Bits Bucket And Craigslist Finds For January 6, 2007
Please post off-topic ideas, links and Craigslist finds here.
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Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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A good debt-roundup posting from this blog:
http://www.maxedoutmovie.com/blog/
Blogger is also a Wharton grad who directed film about credit card debt. Sounds interesing!
Our nation owes the subprime lending sector a whopping debt of gratitude for the deteriorating collective condition of our nations’ household balance sheets. (Sarcasm off.)
———————————————————————————————-
“Foreclosures on sub-prime mortgages are way up, and, contrary to the loud cheers from Wall Street and Alan Greenspan, one of the nation’s largest homebuilders just announced hundreds of millions of dollars in write-offs and said it sees no signs of recovery. So 2007 could be the year the housing bubble finally burst…Is it a coincidence that a survey of the nation’s bankruptcy attorneys found that 64 percent of bankruptcy filings involved overly burdensome mortgage or home-related debt? Scary.”
GS,
Sounds quite plausible. I was doing some early morning blogging and came upon this from last month:
http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0612/document/ec120106.pdf
It’s a PDF from Paul Kasriel, another Bear. It’s got charts.
Being and engineer, I tend to favor charted data or graphs.
Just more “evidence” that things are due for an “adjustment”.
test comment.
posts are failing………………the end is near……….sabatoge, oh no! Will I get to say a few final words??
GS,
In some early morning blogging, I came across this from Paul Kasriel, another Bear. He posted it last month:
http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0612/document/ec120106.pdf
I liked it because it has charts. I like charts. It’s just more evidence that we are due for an “adjustment”.
Signs of no recovery:
http://web-xp2a-pws.ntrs.com/content//media/attachment/data/econ_research/0612/document/ec120106.pdf
4th post: “no signs of a recovery…2007 could be the year the housing bubble finally bursts”……………………..
Evidence that it’s “time”. A few charts from Paul Kasriel, another Bear. Short and simple, in PDF.
http://web-xp2a-pws.ntrs.com/content//media/attachment/data
/econ_research/0612/document/ec120106.pdf
From Reuters
Saturday, January 6, 2006
http://asia.news.yahoo.com/070106/3/2vcq6.html
CHICAGO — A misunderstanding by financial markets of the so-called “strong dollar” mantra preached by U.S. officials is helping keep the U.S. currency overpriced and contributing to bloated external deficits, Harvard University economist Martin Feldstein said on Saturday.
Speaking on a panel on the U.S. current account deficit at the Allied Social Sciences Conventions, Feldstein outlined several factors that are holding the dollar at an overly high, and unsustainable, level.
Repeated statements by U.S. officials in support of a strong dollar “are a nice slogan, but that’s all it is,” said Feldstein, who is also head of the private National Bureau of Economic Research.
Feldstein said a correct interpretation is that “we would like to have a strong U.S. dollar at home (helped by low inflation rates) and a competitive dollar in the world.”
Financial markets are “misled” if they think there would be government intervention or a shift in the Federal Reserve’s monetary policy to protect the dollar’s value, he said.
“The Treasury should not advocate a decline in the dollar, but it should not mislead the markets to think there is some hidden support there for the currency,” he said.
Feldstein said the sense that foreign investment will keep flowing to the United States because it is still the healthiest economy is another “error of understanding.”
Most of the money now coming into the country is for debt purchases by foreign governments, not from equity investors attracted by fundamental strength in the U.S. economy, as was more the case in the 1990s, he said.
Speaking on the same panel, Michael Mussa, senior fellow at the Peterson Institute of International Economics, a leading think-tank, said the dollar will need to depreciate substantially, in real effective terms, probably by at least another 20 percent over the next decade to help cut the U.S. current account deficit in half.
The dollar has fallen in the past five years by about 15 percent on a trade-weighted basis against an index of major trading partners. Nonetheless, Feldstein and others say it is still overvalued.
The current account is the net flow of transactions, including goods, services and interest payments, between countries. The U.S. deficit most recently was running at about $900 billion a year, almost 7 percent of U.S. gross domestic product or roughly double the peak deficit of a share of GDP reached in the 1980s.
Many economists regard that level as unsustainable, but the timing, trajectory and impact of any adjustment process remains subject to vigorous debate.
Mussa said opinions on issue are typically split between the Alfred E. Newman “What Me Worry?” school, and the Chicken Little “The Sky is Falling” contingent.
Slashing the deficit with a weaker currency “will not be completely smooth” but the risk of a disruptive dollar crash is not particularly great, Mussa said.
At the same time, China’s currency, the yuan, needs to adjust more rapidly than the nominal changes made over the past 18 months, he said.
“The need for substantial appreciation of the yuan against the dollar over the medium term is unmistakable,” he said.
China, in contrast to the United States, runs a huge current account surplus. In addition, it runs a large trade surplus with the United States. In October, Washington reported a record $24.4 billion trade deficit with China, 40 percent of the total U.S. trade deficit.
Feldstein said both an increase in U.S. domestic savings, now running at a negative rate, and a dollar decline were necessary to wrestle the current account deficit to the mat.
“An increase in the savings rate is necessary but not sufficient to bring about an adjustment,” he said.
* * *
Look for the dollar to appreciate for most of the year. Too many people are down on the dollar the extreme sentiment is a setup to a good “buy the dollar, sell the euro” trade.
So, Wheatie, I take it you don’t buy the rumors circulated by some gold investors that the US is interested in throwing away the $US’s reserve currency status just yet? (Nor do I…)
Aren’t you concerned that GDP growth dropped to 1.6% in the latest quarter? That’s kind of anemic, and we’ve seen a downturn in the housing market. Convince us we’re not going to have a recession next year.
I can’t convince you. But as I looked at the third quarter, I felt good because I saw a major correction in the housing market, and I knew that was going to take more than one percentage point off GDP. And then I’m looking at the rest of the economy - strong corporate profits and investment, good growth outside the U.S., strength in the construction sector away from housing, and then an equity market that has gone up and added $1 trillion in value.
I know how much people care about housing. But I would be quite hopeful that through 401(k) plans, pension plans, and elsewhere that the average American is feeling an uplift from the appreciation of the equity market that would be very offsetting to any potential decline in housing.
http://money.cnn.com/2006/11/11/magazines/fortune/paulson.fortune/index.htm?postversion=2006111609
“But I would be quite hopeful that through 401(k) plans, pension plans, and elsewhere that the average American is feeling an uplift from the appreciation of the equity market that would be very offsetting to any potential decline in housing.”
Is Paulson showing the Fed/PPT’s plan of action i.e. inflate the stock market to offset the contraction in housing?
My understanding is that although a housing boom may be able to offset a stock market bust it is not the case that a stock market boom can offset a housing bust. I think it has to do with the “wealth effect” getting into more consumer hands in a housing boom vs. a stock boom and the higher rate of participation in the housing market vs. the stock market.
“Is Paulson showing the Fed/PPT’s plan of action i.e. inflate the stock market to offset the contraction in housing?”
He did not come right out and say that, but he certainly left the door open to that interpretation.
“Is Paulson showing the Fed/PPT’s plan of action i.e. inflate the stock market to offset the contraction in housing?”
