A Feeling Of Getting Revenge For All Of Those Years

1. ‘I don’t think $200 would do it. Certainly it would help, but if you’re talking about folks who spend 50% of their income on housing and they’ve got $500, $700 a month left for the rest of their bills … it’s so tight. I’m not sure that’s the right number’

   How much of the system is depending on a few hundred bucks of free cheese? BTW all USDA loans are subprime.

   ‘Last week the World Bank said that the 2008 financial crisis reduced the value of global pension assets by 23%. ‘The magnitude of the pandemic is expected to be higher’

   I’ve said for years, there’s a bunch of people who thought they’d be retiring who won’t.

   1. Let me get this straight: USDA = United States Department of Agriculture, right?

      What does subprime lending have to do with farming?

      1. It used to be a narrow program aimed at rural poor. It used to get spotty funding by congress. Now they renew it every year and expanded to areas that aren’t rural, all over the US. It’s pretty much zero down, and they can (usually from what I see) get closing costs rolled into the loan meaning it’s greater than 100% financing. These loans are reserved for subprime borrowers.

         1. “It used to be a narrow program aimed at rural poor. It used to get spotty funding by congress. Now they renew it every year and expanded to areas that aren’t rural, all over the US.”

            “If you put the federal government in charge of the Sahara Desert, in 5 years there’d be a shortage of sand” – Milton Friedman, Nobel Laureate Economist

            “Nothing is so permanent as a temporary government program” – Milton Friedman, Nobel Laureate Economist

            “Laws are like sausages, it is better not to see them being made.” – Otto von Bismarck

            – Where’s the beef?

            USDA Beef ( & Mortgage Loan) Grades

            U.S. Prime (Not available for Mortgage Loans)

            U.S. Sub-Prime (Beef & Mortgage Loans):
            U.S. Choice
            U.S. Select
            U.S. Standard and U.S. Commercial
            Utility, Cutter, and Canner Grades

            🙂

         2. “It used to be a narrow program aimed at rural poor.”

            …aka Yokels.

            1. Now its mostly Hispanics who according to the cites are still paying their debts.

      2. Apparently you don’t need to be a farmer to get one of these. Just need to have a sufficiently low income and be willing to live in whatever redlined areas qualify.

         1. I guess there are even financial advisers who specialize in helping “low income Americans” navigate the ropes of how to qualify for a USDA loan.

            What Is a USDA Loan?

            USDA loans are low-interest mortgages with zero down payments designed for low-income Americans who don’t have good enough credit to qualify for traditional mortgages. You must use a USDA loan to buy a home in a designated area that covers several rural and suburban locations. We’ll explain everything you need to know about USDA loans and how to qualify for one. If you want hands-on assistance as you navigate USDA loans, consider finding a financial advisor in your area.
            …

            1. A brief recap on subprime. Prior to 2001-2, subprime was less than 1% of loans, and always had a default rate of around 14%. This was a trade off for providing loans to veterans, rural poor etc. It was considered a societal benefit by the guberment. In 2003, they ran out of buyers and it grew to 30% of loans. We all know what happened then.

               So they just stopped calling it subprime. Non-prime is the current term. VA loans, also pretty much all subprime, have expanded from 2% of the US market to 12% in the last decade. Isn’t that a 6 fold increase? Oh and VA got rid of their loan cap entirely a couple of years ago. So if a coast guard family in San Diego wants to snap up a shack, they can! And the non-qualified mortgage under the GSE “patch” (13% plus of the market) is subprime by definition.

               Add them up and it a lot. We can debate if this group or that deserves this treatment. But don’t tell us there aren’t subprime loans cuz that’s just not true.

            2. Additionally, even the qualified mortgage limits were pushed into riskier areas, year after year, by Mel Watt. Loan to value, debt to income, everything got the drip, drip treatment. Remember Freddies loan program to undocumented immigrants who could use aunties income, or income from people who promised to be roommates to qualify? We don’t have any way to know how bad loans are except the FHFA guy who says it’s worse than last decade.

               March 26, 2020

               “As America heads into a deep recession, the $11 trillion residential-mortgage market is in crisis. Investors who buy home loans packaged into bonds are dumping even those with federal backing because of panic that millions might not make their payments. Yet one risky sector had started to show cracks long before the coronavirus pandemic sparked the worst financial meltdown in 12 years: the federal government’s largest affordable-housing program, whose lenient terms are geared toward marginal borrowers.”

               “As real estate prices soared in recent years, working-class adults everywhere have increasingly relied on mortgages backed by the Federal Housing Administration — and U.S. taxpayers. Since 2007, the FHA’s portfolio has tripled in value to more than $1.2 trillion, almost 11% of the market. While private lenders make these loans, they are packaged into Ginnie Mae bonds, common in mutual funds and pensions.”

               “Before Covid-19 started roiling China, a November FHA report found that 27% of borrowers last year spent more than half their incomes on debt, a level it describes as ‘unprecedented.’ The share of FHA loans souring in their first six months has doubled over the last three years to almost 1%.”

               “Not long ago, Alex Castillo drove his shiny black Infiniti SUV through an office park north of the San Antonio airport, along a busy seven-mile stretch of highway that loan officers call ‘Mortgage Row’ because of its abundance of small independent mortgage companies that dominate FHA lending. Castillo, who has the words ‘The Dream Starts Here’ stitched into his jacket, works for Pennsylvania-based American Residential Lending. Oddly, amid the pandemic, his business is booming. His customers locked in FHA mortgages after interest rates plunged this month — adding to federally backed mortgage debt.”

               “‘If the government tells me you’re good enough to get a loan, I have to trust and believe in the government,’ Castillo said. ‘Then we just hope and pray that the client doesn’t get foreclosed on.’”

               “In downtown San Antonio, scores of investors stood on a parched lawn beside the city’s historic granite-and-red-sandstone courthouse. It was the first Tuesday of February, the day of the foreclosure auction. Matt Badders, a San Antonio lawyer who represents lenders, auctioned off two houses. The failed mortgages remind him of the run-up to the financial crisis 12 years ago, when lending to customers with spotty credit nearly brought down the world’s financial system. ‘We’re almost back to 2007, when mortgage originators are waking people up on park benches, saying sign here,’ Badders said.”

               “At the auction, the crowd bid on 338 homes, a third with FHA mortgages, according to Roddy’s Foreclosure Listing Service. One house had dual master bedrooms, a game room and granite kitchen counters. It sold for $202,000 — $52,000 less than the homeowner borrowed only two years ago. The taxpayer-backed FHA insurance fund will take a loss.”

               “Dave Stevens, FHA commissioner under President Barack Obama and former chief executive officer of the Mortgage Bankers Association, said a recession will expose hidden risks in home lending. ‘This should be an alarm bell to policymakers,’ Stevens said. ‘Sometimes you get blinded by a good economy and suddenly look at it and see a bubble of defaults coming.’”

               “The federal government has decided it doesn’t want to pursue — and has asked a judge to dismiss — a lawsuit against Utah-based Academy Mortgage Corp. The judge refused. The suit claims the company’s staff would repeatedly feed information into an automated federal underwriting system, manipulating it until the computer gave the green light. ‘Decline is a curse word,’ Plaintiff Gwen Thrower, a former underwriter, quoted a manager as saying. ‘We don’t use it.’”

               http://housingbubble.blog/?p=3070

            3. ‘Sometimes you get blinded by a good economy and suddenly look at it and see a bubble of defaults coming.’”

               Never confuse debt-fueled consumption and speculative binges fueled by easy money with “a good economy.”

            4. a bubble of defaults

               Sorry Dave, the bubble is what comes before the cascading defaults.

            5. We’re just in a credit orgy cycle. “Fog-a-mirror” has been back for years. I’ve heard a number of people saying that they bought a brand new car without a credit check or income verification. Yeah, that’s SOLID.

            6. Never confuse debt-fueled consumption and speculative binges fueled by easy money with “a good economy.”

               The people on CNBC and Bloomberg Radio were sure as heck making that mistake leading up to the pandemic. According to them, the economy was doing great and the consumer was strong!

            7. Only when the tide goes out do you discover who’s been swimming naked.

               — Uncle Warren Buffett

      3. Farmers like to have the government subsidize their labor force so they can pay below subsistence wages.

         1. It’s not that simple. If farms were to pay prevailing wages they couldn’t compete with imported produce, so it’s back to food subsidies. And unskilled immigrants who become citizens instantly qualify for section-8 housing, snap food, etc., so now they’re inclined to stop working. It’s a vicious circle.

   2. I’ve said for years, there’s a bunch of people who thought they’d be retiring who won’t.

      They might still retire, but it will be a lot more austere than they were planning on.

      1. It’s all good. They just bought a brand new $75,000 truck and $60,000 RV – on credit of course.

      2. They might still retire, but it will be a lot more austere than they were planning on.

         Might not even be voluntary.

