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Walking Away From Obligations That Didn’t Make Economic Sense

A report from the Norman Transcript in Oklahoma. “The developer that partnered with the University of Oklahoma to construct Cross Village is suing the university for more than $750 million, alleging that OU misled Cross investors and breached its contract. Provident Oklahoma Education Resources filed suit against the university Monday in Cleveland County District Court, claiming that OU had a ‘costly but hopelessly flawed vision’ for Cross Village.”

“The Monday suit claims that while Provident and investors went into bond debt to fund the $250 million Cross project, OU misrepresented the demand for housing at Cross and the profit the development could produce. While the units OU wanted would have been suited to freshman students, Provident said, there was little upperclassmen demand for apartments without in-unit kitchens. The OU Daily reported that as of August 2019, only 34.7% of Cross’ 1,200 beds were occupied as the apartments’ rent rates were on par with those of other luxury housing developments in Norman.”

The Wall Street Journal. “Planned as a luxury option for students who might otherwise live off campus, Cross Village has been plagued by low occupancy rates since opening last year. In July, the university declined to renew the parking and commercial-space leases at the Norman, Okla., dormitories after a year, saying they weren’t providing enough value to justify the cost.”

“The lease terminations deprived the project of roughly one-third of its total revenue, according to the complaint. Some amenities at Cross Village have been closed since the lease, removing some of the dining options and other conveniences that made the facility attractive to students, who don’t have kitchens in their suites.”

“The trustee for bondholders, UMB Bank NA, said in September that the university would send a negative message to the municipal market by refusing to renew the leases. The university said it had ‘simply exercised its explicitly contractual rights’ to walk away from obligations that didn’t make economic sense.”

From Globe St on California. “The Los Angeles apartment market has a severe supply-demand imbalance, which has been a primary driver of record-low multifamily vacancy rates and rising rents. That trend, however, might be shifting. The vacancy rate in Downtown Los Angeles, for example, increased to 9.2% in the third quarter, according to research from NAI Capital.”

From Forbes on New York. “The six years following 2009 saw prices for New York real estate accelerating rapidly, leading to a 2015 peak; values soared to numbers at or even above their 2008 pinnacles. Then, as the rest of the national market continued to grow, albeit at a more moderate pace, ours faltered.”

“Buyers became more cautious as 2015 moved into 2016, with more and more new condo inventory flooding the marketplace, the product of development plans initiated several years earlier when the market indicators seemed so strong. The foreign buyers on whom so many developers were counting, especially the Russians and the Chinese, slowed their purchasing (in fact, with the Russians, their commitment to our market literally fell off a cliff; they stopped buying altogether).”

“Today, my analysis of recent sales finds them equivalent in price to those consummated in 2012. I believe our market has reached a floor, and that prices will stabilize at or near this level. That said, it will take time for many sellers to adjust their expectations to acknowledge the fact that prices have actually reached this level.”

The Gulf Times on New York. “For the world’s wealthiest, paying cash for a lavish Manhattan apartment was the ultimate status symbol. These days, even those buyers would rather get a mortgage. Of all $5mn-plus home purchases in the borough, the share made with cash tumbled to 44% in the third quarter, according to appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate. That’s down from 80% a year earlier and the lowest rate since the firms began tracking the data in 2015.”

“‘In a rising market, cash has more power, but in a stable or falling market, it’s not as important,’ said Stephen Kliegerman, president of Halstead Property Development Marketing.”

From Senior Housing News. “Pegasus Senior Living has made progress turning around the nearly three dozen former Brookdale Senior Living properties it took over last year. All of this is aimed at positioning Pegasus to potentially take on other turnarounds while seizing additional opportunities down the road, Co-Founder and current Vice Chair Chris Hollister told Senior Housing News.”

“The issue is often complicated by new senior housing players like multifamily or commercial real estate firms which, while well-funded, lack an operating platform, he added. That’s not to say there aren’t some that are successful with this approach, it’s just that there are many more that aren’t.”

“‘They’re reading all the trends, and they maybe they go to NIC, but they don’t really know enough people to get the full story of how much people are hurting,’ Hollister said.”

“In surveying the senior living industry today, Hollister sees some similarities to two times when the senior living industry experienced a downturn: the first being the early 2000s, and the other being right after the Great Recession in 2008. ‘History doesn’t repeat itself, but it rhymes,’ Hollister said. ‘I do think we’re overbuilt, clearly, in most of the major markets.'”

