Mar242016
Token principal reductions induce deeply underwater borrowers to keep paying
The GSEs will implement a targeted program of principal reduction to provide false hope and stave off further strategic defaults.
The demand for free money is infinite. The demand for anything free is high, but since money can buy almost anything, the demand for free money knows no bounds.
The lure of free money is very enticing. One of the most effective free-money advertising programs of all time emerged during the housing bubble. Lenders offered to give homeowners money and reduce their monthly payments to boot. Not just was this money free, lenders were actually paying borrowers to take it.
Of course, if something seems too good to be true, it probably won’t work out as hoped. The free money from the housing bubble was no exception. Many borrowers who were in stable loans and comfortable life circumstances were enticed by this free-money advertising ploy, and they mortgaged themselves into a very deep hole. Many haven’t recovered to this day.
Principal reduction is a tricky issue. It seems unfair that so many borrowers should endure such hardships when they merely accepted an offer from a lender who should have known better. However, while the housing bubble and bust was engineered by lenders, it took the participation of millions of borrowers who also should have known better. Financial innumeracy is no excuse, particularly when the ignorance of many was willful.
Principal reduction is the worst possible solution to the problem of excess debt left over from the Great Housing Bubble because principal reductions merely gives foolish borrowers a pass. If borrowers go through foreclosure, they have consequences that minimize moral hazard:
- Borrowers will be forced to rent, at least for a time.
- Borrowers will have reduced access to consumer credit as the foreclosure lowers their FICO score.
- Borrowers will have to save and be prudent in order to meet the standards of home ownership and get another loan.
All of those consequences — inadequate though they may be — are eliminated if the GSEs merely reduce principal. The borrowers who have the most to gain are those who borrowed most foolishly, and the people paying the price are (1) prudent borrowers and (2) those who didn’t borrow at all. Next time around, there will be no prudent borrowers, and everyone will participate. Who is going to pass on free money? This is the essence of moral hazard.
The appearance versus the reality
Joe Six-pack loan owner favors principal reduction because he believes his lender is going to reduce his mortgage balance to fair market value with no strings attached. Joe further believes he will get to keep all the upside. In other words, a typical loan owner believes free money is on the way. That isn’t going to happen because the cost is simply too large. There is no way the government can afford to make everyone whole, and I would be leading the rebellion if they tried.
Any principal reduction program would actually benefit a very small fraction of underwater loan owners, and those the receive principal reduction will likely see their balance reduced by a small amount so they are slightly less underwater.
The reality of principal reduction is that many will hope for some benefit, and very few will obtain it. The real purposes are twofold: (1) pandering politicians get to look like they did something and (2) loan owners will gain some false hope to keep them making a few more payments before they implode.
Fannie Mae, Freddie Mac finally set to reduce mortgage balances
March 22, 2016, Ben Lane
After years of speculation and equivocation, Fannie Mae and Freddie Mac will begin to cut the mortgage balances for a number of homeowners later this year, according to a report from The Wall Street Journal.
The Wall Street Journal report, written by Joe Light, states that the Federal Housing Finance Agency recently approved a plan for the government-sponsored enterprises to engage in principal reduction on a large scale for the first time since the housing crisis.
For years their leaders claimed this would never happen. They all said the GSEs were in conservatorship, not receivership, and so a reduction in asset values would be counterintuitive to that status.
Perhaps this is why the scale of the reduction program is not as significant as some might expect, as Light reports.
From the WSJ:
Fewer than 50,000 “underwater” homeowners, who owe more than their homes are worth and are already behind in their mortgage payments, will likely be eligible, people familiar with the matter said.
Fannie and Freddie—which don’t make mortgages but rather buy them from lenders and wrap them into guaranteed securities—would also forgive principal only in cases where they determine the companies would lose less money with that option than foreclosure or other foreclosure-prevention methods. In addition, the new program will likely be limited to mortgages whose outstanding principal balance is under a certain dollar amount, people familiar with the matter said.
According to Light’s report, the plan will be officially announced “within the next few weeks.”
There are still 3.4 million underwater borrowers. If less than 50,000 obtain principal reductions, that’s a little over 1%. Hmmm… principal reductions for 1% is not what the 99% are hoping for.
The issue of principal reduction has long been a hot button for many housing industry participants and observers alike.
Nearly four years ago, Ed DeMarco, who was the acting director of the FHFA at the time, said that the FHFA was not going to engage in principal reductions, despite the urging of then-Treasury Secretary Tim Geithner.
“I am concerned by your continued opposition to allowing Fannie Mae and Freddie Mac to use targeted principal reduction in their loan modification programs,” Geithner said in 2012. “In view of the clear benefits that the use of principal reduction by the GSEs would have for homeowners, the housing market and taxpayers, I urge you to reconsider this decision.”
But DeMarco refused Geithner’s request, stating at the time: “Given our multiple responsibilities to conserve the assets of Fannie Mae and Freddie Mac, maximize assistance to homeowners to avoid foreclosures, and minimize the expense of such assistance to taxpayers, FHFA concluded that HAMP PRA did not clearly improve foreclosure avoidance while reducing costs to taxpayers relative to the approaches in place today.”
As Light writes, when Melvin Watt took over as the official director of the FHFA in 2014, some thought that Watt would move quickly to cut mortgage principal, but Watt took a “slower, more-measured approach” to considering principal reduction.
Watt was still “considering” principal reduction in February 2015, when he said that even if the FHFA was going to allow principal reduction, it would likely end up being on a much smaller scale than some people expect.
If the agency does decide to allow debt cuts for some borrowers, “I think it will be substantially narrower than the vision people have,” Watt told Bloomberg at the time. “Reducing everybody’s principal would cost taxpayers billions.”
Let’s be completely realistic about what this program does. The actuaries at the GSEs have detailed metrics on loan performance. They know the delinquency rates and default losses associated with every level of borrower indebtedness. Someone completed a fancy analysis that showed that if the GSEs reduce the principal on 50,000 loans by some token amount today that the losses over time would be far less because the borrowers would continue paying.
This is not borrower relief. This is a calculated move to keep borrowers from obtaining relief through strategic default.
Despite the concerns about moral hazard, this is probably the right move for the GSEs and the US taxpayer. While they sort out who will get principal reductions, many people will keep paying to see if they can cash in their lottery ticket. The GSEs will drag this out as long as possible because the hope of principal reduction is actually more effective than the implementation. The GSEs never want people to know that the possibility is completely off the table and if a borrower hasn’t received it yet, they never will. That would eliminate the false hope that makes the entire program work.
[listing mls=”PW16059446″]
My guess is they are just trying to motivate people to continue to pay. When the people fail again they will still end up with the entire house. They are only wiping away a debt which was going to be a 100% loss anyway.
I also wonder how much principle reduction will just be all the additional fees these loan owners accumulated from failing to pay.
Right, maybe not a 100% loss, but statistically a very high probability of loss.
Good point. This “reduction” may not impact the original principal balance but only the fees and penalties incurred when they originally stopped paying.
