COST OF WAR in IRAQ: $733 billion in AFGHANISTAN: $283 billion
Official# of Unemployed Americans: 14.6 million (9.5%)
FRANCONOMICS.COM Real Unemployment Multiplier = 1.6
Actual Full-time Unemployed= 23.36 million (15.2%)
Total # of Foreclosures (Projected Data for 2010): 4 million households
Total# of Vacant Homes (As of 2010 First Quarter): 19 million (15%)
Mortgage Delinquencies: 10.06% of All Loans Loans in Foreclosure: 4.63%
Total# of Mortgages Underwater = 15 million
To view comprehensive economic data at the bottom of this page, please CLICK HERE.
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CURRENT PODCAST (28 June 2010)
This latest FRANCONOMICS.COM podcast delves into the following:
Listen / Subscribe Using: DOWNLOAD MP3 FILE>> Older Irregular Podcasts Want to provide feedback on this podcast? Please use our CONTACT form. Thank You. THE 20 TRILLION DOLLAR VALUE DRAIN How Goldman and Other Banks Looted America and Why They Will Do it Again By Sam Mishra Browse the latest Value Drain article by Sam Mishra here Browse / Buy Strategic Case Analysis by Sam Mishra, now a prescribed text-book for a management course in a Major Accredited University, on Amazon.com 
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Goldman Subpoena (Issued by the FCIC) Chronology January 2010 to June 2010
 Cokeley was defeated in Mass, but Obama needs to be humiliated more in 2010 before he realizes that firing Geithner and Summers is the least he can do to assuage the concerns of main street. And why does he keep continuing Bush appointee Gates as the defence secretary? Are dems not good in defence (read offence)? Then why not elect republicans? Gosh! We on the main street should feel sorry for ourselves. Hank Paulson got away with $300 million in Capital gains tax-free by unloading his Goldman stock at peak, and the conservatives are now lapping up his book. We better teach our kids to fit into these corrupt labyrinths, else they may discard us for not “educating” them? And look what these think tanks like CATO are doing? Peddling “greed” and giving a Milton “Mr. Greed” Friedman award for half-a-million dollars. Also, business schools keep teaching how to fit into the “system,” not overturn it. As unemployment keeps going up, and as foreclosures keep mounting, Goldman (and other banks) are surely doing God’s work… Do you think Angelides & crew have the political and financial muscle to bring these crooks to justice? Don't you feel aweful? Why should a few crooks eat up millions while millions are foreclosed homeless, and unemployed jobless? How can the rank-and-file American take this rape lying down??? Current News boston.com - $550m settles Goldman fraud case - Penalty is largest in SEC history for a financial firm The Conference Board - Consumer Confidence Index® Drops Sharply to 52.9 (It was 62.7 in May) Reuters - Regulator orders Goldman to pay $20.5 million over Bayou Ponzi Scheme MarketWatch - JP Morgan hires Goldman investment banking veteran Washington Post - Geithner confident on recovering cost of bailout WSJ - Blankfein: Clients Stand Behind Goldman The Motley Fool - The Coming Financial Meltdown Market Watch - Crisis panel issues subpoena to Goldman Sachs - - - Goldman seeks to 'run out the clock' by offering voluminous documents: panel |
THE FOURTEEN TRILLION DOLLAR VALUE DRAIN™
(This Value Drain Article# 2 was first published here in August 2009)INTRODUCTION
In
our first
of a series of articles on the Value Drain by the banks, I had
challenged fellow MIT alum Ben Bernanke, the current Federal Reserve
Chairman, as to whether he had used the considerable number of Economics
Ph.Ds he commanded as a resource base to sum up a simple geometric
progression of financial derivatives. Well, looks like Dr. Bernanke has
done his math by now. And has come up with a number. As we commented in
our weekly economic update podcast for the business week ending April
17, 2009, it is really a huge number. So, how big is it --- well, it
could be as big as the American GDP, which stood at $14 trillion at last
count. And if you never listen to any of our podcasts, you might be
wondering: how could that be, because it was only a $700 billion
bailout, followed by another $747 billion which the Congress passed
under President Obama. Simply put, the Federal Reserve is working
simultaneously to bloat up its balance sheet with a lot of the toxic
waste that has been sugar-coated as "legacy assets" by the economic
brain trust of Obama.
