Bits Bucket And Craigslist Finds For July 14 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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Sacramento New Home Sales Crater; Record Inventory
Sacramento Land(ing) Blog, read here: http://tinyurl.com/2j6l73
Everytime I think we may be reaching a bottom or flattening out a bit in the value decline, the stats come up and indicate the slide is getting worse instead of better. Builders inventory rising, MLS listings up, sales down, values down, foreclosure up………it may be a perfect storm.
From Merriam-Webster online…
panic
Function: noun
1 a : a sudden overpowering fright; also : acute extreme anxiety b : a sudden unreasoning terror often accompanied by mass flight c : a sudden widespread fright concerning financial affairs that results in a depression of values caused by extreme measures for protection of property (as securities)
“extreme measures for protection of property (as securities)”
Can anyone elaborate on this part of the definition?
sell now before it’s worth even less?
sell now before it’s worthless?
Sell, Randolph! Sell!
Turn those machines back on . . . .
To load onto the waiting choppers…
Stucco, if it makes you feel any better, my CD, savings account, fully-funded 401k and complete lack of debt didn’t make me lose any sleep last night. There might be a war on me, since I am a saver, but some days I still feel like I’m winning the war. I wonder how the FBs, and some of these hedge fund managers, slept last night. Not so good, I bet.
I slept very well last night, too
SAME HERE
a beautiful saturday in nyc
heading to a bbq party without a financial worry
no yardwork, no house duties
just relaxation
enjoy the beautiful day
“no yardwork”
Amen to that, Brotha!
Bravo, NYCB! In addition to all that you said, our 1x annual income 15 (now 9) year mortgage didn’t make my wife and I lose any sleep last night either.
I doubt if many hedge fund managers had a bad nights sleep. It is not the hedge fund managers investment that gets lost, just a lost opportunity for ridiculous income.
I agree, to a point. Read NNT’s Fooled by Randomness to learn what happens to hedgies’ careers when their funds blow up. It ain’t pretty…
why worry about careers when hedgies make enough money in one year to make all family members into multi-millionaires (if they want)?
The fund operators that have “lost” have become reincarnated and many are doing the same thing. LTCM nearly took down the world markets in 1997 - look at what John Meriwether’s fund is doing now! Get real my friends, the street takes care of its own. I do not know which fund or funds are going to take down the world markets. I know it is going to happen, but I also know the fund managers will be OK.
GetStucco,
I love Taleb (hear him speak if you ever get a chance), but even he would say Niederhoffer made out okay, all things considered. Also, Brian Hunter (of Amaranth fame) has already raised an unbeleivable amount of money for a new fund. John W. Meriwether and his friends from LTCM set a new shop called JWM Partners and are doing quite well financially. In my job, we call this the “heads we win, tails you lose” phenomenon.
“why worry about careers when hedgies make enough money in one year to make all family members into multi-millionaires (if they want)?”
There is the beautiful irony of the story. Those of us (like me) who don’t really care that much about money would happily live off the spoils of riches these guys get to keep after they blow up. But given their motivations, leaving the game forever would result in a loss of face and sense of purpose. It is poetic justice that hedgies will generally have to suffer post-blowup no matter whether they are financially set for life.
‘In my job, we call this the “heads we win, tails you lose” phenomenon.’ = perfect arbitrage opportunity / perpetual money pump.
Where do you get one of those (w/o having to live in smelly NYC)?
This video on Youtube is pretty much what I believe to be ~15% chance of occurring. I first saw this saw this on Itulip.com. I had nothing to do with this film.
http://tinyurl.com/259t67
As Christoph Amberger says “A day late and a dollar short”
No way would cnn run such a negative piece no matter how bad things got.
“No way would cnn run such a negative piece no matter how bad things got.”
CNN: Rostock, Germany, G8 summit riots
http://tinyurl.com/2nlyhq
June 2, 2007
In 1929 the banks had the people’s money. In 2009 the people have the bank’s money. Maybe it’s different in other countries…
OK, but what was the point?
Is it safe to move back to NOLA yet? (And why does our govt like to put people in harm’s way?)
———————————————————————————–
New Orleans’ Levees: Can Disaster Strike Again?
