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The Central Bank Is Quite Happy To See Those Prices Fall

A report from The Hill. “A series of layoffs at America’s major technology companies could put pressure on local housing markets. San Jose and San Francisco are among five U.S. metros that have already experienced year-over-year price declines. Prices fell by 4.5 percent from last year in San Francisco and by 1.6 percent in San Jose. Redfin deputy chief economist Taylor Marr told The Hill that other economic factors might outweigh the real impact of tech company layoffs.”

“‘There are a lot of other factors also at play here — namely that the Nasdaq is still in a bear market 2022 and this is hurting these local economies and housing markets more — already Seattle and SF home values declined 9 percent between May and August — according to Case Shiller — and are expected to have fallen further since then,’ Marr said.”

The Philadelphia Inquirer in Pennsylvania. “‘I can tell you the phone isn’t ringing like it was,’ said Philadelphia-area agent Maria Quattrone. ‘This is the ‘have-to’ market,’ she said. ‘We have to talk to more people to find the ‘have-to’ people,’ said Quattrone, whose team of about 20 makes calls every day. ‘And less people are answering the phones,’ she said. ‘Less people want to do anything.'”

From The Tribune. “Sky-high home and rent prices continued their slow decline in October across California, reports from the California Association of Realtors and Rent.com showed. On the Central Coast, San Luis Obispo County’s median home price dropped from $875,000 in September to $815,000 in October, the CAR report said, a 6.9% decline that brought prices nearly in line with this time last year. The current median SLO County home price of $815,000 is now just 1.9% higher than October 2021’s median of $800,000. Those lower prices come as nearly 45.6% of SLO County homes were sold below listing price, Arroyo Grande Realtor Barry Brown said. ‘This is where I think that there’s some opportunity for buyers like right now,’ Brown said.”

“18% of California households were capable of purchasing a $829,760 median-priced home in the third quarter of 2022, the report said, based on an ability to meet a monthly payment of $4,820 with a 5.72% interest rate. That would require a minimum income of $192,800 to qualify for the purchase of a median-priced single-family home. ‘In the end, what really drives home sales is what someone can afford to pay each month in a housing payment,’ Brown said.”

From Bankrate. “In one common scenario, known as a 2/1 buydown, the seller pays to cut the buyer’s mortgage rate by 2 percentage points for the first year of the loan and by 1 percentage point for the second year. During the pandemic-driven housing boom, sellers hardly needed to do anything to unload their homes quickly and for a hefty premium. This year, the housing market has slowed sharply, and sellers face a new reality. ‘Buyers don’t have to go through all these crazy inspection waivers and appraisal waivers,’ says Elena Sarantidis, a mortgage broker in Wellington, Florida.”

“The most common way for sellers to close a deal with a reluctant buyer is to simply cut the price. Proponents of buydowns, however, say both sellers and buyers get more bang for their buck with a temporary rate buydown. For builders, the appeal of a rate buydown is clear: If they cut the price now, they’ll feel pressure to do so for future buyers. The temporary buydown is a way to protect their pricing while also giving the buyer something of value.”

Multi Housing News. “Lately, demand has not resulted in absorption at the levels we would have expected, said Jay Lybik, Director of Multifamily Analytics, CoStar Group. ‘We knew that demand would be lower than the record levels posted last year but absorption in the all-important second and third quarters significantly underperformed,’ he said. Year-to-date, the apartment market has absorbed only 200,000 units, with just 60,000 in the typically strong summer leasing season’s third quarter.”

“At the same time, new supply additions over the past three quarters totaled 320,000 units, highlighting the market reversal of supply outpacing demand so far in 2022. The oversupply situation has pushed the national vacancy rate up from an all-time low of 4.7% a year ago to 5.4% today. The rising national vacancy rate does not tell the whole story as four- and five-star properties have outpaced the nation in terms of increasing vacancy. Four- and five-star vacancies rose 90 basis points to 7.4% in Q3 after hitting a low of 6.5% just 12 months ago.”

The News and Observer in North Carolina. “The Triangle’s rental housing market appears to be stabilizing, according to industry experts and data from Apartment List. The reversal of widespread price hikes follows a national trend. ‘It’s kind of like the perfect storm,’ said AnnMarie Janni, a Realtor. She also runs her own property management firm based out of Apex.”

“‘In 2022’s third quarter, Raleigh absorbed just 180 units,’ said Kim O’Brien, a RealPage analyst. ‘Along with second quarter’s net move-outs for 560 units, (it) was one of the weakest showings the market has displayed since 2019. Two quarters of softness in Raleigh pulled annual demand down.’ Meanwhile, new apartment supply jumped, data showed. Raleigh saw 1,761 units completed in the third quarter, and a total of 6,126 completed this year. In contrast to demand, O’Brien said annual supply has ticked up in the past two consecutive quarters and is now ‘well ahead of five-year norms for this market.'”

Yahoo Money. “Many tenants across America are also breathing a sigh of relief as rents drop from record highs for the first time in nearly two years. ‘In 2021-2022, U.S. occupancy rates rose to record levels. The market was on fire and many renters were priced out of double-digit percentage rent increases,’ said Anthemos Georgiades, CEO of Zumper. ‘Now, as we enter the third year of the market since Covid, there’s a very different story. Occupancy rates are in freefall, vacancies are rising, the fear of recession is biting, and rents have plateaued. We’re seeing month-over-month declines in more than half of the cities on our list,’ he said, including Minneapolis; Nashville; El Paso, Texas; and Jacksonville, Tampa, and Orlando in Florida.”

“After numerous failed attempts to find new housing last year and repeatedly being told she had to be ‘mortgage-ready’ in order to even qualify for a rental, 34-year-old Nicole Thelin recently moved into a home just south of Olympia, Wash. ‘Clearly, the market has shifted,’ Thelin said. ‘Our landlord brings over flowers.'”

Bisnow Boston in Massachusetts. “From the world’s largest companies to small startups, the technology industry has been laying off employees by the thousands in recent weeks, part of cost-cutting measures that are creating uncertainty about their commercial real estate footprints. In the Boston area, where local tech companies have been laying off employees for several months, the new wave of big tech layoffs could serve as another blow to an already weakening office market. ‘A lot of these companies were too optimistic about how the path of things that was started by Covid was going to continue and now you’re seeing the recalibration,’ said Max Saia, senior director for investor research for VTS. ‘Tech demand is down. Everything is down but tech is down more than any other major industry.'”

Bisnow London. “The UK is the European real estate market that should be most appealing to investors next year, a new forecast from a major global fund manager predicts. That doesn’t mean real estate investment is now generally attractive on a risk-adjusted basis, however, AEW said, pointing to rising interest rates and yields that have not kept pace. AEW’s new base-case scenario assumes the market is past the peak of inflation across the 20 countries covered. Inflation is expected to come back down to below the 2% target adopted by central banks by early 2024.”

“A debt funding gap of €24B is estimated for the next three years in the UK, France and Germany, with refinancings of maturing loans expected to face issues from the decline in capital values and lenders’ reduced risk appetites leading to lower LTVs. Negative capital returns are expected for the next three years across all sectors, with a cumulative capital value decline of -12% in the base-case scenario.”

The Globe and Mail. “Canada’s financial system should be able to weather a period of heightened stress, but many recent home buyers could experience a ‘painful’ squeeze as interest rates continue to rise, the Bank of Canada’s second-in-command said. Senior deputy governor Carolyn Rogers said long-standing vulnerabilities in Canada’s housing market worsened through the COVID-19 pandemic as home prices soared and buyers increasingly relied on variable-rate mortgages, which are linked to the central bank’s benchmark lending rate. Now that interest rates are rising and home prices are falling, many of these home buyers are experiencing a nasty adjustment, Ms. Rogers said.”

“When the monthly payment no longer covers any principal, the borrower hits what is known as a trigger rate, and their monthly payment rises. In some cases, the lender allows the borrower to shift the interest onto the principal, which increases the size of the mortgage. Fifty per cent of these variable-rate mortgage holders have already reached their trigger rate, according to estimates from a new Bank of Canada research paper published Tuesday. That share will rise to 65 per cent by the middle of next year as the central bank continues to hike interest rates to rein in inflation.”

“The central bank is raising interest rates to slow consumer price growth. It does not specifically target home prices, but Ms. Rogers suggested the bank is quite happy to see those prices fall. Nationally, home prices are down by around 10 per cent from the peak in February. ‘We need lower house prices to restore balance to Canada’s housing market and make home ownership more affordable for more Canadians,’ Ms. Rogers said.”

The Sydney Morning Herald. “In terms of apologies, it was of the ‘I’m sorry you were offended by what I said’ variety. Reserve Bank governor Philip Lowe, making his first appearance before a Senate estimates hearing, was asked by the Greens’ Nick McKim whether he owed an apology to the hundreds of thousands of Australians who took out mortgages over the past two years on the understanding interest rates would not increase until 2024.”

