          1. “People who I do not want”, why is it so hard to see the mistake prior to posting?

    3. My first argument against just giving 4 million people 25 thousand plus costs for house buying for discrimination/redlining decades ago is they are beyond the statue’s of limitations.

       2. No way of knowing who actually where disqualified on income and credit verses actual civil rights violations.

       3. Would be racist base on color excluding whites and other ethic groups who were turned down based on income and credit, or health and safety violations also.

       4. The legal remedy was to file a lawsuit at the time of the infraction case by case that is claimed. At the time Banks/lenders had legal right to turn down a unqualified applicant based on income or bad credit and weigh risk of loan to protect depositor in bank.

       The claim that blacks have 10 dollars to every 100 that whites have is not a civil rights violation or proof of same.

       1. This was a response to Mr Bankers post above about the new give-a-way. I don’t know how it got way down here. Oh well.

       2. I agree with everything you wrote and honestly I just read the article and you address the true program. I got bogged down on my contention that programs with a 3.5% down payment are enough assistance for everyone, anyone who cannot meet that requirement really should not be buying the house. What we really need is less government intervention.

       3. “Would be racist base on color excluding whites and other ethic groups who were turned down based on income and credit, or health and safety violations also.”

          My wife’s ancestors were Mormon pioneers who got chased out of the settled part of the U.S. to the Utah desert, where they had to lay down roots and figure out how to grow crops without any federal agricultural subsidies to help. Will she also qualify for reparations, or will they only be granted on race-based factors, like skin color?

          1. PS Would a critical mass of U.S. voters go for a Democratic candidate who campaigns on discriminatory policies that favor certain racial minorities over others? It seems like a couple of Democratic candidates in the current mix fit this description. Trump’s people would sniff this out and throw it in their faces.

             1. Trump’s people would sniff this out and throw it in their faces.

                In a New York minute, growing up as very working class I never received any of this white privilege which is talked about all the time. I saw wealthy white children receive the benefits of having wealthy parents and to a lesser extent minorities receiving affirmative action, I did not see working class white children receive anything. Precisely why, I think that a merit based society is best for everyone.

             2. Precisely why, I think that a merit based society is best for everyone.

                I qualified and ran the Boston marathon last year. Eliud Kipchoge is the fastest runner in the world and almost broke the 2 hour mark in the marathon. The slowest marathon runners may finish in 6 or 7 hours, or about 3x that of the absolute fastest.

                My view of meritocracy is, sure, some people should make 3x or 4x what someone else is making. But when someone makes 3000x what someone else is making, it’s hard to argue we have a meritocracy and more likely that much of the value being awarded as “meritocracy” is theft from the underlings.

    4. Next up:

       Personal bailouts for people of color who fell victim to Affordable Housing lures to buy houses at Housing Bubblw 2.0 peak prices, only to go underwater in the next crash.

       1. Harris wants to just give out 100 billion in hand outs to 4 million people of color to get their vote.

          This is a claim of racism in lending from many decades ago that isn’t proven. People were turned down for bad credit or income not qualifying. I know for a fact that Underwriters didn’t care about what color the person was. It was all about the numbers .

          Later lenders gave loans to everybody and anybody in the sub prime period. Look where that took us.

          My point is that claims of racism that are in .my opinion not justified is unjust .

          1. I would go further and say that it was fraudulent to give out the sub prime loans in the last bubble in which unqualified applicants were targeted, and this included whites and every ethnic group.

          2. Redlining, systemic racism, and inequality for the black community is a stain on the country. How to rectify this though? I don’t think a cash payment will work politically. Nor do I think the disparity of wealth between a white family and a black family (which is largely because of housing appreciation) is likely to repeat itself in the next 50 years.

             I would support smart ideas, like Harris’s LIFT program that give tax credits for low income working families regardless of race. This would disproportionately benefit black families, who are poorer on average, but would be race-neutral. That is the path forward on reparation in my view. It should be education, acknowledgement, and some form of anti-poverty, education, health benefit that is broad.