CNBC: Why you should have bought a house last year …
cnbc.com/2016/03/23/why-you-should-have-bought-a-home-last-year.html
Straw buyers + massive foreign capital—>US inflows + people buying monthly payment, NOT price + flippers and cash buyers near all time highs(aka speculative frenzy) = “should have bought a home last year” ??
Laughable!
You should have bought a house last year as long as the recession doesn’t happen until 2018 or later.
We are now in the normal CA cycle with down payment and homes bought with income at rental parity.
When the recession happens prices will drop. As long as you keep your job you will be in great shape. Mortgage rates will be manipulated further downward in the next recession.
Your “personal economy,” as you mention, is almost always, by far, the most important factor in your financial success. It’s fun to speculate and worry about fluctuations in equities, bonds, and housing; but over the course of the asset accumulation phase of your life, it matters little.
+1 The difference between what you earn and what you spend each month (i.e. your savings rate) has the biggest influence on where you end up financially. Being a good investor is secondary to this.
Below is one of the all time great personal finance blog posts that illustrates how savings rate determines when you can retire:
http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
REMINDER: the aggregate bubble prices CANNOT be realized by selling. Facts are stubborn!
Any idea what the ratio of Orange County (true value) / (bubble price) actually is?
I will take a wild guess of .6 (60%)
I am sure others will have different numbers base on better info.
Very curious what is a consensus percentage.
I think it’s 75% based on historical ratios of price / income.
As laughable as going to cash in January? 😉
thinking you are smart enough to time a top or bottom is as laughable as not buying in 2010-2012 below rental parity.
It’s been so long since we’ve been forewarned about the coming armageddon with a “tic, tic, tic” countdown.
Funny. I’d forgotten all about that. I guess doom saying is only fashionable when stocks are falling – otherwise it’s just the crazy guy on campus that every one hurries past whilst cranking up their music.
Same could be said of perma-bulls that saw nothing wrong with 20% jumps in prices during the housing bubble.
Don’t drink the Kool-Aid. Just, don’t, do it.
The stock market is still down over the past 12 months, or up about 0.5% if you include dividends. A lot of cash substitutes have done better than that. Despite the rebound since January, the long term chart for stocks doesn’t look good. Throw in the shaky fundamentals underpinning the market right now, and I wouldn’t get too cocky.
Not being cocky. I never tell anyone where markets are going. It’s just a friendly poke at El O.
This article implies people should have purchased homes for fear of being priced out. It’s the same kind of nonsense thinking that drove sales during the housing bubble, and everyone who bought out of fear got truly burned.
I think buying last year was a good idea, but not because future buyers might be priced out, but because the cost of ownership versus rent ratio said owning made sense. The fact that prices are getting unaffordable is a negative sign of a potential top, not a positive sign of sound decision making.
Homeownership increasingly difficult for average Americans: report
Home prices are rising faster than wages in most of the United States, making homeownership increasingly difficult for average Americans in some of the most populous areas of the country, according to a report released on Thursday.
The report found that home price growth exceeded wage growth in nearly two thirds of the nation’s housing markets so far this year, with urban centers like San Francisco and New York City among the least affordable.
Home prices in 9 percent of the U.S. housing market are now less affordable than their historic norms, the report by RealtyTrac found. Home buyers need to spend more of their incomes on housing, leaving less money for other purchases.
“While the vast majority of housing markets are still affordable by their own historic standards, home prices are floating out of reach for average wage earners in a growing number of U.S. housing markets,” said Daren Blomquist, senior vice president at RealtyTrac, which monitors housing market trends.
RealtyTrac parsed homes sales and income data in 456 U.S. counties with a combined population of 221 million.
The report comes after data showing house flipping, buying and selling a house to make a quick profit in a hot housing market, had risen to record levels in some markets, generating concerns of a price bubble.
When $250,000 per year salary could qualify you for subsidized housing. 100,000 Apartments come online in Q3 of 2015, most since the late 1980s.
There were two housing stories that stood out to me today. One shows the pure absurdity of housing in California, in particular Northern California. As we’ve discussed before a home is expensive or affordable only as measured by incomes in the local area. Well for Palo Alto, it looks like having a salary of $250,000 per year could qualify you for subsidized housing. Of course having this income puts you in the top 2 percent of all U.S. households but in Palo Alto you might as well be eating Purina Dog Chow with a nice class of Manischewitz. The Bay Area is running on hot money from the tech industry. Another story focuses on the continuing rental revolution we are undergoing. In Q3 of 2015 100,000 apartments came online, the most since the late 1980s. And most were rented within 12 months. I think these stories really highlight the larger theme in housing – extreme money for hot enclaves and renting for the vast majority. The middle is being cleaned out like using a melon baller on a cantaloupe.
You are broke on $250,000 in Palo Alto
People in the Bay Area are so far removed from reality that $250,000 now could qualify you for subsidized housing. It is so preposterous yet in an area where tear downs go for $1.5 to $2 million, you would need a sizable income to buy a home here.
“PALO ALTO (CBS SF) — Palo Alto is seeking housing solutions for residents who are not among the Silicon Valley region’s super-rich, but who also earn more than the threshhold to qualify for affordable housing programs.
The city council has unanimously passed a housing plan that would essentially subsidize new housing for what qualifies as middle-class nowadays, families making from $150,000 to $250,000 a year.”
This is simply mind boggling. First, there should be absolutely no subsidy here. This is nuts. If you look at the current political climate things like this only add fuel to the anger that small bubble areas are completely out of touch with most Americans. A third of this country has no retirement savings and yet we are going to subsidize households making $250,000? Also, large mortgage interest deductions truly only benefit the super wealthy. With more and more people renting, expect some changes if this trend continues. The standard U.S. house costs around $200,000 so most people get tiny benefits from the mortgage interest deduction once you factor in standard deductions. The vast majority of benefits go to high income households taking on giant mortgages, like for example in Palo Alto.
It’s completely ridiculous to say your are broke with a $250K job in Silicon valley.
It’s sensationalized bullshit. You can buy a house in the areas with the best schools and have an awesome life at that salary in the bay area.
True, you won’t be Mark Zuckerberg’s neighbor in the ultra wealthy enclaves around Silicon Valley… and yes you will have a commute… but it’s total nonsense to say $250K makes you broke.
Then why is the Palo Alto city council voting to subsidize their housing?
Because they use the normal incomes in the area. That doesn’t mean someone earning $250K wants to live in the subsidized housing when the have much nicer alternatives.
This has been the case in cities like New York and San Francisco for decades now, this is not a new procedure.
It may not be new, but it is astonishing that someone making $250,000 a year qualifies for a low-income subsidy. Something is wrong with the procedure if that occurs.
That’s what incomes are, so it is what it is.
The people who end up in the subsidized housing will most likely be in the $80K-$120K range.
They could make the limit $500K and it won’t really change who applies and more importantly who gets approved.
I should clarify that the $150-$250K range cited is outrageously misleading.
From what I have seen of current subsidized housing in NY and SF those are the upper limits.
For 2BRs maximum income is typically $250K.
For 1BRs the maximum income is typically $150K.
The maximum is based on the real normal incomes of the area, but once you get to the $250K stratosphere people tend to move to more well to do suburbs.