From Reuters. “Thirteen prominent banks and financial services companies agreed to pay $337 million to resolve claims by investors that they conspired to rig prices of bonds issued by mortgage companies Fannie Mae and Freddie Mac for a decade. The preliminary settlements filed late Monday night in federal court in Manhattan require a judge’s approval, and would conclude private nationwide antitrust litigation brought against 16 defendants, with settlements totaling $386.5 million.”

“Investors including Pennsylvania Treasurer Joe Torsella had accused the defendants of exploiting their market dominance to overcharge for Fannie Mae and Freddie Mac bonds from Jan. 1, 2009, to Jan. 1, 2019, and keep more profit for themselves. The civil case began after a published report said the U.S. Department of Justice had opened a criminal price-fixing probe related to the bonds.”

“According to an amended complaint, the 16 defendants underwrote $3.97 trillion, or 77.2%, of Fannie Mae and Freddie Mac bonds from Jan. 1, 2009, to Jan. 1, 2016. Fannie Mae and Freddie Mac guarantee more than half of U.S. mortgages.”

This Post Has 128 Comments
  1. ‘my analysis of recent sales finds them equivalent in price to those consummated in 2012’

    Worser and worser.

  2. ‘The vacancy rate in Downtown Los Angeles, for example, increased to 9.2% in the third quarter’

    It’s been over 12% for years. These REIC dogs would sell their grandmothers for one more month of commissions.

      1. I think that they understand that once they start lowering rents, that it will be an avalanche, or as Ben would like to say, a bowling ball rolling down the stairs. If rents were to drop 20%, renting out those vacant units won’t even come close to making up the difference. Now imagine if rents were to drop 50%.

          1. Not sure I follow

            All likely deeply in debt. If rents drop even a dumb banker can see the loan will never get repaid. Maybe vacancy is easier to gloss over for a time as being just temporary.

          2. In Downtown Salt Lake City the vacant luxury apartments (next to the homeless camps) often rent out as AirBnB.

            I’m guessing that cashflow looks more positive to a banker than declining rents. Apparently few people capable of paying $1,600+ for rent want to live near junkies and the mentally ill.

          3. Let’s say you have 100 units but only 90 are occupied, and you are collecting $1000 a month rent. That would be $90,000 per month.

            Now rents drop to $800 per month (20 % drop), but you rent all 100 units out. That’s $80,000 a month. You’re down $10,000 a month.

          4. Those are just arbitrary numbers you made up off the top of your head. The idea that the complexes are 90% rented at a 20% premium over market seems a little bit fantastical, no? I could just make up some figures to disprove yours, but they would be be pure fantasy as well. What I DO KNOW, is that vacancies will destroy any landlord. It’s better to get something than ZERO.

          5. Ben has already given us the answer as to why rents aren’t coming down. It’s because the loan money was so cheap that they can continue to pay the minimums on the loans even without collecting rent from the units. Instead, they are planning on making their money on the appreciation and flipping the property up to another greater fool who will try the same thing.

            It’s the same reason that commercial real estate can keep the rents high even tho they are vacant. Remember all those luxury stores pulling out of their flagship stores on 5th(?) Avenue in Manhattan? (Tiffany’s and Barney’s I think.)

            It’s also the same reason that banks allowed mortgage deadbeats to stay in their homes rather than evict and fire sale on the courthouse steps.

            It’s actually cheaper to play liquidity games than it is to conduct an honest business of providing goods and services.

          6. “…they are planning on making their money on the appreciation and flipping the property up to another greater fool who will try the same thing.”

            This doesn’t seem to be working very well for these Bay Aryans.

            One surprising thing is less expensive this year in San Francisco: rent
            Anna Marie Erwert, SFGATE|on December 9, 2019
            National rent report, via Zumper

            Bay Area residents may feel that everything is becoming more expensive, all the time. But one thing that is not more expensive this year, surprisingly, is rent.

            Year-over-year dip

            Apartment rental sites are rolling out their year-end reports. And the big news is that San Francisco rents went down in 2019.

            Rental listing site Zumper is reporting that San Francisco, while still the priciest place to rent in the United States, has seen the median rent for a one-bedroom apartment in the city proper drop 1.1% to $3,490, while two bedrooms fell 3.6% to $4,500 this November.

          7. It’s actually cheaper to play liquidity games than it is to conduct an honest business of providing goods and services.

            And there you go. It’s been that way for quite a while now. And the people doing it have been getting richer while everyone else has been getting poorer…leading to the two Americas. Seems like it can’t go on forever.

