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how apt-probos
10 year t bill scratching 2%, who predicted that? Lol Cashed in a nice portion of the bond portfolio today.
5/1 ARM is 2.9%?
Wow we all know folks in Orange County won’t use that rate, thankfully.
Another 10% drop in the stock market and I will be ready for another great time to buy real estate in high demand.
Yup, rates lower, Fed and banskters in bed together. Far left and far right polarization. Plutocracy rules the land.
Good times in store for americans. Well done wise voters, well done. Perhaps the TV evangelist/Governor of Texas will save you all.
I’ll vote Ron Paul again. “The doctor will free you now.”
Why isn’t Ron Paul more popular?
“If you have ever been robbed by a black teen-aged male, you know how unbelievably fleet-footed they can be.” - Ron Paul, 1992
“Given the inefficiencies of what D.C. laughingly calls the `criminal justice system,’ I think we can safely assume that 95 percent of the black males in that city are semi-criminal or entirely criminal.” - Ron Paul, 1992
“We don’t think a child of 13 should be held responsible as a man of 23. That’s true for most people, but black males age 13 who have been raised on the streets and who have joined criminal gangs are as big, strong, tough, scary and culpable as any adult and should be treated as such.” - Ron Paul, 1992
“What else do we need to know about the political establishment than that it refuses to discuss the crimes that terrify Americans on grounds that doing so is racist? Why isn’t that true of complex embezzling, which is 100 percent white and Asian?” - Ron Paul, 1992
His lack of popularity makes more sense now, I’d never seen those quotes before, disappointing.
he’s not completely against blacks…
Stating that lobbying groups who seek special favors and handouts are evil, Paul wrote, “By far the most powerful lobby in Washington of the bad sort is the Israeli government” and that the goal of the Zionist movement is to stifle criticism.
There…you see? It appears Ron Paul is an equal opportunity offender. He gets my vote.
He has bashed Asians, Whites, Blacks, and now Jewish people. If anything, I am offended that he hasn’t….errrr….offended Hispanics.
when has he bashed whites? christians?
It’s looks simpler than that to me: Ron Paul supports decriminalization of drugs, closing of overseas military bases and ending all foreign deployments with major reductions in military spending, return to the gold standard, etc., along with the more usual Tea Party Republican must-haves and does not drape it all in righteous Christian rhetoric. So the right-wing social conservative religious Republicans can’t live with his program, nor can any significant proportion of Democrats or independents. Lots of people like some bits of what he stands for, but not enough, or strongly disagreeing with other parts.
I’ve seen these quotes surface before, yet no one seems to be able to produce the newsletters in full…perhaps because they are being taken completely out of context?
Bill Cosby has also been villified for speaking such truths as “the number one killer of a young black male is another black male” and “Let me tell you something, your dirty laundry gets out of school at 2:30 every day, it’s cursing and calling each other n———as they’re walking up and down the street,” and, in a stunningly parallel statement to the Ron Paul statement about D.C. criminals “There’s a Fulton County juvenile court judge in Atlanta who’s black. He grew tired of so many young black men coming through his courtroom. He said they made up 95 percent of his cases. So in April, he cleared the courtroom of all the white people and began to chastise these young black men. He scolded them, told them what they should be doing instead of standing before him for conduct and crimes against society and their ancestors.”
So is Bill Cosby a racist? Is Ron Paul? Is speaking the truth “racist?”
he’s not racist if he spoke the truth, but you would be an idiot or racist yourself not to see that these are racist statements that have nothing to do with the truth.
“If you have ever been robbed by a black teen-aged male, you know how unbelievably fleet-footed they can be.” - Ron Paul, 1992
—- aren’t most [non-overweight] teens of all races “fleet-footed”?
“I think we can safely assume that 95 percent of the black males in that city are semi-criminal or entirely criminal.” - Ron Paul, 1992
—- nuff said
“We don’t think a child of 13 should be held responsible as a man of 23. That’s true for most people, but black males age 13 who have been raised on the streets and who have joined criminal gangs are as big, strong, tough, scary and culpable as any adult and should be treated as such.” - Ron Paul, 1992
—- according to the law it’s your mental state that determines culpability, not how “big and strong” you are.
