The view of the Americans to the economy plays a big role in determining if the country really has surpassed the recession period. In the recent CNBC All-America Economic Web Survey in June of this year, the views are negative in terms of the standard of living in the country.
There are 810 Americans who participated in online surveys from various parts of the country that come in different occupations, religions and income groups. In this web survey, 41 percent of citizens hope that their wage would go up for the next year. This is the largest percentage recorded since 5 years ago.
The Bad News
44% percent said they are less satisfied with the standard of living in the country compared to 28% that CNBC collected in 2007. Only fifty-four percent feels that the standard of living has exceeded or met their needs compared to 71 percent people in 2007.
The results show that there is a significant shift among the middle and poor classes. In 2007, a survey was conducted among people with income of $30,000-$50,000 and they said that their standard of living is satisfactory but it dropped to 49% in this year’s survey.
For six years, there is one group that has no significant shift. These are the people with postgraduate degrees that 86% of them said that they are satisfied with their status.
However, sixty-nine percent of wealth citizens earning $75,000 annually are satisfied with the living but it is 17 percent down compared to 2007.
The Good News
However, there are positive sights in the survey, including 40% judge the country as poor compare to fifty-four percent in 2008. Optimistic people went up to 15 percent which is twice the number in 2008. 38% of homeowners expect their house value to rise compare to twenty-three percent five years ago.The home price is expected to rise at an average of 3.1 which is higher than 1.6% in October 2007.
But the price of everyday goods is expected to rise by 4.3 percent compared to 3.8 in the first quarter of the year. Americans’ optimism to stock market went down to thirty-six percent from forty percent in March.
Although there is good news in this survey, there is no denial that the negative results indicate that Americans are less satisfied of what they have now compared to years ago. The country is well-known for its products, movies, music, industries, Hollywood, but unfortunately, it is one of the struggling countries that aims to return to its top position like before.
Buying a new home is not an easy decision most especially for first time buyers. There are certain factors that need to be considered to ensure that you purchased the perfect home. The increasing rates of mortgage urge renters to buy new homes instead. This has been going on for quite some time as real estate forecasters predict the low housing input every year.
Mistakes during Home Purchase
- Disregarding Financial Aspect – oftentimes, first time buyers tend to look for perfect design houses with good kitchen layouts but forget to think about how much money is involved. It is important to integrate your desire and the amount of budget you can afford.
- No Future Plans – when buying your new home, it is essential to think about what’s going to happen in the future. Think about your plans 5 or 10 years from now and consider them into your decision. Do you need a big lawn? How many rooms do you need?
- Don’t be too obvious – if you are novice buyer, it is still important to control your emotions so as not to easily get intimidated and overpowered by real estate agents.
- Inspection Skipping – this is mostly an issue with buyers. Always keep in mind that pictures online is totally different when you get to see the house firsthand. This will give you entirely an idea what the rooms and other areas of the house look like. This will save you some money because who knows you’ll spend more on renovation than its actual price.
- Depending on Good Faith Estimate – good faith estimate is what lenders have to provide potential buyers to give them an approximate amount of what they have to pay during the closing time. You need to realize that this is not the exact amount, it can change and normally it goes higher.
Novice buyers need some guidance, try to ask from individuals that you trust or from people who have experienced purchasing their own homes. More than anything else, think hard and be wise with your decision. Don’t be too over excited and avoid being impulsive, you need to consider a lot of factors before buying a new home.
It may sound alarming but housing foreclosures recently showed that there is an increase in filings every month since the past years. What does economy suggest about this?
There is nothing that companies can do about the situation and even lending institutions agree that they cannot help those who are in financial crisis. Unless people are allowed to stall on the foreclosures, there is a certain possibility for modifications of loans to prevent, if not totally stop, the emergence of mass foreclosures. A few lenders can just accept foreclosures and people regard this as an opportunity to still stay in their residential property for at least another 90 days before finally leaving.
Some banks or lending entities try to hold back the list of Real Estate Owned properties or the REO which results in a feeling of insufficiency in the market. This is done in order to control the flow of supply and demand of the properties, and eventually they can control the price and the stocks accordingly. It is still a business after all and these banks/lending companies can always play around to gain money out of the situation.
