Planning for Old Age

Anybody have advice/experiences to share in regards to an elderly parent losing their ability to function, yet being entirely uncooperative about doing anything about it?

Right now, we’re struggling to get my dad to the doctor. He doesn’t want to go. We’re trying to get his house to be a little friendlier to his inability to move around, and trying to convince him to put bills on autopay so there’s nothing to forget, and the power won’t get cut off. Again, not very cooperative.

He’s got two dogs he never lets out, and he cleans up after them some if they go to the bathroom in the living room but two of the back rooms were a mess, and we’re going to have the carpets replaced (that in itself will be a challenge . . . his house is very dirty, and crammed with crap). My sister will be putting pee pads down in one of them (already is, and will presumably continue to do so after the carpet is replaced) and is now checking on him daily. He really needs to be in some sort of nursing home, but he is adamant about not having that, and I’m fairly confident all that will accomplish is to kill him quicker. And right now, he’d have to cooperate on that. And he won’t.

My Uncle Don had him doing the accounting for his building company for about 30 years, and now needs information for taxes, and my dad is being uncooperative there as well (and likely does not know where it all is). He has about sixty or seventy baskets in the house (in desk baskets) spread all over the house, filled with all the paperwork from the last few years. Nothing particularly organized. He grows very hostile if someone tries to start going through it, however. Ultimately, I guess that battle will be up to me. Not looking forward to it.

Looking around for an Eldercare lawyer to consult that doesn’t cost an arm and a leg. Also trying to get my ducks in a row as to what sorts of contacts we’ll need. In addition to getting the carpets replaced we just found out he needs a working tub, so we’re likely to replace one of his tubs with a walk-in shower or walk-in tub. Additionally, he could clearly use some strategically placed grab bars. And he definitely needs someone to come in and radically reduce the clutter in the house, but is stubborn about it.

My father at least had the foresight to put my sister’s name on one of his bank accounts, so there’s some access to money (I think the idea was to have money to cover funeral and other related expenses, though, not to provide assisted care, but there should be enough money to cover some of the fixes that have to be made to his house, among other things). But nothing else is planned for. So, good lord, do your children a favor and assume there may come a point where they need a lot of help taking care of you, but you’ll be hostile to letting them, and provide for it. I could do with a list of accounts and bills and necessary numbers and whatnot right now.

My mother, fortunately, is younger, in much better shape, and has planned her estate out to the nth degree. So, I’m likely only going to have to go through this once but still—sheesh, what a pain in the ass.

At some point soon, I need to do a little planning to try and make things easier if I kick off unexpectedly. List of bills and accounts and URLs where I pay them and logins and passwords, that sort of thing. Or I’m going to end up like my dad.

So the lesson is: get your kids set up to take care of your before you start getting dementia!

Any wisdom would be appreciated. Thanks!

Morning Report: Housing Starts Tomorrow

Markets are higher this morning as Greece will get another shot of aid for its banks. Bonds and MBS are down.

The EU agreed in principle to a 7 billion euro bridge loan to Greece which will keep the lights on while Tsipras negotiates a bigger bailout loan. The deal still has to be approved by a number of countries, and the vote was actually more contentious that people were thinking it would be.

The Iran deal faces some opposition in Congress, but it will probably end up passing. I don’t see a major economic effect, aside from some pressure on North Sea Brent oil prices, which really only affects the East Coast. The rest of the country is based on West Texas Intermediate, and the two types of oil are not fungible. While the Republicans generally view the deal as a capitulation, the Democrats are split between the pro-Israel bloc and the far left bloc.

Initial Jobless Claims fell to 281k last week from 296k the week before. The Bloomberg Consumer Comfort Index slipped to 43.2 from 45.5 as well.

Janet Yellen continues her trek to the Hill today, and will appear before the Senate this afternoon. Yesterday’s testimony in front of the House was pretty uneventful. She didn’t deviate from the what she said after the June meeting – they want to get off the zero bound, but will be data-dependent.

