patrick.net

Headset,

But who would they bring the class action suit against? Many of those guys are already belly up. Then again that hasn't stopped anyone before!

So, DinOR

Are you going to add a 4th to your 3 stages of house? You know, your "starter", "dream," and "final?" Perhaps you can put "forclosed" after dream, but before final?

But who would they bring the class action suit against?

Whoever is currently servicing the load. Some are trying to hold Wachovia responsible because assets they purchased were from companies old enough tp have profited from slavery.

Headset,

Absolutely! As ColoradoBear points out, it no longer matters "how" you get there at all! I think I shall call this phase... the "walk away and start over" home?

DinOR - Sorry, for the curiosity, but did your daughter go ahead and buy the in-laws house?

If people walk away from their mortgage obligations, how long is it until they can buy another house currently - and do you think that tiem lag will get shorter or longer?

"Whoever"

Whoever indeed. I worked at FleetBoston during what Savage described as "rape-a-nation". Problem solved. Proceed.

Because of the parity - Canada is now losing out on outsourcing to China - when do you think businesses are going to realize that outsourcing to China is not really as cheap as it seems - all I keep thinking is - "you get what you pay for..."

Claire,

No apology needed whatsoever! Here's the real skinny. In the short time they've had their (perfectly fine) home on the market so much has transpired it looks like a cork on the ocean! With Jumbo completely stalling our rinky-dinky local market has come to a standstill. Now the listings in the 250k to 400k range are all competing for buyer attention.

When they first listed they were EASILY the most sensible home in the price range. Now, as each new listing comes on the market (ever lower in price) their home is getting lost in the noise. Brand new homes (with more modern amenities) are now priced BELOW what they're asking!

And I'm fine with this. A silver lining after all!

DinOR - thanks for the update - I was absent for a while, so I suspect I have missed a lot - I wasn't sure whether it had all become a done deal a long time ago. Are you keeping quiet through this all for the sake of family peace? How are the in-laws?

BTW, isn’t one of the major reasons the US automakers are in such dire straits precisely because they’ve given too much to unions already? The employee buyouts, pensions, health coverage, etc etc.

Well, part of this agreement is GM attempting to offload its healthcare liabilities. And as they point out, the executive bonuses at GM are going up and up every year even while the company struggles.

GM also has many wholly owned subsidiaries and factories around the world, including in cheap labor countries (e.g. GM Daewoo). Hence, the profits in Australia, where GM is the premier local manufacturer (followed by Ford, also a subsidiary of its US parent), flow back to the US.

There are some countries where healthcare is automatically provided for free all the time no matter who you work for, or whether you are working or not. To expect GM to live up to its healthcare commitments is not asking too much in a country where employers are expected to subsidise healthcare.

There is a wage difference with some of the Japanese car companies operating inside America -- if their employees belong to the UAW, there is a chance of addressing that issue due to the universal presence of the union.

There are other reasons car sales are slow these days (hint: soaring property prices) which is a failure of the market system in general.

Otherwise, it is hard to beat cheap labor countries at their own game if you want to have a strong local manufacturing sector -- you cannot compete with cheap labor by slashing wages and conditions to the point where your own workers are earning a 3rd world wage. (And the large multi-national auto makers have several fingers in the offshoring pie to boot.)

"The workers, united, will never be defeated!" -- Just my 2c

Everyone should take this blip from Ben for what it is - an opportunity to get your house in order (pun intended). If you are holding real estate as a short term investment, sell if you can. If you an ARM owner, refinance NOW. If you are neither, try your best to get a job that will last through the recession, increase your cash position and look at getting a home in the community in which you have always wanted to live around 2011.
The Carter years are returning. Stagflation is coming. Start preparing today.

DinOR

Btw, UAW always goes on strike when the company can least afford it.

And this time that may be what GM management wants. GM is saddled with overcapacity, high wages, and $51 billion in unfunded health care obligations. They are few, if any, financially and politically acceptable remedies under the current framework. GM doesn't have much to lose by scapegoating the UAW, "Everybody knew the automotive industry was in bad shape. Their strike kicked us when we were down and they put us under." (While quietly ignoring the fact that they *agreed* to these obligations in the first place.)

And I think the union is going to find surprisingly little public support outside of the die hard ranks. Two Job Joe and Jane Nurse no longer see the typical UAW member as their working class compatriots. These guys are fighting over wages and benefits the average worker can only dream about. It's greedy pig versus even greedier pig, nobody cares.