Updated May 16, 2007
As residents of New Orleans slowly rebuild their homes and lives after Hurricane Katrina, they are relying on the city’s cordon of levees and floodwalls to protect them from the next big storm. The U.S. Army Corps of Engineers declared almost a year ago that it had restored the barriers to pre-Katrina strength. But leading experts from the U.S. and the Netherlands say the system is riddled with flaws. They say that even a weaker storm than Katrina could breach the levees if it hit this season.
http://magma.nationalgeographic.com/ngm/levees/index.html
The Dutch built protection for the 10,000 year event, started in 1953, and are not done with it yet. But the Army Corps got it done in a year.
Heckuva job Brownie.
to give an idea have far the Dutch have com in 50 years:
I’m from Zeeland (where disaster struch in 1953, +/- 95% here is below sea level). Government recently acknowledged that if the dikes break again (chance estimated at probably once in a 1000 years, but not all experts agree) they cannot do anything for the +/- 300.000 citizens in this province, because there is only one road out of the area and people have no chance to escape. Citizens are advised to look for higher ground (the higher dunes near the sea and some small parts of the older cities). Unlike in 1953, most citizens will now try to contact government by email or cell phone, check their iPOD and wait for a helicopter to magically evacuate them from their home. In 1953 at least people knew that they were on their own and many had some kind of idea what to do in an emergency.
nhz
Count your blessings. At least there is zero chance of a Cat 5 hurricane hitting Zeeland (at least I think?)…
sure, we don’t have hurricanes here - but we do have stormfloods once in a while, and because of global warming their threat level and frequency is expected to increase. But it’s definitely safer than New Orleans now.
of course many local mortgages will get under water anyway when the tide of the rates turns
I just read the wiki article on this. Scary. It said that, at the time, none of the local radio stations operated at night so there was no warning. How things have changed.
Why can’t everyone just buy a boat and a couple of oars?
GS~
New Orleans was a textbook example of the tenuous existence we all face in life today.
From functioning government to anarchy in 72 hours.
When the shit really got goin’, the cops threw down their badges and ran for the exits. And then it was Katey bar the door.
I remember readin’ in the WJS about some dude who rode out the flood in his attic, and then huddled in terror with his next door neighborhood as the looters did their thing.
He said he’d have given all this possessions in the world ransom for an AK-47, because he was so scared for his life.
Anybody who is depending on the system today to bail their sorry azz out in a catastrophe, financial or natural, is an ignorant fool who will be find out you’d better be paying attention to history, because it has a real tendency to repeat itslef.
“And then it was Katey bar the door.”
Katrina bar the door…
But is a financial catastrophe as mind numbing as a physical catastrophe? Any licensed psychologists here?
I mean walking down the street and having every building and 1/2 the people you know including friends and family members gone is debilitating in so many ways. A financial meltdown is really only one part of life. But then again I guess it really depends on what people use to define themselves.
” why does our govt like to put people in harm’s way?”
The risks of New Orleans have been known for oh, about 200 years. Its underwater and sinking.
Now, me, personally, I don’t like those odds. Call me a coward. But some people actually CHOOSE to take the risk. God bless them….and INSURE THEM.
Please forward the video of Marines forcing people back into New Orleans. I missed it. And the levees? Even if ones could be built to do the job perfectly, count on the culture of New Orleans corruption to screw it up somehow.
“God bless them…”
Fine.
“….and INSURE THEM.”
It is fine with me if God wants to insure them, but LEAVE ME OUT OF IT!
Engineering is the art of modeling materials we do not wholly understand, into shapes we cannot precisely analyze so as to withstand forces we cannot properly assess, in such a way that the public has no reason to suspect the extent of our ignorance.
- Dr AR Dykes
British Institution of Structural Engineers, 1976.
Is it safe to move back to NOLA yet?
Is it still below sea level? Is it still an ecological disaster and public health crisis waiting to happen?
“Is it still below sea level?”
Yes, and still sinking, and still in the path of future Category 5 hurricanes. ‘Future public health crisis’ does not quite capture a scenario where 10Ks drown in one shot.
‘Future public health crisis’ does not quite capture a scenario where 10Ks drown in one shot.
True, there’s that as well. I was actually referring to the fact that I think there’s a lot of mold, bacteria, and other badness festering in all of those flooded houses and stores: food, wastes, that place is a breeding ground for infestation. I expect that the EPA will make some reports five years from now and tell us that there are health issues (similar to the 9/11 dust problem).
