But when I finally got around to reading the New York Times Sunday, later than usual thanks to a hurricane-powered cable-modem outage, I saw that the headlines are entirely dominated by speculation over just how bad today's, Monday's, stock market drop is going to be, on the news that one of Wall Street's oldest and most famously stable investment banks is being bought at pennies on the dollar, and another is going into bankruptcy, a near total wipe-out of both investment banks' stocks. And, just as importantly, the markets are going to be reacting to the fact that the government did nothing to stop it, which tells them that all the other technically insolvent financial services firms are (as some were predicting) on their own, shouldn't be waiting for a bail-out. And this makes a good time for me to offer you some numbers, I've been collecting, that may help you with your own personal financial planning:
12/31/2009: That's the date when you can assume that the economy will stop getting worse. Why? According to an article I saw (and lost, sorry) about a month ago, by the end of 2009, 97% of all of the teaser-rate mortgages will have reset. Only a tiny handful will be remaining to trickle in over the first couple of months of 2010. Among the implications of this, that's the date on which the glut of foreclosed houses being dumped onto the market all at once will peak. It will be months or years before there are enough buyers to work their way through that huge backlog of sales, but at the very least, it will have stopped getting worse.
The other major implication of this is that any financial institution left alive by the end of 2009 will probably survive. If you want to be pessimistic, stretch that date out to March 31st, 2010, to allow for the last of the December '09 loans to be defaulted and foreclosed on, for the institutions stuck holding fragments of those loans to have to give up on them. But for all practical purposes, the melt-down of our financial services sector will stop getting worse by the end of 2009. As with the housing glut, it will take time for the surviving firms (and probably some help from the government) to raise the capital necessary to start making serious numbers of loans again, for anything, but the credit supply should, barring further disaster, stop contracting by the end of 2009. Which means that some time in 2010, regardless of anything else, companies may be able to start hiring again, and consumers may be able to shop again.
One third of the median income on your block: That's the number that everybody forgot to factor in, the number that got us into this problem in the first place. That's the answer to the question, "what is the highest possible loan payment that anybody can really afford to pay for a house on your block." That's not a guarantee that your house is worth that much. Your house might be a wreck. But assuming that it's not, assuming that your house is roughly as good as the median house on your block, that number can tell you what your house is really worth. Go to the US Department of the Census web page. Look up the median income for your census tract. Knock about a third off of that for taxes. Divide the resulting number by 36, to give you 1/3rd of the monthly take-home pay for a median household in your neighborhood. Now plunk that number into any random loan calculator, at whatever interest rate someone living in your neighborhood is likely to qualify for, 30 year loan. Add a couple of grand to at most five grand for down payment. There. No matter how much you paid for your house. No matter how much houses sold for in your neighborhood during the housing bubble. No matter how many improvements you put into your house, even if you made the silly mistake of making your house the nicest house in the neighborhood? No matter what some politician or banker or (gods forbid) realtor tells you about the potential investment value of your house? That's what your house is actually worth.
Hint: You can probably short-cut this calculation, if you go back and look at what a comparable house sold for ten years ago, before the bubble started inflating, before people started buying houses on "the greater fool theory" (the one that says it doesn't matter if you pay a stupid price for something, as long as you can count on an even greater fool to pay you even more for it later). If you want to be insanely optimistic, push that price up by roughly 30%, to allow for inflation, and hope that the glut of foreclosed houses hasn't pushed the value of your house below that.
If you have to sell your house any time soon, whether because you lost your job, or you're going bankrupt because of medical bills, or because your teaser-rate mortgage reset and suddenly you can't get refinanced because your equity in the house went negative? That's what you're probably going to be able to get. At best. And even then, you may not be able to get that much until some time in 2010.
Plan accordingly.
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bradhicks- J. Brad Hicks
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Buy a manufactured home.
My advice to most everyone.
No, not much resale value, but then look at what's happening to the value of homes in general right now.
What kills people about mortgages is the interest. A house one can pay off in five years, beats a 30 year loan all to hell & back.Once it's paid off, the money you'll save vs. renting or paying off a longer term mortgage is the prize.
Oh & a manufactured home is a home you can move (yes it takes permits & contractors & a big ass flat bed truck, but you *can* take it with you if a job necessitates a move-- try that with a conventional home).
I know not all parks are like this, but nice parks with ammenities & community events do exist :)
Also, many cities/towns no longer allow manufactured housing except in very limited circumstances. Apparently, they'd rather put more people in Section 8 apartments, instead.
This is very true & very sad (I can't imagine giving up my big front & back yard for an apt-- where would I garden?)
This is, in theory, illegal. The problem is that the people who have the time and money to fight it are the very people who *aren't* buying mobile homes in the first place.
If you want to post more about questions that haven't gotten answers yet, I'm interested to read it.
Here's one from me: Where does people's sense of self come from? Why do some changes feel like "the real me" and others not?
My nerves command me to keep looking.
http://www.census.gov/hhes/www/saip
Not very precise, but better than nothing.
http://factfinder.census.gov/servlet/AGS
Select the 2007 American Community Survey (most current data they have) and choose "Public Use Microdata Area" as the geographical subset. Then, under Subject Tables, click on "more tables" and find Median Income in the Past 12 Months. You can check out the map of the area covered, as well. For me, it covers the Madison, WI metro area, which isn't exactly my "neighborhood" but it's probably a better estimate than 2000 data for the entire county.