By the look of my self directed IRA accounts, it sure looks that way. Any suggestion that the rallies of late are due to “free market capitalism” is quite hilarious indeed. Ask the folks on Main Street how well free market capitalism is working for them. Nevertheless, the PPT is my friend as of late.
Glad to hear your contestants are doing so well in the PPT-sponsored Keynesian beauty contest…
http://en.wikipedia.org/wiki/Keynesian_beauty_contest
Exactly. It’s like kids trading worthless trinkets.
Starting to look that way to me. I don’t know if the FED can pull it off though? The dollar may go down too much ?
Answer: Yes.
GetStucco you are 100 % right.
And kill the hedge funds that stupidly bet on commodities and the fall of the US. The US dollar boost is totally artificial but it will kill commodities for a couple of months and allow them, in this make believe world, that everything is booming again and the dollar is allmighty, and than debts and bubbles are no problem.
Paulson Pulls for U.S. Markets
Treasury Chief Aims to Tweak
Rules Some Say Are Crippling
The Nation’s Competitiveness
By DEBORAH SOLOMON
October 23, 2006; WSJ Page C1
WASHINGTON — With just two years to make his mark, new Treasury Secretary Henry Paulson is focusing much of his attention on making American financial markets more competitive.
So far, his efforts have mainly involved meeting and jawboning. He is well-positioned to help tweak some rules, but his power could wane next year if Democrats make significant gains in the November elections.
Since taking the reins in July, the Wall Street veteran has reinvigorated the President’s Working Group on Financial Markets, which had languished. He also has backed a private-sector effort to recommend changes to laws and rules that critics say handicap U.S. financial markets. And he raised business hopes that the government will ease a controversial rule created by the Sarbanes-Oxley law in response to corporate scandals.
Mr. Paulson is chairman of the Working Group, which coordinates government policy on financial markets and includes the heads of the Federal Reserve, Securities and Exchange Commission and Commodity Futures Trading Commission. Mr. Paulson has insisted that they meet about every six weeks. Before his arrival, the group met every few months and sometimes as infrequently as once a quarter.
“The issues that are natural for the President’s Working Group to deal with are issues that he has thought a lot about while he was on Wall Street and to which he clearly has wanted to devote a lot of attention while he’s here in Washington,” said Randal Quarles, who recently stepped down as Treasury undersecretary for domestic finance.
The Working Group is a significant lever to influence policies outside the Treasury’s bailiwick. The committee is “where he can have influence over the process and can shape the debate,” said Rob Nichols, president of the Financial Services Forum, a group of chief executives from that industry that met with Mr. Paulson and President Bush last week. Mr. Nichols, a former Treasury spokesman, said Mr. Paulson talked about “what we can do to keep the U.S. economy competitive and keep the capital markets competitive.”
Mr. Paulson’s efforts are a response to a growing business concern that the regulatory and legal environment puts U.S. capital markets at a global disadvantage. Mr. Paulson often points out that more initial public offerings of stock are being issued on exchanges outside the U.S. Business leaders complain that the costs of doing business in the U.S. are increased by provisions of Sarbanes-Oxley, class-action lawsuits and a state and federal law-enforcement crackdown on corporate misbehavior.
The U.S. Chamber of Commerce on Friday held a public forum in Washington to publicize such issues. “If our capital markets become less competitive, the cost of capital rises, [stock] listings and investment opportunities go overseas,” said David Chavern, the chamber’s chief of staff.
Mr. Paulson is having the Working Group look at the systemic risk posed by hedge funds and derivatives, and the government’s ability to respond to a financial crisis, officials said.
He has ordered his chief of staff, Jim Wilkinson, to oversee the creation of a Treasury command center to track markets world-wide and serve as an operations base in a crisis. The center would revive a market-monitoring room closed in a 2003 budget cut. Mr. Wilkinson has relevant experience: A former spokesman for the U.S. in Iraq, he was a White House aide during the Sept. 11, 2001, terrorist attacks.
Mr. Paulson, a former chief executive of Goldman Sachs who declined to comment for this article, has said the regulatory pendulum “may have swung too far” in response to corporate scandals. He is expected to sound the capital-markets-competitiveness theme in future speeches. He also has emphasized restraining the growth of federal spending, but that will require congressional cooperation, a particular challenge if Democrats take control of one or both houses of Congress.
The secretary doesn’t need much congressional cooperation on other priorities, including persuading China to keep moving toward market capitalism and shoring up the competitiveness of U.S. capital markets through rule changes.
Much depends on his persuasiveness. The Treasury’s jurisdiction is limited. The controversial Sarbanes-Oxley rule — which requires that companies assess their internal controls to ensure their financial reporting is accurate and reliable — was crafted by the SEC and the Public Company Accounting Oversight Board. Both plan revisions before the end of the year.
Mr. Paulson, aware of the ticking clock on the Bush presidency, wants to move quickly. He told the organizers of the private Committee on Capital Markets that he wanted recommendations by next month.
“He explained what the political cycle was and that Treasury would be thinking about this issue come the new Congress in January, and if we were going to have an impact on that process, we would want to get this out by end of November,” said Hal Scott, a Harvard Law School professor who heads up the panel.
The committee includes business leaders and academics but not consumer or shareholder-rights activists. It will draft a report looking at legal-liability issues, the Sarbanes-Oxley rule, shareholding rights and the regulatory process, including whether the SEC should weigh costs and benefits more explicitly before adopting rules. Mr. Paulson didn’t help create the group, but he called it “important to the future of the American economy and a priority for me.”
Gary Gensler, an assistant secretary for financial markets in the Clinton Treasury, said Mr. Paulson should be careful how he wields his power.
“I think that we have very competitive markets and have had for a very long time,” Mr. Gensler said. “That’s not to say it’s not worth looking, but I think the hallmark of the U.S. markets is efficiency tied with a set of clear rules. … There’s always pressure that comes from groups to roll something back. What would be a mistake, though, is to think we need some wholesale changes.”
Write to Deborah Solomon at deborah.solomon@wsj.com1
The unbridled greed and shillery of some to even hint at messing with SarbOx is truly outrageous. Only liars, cheats and blind fools yammer on about “less regulation” in the face of Nardelli absconding with$220 million of shareholder cash while letting the stock price sink to multi-year lows.
Captain Credit if my eyes don’t deceive me the looting has turned up dramatically since SarbOx.
If that is true, and I don’t know that it is or isn’t, now is not the time to open the vault door wider by getting rid of regulation. To the contrary, more will level the paying field.
more co’s ipo action abroad than in US now
sarbox scks
Sarbanes Oxley has to do with financial statements representing reality and financial controls, etc.
It has nothing to do with corporate pay.
Sarbanes Oxley is an expensive thing to comply with. Watering it down wouldn’t make the looting any easier.
More ipos abroad (London) than in US due to globalization of brokerage houses.
You distort, we correct. A little different than FNN.
I don’t think IPOs going overseas has anything to do with “globalization of brokerage houses”. What would CAUSE a company to list overseas when the US has the deepest financial markets with the most investors? The brokerage houses are “global”? Who cares. They’ve always been global to an extent, why is it now that companies are fleeing?
When you ask them, why do they say that SOX is one of the reasons? Are they lying? Are you wrong?
Then offer a believable suggestion as to why a organization headquartered in the EU or UK would IPO somewhere beside their own backyard?