The main flaw of the New Orleans levees is their location, which encourages people to huddle together below sea level in a state and country with a vast amount of living space. The parts of New Orleans above sea level handled Katrina rather well. Don’t compare New Orleans with the Netherlands, they’re like apples & Oranges.
Yup. If you had just condemned the below sea level areas and torn down the levees there would still be enough above sea level ground to support a nice little city.
There doesn’t seem to be any conception in this country that throwing good money after bad is not a good idea. (As long as it’s OPM).
‘Since the 1950s, the federal government has enacted several policies to deal with threats imposed by natural hazards. The early policies had a paternalistic tone, favoring federal relief after disaster and federal projects(e.g., levees, and seawalls) to mitigate and protect communities before an event. Later research showed that levees encourage development in these “protected” floodplains. The “levee effect” can create a sense of security in these communities, a sense that could be false in a flood of record.’
http://www.systemdynamics.org/PhD_Colloquium/11th%20MIT-UAlbany%20SD%20Colloquium.htm
The Fed creates a parallel Frankenstein problem of its own creation to that of the Federal govt’s levee builders. The Greenspan Put policy of shoring up markets at the first sign of weakness has created a “levee effect” with respect to investment choices. All investments look good when a flood of liquidity is used to buoy returns. This is quite a conundrum indeed.
Like the levees which temp NOLA residents to come back and put themselves in the path of future disaster, the Fed’s policies have encouraged massive stupidity on the part of the average investor to gamble foolishly, w/o bothering to address the question of whether a given investment has an attractive risk/return profile. And the Fed’s preference to mop up after a financial crash is similarly lame-brained to the flood controllers’ preference for offering relief after a disaster, ignoring the role of the “levee effect” in putting myriad fools in harm’s future path.
One no longer loves his knowledge sufficiently after he has communicated it.
– Friederich Nietschze –
Oh d@mn — German spellchecker on the fritz…
“Nietzsche”
tempt (ugh!!!)
You’re spot on, GS. Good analysis and comparison.
Roosters are becoming a problem in the DC suburbs:http://tinyurl.com/29ozu7
http://tinyurl.com/29ozu7
My son always makes fun of places with restrictive zoning. I’ve told him some are ridiculous, but some zoning helps protect the value of your house. We’re in the country so if we hear a rooster we’re not surprised. However with small farms almost virtually gone we haven’t heard one in years. However when you merge many different cultures into a development, very strange customs appear. Hopefully zoning will curtail some of that.
This is what you don’t want happening
http://tinyurl.com/yp8gnh
“When zoning inspectors ordered the family to get rid of the animals, Rodriguez and her mother cooked them for dinner. Her brother bitterly abstained.”
Hah.
I grew up just outside the beltway in Maryland in the 70s, and neighbors 5 doors down had chickens. They just had a taste for really fresh eggs. It was certainly unusual, but it didn’t freak us out.
Chickens don’t crow at four in the morning.
But tolerance is running low these days among jittery Prince William residents who say they see too many houses for sale, too many foreclosures, and too many unkempt yards for their liking. That’s why Virginia Paris and her husband, Cavin Mooers, said they’re eager to sell. “We’re afraid our home will depreciate more, so now we want to make a run for it,” Paris said.
Everybody already knew there were a bunch of cocks in D.C., making life difficult for everybody else.
Yes, I live in Fairfax and for awhile heard the rooster crow. Never did figure out who had it. Now we have a red tailed hawk showing up once in awhile. The rooster has been silent.
Did June retail sales strongly “crash and plunge?” Sounds like time for more plunge protection.
Retail Sales Numbers: Which Ones Do You Buy?
By Ylan Q. Mui
Washington Post Staff Writer
Saturday, July 14, 2007; Page D01
Two days ago, stocks raced to record highs on reports of strong June retail sales. Yesterday, the news cycle did an about-face as June retail sales were described as “crashing” and “plunging” in a record drop.
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/13/AR2007071301972.html?hpid=moreheadlines
“The numbers don’t lie, but sometimes the truth gets lost in translation.”
Figures don’t lie, but liars do figure.
The retail numbers plunged but the market still managed to go up. One of the strongest sectors on Friday were the homebuilders. The homebuilders were buoyed by a rumor that Warren Buffett, or maybe it was Jimmy Buffett, might take over Hovnainian or another of the many struggling builders. As a value investor their book value might be enticing to Mr. Buffett, or so the story goes. This is clearly a sham. They are waiting for the “cargo cult” (credit to Stucco) to rain untold billions down upon them.