Here, let us put the capacity of
the Federal Reserve in a VALUE DRAIN™ equation format:
Equation
1: Federal Reserve Bailout = Geometric Sum of All Toxic Assets and
Derivatives Thereof (GSTADT) – Treasury Bailout Capacity
In other words,
Equation
1: GSTADT = Federal Reserve Bailout + Treasury Bailout
SECTION
I - $9 TRILLION BAILOUT COMPONENT OF THE $14 TRILLION DOLLAR VALUE
DRAIN™
A. The multi-trillion dollar complex rescue package by Dr. Bernanke and the Federal Reserve:
BUY UP TOXIC ASSETS
1. $1.8 trillion to buy commercial paper
2. $540 billion
to buy mone market funds short of cash
3. one trillion dollars in
TALF-term asset backed securities loan facility
4. $1.45 trillion in
housing related purchases from Freddie and Fannnie
Total: $4.8
trillion in Federal Reserve’s plan to buy up toxic assets
PROVIDE NEW LENDING
1. $620 billion in
expansion of SWAP lines
2. $900 billion in Term
Auction Facility (TALF)
TOTAL: $1.9
in New Loans
FEDRERAL RESERVE BAILOUT GRAND TOTAL = $4.8
trillion + $1.9 trillion = $6.7 trillion Value Drain
B. Able Support from the Treasury:
1. $700 billion
bailout architected by Henry Paulson, the treasury secretary under
President Bush
2. $300 billion from the $787 billion
stimulus (let's assume the rest flows back into the economy as extended
unemployment benefits, one time retirement benefit checks, mortgage /
housing prop-up schemes, mortgage refinance incentives because of
lowered interest rates by the Federal Reserve, etc.)
3. $ 1 trillion
lost through the pPiP (public private investment plan) plan --- if they
have their way (in light of the SIGTARP's 250 page report made public
on Apreil 22nd 2009, the banks may drain more than $1 trillion, in which
case we will update this amount to what is actually looted.
TREASURY BAILOUT GRAND TOTAL: $700 billion + $300 billion + $1 trillion through pPiP = $2 trillion Value Drain
Let's
combine A and B above and call it the Announced Fed Bailout
So, Announced
Fed Bailout = $6.7 trillion + $2 trillion = $8.7 trillion of Value Drain
This is displayed by our up to date Value Drain
Framework applied to the current public looting in the name of Free
Markets, Meritocracy (AKA greed of Wall-Street executives):
If you
look at the above picture, you can see that we have plugged in the
entire value drain of $700 billion Paulson bailout as one of the
components of the Value Drain Framework. The above value drain analysis
provides a clear picture of where things are today. Also, if you compare
it to our previous article, you can see that is this whole financial
scam is the biggest money drain in the history of American Capitalism.
SECTION II - ROOT CAUSE OF THE MELTDOWN - FRIEDMAN? FREE MARKETS? FEAR?
We
podcasted a few weeks ago (April 3rd weekly podcast) the mind-set of
Dr. Lawrence Summers, the head of the Obama Economic Brain Trust, and a
died-in-the-wool Friedmanite (he has said so on record). Now, Milton
Friedman, while having utility in terms of bringing in Glasnost and
Perestroika in the erstwhile Soviet Union, corrupted the entrepreneurial
mindset of Business America.
We have podcasted Dr. Krugman's critique of Friedman in the same April 17 update: "In the aftermath of the Great Depression, there were many people saying that markets can never work. Friedman had the intellectual courage to say that markets can too work, and his showman's flair combined with his ability to marshal evidence made him the best spokesman for the virtues of free markets since Adam Smith. But he slipped all too easily into claiming both that markets always work and that only markets work. It's extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose.”