  3. “…luxury option for students…”

    Anytime you see the word “luxury” and “student” in the same sentence, run as fast and as far as you can in the opposite direction.

    1. From the senior article above:

      ‘While millions of baby boomers will reach retirement age over the next decade, some current senior living price points are too high to attract them all. “There’s going to be a lot of people that have a need for [senior care], that they don’t have six grand a month,” Hollister said.

      1. boomers will reach retirement age

        From where I stand, we don’t need “senior’s housing in our 60s. Maybe in our 80s, maybe later. My grandmother lived in her house until she was at least 100.

        1. Your mileage may vary, though sixty is definitely on the low end, though a quick glance at the obits shows that dying in your 60’s isn’t as rare as we would hope, and I’m thinking that the fatpocalypse is going to make it worse.

          US life expectancy is currently just shy of 79, so I’m guessing that many will need some form of assisted care before they turn 80, though for many it might be for a relatively short time, say their final year. But you never know. My in-laws were in a memory care unit for almost 5 years. Fortunately he had the pensions to cover it.

          1. life expectancy is currently just shy of 79

            Ironically, it’s higher than that if you already made it to your 60s. Mine is something like 85 according to the Social Security guys. Many of my friends from HS are gone. Most of them went pretty quick, not all.

          2. Ironically, it’s higher than that if you already made it to your 60s.

            It also varies by socio-economic class. The higher up you are, the longer you tend to live.

          3. A friend’s mother had a huge San Jose house to herself in retirement; husband deceased. She slipped into dementia and later Alzheimer’s disease back in the nineties, and she was placed in a $11,000/month care facility, and she lived another 14-yrs! The state took her home, and her three children inherited nothing.

          4. “Ironically, it’s higher than that if you already made it to your 60s.”

            Not really ironic. Barring the onset of serious health concerns, your overall life expectancy will tend to increase each additional year you survive, though by a decreasing increment once you are older.

          5. The state took her home, and her three children inherited nothing. ……………… Thats why my parents signed over their home to us almost 20 years ago,

      2. ““There’s going to be a lot of people that have a need for [senior care], that they don’t have six grand a month,” Hollister said.”

        Given the fact that the majority of Boomers don’t even have $50k for retirement, I think these ass clowns may have misjudged the market a skosh.

        1. retirees have $6K per month?

          If you have two social security checks coming in and a pension on top it could get pretty close to that.

          1. True, but in that case you need $12,000 a month for his and hers old folks home. That’s about what my in-laws were spending.

          2. Oh.

            Were they in nursing care or just someplace that would send a golf cart over to your apartment if you wanted a ride to the activity center?

          3. They were in a memory care center. Very pricey.

            They did the “semi independent” living thing for a while, until the dementia kicked in.

          4. There was a period of time that I was trying to work and take care of my 5 year old and my 95 year old grandfather back in the 90’s. Used to joke they added up to a 100. He was losing it and though we held out as long as we could, he eventually had to go into a nursing home; died at 102.
            One time he told me he was sure Popeye was dead because he didn’t see him on tv anymore.

          5. “One time he told me he was sure Popeye was dead because he didn’t see him on tv anymore.”

            ( just how eye feel about Bugs Bunny & Woody Woodpecker!)

        2. My parents are not 1%ers, but their retirement income approaches that, especially if adjusted for low Midwest living costs, thanks to their good fortune to grow older during the golden era of pensions and social security.

          Boomers will get crumbs by comparison.

          1. “Boomer$ will get crumb$ by compari$on.”

            Iffin’ one (born in 1957) bought x10 $hares of brk:B (per month) for the last x23 year$ does you conjecture hold true?

            Reaching out to small investors with Class B shares:

            In 1996, Berkshire Hathaway created its Class B shares, giving the right to existing Class A shareholders to convert each share of Class A stock into 30 shares of Class B stock at will. The net impact was to give small investors a way to invest in Berkshire, which at the time commanded more than $30,000 per Class A share.

            Buffett didn’t want to make the move, but he did so in response to financial entrepreneurs who sought to create an alternative investment vehicle to make Berkshire accessible to those with modest amounts of capital. Rather than allowing outsiders to reap fees, Buffett instead made the move himself, potentially saving ordinary investors thousands of dollars in added costs over the years and creating a way for them to participate in Berkshire’s amazing run.

