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Our Challenge Is Our Inability To Generate Prosperity In The First Place

A weekend topic starting with Yahoo Finance. “Homebuyers in some cities have no choice but to buy million-dollar homes as prices near all-time highs. A report from LendingTree found that two California cities have larger shares of million-dollar homes than properties under that mark. The percentage of homes over $1 million was 66.28% in San Jose and 52.91% in San Francisco. Los Angeles followed at 26.48%, San Diego at 23.15%, and Seattle at 18.70%. There are 1,230 homes for sale in San Diego, but just 529 units are listed at $1 million and under as of Wednesday this week. Of these, only 114 properties have three or more bedrooms and only 63 units are single-family homes. ‘There are a lot of areas, especially really expensive areas, at this point where million-dollar homes have not only become more common, they’ve also — for lack of a better term — become more middle class,’ said Jacob Channel, LendingTree’s senior economist. “[These homes] are not huge, only a few bedrooms, modest amenities.'”

KTVU in California. “With mortgage rates at a 20-year-high, home values have sunk with fewer ready buyers. ‘We’ve seen a decrease in prices of 20 to 30% in the last 16 months of probably 10 to 20% depending on the neighborhood,’ said Jeff Mann, a long-time broker and realtor in Antioch. ‘It’s uncommon to have multiple bids. Most properties are available. A buyer can come in and purchase a home without competition.'”

From WFLX. “You’ve likely heard about the migration to Florida from places like New York and California. But what about the Florida residents leaving and moving to places like Georgia and the Carolinas? Leanne McClaren said it was time to leave Florida, departing the Sunshine State for South Carolina after her husband received a job offer. She was in search of a more comfortable life than what Florida was providing. ‘It was a very hard decision,’ she said. ‘It’s definitely a lot more affordable there. … That was the main reason, the expenses.’ In a twist of events, it turns out there is no place like home for the McClarens. She’s heading back to Florida. ‘I really would say to really really think about it before you do it,’ McClaren said. ‘Because I kind of did it on a whim. Because ultimately, at this point in time, buying my house back would be double.'”

Yahoo Finance. “Mortgage rates haven’t been this high for over two decades, but it’s far worse to be a homebuyer now than then. Add in high inflation and decades of stagnant wage growth, and buyers now have less purchasing power than twenty-some years ago. Today’s homebuyers couldn’t have a more different experience, with the Fed raising its benchmark rate rapidly over the past 18 months. Mortgage rates followed, but only after buyers witnessed them plunging under 3% for more than a year during the pandemic, setting off a frenzy among buyers and a refinance boom among homeowners.”

“‘It all comes from how homebuyers – and correspondingly home prices – behave in a falling interest rate environment like the one we’ve broadly been in for the past 40 years,’ said Andy Walden, vice president of strategy at Black Knight. From 1975 to 2000, the median home price was on average 3.6 times the median household income. Today, that figure has jumped to 5.9 times the median income – slightly lower than the six times reached last summer before prices began to correct, Walden said.”

“‘The last time interest rates were at this level, home prices, which are up 160% over that span, have risen at twice the pace of incomes, which are up only 80% over that period,’ Walden said. ‘That all works fine until interest rates push sharply higher, which means that you’re no longer able to leverage those same income dollars to the degree you were in recent years.'”

From Bloomberg. “Oaktree Capital Management co-founder Howard Marks said he expects more companies to default on their debt as higher interest rates make it harder for struggling companies to raise capital. ‘When you go through a period when it’s super easy to raise money for any purpose or no purpose, and you go into a period when it’s difficult to raise money, even for a good purpose, clearly many more companies are going to founder,’ Marks said.”

The Telegraph. “A ‘wave of bankruptcies’ threatens the eurozone economy as companies used to ultra-low borrowing costs are hit by rising interest rates, the OECD has warned. More companies are already failing because of high levels of debt and the withdrawal of pandemic-era support, with businesses in Spain proving particularly vulnerable. ‘Looking at the historical record, there seems to be no post-1950 precedent for a sizeable disinflation induced by the central bank in the US, Canada, Germany or the UK that does not entail substantial economic sacrifice or a recession,’ the OECD said.”

From Burnaby Now. “It can be tempting to follow American policy discussions and presume that Canada and B.C. are similarly challenged by rising income inequality. However, the data does not support that assessment. Canada is not like the United States when it comes to the distribution of household incomes. It is right to be concerned about wealth inequality, too. However, since real estate makes up most of households’ non-pension assets, concerns about wealth inequality mostly relate to developments in established dwelling prices and housing markets, not wages and labour markets. A country cannot redistribute income that it does not generate.”

“The OECD projects that Canada – and by extension B.C. – will be the worst performing economy out of 38 advanced countries over 2020-60, with the lowest rate of per capita economic growth. The principal reason is that Canada is expected to rank 7th last and dead last for productivity growth over 2020-30 and 2030-60, respectively. Consequently, young and aspirational Canadians face 40 years of stagnation in average real incomes.”

“Canada and B.C. are on track to meet these dismal projections. Canada’s recovery from the pandemic downturn was the 5th weakest of any advanced country, and we are one of only seven OECD countries that has still not recovered its pre-pandemic level of real GDP per capita. Projections based on the federal budget indicate Canada will not recover its 2019 level of GDP per capita until at least 2027. B.C.’s GDP per capita has recovered its 2019 level, but provincial budget forecasts show it falling over the next five years, meaning it will be lower in 2027 than in 2022.”