However, we have to take criticisms of great economists, including Nobel Laureate Krugman, with a grain of salt. Are the Krugmans of the world really desirous of helping the man on the street, or are they there to hog some limelight, for this financial crisis has propelled a lot of them to stardom: Roubini, Krugman, even Professor Johnson. Critiquing these great economists is beyond the scope of the current article, but Dr. Krugman really doesn't critique Dr. Larry Summers, one of the architects of the Gramm-Leachy-Bliley act. We have thrown light on this deregulation of the Glass-Steagall-Act in a prior weekly podcast, under the supervision of Dr. Summers, the then treasury secretary under Bill Clinton. It seems fear and greed rule the economists too. On the one hand, they are greedy for being the Pundit who should be listened to; on the other they are afraid of stepping on the toes of powerful plutocrats lest the powerful turn too much against them. In other words, unless Dr. Krugman is vocal in his criticism of Larry Summers, people will treat his sermons in the Conscious of a Liberal as mere economic sermons, with intellectual data-processing behind the blogs, sans courage.So, let's call a spade a spade, or tell it like it is. if you look under the hood, what Milton "Mr. Greed" Friedman peddled was pure greed. He has claimed on record that there wasn't a better component of human character which could motivate men to higher entrepreneurial, material, and social success than greed. And the proof is in the pudding. Dr. Summers, before taking his current job, was earning $5.2 million a year, for working one day a week in a hedge fund called D.E. Shaw. Even Madelin Albright started a hedge fund after she was done with the Secretary of State role under Bill Clinton. Chelsea Clinton works for a hedge fund.
Where one's success or achievement is measured only by money, no doubt greed can be a great motivator. However, by that argument, you can get extended to believe that the more you have, the greedier you must be. So by that extended token, Bill Gates and Warren Buffet must be the two greediest persons in America. But wait a minute --- if that is so, how come each one has given almost 50% of their net worth to the Bill and Melinda Gates Foundation? So, if charity is an offshoot of greed, where are the Larry Elisons of the world? They are greedy, they have wealth, but are they charitable?
This whole corporate culture of greed being synonymous with talent is causing havoc in the lives of hard-working Americans. As Goldman Sachs executives prepare for a
nice bonus payment again in 2009, their ex-employees who didn't have the political savvy to latch on to the redundant jobs are on the street. May be it is some kind of crooked justice, considering that those whose houses are being foreclosed are on the streets too. But what we on main street really want to know from the Senators and the Congressmen is this: "When will people like Lloyd Finklestein be really grilled for mis-managing their business to the point of bankruptcy, firing their own people, and pocketing nice bonus simultaneously." Again, we are not attacking a person here, but a system which has brought havoc, panic, great sorrow, failed marraiges, failed families, great psychological depression, massive unemployment, and of course, fear. Business schools are still peddling it, corporations live by it, by this stupid human talent called greed. Which is nothing but the other side of fear.
Why is "too much" greed not good? Because greed gives way to fear, and when fear strikes, people pull money out of everything: stock markets, US treasury bonds. They deposit it in bank accounts (including Swiss banks), and also take recourse to investing in safe bets like gold. The double whammy here is that in addition to mortgages deflating, the stock market is still deflated by 42% from its peak. Let's analyze the markets a little, using scientific intuition, from which a lot of technical analysis has sprouted as a science in itself.
Section III -
IN SEARCH OF THE NEW MARKET EQUILIBRIUM USING THE LAW OF TECHNICAL
REBOUNDS
In our podcast for the business week ending on May 1st 2009, we introduced the concept of market rebounds to get to some additional trillions added to the VALUE DRAIN™. We will analyze it more thoroughly in our third VALUE DRAIN™ article. But let's briefly explore it here.
When you bounce a ball from the height of 6 feet, and drop it normally without applying force, it rebounds back 50% to 3 feet. The law of gravity pulls the ball down, but the physical resistance of the floor intervenes, absorbs some of the impact; and obeying the law of conservation of energy, deflects the ball back up. When the ball is back up 3 feet the first time, we can say that it is momentarily in equilibrium after the bounce.
Similarly, from its all time highs (when Dow Jones went up to 14279) of 23 trillion dollars in market capitalization, the markets deflated to a low of 11 trillion dollars in market cap about seven weeks ago at the time of this writing. Now they are back up a little bit, but we are still losing 42% from the highs. 42% of 23 trillion dollars is roughly 10 trillion dollars. Suppose we gain back 50% of that, or 5 trillion dollars, and call that point to be the momentary equilibrium where everything is restored and we can start on a new footing (hopefully with less greed), we can assume that the other 5 trillion dollars got drained by Wall-Street traders.