“Lowe’s answer was couched as an apology. But the actual words were more apology-adjacent. ‘I’m sorry if people listened to what we’d said and acted on what we’d said and now regret what they’ve done. I’m sorry that happened,’ he said. ‘I’m sorry that people listened to what we’d said and acted on that, and now find themselves in a position they don’t want to be in. At the time, we thought it was the right thing to do.'”

“In other words, the RBA governor – whose decisions, along with the rest of the bank board, are costing mortgage holders about $1000 a month in higher repayments – told people he was sorry they had listened to him. Pressed further, Lowe conceded he should have been more careful with his language around what might lead the bank to abandon its ‘no rate rise till 2024’  position. ‘That’s a failure on our part, we didn’t communicate the caveats clearly enough. The community heard 2024, they didn’t hear the conditionality, that’s partly our fault,’ he said.”

“Again, it’s an apology in outward appearance but there’s a kicker. It was only ‘partly’ the bank’s fault that ordinary Australians, going about their business, did not drill down to the ins and outs of monetary policy jargon. So, what hope did a family living in Melbourne’s Mill Park or Sydney’s Harrington Park or Perth’s Gosnells have of understanding that rates could be increased ahead of 2024?”

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This Post Has 180 Comments

  1. ‘a 6.9% decline that brought prices nearly in line with this time last year. The current median SLO County home price of $815,000 is now just 1.9% higher than October 2021’s median of $800,000’

    Another sh$thole about to go negative YOY.

  3. Re-posts from the end of the last thread.

    Washington Post — High-profile Republicans gain followers in first weeks of Musk’s reign (11/27/2022):

    “High-profile Republican members of Congress gained tens of thousands of Twitter followers in the first few weeks of Elon Musk’s reign over the social media network, while their Democratic counterparts experienced a decline, according to an analysis by The Washington Post.”

    SHUT. IT. DOWN.

    “Sen. Elizabeth Warren (D-Mass.), Rep. Adam B. Schiff (D-Calif.) and Sen. Bernie Sanders (I-Vt.) all lost about 100,000 Twitter followers in the first three weeks of Musk’s ownership of Twitter, while Republican Reps. Marjorie Taylor Greene (Ga.) and Jim Jordan (Ohio) gained more than 300,000 each.”

    SHUT. IT. DOWN.

    “The right wing and conservatives for years have accused Twitter of censorship with no proof. Many have cheered Musk’s takeover, saying it’s a reason to return to the site.”

    https://archive.ph/kFsUc

    Reminder: Jonathan Greenblatt does not hold elected office. He is not in an appointed position that required approval from Congress.

    He is a leftover from the King Obama administration who has zero legal or legislative or prosecutorial authority over anything.

    He is not the Language Police™ and any alleged authority he thinks he has is nothing more than a delusion.

    1. The Guardian — Elon Musk’s Twitter is fast proving that free speech at all costs is a dangerous fantasy (11/28/2022):

      “Free speech absolutists are like the cocky audience of a spectator sport – they think they could do better than the players, if they were just allowed a crack at it. To them, speech should be as free as possible, period. Nowhere is their oversimplification of the issue more evident than on social media, where abuse and disinformation have created a new frontier of regulation – and with it a cohort of disingenuous free speech warriors.”

      Did you know that you will find more truth spoken by anonymous posters on 4chan than you ever will in the pages of the New York Times and Washington Post?

      “These absolutists are so unaccustomed to facing consequences for their actions that they have pushed the idea that a censoring “woke” orthodoxy now prevails, and is a threat to freedom of expression. Elon Musk is among them, but since his takeover of Twitter he is having to learn quickly that free speech is not simply about saying whatever you want, unchecked, but about negotiating complicated compromises.”

      SHUT. IT. DOWN.

      “Twitter is about to turn into a far more unpleasant and potentially dangerous experience. Little of this appears to have anything to do with a political strategy on Musk’s part. Like Trump, Musk has become the tribune of fascists and racists by way of adolescent contrarianism, an insatiable need to flaunt his control and a radicalising inability to cope with being told he’s wrong on the internet.”

      SHUT. IT. DOWN.

      “The ultimate cause of that demise will be the failure of Musk to understand that for some speech to be free, other speech has to be limited.”

      SHUT. IT. DOWN.

      “Those with power have more leeway to define what free speech is, but they can rarely do so without limitation. Twitter’s chance of survival is dependent on whether Musk chooses to accept that, like freedom of speech, his power is not absolute.”

      https://archive.ph/YCm2t

      Freedom of speech?

      The 2020 election was stolen.
      COVID vaccines are poison.
      There are only two genders.

      1. New York Post — The left throws a tantrum as Elon Musk reverses censorship on Twitter (11/27/2022):

        “instead of applauding Twitter’s dedication to child safety and attack on degeneracy, leftist media has been decrying Musk’s attempts to restore free speech protections as if they are a threat to civilization.”

        Degeneracy? Degeneracy is a critical component of Marxism. It is the bedrock, the foundation of Marxism.

        “They are hopping mad that Musk is demolishing the left-wing censorship regime that saw a sitting president de-platformed, satirical site The Babylon Bee banned and the oldest newspaper in the country locked out of its account for two weeks before the 2020 election.”

        The Hunter Biden laptop that Jack Dorsey’s Twitter blocked publication of contains photos of Hunter Biden naked in the same room with his niece Natalie Biden, who was 14 years old at the time.

        “Lamenting the explosion of free speech under Musk, Yoel Roth, the former head of “Trust and Safety” who was responsible for censoring The Post, delivered an implied threat to his former employer in an op-ed piece in The New York Times.”

        SHUT. IT. DOWN.

        “Keep the censorship regime in place or Twitter will be thrown off Google and Apple’s app marketplace, he wrote, “making it more difficult for potential billions of users to obtain Twitter services. This gives Apple and Google enormous power to shape the decisions Twitter makes.”

        SHUT. IT. DOWN.

        “Roth claims he just wants to prevent “hate speech,” but why was it that everyone banned by Twitter was conservative?

        “Correct,” Musk replied to a tweet observing: “We don’t hear much about Democrats and leftists being let back on Twitter [because] they were never kicked off in the first place . . . Censorship has been deployed as a one-way operation against conservatives.”

        Which raises the question a a lot of people on Twitter have been asking of Roth, the former head of “Trust and Safety”, after he, too, quit the company in protest. 

        Why was child porn permitted on Roth’s watch for years and all but eliminated by Musk in a few days? It’s an important question, but the rest of the media is more interested in amplifying his threats against Twitter.

        https://nypost.com/2022/11/27/the-left-throws-a-tantrum-as-elon-musk-reverses-censorship-on-twitter/

        President Donald Trump was correct when he stated that “the media is the enemy of the American people”

        1. They also trot out the Orwellian lie “freedom of speech doesn’t mean freedom from consequences.”

          As always, the truth is the exact opposite of whatever they say. Freedom of speech IS freedom from consequences.

      3. Free speech absolutists

        If any speech/opinion can be censored then all speech can be censored. And that is what the left wants: to muzzle you.

  4. ‘I’m sorry if people listened to what we’d said and acted on what we’d said and now regret what they’ve done. I’m sorry that happened,’ he said. ‘I’m sorry that people listened to what we’d said and acted on that, and now find themselves in a position they don’t want to be in. At the time, we thought it was the right thing to do.’

    Can’t make people eat bugs without cracking a few eggs, eh?

    1. “But Lowe said falling real wages would give way to higher real wages in the next 18 to 24 months.”

      Is that another promise?

    2. Pressed further, Lowe conceded he should have been more careful with his language around what might lead the bank to abandon its ‘no rate rise till 2024’ position.

      What difference could that possibly have made? Would all the mortgages be paid off by 2024?

      1. thank you, that’s what I can’t figure out. Did all these people figure they could have a house for 3 years instead of 2? Or, more likely, they figured the speculation would still continue and they would be BIG WINNAH’S instead of being bag holders and someone else would be holding the bag.

        Lowest rates ever (in 100’s of years) and you expect that to continue?

        my give a darn is still busted.

    1. When an organization reaches a certain level of convergence it can no longer function in a competent manner. Disney is finished. Even if they were to release another Toy Story movie, it would no doubt be another piece of woke propaganda and would bomb.

      Right now, the only thing keeping them in the black are their theme parks, and that could easily change, as a crashing economy and angry parents could spur countless trip cancellations.

      1. I’ve read a dozen articles about this and the left is still in complete denial. They believe it was bad marketing, or people waiting for streaming. But Ask a million parents and every one of them will tell you that Disney woke nonsense is why they didn’t take their kids to Disney movies anymore. They pretend like they have no idea why their movies are bombing.

  8. Does the political upheaval in China make you you feel like paring your risk asset HODLings?

    Why should this suddenly matter now, given that the CCP has been purposefully destroying the Chinese economy for the full duration of the pandemic with little effect on stock markets outside of China?

