December 23, 2007

And the Great Housing Ponzi Scheme ends. Get ready for the carnage.


Another GREAT housing crash expose in the New York Times. Nice to have good writers out there doing their jobs (hint hint Catherine Reagor).

You wonder how this kind of information can be out there, and the NAR and realtors are still out there lying and spinning. It's over folks. It's all over. And with the crash of housing comes the crash of everything. Get ready.


This Is the Sound of a Bubble Bursting

Southwestern Florida is in the midst of this gathering storm. It was here that housing prices multiplied first and most exuberantly, and here that the deterioration has unfolded most rapidly. As troubles spill from real estate and construction into other areas of life, this region offers what may be a foretaste of the economic pain awaiting other parts of the country.

National home builders poured in, along with construction workers, roofers and electricians. But as a kingdom of real estate materialized, growth ultimately exceeded demand: investors were selling to one another, inflating prices. When the market figured this out in late 2005, it retreated with punishing speed.

“It was as if someone turned off the faucet,” Mr. Carey said. “It just came to a screeching halt. When it stopped, people started dumping property.”

Throughout Lee County, a sense of desperation has seized the market as speculators try to unload property or lure renters. On many lawns, a fierce battle is under way for the attention of passers-by, with “for rent” signs narrowly edging out “for sale.”

Mr. Jarrett hasn’t closed a deal in three months. He is on track to earn about $50,000 for the year, he said. Yet he needs $17,000 a month just to pay the mortgages, insurance, taxes and utility bills on his four properties — all worth less than half what he owes. Rental income brings in only about $3,500 a month.

It started with housing, the loss of construction jobs, mortgage companies, title companies, but now it’s spread through the entire economy,” Mr. Kest says as he walks a strip of mostly empty condo towers on the riverside in downtown Fort Myers. “It now has permeated everything.”

All the local governments were drunk with money,” says Mr. Kest, the finance professor. “Now, they’re going to have to cut back and learn how to manage.”

23 comments:

Anonymous said...

"He is applying for a state-subsidized health plan that would cover his 9-year-old daughter. “I’m in survival mode,” he says."

This is a man w/ a $750,000 dollar home and Corvette asking the taxpayers to pick up his families health care???? WTF!!!

Anonymous said...

I am willing to bet he owes more then his assets are worth.

Anonymous said...

Sure Arizona looks messy but in todays NYTimes there is an article about a certain condo where real estate agents bought units at $7mil and they are now in contract at $13mil a month later. No joke. Seems like rich get richer on the high end, everyone else is screwed with a mortgage they cant handle

White Swan Event said...

Government in Florida cut spending??? They raised property taxes for 2007, whilst the value of Florida property drops like a rock.

Стивен said...

What we've been saying for years, and it will only get better and cheaper and beter and better and cheaper and cheaper:

People who were priced out of the earlier boom here could wind up the winners. “We had an affordable-housing crisis,” says Tammy Hall, a Lee County commissioner. “The people who were here for a fast buck are gone. You’re going to see normal people go back into that housing.”

When Andrea Drewyor, 24, moved to Cape Coral from Ohio this year to take a teaching job, she found a brand-new two-bedroom waterfront duplex in a gated community with a fitness center, a swimming pool and a Jacuzzi — all for $875 a month in rent.

At night, most of the units around her are dark. The developer can moan.

Not Ms. Drewyor.

“I like not having a lot of people living here,” she said. “This place is awesome.”

01/20/2009 end of an error. said...

This is the beginning of the next Great Depression. Once most of Klownifornia looks like this we are SCREWED.

Phoenix
LA
San Diego
San Francisco
Sacramento
Cleveland
New York
Washington

This will make the 30's look good. While I am lucky probably will have a job, I'm in the medical field. I rent and have no real debt other than a lease I set to go away in 2009.

What I fear is crime getting totally out of control. People do stupid crap when they are desperate.

Anonymous said...

"What I fear is crime getting totally out of control. People do stupid crap when they are desperate."

If you think this is an exaggeration, just Go to any Mall and look at the charging homedebtors you will be defending yourself against...

American people - a f*cking sorry lot, that is For Sure.

Anonymous said...