We are at a point where the second Value Drain(tm) equation can be introduced:
Equation II: Total VALUE DRAIN™ = GSTADT + Market Deflation
Now, let's plug in the numbers - - -
GSTADT = $8.7 trillion
Market Deflation = $5 trillion
Total VALUE DRAIN™ = $8.7 trillion + $5 trillion = $13.7 trillion
$13.7 trillion is equivalent to one years's US GDP. This is where we shall stand as an economy, when the markets rebound another 20% from where we are. That will take time,
as will full implementations of programs like pPiP, TALF, Fed's buying up of all the toxic assets from the likes of Fannie and Freddie, etc. We have documented the VALUE DRAIN™ more fully in this article for the educational purposes of all Americans. It is for you to decide if we live in a equitable society, where Wall-Street looted one year's worth of U.S. GDP (Gross Domestic Product), or roughly in the name of greed, deregulated markets, capitalism, and meritocratic democracy. Wall Street bankers (and traders) are looting this from Main Street: foreclosed homes, closed down factories, bankrupt automotive manufacturing companies, unemployed / underemployed citizens, and the rest of us (hardworking people), even as you read this article. If 5 billion dollars are looted every day, it will take 2740 days to get to $14 trillion. 2740 days is a long period in human time: 7.5 years.
<< June 21 Update: We are now projecting that the total value drain is much more than the US G.D.P. If you add the 6 trillion dollars lost in home value to the 13.7 trillion dollars, you arrive at the figure of almost 20 trillion dollars looted by the toxy-morons. We will delve deeper into this, for the housing crisis actually brought this financial meltdown, in the third in our Value Drain series of articles. >>
CONCLUSION OF VALUE
DRAIN™-II
This looting, which we have
calculated to be equivalent to $14 trillion in
DRAINED VALUE, has been going on since the liar
loan (sub-prime mortgage with zero down) days, and even before that,
when the Gramm-Lichey-Bliley act deregulated the financial institutions
completely. Wall-Street insiders have handsomely benefited from this
Value Drain by paying themselves big bonus amounts even as their
mis-managed derivatives related businesses were going bankrupt, and were
saved by the Fed and the US Treasury TARP. In addition to the John
Thains and the Finklesteins of the world, some powerful names of people
who have enjoyed form the Valye Drain include Henry Paulson got $400
million from is Goldman Sachs stock, Alan Greenspan who got $8 million
from his book royalties, Larry Summers who pocketed $7 million plus from
his one day a week job for $5.2 million yearly compensation plus
speaking engagements, etc. In particular, Goldman and Bank of America (which bought Merril Lynch) bankers paid themselves multi-million bonus packages in 2005, 2006, 2007, 2008, and will pay themselves fat bonus this year (2009) and also in 2010. What can you do today to stop this robbery, which we have politely introduced as the $14 trillion Value Drain? We estimate that 5 years are gone, but 2.5 years still remain. Will you rise up, and vote the law-makers, whose campaign finances are funded by Wall Street financiers, out? Will you write to your senator / congressman about this looting, so that they are forced to change the laws? Tougher sanctions are necessary against bankers; mere slaps on the wrists by the congressmen (since they depend on rich bankers and their banks for campaign finance) and senators will not suffice; changes in law are necessary. Every time robbers clothed as bankers are invited to the White House for lunch, will you follow through complain loudly to your neighbor, your congressman, your senator, your church minister? Or will you put the load on your progeny, for you are too weak?
June 21 Update: We are now projecting that the total value drain is much more than the US G.D.P. If you add the 6 trillion dollars lost in home value to the 14 trillion dollars, you arrive at the figure of 20 trillion dollars looted by the toxy-morons. We will delve deeper into this, for the housing crisis actually brought this financial meltdown, in the third of our Value Drain series of articles.