            Berkshire’s one stock split:

            Similarly, Buffett was never a fan of stock splits, but exigent circumstances did make one prudent. In 2010, Berkshire did a 50-for-1 split of its Class B stock. That made the shares more accessible to shareholders in railroad giant Burlington Northern when Berkshire bought out the company. The move allowed more Burlington shareholders to retain interests in Berkshire stock rather than having to liquidate what would have been fractional shares. Now, Class A shares are convertible to 1,500 Class B shares, and the current Class B price around $165 per share is squarely within the range of where typical stocks in the market trade.

          2. I meant Boomers who are expecting the pension system to provide for their retirements. Those who were enterprising and lucky or smart with their investments will do fine.

    2. ” there was little upperclassmen demand for apartments without in-unit kitchens.”

      Legally that’s not even an apartment. This sounds more like a ruse to force students into the meal plan scam at the dining hall. Grade D food at high prices might fly for freshmen in food desert city schools. But upperclassmen know better. They want control over their food and I don’t blame them.

      1. My daughter came home from her campus student job to find the electricity shut-off for lack of payment. She is subletting a bedroom in a shared house from a reality firm. Now the energy utility are demanding 4-months utilities paid in advance; wtf?! She had to toss her food in the refrigerator. IMHO, her lease with this flaky property manager is null and void. Thankfully the University is on its holiday break.

      2. If the investors were told that up front and still went ahead with it, they have no one to blame but themselves.

        Did any of them go to college and either live on or near campus, just to have a frame of reference?

        You built them luxury rooms with no kitchens, with the expectation that every day they would do one of the most anti-luxury things possible, trudge to a separate cafeteria to eat?

        I earlier thought that these were proper apartments with individual amenities.

        1. luxury rooms with no kitchens

          Before I got married I lived in a basic dorm room. We all had a hotplate and washed our dishes in the bathroom sink. The word “luxury” was never mentioned.

          1. “…The word “luxury” was never mentioned….”

            Ditto for myself. A bed, old wooden desk, a chair, a hotplate.

            “Luxury” was not in our dictionary.

            We all thought we had it made when the heat worked correctly.

            But that was early ’70’s, before the entitlement generation was even born.

          2. Before I got married I lived in a basic dorm room. We all had a hotplate and washed our dishes in the bathroom sink.

            My college roommates and I were so poor, one night a burglar broke into our apartment and we robbed him.

            That’s my story and I’m sticking to it….

        2. I gave this some more thought, after I had time to reflect on the past a bit.

          Students frequently ate in their dormitories — at a minimum, you’d have a small, few cubic feet fridge for liquid refreshment. One summer, my room shared a common bathroom with another where the student had a hotplate and cooked breakfast in his room. There were no real facilities for disposal of food waste, so dishes were scraped off into the can in the bathroom. You can guess the outcome.

          Within a few weeks, my room was overrun with the little ****ers. I’d come home at night and see one or two on the wall that would scurry away when the light was switched on.

          I figured out that the ammonia in glass cleaner killed them in seconds, so I had a bottle on my desk, and I’d come in at night and leave the door open, just enough light to see where I was going but not enough to trigger the fleeing. And I’d sneak up and ambush them.

          I collected the carcasses in a small box, and when I had accumulated several dozen I took the box downstairs to the front desk to let management know we had an infestation problem in a way that they would not brush off.

          When I moved out at the end of the term to the next dorm for fall, I went through my belongings thoroughly to make sure that there were no stowaways making the trip with me. I checked a second time when I got there, and good thing I did because sure enough one of them was hiding in the guitar case and I somehow missed that the first time. Never had a problem again after that.

          But it got me thinking In retrospect that perhaps a common cafeteria for students isn’t such a bad idea after all. But it still doesn’t justify overpriced digs. Our dorms were painted cinderblock walls and indoor-outdoor carpet laid over poured concrete floors.

          1. “But it got me thinking In retrospect that perhaps a common cafeteria for students isn’t such a bad idea after all.”

            We tried the “meal plan” at my daughter’s university dorm when she was on campus, but she said it was awful food, e.g., sugar, salt, fat and preservatives.

  4. With New York apartment prices already falling against the backdrop of record low interest rates, how much farther will they fall after rates normalize?

  5. ‘The offering statement for the bonds makes clear numerous times that the bonds are not obligations of the university or the state and that the debt is backed solely by rents. The commercial and parking rents make up about a third of project revenue while student rent make up the rest.’