“complex embezzling, which is 100 percent white and Asian?” - Ron Paul, 1992
—- really? only whites and asians are capable of “complex” embezzling?
Simply ending the War on Drugs, would do more for black americans than any other single issue. The War on Drugs and how it has eroded our constitutional rights, created a police state, and burdened us with the prison industrial complex is horrific. There are more people incarcerated in the U.S.A. per capita, than *any* industrialized nation on the earth, that includes Russia and China BTW.
The War on Drugs is the biggest travesty to america since slavery. There cannot be a free america, if your goal is a drug-free america.
“The prestige of government has undoubtedly been lowered considerably by the Prohibition law. For nothing is more destructive of respect for the government and the law of the land than passing laws which cannot be enforced. It is an open secret that the dangerous increase of crime in this country is closely connected with this.”
- Albert Einstein
Agree with every word of this great post, Swiller.
Worse, our drug prohibition is creating addicts, not preventing addiction. As long as drug distribution is in the hands of criminal outlaws, it is they who will decide what is sold, and to whom it is sold. And if they decide they will sell heroin to the high school kids in your suburb, that’s who it will be sold to.
If we want to control access to dangerous street drugs, we need to decriminalize them and impose multi-tiered regulation that recognizes different levels of impairment and threat to health. As things are now, we have no control at all and we are are only adding to the death toll as criminal gangs engage in daytime gun battles on our city streets for control of drug turf.
Those quotes are not Ron Paul’s. The scheme was debunked long ago.
I dont think he has a problem with any person, of any race, color, or creed, who strives to be a productive member of society.
He is speaking the truth even if it is an ugly one.
Why isn’t Ron Paul more popular?
He is popular, but the MSM doesn’t want you to know that. Especially so here in Kalifornia.
Ron Paul is anti-war and the Pentagon hates him (as do all the war contractors like GE—which happens to own a TV network.) Perpetual war is great business—especially for the wealthy who never see action.
To his credit, Ron Paul is the only free-market firebrand I know who actually adheres to the principles he espouses.
Unlike many conservatives, Ron Paul does not try to reconcile statements such as “no public employee adds value” and “it is always better for the government to stay out of markets”, on the one hand, with “cash-flow investors should enjoy credit subsidies because they’re deserving”, on the other.
One root cause of America’s problems is that so many conservatives favor government spending they claim to oppose, which helps fuel tax-cut and deregulation ardor without corresponding spending cuts. Seems that nearly everyone has cherished government programs they’d rather not see cut, or others they’d like to see enacted.
As much as I admire Ron Paul for his consistency, it is consistency in adhering to views I do not share. So I don’t support him. But I believe that if free-market conservatives actually acted on their principles this nation would be better off, much as I find their principles simplistic.
“But I believe that if free-market conservatives actually acted on their principles this nation would be better off, much as I find their principles simplistic.”
agree with you there, i’m a conservative, and was a registered republican until bush decided to invade iraq for oil… i actually agree with most of ron paul’s positions… but, “fool me once, shame on you, fool me twice, shame on me”
or as W puts it…
“There’s an old saying in Tennessee — I know it’s in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can’t get fooled again.” —Nashville, Tenn., Sept. 17, 2002
From what I’ve seen from politicians regarding economic issues Ron Paul seems head and shoulders ahead of most. I know a lot of people that are economically conservative and believe in free-market economic policy but are socially liberal. A candidate like this could appeal to moderate Republicans, moderate Democrats, and independents, I don’t know if he is racist but those comments make it seem like he is, if he is, that’s unfortunate.
What makes you think he said any of those things?
he didn’t “say” any of them… they were published in HIS newsletter… with no author… so he may, or he may not, but he surrounds himself with racists or he hires them it was him… we’ll probably never know.
http://articles.cnn.com/2008-01-10/politics/paul.newsletters_1_newsletters-blacks-whites?_s=PM:POLITICS
...or he hires them *or it was him… we’ll probably never know.
