Rolling US Economy Into The Shitbin Thread

Message Bookmarked
Bookmark Removed
Not all messages are displayed: show all messages (8786 of them)

I think this is a good thing?

https://www.engadget.com/tsmc-12-billion-chip-plant-arizona-083518143.html

DJI, Friday, 15 May 2020 16:45 (one month ago) link

Do economists not know how much things cost pic.twitter.com/dMdSoaL3tA

— Keezy Young πŸŒΈπŸ‘» (a ghost) (@KeezyBees) May 17, 2020

π” π”žπ”’π”¨ (caek), Sunday, 17 May 2020 17:49 (one month ago) link

it's one banana michael

silby, Sunday, 17 May 2020 18:04 (one month ago) link

(of course that was in the twitter replies, my referential humor is so feeble!)

silby, Sunday, 17 May 2020 18:05 (one month ago) link

"might not have a reason to buy a new car with fewer places to visit"

uh huh uh huh, tell me more

Fuck the NRA (ulysses), Sunday, 17 May 2020 18:12 (one month ago) link

I'm close to paying mine off (for the first time in my life, I'll have a pink slip", and I hope to not buy another one for 27 years

I am a free. I am not man. A number. (Neanderthal), Sunday, 17 May 2020 18:31 (one month ago) link

In case you’ve been wondering β€œI wonder what fucked up shit lurking under the surface is going to be brought up by this crisis” here’s a good candidate.

https://www.propublica.org/article/whistleblower-wall-street-has-engaged-in-widespread-manipulation-of-mortgage-funds

longtime caller, first time listener (man alive), Sunday, 17 May 2020 20:11 (one month ago) link

ProPublica closely examined six loans that were part of CMBS in recent years to see if their data resembles the pattern described by the whistleblower. What we found matched the allegations: The historical profits reported for some buildings were listed as much as 30% higher than the profits previously reported for the same buildings and same years when the property was part of an earlier CMBS. As a rough analogy, imagine a homeowner having stated in a mortgage application that his 2017 income was $100,000 only to claim during a later refinancing that his 2017 income was $130,000 β€” without acknowledging or explaining the change.

Is this the right analogy though? Wouldn't it be more like inflating the property value of the house by saying it was purchased for more than it actually was? Or are these loans not made based on LTV but other criteria? idk

sarahell, Monday, 18 May 2020 04:29 (one month ago) link

I think commercial mortgages are a lot more tied to the amount of income a property is supposed to produce rather than a static "value."

longtime caller, first time listener (man alive), Monday, 18 May 2020 04:31 (one month ago) link

In the case of a commercial mortgage, the lender is willing to lend based on whether the property produces enough income to service the mortgage. In a residential mortgage, the lender is willing to lend based on whether the owner earns enough income to service the mortgage. In both cases the question is whether the mortgage can be paid, not what the property is "worth."

longtime caller, first time listener (man alive), Monday, 18 May 2020 04:33 (one month ago) link

In the case of a commercial mortgage, the lender is willing to lend based on whether the property produces enough income to service the mortgage

yeah, and that income (or projected income if the property is "underutilized") is what comprises the "value" right? It's investment property. It's value -- what it's worth -- is how much income it can generate (also factoring in expenses and other debt), yeah? Like isn't it the standard thing that a commercial lender won't do more than 80% of the "value" of the property? ...value doesn't equal "assessed value" of the building, as opposed to a residential loan which is based both on the assessed value of the building (e.g. the underwater issue) AND the borrower's ability to pay.

sarahell, Monday, 18 May 2020 04:42 (one month ago) link

a lender for a residential mortgage generally isn't going to loan the borrower more than they believe the house can be re-sold for, because the house is the collateral securing the loan.

sarahell, Monday, 18 May 2020 04:59 (one month ago) link

Yeah, the "value" of commercial property is basically the present value of the future cash flows as I understand it.