“To put it plainly, Canada and B.C. are good at sharing prosperity – our challenge is our inability to generate prosperity in the first place. This is where our political class in Ottawa and Victoria must turn their attention.”

Business Insider. “China’s economic troubles are the result of a debt bubble that began in 2008 – and the money used to prop up growth in the country over the past decade is now finally coming back to bite, according to top economist Kenneth Rogoff. The Harvard professor pointed to a ‘debt supercycle’ that started in the US during the financial crisis, spread to Europe in 2010, and has since reached the world’s less prosperous economies. ‘China’s current problems can be traced back to its massive post-2008 investment stimulus, a significant portion of which fueled the real-estate construction boom,’ Rogoff said. ‘After years of building housing and offices at breakneck speed, the bloated property sector – which accounts for 23% of the country’s GDP (26% counting imports) – is now yielding diminishing returns.'”

“Though China’s housing supply and infrastructure are similar to that of other advanced economies, its per capita income remains relatively low, Rogoff said, just one of the factors that has shaken confidence in the sector. ‘The debt supercycle may have lasted longer than initially expected, perhaps because of the pandemic. But it was a critical piece of the story, and now, as China’s economy falters, it is the best explanation for what might come next,’ he later added.”

From Reuters. “In the beginning, Hui Ka Yan followed a simple formula. Borrow to buy land. Sell homes on the site before they are built. Use the cash to pay lenders and finance the next real estate project. For two decades, starting in the mid-1990s, this approach was enormously lucrative as Chinese home prices soared. It transformed Mr. Hui, a former steel-industry employee from a rural village, into China’s richest man. And it turned his company, China Evergrande Group, into a vast real estate empire. But as Evergrande grew increasingly laden with debt, the company resorted to ever more unorthodox strategies to generate funds.”

“Companies accounting for 40 per cent of Chinese home sales have defaulted since mid-2021, according to analyst estimates. Homes have been left unfinished. Suppliers haven’t been paid. And some of the millions of Chinese people who put their savings in property-linked wealth-management products face the prospect of not getting their money back.”

“Evergrande’s properties were ‘sold as a speculative investment, not sold as a place to live,’ said Anne Stevenson-Yang, managing principal at J Capital Research in the United States. People purchase them because they think the value will appreciate ‘so obviously the confidence game will only work as long as people keep buying.'”

From ABC News. “If it feels like we’re in uncharted territory when it comes to keeping a roof over your head, you’re right. Housing costs are the highest on record, and a closer look reveals who is being hit hard and who is unscathed. Associate professor Emma Power from Western Sydney University says the growing number of older Australians renting is a sign the housing system is no longer working as it used to.”

“‘Home ownership has been seen as a pillar of our welfare system. The age pension calculations assume home ownership, and it’s supported in all sorts of ways — negative gearing, capital gains, tax discounts. So there’s all of these systems through many different types of policies that supported home ownership, because it was seen as being a welfare good,’ she said. ‘The house was always assumed to be this asset that people could draw on when they needed that wealth. But as that starts to crumble and fall apart, the things that it was propping up for individuals start to become social costs.'”

The Miami Herald. “Inflation needs to decline further before the Federal Reserve considers ending its more than yearlong string of quarterly interest-rate hikes meant to slow breakneck economic growth, the Federal Reserve Bank of Atlanta chief executive told a student gathering this week at Broward College. Although he acknowledged consumer price increases have slowed to less than half of their 9.1% peak in June 2022, Raphael Bostic, CEO and president of the Fed’s Atlanta bank, said U.S. inflation remains more than double the Fed’s target of 2%. ‘That’s a problem,’ he said.”

“Bostic said he’s been having conversations with lower-income communities in South Florida, as part of a series in which Fed officials visit local residents. He’s asked them what hurts them more: inflation or higher interest rates? ‘The uniform answer, which surprised me, was inflation,’ he told the group at Broward College.”

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This Post Has 94 Comments

    1. Appeals court rules government likely violated First Amendment in vaccine misinformation campaign (9/8/2023):

      “A U.S. appeals court on Friday ruled several government entities including the White House, the FBI, the Surgeon General and the Centers for Disease Control and Prevention likely violated the First Amendment by pressuring social media companies to moderate their content on misinformation surrounding vaccines.

      In a decision issued Friday evening, the Fifth Circuit Court of Appeals said government actors “likely coerced or encouraged” social media companies to moderate their content, affirming a decision by a lower court with respect to the White House, the FBI, the CDC and the Surgeon General.

      At the same time, the court largely vacated an injunction by a lower court that prohibited the government from contacting social media companies about their content, ruling the previous injunction was both too broad and vague.

      It issued a modified injunction that prohibits parts of the government from coercing or significantly encouraging a social media platform’s content moderation decisions. It said this conduct would include threats of adverse consequences, even if those threats were not verbalized or did not materialize, “so long as a reasonable person would construe a government’s message as alluding to some form of punishment.”

      The decision also said the government could not “supervise a platform’s content moderation decisions or directly involve themselves in the decision itself.”

