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More Sellers Are Having To Cut Asking Prices To Garner Interest

A report from National Real Estate Investor. “Snowballing distress in commercial real estate loans are threatening to become an avalanche that could overwhelm banks. Getting a glimpse behind the curtain on how bank loans are performing isn’t easy. ‘It’s amazing that we have gone from the great financial crisis to now and still have no better transparency into the banks at a granular level as we do with CMBS,’ says K.C. Conway, director of research and corporate engagement at the University of Alabama’s Alabama Center for Real Estate.”

“In addition, the FDIC is allowing banks to forbear on loans and not have to report them as troubled loans for up to 180 days. ‘We’re not going to see anything big show up in the numbers until this deferral period expires,’ says Johannes Moller, director in North American banks, at Fitch Ratings.”

“There is some data emerging that is providing insight into the potential stress ahead. For example, Trepp has analyzed a diverse portfolio of 13,000 commercial real estate balance sheet loans held by commercial banks. Trepp is forecasting that the cumulative default rate for that dataset will rise from its current 0.5 percent default rate to 6.5 percent.”

“The concentration of commercial real estate debt held by banks is concerning, and what is more worrisome is added exposure risk to commercial and industrial (C&I) loans, says Conway. One way that banks were able to lower commercial real estate loan concentration numbers is to structure real estate loans to operating businesses, such as seniors housing, hotels, restaurants and auto dealership as C&I loans with a lien on the real estate. ‘I think we are going to find as we peel back the C&I onion that there is a lot of real estate classified as C&I loans in the banks,’ he says.”

“According to the FDIC, nearly 500 banks failed during and immediately following the Great Financial Crisis. ‘I think we could easily end up over the next 18 to 24 months breaking bank closure records. It’s going to be pretty severe, particularly when you look downstream at community banks,’ says Conway.”

From Marketplace on New York. “Thousands of people have left New York since March due to COVID-19, leaving vacancies in their wake. And what will that mean for the city’s notoriously high rents? Columbia University Professor Stijn Van Nieuwerburgh said that if federal pandemic benefits expire, we’re likely to see a wave of evictions. ‘There’s been fairly generous unemployment insurance with the $600 a week top-offs, which are about to expire in the next several days, leading to some sort of fiscal cliff for a lot of households,’ he said.”

“Van Nieuwerburgh said that right now, some landlords are letting tenants live in their apartments for free, rather than evict them or lower their rents. Because if landlords lower tenants’ rents, it could make it difficult for them to refinance their mortgages.”

The North Bay Business Journal in California. “Katherine Higgins, who works with Marin rental property owners via Berkshire Hathaway/Drysdale Properties Commercial Group, has seen the more affordable units from San Rafael south having a mounting number of vacancies since the pandemic lockdowns. ‘The more problems we have with retail store closures, where a lot of the tenants in these units work, the more we’ll see this,’ Higgins said. ‘We’re just seeing the tip of the iceberg.'”

“Scott Gerber, a multifamily property brokerage specialist with Meridian Commercial said that while higher-end apartments in southern Marin are in demand from higher-income families exiting San Francisco and higher-rent areas on the Peninsula, he’s seen demand slackening off further away from the city. There’s active demand in Petaluma, but Santa Rosa has pockets of challenge. One property there has had 15% vacancy, which is higher than the roughly 5% vacancy seen in Gerber’s recent surveys of thousands of units in both Marin and Sonoma counties.”

From SFist in California. “It’s beginning to be more of a buyer’s market in San Francisco than it has been in over a decade as the number of homes for sale last week reached levels unseen since 2011. And this means that more and more sellers are having to cut their asking prices to garner interest and remain competitive.”

“Over the past week, as Socketsite reports, the number of homes for sale in the city rose 6 percent to 1,360, which is a 200-percent increase of inventory over the same time last year. Not since 2010 and 2011 have so many homes in San Francisco been on the market at once, with almost 50 percent more single-family homes on the market than this time last year, and 130 percent more condominiums. Socketsite reported last week, there were 150 percent more reduced-price listings on the MLS in San Francisco than the same time last year.”

The Dallas Business Journal in Texas. “New and existing home sales in North Texas rebounded in June, although prices of new homes fell. ‘Dallas-Fort Worth new home sales noticeably accelerated in June and home demand is growing as buyers continue to push local pending sales higher,’ said Ben Caballero, owner of HomesUSA.com. ‘The good news for buyers is that the average new homes price in Dallas-Fort Worth improved a bit in June for the fourth month in a row.'”

From WBRC in Alabama. “For years now, the city has been trying to get a handle on the growth of mega student apartment complexes. Tuscaloosa Mayor Walt Maddox believes there is still an oversupply of student apartments in Tuscaloosa. He recommends extending the current apartment moratorium through the end of the year. In a committee meeting this afternoon, city leaders say the rental occupancy rate with student apartments built in the past 10 years is between 50 and 65%. Maddox says that shows how overbuilt those apartments are in Tuscaloosa.”

“‘I believe that the proliferation of student apartments has led to crime and blight in our community. That’s an opinion based off of facts that have been provided to me,’ Maddox said.”

Related Posts

Inventory Surges And Prices Decline

https://www.youtube.com/watch?v=XNejotELztU https://www.youtube.com/watch?v=ZFqbPQixN9M https://www.youtube.com/watch?v=u8MdD64eNQ8 https://www.youtube.com/watch?v=TkOx1nH4-Ic https://www.youtube.com/watch?v=QMfsqe9biiQ

This Post Has 206 Comments

  1. ‘some landlords are letting tenants live in their apartments for free, rather than evict them or lower their rents. Because if landlords lower tenants’ rents, it could make it difficult for them to refinance their mortgages’

    Ahem…

    2. “…landlords are letting tenants live in their apartments for free…”

      She must be pretty, and gives it up too.

