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When Yields Fall Too Fast, You Are On Your Deathbed

A weekend topic starting with Good Returns in New Zealand. “As the property landscape changes, yields are, once again, starting to move to centre stage for investors. Yet Kiwibank’s latest property market report reveals that the once stellar yields available in many regional markets are now on the decline. The bank’s chief economist Jarrod Kerr says the decline in regional yields follows the sharp fall in yields which occurred in the Auckland market when property prices took off well in excess of rental gains.”

“He says that what happens when prices rise too far, too fast, and rental yields fall too fast too fast is that investors go on the hunt for yield elsewhere. Last year, for example, Whanganui had yields of 9%, a shortage of property and rents were going up. Yet Kerr says that, just a year on, demand means Whanganui prices have been pushed up while yields have gone down.”

“‘The same can be said for the mighty Hawke’s Bay, Gisborne, Palmerston North, Northland and other regions… But the rise in property prices, and fall in rental yields, outside Auckland is perfectly rational,’ he said. At the same time, rental yields in Auckland are actually rising because property prices are falling, modestly, compared to a continued rise in rents, Kerr says.”

“‘The Auckland market is stabilising and finding its footing. Prices will start to rise again at some stage but prices are still coming off now,’ Kerr said. ‘It helps investors’ decisions. If you are interested in a property and the yield is 2.5% it’s not so attractive. But if you can get one and the yield is 3.5% to 4% that makes it much more so. It’s makes much more financial sense.'”

From The Real Deal on Florida. “Amid an influx of new high-end apartments in Miami, rent growth is starting to slow down in downtown Miami and South Beach, according to a new report. The slowdown in rent price growth shows that after years of rising prices, rents are starting to stabilize in Miami amid a glut of inventory from new apartments and condos that are being rented out. In West Miami and Doral, monthly rents actually decreased 2.2 percent to $1,850, the report shows.”

“From June 2018 to June 2019, 4,815 apartments were delivered in South Florida. Since 2014, more than 20,000 Class A apartment units have come to market in Miami, according to a TRD analysis of data from Integra Realty Resources.”

The St Louis Post-Dispatch in Missouri. “T.E.H. Reality, on a buying spree of low-income housing apartment complexes despite mounting complaints from existing residents, has said the firm has plenty of money to go around and a plan to make improvements. ‘We are in the middle of making it happen,’ Eliram Rabin, co-founder of T.E.H. Realty, told the Post-Dispatch in late March.”

“He spoke then during a meeting at Park Ridge Apartments, a 336-unit spread that was refurbished in the past 15 years with the help of about $15 million in low-income housing tax credits. But after a year of owning Park Ridge, one of 12 complexes the firm purchased in the region since late 2014, T.E.H. Realty lost the property. Meramec Enterprise Holdings II LLC recently purchased the property at a foreclosure sale.”

“‘The owners of this project were not meeting their financial obligations, but more importantly were not meeting their obligations to the tenants for a safe and healthy living space,’ Lynn Ziegelmeier, a spokeswoman for Meramec said Friday. ‘The bank has foreclosed and now Meramec Enterprise Holdings II LLC will begin the important work of improving these apartments for the people who live there now and future tenants.'”

“In October, Ferguson authorities told residents of one Park Ridge building to evacuate in 24 hours because a block of concrete had fallen from a second-story walkway. Other substandard living conditions and building code violations were reported. T.E.H. Realty has said it was making improvements. But in June, following inspections, the Housing Authority of St. Louis County said it would not allow new subsidized housing vouchers to be used at Park Ridge and four other properties owned by T.E.H. Realty, one of the largest providers of affordable housing in the region.”

The Times Union in New York. “A lofty plan to turn the former Kenwood Academy into a large development of apartments, townhomes, hotels and arts and entertainment facilities has ground to a halt, with developers owing millions of dollars through a defaulted loan, overdue taxes and unpaid contractor services. Developers owe over $1.5 million in unpaid city, county and school taxes, interest and penalties, and unpaid contractor services, and face foreclosure on a $5 million mortgage loan from TBG Funding, LLC, court documents for the mortgage foreclosure show.”

“Civil court and Albany County records paint a bleak picture for the project that aimed to construct 13 apartment buildings, six clusters of townhomes and two hotels as well as space for retail, an art gallery and an amphitheater. While brokers selling the property tout $15 million in improvements, it’s unclear what work was done. The entrance from South Pearl Street was closed Friday. Two permits for building and plumbing work were taken out by developers for the project, but they expired earlier this year, city officials said.”

“Despite the apparent work, Kenwood Commons filed a grievance last week over the property’s assessment in May, claiming the property is worth just $1.8 million, a 90 percent decrease from its current $18 million assessment. City Planning Commissioner Chris Spencer said it’s hard to predict what issues a project may face, or whether a contractor has the capacity to complete a project.”

“‘You can’t foresee all the contingencies that might happen,’ Spencer said. ‘Something unforeseen could eat up a lot more, and there’s a bit of a snowball effect. ‘You’re not getting the full tax revenue on a project. If it’s retail, you don’t have that activity on the street. You’re not creating the vibrancy that was promised.'”

The Buffalo News. “Robert C. Morgan, the embattled Rochester developer who faces federal mortgage fraud charges, has transferred about half of his properties to a joint venture with a Pennsylvania company, according to court documents. An affiliate of the joint-venture partner also has taken over management of at least one of the properties, according to the documents.”

“The affected properties represent about half of Robert Morgan’s empire of 180 properties and 36,000 units in 14 states, including in the Buffalo area, where he owns or controls several thousand apartments. The future of the other properties remains uncertain. Robert Morgan, who built up his real estate empire over the last 28 years after being paralyzed by an armed robber, has been charged with mortgage and insurance fraud in a 114-count federal indictment, following a multiyear probe by the FBI and U.S. Attorney’s Office in Buffalo.”

“His son, Todd; Buffalo mortgage broker Frank Giacobbe; and Morgan’s finance director, Michael Tremiti, are also charged in the indictment. Morgan’s nephew, Kevin; Giacobbe’s former deputy, Patrick Ogiony; and Morgan’s former chief operating officer, Scott Cresswell, have all pleaded guilty and are cooperating with authorities.”

The Wall Street Journal. “Don’t blame all the vacant stores on e-commerce. Sky-high rents are squeezing retailers, too. Although commercial retail rents are down from recent peaks, they haven’t fallen as fast as sales at struggling chains. The rents remain higher than prerecession levels in many prime shopping areas such as Manhattan, Los Angeles and Dallas.”

“In a high-profile example of this tug of war, Barneys New York Inc. has hired restructuring advisers and is considering several options including a possible bankruptcy filing, as it seeks to renegotiate the lease on its Madison Avenue flagship and other locations, according to a person familiar with the situation.”

“The landlord raised the annual rent on the Madison Avenue store earlier this year to $27.9 million, from $16.2 million, this person said. Barneys fought the rent increase but lost during an arbitration proceeding. Reuters earlier reported that Barneys had hired restructuring advisers. ‘Compared to a decade ago, rents are still up considerably—and for some retailers, it’s too much,’ said Nicole LaRusso, director of research and analysis at CBRE Group Inc., a commercial real-estate company.”

“Landlords say it isn’t that simple. They argue retailers fueled demand with a flood of store openings coming out of the 2008 recession. And even when the landlords dangle lower rents, it is hard to tempt retailers to open stores when they are retrenching. ‘We’ve cut rents by 30% and are offering all sorts of concessions, but we still have vacant space,’ said William Friedland, a principal with Friedland Properties, which owns commercial real estate in Manhattan.”

