Bits Bucket And Craigslist Finds For March 1, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Greenspan dances a little sidestep, saying recession “possible,” no “probable,” according to someone present at secret meeting:
http://www.reuters.com/article/businessNews/idUST30037620070301
Do you think Asia and Euro markets are on to the b.s. of Fed chairs past and present?
‘”By the end of the year, there is the possibility, but not the probability of the U.S. moving into recession,” Greenspan told the forum, according to notes by Bernard Key, a former economics professor at Tama University in Tokyo, who attended the event and spoke to Bloomberg.
There are specific housing and general inventory problems that are being addressed quickly, but need to be carefully monitored, he was quoted as saying.’
Can anyone specifically pinpoint the date in history when the Fed turned economics into a branch of engineering?
“Can anyone specifically pinpoint the date in history when the Fed turned economics into a branch of engineering?”
I believe it was back in 1913, when the Federal Reserve Act was passed by Congress. And yes, the boyz (and girlz) at the Fed think of themselves as engineers, involved in a system of social engineering designed to profit financiers.
Repeal the Act and Eff the Federal Reserve and their debt slave system. Brief quote from a much longer article by Melvin Sickler:
“Creating” Money
We should probably clarify the term “create”. When we use this term, we refer to the process used to bring money into existence. The Bankers create money out of nothing, simply by writing numbers in their ledger books, and then giving loans to the American people with this money, allowing them to write checks on the numbers written in their accounts, and then requiring payment with interest. Money is nothing but numbers, be it numbers in a ledger book, on checks, or on dollar bills. Using this process, most banks are legally allowed to lend out up to 50 times of what they have on deposit, creating the money out of nothing and then charging interest on it. You have to admit that it is quite a racket!.
And the Federal Reserve prints the paper money we use in circulation, the Federal Reserve Notes, by having numbers printed on pieces of paper of little value, since a few cents will print a $1 bill or a $10,000 bill (at the same cost). Money is very cheap to make, and whoever has the legal right to create the money in a nation can make a tremendous profit.”
Yesterday someone defended the PPT buying down markets. Sadly, this market distortion is the antithesis of a free market. Eliminating risk allows money center banks to leverage through carry trades, derivatives, etc. and create asset bubbles with impunity. You may get your 10% return on the S&P (before adjusting for inflation) but the banks get 300% return. PPT enriches the big boys. Goldman Sachs CEO made over $50 million last year; how did you do?
I wonder if the PPT was active in China yesterday?
If there is a PPT and if the PPT directly participates in the market, then with financial institutions in the US following the Chinese Stock market (total capitalization ~1.6 trillion) and making their trading decisions in the US market (~14 trillion). It would be most logical for the PPT to trade in the China market - the end result is the same. The potential maximum loss to the PPT ~ 100 billion in China vs 1.5 trillion in the US.
Can anyone specifically pinpoint the date in history when the Fed turned economics into a branch of engineering?
Probably about the time that someone realized that understanding stochastic calculus and its application to markets was a way to make a ton of money.
Here is an uplifting article on the housing market and it’s effects on the economy!
http://onlinejournal.com/artman/publish/article_1777.shtml
Asia extends losses despite Dow recovery
By FT Reporters
Published: March 1 2007 03:04 | Last updated: March 1 2007 10:06
Asian stocks continued their falls on Thursday, despite a cautious recovery on Wall Street over night following remarks by Ben Bernanke, chairman of the Federal Reserve, that helped to calm nerves.
Tokyo extended losses into the third day as investors continued to unload exporters such as Toyota Motor on concerns over the US economy. The benchmark Nikkei 225 stock average finished the day 0.9 per cent lower at 17,453.51, after posting its biggest one day fall for eight months on Wednesday. The broader Topix slid 0.7 per cent to 1,740.11.
Chinese stocks continued their volatile movements, with the Shanghai composite index finishing down 2.9 per cent, to 2797.19, amid worries that the strong rally in the previous session had made the shares too expensive compared with their emerging market counterparts.
http://www.ft.com/cms/s/10fa33a4-c7a0-11db-8078-000b5df10621.html
Recovery my big white butt. Only 5 minutes into the opening and we’re down 200. It’s gonna be another cringing kinda day….
“Only 5 minutes into the opening and we’re down 200.”
That’s what is being reported, could be down 400 points for all we know, cause of the “computer clitch”.
EU stocks extend losses as well, after a minor bounce the Dutch AEX stockindex is now down 7% within three days.
but I got to tell you, sentiment is as bullish as ever, and still no word on the TV news about stockmarket declines. The papers are writing about it but all they say is: this is a healthy correction, we will see new highs very soon. After a few hours of selling, small speculators (the general public) were buying enthousiastically again yesterday.
Ha ! Healthy correction ? My a$$ ! Its the liquidity bubble bursting. Japan raised interest rates a week or so ago, the yen is climbing and all of a sudden money isn’t “free”. 9000 hedge funds all after the same market gains, all figuring that they are smarter than the next hedge fund. Good luck with that.
The NYSE is still in denial. Capitulation will come later this year. Look out below.
Nice catch tweedle-dee. From an article Feb. 22 in the Independent:
http://news.independent.co.uk/business/news/article2293530.ece
“Japan’s central bank doubled its main interest rate to 0.5 per cent yesterday, the highest for more than a decade, amid mounting evidence that the world’s second biggest economy is on a solid recovery path.”
Wait for it…
“Before today’s meeting, fears had been growing that higher rates would boost the yen and unwind the popular carry trade, in which investors borrow yen at a low interest rate and then invest in higher-yielding overseas assets. An unwinding could trigger major dislocations in financial markets as investors sought to exit a variety of assets at the same time.”
Eff the “globalization of the economy”.
The most interesting aspect of the last few days is that as the result of the “globalization of the economy”, we (as a country and as individuals) have put all our eggs in one basket. I previously felt there was substantial risk in the US economy, now I believe the risk is significantly greater.
$499 phone to fly off shelves, Apple says. Time to buy puts on AAPL.
Apple always had a problem with finding enough cultists willing to pay their exorbitant prices…
Maybe with the exception of the iPod.
By dumb luck, they timed its release for the last wave of the home equity cashout ATM financed luxury consumption spending binge.
Do you own an iPod? I do. And it makes perfect economic sense. With all the aftermarket accessories, I have now been able to consolidate several different music devices (clock radio, stereo, car stereo) in to a single electronic device with my entire music library on it.
If you are into music, the iPod makes perfect sense. Not all of us who own these things are ignorant about cost/benefit ratios.
“If you are into music, the iPod makes perfect sense.”
That is the biggest fallacy about the IPOD! The compression ratio of the music renders the sounds akin to the growls of my obese stomach at feeding time.
Maybe it’s my ears, but most of the MP3’s I listen to are at least 192K, most 320K and LOSSLESS.
Sounds great to me!
Walker, that’s the same argument my wife makes when she buys something. “But I saved x dollars cause it was on sale”. Then I tell her, “but you spent y dollars that you didn’t need to…”
compression ratio of the music
Uh, you do know that you can put uncompressed music onto an iPod (or any other portable MP3 player), right?
Also, it will play any of the standard bit rates. If you can hear the difference between 256kbps MP3 and uncompressed audio, you should have your auditory system studied by scientists, as it is obviously superhuman.
“If you can hear the difference between 256kbps MP3 and uncompressed audio”
Any one can hear the difference- except in a car, the Ipod compression eliminates/blends notes. Listen to a Mozart concerto on a reasonable sound system, then listen to the same on the Ipod thru the sound system’s speakers. The difference is very apparent. For practical purposes - you are correct - most individuals are not aware of compression and for much of the music world the quantity is more important than quality.
Chrisusc,
No. I was going to spend that money anyway on the more expensive stuff (home stereo was dying, mulling CD changer for the car). So I did save the money.
Now, you are right, I did not need these. But I had budgeted for the more expensive things considering the enjoyment that they bring me. And the iPod was the better investment assuming I was going to spend the money anyway. That’s why this is not a fallacy.