             1. One, I am more supportive of programs which target poverty and not race. As you said it will have a disparate positive impact on minorities but that does not bother me one bit as long as everyone at the same income benefits equally. For one they are constitutional since government benefits should not based on raced. I think that fiscal literacy education is a must. We have an amazing number of people who believe that playing the lottery is a sound retirement plan. Sorry but daily decisions which people in poverty are making are much more responsible for their poverty than what happened more than 250 years ago.

             2. This is a classic example of the bad decisions:
                https://learn.stashinvest.com/why-saving-for-retirement-isnt-playing-the-lottery

                The article states that 59% of millennials think that retiring with lottery winnings is a good retirement strategy. OMG, perhaps it is too late to save this country. We have way to many dreamers in this country. They dream of winning the lottery to finance their retirement.

             3. Some Black Leaders have said in essence that the ” welfare system”, was one of the worse things to happen to the black communities.

                It caused generations of people to not compete and created a culture of being paid for having children out of wedlock. This is just a example of how hand outs corrupt.

                Was it racist to give this welfare, or was it just a stupid idea that got bad results?

                Is it intelligent to hand out loans to the unqualified as if there is a right to create loss for the parties that put the money up for the loan.

                You got poor white communities with low income or living on welfare that have the same results as the black sectors.

                I’m just saying that when you claim racism, or civil rights violations , rather than what the true clauses were, than your not being honest.

             4. Some Black Leaders have said in essence that the ” welfare system”, was one of the worse things to happen to the black communities.

                It caused generations of people to not compete and created a culture of being paid for having children out of wedlock.

                It strikes me as a little more evil than that…intentionally or unintentionally. It was socialism for black women, and brutal dog-eat-dog capitalism for black men as soon as they came of age.

11. BREAKING NEWS! (not)

    San Francisco: More homeless living in vehicles
    https://apnews.com/6bb3e1383368494ba69f6a012312f30e

    1. From the article:

       “I’m seeing people with decent RVs but with no place to live, and many of them have jobs,” he said. “It’s very concerning and it all indicates what everybody already knows in California: that we have a severe affordable housing shortage.”

       I run all over the city and see these vans/RVs parked everywhere. It is pretty easy to spot them once you know what you are looking for. Huge RVs in urban areas stick out like a sore thumb. If I were attempting this, I would live out of a car, put up sun shades in all windows, and park in hospital parking lots or some other 24/7 parking facility. RVs on the side streets attract notices very easily.

    2. “San Francisco: More homeless living in vehicles”

       In Europe, collectively, they are called Gypsies.

12. The Lemming Report:

    “Is it a Bond? Please Can I Have It? Right Now? – Bloomberg”

    https://www.bloomberg.com/opinion/articles/2019-07-05/is-it-a-bond-please-can-i-have-it-right-now?srnd=premium

    (snip)

    “Yields everywhere are turning negative, and fund managers have little choice but to buy – against their better judgment.”

    (snip)

    “A pervasive fear of missing out on even the slightest hint of yield has created an unseemly buying frenzy that has swept across Europe, touching government bonds and making its way down the credit spectrum to high-yielding corporate debt.”

    1. The money line is the last sentence in that article;

       “Just try not to think about how all those pensions will get paid in the future.”

    2. Don’t those negative yields suggest that a stock market calamity lies just ahead? Kind of like when negative tides on the beach signal an approaching tsunami?

       It might be instructive to have a look at Japanese bond yields in the early 1990s, as their stock market imploded and deflation took hold. Were their bond yields then on the high side or the low side of normal?

       1. Here’s a chart which I find both surprising and frightening: Japanese long bond rates underwent a process of collapse between 1990 and the recent past. They appear stuck in the same low-rates trap as those of other economically developed countries.

       2. Which hypothesis better explains cratering sovereign bond yields?

          Hypothesis 1: Negative bond yields reflect an investor response to blatant announcements from central bankers that they are teeing up more rounds of quantitative easing. Investors are piling into sovereign debt on the old advice to “buy what central bankers buy,” realizing that eventual reinitiation of quantitative easing will drive bond yields even lower, generating capital gains for negative yield bond HODLers.

          Hypothesis 2: Investors are willing to hold negative yielding bonds because they anticipate a combination of low or negative inflation (aka deflation) ahead, coupled with even more negative returns on risk assets, making the negative yielding bonds relatively attractive.