    1. Updated Mon, Nov 28 2022 7:53 AM EST
      Stock futures fall as unrest in China grows over Covid restrictions
      Alex Harring
      Carmen Reinicke
      Stock futures drop as unrest in China grows over Covid restrictions

      Stock futures fell Monday as social unrest from China’s prolonged Covid restrictions weighed on markets, sending oil prices lower — after Wall Street notched gains during the Thanksgiving holiday-shortened week.

      Futures tied to the Dow Jones Industrial Average lost 178 points, or 0.5%. S&P 500 and Nasdaq 100 futures each dropped 0.7%.
      …
      https://www.cnbc.com/2022/11/27/stock-futures-slip-after-a-winning-holiday-week-.html

    3. The Financial Times
      Chinese politics & policy
      Xi Jinping faces stiffest challenge to rule as Covid outrage sparks mass protests
      Demonstrations stamped out by Monday but analysts warn of reprisals if dissent flares up again
      Demonstrators in Beijing hold blank pieces of paper to protest against censorship
      Edward White in Seoul, Thomas Hale in Shanghai, Ryan McMorrow in Beijing and Gloria Li in Hong Kong yesterday

      Xi Jinping faces one of his greatest challenges as president of China after tens of thousands of people took to the streets over Beijing’s strict coronavirus controls and suppression of freedom of speech.

      At least 10 cities, including Shanghai, Beijing, Wuhan and Chengdu, were shaken by rare political protests over the weekend, triggering clashes with police and security officers that led to a spate of detentions, including of two foreign journalists.

      The sudden outbreak of civil disobedience was sparked by outrage after a deadly apartment fire in Urumqi, Xinjiang, was partly blamed on coronavirus restrictions. While most of the protests appeared to have been stamped out by Monday, they followed months of frustration, especially among China’s young people, with relentless lockdowns, quarantines, mass testing and electronic surveillance under Xi’s zero-Covid policies.
      …

      1. partly blamed on coronavirus restrictions

        As the saying goes: Dogs have more freedom in China than humans. But sure, the people are upset about Covid.

    4. Stocks close lower, Dow drops nearly 500 points as supply chain concerns mount amid protests in China
      Alex Harring
      Carmen Reinicke
      Covid unrest in China will not impact the Fed’s moves against inflation, says Mohamed El-Erian

      Stocks fell Monday as social unrest from China’s prolonged Covid restrictions weighed on markets.

      The Dow Jones Industrial Average lost 497 points, or 1.5%. The S&P 500 and Nasdaq Composite shed 1.5% and 1.6%, respectively.

      Over the weekend, demonstrations broke out in mainland China as people vented their frustrations with Beijing’s zero-Covid policy. Local governments tightened Covid controls as cases surged, even though earlier this month Beijing adjusted some policies that suggested the world’s second-biggest economy was on its way to reopening.

      The developments reverberated across global markets, with West Texas Intermediate crude futures briefly dipping to their lowest price since last December.

      Shares of companies with big production facilities in the country were under pressure. Apple dropped 2.8% after Bloomberg reported that unrest at a factory in China could mean 6 million fewer iPhone Pro units for the year.

      “When you look at Apple not being able to fulfill the orders for their iPhone because the factories in China are shut down, I think that’s a perfect example of how something in one country can affect somewhere else,” said Victoria Fernandez, chief market strategist at Crossmark Global Investments. “It just has a ripple effect through the global economy when you have something as large as the Chinese economy shutting down.”
      …
      https://www.cnbc.com/2022/11/27/stock-futures-slip-after-a-winning-holiday-week-.html

    5. The Financial Times
      Markets Briefing Equities
      Global stocks fall sharply after China’s zero-Covid protests
      US equities drop and oil prices stabilise as outlook for world’s second-biggest economy becomes muddy
      Protesters in Beijing and other Chinese cities demonstrate against the government’s zero-Covid policy
      George Steer in London, Jaren Kerr in New York and Hudson Lockett in Hong Kong 23 minutes ago

      Global stocks fell sharply on Monday after protests in China against the government’s strict Covid-19 policies prompted investor worry over the outlook for the world’s second-largest economy.

      Wall Street’s benchmark S&P 500 index closed 1.5 per cent lower, while the tech-heavy Nasdaq Composite lost 1.6 per cent. The losses were the largest since November 9, the first session after the US midterm elections, and cut into strong gains for equities this month.

      In Hong Kong, the Hang Seng China Enterprises index dropped as much as 4.5 per cent before pulling back to shed 1.6 per cent. The decline on China’s CSI 300 index of Shanghai- and Shenzhen-listed shares was as big as 2.8 per cent before it was trimmed to just over 1 per cent.
      …

    1. You know, if they’d just stop pumping money into the economy AND keep oil prices low things would be fine.

  10. ‘I’m sorry that people listened to what we’d said and acted on that, and now find themselves in a position they don’t want to be in. At the time, we thought it was the right thing to do.’

    Was he more contrite than SBF?

    1. “…who took out mortgages over the past two years on the understanding interest rates would not increase until 2024.”

      What led Australians to such a misunderstanding?

  11. ‘And less people are answering the phones,’ she said. ‘Less people want to do anything.’”

    Fewer people, not “less” people, Maria. Marks not answering their phones makes it harder to lie to them, I suppose.

  12. Re-post, because housing.

    Post Millennial — Heavily armed Antifa militants ‘stand guard’ outside Texas ‘kid friendly’ drag show (8/29/2022):

    “A “kid friendly” drag brunch for all ages was guarded against protests by armed Antifa militants carrying AR-15s. The drag event was held at the Anderson Distillery and Grill in Roanoke, Texas.

    The event called the Barrel Babes Drag Brunch was advertised as “Dancing Music and Laughs.” Journalist Taylor Hansen said that the “kid-friendly” event featured “Vulgarity, Sexualization of Minors, and Partial Nudity.”

    Protestors outside the event were spit on and confronted by activists who support “kid friendly” drag brunches.

    Kris Cruz from Blaze TV reported that Antifa militants armed with AR-15s acted as “bodyguards” and escorted attendees to their vehicles. He added that Antifa and the staff worked together to provide “protection” for attendees.

    Kruz also reported that Antifa was placed strategically during the “kid friendly” drag show and “was armed like snipers on the 3rd floor of the parking garage.”

    https://thepostmillennial.com/breaking-heavily-armed-antifa-militants-stand-guard-outside-texas-kid-friendly-drag-show

    Housing? Why, yes, housing.

    Because when you buy a house, your property taxes are paying to promote this in the public schools.

    And if you dare object, you will be tossed in the January 6th gulag.

    This is what Attorney General Merrick Garland’s Department of Justice has prioritized for prosecution, so yes, your federal income taxes are paying for this as well.

    Globalists gonna globe.

  15. Does it make you feel better about your risk asset losses knowing that Cathie Wood also lost bigly in 2022?

    1. Cathie Wood Has Bet Big On These 10 Stocks; Here’s How They’re Performing
      ED CARSON 08:02 AM ET 11/28/2022

      Cathie Wood, CEO and founder of Ark Invest, says she invests on a five-year time horizon, betting big on speculative growth names such as Tesla (TSLA), Roku (ROKU), Zoom Video Communications (ZM) and Shopify (SHOP). But in 2022 at least, Ark’s 10 biggest holdings are down sharply.
      …
      https://www.investors.com/news/cathie-wood-has-bet-big-on-these-10-stocks-how-theyre-performing/

  17. Is it safe to say at this point that the FTX collapse had no contagion effects beyond the cryptoverse?

    1. The Financial Times
      Cryptocurrencies
      Nervous auditors re-examine crypto clients after FTX collapse
      Collapse of Sam Bankman-Fried’s company highlights risks in industry where accounting rules are only half-formed
      Sam Bankman-Fried
      The insolvency expert now running FTX cited a ‘complete failure of corporate controls’ at Sam Bankman-Fried’s crypto empire
      Stephen Foley in New York yesterday

      Cryptocurrency businesses that need their financial statements audited are probably going to have to pay more for it, and they have Sam Bankman-Fried to thank.

      The collapse of Bankman-Fried’s crypto empire, and the spotlight it put on the auditors that signed off on his books, has prompted small audit firms to re-examine their work for businesses in the nascent industry.

      Several US firms told the Financial Times that they had elevated some or all of their crypto-related clients to the status of “high risk”, triggering a more thorough audit that will take longer and lead to higher bills. Some clients could ultimately be dropped altogether.

      The re-examination comes just weeks ahead of the financial year-end in the US, where auditors are struggling to apply accounting rules for digital assets that are still only half formed and regulators are watching closely for slip-ups.

      “Your antennas have to be up at this point,” said Jeffrey Weiner, chief executive of Marcum, whose audit clients include bitcoin miners and digital asset investment groups. The firm has designated crypto clients across the board as high risk in the wake of FTX’s collapse and the fallout in cryptocurrency markets.