         1. Yup. Many will find themselves scrambling to find any job, most likely at a huge pay cut, to pay the bills and buy time for Social Security and whatever savings they have.

   3. only gov workers can retire
      Redfin says re up 13%
      where?

   4. “I’ve said for years, there’s a bunch of people who thought they’d be retiring who won’t.”

      Maybe you were wrong, and it will go in the other direction — sans income.

      1. ‘Finning, the world’s largest Caterpillar dealers, posted CDN $1.335 billion in net revenue in the second quarter 2020, compared to $1.995 billion in the second quarter of 2019, a 33-percent decline. Equipment rental dropped from $62 million to $41 million, a 33.9-percent plunge. The revenue decline was caused by the pandemic and low oil prices.’

         ‘Finning Canada’s product support revenue dipped 24 percent as many customers parked their equipment fleets and temporarily shut down operations in response to low commodity prices and COVID-19 restrictions. Strong free cash flow conversion in the second quarter resulted in free cash flow of $312 million, bring year-to-date free cash flow to $262 million and further strengthening Finning’s financial and liquidity position. As of June 30, 2020, net debt to adjusted EBITDA ratio was 2.1, down from 2.8 on June 30, 2019.’

         ‘For the first six months of 2020, net revenue decreased 25 percent from $3.714 billion in the first six months of 2020 to $2.774 billion this year. Rental revenue dropped from $120 million in the first six months of 2019 to $94 million this year. Finning plans to reduce its global workforce by 8 percent by the end of 2020 compared to 2019.’

         https://www.rermag.com/news-analysis/wall-street-beat/article/21138681/cat-dealer-finnings-revenue-declines-33-percent-in-second-quarter

         1. ‘They are caught in the grip of a pandemic that has pummeled the economy, forcing lockdowns that closed businesses and leaving many people too worried about infection to travel, shop, gather in crowds or eat out — or barred from doing so by states or localities. Yet their predicaments, as much as the wave of layoffs the virus triggered, speak to the dire impact the virus has had on the American labor force.’

            ‘They don’t portend good things for the economy, said Elise Gould, a senior economist at the Economic Policy Institute, a progressive think tank, who notes that anxious consumers, whether they hold a job or not, typically cut back on spending, the primary driver of the economy. “The insecurity of what has happened to people around them may lead people to save as much as possible,” she said. “And that could decrease spending in the sense that, ‘I don’t know what happens next.’”

            https://www.nbclosangeles.com/news/national-international/virus-causing-financial-pain-even-for-people-still-working/2410209/

2. ‘resulting in a pricing decrease of roughly 4% in metro Denver compared to six months ago’

   How do those 4.5% cap rates look now?

   1. Denver: come for the weed, stay for the tents, needles, and feces.

3. “While the share of loans in forbearance has consistently declined since April, more than half of the borrowers in forbearance are already in an extension, according to the Mortgage Bankers Association.”

   One of these things is not like the other.

   1. ‘more than half of the borrowers in forbearance are already in an extension’

      It’s a credit event. The bust is already here.

      1. Pshaw, Ben Jones. Surely if the bust you conspiracy theorists and your fringe blogs are warning about is for real, all those highly qualified housing analysts on the MSM would’ve sounded the klaxon by now.

4. ‘Colleges are making cuts and tradeoffs amid this pandemic that are upending campuses. ARONCZYK: Layoffs are happening at colleges all over the country. Kelchon says that’s because all sources of funding are taking a hit – tuition, state dollars, endowments, donations and auxiliary revenues, which means dorms and meal plans and the money sports teams make. And some of those sources of funding require real, live, in-person students. However…’

   https://www.npr.org/transcripts/900063446

   ‘Texas universities have started shedding jobs and are bracing for a serious financial hit’

   ‘On the first day of her vacation in late June, Melanie Bentley lost her job as an administrative assistant, one of several employees let go from the Tomás Rivera Center at the University of Texas at San Antonio.’

   ‘Her belongings would be packed up, she was told by an administrator on the phone, and her email access terminated before the day was over. “We had no indication whatsoever that the wrath was coming,” Bentley said. “We were cut off immediately.”

   ‘Texas universities are headed for a financial cliff, and it’s anybody’s guess how far they will fall. Most are already reeling after losing millions of dollars in revenue and eating the costs of shutting down campuses and moving classes online in the spring. Faced with what experts have deemed an unprecedented budgetary crisis, they’re tightening their belts and enforcing hiring freezes, furloughs and layoffs. Struggling departments and programs may be eliminated, and some sports are on the chopping block.’

   https://cbsaustin.com/news/local/texas-universities-have-started-shedding-jobs-and-are-bracing-for-a-serious-financial-hit

   1. So by all means UHS/REIC, shoehorn those borrowers into loans while you can, beat the FOMO drum. Read em’ and weep:

      Hard times for San Diego County cities

      https://www.sandiegoreader.com/news/2020/aug/05/cover-heres-rainy-day/

5. ‘I think the extension [activity] is saying you have a lot of homeowners out there who are not stable yet.’”

   It is also a predictable consequence of inculcating parasitism and deadbeat behaviors in your population.

6. “The number of signed contracts for co-ops and condos in Manhattan — the best real-time measure of activity — dropped 57% in July compared with a year ago, according to Miller Samuel and Douglas Elliman.

   Is that a lot?

   1. It’s more than half.

      1. Just by volume, right?

         I’m sure if you asked a realtor, they would attest that prices are as high as ever and headed higher.

      2. That my friend is un-possible. The REIC trolls who used to crop up on the HBB repeatedly assured us that 50% drops in demand or pricing were wholly inconceivable.

         Cue Princess Bride: “I don’t think that word means what you think it means.”

         1. “Inconceivable!”

            1. “No one could have seen it coming”! 🙂

   2. LOL@ New York City:

      “Crimes committed over the past several days would’ve been unheard of a year ago in the quiet neighborhood that’s home to Lincoln Center and restaurants by Daniel Boulud. A 40-year-old woman was randomly stabbed in the 72nd Street subway station at noon on Thursday; a 56-year-old man was sucker-punched while dining outdoors with his wife Wednesday night; photos were posted online of a man masturbating on the steps of the New York Historical Society; and onlookers witnessed an apparent overdose in the aisle of a Duane Reade across the street from the Lucerne Hotel.

      The Lucerne, on 79th Street and Amsterdam, and Hotel Belleclaire, on 76th Street and Broadway, were recently converted into homeless shelters, with nearly 300 vagrants between them. Ten of the men are registered sex offenders, including convicted rapists, child molesters and child-porn possessors — all living a block away from a school playground.

      Carr said one friend couldn’t find a broker to take on her apartment listing on 72nd and Columbus, normally a desirable spot, because conditions were so bad.

      “It’s this slow slide,” she said. “How can families stay here? Does the city want families to stay?”

      https://nypost.com/2020/08/08/nyc-moms-fleeing-upper-west-side-amid-crime-and-chaos/

      1. “It’s this slow slide,” she said. “How can families stay here? Does the city want families to stay?”

         Got a long way to go to catch up to the urban dystopia that San Francisco or Seattle have become.

7. “On Wednesday, the Getty Residences — a glamorous new condo building in downtown Manhattan designed by Peter Marino — announced price cuts of more than 50% on some units.

   Under the bus you go, prior purchasers. But fear not: the knife catchers who leap at those 50% price cuts will soon be joining you on the bagholder bus to Schlongville.

8. ‘the Getty Residences — a glamorous new condo building in downtown Manhattan designed by Peter Marino — announced price cuts of more than 50% on some units. One full-floor unit, with more than 3,800 square feet, had once been offered for over $20 million and is now listed for $10.5 million’

   What does that do to previous buyers?

   1. Stuck with payments / Unable to sell except at a steep loss.

      1. But at least they aren’t “throwing money away” at rent!

         1. And they can HODL until the Fed financially engineers enough inflation to bring them nominally back into the black.

            It’ll all be fine for them at the end of COVID-19.

9. ‘People were making really dumb offers,’ he says. ‘I had a whole townhouse listed for $24,000, and I was getting offers between $12,000 and $15,000.’ He decided, he says, ‘to take it off the market. We decided to wait until there are actually bodies back that really need to move.’”

   You stick to your guns, Greedhead Bill. Surely a Greater Fool will lurch into Mr. Banker’s office any minute now waving Suzanne’s research and wanting to chat over the most expensive free cup of coffee he’ll ever imbibe. Spoiler alert: those offers will seem even dumber when the Fed’s Everything Bubble finally craters.

   1. Chasing the market down, classic behavior. One very interesting thing in that article: mentioning opportunity costs of renting versus buying, with renting winning out. The mentality has changed. An $8M airbox looks dumb. It’s speculative because no one needs an 8M condo. The only reason you would buy one is if you expect to sell it to a greater fool for 11M.