    ‘The dorm at OU’s flagship campus in Norman, known as Cross Village, has struggled to attract students and in late July suffered another blow when the university notified Provident that it wouldn’t renew the annual leases. Cross Village had a 34% occupancy rate as of Oct. 1 and its tax-exempt bonds trade at about 56 cents on the dollar.’

    https://finance.yahoo.com/news/university-oklahoma-sued-over-struggling-194848489.html

  6. “‘In a rising market, cash has more power, but in a stable or falling market, it’s not as important,’ said Stephen…”

    What an odd thing to say Stephen. Maybe you should think about it more.

  7. Building student “apartments” without kitchens? And then they can’t rent them to upperclassmen? Sounds like they cheaped out and now it’s coming back to bite them.

    1. Clearly the idiots who financed or “invested” in these student apartments didn’t talk to any actual students. Dining hall food gets old in a hurry, and costs too much.

    1. There’s no inflation because these ivory tower hacks don’t even do their own grocery shopping, write the check for their car insurance, pay rent, fuel up their own cars, or any other of life’s necessities. They’ve turned into a bunch of Baghdad Bobs.

    2. “Wor$er & Wor$er…”: Ben Jones

      (Be.ute.tea.full chart$!)

      home |Inve$ting |Stock$ |Out$ide the Box

      Opinion: Americans keep gorging on debt, thanks to the Federal Re$erve

      MarketWatch| By Brian Frank |Published: Dec 14, 2019

      Even only a $light increa$e in intere$t rate$ create$ millions more in intere$t payment$ for consumer$

      In the previous two economic cycles, the fed funds topped 5%. So why did a mid-2% intere$t rate prompt such distre$$ in the U.$. economy? The answer is a whole lot of debt$.

      Lower rates, higher spending

      Investors should be careful now that the Fed has decreased rates three times in recent months. There are two reasons why. First, companies and consumers are ignoring the opportunity to lower their debt burdens. Second, lowering rates is normally a response to economic weakness, which means jobs and profits are at risk.

      The chart below shows the tremendous increase in outstanding auto loans. With the Fed lowering rates, consumers took this as a cue to gorge more by borrowing as opposed to paying down loans. Consumers are increasingly financing their cars, and rising interest rates mean higher monthly payments for more people.

      https://www.marketwatch.com/story/americans-keep-gorging-on-debt-thanks-to-the-federal-reserve-2019-12-10?mod=home-page

  8. Oil has quietly moved above $60. If the Wall St. scum can somehow blow another oil bubble, that will be the cherry on top of this whole house of cards.

    1. Ironically it was Yellen bux that kept oil and natural gas prices artificially low. $250 billion was lost in the shale fields as drillers were lent money to drill at a loss. Now, that drillers can only drill wells which can turn a profit oil prices are rising. The shame is the best sites were drilled at a loss. We should have let the Saudis sell only at $35 a barrel and saved our oil. Just more damage caused by the Federal Reserve.

      1. Hey aqdan, how is those Boeing “tailwind$” conjecture prediction$ you e$poused x2 months ago working out? … Dec 17th 2019, still sittin’ on the ground. $ad.

        Boeing’s 737 Max debacle could cut 0.5 percentage points from US GDP

        Boeing’s recent decision to halt 737 Max production in January will cut 0.5 percentage points from gross-domestic-product growth in the first quarter of 2020, JPMorgan’s chief US economist, Michael Feroli, said Tuesday.

        The model is Boeing’s bestselling plane, and the production cut will pull GDP growth lower by hitting the company’s inventory growth, the economist said.

        The production pause could also harm firms in Boeing’s supply chain, as several parts-manufacturers rely on the aircraft as a steady revenue driver.

        Boeing announced on Monday that it would halt 737 Max production in January as it looks to clear the plane for commercial service. The Federal Aviation Administration earlier this month said Boeing’s timeline for the model was “not realistic,” punting the expected date for the plane’s recertification.

        New York (CNN Business) Boeing’s 737 Max crisis keeps getting worse and worse. And there is no clear end in sight.

        On Monday, the company suspended production of the jets. While the planes may be airborne sooner, analysts estimate that it could be well into 2022, maybe even 2023, before Boeing is able to put its 737 Max problems behind it.

        Part of that backup is because airlines can’t take immediate delivery of all of the jets Boeing has built for them — they need time to integrate the planes into their fleets.
        “Two or three planes per airline per month would be a pretty aggressive schedule,” Epstein said.
        Boeing is halting production of the embattled 737 Max starting in January.
        And the process of delivering the jets will be time consuming, especially since the FAA itself will now certify each plane individually. In the past, Boeing was allowed to sign off on the jets as they rolled off the assembly line.
        “That’s a lot of planes to deliver. You’ve got to do pre-delivery checkouts. You’ve got the FAA looking over their shoulder,” said von Rumohr.