WCI played out the same charade in the past 6 months. A phantom offer by Carl Icahn for $22 per share made its rounds through the media. The stock shot to $24 as more tales of multiple bidders lining up for WCI surfaced in news reports. Well, no bidders have made officially recognized offers yet. The price of WCI, as of Friday, was hovering just above $16.
The builders on Friday, up 3% for the most part, got another temporary reprieve from the slaughterhouse. This is a game that’s been going on for more than a year. All one has to do is look at the earnings estimates for a company like KBH to see that there is no great value play in the builders, as the pace of write-downs will accelerate. These businesses are all about cash flow and some continue to buy back shares or hand out decent dividends. Just when that cash is most needed, it will be gone.
The stock market is a game, just like the real estate market was a game in the past 5 years. The length of time that it remains illogical is directly proportional to worldwide stupidity, and there is an abundance right now. The market shows no sign of an imminent crash but don’t let that fool you. How many people really knew what was going on in 1929 or 1987? Games can be played for a long time. As I like to now say, “nobody ever went broke saving money (or gold for you gold bugs)”.
nobody ever went broke saving money
I’m not sure that applies to Argentina just a few years ago. Savings accounts and salaries were not compensated for the currency devaluation that was arranged while accounts were frozen, but debts (like mortgages) and daily expenses for food etc. did go up all the same. As a result many people and small businesses went broke. I don’t doubt the banks will be happy to organise the same trick in the US or Europe. Argentina was just a try out and they probably have perfected the game by now. As for gold, it depends on who makes the rules … I’m not too confident about that either.
Nobody, in the U.S., up to this point, has ever………
That could change. Use some of that saved money to leverage against currency destruction. Who posted the line that went something like, “if only I had buried some gold coins in a field. It would have made all the difference.” Hedge against government madness, if you can.
The difference with gold is that no one can print it, and it can’t default.
GOLD! Theres no guarantee it is going to stay high. Early 2000’s it was in 200-300 /ounce price range and now it came down from 700s to 600s.
In 1970s prices went upto 800 an ounce and went down to 200s since then.
Please correct me if I am wrong.
“The homebuilders were buoyed by a rumor that Warren Buffett, or maybe it was Jimmy Buffett, might take over Hovnainian or another of the many struggling builders.”
This is Wall Street’s version of the classic Realtwhore’s scam:
‘There are other offers on the house you are trying to buy…’
‘They are waiting for the “cargo cult” (credit to Stucco) to rain untold billions down upon them.’
NYCBoy;
With all due respect to GS, I believe I was the first to use the phrase “Cargo Cult” on this blog.
SubKommander Dred
Saturday, November 26, 2005
Senator Robert Byrd and the war in Iraq
I read that speach and had to double check the date. It’s almost unbelievable that we are still over there.
“SubKommander Dred”
I can say I introduced “cargo cult” independently from anything I read here. Whether I can claim precedence will be up to those who someday sift through the bowels of the blog archives.
Signs of excessive liquidity, way too much $ chasing worthless trash. The madness will end. The clods will change from smarty pants “investors” into FIs just like the current FBs. HOV up 11% on Friday ? With all the “wonderful” news like Citigroup downgrading it to hold (more like SELL), the subprime meltdown, Bear Steins CMO catastrophe, … Ahh HOV priced 30% below book = BARGAIN
Hold always means sell, only j6pack doesn’t realize this.
Attention all planets of the solar federation
We have assumed control.
“The retail numbers plunged but the market still managed to go up.”
Fundamental disconnect…
Thursday financial news: ‘Stocks hit record highs on strong retail report.’
Friday financial news: ‘Stocks hit record highs on news that June retail sales plunged and crashed in a record drop.’
The Carry Trade is alive and well.
BoJ Governor Fukui’s failure to signal an August rate hike has kept carry trades steady.
Japanese markets are closed on Monday.
The economic calendar is extremely light in the week ahead.
