California Nightmare: Over Half Of The People Living In The State Wish They Could Leave

This just shows what can happen when you let crazy people run a state for several decades.  In the 1960s and 1970s, the possibility of moving to the west coast was “the California dream” for millions of young Americans, but now “the California dream” has turned into “the California nightmare”.  According to a brand new survey, 53 percent of those living in California are considering leaving the state, and there are certainly lots of reasons to hit the road and never look back.  The cities are massively overcrowded, California has the worst traffic in the western world, drug use and illegal immigration both fuel an astounding amount of crime, tax rates are horrendous and many of the state politicians appear to literally be insane.  And on top of all that, let us not forget the earthquakes, wildfires and landslides that are constantly making headlines all over the world.  Last year was the worst year for wildfires in California history, and these days it seems like the state is hit by some new crisis every few weeks.

But none of those factors are the primary reason why so many people are eager to leave.

According to a brand new survey by Edelman Intelligence, the main reason why so many are considering leaving the state is the high cost of living

A growing number of Californians are contemplating moving from the state — and not due to wildfires or earthquakes but the sky-high cost of living, according to a survey released Wednesday.

The online survey, conducted last month by Edelman Intelligence, found that 53 percent of Californians surveyed are considering fleeing, representing a jump over the 49 percent polled a year ago. The desire to exit the nation’s most populous state was highest among millennials, the survey noted.

Thanks to absolutely ridiculous construction restrictions, it has become increasingly difficult to build new housing units in the state.  But meanwhile, people from all over the world continue to move there because they are attracted by what they see on television.

As a result, the supply of housing has not kept up with demand, and prices have shot through the roof in recent years.  The following numbers come from CNBC

Statewide, the median home value in California was $547,400 at the end of 2018, while the U.S. median home value was $223,900. By comparison, the median home value in New York state stood at $289,000 and $681,500 in New York City; New Jersey was $324,700.

Yes, there are a lot of good paying jobs in California, but you better have a really, really good job to be able to afford mortgage payments on a home worth half a million dollars.

Of course many Californians find themselves greatly stretched financially by out of control housing costs, and so more of them than ever are moving in with roommates.  In fact, one recent report found that the number of married couples in the U.S. that are living with roommates “has doubled since 1995”

The number of married couples living with roommates has doubled since 1995, according to a recent report from real estate site Trulia. About 280,000 married people now live with a roommate — and that’s particularly true in pricey cities like those on the West Coast.

The reason: Housing costs a ton. In Honolulu and Orange Country, Calif., the share of married couples with roommates is between four and five times the national rate. San Francisco, Los Angeles, San Diego and Seattle also have sky high rates of married couples with roomies. Those same cities all have well above average rental and housing costs (Trulia notes that housing costs in all these markets have risen more than 30% since 2009), with residents of uber-pricey San Francisco requiring more than $123,000 in income to live comfortably, one study showed.

In addition to housing costs, many Californians are greatly frustrated by the oppressive levels of taxation in the state.

At this point, the state has the highest marginal tax rate in the entire country

At 12.3 percent, California led the 50 states in 2018 with the highest top marginal tax rate, according to the Federation of Tax Administrators. And that doesn’t include an additional 1-percent surcharge for those Californians with incomes of $1 million or more.

Ouch.

But at least the weather is nice.

Yesterday, I wrote an article entitled “Rats, Public Defecation And Open Drug Use: Our Major Western Cities Are Becoming Uninhabitable Hellholes”, and it sparked something of a firestorm.  More than 1000 comments have already been posted on that article, and a few hearty individuals actually tried to convince the rest of us that life on the west coast is not actually all that bad.

I’m sorry, but if your city has far more intravenous drug users than it does high school students, that is not somewhere that I would want to raise a family

According to a report from the Chronicle, San Francisco now has more intravenous drug users than high school students. San Francisco, which operates 15 high schools, currently has 16,000 students enrolled grades nine through twelve.

By comparison, the northern California city currently has 24,500 “injection drug users.” That is approximately 8,500 more drug users than high school students.

As I mentioned yesterday, the city of San Francisco gave out 5.8 million free syringes to drug users last year.

When you have such widespread drug use, people are going to commit a lot of crime and they are going to do some really weird things.  Just consider the following example

Authorities are searching for a man seen on security footage licking the doorbell of a California home and relieving himself in the family’s yard.