A funny and misleading article.
How do you make someone in flyover country who makes $25,000 per year understand how someone making $250,000 per year needs a subsidy?
Put it in terms they can understand: not income, but % income spent on housing. If you pay 50% of gross income on housing, then you’re going to have trouble living on $25k or $250k.
Intellectually, I get it. I understand the math, but Joe Six pack scraping by on $25,000 per year would be incensed by a subsidy going to someone making 10 times what he is — and he should be angry. This is the kind of thing that fuels support for Donald Trump and Bernie Sanders.
I still don’t think you get it Irvine Renter.
Those are the upper limits based on the law.
You need:
A. People making $250K to actually be interested in applying for a subsidized 2 BR apartment and it will be at a percent of income level. It could even be higher than market rate at that income and affordability level.
B. You need to be approved. Those income levels have zero chant chance even if they were interested given the pool of applicants.
It’s a complete misleading article for Joe 6 pack who is lost in this world anyway.
IR:
I don’t see why someone making 25K in the mid-west would even care. This is a local ordinance in Palo Alto. It doesn’t affect them one way or another. They don’t get a subsidy and they don’t pay for this one. If they want this one, they can move to Palo Alto, then maybe they will understand how far 25k, or even 250k goes.
If Trump and Sanders get elected, they are going to do what? Outlaw all housing subsidies? Or just for the nationally rich, but locally poor? Is that the endgame?
Why are you assuming that all these $250K income people are living in subsidized 2 BR apartments?
They aren’t
Whoa, you sound like a raging liberal chastising those complaining about paying a few additional points in taxes on $250K+ household incomes!
California pending home sales down Y-o-Y for second consecutive month
LOS ANGELES (March 23) – Low inventories and eroding affordability coupled with financial market volatility contributed to a second consecutive month of year-over-year declines for pending home sales statewide, CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) said today.
Pending home sales data:
* Statewide pending home sales fell in February on an annual basis, with the Pending Home Sales Index (PHSI)* decreasing 0.4 percent from 121.4 in February 2015 to 120.9 in February 2016, based on signed contracts.
* On a monthly basis, California pending home sales increased 26.4 percent from January, well above the long-run average increase of 15.9 percent typically registered from January to February based on data collected between 2009 and 2015. Even after adjusting for typical seasonal factors, pending sales still rose 6.3 percent over January despite remaining below February 2015 levels.
* C.A.R.’s 2016 housing market forecast, released in October 2015, calls for a slightly slower pace of sales growth in 2016 than California experienced last year. Current pending sales figures suggest that tight inventories could begin to weigh more heavily on sales in coming months.
* Regionally, pending sales increased significantly in month-over-month comparisons, but varied in year-over-year changes.
* San Francisco Bay Area pending sales rose 36.3 percent from January to reach an index of 145.2 in February, up from January’s 106.5 index but down 13.6 percent from February 2015.
* Pending home sales in Southern California declined 1.3 percent from February 2015, but increased 28.7 percent over January 2016 to reach an index of 97.7.
* Central Valley was the only region to see pending sales rise both year over year and month over month, which suggests that tight supply and affordability will continue to push more activity to less constrained, more affordable areas of the state. Pending sales in the Central Valley region rose 20.2 percent from January to reach an index of 87.5 and increased 6.7 percent from February 2015’s index of 82.
Yale Law Journal: “In Defense of ‘Free Houses’”
The Yale Law School Journal has published a new article, “In Defense of ‘Free Houses’” (hat tip Deontos), which makes an argument that I wish had gotten an airing when the foreclosure crisis was national news. From the opening section:
When addressing faulty foreclosures, courts are afraid to bar future attempts to foreclose—that is, afraid of giving borrowers “free houses.” While courts rarely explain the reasoning behind this aversion, it seems to arise from a reflexive belief that such an outcome would be unjust. Courts are therefore quick to sidestep well-established principles of res judicata in favor of ad hoc measures meant to protect banks against the specter of “free houses.”
This Comment argues that this approach is misguided; courts should issue final judgments in favor of homeowners in cases where banks fail to prove the elements required for foreclosure. Furthermore, these judgments should have res judicata effect—thus giving homeowners “free houses.” This approach has several benefits: it is consistent with longstanding res judicata principles in other forms of civil litigation, it provides a necessary market-correcting incentive to promote greater responsibility among foreclosure litigators, and it alleviates the tremendous costs of successive foreclosure proceedings…
So what should courts do when banks lose their foreclosure cases? As described above, one approach—that taken by the Florida and Maine Supreme Courts—is to bend the rules of res judicata to avoid a windfall for homeowners. This approach creates few benefits and significant economic problems…[We argue that further subsidizing banks’ poor litigation practices results
in deadweight loss by contributing to negative public-health outcomes and by disincentivizing banks from improving their servicing and litigation techniques. We also explain how granting winning homeowners “free houses” will not negatively affect the mortgage market.
Authors Megan Wachspress, Jessie Agatstein and Christian Mott argue that state courts have been systematically violating a basic premise of the law, res judicata, in foreclosures, by bending the rules to favor banks. When the parties to a case have had a “full and fair” opportunity to present their arguments and evidence fully, the judge should issue a verdict “with prejudice,” meaning barring the losing party from trying to file suit again. The Restatement (Second) of Judgments points out why it is important to shut down the opportunity to re-litigate when both sides have had their say:
Indefinite continuation of a dispute is a social burden. It consumes time and energy that may be put to other use, not only of the parties but of the community as a whole. It rewards the disputatious. It renders uncertain the working premises upon which the transactions of the day are to be conducted. The law of res judicata reduces these burdens even if it does not eliminate them, and is thus the quintessence of the law itself: A convention designed to compensate for man’s incomplete knowledge and strong tendency to quarrel.
The writers point out that the amount of evidence that a lender needs to provide in order to foreclose is not difficult to satisfy. Moreover, when a lender of servicer initiates a foreclosure, it accelerates the debt, meaning it comes due in full at present. But in fact, in many states, the acceleration of a debt is irrevocable, and before the crisis, courts respected that principle with foreclosures. If a bank lost, it was not allowed to pretend that it could wind the clock back and keep dunning the homeowner for monthly payments.
Some readers may take umbrage at the fact that the article fails to mention servicing fraud and abuses, and also underplays the failure to convey mortgages to securitization trusts and the use of fabricated documents to try to remedy that fact as mere “errors” and sloppiness. But rhetorically, the authors don’t need to make that argument, which many bystanders regard as controversial, to substantiate their position, which is that by not issuing judgments on failed foreclosures with prejudice, banks are getting an unjustified windifall, and that is subsidizing their substandard practices and producing unnecessary social harm.
“…banks are getting an unjustified windifall, and that is subsidizing their substandard practices and producing unnecessary social harm.”
Is it possible all mortgage borrowers receive a portion of the windfall in lower rates? Is it possible that these proposed changes to the system might result in higher costs passed on to borrowers?
It’s difficult to make arguments in favor of the indefensible. I give them credit for trying, but I think most of their arguments are nonsense, and they completely ignore the moral hazard implications of what they propose.