      In striking language, the decision harshly criticized the campaign by the government to pressure social media companies to moderate their content on vaccines, writing that it did not take its decision lightly and that “the Supreme Court has rarely been faced with a coordinated campaign of this magnitude orchestrated by federal officials that jeopardized a fundamental aspect of American life.”

      It said the earlier court was right it its assessment that “unrelenting pressure” of certain government officials likely “had the intended result of suppressing millions of protected free speech postings by American citizens.”

      https://thehill.com/homenews/administration/4195254-appeals-court-rules-government-likely-violated-first-amendment-in-vaccine-misinformation-campaign/

      If you were threatened to get FIRED FROM YOUR JOB for not getting injected with deadly experimental mRNA poison, that means no paycheck, and no mortgage or rent, so yeah that’s housing.

      1. Criminal government, but too many brainless MPC meatbots support tyranny because it makes them feel safe and superior

      2. ‘the decision harshly criticized the campaign by the government to pressure social media companies to moderate their content on vaccines, writing that it did not take its decision lightly and that “the Supreme Court has rarely been faced with a coordinated campaign of this magnitude orchestrated by federal officials that jeopardized a fundamental aspect of American life’

        It’s never faced a coordinated campaign of this magnitude orchestrated by federal officials.

  2. ‘To put it plainly, Canada and B.C. are good at sharing prosperity – our challenge is our inability to generate prosperity in the first place’

    That’s because buying and selling shacks to each other doesn’t generate anything but debt Dave.

    1. “That’s because buying and selling shacks to each other doesn’t generate anything but debt Dave.”

      \\

      – And we all know that debt is slavery…

      “The rich rule over the poor,
      and the borrower is slave to the lender.” – Proverbs 22:7

      “There are 2 ways to conquer & enslave a nation. One is by the sword. The other is by debt.” – John Adams

      “Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves.” – Norm Franz, Money & Wealth in the New Millennium: A Prophetic Guide to the New World Economic Order

      \\

      – I don’t know if this X post is from a previous HBB post or not, but still seems apropos. Canada is screwed. The U.S. is on a similar trajectory, and in fact so is the rest of the OECD countries. I’m sure that’s just a coincidence…

      \\

      https://twitter.com/geoeconomic10/status/1698307609525125477
      Geoeconomic🇨🇦 | @geoeconomic10
      Canadians collectively getting poorer. Their Children will be even poorer.

      It started when they decided to use real estate as primary growth engine and then rent seeking to maintain living standards.

      Led to loss of productivity. Have fun staying poor with your real estate bags.

      National Post | @nationalpost · Aug 28
      FIRST READING: For the first time, Canadians suspect their children will be poorer than they are https://nationalpost.com/opinion/canadi…

      6:11 AM · Sep 3, 2023 · 50.7K Views

  3. ‘Bostic said he’s been having conversations with lower-income communities in South Florida, as part of a series in which Fed officials visit local residents. He’s asked them what hurts them more: inflation or higher interest rates? ‘The uniform answer, which surprised me, was inflation’

    This is what happens when you have globalist scum, riding around in limos, who never get fired or a pay cut and then they go on to give $150,000 speeches for life. Read a little history Ralph, inflation can destroy empires.

    1. ^This second paragraph, that is the parasite class.

      Bloodsucking parasites. Never done a day of actual work their entire lives. Soft, soft hands. Soft city boy hands.

        1. ‘Sometimes you need to know when to give up’

          Ennio Morricone – the ecstasy of gold

          Dec 24, 2010
          Ennio Morricone conducting his own composition, “The Ecstasy of Gold” from the film, “The Good, the Bad and the Ugly”.

          3:44.

    2. The uniform answer, which surprised me

      DUH. Only banks and commercial businesses touch interest rates directly, when they take out debt to build something or to roll over existing debt. Low-income people are probably renters with low credit limits on the Mastercard. They aren’t looking to buy or refi, and they’re CC % is already high. They don’t know (yet) the effect that high interest rates will eventually have. But they go to the grocery store and the gas pump every week. If Bostic was “surprised” by this, then he should be demoted (at best).

    3. Emperor Diocletian ruled during a time of high inflation. He forced all plebs to stay on the villa or estate in which they live, and transformed them into serfs overnight, laying the foundation for 1,000 years of feudalism. He also, at one point, tried to dispense with common coinage altogether, as he cobbled together a centrally planned bartering system. Within less than a century, the Barbarians were at the gates, the Romans abandoned vast swathes of Europe, and the capital was moved to Constantinople. Despite what Gibbon said, it was inflation underlying future terrible event. Reducing peasants to subsistence farmers because of too much inflation was a really bad thing that ultimately set off a chain of events leading to the collapse of the Western Roman Empire

  4. ‘China’s current problems can be traced back to its massive post-2008 investment stimulus, a significant portion of which fueled the real-estate construction boom’

    So Ken, yer saying that pouring 100 years of concrete in 3 has a downside?

  5. ‘We’ve seen a decrease in prices of 20 to 30% in the last 16 months of probably 10 to 20% depending on the neighborhood’

    It’s a good thing everybody put 40% down Jeff!