      1. NYC has rent control an s stabilization, and set rents, the reforms last year means if a landlord gave you a preferential say from $1500 to $1200 rent, that becomes to the new rent and can only increase by the percentage the RS board allows. Before the LL could at the end of your lease jump it back to 1500 legally. so lowering the rent today is a bad option for a stabilized apartment.

  2. ‘He recommends extending the current apartment moratorium through the end of the year. In a committee meeting this afternoon, city leaders say the rental occupancy rate with student apartments built in the past 10 years is between 50 and 65%’

    OK, so why would they have to put in a moratorium if vacancies were so ghastly? Because these guys were building them to flip to people who would cash-out refi every year. QE creates oversupply and is ultimately deflationary.

    1. Any thoughts on how much longer it will be until the deflation shows up at the grocery store? I did my COVID-masked visit to Trader Joe’s today, and it seemed like food prices have been rising as of late. I went ahead and bought the quart of blueberries for $9, since I’d rather overpay at the grocery store than at the doctor’s office.

      1. I got a big ol’ box of blueberries for under 2 bucks. Local gas hovering just above 2 bucks a gallon too.

          1. Frozen blueberries! Trader Joe’s has the organic wild ones, at least where I live. They’re a little expensive, but not as much as fresh. They are much sweeter than the fat blueberries, and more antioxidants too. And BTW FYI, the cheapest antioxidant out there is a 36-hour fast.

          3. stop and shop has pints buy get one free for $4.99 just put a pint into a quart of non fat greek yogurt. Sometimes i use strawberry of pineapple/coconut vitamin water to thin it out.

          4. Picked up 18 oz at smart and final yesterday for $2. Orange county, CA. Trader Joe’s is for single people who can’t cook.

        2. Nothing like falling prices…. Nothing..

          As a distinguished economist said so eloquently, “Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.”

          He’s right.

          Tampa, FL Housing Prices Crater 17% YOY As Guf Coast Housing Market Turns Toxic On Rampant Appraisal And Mortgage Fraud

          https://www.zillow.com/tampa-fl-33617/home-values/

        4. I picked up 3 pints for $3 and a dozen ears of corn at 25 cents each at one of the countless fruit stands yesterday afternoon.

          Picked up prime strip steaks at TeeterHarris for $7 a pound.

          Gotta love falling prices.

        1. That’s normally where I get them, but we just returned from a trip last night, and won’t be going to Costco until Saturday at the soonest.

      3. “…I went ahead and bought the quart of blueberries for $9,..”

        Here is SoCal, I like Trader Joe’s for lots of items, but for fresh fruit, Costco is my go-to. Costco has a huge turnover, so everything is fresh. Downside is you have to purchase big containers. (not such an issue for fruit, you just need plenty of fridge space)

        Eating Costco fresh blueberries while I write this. (about $8 for 2lb)

        1. Good point. Don’t know why avacadoes are so expensive here, but I don’t believe blueberries are grown locally, so shipping costs are included.

      6. All the low-wage, low-skill workers who were let go are now livin’ large at over $50,000 per year. They have never had it so good, and they are spending every dime. The goods and services those people buy will go up accordingly.

      7. Best place for blueberries by far is Costco; in Reno I get a 5 lb bag
        of frozen ones for $7.97. Are they organic?? No. Who cares??
        Organic isn’t all it is cracked up to be anyway.

  3. ‘We’re not going to see anything big show up in the numbers until this deferral period expires’

    ‘The more problems we have with retail store closures, where a lot of the tenants in these units work, the more we’ll see this…We’re just seeing the tip of the iceberg’

    I continue to see local signs of serious economic fall out. I was at the chain grocery yesterday and it was ghost town. Plenty of food though, (even onions!) There are signs all over, “We’re Open!” with no cars parked in front.

    1. I continue to see local signs of serious economic fall out. I was at the chain grocery yesterday and it was ghost town. Plenty of food though, (even onions!) There are signs all over, “We’re Open!” with no cars parked in front.

      What part of Phoenix?

    2. The goods and services those people buy will go up accordingly.

      The local King Soopers (Kroger) is as busy as ever.

    3. “I was at the chain grocery yesterday and it was ghost town”

      Every time I go into a Walmart here in Las Vegas, it’s quite busy. But if you’re at Walmart, you’re probably just buying essentials.

  4. The HCQ deniers have run the gamut all the way from obfuscation to up and including intentional murder in Brazil by using lethal doses of the medicine in the bid to ruin the chances of HCQ being used to save people lives. And it’s all finally been documented in the links below.

    Their plan was to ruin the economy to get rid of Trump and at the same time force an expensive vaccine or other treatment down our throats where they could make a fantastic amount of money at the expense of all the rest of us.

    https://drive.google.com/file/d/1hF0vgIGXOA4mut5NauUmSbAtoWH_Kxsn/view

    or

    https://twitter.com/zev_dr/status/1285722807444406274?ref_src=twsrc%5Etfw

    1. Now that Trump is recommending masks, I don’t see how Biden stands a chance in November.

      1. Don’t underestimate the impact of the shut down on the economy. Utimately, if the voting public feel poor they will take it out on the incumbent. There will be more handouts / promises/ unemployment benefits etc. Big question is how will the main street compare to wall street.

        1. Trump’s going to win in a landslide. They’re going to extend the extra weekly cheese, and these people have never had it better. Nobody’s going to risk putting a demented, corrupt old fogey in office with unknown circumstances.

      3. Biden’s VP short list (in order, per Marketwatch)
        Kamala Harris
        Susan Rice
        Tammy Duckworth
        Rep. Karen Bass
        Elizabeth Warren
        Rep. Val Demings

        1. Biden’s VP short list (in order, per Marketwatch)
          Kamala Harris

          A more vile, corrupt politician would be hard to find.