Greedy wall street vs. foolish home buyers vs. absent or negligent 3rd parties, the politics, the finger pointing, the name calling, it's all so familiar. :)

Skibum

My dad has been in the auto industry for 25+ years and business has been crappy for years. He thinks the auto manufacturers are deliberately trying to break the unions. They keep running at a loss and telling the unions that they can't afford their demands. I haven't talked to my dad about it lately, but I bet if I asked he'd say this strike is what the auto manufacturers want.

SQT,
I'm sure your dad's right. I wonder if the UAW realizes they are playing into the hands of management. I will add another point, though. Much of the automakers' financial obligations are severe and cannot be renegotiated, and will saddle their financial books for a long time - retirement packages, early retirement buyouts, generous healthcare for retirees. Not that any of these are necessarily wrong, but in comparison to leaner industries, these costs are a huge sink (along with ballooning executive compensation...)

This is shaping up to be a huge game of chicken.

SQT,

I agree with your dad, they are trying to bust the union. When the job no longer exists there's not much to negotiate about.

DS wrote:
Well, part of this agreement is GM attempting to offload its healthcare liabilities.

Pure speculative thinking time. Suppose GM goes bankrupt, who picks up the tab on the health care? The only entity that could swallow such an obligation is the US taxpayer. And of course, if you do it for one group, you've got to do it for everybody. Could this be the early stirrings of universal health care?

skibum Says:
Ghost Flippers.

Hey, I have an idea. Five-Hundred year mortgages. Neg-Am for the first fifty years. Let your ghost deal with it later.

SP

believe it or not, full time career union officials and negotiaters operating in giant multinational industries are not completely stupid, or unable to access corporate financial information.

there is a difference between a giant multinational company still turning a healthy profit with a huge international presence which just wants to retain a healthy share price and corporate bond rating, and a genuinely struggling company.

DS,

I'm sure you're correct. Union officials (Jimmy Hoffa and his descendents aside) are generally more corporate/lawyer types than average workers, or at least they're surrounded by such advisers.

In the big picture, this whole thing is just another dying gasp of the US auto industry. SUV-mania unfortunately kept them in a false sense of coming back into solvency, but that wasn't going to last (obvious in hindsight).

Between auto strikers, inflation, economic woes, foreigners buying US assets, etc etc, this seems just like the late 70's and early 80's all over again.

>This is shaping up to be a huge game of chicken.

Reminds me of union negotiations in New York.

Round 1 - FIGHT!

Mass Transit Union: We want 10% a year raises for the next 5 years.

City Negotiator: You'll get a 2% raise over the next 5 years.

Union: Uh uh!

City: Uh huh!

Round 2 - STRIKE!

Union: We won't settle for anything less!

City: We won't settle for anything more!

Round 3 - DENOUEMENT!

Union and City: We agreed on 5% a year raises for the next 5 years.

Union: We won! See? That's why you should keep paying your union dues!

City: We won! See? We fight for taxpayers.

Skibum,

I'm getting that deja vu all over again feeling as well. Only, I think it's actually 1970. Where are the Allman brothers?

Bruce,

The heavy-duty M+A private equity LBO type stuff reminds me of the 80's (think "Wall Street"), while the other stuff does seem more 70's.

Allman Bros, good. Bee Gees, or disco in general, not so good.

skibum,

I am SOOOO ready to watch KKR and gang to start squirming.

Bruce says: I’m getting that deja vu all over again feeling as well. Only, I think it’s actually 1970. Where are the Allman brothers?

Suddenly, and for a very brief moment, this whole situation seemed far cooler than it really was.

I am so ready for the paper pushers on the street who generate nothing but reap everything to go under.

Is Alan Parson's Project more 70s or 80s?

Is Alan Parson’s Project more 70s or 80s?

I'd say more 70's than 80's, but either way, they're lame.

eburbed Says:
Reminds me of union negotiations in New York.
Round 1 - FIGHT!
City Negotiator: You’ll get a 2% raise over the next 5 years.
Round 2 - STRIKE!
Round 3 - DENOUEMENT!
Union and City: We agreed on 5% a year raises for the next 5 years.
Union: We won! See? That’s why you should keep paying your union dues!

that's the whole point, the unions deliberately put out ambit claims that they know they probably won't get, then negotiate back, in order to at least maintain wage parity with inflation. it's a time-honoured strategy. note that the city was offering 2% total and the union ended up getting 5% x 5. that's the point. as long as the dues are not 4.5% of your wage, you're ahead, and hopefully keeping parity with real inflation. typical dues are about $10 a week, that's 1% of a wage...

a friend of mine in a non-unionised call centre (as they all are) ended up getting a $20 a month pay rise over 3 years. pretty scary stuff when real inflation is probably about 6-7% right now.