Distort? It is a fact that more and more companies are looking to London purely because of Sarb-Ox. Problem is-no one will admit it because of what it implies. Sarb-Ox has nothing to do with Nardelli and his pay package.
It’s not a fact. It’s a claim until you provide evidence of your claim.
Dude… even the Democrats think SOX is a too much:
http://www.businessandmedia.org/commentary/2007/20070103153849.aspx
This is a good assessment:
http://www.redherring.com/Article.aspx?a=20182&hed=SOX+Help+Finally+on+the+Way%3F§or=Capital&subsector=VentureCapital
Here’s a quote:
“I think accounting firms are trying to exert major pressure on the SEC to keep the changes as minimal as possible,” said Mark Heesen, president of National Venture Capital Association. And the ball’s in their court as to how far they can go in keeping any substantive changes as muted as possible,” Mr. Heesen said. “Quite simply, this is a huge moneymaker for them, and they’re not willing to see that go away.”
It’s real, SOX is a major reason behind my job… and I get a pretty good salary. I benefit, but my company has to carry my costs.
Too many have bought the SOX issue hook, line, and sinker. It’s good for accountants, not for America. Once again to the benfit of a few a the cost of many. At least it’s not taxes.
So the fact that dems are bought and paid for by big interests just as the GOP makes good reason to remove all protection for shareholders and employees?
Isn’t it true to say that Sarbanes-Oxley stems from the fact that auditors had royally fuukked up and then Sarbanes-Oxley gave the auditors more work and more power?
That seems like some logical thinking to me. “We can’t enforce our current rules so let’s create some new ones.” Way to go government dip$hits.
Buy DBV and PSQ. Boycott stocks of companies. The management (employees) are ripping off the the capitalists (shareholders).
100% right. Don’t get suckered again buying stocks. I would suggest yes, yes, yes, buying gold, silver, palladium, platinum on weakness and wait. I know waiting is tough for Americans. But you should try it!
By the way. Buy the way, buy the physical stuff. Shares suffer all the same problem. Too much Eisners, Nardelli and piggy wiggy Steve Jobs. CEO are pigs and no 210 million for 6 years doing a crappy job at Home Depot is robbery ! Jesse James at least took risks not that piece of sh-t Nardelli.
I have had a quick glance at some of the SOX control strucutre and it sort reminds me of single audit compliance of federal funds.
Goldman Sachs Mafia. No difference between Paulson and Rubin.”What’s good for the bubble masters, is good for America.”
So Paulson, a member of the ultra rich aristocracy of America and the ex-CEO of Goldman-Sachs which is one of the Financial Gangsters Of America, says he likes Charlie Rangel a lot. “In fact,” says Paulson, Charlie and I are having lunch next week.” How nice. Btw, Mr. Blue Blood of America, would you let Charlie Rangel marry your daughter (if he were younger)?
Rangel is just another crook from Harlem.
At least crooks from Harlem and the Bronx take real risks. It’s called bullets.
Good. I’m ecstatic they have working relationship. Now we might finally seem some progress on the domestic agenda for the first time since the early 90’s.
Yeah and a piece of sh-t that when he “sold” his partnership in Golman, managed to pay 0% income tax on his capital gains. How that for financing the horrendous spending by these Republican and Democrat orgy of spending. Don’t worry it’s the same in Russia, Costa Rica, France, Britain, Cacanada. These people are in charge of screwing the middle class and saying to you. You must tighten your belts and shut up! Income tax? What’s that? Paulson is one big fat bastard.
Does the government rig the stock market? Here is another interesting tidbit:
PLUNGE PROTECTION TEAM
In Richard Russell’s Dow Theory Letters:
Hello Richard.
I just wanted to comment on your Fed conspiracy theory. I have been a member of the Chicago mercantile exchange for 20 years, and have traded in the S&P 500 pit for all of these years. Back in October of 1987 during the crash a mysterious event happened. The market was in a free-fall you could not find a bid in the pit. Suddenly the bell rang without warning, and they closed the market early. They closed the N.Y stock exchange and all other stock market futures and derivatives. All except a thinly traded future of the Dow 30 at the cboe called the maxi. After all the markets closed the maxi took off like a missile. A lot of us were short the market, and were helplessly unable to cover our shorts. When the maxi had rallied about 7% the markets were allowed to open again.
I know the fed manipulates the market. I’m not paranoid, I lived through it. What better way to stop a crash than to close all markets except a thinly traded one, and begin buying everything you can? Since then we in the S&P 500 pit have witnessed Merrill and Goldman come to the rescue time and time again. You might be kidding, but you don’t know how right you are.
Always a fan
JHH
+++
The Dow plunged 22% on Monday, October 19, 1987. On the next day, there were no bids as described by JHH above. It was a black hole…until early afternoon when mysteriously the market sharply reversed. JHH has explained why. By buying large quantities of futures, the government can force buying of stocks. Why is this? Because the seller may have to deliver the stocks at a future date. In order to be in a position to do so, purchases are made of some of what might be required later. It is a neat trick and there have been many anecdotes describing the practice since 1987.
“It is a neat trick and there have been many anecdotes describing the practice since 1987.”
Didn’t Enron have a name for this? I believe it was Get Shorty.
Kenny Boy is dead. So they say.
Here is an interesting item on stock market rigging:
Counterparty Risk Management Policy Group
http://www.siliconinvestor.com/readmsg.aspx?msgid=22789705
To: mishedlo:
From: Joe Stocks
For the last several months I have been doing a good bit of research trying to obtain some insight into inter-relationship between the Federal Reserve, the government, and the large money center NYSE member banks. In my reading I kept coming upon the phrase ‘moral hazard’- as in “we want to avoid a moral hazard”. I tried to find the definition as they defined within the context of what I was reading - no luck. These guys seem to have their own code words.
A link for the most current CRMPG report is here.
http://www.crmpolicygroup.org/docs/CRMPG-II.pdf
Notice how the report is addressed to the chairman of Goldman Sachs. Notice that Goldman Sachs had much imput into the report and the CRMPG is Chaired by a Goldman Sachs guy. Also make note that the current Secretary of the Treasury just came over from GS as well as an new appointee.
http://en.wikipedia.org/wiki/Moral_hazard
Richard Russell
Dow Theory Letters
May 24, 2004
Extracted from the May 21, 2004 edition of Richard’s Remarks
The smartest economists and the smartest investors are all debating (quietly or publicly) one thesis. The thesis is — inflation or deflation?
Those who favor inflation insist that there cannot be any real deflation. They point to the Fed’s ability to create unlimited liquidity. They point to the Fed’s ability to hold short rates down to where rates are even negative (below the rate of inflation, as now). They point to the fact that, if necessary, the Fed can buy bonds and thereby hold long rates down. The Fed, states Fed Governor Bernanke, can drop money from planes if need be (we assume he was kidding, of course). Furthermore, states Bernanke, “we have the printing presses,” so if you’re worried about deflation, we won’t let it happen. It can’t happen.
http://www.321gold.com/editorials/russell/russell052404.html
“All of which makes me believe that the gold correction has come to an end, and that the direction of gold and gold shares will now be to higher levels.”
People who listened to Richard did alright — gold was at $375 when he called the end of the correction. (It stood at $606.90 at day’s end yesterday, after a drop of $19.20.)