          1. vile

            I hear she tosses a mean salad. And I’ll add again: how does a whoring daughter of Indian and Jamaican immigrants married to a Jewish Caucasian appeal to African-Americans?

          2. By yammering endlessly about how Black Lives Matter? (I am not suggesting she actualy does this; merely suggesting a potential political strategy.)

          3. What did people think of Shirley Chisholm in 1972? It was before I was born but she spoke at my Holmby Hills girls’ school in the late ’80s when we celebrated Women’s History Month. My liberal indoctrination apparently started in seventh grade.

          4. “My liberal indoctrination apparently started in seventh grade.”

            At what point did you see the light of day?

    2. They won’t be able to suppress Ivermectin. Ivermectin is showing signs that it’s even more effective than HCQ because it could prevent the blood clotting; it’s even safer than HCQ, and the dose is one-and-done. Let’s hope Trump keeps his mouth shut about it.

      There area a couple gold-standard RCT tests in the works right now, with results to be published in October. Uh-oh.

      1. Dumb question of the day:

        Why would the effectiveness of a particular COVID-19 treatment depend one iota on anything Trump says?
        Doesn’t seem to make sense, scientifically…

        1. Two great memes I saw yesterday:

          “If we all started wearing masks with ‘Trump 2020’ on them, how long before experts decided we don’t need them anymore?” I’ll be buying my family a few the next time I pass the Trump booth.

          Image of Trump calling HRC “How to kill the coronavirus: Hey Hillary, I hear the coronavirus is going to testify against you.”

  5. ‘It’s amazing that we have gone from the great financial crisis to now and still have no better transparency into the banks at a granular level as we do with CMBS’

    ‘what is more worrisome is added exposure risk to commercial and industrial (C&I) loans, says Conway. One way that banks were able to lower commercial real estate loan concentration numbers is to structure real estate loans to operating businesses, such as seniors housing, hotels, restaurants and auto dealership as C&I loans with a lien on the real estate. ‘I think we are going to find as we peel back the C&I onion that there is a lot of real estate classified as C&I loans in the banks’

    You mean the banks are a lion? It’s not till the tide goes out…

      2. The prepper community has been encouraging a lot of Get Out of Dodge. And now with w@h, I think a lot of people will.

        1. We’re w@h through January. About to go on a trip to “w@h” while investigating potential future homesteads outside of dodge…

          2. Been W@H full time since 2016 (Distributed dev team across 3 continents). Mrs Spiff is now 100% W@H until mid-2021 at minimum.

          3. About to go on a trip to “w@h”

            Same here…we started to go back in once in a while and now we’re back to bare minimum and everybody else stays home. Taking an RV trip around the USA in a few weeks to work from everywhere.

          4. Taking an RV trip around the USA in a few weeks to work from everywhere.

            I mean no disrespect, but people really are like sheep. The entire American population thinks now is the time to go RVing.

          5. I mean no disrespect

            Not insulted at all :-). What it tells me is that there are a bunch of people who always wanted to do it but couldn’t because work and school schedules basically made it impossible. That’s my reason anyway. Then you add in that most indoor activities suck or are impossible right now and outdoor stuff starts to look pretty good. Then add cheap fuel and avoiding airtight aluminum tubes full of diseased people…

          6. and avoiding airtight aluminum tubes full of diseased people

            This. I’ve been wanting to visit the Riviera Maya, which has reopened, but having to sit in a flying tube is rather unappealing right now (not that it’s ever appealing).

          7. then you add in that most indoor activities suck or are impossible right now and outdoor stuff starts to look pretty good. Then add cheap fuel and avoiding airtight aluminum tubes full of diseased people…

            In addition to chest freezers being next to impossible to obtain, pools – the above ground kind for your kids to play in, are now a scarce good with prices going through the roof.

          8. I love the “RV trip / work from everywhere” idea, although I don’t know if I could manage it personally. Music is such a big part of our lives, and I can’t envision how that could work from an RV platform.

            Anyway, I look forward to your dispatches from everywhere.

          9. Music is such a big part of our lives, and I can’t envision how that could work from an RV platform.

            I don’t play professionally so yeah, it’s not the same. But I am in the process of getting very portable. I already bought a pair of Bose S1Pro speakers that sound decent at standard volumes and have batteries in them. But I always needed an amp to make guitar sound right. So I’m converting over to UA Apollo x4 using low latency software emulations for amps. I’ll have enough inputs for 2 guitar and 2 mics and be completely battery operated (laptop recharger battery for the x4). My backing tracks go from my phone to the speakers via bluetooth. So I’ll be able to do some high end “Campground Karaoke” and see if anybody wants to join. We’ll see if anything interesting happens with it. Should sound very good for a portable system, though.

    3. “You mean the banks are a lion? It’s not till the tide goes out…’

      I like to think of it as living in The Now.

        1. Counted the old way it was everyone of working age not working, I think. Today it’s just people recently let go, which would make it much worse.

  8. LOL@ there was a vagrant sleeping in an unoccupied carport of my building that somebody moving out left a couch and other furniture in a few days ago. He looked like he was still high on fentanyl at 5:45 this morning.

    Lessons learned:
    Live in a security building.
    Do not live on ground floor.
    Do not buy house in neighborhood with vagrants.
    Accelerate plans to leave Denver permanently.

    1. Must have been high on something else, if it was fentanyl he would have been dead on the abandoned couch.

      1. And the furniture is all gone. I emailed the building manager (who is an EMPLOYEE of the building’s tenants), and it was done in a day. This is the kind of service you receive renting from a small, family-owned LLC. Corporate rentals do nothing for their tenant but cash their rent checks.