Hoz,
Then use Apple lossless to encode. Compression is independent of the player. If you are complaining about the range of the sound chip (which I cannot tell as being worse than any similarly priced consumer audio device), that would be one thing. But as far as I can tell, that is not the argument you are making.
The Lossless system is in infancy and Apple will not license it so that it can be improved and Apple’s is not compatible with windows media. Admittedly wav can be put on an ipod but then why have an ipod - all the neat tags are lost.
“The digital format of its audio files are converted within the iPod, which negates any attempt to create true-to-CD audio. This means that no matter how much money an audiophile spends on iPod docking stations that boast great sound, the quality will not come close to a CD played on a high-end system.”
http://tinyurl.com/34956d
Allright Walker, you sold me. I dont know what I’m criticizing you for, as we speak I am trying to figure out how to convince my wife that a Porsche is a good “investment”.
I have a $20K home system, and listen more often to MP3s (encoded via LAME r3mix VBR) on my PC setup, which has a full-size Yamaha receiver and PSB Alpha speakers.
Sounds wonderful, and the ability to have my thousands of CDs a click away is fabulous. Especially with CD-singles, which are impractical to play most of the time on a CD player.
Still don’t have an iPod, though — too expensive.
My wife got one for Christmas…I would have bought one of the cheaper players had it been my decision. The player has cool aspects, but nothing earth shattering…and the apple encoding requires that she make a copy of any song in our existing library (converted to Apple’s wierdo format), which sucks.
They do, however have an awesome accessory market. My neighbor’s kid just got a car stereo that plugs into his ipod, and he can control the whole thing from the face of the stereo…the ipod goes in the glove box. Pretty damn cool, if you ask me.
Sooner or later the player industry will standardize on some communications/connector format, and this kind of stuff will be common…till then, Ipods will rule.
I can wait.
It’s not a weirdo format, it’s an MP4–a slightly more advanced MP3. *And it does play MP3’s*.
Hoz,
You are confusing the Digital-to-Audio Converter chip (DAC) for the sound quality of the incoming data: The iPod can and does store lossless WAV data, and it does play it as lossless WAV data.
‘Converting’ in this sense means that the sound chip is in the iPod, and that sound chip may not be as fancy-schmancy as the ones the audiophiles might like. But it is most certainly NOT turning WAVs into crappy MP3s and then playing that.
Fly off the shelves? I don’t know. But go to the tech sites. Listen to the people talk about this phone. Apple isn’t that stupid. There is enough interest in this phone for it to be profitable.
As for your claim GetStucco, Apple has very rarely had a problem making a profit (only in 1997 during the Dark Ages of Apple). Sure, they have a market share problem. However, history has shown that this is less of a business problem than anyone thinks.
With that said, I won’t comment on the puts claim because I think Apple may still be a little overvalued based on continuing iPod optimism.
Yes, but this time it is different because of all the foreclosures. And who really needs cell phones? Those who work from their car or truck. And of course a lot of those folks are going out of business.
If that is true (which it may be), then this is not just an Apple problem. The entire consumer electronics business is going to take a major hit.
Oh come on, nobody is going to give up their cellphones. We’re long past the tipping point on that one.
Whether Apple can sell theirs, I don’t know. But to say cell phone use will decline is like saying indoor plumbing has peaked.
Besides, a cell phone comes in handy when you’re living in a van down by the river.
Um, I think indoor plumbing probably has peaked, at least for a while. That’s what the huge empty inventory of downtown condos and McMansions in the desert is all about. The rate of building new units requiring plumbing should go way down for at least a few years. But a bull market in refrigerator boxes and shacks made out of salvaged lumber and tyvek!
I was under the impression that cell phone use/purchases has been a good barometer of the health of the economy, no?
If money is tight enough, a cell phone becomes a WANT not a NEED.
Edgewater:
http://www.youtube.com/watch?v=CIll-rZINsY
Chris Farley RIP.
Thanks, LA - I just knew someone would catch that one.
Oh come on, nobody is going to give up their cellphones
Indeed. The more obvious choice is to give up the land line, which I did some two years ago.
I’m now using Skype for all long distance–still have a land line though
Cellphone cheaper than landline, ergo, no landline. This is because of frequent moves and ridiculous connection charges. If not for the cellphone that broke, it would have more than paid for itself.
when ipods are selling at 300 per minute worlwide, you can afford to lose a few bucks pumping the new phone…
Btw, this phone really is “the bomb”. I’ll be getting mine in three years when it’s down to $200. Heh heh.
More in the WSJ on mortgages, this time an assertion that defaults are spreading to Alt-A. Primes still OK, says the WSJ. Actually, those who lent ot primes are still OK; the primes themselves are permanently house poor.
Also in the WSJ, A2, investors may be losing their appetite for risk. As far as I’m concerned, they never had an appetite for risk. They are just increasing their perception that risk actually exists.
Another article says diversification hasn’t helped, because bonds, stocks, and RE have become correlated. Even gold went down in the Tuesday plunge I agree — the are all overpriced. So what to do?
Sit on cash & maybe diversify into some foreign currencies? Of course, we could all go short (as many already are).
Difficult environment for investors.
what foreign currencies? the euro has hardly moved in the last days despite all the stockmarket turmoil. I’m keeping an eye on the resource currencies (AU$, NZ$) but same story there. People still believe in the mighty US$. Maybe that will change after Ben Bernanke starts announcing major rate cuts to save the FB’s and the stockmarket.
I know what you mean. Been expecting the USD to fall for a long time, and it’s not happening. Could the other FCBs be inflating alonside the Fed — a bit of a peg? Not sure if that theory works, but the USD is toast, IMHO, unless every other currency is toast as well. Time for that single, global currency??? Interesting times…
“They are just increasing their perception that risk actually exists.”
Spot on, and this gets straight to my beef about economics as a new branch of engineering. Volatility management has an extremely damaging effect on the long-term health of the US economy which seems to be completely missed by some people who, given their stellar academic credentials, really ought to know better. By shielding investors from all risk, you also destroy the price signal which helps sort out which investments are worth the risk of undertaking them (given the potential economic rewards) from those which are not (Apple phones priced at $499, for instance). And you also create the mother of all sandpile effects.
Clap clap clap
Very well said and true. The whole concept of risk vs. return is corrupted (in a bad way) when risk is artificially managed. To the main subject of this blog - this is why no gov’t bailout of anything related to the housing market should be done.
or healthcare or ——–fill in the blank
housing
welfare
it all works in reverse
flat,
Not sure if you have any family (I believe you mentioned a wife before), but have you ever watched as someone died when there was an available cure — which couldn’t be attained because of cost?
Many people in third-world countries have to do exactly that. If that’s how you want to live, why not move to a country where it’s every man for himself, and when you get sick, you simply die.
It’s what makes “humane” animals human. We have some sort of empathy for one another, and devise a system that provides for the greater good of society. In doing so, every **individual** has a better chance of living a healthier, happier life.
By shielding investors from all risk, you also destroy the price signal
I once saw a news story on TV about a little girl who was unable to feel pain. It turned out to be more of a blessing than a curse, because she had no way of knowing if she had bumped her head or been scratched or had touched something hot, etc, so she was MORE likely sustain injuries. I guess the markets work the same way.
Exactly the right principle, though I think you have it backwards - it turned out to be a curse not a blessing.
Physical-evolution-wise - pain plays an important role in keeping us out of trouble. If pain didn’t exist, I dare say we would not exist as a species. It’s an appropriate metaphor for financial markets - if there were no potential losses, then financial markets would eventually cease to exist.
Very well said, as usual, GS.
oxide/packman,
Very good analogy. This should be mentioned in every political science & economics class.
“Another article says diversification hasn’t helped, because bonds, stocks, and RE have become correlated.”
Vintage HBB (I think we had that discussion two years ago…ancient history)
Stucco, you probably did have that conversation 2 years ago. The level of intelligence on this blog continually amazes me. I work around a lot of people that I think are pretty smart and they wouldn’t last 5 minutes on this blog. This is truly a place for the best and brightest. Look at how quickly guys like HedgeFundAnalist or Troutmaster get shot down here. They get overwhelmed by facts before they know what hit them. This is a place where you better know what you’re talking about or you get destroyed in a big way. Ben has created something special.