The NAHB Housing Market Index came in at 60, the strongest reading since early 2007. While builder sentiment has remained buoyant, it hasn’t really translated into housing starts. Typically, sentiment leads housing starts, and if the chart below is any indication, starts are lagging but need to catch up. I suspect they will as prices remain high and inventory remains tight. Note: we will get housing starts tomorrow morning. The Street is forecasting a 1.1 million run rate.

Morning Report: Janet Yellen testifying today

Stocks are flattish this morning as economic data and earnings pile in. Bonds and MBS are down.

Janet Yellen will testify in front of the House Financial Services Committee this morning at 10:00. Her prepared remarks are here. She is basically saying the economy is expected to re-accelerate after the Q1 weakness, and if that plays out as expected, the Fed will probably make the move off the zero bound later this year. The rest of the testimony will generally consist of Republicans trying to get her to say that government spending and taxes are too high, and Democrats trying to get her to say that income inequality is the biggest threat to our planet today.

Mortgage Applications fell 1.9% last week, as purchases fell 7.5% and refis rose 3.7%.

Inflation at the wholesale level came in a little hotter than expected – 0.4% on the headline number, and 0.3% on the ex-food and energy number.

Industrial Production rose 0.3% in June, a little better than the 0.2% expectation. Capacity Utilization rose to 78.4% from 78.2% last month. Manufacturing Production was flat. The Empire Manufacturing Index came in at 3.86. So manufacturing rebounded a little after a dismal start to the year.

Bank of America reported better than expected earnings this morning. Mortgage origination increased 40%.

Morning Report – Second Quarter GDP revised upward

Markets are lower this morning on tensions in Ukraine. Bonds and rallying as well. 


Some strong economic data this morning, with the second revision to 2Q GDP coming in at 4.2%. Consumption rose to 2.5% and the PCE price index (the Fed’s preferred inflation indicator) came in at 2.1%, with the core at the Fed’s target rate of 2%. 


Initial jobless Claims came in at 298,000, another strong number. The Bloomberg Consumer Comfort Index rose to a 5 week high. 


Pending Home Sales rose 3.3% in July, but are down 2.7% year-over-year.


The Ellie Mae Origination Insight Report is out. Refis dropped to 32% of all loans in July. FHA accounted for 20%, Conventional 64%, VA 11% and other 5%. The average FICO dropped to 727.


Fannie Mae has taken down their estimate for housing in 2015. They dropped their estimates for housing starts and new home sales by 17%. People hoping that 2015 is the breakout year in housing are going to be disappointed.


New rules on PMI could raise rates on average 15 basis points. 


The elderly are finding the amount they owe on their mortgages increasing. Not sure how much of this is due to reverse mortgages. The mortgage-burning party seems to be a thing of the past.


Consumers have confidence, but not the cash to do anything about it. This is why the consumer confidence numbers look good, but spending numbers are not. Asset prices can only do so much – the chief driver of spending is wages, not asset prices. In fact, home equity extraction during the bubble years masked the overall weakness in wage growth. 

Morning Report – Calm before the storm

Markets are lower this morning after some earnings misses. Bonds and MBS are down. Argentina missed a bond payment

Initial Jobless Claims climbed back above 300k last week, however Challenger’s announced job cuts number increased 24%. The ISM Milwaukee index rose to 63.87. However the Chicago Purchasing Managers index slumped by 10 points in July, coming in way below expectations.

The FOMC statement was slightly more hawkish than previous statements as the Fed edges more towards normalization. Bonds rallied slightly on the statement, but gave it back towards the end of the day.

Tomorrow is a big day with the jobs report and the ISM report. Plus, it is a summer Friday, which means thinly-staffed desks and probably some added volatility. I would not want to be floating going into tomorrow’s numbers.

The homeownership rate in the US fell again last quarter, to 64.7%, the lowest rate in almost 20 years. Separately, the rental vacancy rate fell to 7.5%. The Millennial generation is still stuck renting because they are lugging high levels of student loan debt and are facing a tight credit environment for the first time homebuyer.

Chart: Homeownership rate 1965 – Present
homeownership rate bbg

Graduation Day at the USMA

My daughter has a friend who graduated from the United States Military Academy today, and he invited her to the ceremony. I was lucky enough to be allowed to accompany her, so I spent the day today at West Point, which is a truly beautiful and impressive place. I thought some of you may be interested in a few pictures from the ceremony.