“Some chains wound up paying as much as 30% of their sales in rent, double the historic norm, industry executives said. ‘At that point you are on your deathbed,’ said Nina Kampler, a consultant who works with retailers looking to reduce their store base.”

“In other cases landlords have an incentive to leave space vacant because slashing rents would violate their loan agreements, industry executives said. Moreover, any devaluation of the property would make it harder for them to borrow in the future. Commercial rents in San Francisco are up 53% from a decade ago, and in Miami they are 46% higher, according to CBRE. Even in smaller cities, such as Nashville and San Jose, Calif., rents are up by nearly one-third.”

This Post Has 167 Comments
  1. ‘The slowdown in rent price growth shows that after years of rising prices, rents are starting to stabilize in Miami amid a glut of inventory from new apartments and condos that are being rented out’

    And for what they paid, they are losing money every – single – day. Tens of thousands of them.

    1. Every time these article say something has “stabilized” it is after data is being released that either the price or the rent for a unit of housing is dropping. There is nothing stable about it. Stable is neither going up nor down, not reaching terminal velocity while falling.

  2. ‘T.E.H. Reality, on a buying spree of low-income housing apartment complexes despite mounting complaints from existing residents, has said the firm has plenty of money to go around’

    I said these foreclosures were going to happen starting in late 2014. At that time no one in the industry would have believed me. They were caught up in the easy money! Sound familiar? Now they are dropping like flies.

    How did I know in 2014? Motivation. You could see that they were paying fantastic sums for little to no or negative cash flow. But lenders were cash out refinancing like crazy, with government backed loans. Which allowed the ponzi to continue – literally!

  3. ‘The Auckland market is stabilising and finding its footing. Prices will start to rise again at some stage but prices are still coming off now,’ Kerr said. ‘It helps investors’ decisions. If you are interested in a property and the yield is 2.5% it’s not so attractive. But if you can get one and the yield is 3.5% to 4% that makes it much more so. It’s makes much more financial sense’

    And remember these apartments “yield” doesn’t include financing cost.

    It’s irrational to buy rental properties costing so much. The only thing left is a greater fool.

    1. For property to cash flow.

      The total combined rent (accounting for vacancies) must be greater than the combined total costs of the mortgage, taxes, insurance, maintenance, fees and the costs for legal action (like for eviction).

      And then their is the costs of your time…

      1. A lot of small independent businesses have closed and left empty store fronts due to rising rents in NYC and surrounds. The investment funds that bought the properties leave them vacant rather than lower the rent.

    2. I remember last bust when certain properties went into foreclosure, then knifecatchers bought them and they went into foreclosure again as prices kept falling. These people are needed to get to the bottom. I don’t see any real buying opportunities for the next 5 years.

  4. As the above articles point out.

    The tide is going out.

    Most people are swimming naked.

    And it is going to get a lot worse.

    A 50 bps rate cute is not going to stop it either.

    “A lofty plan to turn the former Kenwood Academy into a large development of apartments, townhomes, hotels and arts and entertainment facilities has ground to a halt, with developers owing millions of dollars through a defaulted loan, overdue taxes and unpaid contractor services.”

      1. Nobody over 30 should be seen naked, either. One of my buddies had his shirt off on a bike ride the other day. He should not have…..

        1. DeWeese v. Town of Palm Beach, 616 F. Supp. 971 (S.D. Fla. 1985)

          PROCEDURAL BACKGROUND

          On November 19, 1979, Allen J. DeWeese (“DeWeese”), an attorney, was stopped by a police officer and issued a Notice to Appear for Indecent Exposure Lewdness for running on a public jogging and bicycle trail in the Town of Palm Beach (the “Town”) clad in running shorts but with the upper part of his body uncovered.

          DeWeese is an adult male resident of the Town of Palm Beach, a Florida municipal corporation located within the Southern District of Florida. DeWeese was verbally warned by the officer on numerous occasions, and was issued one prior written warning.

          https://law.justia.com/cases/federal/district-courts/FSupp/616/971/1811787/

    1. – So if the eCONomy is doing so great, why does the Fed need to CUT rates?
      – Historically in the U.S., the stock market has a significant correction after the 1st rate CUT at the end of the (credit) cycle. This is because investors (rightly) read the cut as an indicator of a slowing economy (Uh-oh, Wile E Coyote suspended in mid-air moment.) The Fed speaks with forked tongue. If “everything is awesome”, then why the need for a rate cut? I don’t think it’s different this time.
      – The Fed has painted themselves into a corner, meaning they can’t cut rates and they can’t raise rates, without dire consequences. So basically, no matter what they do, WE’RE screwed.
      – The Fed is a bunch of unelected and unaccountable hacks doing stupid things for the financial benefit of their crony buddies, not for Americans as a whole. If it’s not different this time, then the taxpayer gets the bill again. Bend over. Rinse and repeat. I guess Americans like this treatment (?).

      “One of the great mistakes is to judge policies and programs by their intentions rather than their results.” – Milton Friedman

      “There are no rewards or punishments — only consequences.” – W. R. [William Ralph] Inge

      “It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities.” – Sir Josiah Stamp

      1. Cutting rates right now will destroy any shred of credibility the Fed may have had left. There is positively no good reason or excuse to do so. It is grossly reckless, irresponsible and goes against their own mandate.

  5. according to CBRE. Even in smaller cities, such as Nashville and San Jose, Calif., rents are up by nearly one-third.” ??

    Thats rear view mirror talk…I have seen a significant increase in retail vacancy around here this year and it appears to be getting worse…

    1. That claimed boom in retail rental demand happened a lot earlier than 2008, at least around here. It was growing by leaps and bounds before the first bubble burst.

      Even before 2007, you had to be scratching your head wondering where all of the customers for all of these new stores were going to come from.

      Most of the metro area malls here are dying now, big surprise. Customers not only saturated with options, but driven out by crime (gangs loitering inside, cars in parking lots broken into, etc.). No wonder everyone shops online now.

      1. I don’t think it’s all online. Women are still buying clothing, but from Wal-Mart, Target, Kohl’s and Marshall’s/TJMaxx. Immigrants are getting clothing from thrift stores and sausage leggings from Wal-Mart.

        1. Good observation Oxide. Target has really upped its game IMO. Kohl’s is partnering with Amazon; they see the writing on the wall.

    2. ‘We’ve cut rent$ by 30% and are offering all $orts of conce$$ions, but we still have vacant $pace,’

      $ad. … $o $ad being a Manhattan landLORD.

  6. Rents have been one of the final supports of this housing boom and value is compounds when interest rates decline which lowers cap rate expectations for investors. However these factors are now stretched like a rubber bank with no more flex remaining.
    Therefore anticipation of value appreciation is at end of cycle. Best outcome is for value to stay flat. Worst outcome is obvious and increasingly likely. Consumer confidence is at least partially based on anticipation of future gain. Without that, what is likelihood of future events or trends?

    Where can things therefore possibly go from here? Items on that list are being crossed out daily with fewer outcomes possible.

    It’s the cycle, stupid! Right Yun?

    1. Therefore anticipation of value appreciation is at end of cycle ??

      Thats what I believe and basically for all real estate asset classes and the lenders are watching…

    2. I do not honestly understand how rents got so high, especially in the podunk areas where there has been no eCONomic recovery. Last bubble, rents stayed the same in spite of the hyperinflation in home prices. This time, rents exploded to the upside. I am wondering if the massive shadow inventory is the reason. The Fed and the banks are sitting on millions upon millions of empty houses while hordes of homeless take over every large city in this country. This is not only criminal, it is diabolical.