Good point, regardless, if this perception is out there my question is answered. I know some strong Ron Paul supporters that are not racist, I am curious regarding their thoughts on this.
one of my buddies is a black dude… he’s a ron paul supporter… we talk about this once in a while. his thing is but his ideas are what’s important… voting for anyone else will be ruinous for the country, but my response was that sometimes you have to step back and and see who around you cheering at the crowds… not drawing comparisons, but hitler had a singular “unifying” theme for germany too at the beginning… and it was nothing more than a bunch of pissed off people at rallies that thrusted the nazi’s into power.
OK, I’ll bite at the bait.
I’m a very strong supporter of Ron Paul. I WAS a registered Democrat, now registered Independent. I always considered myself fiscally conservative and socially liberal. I don’t think of myself as a racist (mixed-race background).
Ron Paul occasionally says some kookie things, but I GREATLY prefer listening to him than to almost any other politicians. Most of what he says MAKES SENSE. Other politicians just make me gag. Ron Paul seems to really want to get the government out of our lives and just generally make it smaller. Other politicians, both left and right, want to use the government for their own ends, whatever words they say. Look at Rick Perry. He warbles on and on about making government smaller. But then he wants to MASSIVELY increase military spending. Yet another hypocrite. And don’t get me started on the Democrats.
SM
“Ron Paul seems to really want to get the government out of our lives and just generally make it smaller.”
Well, then get him to stop the govt from locking up all those wonderful black people. <snark>
Rachel Maddow for president then?
“10 year t bill scratching 2%, who predicted that? Lol Cashed in a nice portion of the bond portfolio today.”
That was a brilliant trade, particularly if you actually did cash in and take your profits. Several astute observers wondered why you didn’t stop by to gloat earlier.
I didn’t cash in all of it yet.
There is another 2 years of this at least, if the fed says 2 then bank on 3 years or more. This means only one thing for mortgage rates… Lower lower lower, how low can they go? I would say 100 basis points above the 10 year, as I said long ago. They will definitely head into the high 3’s at a minimum. It was so easy to see this, I can’t understand those who doubted me vehemently.
Not sure about these rental predictions. However I’m confident the fed will eventually succeed. In 10 years rents will be 50% higher in Irvine at a minimum.
5/1 arm will probably be in the low 2s that will be a killer play at the bottom. Speculation will eventually boom again. Its all too easy to see.
Rates staying low and rents increasing are an either-or position. If you get really increasing rents, like the 50% you’re claiming, that will be a sign of general inflation. If we have general inflation, rates will rise.
I begrudgingly agreed with your call on rates staying low, but didn’t trade on it myself. Congrats on the gain, but don’t get greedy.
You don’t get it. Mortgage rates lowering and rents increasing can happen simultaneously as they have by design. That is the intention. They longer the fed rate is held at zero mortgage rates are manipulated to conform lower. The ensuing inflation from the manipulation will inflate rents.
Eventually rates will rise, but eventually is a long time. By the time that happens inflation will probably he horribly out of control. Unless you believe the fed is looking out for the little guy lol.
No, I get it, but I just don’t believe that rents will go up 25-50% in the short term. That would happen if there were a true shortage in dwellings, which there isn’t. Funny to see Tampa listed. Nearly all of FL has too many dwellings, not too few. Sure people may not want to buy, but as rents go up, investors will buy the vacant homes and rent them.
Plus, the recent construction in apartments will put downward pressure on rents. There is this dream of massive new household formation, but those people forget the huge increase in 2nd home and investment buying that created excess housing supply when those purchases reversed.
As IR has stated ad infinitum, rental rates are correlated to income levels. And I doubt incomes will rise by 50% in ten years. In fact, in real terms, higher inflation and taxes (yes it’s coming) will eat away at wages thereby DECREASING the net incomes people have for housing. Rents will have to decline or stagflate in order to remain marketable in that scenario.
short term? he said 10 years. You realize that Jaysen’s exact trend line of 2.5%, that equals 28% after 10 years right?
To get to 50%, all you need is 4% a year. Seems hardly a stretch given the massive printing of money they have already done…much less will do in the next several years.
I’m sorry but you are dead wrong. The reason rates have fallen so quickly is fear. Major investors are pouring into the safest thing they can find right now because they are worried about another major down turn. It may not matter if rates are low, if there is too much negative equity out there to capitalize on.
the safest thing they can find right now is on the top of the treasury bubble? nice.
golf clap for PR’s prediction/call.