Unemployment is also one of the major factors of some foreclosures because if one loses a job and cannot find an immediate replacement for the lost income, how can he possibly pay the home and car amortization? Surely, a person cannot just acquire loan from so many loan sharks because eventually this can result to bankruptcy and would only add to already existing financial problems.
The economy has not been so bad yet this is very visible because companies continue to cut workers and have been experiencing unpredictable amount of losses due to the recession. Economists had been predicting a rise in the percentage of unemployment so while still employed, it is best to save money as much as possible. The circulation of money is diminishing day by day which only worsens the already worse situation.
While most people and large businesses are both running out of money, credit cards are being continually used to pay the bills and other mortgage obligations. The problem is once a person had depleted his credit limit, he would most probably spend all his savings and even the retirement benefits. If these are all used up, there is only slim chance that he can acquire or buy a particular property after a foreclosure in the years to come. It is actually a domino effect which started with unemployment, unwise spending and improper handling of finances.
One of the major difficulties that may happen right now is the possible decrease in terms of value of your homes and other properties. It may cause panic and can be brutally frustrating but you need to let it pass or else you will end up devastated.
It’s like buying and investing in something like a truck or a car, the moment you get it from the car dealer and drive it off, that is the start of devaluation. The value is not increasing but will generally start to decrease the minute you use it. And yes, although the value starts to decrease you don’t leave the car and abandon it right on the road. Every vehicle can devalue yet people still keep t
hem because they need them and they invested a whole of lot of money on these automobiles.
And keeping the car is reasonable, why? It’s because it is still valuable and it takes you wherever you want to go – in your workplace, in your client’s place and in your homes. You don’t think of how much you have to pay for the loan, instead you think of how necessary and important the role of a car is in your daily activities. The only time that you should be concerned is when you have to deal with an approaching financial event which can totally affect your economic status. In this case you can deal with taking out an equity loan if you really need to.
Worrying can get you to nowhere instead think and take things positively in situations as follows:
- If you really need to sell your house to upgrade, and you sold your house a little down your expectations, you should also think of the seller of the house you bought. The owner must have lost a little than you do, and that would make you feel better. Of course, you bought that house to upgrade, that means it is a better house than your old one, and the value is pricier when you decide to sell it in the future. Think of it as a good investment and can help alleviate your financial status.
- Refinancing an existing loan may be a better option than paying for the interests on your properties which you cannot afford to update your payments anymore. It is like getting another loan to pay for an existing loan on easier terms.
You see, if you invest your money on something, you need to think of the value in terms of money and necessity. Money means in the future you can sell that certain property in a much higher value. Necessity means the property may devalue, yet it had served its purpose and you can still sell it in a much lesser price.
America might be struggling with its economy for the past couple of years. College graduates can’t find decent jobs and there are still insufficient jobs for millions of people. However, this country still excels in a few other things.
In a recently released, “better life index” by the Organization for Economic Cooperation and Development, Switzerland came in 1st place for overall life satisfaction. Australia ranked the highest in all 11 categories earning the title “World’s Happiest Country”. In this survey, United States came in 6th.
U.S. Ranks No.1
U.S is in the top 1 for income and housing. For income, the country has the highest average level of household health with $116,000 per household. American citizens have the highest level of personal earning with $54,450 and disposable income of $38,000 per household per year.
However, income quality in the country is not doing well. It is the disproportionate of wealthy to the average family. In fact, U.S. is the worst out of 27 nations. Wealthy Americans really live in luxury.
Housing affordability in U.S. ranks eight out of 36 nations while the quality of housing, as measured by basic facilities, is at No. 1. Americans also enjoy the more spacious living spaces. A typical American house has 2.3 rooms per person other than homes in Korea, Japan and other countries which do not have the same amount of open space.
U.S. is Way Behind
On the other hand, U.S is losing its ground in the quality of life. According to a survey conducted by the Word Economic Forum, the U.S has fallen from the first place down to seventh in 2008. In another study, Cyprus is found to be more appealing for foreign investors rather than America.