  6. ‘It all comes from how homebuyers – and correspondingly home prices – behave in a falling interest rate environment like the one we’ve broadly been in for the past 40 years,’ said Andy Walden, vice president of strategy at Black Knight. From 1975 to 2000, the median home price was on average 3.6 times the median household income. Today, that figure has jumped to 5.9 times the median income – slightly lower than the six times reached last summer before prices began to correct, Walden said’

    ‘The last time interest rates were at this level, home prices, which are up 160% over that span, have risen at twice the pace of incomes, which are up only 80% over that period,’ Walden said. ‘That all works fine until interest rates push sharply higher, which means that you’re no longer able to leverage those same income dollars to the degree you were in recent years’

    That’s a real pickle Andy. And it only took 40 years to get into it. I’m sure it’ll have a happy ending.

  7. ‘Looking at the historical record, there seems to be no post-1950 precedent for a sizeable disinflation induced by the central bank in the US, Canada, Germany or the UK that does not entail substantial economic sacrifice or a recession’

    It is different this time.

  8. ‘When you go through a period when it’s super easy to raise money for any purpose or no purpose’

    That’s some sound lending Howie.

    1. ‘When you go through a period when it’s super easy to raise money for any purpose or no purpose’

      \\

      John Hammond: I don’t think you’re giving us our due credit. Our scientists have done things which nobody’s ever done before…

      Dr. Ian Malcolm: Yeah, yeah, but your scientists were so preoccupied with whether or not they could that they didn’t stop to think if they should.

      – Quotes from “Jurassic Park”, 1993

      \\

      – Maybe printing $Ts ex nihilo (out of nothing) isn’t such a good idea. History has shown that this behavior never ends well. The Mississippi Bubble comes to mind.

      \\

      “As a dog returns to its vomit,
          so fools repeat their folly.” – Proverbs 26:11

      “That men do not learn very much from the lessons of history is the most important of all the lessons that history has to teach.” – Aldous Huxley

      “What’s past is prologue.” – William Shakespeare, The Tempest

      “What has been will be again,
    what has been done will be done again;” – Ecclesiastes 1: 9

      “Those who cannot remember the past are condemned to repeat it.” – George Santayana

      “History doesn’t repeat itself, but it does rhyme.” – Mark Twain

      “The four most dangerous words in investing are: ‘this time it’s different.'” – Sir John Templeton

  9. ‘Home ownership has been seen as a pillar of our welfare system. The age pension calculations assume home ownership, and it’s supported in all sorts of ways — negative gearing, capital gains, tax discounts. So there’s all of these systems through many different types of policies that supported home ownership, because it was seen as being a welfare good,’ she said. ‘The house was always assumed to be this asset that people could draw on when they needed that wealth. But as that starts to crumble and fall apart, the things that it was propping up for individuals start to become social costs’

    Emma, give me an F, give me an O, and another O, then a K…

  12. Everyone in our household was sick yesterday, really sick, with dry cough and a splitting headache. We’re vax’d and boosted, and my daughter and wife have already been infected with one of the covid variants. This is Washingtons’ Columbia Basin area, and my son is sick too at college in Pullman, WA. Not sure what we’ve come down with, but it’s a humdinger.

    2. Nothing here in Tampa but some allergies. No shots. Son (10 years old) had a limited vax schedule when he was a little guy and came away with mild ADHD. My daughter has had no shots of any kind. She towers above the boys in her class.

      Nobody has had MRNA jabs and wife had the CV coooof several years ago and received a prescription for Ivermectin which knocked it out in 36 hours or so.

      Can you try an immune boost schedule and some of the advice to eliminate the spike from your systems? Seems the Fauchi Ouchie is detrimental to the immune system.

      1. no more experimental mRNA shots

        We’re not lab rats, why should we allow these people to treat us as such?

  13. “Homebuyers in some cities have no choice but to buy million-dollar homes as prices near all-time highs.

    Right on cue, here come the victim chronicles. These FBs could’ve sat out the lunacy in a rental, but instead they just had to get up on that housing ladder to effortless riches. Now I’m supposed to feel sorry for them as their shack valuations plummet back to earth?

  14. The percentage of homes over $1 million was 66.28% in San Jose and 52.91% in San Francisco. Los Angeles followed at 26.48%, San Diego at 23.15%, and Seattle at 18.70%.

    This is what you get when the Keynesian fraudsters at the Fed run the money printer white-hot for 15 years.

  15. From 1975 to 2000, the median home price was on average 3.6 times the median household income. Today, that figure has jumped to 5.9 times the median income – slightly lower than the six times reached last summer before prices began to correct, Walden said.”

    Nixon took the U.S. off the gold standard in 1971. It’s been all downhill ever since as the criminal private banking cartel called the Fed has been given free rein to create trillions of dollars out of thin air, stealing value from every honestly-earned dollar in existence.

  16. “Homebuyers in some cities have no choice but to buy million-dollar homes as prices near all-time highs.“

    FOMO still strong. There is another choice—wait.

    A relitter friend of mine just listed what she called a “starter house” in a modest neighborhood of Long Beach for nearly $800,000.

    The absurdity continuith.

    1. “she called a “starter house” in a modest neighborhood of Long Beach for nearly $800,000.”

      If $800,000 is a “starter house” what is the end game, a $12 million estate next to the Obamas on Martha’s Vineyard?

    2. “A relitter friend of mine just listed what she called a “starter house” in a modest neighborhood of Long Beach for nearly $800,000.”