I've got a great idea for our next Ponzi scheme, that pulls the economy out of the doldrums. The US govt limits the number of cars manufactured, or imported to 5,000 a year. Then we all can get rich selling our used cars to each other. 92 Dodge, only 300,000 miles, $125,000 firm.

Anonymous said...

HP'ers just shrug and ask what took so long.

(Shrug... Shrug... where did I hear that word before???)

Anonymous said...


This is a man w/ a $750,000 dollar home and Corvette asking the taxpayers to pick up his families health care???? WTF!!!


Doesn't everyone deserve free healthcare? There's 30 million illegal immigrants out there without healthcare. The Democrats will get them free healthcare.

Paul E. Math said...

The scarey thought is that this is what is happening now in Florida but it's a sign of what is to come everywhere. California, New York, everywhere.

Anonymous said...


Sure Arizona looks messy but in todays NYTimes there is an article about a certain condo where real estate agents bought units at $7mil and they are now in contract at $13mil a month later. No joke. Seems like rich get richer on the high end, everyone else is screwed with a mortgage they cant handle


Which lenders are still bankrolling the ponzi scheme? I need to short them into bankruptcy.

Anonymous said...


What I fear is crime getting totally out of control. People do stupid crap when they are desperate.


In the 1930's most people were hard working and disciplined. Today, most people don't give a damn. Society would completely break down if there was another depression. There will still be law and order in the surburbs. The big cities will be in chaos. On top of that, most big cities ban guns, so only the criminals will have guns since the police will be non-existent without pay.

happy homeowner in the stix said...

I'll take the Vette if that guy still has it. (Sold mine a year ago and still miss it.)

5k, cash. It would have been more if it was red, gotta give me some compensation for the color mistake.

Of course, the doofus probably leased the thing, so I doubt he could hock it if he wanted to.

Anonymous said...

Mr. Jarrett hasn’t closed a deal in three months. He is on track to earn about $50,000 for the year, he said. Yet he needs $17,000 a month just to pay the mortgages, insurance, taxes and utility bills on his four properties — all worth less than half
what he owes.

Anonymous said...


Yet he needs $17,000 a month just to pay the mortgages, insurance, taxes and utility bills on his four properties — all worth less than half
what he owes.


Why is the moron still holding onto properties like that? Even if they double in price by 2008, he would still be selling at a big loss. It's time to let the banks eat it. I guess like our DOPES, he is still in denial. Maybe he is our favorite DOPES.

Amtex said...

anonymous says..."the Democrats will give them free health care"....

Okay, think about it. The Democrats give them free health care or the Republicans start wars to pay the military-industrial complex.

Both provide high paying jobs. But with the Democrats no one dies in a meaningless war, we don't have the huge lifetime costs of tending to the wounded soldiers, and people actually get health care!

Common sense says the Democratic idea is by far the lesser of two 'evils'.

Anonymous said...

Can you believe they downgraded Smith & Wesson stock!
I just bought 1000 shares @ $6.00
When the run for guns starts it will skyrocket.

Anonymous said...

This place looks like a prison built overlooking an open sewage pit. Perfect for Arizona.

Why not get closer and make diving boards optional?

Blow that place up and bury the rubble. OR make it into a Realtors 'Old Folks Home'. Push one realtor off the balcony (14 story height-minimum) every morning as the NAR flag is raised, just so they may satisfy their taste for fresh human blood and misery so common to their careers.

6% ers are DEAD.

FlyingMonkeyWarrior said...

Breaking Point Ahead For the Global Financial System in 2008
Carnage will be Global, and may start in The USA.
________________________________

SNIP:
According to LEAP/E2020 research team, it is already a fact that after it (sic {Fed Bank}) lost control over interest rates, the US Federal Reserve has now lost two more of the attributes that characterized the post-1945 global financial system: its credibility as a proactive player capable of influencing heavy market trends, and its capacity to organize and drive global central banks altogether along its own rhythm and goals. In doing so, it has just lost the ability to steer by itself the entire global financial system, an ability it has gained after 1945.

Even though today, financial markets are mostly receptive to the loss of the first attribute [9] , our researchers estimate that it is the loss of the second attribute (and the impact on the system’s leadership) which will result in the global financial system’s break sometime in the course of next year, probably by summer, when the effects of the ongoing US recession will start being fully felt and when Asians and Europeans will decisively be compelled to impose their own priorities to the “Fed-pilot”.