      “When a client is high risk, you significantly expand the scope of the audit, and that translates into needing more resources and more time,” Weiner added. Extra work will be required to check a company’s “systems, controls, the existence of assets, segregation of funds and, of course given FTX, there will be extra scrutiny of related-party transactions”.

      FTX bankruptcy filings described a chaotic operation where the crypto exchange was deeply intertwined with Bankman-Fried’s personal trading business, and billions of dollars of customer money is unaccounted for. John Ray III, the insolvency expert newly installed as chief executive, said he had never seen “such a complete failure of corporate controls and such a complete absence of trustworthy financial information”.
      …

        1. Business
          Crypto company BlockFi declares bankruptcy in the first big aftershock of FTX’s fall
          Updated November 28, 20221:20 PM ET
          David Gura
          The BlockFi website on a laptop computer arranged in the Brooklyn borough of New York, US, on Nov. 17. BlockFi filed for bankruptcy on Nov 28, 2022.
          Bloomberg/Bloomberg via Getty Images

          Another crypto company has fallen, as contagion from the collapse of cryptocurrency exchange FTX spreads across the industry: BlockFi says it has filed for bankruptcy.

          Lender BlockFi was one of a handful of companies FTX bailed out in recent months, and its prospects worsened considerably as FTX imploded.

          A little more than two weeks ago, the once mighty crypto giant FTX – founded by Sam Bankman-Fried to bring everyday people into the opaque world of virtual currencies – filed for bankruptcy. In the days since, the crypto industry, Wall Street, and even federal regulators have been on the outlook for the next domino to fall, wondering if the end of crypto is in sight or if wider financial stability is under threat.

          Announcing its plans to file for Chapter 11 reorganization in New Jersey, where the company is based, BlockFi noted FTX’s own bankruptcy proceedings will lead to delays.

          “Rest assured, we will continue to work on recovering all obligations owed to BlockFi as promptly as practicable,” the company said in a letter to customers.
          …
          https://www.npr.org/2022/11/28/1139431115/blockfi-ftx-bankruptcy-chapter-11

          1. “…wondering if the end of crypto is in sight or if wider financial stability is under threat.”

            Those who gambled in crypto keep hoping and praying for new evidence that wider financial stability is under threat, as that could lead to evidence that cryptocurrencies are systemically important and qualified for too-big-to-fail bailouts.

            Sadly for them, there is no evidence that financial stability is under threat outside the black hole of the cryptoverse, where money goes to die.

          2. Axios
            4 hours ago – Economy & Business
            BlockFi bankruptcy filing claims Alameda defaulted on $680M in loans
            Ryan Lawler, author of Axios Pro: Fintech Deals
            Illustration of a sad face on a digital, pixelated coin
            Illustration: Annelise Capossela/Axios

            Crypto lender BlockFi was taken down by exposure to FTX and Alameda Research, the latter of which defaulted on $680 million of collateralized loan obligations, according to a bankruptcy filing.

            Why it matters: Despite claims of transparency and decentralization in crypto, the intertwined balance sheets and opaque nature of crypto lending have led to contagion in the ecosystem.

            State of play: The filing from Mark Renzi of Berkeley Research Group — BlockFi’s proposed financial adviser in the case — breaks down the events leading to its bankruptcy into two acts: the first related to the collapse of Luna and Three Arrows Capital (3AC) and the second due to the fall of FTX.
            …
            https://www.axios.com/2022/11/28/blockfi-alameda-680m-default

          3. “Despite claims of transparency and decentralization in crypto, the intertwined balance sheets and opaque nature of crypto lending have led to contagion in the ecosystem.”

            It is the centralization and intertwined balance sheets of crypto that explain why contagion of the FTX implosion has been limited to the cryptoverse. Since the real world economy is decoupled from the imaginary ecosystem of the cryptoverse, systemic risk is not a problem, and bailouts of those who gambled and lost on cryptocurrencies are unnecessary.

    3. What has played out so far after the FTX collapse reminds me of the subprime mortgage industry implosion of 2007. It didn’t happen overnight, but over many months.

      At the end of it, the subprime mortgage lending industry was gone.

    4. https://www.zerohedge.com/political/blockfi-files-widely-anticipated-bankruptcy-cites-ftx-collapse

      Blockfi files for bankruptcy. Reddit awash in account holders who can’t access their accounts and some saying they lost their life savings.

      Blockfi told customers their account titles were with the account holder name not Blockfi

      https://www.reddit.com/r/blockfi/

      Blockfi fined 100 million $ by SEC

      https://www.sec.gov/news/press-release/2022-26

      All these ponzi schemes that claim to pay interest on crypto deposits that have no dividend or interest generation intrinsically….it’s just the classic ponzi reinvented.

    5. “Is it safe to say at this point that the FTX collapse had no contagion effects beyond the cryptoverse?”

      Maybe it’s contained, i.e., dropped a bag over it?

      1. I seem to recall that Fidelity offers a crypto fund, which I’ll bet is doing an imitation of the guy who went over Niagara falls in a barrel.

    6. Miami nightclub owners mourn loss of ‘crypto nerds’ after FTX collapse
      By Ariel Zilber
      November 28, 2022 12:21pm Updated

      Nerdy crypto entrepreneurs who spent big at Miami nightclubs, showering patrons with cash as they ordered “bathtubs of champagne” and sang with rappers like 50 Cent, have gone quiet, South Florida venue owners said.

      The sudden collapse of the cryptocurrency exchange FTX and the plummeting value of digital coins has Miami nightclub owners pining for the days when young entrepreneurs flocked to venues such as E11even and its neon lights, trapeze dancers and burlesque shows.

      “They were ordering 12 or 24 bottles of the most expensive champagne and just showering themselves without even drinking,” Andrea Vimercati, the director of food and beverage at Moxy Hotel group, told the Financial Times. “[The crypto entrepreneurs] wanted to show that they didn’t have any limits.”

      Vimercati recalled that the crypto boom of a year ago prompted a wave of predominantly young men awash in money to flaunt their newfound wealth in Miami.

      Nightclub owners in Miami said that crypto executives would spend seven-figure sums to rent out their venues.
      Nightclub owners in Miami said that crypto executives would spend seven-figure sums to rent out their venues.

      “Out of the blue, all these kids from crypto started coming down and spending a lot of money — like, an insane amount of money,” he said.

      “They were booking tables for $50,000, and it was like, ‘Who the hell are these people’?”

      Vimercati described the crowd as “95% men, young…with a kind of nerdy style.”

      “You couldn’t tell they had a lot of money if they were just walking around,” he said.

      Gino LoPinto, operating partner at the Miami hotspot E11even, told FT that a group of crypto businessmen came into the club in June of last year to celebrate what they claimed was the successful sale of their company.

      “50 Cent was performing, and their spend was more than a million dollars,” LoPinto told FT. “They paid in crypto.”

      LoPinto added: “They had bathtubs of champagne brought out, and gave 50 Cent a bunch of cash to throw.”

      Miami nightclub owners say that crypto entrepreneurs are no longer spending lavishly at their venues since the collapse of FTX.

      In April of last year, E11even started accepting cryptocurrency payments. LoPinto said that the club processed $6 million worth of transactions between April and December of last year.

      In the last three months, however, the club has taken in just $10,000.

      LoPinto said that crypto entrepreneurs would brag about their wealth by showing each other their digital wallets.

      “You wouldn’t normally show your bank account, but people do show their crypto wallets,” he said.

      “I’ve seen more crypto wallets in a year than I’ve seen bank accounts in a lifetime.”

      In the year since, the crypto partiers aren’t calling. Instead, they’re licking their wounds alongside an entire industry that has been rocked by the implosion of FTX, the exchange founded by the disgraced Sam Bankman-Fried.

      FTX filed for Chapter 11 bankruptcy protection earlier this month after it was learned that Bankman-Fried was using customer funds to place risky bets through sister firm Alameda Research.

      The collapse of FTX, the crypto exchange founded by the disgraced Sam Bankman-Fried, has rocked the industry.

      The collapse of FTX was shocking given that the company, whose roster of celebrity endorsers included Tom Brady, Gisele Bündchen, Larry David, Steph Curry, and others, was at one point worth some $32 billion.

      BlockFi, another crypto firm that was in talks to be acquired by FTX, filed for Chapter 11 in federal bankruptcy court in New Jersey on Monday.

      The news sent the value of the overwhelming majority of cryptocurrencies down. As of 11:19 a.m. Eastern time, bitcoin was down nearly 3% while ethereum was down more than 4.8%.

      The global market capitalization of all cryptocurrencies in circulation was valued at $814.55 billion on Monday — which is down 3.5% compared to the previous day, according to CoinMarketCap.com.
      …
      https://nypost.com/2022/11/28/miami-nightclub-owners-mourn-loss-of-crypto-nerds-after-ftx-collapse/

      1. “…which is down 3.5% compared to the previous day…”

        Annualized rate of price decline is
        1-(1-0.035)^365 = 99.9997749%.