        1. Not defending the cop’s action to stand on Floyd’s neck here, at all.

          But couldn’t being hopped up on fentanyl have reduced Floyd’s survival chances, and also have led to behavior that warranted police efforts to control it?

          2. Thats what the coroner said both contributed to his death….but content of character only applies to white people and cops today

    2. I left my garage door open all week and a big yellow cat took up residence. He accepted eviction without too much fuss.

    3. Dozens of King County prosecutors want office to ignore some burglary, drug and assault cases

      A deputy prosecutor who provided the letter to Q13 asked to have their name withheld due to concerns about retaliation, but called the proposals alarming.

      “I don’t even know why we’re prosecutors anymore,” the source said. “It seems almost as if the prosecutor’s office becomes less and less relevant and necessary to a safe society when we’re willing to let burglars or robbers go free or have a license to assault police officers.”

      Lemmings off the cliff in the peoples progressive republik of Seattlegrad. Fortunately it doesn’t seem to be spreading to surrounding cities, except for a spike in ammo sales.

  11. “according to the National Association of Realtors.”

    Realtors are liars.

    Colorado Springs, CO Housing Prices Crater 10% YOY As One Brokers Concedes, “Appraisal Fraud Is Rampant”

    https://www.zillow.com/colorado-springs-co-80908/home-values/

    *Select price from dropdown menu on first chart

    As a distinguished economist said so eloquently, “Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.”

  12. I copied this verbatim from another site and re-posting because I think it really nicely sums up the tone of whats going on with R/E in SoCal.

    As noted many times prior here on the HBB, for some reason show business types seem to have a unique talent to lose money in R/E.

    Here is yet another:

    “..A report from Variety on California. “The Los Angeles historic cultural monument known as the Samuel-Navarro house has a notable new owner to chalk into its colorful history. Nearly four years after screenwriter Dale Launer first put the idiosyncratic Art Deco-meets-Mayan Revival masterpiece up for grabs, the home has finally sold for about $3.5 million. Launer picked up the property in 2014, for $3.8 million, before selling at a hefty loss.”

    Less money than 6 years ago…Nothing to see here, move along. Enjoy the weather…”

    1. And it took 4 long years to unload it. I wonder why he tried to sell after just two years? A nasty divorce? Lack of screenwriting gigs?

    2. See my post yesterday on the real dollar value of the loss, before adding in real estate commissions and HODLing costs.

  14. Published today:

    “Cancel culture is generally discussed as being performed on social media in the form of group shaming. A plurality (46%) of Americans believe that cancel culture “has gone too far.” About a quarter of Americans — many of whom are perhaps blissfully offline — said they didn’t know or had no opinion on the matter. When they are removed from the results, a clear majority — across almost every demographic category — says that cancel culture has gone too far.

    Twenty-seven percent of voters said cancel culture had a somewhat positive or very positive impact on society, but almost half (49%) said it had a somewhat negative or very negative impact.

    Age is one of the most reliable predictors of one’s views. Members of Generation Z are the most sympathetic to punishing people or institutions over offensive views, followed closely by Millenials, while GenXers and Baby Boomers have the strongest antipathy towards it. Cancel culture is driven by younger voters. A majority (55%) of voters 18-34 say they have taken part in cancel culture, while only about a third (32%) of voters over 65 say they have joined a social media pile-on.”

    https://www.politico.com/news/2020/07/22/americans-cancel-culture-377412

    Note to self: accumulate more paper books by soon to be cancelled authors, and anything about 18th, 19th, 20th century American history, before it gets summarily erased.

    1. Cancel culture is generally discussed as being performed on social media in the form of group shaming

      Shaming? Is that what they call getting people fired from their jobs for Wrong Think?

      1. Excuse me, but who gives these canceling culture people the right to cancel anything.?
        By what I have seen so far these are mentally disturbed people that have no respect for other people’s rights. If you don’t join their cult you get attacked.
        They have nothing to offer that’s any good but to destroy the current society.
        That aren’t nice people offering something better. They are frauds,

        1. Excuse me, but who gives these canceling culture people the right to cancel anything.?

          Nothing. But people with the power to hire and fire listen to them. Why would that be?

    2. Just read the other day that Trader Joe’s will discontinue their ethnic-name labeling — Trader Jose, Trader Giotto, Trader Ming. Some high school activist got 2500 signatures on a change dot org petition, saying that the names were racis and demeaning. She demanded not only an immediate change, but she wanted all existing product pulled from the shelves. Trader Joes gave in, saying that they were thinking of returning to plain Trader Joe’s anyway. But I don’t think they’ll pull existing product.

    1. I’ve been into central Denver once since March and that was only to go to Quality Electrical Distribution just west of downtown.

      Arapahoe, Jefferson, Douglas Counties are so much better than that cesspit. There is nothing north of Mississippi Ave that I need or want. LOL@ paying sales or proprty taxes to Denver.

        1. When the bonus Uncle Sugar gravy ends, I suggest they all move to a designated homeless campsite on Denver City Councilwoman Candi CdeBaca’s front lawn.

          “You love to see it” — Alexandria Ocasio Cortez

          1. When the bonus Uncle Sugar gravy ends…

            It was just announced it’s not ending anytime soon, so the free sh!t army marches on.

          2. Now that the precedent is set I’m thinking for sure it won’t end until after the election. If Biden wins maybe never and it becomes UBI. I *think* Trump would end it after the election.

          3. It was just announced it’s not ending anytime soon, so the free sh!t army marches on.

            From what I just read it’s far from a done deal. The House and the Senate have very different ideas of what the next stimulus bill will be.

          4. Now that the precedent is set I’m thinking for sure it won’t end until after the election. If Biden wins maybe never and it becomes UBI

            My back of the napkin calculation says that it would cost $3T a year to give 50+M deadbeats $1000 a week.