          1. I think it’s #2

             1. It seems difficult to separate these hypotheses, as both seem plausible.

             2. Seems like lots of fund managers concur with you:

                The Financial Times
                Markets
                Investors braced for global recession
                Survey of fund managers shows highest expectations of recession in 4 years
                Tommy Stubbington in London 2 hours ago

                Investors are buckling up for a global recession, an influential survey of some of the world’s largest fund managers shows.

                The risk of a global downturn is now at its highest in at least four years, according to investors surveyed by Absolute Strategy Research.

                Global bond markets have rallied in recent weeks as central banks respond to signs that major economies are looking increasingly fragile. Investors ramped up purchases of government debt last week after Christine Lagarde’s nomination as the next European Central Bank president, betting that the IMF chief’s appointment would mean the era of ECB stimulus is set to continue.

                ASR’s findings, which are based on a survey of more than 200 institutions controlling a combined $4tn of assets, suggest that the bond rally is not a blip.

                The survey indicates that investors anticipate a 45 per cent chance of a global recession in the coming 12 months, the highest since the survey began in 2014. Investors have also shifted their views on where bonds markets are headed next. The majority now expect short-term US bond yields to be lower in a year’s time — a reversal since March, when more than half were banking on higher yields.

                Expectations that longer-dated yields and record-low yields in Europe will rebound have all but disappeared.
                …

    3. Opinion Capital markets
       Negative interest rates take investors into surreal territory
       The markets are vulnerable to potential nasty losses if rates suddenly shoot up
       Gillian Tett
       June 27, 2019

       This summer, Germany’s housing market has turned into Alice in Wonderland: the yield on five-year bonds issued by mortgage banks slid to minus 0.2 per cent, compared to a level of plus 5 per cent a decade ago.

       That means investors are essentially paying for the privilege of lending money into Europe’s largest property sector. Economic logic — or gravity — has been turned on its head.

       If that were not bizarre enough, consider this: in Denmark, some financial institutions are offering borrowers “negative” mortgages that pay interest; treasurers of major German companies are muttering about their bonds trading with negative yields; and yields on 10-year government bonds in France and Sweden have fallen into negative territory too, joining Germany and Japan.

       Overall, the global pile of negative yielding debt has swelled above $12.5tn, breaking the record set in 2016. Even in America, the yield on 10-year Treasuries recently fell below 2 per cent. That might not look dramatic since it is still positive in nominal terms. But when adjusted for core inflation (about 2 per cent) it equates to a near-negative real rate. This is remarkable given that the US just notched up an economic growth rate of 3.1 per cent in the first quarter.
       …

       1. Overall, the global pile of negative yielding debt has swelled above $12.5tn

          I’m pretty happy holding my 30yr US Treasuries yielding 2.75-3% bought when folks said yields can only go higher… Diversified, passive portfolios ftw!

          1. Nice. My 4% 5-year FDIC CDs purchased in Christmas look really good right about now.

13. “Just try not to think about how all those pensions will get paid in the future.”

    Just a wild guess but if it is a government pension, the government will borrow the money.

    1. Sure…MMT is the fairy dust…

       1. The central bankers have only themselves to blame, for demonstrating that balance sheet expansion can be used to create any arbitrary amount of seignorage out of thin air.

          1. “…seignorage…”

             Had to lookup that one. 🙂

          2. Democratic politicians are gonna naturally be like, “Hey, if they can electronically print all that money and hand it out to their Wall Street buddies, then why can’t we just have them print a little more to pay for stuff Democratic voters want?”

             1. While two wrongs do not make a right, it is a compelling political argument. The fact that the rich were more than made whole by the numerous forms of QE also is the reason why they could not understand the pain of the working class. The bankers had inflicted damage on main street which was not fixed by QE but it went unrecognized by many of the rich and many who did recognize it did not care because they were even wealthier than before the crash. I was against the QEs and stated at the time it was the biggest transfer of wealth to the rich the country had ever seen.
                If the Fed is allowed to create money out of thin air it will go to the politically well connected first before it is devalued. The Founding Fathers are attacked today using modern standards but just think how they were willing to forgo a system of fiat money and created one that limited government which meant a much fairer system for everyone. The Founding Fathers were all better than the standards of their day and helped create a system which allowed society to advance and that is how they should be judged.