    7. Curse of the crypto whizz kids: Missing millions, mysterious deaths and wild conspiracy theories surrounding the untimely demise of digital currency tycoons – after young star becomes SECOND to die in four weeks
      By Lewis Pennock For Dailymail.Com 14:55 EST 28 Nov 2022 , updated 16:07 EST 28 Nov 2022

      – Cryptocurrency entrepreneur Tiantian Kullander, co-founder of Amber Group, died unexpected ‘in his sleep’ on November 23, the company announced

      – Weeks earlier, Nikolai Mushegian, 29, died hours after a paranoid Twitter post expressing fears the CIA and Mossad were going to murder him

      – There have been four high-profile deaths in the crypto industry since 2018

      – The two others, Gerald Cotten and Matthew Mellon, died without sharing the keys to crypto wallets worth hundreds of millions of dollars

      – Cotten’s demise was so mysterious and controversial that it prompted a Netflix documentary – Trust No One – into whether he faked his own death
      …
      https://www.dailymail.co.uk/news/article-11477765/Curse-crypto-whizz-kids-Missing-millions-mysterious-deaths-wild-conspiracy-theories.html

      1. after a paranoid Twitter post expressing fears the CIA and Mossad were going to murder him

        The CIA and Mossad are precisely the organizations I would expect to be using crypto and killing their fronts. But go ahead and gaslight us with a psychiatric diagnosis that he was paranoid.

    8. The Financial Times
      Cryptocurrencies
      US lawmaker pushes bipartisan bill to regulate crypto
      Republican senator Cynthia Lummis describes collapse of FTX as a wake-up call for Congress
      Senator Cynthia Lummis was an early mover on cryptocurrencies, buying her first bitcoin almost a decade ago
      Joshua Franklin in London 6 hours ago

      A US senator pushing for greater federal regulation of cryptocurrencies says the collapse of Sam Bankman-Fried’s FTX exchange should be a catalyst for lawmakers to start paying attention to crypto.

      In an interview at the Financial Times’ Crypto and Digital Assets Summit, Senator Cynthia Lummis said FTX’s failure, which has resulted in $8bn in missing customer deposits, highlighted the need for greater regulation in the nascent crypto industry. Lummis, a Republican from Wyoming, pushed as a solution a bill which she introduced in Congress in June with Kirsten Gillibrand, a Democratic senator from New York.

      “I hope [FTX’s collapse] highlighted with members of Congress who have not taken the time to learn more about this asset class, that it’s time for them to learn more about it so we can engage in proper regulation,” Lummis said.
      …

      1. “…who have not taken the time to learn more about this asset class…”

        Sounds reminiscent of the language true believers use to convert cryptocurrency doubters.

        1. Matt Laslo
          Business
          Nov 27, 2022 7:00 AM
          The US Congress Is Starting to Question This Whole Crypto Thing

          Think Washington lawmakers have what it takes to tackle the volatile world of cryptocurrencies? Neither do they.

          Dark clouds are seen over the U.S. Capitol
          Photograph: Drew Angerer/Getty Images

          Hundreds of thousands of investors just had billions picked from their collective e-pockets. Yet, crypto remains the untouchable queen in the antiquated marble halls of the US Capitol.
          …
          https://www.wired.com/story/us-congress-ftx-cryptocurrency-regulation/

      2. US lawmaker pushes bipartisan bill to regulate crypto

        Finally! We need to have a ponzi scheme regulator. I was way ahead on this one.

    2. And those are just the deaths. There are many more who now have permanent heart damage and who likely will lose decades from their life spans.

        2. The Irish Have Been Pushed Too Far

          The Irish fought tooth and nail for their independence and sovereignty, and now they are being told to step aside while their homeland is invaded by third worlders.

          I have little doubt that their elections are also rigged so that globalists can rule over them.

          1. A have a colleague in Dublin. One night while he was out walking, minding his own business, he was jumped by some vibrants, who beat him so badly that he had to be hospitalized.

            Incredibly, after he was attacked, he told me that he thought that Americans were crazy to be armed.

          2. Every Irishman (woman) I’ve met is a socialist globalist cuck.

            They are literally inviting this into their island. Maybe Northern Ireland is better, but I doubt it.

      3. That is shocking. The footage makes mostly peaceful protests in the US look like church communion by comparison.

        Not a fun time for CCP security guards!

    1. NextDoor is the last social media site I am still on, and I do it for local information. That said, there is a new trend I’m seeing: everyone wants a subsidy: for their new electric car, for their solar panels, even for their electric lawn mower. They whine because the subsidy they applied for has expired or there’s no more money in the program. When you remind them that the “rebate” they think they are entitled to is a subsidy and it’s paid for by their neighbors, they can get defensive quite quickly.

      1. NextDoor

        I tried it, supposedly just for my little neighborhood. Aside from the guy who wanted a free kitten, not useful. Mostly it was messages from the government. I shut it off.

  26. Merriam-Webster Word of the Year: ‘Gaslighting’

    JOEL B. POLLAK
    28 Nov 2022

    The Merriam-Webster dictionary has declared “gaslighting” to be the word of the year for 2022, as searches for the term skyrocketed — though there was no specific incident or usage of the word to spark the sudden interest.

    The term refers to the practice of intentionally deceiving someone by telling them that the state of the world is not what they perceive it to be. The term is used often in online political debates to accuse opponents of lying.

  28. A reader sent these in:

    CarDealershipGuy

    Jerome Powell working his magic

    https://twitter.com/GuyDealership/status/1596651520409346051

    CarDealershipGuy

    New month, new record 😵‍💫 The average APR for a used vehicle purchase climbed to 9.6% in October 2022, the highest since February 2010.

    https://twitter.com/GuyDealership/status/1596277789346263043

    “Canadians currently have one of the highest personal household debt ratios in the world. At a debt-to-income ratio of about 186 per cent, Canadians are living well beyond their means through spending or borrowing $1.86 for every dollar earned.”

    https://twitter.com/RE_MarketWatch/status/1596886112579960832

    John Wake

    Metro Phoenix Months of Supply
    April = 0.5
    Nov = 4.0
    And I think 4 months of supply today is higher than 4 months of supply in the olden days because with all today’s tech – huge amount of info online & electronic signings – houses priced well can go under contract more quickly.

    https://twitter.com/JohnWake/status/1596896541381300225

    Lance Lambert

    “Falling” markets: Austin, Denver, Vegas, Phoenix
    “Slowing” markets: Dallas, Boston, Nashville, DC
    “Plateauing” markets: ATL, NYC, Tampa, Indy

    https://twitter.com/NewsLambert/status/1596726910318309376

    Nominal housing cost of carry through Q3: Cost of carry: Avg. House Price x 30 Year Mortgage

    https://twitter.com/SuburbanDrone/status/1596874879131070470

    This doesn’t fit the narrative.

    CT was deadset on a tinfoil conspiracy where SBF was tied to the Democrats. It’s time to figure it out. It’s not right v left like they want you to think. It’s the Elites vs everyone else, and until we figure it out, we are all merely pawns.

    https://twitter.com/sol_underground/status/1596971830685798400

    SBF personal Senate contributions:
    $26,600+ to @SenStabenow (D)
    $8,700 to @JohnBoozman (R)
    $16,600 to @SenGillibrand (D)
    $5,700 to @CoryBooker (D)
    All are on Senate Ag Committee (CFTC oversight). All are sponsors and public advocates of “SBF Bill”.

    https://twitter.com/EpsilonTheory/status/1596918497837469696

    Crypto Correction…
    Binance $BNB: -55%
    Tron $TRX: -71%
    Polygon $MATIC: -71%
    Ethereum $ETH: -75%
    Bitcoin $BTC: -76%
    XRP $XRP: -80%
    Litecoin $LTC: -82%
    Dogecoin $DOGE: -88%
    Uniswap $UNI: -88%
    Cardano $ADA: -90%
    Polkadot $DOT: -90%
    Solana $SOL: -95%
    FTX $FTT: -98%
    Terra $LUNA: -99%

    https://twitter.com/charliebilello/status/1596595401322565632

    A 2.3% increase in online sales on Black Friday is 5.4% below current CPI inflation, meaning in real terms, sales declined. Worse yet, is the stunning increase in the percentage of buy now, pay never. This is how recessions start, not end.

    https://twitter.com/RJRCapital/status/1596902416255184897

    Oof. Not good. Stores were apparently empty on Friday. No lines. Black Friday 💀 ☠️ Let’s see if cyber Monday confirms this.

    https://twitter.com/StealthQE4/status/1596503111346323457

    Buy Now Pay Later payments increased by 78% compared with the past week, beginning Nov. 19, as consumers continue to grapple with high prices and inflation. The consumer is buying things they don’t need with money they don’t have amidst a recession. Credit Crisis cometh.