10. Welps, I am sitting on the sidelines with cash waiting for this to unfold. Praying for California housing crash and more inventory to flood market.

11. ‘This year, September is a few weeks away and the rental market is almost unrecognizable: Vacant apartments abound, rents are dropping, and landlords are willing to waive fees, allow pets, grant lease flexibility, and do pretty much anything to secure a paying tenant’

    ‘Zumper shows that one-bedroom rents in Boston have had a 6% year-over-year decrease, a decline the city hasn’t seen since 2016’

    Rents have been falling in Boston since 2016. Same with the other cities mentioned.

    1. I am looking for a larger place to rent. Hopefully, I can find a 2 bedroom 1200 square foot home with a garage to rent for less than buying.

       1. Unfortunately I think that’s a good plan. Could be a while.

12. “We’d love to recommend the Miami Beach, Florida, mansion of Baseball Hall of Famer Mike Piazza. The legendary slugger has slashed the price of his Miami waterfront mansion again in hopes of enticing a buyer onto the field.

    REIC touts who use sports analogies in their shilling should be publicly horse-whipped on general principle.

    1. ‘in hopes of enticing a buyer onto the field’

       Sports analogies are the worst.

    2. publicly horse-whipped on general principle.
       This sort of punishment / public shaming should make a comeback. Especially for those “so and so corporation agrees to pay the fine of $xx million without admitting wrongdoing” crimes. They can without admitting wrongdoing, but public horse-whipping should be part of the parcel of settling the complaint.

       Maybe when we are in fulle “going Roma” mode we will get to see this.

       1. Horsewhipping has no effect on greedy a-holes who don’t feel shame. Look at all the CEOs that get hauled in front of some Congressional committee for an old-fashioned grill-n-roast. Sure, they might be a little embarrassed for a few hours, but they get the same bonus the day after as the day before.

    3. Looks like they have been whiffing out for a while.

13. so what do pension plans do in March/April 2021 when they have to report? I think that kick the forbearance down the road … and push off hard choices until 2022. This will take very long to unwind

    ———-
    “The pandemic may have kicked off a revolution in working practices — and that could spell trouble, economists say, for pensions funds, which have billions of dollars invested in commercial property, seen before the pandemic as a safe long-term bet. Across the world millions of tenants and not only in financial districts have stopped, or are delaying, paying their rent to landlords as economies have been left reeling. Hotels and restaurants as well as retail and warehousing businesses have all been struck hard by the pandemic, many will go bankrupt, leaving commercial landlords with considerable losses on their hands, say analysts.”

    1. Public pensions funds are in trouble, and taxes are being increased and services cut, because of a combination of retroactively increased benefits and taxpayer underfunding of the pensions public workers were promised to begin with (wage theft). The distribution of blame between these two factors varies from place to place, but either way Generation Greed took too much out and didn’t put enough in. The generations to follow were screwed.

       What those who benefitted really want, however, is to blame investment returns, which is hard to do during an “everything bubble.” A crash would be a political gift from the gods. “It’s not our generation’s fault! It was circumstance beyond our control!” Hardly.

       1. “Public pensions funds are in trouble, and taxes are being increased and services cut, because of a combination of retroactively increased benefits and taxpayer underfunding of the pensions public workers were promised to begin with (wage theft).”

          +1

          – There’s an implicit contract between public service workers and government; vote for me and I’ll promise you ridiculous pension benefits. I don’t know of any pension fund that’s even close to 100% funded. This has been going on for as long as I can remember, and is essentially a Ponzi scheme. The very first pensioners will get benefits, the more recent ones not so much.

          “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” – Alexis de Tocqueville

          Stein’s Law: “If something cannot go on forever, it will stop.” – Herbert Stein (1916-1999), Economist

          1. I don’t know of any pension fund that’s even close to 100% funded.

             https://taxfoundation.org/state-pension-plan-funding-2019/

             Apparently South Dakota and Wisconsin were 100% or more last year:

             Pension plans in Wisconsin and South Dakota are in the best shape, with funded ratios of 103 and 100 percent, respectively. Tennessee is right behind with a 97 percent ratio.

             Twenty states have pension plans that are less than two-thirds funded, and five states have pension plans that are less than 50 percent funded.

             A time bomb ready to explode.

             1. A time bomb ready to explode.

                We’ve been hearing this for decades. How long until these bombs explode? I’m being serious – this pension crisis has been going on since before the last crash. That’s over 15 years.

             2. over 15 years.

                I think the first fuses were lit in the ’80s.

             3. We’ve been hearing this for decades. How long until these bombs explode? I’m being serious – this pension crisis has been going on since before the last crash. That’s over 15 years.

                An internet search for “cities cutting services to fund pensions” will reveal that state and local governments are already cutting services so they can pay their pension obligations.

             4. When? 2-3 years. The holding pattern we are in is running out of fuel. The Boomers have been “hanging on for one more year” for 8-10 years now. They couldn’t stop working because:

                1) They don’t have enough money even with pension, such as it will be.
                2) They are supporting Millenial kids.
                3) The men divorced when they were 41-42, traded in for a newer model, had another kid when they were 45-50, and now that kid needs to go to college and newer model depends is too young for Medicare and depends on his health insurance.

                But those hangers-on can’t hang on hang on forever. The public employees who could have retired at age 56-60 are now age 66-70. That’s a big decade for health problems. They will be forced out of work either from a health problem, or by this pandemic. It’s coming soon.

             5. We’ve been hearing this for decades. How long until these bombs explode?

                Once they can’t meet their obligations. They are limping along for now, but once the tsunami of new retirees hits those pensions, the balances will start to drop precipitously. And as others here have mentioned, some governments are starting to redirect spending to shore up the pensions. But that’s only a band aid. They can only defer non pension spending for so long.

          2. “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” – Alexis de Tocqueville

             Congress discovered that years ago. Which tells you how far down the tubes we have already gone.

          3. “There’s an implicit contract between public service workers and government; vote for me and I’ll promise you ridiculous pension benefits.”

             Or public COLA salary increases frozen in-lieu of increased pension benefits, which become someone else’s problem years later.

    2. Commercial real estate seemed as safe as houses up until the coronabug showed up in town.

       1. Maybe in your neck of the words. In Colorado Springs, almost all CRE that closes stays closed indefinitely, unless it reopens as a pot dispensary. A lot of former big-box stores, K-Marts, restaurants, etc. are slowly rotting shells with no buyers or renters in sight.

          1. Our K-Mart, the last one in the state, closed and is reopening as a Jax Outdoor Gear store.

             1. We also had an old stand alone restaurant that closed and remained closed for about 20 years, until it was bulldozed and replaced with a KFC a few years ago.

          2. unless it reopens as a pot dispensary

             Or as a nail salon, tattoo parlor, or pay-day lender.

          3. “A lot of former big-box stores, K-Marts, restaurants, etc. are slowly rotting shells with no buyers or renters in sight.”

             Is that because the landlords refuse to “give away” the property at a modified market rate? I see properties vacant all the time, for years, in great locations because the owner would rather cut their nose off to spite their face.

             1. Big boxes have been turning into giant thrift stores, or discount stores of Chinese goods, such as At Home.

             2. Sears/KMart has been known for selling off real estate to keep the cash flow positive. Just days after the local KMart announced its closing it was announced that Jax was buying the property, and the moved fast, the new Jax Store has already opened.

                Across the street is a Safeway, which also announced that it had sold it’s property just before the pandemic began. There have been no announcements regarding the future of the store, but it’s still there. A former Albertson’s, just a few blocks away, was converted into a Safeway a few years ago. It would make sense to close the store that sold the property, but months later it seems to be business as usual there.

    3. Here’s an idea: lower the rent.

14. Certainly it would help, but if you’re talking about folks who spend 50% of their income on housing and they’ve got $500, $700 a month left for the rest of their bills … it’s so tight. I’m not sure that’s the right number,’ he said.”

    How many of those “folks” drive leased Escalades or BMWs, have $1000 cell phones, and cable TeeVee?

    1. Too many.

       One of my former co-workers from DFW that I’ve been recently keeping in touch with (and may have mentioned here) is 63. He got laid off at the start of the shutdowns after 11 years at his job. Next week he’s starting the first job he could find, at a ~$40k/yr haircut.

       Anyway, he always had a thing about needed a recent model, flashy car. He’s currently got a BMW 750i and a $850/month payment on it. The income reduction he’s facing is going to make making that payment hurt every month.

       1. Sad for your friend. Having “that thing” for a recent, flashy model car reveals his need to impress others. He thinks he’s doing it for himself but his choice to drop that kind of money per month is likely more about feelings of inadequacy and a need to keep up with the proverbial Joneses. He’s certainly not alone.

          1. I’ve talked with him weekly for the last month, and we talked a good bit about some of that. I think he’s really starting to embrace the idea of not needing to impress anyone, as well as realize that you can get 90% of the nice stuff in a car for 35-40% of the sticker price and 10% of the repair bills.