             2. “The bankers had inflicted damage on main street which was not fixed by QE but it went unrecognized by many of the rich and many who did recognize it did not care because they were even wealthier than before the crash.”

                The Titanic passengers who had seat in a lifeboat understood their station in life, and I’m certain that the progressive among them were not likely to trade places with someone splashing in the frigid Atlantic.

                The bailouts were all about fat cats and starving dogs.

14. Basking Ridge NJ Housing Prices Crater 10% YOY As Brokers Conceal Stalling Market From Public

    https://www.movoto.com/basking-ridge-nj/market-trends/

15. Music from the Bay Area before the Bay Area became all tech and REALTOR. Operation Ivy — Energy:

    https://www.youtube.com/watch?v=5HtUnubXAO4&list=PLC1A4216BA8DFF1F1

    1. I hurt my neck 14 seconds in.

16. Raleigh, NC Housing Prices Crater 13% YOY As Debt Burdened Borrowers Default

    https://www.zillow.com/raleigh-nc-27606/home-values/

    *Select price from drop-down menu on first chart

17. No, it’s not just you, New Yorkers and San Franciscans: Urban housing markets all over the world have grown way too expensive
    By Andrea Riquier
    Published: July 6, 2019 12:01 p.m. ET
    Why are big cities so popular, and does a surge in demand for housing always result in a financial bubble?
    …

18. Here’s something interesting that I happened to run across …

    The Perks of Being a Psychopath
    https://psychcentral.com/blog/the-perks-of-being-a-psychopath/

    (snip)

    “According to the authors, who estimated psychopathy prevalence based on Big Five personality patterns (Openness, Conscientiousness, Agreeableness, Extraversion, and Neuroticism), Washington D.C. has the highest prevalence of psychopaths.”

    This bears repeating: Washington D.C. has the highest prevalence of psychopaths.

    “Master swindlers, Svengalis of the highest nature, it makes sense that psychopaths flock to an area of the United States synonymous with political power and influence.”

    1. This bears repeating: Washington D.C. has the highest prevalence of psychopaths.

       In other breaking news, the Sun will rise tomorrow.

    2. psychopaths flock to an area of the United States synonymous with political power and influence

       So many strong arguments out there for limiting concentration of power and keeping decisions/politics/power local and decentralized

    3. https://www.cbc.ca/doczone/features/the-hare-psychotherapy-checklist

19. Renters in Los Angeles and San Francisco are paying $1200 a month for a bunk bed in a shared space | Daily Mail Online
    https://www.dailymail.co.uk/news/article-7218067/Renters-Los-Angeles-San-Francisco-paying-1200-month-bunk-bed-shared-space.html

20. I finally discovered what is causing the massive homeless situation in California. Here, allow me to share …

    “It’s white people who are primarily the challenge on this housing question,” Newman tells Scheer. “White people support more multifamily housing, more apartments—whether they’re affordable or not, more apartments—to the tune of about 40%. And people who are not white support apartments to the tune of about 60%. So it is white people who own homes who are the cause of the homelessness crisis, and will need to be a part of the solution in some way, unless we can build a larger coalition around them and create that pressure.”

    The Homegrown Crisis California Refuses to Own – Truthdig
    https://www.truthdig.com/articles/the-homegrown-crisis-california-refuses-to-own/

    1. Liberals who think they can outsmart and legislate away human nature are the worst examples of brain dead, clueless morons walking the face of this planet.

    2. Correlation does not equal causation. This bears mentioning, homelessness isn’t caused by “white” people (obviously). But it does seem to be exacerbated by single-family-only zoning and regulations that disallow dwellings that allow housing at all price points to be built.

       1. ‘it does seem to be exacerbated by single-family-only zoning’

          Flavor of the day top down solutions that aren’t. Why not just outlaw it?

          ‘Santa Rosa Presses On With Plan To Remove Homeless Encampments’

          https://sanfrancisco.cbslocal.com/2019/07/06/santa-rosa-presses-on-with-plan-to-remove-homeless-encampments/

          1. Why not just outlaw it?

             Are you saying why not just outlaw homelessness or outlaw single-family-only housing?