Get Goldie!
Get silver too!
It’s a much better bargain.
Central Banks cannot manipulate it !
Gold is nice but silver is one fantastic asset to accumulate.
Last year I made PLUS 45%!
Don’t expect Bloomberg, CNBC or MNBC or these sh-ts from TV, talking about the PLUS 45% in silver last year.
Anyways it’s just the beginning. Silver is really special. Because you can squezze the shorts with a almost no money. It will happen. And if it doesn’t? You will still have a nice profit.
Someone tried (rather unsuccessfully I might add) to corner the silver market back in the late 1970s. You might say their scheme was Volckerized.
http://en.wikipedia.org/wiki/Silver_Thursday
“Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump.”
True, governments can reduce the rate of interest in the short run. “They can issue additional paper money. They can open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.”
Both quotes from Ludwig Von Mises.
Deflation will happen. You CANNOT avoid it. ALL CREDIT INFLATIONS RESULT IN CREDIT DEFLATIONS…period! It’s all a matter of timing. Remember, we are not in a monetary inflation where labor prices are going up with prices of commodities. We are in credit expansion where loans are built on loans - no cash involved, just IOUs. When people stop borrowing the system collapses. The Fed cannot make someone borrow.
Yes, but unfortunately for the deflationist approach, the deflation may come after a hyperinflation that wipes out the existing currency, as Von Mises also pointed out. That’s why you can’t just go long t-bonds and wait for deflation; a hyperinflation would wipe you out while you wait.
the one big flaw i have with the PPT theory is why is it still a rumor? Not like the people involved have security clearances or signed oaths? even then there are so many people involved it should have come out by now
dba –
Are you an economist? Because your argument (”If many people have not confirmed a rumor, then it must not be true.”) sounds quite a bit like the joke about the economist well-versed in efficient market theory who did not believe his friend’s claim to have found and picked up a $100 bill off the sidewalk (”Since markets are efficient, if anyone had dropped a $100 bill on the sidewalk, it would have already been picked up; thus there could not have been a $100 bill on the sidewalk.”). (The joke used to involve a $20 bill, but inflation even takes its toll on the punch line to jokes…)
I think a big factor to weigh in is the potential role of a code of silence:
http://en.wikipedia.org/wiki/Code_of_silence
Absence of evidence is not conclusive evidence of absence.
P.S. Any financial journalist who wanted to get off their lazy @$$ and write an interesting book should get started by checking some of the sources in this link…
http://www.informationclearinghouse.info/article14979.htm
I hope Mike Whitney is working on his book right now. I will be one of the first to buy a copy if he does.
the more people you have who know something, the greater the chance it will be found out about. people talk to friends, while drinking, they boast, etc. people who overhear this talk to others and things get out.
if the PPT was really true it would be all over the newspapers
Sorry you don’t understand the code of silence concept.
if the thing about the NSA tapping the atlantic fiber optic cable gets out along with iran-contra and countless other secrets this should get out as well
it’s like stalin said, people are the problem. get rid of the person and your problem goes away. anytime more than one person something, it’s at least one person too many.
i had a clearance in the military. i’ve seen information compromises there. i laugh at all the nonsense at los alamos. anytime you give information to people there is a very good chance it will get out into the public no matter how much you try to keep it secret.
if the PPT was real it would get picked up by the real media and not just a few stories on someone’s blog or some website no one knows about
“When three know a secret, two must die.”
if the PPT was real it would get picked up by the real media and not just a few stories on someone’s blog or some website no one knows about
Right. So in light of the fact that it has already been picked up by the “real” media, are you acknowledging that the “PPT is real” (whatever that means)?
‘The Plunge Protection Team was first uncovered in comments by Clinton advisor, George Stephanopoulos on Good Morning America on Sept 17, 2001. Here’s what Stephanopoulos said:
“Well, what I wanted to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets….perhaps the most important the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges and they have been meeting informally so far, and they have a kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem. They have in the past acted more formally… I don’t know if you remember but in 1998, there was a crisis called the Long term Capital Crisis. It was a major currency trader and there was a global currency crisis. And they, with the guidance of the Fed, all of the banks got together when it started to collapse and propped up the currency markets. And, they have plans in place to consider that if the markets start to fall.”’
Is the PPT the same thing as the Elders of Zion?
I noticed the members of the PPT cited by Stephanopoulos seem to be primarily headed by individuals of the Jewish orientation—Federal Reserve, Big Major Banks, Representatives of the New York Stock Exchange, etc. Just saying.
The PPT exists to injet liquidity into a spiraling market JUST LIKE 1987. The markets were closed, and a thinly traded contract was reinflated, forcing bids on the market, hence LIQUIDITY.
Now, for all the people who think the PPT sits around buying and selling day to day so the S&P won’t lose 20 points, where was the PPT from 2001 and 2002 as the S&P trimmed 40% from its high? This is twice as much loss percentage as 1987’s crash!
So again, the PPT injects liquidity, not day to day manipulation. The boom you see is a freaking crazy liquidity mania bound to end like the tulip bulbs.
“Now, for all the people who think the PPT sits around buying and selling day to day so the S&P won’t lose 20 points, where was the PPT from 2001 and 2002 as the S&P trimmed 40% from its high?”
I am not whatsoever convinced by your argument. Just because the NASDAQ went through the mother of all crashes in the tech stock bust does not mean the PPT does not currently intervene on a regular basis. In fact, the logic of political economy suggests there is now a stronger case for intervention (on the flawed premise that markets can be artificially propped up indefinitely) to make sure that “it never happens again.”
But it did happen again. The S&P lost 30% or 40% or whatever from 2000 to post 9/11 2002.
Besides, when the Fed BUYS S&P futures, how does it eventually settle up? I’m not sure if they are cash or stock settled, I would think cash. If they buy futures, and they lose they have to roll them over or pay out the cash. They would have an ever growing pile of futures.
You may say, “well, they’ll wait for a rally and then sell out”, but suppose it doesn’t rally? Do they end up owning 20% of the stock market? Did they in 2002?
“Do they end up owning 20% of the stock market?”
Dunno. But I can say that our government has been known to accumulate stuff that it buys in the interest of propping up markets…
http://en.wikipedia.org/wiki/Government_cheese
‘You may say, “well, they’ll wait for a rally and then sell out”, but suppose it doesn’t rally? Do they end up owning 20% of the stock market? Did they in 2002?’
With all the Gekkos out there, it does not take a 20%-of-the-market-sized liquidity injection to spark a Keynesian beauty contest rally.
I offer one final remark about liquidity injections to prop up the stock market (Greenspan puts), and then I promise to shut up.
Using liquidity injections to prop up markets cannot change fundamental economic reality, but it can do much to distort the workings of the invisible hand. The effect is not to abolish the business cycle, but rather to smooth short-term fluctuations at the expense of greatly amplifying the low frequency components of the cycle. If this does not make sense to you, then please refer to Shiller’s graph of real housing prices (reprinted in the NY Times) that gets linked in here about once a week or so.
Unfortunately, the conundrumishly-large disconnect between prices and fundamentals induced by all the low-frequency upside smoothing implies a larger correction will be needed to restore the relationship between prices and fundamentals. Don’t fight the invisible hand!