This was taken as the cadets marched into the stadium and to their seats.


This one shows the cadets as they received their diplomas.


And my favorite, this one shows the traditional throwing of the caps as the cadets get dismissed. I hadn’t realized that part of that tradition included allowing young children, between 6 and 10, onto the field to collect, and keep, the hats right after they are thrown. The cadets apparently put various tokens inside their hats, ranging from money to gift cards to notes of advice for the lucky young collectors.


Another tradition I was not aware of until today: All of the graduating cadets sat in dignified silence as their fellow graduates proceeded up to the podium to collect their diplomas once their name was called. That is, they did until one particular name was called, at which point the entire class rose in unison and screamed and cheered as if the winning touchdown had been scored as time expired. I found out later that the person they went berserk for was the “goat”, the cadet who had finished last in their class.

Anyway, it was really a spectacular day, despite some pretty bad weather (45 degrees and a steady drizzle all day), and the West Point Campus is truly a beautiful place. I’d encourage you all to go and see it if you have the opportunity.

Morning Report – Charles Plosser and ending TBTF

Vital Statistics:

  Last Change Percent
S&P Futures  1625.3 0.7 0.04%
Eurostoxx Index 2780.9 7.8 0.28%
Oil (WTI) 94.53 -1.9 -1.93%
LIBOR 0.275 0.000 0.00%
US Dollar Index (DXY) 83.03 0.240 0.29%
10 Year Govt Bond Yield 1.84% 0.03%  
Current Coupon Ginnie Mae TBA 105.9 0.0  
Current Coupon Fannie Mae TBA 103.5 -0.1  
RPX Composite Real Estate Index 195.8 0.8  
BankRate 30 Year Fixed Rate Mortgage 3.52    

Markets are flattish this morning on no real news. We will get the monthly budget statement at 2:00 pm this afternoon. Bonds and MBS continue to sell off, and the 10 year is at 1.84%

The Mortgage Bankers Association reported that 90 day delinquencies ticked up to 7.25% in Q1 from 7.09% in Q4. Separately, foreclosures as a percent of total mortgages fell to 3.55% from 3.74%. This is still an elevated numbers; prior to the bubble, foreclosures were in a 1% to 1.5% range. Similarly, with delinquencies, pre-bubble the typical 90 day delinquency rate was in the 4% to 5% range. It peaked at just over 10% in Q1 2010.

Fannie and Freddie’s profits have moved the debt ceiling limit to September from August. Treasury Secretary Jack Lew said that the statutory debt limit will be reached in a few days, but that there are measures the government can take to shift around funds and that we won’t really start having issues until after Labor Day. Republicans have proposed a prioritization of creditors, which will go nowhere in the Democratically controlled Senate. My question:  How much of the interest owed is going to the Fed due to quantitative easing? They have been buying up 90% of Treasury issuance. And since the Fed’s profits and losses are just sent right back to Treasury, isn’t that just money we effectively owe ourselves? 

Anyway, the debt ceiling debate is coming up this summer and the Administration and House Republicans are sure to butt heads over raising the debt ceiling. The Administration will not accept spending cuts without tax increases and the House will not accept tax increases at all. Just saying, since the S&P 500 has been a one-way bet since last Fall. There are two exits at the front of the plane and two exits over the wings. Please take a moment to locate the nearest exit, and remember that your nearest exit may be behind you.

Philly Fed President Charles Plosser is skeptical that Dodd Frank can end Too Big To Fail (TBTF). He proposes a more systematic process, in which the ultimate decision-making would be rest with a judge and and deviations from priority would be cleared through a judicial authority and not through regulatory discretion. Derivatives and repos would be treated like other claims. Separately, he is skeptical that QEIII is going to do much good. It would be refreshing to have someone on the hawkish side replace Bernake after having doves for the past 25 years, but we’re probably going to get an even bigger dove in Yellen.