          2. A cursory read of the news indicates that he purchased the services of under-aged prostitutes. I didn’t see any kidnapping, wire steel cages or a Neverland Ranch theme park to attract them. I imagine lots of powerful friends liked visiting Epstein Island.

             1. Oops. Ignore!

21. This could get very interesting:

    https://www.forbes.com/sites/lisettevoytko/2019/07/03/jeffrey-epstein-documents-could-expose-powerful-politicians-businessmen/#62c44cb05ac9

    1. “This could get very interesting:”

       But it probably won’t.

    2. A cursory read of the news indicates that he purchased the services of under-aged prostitutes. I didn’t see any kidnapping, wire steel cages or a Neverland Ranch theme park to attract them. I imagine lots of powerful friends liked visiting Epstein Island.

22. Math is easy:
    1) A shorter amortization period implies a higher payment to pay off the same loan amount.
    2) Conversely, the same monthly payment will support a lower loan amount and purchase price if it has to be repaid over 10 years instead of 30.

    I could provide a numeric example later today if that would help make the point.

    1. The other big bubble enablers are the GSE MBS securitization process, which was backstopped by Fed MBS purchases after the Fall 2008 GSE implosion, along with confirmation that the so-called implicit guarantee is actually explicit, with the risks externalized across the U.S. financial system.

       Get Uncle Sam out of the loan securitization and guarantee business and return these financial services to the private sector, with private individuals bearing the rosk of loss on bad loan underwriting, if you want to see the end of astronomical housing prices.

       1. Sure, I could get behind all of these ideas. But getting from here to there would need to be done gradually to avoid killing the patient since the US economy is so enmeshed in buying, selling, and flipping houses. Rightly or wrongly, the 30-year mortgage has come to be seen as an American right. It is a sacred cow to many. One might have as much luck getting rid of social security. A pragmatic course would be to increase required deposit gradually from 3.5% up to 20%. A gentle normalization of lending standards and then perhaps limit Federal-backed mortgages to 1 per income tax filing status. No need to have the government backing mortgages from 4 to 10 properties per individual.

    2. If this post was addressed to me (I don’t see any others here using the word “math”), it was not a literal question looking for an explanation for the difference in amortization between loans of different lengths. It was what I felt was the specious claim that eliminating the use of 30 year mortgages and their backing up by Fannie Mae / Freddie Mac would magically destroy demand and lower the prices of homes for everyone.

       I don’t think anyone here supporting this are looking at the possibility for unintended consequences — how about the one where builders and sellers don’t capitulate, and the purchase of homes is inundated even further by Wall Street and investors speculating for high returns, now that you’ve completely priced out first time buyers and folks of more modest means?

       Show me one instance from the last century where 30 year home loans grossly inflated prices, above and beyond normal inflation.

       It’s not the length of the loan, it’s the ridiculously low interest rates that are the problem.

       1. “It was what I felt was the specious claim that eliminating the use of 30 year mortgages and their backing up by Fannie Mae / Freddie Mac would magically destroy demand and lower the prices of homes for everyone.”

          That was the point of my math example, and related post about the role of federal risk subsidies to inflate housing demand. Sorry if you found my unassailable logic unclear or unconvincing.

       2. “Show me one instance from the last century where 30 year home loans grossly inflated prices, above and beyond normal inflation.”

          I suggest you examine the 1934 to 2019 period, with particular attention to the End Game (1996 to the present).

          1. From the standpoint of Owner Occupied Homes with Mortgages, it appears the Housing Bubble popped in 2008:

             Date Owner Occupied Homes with Mortgage
             01/01/2017 62.81%
             01/01/2016 63.04%
             01/01/2015 63.27%
             01/01/2014 63.76%
             01/01/2013 64.32%
             01/01/2012 65.74%
             01/01/2011 66.42%
             01/01/2010 67.23%
             01/01/2009 67.81%
             01/01/2008 68.43%
             01/01/2007 68.35%
             01/01/2006 68.23%
             01/01/2005 67.90%
             01/01/2000 64.48%
             01/01/1990 61.60%
             01/01/1980 60.66%
             01/01/1970 60.56%
             01/01/1960 56.77%
             01/01/1956 55.40%
             01/01/1950 43.97%
             01/01/1940 45.28%
             01/01/1920 39.84%
             01/01/1910 33.29%
             01/01/1900 32.02%
             01/01/1890 27.70%