If There Were Truly Growth, Home Builders Would Be Very Busy
There is one part missing from the narrative sketched out in home resales being subjected to monetary imbalance. It is a compelling explanation for what we find as the most striking aspect of existing home sales, namely the curious lack of depth among sellers. It’s as if despite rising prices there is a seller strike where a significant part of what should be that market just will not participate.
As I outlined a few days ago, the likely explanation is serious stratification. In other words, prices are rising much faster in the more expensive segments leaving those in either starter homes or still the lower tiers unable to make the usual jump that accompanies economic mobility. Because they aren’t buying up, they aren’t selling despite rising prices which are supposed to signal at least stable demand.
That’s the part that demands further examination. There is another subset of housing that is supposed to act in that circumstance – new homes. If there was not enough supply via resales as the NAR suggests, thwarting a more consistent and healthy home market, then home builders should have been the answer. As noted Monday, this is not an imbalance that just showed up, it has been a factor for at least several years (and in all likelihood throughout the QE-inspired mini-bubble that favored “investors” over potential resident owners). Where are the home builders?
If there is demand for even starter homes well above the visible and attainable supply, that is exactly the market imbalance that should favor new construction. Instead, outside of what increasingly looks to be a one-off rise in new home sales in 2014, home sales have been rather stagnant. All the way back for June 2013, the Commerce Department has been estimating new home sales at around 500k almost as if that were an anchor or fixation. There have been revisions here and there redrawing the exact trajectory, but for the most part ever since then new home sales have been stuck around that level – especially since the start of 2015 (as if that were coincidence).
http://www.alhambrapartners.com/wp-content/uploads/2016/03/ABOOK-Mar-2016-New-Home-Sales.jpg
China Sends Fed A Warning: Devalues Yuan By Most In 2 Months
With the USD Index stretching to its longest winning streak of the year, jawboned by numerous Fed speakers explaining how April is ‘live’ (and everyone misunderstood the dovishness of Yellen), it appears that The PBOC wanted to send a message to The Fed – Raise rates and we will unleash turmoil on your ‘wealth creation’ plan. Large unexpected Yuan drops have rippled through markets in recent months spoiling the party for many and tonight, by devaluing the Yuan fix by the most since January 7th, China made it clear that it really does not want The Fed to hike rates and cause a liquidity suck-out again.
The last 4 days have seen nearly a 1% devaluation in the Yuan fix with today’s drop the biggest in over 2 months…
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/03/24/20160323_CNY1_0.jpg
And while everyone is quietly commenting on how “stable” the Yuan has been this year, the truth is that is only the case against the USD, the Yuan basket has been consistently devaluing since PBOC admitted it was more focused on that than the USD only…
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2016/03/24/20160323_CNY2_0.jpg
The last time they sent a message, The Fed rapidly acquiesced and decided a rate hike was inadvisable due to global market turmoil… we wonder what happens this time.
Property Bubble Ghost Haunts Central Bankers Trying to Boost Prices
The property market is an animal almost every central banker is worried about and hardly anyone can control.
As the Federal Reserve downshifts into go-slow mode while the European Central Bank and other monetary authorities ease, expect to hear a lot of concern about property prices. Here’s the dilemma: How do you cut rates to goose too-low inflation and support growth without lighting a fuse under real estate?
The U.S. is still feeling the consequences of a housing-market collapse that is widely blamed for triggering the Great Recession. The world’s largest economy stopped contracting in the second quarter of 2009, but house prices continued to fall over the next three years. While property costs since then have risen at a faster annual pace than an aggregate of 23 countries tracked by the Dallas Fed, prices are still 3.8 percent below their peak.
Since the global property market bottomed out at the start of 2012, house prices have risen most in New Zealand, Australia and South Africa. Increases of more than 30 percent in the three countries compare with an average gain of 11 percent in the sample. Prices are still declining in some of Europe’s largest economies. One exception is Germany, where property costs have surged more than 17 percent after prices slid for a decade and a half starting in the mid 1990s.
http://assets.bwbx.io/images/iyALX8sh7vnI/v2/-1x-1.png
Central bankers want to see their low rates transmit into economic activity. Prices and transactions in real-estate markets can serve as indicators for buyers’ confidence in the economy, the strength of the labor market and spending prospects.
Too much froth in property markets can also be an obstacle to cutting rates further.
http://assets.bwbx.io/images/ihbnbh.Gg7fs/v2/-1x-1.png
For Graeme Wheeler, governor of the Reserve Bank of New Zealand, the challenge is to boost inflation that has undershot the target band for more than a year without causing a housing bubble. Policy makers cut their benchmark interest rate to a record-low 2.25 percent this month.
Sweden’s central bank has cut its repo rate to minus 0.5 percent in an effort to lift prices back to its target of 2 percent, an inflation rate unseen since 2012. House prices there are up 25 percent since the fourth quarter of 2011, when the Riksbank began cutting interest rates, according to the Dallas Fed’s Home Price Index, which has data through the third quarter.
Moody’s Investors Service, the credit and risk analysis firm, is warning that for Sweden, “the sustained and strong growth in mortgage lending and house prices risks leading to an (ultimately unsustainable) asset bubble.”
Principal Reduction Door still Ajar
False hope incentive painfully obvious
It could be a little like the fabled barn door – closed but locking up little more than hay and manure – but the Federal Housing Finance Agency (FHFA) seems to be nearing a final decision as to whether Fannie Mae and Freddie Mac will be allowed to incorporate principal reduction into their loan modifications. Five years ago this would have been a big story. Actually five years ago it was a big story, but now we are on the flip side.
Some history:
As home prices fell, delinquencies rose, and home equity disappeared many lenders began to reduce the principal on delinquent and underwater mortgages as part of some loan workouts and restructures both to reduce monthly payments and as an incentive to homeowners to hang on to their homes rather than throwing in the towel. By early 2013 principal reductions played a role in 70 percent of non-GSE restructures done under the Home Affordable Modification Program (HAMP)
However, principal reduction played no role whatsoever in the borrower assistance programs for loans owned or guaranteed by the biggest lenders/guarantors of all, Fannie Mae and Freddie Mac. The two government-sponsored enterprises (GSEs) were by then under government conservatorship with FHFA as their conservator. Acting FHFA Director Edward J. DeMarco was adamant in his refusal to allow principal reduction to become a part of the GSE arsenal to stem the tide of foreclosures.
DeMarco based his stand on his responsibility as conservator to preserve the assets of the two GSEs but it was not a popular one. The Obama Administration was rumored to be pretty unhappy with DeMarco anyway, – the Senate had refused to confirm Obama’s nominee as director; DeMarco was a Bush holdover – and the Treasury Department had made a big push to lenders to utilize principal reduction. But the biggest blowback came from congress including a letter from nine Democratic senators demanding DeMarco’s removal. He never wavered and in early 2013 President Obama finally succeeded in having a Melvin Watt confirmed to replace the acting director. Still, two years later, principal reduction is still not available from the GSEs.