        1. Boeing will fix the plane in 2020 and it will be a tailwind going into the election. It will have to speed production even more due to the later start. Actually for Trump that is even better. Better for him to have a stronger economy in September than January.

      2. A-dan, I don’t know much about this, but there’s probably a geopolitical reason for this. In terms of global reputation and military, in the end it may have been cheaper (and less deadly) to have our own energy independence even if at a loss. It’s not money only.

        1. Shale oil is a finite resource. It is better we save it for when oil is in short supply and price identifies that time. However, there was a geopolitical reason to keep the Taps open and I identified it at the time. Obama wanted to hurt Putin and lower oil prices did that. Thus, his pressuring the Saudis to raise production when they should have been cutting. The channeling of Yellen bux to shale companies did that too. In the end probably only the shareholders who were not in the know who got crushed. I avoided shale oil because I knew at the time they are losing money in an under $80 a barrel environment. Some costs savings have been achieved in the industry but now the quality of the acreage is dropping rapidly offsetting those gains.

  9. When I look at new car and truck prices I am astounded. I am at a loss as to how they could get so high. I know it’s the financing, but you have to be able to carry the payments. A mid-size Chevy Colorado truck – which is hardly a truck when you consider the payload – is over $50,000. A loaded full size with all the trimmings is pushing $90,000.

    1. I’m not sure where you’re seeing $90k for a mini-pickup but you might want to look elsewhere. Fully loaded duramax crews are less than 50k.

      1. You might want to re-read. I never said $90k for a mini-pickup. A brand new loaded Duramax LTZ crew 4×4 for under $50k? I’d like to see that.

          1. I’ll wait until the recession, then I’ll go into my local GMC dealer and offer them $45,000 for a loaded Denali with a sticker of $85,000. I’ll tell them “The Big Fat Bastard” said that I could buy it for that and see what they say.

          2. If you need to haul material and make a profit doing it, paying $85k for a pickup truck might not be your best option.

            Right?

          3. “If you need to haul material and make a profit doing it, paying $85k for a pickup truck might not be your best option.”

            My brother (independent.contractor) hauls x2 ton of mirror$, but has his glass $upplier provide for the $73,000 Chevy duel wheeled “truck” for delivery to the customer … Eye’m lost on yer thoughts about “be$t.option$” prognostication$.

        1. Any transportation over 50k is over priced IMO but if you got the money there are Tons of year end deals, ram 2500 limited cummins ive seen 20k off. Ford, Ram, GMC all have the incentives / discounts, you just need to hunt the hungriest dealers down. Carguru is a good site

    2. All the prices are a joke considering the majority wages. Price sitting monopolies sitting prices as well as cheap credit sending prices to the moon.

      The medical industry prices are at least 50% over what they should be, as well as housing.

      The policies that made it possible for the majority wage earner to have a reasonable financial life, and not go into unsustainable debt is what we need to return to in this Country.

      The first step is for Government to get out of interference with commerce.
      The second step is to do what is necessary to reverse Globalism and place necessary tariffs and tax penalties on Companies that would outsourse jobs in USA yet be able to charge untariffed prices as if their workforce was USA Citizens.

    3. I checked the website at the local Ford dealer. They have 8 pickups priced at over $80,000. Well over 100 vehicles over $60K. Mostly pickups and large SUV’s.

      1. The higher end ones are equipped beyond belief. They did have a V6 F-150 for 35K. The cheapest V8 was 40K (discount price, not MSRP), which is still a chunk of change.

      2. You know the old adage, “I can ask $50k for my 10 year old run down Chevy pickup but where is the buyer at that price?”

        So is it with all depreciating assets like cars, trucks and houses.

        Sacramento, CA Housing Prices Crater 19% YOY On Rampant Mortgage And Appraisal Fraud

        https://www.zillow.com/sacramento-ca-95825/home-values/

        https://snag.gy/m5EzRB.jpg

        As a noted economist said so eloquently, “A house is a rapidly depreciating asset that empties your wallet every day you own it. Rent a house for half the monthly cost of buying it.”

      3. “I checked the website at the local Ford dealer.”