      1. “The Fed and the banks are sitting on millions upon millions of empty houses while hordes of homeless take over every large city in this country. This is not only criminal, it is diabolical.”

        “I’ve put America behind me.” —Chad Haag

        1. The problem seems to be in part that in a moment when crisis, the Fed takes the liberty of intervening to whatever degree and through whatever channel they deem necessary to rescue the economy. And once the economy is rescued, the training wheels are never removed.

      2. I do not honestly understand how rents got so high, especially in the podunk areas where there has been no eCONomic recovery.

        I’ve gotta agree with you – tracking semi-rural Michigan and suburban Texas and I can not even begin to imagine where a fraction of the higher paying jobs needed to keep parity would come from…

        For the most part, we can assume they didn’t.

        And that means rents, as percentage of income, have gone up, which means money left over for everything else has to have gone down in the squeeze.

        That is the recipe for a whole host of problems and backlash.

      3. “This time, rents exploded to the upside. I am wondering if the massive shadow inventory is the reason.”

        I don’t believe so. It’s because all the new inventory is luxury which commands high prices. A lot of the Grade B stuff, which kept the average rent down, was converted to luxe which also spiked rents.

        Day after day, Ben keeps telling us that cap rates are falling, and developers are fooked and hosed and otherwise going to default and this is going to collapse, but when? This has been going on for years and seems. When are we going to see some real price drops and fire sales? Not 1-2%, or first-year concessions. I mean real price drops which would allow a Millenial can move from Grade B into Grade A, and allow a single mom to get off the street and into Grade B. How long can this go on before someone finally declares bankruptcy and liquidates some of this?

        Heh, I think I know the answer… they can keep this afloat just like they do with Greece.

        1. “Day after day, Ben keeps telling us that cap rates are falling, and developers are fooked and hosed and otherwise going to default and this is going to collapse, but when?”

          Not to worry! A closely watched pot never boils over. (That said, I am not quite sure what went wrong in the fall of 2008…)

          1. How many apartment foreclosures are in today’s post?

            Anyway, where prices are down cap rates are going up. Like in Auckland, Miami or NYC.

          2. A deliberate kicking of the house of cards so Sarah Palin would not be elected to Vice President and become President if McCain died. The globalist only like elections when people have choices like Jeb Bush or Hillary Clinton.

          3. Well, just this one:

            ‘The bank has foreclosed and now Meramec Enterprise Holdings II LLC will begin the important work of improving these apartments for the people who live there now and future tenants.’”

            That doesn’t sound like a fire sale. From the careful wording of that statement, Meramec is planning to use PowellBux to value-add those Grade B into semi-luxe and drive rents up even more, for “future tenants.” Yup.

          4. ‘That doesn’t sound like a fire sale’

            This is why it’s pretty useless talking about stuff on the internet.

          5. We got an offer on our complex. A very good one too. Still need to counter. If everything closes, I’ll give details.

          6. A deliberate kicking of the house of cards so Sarah Palin

            She did scare a lot of people. I kind of liked her but I had liberal friends who up to that point were fairly reasonable people that you could agree to disagree with and still be friends. But they lost their minds after her nomination and it was never quite clear to me exactly why they were so triggered specifically by her. Maybe because if she got all the “firsts” for women there would be no point in voting for Hillary any more?

  7. Missed being able to respond on previous posts about RVs, but I’m currently traveling in a van conversion that cost less than 50k. I don’t live in it full time (month at a time) but for me it’s infinitely preferable to hotels/rental cars in terms of both cost and comfort. I can also bring my toys with me (bike, guitar, surf gear) – it’s a mobile man cave.

    I’ve noticed at the more urban RV parks a fair amount of people living in their old RVs and have a car to get around. Curious if the 2008 crash had something to do with their situation.

    Resale value on the typical RVs/trailers is bad from what I hear. Guy was telling me 2 days ago he bought a nice big trailer but it’s heating/AC wasn’t very good so he traded it in after 5 months. He got about 70% of what he paid.

    1. Curious if the 2008 crash had something to do with their situation ??

      We are active RV’ers…Bought my first RV in 1980…The answer to your question is “absolutely”…Many, Many more full timers on the road and in RV parks…School buses arriving at the RV park each morning is just one indicator…

      1. School buses arriving at the RV park each morning is just one indicator…

        Good thing most American$ have no i$$ues with: $ocial.$tatu$,
        … You own$ an iphone, yer.in.thee.club!

        1. Ah yes, we’re all poor because we have to have the newest iPhone. Because $500 is the difference between poor and middle class. 😐 iPhones cost $20/month and most people can afford that. Phones are NOT that expensive if you cut your land line and get basic internet. 20 years ago we spent the same amount; it was just to AT&T long distance.

          School buses at the RV park… well I’m very accustomed to seeing school buses at the apartment hi-rise, even junior high and high school kids. Imagine, your kids are teens are your job is so dead-end that you still can’t afford to buy a property. Talk about being fooked. What are these people going to do when they’re 60? Work and rent until they die? Actually, probably.

        2. Don’t for get your Apple Watch! That was the status symbol at my hospital. All the RNs and MDs sported their watch (but were overweight, overworked, and sleep-deprived running on caffeine and cupcakes/cookies/brownies from pharmacy sales reps).

          1. Since you worked in healthcare, perhaps you could explain something I have never understood: How come medical professionals, especially doctors, adopt work-life routines which violate the most basic tenets of health maintenance, particularly getting sufficient sleep and time away from work?

            Doctor, heal thyself.

          2. How come medical professionals, especially doctors, adopt work-life routines which violate the most basic tenets of health maintenance, particularly getting sufficient sleep and time away from work?

            They basically mirror the American population. There are a few who can buck the trend, but the way the system is setup it is extraordinarily hard to really be healthy. We have a sedentary society where we go from box to box in car. The food we have is overly processed with added salt, sugar, and trans fats. It’s an uphill battle for anyone really, but medical professionals have really long hours and high stress, so even though they have the knowledge, creating healthy habits is much harder.

    2. Resale value on the typical RVs/trailers is bad from what I hear ??

      “Bad” is a understatement…

      1. There’$ alway$ po$$ible $olution$:

        Eye years in some States, theys gets a backhole, bury it & no $eptic cost$ for x2 generations.

      1. Chinbabwe – did you see this hit reddit the other day

        The Reality of #VanLife (2018) A movie That follows an ex van dwellers journey as he seeks to dispel the myths about living in a van that social media shows.

        Watched it the other the other night – it’s actually fairly balanced, but pokes some serious fun/subversive scorn at Instagram culture.

        I just shake my head at our current generation of kids who thinks they can be a professional streamer/youtuber/instragram artist. I mean I am sure that when I was that age, there was a subset of peers that dreamed of being a rock star or actor/actress, but almost all quickly realized it was beyond their reach and got serious quickly. With so many kids I talk to today, because the barrier to entry for so many digital things from Indie/Mobile games, podcasts, youtube channels, etc is so bloody low, too many of them seem to think that for sure they will be that 1 in 100,000 that makes a living at it and have to keep trying.

        We are in a world that has never has never had so much content to consume, and even with junk outweighing the really good stuff 100 to 1, there is still far to much for any person to fully follow.

        /shakes head.

    3. Like a lot of things, RVs seem to have a depreciation curve that is sharp and steep at first, and the levels out over time. Go on ebay and look at some Luxury Class A RVs under 10 years old and the haircuts some people are taking on them.

      I don’t remember if I had mentioned it to this group, but I while back I was able to chat with Jessica Bruder, author of “Nomadland: Surviving America in the Twenty-First Century” (which I would recommend as a good read if the topic piques your curiosity) which is about people fulltiming in RV, with an eye towards recent economic events driving people to it.