       3. “…ridiculously low interest rates…”

          Definitely an exacerbating factor, and predestined to be a significant driver of falling home prices at the eventual point of mean reversion:

          Historical Mortgage Rates: Averages and Trends from the 1970s to 2019
          Year Lowest Rate Highest Rate Average Rate
          2018 3.95% 4.94% 4.54%
          2017 3.78% 4.30% 3.99%
          2016 3.41% 4.32% 3.65%
          2015 3.59% 4.09% 3.85%
          2014 3.80% 4.53% 4.17%
          2013 3.34% 4.58% 3.98%
          2012 3.31% 4.08% 3.66%
          2011 3.91% 5.05% 4.45%
          2010 4.17% 5.21% 4.69%
          2009 4.71% 5.59% 5.04%
          2008 5.10% 6.63% 6.03%
          2007 5.96% 6.74% 6.34%
          2006 6.10% 6.80% 6.41%
          2005 5.53% 6.37% 5.87%
          2004 5.38% 6.34% 5.84%
          2003 5.21% 6.44% 5.83%
          2002 5.93% 7.18% 6.54%
          2001 6.45% 7.24% 6.97%
          2000 7.13% 8.64% 8.05%
          1999 6.74% 8.15% 7.44%
          1998 6.49% 7.22% 6.94%
          1997 6.99% 8.18% 7.60%
          1996 6.94% 8.42% 7.81%
          1995 7.11% 9.22% 7.93%
          1994 6.97% 9.25% 8.38%
          1993 6.74% 8.07% 7.31%
          1992 7.84% 9.03% 8.39%
          1991 8.35% 9.75% 9.25%
          1990 9.56% 10.67% 10.13%
          1989 9.68% 11.22% 10.32%
          1988 9.84% 10.77% 10.34%
          1987 9.03% 11.58% 10.21%
          1986 9.29% 10.99% 10.19%
          1985 11.09% 13.29% 12.43%
          1984 13.14% 14.68% 13.88%
          1983 12.55% 13.89% 13.24%
          1982 13.57% 17.66% 16.04%
          1981 14.80% 18.63% 16.64%
          1980 12.18% 16.35% 13.74%
          1979 10.38% 12.90% 11.20%
          1978 8.98% 10.38% 9.64%
          1977 8.65% 9.00% 8.85%
          1976 8.70% 9.10% 8.87%
          1975 8.80% 9.60% 9.05%
          1974 8.40% 10.03% 9.19%
          1973 7.43% 8.85% 8.04%
          1972 7.23% 7.46% 7.38%
          1971 7.29% 7.73% 7.54%
          Overall 3.31% 18.63% 8.08%

          1. The percentages are annual summary statistics for the interest rates charged on 30-year fixed-rate mortgages in the U.S.

          2. The numbers suggest that 2012 was a more-than-30-year low, before the full effects of the Fed’s MBS purchase program to reflate housing demand kicked in. It’s hard to say how the current wave of plunging yields, including negative yielding sovereign bonds, might affect the long-term trend towards higher U.S. mortgage rates.

23. I drive by a luxury student apartment building daily, and this year I noticed they haven’t bothered putting flowers in their outdoor planters.
    In fact, they shoved the planters in a cluster against the wall near the garage entrance. That and the perpetual “great lease deals” sign tell a tale. As does this review of the building by a former renter:

    “…I pay $165 for parking and the garage door was broken for a full semester. Leaving no security over my car and random cars being able to park in the lot. I also did not get a remote to open the door once it was fixed and always was told: “they were on order”. Also, the common areas are usually trashed. Multiple mornings with puke and blood in the elevators that would not be cleaned until the following Monday. Speaking of elevators, these are commonly not working. They do have 3 elevators but most of the time 2 are broken, which is not ideal for 11 floors. My last complaint would be the random charges you could find on the monthly bill.”

    Such are the amenities in a newish student housing apartment where the 4-bedroom units go for $8K/month.

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