“The level of intelligence on this blog continually amazes me.” I’ll second that NYCityBoy. In fact I was just thinking that yesterday.
Long time lurker here. Just want to say thank you to those that post. Your comments are very much appreciated.
And Thank You Ben.
What ever happened to that troll (Hedgefund a-hole)? I recall that you and TxChick, among others, took him to the woodshed pretty regularly.
The trolls on this blog have gone from endandered to almost extinct. It’s interesting that they still exist in force on other similar blogs, but not here. You guys are right, to much intelect here. It’s always fun to see a troll post here, though, ’cause you just know you just have to sit back and watch their ass-kicking unfold. It’s truly a “spitting in Supermans face” situation - not a good idea.
That’s pretty funny.
Those three items you note are also three items not included in the CPI. The Fed is doing their job, as long as you don’t count those three items as part of inflation (at least the moderate long term rates and price stability).
“So what to do?”
Go to cash.
First bank failure
http://www.heraldtribune.com/apps/pbcs.dll/article?AID=/20070212/COLUMNIST21/702120338
There’s gonna be a lot of shotgun weddings involving banks before this is over.
It’s ironic that that article is in the Bradenton Herald, even though it’s about a Pittsburgh bank. The Bradenton-Sarasota-Tampa area is home to some other soon-to-be-failed banks, e.g. Coast Bank.
There are probably a lot of transplanted folks from the Pittsburgh area living in Bradenton/Sarasota. That’s usually why media in Florida run articles about financial matters in other areas of the country. I’m waiting for them to publish financial articles from Mexico.
OLD news
About 2 weeks old but not very much blog time:
http://pittsburghlive.com/x/pittsburghtrib/news/rss/s_492712.html
Also, problems brewing at Suntrust:
http://biz.yahoo.com/bizj/070301/1424982.html?.v=1
Suntrust, eh? Wouldn’t you like to know who or what the borrower is that is causing them such trouble. Hey, but no worries. Suntrust lent them a bunch of money made out of thin air anyway. So why worry about a default? You can’t lose what didn’t have any value in the first place. As Stucco said above, it’s all about managing public perception. That’s the only thing that makes the money valuable.
$69 million write-off on a single loan and they agreed to the short sale? That must have been one monsterous loan in default.
CD’s at major banks only. Citi, Chase, Wells, B of A. Give up a lttle yield for safety.
Why buy a CD when you can get a better yield on a 28 day treasury bill at treasurydirect.gov? The interest is state tax free and that’s in addition to the better yield.
like i’m going to buy a useless yellow shiny metal with my dollars instead of keeping them in the bank for things like food. whole foods doesn’t accept payment in gold.
anyone buying gold now is speculating as if they were buying any other investment since you have to convert gold into dollars to make it worth anything.
dba, the key is to not go too heavily into one thing or another. I would say, “turn your family into a true hedge fund”. Hedge everything. Buy some precious metals. Put some money in the bank. Do some dollar-cost averaging through long-term programs like 401k accounts. Maybe put your 401k into the most conservative funds available. Be careful. That might even contain toxic MBS investments. Buy some market puts in your personal stock accounts. Stay as far away from real estate as possible. 2007 is the Year of Wealth Preservation, not the year of getting rich quickly. Hedge it all and come out safe on the other end.
I like the Will Rodgers quote. “I am not concerned about the return on my money. I am concerned about the return of my money.” It is something like that. You get the point. Have a great day all.
dba,
Ask yourself “What is a dollar?” Also, ask yourself “What is money?” Hint: There are three characteristics that distinguish the things we call money from other stuff, like rocks, grains of sand, etc.
If you can’t answer both of those questions immediately, I suggest you read Pieces of Eight - The Monetary Powers and Disabilities of the US Constitution. You may think you know what’s going on. But do you really?
You’re right on gold. Buy low, sell high; why can’t people get that? I bought a little physical at $290, will sell above $700 (should have sold my gold last summer, I guess). The gold ETFs make it easy to buy, but will also make it easy to sell. That is why I didn’t sell last summer; the physical stuff is a pain to get rid of. Gold will go down hard.
Aren’t you the guy who calls for the destruction of the USA? Fascinating that you have no faith in gold, which would skyrocket if your self-destructive fantasy comes true.
I don’t call for the destruction, I just hope for it. More likely is a stronger dollar and a stronger central gov’t with less freedom, more welfare. Pension funds buy treasuries, not gold. If they did, the fund manager would be fired, and possibly indicted if gold goes down, like it always does.
“Aren’t you the guy who calls for the destruction of the USA?”
You ALMOST got it right: we’re the guys who are calling OUT the GUYS responsible for the destruction the USA–slight difference. [And preparing to take care of our own after the party's over]
“Gold will go down hard.”
Well, as they say, good luck with that.
Who cares what gold is worth in FRNs? An ounce of gold 100 years ago would buy you a good suit. Same today. It’s a historical store of value regardless of what’s happening on casino–er, wall–street.
And if it’s not in your possession when you really need it–then you don’t really have any. Good luck calling your broke-er/bank-ster when the meat hits the fanblade and every other @$$hat in town is trying to do the same thing. Oooopps.
“Daddy, I’m hungry. You said we were rich.”
Gold is rare, easily divisible, and pretty indestructible.
Rare - can’t be created, duplicated, printed out of thin air, etc.
Divisible - can be partitioned to equal the agreed price of an item, (try dividing a cow, pistol, or a pair of shoes in a barted exchange)
Indestructable - can only be “destroyed” by aqua regia ( a mix of Hydrochloric and Nitric acids) Won’t tarnish, rust, mold, or burn, or even die.
Plus it has been the ultimate choice for commodity money for every advancing civilization for thousands of years. Fiat money has no where near that track record.
Let’s not forget
Convenient because a lot of value is packed into a small amount, which is why we don’t use lead for instance (too heavy for an equal value)
AND
Fungible, An ounce mined in China is exactly the same as an ounce from Nevada
Just to round out your list
Wait let me know where your Whole Foods is and I will take your $5, $10, $25, or even $50 Gold coin in exchange for the food you buy.
So by the same logic - investment in stocks, bonds, treasuries is pointless? After all, the paper the certificates are printed on isn’t very tasty, therefore they’re useless. (That is, if they were still printed on paper). You have to convert them to dollars before they can be used for anything.
We’re talking caveman logic.
Difference is with gold and other metals - if the economy *really* hits the fan, then these will be all that’s worth something, because they’re all that will come out clean on the other side. That and possibly real estate (believe it or not) - which is why I personally think that real estate overall is also a very good investment; though it hasn’t been so for about 5 years now due to the obvious and measurable speculation.
If it gets that bad, there will be a rush to safety, namely the US Dollar and treasuries. If it gets so bad that the dollar is worthless, then you had better own guns, ammo, and canned food, but not gold.
Gold is one of the heaviest metals, which makes it good to use as a projectile to throw at the deparate people trying to steal from you or kill you…much better than rocks. Of course, I would rather have and intend to stock up on guns, ammo, and canned food as suggested by Mark.
Rush into the USD? Now that’s funny. How has that worked over the past 90 years?
All perhaps true except for that last “but not gold” part. It’s not very logistically feasible to buy things with food or guns, but it is so with gold. Thus if the dollar completely goes to the crapper, gold will be the only thing easily used for bartering. But again, only in a “worst-case” scenario - hopefully we’ll never know the answer. Gold is like homeowner’s insurance or life insurance - you hope you never have to use it, but it’s nice to know it’s there in case you do.
You just need enough packaged food to last during the trip from the metro areas to the outskirts, and you need some ammo to ensure you & family get there in one piece. If we get to that point, hopefully not, paper money won’t do you a bit of good. If this country fails but others survive, then the gold would come in handy - assuming you could get to another country and that they let you in and that they respect your automony once you arrive there.
If the whole world fell into a Mad Max type scenario, then gold would probably not matter either. What would matter is guns, ammo and technical know-how like how to rebuild an automobile engine, how to put some sort of fuel into it, how to farm and fish, how to break and train horses, etc. Those are things that would matter at that point.