      In short, she said a lot of people cited the 2008 crash and related aftermath as being what kicked them out of homeowning or renting. We got into it a bit, and agreed that there is a widespread, but under reported, transformation taking place in America with regards to not just home ownership, but with with traditional renting as well. More people are seeing smaller rewards and adapting any way they can figure out how to. It’s not pretty. It’s not glamorous. And it doesn’t like it’s going to slow down.

      1. “Go on ebay and look at some Luxury Class A RVs under 10 years old and the haircuts some people are taking on them.”

        Why not eat your pride and buy a slightly-used model, if the initial depreciation is so terrible? Don’t own an RV, but we have taken this approach with many of the cars we have owned through the years.

        1. Uhm… not sure where you assumed that anyone wasn’t?

          I’ve never bought a “new” car in my life. In fact I never paid even half original sticker. And the RV I was looking at for her was asking ~35-40% of original sales price.

          I just mentioned that as an example to find luxury models that were > 500k new asking over 2/3rd off original (and see the occasional seller who doesn’t get no bids)

          1. I give my father grief for buying at $200k Allegro about 8-9 years ago. I think he bought it for about 1/2 off since it was used. He parked it full time at an RV park in So Cal (Newport Dunes) for about 3-4 months out of the year). He always said he was enjoying the So Cal lifestyle on the cheap, but I would always do back of the envelope math and show him that just Airbnb-ing a place for the amount of time he was actually in the area would have been far cheaper once maintenance, RV site fees, depreciation, etc. is taken into account.

            It’s fine if people want to buy nice things and they can afford it, but I think it laughable when people fool themselves into thinking it makes financial sense. Same with my model 3. Compared to buying a used Honda Civic, it will never be cheaper. I’ll readily admit that. But I was willing (and able) to pay for something I wanted that is a luxury vehicle and which happens to have a lower maintenance cost that most of my other “cheap” cars. But I don’t pretend that it is saving me money.

          2. It’s fine if people want to buy nice things and they can afford it, but I think it laughable when people fool themselves into thinking it makes financial sense.

            I understand both the practical and emotional reasons we buy new. Especially the emotional reasons. As long we know the tradeoffs in actual numbers, are ok with it and not just fooling ourselves, then I’m down with buying new. In the case of the Model 3, you also have the issue that higher depreciated used models don’t exist. I think all of us should have a few new things that especially enjoy sometimes.

            For most big purchases, I like to let someone else take the big depreciation hit, for the cost of the wear and tear. That tends to lead to the shopping experience where I’m looking for a used item that’s been well maintained and cared for, not rode hard and put away wet. The idea being that the extra non-recurring maintenance or consumables that I have to deal with early will cost a (small) fraction of the purchase price saved. For the RV in question the other day, the MSRP is $145K. So to be talking 45-50K for the same utility but for it not to be brand new, I thought was a smart tradeoff for the specific situation.

            Again, with your model 3 I think there’s a bit more to that specific situation – it’s not quite apples to apples to the civic – it’s as major a change in energy and propulsion technology as we’ve seen in a hundred years. It’s the kind of thing that I would do if I felt comfortable with the money side.

          3. I think all of us should have a few new things that especially enjoy sometimes.

            I remember in college I was driving a 50cc scooter and taking public transit. I found a used Nissan Maxima for $750 and thought I had hit the jackpot. The engine went out two months later and I ended up spending $3k to fix it. What I thought was a good deal turned out not to be such a great deal after all.

            I kept going over and over in my mind at how much I had spent on a junk car that I didn’t even want. It all felt very upsetting.

            It was a good lesson about the total cost of ownership and that–sometimes, but not always–when you “buy cheap, you buy twice.”

            I also would greatly come to appreciate George Akerlof’s treatise “The Market for Lemons” (he won the Nobel prize for that if I recall).

            What is Information Asymmetry

  8. I’m looking at the Aramco ad in the weekend dead tree edition of the San Diego Union-Tribune. (I thought Aramco was an oil company based in the Middle East, but whatever.)

    The ad depicts an attractive young heterosexual couple; the woman is sitting behind the guy, and she has her open legs invitingly wrapped around his waist. Below the photo is the sales pitch line: “TIME TO REFINANCE! LOWER YOUR PAYMENTS. TAKE CASH OUT.”

    There never has been a better time to go underwater on your mortgage by using cashout ATM financing to suck out equity at a time of falling prices!

    1. “There never has been a better time to go underwater on your mortgage by using cashout ATM financing to suck out equity at a time of falling prices!”

      It’s a great time to sell your house to the bank!

      1. Hmmm…. how did I know that you would answer that comment?
        Something must have attracted your attention… what could it be…

  9. From yesterday;

    ByHousing Wizard
    July 20, 2019 at 3:45 pm

    scdave,

    I just don’t want socialism, or open borders, so I will vote in accordance with stopping that ??

    And neither do I…I know that comes as a “shock & dismay” to Adan who loves to pigeon hole people…

    I would never, ever vote for a person like trump…If I had to vote today, I would vote for Steve Bullock…

    1. “I would never, ever vote for a person like trump”

      Geez scdave, Eye think dtRumpsis tantrumosis Chaostis is quite thee ble$$ing for America, … Happy he came along, makes a interesting bookend to A. Lincoln. (imhto)

      1. scdave saying “I would never, ever vote for a person like trump” may be the least shocking thing I have heard in my 59 years on this planet.

        IIRC last time sc tried to lead a let’s all get behind Bernie charge on this blog that looked something like the clip below.

        https://www.youtube.com/watch?v=6eX3fiQLo84

        1. I will be voting for Bernie in the Colorado primary in March 2020. In 2016 as a registered Republican I was denied the ability to participate the closed Republican primary.

          In 2020 as an unaffiliated voter I can vote in one party primary, and I support Bernie because it will promote dissent within the party, deny Biden a coronation, and hopefully lead to a replay of Chicago 1968 both inside the DNC convention hall and on the streets of Milwaukee next year.

          And I will be voting for Trump again in the general election November 2020.

          “This sucker could go down” — George W. Bush

          1. good strategy. Biden is a 1%, that is he always had about 1% of the population support his presidential runs. The fact that he is leading the Democrats demonstrates how weak the other candidates are at getting independent support.

  10. Speaking of yields falling too fast, how about them cratering bond yields in the Eurozone?

    1. Streetwise
      The Money’s More Than Free. Why Won’t Europeans Borrow?
      Which explanation you prefer determines whether you think the European Central Bank is right to be considering another cut
      It is plausible that negative rates have worked, as eurozone investment since rates went negative in June 2014 has been slightly ahead of the U.S.
      Photo: daniel roland/Agence France-Presse/Getty Images
      James Mackintosh
      Updated July 21, 2019 10:03 am ET

      When it comes to interest rates, the U.S. and Europe are upside down.

      A big worry about the expected interest-rate cut in the U.S. is that it will encourage too much borrowing, inflating bubbles in debt and equity markets. A big worry about the expected interest-rate cut in Europe is that it will discourage borrowing, with many companies, households and governments paying down debt even with negative central-bank rates.

      Of course, the two regions face plenty of shared troubles: inflation is stubbornly low, pay rises are surprisingly low given how low unemployment is, and populist politicians are harder to predict.

      But the behavior of American capitalists is at least easy to understand. When rates are cut by enough, speculators borrow to buy riskier assets; companies borrow to buy each other and their own stock; and, to some extent, entrepreneurs borrow to expand their businesses.