PAUSE A MINUTE AND TAKE THIS POLL:
THE CURRENT LOOTING OF THE AMERICANS TO THE TUNE OF 20 TRILLION DOLLARS, WHICH WE CALL THE 20 TRILLION DOLLAR VALUE DRAIN, HAD ITS GENESIS IN THE $700 BILLION (OR THE $785 BILLION) DOLLAR BAILOUT PROPOSED BY THE BUSH ADMINISTRATION, AND PASSED BY THE CONGRESS. TAKE THE POLL BELOW AND LET US KNOW WHAT YOU THINK?
(9/22/2008) Coughing up the cash for the 700 billion dollar VALUE DRAIN of troubled financial institutions
A Value Drain™ analysis by Sam Mishra on the eve od the $700 billion TARP bailout
What do you get when you are Martha Stewart, the American Icon, and
indulge in insider trading? You go to jail.
What do you get when you pocket multi-million dollar bonus packages for
skillfully selling bonds and other fixed assets based on thousands of
mortgages pooled together (these are called mortgage
backed securities) and then these bonds / securities under-perform
in their promised yields? If you are a Bear Stearns, you get a Fed
bailout to the tune of $30 billion.
What do you get when you insured that these mortgage backed securities
will be able to deliver their intended returns and then they don't and
you can't pay for the damages in spite of insuring them? You get a
Fed bailout of $85 billion, if you are AIG. And
what if you originated some of these mortgages and / or guaranteed that
the mortgage premiums would keep coming or else you will make up for
it? You go belly up, for you are either Fannie Mae or Freddie Mac,
and are ultimately rescued by the US Government.
You also give violent jolts to the stock markets world-wide, and
$10,000 or more per household in additional taxes to fund the $700
billion dollar US bailout plan that Bush and Paulson are now
negotiating with the Congress. This is bad.
When I heard fellow MIT alum Ben Bernanke chuckle while participating in the Senate hearing in the aftermath of the Bear Stearns bailout back in March of this year, I thought the esteemed Fed Chairman was on top of his game --- he knew how to avoid a world-wide financial meltdown. I thought being the Fed Chairman, he controlled enough resources to do a decent math job in terms of summing up of all outstanding mortgages, and derivatives thereof, and even though some fat cats in Bear Stearns were getting a helping hand, Americans and the world will be better off. Boy was I wrong! Ever since, the markets have been more and more volatile, a host of other loan originators like Countrywide and IndyMac and investment banks like Lehman / Merrill have gone either bankrupt or been sold to the next available purchaser; and the government is all set to drain another $10,000 in taxes from each American household to bail out big financial institutions run by CEOs with multi-million dollar pay packages and hundreds of thousands of dollar in pocketed cash bonus. This is terrible.
Let me explain how close to $800 billion ($700 billion in future bailouts plus $85 billion paid to AIG to own 80% of the company by the US government) will be drained out, by using a VALUE DRAIN™ framework. Now, there is no reason to panic. It is similar to the VALUE CHAIN framework we strategists are familiar with. In a Value Chain, each segment of the chain adds some value, so that the customer enjoys a margin. In other words, Value Chain Margin = Value Delivered to Customers - Value Created by the Business.
Similarly, what you see above is how the various stakeholders: flippers, real estate agents / loan consultants, mortgage loan originators, investment banks who sold mortgage-backed-securities, and the FED are all set to drain the $800 billion dollars out of American taxpayers. Here, Dollars Drained = $800 Billion U.S. Bailout = Financial value perceived by Americans from all the home related transactions and derivatives thereof (mortgage backed securities, bonds, stocks, options) - Financial value actually delivered to the Americans by the various stakeholders. This is outrageous! But where did the eight hundred billion dollars being sought for by the Government really vanish? Let me think really hard here --- Well I don't have to. All the Investment Bankers who pocketed hudred thousand dollar cash bonus each last December are expecting a bonus this year too. We still have enough executives in Wall Street (and also Main Street) gobbling up multi-million dollar compensation packages and turning them into beach houses, and they are not done yet. And some Americans did enjoy nice capital gains flipping houses during the housing bubble. Also, I still remember how selling mortgage loans by being employed as a loan consultant was still a lucrative career. And in these declining real-estate markets nation-wide, there are real-estate agents still touting that buying a home is a good idea --- the agents in just one county here in the SFO Bay Area as a group were earning a billion dollars in combined commissions not so long back.