      \\

      – So, a “starter house” used to mean a first time (shelter) buyer. They typically have modest means, because, well, they’re just getting starting in life. Someone is going to need a huge starter income to make an $800K house purchase “pencil out.” Try about $267K/yr. for “starters.” Uh huh. That’s totally normal in a world of stagnant incomes since, IDK, the 1970’s…

      – Debt-to-income (DTI) ratios used to matter. Something like 25-33% of income for mortgage, and limited other debt was (and still is) a good metric. That is another way of stating the “old fashioned” 3:1 house price to income ratio (inverted DTI).

      – Loan-to-value (LTV) used to matter. You know, 20% down (80% LTV). That used to mean “skin in the game.”

      – Now, we’ve got some serious DTI’s north of 50%, LTV’s north of 100%. I’m sure there’s no lending or appraisal fraud though to keep the game going just a little longer…

      – Of course this ponzi isn’t sustainable. There will be consequences and a day of reckoning. I think we’re pretty close now.

      – A viable solution to all of this would be a return to the gold standard and an end to central banks. Just spit ballin’ here…

      – Bedford Falls or Pottersville? Not even close in my view.

      1. Starter homes, like my mother grew up in, were 1,200 sq on a slab, no basement, one bathroom, three bedrooms, a one car garage and a 7,000 sq ft lot, at least in the suburbs. Dining room table in the kitchen, one smallish living room and three bedrooms down the hall. This concept exists only in condos, and they’re all luxury now.

  18. More Americans are forced to retire early — and are unprepared for the long haul

    https://finance.yahoo.com/news/more-americans-are-forced-to-retire-early–and-are-unprepared-for-the-long-haul-124815118.html

    According to recent surveys, many Americans are forced into retiring earlier than they imagined. To make matters worse, they don’t have an inkling of how much they need to save to live comfortably during their retirement years. Nor do they have a firm grasp on how many years they might need to finance after they leave the workforce — putting them at risk of outliving their money.

    Let’s start with that involuntary retirement.

    According to a recent Edward Jones study, 40% of its clients were forced into retirement. That’s “not entirely shocking because life is full of surprises and that doesn’t stop with retirement,” Jennifer Schoonmaker-Dasch, an Edward Jones financial adviser in Lexington, N.C., told Yahoo Finance.“I see clients being forced into retirement for a variety of reasons such as company downsizings or, most frequently, personal health issues.”

    That meshes with a survey by the Employee Benefit Research Institute (EBRI) and Greenwald Research earlier this year, which found that there is a big disparity between when active workers expect to retire and when retirees say they actually did: Workers continue to report an expected median retirement age of 65, while retirees say they retired at a median age of 62.

    Workers are even likely to say they expect to retire at ages 70 or older. One in three workers expect to retire at 70 or beyond or not at all, while only a slim fraction actually hang on that long.

    (Click on the link to read the ret of the article.)

    1. personal health issues

      Which means people either have diabetes II from eating too many seed oils and HFCS, or people are retiring much older than they used to.

      I wonder how many of them have a paid-off house? Or at least enough equity to downsize into something cheap. There are thousands of manufactured home parks in Florida alone.

  19. We will not have sound money, honest markets, or a future for our children as long as the criminal private banking cartel called the Federal Reserve controls our money issuance

    The Federal Reserve, “the Fed”, is the central bank of the United States of America that was created in 1913 by Congress. It is a banking cartel that has a government-granted monopoly on the creation of money and credit. The Fed literally loans “money” (Federal Reserve Notes) into existence. Federal Reserve Notes are paper promises backed by nothing of intrinsic value and they are only functioning as money because the government forces them on the public through legal tender laws. Federal Reserve Notes are referred to as dollars but are not. The definition of a dollar is a weight of silver (371 grains). To put it simply, the Fed is a group of banks running a national criminal counterfeiting racket with the protection of the government.

    http://endthefed.org

    1. And this is why it doesn’t matter who you elect or from what what side of the aisle. Just the same story with a different wrapper. Can you really blame folks who choose not to vote?

  20. “From 1975 to 2000, the median home price was on average 3.6 times the median household income. Today, that figure has jumped to 5.9 times the median income…”

    Therefore, there is substantially LESS MONEY for EVERYTHING ELSE. Which means less income for nearly every other business and employee of that business. Which leads to recession.

    1. The chances of a U.S. recession are rising, says former Goldman Sachs strategist Abby Joseph Cohen
      Last Updated: Sept. 8, 2023 at 4:10 p.m. ET
      First Published: Sept. 8, 2023 at 11:59 a.m. ET
      By Isabel Wang
      comments
      The consequences of a government shutdown are very hard to quantify, says Abby Joseph Cohen
      Getty Images
      “While I don’t think recession is now the most likely scenario, I think the probability of recession has been rising in recent months”
      — Abby Joseph Cohen, former Goldman Sachs partner and Columbia Business School professor

      Those are the words of Abby Joseph Cohen, former chief U.S. strategist at Goldman Sachs, who discussed her forecasts for the U.S. economy over the next 12 to 18 months with CNBC’s “Squawk Box” on Friday morning.

      While a recession may no longer be the base case for many investors and analysts, the likelihood of an economic downturn have actually been rising in recent months, Cohen said in a CNBC interview.

      Cohen compared current economic conditions with 18 months ago when everyone was concerned about what would happen as the Federal Reserve started its campaign of raising interest rates to curb inflation, even as the economy held up well due to a strong consumer sector supported by savings from the government’s stimulus payments and the suspension of student loan repayments during the pandemic while the labor market remained healthy.