OK, I lied. I forgot to mention the popular name for “a larger correction will be needed to restore the relationship between prices and fundamentals” — it’s called a secular bear market and in the past these have played out over a sixteen-or-more-year period (which, counting from Y2K, would take us out to 2016 or so).
OK. I agree with GetStucco, if I understand his comments, that a bear market will happen over an expanded period of time and not a one day to one week crash of markets. That was my point above. The PPT injects liquidity in a day of spiraling markets, not day to day manipulation. We are in a mania. Debt drunkeness as it were. The party has lasted a long time, but there will be a time to settle the bill. 2007 is lining up to be the year. “Be sure your sin will find you out.” (Please excuse my misapplied use of the Bible, but it kinda fits.)
Is there any way to differentiate between intentional PPT action and the unintentional results of hordes of fools engaged in programmed trading?
No, they are inexorably intertwangled. Refer to my comments about Keynesian beauty contests, which are the intertwangling (and plausible-denialating) mechanism.
The very fact you can’t discern the difference between a mania and manipulation is the very fact that calls the PPT intervention into question. So, you say I cannot prove that the PPT does not intervene, yet you cannot prove that it does.
Wheatie –
You have nailed the exact reason that I have tired of musing about the potential role of the PPT. It seems quite pointless to entertain conspiracy theories which I have neither the means nor the interest in either proving or disproving. That is some journalist’s job (Bob Woodward or William Greider, are you reading here?), not mine.
Auger-inn posted this to yesterday’s bits bucket. It is an interesting analysis of the housing situation, with graphs that provide a quick visual comparison between the status quo and historical US busts. The take home message: We’ve only just begun…
http://www.financialsense.com/Market/wrapup.htm
Looks like we are about halfway to the historical bottom based on Starts and Permits. Subprime is blowing up right on cue to kick off the next leg down over the coming months.
Don’t the HB’s (Centex comes to mind) run their own in-house subprime units? When do these units blow up or at least get cut off from funds? Anybody know how many units sold by the HB’s are financed in-house?
..but this time it is different. None of the past boom/bust cycles had the subprimes to overinflate things on the way up. The way down should be interesting..
“Don’t the HB’s run their own in-house subprime units?”
I sure hope so. Endogenous risk at its worst!
“Don’t the HB’s (Centex comes to mind) run their own in-house subprime units?”
Yes, they do and it is the most incestuous type of relationship between the sales unit and the lending unit; the relationship is similar to car dealerships; if they don’t nail you on the price they will on the financing and sometimes they nail you twice.
Ben had a Colorado thread several days ago where 90 percent of the homes sold and financed through KB Homes’ lending unit in one neighborhood were foreclosed! However, prior to this report KB Homes was asked by a government regulatory agency to get out of the lending business because of unsavory lending practices. As a result, it was forced to sell its lending unit to countrywide.
Colorado just had an avalanche. And believe it or not, I am not talking about housing inventory…
http://www.cnn.com/2007/US/01/06/avalanche/index.html
Good Article. Heres’ a quote I lifted from near the end of it.
“Given the leverage both in residential real estate and the US economy as a whole, they really have no other alternative at this point except monetary inflation.”
Secured Funding, what an oxymoronic name, and fitting for our times: 1000 employees, close to $2 billion in originations, and 15,000 sf office space.
http://www.findarticles.com/p/articles/mi_m0EIN/is_2006_May_8/ai_n16347717
Dear Valued Customers,
Based upon market conditions and limited product availability, we are ceasing wholesale operations. We have stopped accepting new applications, and will have until the 12th of January to fund out the pipeline. We appreciate your patience as we undergo this transition.
Russ — Thanks for the update. The subprime dominoes seem to be dropping as quickly as the real kind normally do…
Is somebody who posts here keeping a running tally of the shrinking subprime sector?
yes, this site was posted yesterday to keep a running tally: Implode-O-Meter
http://br.endernet.org/~akrowne/ml-implode.html
” Latest count of US Mortgage lenders that have croaked since about Dec 2006:
7 lenders have now gone caput”
LOL!
“Jitters Rock Subprime Mortgage Market”, by Anusha Shrivastava, Dow Jones, January 5, 2007.
http://tinyurl.com/uoxge
Bye bye, conundrum, and good riddance!
By the way, Russ, my apologies for dropping the ball on this one. Twist has been out of town doing some off-computer, off-cell downtime with the family, and is due to resurface later today. As you can see, the timing couldn’t have been worse and, silly me, I was pushing the thing from about Wednesday. To this point the REIC is way ahead and HousingDoom has hung you and a few others out to dry.
“Twisted minds: Was BusinessWeek bamboozled by bubble-blogstress?”, by Greg Swann, Bloodhound blog, January 4, 2007.
http://www.bloodhoundrealty.com/BloodhoundBlog/?p=853
‘And, obviously: Bubble bloggers are notoriously reckless with numbers. They have an agenda, so they tend to throw out any data that do not fit their preconceptions. I have no idea if that’s what has happened here, but I can’t see any way for “Twist” to have made an honest error.’
Listen to the blackest of all possible pots (a Realtwhore) call the kettle black!
What makes this even more bull$hit is that on this blog nothing goes unchallenged. A poster always has to prove him or herself if they are putting forth any kind of numbers. These tw#t Realtors lie with impunity and never get challenged. They sure seem scared. Don’t they?
Oh well, shit can happen. However, why even blink an eye over it? Perhaps the AZ realtor’s should address the fact that 47% Phoenix of December sales were vacant properties? That factoid comes from a Credit Suisse report with no axe to grind.
Who is next?
There is a lot of chatter out there. Maybe we need a colored system similar to the terrorist alert when the Sub Prime Blow Up Chatter heats up.
we are at blood red level
I can hardly wait for guts splattered on the streets level.
I hope a bunch of these SOB’s get prison time, their has got to be so much fraud in those places.
No they won’t get prison terms. They will promoted in the Republican and Democrat party.
God blesse Ameri-caca.
LOL!!!
Arizona:
http://www.azcentral.com/arizonarepublic/news/articles/0106sellerintro0106.html
Did the Souperbowl come early this year? SD zip shows 200 “newly listed” homes (just since 1/4/07) and has not even put up any for today. Each day’s new listings are close to 1% of the entire inventory — that seems like a lot of churn!
I have a listing service from REMAX that auto-updates new listings matching my criteria to my email each day. Prior to the holidays i was getting about 1/day. Since the new year, it has gone something like 3,6,6,9,17. People are getting itchy. I’ll bet it s cause i live in the Baltimore area and the weather has been really nice. Anyone tracking Ziprealty since the begining of the new year?
Nice weather sure has had a miraculously strong effect on all markets lately. I understand it also explains the retail slump over the holiday season.
Bull! The lower heating bills should have the inverse impact. It means that that the liars at the Labour Department are at it again. Lies, damn lies and statistics! Never mind the weather. Try the debt levels as the real reason for the crummy sales.
MMG,
It’s up up and away for my search numbers as well. Since Tues I’ve got 15 new homes.