            If that is the case, then all menial jobs will need to be automated. Who in their right mind would work for less than $25/hr if they can get it for doing nothing? That 50M deadbeat count could get a lot bigger.

          5. My back of the napkin calculation says that it would cost $3T a year to give 50+M deadbeats $1000 a week.

            That’s massive. That’s almost 15% of GDP.

          7. That’s massive

            But if we don’t pay this ransom, people might get mad and take to the streets, breaking and burning stuff.

            Let them eat cake.

          8. That 50M deadbeat count could get a lot bigger.

            Dude, I’ll pay cash for a house then gladly stop working and get $50k a year to sit around and play xbox. Bring it on!

          9. Dude, I’ll pay cash for a house then gladly stop working and get $50k a year to sit around and play xbox. Bring it on!

            That’s the thing. I’m starting to become resentful over this. I’ve saved and I could afford to just sit home and never work again on $50,000. This is wrong on many levels. I have to work for my money.

          10. I have to admit, after hanging with my daughter and her unemployed boyfriend for a couple of days, the Millennial day trader lifestyle, fueled by Powell bux, doesn’t seem half bad.

            Watching him in action reminded me that I found myself in a similar situation at about the same life stage in the early 1990s, unemployed during a bad recession after six challenging years building a career. However, in the absence of a firehose of Fed-funded liquidity aimed at my bank account, I divided my time between various short-term opportunities in the gig economy, while planning my next long-term career venture.

            I’m unconvinced of the utility of turning a generation of young people into the Wall Street equivalent of casino gambling addicts.

          11. I have to admit, after hanging with my daughter and her unemployed boyfriend for a couple of days, the Millennial day trader lifestyle, fueled by Powell bux, doesn’t seem half bad.

            Absolutely revolting.

          12. A $50K UBI would kill this country. Anyone who has a nice house they can sell or a medium-sized nest egg would retire on the spot. Doctors nurses lawyers teachers truck drivers accountants software developers med-techs cameramen, even farmers. Who’s going to do the jobs that can’t be automated? I guess they’ll have to pull in more immigrants whose kids will vote Dem?

            But it’s a trap. The minute everyone gets $50K, prices of everything will rise to soak up that $50K. The menial poor will be poor again and those who retired better hope they can afford food and gas.

            No, I think any UBI will end with the epidemic. At most, Dems will be able to raise the minimum wage, which needs to be done anyway.

          13. The epidemic is showing where lotsa UBI would go: into the Wall Street gambling casino.

            There’s also no doubt that lots would also go towards purchases of alcohol and controlled substances. A fair amount would go towards purchases of lottery tickets and casino gambling sprees.

            I can see a lot of reasons why the Democrats could get behind this idea!

          14. “But it’s a trap. The minute everyone gets $50K, prices of everything will rise to soak up that $50K. The menial poor will be poor again and those who retired better hope they can afford food and gas.”

            Exactly!

          15. “Free money” crisis solutions scare me. If the Fed subsidized crises, wouldn’t more crises be the natural consequence?

            Wait a minute…the Fed’s bailout facilities already create a massive crisis subsidy, especially after Bernanke’s massive expansion of their scope!

          17. But it’s a trap. The minute everyone gets $50K, prices of everything will rise to soak up that $50K.

            The mental retardation of politicians to not recognize this is scary.

          18. I don’t know if politicians are necessarily as dumb as they appear regarding the availability of free shit to the UBI recipients. It could be that they grasp the absurdity, yet also count on the votes of the FSA members, and the Democrats who are in love with this idea, who do not grasp the absurdity.

          19. Democrats who are in love with this idea, who do not grasp the absurdity

            I think even they know we are screwed and are eating our own seed corn. But they see no way to stop that so they want to get in on it rather than let the Pentagon and Wall Street take it all.

          20. I think even they know we are screwed and are eating our own seed corn.

            Meaning they are hoard all they can, bought a bug out estate in NZ and have the Gulfstream ready to go.

    2. As I’ve understood it, for many years now there have been years-long waiting lists, and lotteries, just to get approved for Section 8 (which has nothing to do with finding a place that will take Section 8) in pretty much every medium to large city in the country.

      You may have recalled me mention helping a disabled woman who I went to school with (and tied for academic position with in HS) move from Kentucky to the Seattle area back in 2014. She had been on SSDI and raising 2 kids alone. The disability came from when she had a snowmobile roll over her winter our senior year and crack 3 of her vertebra, which didn’t get diagnosed for months.

      Anyway, she went on the wait list for well over year even with her disabled status putting her high on the list, then once approved, it took a year+ search to find a place that would take her (for the amount she got – many places ‘accepted’ section 8 but the rent was still too high as a way to keep most units from going that route) and finally got a decent efficiency apartment in Federal Way.

      When her situation changed (read moving in with a guy she would eventually marry), her apartment was rented to the next person within one hour of her turning in her notice, schedule for move in the day after move out.

    1. Yep, Au and Ag are off and running! Gee, are people becoming a little nervous about fiat currencies and other asset classes?

    3. Got snakes?

      The Tell
      The ‘cobra effect’ will have a ‘disastrous and unimaginable’ impact on the market, Wall Street vet warns
      Published: July 22, 2020 at 1:59 p.m. ET
      By Shawn Langlois
      ‘We’ll survive and thrive after the adjustment process for sure’
      MarketWatch photo illustration/iStockphoto

      Basic economic assumptions, or structures, will turn out to be much more fluid than policymakers can anticipate. Therefore the results will be disastrous and unimaginable.

      — Larry McDonald

      As the story goes, there was once so many cobras in Delhi that there was a bounty placed on each dead one delivered to the government. At first, it worked. But then, entrepreneurs began breeding cobras for the income, and the authorities had to cancel the program. The breeders then released their snakes — whoops! — and the cobra population exploded worse than ever.