Watt’s remarks on the subject came Tuesday in a speech given to the Women in Housing and Finance about progress made by the GSEs in loss mitigation. Watt recapped the history of the mortgage crises and how unprepared lenders and servicers were to stem the rising tide of delinquencies and defaults and to deal with millions of homeowners who were underwater on their mortgages. Today, he said, the picture is quite different. Delinquency rates are way down, and most of those who remain in negative equity are current on their mortgages. This rising tide however has not lifted all areas equally. Some states and many lower-income and minority areas still have significant problems with home values that have not recovered, weak sales markets, and vacant and abandoned properties.
He acknowledged the “substantial criticism” FHFA has received for not allowing the GSEs to offer principal reduction as part of their loss mitigation strategies and said that for the two years he has been director the agency has been methodically studying the issue in an attempt to determine if a “win-win” strategy was possible – one that would benefit both borrowers and the GSEs.
As to why an answer has been so long in coming, Watt said a decision includes an extremely complicated set of factors including balancing the shrinking number of borrowers who are both underwater and seriously delinquent with the cost and significant operational complexities for both the GSEs and services in implementing a principal reduction program. He called it, in fact, the most challenging evaluation the agency has undertaken during his time as Director.
However, if anyone was waiting for the barn door to slam shut as Watt spoke, they will have to wait a little longer. He concluded this discussion by saying, “We are, however, drawing close to the end of this difficult process, and I expect to announce a decision within the next 30 days about whether we have been able to find a “win-win” principal reduction strategy or whether, on the other hand, we will take principal reduction off the table entirely. So, while I don’t have an answer today, I invite you to stay tuned for more on this in the near future. As always, our decision and the reasons for making it will be documented and transparent.”
Rent growth slowing down
WASHINGTON (AP) — U.S. renters saw their monthly leases rise at a significantly slower pace in February, a sign that new construction may be starting to limit housing costs for apartment dwellers.
Real estate data firm Zillow said Thursday that median rent rose a seasonally adjusted 2.6 percent from a year ago. The median rent nationwide was $1,383 a month, having barely budged over the past six months after a period of extended acceleration. Two major forces appear to be dampening price growth: an influx of new apartment construction and renters finding their incomes are too low to afford further price hikes.
For the first two months of 2016, finished construction of multi-family apartment units is running nearly 19 percent above last year’s pace. This would come on top of a 21.4 percent increase in 2015, according to the Commerce Department.
Price growth has slowed in many metro areas where gains are running above the national average: New York, Los Angeles and Houston. Rental costs have slowed in still hot markets such as San Francisco, San Jose and Denver. Prices have fallen outright in Cleveland, Oklahoma City and Memphis, Tennessee.
Not all markets have seen price growth slow — with many markets seeing rental costs rise at a faster clip.
The median rental price in Seattle has climbed 7.22 percent to $1,946 a month, despite a wave of development in that area. Rental costs are also picking up speed in Boston and Portland, Oregon.
Rental prices had until recently been consistently rising at more than double the pace of wages. But February’s slowdown put rents closer to the 2.2 percent increase in average hourly earnings tracked by the Labor Department.
US new-home sales rise 2 percent in February, with Western buyers accounting for all of the gains
WASHINGTON (AP) — U.S. homebuyers in the West accounted for all of February’s increase in sales of new houses, possibly signaling uncertain growth prospects for the broader real estate market heading into the spring buying season.
The Commerce Department said Wednesday that new-home sales rose 2 percent last month to a seasonally adjusted annual rate of 512,000. All of the increase came from 38.5 percent surge in purchases in the West, which reversed a stiff 32.7 percent decline in January that had cut into overall sales.
The rebound likely reflected a government report that can be extremely volatile on a monthly basis, clouding some views of where the construction and housing markets are heading at the start of the most intense months for home sales.
“At this stage, it is unclear whether new-home sales are plateauing or are still in an uptrend,” said Joshua Shapiro, chief U.S. economist at MFR, a forecasting firm.
The U.S. housing market looks somewhat more tempered after strong growth in 2015. Sales in the opening two months of 2016 are running slightly below last year’s pace. Builder confidence has held steady despite a dip in sales expectations. Purchases of existing homes tumbled in February, with the prior two months of healthy sales likely straining already tight supplies.
Price pressures are mounting as the share of new homes being sold for less than $200,000 has declined so far this year, while the share of new-homes selling for more than $400,000 has risen. New-home sales fell in the Northeast, Midwest and South in February. The median new-home sales price rose 2.6 percent from a year ago to $301,400.
The market still has yet to fully rebound from the housing crisis of nearly a decade ago. New-home sales remain well below the historic 52-year average of 655,200, a figure that includes the build-out of the suburbs and influx of buyers after World War II. Subprime mortgages helped push up sales as high as 1.28 million in 2005, which in hindsight was an alarm sounding about an imbalanced, debt-ridden economy that shortly tumbled into the worst economic downturn since the Great Depression.
Sales of existing homes fell 7.1 percent last month to a seasonally adjusted annual rate of 5.08 million, the National Association of Realtors said Tuesday.
This fairness question, and the idea of rewarding and/or punishing behavior, is raising its head in employment benefits, specifically wellness programs. Is it fair to reward employees for losing weight? If you’ve been managing your weight, you receive nothing? Is it fair to reward employees for quitting smoking? What about those of us not dumb enough to ever start smoking?
Conversely, is it fair for an employer to pay for fitness center access and programs? This benefits employees who are already paying for these things outside of work, and doesn’t benefit employees with little interest.
Good question, but while you’re debating that, I’d like to point out that:
At the same time, banks get away with giving worse mortgages to minority dominated neighborhoods compared to equal income white neighborhoods.
http://www.nytimes.com/2007/10/15/nyregion/15subprime.html?ex=1350187200&en=a9978e04a9864642&ei=5088&partner=rssnyt&emc=rss
This concern is the driving force behind the new HMDA rule:
http://www.consumerfinance.gov/regulatory-implementation/hmda/
Beginning in 2017, creditors will be required to report more data about borrowers to help determine whether unlawful discrimination is occurring in mortgage lending. Just because a similar income pool of white borrowers receives lower rates/fees than a similar income pool of non-white borrowers, it doesn’t paint a sufficiently complete picture to evaluate unlawful discrimination.
The pools could have dramatically different FICOs, assets, etc. The new HMDA data will greatly help these evaluations, and plaintiffs attorneys! We’ll have a better idea if these disparate outcomes are the result of explainable differences, or plain ole fashioned Trump supporter bigotry!
I would argue that in the case of health benefits, those that are already in good health and have good habits are already rewarded. They don’t need a financial incentive to do the right thing.
I, with the help of Mellow Ruse, am trying to help us understand Trump supporters:
https://www.yahoo.com/news/who-s-really-voting-for-trump—portraits-beyond-the-polls-061622809.html
For decades we been used to seeing most political candidates play the game by the rules made up by the system. In the end you had a lot of the same. Every candidate went through the process of their political party, building reputation until they had enough to give it a shot. The only way to build reputation in a party is to ignore your personal beliefs and conform to the party’s core beliefs.
Then along comes the outsider, who has no backs to scratch, and never had to substitute his own beliefs for his party’s. What he brings is refreshing change and a new belief system.