      “But where are we now? The tailwinds quite frankly, have gotten weaker,” she said. “That doesn’t mean that we’re heading into a recession anytime soon, but I think we are in a situation where things are not quite as easy as they might have been 18 months ago.”

      Cohen also thinks it will be “more difficult” to forecast the U.S. economy over the next 12 to 18 months as political issues during an election year may weigh on the outlook.

      For example, if the Sept. 30 deadline for the Congress to pass a new federal budget deal is not met there is a chance of a government shutdown.

      “Even though the Republicans in the Senate and the Republican leadership in the House are saying they’d like to come to terms and have a budget deal by the end of this month, there are a few Republicans in the House who say they’d like to create a little bit of friction,” Cohen said. “If we don’t have a budget deal and the government shuts down, there are all kinds of consequences that are very hard to quantify.”

      Cohen pointed to problems associated with social security payments and how the rest of the world would view U.S. Congress which could be “somewhat dysfunctional again” after the debt-ceiling standoff earlier this year. “It could be pressure for dollar, it could be pressure on the Treasury, for reasons not having to do with the economy,” she added.

      Funding for the federal government is set to run out by the end of September unless action is taken by Congress. With less than a month to go until the deadline, the White House last week called on Congress to pass a short-term “continuing resolution” to keep the government funded past Sept. 30, avoiding the fourth shutdown in a decade.

      The last government shutdown occurred under former President Donald Trump from Dec. 2018 to Jan. 2019.
      …
      https://www.marketwatch.com/story/the-chances-of-a-u-s-recession-are-rising-says-former-goldman-sachs-strategist-abby-joseph-cohen-1ec9a3cc

  25. The average life span in 1930 was 58 years for men and 62 years for women, but the average included infant mortality, you people would live longer than those averages. But, this is the decade that Social Security was enacted. So it doesnt like like they expected people to collect for very long, or at all.
    Fast forward to 2011 and it went to about 79 years for males and about 82 for women, but has gone down since then.
    Another chart I saw basically showed that the richer class lived on average 14.50 years longer than the poorer classes.
    So, richer class gets Social Security and Medicare longer than other classes by many years.
    So, it looks like they never intended for regular people to be on Social Security for very long, but the rich would benefit by 14.5 years longer average life spans.
    France just raised their retirement age by a couple years, and riots broke out.
    Maybe Social Security should be means tested based on retirement income, but that would probably effect the richer classes, so probably why they haven’t done it. Also ,the fact that they capped off Social Security tax at around 117 thousand, was another benefit to the richer income class.
    Tax write offs for the rich, another example of Government enriching the rich. .
    The 16 th amendment was enacted as a Rich persons tax, they said at the time, but Federal Income tax ended up being favorable to Rich people and hit the middle class the most, for most the years.
    Just saying Government for the 1%.

    1. FWIW, if you are truly rich even the maximum SS benefit is a pittance. I kind of doubt that mega millionaires and billionaires are going to make an appointment at the Social Security office and rub elbows with the hoi polloi to collect a few thousand a month.

      The real problem for them is paying it to the rest of us. Which is probably why they seem utterly unconcerned that life expectancy is dropping. They seem especially unconcerned about the fatpocalypse. In fact, I strongly suspect they want life expectancy to drop and continue dropping.

      1. make an appointment at the Social Security office

        Just for your future reference, that visit isn’t required anymore.

        I also think that the wealthy would have an accountant, who would not turn up their nose at a half million $ annuity.

        1. I suppose that the rich didn’t get rich by leaving money on the table. Though I doubt Bill Gates is all that worried about his $3500 month benefit, though as you mentioned, he probably has someone take care of that for him.

    2. The truly rich, wealthy and very well off Americans pay most of the taxes:
      In 2020, taxpayers filed 157.5 million tax returns, reported earning nearly $12.5 trillion in adjusted gross income (AGI), and paid $1.7 trillion in individual income taxes.
      The average income tax rate in 2020 was 13.6 percent. The top 1 percent of taxpayers paid a 25.99 percent average rate, more than eight times higher than the 3.1 percent average rate paid by the bottom half of taxpayers.
      The top 1 percent’s income share rose from 20.1 percent in 2019 to 22.2 percent in 2020 and its share of federal income taxes paid rose from 38.8 percent to 42.3 percent.
      The top 50 percent of all taxpayers paid 97.7 percent of all federal individual income taxes, while the bottom 50 percent paid the remaining 2.3 percent.
      The 2020 figures include pandemic-related tax items such as the non-refundable part of the first two rounds of Recovery Rebates and the $10,200 unemployment compensation exclusion.

      One big problem in this country is that there are a lot of folks that don’t pay any income tax (or property) and they outnumber the better off by many, many times. So come election time, the not so rich have the advantage (Bill Gates gets ONE Vote, Joe Blow on welfare gets ONE Vote) since they far outnumber the people with money.

      BTW, you do realize that a lot of people who are in the upper percentiles of wealth and income are ordinary people who worked hard to get to where they are today. If Bill Gates dropped tomorrow, nobody would notice since he really doesn’t do anything or have a job. If the cardiologist or neurosurgeon on call at your local hospital drops dead on his way to save your life, well someone will notice that (but not you, because you’ll be dead).