My thoughts are that ultimately either the paper stuff will continue to have some value (even if its only a token amount) becasue the powers-that-be remain in control (or) the worst-case scenario will apply. But I dont think gold will ever overtake paper money as a daily currency. As a short-term hedge, maybe.
I was thinking…
In this topsy turvy world that makes little or no sense anymore~
A decent house in el lay could be worth $100k in the near future, the delusion that a suburban lot is now worth around $500k is madness.
On the other hand, gold has the posssibility to be worth around $3k an ounce.
There is an incredibly ample supply of houses, yet…
I’d wager that 99% of my fellow citizens have never held an an ounce of gold, in their hands, let alone own any.
Quite right, aladinsane. IMO they will rue that fact in the near future. The rush out of paper assets is intensifying; gold just looks brighter and brighter.
My grandfather was a rich man in Czechoslovakia, in the late 1930’s, he owned much real estate, houses, hotels, (he was an architect, we ate lunch a few years ago in a restaurant in a hotel he built, about 75 years ago) and first came the nazis and then the soviets and the end result was, he ended up with nothing.
The economy of Prague and most of Czechoslovakia ran on 2 things during the war. Cigarettes and Gold. Luckily grandfather had a nice stash of Austrian 10 and 20 Corona Gold Coins, as they enabled my father and his family to make it through the war, and after the war, my 22 year old father went to the University of Lausanne in Switzerland and got his degree in economics, in 1949.
Just before my father passed away, 5 years ago, I asked him, how it was possible for a Czech displaced person, to be able to go to university in Switzerland, when there were millions of displaced persons all over Europe at the time?
GOLD
“GOLD”
Great story — thanks for sharing!
I just purchased 30 acres of arable land with three good springs, a pond, terraced for planting (it was an ex pot farm,) irrigation throughout, isolated in a completely defensible mountain valley with a view from SLO to LA, AND an 800 sq. ft mobile for…39,500USD. A one-hour ride by good horse from my home.
How much gold can you drink when the faeces hit the fan?
Owning property outright is job number 1, we are in agreement there…
Money will have to have some form, when the you know what hits the fan. Most cultures, from way back when, tended to value the rarest item, be it a ginormous Yap Stone, (imagine an item weighing as much as several tons) from Palau in the South Pacific, or Wampum, as used by our native Americans, for trade.
Why did these 2 items count as wealth?
Neither culture had access to gold. Every culture at the time that had gold, (typically placer gold) held it in the highest esteem, dozens of disparate cultures doing the same thing without knowledge of this value system being widespread~
Time to rethink about gold, perhaps?
Beside the obvious items of value for bartering (booze, ammo, firewood, food, gas, sex) keeping bags/rolls of “junk silver” (pre-`65 coins) in bad times could buy you just about anything. The smaller coins eliminate the need for coin/bullion partitioning (e.g. shaving off part of a $700 Maple Leaf) and are more useable for everyday transactions like food, fuel, etc. Although many people are dumb as rocks, even a mouth-breathing @$$hat knows that silver and gold are “worth sumptin”. Worth way more than a stock cert or a FRN in a near-Mad Max post-Goldilocks world IMHO.
Guns vs. butter. Which hold value in all markets? Your 2006 Escalade–or a Glock with 500 rounds? A wine cellar full of French wine or a diesel generator? That sweet Harley Davidson in the garage or a roof full of solar panels?
I suspect that “worth” and “value” will get down to the basics in the near future.
Mantra of the future: “Paper is piss.”
For a very brief time, gas station owners were accepting Pre-65 silver after the Northridge quake. I think the same applies to Katrina.
It has been said that gold is for after the crisis, so that you can put yourself in a very good position once things stabilize. Imagine having hard money in Iraq, after we leave.
Gresham’s Law was absolutely deadly, when you consider that there must have been Billions of common 90% Silver Coins minted from 1794 to 1964, and yet one rarely receives a older silver coin in change… (my latest was around 8 years ago @, a Silver Dime)
A weirder, baser Gresham’s Law for our times, relates to the amount of copper in our Cents, and particularily, Nickels.
The Cents used to be 95% Copper and are now 97 1/2% Zinc.
The Nickel composition is 75% Copper, so think of it this way:
Every last Nickel out in circulation has 40% more value in Copper, than it’s Face Value and recently, laws were passed forbiding their exportation, or the act of melting them down, similar to older rules about melting older 90% Silver Coins, in the 1960’s.
That’s how far debased our culture has come. We are down to Copper being our “precious” metal.
Heh. If I stock up on lead, I can get all the gold or food I want! : )
By the time people realize they should buy gold, it will probably be too late. Supply is already tight, and people probably won’t be able to find physical at any price. I certainly won’t be selling more than necessary to survive. Also, the goverment may outlaw private ownership of gold (again).
Gold is still very much available for purchase, but you’ll have to show your credentials, in order to acquire some…
Your credentials?
Payment in full, for physical delivery. No hocus pocus financial wizzardry is gonna work for this gig.
Gotta be real to buy something real. Simple as that.
Do any coin shops take credit cards for gold coins? Just curious. Thanks.
I worked for one of the largest bullion firms in el lay in the late 1980’s to early 1990’s and we took creditcards for bullion, for awhile, until the creditcard companies realized they were essentialy giving out cash advances, (the buy/sell spread on a 1 oz gold coin is around $20) and stopped allowing the transactions.
p. D1 Mortgage Defaults Start to Spread
…
Data from UBS AG show that the default rate for Alt-A mortgages has doubled in the past 14 months. “The credit deterioration has been amost parallel to what’s been happening in the subprime market,” says UBS mortgage analyst David Liu. The UBS report contrasts with testimony Federal Reserve Board Chairman Ben Bernanke gave to Congress yesterday. “Our assessment is that there’s not much indication that subprime issues have spread into the broader mortgage market,” Mr. Bernanke said.
—————————————————————————————–
One of these two assessments will look wrong through the lense of history. I personally usually go with assessments that are supported by the data.
That’s my question. Sold the house based on the wisdom of this blog –should I now take the tax hit and cash in the 401k? I don’t want to chase the stock market down until my nest egg is cut in half. Don’t have that many years to build it back up!!
As they said yesterday, your 401K should have a money market fund option.
I nearly started a 357 plan this year, but I got cold feet… the only decent fund was the index fund, and equities are so overvalued that the only sure bet is that they’re going nowhere fast.
I’m glad I followed my instincts.
It doesn’t. So I’m fried?
If there’s no moneymarket, try an intermediate-term bond fund.
You should also call up the company that administers your plan and ask them whether or not they have a moneymarket. The company that my employer uses has one, but it’s disguised with this weird name that makes it look like a regular mutual fund. Just call and make sure.
Round about the dinner hour last night, I heard a knocking on my humble 2 bedroom apartment door. Who was it?
A door-to-door Realtor!!!!
Realtor: “Good evening, are you interested in buying a home anytime soon?”
Me: “Not a chance, buddy.” . . . slam
But remember, the DC metro area is different. No bubble here.
LOL
Now That is funny.
Unless I’m expecting someone, I don’t answer the door.
I profiled him through the peephole and thought he was the property manager of the apartment complex. You know, coming to fix something for free . . .
I’ve heard of Realtors trolling door-to-door for sellers but never for buyers. This is unusual behavior, is it not?
My neighborhood realtor trolls all the time for buyers. Money must be getting a little tight though. He went from a monthly calender to a 2 month calender printed on both sides with a handy dandy to do list.
April 11- Call Craig Free Market Analysis
April 14- Call Craig to Sell House
April 18- Call Craig for RE Questions
April 22- Call Craig Free Market Analysis
April 25- Refer Craig to Friends
April 28- Call Craig to Sell House
Lather, rinse, repeat for May and call him on the 19th to buy another home.
Could I throw out a question? On a board unrelated to housing or finance, I came upon a post that has me puzzled. It’s too late to go back and ask the poster what she meant, so I’ll ask if any of you know.