Police have identified the man as Roberto Arroyo, 33, and say that he spent three hours around the Salinas home of Sylvia and Dave Dungan.

The couple had been out of town, during the strange incident, but their children were sleep inside the family’s home. They noticed something amiss when they woke up to multiple alerts from their surveillance system, which notifies the homeowners whenever there is movement near the front door.

A lot of really good people used to live in California, but they left because of stupid stuff like this.

In fact, quite a few of my best friends are people that have moved out of the state within the last 10 years.

Over the past decade we have seen a mass exodus out of California.  And according to Kristin Tate, the author of a new book entitled “How Do I Tax Thee?: A Field Guide to the Great American Rip-Off“, the “upper-middle class” has been moving out of the state faster than anyone else…

The largest socioeconomic segment moving from California is the upper-middle class. The state is home to some of the most burdensome taxes and regulations in the nation. Meanwhile, its social engineering — from green energy to wealth redistribution — have made many working families poorer. As California begins its long decline, the influx outward is picking up in earnest.

Overall, approximately 5 million people have packed up and permanently moved out of California within the last 10 years.

Unfortunately, the entire nation is slowly becoming just like California, and if we don’t turn things around eventually there will be no place left to go.

Get Prepared NowAbout the author: Michael Snyder is a nationally-syndicated writer, media personality and political activist. He is the author of four books including Get Prepared Now, The Beginning Of The End and Living A Life That Really Matters. His articles are originally published on The Economic Collapse Blog, End Of The American Dream and The Most Important News. From there, his articles are republished on dozens of other prominent websites. If you would like to republish his articles, please feel free to do so. The more people that see this information the better, and we need to wake more people up while there is still time.

“If The Yield Goes Significantly Higher The Market Is Going To Freak Out”

Freak Out - Photo by Alex ProimosIf yields on U.S. Treasury bonds keep rising, things are going to get very messy.  As I write this, the yield on 10 year U.S. Treasures has risen to 2.51 percent.  If that keeps going up, it is going to be like a mile wide lawnmower blade devastating everything in its path.  Ben Bernanke’s super low interest rate policies have systematically pushed investors into stocks and real estate over the past several years because there were few other places where they could get decent returns.  As this trade unwinds (and it will likely not be in an orderly fashion), we are going to see unprecedented carnage.  Stocks, ETFs, home prices and municipal bonds will all be devastated.  And of course that will only be the beginning.  What we are ultimately looking at is a sell off very similar to 2008, only this time we will have to deal with rising interest rates at the same time.  The conditions for a “perfect storm” are rapidly developing, and if something is not done we could eventually have a credit crunch unlike anything that we have ever seen before in modern times.

At the moment, perhaps the most important number in the financial world is the yield on 10 year U.S. Treasuries.  A lot of investors are really concerned about how rapidly it has been rising.  For example, Patrick Adams, a portfolio manager at PVG Asset Management, was quoted in USA Today as saying the following on Friday…

“I am watching the 10-year U.S. bond,” says Adams. “It has to stabilize. If the yield goes significantly higher the market is going to freak out.”

If interest rates keep rising, it is going to have a dramatic effect throughout the economy.  In an article that he just posted, Charles Hugh Smith explained some of the things that we might soon see…

The wheels fall off the entire financialized debtocracy wagon once yields rise.  There’s nothing mysterious about this:

1. As interest rates/yields rise, all the existing bonds paying next to nothing plummet in market value

2. As mortgage rates rise, there’s nobody left who can afford Housing Bubble 2.0 prices, so home prices fall off a cliff

3. Once you can get 5+% yield on cash again, few people are willing to risk capital in the equities markets in the hopes that they can earn more than 5% yield before the next crash wipes out 40% of their equity

4. As asset classes decline, lenders are wary of loaning money against these assets; if the collateral for the loan (real estate, bonds, stocks, etc.) are in a waterfall decline, no sane lender will risk capital on a bet that the collateral will be sufficient to cover losses should the borrower default.

In addition, rapidly rising interest rates would throw the municipal bond market into absolute chaos.  In fact, according to Reuters, nearly 2 billion dollars worth of municipal bond sales were postponed on Thursday because of rising rates…

The possibility of rising interest rates rocked the U.S. municipal bond market on Thursday, with prices plunging in secondary trade, investors selling off the debt, money pouring out of mutual funds and issuers postponing nearly $2 billion in new sales.