             He got divorced back in 2014, and still has child support for another year (downside of marrying someone 20 years younger than him I suppose), and doesn’t have much at all in the way of retirement, except a house that is just about paid off.

             I’ve prodded him a lot about visualizing and making a plan to exit the corporate workplace in the next few years and enjoy life again.

             1. I’m sensing a theme with the men in your orbit: young thigh gaps are expensive.

             2. I’m sensing a theme with the men in your orbit: young thigh gaps are expensive.

                *shivers*

                I’ve been blessed with incredible will power, because if I wasn’t I’d be on the hook with one of these young hussies. They sure can turn on the charm, but I’ve stayed clear.

             3. incredible will power

                I used to ask them if they could swim.

             4. In all fairness: when you think with your d***, don’t expect sympathy when you get burned.

             5. I’m sensing a theme with the men in your orbit: young thigh gaps are expensive.

                Ugly cheating heffalopes can be as well – Spiffy was young, dumb and really beaten down when he married his ex (against his better judgement).

                I just recently pulled my latest statement from the AG website – looks like once I make the final child support payment it will have cost me around $480K in child support + alimony; and that’s not counting kids insurance & COBRA, travel and lodging for visitation, her house down payment, and so on.

                A quick query in Quicken shows another ~$242K in divorce/kid related expenses, the majority of which wouldn’t be incurred had we stayed married.. but you what they say, you can’t buy happiness (but maybe you can rent it).

                18 Months to go until the last payment, then I’m throwing one hell of a party. You are all invited…

       2. “One of my former co-workers from DFW that I’ve been recently keeping in touch with (and may have mentioned here) is 63.”

          Does he own a modest paid-in-full house?

          1. Does he own a modest paid-in-full house?

             Almost. It’s in the Dallas suburbs (Plano or Allen) and I think he said it’s currently ‘worth’ about $350k. He managed to keep in the divorce by buying out his ex (she cheated, go figure) and owes maybe $25K on the mortgage.

             He’s tired of Texas weather, and once his youngest is out of high school and off to college in 1.5 – 2 years, the plan is to sell it, and move to someplace more rural, cheaper, and better climate.

             His ex is living next door (!!) and has this crazy idea he will move with her to California and fund her new business idea. He’s keeping his mouth shut, but she’s in for disappointment.

             1. His ex is living next door (!!) and has this crazy idea he will move with her to California and fund her new business idea. He’s keeping his mouth shut, but she’s in for disappointment.

                Yikes. It is kind of funny sometimes how delusional exes can be. But maybe he didn’t put up many boundaries in order to keep things working best for him for a time so that makes it easy for her to be delusional if she’s naturally prone to that anyway.

             2. His ex is living next door (!!) and has this crazy idea he will move with her to California and fund her new business idea.

                So, either the boyfriend is 1) broke 2) Not interested in moving or 3) Has already left her.

             3. Yikes. It is kind of funny sometimes how delusional exes can be. But maybe he didn’t put up many boundaries in order to keep things working best for him for a time so that makes it easy for her to be delusional if she’s naturally prone to that anyway.

                His ex cheated with their next door neighbor, which is why she is living so close but that recently fizzled out after ~7 years.

                I can speak from experience about delusional exes and boundaries – the problem is having minor kids.

                As long as they are growing up, many ex wives will use them to bludgeon the guy and assert ‘her way’ whenever possible, while dad just nods and ignores her. It’s not worth blowing up her delusions when she’ll get the kids involved to strike back. Once the last kid is finally an adult, she gets the reality hammer to the face.

             4. When it’s time for him to move, he needs to seriously think about getting a restraining order to keep her away. Even if he moved far away, she’d likely find him and show up on his doorstep crying poor. Her “new business idea” is a meal ticket, no more no less. She’ll dog him for life. Disgusting.

             5. She’ll dog him for life.

                Thankfully, it doesn’t always play out that way.

             6. Once the last kid is finally an adult, she gets the reality hammer to the face.

                That’s what I was thinking. With my ex she does reach out once in a while when angry-depressed (the bipolar version of drunk dialing) but mostly keeps to herself. So luckily for me it hasn’t taken much effort to maintain boundaries, just avoid taking the bait once in a while. “I don’t have to attend every fight I’m invited to”.

             7. “His ex cheated with their next door neighbor…”

                A college classmate rented a nice duplex, fully covered parking and at a great price. Then his girlfriend moved in with the guy in the other half of the duplex. My friend couldn’t study or get much sleep with their bed banging against their dividing wall.

             8. Her “new business idea” is a meal ticket, no more no less. She’ll dog him for life. Disgusting.

                I’m not worried for him about this. He’s clearly over her and holding his tongue only for the sake of his kids.

                It really surprises me how often it plays out the exact same way — bi-polar NPD lower earning wife cheats, does her best to take guy to the cleaners and monopolize the kids, and somehow thinks that her ex is still the same guy when they very first met and is willing to do anything for her because he’s still secretly in love with her, blah blah blah just because he’s still there for the kids when in reality he recognizes that anything he says will set off the crazy so he just makes vague nodding noises to place her while planning for the day he never sees he or hears her voice ever again.

             9. Then his girlfriend moved in with the guy in the other half of the duplex. My friend couldn’t study or get much sleep with their bed banging against their dividing wall.

                That sounds terrible. Poor guy. It’s one thing to have your girlfriend leave you for another guy – but to have to listen to her banging him? One night would be enough for me. I’d be out of there.

15. Last week the World Bank said that the 2008 financial crisis reduced the value of global pension assets by 23%. ‘The magnitude of the pandemic is expected to be higher,’ it warned.”

    Pension funds represented the last great untapped pool of wealth for the oligarchy to pillage. Looks like they’ve fixed that, as a lot of Boomer bagholders are about to find out.

    1. Didn’t Argentina actually confiscate people’s pensions during one of their financial convulsions of the last couple decades?

       1. They grabbed $30B worth. The pensioners were given something in exchange, government bonds, which quickly depreciated as the interest they paid didn’t come close to matching inflation.

          1. Were their pensions indexed to inflation?

             Most aren’t (Social Security excepted).

             1. Not sure, but I doubt it.

16. It sure sux these daze to be a commercial landlord.

    The Financial Times
    Coronavirus business update 30 days complimentary
    Property sector
    Hard hit businesses pay only fraction of rents in July
    Private equity-owned tenants pay less than listed peers, says one US property group
    Rent collection rates have risen since the lockdowns of the spring, but remain beneath normal levels
    Alistair Gray 7 hours ago

    The challenge of collecting rent in the age of coronavirus has been laid bare in recent days by US commercial landlords that have reported receiving only pennies on the dollar from movie theatres and some other tenants hard hit by the pandemic.

    A series of financial filings from listed real estate investment trusts show that overall collection rates have risen markedly from the height of lockdown in the spring. But they remained beneath normal levels in July, even as the economy reopened.

    While groceries and other retailers selling essential goods have largely paid what they owe, many restaurants and discretionary retailers have not. Illinois-based Retail Properties of America, which owns 102 shopping centres and other properties, said its collection rates for movie theatres and amusement and play centres were only 9 per cent and 6 per cent, respectively.
    …

17. Poor Uncle Warren…do you think he’s feeling humiliated by all the whippersnapper
    Millennial day traders who have been using their UBI plugs to outperform his investing results?

    1. Buffett’s Berkshire Hathaway earnings jumped 87% as it recovers from the pandemic
       By Shannon Liao, CNN Business
       Updated 12:01 PM ET, Sat August 8, 2020

       New York (CNN Business)
       Berkshire Hathaway is recovering from a rough start to the year where it was hard hit by the coronavirus. On Saturday morning, it posted $26.3 billion in net income for the most recent quarter, up almost 87% from last year.
       Billionaire Warren Buffett’s industrial and insurance conglomerate is typically considered a bellwether, given the diverse businesses it owns, including Kraft Heinz, Geico, Duracell and more. Like the economy itself, the company is trying to mitigate economic loss.
       Berkshire (BERK) had net earnings of $26.3 billion, or $16,314 per Class A share equivalent, from $14.1 billion, or $8,608 per Class A share in the year-earlier quarter.
       That’s a big turnaround from its first quarter, when Berkshire lost $50 billion, the company’s biggest-ever loss, as it suffered from a massive shift in consumer behavior. But much of the rebound was the result of a turnaround in the overall stock market. Its operating earnings fell from the prior quarter.
       …

18. Are you enjoying your Fed-funded financial market churn?

    1. Isn’t this basically the definition of a bubble?

       “Its upper limit is confined only by what the next buyer is prepared to pay.”