      That is what’s known as the “cobra effect,” and, as Wall Street veteran Larry McDonald explained, it’s playing out right now in regard to the unintended negative consequences of public policy and government intervention in economics. Basically, the solution is worse than the problem.

      “We believe we are at the early stage of the biggest cobra effect in the history of economics,” McDonald wrote in a post on his popular Bear Traps Report blog. “As the massive monetary and massive fiscal stimuli (over $15T globally) conjoin to save the economy from a deflationary depression, they will cause instead a hyperinflationary economic collapse.”
      …

      2. Basically, the solution is worse than the problem.

        Yep. The FED and .gov are absolutely destroying the country’s future right now, and nobody is making so much as a peep about it. Propping up asset price bubbles is a fool’s errand.

        1. destroying the country’s future

          Once the looting frenzy goes mainstream is there any turning back? I think everybody just grabs all they can and figures they’ll deal with the future when it gets here.

          2. That’s part of the looting. A small part compared to the masters of the universe but still a part. They’re all jumping on the carcass now.

        2. The progs are peeping, saying give us a cut of that fake money big corp gets, or else.

          They got a point.

    4. Yep, silver is on such a tear that I might just break even on the silver I bought roundabouts Jan 2006

      1. Selling mine if it breaches $30. The local dealer is paying $1.50 over spot right now, so $28.50 per ounce and I take all of it in. That’ll give me a 30% return in a year.

    5. Is an even bigger Unlimited Quarantinive Easing on the way soon?

      The Financial Times
      Coronavirus business update 30 days complimentary
      US Treasury bonds
      US real yields tumble in an indication of prolonged Fed support
      Investors pushed into riskier assets as market eyes long economic recovery
      Jay Powell, Federal Reserve chairman, says he is ‘not even thinking about thinking about raising rates’
      © AP
      Colby Smith in New York yesterday

      Real yields on US Treasuries fell to the lowest level since 2012 this week in a move that reflects a belief that a weak economy will need very loose monetary policy for a long time.

      Real yields, which strip out expected consumer price-changes from the nominal yield on bonds, have plunged around the world as central banks have cut rates and unleashed monetary stimulus to limit the economic fallout from the coronavirus pandemic.

      Investors attributed the latest leg down in the US to expectations that the Federal Reserve would be prodded to do more to shore up the economy, following signs an economic rebound is stalling.

      “Low real yields represent a barometer for liquidity being injected into the market,” said Jim Caron, a senior portfolio manager at Morgan Stanley Investment Management, who added that they prompt investors to search out other sources of income.

      “It is no doubt supportive for financial assets and supportive for growth,” he said.
      …

  17. “that surge makes Tesla the world’s highest valued car company — if far from the largest. Of the 90 million cars sold around the world in 2019 Tesla sold 367,000. Take the two top-selling carmakers in the world, Toyota and Volkswagen, toss in Ford; the stock market still values Tesla higher than all three combined.

    In recent weeks, Tesla has also become a retail daytrading favorite with the number of Robinhood accounts holding Tesla shares rising to an all-time high of 496,890, making Tesla the second-most popular stock on the platform over the last 24 hours, and the 19th-most popular stock over the last 7 days. This flood of new retail money has certainly helped send the stock surging, although many have speculated that gamma manipulation in TSLA options has been critical to facilitate the recent surge.

    To be sure, Tesla’s crazy stock moves continued this week: on Monday, Tesla stock climbed nearly 10%, adding $26.5 billion to its market value in a single day. It pulled back 4.5% on Tuesday, to $1,568.36 a share. Even Jim Cramer who has hyped Tesla stock plenty in the past, is astounded. Asked about Tesla stock on Twitter on Monday, he wrote: “I don’t even know if it is a stock. it is something else entirely, like a new species discovered in the wild.”

    Let the winners ride. I learned that from the sub-Reddit WallStreetBets. Why does anybody work a full-time job when they can make more riding this money train? CHOO CHOO!

      1. “The FED should be dismantled.”

        After reading the Illinois Pension Fund piece I’m not so sure about that idea.

    3. I can’t wait for the big Tesla stock collapse. Could happen any day now. Even Elon sees the handwriting on the wall.

      2. I can’t wait for the big Tesla stock collapse.

        Jerome “Zimbabwe (Lil Zim)” Powell has other ideas.

  18. Minneapolis, MN Housing Prices Crater 26% YOY As US Housing Demand Plummets

    https://www.zillow.com/minneapolis-mn-55436/home-values/

    *Select price from dropdown menu on first chart

    As a distinguished economist said so eloquently, “Nothing accelerates the economy and creates jobs like falling prices to dramatically lower and more affordable levels. Nothing.”

      1. Those two are much better houses. They have a lot more land. I like the Orchard Bend one more.

        1. Orchard Bend is one of two beautiful Craftsman-inspired homes in the area.

          Sagecrest closed slightly below list price despite multiple offers. My insurance company, State Farm, refused to insure it so I didn’t bother looking at it.

      2. $17,000 per year in taxes alone. I’d move to the midwest before I’d agree to such a disgusting money grab.

    2. Gotta love it. The world is about to go over a cliff, and people are paying millions for tract homes that originally sold for 5 figures.

      1. A pool is an absolute necessity for our son! Nothing matches the sensory input he gets from the water.

        1. As the father of an on the spectrum, easily sensory overloaded son, I totally get it!

          One the flip side, I had a (big) pool once, back in Texas. It cured me of ever wanting one again (without a good reason)

          1. I like big backyard pools…in other people’s backyards. About twice a summer is enough to satisfy my pool cravings.

            My generous BIL let my family enjoy his over Memorial Day weekend. To my knowledge, no COVID-19 cases resulted from our family get together.