(sic-There is a) growing divergences between the four main central banks (US Federal Reserve, European Central Bank, Bank of England, Swiss national Bank).

According to LEAP/E2020, these crucial trends, coming at a time when the entire magnitude of the US recession effects has not yet been reached (in Asia and the US in particular), illustrate the rapid increase of centrifugal forces which, according to our anticipations, will lead the contemporary global financial system to a break point by summer 2008.

This break point will entail numerous disastrous effects for the world’s largest financial institutions, in particular for all those who do not yet fully understand the meaning of ongoing tendencies and therefore who remain largely involved in the US dollar system currently imploding. These institutions will experience, to a much larger degree, what those who failed to anticipate the subprime crisis experienced, now being on the verge of disaster.

Meanwhile, for depositors and investors, this breaking phase will convey risks of considerable loss comparable to the two previous breaking periods (1929 and the years that followed, and 1973 and the end of the 1970s).

According to our researchers, the ongoing rupture is even more disastrous than the two previous ones due to a disproportionate importance of the financial sphere in contemporary economy.


US banks quarterly change in domestic loans (in blue) versus domestic deposits (in red) – Source FDIC - Comment: There is a historical disconnection between loans and deposits since 2006, illustrating the dangerous spiral US banks have entered

By summer 2008, it will be possible to distinguish more clearly the lines along which the global financial system will reorganise once the break point has been reached.

According to our team, it is a fact that the Europeans (the Eurozone essentially), together with Japan and China, will have to compose with Russia and oil-exporting countries in order to structure a new system.

The evolution will be painful for the US (and for all related operators) as, inevitably, the new system will no longer be organised along their interest as it was the case in the past sixty years. The next US Administration (that will be in charge from January 2009 onward) will have a task high on their agenda: to handle as well as possible this historic change, conveying new economic and financial constraints, in a context of economic recession. Europeans and Asians too will have to keep in mind this aspect if they want to avoid the break from turning into chaos.

Link for charts, full opine and References:

http://www.europe2020.org/spip.php?
article515&lang=en

FlyingMonkeyWarrior said...

Keith, I accidentally posted a really big story here. Deserves its own thread IMO>

Girl Guide said...

Blogger FlyingMonkeyWarrior said...

Breaking Point Ahead For the Global Financial System in 2008
Carnage will be Global, and may start in The USA.
Followed your link. It is written in French. Any chance of reading the original in English?

I live and own businesses in Lee County Florida. Street after street of vacant houses with For Sale/For Rent signs. Grow houses, courtesy of the wet foot/dry foot Cubans.
(20+ busts since October, almost all Cubans)

Rampant violent crime.(Drug-related murders with victims left among the deserted houses in East Lee County)

This area relies on tourism and construction. The construction jobs - and all the illegal immigrants they employed - have left the area.

When they left,they abandoned their houses. Houses that were brand new two years ago look like slums. It is what happens when you cram 20 people in a house made for 4.

Retirees from the Midwest used to come here because it was the cheap side of Florida. But, they wanted
an inexpensive little mobile home in a park full of other retirees, not a $300,000 "condo."

Vacant lots in the worst areas of the county inflated to $55,000 per quarter acre during the mania. Now, you can have your pick for $9,900, if there were any buyers.

FYI. They are not worth that.

There are partially finished developments all over the county. One area is particularly sad. The developers gave land for a school, which has been built. The roads are in, club house, golf course, and maybe 40 houses total. (I read they planned for 1200).

Just down from that development is another with not one house built. The elaborate entrance has a big sign - SNEAK PREVIEW. There is nothing there to preview, except empty lots. Not even a model home.

Where I live, a neighbor listed his waterfront condo for $225,000. No lookers. Over a year later, his price is $159,000. I think he will have to come down even further.

FlyingMonkeyWarrior said...

Anonymous Girl Guide said...
I live in Orlando and I am sorry that Lee county is such a disaster. I had no idea! I am down town and we are okay except the highrise condos are abandoned.
Thanks for posting. (:
This is such a big story I am going to move it. heh.