      Those looking enviously across the Atlantic at negative interest rates in the eurozone may be surprised by the lack of a debt-driven boom. There are dozens of companies with old bonds now trading at negative yields, some maturing as far out as 2023. Yet only a handful of companies have issued euro-denominated bonds with a negative yield (done by paying no coupon and selling them for more than they repay at maturity).

      European companies stubbornly refuse to borrow. Since the European Central Bank brought in negative rates in June 2014, nonfinancial corporate debt to GDP in the eurozone is up by just 0.5 percentage point, to 105%, according to the Bank for International Settlements, and it is still far lower than in 2015.

      Why won’t Europeans borrow? Which explanation you prefer determines whether you think the European Central Bank is right to be considering another cut.

      1. No confidence in their leaders and for good reasons. Trump made the US economy jump just because he was not Obama.

        1. You should hang out in a farm country cafe, ask farmer folks how thing$ were in 2013 … The Kenyan.Obama years.

          1. Did Obama cause the 2012 drought which was the worse since the 1950s and wiped out the crops in 2012 which led to higher crop prices in 2013?

          2. It was the global (primarily Chinese) QE that caused the commodity boom in that period. It was all foods and materials: copper, cement, steel, New Zealand milk, oil. Remember how they poured 100 years of concrete in 3?

          3. Remember how they poured 100 years of concrete in 3?

            It doesn’t yet look like they can pull off another “miracle” like that one this round.

          4. It doesn’t yet look like they can pull off another “miracle” like that one this round.

            I think they could pour that much more again if they really wanted to. But I don’t think they can fool nearly as many people into thinking it’s a good idea again. So I guess it depends on which part you thought was the miracle.

    2. Trump tweets are blowing Fed off course
      By Greg Robb
      Published: July 21, 2019 3:02 p.m. ET
      Trump tweets feed back into market push for lower interest rates
      MarketWatch photo illustration/Getty Images, iStockphoto
      Would the Fed be cutting rates on July 31 if Twitter didn’t exist. No, says Jim Glassman of JP Morgan Chase.

      President Donald Trump’s social media war to get the Federal Reserve to adopt an easier monetary policy stance is throwing the U.S. central bank off course, despite the central bank’s best intentions to remain independent, some economists fear.

      Trump is having a gravitational pull on the Fed. Markets are now convinced his political pressure for easier policy is working, and this is raising market expectations for Fed rate cuts that might be damaging for the economy if not met.

      “The Fed has tried to take the high road. But markets don’t buy it. They think political pressure is making the difference,” said Jim Glassman, JP Morgan Chase commercial banking head economist.

      In this feedback loop, Wall Street’s view on Trump’s persuasion is helping push down bond yields, which are then used to justify interest rate cuts.

      “To the extent the Fed cares about what is in market prices, the president has an indirect reach into the Fed,” said Vincent Reinhart, a former senior economist at the Fed and now chief economist at Mellon.

      “If Trump can shape market expectations, he can influence the path of policy,” Reinhart said.

    3. Opinion: If the stock market is irrational, what do you call the bond market?
      By Mark Hulbert
      Published: July 21, 2019 11:38 a.m. ET
      It’s even crazier
      AFP/Getty Images

      CHAPEL HILL, N.C. — If you thought stock-market investors were irrationally exuberant, you should take a look at the behavior of those in the bond market.

      To illustrate how exuberant they are, consider which of the following bonds is riskier, and therefore must pay a higher yield to compensate investors for that risk:

      • A U.S. 10-year Treasury note

      • A Greek 10-year government bond

      If you’re like every other sane and rational investor, you answered the latter. Yet the Greek 10-year yield recently dipped below that of the U.S. 10-year, as you can see from this chart. I challenge you to tell a plausible story in which this is rational.

      Credit for pointing out this crazy situation goes to Vincent Deluard, head of global macro strategy at INTL FCStone, a financial services firm.

      Before you even think of trying to devise a plausible explanation for why Greek government bonds should yield less than U.S. Treasurys, Deluard reminds you that “Greece is rated B+ by Fitch, has a debt-to-GDP ratio of 181%, a youth unemployment of 40.4%, and its nominal GDP has shrunk by 23% in the past decade. Greece has defaulted eight times and has been in default for half of its time as an independent country.”

      1. Before you even think of trying to devise a plausible explanation for why Greek government bonds should yield less than U.S. Treasurys, Deluard reminds you that “Greece is rated B+ by Fitch, has a debt-to-GDP ratio of 181%, a youth unemployment of 40.4%, and its nominal GDP has shrunk by 23% in the past decade. Greece has defaulted eight times and has been in default for half of its time as an independent country.”

        Is a peanut butter and jelly sandwich still redeemable?

      2. Makes a certain kind of sense to me. Who’s in the market for Greek debt anymore? I can only think of one customer, the League of Central Banks. They’ll buy and take any or no yield so long as they can keep Greece dancing to the tune. The yield on Greek debt is now just lipstick on that particular pig.

        Contrawise, the FRB needs T-notes to be attractive to buyers so that it can get its purchases lost in the noise of general commerce. The yield isn’t so important right now since its expense is deferred. If we’re still spinning the plates while riding a unicycle on a tightrope 10 years from now then I’m sure the FSB can fund those payments with more bond purchases.

      3. It has to do with the expected exchange 10 years from today. The U.S. is expected to have (a little bit) more inflation over this time period. Hence when you convert your Euros back to dollars in 10 years time you will get a (risk adjusted) yield comparable to the 10 year U.S. bond. Also, people probably think Greece will continue to get bailed out forever. And, I believe the Greeks just elected a fiscally conservative government that is committed to staying in the euro zone. But I am not an expert on Greece. Although I do have a big fat Greek friend named Yannis (true story).

        The thing that really horrifies me is just the shear scope of bonds with negative long term yields, both national and corporate. It seems smart money is betting on massive deflation on a global scale. That’s great depression sh*t.

        1. Your expected future exchange rate argument, as related to relative inflation rates, also helps explain why the Eurozone has a much greater prevalence of negative yielding sovereign bonds than other corners of the developed world economies.

    4. Markets
      A $10 Billion ETF Is Smashing Records Amid the Junk-Bond Binge
      By Marianna Duarte De Aragao
      July 18, 2019, 12:00 AM PDT
      – BlackRock’s Europe high-yield fund enjoys highest inflow ever
      – Mounting pile of global negative-yielding debt boosting trend

      As negative yields engulf everything from Brazil’s state oil company to Hungarian sovereign debt to euro junk, investors are seeking refuge in high-yield bond ETFs.

      Europe-listed funds have attracted over 5 billion euros ($5.6 billion) since January, more than in any full year going back to at least 2010, according to data compiled by Bloomberg Intelligence. The largest exchange-traded fund tracking the debt — BlackRock Inc.’s 8.5 billion-euro IHYG — took in 640 million euros in the week ended July 5, smashing a record it set just two weeks before, the data show.

  11. The only way to get your money out of an RV is to use it for decades, then park it on some acreage as a getaway in its later years, if it isn’t rotted out by then.

    1. You can easily pick up a used cargo van like an E150 that will last a decade for less than 10k$. If you aren’t paying to park it, you could save a lot of money living in it in SoCal. You’d have got your money back in less than a year saving what you’d pay for a tiny studio apt. Maybe more like 6 months. But they don’t let you sleep in your vehicle anymore out here so you’d have to go to an RV park to be legal and prices at RV parks have gone up as a result. You might save a few hundred bucks a month but you’d be living in van.

      1. they don’t let you sleep in your vehicle anymore out here

        Peculiar, when they let you sleep on the sidewalk.