          2. Hot tub, maybe

            Hot tubs are a pain too. Constantly adding chemicals/adjusting the pH, cycling the water, cleaning all the growing stuff out of the piping/jets…

            It’s great that first year, though!

          3. I like big backyard pools…in other people’s backyards

            What I can’t stand are those “play pools” where you can’t swim or dive, or anything fun.

          4. “I like big backyard pools…in other people’s backyards.”

            I like those swim and racket club pools with expensive memberships and arrogant, bitchy eye-candy.

          5. arrogant, bitchy eye-candy

            They do it just for you because they know you like it :-P.

            I on the other hand have no use for them and I’m sure the feeling is mutual. But I can’t deny the visual appeal.

  20. There’s nowhere to get a return on cash right now. A guy on Peak Prosperity said essentially that the FED is trying to make cash holders as uncomfortable as possible right now so they jump into the stock market. Ain’t happenin’. I’d never buy in at these nosebleed prices. Starting to think I’ll probably just start to buy tools and construction equipment as people start liquidating – whenever that is.

    1. Was that Martenson or whatever his name is? He’s a kook. Said back when the beer flu was starting to make its rounds that a few cases in thailand disproved the notion that it would be less lethal in high temperatures. Complete dumbazz, selling doom to karens.

      Cash is still king, even with near zero returns – you want to buy into the only thing driving this market up, a handful of tech frauds monopolies that hate their users and treat them like dirt? The rest of the market is mostly dead. And housing will tank far heavier than the rate of depreciation of the dollar. So metals (especially lead ;)) and cash is king imo.

          2. No, it’s really not. It’s written by a conservative doctor-turned lobbyist, using old data from a month ago. No matter how much technical jargon she writes about sub-micron particles, masks worked in Maryland and Asia and Czechia, and with those hairdressers.

            Also note the black-and-white nature of such arguments: If it doesn’t keep out 100% of the particles, it doesn’t work at all and they should be banned. 🙄 Lowering the risk from, say 17% to 2% isn’t enough? You do understand about the lower inoculum, right?

      2. Martenson is getting flakey and condescending, but he’s not a kook. The virus is just as lethal now as it was back in January. It’s just looks less lethal now we have masks, (lower inoculum=mild case) better treatments, and younger patients. But if Martenson is still too kooky, that’s okay, go to Medcram.

        You know who’s fallen for the bull market bullchit? Both Dave Ramsey and popular YouTuber Graham Stephan. Both are pitching dollar-cost averaging and “time in the market rather than timing the market.” No thanks!

        I like Adam Taggert, the co-founder at PP who does the financial videos. He’s more down-to-earth than Martenson. Plus, I follow the heartthrobs at Real Vision. Roger at Real Vision let it slip that he’s ~25% in equities. Independently, that’s where the PP guys recommend being.

        1. “(lower inoculum=mild case)”

          Using this logic it would be best to expose everyone to lower doses of the virus and accept the resulting mild cases.

          1. An interesting read from Wikipedia …

            Cowpox is an infectious disease caused by the cowpox virus. The virus, part of the genus Orthopoxvirus, is closely related to the vaccinia virus. The virus is zoonotic, meaning that it is transferable between species, such as from animal to human. The transferral of the disease was first observed in dairymaids who touched the udders of infected cows and consequently developed the signature pustules on their hands. Cowpox is more commonly found in animals other than bovines, such as rodents. Cowpox is similar to, but much milder than, the highly contagious and often deadly smallpox disease. Its close resemblance to the mild form of smallpox and the observation that dairy farmers were immune to smallpox inspired the modern smallpox vaccine, created and administered by English physician Edward Jenner.

            The word “vaccination,” coined by Jenner in 1796,[4] is derived from the Latin adjective vaccinus, meaning of or from the cow. Once vaccinated, a patient develops antibodies that make them immune to cowpox, but they also develop immunity to the smallpox virus, or Variola virus. The cowpox vaccinations and later incarnations proved so successful that in 1980, the World Health Organization announced that smallpox was the first disease to be eradicated by vaccination efforts worldwide. Other orthopox viruses remain prevalent in certain communities and continue to infect humans, such as the cowpox virus (CPXV) in Europe, vaccinia in Brazil, and monkeypox virus in Central and West Africa.

          2. This only works when you can quantify the material and control exposure, which you can’t do in the wild.

          5. Mr. Banker, there have discussions about doing exactly that. What’s the lowest inoculum to confer immunity, and can you control it. But there are a couple problems with that. First, the problem severity of the case depends on the person, not just the inoculant. Given the same inoculum, one person may cough for a couple days, but an obese person may have a serious case. In addition, there are hints of organ damage even in mild or asymptomatic cases. Third, the more people get this, the more chance of a mutation for the worse. And fourth, we aren’t sure about the immunity. There’s evidence that we have antibodies for a few months and T-cell memory for a long time after that, but it’s not certain.

            So a low-dose strategy is logical, but too risky.

        2. Martenson is getting flakey and condescending, but he’s not a kook.

          I don’t watch his COVID garbage. I did a couple times and he’s a little too full of himself and came off as a self-important fearmonger. I like the Adam Taggert financial videos that are posted once a week, particularly when they have good guests on.

          1. the more people get this, the more chance of a mutation for the worse. You left out another possibility: the more chance of a different mutation, one that renders the virus less lethal. No reason to choose one over the other.

      3. selling doom to karens

        That was the general consensus of the comments to a Martenson piece on ZH.

    2. There’s nowhere to get a return on cash right now

      I’m getting a pretty good rate on the 30yr treasuries and 5yr CDs I bought years ago!

      1. My dad has a nice selection of bonds in his portfolio from back in the day when positive real yields were available. He has inflation protected bonds whose yield before inflation protection are much higher than nominal Treasury
        bond yields are today.