longtime caller, first time listener (man alive), Monday, 18 May 2020 05:03 (one month ago) link

yeah ... I like a lot of propublica's coverage, but it has a tendency to oversimplify and/or make not-so-good analogies to explain things to readers (which, some of these topics are complex, and it is really good that they are covering them in an accessible way). I think there was an article a few weeks back about taxes/tax policy (something like that) that was like 90% right, but 10% misleading/inaccurate but I don't recall the exact article.

eh ... i might be being too negative ... maybe it was more like 95% right/5% misleading/inaccurate

sarahell, Monday, 18 May 2020 05:19 (one month ago) link

Not sure I understand what the problem is with the analogy

longtime caller, first time listener (man alive), Monday, 18 May 2020 06:30 (one month ago) link

the analogy equates the income value of the commercial property with the income of the homeowner -- which is fine, if you are looking at it from an "ability to repay" standpoint, but the income value of the commercial property determines the maximum loan value (regardless of the borrower's ability to repay / their credit / etc), which is more accurately equated with the assessed value of the house -- the underlying property that secures the loan.

sarahell, Monday, 18 May 2020 07:18 (one month ago) link

the subprime crisis was partly loans being made to people who couldn't afford them, but also partly the overinflated values of the properties because of the lax lending standards, such that the actual re-sale value of the houses securing the loans wasn't nearly enough to pay off the outstanding debt -- it's like student loans and college tuitions which are partly so high because it is easy to get loans for that much. If they regulated student loans like they did residential mortgage loans (well, like since 2008), tuitions would not be/have gotten that high.

sarahell, Monday, 18 May 2020 07:22 (one month ago) link

the analogy is about lying, not the underlying value of assets

Greta Van Show Feets BB (milo z), Monday, 18 May 2020 07:41 (one month ago) link

the distinction isn't meaningful from the perspective of commercial properties, which is what the argument is about The value of the property and its income-producing ability are one and the same.

longtime caller, first time listener (man alive), Monday, 18 May 2020 15:17 (one month ago) link

The distinction is meaningful wrt a residential property because you could have a loan secured by a correctly valued property and a buyer who lied about his income, meaning that the buyer can't pay but the bank still has sufficient collateral.

In a commercial mortgage, the only value the property has is as income-producing property, so if the income is overstated the value is per se overstated. People buy houses to live in. People only buy commercial properties for income. Therefore the analogy to overstating a residential buyer's income is more apt.

longtime caller, first time listener (man alive), Monday, 18 May 2020 15:20 (one month ago) link

People only buy commercial properties for income.

nope -- there are people who buy commercial property to live in (this is something i deal with on a daily basis for work); there are people who buy commercial property to run their business(es) out of -- active vs passive income. Different things are required on the loan docs

sarahell, Monday, 18 May 2020 17:16 (one month ago) link

In a commercial mortgage, the only value the property has is as income-producing property, so if the income is overstated the value is per se overstated. People buy houses to live in. People only buy commercial properties for income. Therefore the analogy to overstating a residential buyer's income is more apt.

I get that, but, I would argue that overstating the income (bu under-reporting expenses) is closer to not disclosing some physical flaw in the house or misrepresenting the size of the lot -- as in, "Yes, this house is worth $600k but it needs a new sewer lateral and foundation that will cost $50k, but we hid that fact from people."

sarahell, Monday, 18 May 2020 17:24 (one month ago) link

ugh -- typos -- (by under-reporting expenses) like, the house is only worth $550k because in order to get that $600k value, you would have to spend $50k on foundation work and the new sewer lateral.

sarahell, Monday, 18 May 2020 17:27 (one month ago) link

I think this is kind of point-missing. These are commercial mortgages that get bundled and sold as mortgage-backed securities. Mortgage backed securities provide a stream of payments. The ability to provide that stream of payments depends on the ability of the property owners to service the mortages, which in turn depends (in nearly all cases) on income produced by the properties. No one buys a mortgage backed security with the hope that the underlying properties will be foreclosed. In the same sense, RMBS are also a stream of payments based on the ability of the property owners to pay, except from their own income instead of income from the property. So in that sense it is a very good analogy. Using the underlying asset value instead would make no sense. The point is that the payment generation ability of the property in each case is overstated.

longtime caller, first time listener (man alive), Monday, 18 May 2020 17:31 (one month ago) link

Using the underlying asset value instead would make no sense. The point is that the payment generation ability of the property in each case is overstated.