Nikki, where to you live? I am in the white marsh area. You would not believe the number of 450k-900k new homes that have been built off of Honeygo and there are still a ton to build. There maybe broad market weakness but, im not seeing it here. The builders incentives havent changed IMO from a couple years ago.
i’m seeing much the same here in Los Angeles - I commented a few days ago that there’s been a lot of new listings on ZipRealty for Westside/San Fernando Valley.
) since 1/1/7
Lots of ‘new’ listings came online after 1st Jan. In fact, a quick perusal of Zip today shows around 100 new listings (some of which are ‘resets’ of older listings, but let’s not split hairs, eh?
Interestingly - it seems whole areas are being listed in bulk: 2nd Jan had 20+ Pacific Palisades listings, then Beverly Hills (3rd Jan) and today a lot of huge, completely unaffordable places in Santa Monica sprang in to life.
Who knows how many will be on the market by March….?
Everything’s cool and groovy in Houston. It’s different here.
http://www.chron.com/disp/story.mpl/business/4451007.html
Ben oui.
This is easily the best real estate story I’ve seen all year:
http://www.wusa9.com/news/news_article.aspx?storyid=54772
If you’re still not tempted to read, here’s the title: Real Estate Agents by Day, Prostitutes by Night.
Wow.
Excellent! What do you call these ladies? RealRealtwhores?
No. Republican and Democrat canditates.
“Both realtors were charged with prostitution. They were also charged with having sex with men for money.”
Well if you are a fu-ken politician it’s legal!
there have been jokes about this for months on the blog
all predictions are coming to fruition
yahooooooo
this is classic stuff
She looks hot with the hat - but the mug shot is downright sad looking.
Check out here website - Melissa Wolf (google). DAMMMM.
I wont say how I know it. But I know one of the gals on here list of friends. I wonder if she is turning tricks also…
DAMMMMM is right.
You know one of the chicks in the ahem “preview” section? Dude you better do a “live” action interview on your website and get to the bottom of the “tricky” business! That’ll get you some traffic! LOL (TM)
LMAO (TM)
At least some realtors are providing a valuable service.
A lot of licking of client and saliva transfer and other liquids.
Talking about liquidity problems ? That’s their objective. To lubricate the sales and the number of transactions. I really get a kick reading this blog. The essence of real estate is liquidity.
More precisely it’s called liquidate an illiquid asset.
Hey,
It’s redundant I know:
“Economic implosion derived from illiquid assets alchemized by the credit expansion of global central banks using irrational exuberance to sustain a financial catastrophe of their own creation.”
How rich. The world’s oldest and the world’s sleaziest professions, combined.
POLITICIAN ?
“Melissa Wolf” is a long-time member of the adult entertainment community. Her primary job is (and has been) adult entertainment. I’m guessing the whole “realtor” thing was a cover-up because of her very nosy neighbors.
In what may be the “Dow 36,000″ call of 2007, Ken Harney has declared the correction over:
“…the 18-month market correction that followed the four-year housing boom has just about run its course.”
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/05/AR2007010500839.html
How many times has Lereah already called a bottom? Somebody ought to start a bottom-calling blog to keep track of how many times these idiots jump the gun over the next 5+ years.
The DL Watch blog has a running count of the bottoms that DL has called I think we are up to 4 now.
This is really funny — the dude sounds like he is trying to convince “smart shoppers” to seize the opportunity to buy tomatoes on sale at the local grocery store. Did he take bribe money from the NAR to run this ad-disguised-as-reporting?
———————————————————————————————-
“On the other hand, smart shoppers should recognize that the game is changing, the spring buying season is just on the horizon and lobbing lowball offers at already marked-down properties isn’t a winning strategy. If you are seriously in the market, be prepared to pay a price that may not be as low as you had hoped, but that just might be your last shot at a particular house before it sells for closer to the asking price a few weeks from now.
Shoppers also need to understand that today’s prevailing mortgage rates — a little above 6 percent for 30-year money, and the high-5 percent range for 15-year loans — are less than a point above 40-year lows. They won’t be around indefinitely, so a fairly priced house combined with a low-cost mortgage adds up to a potentially great deal.”
Good Afternoon Mr. Harney,
I enjoyed reading your article, however I respectfully disagree with it. Since these numbers are subject to revisions a 0.6% increase is meaningless. In addition you did not mention the biggest problem with real estate in the nation - affordability. Since 2002 many metro areas around the country have had the value of their homes increase by over 100%, indeed some have been over 200%!
The only way that people can get into houses at these prices is with negative amortization loans, those that start at around 1%. It was interesting to see the ad to the left of your article saying that I could borrow $510,000 for only $1,698 per month - ah yes in fantasy land life is good. The problem with these loans is that the real cost is much higher and the amount of money added to ones principal balance is over $1000.00 a month. So the buyer who has this loan owes over $12,000.00 more on his house a year later. Also at this time the loan adjusts to the real cost and his payment jumps to $3,566.00 per month. After he misses his payment for a few months he gets a foreclosure notice. He cannot sell as properly values have not risen and he is underwater because of the negative amortization.
This will happen to millions of people this year and it will not be pretty. They will lose their houses and their credit ratings and will not be able to buy a house for many years to come.
Now there is good news, and that is that effective Jan. 30 Fannie Mae will no longer guarantee loans that are not fully indexed and fully amortized. So most of these loans will go away soon.
However the bad news is that without these loans the only people who can afford to buy already own homes.
OK here is a beauty in the South Natomas area of Sacramento, otherwise known as the hood. Plenty of shopping carts to pick from around here, if you know what I mean.
http://sacramento.craigslist.org/rfs/257663224.html
All this for $199,000. Wow, is it me or does the house look like it is tilted.
Gotta love the picture on this website, announcing SecuredFunding has quit accepting sub-prime business. See https://securedwholesale.com/
Do all sleazy subprime shops all use photos of hookers to sell their “product?”
If you can Botox the lips why not the loan.
Doesn’t this make you wonder if some similarly gargantuan loss was incurred over at Fannie? (But then again, what’s 1/2 $billion between friends, especially when there are implicit too-big-to-fail guarantees behind you.)
—————————————————————————————————
Freddie Mac guides to 4Q losses
Friday, January 05, 2007 1:22:03 PM ET
newratings.com
NEW YORK, January 5 (newratings.com) – US home mortgage giant Freddie Mac (FRE.NYS) Friday announced that it had posted third-quarter losses of $550 million due to an erosion in the value of is derivatives used to hedge risk. The company guided to similar losses for the fourth quarter.
McLean, Virginia-based Freddie Mac had posted its net income at $880 million in the year-ago quarter. The company attributed the latest quarter losses to $1.5 billion in pre-tax losses on derivatives and credit guarantee assets and obligations. A decline in interest rates and a widening of the credit spread restricted growth in the fair value of the company’s net assets attributable to shareholders, Freddie Mac stated. The company also reported $2.5 billion in net income for the first nine months of 2006, versus $1.4 billion posted for the same period a year earlier.
P.S. In case anyone has electronic access to the WSJ, there is an article today on p. B4 which I am hoping someone will post. (My comments are in parens…)
——————————————————————————————–
Freddie Mac Warns of a Loss, Citing Drop in Interest Rates
(Sounds like somebody’s hedges turned out to be a bad bet!)
By Damian Paletta
Washington — Home-mortgage financier Freddie Mac estimated that it swung to a third-quarter net loss of $550 million from net income of $880 million in the year-earlier quarter, citing a drop in interest rates (but I thought lower rates were good for stimulating home sales, which should lead to more loans to repackage and sell as MBS?).