Actually, probably a lot of people did this trade. Certainly anyone who’s been following Mish for the last few years would at least have had the idea for it. Mish, David Rosenberg, John Hussman, and others have been saying for years that we’re in an extended underlying deflationary environment in the US, Europe, and Japan. Governments keep playing at QE, but the gravitational pull of debt deflation keeps pulling us back.
But the far more profitable trade was in gold. Unfortunately, I only nibbled on that one.
SM
We will have inflation when pricing things in dollars and deflation when pricing things in real money, gold.
Mish is right in that we are in economic contraction, but he is delusional in thinking the Fed and govt wont fill the streets with dollars to repudiate all the debt. They already are but the general public is fooled into thinking there is no inflation. Inflation has a funny way of showing up in various places and taking years to do so, catching everyone off guard. 0% fed funds rate for the next 2 years +? Subsidies as far as the eye can see. This robs savers of the benefit of falling prices and is inflationary in every sense of the word.
House prices have been falling off a cliff when priced in gold and i’ve been heavily weighted on this trade. It will continue in the same direction. 60% of treasuries expire in the next 3 years and thus are adjustable rate. Govt default is an inevitability and this treasury bubble marks the beginning of the dollar’s fall. how far will it fall? nobody knows.
I recommend making that nibble the biggest bite you can chew.
“10 year t bill scratching 2%, who predicted that? Lol Cashed in a nice portion of the bond portfolio today.”
Congratulations. Good call.
I hear that if the interest rates go up, the US immediately goes into default, so can we say that interest rates go up means insolvency for our US government?...
So interest rates will never go up again. It will stay low indefinitely.
Mortgage rates reached record lows this week, according to the weekly market survey from Freddie Mac. The average rate on a 30-year fixed-rate loan fell to 4.15 percent, with borrowers paying an average point of 0.7 percent. That rate is down from 4.32 percent last week.
PR, it looks like you got it right with your prediction about record lows being broken. Have to give credit where credit is due. It did not even take a Greek default, go figure.
David, even a downgrade of US debt couldn’t stop it. Hell it probably helped it.
Another 10% drop in the stock market and it will be the ideal time for you to pull the trigger on your Scottsdale dream home. Get ready.
In some places apartments and rental homes are making a killing. We were renting a home in a one-owner rental community of 120 homes. $1200/mo for something that was probably $75k to build. That’s close to a 20% return. Same guy is building nicer models closer to our new neighborhood. Will probably get > $2k/mo for homes costing $100k to build. Almost a 25% return. When we lived in the old community, homes did not stay vacant very long - maybe one month. Lots of long-term residents too, meaning less turnover costs (paint/carpet). Upkeep costs are a little higher than normal rentals - communities have workout areas & a pool, but you could pay for a lot of that with 20-25% returns.
“Weak jobs is a plus for apartments? That is pretty stupid. Rents are directly tied to incomes. Without both job growth and wage growth, rents aren’t going anywhere.”
I think what the author is saying is that with a weak job market, those that have jobs will be more likely to rent than if the job market is strong. There is still lots of uncertainty, and it’s easier (maybe) to bail on a rental lease than a home you ‘own’.
Hmmm, when your prospective renters have been living at home or doubling and tripling up to shared expenses, that does not seem like the same people who can or will tolerate 25% rent increases in 3 years in their own new rental unit.
And the only “jobs miracle” is Perry’s Texas where most of the jobs are at or below minimum wage with no health insurance (if there really is any such miracle at all).
For it to work, doesn’t there need to be a high-rate creation of solid middle-class salary jobs, or substantial wage inflation, or both? I just don’t see it, but I admit that I have not made any fortune in real estate, so I could be just totally clueless. I’m here to learn!
Kudos to PR for his bold and accurate rate call.
Agree with his assessment that rates will continue to move even lower.
The FED/Washington is trying to recapitalize the residential and commercial real estate markets.
since we are following Japans fate, it is not a hard call to make. Are all you financial gurus going to study up on Japans lost 2 decades going on 3?...