    3. There’s nowhere to get a return on cash right now.

      And everything out there feels like a sucker’s game.

      Despite buying Casa $piffy in 2018 depleting us, and taking 5 months off from work for my knee replacement, our cash reserves are up into 6-figures again (and likely to double before the election) and we see nowhere that we are comfortable putting ANY of it into right now.

      Fooked if do, Damned if we don’t. -sighs-

        1. I’ve pondered it, but can’t make a compelling case for it. The only debt we have left is the mortgage, now at at 2.625%. The spread from even just keeping it in cash at Ally is only 1.5% (and that’s not counting the additional return from being able to itemize our federal taxes due to it). I don’t see it as worth the complete loss of liquidity when looking at the all the potential volatility over the next 6-12 months.

      2. we see nowhere that we are comfortable putting ANY of it into right now

        I’d like to offer you an opportunity to invest in drumminj‘s happiness! For only $10k you can get a guaranteed positive real return of good vibes!

        1. Can I get a copy of the prospectus? 😀 😀

          That said, what would this board be without the Joshua Tree Extension??

          And given that javascript hasn’t driven you insane, I feel like I should at least donate a couple bills to a tip jar or something for it. (Did I mention walking away from an easy $240k+/yr back in 2016 because of .js destroying my soul in just a few months?)

          2. I feel like I should at least donate a couple bills to a tip jar or something for it

            Any goodwill should be directed Ben’s way, in the form of donations. Keep this place alive. But thank you regardless — glad you find it helpful!

            (TypeScript makes JS development so much more sane…finally MS got something right 🙂

          3. Keep in mind that it is Ben’s blog, not a “board”.

            It was also almost 2am 😛 But seriously, this tiny little back corner of the internet here is one of the few places I feel comfortable to talk about some things.

            Any goodwill should be directed Ben’s way, in the form of donations. Keep this place alive. But thank you regardless — glad you find it helpful!

            I’ve donated $20 or so a couple times to Ben already, but it cant hurt to help defray costs.

            I actually pay out a couple hundred dollars a month (likely more by now) to various content creators I respect/use in the form of donations, patreons, subscriptions, etc. I’ve purchased WinRAR. I’ve donated to The Guardian. I do because I believe in rewarding the effort I get value from, especially given that I have been on the receiving end of being rewarded for my past efforts for years now to the tune of many thousands a month.

          4. I’ve purchased WinRAR

            Now we *know* you’re serious 😉

            (you’re one of the 5 out there..thank you!)

          5. Now we *know* you’re serious 😉

            I usually am. I wouldn’t be able to resolve the internal hypocrisy of making my entire living from the sales of digital content one way or another while doing nothing to respect other people trying to do the same.

            The pandemic seems have given digital sales of entertainment a kick in the arm. My ‘old’ product has had a good long tail, but had finally been drifting down after 7 years and a new version to compete with. Since April, sales tripled and are holding steady, keeping my little fraction of a percent on track for $60-75k this year. My more recent product finally earned out in early March (pays quarterly instead of monthly), netting me right at $1k/day. If it sees a similar sales spike in Q2 (they are related), it should be fun.

          6. “I’ve purchased WinRAR”

            It’s 7zip for me, and I donate to all the developers at Christmas time. PortableApps, Free42, etc., lots of favorites that make me more productive.

    1. AFAIK, those are rioters attacking a federal courthouse.

      FindLaw: Rioting and Inciting to Riot

      The right to protest is one of the oldest and most-respected rights in the American democratic system. The right of citizens to peacefully protest is protected by our First Amendment rights to free speech. Of course, there are limits to even the most important rights, and the right to protest doesn’t permit violence or the incitement to violence.

      Protests that turn violent are called “riots” and, First Amendment rights aside, there are laws against rioting and inciting others to riot that you should know before taking to the streets. The following article looks at federal prohibitions against rioting and inciting to riot.

      1. AFAIK, those are rioters attacking a federal courthouse.

        And they clearly had no stomach to fight when the Federal agents showed up. They scattered like cockroaches.

        1. And they clearly had no stomach to fight when the Federal agents showed up.

          As soon as they do I expect a shootout. Right now they are playing the Hamas game and focusing on winning the propaganda war by making their opponent look like bullies.

  22. I have great news for the Wall Street gambling brigade: Bad news on the jobs front is a sign that more stimulus is soon to come.

    So hurry and load up on more stocks before the Fed or the Congress pour the next barrel of gasoline onto the raging bonfire!

    1. The Financial Times
      Coronavirus business update 30 days complimentary
      US economy
      US weekly jobless claims elevated as economy appears to stall
      First rise since March in initial benefit applications as employers struggle with renewed lockdowns
      Donald Trump indicated this week the next US relief package will extend at least part of the supplemental jobless aid, saying employers are ‘having a hard time’ rehiring
      © AAPIMAGE
      Matthew Rocco in New York an hour ago

      The number of Americans filing for initial unemployment benefits has levelled off near 1.4m, as Covid-19 outbreaks in parts of the US south and west stoke concerns that the labour market’s recovery could stall.

      New jobless claims came in at a seasonally adjusted 1.42m last week, compared with 1.31m a week earlier, the US Department of Labor said on Thursday. Economists had forecast that claims would match the previous week’s unrevised figure of 1.3m.

      It was the first time since early in the crisis that weekly applications for benefits have risen. The pace of first-time claims had gradually eased in each of the preceding 15 weeks since hitting a high of 6.9m in March. Weekly claims remain elevated, having hit a peak of 669,000 during the 2008-09 financial crisis.
      …

    4. The stock market shakes off massive unemployment numbers like they don’t even exist. Another million + this week and there’s not even a leg down.

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