      Do you have any idea how much neurosurgeons and cardiologists get paid? Or what about the small business owner who worked like crazy to build their business? America is a great country because people are rewarded for being successful. This is not true in much of the world.

      The obscene wealth we see today (NWO members) is mostly phony. Facebook, Google, Apple and Microsoft are not that essential for running our nation and economy. Compared to the robber barons of the 20th Century, or companies like GM, GE, Ford, North American, Boeing, Douglas Aircraft, IBM, US Steel, AT&T and so forth, the wealth of Gates and Zuckerberg are just an illusion.

      What we have today is a world economy that is built on borrowed wealth and speculation–how this party is going to end might not be very pretty.

  26. Governor Newsome just said he’s not going to run for President in 2024, and VP Harris is natural successor to Biden.
    So you would have to have a rigged election at this point for either Biden or Harris to win, IMHO.
    So, if Biden is taken out, who would be the VP to Harris? Would it be Newsome or Mrs Obama.
    Kampala Harris was a byproduct of a rigged election , and she is a puppet of the One World Order, as Biden is.
    Seriously, Harris could not win a National Election , unless it was rigged.

      1. We don’t seem to hear much about him anymore. I’m sure he shows up and votes as he is told. And if another stroke takes him to the grave his Brazilian wife can be appointed by the governor to take his place.

        1. I think they don’t need a functioning person for the role, in that they govern by committee from behind the curtain.

    2. Governor Newsome just said he’s not going to run for President in 2024

      There is plenty of time for him to change his mind. Though such a statement seems to say that the plan is to renominate Joetato, despite his low approval numbers and advanced age.

      As some pundits are pointing out, our leadership, in both parties, is older that the Soviet Politburo was when the USSR collapsed. Pelosi is running for re-election and Feinstein looks like the Crypt Keeper.

        1. I’d bet 80% of the country has never heard of this clown. But he’s got a great record to run on. California is the sick man of the US. Plus all the poo, needles, mass shoplifting, cratering real estate and people are leaving by the millions. Not ready for prime time by a lot.

          You know, for many years polls said, lot’s of people want to leave this sh$thole. Oh silly, bay aryans will ALWAYS be prime. How does that look now? Good luck with those 500k Modesto shacks.

          2. I’d bet 80% of the country has never heard of this clown.

            The MSM will be sure to not mention his failures and do everything possible to make him look good. The reparations nonsense will be sent to the memory hole.

        2. I have to wonder if DeSantis is doing the same thing — laying low while he goes all Elon Musk (I know, I know) on his campaign staff. I don’t think Ron’s given up yet.

      2. The problem isn’t the advanced age, it’s the advanced mental deterioration. Trump is only two(?) years younger and he’s sharp as a tack. I don’t think it matters. People are only voting for R or D now, knowing that even if one of them keels over, the state governor will simply slot in a new R or D.

  27. AAR: Rail Volumes Fall for Third Straight Month in August

    https://www.railwayage.com/freight/class-i/aar-rail-volumes-fall-for-third-straight-month-in-august/

    “August was the third straight month in which total year-over-year U.S. rail carloads have fallen,” Association of American Railroads (AAR) Senior Vice President John T. Gray reported on Sept. 6. Total combined U.S. traffic for the first 35 weeks of 2023 was 16,173,208 carloads and intermodal units, a decrease of 4.9% compared to last year.

    Gray said that a major reason why is that “other than automotive manufacturing, the industrial economy, in recent months, has not been doing as well as other areas of the economy. Until industrial activity, and especially manufacturing recovers, rail volumes in many key markets could remain constrained.”

    (To get into the weeds of the article access the link.)

  28. LAY DOWN Melanie & The Edwin Hawkins Singers LIVE ’70 (Candles In The Rain)
    Melanie – Official Page of Melanie Safka
    Oct 28, 2015
    Special thanks to Harley White, Sr. who played an amazing bass, and to Edwin (piano) and the Singers. The single hit #1 on the Dutch charts soon after this. Willem Duys, the host, was the Ed Sullivan of The Netherlands.

    https://www.youtube.com/watch?v=IZ52lk9wjZI

    7:24.

    2. I’m sure London Breed and her cronies are stealing everything that isn’t bolted down. The brown envelopes must be everywhere.

  30. The demolition has resumed.

    Cool weather comes in tomorrow, and I could be working on the teardown every weekend going into November. One, possibly two, more 30 cubic yard rolloff dumpster rentals.

    On a related note, I was talking to an old school licensed master plumber last week, he gave me some great advice and I’ll probably be hiring him to do the new house.

    Denver is so f*ing over. Sitting in a lounge chair drinking a beer camping on private land owned by family, just a few miles away from the teardown house.

    Having a “base of operations” where I can camp and store tools and materials greatly influenced my decision to buy this teardown, which I shall remind our dear HBB readers, I paid less for it than I paid for my car.

    Image files for Jeff tomorrow or Monday.

    1. Who builds a house, rather than take out a virtually lifelong loan?

      Someone with energy, practicality, and an aversion to slavery.

      1. These things take time. I had one friend from Denver come help to take down the chimney with the help of two local guys.

        Other than that, it’s a solo project. On my time, my schedule, my budget.

        Why pay someone for demo when you can do most of it yourself?