I can see that, if you are only looking at it from the perspective of the CMBS investor, which is ostensibly what the article is about, though the issue of fraud in commercial mortgage lending is also discussed quite a bit in the article, and is perhaps more interesting/relevant to a general audience, and the underlying asset value definitely plays a part in that. Also, comparing it to more regulated disclosures and valuations of residential properties w/r/t underwriting.

sarahell, Monday, 18 May 2020 17:47 (one month ago) link

That is 100% what the article is about, and it is 100% relevant to a general audience, because this is the commercial mortgage equivalent of what caused the last financial crisis. That's the whole point.

longtime caller, first time listener (man alive), Tuesday, 19 May 2020 03:16 (one month ago) link

the resale value of the properties was a secondary consideration at best in the subprime crisis -- mass foreclosures are bad news for banks even if they get collateral of value.

longtime caller, first time listener (man alive), Tuesday, 19 May 2020 03:34 (one month ago) link

I wasn't saying that it wasn't relevant. I was saying, in addition to the parallels with the subprime crisis, it also reveals a disparity in regulation and valuation of real estate owned by more affluent/powerful people/business interests vs. low and middle income individuals, which is also relevant, and the article talks about as well.

sarahell, Tuesday, 19 May 2020 15:02 (one month ago) link

https://www.reuters.com/article/us-boeing-jobs-idUSKBN2332EP

Ah! Well, nevertheless,

Li'l Brexit (Tracer Hand), Wednesday, 27 May 2020 21:12 (one month ago) link

thought this was pretty interesting and honestly a little surprising. i don't think this is going to be a common vector for transmission to i think it's probably good news?

https://medium.com/thumbtack-blog/data-exactly-how-hard-covid-19-is-hitting-local-services-cf7737775f6e

i think these %s are compared to march 1 rather than compared to, e.g. what they were on that day a year ago. so the fact that home services work is *up* is not necessarily surprising because people work on their homes in the summer. but still!

π” π”žπ”’π”¨ (caek), Thursday, 28 May 2020 03:32 (one month ago) link

"i don't think this is going to be a common vector for transmission to i think it's probably good news?"

"this" = an electrician or something coming to do work on your house, not like a peripatetic singing teacher coming to your house.

full data here goes back to march 1 https://docs.google.com/spreadsheets/d/e/2PACX-1vSLW6qVKKs9-SpvFVki3ZRrsr8EWfLokMg5JGn6upbw1pg1krEkwgcxED3jfLE7dqSZ1WkS5zVlvjJg/pubhtml#

π” π”žπ”’π”¨ (caek), Thursday, 28 May 2020 03:36 (one month ago) link

Anecdotal evidence gathered by me would indicate that DIY projects are definitely on the upswing as people get fidgety at home. I’m also not at all surprised that folks would be bringing in the pros to take care of household projects that have been on the back burner, what with all the money people are saving on gas and by cooking at home.