It is pretty hard for GM to compete with auto makers in countries where the work force all has nationalized health care.

Jimbo Says:
It is pretty hard for GM to compete with auto makers in countries where the work force all has nationalized health care.

Is this an ambit claim for Hilarised medicine? ;)

The thing is that nationalised medicine countries achieve the same result at approx half the cost per capita of the US system, and some of these countries have taxes no higher than the US to do it. Apparently nationalised medicine was attractive for GM placing plants in Canada (until they tried to shift them to Mexico). But these are multinationals who have factories around the world, in rich countries and poor -- not all have good medical systems necessarily, e.g. Mexico. The overarching factor is always to produce for less, altho Keynesian theory says that the more you offshore, the poorer your target consumers become also...

Ugly national existing sales numbers for August:

http://www.bloomberg.com/apps/news?pid=20601087&sid=a1.psdAxTViI&refer=home

This is really before the credit crunch effect has had a significant impact...

SQT Says:
> My dad has been in the auto industry for 25+
> years and business has been crappy for years.
> He thinks the auto manufacturers are deliberately
> trying to break the unions.

While I'm sure that the big 3 want the unions to go away I don't think they have been working a plan over the last 20 years building ugly crappy cars that use a lot of gas just to break the unions...

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/09/25/BUKCS4NNB.DTL

Real estate blogger taps into bursting market bubble

@lunarpark,

Much thanks for the link! I can't believe some clown interviewed Patrick just to read him the riot act about his bearish web-site! Oh and the fact that he's WAY upside down on his home.

Skibum will be heartened to know that "McAlbatross" made the short list from our expansive glossary! Too funny.

Jimbo Says:
It is pretty hard for GM to compete with auto makers in countries where the work force all has nationalized health care.

I find that rather difficult to square that statement with the fact that the English automakers didn't do too well despite their workforce having NHS coverage. Building godawful crappy cars will kill a car company, even if their workers have taxpayer funded healthcare.

Socialized medicine is the answer to GM's problems? I think not.

SP

While I’m sure that the big 3 want the unions to go away I don’t think they have been working a plan over the last 20 years building ugly crappy cars that use a lot of gas just to break the unions…

Yeah, I'm not sure where the whole build a crappy car thing fits in.

lunarpark,
Thanks for the link. I wonder which of us is "Peter Christiansen"?

How do you like the counter point from yet another Realtor (tm):

"I laugh at bubble bloggers," said Matt Lanning, a Realtor with Zephyr Real Estate in San Francisco, whose sfhomeblog.com takes a considerably more upbeat view of the market. "I don't claim the world is always going to be stable, but there is no way the San Francisco market will collapse. It's a lot like the sensational journalism we're seeing with subprime mortgages which are far less of an issue than the media is making them out to be."

Yeah, great example of sensational journalism, saying the subprime crisis is overblown. Let's see, world-wide credit crunch, bank runs in the UK, RE market taking another huge hit, Fed forced to lower rates and increase inflation risk. Okay, I guess that was sensational journalism, you nimrod.

When I was in college many of my friends interned and others had full time job as engineers at GM in southern Ontario, most of them tell me it's the best place to draw a paycheck without doing anything. A friend of mine got hired as an engineer at GM and he drove his Nissan to work and was told to park at the visitor's lot. He quit after 2 months.

There are many foreign auto-makers that build cars here (albeit most of them are in the anti-union south), they seemed to do quite well. The fact is the big 3 only "know" how to make trucks and SUV's; everytime I go on vacation when I drive a domestic rental cars, they still seemed to be of really poor quality.

"The MEDIA have OVERBLOWN the subprime crisis."

Translated from REICSpeak:

"We absolutely adored the media when they unquestioningly reported ten and twenty percent year-over-year gains in the median house prices. Now that the party is over, and we're all drunk, we're pissed that the media won't give us our car keys back."

"I can’t believe some clown interviewed Patrick just to read him the riot act about his bearish web-site!"

I know! That is just crazy!!!

“I laugh at bubble bloggers,”

Laugh away man, laugh away...

What is the starting wage of a GM employee nowadays? What about the guy who can put the right size nut on the right sized bolt (a skilled worker)?

Remember the gov takeover of airline pensions a while back? The major air carriers had granted heavy compensation packages that were unsupportable in the long run. Therefore, when the bills came due on the pensions, the gov insurance came into play. And like the UAW, the retired pilots were looking for public sympathy. That sympathy dried up when the actual numbers came out, when it was made public that the pilots were expecting in excess of $100,000 per year pension.

Public familiarity with GM pay scales may elicit more a "stop crying and get back to work" than any form of sympathy.