        “Ford today announced it will phase out most cars it sells in North America. According to its latest financial release, the auto giant “will transition to two vehicles” — the Mustang and an unannounced vehicle, the Focus Active, being the only traditional cars it sells in the region. Ford sees 90 percent of its North America portfolio in trucks, utilities and commercial vehicles. Citing a reduction in consumer demand and product profitability, Ford is in turn not investing in the next generation of sedans.” —ford motor company, 2018

  10. I wish a Millenial or anyone frankly would talk about the Elephant in the Room in the US.

    Bloomberg
    Kati Pohjanpalo 7 hrs ago

    Finland’s millennial PM warned of baby boomer threat to finances

    Finland’s central bank said on Tuesday that the burden on public finances, as more people head for retirement, is unsustainable and requires a political response. The warning comes just days after 34-year-old Prime Minister Sanna Marin took office.

    The so-called sustainability gap — which measures the difference between spending and income — has widened to 4.7% relative to gross domestic product, from about 3% a year ago, the Bank of Finland said in a report on Tuesday. The biggest contributors to the increase are cooling growth, higher government borrowing and political stalling over health and welfare reform.

    According to the European Commission, the sustainability gap poses a significant risk to the long-term health of public finances when it exceeds 6%, while a reading of under 2% denotes low risk.

    “One factor currently weighing on the long-term outlook for the public finances is the fact that the baby-boom generation has reached retirement age,” the central bank said. “This has increased public pension expenditure, and over the next few years it will also lead to a more rapid increase in expenditure on health care and long-term care of the elderly.”

    1. ” …rapid increa$e in expenditure on health care and long-term care of the elderly.”

      The babie$ that were born, were the result of the end of a particular war. Most of the current financial burden$ are knot a cau$e of German de$cendant$.

  11. Re-post from a related thread:

    “We need mo money fo dem programs…”
    “Tax Billionaires. They can afford it.”
    programs get more money and expand
    mission creep sets in and programs run short of money again

    “We need mo money fo dem programs…”
    “Tax Millionaires. They can afford it.”
    programs get more money and expand
    mission creep sets in and programs run short of money again

    “We need mo money fo dem programs…”
    “Tax everyone with more than a hundred thousand dollars in their bank account. They can afford it.”
    programs get more money and expand
    mission creep sets in and programs run short of money again

    “We need mo money fo dem programs…”
    “Impliment negative interest rates, anyone that can afford to save money can afford it.”
    programs get more money and expand
    mission creep sets in and programs run short of money again

    “We need mo money fo dem programs”
    “Confiscate all private property and call everyone that complains a kulak”
    programs get more money and expand
    mission creep sets in and programs run short of money again
    Everyone is poor, there is no mo money fo dem programs, the system collapses.
    You Died.

  12. “Planned as a luxury option for students who might otherwise live off campus, Cross Village has been plagued by low occupancy rates since opening last year.

    What planet are these planners and investors from? In our oligarch-looted economy, it’s already a huge financial stretch for middle class parents of non-diverse children to send them to college. Having to house them in “luxury” dorms is a bridge too far. What a mind-boggling misallocation of resources, even if we’re talking about Yellen Bux.

      1. Those impeachment polls are loaded questions by design. The choices should have been:

        Don’t impeach.
        Impeach but don’t convict.
        Both Impeach and convict.

        But they don’t want to know the answer to that, oh no precious.

        The same tactics are being used for all the DACA polls too. My suspicion is that the majority opinion is “keep the DACA kids resident but not citizens, but also deport the parents and get rid of chain migration.” Which, of course, is why NO poll ever used that phrase.

  13. I posted the other day that I had received an extension to our lease (which is not technically true, since our lease expired years ago). It wasn’t the “get out” letter I feared but I only really read it thoroughly today.
    I think it’s got our “get out” date in it. The “extension” starts on February 1, 2020 and ends March 31, 2021, a 14 (really 15) month lease – weird. I think it indicates her planned sell date.

      1. I like the way you think 😉 I had the same thought.
        However, I think I will test the waters by pressing for a full two years, just to see what the PM says. The place is too big for us now, the dust is Interstellar and the only reason I’d like to stay in this particular place is it would be a PITA to move. As far as the city, I’m done with it. Not really a criticism, but there’s really not a lot here here.
        My brother is here which part of the reason we moved but I miss the rest of my family (all NYC). I’ll have to talk to him and give it a lot of thought.
        This whole thing has lasted far longer than I wanted to play. I don’t want to be stuck here; I’d rather relocate. Friends in South Carolina are encouraging us to come there. Additional problem is hubby – no matter where we’ve lived, he is very resistant to change and wants to be buried in the backyard wherever we’ve lived.
        Funny – one of my friends in SC told me her neighbors have had her record their phone mail messages, they find it hilarious. Her NYC accent is way, way worse than mine 😁

        1. My aunt and her husband (both in their late 60s) moved to Aiken, SC from Phoenix, AZ in March after touring a number of cities.