She was talking about her budget and said she can’t wait until 2008 when she can refinance to a lower rate and start paying down the principal on her house. What kind of mortgage would that be? How can she know the interest rate will be lower?
Someone who has been reading that interest rates will be lowered in response to a recession. If she hasn’t been paying down principal, however, she won’t be able to refinance into a fixed because it is likely the house won’t be worth what she owes on it.
IOW, a Koolaid drinker.
Possibly someone with a PrePay penalty expiring in 2008.
everyone is expecting BB to start lowering rates soon and she probably wants to refi into another ARM or if there is a recession the 30 year fixed may drop as well.
there is the increased risk for investors when A paper goes belly up, but it is counteracted by the reduced demand for mortgages
Dimwitted Cramer last night was spewing how the Fed will be forced to lower interest rates soon. Of course he didn’t mention the disastrous consequences that this could have. I have grown to hate that man. I only watched for 5 minutes. And that was just to see how he was spinning his B.S. His spin last night was, “interest rates will go lower and the market will soar.” Brutal!
Saw him on Scarborough Country 2 nights ago. He predicts two rate cuts in a row.
I am convinced that they are not “predicting” at all. It’s a cross between wishing and threatening — “blah blah will improve when BenB lowers interest rates, and he IS going to lower them, right? right? RIGHT? Hint hint?”
The wags that they interview on Nightly Business report do the same thing.
I saw him as well, but on Hardball. The interesting point in all of this is that there is now a PUBLIC discussion going on during primetime TV about housing, deficits, globalization and the outlook for the dollar/interest rates. I would say that there are at least a million more people out there in viewer land that now have an inkling that there is something amiss in the ole US of A. All this commentary was driven by a measly 400 point drop in the DOW two days ago. When this housing debacle gets up a head of steam I expect 24/7 coverage on how badly the USA is screwed instead of the occasional vague references we hear today.
I thought the FED would lower rates late this year due to a housing recession. Because of high inflation readings and a weak dollar the FED may not be able to bail out the housing mess like many would like. Thats too bad……..
It could also be that she has a 3 year prepay penalty. The brokers made much more money if they could get the mark to sign up fot that.
Thanks, guys. If it was the three year prepayment penalty thing one of you mentioned, that means she’s been stretching to pay nothing but interest since 2005!
Phoenix housing bubble party - everyone is welcome. It will be a The Vintage Market at the Biltmore Fashion Mall (24th street and Camelback) on March 7th (wed) at 6:00 PM. See ya there!
AZgolfer, I’m officially jealous! We Tucson bubble-eers just aren’t in the party mode. Yet.
can we have a san diego housing bubble blog party?
I’d love to have a SD bubble blog party.
Melody (in OC) has been trying to rally the troops for over a year, but I think the timing wasn’t right, yet — we still weren’t in the clear.
I think we ought to just name a time & place & make it happen.
Be there or be square.
I used to live near there decades ago, as a kid. Have fun, I’ll be with you in spirit.
AZGolfer,
Didn’t you recently try to invite some people to come meet you somewhere? You know it’s dangerous to do that sort of thing.
It looks like Wall Street has finally started to notice main street USA.
I’ve been looking at prosper.com lately, just to see what it’s all about. That’s the site where you can lend directly to individuals. The more you look through the borrowers the more you start to get a sense of certain profiles. Right now I’m not sure who I’d rather lend money to:
1. The homeowner who needs money to fix up their house?
2. The grad student who is graduating but has racked up a heap of credit card loans
3. The homeowner who has racked up a heap of credit card loans
4. The ambitious entrepreneur who wants to start a company that will revolutionize the industry
Traditionally, homeowners would be given a higher credit rating, but if you’ve got a renter and a homeowner with loads of Credit card debt, I’m starting to lean towards the renter.
I’d love some other thoughts on the site and the whole concept. If you haven’t had a chance to see it, take a look. They have default rates and total returns per credit rating. It’s interesting.
(To be totally honest I don’t think there is anyone I would lend to right now)
If you want to have some fun, click “Lend” and enter “real estate”. Notice the career changes, fantastic business plans, and assorted sob stories….if you could just see your way to help them with a little cash flow problem.
I”ve been a Prosper member for almost a year now. Have not found one person I’d lend to. I have given money to a couple of them.
Conceptually, I like the idea. But when I get to the specific loan level, my good will gets overtaken by my brain.
http://www.kiva.org/
you will not see a single soul asking to borrow money to pay off money they borrowed to buy something esle.
I am a big fan of Kiva. I have already had 4 loans paid back. For Christmas we gave Kiva gift cards, people thought we were insane. A few people probably didnt use theirs but others are excited how it works and are looking forward to making other loans.
When we head to Africa next year we are going to look up some of the Kiva reps and a friend we have make through Kiva. Karma all around.
What a great idea - thanks for the link.
What a fantastic idea, thanks for directing me to it.
“This is truly a place for the best and brightest.”
Hey, I figured out gravity,, no lie
Space is a very fine flexible solid that does not tear and is not displaced
Space is CONCENTRATED in the particles of matter and stretched everywhere else.
Matter continuously moves relative to space and space is continuously exchanged out of matter
As 2 objects of matter approach each other depriving each other of the required space for them to exist in an insufficiency of space material in the matter causes the matter to gravitate toward each other. i.e space tightens and is like a rope.
Space does not resist energy and so is not perceived by our senses
Space is a solid that connects everything
Another mystery solved
heheh
So space only stretches, it’s not compressible?
Space was compressed during the singularity event and remains compressed within the particles of matter.
That’s what causes the pull between objects of matter,,, they require alot of space and as the universe expands and space stretches even more sparse, when they get too close together, 2 objects of matter will start to fight for the same space and it puts them on a hit or miss collision course.
Another seemingly obvious yet rarely heard truth, merchants set up the colonies and merchants were behind our fed banking system
Looks to me like it’s all about merchant run globalization dude.
It will be interesting to see how bad this housing issue turns out to be
It seems like my generation was deprived of credit (1978 - 1990),, the borders were opened up and then the credit spigot was gradually opened up full force
Soon the fed will be practicing the ’string theory.’
heheh, it went through
As mysterious as money itself eh?
Let me say this about BB and the Fed: If they lower rates I will immediately move over 50% of our net worth into foreign currencies, probably the Euro or Yen. I’ve already told my wife this and I’m ready to act. I personally do not think the Fed will lower rates and abandon the $, but who can say for sure? I think if rates move it will be up!! Why? First of all we MUST make sure that the Govt. can sell the US bonds that cover our CURRENT ACCOUNT DEFICIT FINANCING (this is like borrowing money on your credit card to buy groceries). Secondly, inflation indicators, even as fraudulent as the measurements are, are on the up and already over what the Fed claims it is confortable with. Anyway, as has been pointed out here often, lowering rates wouldn’t really help the housing market much since the problems go way way beyond anything that marginally cheaper rates can cure.
My BIL is the chief economist for the bond house on the West Coast and he is often on CNBC predicting Fed rate cuts. We have a private bet where I say the Fed raises before it cuts. My BIL might be right, but if he is it really is time to head for the hills because the US economy will absolutely crater, IMHO.
I work in the MBS business for a very large WS Bank….the MBS bankers are very nervous right now. Product is drying up, but more importantly, investors willing to buy the subordinate bonds are getting very thin on the ground. Bottom line: It’s close to being over.
Stop by, we’d like to pick your brain.
njrereport.com
jb
I think you hit a ’six’ with that call about the dollar. Damned if they do; damned if they don’t. We’ll see.
it the FED lowers rates, Trichet will be the first to react by lowering rates even more. The euro will go down with the US dollar, no doubt about that. As for the Yen, 20 years of currency debasement is against it. And I DO think that Bernanke will lower rates and try to print himself out of the problems, just like he has explained in many papers over the last years. They just need to keep a cap on gold and do some more magic with the inflation statistics and the ‘correction’ will be over before J6P notices who bad things really are.
fed isnt gonna make a move unless they are forced, thus no move, is the move.
they sit tight with thumbs inserted, just like the House, Senate, and Prez…. nothing gets done…
Euro is horribly inflated, and probably all major currencies are. They will all fall.