Another thing that is pushing this country down in rankings is the health care system. The health care system in the country costs more than other countries in the word. The spending on health care is 2.5 times more than the average in other developed countries.
However, life expectancy is still below average. In WEF’s latest study, the trustfulness of people to its politicians put U.S. in the 54th place and 76th in efficient spending of the government resources. Also the Homicide rate brought the country to 32nd out of 36 nations.
In conclusion, America still has a stable economy and many opportunities are still available. However, success for many businesses and people are getting slimmer and slimmer. It might still be a better idea to build a good life in America but it is not as easy as it used to be.
Overshadowed by the cutbacks and slow inventory building, the U.S. has gained the biggest expansion since 2010. Gross domestic products increased by 2.4 percent annualized rate but it is less than what is expected by the government.
With the rise of the household wealth, increase in home values and stock prices which resulted to America to weather down to pay high taxes and substantial purchases. With flexible consumer spending, housing marketing and more jobs will strengthen the expansion for the second quarter of the year.
However, more Americans are applying for the unemployment insurance payments which increased by 10,000 to 354,000 as the week needed, as Labor Department reported.
Eighty-one economists conducted the survey of value of the services and goods. According to the survey, the GDP increased 2 to 3 percent. Consumer spending is 70 percent of the economy which increased by 3.4 percent annualized rate in the first months of the year. This increase is added to the 2.4 percent increase of GDP.
A decline was noticed in the commercial construction which the government did not expect. Equipment and software businesses become popular which the government also predicted to be less than the estimate.
On the Right Path
The gain in household purchases means that the economy is equipped with $85 million for fiscal tightening and also the 2 percent increase in payroll tax has taken effect at the start of the year. Economists predict that for the next quarter, 1.6 percent annualized rate and the GDP will also climb up to 2.4 percent for the last 6 months of the year.
The domestic sales went up to 1.8 percent a little bit more than the 1.5 percent estimated. According to Brian Jones of Societe General in New York, the country is on the right path for a better economy. He also said there are other factors that could affect the growth of this country that should be considered.
There is Still Hope
Most homeowners buy new products to redecorate their homes. When you move in to a new house, it is common for owners to buy new things for the house. Also home values in more than 20 cities have increased by March 2013.
Price pressures are still contained. The measure of inflation with the consumer spending increased by one percent which is a high number than the 0.9 estimated. It is the goal of central banks to maintain inflation with 2 percent.
However, the number of unemployed, insufficient wages and tightening policy are still problems for this country. The tightening policy could slow down the progress of the country, so the government should take action regarding these issues.
U.S. is struggling with its economy but with its men not losing hope, everything is still possible and can be achieved.
With the lack of pop in the Zynga (ZNGA) IPO there have been calls that the IPO market is now smart enough to avoid the whole bubble plague of the late 90s. I’d like to argue that it’s still there its just that the IPO is no longer the point from which you track bubble behavior.
So really the fundamental question is when is the true IPO? Yes there is the technical definition involving S1 filings and such but since the last bubble there has been the rise of the private company markets like SecondMarket and one could argue that Zynga amongst others started trading pseudo publically a long time ago. If you read the press on them in these markets they certainly behaved like the IPOs of yore. Zynga tripled in valuation in these gray markets in 2010/2011.
This is what lead to the valuations that look like non-bubble businesses. It really was public mania done in a semi public way that lead to these apparently stable non-bubble IPO valuations.
The problem is there is no term for this and if you can’t name it you can’t track it. So I would like to propose a name. When a private company begins trading on a private company “gray” market like Second Market it should be called a PPO – PremInitial Public Offering so that way we can still track it’s valuation pop and call it a bubble when price swings outpace fundamentals. It foresees the bubble before the IPO.
So 50B (or 25 times current sales) is the valuation for Facebook (see Forbes for a sobering comparison to current public companies) What actually makes this even scarier is NOT the current valuation but the expected valuation. My guess is that when you invest in a “hot pre-IPO” stock your expectations for a total return probably range from 2 to 4 times the investment (there is a sexiness to the notion of “doubling your money” that is reserved for the big bet).