“The market got crushed,” said Daniel Berger, an analyst at Municipal Market Data, a unit of Thomson Reuters, about the widespread sell-off.

We are rapidly moving into unprecedented territory.  Nobody is quite sure what comes next.  One financial professional says that municipal bond investors “are in for the shock of their lives”…

“Muni bond investors are in for the shock of their lives,” said financial advisor Ric Edelman. “For the past 30 years there hasn’t been interest rate risk.”

That risk can be extreme. A one-point rise in the interest rate could cut 10 percent of the value of a municipal bond with a longer duration, he said.

Many retail buyers, though, are not ready for the change and “when it starts, it will be too late for them to react,” he said, adding that he was encouraging investors to look at their portfolio allocation and make changes to protect themselves from interest rate risks now.

Rising interest rates are playing havoc with other financial instruments as well.  For example, it appears that the ETF market may already be broken.  Just check out the chaos that we witnessed on Thursday

The selling also caused disruptions in the plumbing behind several ETFs. Citigroup stopped accepting orders to redeem underlying assets from ETF issuers, after one trading desk reached its allocated risk limits. One Citi trader emailed other market participants to say: “We are unable to take any more redemptions today . . . a very rare occurrence due to capital requirements we are maxed out on the amount of collateral we have out.”

State Street said it would stop accepting cash redemption orders for municipal bond products from dealers. Tim Coyne, global head of ETF capital markets at State Street, said his company had contacted participants “to say we were not going to do any cash redemptions today”. But he added that redemptions “in kind” were still taking place.

These are the kinds of things that you would expect to see at the beginning of a financial panic.

And when there is fear in the marketplace, credit can dry up really quickly.

So are we headed for a major liquidity crisis?  Well, that is what Chris Martenson believes is happening…

The early stage of any liquidity crisis is a mad dash for cash, especially by all of the leveraged speculators. Anything that can be sold is sold. As I scan the various markets, all I can find is selling. Stocks, commodities, and equities are all being shed at a rapid pace, and that’s the first clue that we are not experiencing sector rotation or other artful portfolio-dodging designed to move out of one asset class into another (say, from equities into bonds).

The bursting of the bond bubble has the potential to plunge our financial system into a crisis that would be even worse than we experienced back in 2008.  Unfortunately, as Ambrose Evans-Pritchard recently noted, the bond market is dominated by just a few major players…

The Fed, the ECB, the Bank of England, the Bank of Japan, et al, own $10 trillion in bonds. China, the petro-powers, et al, own another $10 trillion. Between them they have locked up $20 trillion, equal to roughly 25pc of global GDP. They are the market. That is why Fed taper talk has become so neuralgic, and why we all watch Chinese regulators for every clue on policy.

This is one of the reasons why I write about China so much.  China has a tremendous amount of leverage over the global financial system.  If China starts selling bonds at about the same time that the Fed stops buying bonds we could see a shift of unprecedented proportions.

Sadly, most Americans have absolutely no idea how vulnerable the financial system is.

Most Americans have absolutely no idea that our system of finance is a house of cards built on a foundation of risk, debt and leverage.

Most Americans have complete and total faith that our leaders know what they are doing and are fully capable of keeping our financial system from collapsing.

In the end, most Americans are going to be bitterly, bitterly disappointed.

Chaos

Why Is The Smart Money Suddenly Getting Out Of Stocks And Real Estate?

Exit Sign - Photo by SheDreamsInRedIf wonderful times are ahead for U.S. financial markets, then why is so much of the smart money heading for the exits?  Does it make sense for insiders to be getting out of stocks and real estate if prices are just going to continue to go up?  The Dow is up about 17 percent so far this year, and it just keeps setting new record high after new record high.  U.S. home prices have risen about 11 percent from a year ago, and some analysts are projecting that we are on the verge of a brand new housing boom.  Why would the smart money want to leave the party when it is just getting started?  Well, of course the truth is that the “smart money” is regarded as being smart because they usually make better decisions than other people do.  And right now the smart money is screaming that it is time to get out of the markets.  For example, the SentimenTrader Smart/Dumb Money Index is now the lowest that it has been in more than two years.  The smart money is busy selling even as the dumb money is busy buying.  So precisely what does the smart money expect to happen?  Are they anticipating a market “correction” or something bigger than that?