Now I have the following words of persuasion for the various stakeholders:
1. Congress: Don't tax the poor Americans who never lived in a home; or for that matter, those renters who have been frugal and / or prescient about the housing bubble. What have these poor souls done for them to foot the bills of champagne drinking, caviar eating investment bankers from Lehman, Merrill Lynch, and Bear Stearns? Don't socialize the losses, please. Tax the flippers and those households who have gained from the bubble --- you have the data on this, don't you? If you don't, use a service like Zillow.com.
2. Americans: Don't take this lying down. It is our government, after all. Millions of us are suffering from foreclosure related woes, and millions more are on the verge of being foreclosed. The package must help out those who got duped by sub-prime mortgages with teaser rates, and not investment bankers with million dollar salaries and hundred thousand dollar cash bonus packages who pooled our mortgages into mortgage-backed securities, and hacked them into pieces to be sold off in the bond market for an annuity / perpetuity. While the going was good, these smart-alecs pocketed hundreds of thousands of dollars in cash bonuses; and now that the chickens have come home to roost, all of them have suddenly become pan-handlers. Refuse to pay them; let them foot the bills.
3. Congress: Enact laws so that the financial criminals who orchestrated these massive micro and macro-level bankruptcies while filling their own coffers with gold / fat bonus packages / multi-million dollar salaries are punished, and not allowed to roam free to orchestrate the next financial scam. Don't let these criminals run away with millions in their pockets, while the gullible American loses his home, and his job. Put some of these criminals in jail, so the others take deep breaths before committing these financial crimes.
4. Americans: Press your congressman and your senator to bring the financial criminals to justice. Demand that those who made the big bucks pay for bulk of the bail-out and not you. $785 billion in bailouts is fine. But, the lion's share should be borne by the rich CEOs / ex-CEOs of these failed financial institutions and the cash-guzzling investment bankers who profited from the VALUE DRAIN. Executives of financial institutions still dealing with mortgages and mortgage-backed assets should also be taxed heavily, for they are the ones indirectly responsible for this VALUE DRAIN™ . The more these fat-cats pay up, the less remains to be paid by the rest of us.
5. Executives of Financial Institutions (and public companies with million dollar executive pay packages) still standing: Good luck with your hundreds of thousands of dollars in cash bonus this year; and good-luck with your multi-million dollar executive compensation packages; and good luck with your multi-million dollar severance packages, if you were to lose your jobs.
Update I on 2/6/2009: As per the table maintained by NY Times, the top 3 TARP (troubled asset relief program) recipients are Citigroup, the troubled financial giant; Bank of America which gobbled up Merrill Lynch of the John Thain fame; and AIG, the troubled insurance giant. If you check our current news regularly, you will realize that most of these financial institutions are firing their politically unsavvy / powerless / lowly employees while paying huge bonuses to their executives (total Wall-Street bonus has been to the tune of $18 billion plus by some estimates), and begging for more and more taxpayer funded bailout money. And the gullible American thinks that it is in the best interest of the nation and the world!
Update II on 2/26/2009: To listen to the associated fifteen-minute long podcast released on 2/26/2009 exploding this Value Drain further, please click here. Thank you.
We called out the Real-Estate Scam as early as 2007, please feel free to browse ...
(8/14/2008) If you want to minimize your losses in the declining real-estate markets, putting in 20% down gives in a better deal than putting in only 10% down.
Using 6th grade math, the author convincingly proves that putting in 20% down while buying real-estate in today's declining markets is good insurance against massive losses down the line, should the buyer have to sell for a loss. Read more …
(9/18/2007) Going for fixed rate mortgages, with 20% down, is the financially savvy way to buy your dream home in the aftermath of current sub-prime carnages and rising foreclosures / short-sales.
With subprime mortgage meltdowns rocking the Feds to lower interest rates today by a whopping fifty basis points, whether to buy, sell, or hold is on the mind on every real-estate investor / speculator. . . When flipping was in vogue, taking adjustable rate mortgages with teaser rates made immense practical sense. You wanted to buy low, flip high, and leverage extremely by going for low teaser rates for the first couple of years, assuming you could successfully flip within that time-frame. But, is taking adjustable rate mortgages for a house you want to own over the long haul a good financial idea? Read more …
(4/12/2007) Home sales plummet 21% in Santa Clara County, real-estate agents lose quarter of a billion dollars in commissions this past year; How, When, and Where you should buy that SFO Bay Area dream home this spring-selling season . . .