I agree, the question remains against what they will fall. Even the Swiss franc has turned into horribly inflated fiat paper.
All fiat currencies should fall against gold (and they already have, more or less in agreement with M3 growth). But it’s too easy and too attractive for the FED to manipulate gold down, especially over a short-medium timeframe.
I agree, nhz, and would add that if not for China, Russia and India buying up the gold being fed into the market, they (central bankers, FED) would probably be able to pull off the coordinated debasement of all the major currencies. So far they have been fighting a pretty decent accumulation by the aforementioned countries by selling gold into the rallys. When the cash market gets overwhelmed one of these days by some exogenous event that sends fearful investors into gold, the gold market will be off and running instead of these “two steps forward, one step back” moves we have been experiencing since 01. I suspect that 07/08 will bring renewed interest in the idea of what constitutes money and why.
I agree as a fiat currency the Euro is bubbly, BUT the Euro is backed by gold. Each Euro country is required to maintain a 15% euro cover in gold reserves. A slight difference that makes huge swings possible and causes billions of dollars to change hands.
please explain me how this works; the money supply in the EU has more than doubled in the past 6 years, while many EU countries have been fierce gold sellers. And most of them didn’t have a 15% gold backing to start with.
Something does not compute …
I think the 15% rule only applies to currency in circulation (which is probably less every year because of more electronic payments, credit/debit cards etc.). I would doubt that even 1% of the total EU credit bubble is backed by gold.
The euro countries can and probably will change their rules, but many of the countries were obligated to sell gold to bring their currency reserves lower (Germany, France, Italy), the other countries were allowed to borrow gold from these primaries. But when it came time to do outright sales of gold last year - Germany and France balked.
The 15% rule is for all currency in circulation including credit cards (the seller on a credit card gets money) and debt. How tthis will play out - No idea. But I now some monetarists that feel that gold would have to rise to over $13,000/oz to cover the US currency and if we were obligated to keep 15% gold reserves gold would be at $1900/oz.
The Euro is a strange currency; as a fiat currency, it is in a bubble, but as a semi hard currency, it is relatively cheap.
Someone who thinks the FED is going to lower, has he put his money where is mouth is?
“That ultimately leads to the Fed cutting rates, perhaps as early as June of this year.”…
Gross, who manages the $101 billion PIMCO Total Return Fund
Gross, who was burned late last year by forecasting a Fed rate cut too early, is as convinced as ever that the Fed will have to act before long.
http://www.reuters.com/article/ousiv/idUSN0130418720070301?pageNumber=3
This may be a naive question - but, what happens to bad loans when the lender/originator goes out of business? Say “Subprime Lender Co.” closes its doors — what recourse does the company/institution that bought their lousy loans have when the early defaults start piling up? Are they simply stuck with them?
Also - what are the standards for returning loans to originators? First-year defaults? Are individual loans returned for the most part, or, are whole bundles of loans returned if a certain percentage of them default?
The bigger they are, the harder they fall.
SunTrust Banks Inc. has lowered its earnings for 2006 and for the fourth quarter, following a $40 million increase in the provision for loan losses.
Atlanta-based SunTrust (NYSE: STI) is now reporting net income of $2.11 billion, or $5.82 a share for 2006. It originally reported in January net income of $2.13 billion and earnings of $5.88 a share for the year.
I expect this problem to spread globally.
When in the world will sellers start lowering their prices on Long Island? Any idea? I keep seeing the same houses some for 2 years on the market. They keep holding open houses but not lowering their prices! Also, houses that dissapear after being on MLS for over a year are re-emerging with their prices listed way up again. No one seems to be buying but prices ARE NOT coming down. WHEN???
liz
It took seven years between when prices peaked in 1987 and when we bought in 1994.
For the first two years, through 1989, prices were unchanged but nothing sold — just like now. Of course, wages and prices rose, knocking some affordability back into the market.
But the big declines in nominal prices happened in 1990 and 1991. After that, you had slower declines.
OK, so let’s say 2005 is 1987. That makes 2007 equal to 1989 — people continuing to hold on until a recession makes them give in. But it could happen faster this time. By this time next year, for sure, there will be big price declines.
Liz,
where in LI are you? I’m in Nassau on the north shore — seeing the same houses with hardly a price reduction in site yet sitting for months and months on end as well.
I’ve been tracking one house a block away from me — went on the market last year in the fall for $629,000 then reduced to $600,000 then $569,000 and just last week listed at $549,000. Cute house, but not worth it, IMHO. Small lot at busy t-section with a smattering of section 8 houses on the street.
prices will eventually come down if these yahoos really want to sell their tacky LI homes. (been to a ton of open houses and see a lot of overpriced and very ugly POS)
Hi Shy!!!! I am currently renting and would like to buy in the Huntington/Northport/Centerport areas. $550k seems to be the buy in point but houses at this price really are junk! Your’e looking at 650k to get something decent. What kills me is you zillow a property that is listed at $619 and you see they paid $250 for it in 2002. Are you kidding me?
-a-holes!
haha — so true — we’re looking in the Glen Cove area and are running into the same problems — you can’t get anything decent under $500,000 which is staggering considering most of the area feels blue collarish to me — and most of the houses are overpriced by at least $100,000 to $150,000
it will be interesting when these same houses are still sitting after the supposed “spring selling season” passes them by
i saw a real POS several weeks ago and tried to leave so as not to say anything to the realtor — well, she cornered me and asked me what i thought and i said, “do you want me to lie or do you want the truth?” She wanted the truth so i let her have it and pointed out every shoddy piece of construction work (owner is in construction) Needless to say, she wasn’t happy, but i felt really good.
And i also pointed out what looked like a crack house i would be living next to if i bought said POS.
i saw some cute old houses in huntington on mls the other day — what is the commute like from there?
BTW — i used to have a cat named Smudge
Shy, my commute would be great from huntington because i work in melville and my b.f. works in westbury. I really love hunt. village and that is my target area to buy. But people keep holding onto these ridiculous “wish prices!” I’ve been watching one poor house that has sold ever year for more money. It started at about 470k in 02… now its up to 980k! Same house, no improvements! and no one has lived in it either!
Check out my craigslist posting & send me an email if you want and we can swap real estate info & vent!
http://longisland.craigslist.org/rfs/285581158.html
liz
Equity markets already down over 200 points and we are only 6 minutes into the trading day. Hold on tight. I’m short CFC and hoping for a big day!
Oh, mama . . .
The rally is over. Probably seen the highs for the year! Crank up the shorts!
And my little pig long stock just hit a two year high! LOL
“I think this indiscriminate selling is not at all justified by the fundamentals”
~CNBC Hehehehe.
Yes they all were screaming “fundamentals” on CNBC but they never, ever examine the fundamentals of the housing market, much less mention them.
Do historical P/Es not count among Fundamentals for these shills?
An astute observation. Do you not know that we are at a new plateau for P/E’s.
“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
I held CFC for 13 years. Sold it last Friday.
Unless stocks are down big between now and 3 pm Friday, they might go down big then. Traders afraid to hold stocks over the weekend, because they are afraid of what news might come out before they can sell.
In other words, instead of trying to buy before news, or reacting to news, I think people are going to start selling before news, with an up-bounce if it isn’t that bad. Dred.
The whole character of this market has changed virtually overnight. Lots of people trapped at very high prices, just insane. I spent the first two months of this year with a daily headache watching this garbage happening every single day. I hope we get about 2-3 years of bear market now. That will be an outstanding money making opportunity on both sides.
Let me ask this about the market today, since following it is not something I normally do. There was a big rally off the lows.
Was it that all the sell orders from panicked small investors/mutual funds were executed at the open, while the “smart” money came in after and bought? Of course, if people are investing for more than a few days, we’ll see who is smart.
Theoretically a retest of Tuesday’s low. Forget it, nobody’s gonna prop this sucker up, IMO.
Again, the gains take 8 months to accumulate and 1 month to strip away. It’s incredible.
I’m short CFC and hoping for a big day!
I’m in the same boat. Let’s see what happens.