Morning Report – Whither the GSEs

Vital Statistics:

  Last Change Percent
S&P Futures  1625.8 -2.9 -0.18%
Eurostoxx Index 2768.2 -16.5 -0.59%
Oil (WTI) 95.83 -0.8 -0.82%
LIBOR 0.275 0.000 0.00%
US Dollar Index (DXY) 82 0.103 0.13%
10 Year Govt Bond Yield 1.79% 0.02%  
Current Coupon Ginnie Mae TBA 105.9 0.2  
Current Coupon Fannie Mae TBA 104.1 0.1  
RPX Composite Real Estate Index 195 0.3  
BankRate 30 Year Fixed Rate Mortgage 3.54    


Markets are slightly weaker this morning.  Initial Jobless Claims came in at 323,000, better than expected. Bonds and MBS are up small.

I was surprised by the magnitude of last Friday’s reaction to the jobs report and the persistence. The jobs report was good, but not great. I do not see anything in the report to prompt the Fed to end QE early. Perhaps the strength in the equity market is causing people to rotate out of stocks and into bonds. If you believe in technicals, you might be looking for the 10 year yield to do a 50% retracement, hit 1.85% and then bounce back.

Tonight is the Fannie / Fred MBS roll as we go from May to June. MBS prices will look like they just fell tomorrow morning, but it is just the roll.

Freddie Mac reported $4.6 billion in earnings in the first quarter, its second-largest in history. They required no Treasury draw and paid $5.8 billion to the government in Q1. So far, they have paid $29.6 billion. This is after Fannie Mae reported $7.6 billion in Q4.  One almost certainty is that G-fees are going up. The government wants to “crowd in” private capital and price credit risk more in line with private mortgage insurers. The game for originators going forward may well be to stick with qualified mortgage (QM) loans and compete with the government on the guarantee fee. The other sense I got from the conference is that QM is not enough of a safe harbor to really encourage lending outside of the QM box. Which means that anyone with dinged credit is more or less stuck in the FHA box. 

The sense I got from the MBA Secondary Conference is that despite the Obama Administration’s white paper that claims they would like to replace Fannie and Fred with some private entity, they are slow-walking reform. Certainly Mel Watt was not nominated to preside over the orderly dissolution of the GSEs. After the Administration changed the terms of the deal, the GSEs now just distribute all of their profits to the government, which has created a slush fund for general government purposes. And $13 billion a quarter isn’t chump change. I think at the end of the day, Fan and Fred are going nowhere and will stay on as quasi-nationalized entities until they are fully re-capitalized and then they will be sold. 

The big questions regarding Mel Watt as the new FHFA Chairman concern principal mods and an extension of the HARP window (HARP 3.0). As of now, HARP eligibility does not extend to anything originated or refinanced after  May 31, 2009. There is talk that the window might be extended to allow people who took out conforming loans in 2009 and 2010 to be HARP eligible. Also, there is talk of allowing people to “re-HARP.” Anyway we could see another refi boom if Watt is confirmed. Regarding the principal mods, CBO gave FHFA the ammunition to permit mods. If Watt is rejected, expect Mark Zandi to be the next guy nominated and he fully supports principal mods.

60-day delinquencies dropped to 4.56% according to Transunion, which is the fastest drop since they started keeping records in 1992. This decrease was higher than expected.

Bites and Pieces: Eat Your Sprouts

Brussels sprouts have a well-deserved reputation amongst children for being one of the nastier things they’re forced to choke down. They manage to combine insipid flavor with a mealy texture. You can imagine my surprise when my wife came back from a trip gushing over these amazing Brussels sprouts she’d had. She went to a place in Kansas City called PizzaBella. They roast Brussels sprouts with pancetta, cranberries, almonds, and vinaigrette. Looks a lot more appetizing than cream of Brussels sprouts, no?

Creamed Brussels Sprouts

Creamed Brussels Sprouts

PizzaBella Brussels SProuts

Sprouts from Pizza Bella

Brussels sprouts have been a fixture in our household ever since. You can find plenty of recipes out there for roasted Brussels sprouts. Here’s an example from the good folks at Epicurious (originally published in Gourmet magazine).