The appeal for someone who never conformed to an unpopular establishment is very broad. In the end it almost doesn’t matter what you believe as a candidate as long as you bring some new angles to the debates.
What is the change he brings? His most popular positions are extreme, and infeasible, if not impossible to accomplish. What is his belief system?
All that doesn’t matter for many people. Let’s be honest, the majority of people who vote don’t know much about political issues.
But when they’ve been hearing the same exact thing for decades, while they and their children are worse off now, they know something’s up.
In these times anyone who is willing to tell people something different will be heard.
Trump is strongly against, trade pacts, exporting jobs to china, immigration, allowing Muslims to come to the US. In addition, he is the only Republican who says Iraq was a mistake.
The point is, he doesn’t have to be right on these issues to win people over.
It’s like religion. There’s a lot of unknowns in the world, but as long as someone gives people an answer, it doesn’t matter if it’s true or not, people are willing to accept that as the truth.
Trump gives people an answer to why the US is worse off today than 30 years ago.
I’m not even saying the US is worse off today, but for a lot of people it is worse.
That’s fair and accurate.
You saw my response yesterday I hope.
I did – also fair and accurate. I get the protest vote theory. I don’t get the rabid enthusiasm for THIS dude.
Yes, that is a good synopsis of why the common man supports Trump. It also illustrates why the Republican establishment won’t be able to steal the nomination from him. His followers would never support the candidate that usurps him.
I’m not even saying the US is worse off today, but for a lot of people it is worse.
Bingo! I’m doing fine because I went to college and majored in something marketable, but I have many blue collar people in my family that have fallen further behind under the last 25 years of NAFTA and open borders.
My vote is really driven by the effect that our nation’s policies have had on my family members. I’m doing fine but I try to vote for the good of society and not just for my own best interests. If the cost of goods goes up under more restrictive trade agreements and more expensive American labor, so be it. I will still be doing fine.
Do you think that Smoot-Hawley was at all responsible for the depth and/or length of The Great Depression?
I’ve seen arguments on both sides of that one. Paul Krugman, among others, believes that it does not. While I disagree with many of Krugman’s positions, international trade is his expertise, and I find it hard to argue with him in that area.
The problem with getting an economists assessment is that they live in ivory towers. They don’t understand the real world. If you asked Krugman what impact a similar tariff law would have today, he would say no effect – because declining exports would be offset by declining imports.
The fallacy with this argument is that he ignores the effect that supply disruptions will have on prices. Sure, similar goods can be produced domestically or abroad, but the can’t be produced here tomorrow in a factory that doesn’t exist. Similarly, if the market for cotton is in China, and China stops buying it because of trade laws, then the farmers or investors in that cotton will lose their shirt.
If Ford is selling 10k cars/day to China, and they can’t sell them there anymore, they can’t sell them here because they don’t meet US regs. Furthermore, since Ford’s plants are in China, they can’t move them back here. They are essentially out the capital to set up domestic manufacturing.
These supply disruptions have real world impacts that economists like Krugman ignore.
There are really tough generational consequences to free trade. There’s no doubt about that. My politics supports free trade and government assistance to affected folks.
Many hard-working blue collar people don’t want welfare.
Are you sure? They want jobs, more specifically higher-paying jobs. And they want the government to pass laws restricting their competitors so that they can charge higher prices for their labor than the free market would pay them. How is this different than welfare? If we are going to provide wage subsidization, we might as well do it directly so that all consumers don’t have to pay higher prices.
And they want the government to pass laws restricting their competitors so that they can charge higher prices for their labor than the free market would pay them.
This sounds like a straw man.
“This sounds like a straw man.”
“If the cost of goods goes up under more restrictive trade agreements and more expensive American labor, so be it.”
I thought your point was that more expensive American labor was the result of trade restrictions. I was arguing against that. Having the government give you money directly through welfare or increase wages via trade restriction is the same thing.
Trade policy changes have lasting impacts that aren’t always initially obvious. This works both ways: removing trade barriers or adding them realigns investment activity. Plants are moved from one state to another or even out of the country based on tax treatment (which can be less restrictive than trade barriers).
Trump interview Jan 26 2016
https://www.youtube.com/watch?v=Y9JBQvGJ4as
“There is something going on, Maria,” he said. “Go to Brussels. Go to Paris. Go to different places. There is something going on and it’s not good, where they want Shariah law, where they want this, where they want things that — you know, there has to be some assimilation. There is no assimilation. There is something bad going on.”
he added that Brussels was in a particularly dire state. “You go to Brussels — I was in Brussels a long time ago, 20 years ago, so beautiful, everything is so beautiful — it’s like living in a hellhole right now,” Mr. Trump continued.
This will add to his credibility and strengthen his xenophobic message.
What percentage of the US population is Muslim? What percentage of these Euro countries is Muslim?
Europe was at 6% in 2010 prior to the Syria migration. The US is at 1%.
Whenever someone complains about Muslims pushing their religion on others, how can you NOT think about the US and its Christians? Georgia just tried to shoot itself with a “religious freedom” bill by zealots.
Crazy is crazy, regardless of the god(s) to whom they pray.
I read that bill was to ensure pastors could not be sued for violating their religious beliefs by marrying two men or two women. Was there something more to it?
I think his bigger point is the hypocrisy of it. Religious people here in the US have no problem pushing their religion on other people, but they violently disagree when someone does the same to them. The same people who rally against muslims entering the US are the ones who support Christian missionaries in Irag and Syria.
Well, my church is helping eight refugee families resettle in Long Beach, so his beliefs about Christians are based on gross generalizations. Kind of like those that oppose Muslims, no?
I am assuming it is expected that those eight refugee families go to church every Sunday, right?
They are receiving resettlement assistance. The assistance is comprised of financial help in the form of donations and volunteers from the church that help them acquire housing, schooling, basic items, jobs, etc. Believe it or not this stuff is hard to navigate when you’re not from the US. Nothing else is expected in return. In fact, it’s quite likely that most of them are not Christians and will not be attending church.
They’re certainly generalizations. However, isn’t it fair to assume the vast majority of US Christians oppose same sex marriage and abortion, even though the bible says nothing about either?
I was raised extremely religiously. Sundays were days for rest where no TV was allowed, and I couldn’t play with friends. So, it’s not like I was raised by atheists. Although, it might explain the contempt you hear in my writing for religion. 😉
My mother used to force me to go to church with her every Sunday until I was 14. All it accomplished was it made me passionately hate going to church.
The Bible talks about marriage quite a bit actually, and also the value of children.
“However, isn’t it fair to assume the vast majority of US Christians oppose same sex marriage and abortion, even though the bible says nothing about either?”
Old testament leviticus 18 with regard to homosexuality.‘Do not have sexual relations with a man as one does with a woman; that is detestable.
The abortion thing is cover by the old testament exodus as one of the 10 commandment “thou salt not murder.” Since it is accepted an embryo is a human life.
Let’s start with the fact that this book was written thousands of years ago in ancient cultures and not in English. Your quoted scripture is actually interpreted as “Do not lie with a man as you do with a woman.” That’s it. Nothing more. And we don’t even know if that’s accurate. It’s our best effort at interpreting this. It is impossible to know an author’s true intent from a completely unfamiliar culture and a foreign language. But there is no shortage of modern day preachers who will tell you they know exactly what the bible means.