I have shorted CFC, NEW, TOL, KBH, CTX, FED and I am being rewarded pretty well. I am still short.
Market is going down the tube really fast
Not FED, I meant LEN.
No difference, they’re all fish in the same barrel now…
http://www.secform4.com/insider-trading/25191.htm
AN EYE OPENER
Unbelieveable! The Countrywide CEO (Mozillo) dumped over $32,000,000 of CFC in the last two months alone. Dumb and run…I bet he will resign shortly.
…I meant he will “dump” and run. Mozillo actually seems to be very smart to cash in his chips.
Geez, does nobody but me see that the Nasty is puking at twice the rate of the Dow? Those stocks are ridiculously overpriced and there is little conviction!
“200 points and we are only 6 minutes” Could be down 400 points for all we know. Remember the ” Computer clich” 0f Feb 27?
I almost snotted all over my windshield when I heard the news reports of at least two “computer glitches”!
Does anybody really buy this $$#@%?
As Lucy says, “Oh Charlie, can you kick this lil’ old football, darlin’ . . . I swear it’ll be different this time, sugar.”
This may be a good time to ask this question that I can not figure out.
How stock trades (sell & buy) is done?
Let say that someone wants to sell 100,000 share of X, what happens if there is no buyer at that moment?
What happens if there is a sell order but there is no buyer?
What is the mechanics of sell & buy?
actually it’s quite similar to the mechanics of selling 1000 condo’s when there are no takers … price has to go down or there will be no sale at all.
There is always a buyer unless trading is halted, but it may be at a much lower price. If no real investors want to buy, there is a “market maker” or “specialist” whose job is to buy.
Most electronically enabled investors use a limit order, especially in stocks that aren’t heavily traded. A limit order means you set your minimum price for a sell or maximum price for a buy.
If you look at an electronic quote, it will usually have three different prices, a “bid” an “ask” and the “last.” The bid is the highest limit order from a buyer. The ask is the lowest limit order from a seller. The last is just the last trade that happened.
As long as the highest bid is lower than the lowest ask, no trades happen. It is also possible to put in a “market” order, which means you will take the highest bid or the lowest ask.
This obviously doean’t cover all possibilities - hope it is helpful.
even that part is similar to the housing market, although ‘limits’ on the sell/buy orders are less obvious there. But it is clear that the relatively high limits on RE sell orders (compared to what the market is currently willing to pay) have caused sales to decline and inventory for sale to go up.
ISM manufacturing index back in expansion at 52.3, above estimates. Construction spending down 0.8% in January. Details soon.
ISM manufacturing index back in expansion at 52.3, above estimates.
What do we manufacture beyond loads of debt? The ISM numbers here are really quite meaningless and misleading. At any rate, the market bounced right back up on the number. Probably finsih with a flurry on the upside. What bs.
Does this index also include burger & sandwich “manufacturing”? If so, it might be due to all the depressed FBs gorging on whoppers.
haha -
and for all the FBs priced out of SBUX latte mochaccinos since their HELOC $$ dried up - no worries.
Mickey D to the rescue!
and don’t forget, Iraq death toll numbers down from previous month (maybe they found a way to manipulate those statistics too?). They even quoted the percentage change on CNN
What more ‘good news’ do we have to pull stocks up?
TMA, WM, WFC, WF, NDE, AHM, NEW all leading the market down bigtime. The surprise there (if any) is Indymac down more than 6% and AHM down more than 4%, both well in advance of actual market decline.
GOOD NEWS GOOD NEWS GOOD NEWS
BUY BUY BUY
U.S. Economy: Spending, Incomes, Prices All Exceed Forecasts
http://bloomberg.com/apps/news?pid=20601087&sid=a4d23fA2yKEw&refer=home
NYSE institutes trading curbs for downside trading. I guess markets are only suppose to go up. LOL
Computer glitch on the upside?
The PPT is using the irrelevant ISM number as cover for its intervention. Guess we’ll have to postpone the sell-off till tomorrow. LMAO
10:30 a.m. EST is usually the end of the countertrend in a big move up or down like we’ve had. I’m shorting here for intraday, would stop out if the indices go green.
would stop out if the indices go green.
Pretty sharp turnaround. My guess is that the BIG sell-off is going to be on hold until further data comes out. Maybe equities are the only profitable play left in town? Even if you wanted to unload holdings, the NYSE won’t let you today. It;s gonna have to be a slow bleed.
Yeah, looks like they’re going to “save it” today. All that does IMO is give everyone a better entry for short sells and puts. Whatever. Sick to death of this crap.
What’s sick about it is that they’ll let you BUY BUY BUY, but when it comes to selling they then limit you. Politbureau stuff. Markets only allowed to go up.
Anything you can’t short, you don’t want to short. Hedge funds look for things like that and run them to cause buy-ins. I made some nice bank last year on CROX on a deal like that.
Did anyone buy my recommendation last week or so of PSQ? I love it when a plan comes together.
Almost all losses regained. Incredible. Based on ISM alone. Incredible. Vegas looking better every day now.
Stopped out 10 minute ago. F**k it. See ya tomorrow.
Almost all losses regained. Incredible. Based on ISM alone. Incredible. Vegas looking better every day now.
It means the real drops will be much worse when the bulls finally get run over.
Trading curbs are like the banks closing their doors during the Depression, IMHO.
BWAHAHAHAHA! And some here on this blog think I have a permanent tin foil hat for thinking the markets are gamed.
“All safe deposit boxes in banks or financial institutions have been sealed… and may only be opened in the presence of an agent of the I.R.S.”
- President F.D. Roosevelt, 1933
Market is so choppy right now, who knows where it will settle out. CFC down 3% though, hopefully that will hold.
I could have written the WSJ today. Great article on how subprime woes are spreading to “prime”. Gee, now where else did I see that said………?
I love this volatility.
I expected to see a prior post on the Personal Income reported this morning (up 1.0%). This number certainly suggests a dramatic rise in inflationary pressures, but the biggest problem is that if government wage increases and government wage bonuses are stripped then personal income rose at less than 0.5%. Just an observation that all year end bonuses have been paid and there are no salary increases in the near future.
http://www.foreclosure.com/listingdetails.html?ps=25&o=dos&tab=f&cno=037&pi=&bhi=&z=90044&pa=&st=CA&bdi=&ci=&listingid=6024034
Here’s a real CCentral LA beauty in zip 90044! Just went to foreclosure and listed REO price of $506,000, Zest $637,253. A 2/1, 796 sq ft genuine crackshack, yr built 1923. located just off the scenic 110 harbor fwy in the heart of beautiful South Central LA(Big Sarcasm!).Nearby attractions:Watts, willowbrook.Grape St Crips,King drew medical ctr,Compton(more sarcasm).
My Los Angeles BS Indicator points to 100% mortgage fraud.
http://www.foreclosure.com/listingdetails.html?st=CA&tab=f&cno=037&z=90044&listingid=6024034
Location (Negative), Location (Negative), Location (Negative)
YoY price declines hit every zip code in Sacramento County.
In Barrons: By Rex Nutting
WASHINGTON (Dow Jones) — Corporate layoff announcements jumped by 33% to 84,014 in February, a figure including a “Valentine’s Day massacre” of more than 20,000 jobs in one day, according to the latest unscientific tally compiled by outplacement firm Challenger Gray & Christmas Inc.
More foreclosures…
I think Barron’s called the housing bubble peak, just as it called the dot.com bubble peak.
The Economist called the housing bubble earlier, but the bubble continued to inflate for a while afterward. The Economist showed a mastery of reality, Barrons also a mastery of unreality.
ISM PPT cover story
The Institute for Supply Management’s index of manufacturing activity came in at 52.3, stronger than the 50.0 reading analysts expected. The index is an important measure of a part of the economy that has given investors headaches in recent months. Manufacturing has struggled and at times given off signals that a recession might be in the offing. A reading at 50 and above indicates expansion, while anything below 50 signals contraction.
The ISM data showing manufacturing expansion was the trigger behind the market bouncing back from earlier lows, said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc.