So given that the investors are expecting this stock to hit 50-100 times current sales. While it is true that sales will continue to grow its still sobering to see what the expected valuations are (100-200B total market cap). For reference Google as about a 200B market cap right now and at its peak was about 230B.
Secondly this is a very clever vehicle that gets the employees around the typical 6-month post IPO lock-up period. The truth is the vast majority of the money going into this offering is actually just being used to cash out insiders (VCs and employees). As a result they get their IPO (which now means “Internal Private Offering”) and the only ones with the lock-up are the current “market” investors and that lock-up is now 2 years.
The one hopeful note here for those that feel like the wealthy class have been taking advantage of the working class is that the only ones that get taken are the wealthy as not many working class individuals have 2 million to invest right now.
(Follow Me on Twitter at watchingmarcitz)
(Having problems with your Toyota. Learn how to get more for your troubles)
So President Obama has finally decided to do ”cram-downs” with taxpayer money. This is the idea that one should reduce (cram-down) the amount owed on a house to put it more in line with the new (reduced) value of that house so a person can refinance or won’t just abandon the property.
I am totally opposed to cram-downs (especially for those that are underwater because they chewed up their equity on cash-out refis for frivolous spending) but if Obama is going to do it let’s at least do it in a way that protects taxpayers, encourages the right kind of behavior going forward and isn’t just a handout to the unfortunate or financially ignorant or profligate. That lesson comes from the way venture capitalists invest in Silicon Valley startups and the answer is “cash for equity.”
Yes cash for equity has already been done with the money going to the banks but the valuation method has all been wrong. For housing cram-downs its very simple and it aligns everyones goals (at least the ones we want to support)
Take for example you have a house that has $600,000 in loans against it but it is now worth $500,000 . The owner is seeking to refinance it but can only do so for $500,000 so they need a $100,000 “cram down”.
If the government (or the bank ) provides it they should get a percentage of equity in the house equal to the cram down amount divided by the new appraised value of the house.
In this case that would be $100,000/$500,000 = 20%
Now when the owner goes to sell the house 20% of the proceeds immediately go to the entity providing the cram-down (government, bank, etc..).
Why is this fair? Well if you are going into foreclosure you have effectively lost the asset. Refinancing is a way to buy it back but to buy it back you need a partner to provide some of the financing. So, in this example, you are effectively asking someone for $100,000 to buy a $500,000 asset (remember $600,000 is irrelevent at this point in the game). They are putting up 20% of the money so effectively they own 20% of the equity.
Here’s why you do it this way:
- Supposedly preventing foreclosures will “save the market” so the taxpayer/bank investor should get to partake in the upside (and share the risk on the downside).
- If the goal is to keep people in their homes with our money then those people better damn well stay in those homes. This will make that likely because they’ll have to wait it out until either they have paid down the principal on their loan by the equity percent or the home has risen in value enough so they can sell the home and pay off the cram-down equity holder and the mortgage lender.
- This should also separate the real homeowner from the “flipper”. The “flipper” won’t want this “long term commitment” and will just give up the house. The real homeowner who is committed to staying will be much more agreeable because they truly plan on riding this thing out.
Administering this program is simply done by the IRS which is informed of all major income events and can act as a collection mechanism for this.
So PLEASE don’t do cram-downs but if we must lets do them right. It works for Silicon Valley to take cash for equity so why not let it work for the rest of the country.
Oh and don’t forget to email Timothy Geithner to tell him what a horrible plan this is.
(Follow Me on Twitter at watchingmarcitz)
(Having problems with your Toyota. Learn how to get more for your troubles)
(Follow Me on Twitter at watchingmarcitz)
(UPDATE 3/18/10: Toyota executive offices contacted me today, OK I actually contacted them first (310-468-4000), and offered to buy back the car. We’ll wait to see the offer before deciding whether they are trying to help or just get rid of me.)
(FURTHER UPDATE: In a conversation with one of their executive analysts today (a representative for Toyota Executives) they said to me “I feel you are trying to swindle us”. Not exactly a way to earn points for customer service. OH and then they “call-blocked” me (a strange badge of honor). No worries its simple to bypass, see below.)