    https://twitter.com/eliant_capital/status/1596631851812421632

    Ron Butler
    @ronmortgageguy
    Let’s Be VERY Clear: Prime Rate Will Go Up Again In 2 Weeks
    Either 25 bps or 50 bps
    It’s also pretty damn likely it will go up another 25 bps in January
    Rate of Increase is slowing
    But this ain’t over: if it pauses at 4.5% that’s a 7.20% HELOC Rate for most folks
    No Bueno

    https://twitter.com/ronmortgageguy/status/1596168536178982913

    Coinbase: “We’re fine” Coinbase bonds are trading at 53 cents on the dollar. The market seems to think there is something wrong here.

    https://twitter.com/WallStreetSilv/status/1596892269251948544

    What recession? The malls are super busy! I keep seeing people tweet that, but consumer credit spending data I’ve seen from large banks, shows people are spending less than last year. Factor inflation and there’s a big economic slowdown happening.

    https://twitter.com/StephenPunwasi/status/1596974411252662272

    It’s wild that Realtors that gave bad advice in March are still giving bad advice. Yes, rents are rising. But investors doubling the rent to get a 2% yield while paying 5% interest with equity vaporizing over $10k/month isn’t the opportunity you think you’re presenting.

    https://twitter.com/StephenPunwasi/status/1596934506056777728

    It doesn’t look like much but *slaps the roof* This rural bank that looks like a shed with 3 employees and $10m in deposits was able to get 4 accounts that deposited $84 million right after FTX bought it for more $11 million.

    https://twitter.com/StephenPunwasi/status/1596208572781973504

    You’ve probably heard about QT & balance sheet reduction. But 99% aren’t paying attention to the other two parts that together have had a 95% correlation with the S&P 500 since 2020…Here’s how the Fed has changed the game (and how you can capitalize on it):

    https://twitter.com/BackpackerFI/status/1596606505331351553

    1. – Great perspective here. Don’t forget TGA and RRP when looking at QT/Balance Sheet.
      – The U.S. financial system is held together with duct tape and bailing wire. It’s like a high pressure boiler with the safety valve disabled. Stand back from a safe distance.
      – As a pragmatist, I don’t see a good outcome from the bursting of “The Everything Bubble,” nor do I see bailouts, due to social mood and the sheer magnitude of the problem. There’s simply not enough $ in the world for that.
      – Nothing to see here. Move along.

      “If money isn’t loosened up, this sucker could go down.” – George W. Bush
      “Summing up the risk to the global economy if Congressional leaders failed to approve Treasury Secretary Paulson’s $700 billion financial bailout plan, at a bipartisan meeting hosted by the White House (September 26, 2008)”

      …

      “You’ve probably heard about QT & balance sheet reduction. But 99% aren’t paying attention to the other two parts that together have had a 95% correlation with the S&P 500 since 2020…Here’s how the Fed has changed the game (and how you can capitalize on it):”

      https://twitter.com/BackpackerFI/status/1596606505331351553

      …

      – At risk of stating the obvious, the system is completely corrupt. FTX is just one symptom of this. The tip of the iceberg. See link, below.

      https://twitter.com/Convertbond/status/1577639416180482051
      Lawrence McDonald @Convertbond

      Much of Wall St’s economists and strategist have been focused on meaningless, backward looking jobs data – it’s all about leverage, the internal plumbing underlying the financial system and most important – the rate of change of real financial conditions. That’s all that matters.

      6:38 AM · Oct 5, 2022 · Twitter for iPhone

      https://twitter.com/Convertbond/status/1595497975781986319
      Lawrence McDonald @Convertbond

      Fed Minutes today — “Several worried fast increases risked financial instability.”

      *Last Decade, Ultimately – EVERY major inflection point in altering the Fed policy path has come from financial conditions, NOT economic data.

      (2)
      12:22 PM · Nov 23, 2022 · Twitter Web App

      https://twitter.com/Convertbond/status/1595749308606840834?cxt=HHwWhICwodTinqUsAAAA

      Thread
      Lawrence McDonald @Convertbond
      Oct 21
      Never forget, we live in a world where “insider trading” is illegal, but Fed policy path leaks to Wall. St. Journal reporters move asset prices in the hundreds of billions of dollars.

      Lawrence McDonald @Convertbond
      Nov 24
      “Fed officials see smaller rate hikes coming ‘soon,’ minutes show” Reuters — November 23, 2022

      *WSJ told us this a month ago, Dow Jones Industrial Average up nearly 20% off the October lows – high impact on the US midterm elections. This is how the game is played.
      (2)

      Lawrence McDonald @Convertbond
      Key Dates – let us Connect the Dots

      Fed Meeting: November 2-3
      CPI Data: November 10

      *Fed minutes from November 3 show an FOMC talking DOWN rate hikes, seven days BEFORE the historic CPI data miss (better than expectations). Hmmm.
      (3)
      5:00 AM · Nov 24, 2022 · Twitter Web App

      …

      https://twitter.com/WallStreetSilv/status/1597122776502276098?cxt=HHwWhMDUwYGtj6osAAAA
      Wall Street Silver @WallStreetSilv

      There is a lot more you never hear about …

      FTX is just the tip …

      [see image]

      11:58 PM · Nov 27, 2022
      ·Twitter Web App

    2. New month, new record. The average APR for a used vehicle purchase climbed to 9.6% in October 2022, the highest since February 2010.

      From the comments: “When do we get to see the tank in prices?”

      Wholeheartedly agree. Prices are still in the stratosphere.

    3. It’s time to figure it out. It’s not right v left like they want you to think. It’s the Elites vs everyone else, and until we figure it out, we are all merely pawns.

      Exactly. Both parties have been taking the American people for a ride for half a century – my entire existence. “Divide and conquer” is the game they are playing while they make off with the loot.

      Mitch McConnell is no better than Nancy Pelosi or Chuck Schumer. McConnell is a hardcore “Orange Man bad,” corrupt piece of bloated garbage who deserves to be curb-stomped just like the rest.

      1. McConnell is much worse. He will stab you in the back. At least you know where Shoomer and Piglosi stand…and you can do all you can to avoid them.

    4. Buy Now Pay Later payments increased by 78% compared with the past week, beginning Nov. 19, as consumers continue to grapple with high prices and inflation. The consumer is buying things they don’t need with money they don’t have amidst a recession. Credit Crisis cometh.

      It’s the biggest credit bubble in world history, and it continues unabated. Until credit dries up – it hasn’t in the least – expect more of the same. People will always borrow whatever is available. You can’t solve a credit bubble with more credit. You need to remove all of the credit.

      1. I mentioned the other day that I took my car in to the local warehouse club store for a rotation and balance on Black Friday. It was unusually quiet. I don’t know about across the country, but in my little burg shoppers have slammed their wallets shut. The gas station at the warehouse club was undercutting other gas stations by 40 cents a gallon, and the line was long.

        1. “The gas station at the warehouse club was undercutting other gas stations by 40 cents a gallon, and the line was long.”

          So you wait in line to save $6.00?

          “If you can’t afford super you can’t afford to drive” —Wayne Geist

        1. I recall the Banana Republics and Mexico overextending, and one of ’em bragging that they could make Wall Street go away.

  29. I had a CNN watching liberal get wild eyed crazy pissed last week when I said we shouldn’t be sending $ billions to Ukraine.

    “The Russians are waiting for something like this. They need a propaganda campaign against the United States and against our support for Ukraine, and they’re gonna be all over Twitter – I guarantee this – supporting the far right, plans, demands to stop arming Ukraine. You just wait.”

    Former CIA analyst Bob Baer, in an interview with CNN’s Boris Sanchez, said that the idea of “free speech” on Elon Musk’s Twitter is “nonsense.”

    https://youtu.be/ydBfsLCsx1w?t=53

    1. Former CIA analyst Bob Baer, in an interview with CNN’s Boris Sanchez, said that the idea of “free speech” on Elon Musk’s Twitter is “nonsense.”

      The left definitely sees any form of free expression as a threat to their power.

      1. “The left definitely sees any form of free expression as a threat to their power”

        If it doesn’t fit their narrative, the left sees any form of free speech the same thing as screaming fire a movie theater.

        Former CIA analyst on Twitter: “this freedom of speech is just nonsense”

        Dan Frieth | Reclaim The Net
        November 28th 2022, 4:45 am

        “Baer blasted Musk’s idea of free speech, saying, “And it’s not right. And you know, this freedom of speech is just nonsense, ’cause you can’t go into a movie theater and yell, ‘fire!’ It’s against the law,” – repeating a statement that in itself is misinformation.”

        https://www.infowars.com/posts/former-cia-analyst-on-twitter-this-freedom-of-speech-is-just-nonsense/

        2. And you know, this freedom of speech is just nonsense

          They aren’t even pretending to not be tyrants anymore

  30. “Sky-high home and rent prices continued their SLOW decline in October across California…San Luis Obispo County’s median home price dropped from $875,000 in September to $815,000 in October…”

    A drop of $60,000 — nearly 7 percent — in a single month is not “slow.”