…
Freddie Mac said it would release 2006 results before the end of the first quarter of 2007 (what is it about private GSEs that confers them special rights to delay financial reporting?). The company has been getting back to regular financial reporting but is still recovering from its massive accounting scandal, which led the company to push out multiple senior executives and pay hundreds of millions of dollars in fines and legal settlements (plus, I am guessing, some very lucrative sendoffs for those disgraced former executives who were so shamefully pushed out).
…
The company did not report earnings-per-share data as part of its market updates (is earnings-per-share ever reported if it is negative?).
…
Freddie Mac didn’t predict what would happen with the current effort on Capitol Hill to create new oversight for it and rival Fannie Mae. (Let’s hope the overseers put in place a very thick firewall between taxpayers and the GSEs, which preempts using a bailout to repay their gambling losses.)
(Let’s hope the overseers put in place a very thick firewall between taxpayers and the GSEs, which preempts using a bailout to repay their gambling losses.)
The Fed’s Bill (The Butcher) Poole is trying to do this. I think the political will is still there to honor the implicit guarantee, but the problem has grown so big that Congress simply won’t be able to come up with enough money.
“Responding to Financial Crises: What Role for the Fed?”, by William Poole, President, Federal Reserve Bank of St. Louis, prepared remarks for the Panel Discussion, Cato Institute - 24th Annual Monetary Conference, Washington, D.C., November 16, 2006.
http://stlouisfed.org/news/speeches/2006/11_16_06.html
Go Poole! Stay the course, and keep the GSEs’ grubby hands out of taxpayers’ wallets!
I forgot to post one important tidbit from that article:
“Freddie Mac reported that its credit guarantee portfolio rose to $1.5 trillion as of Nov. 30, up an annualized growth rate of 11%. Long-term, fixed-rate mortgages account for more than 80% of the credit guarantee portfolio, though the government-sponsored enterprise said it did purchase more variable-rate and exotic mortgages in 2006. Interest-only mortgages of its made up close to 4% of its credit guarantee portfolio.”
BIG QUESTION: Will Fannie and Freddie blow up with the subprime subsidance?
Yes, they will. And yes, I hope they do. The more suffering, the better.
subsidancehttp://en.wikipedia.org/wiki/Subsidence
(My money is on subsidence by collapse.)
OUI DA YA SI ….
NO problem. Japaneese morons will be paying.
IIRC Fannie has consumed $1.2 billion in accounting charges over the last year for the purpose of fixing their old financials, and they are still about two years behind. Should they ever catch up, there will likely be a serious recession in the chartered accountancy field (this whole thing is getting silly).
Recently the NYSE put its foot down about deadlines. They are now committed (well, almost committed) to delisting Fannie if they don’t get their ‘05 10-K done by the end of this year.
“Fannie Mae gets December 2007 deadline from NYSE”, by Jeff Clabaugh, Washington Business Journal, December 13, 2006.
http://tinyurl.com/y9qet5
What’s $1.2b between friends, especially when you have a taxpayer-funded implicit guarantee backing you up?
The great thing about taxpayer-funded insurance is that (1) it benefits FNM’s shareholders; (2) it greatly enriches FNM’s upper management and (3) the premiums look like they are $0 on paper (at least until the day a claim payment is made); (4) it provided a windfall to flippers and fraudsters who rode high on the bubble price wave that FNM helped to generate.
Actually the premiums are not $0; they are born by (1) taxpayers, who unwillingly and unwittingly stand ready to back up Fannie’s supposedly-nonexistent implicit guarantee; (2) Fannie’s competitors, who do not have any implicit guarantee to give them an unfair leg up in the MBS-securitization business; (3) on the assumption that the subprime lending could not have gotten so far out of hand without GSE aid and abetment, those who recently purchased homes at a price which reflected a temporarily-high subprime premium.
No wonder Fannie’s stock price is so resilient despite their missing financials.
BINGO !
> thought this was interesting Ad from Los Angeles Times
> 450k for 2 bed 2 bath condo - with Free Toyota Corolla
> property ID = EPCB1
Best Buy in Pasadena.Car w/ Full Price*
Best Bargain in Pasadena. *Seller will give buyer 07 Toyota Corolla CE w/ full price offer at close of escrow. Steps away from Old Town, public transportation and library. Worried that you can’t make your house & car payment? Now you don’t have to! Call Agent for additional details. Open House Sunday Jan. 7th (1-4pm). Zero Down Okay.
a 30yr note on a corolla my prayers have been answered
i am on the red eye tonight!!
Sorry if I duplicate this…
brokeroutpost.com post, confirming that no-doc/liar loans have contributed to the run-up of prices in select bubble markets:
http://tinyurl.com/yzl7mf
“i can see where some say stated is for lighter documentation in the case of someone who runs a business (w2 stated is crap and while ive done them to make my paycheck.. they should be banned). But i also agree that that if it tightened down regulationwise in California the market would crap out overnight for the next 2-3 years since very few could buy a home full doc the correction would be horrendous, long lasting, and not pretty especially for schmucks who got 2 and 3 year arms on a stated loan and now cant refiance full/lite doc and have to eat the adjustable payment. Stated programs are just that… you STATE the income that seems reasonable and the underwriter either swallows it, counter offers, or rejects it. Its not like the banks are idiots.. they spend millions on credit risk assessment when they sell this crap on the secondary market to hedge funds. If a large lender has idiot underwriters who like it and approve it… and ivy league bond traders are stupid enough to trade it and buy it in large pools… how can it come back to us and people say “ohhh.. the loan officers are the evil ones..” if a deal doesnt make sense the underwriter or the manager at the lender should put the brakes on it. The stated loan / inflation phenomenon has two sides… many in california have GREATLY profited (i mean homeowners too who sold their home and bought a huge spread in another state) and if they tightened down and made us afraid of pushing stated loans you can just chalk up a nice fat recession or write the book about the 2nd great deperession of the new millenium.”
This line deserves its own post!
not pretty especially for schmucks who got 2 and 3 year arms on a stated loan and now cant refiance full/lite doc and have to eat the adjustable payment
Now that word is out about how risky these toxic stated-income subprime loans are, it must be harder to find a subprime borrower who doesn’t know what he is getting himself into than it was to find jurors who had never heard of the OJ case…
“California housing prices are dancing on a rotting floor of subprime debt.”
“if they tightened down and made us afraid of pushing stated loans you can just chalk up a nice fat recession or write the book about the 2nd great deperession of the new millenium.”
That pretty much jives with what many on Ben’s blog have suspected. Tighten up the lending standards and the reduced liquidity will send the US economoy into a death spiral.
That’s quite a conundrum. No wonder investers are still “snapping up” vacant homes around SD and PHX, in anticipation of a respiking of the lending biz’s subprime punchbowl in some way, shape or form.
Tighten up the lending standards and the reduced liquidity will send the US economoy into a death spiral.
It’s not an option, it’s an inevitability.
Ramen instant-noodles inventor dies at 96
11:57 AM EST January 6, 2007
NEW YORK (MarketWatch) — The Japanese inventor of ramen instant noodles, Momofuku Ando, died at age 96 Friday after suffering a heart attack, the Associated Press reported.