       The Financial Times
       Coronavirus business update 30 days complimentary
       Gold
       How the 2020 gold rush smashed through records
       Inflation worries return to fuel a surge in price of the precious metal
       Some of the most prominent hedge fund investors have, in many cases reluctantly, turned into gold supporters
       Henry Sanderson, Robin Wigglesworth and Neil Hume yesterday

       Nine years after the last rally collapsed, a new gold rush is in full swing.

       This week, prices rocketed to record highs above $2,000 per troy ounce for the first time — a 36 per cent ascent in the year so far that far outstrips any stocks index.

       Even with prices at these lofty nominal levels, few are calling for a drop, prompting some to warn of a bubble and stunning even veterans of the industry.

       “I’ve been active in the gold market for 35 years, and this is probably the most abrupt shift I’ve seen,” said John Reade, chief market strategist at the World Gold Council and a former gold trader.

       Much of the latest rally stems from central banks’ efforts to shield the global economy from the worst effects of the coronavirus pandemic. Interest rates in major economies, which had started to pick up after the last financial crisis, have now headed back close to zero. That, plus central banks’ aggressive bond-buying programmes, has crushed the returns available to buy-and-hold investors in government debt and left little further room for price appreciation.

       Meanwhile, inflation expectations, while low by historical standards, have ticked higher. That leaves gold, typically second-best to bonds because it does not provide interest payments, in a sweet spot. Its upper limit is confined only by what the next buyer is prepared to pay.
       …

    2. One week ago seems like forever in COVID-19 time.

       But for the record, one week ago the bond market priced in a five year U.S. economic depression.

       Bonds
       Treasury yields fall, with 3-year, 5-year rates hitting all-time lows, amid economic concerns
       Published Fri, Jul 31 2020 1:54 AM EDT
       Updated Fri, Jul 31 2020 8:32 AM EDT
       Yun Li

       Treasury yields continued to move lower on Friday with short-maturity rates reaching record lows as investors remained worried about the pace of economic recovery.

       The yield on the benchmark 10-year Treasury note, which moves inversely to price, hit a low of 0.520% its lowest level since March 9. The yield on the 30-year Treasury bond fell slightly to 1.176%, its lowest level since April 29.

       The rate on the 3- year note hit a new intraday record low of 0.122%. The 5-year yield also reached a new all-time low of 0.214%.

       The decline in Treasury yields came as Congress failed to agree on the next coronavirus stimulus deal. The current $600 weekly federal unemployment benefit is expiring Friday.

       Meanwhile, U.S. gross domestic product plunged by a record 32.9% in the second quarter, data showed Thursday. The number was not as bad as feared, however, as economists surveyed by Dow Jones had expected a 34.7% decline.

       The euro zone economy contracted by 12.1% in the second quarter, the worst reading since the region began tracking the data in 1995. Its largest economies, including Germany, Italy, France and Spain, contracted by double digits during the period due to strict lockdown measures.

       “As the toll of the pandemic continues to mount, it’s challenging to envision a turn of events that could stoke optimism for the months or even quarters ahead,” Ian Lyngen, BMO’s head of U.S. rates, said in a note Friday.
       …

       1. The following passage makes the U.S. situation sound much worse than Europe’s. But this is just an artifact of misreporting the respective numbers. The U.S. number is on an annual basis (i.e. if the first quarter rate of decline continued for a full year) while the euro zone number is just for one quarter.

          A little arithmetic can set the facts straight:
          (1-.329)^0.25-1 = -9.5%.

          So the Eurozone’s reported 12.1% one-quarter rate of contraction is actually much worse. On an annualized basis, it is
          (1-0.121)^4-1 = -40.3%,
          alot more crater than 32.9% in the U.S. It turns out those high school algebra courses really are important, even for journalists!

          He who refuses to do arithmetic is doomed to talk nonsense.

          — John McCarthy

          “U.S. gross domestic product plunged by a record 32.9% in the second quarter, data showed Thursday. The number was not as bad as feared, however, as economists surveyed by Dow Jones had expected a 34.7% decline.

          The euro zone economy contracted by 12.1% in the second quarter, the worst reading since the region began tracking the data in 1995.”

          1. if the first quarter rate of decline continued for a full year

             Making the reporting even zanier, it was the second quarter. It is unpossible for that to continue into the first quarter.

             1. I meant the first quarter at that rate of decline, not the first quarter of 2020.

             2. on an annual basis

                Usually starts in January…

                If the Q3 numbers go up 2% from the Q2 numbers they will look quite silly projecting an 8% increase in GDP for the year. Not that I would be shocked.

             3. “Usually starts in January…”

                I misspoke when I said “first quarter.” My point was about the importance of an apples-to-apples comparison in GDP changes. You shouldn’t compare an annualized rate of decline for the U.S. to a one-quarter rate of decline for the euro zone, especially without explanation.

                I’m also not a big fan of extrapolating an entire year’s rate of decline off the worst quarter on record.

             4. I get that. Was just adding to the absurdity regarding extrapolation backwards.

                This probably was a P?R ploy to make things look better when growth was modest but positive. Hey! The economy grew 2% this quarter (when it was really only 0.5%).

             5. I find the whole porcine beautification industry a tremendous puzzlement.

                Why not just call a spade a spade and be done with it?

    3. Commodities
       Lumber Futures Price Climbs to Record as Covid-19 Sets Off Building Boom
       Demand is supported by do-it-yourself remodeling and resurgent home builders
       By Ryan Dezember
       Updated Aug. 6, 2020 7:36 pm ET

       Lumber futures ended Thursday at a record high, propelled by a do-it-yourself remodeling boom and resurgent home builders.

       Lumber for September delivery gained 3.1%, or $19, to settle at $641.60 per thousand board feet. That tops $639, the old high mark for the most actively traded lumber contract, reached during a short-lived climb in 2018, when railroad delays, tariffs on Canadian lumber, wood-boring beetles and forest fires crimped supply during the building season.
       …

       1. Here’s some economic logic the WSJ writer may have missed:

          Lumber = input to real estate investment = perceived inflation hedge

       2. COVID isn’t setting off a building boom. New trillions in Fed “stimulus” is encouraging and enabling more runaway speculation.

    4. Opinion: The stock market is in a bubble — but the bubble is likely to get bigger
       Published: Aug. 8, 2020 at 8:14 a.m. ET
       By Nigam Arora
       The target for the S&P 500 is about 3,800 points

       Investors are asking me how high can this stock market go.

       The July employment report, released Friday, is providing a relief for the stock market. Nonfarm payrolls came at 1.46 million. Normally I compare economic data with the consensus forecast. In this case the forecasts were all over the place. The key point is that optimists have proven to be right.

       President Trump has banned TikTok and WeChat. In a normal market, this would be bad news for the stock market. However, in this market, bad news is good news. The momo (momentum) crowd is excited about Facebook (FB, +1.19%) replacing TikTok. The enthusiasm has caused a rip-roaring rally in Facebook stock. At the same time, the momo crowd is excited about Microsoft (MSFT, -1.78%) buying TikTok. It does not occur to the momo crowd that if Microsoft ends up buying TikTok, it will be a much stronger competitor to Facebook than TikTok ever was.
       …

    5. Aug 7, 2020, 06:50pm EDT
       ‘Another Day In Crypto,’ Warns Binance CEO After ‘Nightmare’ Bitcoin Futures Spike To $100,000
       Billy Bambrough, Contributor
       Crypto & Blockchain
       I write about how bitcoin, crypto and blockchain can change the world.

       Bitcoin, after suddenly soaring early last week, had a difficult day last weekend.

       The bitcoin price briefly topped $12,000 only to flash-crash early on Sunday morning, pushing bitcoin back to just over $10,000.

       Meanwhile, bitcoin and cryptocurrency exchange Binance, the world’s largest by volume, was having problems of its own—with one trader briefly sending the price of some bitcoin futures to $100,000.

       “Another day in crypto,” Binance chief executive Changpeng Zhao, often known as CZ, warned via Twitter, revealing the bitcoin futures price spike and explaining, “a user’s [algorithm] went ballistic and sent multiple orders to achieve this.”

       Bitcoin futures trading, allowing investors to speculate on the future price of bitcoin, has surged in popularity over the last year or so, boosted by exchanges such as Binance, and the Chicago Mercantile Exchange (CME) and the Chicago Board Options Exchange (CBOE) offering long-awaited cash-settled bitcoin futures. CBOE, after rolling out the first bitcoin futures contracts in December 2017, decided to stop adding new ones in March this year.

       According to a statement released by Binance after the “large price fluctuation,” the “extreme” price movement in the bitcoin quarterly futures contract “did not cause any liquidations in user positions.”

       “We do have price band protection,” CZ added, meaning the rogue trade did not cause other traders to lose the capital they’d used to speculate on the future bitcoin price.
       …

       1. Electronic tulips with absolutely zero intrinsic value.

          1. If you had tulip bulbs, at least you could plant a pretty garden. 🙂

    6. Picking Pennies: Dollar Slump Lifts U.S. Bond Returns for Foreigners
       By Reuters
       Aug. 7, 2020

       NEW YORK/LONDON — A 10% decline in the value of the U.S. dollar since March has boosted returns for foreign investors in the world’s largest government bond market at a time when U.S. Treasury yields are near record lows.