    1. Get economy accelerating prices declines like that going for 12 consecutive months and it puts prices at the long term historic price trend and right around construction cost.

      1. Once prices bottom out, a huge real estate boom will result, as the younger generation that has been priced out of housing for decades can finally afford to get onto the property ladder.

        Let’s see if the Fed can avoid the temptation to screw up the market adjustment process again. I’m thinking with rampant uncontained inflation, it might be less in their interest to prop up housing prices this time.

    2. A drop of $60,000 — nearly 7 percent — in a single month is not “slow.”

      More like going over a cliff.

    3. I find it helpful to annualize the one month decline:

      1-(815/875)^12 = 57.4% annualized rate of price decline

      1. Once word gets around how fast prices are dropping, buyers will become even more hesitant than they are due to the primary effect of rate hikes on purchase budget constraints. Why buy now when facing the prospects of getting it for 50% off this time next year, especially if your future employment prospects are uncertain? Nobody wants to catch themselves a falling knife. 🗡️ 🔪

    4. SLO is all about retired equity locusts and Cal Poly students funded by their parents or student loan borrowing. The local economy cannot support these inflated prices.

    1. Not down enough. A lot of overpriced new construction crap townhouses have been built. Wouldn’t be surprised if price per square foot is not down.

  33. “18% of California households were capable of purchasing a $829,760 median-priced home in the third quarter of 2022, the report said, based on an ability to meet a monthly payment of $4,820 with a 5.72% interest rate. That would require a minimum income of $192,800 to qualify for the purchase of a median-priced single-family home.”

    What percentage of Californians have mortgage payments close to $5000? My guess is that it is very small.

    1. The best is the folks who pay 20th century property tax prices. So much manipulation, so few new bag holders.

      1. Those Proposition 13 winners will eventually have to give up their sweet tax deals. Should be interesting when this happens on a large scale!

        1. You’re talking about dismantling CRE syndicates that resemble empires and trust funds composed of capitalism’s royalty.

        2. My elderly relative with a 4 bedroom house in the Silicon Valley pays low taxes on his 2M house, maybe even worth more now.

  35. From CNN:

    Customers are pulling back on spending at Gap and Old Navy — particularly in one specific category that shows just how much families are feeling inflation’s pinch.

    In tough times, parents typically skimp on themselves and focus on meeting the needs of their growing children. But Gap and Old Navy said Thursday they’re now seeing less spending on babies’ and kids’ items.

    “Spending on kids is one of the last areas most parents cut back on, so softness at Gap and Old Navy suggests that some households are under significant financial strain,” said Neil Saunders, retail industry analyst and managing director of Globaldata.

    What happened to “the economy is strong as hell”?

  36. Go Woke, Go Broke

    Nolte: Disney’s Gay, Green ‘Strange World’ ‘To Lose $147 Million’

    JOHN NOLTE
    28 Nov 2022

    Over Thanksgiving, the child groomers at Disney again sought to groom your child, which cost them a loss of up to $147 million.

    Strange World, Disney’s latest $140 to $180 million (not counting promotion costs) animated feature, is all about spreading environmental propaganda and exposing your child to adult sexuality. One of Strange World’s lead characters is a gay teenage boy in love with another boy. This plot point has nothing to do with teaching children tolerance for people who might be different and everything to do with shattering your child’s innocence.

    https://www.breitbart.com/entertainment/2022/11/28/nolte-disneys-gay-green-strange-world-lose-147-million/

    1. I wonder if Chapek tried to postpone its release before he was fired.

      The theme parks can’t prop up the company forever. Heck, they might join the ‘lose money club’ next year. Their absurdly expensive Star Wars themed hotel has been a disaster, so much so that they might pull the plug on it.

  37. Oh God, Dr Fauci ain’t going away. He’s out there on the news circuit pumping his lies and trying to blame Trump for Covid 19 screw ups.
    The topic of conversation should be , why was Dr Fauci diverting funding for bio weapon gain of fiction research to a possible foreign rival like China, when such research was illegal In US.
    Why was Dr Fauci the Spokesperson for US, on Covid Panademic, when he funded this research in China, that got unleashed on the World. ?
    In other words , why would it be ok to out source illegal US research to a potential foreign enemy , using taxpayer funds, where that source could use it as a weapon of mass destruction.
    .
    What if the US outlawed making necular bombs . . . Than what if some Guy like Fauci in a government agency outsourced and funded necular bomb making in a foreign Country. . .. Than what if that foreign Country accidentally or on purpose set off the bomb and caused massive death and destruuction.
    And than what if than the US made that same Government Agency Head the
    Spokesperson for what the US response to the bomb threat should be ,because he’s the face of Science, while thousands of Drs and Scientists are censored.
    In a sane World wouldn’t you say “what the hell is that Government employee doing funding something illegal in US in a foreign rival Country, using taxpayers funds , that could be unleashed on the globe.”
    You would say , ” isn’t this a felony, a abuse of authority, or outright treason to collude with a potential foreign rival on a weapon of mass destruction.”
    So, Im just saying in this insane world we are in today , you have infiltration into our government agencies , that are colluding with foreign potential adversaries, or other adversaries, like Mega Corporations, to undermine, or actually attack with bio weapons or bombs, what’s the difference?

    But according to Dr Fauci, its all Trumps fault.

  38. Report: Thousands of Migrants Waiting in Mexico to Rush U.S. Border When Title 42 Ends

    JOHN BINDER
    27 Nov 2022

    Thousands of migrants are camped out in Mexico, waiting to rush the United States-Mexico border when the Title 42 public health authority — used to quickly remove illegal aliens — ends in a few weeks at the request of President Joe Biden’s administration.

    This month, a federal judge struck down Title 42 — the Center for Disease Control and Prevention’s (CDC) authority first imposed by former President Trump in 2020 to allow Border Patrol agents to quickly remove illegal aliens arriving at the southern border.

    https://www.breitbart.com/politics/2022/11/27/report-title-42-waiting-in-mexico/

    1. ZH (no link): In-House Designer For Balenciaga, Adidas Comes Under Fire Over Disturbing Social Media Posts

    2. “The ACLI data doesn’t break out the causes of death of life insurance policyholders.”

      Nobody on the planet collects more granular data than insurance companies.

  47. National Public Radio is funded by U.S. taxpayers.

    NPR — Bills targeting trans youth are growing more common — and radically reshaping lives (11/28/2022):

    “An NPR analysis of this fast-changing landscape found that over the past two years, state lawmakers introduced at least 306 bills targeting trans people, more than in any previous period. A majority of this legislation, 86%, focuses on trans youth.”

    Note the word choices here. “Fast-changing landscape” why exactly is that fast, and who is promoting it to be fast?

    “While not every proposal has succeeded — about 15% of the bills have become law — the surge of legislative activity reflects what many advocates see as an increasingly hostile environment for LGBTQ rights in statehouses across the country and even some corners of Congress.”

    There is a distinct difference between the behavior of consenting adults and the grooming and mutilation of children, globalists.

    “It’s also a phenomenon that advocates for the trans community fear will have disastrous consequences for trans youth in particular. A January poll from the Trevor Project, an organization that provides crisis support for the LGBTQ community, found that 85% of trans and nonbinary youth said their mental health was negatively affected by these laws.”

    Who funds the Trevor Project? Who gives them money?

    “For some trans youth, proposed restrictions would make it significantly harder to access gender-affirming health care. For others, it would make it virtually impossible.

    In some cases, bills have been given a boost by conservative advocacy groups like the Heritage Foundation and Alliance Defending Freedom (ADF), according to lawmakers and advocates. The Southern Poverty Law Center has classified ADF as an anti-LGBTQ hate group. The group, which was involved in the Idaho ban on trans women and girls in sports, disputes the designation, writing in a statement that its legal cases in support of conservative causes “frequently draw broad support across ideological lines.”

    Southern Poverty Law Center?

    Who elected them to govern anything? NOBODY. Are they a government agency? NOPE. What actual authority do they have over anything or anybody? NONE.

    Mark Potok, an executive with the SPLC, was photographed with a chart on the wall of his office projecting the future dates of white Americans as a percentage of the total population and its decline into becoming a minority in the next few decades.

    He has it pinned to the wall of his office. Replacement theory is not a theory, because the SPLC is its biggest supporter.

    “Efforts to restrict trans rights haven’t been limited to state capitols. In recent months, some Republican lawmakers in Congress have unsuccessfully sought to pass legislation restricting access to gender-affirming care for children, as well as discussion of gender identity in school curriculum and access to school sports for trans youth.”

    Under Marxism, children are property of the state.

    “In June, President Biden signed an executive order aimed at increasing access to gender-affirming care and developing ways to combat state efforts to restrict such treatments for youth.”

    https://www.npr.org/2022/11/28/1138396067/transgender-youth-bills-trans-sports

    Joe Biden is a pedophile. And a rapist.