... Or you should wait a while before you buy a home quickly in the SFO Bay Area this spring-selling season, may be? One in five real estate agents lost business because of plumetting sales in Santa Clara county. ... In other words, $ 240,690,933.88 / $50,000 = 4813 real-estate agents went out of business in the last 12 months in Santa Clara County. If we assume that the agents who went out of business were earning 6 figure of $100,000, then also we come up with a number of 4813 divided by 2 or at least 2400 agents who are hurting because they did not earn any commissions last year! Read more …
(3/15/2007) California foreclosures are up 300% ... Is the SFO Bay Area housing-market primed / sub-primed for a meltdown?
California foreclosures are up 300% year over year for January 2007. Recently, RealtyTrack data showed that with 142, 429 foreclosures in 2006, California suffered a year over year increase of 131% compared to the number of foreclosures in 2005... Read more …
(3/7/2007) Demand for housing to fall 40% this spring-selling season, should you be worried?
The Wall-Street Journal Online reported today that 16% of all mortgages issued last year belong to the Alt-A category. Alt-A category falls in the gray area between prime and sub-prime mortgages. Considering that sub-prime mortgages contributed to 24% of all mortgages last year, the total of Alt-A and sub-prime mortgages added up to 14% + 24% = 40% of all mortgages issued last year. Read more …
(2/8/2007) Here comes the Spring-Selling Season… Should you buy that dream first home in 2007?
People don't like to move in winter. But spring is a different matter. Change is in the air. People change apartments, and the more fortunate amongst us buy our first dream home. Should you buy that home this spring? Or should you wait? Read more …
(2/5/2007) Number of vacant U.S. homes for sale reach four decade highs
In the final quarter of 2006, about 2.1 million vacant U.S. homes went on sale, as per the census bureau. The census bureau has tracked the number of vacant U.S. homes for the last four decades, and U.S. home owner vacancy rates have never been higher: the rate currently stands at about 2.7% (+- 0.1%) , as per the bureau. Read more ...
Economic Data in Detail
COST OF WAR in IRAQ: $733 billion
in AFGHANISTAN: $283 billion
Official# of Unemployed Americans: 14.6 million (9.5%)
FRANCONOMICS.COM Real Unemployment Multiplier = 1.6
Actual Full-time Unemployed= 23.36 million (15.2%)
Total # of Foreclosures (Projected Data for 2010): 4 million households
Total# of Vacant Homes (As of 2010 First Quarter): 19 million (15%)
Mortgage Delinquencies: 10.06% of All Loans Loans in Foreclosure: 4.63%
Total# of Mortgages Underwater = 15 million
Consumer Price Index (CPI - U) = 218.178 (Up 2.0% over the last 12 months)
So, what is going on in Real Estate?
COST OF WAR in IRAQ: $733 billion in AFGHANISTAN: $283 billion
Official# of Unemployed Americans: 14.6 million (9.5%)
FRANCONOMICS.COM Real Unemployment Multiplier = 1.6
Actual Full-time Unemployed= 23.36 million (15.2%)
Total # of Foreclosures (Projected Data for 2010): 4 million households
Total# of Vacant Homes (As of 2010 First Quarter): 19 million (15%)
Mortgage Delinquencies: 10.06% of All Loans Loans in Foreclosure: 4.63%
Total# of Mortgages Underwater = 15 million
Consumer Price Index (CPI - U) = 218.178 (Up 2.0% over the last 12 months)
So, what is going on in Real Estate?
Apart from Americans bulldozing their houses in desperation to avoid foreclosures, a key barometer (Mortgage Interest Rate) needs to be taken a closer look into. Mortgage Rates have been falling in general for the last 3 years...
How much more can these Mortgage Rates fall? How are they tied to the Fed Funds rate, which is sitting close to zero percent? What would happen to Home Prices once these Mortgage Rates start climbing? Click here for more details.
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