I'm still holding out for the housing prices to collapse further... but I don't know anyone who was stupid enough (or conned enough) to take out a mortgage for stupidly much at a stupidly high interest rate.
The Economist is forecasting that US housing prices won't recover until 2010.
We'd all like a totally mobile workforce, but the reality is people don't want to upend their lives every 3 years or whatever to move.
I honestly don't get that. I agree that it's a question of ideal versus reality, but the ideal is settling down in a single place, putting down roots, and being able to find local work that puts your skills to use. Mobility is the horror that is inflicted upon us by the low supply of jobs and overabundance of qualified workers.
Then again, anything a white collar worker produces can be moved anywhere, so it doesn't matter where it's made.
My initial thought was a mobile workforce was to avoid pockets of expertise forming in certain places, but after thinking about what you said, I think I'm out to lunch on the benefits of mobility.
Speak for yourself. It isn't me who wants a totally mobile workforce, it's the big corporations. One of the reasons big corporations want us to be so mobile is to break up extended families, so that our first loyalties will be to the corporations rather than to family. To make us feel more isolated and desperate, and thus more dependent on them: that is, better slaves to the corporations.
As someone said, the best way to keep a slave is to teach him to love his chains.
The animate property will put all the energy they might put into Getting Uppity into Getting Laid. And each baby slave so bred is pure profit to Massa.
It's no coincidence that the pols & intellectuals who adore the idea of the Nanny State also adore the idea of Total Sexual Freedom (TM).
It's no coincidence that the pols & intellectuals who adore the idea of the Nanny State also adore the idea of Total Sexual Freedom (TM).
While I would certainly prefer a Nanny state to a Strict Father state, I think you have it wrong. It isn't liberals who advocate Total Sexual Freedom, it's Consumer Hedonists, most of whom are apolitical.
While there was a brief period in the sixties where young people advocated total sexual freedom, each generation of young people really think they invented sex. It was nothing new, and they mostly grew out of it. What you're complaining about is really not from either liberals or conservatives, but is from that third group, Consumer Hedonists, and the culture and creed of Consumer Hedonism is taught largely by movies and television, radio and magazines. Those things are all owned and run by Big Business, which has no conscience and is supremely greedy, and is therefore evil. but, while people complain about materialism and greed, most of them aren't willing to give up either the media or the equipment of materialism themselves -- everyone else should.
I am stunned. How'd that happen?
I am, however, afraid to look at my 457, my IRA and my Putnam account. I lost over $500 on the Fanny-n-Freddie bailout through my Dodge and Cox- how much more am I going to lose? And is it wise to keep putting money into these accounts, or should I just divert the money until they stabilize- if they ever do?
Sigh...
Is there anything you would like to own, that you can afford to pay cash for, but have been holding off on buying out of some notion of fiscal discipline? Get it now - it's not gonna get any cheaper and your money won't be worth as much in a couple months.
We're headed for "make it do or do without" time. Might as well start into it already owning the things you can afford right now, instead of with a small pile of cash that has dwindling value.
I think tools of various sorts are an especially good purchase. Whether it's a sewing machine or a socket set that floats your boat, if we're gonna have a rerun of the 30s or the 70s, then owning and knowing how to use tools, is going to more worthwhile than it's been in years.
But we love our home and aren't planning on moving anytime soon.
We'd still make a good profit even if we sold today.
If we ever move, we won't ever be able to move back to the SF Bay Area. And I was born and raised here.
Did the Neocons do this on purpose to our economy, or did they really believe in what they say will be good for the economy? Or are they satisfied in draining the rest of us dry and killing the goose that laid the golden egg?
But I don't think the neocons think about us or the effects of their decisions on the country. They have a twisted "vision" and are blind even to their own failures. Only by voting out those who support them can we defeat them
I can't imagine anyone in their right minds would recommend that the modern family (1.5 children, both parents work, etc.) should be ready to uproot themselves every time one person's job changed.
I happen to live in an area where housing demand (and therefore price) is likely to remain high; hopefully, that won't matter, since we bought our house with the intent of it being the only house we'll ever own.
That's okay, I don't want to move anyway.
have you seen this movie(can be watched at this link)?
http://www.zeitgeistmovie.com/main.htm
having seen this recently puts a whole lot more questions in my mind re this domino effect going on with Lehman etc
Job interviewers also seem, in my experience, to be looking for people who haven't moved more than once since graduating college but will cheerfully accept a transfer anywhere in the world.
They want people who have had a wide variety of different work experiences (if you haven't used a skill as a primary job function you don't have that skill) but held a very small number of different jobs.
They want people with cute photogenic families but who are willing to work eighty-hour weeks without complaint.
They want people who are highly educated, but not beyond a certain point that varies from interviewer to interviewer.
They want people who are continually improving themselves and gaining new skills, but whose schedules are completely flexible.
They want people who have intense company loyalty but whose reason for leaving every previous job was "offered more money by someone else."
They want people whose every job has paid more and been more prestigious than their previous job, but who expect that the job they're currently applying for will be for life.
The entire hiring process in this country is founded on contradictions ... as near as I can figure, there are enough mutually exclusive standards to give them reason to reject any possible applicant for any arbitrary reason.
... I don't suppose they were asking for a literally impossible prerequisite as a test? Anyone who claimed to actually have the requested experience obviously didn't know their stuff, so only people who complained were considered, that kind of thing?
Somehow, the impossible requirements seem to disappear when a foreign person applies for the job. As long as they accept the lower salary....
Because I think the gold market is run by persons of regrettable characgter.