Ando founded Chukososha Co. in 1948. A decade later the company changed its name to Nissin Food Products Inc. and launched Chicken Ramen, the world’s first instant noodle product. In 1971 the company introduced Cup Noodle. By 2003 total sales for the Cup Noodle brand topped 20 billion servings.
Ando came up with the idea for a cheap, convenient noodle soup because Japan in the post-War War II period was facing chronic food shortages.
For the most recent fiscal year, Nissin reported total revenue of $2.74 billion.
He is survived by his wife, Masako.
As often as the subject of Ramen noodles is brought up on this blog I have to wonder if this is some sort of a sign or premonition of the future.
I have to admit that during my University days I got to the point were I would just eat the damn noodles straight out of the bag and wash it down with something liquid–not necessarily hot either in most cases.
A moment of silence please. I’m in my 4th decade on this earth and still love Ramen noodles as much as I did when I was 18. Two packages of noodles, one of the MSG mix and a cup of steamed broccoli - a heavenly dinner for about 35 cents.
They’re not bad straight!
Seattle Eric is “no longer doing flips”:
http://seattlerei.blogspot.com/
“Though we (my wife and I) successfully flipped three houses in 2006, our last two have been languishing on the market for the past three months. We’ll certainly sell them in Q1, but we’ll take a loss on each of them. It’s disappointing, but in hindsight, the reasons are pretty clear.”
In response to Seatle Eric saying that he is no longer doing flips in Seattle, someone responds:
“I just came across your blog and my wife and I are going through a very similar change in investment strategy. We currently own 2 houses in Queen Anne which are rentals and 1 in Magnolia which we live in. We have made great appreciating on all the homes but are sick of going a bit negative every month.
We are both agents and have set a very similar cash flow goal. Our focus is going to be Texas. We just can’t find any properties in Seattle that make sense from a cashflow perspective. Have you thought about going out of state?
My wife is finishing her Texas license and we shall start our first buying spree in February.”
http://tinyurl.com/yaspso
TxChk, tell them I said “hi”.
I thought about responding but why. Let them lose their ass. Plenty of Texas folks will be glad to take their money.
“We made great appreciation on both homes but are sick of going a bit negative every month”…..
Does everybody see the irrationality in this statement? Apparently, for a time, as long as his house was “appreciating”, he didn’t care that he was negative each month.
Then one day he woke up and smelled the coffee- “hey, I’m actually *losing* money on this appreciating asset!”
Yep, they need to go make a couple of Texans rich. Spread the wealth around.
Anyone familiar with the Safford,AZ scene? I am listening to a raw land radio show on KFNN that is pumping that area because Phelps Dodge has a mine there. Is this a great area to build? On another note, friens of mine report they bought land near Hot Springs, Arkansas. Young couple and looking for speculative growth I guess. I wish them good fortune and hope they make out like bandits. Arkansas though?
We have some posters here who would probably confess to their liberal Democrat stripes (nothing wrong with that — unless your name is Gekko).
Are any of you willing to offer insights into why a Democratic Congress would want to support the GSE mission of giving masses of low-income Americans a push down the path of future household bankruptcy by making it easy for them to get into a house they cannot afford through the magic of subprime lending? Because I personally think that this kind of low-income housing assistance really svcks for everyone except for some big-money guys behind the scenes and the politicians who accept their bribes — er, I mean, campaign contributions.
If Congress subsidizes housing any more than it has, it will only push housing prices up even further up, making it even more unaffordable (supply and demand).
Congress, ask The Netherlands and nhz what happens to house prices when you do this.
That’s the problem. It has nothing with helping the poor. It has everything with bailing out the bastards bankers.
They’ll make a show of it but it won’t pass through Congress and they know it. They win both ways. They appear to “care” but nothing happens.
“but it won’t pass through Congress”
Which it?
Cousin
Supposed “liberal” here!
While I strongly support having social safety nets, strong unions, workers’ rights, public control/regulation of necessary goods and services and universal healthcare for **U.S. citizens**, I do not support subsidizing homebuying for unlimited numbers of low-income people.
There have long been programs (like FHA loans and mortgage credit certificates, etc.) which can help a limited number of otherwise **qualified** people buy homes, but it should be very limited, very regulated and used for credit worthy people in special circumstances, IMHO.
Not a liberal by any means - I’ll be happy when we tree the last of them with bloodhounds - but agree with the “general welfare” provision of the Constitution. I’d be for strong unions if they actually represented the interests of labor and the workers, instead of being the corrupt, sleazy obstructionists that they’ve become [though any displeasure I have with unions is totally surpassed by the disgust I have with CEOs and other corporate officers with obscene salaries and benefits, or the short-sighted looting of pension funds and company assets in the name of "shareholder value."] Think we need rigorous protections for our God-given [NOT government-tolerated] rights and liberties. However, I also think we need to deal realistically and ruthlessly with people who have shown their inability or unwillingness to respect the rights of other members of society, i.e. career criminals, child molesters, and social parasites. Why some welfare bum’s vote counts as much as a doctor’s or hard-working, successful businessman is beyond me. I also don’t believe in protecting people from their own stupidity. Finally, we do need regulation and safeguards to check the power of the “monied interests”, especially the financier oligarchy running this country, that Thomas Jefferson warned us about.
Other than Dr. Ron Paul, are there any true conservatives left out there?
Are any of you willing to offer insights into why a Democratic Congress would want to support the GSE mission of giving masses of low-income Americans a push down the path of future household bankruptcy by making it easy for them to get into a house they cannot afford through the magic of subprime lending?
I vote Dem, so I’ll take a crack at it….they haven’t a clue about what sub-prime lending has done to the housing market, and thru MBS, the financial markets. “Low-income housing assistance..yeah sounds good, and they are perhaps aware of how high prices have climbed, but understand the affordability issue, appraisal/mortgage fraud, and what the effects of allowing knuckleheads without 2 cents to rub together into the “ownership society” will have for the economy and the country?…nah, clueless. And that’s assuming they’re relatively honest, and not in some developers pocket. Smart dems should distance themselves and let the repubs who cheerleaded the “ownership society” take the fall on this one.
As for either party “helping”..please, just let the market work.
I vote Dem, so I’ll take a crack at it….they haven’t a clue about what sub-prime lending has done to the housing market, and thru MBS, the financial markets.
Spot on. Hence my numerous posts on this topic — I hope they provide a public service by educating the clueless. Because I would hate to be a Democratic politician who unwittingly rubber-stamped my support of GSEs, only to come a cropper when it turns out the GSEs were helping pump low income households full of subprime debt which would eventually bankrupt many of them.
Here’s one for you Stucco. I thought about you when I read this because of the story you told last week about the Ipod.
http://www.craigslist.org/about/best/van/239203614.html
I am happy to report that my wife does not “scam” me that way. But she is susceptible to emotional blackmail from our daughter…
Some things I just don’t understand. Caving in to “emotional blackmail” from your kids? Sounds like wife & daughter both need a trip to the woodshed. Daughter demands an iPod? Tell her to go babysit or mow lawns if she wants one that bad.
In all fairness, my daughter used “her own” (aka grandma’s) dough to buy the IPod. My wife and I would not have done it…