       German and Japanese buyers of U.S. government debt can pocket a few basis points in yield after hedging their foreign exchange exposure back to their home currencies, despite a 140 basis-point drop in 10-year Treasury yields so far this year.

       For Japanese investors, buying U.S. 10-year debt and hedging back to yen using three-month currency forwards would net a total yield of 10 basis points, Neuberger Berman data showed. It was -74 basis points a year ago, and negative for nearly three years before that, due to higher U.S. interest rates.

       The situation is roughly similar for a German investor. Buying U.S. 10-year Treasuries and hedging back to euros showed a yield of -20 basis points, up from nearly -100 basis points a year earlier.
       …

       1. This is why it’s important to watch the relative strength of the U.S. Dollar versus other developed currencies.

          In non pandemic years, the idea was to take a European vacation when the dollar was relatively strong, and to take a domestic vacation when the dollar was relatively weak.

          Translating that into dollar cost average investing, you overweight international equities when the dollar is relatively strong, and you overweight domestic equities when the dollar is relatively weak.

          This tracks the US Dollar/USDX – Index on Yahoo:

          https://finance.yahoo.com/quote/DX-Y.NYB?p=DX-Y.NYB

          The US dollar is down about 9% relative to other currencies since March 2020.

          1. Interesting thought. But what if the dollar weakness is already reflected in steadily rising U.S. stock prices against the backdrop of the worst financial crisis since the 1930s?

             1. I try to keep things simple and try not to overthink things. I’ve learned to try to avoid being too clever for my own good.

                You can pull out a lot of what-ifs, many which will be true, but that’s outside my control.

                I’ll stick to the basics that I can understand, and accept that there will always be permutations that I had not considered.

             2. I’m just recalling how everyone said the dollar was going to fold when QE kicked in during the post-2009 period. PMs raced up for a bit, just as they did recently. But soon enough, King Dollar was king again.

    7. The Financial Times
       Coronavirus business update 30 days complimentary
       Capital markets
       Investors say negative real yields are driving the ‘everything rally’
       Concerns start to grow among analysts over the longer-term inflation outlook
       Swaths of the Treasury market are expected to lose money, in real terms, over the next decade
       Tommy Stubbington and Robin Wigglesworth
       August 6 2020

       A collapse in real yields — the return that bond investors can expect once inflation is taken into account — is rippling through global financial markets and driving record rallies in assets from gold to technology stocks, investors say.

       The yield on 10-year inflation-linked US government bonds, known as Tips, sank below minus 1 per cent last week to a historic low, as investors bet that a surge in coronavirus cases would prolong the damage to the world’s biggest economy — and that the Federal Reserve’s efforts to stimulate demand could stir inflationary pressures.

       The deeply negative Tips yield implies that large chunks of the Treasury market are expected to lose investors money, in real terms, over the next decade. Sub-zero real yields have long been a feature of the landscape in Japan, the eurozone, and the UK. But the shift in the US — the last bastion of positive real returns on safe assets — is showing up in all corners of the financial markets.
       …

    8. The Financial Times
       Coronavirus business update 30 days complimentary
       Opinion FTfm
       Fed policy could leave retirees broke after crisis
       A 5% yield on a $1m nest egg delivers $50,000 a year but the egg must be five times bigger to produce that at 1%
       John Dizard
       August 6 2020

       During the shambolic negotiations between Congress and the White House, one of US president Donald Trump’s proposals was to suspend the payroll tax funding social security for several months, ie long enough to buy some popularity before the elections. That was rejected by the Democrats for not covering the unemployed and for reducing the dedicated funding for the national pension system.

       At the same time, there is a cross-party consensus that the Federal Reserve should not raise policy interest rates, and to continue open-ended funding of what will be an even larger federal deficit.
       …
       At the present trajectory of Fed policy, the 10-year bond will be close to yielding zero per cent by election day in November. The Fed will be trying to defend the “zero lower bound”, a set of points on a yield curve just above negative interest rates, for short-term funding. But by the time the 10-year rate gets within 10 or 20 basis points of the ZLB, the curve is telling you that there is no reward for saving money for the long term.

       At that point, which by simple extrapolation comes in three months or so, fixed income investors will frantically chase yield from anywhere available. That is already happening.

       The Bank of America/ICE CCC index of yields on bonds one step away from default has rallied from 19.03 per cent on March 23 to 12.55 per cent on August 3. At the same time, actual defaults are rising fast. According to Fitch, 5.5 per cent of junk bonds defaulted in the year up to the end of July.

       By the end of next year, the defaults will accumulate to higher than the yield on CCC junk. The courts are so backed up by covid-related closings and slowed procedures that reported defaults and filings are far behind the reality. So extreme yield chasing will end badly.

       This is about desperation, not high spirits.
       …

       1. There could be a downside?

          1. It seems like the Fed gets to decide who gets thrown under the bus anymore.

          2. Thinking out loud here: if a bunch of people have considerably less money to spend in retirement, they will buy less of all sorts of things. Less money spent on stuff, same as lower demand, means lower prices. Huh, so once again, we get deflation.

             1. You’re not the first one to say that, Ben. In October 2018, long before COVID, Raoul Pal, the head honcho heartthrob 💝at Real Vision, posted a 40-minute YouTube video going into great detail about the demographic retirement time bomb causing a crash.

             2. less money to spend in retirement

                Every so often someone says the Feds will come after your 401K. Being on the other side of this retirement savings thing I can say that they already have. Because I cannot earn 5% on my savings, I have to withdraw 5% of my starting savings every year. That’s simplified of course, but it means that in 20 years my retirement savings will be gone completely and that’s if everything goes well. I don’t want to spend that money on day to day things, so you bet I won’t be buying as many things.

             3. “I can say that they already have. Because I cannot earn 5% on my savings, I have to withdraw 5% of my starting savings every year.”

                Exactly.

                And all those underfunded pension plans that cover millions of retirees’ future income streams have exactly the same problem. Too many years of extraordinary accommodation, with more currently in play, have led to historically low risk premiums on tradition low-risk fixed income assets like government bonds. The problem never ended after the 2007-2009 financial crisis, and got worse with COVID-19.

       2. Professor

          It’s your brother from another mother!

          https://youtu.be/UMPnLXNb5QU

          1. I don’t take my personal COVID-19 precaution to such extreme levels. But plenty of people I know do so.

             1. plenty of people

                and may do so now for years and years.

          2. And speaking of that quotation, may Herman Cain RIP.

             Family, friends say goodbye to Herman Cain in Atlanta service
             By Claire Simms
             Published 1 day ago
             FOX 5 Atlanta
             Remembering Herman Cain
             A private funeral was held for Herman Cain in southwest Atlanta. He passed away in July after a battle with the coronavirus.

             ATLANTA – A small crowd of family members and friends wore masks inside Alfonso Dawson Mortuary Friday as they attended the funeral service for Herman Cain, 74.

             The former presidential candidate and talk radio personality passed away in an Atlanta hospital July 30 after a battle with COVID-19.

             “Rev. Herman Cain had an abundant life,” said Rev. Kenneth Alexander of Antioch Baptist Church North. “He had an abundant life; he didn’t have just an ordinary life.”
             …

19. Bellingham, MA Housing Prices Crater 15% YOY As New England Housing Market Rolls Over

    https://www.movoto.com/bellingham-ma/market-trends/

    As a Boston area broker put it, “If you bought a house in the last 15 or 20 years, you’re already underwater…. with no bottom in sight.”

20. This will end in tears.

    TheHill
    Finance
    August 06, 2020 – 06:00 AM EDT
    Are trading apps propping up markets?
    By Niv Elis

    The rush of armchair traders investing through Robinhood, an easy-to-use app for trading stocks, may be helping inflate a stock bubble and setting up investors for a potential bust.

    The ease of access to quick, fee-free trading has lured millions of inexperienced investors into a gamified trading environment and raised questions about both consumer protections and effects on the broader markets.

    Goldman Sachs found that daily average trades had doubled in early 2020 as individual investors piled into the market. Robinhood, in particular, went from 4 million users invested in S&P 500 stocks before the pandemic to 12 million in May.

    By some revenue measures, it has become the second largest trading platform behind TD Ameritrade, surpassing giants such as E-Trade, Charles Schwab and Fidelity.

    “It’s interesting how fast it’s happened,” said Paul Rowady Jr., director of research at Alphacution Research Conservatory, which has compiled data pointing to the app’s monumental growth.