Roasted Brussels Sprouts


1 pound of Brussels sprouts, halved

2 oz. of diced pancetta

1 garlic clove, minced

½ tablespoon olive oil

salt and pepper to taste


Combine everything and spread in a single layer in a baking pan. Roast in 450 degree oven, stirring after about ten minutes, until sprouts are browned on the edges and tender. Add a bit of water to the pan when done to get the brown bits . Serve warm.

Not bad. One could add the cranberries and almonds and get reasonably close to that served up by PizzaBella. I find a bit of sweetness works well in this sort of dish, so some pomegranate juice adds a nice touch. Still, one isn’t going to approach what you get from a good pizza oven at home. I wanted proper caramelization and wasn’t going to get that from the oven alone.

Enter my cast iron pan. If I want a good steak, I sear it on both sides and put it in the oven until it’s medium rare. [If I want a great steak, I’ll put it in a low temperature oven until medium rare and then sear it.] So, I sear the cut sides of the Brussels sprouts, toss in the other goodies, and then finish in the oven. It’s a pain to halve and place the Brussels sprouts, but the center gets pretty mealy by the time whole sprouts are cooked.

Caramelized Brussels Sprouts with Almonds, Cranberries, and Pomegranate


1 pound of Brussels sprouts, halved

¼ cup of olive oil

¼ cup of slivered almonds

¼ cup of sweetened, dried cranberries (Craisins)

½ cup of pomegranate juice

salt and pepper to taste


Heat the oven to 400 degrees. Put a case iron skillet over med-high heat and add olive oil. When the olive oil is shimmering (not smoking), add the Brussels sprouts, cut side down. Cook until they develop a good brown crust, several minutes. Add the cranberries and almonds (if using) and use a metal spatula to get the Brussels sprouts off the pan and mix briefly. Pour in the pomegranate juice and put into the oven until the sprouts are just cooked through. Serve with a bit of grated Parmesan cheese.

Some variation on this has been my go to dish until recently, when I started playing with unusual ingredients for different cuisines. I tried my braised squid concept, using an Indian recipe for chicken with tomatoes, yogurt, ginger, garlic and the usual spices. We had a big bag of Brussels sprouts in the kitchen and I decided to try cooking them with an Indian flare. And so here we have it.

Curried Brussels Sprouts


½ pound of Brussels sprouts, halved

¼ cup of ghee (I used two tablespoons each of clarified butter and canola oil)

½ cup chopped onions

1 teaspoon minced ginger

1 teaspoon minced garlic

¼ teaspoon red chili powder

½ teaspoon ground coriander

½ teaspoon ground cumin

½ teaspoon ginger powder

1 teaspoon ground cinnamon


Heat the oven to 400 degrees. Put a cast iron skillet over med high heat. Add the ghee until shimmering. Add the onions and cook until browned. Add the ginger, garlic and spices and cook until the fat begins to separate. You might need to add a bit of water, a technique known as bhunao.

Place the Brussels sprouts, cut side down, and cook for several minutes. Scrape the Brussels sprouts from the bottom of the pan with a metal spatula and toss slightly. Put the pan in the oven and cook until the sprouts are tender, about ten minutes. I’ll post a separate B&P update for the curried squid with coconut/saffron rice.

Since starting this post, I tried a third variation. The first two are good, but go into the category of anything tastes good if you add enough butter. I wanted to make sprouts that might be a bit healthier. Well, that and I was out of butter. But I did have cheese! I also had some leftover sliced and spiced apples from an apple pie that I’d made. As a slice of cheddar cheese is a classic topping for apple pie, I had my inspiration.

 Brussels Sprouts with Apples and Cheese

Sprouts no cheese Sprouts and Cheese

½ pound of Brussels sprouts, halved

2 tablespoons of vegetable oil (I used canola)

1 Granny Smith apple

1 tablespoon sugar

½ teaspoon cinnamon

¼ teaspoon ginger

¼ teaspoon allspice

Optional: ½ cup of grated cheddar cheese


Peel and slice the apple, then toss with sugar and spices. Set aside.

Heat the oven to 400 degrees. Put a case iron skillet over med-high heat and add vegetable oil. When the oil is shimmering, add the Brussels sprouts, cut side down. Cook until they develop a good brown crust, several minutes. Add the sliced apples and use a metal spatula to toss everything together. Put into the oven for ten minutes.