So, you should never kill? Should we have capital punishment? Can you kill someone in self defense if your life is in immediate grave danger?
This is just a taste of my problem with people who listen to others who tell them how to live their lives based on a thousands year old book.
I was merely pointing out it is mentioned not that I agree with it.
I do not personally believe in capital punishment but killing somebody in self defense is acceptable.
It was similar to the Indiana bill that sought to allow retail businesses to deny service to people based on “sincerely held religious beliefs.”
It seems to only apply to religious institutions, so that would be quite different than the Indiana law, which applied to businesses.
The Georgia law applied broadly before it was gutted on the eve of its signing.
Europe is seeing a strong increase in neo nazi populism…
it doesn’t even compare to the US current state and Trump’s support…
what you have is unemployment at 20-40%, great depression levels for millenials and you have these terror attacks… that are more likely to occur because of long standing liberal politics…
Trump won’t win because we have things too good in the US… but you will see neo nazi populism continue to take hold in Europe.. it’s the perfect storm.
Merkel’s handling of the refugee crisis was absolutely terrible. The only prime minister who never had to change his position was Orban from Hungary who coincidentally built a razor-wire fence that Trump would even be proud of.
You can’t INVITE everyone from the middle east in, and then say SORRY, WE’RE FULL when you change your mind.
Just step back and think about this latest incident, of dozens:
http://www.businessinsider.com/donald-trump-shared-an-unflattering-picture-of-ted-cruzs-wife-2016-3
One of these two children will be the Republican nominee for President of the United States. Broken record, but it’s still shocking to me.
Was Bill Clinton’s behavior shocking to you as well?
Yes, Clinton’s womanizing is beneath the office. It was shameful.
You have to admit, it is pretty funny.
Global warming rears its ugly head again. Roads in Wisconsin are undrivable.. Too bad IR’s relatives sold their snowmobiles!
WinterSpring Storm Selene Strands Hundreds on Snowy Interstates; Wisconsin Declares State of EmergencyA powerful
WinterSpring Storm Selene hammered the Rockies, Plains and Midwest Wednesday and Thursday, bringing an entire region to a halt, both on the ground and in the air.More than 30 inches of snow fell from this storm alone in parts of Colorado; when the snow stopped, DIA officially reported 13.1 inches. Further east, the snow continued to fall Thursday on the Upper Midwest.
Most major roadways across central Wisconsin were either snow- or ice-covered Thursday morning, complicating travel.
Gov. Scott Walker declared a state of emergency…
https://weather.com/storms/winter/news/winter-storm-selene-denver-interstates-airport-closed
Thank goodness we are experiencing the hottest couple of months in world history! That should help thaw things out in Wisconsin! [email protected][email protected]! Deluxe!
Tsk. Tsk. Everyone knows that snow is caused by pollution:
Air Pollution Can Prevent Rainfall
https://www.sciencedaily.com/releases/2000/03/000314065455.htm
Washington D.C. – Urban and industrial air pollution can stifle rain and snowfall, a new study shows, because the pollution particles prevent cloud water from condensing into raindrops and snowflakes. These findings are reported in the 10 March issue of Science.
The new study, by Daniel Rosenfeld, of the Hebrew University of Jerusalem, presents satellite images and measurements of “pollution tracks” downstream from major urban areas and air pollution sources such as power plants, lead smelters, and oil refineries. The tracks consist of polluted clouds that have shut off virtually all precipitation because they contain abnormally small water droplets.
The droplets’ small size is caused by pollution particles that act as “seeding” sites around which cloud moisture condenses. Approximately one million small droplets must collide and coalesce in order to make a precipitation-sized drop-that is, one large enough to fall below the cloud base and reach the ground before evaporating. In polluted clouds, there are too many small droplets and not enough larger ones. These small droplets float in the air with low probability of bumping into each other and merging into raindrops. The smaller droplets are also slower to freeze into ice crystals, resulting in less sleet and snowfall.
Because urban and industrial air pollution is a significant problem in many regions of the world, Rosenfeld’s findings suggest that human activity may be affecting rainfall patterns on a global scale.
These data are the first direct evidence of how urban and industrial pollution affects rainfall levels, a question scientists have debated for several decades. In fact, some previous studies have concluded that air pollution might increase rainfall, but the debate has continued due to a lack of convincing data.
“In the past, scientists had to collect information by poking little holes in clouds from airplanes, or using statistics about rainfall patterns because you can’t replicate rain-clouds in the lab. Now, new satellite instruments allow us to have a comprehensive look at the problem. For the first time, we can measure cloud precipitation and microstructure simultaneously over large areas,” Rosenfeld said.
In his Science paper, Rosenfeld presents the first images of pollution tracks over land. The images, taken over regions in Turkey, Canada, and Australia, all contain known sources of industrial or urban air pollution. The tracks stream away from these pollution sources in long narrow plumes.
Rosenfeld took yet a closer look at the pollution tracks in Australia, where the plumes were particularly striking. Further measurements from a bevy of satellite instruments showed that precipitation of both raindrops and ice crystals-which was occurring in the unpolluted clouds-was practically shut off in the clouds within the pollution tracks. However, the total amount of moisture in the polluted clouds was sufficient to produce rain and snow.
Rosenfeld also notes that in other parts of the world air pollution is more widespread and not as easy to distinguish as it is against the relatively clean Australian atmosphere. Thus the well-defined tracks identified in the study “serve as a Rosetta stone for the potential impact of more widely distributed aerosol pollution on clouds,” writes Owen Toon, of the University of Colorado at Boulder, in a related commentary article.
It’s been 25 years since I studied water chemistry, but his explanation makes sense.
Did you post this because you want to see more pollution, or is this somehow evidence against global warming?
I’m not sure what my motive was in posting this, I just found it interesting. If I had an ulterior motive, it might be to point out that a single weather event doesn’t support or undermine global warming theory. Or that precipitation is affected by pollution, which CO2 isn’t.
CO2 Causes More Precipitation And Less Precipitation
http://www.eurekalert.org/pub_releases/2011-03/ci-ccd032411.php
Washington, D.C.–Recent climate modeling has shown that reducing the concentration of carbon dioxide in the atmosphere would give the Earth a wetter climate in the short term. New research from Carnegie Global Ecology scientists Long Cao and Ken Caldeira offers a novel explanation for why climates are wetter when atmospheric carbon dioxide (CO2) concentrations are decreasing. Their findings, published online today by Geophysical Research Letters, show that cutting carbon dioxide concentrations could help prevent droughts caused by global warming.
Cao and Caldeira’s new work shows that this precipitation increase is due to the heat-trapping property of the greenhouse gas carbon dioxide in the atmosphere. Carbon dioxide traps heat in the middle of the atmosphere. This warm air higher in the atmosphere tends to prevent the rising air motions that create thunderstorms and rainfall.