I think you can get 1% mortgage loans over there, but their loans are recourse.
“I think you can get 1% mortgage loans over there, but their loans are recourse.”
So are real estate prices still high over there?
A 1% rate? Isn’t there some cost in there that makes that almost impossible to carry?
Although I’m sure people will take it even if it’s recourse.
It’s actually 2.375% but i’m not sure what that means. fixed 30 years or adjustable.
So if there is an apartment bubble… can they same be said for rental properties?
Won’t the same factors that will pop that bubble also affect the cash flow for investment homes? Or are rental SFRs different?
SFR rentals in Las Vegas have good current cashflow and low valuations. OC SFRs and apartments have poor current cashflow and high valuations. It is only the pie-in-the-sky growth rates of rents that make the proformas work.
In finance the surest way to see a disaster in the making is when you see buyers ignoring current cashflow and betting on rates of appreciation to justify their decisions. Whether the appreciation is in rents or resale value, reliance on stellar growth rates nearly always turns out badly.
See ‘State of California’.
See ‘USA’
Rates are low and credit relatively easy in Japan abut that hasn’t helped the asset markets there, as the populace is conditioned to “stocks and real estate always go down.” In that case the herd has proved right, and the Japanese populace is happy to fund their record low rates by plowing their trillions of $$ of national savings into JGBs. If they weren’t able to recapitalized their real estate markets what makes anyone think we can accomplish that here? The American populace is starting to wake up.
In other news:
Pet stores banned from renting Irvine Co. store space
Orange County mega-developer the Irvine Co. has decided to stop renting space to stores that sell cats and dogs. Other animals, such as birds, fish and reptiles, weren’t included in the decision.
“Effective immediately, the Irvine Co. will not lease space in any of its centers to tenants that intend to sell dogs or cats,” spokeswoman Erin Freeman said in an email. “The Irvine Co. will honor its existing contractual commitments with Russo’s until the expiration of current lease terms.”
The new policy means Russo’s Pet Experience, which has sold purebred puppies and fancy cats for more than three decades at Fashion Island, is likely to close.
The Irvine Co. does not plan to renew Russo’s leases at Fashion Island or at the Irvine Spectrum, a company spokeswoman told the Daily Pilot.
Forget about if CAP rates go down to 4%.
What happens when rates eventually rise and cap rates go back to 8 or 9. What will rents have to have risen up to so you reach breaken even.
Buying a 5.5 CAP is a guaranteed loser. CAPS can’t go lower without a concommitant lower rent roll.
Larry,
Do you see a way to capitalize on this bubble? I didn’t at all like being the stooge of the last bubble, and I’d rather be the victimizer than the victim in this next one.
-Darth
It’s very difficult to capitalize on bubbles. You can try to play the short side, but the timing is always difficult. The apartment REITs won’t blow up for several years.
IMO, the best bubble bets are picking up the pieces in the aftermath. That’s why I am out in Las Vegas pickup up properties. Perhaps buying apartment REITs eight years from now when investors flee that asset class will be a good play. I’m a believer in distressed asset investment.
I agree that picking up pieces in the panic and aftermath is the easiest safest bet. Unfortunately Vegas is not long term viable.
Darth, wait for the 10-20% further drop in the stock market.
That is going to be the ideal time to buy a house again in the panic and pick up stocks with high returns in a 1-2 year time frame.
Haven’t been here a while; same cast of characters, some new ones, and better dialogue!!
Actually Vegas is not short-term viable unless you’re looking for slumlordship. Long-term shouldn’t be an issue and as long as an investor is prepared to be in it for the long-term (10+ years), it’s probably a good investment right now or in the next year or two.
20% drop in stocks would put the DOW at below 9000… Not sure that will happen for anything longer than a blip in time, but 10% is probably a pretty realistic number. Not convinced it will go that low, but it’s entirely possible.
As for picking up housing once the returns come back in a stable fashion. I think as soon as Fed notices a stable growth, interest rates will start going up and buyers will err at that. I see the stock market growth stabilizing (not just going back up, but actually lowering volatility) in a year’s time, I don’t see housing doing the same for at least 5 years, probably more like 10. It will stagnate for years.