Optional: After five minutes, sprinkle shredded cheese over the sprouts and apples and return pan to oven for another five minutes.

Note: use whatever combination of spices you prefer for apple pie. I actually used some leftover sliced apples from an apple pie. I had tossed the apples with lime juice to prevent them from darkening until I assembled the pie. You can also toss in some minced ginger and garlic if you like.


Morning Report – The new normal?

Vital Statistics:

  Last Change Percent
S&P Futures  1514.3 -2.2 -0.15%
Eurostoxx Index 2616.9 0.2 0.01%
Oil (WTI) 90.76 0.1 0.09%
LIBOR 0.283 -0.001 -0.35%
US Dollar Index (DXY) 82.31 -0.004 0.00%
10 Year Govt Bond Yield 1.84% 0.00%  
RPX Composite Real Estate Index 194.9 0.2  

Markets are slightly lower this morning after China imposed new measures to slow its housing bubble. There isn’t much in the way of economic data this week with the exception of the jobs report, which was moved to this week.  Bonds and MBS are flat.

While the unemployment rate stays stubbornly in the high 7s, there are signs under the surface that things are getting better.  The median duration of joblessness fell to 16 weeks in January from 25 weeks in June 2010. American aged 45-55 experienced the biggest turnaround, and this would address one of the biggest achilles heels to the economy:  that many people in their prime earnings years are on the bench, which crimps spending.  Nobel Laureate Dale Mortensen views this as evidence that the US labor market will not enter hysteresis, or permanently higher joblessness, which happened in Europe in the 80s. 

Is slower economic growth the “new normal?” There are a few explanations why the economic recovery has been so slow.  The first is simply bad luck. A series of exogenous events (the Euro crisis, crises in Washington, the Japanese tsunami) keep delivering blows to the economy just as it is getting going.  The second is the view of Kevin Warsh, which holds that bad policy decisions in the aftermath of the financial crisis – overregulation and a focus on short-term stimulus measures) have left the economy weakened.  The last is the view of the Keynsians, who argue that the stimulus was not enough, we need to do more, and as long as the bond market is willing to lend to us at sub 2% rates, we should borrow as much as we need to upgrade our infrastructure and hire millions of unemployed workers in the process. 

FWIW, I believe that all of these explanations have a kernel of truth, but miss the big picture – that we are recovering from an asset bubble, and the de-leveraging that follows takes a long time to work through. When people borrow en masse to fund asset purchases, the debt remains even if the asset falls in value. That debt has to be dealt with, and someone has to eat the losses. While Washington would love to figure out a way to short-circuit this process, there isn’t a good way to do it.  Much of the policy debate in Washington has centered over who should shoulder the costs, but you can’t make them go away. And until they are dealt with, they will act as a drag on the economy.

Luckily, corporate America is awash in cash.  They are done deleveraging.  The banks are still working their way through it, and no one really knows where they are marking some of their dodgier paper. Households are a mixed bag.  Debt service (the amount of principal and interest payments) is at multi-decade lows, however the total amount of debt is not. We have some ways to go here. The recovery will be made on two fronts – debt will be slowly paid down, while real estate prices will continue to rise.  And that is why the Fed is doing QE – to (officially) cut down debt service payments, and to (unofficially) help goose the real estate market.

Chart:  US Household debt as a percent of GDP:

Chart:  Debt Service Payments as a multiple of disposable income


But ZIRP and QE isn’t “free.” Unintended consequence of ZIRP # 547,624 – a bubble in student loan paper. Sallie Mae just sold $1.1 billion of securities backed by private student loans (in other words, not backed by the Federal Government) and the riskiest tranches were 15x oversubscribed. This year alone, dealers sold $5.6 billion of student loan backed securities, with an average yield of 1.48%.  And we have only issued about a billion dollars worth of jumbo securitizations since the bubble burst?  I find it absolutely amazing that we can securitize unsecured loans made to students majoring in underwater basket weaving, but we can’t securitize a stated income loan. Is it Dodd-Frank and its open questions regarding “skin in the game” for issuers?  If it is, I suspect the private label market will come back in a hurry once the regulators figure out what they want to do. 

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