Those are very good questions.  Unfortunately, the smart money rarely divulges their secrets, so we can only watch what they do.  And right now a lot of insiders are making some very interesting moves.

For example, George Soros has been dumping almost all of his financial stocks.  The following is from a recent article by Becket Adams

Everyone’s favorite billionaire investor is back in the spotlight, and this time he has a few people wondering what he’s up to.

George Soros has dumped his position with several major banks including JPMorgan Chase, Capitol One, SunTrust, and Morgan Stanley. He has reduced his exposure to Citigroup and decreased his stake in AIG by two-thirds.

In fact, Soros’ financial stock holdings are down by roughly 80 percent, a massive drop from his position just three months ago, according to SNL Financial.

So exactly what is going on?

Why is Soros doing this?

Well, there is certainly a lot to criticize when it comes to Soros, but you can’t really blame him if he is just taking his profits and running.  Financial stocks have been on a tremendous run and that run is going to end at some point.  Smart investors lock in their profits while they still can.

And without a doubt, stocks have become completely divorced from economic reality in recent months.  For example, there is usually a very close relationship between corporate earnings and stock prices.  But as CNBC recently reported, that relationship has totally broken down lately…

That trend disrupted a formerly symbiotic relationship between earnings and stock prices and is indicating that the bluechip average is in for a substantial pullback, according to Tom Kee, who runs the StockTradersDaily investor web site.

“They’ve been moving in tandem since 2009, until recently. Earnings per share for the Dow Jones industrial average have flatlined and the price has taken off,” Kee said. “There is something happening here that defines a bubble.”

At some point there will be a correction.  If the relationship between earnings and stock prices was where it should be, the Dow would be  around 13,500 right now.  That would be a fall of nearly 2,000 points from where it is at the moment.

And we appear to be entering a time when revenues at many corporate giants are actually declining.  As I noted in a previous article, corporate revenues are falling at Wal-Mart, Proctor and Gamble, Starbucks, AT&T, Safeway, American Express and IBM.

Of course a stock market “correction” can turn into a crash very easily.  Financial markets in Japan are already crashing, and many fear that the escalating problems in the third largest economy on the planet will soon spill over into Europe and North America.

And things in Europe just continue to get steadily worse.  In fact, the New York Times is reporting that the European Central Bank is warning that the risk of a “renewed banking crisis” in Europe is rising…

The European Central Bank warned on Wednesday that the euro zone’s slumping economy and a surge in problem loans were raising the risk of a renewed banking crisis, even as overall stress in the region’s financial markets had receded.

In a sober assessment of the state of the zone’s financial system, the E.C.B. said that a prolonged recession had made it harder for many borrowers to repay their loans, burdening banks that had still not finished repairing the damage caused by the 2008 financial crisis.

And there are many financial analysts out there that are warning that their cyclical indicators have peaked and that we are on the verge of a fresh global downturn

“We see building evidence of a cyclical downturn,” said Fredrik Nerbrand, HSBC’s global asset guru. “We find it highly troubling that the eurozone is still marred in a recession at the same time as our cyclical indicators appear to have peaked.”

In the United States, a lot of the smart money has also decided that it is time to bail out of the housing market before this latest housing bubble bursts.  The following is one example of this phenomenon that was discussed in a recent Businessweek article

Hedge fund manager Bruce Rose was among the first investors to coax institutional money into the mom and pop business of single-family home rentals, raising $450 million last year from Oaktree Capital Group LLC.

Now, with house prices climbing at the fastest pace in seven years and investors swamping the rental market, Rose says it no longer makes sense to be a buyer.

“We just don’t see the returns there that are adequate to incentivize us to continue to invest,” Rose, 55, chief executive officer of Carrington Holding Co. LLC, said in an interview at his Aliso Viejo, California office. “There’s a lot of — bluntly — stupid money that jumped into the trade without any infrastructure, without any real capabilities and a kind of build-it-as-you-go mentality that we think is somewhat irresponsible.”

So what does all of this mean?

Is there a reason why the smart money is suddenly getting out of stocks and real estate?

It could just be that the insiders are simply responding to market dynamics and that many of them are just seeking to lock in their profits.

Or it could be something much more than that.

What do you think?

Why are so many insiders heading for the exits right now?

Feel free to post a comment with your thoughts below…

 

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