As a result, an increase in the atmospheric concentration of carbon dioxide tends to suppress precipitation. Similarly, a decrease in the atmospheric concentration of carbon dioxide tends to increase precipitation.
The results of this study show that cutting the concentration of precipitation-suppressing carbon dioxide in the atmosphere would increase global precipitation. This is important because scientists are concerned that unchecked global warming could cause already dry areas to get drier. (Global warming may also cause wet areas to get wetter.) Cao and Caldeira’s findings indicate that reducing atmospheric carbon dioxide could prevent droughts caused by climate change.
“This study shows that the climate is going to be drier on the way up and wetter on the way down,” Caldeira said, adding:”Proposals to cool the earth using geo-engineering tools to reflect sunlight back to space would not cause a similar pulse of wetness.”
The team’s work shows that carbon dioxide rapidly affects the structure of the atmosphere, causing quick changes precipitation, as well as many other aspects of Earth’s climate, well before the greenhouse gas noticeably affects temperature. These results have important implications for understanding the effects of climate change caused by carbon dioxide, as well as the potential effects of reducing atmospheric carbon dioxide concentrations.
“The direct effects of carbon dioxide on precipitation take place quickly,” said Cao. “If we could cut carbon dioxide concentrations now, we would see precipitation increase within the year, but it would take many decades for climate to cool.”
Climate and weather are two different things. Weather can vary considerably and we can experience hot spells during cooling periods and visa versa.
If we stop producing so much CO2, the planet would likely heal itself rather quickly. The oceans absorb nearly all the CO2 it touches, and plants become more metabolically efficient with more CO2 in the air. The problem is that we churn out the stuff far faster than the natural mechanisms can absorb it. It’s one of the reasons I get excited about some energy solutions that don’t produce greenhouse gasses.
It will be a great time for a week or two until the snow melts again.
Anecdotally, I’ve been told the snowfall has actually increased. When they get storms now, it has more gulf moisture than ever before, so it dumps a lot of snow when it happens. When it’s really cold, the air can’t carry that much moisture, so the snowfall isn’t as deep, but since it is so cold, it doesn’t melt off either.
This is a hilarious example of how political correctness at colleges tries to stifle free speech:
Some Emory University students “in pain” after “Trump 2016” chalked on campus
The specter of a Donald Trump presidency is so disturbing to some college students that they’re protesting pro-Trump chalk writings on their campus, according to a report by Emory University’s campus newspaper.
The words “Trump 2016” appeared earlier this week scrawled in chalk around the college campus, the Emory Wheel reported Monday. In response, a few dozen students gathered at the school’s administration building later that day, holding signs that read “Stop Trump” and “Stop Hate.” According to the paper, the activists shouted, “You are not listening! Come speak to us, we are in pain!”
Some of the students, according to the Emory Wheel, complained about the slow response time to their grievances, although university administration officials met with demonstrators on the day the protests took place. One question posed to the university during the protest included: “Why did the swastikas [spray-painted on a Jewish fraternity house in 2014] receive a quick response while these chalkings did not?” Another asked if the university would “decry the support for this fascist, racist candidate” in an official campus statement.
In response, [president] Wagner’s Tuesday email said the university “cannot dismiss their expression of feelings and concern as motivated only by political preference or over-sensitivity.”
“I think the response from President Wagner was just kind of embarrassing for the school — because it’s not his job to police who students on campus can and cannot support,” Amelia Sims, chair of the College Republicans group, told the Post.
That is exactly how political correctness works. Eventually, people will not be able to disagree with any crazy idea of the political left because it might hurt their feelings.
If I rear-end a car with an Obama/Biden bumper sticker, can I sue the driver for causing me to lose control of my car? No, that would be stupid. And yet, that’s what the PC police want: to chill free speech they don’t agree with.
Hah. Crazy college kids. I was just as dumb in my teens/twenties.
I noticed a neighbor has a “Bernie 2016” bumper sticker this week. Seriously? I’d like to chat it up with this dude.
Bernie is leading Hillary in the latest national poll released by Bloomberg, 49-48. The headline writer classifies it as a “split”:
Democrats Evenly Split Over Clinton, Sanders
http://www.bloomberg.com/politics/articles/2016-03-24/democrats-evenly-split-over-clinton-sanders-in-bloomberg-poll-im63yb0w
Bernie also won more delegates this past Tuesday, 76-55, although strangely the news media reported something different:
Clinton Pads Lead for Party Nomination
http://www.realclearpolitics.com/articles/2016/03/23/trump_and_clinton_pad_leads_in_race_for_party_nominations_130068.html
The Democratic establishment has the same problem as the Republican establishment, but their candidate has a more comfortable lead, and they have support of a compliant media.
Actually, as a percentage of the delegates needed, her lead over Sanders is much smaller than Trump’s. You would not know it from the media coverage though.
http://projects.fivethirtyeight.com/election-2016/delegate-targets/democrats/
Dems:
Delegates needed to win – 2,026
Hillary – 1,229
Bernie – 933
Reps:
Delegates need to win – 1,237
Trump – 754
Cruz – 465
This doesn’t include the “Democrats” super delegates though. Funny how the people’s party is less democratic than the evil repubs.
Yes. That’s another issue nobody is talking about. Perhaps this is due to the more vocal opposition from the Republican establishment.
It will all come down to the superdelegates for the democrats
A) Choose the candidate who has a better chance at winning against Trump
http://www.huffingtonpost.com/seth-abramson/sanders-currently-winning-democratic-primary-race-ill-prove-to-you_b_9528076.html
or
B) Carry out the will of the establishment in securing the throne for Hillary even if it risks Trump as our next president
Enjoy!
Be your Own Owner
Andre Willers
11 Nov 2014
Synopsis:
Can you own yourself in a world of juggernaut Corporations, Megastates and people smarter than yourself rigging the whole system?
The answer is Yes.
Discussion:
1.Existence Proof: It has been done repeatedly, throughout history.
2.The pattern is then that the liberators become the new Elite, and things repeat after a number of generations.
3.Why? It is part of the “Tragedy of the Commons” paradigm.
4.The “Tragedy of the Commons” Boundaries has been broken:
4.2 Ostrum Principles is a set of rules to utilize this to make the process self-sustaining. No new Elite.
5.2 Depth into the Singularity. Like fish in water, humans do not notice how fast the vortex is already moving. We are talking about human capability changing . Getting smarter, processing more information quicker , learning to jump over the barriers of the rat maze. You know, outsmarting the experimenter.
Interesting times, indeed. We are already seeing it.
All those dumbing down techniques will boomerang. A lot of angry young humans, looking for culprits.
http://andreswhy.blogspot.com/2014/11/be-your-own-owner.html
Did you ever read George Orwell’s Animal Farm?
http://www.cliffsnotes.com/literature/a/animal-farm/book-summary
We haven’t hit 100 comments on this blog in a very long time.
Great job everyone. Nice conversation today.
Wow this is shocking..
I just got a letter from an Investment Bank for a 1-Month LIBOR interest only Adjustable rate mortgage.
The offer is 1.75% fixed rate for 10 years, $1M loan at $1458 per moth for 10 years?
Loan amounts up to $10M available.
Are the flood gates opening?
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