All this means - borrow Yen in Japan convert to Euros and buy US funds in England margined with Gilts. APR ~11%
Crosby, Stills and Nash
“Carry On”
One morning I woke up and I knew
You were really gone
A new day, a new way, I knew
I should see it along
Go your way, I’ll go mine and
Carry on
Carry on my wayward son
There’ll be peace when you are done
Lay your weary head to rest
Don’t you cry no more
Once I rose above the noise and confusion
Just to get a glimpse beyond this illusion
I was soaring ever higher
But I flew too high
Though my eyes could see I still was a blind man
Though my mind could think I still was a mad man
I hear the voices when I’m dreaming
I can hear them say:
Carry on my wayward son
There’ll be peace when you are done
Lay your weary head to rest
Don’t you cry no more
Masquerading as a man with a reason
My charade is the event of the season
And if I claim to be a wise man, well
It surely means that I don’t know
On a stormy sea of moving emotion
Tossed about I’m like a ship on the ocean
I set a course for winds of fortune
But I hear the voices say
Carry on my wayward son
There’ll be peace when you are done
Lay your weary head to rest
Don’t you cry no more
No!
Carry on, you will always remember
Carry on, nothing equals the splendor
The center lights around your vanity
But surely heaven waits for you
Carry on my wayward son
There’ll be peace when you are done
Lay your weary head to rest
Don’t you cry (don’t you cry no more)
–Kansas–
Maybe nothing new here, but some of the stats on condo conversions in the San Diego area seemed interesting.
“According to numbers provided by the city’s Development Services Department, since 2002, owners of 675 apartment buildings, comprising 19,617 dwelling units, are somewhere in the conversion process.”
“Condo conversions have been championed as an entry-level homeownership opportunity, affordable in a region where the median home price hit well over half a million.”
“But, according to a recent report from MarketPointe, folks buying converted condos are paying far more per square foot than someone purchasing a brand-new single-family home. At the end of last year, condo conversions were going for $299 per square foot, the MarketPointe study notes, while a new single-family detached home was selling for $280 per square foot. For single-family homes, that per-square-foot cost remained pretty consistent throughout the housing boom while condos got as high as $338 per square foot.”
The local rag (SD U-T) still touts condo conversions as a positive means of addressing housing affordability. What a joke. Other stories have documented that almost no former renters have purchased the units they formerly rented. No surprise. For example, how does one finance (even with creative “suicide” loans) $450,000 at anything close to the previous $1000 monthly rent? I hadn’t previously seen stats on the price per square foot for these conversions.
Another story story that I think will eventually come out is that a lot of these buyers will have purchased a lot of deferred maintenance, things not repaired in the quicky cosmetic conversions that will fail in a few years and have to be covered by the HOA (roofing, plumbing, etc. - things that aren’t cheap).
Also, since many of these units were sold and financed in the past few years, I expect there’ll be a very high default rate, as high or higher than other loans during this period. Tough to fund special assessments if you can’t make the mortgage payment.
Today’s condo is tomorrows time-share!
Can any of the accountants in the room offer an opinion?
Blackstone forced to defend tax benefit
By James Politi, Francesco Guerrera and David Wighton in New York
Published: July 14 2007 00:16 | Last updated: July 14 2007 00:16
Blackstone was on Friday forced to defend a tax benefit that will result in payments to its partners of up to $930m over the next 15 years, saying it was common practice and had been disclosed in the run-up to its initial public offering.
The US private equity group, which has faced significant scrutiny of its tax practices in Washington, said in a statement: “Blackstone is not in any way taking advantage of tax loopholes but rather is using a standard tax method used widely by private and public companies when business assets are sold.”
Under Blackstone’s structure, its partners will receive payments from the listed entity to compensate them for the tax savings resulting from the IPO.
http://www.ft.com/cms/s/dbd03952-3195-11dc-891f-0000779fd2ac.html
Here is a comment. I just decided to give Hillary a second look.
Clinton backs rise in private equity taxes
By James Politi and Ben White in New York and Andrew Ward in Washington
Published: July 13 2007 23:20 | Last updated: July 13 2007 23:20
Hillary Clinton, the New York senator and Democratic presidential candidate, said on Friday she supported measures to raise taxes on private equity and hedge fund managers, breaking her long silence on the issue and raising the political heat on the booming buy-out industry.
At a campaign rally in Keene, New Hampshire, Mrs Clinton said that profits made by private equity and hedge fund executives, known as “carried interest”, should be taxed at the ordinary income rate of 35 per cent rather than at the capital gains rate of 15 per cent, as at present.
“Our tax code should be valuing hard work and helping middle-class and working families get ahead,” Mrs Clinton said.