    1. Remember that lease goes with the sale….If they sell the house before it ends you can make them or the new owner pay you to move…..nice.

      1. What’s happened to us before is they want you to stay and show it for them, just because they’re such great people and all.

        I agreed but demanded a lower rent and got it, but since the downturn was in full swing and no one was biting it turned pretty ugly over time.

        One day I got an email from the LL saying we didn’t have to pay at all. No clue why. That lasted a year, then a RE agent showed up at the door, told us okay sign here, new month-to-month. I countered, got it. (Original rent $1,600, LL knocked off $200 in the interim, don’t really remember, then RE guy shows up, his offer $1,200, mine $1,000.) We moved about three months later. I could tell he wasn’t happy.

        When this happened again, at the next rental, I refused to show it and had to deal with a really hostile LL until we left.

    2. a 14 (really 15) month lease

      They’ve just jacked the rent up. Maybe they would be thrilled if you suggested a full two years’ lease.

      1. Maybe. But the length of the lease is weird, and probably has a reason. I am going to call the PM.

        1. Maybe its their retirement date…and they want to be free and get all the cash they can get. And buy an RV could be as simple as that.

  14. https://www.zerohedge.com/crypto/fed-presidents-shocking-admission-we-need-be-pretty-focused-asset-prices-not-just-inflation
    Fed President’s Shocking Admission: “We Need To Be Pretty Focused On Asset Prices, Not Just Inflation”
    by Tyler Durden
    Tue, 12/17/2019 – 22:25

    “There was an stunning admission by Boston Fed head Eric Rosengren on Tuesday, when during an audience Q&A after a speech to The Forecasters Club of New York,…”

    “If you look at the last two recessions, they were not situations where inflation got out of control. They were situations where asset prices went way up and then came way down. So if your goal is to avoid recessions, I think we need to be pretty focused on asset prices not just inflation“, Rosengren said in a moment of shocking candor and transparency.

    – Too late (again), and for the third time in 20 years. They must be going for some kind of morbid record, or something. Brilliant.
    – Yes, asset bubbles, including housing bubble 2.0, are a direct result of Fed (and Gov’t. GSE/Ag’cy.) policies, machinations, and interventions.
    – They weren’t worried as prices rose, but now near the peaks, there’s some remorse (maybe, just a little, I think), and a lot of consternation about the Frankenstein’s monster that they’ve created/resurrected.
    – The stock “markets” are so disconnected from reality that I don’t know what’s coming next, but based on the last two bubbles, and the Fed’s one trick pony modus operandi, it can’t be good.

    1. The Financial Times
      Charts that Matter
      Investing in funds
      Investors pull record amounts out of US stock funds
      Outflows come amid anxiety over trade and the health of the American economy
      Anna Gross in London December 16, 2019
      Column chart of Inflows and outflows from stock-focused mutual funds and exchange-traded funds ($bn) showing Investors embark on record exodus from US stock funds

      US stocks have hit all-time highs this year, but not everyone in the market will be celebrating. Investors have pulled more money out of US-focused equity funds than in any year on record.

      Investors have taken a total of more than $156bn out of mutual and exchange traded funds this year, according to data from Refinitiv Lipper — the highest annual figure since the company started collecting data in 1992. Equity mutual funds had outflows of $248bn, while $92bn was drawn into equity ETFs.

      Investors have been funnelling money into bonds and money-market funds, which are seen as havens in periods of uncertainty. Individual investors’ asset positioning “has been very, very cautious and there’s been a lot of de-risking going on”, said Kasper Elmgreen, head of equities at Amundi, the asset manager.

    2. “Tis a puzzlement!”

      – Assuming sarcasm.
      – Answer: 1) Stock buybacks, 2) ‘Not QE”=QE4, 3) Repo; All Fed-driven.
      – All artificial/abnormal market actions. Been that way since GFC and really since 1971, 1913.
      – Free markets: “We hardly knew ye.”

      1. Nailed it. The question is when the manipulators lose control. I am not seeing it. They allow gold to go up once in a while just so the miners will not go out of business but there is no rush by the insiders to cash in their chips and leave the rigged game.

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