    2. “Image files for Jeff tomorrow or Monday.”

      jeff looks forward to it. just out of 11 days in the hospital but I’m back in the saddle again.

      Stay safe on the demo and cograts on the ever forward moving work on the demo / rebuild.

  31. Oprah Receiving Massive Blowback Over Lahaina Fundraiser Racket

    by Jamie White
    September 9th 2023

    Oprah was joined by Dwayne “The Rock” Johnson last week to solicit donations after claiming they both contributed $10 million kickstart the People’s Fund of Maui.

    But the duo, who shared a combined net worth of $2.8 billion, were dragged online by users for forking over only 0.2% and 1.9% of their net worth for the fundraiser.

    https://www.infowars.com/posts/oprah-receiving-massive-blowback-over-lahaina-fundraiser-racket/

    CCBee
    @SeaSeaBee

    Replying to @SeaSeaBee
    Here’s an update on Oprah’s fundraiser.

    People are seeing the real Oprah. It’s not looking so good for her!

    #Lahaina #LahainaFires #Maui #MauiFires #MauiStrong

    https://twitter.com/SeaSeaBee/status/1697657495047610747?s=20

    1. Yahoo Finance
      Homebuyers are paying record high mortgage payments as affordability deteriorates
      Gabriella Cruz-Martinez
      Fri, September 8, 2023 at 12:04 PM PDT·3 min read

      The average homebuyer in July is shouldering the highest mortgage payment on record — as affordability reaches its worst point in nearly four decades.

      The average monthly principal and interest payment for borrowers buying a home using a 30-year fixed rate mortgage in July was $2,306, according to mortgage technology data provider Black Knight, the highest on records dating back to 2000. That’s also $871 more than just two years ago.

      That average payment took up 36.5% of the median household income in July, up from 24.3% in 2021 and marking the highest share on Black Knight’s record.

      The figures underscore how tough purchasing conditions have become for homebuyers, especially entry-level ones, with relief a faraway possibility as mortgage rates push higher alongside prices.

      “This got our research team to wondering, ‘just when did the $2,000-$3,000 monthly P&I payment become the norm?'” Black Knight analysts said in a release accompanying the report. “The answer, as to so many other questions, is: since the pandemic.”
      …
      https://finance.yahoo.com/news/homebuyers-are-paying-record-high-mortgage-payments-as-affordability-deteriorates-190427318.html

    2. Are you looking foraward to paying 8% interest rates on a 30-year mortgage?

      It seems surreal, but we are almost there already!

      1. 30-Year Mortgage Rates Rise to New High
        Today’s Mortgage Rates & Trends – Sept. 8, 2023
        By Sabrina Karl
        Published September 08, 2023

        After a two-week reprieve, rates on 30-year mortgages have roared back to reach a new high. Thursday saw only a small increase in the 30-year average, but a cumulative three-day surge has pushed the flagship average a few points higher than the 22-year peak recorded in August.

        The latest 30-year fixed-rate average is 7.84%. Since rates vary widely across lenders, it’s always smart to shop around for your best mortgage option and compare rates regularly, no matter what type of loan you’re in the market for.
        …
        https://www.investopedia.com/30-year-mortgage-rates-rise-to-new-high-7967123

      2. Are you looking foraward to paying 8% interest rates on a 30-year mortgage?

        No! I’ll rent and save the difference. Where I live, a nice area, mortgages after $150k down are $5,000 per month. Good jobs in general here, not a shole.

        I pay less than $3,000 for rent all-in. I save the difference. And the company covers the blown water heater, roof, and other stuff.

        1. We’ve been paying under 20% of income on rent and saving the difference for almost 20 years now.

          It’s nice to be able to avoid falling knife real estate in a housing bust…something homeowners trapped in mortgage contracts can’t do.

      3. “‘It all comes from how homebuyers – and correspondingly home prices – behave in a falling interest rate environment like the one we’ve broadly been in for the past 40 years,’ said Andy Walden, vice president of strategy at Black Knight.’
        …
        How should we expect home prices to behave in a rising interest rate environment like the one we’ve broadly been in for over the past year, especially now that rates are almost 8%?

        My guess: CR8R

  33. Financial Times
    Opinion The Long View
    Inflation can still shake markets out of their peak Goldilocks vibe
    Suddenly investors are finding it easier to rattle off reasons for caution
    Katie Martin
    Goldilocks may have had an adventure, but ‘ultimately, the winners in this tale are the bears’
    Inflation can still shake markets out of their peak Goldilocks vibe on whatsapp (opens in a new window)
    Katie Martin September 8 2023

    Over the summer, a certain familiar fairy tale kept cropping up in financial markets: Goldilocks.

    Key economic data releases were neither too hot nor too cold, but just right, like the porridge sampled in the story by the plucky young eponymous hero. Jobs and inflation figures were bright enough to suggest the US economy, in particular, was successfully withstanding the Federal Reserve’s scorching campaign of interest rate rises, and dull enough to suggest the central bank might not need to do too much more before inflation gets back in its box.

    Now, summer is over, the tans are fading, and investors have remembered that at the end of the Goldilocks story, a small child is scared out of her wits by hostile animals chasing her into the forest. Sure, the kid nicks a bit of porridge, breaks a chair and briefly exercises her squatter’s rights in a woodland cottage, but ultimately, the winners in this tale are the bears.
    …

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