“It offends our values as a nation when an investment manager making $50m [€36m, £25m] can pay a lower tax rate on her earned income than a teacher making $50,000 pays on her income.”
http://www.ft.com/cms/s/b1aaea0e-318c-11dc-891f-0000779fd2ac.html
Holy crap. Is that for real? Hillary is trying to get my vote. Too bad it will never happen. The hedge funds have too many good friends in the corridors of power. Old Hill gets to play politics with almost no risk to her rich liberal donors. It’s a beautiful system.
These a–holes are useless they dont even pay taxes on the money they loot.
GS,
As a former dem, I urge you to rethink your support of Hillary. She is now delivering two sets of messages, one for the sheep–those “decent, hard-working folks” and another for her corporate sponsors–she supports unlimited HB-1 visas, which will crush salaries for educated Americans, and not just in IT.
This support for taxing hedge fund guys is just a little sideshow for the sheep–Congress and the admin are firmly on the side of the big money, and the hedgies are safe. So, she figures she can do a little tap dance for the middle class, and all her corporate sponsors know it means nothing, affects nothing, but might get her some extra votes from the sheep.
Ahhh. . . the bar exam. So hard to outsource my monkey work.
Hahahaha…you do know that in Texas you do not need to pass the bar to practice law right?
But, then again, when you can hire Indian lawyers at $6/hr, why bother with US citizens at all?
http://money.cnn.com/2004/10/14/news/economy/lawyer_outsourcing/?cnn=yes
http://economist.com/business/displaystory.cfm?story_id=5300960
ndia seemed like the best bet. With more than 500 law schools and about 200,000 law students graduating each year, it had no shortage of attorneys. What amazed Galbenski, however, was that thanks to the Web, lawyers in India had access to the same research tools and case summaries as any associate in the U.S.:
http://www.inc.com/magazine/20060101/handson-casestudy.html
I actually think she is testing the waters. Lifelong Dem and I’m not sure I’m behind her but this has the earmarks of taking a soundbyte out for a spin.
That said, I’m can’t get behind Obama either. I’m a fiscal conservative but very socially liberal and there is nobody in the field that gets my backing yet.
Now if Hilary can move the ship around to really supporting the ailing middle class, I’ll have to give her another look.
Why can’t we have another Gore or Dean in the picture? **sighs**
Why can’t we have another Gore or Dean in the picture?
Gore Vidal is too old (and couldn’t even get elected to congress) and James Dean is dead.
Sorry…
“I’m a fiscal conservative but very socially liberal and there is nobody in the field that gets my backing yet.”
I’ve long argued we need a new party for social liberals and fiscal conservatives. (aka Goldwater Conservatives.) My philosolhy is “Do what you like but don’t use my money to do it.”
Do what you like but don’t use my money to do it.
Isn’t that libertarian?
Ron Paul. How could anyone even consider another candidate at this point in time. He stands in such contrast to the other candidates in terms of his understanding of inflation (money printing), foreign entanglements, etc. He would be perfectly at home talking with George Washington or Thomas Jefferson. In other words, he’s founding father material. Which other candidate can you say that about?
Yeah, I like his financial leanings, but I haven’t heard him speak about social issues - heathcare, education etc…
The finance side is only half the story.
“How could anyone even consider another candidate at this point in time”.
Your kidding - right?
He has long fought for the prohibition of federal individual income taxes by repeal of the 16th Amendment.
So since I am a teacher I will talk about what this would do to education. The public schools would die and the rich people who send their kids to private schools would be just fine. Teachers who get a decent paycheck every month would get less. In short the poor get poorer and the rich get richer. Education is the equalizer. Don’t take it away.
If you really think he is founding father material then you need to read His Excellency - George Washington by Joseph Ellis. Maybe you did not know that Washington was a huge supporter of a federal tax. So I seriously doubt that Ron Paul would be perfectly at home talking with George Washington. You also might want to read the Federalist papers that Jefferson and Hamilton wrote. You should also read Benjamin Franklin by Walter Isaacson. Then you might get an idea what our founding fathers were about. And don’t get me started on the second ammendment.
answer with a question .. Given the current state of affairs, would any reincarnated Founding Father be electable today?
In most places, education is funded by local property taxes rather than income taxes. And teaching kids how to read, write, calculate and think isn’t as expensive as people think. It’s all the frills that make it expensive. (Former teacher saying this.)
You should know that local taxes are only one part of it. Or maybe you taught in a weathly school district. In my school, which is in a poor area, we have about 5 teachers and 4 parapros whose salaries are from federal dollars.