“However, the aftermath of Tuesday’s major selloff will linger for the next couple of days. I don’t think we’re totally out of the woods yet.”
See how it works, folks. You’re merely pawns in the scheme of things.
IMHO the 3.5 Million manufacturing jobs lost over the last 6 years has resulted in a smaller data pool. The question of the survey’s validity has yet to be addressed.
“You’re merely pawns in the scheme of things”…
When the wealthy have income generation degradation it suddenly becomes a concern…for the rest of us… less wealthy, our diminished income generation is profiled as an issue
I’m in the garden…getting seedlings ready for the spring
House prices and wall street dancing have become such amusing things
“déjà vu” :
“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.”
“…leaving homeowners or investors fully exposed to the risks of their behavior”
http://articles.moneycentral.msn.com/Investing/JubaksJournal/DebtMarketBombCouldHurtUsAll.aspx
casey serin finally gets on kfnn radio radar
arizona, you got any land left?
A “True Believer”:
“I think it’s wholly psychological; nothing has actually changed,” said Philip Manduca, managing partner at Titanium Capital in London. “The Chinese stock market is not an indicator of the Chinese economy. The Chinese
economy is not an indicator of the world economy.”
http://biz.yahoo.com/ap/070301/world_markets.html?.v=18
Hey Sunsetbeachguy,
remembering you…
WOW, four prophetic terms in one small sentence:
“Collateral “….”derivatives”… “accelerant”… “debacle.”
Way to go!
“She wrote a long letter…on a short piece of paper” …Traveling Wilbury’s
Gee, with all the fraud in housing is it any wonder that someone could pull off a $15M insider trading scheme?
Hey,
How do think the “Markets” would react if Cheney announced he was going pheasant hunting in Saudi Arabia the same weekend?
http://news.yahoo.com/s/nm/20070301/wl_nm/iran_saudi_dc
Wrong bird…should have been Quail hunting…more birds per bush!
Well, if not this Saturday… Cheney could go Turkey shootin’ in March:
“Saudi Arabia, Iran and Syria have all accepted Baghdad’s invitation to attend a regional conference in March on ways of easing tensions in Iraq.”
Banks are getting the message, … finally
http://forum.brokeroutpost.com/loans/forum/2/98600.htm
well, not in the Netherlands. 6x income loans (with no downpayment) are still the norm, despite new regulations for the banks; and even 10x income is not unusual. Even more housing subsidies (mostly ‘buyer assistance’) and free mortgage insurance options are in development thanks to our new RE bubblehead government. Housing here is still a ‘can’t loose’ game.
but well … when the EU bubble pops and the Netherlands is the last RE market to go down, I think the splash over here will be even bigger thanks to 20 years of relentless pumping.
Same in the Kingdom of Belgium, no signs of tightening lending
standards.
That’s a great link. thanks John Flemming.
What a difference a year makes in the life of a lender.
Anyone who is new to this blog, or new to the concept of a housing bubble, check out that link for a bit of clarification.
Here’s some theory, please check for plausibility:
Are prices essentially limited to a range of affordability as defined but whatever amount of credit banks are willing to extend? If banks only leant 1 X income, would housing be similarly priced?
At least some housing would.
You got it.
That, and cost of building would pretty much sum things up.
That’s exactly why prices rose — higher loan amounts = higher prices.
Wish more people would get this connection between credit and cost inflation.
F*ck Disney:
”Walt Disney World said Thursday it is developing two large tracts of land on different areas of its 43-square mile property, one aimed at high-dollar luxury guests and the other designed to appeal to a more moderately-priced audience.”
http://biz.yahoo.com/bizj/070301/1425076.html?.v=2
Now, Old Walt’s company has a deal where if ya pay a little extra $$$…you don’t have to wait in line with the poor little orphan kids, they give ya a pass to go to the front of the line.
You’re so special!
PS,
I guess Disney and Oprah will not be opening a “Resort” in Africa anytime soon.
Must-read for Cubs fans…
—————————————————————————–
DAVID CALLAWAY
Dow plunge too harsh to ignore
Commentary: The blinders must finally come off
By David Callaway, MarketWatch
Last Update: 12:01 AM ET Mar 1, 2007
…
There are plenty of good arguments why this was a one-off, and why the market can go higher. Corporate earnings have been on a record run. Interest rates are low and likely headed lower. Inflation is still just a word only Fed Chief Ben Bernanke whispers regularly. But the fact is that the swiftness of the declines in the Dow average that day — computer glitch or not — and the willingness of investors worldwide to turn tail and run on something as meaningless as a drop in the fledgling Chinese equity market, indicates that big investors have their fingers on the sell button. That doesn’t happen in a bull market.
You can’t have a market run up as far, and so fast, as this one did over the last eight months, no matter how many people say it’s still undervalued, and not expect a hair-trigger response to the slightest provocation. Now that we’ve had the drop, it’s certainly healthier for the market. But is it really time to step in and buy stocks now that you know the gunslingers and heartless program-trading computers are ready to draw at the first sign of trouble?
Alan Greenspan wasn’t the first wise old owl to bring up the prospect of recession. The economic indicators have been pointing to a slowing economy for months. The housing downturn is getting worse. Corporate earnings, despite achieving their record in the fourth quarter, look like they’re peaking, and the private-equity boom gets sillier by the day.
http://www.marketwatch.com/news/story/any-cub-fan-knows-dows/story.aspx?guid=%7B1C4CB3D3%2DD796%2D4A12%2DA567%2DF0233E824128%7D
“indicates that big investors have their fingers on the sell button”
Actually, the button say’s: NOW!
From Ivanhoe Mortgage Employee
Posted the following at my blog:
don@greatchesapeake.com said…
I was an employee of CPM/Ivanhoe Mortgage. I haven’t seen anywhere yet where it has been disclosed that the sorry leaders of this company have stolen the funds from the 100 branches the operated under it. Funds were to be held in seperate accounts to be used for branch payrolls and expenses. It was our money. They also took the money that was to pay for our insurance policies and has now allowed the policies to lapse., with no COBRA offered. In there last “MEMO” Courson states that they have keeping us informed all along about money troubles, but doesn’t say that he has been saying how well the transition was going and that it would be a seamless transition. This executive group has mislead, literally robbed it’s employees, including the last payroll. They promised employees at the Orlando Ivanhoe Division severance packages but of course lied about that. I have never seen such a bunch of cowards in the business world as John Courson, John Cassell, Ed Fuchs, Paul Reich etc… Now they hide. If you happen to become an employee of any of these people in the future, BEWARE. They will steal from you and smile about it. Hopefully the law will catch up with them on this fiasco. Anyoe looking for anymore info on this situation can email me at don@greatchesapeake.com
Thu Mar 01, 11:42:00 AM PST
https://www2.blogger.com/comment.g?blogID=33255068&postID=2170011790548340889
That’s a good model there for exacting revenge on corporate crooks who happen to also be your former employers. (Something tells me this sort of posting will gain in popularity in the next couple of years…)
Ben,
Your blog distributes still many daily nodes of lovely delights…
“I have never seen such a bunch of cowards in the business world as John Courson, John Cassell, Ed Fuchs, Paul Reich etc… Now they hide.”
As Bob Dylan sings:
“How does it feel to be on your own
With no direction home”…
“Now you don’t talk so loud
Now you don’t seem so proud
About having to be scrounging for your next meal”…
You used to ride on the chrome horse with your diplomat
Who carried on his shoulder a Siamese cat
Ain’t it hard when you discover that
He really wasn’t where it’s at
After he took from you everything he could steal”…
“I haven’t seen anywhere yet where it has been disclosed that the sorry leaders of this company have stolen the funds from the 100 branches the operated under it.”
Lovely, …just lovely
“It is truly enough said that a corporation has no conscience; but a corporation of conscientious men is a corporation with a conscience.”
http://thoreau.eserver.org/civil1.html
This is why the Code still contains the involuntary bankruptcy provisions. You get three creditors together, they can put someone into bankruptcy whether the person wants to or not. Then they can get a trustee appointed to go back and sue people for preferential transfers, regain some of the dough and get some employees paid. Check with a good local bankruptcy attorney.