Key Contacts at Toyota of North America
(If you call please tell them Marc sent you)
- Jim Lentz – President/COO – 310-468-6285
- Nancy Fein – VP of Customer Relations – 310-468-5277
You can also reach other executives by following these simple instructions to manage their voice mail system
- Dial their direct line at 310-468-4000
- Select “2″ from the first menu to dial-by-name
- You can find a list of key Toyota executive names on this website
- After finishing the message hit “#2#” to mark the message urgent and send it.
- You can then dial another extension by hitting “*t” and then hitting “*a” to dial by name, again
IF you get “call blocked” (you call and the call just mysteriously drops) you can either use another phone OR simply find out how to do one-time caller ID blocking of your phone number. For Verizon you dial *67 then the phone number then “snd”. So if you are trying to reach Mr. Lentz its *673104686285 (Send)”
The problems at Toyota (much like the Camry and Prius) are accelerating out of control and just can’t be stopped. Unfortunately the problems go from the ridiculous (stuck accelerator pedals, brief lack of braking control) to the sublime (body rattles and creeks and groans on brand new cars). My own 2007/2010 Camry Hybrid has spent 7.5% of its life until now at the dealership. My most recent trip to the dealership (my 17th one in 3 years) proved that all too true.
- A new 2010 Camry for $2,500 (to replace my 2007)
- $500 in dealer credits for service and parts
- A 2 year/25,000 maintenance warranty that covers all standard maintenance for that period.
- A free 15,000 mile tune-up
- Did I mention the new 2010 Camry for $2,500?
Here is the background on what has happened.
- If Toyota is unable to repair the same problem a number of times (the amount is dependent, I believe, on the type of the problem, for my rattles it was 7 repair attempts) you can request Toyota investigate and make a claim.
- If you are cleared under Lemon Law they will determine a “usage fee” (as dictated by the California law). That is a fee you pay EITHER to have your car replaced or money refunded. The fee is calculated based on the mileage on your car when you reported the problem for the first time. For example I had reported my car problem at about 3000 miles and had it repaired numerous times over the following 2 years. I opted to have my car replaced with a comparable 2010 model for a fee of $2500. If I returned the car and didn’t take a replacement they would have returned what I paid for the car LESS the $2500.
EVEN if you can’t get qualified under Lemon Law (or its just too soon) you can work with the Toyota Customer Experience Center (or your manufacturer’s customer satisfaction line) to get some form of retribution for your troubles as I have done above. Please note just having to have the rattle fixed once or twice won’t get their attention but if it goes 3 or more repair attempts you definitely have a credible gripe that they will find embarrassing and want to provide some form of compensation. The types of compensation that they are likely to do are:
- Some form of credit for further service at a Toyota dealership.
- A free service (e.g. free 15,000 mile service)
- If things get really bad a maintenance contract where they will handle all standard maintenance (oil changes, tune-ups, etc…) for a certain period of time or mileage (e.g. 2 year/25,000 miles)
So a few pointers:
- Report problems early and often so if you have to go to Lemon Law you will minimize the usage fee.
- Keep all service receipts FOREVER.
- Establish an ally at the dealer.
- Contact the Toyota Customer Experience Center (or your automotive manufacturer’s customer care line) at 800-331-4331 and tell them WatchingMarcitz sent you. Establish an ally there as well.
- For my own personal cause PLEASE when you are at the dealerships approach other like-minded Toyota owners and tell them about these tips. Also please forward them to me at email@example.com . I used to work in the auto industry (General Motors Corporate Marketing in the late 80s and early 90s) and I know how to pressure the automakers. More people singing from the same hymnal will help and I will gladly organize the choir.
- Please also keep me posted on your progress so I can gather all the information together.
Regrettably Toyota 2010 feels very much like GM felt back in the late 80s when they were presiding over falling quality and being overtaken by a foreign competitor. For GM it was Toyota. For Toyota it is now Kia/Hundai or Ford (both worthwhile considerations for your next car).
Follow Me on Twitter at watchingmarcitz