    “Robinhood has devised this seamless, gamified app that makes it fun and easy to interact with, which is maybe more fun because you’re sitting at home. This is like a video game with real money,” he said.
    …

    1. This is like a video game with real money,” he said.

       Yeah, it’s all fun & games until you run up a negative $730K balance in your account and end up killing yourself.

       https://www.forbes.com/sites/sergeiklebnikov/2020/06/17/20-year-old-robinhood-customer-dies-by-suicide-after-seeing-a-730000-negative-balance/#6c79b8d16384

       1. Jeebus…all that for a few negative numbers on a computer screen.

       2. And the worst part of that was (quote from the article): “Kearns may not have realized that his negative cash balance displaying on his Robinhood home screen was only temporary and would be corrected once the underlying stock was credited to his account.” 🙁

       3. Shame the chap never heard of Chapter 7 bankruptcy. He could have lived to tell another day.

21. we all need a good laugh for the day https://www.theguardian.com/world/2020/aug/07/german-nudist-chases-wild-boar-that-stole-laptop-berlin-teufelssee

    1. Hehe…boss-hog knows how to go shopping!

22. The reality disconnect is in full swing. Up is down, cats are living with dogs, mass hysteria, and all that.

    The house I mentioned walking by the other day now is pending in under a week on the market.

    3660 sq ft – $ 2.4M (??) on Aug 2020 – https://www.redfin.com/WA/Mercer-Island/4667-91st-Ave-SE-98040/home/8184928

    $2.4M for that is insane- looking at the comps – 2 and 3 doors down from it, same side of the street, exact same lot size, 90% of the square footage. Makes no sense whatsoever.

    3240 sq ft – $1.4M on Aug 2019 https://www.zillow.com/homedetails/4637-91st-Ave-SE-Mercer-Island-WA-98040/48657238_zpid/

    3280 sq ft – $ 1.4M on Dec 2017 – https://www.zillow.com/homedetails/4631-91st-Ave-SE-Mercer-Island-WA-98040/48657237_zpid/

    A $1.6M house at best, maybe $1.7M at very best with updating- (built in ’06 so not that new of construction) – the seller has got be walking away laughing, and the buyer … oooof, they’re gonna be underwater, maybe even before the crash starts.

23. Interesting is a word that is commonly used in the medicine to take the place of more alarming terms when something unexpected, unusual or up to & including disastrous presents itself on a patient. You don’t want to be the interesting patient. That is what the entire world economy looks like right now. Weirdly, to me at least, it makes Covid 19 look way more understandable in comparison. Even though there is a ways to go before the virus is fully understood and controlled from a scientific standpoint-there are expectations that it will happen. I’m not going to touch what non-science based human choices effects are on addressing Covid, that’s too sad & exasperating to spend time on today. The economy though, is a mix of soft science, math, history and what else or what instead, Professor Bear? What is reported happening in NYC, coastal California, Florida etc makes sense to me- things are going down, not going well. Then there are the places people are running to and running up prices in the furious way that is opposite to common sense. I told my spouse today that we should look to buy five acres worth of property in NYC to hold onto until the lemmings forget why they moved to the middle of no where town and are desperate to high tail it back. I am taking 2 Aleve a day for the foreseeable future as I hang on by my fingertips while the Category 5 winds are blowing through my neck of the woods in a real estate frenzy form. My husband wants to enjoy his retirement in a home with a shop and nearby places to enjoy recreational pursuits. It shouldn’t be that hard to do and it shouldn’t take a third of your income to do it, not in this part of the Country. But here we are, trying not to buy. Today I am setting my flag on Overpopulation as the problem. Absolute numbers of people looking to self-survive. Currently they believe that 5 acres out here will do the trick. Lemmings, backed by too much government and existing in numbers such as they are, thanks to a great many medical breakthroughs as well. I am going to start looking up places of more extreme weather and see what pops up on realtor.com Cash is King but those FDA loans sound intriguing. 🙂

    1. “Professor Bear”

       Animal spirits

    2. “May you live in interesting times.”

24. Lebanese are rising up against the corrupt political class that has led the country to ruin and presided over disasters like the huge port explosion and collapse of the country’s currency. Will this set off a new “Arab Spring” of uprisings against corrupt, unresponsive elites?

    https://www.aljazeera.com/news/2020/08/60-missing-beirut-mega-blast-live-updates-200808061240497.html

25. North Hampton, NH Housing Prices Crater 11% YOY As Mortgage Fraud Ravages New England States

    https://www.zillow.com/north-hampton-nh/home-values/

    *Select price from dropdown menu on first chart

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

26. Big Don gettin’ her done.

    Trump Signs Executive Orders On Coronavirus Relief, Payroll Tax

    https://www.foxnews.com/politics/trump-to-sign-coronavirus-relief-executive-orders-saturday-to-help-unemployed-americans-renters

    Let’s hope this is the beginning of the end of Social inSecurity.

    DonK.

    1. ATM, the payroll tax is only being deferred. Presumably it will have to be paid eventually. Unless an actual forgiveness is legislated:

       “The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.”

       https://www.whitehouse.gov/presidential-actions/memorandum-deferring-payroll-tax-obligations-light-ongoing-covid-19-disaster/

       1. “ATM, the payroll tax is only being deferred. Presumably it will have to be paid eventually.”

          Is this akin to deferred rent or mortgage payments?

          In case those payroll taxes get deferred and end up never getting paid, couldn’t the Fed step in and use Unlimited Quarantinive Easing to make up the difference? What, if anything, limits the Fed’s discretionary use of UQE?

          1. What, if anything, limits the Fed’s discretionary use of UQE

             Doesn’t it require a willing borrower on the other end of the deal?

             1. In the case of stocks, the FED is bailing out sellers and HODLers.

             2. Suppose Wall Street financial alchemists cooked up a new “collateralized pension bond”. Private investors who bought them would be compensated with interest and return of their investment at some agreed future point in time, and the purchase proceeds would fund Social Security benefit payments. The Fed could then use a negigible fraction of the total amount of Unlimited Quantitative Easing available to purchase the bonds and add them to their ever expanding balance sheet.

                Problem solved?

       2. Deferred until next year will be ugly if not converted into forgiveness, especially for the ‘self employed’ like I am who see the whole 15.3% After $132,900 the 2.9% medicare tax continues, as well as another 0.9% after $200k (which I’ll hit shortly).

          For some people, it takes a whole lot of discipline to set aside the money for taxes when it’s not taken from w-2 wages, and they will get panicky when April 15 comes around, or whenever its due. but it ‘buys some time’ until after the election I guess…

          1. I expect some court will strike down all the actions by tomorrow.

             1. It doesn’t work that way. Someone with standing must sue. The optics for that someone aren’t good.

                https://www.redstate.com/darth641/2020/08/09/opinion-president-trump-springs-his-trap/

                By signing these Executive Orders, President Trump has taken some of the urgency for Republicans, off the table. The Democrats can no longer hold working Americans hostage to their wish list of corrupt practices. Now the Democrats face some tough decisions:

                -Do nothing, while continuing negotiations: Advantage, Trump

                -Sue POTUS directly or through intermediaries. Great optics. Democrats sue to take benefits away from their (allegedly) prime constituents, working people and students (or student loan recipients). President Trump however, can respond by announcing far and wide that the Democrats are attempting to use the court system to harm “the most vulnerable among us.” Advantage, Trump.

                Majority Leader Mcconnell needs to make sure he keeps his caucus under control. He needs to take full advantage of the opportunity the President has given him and take it to the leftists at the negotiating table. The resulting “compromise” should be a lot closer to the 1T mark than it is to the 3 Trillion porkulous bill the Democrats want. It goes without saying that there should be absolutely no compromise on mail in voting or any other corrupt election proposals by the left. President Trump has given you an advantage. Senator McConnell, see that you take it.

             2. Someone with standing must sue.

                I’m sure that someone will come out of the woods and file a lawsuit. Maybe not the DNC, but maybe the ACLU or SPLC. And once it’s filed the EO’s will be quickly swatted down.

          2. “…who see the whole 15.3%…”

             It’s a big hit, to which self employed musicians can attest.

             1. For people not making near 6-figures but self-employed/1099, it’s often larger than the federal income tax bite. No break, especially for someone on the low end.

    2. More Socialism. Yuck.

    3. I don’t think he can eliminate entitlements by executive pen stroke. But he might eliminate a large number of senior citizen Republican votes come November.

       I guess time will tell.

       1. Most of us realize that SS is not a separate fund. I, for one, cannot imagine how eliminating payroll taxes will miraculously create jobs.

          1. It was established as a pay-as-you-go pension system, where payroll taxes on current workers provided benefits for current retirees. This was feasible in 1935, when only around half of workers survived past age 65 to collect benefits.

             Fast forward to 2020, when
             U.S. life expectancy has increased to 78.5 years, the Baby Boomer demographic bulge is squeezing into retirement status, and unemployment is at a very high level among the working age population, and you can see how the system is overloaded on many levels.