  12. The Squad is a gift to Trump
    By Scott Jennings
    Updated at 1:43 PM ET, Fri July 19, 2019
    Note: Scott Jennings, a CNN contributor, is a former special assistant to President George W. Bush and a former campaign adviser to US Sen. Mitch McConnell. He is a partner at RunSwitch Public Relations in Louisville, Kentucky. The opinions expressed in this commentary are his own. View more opinion articles on CNN.

    (CNN) — I’m glad President Donald Trump disavowed the “send her back” chant that broke out at his North Carolina rally. US Rep. Ilhan Omar and the rest of her “Squad” of House Democratic freshmen are as American as the rest of us, live under the same Constitution and enjoy the same First Amendment rights.

    It strikes me as fundamentally weak and lacking in confidence if you think the best way to debate someone is to have them sent away and essentially censored. Good for President Trump for disavowing it; I am sure he’ll get a chance to put a stop to it for real at the next rally.

    I don’t want to send US Rep. Omar back; I want to send her to the nearest television greenroom. I think she and The Squad ought to speak as freely and in front of a camera as often as possible. Every time they do, they continue to become the face of the national Democratic Party.

    No matter whom the Democrats nominate for president, the message and policies of The Squad will make up the heart of the nominee’s platform. This is a disaster for the Democrats and a gift to the GOP, which is fighting to reassure educated suburban voters to stick with them. Sure, they may not love Trump’s behavior or rhetoric on some issues, but they’ll take a good economy and secure border over socialism, higher taxes and open borders any day.

    1. The Financial Times
      US politics & policy
      Trump says lawmakers not ‘capable’ of loving America
      President intensifies race row by stepping up attacks on four female Democratic Congresswomen
      Elijah Cummings: ‘I heard the same kind of chant. Go home, you don’t belong here,’
      Aime Williams in Washington 3 hours ago

      Donald Trump, US president, continued to stoke an intensifying race row on Sunday, tweeting that he did not believe that four US congresswomen were “capable of loving” America.

      Although Mr Trump did not name the lawmakers, he has previously attacked four ethnic minority freshman Democrats — Alexandria Ocasio-Cortez, Rashida Tlaib, Ilhan Omar and Ayanna Pressley. Last week, Mr Trump tweeted that they should “go back and help fix the totally broken and crime-infested places from which they came”.

      On Sunday, Mr Trump tweeted: “They should apologise to America (and Israel) for the horrible (hateful) things they have said. They are destroying the Democrat Party, but are weak & insecure people who can never destroy our great Nation!”

      His fresh remarks show he is not backing down from his attacks on the four women despite criticism from Democrats. On Sunday morning, two senior Democrat lawmakers, Elijah Cummings and Cory Booker, said the president was racist.

      1. “tweeting that he did not believe that four US congresswomen were “capable of loving” America”

        dtRumpsis might have some actual personal insight in that issue regarding “love” … as his x3 former marriages he eventually discovered that he was incapable of “loving” his spouses.

        1. I’m no psychologist, but it seems like DJT’s paradigm revolves not around love, but around “winning.” He sees “winners” and “losers”.

    2. The Squad took the mainstage of Democratic party politics at just about the very moment that American voters began to care too little about Hillary Clinton for chants of “Lock her up” to resonate anymore.

      The Financial Times
      US politics & policy
      ‘The Squad’ storms the main stage of US politics
      First-term Democratic lawmakers are a lightning rod for Republicans and their own party
      From left: Ayanna Pressley, Ilhan Omar, Rashida Tlaib and Alexandria Ocasio-Cortez © FT montage
      Lauren Fedor in Washington July 18, 2019

      When the crowd at Donald Trump’s latest campaign rally erupted with chants of “send her back” directed at Minnesota congresswoman Ilhan Omar, it echoed the time when Hillary Clinton was the number one hate figure for the president’s supporters.

      At the event in North Carolina, Mr Trump stepped up his attacks on four leftwing first term congresswomen known as “The Squad” — Ms Omar, Alexandria Ocasio-Cortez, Rashida Tlaib and Ayanna Pressley — calling them “leftwing extremists who reject everything our nation stands for”.

      Mr Trump has repeatedly attacked the women since he wrote in a tweet on Sunday that they should “go back and help fix the totally broke and crime infested places from which they came”. It has become a hallmark of the president’s bid for a second term as he tries to force Democrats to back the women’s leftwing agenda. The Squad has also become a lightning rod for a generational and ideological split within the Democratic party.

      The women, who enjoy a huge following on social media — Ms Ocasio-Cortez alone has nearly 5m Twitter followers — champion policies such as the abolition of private health insurance and the dismantling of the US Immigration and Customs Enforcement. Ms Ocasio-Cortez’s proposed Green New Deal, which would overhaul the US economy to combat climate change, has received the backing of many 2020 Democratic presidential candidates.

      The Squad has courted controversy since taking office in January. Ms Omar was forced to apologise earlier this year after making comments that were widely viewed as anti-Semitic, while Ms Tlaib has been criticised for repeatedly saying Congress will “impeach the motherf***er”, in reference to Mr Trump.

      More recently, the four women, who often refer to each other as “sisters in service”, have clashed with House Speaker Nancy Pelosi.

      1. At the event in North Carolina, Mr Trump stepped up his attacks on four leftwing first term congresswomen known as “The Squad” — Ms Omar, Alexandria Ocasio-Cortez, Rashida Tlaib and Ayanna Pressley — calling them “leftwing extremists who reject everything our nation stands for”.

        The people who pay the bills, and heritage Americans in general, are getting sick and tired of the relentless attacks on them and demands for “redistribution of the wealth” by The Squad and its globalist puppet masters.

    3. Is it just me, or does it seem to others that the Democrats are collectively falling on their swords with only the slightest amount of encouragement from Trump tweets?

      1. Trump’s support among Republicans has increased since the tweets last weekend and his campaign rally in North Carolina.

        This is an example of real journalists losing control of The Narrative.

        Real journalists, if you can’t #LearnToCode, you deserve to get laid off from your journalism “career” and starve to death living in a tent down by the river. President Trump was absolutely right in one thing he said: the media are the enemy of the American people.

        P.S. I don’t pay for cable/subscription teevee, subscribe to newspapers or magazines, watch movies in theaters, visit websites that require you to disable the ad-blocker on your browser, or pay more than $35 a month for a phone or $45 a month for internet only. Real journalists, you don’t get any of my money 🙁

        1. Adding that I have deleted Facebook forever, in 2018.

          Any individual or organization that is banned, blocked, censored etc from Facebook, Twitter, Reddit, I immediately go directly to their own website, bookmark it, and read it regularly.

          Real journalists, the “walled garden” of social media doesn’t work. Any idea you ban, I will seek it out and read it for myself…

      2. I see it. IMHO it’s because the Dems think their only problem is insufficient commitment to socialism and intersectional identity politics. If they were only more zealous for those things, the American people would love them again, doncha know.

    4. “Scott Jennings, a CNN contributor, is a former special assistant to President George W. Bush and a former campaign adviser to US Sen. Mitch McConnell.”

      Now those are some impressive globalist establishment Republican credentials. It must have killed him to have to admit to that, Trump knows how to use the squad, he is playing three dimensional chess while the Democrats play a bad game of checkers.

      1. “…he is playing three dimensional chess while the Democrats play a bad game of checkers.”

        $o that explains the whalloping dtRumpsis sent to his GOP political party in the 2018 mid.terms!

        Brilliant, give 1st house Congress away & reap the benefit$!

        Go dog, GO!