El Tomboto, Thursday, 28 May 2020 03:41 (one month ago) link

ha it will be interesting to see how much un-permitted residential construction / improvements are being made rn ... though it feels like the transition to submitting plans, etc. online rather than in person isn't that difficult.

sarahell, Thursday, 28 May 2020 19:14 (one month ago) link

a friend posted on facebook that he had been looking for a bag of shredded rubber to finish a landscaping job for weeks, apparently they are as gone as the nintendo switch

crystal-brained yogahead (map), Thursday, 28 May 2020 19:16 (one month ago) link

such a pain to shred your own, but it does make for a fresher hellscape i mean landscape

Morton Koopa Jr. Sings Elvis (Sufjan Grafton), Thursday, 28 May 2020 20:18 (one month ago) link

southwestern US teal formica shortage

Morton Koopa Jr. Sings Elvis (Sufjan Grafton), Thursday, 28 May 2020 20:26 (one month ago) link

welcome to the shitbin

Stephen Moore, economic adviser to the White House, on the jobs numbers:

β€œIt takes a lot of the wind out of the sails of any phase 4 -- we don't need it now. There's no reason to have a major spending bill. The sense of urgent crisis is very greatly dissipated by the report.”

— Jeffrey Stein (@JStein_WaPo) June 5, 2020

π” π”žπ”’π”¨ (caek), Friday, 5 June 2020 16:46 (four weeks ago) link

Everything's all better! Yay!

Josh in Chicago, Friday, 5 June 2020 16:46 (four weeks ago) link

His own obstinate GOP Senate doesn't even agree with that as of this week

I am a free. I am not man. A number. (Neanderthal), Friday, 5 June 2020 16:47 (four weeks ago) link

at the risk of being extremely paranoid, do we believe these numbers?

bls is of course supposed to be independent and insulated, but so are inspectors general

mookieproof, Friday, 5 June 2020 17:54 (four weeks ago) link

i have a friend who works in labor statistics stuff, they looked bonkers to him. i think his suggestion was that maybe a lot of covid-related work loss was being counted differently.

j., Friday, 5 June 2020 17:59 (four weeks ago) link

i've mentioned this elsewhere but the markets are nearing their all time highs very quickly. It's not the real economy but certain people don't seem to care as long as they can say "the economy" is fine.

Yerac, Friday, 5 June 2020 18:02 (four weeks ago) link

a lot of the "re-employed" are furloughed returning to work, but they could be counting people who returned to work only to be told their job would be ending permanently at the end of the week (as some friends of mine), or coming in for a day or two for re-opening meetings or having their hours severely cut so they're working at a fraction of what they made before. Many of these people can't even file for underemployment, as for example in Florida, you can only file for underemployment if you make less than $275/week, which is their maximum benefit.

so I'm sure the stats are "accurate" from the 10,000 foot view, but they probably don't mean what people think they meet when examined up-close.

I am a free. I am not man. A number. (Neanderthal), Friday, 5 June 2020 18:04 (four weeks ago) link

I saw that it's a lot of forloughed and hospitality workers going back to work, but employment numbers for blacks and Asians actually went down.

Josh in Chicago, Friday, 5 June 2020 18:07 (four weeks ago) link

let's see how many more bodies are nbd

brooklyn suicide cult (Dr Morbius), Friday, 5 June 2020 18:08 (four weeks ago) link

that's the other part.

I am a free. I am not man. A number. (Neanderthal), Friday, 5 June 2020 18:10 (four weeks ago) link

There's gonna be a different picture once the credit card and auto loan and mortgage defaults start to pile up, but that could take a while to show up in quarterly earnings results.

longtime caller, first time listener (man alive), Friday, 5 June 2020 18:45 (four weeks ago) link

there was a headline today that Hertz went up 825% since they declared bankruptcy and their shares plummeted.

Yerac, Friday, 5 June 2020 18:58 (four weeks ago) link

"Unexpected strength in employment, hours, and earnings in May implies less of a decline in second-quarter PCE than previously expected. As a result, we raised our tracking forecast of second-quarter GDP growth by 0.5 percentage point to -41.5%." β€”IHS Markit

— Neil Irwin (@Neil_Irwin) June 5, 2020

π” π”žπ”’π”¨ (caek), Friday, 5 June 2020 19:29 (four weeks ago) link

oh, what a relief

all cats are beautiful (silby), Friday, 5 June 2020 19:34 (four weeks ago) link


You must be logged in to post. Please either login here, or if you are not registered, you may register here.