          2. FICA tax is regressive and should have been eliminated long ago. A VAT or national sales tax would be a welcome replacement for the IRS and its Byzantine tax code.

             1. “FICA tax is regressive and should have been eliminated long ago.”

                Uh, no.

                F.I.C.A. = Federal Insurance Contributions Act. The reason they are contributions, not taxes, is because today’s contribution entitles one to tomorrow’s benefit. And low income workers get back proportionally more for their contributions than high earners, plus they are taxed at a lower rate. So what seems regressive in the short run is progressive once long run costs and benefits are netted out.

             2. A VAT is even more regressive, since a sales tax on essential items like food would affect the poor more than the rich. Even worse, if there’s a big tax on non-essentials, people will limit their consumption to essentials. And this pandemic has already taught us how to do that.

             3. Generally when something is taxed, it becomes more costly to make, and more expensive to purchase. So firms produce less and consumers buy less of it, resulting in less getting produced and consumed.

                What is the advantage to society of producing less value?

             4. The #1 reason to operate a business as a sub S corporation is for owners to pay less FICA tax. Tax gainful employment and you get less of it.

             5. “Tax gainful employment and you get less of it.”

                You make a compelling case. 🙂

          3. “…miraculously create jobs.”

             Reducing the payroll tax bridges the gap between what firms pay to hire workers and what workers get to keep to cover living expenses. The microeconomics textbook result is for employers to be able to afford to hire more workers at the prevailing wage.

27. Old version:

    Q. What’s the difference between a tuba player and a government bond?

    A. A government bond earns money and eventually matures.

    Updated version:

    Q. What’s the similarity between a tuba player and a government bond?

    A. There’s no interest in either.

28. Irvine, CA Housing Prices Crater 13% YOY As Unemployment, Poverty And Crime Ravages Golden State

    https://www.zillow.com/irvine-ca-92618/home-values/

    *Select price from dropdown menu on first chart

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

29. FICA is a tax like any other, contribution my arse. It all goes into the same bucked of govt revenue. SSand Medicare will soon be welfare programs as well only available to so called poor people, financed by so called rich people You got a preview of this with the Trump EO. The payroll tax cut is only for those earning less than $100k. That is the opening bid for the definition of rich with regards to SS. I guess making $100,001 means you’re just like Bill Gates…..RICH!!

    If you recall in 2010 when the last payroll tax cut was enacted there was no income limit. That is a huge change and the first step into transforming SS into a Section 8 type program.

    1. “SSand Medicare will soon be welfare programs as well only available to so called poor people, financed by so called rich people.”

       My understanding of history is that to garner sufficient popular support, FDR had to implement OASDI as a program for everyone, albeit with proportionally larger payouts relative to incomes (and “contributions”) for lower income workers, plus a cutoff in covered wages and benefits for high earners.

       Whether by accident or design, the EO seems to nudge Social Security to be slightly more progressive without proposing to kill anyone’s participation in the program, in the spirit of what FDR might have tried under the circumstances.

       1. If they’re going to means test SS, they’d better pick a number much higher than $100K. Even years ago during some crisis — might have been one of the fiscal cliffs — Congress decided on $400K (houshold?) as the threshold for being upper class.

          1. I think it makes a lot more sense to remove the cap on how much income you tax (even knowing that’s the final step to making it an entitlement instead of earned) rather than capping the payout based on income. It’s already taxed based on income.

    2. SSand Medicare will soon be welfare programs as well only available to so called poor people

       Other than .gov workers with fat pensions, aren’t most retirees “low income”?

       1. .gov workers do not get fat pensions. They get 0.1*years service* hi-3. For example, someone working for 25 years at 100K gets a $25K pension. It’s nice, but not exactly fat. Even adding in SS that’s $50K, again, livable but not fat.

          The real fat bennies for fedgov are job security and health insurance.

          1. You might pile up 40 years of service? Add $3K per month in SS and you’d be at $86K. That in retirement is going to look a lot like $100K did while working.

             1. As a private sector worker, given the current ZIRP environment, you’ll have to save a ton of cash to generate a $4K monthly annuity.

                I am curious as to how they might means test social security payouts. Will it be based on the size of your nest egg? If so, people will learn to hide it.

             2. You can’t really count in the SS. They private sector workers will get the same SS annuity as a .gov.

                Despite what anti-govs say, private sector pay is higher, especially at the higher education and specialty levels. I haven’t done the math, but I believe that if someone invested the difference in pay in investments, they will get very close to the ~$2500/mo annuity equivalent to the .gov pension.

30. Is now the time to load up the truck and move from Beverly (Hills, that is) back to the hills of Appalachia?

    1. The Financial Times
       Coronavirus business update 30 days complimentary
       Opinion Work & Careers
       Spare me the city-dweller’s longing for a rural idyll
       You will regret the decision to swap the metropolis for the patchy WiFi, sumac-free countryside
       Katie Martin
       A move to the country is tempting — unless, as in my case, you grew up there
       © Bruce Wilson Photography/Getty
       Katie Martin August 8 2020

       It’s a tempting idea: now that we all work from home (ie live at work), why stick with the city? Why not pack up and whisk the family away to Plopsbury-on-Tweed to live a bucolic life next to a babbling brook?

       The children will thrive in the fresh air, running ruddy-cheeked through the local fields while you crack open the laptop to contribute to society without the hassle or germs of a commute, gazing in your more thoughtful moments over your uninterrupted views of nature.

       What’s more, your cramped two-up-two-down in Muswell Hill will free up enough cash to buy a rambling pile out in the sticks. The office is so 2019. Move out, breathe, write blogs about how great your life is outside the Big Smoke. We’d all be fascinated.

       Like I say, it’s tempting. Unless, as in my case, you grew up in the back end of nowhere and wild horses could not drag you back.

       Allow me to recline on my psychiatrist’s chaise longue and be clear that I had a happy childhood in the Wirral countryside. I grew up on a farm, cheerfully dodging death on a daily basis around tree swings, machinery, bulls and slurry pits, darting about on my bike to visit my grandparents (my Nana made the best Victoria sponge this side of the Bake Off tent). We kids largely looked after ourselves. Grubby, frequently black-eyed, and often found playing on the roof of the house or on top of the round bales that my dad constantly told us to leave the bloody hell alone. Our school had as many kids in total as my children had in each year of their east London primary.

       Some people clearly want to get out of the city, and good luck to them. Estate agent Rightmove reported in May that more than half of property inquiries from Londoners were for homes outside the capital, up from 43 per cent at the same point in the previous year.

       But for me, the idea of packing up and heading outside of the A406 is a total non-starter. The notion of living more than 200m from a Turkish shop brings me out in hives.

       Sure, I enjoy very few of the pleasures that London has to offer. Theatre, art and nightclubs are not exactly weekly pursuits, even outside lockdowns. But when it comes to the stuff that pays the bills — work — I know I have functioning WiFi and generally compliant mobile phone reception. These are not things to be taken for granted in the rambling countryside stuffed with community groups blocking the construction of phone towers.

       Also, the truth about country living is that if you decamp from the city, you will always be “those new people”, decades after you move in.
       …

       1. You couldn’t pay me to live in London.

31. How are all those high density planned communities that sprang up like weeds in recent decades looking in the dawnlight of a pandemic?

    1. Journal of the American Planning Association
       Does Density Aggravate the COVID-19 Pandemic?
       Early Findings and Lessons for Planners
       Shima Hamidi, Sadegh Sabouri & Reid Ewing
       Published online: 18 Jun 2020

32. Do you suffer from the delusion that the solution to your hangover is another drink the morning after?

    Some folks refer to this approach as a “hair of the dog” hangover cure. I’m unclear about the origins of this expression.

    1. The Financial Times
       Coronavirus business update 30 days complimentary
       Opinion On Wall Street
       Central bankers are caught in a leverage trap
       Response to the coronavirus crisis has made a tricky problem harder to solve
       Joe Rennison
       The Federal Reserve wants to restore functioning markets, not save failing companies, but untangling the two is not easy
       © AFP via Getty Images
       Joe Rennison August 7 2020

       Central bankers have spent years warning of the perils of excess corporate debt. But their solution to this year’s coronavirus storm in financial markets has led to even more of it.

       It is the Catch-22 of post-2008 policymaking, and of now post-pandemic policymaking, too. To stave off a debt crisis, monetary policymakers create conditions that allow companies to borrow even more, increasing the potential severity of the next crisis. No central banker wants to encourage excessive borrowing but, equally, no central banker wants to stand by while companies default, increasing unemployment and throttling economic growth.

       “The chosen solution to a debt crisis is more debt,” said Hans Mikkelsen, a credit strategist at Bank of America. “There is no escaping it. You cannot cut it back unless you can create a tremendous amount of economic growth to offset it. There is nothing the central banks can do.”
       …

       1. The Federal Reserve wants to restore functioning markets, not save failing companies, but untangling the two is not easy

          BULLSH!T.

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