    1. They should have done this 20 years ago, a common trick was to take a $500 rent stabilized apt. and slowly renovate it , by getting the worst tenant you can find, students divorce women druggies, and who will leave in a year or can easily be evicted the a little renno PLUS a 20% vacancy increase each and every time you get a new tenants so the next one pays $750 then 1100 then 1500 then the magical $2000 a month and its permanently deregulated all legally

      NYC also has a fast track eviction called possession only. If the landlord doesn’t ask for any back rent/ damages you could have a court date sometimes in 2 weeks and you would have almost no defenses to stay. .

  13. But if you can get one and the yield is 3.5% to 4% that makes it much more so. It’s makes much more financial sense.’”

    Except those promised returns are a chimera in a plunging housing market.

  14. What is going to happen to the huge debt buildup, which ultralow interest rates for a protracted period encouraged, when the next recession strikes?

    1. Signs suggest we’re headed toward recession in the next year
      By Robert P. Singh
      Baltimore Sun
      Jul 19, 2019 | 6:00 AM

      The incomes of typical Americans rose in 2015 by 5.2 percent, the first significant boost to middle-class pay since the end of the Great Recession, the Census Bureau reported on Tuesday morning.

      The 10-year economic expansion that began in March 2009 became the longest economic expansion in American history last month. With unemployment at 3.6% and the stock market hovering at near record highs, it is not surprising that the president constantly tweets about the state of the economy. However, all is not well, and there are ominous signs that point to a recession within the next year.

      The signs of economic trouble are becoming clearer.

      …the yield curve on Treasury bonds has become inverted. The spread between the 10-year Treasury bond and the 3-month Treasury bond is referred to as the yield curve. In a healthy economy, the 10-year bond should have a higher interest rate than the 3-month bond. The yield curve is now inverted with the 3-month Treasury bond carrying a higher interest rate. The last three times this happened, the U.S. economy went into recession in 2008, 2001 and 1990.

    2. Slowing growth in home prices aggravates recession worries
      by James Langford
      | July 18, 2019 10:35 AM

      Growth in home prices, the main source of wealth for most Americans, is shrinking, fueling concern that the longest economic expansion in U.S. history is nearing an end.

      Prices for residential dwellings rose just 3.6% in the 12 months through May, down from 4.1% in January, according to the property analytics firms CoreLogic, based in Irvine, California.

      While home prices have increased a cumulative 50% in the 10-year recovery since June 2009, the firm cited the bond market’s declining confidence in the short-term economic outlook, as well as two drops of 10% or more in the S&P 500 within the past 15 months as signals of increasing gloom.

      1. Growth in home prices, the main source of wealth for most Americans,

        That really is a terrifying statement.

        1. Seems like the jooz should be worried since the middle-class pays for their defense and provides the troops. Like Dubya said, “This sucker could go down!”

          1. Shrub, like dtRumpsis, was medically scrubbed from serving in the “armed.forces” … what a loss for our military.

    3. Jul 15, 2019, 6:00 am
      In Next Recession, Household Debt Will Feature Big Again
      Christian Weller, Senior Contributor
      Retirement
      – To get out of the squeeze of low incomes and high costs, they borrowed against their houses
      – Student and auto loans in particular grew to record high levels

      Families are getting crushed by debt again. After the mortgage crisis ended, families desperate to pay their bills, move to a new job and pay for their and their kids’ education took on ever more consumer loans. Consumer credit – student loans, auto loans and credit card debt have soared to ever new highs. This is especially true for families in the bottom half of the wealth distribution — those who had the hardest time finding new and jobs with decent wages and good benefits over the last decade since the Great Recession ended. These families are at risk of losing everything when the next recession comes. They will still have to repay that debt. They will then quickly fall behind in paying their bills when jobs disappear. This could lead to another wave of delinquencies, foreclosures and bankruptcies that will not only hurt millions of families, but also worsen the next recession and make an economic recovery harder.

    4. Futures Now
      Recession threat is rising as earnings roll over, market bear David Rosenberg warns
      Published 3 hours ago
      Stephanie Landsman
      David Rosenberg sees evidence of a ‘significant growth turndown’

      One of Wall Street’s biggest long-time bears is painting a painful picture for stocks as earnings season goes into full gear.

      Gluskin Sheff’s David Rosenberg warns earnings are “rolling over” and ominous economic data suggests the economy is on the brink of a recession.

      “Maybe a recession is not here. But it’s certainly suggesting of a significant growth turndown right now in the U.S. economy,” he told CNBC’s “Futures Now ” last Thursday.

      Even though the Dow, S&P 500 and Nasdaq posted its worst week since May, they’re still trading just around one percent from all-time highs.

      But the robust levels are not deterring Rosenberg’s bearishness.

      “The stock market peaked on October of 2007 and the recession started two months later,” he said. “This is one of these rare periods where earnings are coming down, earnings estimates are coming down and the stock market is just rocking and rolling because it’s really a momentum liquidity and central bank driven market.”

    5. Business
      US consumer debt surges to record highs
      By John Aidan Byrne
      July 14, 2019 | 5:28am
      A man looking at a empty piggy bank
      Shutterstock

      America has a shocking new “savings and loan” crisis.

      Consumer debt is surging to record highs, fueled by rising mortgage debt, student loans and a binge on credit card use. And more Americans are flat-out broke, with no emergency savings.

      “Consumer debt is an ongoing personal financial crisis for many Americans,” said John Madison, CPA and personal financial counselor at Dayspring Financial Ministry. “The ease of obtaining ever-increasing levels of available credit traps many consumers into the illusion that they can buy whatever they want — regardless of their ability to repay the debt they take on.”

      Despite borrowing beyond their means, many Americans are in a more upbeat economic mood lately. That positivity is propelling borrowing and spending to new highs, driven by the long-running US economic expansion, a soaring Dow Jones industrial average, low unemployment and rising average hourly pay.

      But some analysts worry about the implications for today’s wild spending spree when the next recession inevitably hits.

      1. “… when the next rece$$ion inevitably hit$.”

        Aw, pshaw … won’t happen, … Sad!

        1. Redhead

          Agree, Charles Ortel is amazing – a good man, investigating the Clinton Foundation for years now and its equally unlawful offshoots.

          I hadn’t heard of Avicii before he died, but I think he paid the ultimate price for his courage in doing that video.

    6. While stock market is booming, freight sector sends a recession signal
      July 14, 2019
      David Nicklaus

      When Americans are in the mood to buy stuff, the nation’s trucks, planes and trains are busy moving goods to market.

      The freight industry isn’t looking very healthy lately, which may be a bad sign for the broader economy. Mark Kummer, president of Fenton-based trucking and technology firm Mid America Logistics, started noticing the downturn late last year.

      “We started seeing contract margins go down, capacity tighten up and also volumes go down,” Kummer said.

      1. You have to move goods coming and going to China a lot further than goods made and consumed locally.

        1. “You have to move goods coming and going to China a lot further …”

          Once them fereigners$ good$ is plopped on the dock$, it’s overpaid American worker$ that pu$h the 1$t movement domino ‘$ … $ee the fore$t from the tree$ aqdan & scratch yer thinking cap.

    7. Personal Finance
      Many Americans who can’t afford a $400 emergency blame debt
      Published Sat, Jul 20 2019 9:15 AM EDT
      Updated Sun, Jul 21 2019 9:56 AM EDT
      Annie Nova
      Key Points
      – Some 40% of Americans would struggle to come up with $400 for an unexpected expense.
      – Just how are so many Americans so short on cash? Anqi Chen at the Center for Retirement Research at Boston College recently tried to answer that question.
      – The researchers landed on a plausible cause for why so many Americans are living paycheck to paycheck: debt.
      GP: We don’t have enough money to pay the bills!