    And the 2020 election was stolen.

          4. “Traffic — Empty Pages”

            Passed a joint around a car with that song playing more than once I can promise you.

  50. ‘A debt funding gap of €24B is estimated for the next three years in the UK, France and Germany, with refinancings of maturing loans expected to face issues from the decline in capital values and lenders’ reduced risk appetites leading to lower LTVs. Negative capital returns are expected for the next three years across all sectors, with a cumulative capital value decline of -12% in the base-case scenario’

    How do those 4% cap rates look now?

  51. Take Two Aspirin and Call Me By My Pronouns:

    Why Turning Doctors into Social Justice Warriors is Destroying American Medicine

    by Stanley Goldfarb, MD (Author)
    4.6 out of 5 stars 36 ratings

    A lifelong physician and educator exposes the alarming takeover of healthcare and medical training by a political ideology untethered to science.

    American healthcare is at risk as radical politics increasingly supplant proven methods for the admission and training of medical students. These changes in medical education and practice threaten to dramatically alter the relationship between doctors and patients.

    In the aftermath of the death of George Floyd in 2020, medical schools across the country raced to adopt increased diversity mandates and anti-racism training. Based on the false charge that the healthcare system is biased against minority groups, medical deans and trustees rushed to institute sweeping reforms that will dramatically reduce the quality of medical training and upend the traditional doctor-patient relationship. According to Dr. Stanley Goldfarb, a longtime medical researcher and educator with extensive clinical experience, these changes coincide with already lowered standards, such as grade inflation and demands for “socially relevant” curricula that have nothing to do with the care of actual patients. In this coruscating lament for the decline of American medicine, Goldfarb debunks the myth of a “racist” healthcare system and shows how elevating diversity above merit will produce substandard healthcare for all Americans—regardless of race.

    (reviews are worth a look)

    https://www.amazon.com/Take-Two-Aspirin-Call-Pronouns/dp/1642938491

  53. Is the incipient collapse of China or the Fed’s unrelenting campaign to contain inflation that is freaking out Mr Market more?

    1. Fox & Friends First
      Published November 28, 2022 8:33am EST
      China’s COVID lockdown unrest is ‘more dangerous than Tiananmen Square massacre’, author warns
      Gordon Chang details what could signal the end of Xi Jinping’s grip on power on ‘Fox & Friends First’
      By Bailee Hill | Fox News
      Gordon Chang predicts Chinese Communist Party ‘will fail’ in coming years as unrest over COVID lockdowns continues

      Gatestone Institute senior fellow Gordon Chang joined ‘Fox & Friends First’ to discuss unrest in China over COVID lockdowns and his predictions for the future of the CCP. 

      Chaos erupted this weekend in China’s streets as Xi Jinping tightened his grip on the nation’s COVID lockdowns, and one expert is warning the end of his leadership could be looming shortly after renewing his tenure as leader of the Chinese Communist Party. 

      Author of “The Coming Collapse of China,” Gordon Chang, joined “Fox & Friends First” to discuss why he believes the current COVID uprisings could signal a political turning point as it pertains to Xi’s reign over the country. 

      “This is actually more dangerous than 1989, the Tiananmen Square massacre, because then, protesters really wanted to keep the Communist Party in place, but just wanted to replace some hard-line leaders,” Chang told co-host Todd Piro. “This is more like 1949, where the Chinese people had just given up on the nationalist government of Chiang Kai-shek, and then the communists came in.”
      …
      https://www.foxnews.com/media/chinas-covid-lockdown-unrest-dangerous-tiananmen-square-massacre-author-warns

      1. The Financial Times
        US inflation
        Top Fed official warns US unemployment could hit 5% next year
        John Williams says he expects job losses to rise as central bank battles inflation
        John Williams, president of the Federal Reserve Bank of New York, said the US central bank needed to do more to stamp out price pressures ow)
        Colby Smith in New York 9 hours ago

        A top Federal Reserve official has warned the US unemployment rate could hit 5 per cent next year as the central bank presses ahead with its fight against persistently high inflation.

        John Williams, president of the Federal Reserve Bank of New York, said the central bank needed to do more to stamp out price pressures that have proven surprisingly persistent across a wide array of goods and services in the aftermath of the coronavirus pandemic.

        Williams said he expected the unemployment rate to rise from its current level of 3.7 per cent to between 4.5 per cent and 5 per cent by the end of next year as the Fed takes further steps to tighten monetary policy via higher interest rates and a smaller balance sheet.
        …

      1. The Financial Times
        Eurozone interest rates
        Christine Lagarde says ECB ‘not done’ raising interest rates
        Central bank president strikes bearish tone in spite of hopes for easing inflation data
        ECB president Christine Lagarde testifies before the economic and monetary affairs committee of the European parliament on Monday
        Martin Arnold in Frankfurt yesterday

        Christine Lagarde has warned that the European Central Bank “is not done” raising interest rates, saying inflation “still has a way to go”.

        Her comments came after a sharp fall in European wholesale energy prices combined with an easing of supply chain bottlenecks encouraged hopes that eurozone inflation was slowing. US inflation also fell in October and global data indicators suggest that this year’s rampant global inflation has peaked.

        But the ECB president struck a bearish tone. “I would like to see inflation [as] having peaked in October, but I’m afraid that I would not go as far as that.”
        …

  54. A drop in Bitcoin to $10,000 would only be another $6,500 down, which is a small fraction of how much it has dropped already.

    So no big deal, right?

    1. DOW 30 -1.45%
      S&P 500 -1.54%
      NASDAQ 100 -1.43%

      Investing in crypto is ‘dangerous’ and bitcoin could plummet to $10,000, billionaire investor Mark Mobius says
      Jennifer Sor
      Nov 28, 2022, 9:58 AM
      Mark Mobius
      Jonathan Wong/South China Morning Post via Getty Images

      – Crypto is “too dangerous” to invest in right now, billionaire investor Mark Mobius said over the weekend. 
      – Mobius predicted bitcoin will plunge to $10,000, though he believes the industry will survive the fall of FTX.
      – “Crypto is here to stay as there are several investors who still have faith in it,” he told Bloomberg.
      …
      https://markets.businessinsider.com/news/currencies/mark-mobius-crypto-winter-bitcoin-fall-ftx-crash-danger-investors-2022-11

      1. “Crypto is here to stay as there are several investors who still have faith in it,”

        What will happen to Bitcoin if this handful of whales realizes that they have been investing in a worthless, imaginary currency?

        1. The Financial Times
          Opinion Lex
          BlockFi/FTX: further collapse suggests ecosystem is unsustainable
          The two companies’ complicated relationship has exposed the crypto industry’s sheer interconnectedness
          The BlockFi website on a laptop
          BlockFi only survived the spring wave of crypto distress when the then mighty FTX arrived with a bailout
          2 hours ago

          Cryptocurrency has a bright future, the digital asset lender BlockFi implied on Monday. The problem was that the company said so in a filing with a US bankruptcy court.

          BlockFi was one of the crypto businesses most exposed to Sam Bankman-Fried’s FTX. After the high-profile crypto trading platform went under this month, BlockFi swiftly halted withdrawals by its own clients. In a bankruptcy filing on Monday, BlockFi valiantly attempted to distance itself from the same move at FTX.

          BlockFi argued that it could simply reorganise in weeks and come out the other side revitalised.

          The company may not have been spectacularly mismanaged as FTX was. But the sheer interconnectedness of the crypto ecosystem suggests it is now inherently unstable for all participants.

          According to court papers, BlockFi has up to $10bn in liabilities. These include customer accounts and settlement payments it owes the US Securities and Exchange Commission. Its complicated relationship with FTX, however, is the most interesting detail.

          FTX rescued BlockFi during the first wave of crypto distress in the spring when the terra-luna stablecoin collapsed. BlockFi secured an emergency credit line of $400mn which also gave FTX a cheap option to buy BlockFi outright.

          The trading arm of FTX, Alameda Research, had borrowed nearly $700mn from BlockFi. The BlockFi cryptocurrency is currently stuck on the FTX platform. The Financial Times reported on Monday that BlockFi was suing Bankman-Fried to seize his shares of internet stockbroker Robinhood. BlockFi alleged he had pledged them to secure borrowings.

          BlockFi’s sunny outlook seems unrealistic for two reasons. First, it requires courts to resolve the intertwined FTX quickly. Given the messiness of the case, that is unlikely. Second, it is not obvious that the cryptocurrency sector is healthy enough for a reorganisation to succeed. BlockFi only survived the spring when the then-mighty FTX arrived with a bailout.

          A rough few months in crypto have felled the likes of Three Arrows Capital, Voyager Digital, Celsius Network, FTX and now BlockFi. Others must be teetering.
          …

          1. ‘Stop teetering’ is what my mom said to my siblings and me as kids, when we stood too near the edge of a cliff. I guess she was afraid we would fall off.

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