    8. Business
      Economy
      Colorado residents see red, carrying more debt than all but two states and D.C.
      Per capita debt burdent at $71K, with the national average near $50K
      By Aldo Svaldi
      The Denver Post
      July 19, 2019 at 6:00 am

      Colorado has the lowest obesity rate of any state, but when it comes to financial fitness, residents of the state borrowed money at an unrivaled pace last year, contributing to one of the heaviest debt burdens in the country.

      Nationally, the per capita debt burden runs $50,090, according to an analysis from HowMuch.net, which looked at numbers from Credit Karma and the Federal Reserve Bank.

      But in Colorado, the per capita debt burden is at $71,340, just behind California at $71,860. The leader nationally was the District of Columbia at $86,730, followed by Hawaii at $72,590.

      Mortgages constitute the lion’s share of personal debt, followed by student loans, auto loans and personal loans.

      1. “Mortgage$ con$titute the lion’s $hare of per$onal debt, followed by $tudent loan$, auto loan$ and per$onal loan$.”

        $o, beside$ the current unraveling of $helter.$hack debacle$, the other debt$ are well balanced & under control right?

      2. Colorado tends toward rural wages and big city costs. But people hang in there because it’s God’s Country and just hope things will work out somehow.

  15. “President Donald Trump signed an executive order on December 21, 2017 which blocks the property and assets of persons involved in serious human rights abuses and corruption. To date, the president’s order is the most consequential and far reaching legislation to help prevent and hopefully put an end to human trafficking in the United States.”

    I think it is important to stress the date this is not a reaction to Epstein, this was a major concern of his a year and half ago.

  16. Sister and husband just sold their house. Bought in east bench area of Salt Lake in an established area for $320k. Radically renovated the downstairs and made it a completely separate, rentable unit. Sold for $560k. They say they will pocket $140k. Moving overseas for a couple years.

    1. Living the good life. Do they expect to find lower purchase prices when they return after a couple years?

      1. Eye see yer an “optimist” . … living oversees, guarantees you’ll return, healthy, wealthy & alive.

    2. Nice. I am interested in learning more about the apartment you are selling or more specifically the reasons to sell?

      1. 5% cap rate. Offer came in a bit low, still pretty decent though. Will counter. Reasons to sell are that several in the ownership group have tax implications such that it will be 0% capital gains.

  17. Oh dear

    A Bank With $49 Trillion In Derivatives Exposure Is Melting Down Before Our Eyes

    by Tyler Durden
    Sun, 07/21/2019 – 08:10

    Deutsche Bank is the most important bank in all of Europe, it has 49 trillion dollars in exposure to derivatives, and most of the largest “too big to fail banks” in the United States have very deep financial connections to the bank. In other words, the global financial system simply cannot afford for Deutsche Bank to fail, and right now it is literally melting down right in front of our eyes. For years I have been warning that this day would come, and even though it has been hit by scandal after scandal, somehow Deutsche Bank was able to survive until now. But after what we have witnessed in recent days, many now believe that the end is near for Deutsche Bank. On July 7th, they really shook up investors all over the globe when they laid off 18,000 employees and announced that they would be completely exiting their global equities trading business…

    https://www.zerohedge.com/news/2019-07-20/bank-49-trillion-derivatives-exposure-melting-down-our-eyes

  18. Ok, Was meaning to share this earlier, but spent most of the afternoon trying to manage the pain of yesterday’s overexertion.

    Where is Mortgage Watch? He’s going to love this.

    In the mail the other day came a junk mailing from Coldwell Banker – something they send around every quarter or so to trumpet their mastery of real estate sales on Mercer Island.

    On the cover was the house that txchick57 was giving a moment of consideration to a few weeks ago. It has received a tremendous 2% price cut meaning act now or be forever something something something.

    https://imgur.com/a/RqervY3

    The first pages has their charts of listing and sales activity on Mercer Island – I’d love to see how they compare to the charts Mortgage Watch posts every time a new hyerbolic description is generated. Honestly, I’ve always thought that any number coming from them would be quite cooked.

    The next page has their “Recap Summary” and the numbers they are touting like average sale price are higher than the ones I hear from asking agents at open houses. In any event, note their “average list price” is 50% higher than their “average sold price” which itself is 25% higher than their “Average closed price” – can anyone clarify the difference in the last two?

    They admit days on the market is up 66%, but of course spin the overall conclusion as “appears to be headed towards a balanced market”, followed by a tactful admission that “owners of overpriced homes are being punished” and half admit that the market’s changed since Q3 18.

    The next page highlights the properties for sale – ranging from $2.5M to $4.6M, with only one below $2.89M

    That amuses me, as the next page showcases “sold and pending” and we see prices from $995K to $2.41M, with only two houses over $1.7M ( $1.84M and $2.41M )

    Notice any “gap” between “for sale – please look at’ and “pending or sold” ?

    Another page of pending & sold shows a couple condos in the 600s and houses from $998K to $1.38M

    Again… nothing like the “for sale” homes they are so proud of.

    Of course they saved the big sales for the rear cover – a $7M waterfront estate and a $3.27M new construction that if I correct, was on the market for about a year. oops, they ran out of big sales, so to fill the rest of the space there’s a couple $1.8M sales to assure everyone the market is still great.

    Finally, we get the “centerfold” – a school photo of the Coldwell Banker “team” – 63 people. That’s 63 people who’s livelihood depends on the hot real estate market around.

    Is it just me, or is that a lot of people (and paychecks) to depend on approx 300 sales a year? to say nothing of office and business overhead. Actually, if that’s total number for the city/island/zip code, then we should assume they only are involved in a smaller fraction of them, but probably also have transactions in neighboring areas such as Bellevue and Seattle. So no way to know the firm’s+agents gross income

    When (not if) we get deep into the next correction, how big will their staff be then? how many can they afford to keep? Inquiring minds (or minds pumped full of pain meds, take you pick) want to know how message the pending bloodshed will be…

      1. Those creep in a lot, due to the propensity for the cursor to land in the Name field when you make a comment under this blog platform.

    1. And this boys and girls is why a person should never be allowed to post while under the influence…

      Monday comes and takes it all away.

    2. their “average list price” is 50% higher than their “average sold price” which itself is 25% higher than their “Average closed price” – can anyone clarify the difference in the last two?

      My guess: “sold price” is the price at which the listing went pending whereas “closed price” is the price at closing.

      1. Thanks.

        I wasn’t sure if it worth posting here and that I was reading it all wrong.

        I think my two big takeaways were #1 “We’re desperate to sell the highest prices houses , but only the lower priced inventory is moving” and #2 “Hold Fr*k* we have a lot of people’s livelihood that’s at risk if this thing slows down”

    1. So the economy is going to crash unless a massive Democrat-designed debt jubilee and wealth transfer is enacted post-haste?

      1. +1 But they can’t do it in August because November’s voters will have forgotten who saved them.

      1. Those who didn’t borrow and spend as much money as possible through the lending programs subject to the debt jubilee are going to feel cheated.

        1. Why?, can’t they be content with the good deci$ions$ they made that allows them to bee: “knot.of.thee.that.live.like.a.donkey.in.a.debtors.world”

          1. No. Absolutely not. Such forgiveness will only encourage more amoral behavior that the prudent will end up paying for in the form of diluted currency and more taxes.

          2. “… that the prudent will end up paying for in the form of diluted currency and more taxes”

            But my millionaire TaxMa$ter big brother a$$ures me that their are workarounds for everything!

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