By the way what are the frills?
Ron Paul is a pro-lifer. I don’t care about your feelings on abortion but when your position is that the government should stay out of regulating business and people EXCEPT for forcing women to have unwanted children you’ve lost my vote.
I don’t want to get into a pro-life/pro-choice debate here. I believe education can and should eliminate 95% of abortions except the religious fanatics wouldn’t allow it. But don’t call yourself a conservative if you believe the government has a right to force people to reproduce.
No worries — I was joking
Personally, I support Ron Paul. But if you want fiscal prudence and intelligence coupled with social liberalism, then Mike Bloomberg might fit your bill.
The idea that education is the great equalizer always makes me smile…sounds good, but the reality is something else.
Educated parents value and evaluate schools and teachers and will fight like tigers to get their kids into the best…even middle-class parents in Manhattan can play hard and get their kids into the handful of great public schools.
Those with higher disposable incomes are still in a fight to get their kids into the highly competitive private schools.
For the rest, exactly what jobs are they being prepared to take? The low end will compete with illegals for unskilled and moderately skilled jobs, and if the HB-l visa floodgates open, as Hillary promises, then skilled and highly skilled employment will be at a premium.
The real value in Ivy education will continue to be in the social networking available…who you know will matter hugely.
Options to move up…for the lucky or the very talented. For the rest, welcome to the realities of a bifurcated economy.
Any reference by pols to education as “the great equalizer” is just lip service to an idea whose time has passed.
Thought I would share some stories about our local market here on Long Island….
My brother’s across the street neighbor died last year. It was a little weird because though he was elderly he seemed pretty healthy. The family decided to sell the 2 bedroom house which was always a wreck.My sil wouldn’t enter their house or allow any of the children near it because it stunk to high heaven. Well, apparently they had anthrax in the house from all the animals this man kept. (still no word of the official cause of death) His family sells the house to a flipper who, after having men with the yellow suits come in, rips everything out, spruces up the yard and slaps a for sale sign of 499,999! My sil says, “gee do you think they’ll get it? I mean, all the houses in the neighborhood is going for way more.” I nearly did a spit take!
Well, their OTHER neighbor decides to put his lovely farm house with front porch and 4 br 2ba for sale for 439k. Do you know that flipper went over and yelled at this elderly couple for ruining his comps!
Needless to say, the elderly couple had one open house with tons and tons of offers…all WAY below their asking. Apparently, they shrugged their shoulders and went for the highest offer they could get. Not sure yet how much that was.
It certainly warms my heart that so many people are so willing to ” insult the seller” with low ball offers. YEA!
Danni
Anthrax? What are you smoking?
Don’t you watch House?
Whole episode on a kid with anthrax poisoning because of an old house. Bats maybe? Can’t remember the cause.
What warms my heart is that they didn’t take it as an insult, they just took the money and ran.
“Recent outbreaks of anthrax in the US have focused new attention on one of civilization’s oldest and deadliest diseases. Anthrax remains a far greater threat to livestock than to people - while infected animals left untreated die within a few days, the most common form of anthrax in humans is a generally non-fatal skin infection that strikes workers handling infected animals or animal products….
Which animal species can be affected by anthrax?
The disease affects domestic animals - such as cattle, sheep, goats, horses, donkeys, pigs and dog”
Agriculture Magazine
http://tinyurl.com/yre2pl
Pounding!
http://www.economist.com/finance/displaystory.cfm?story_id=9482868
“Problems in America’s housing market begin to undermine confidence in the global credit bubble”
At the end of the day, it all looks like a big confidence scam.
of course the real scam is central (fractional reserve) banking, and I don’t think we will get rid of that in our lifetime
Although the article mentions higher spreads for high risk EU firms, I still don’t see any signs of liquidity drying up in Europe. My local paper has two pages today on the issue that there are no ’starter homes’ available, even the cheapest homes are now out or reach for most starters (even those with two incomes per household). Usually the Dutch papers only talk about the easy riches in the housing market. Trouble is brewing at the bottom of the housing pyramid, government has to invent a new subsidy soon to keep the game going (I’m sure they will, probably more+higher free starter loans and a higher ceiling for the national mortgage insurance plan).
“and I don’t think we will get rid of that in our lifetime”
Getting rid of it requires a superior substitute system. Do you have any suggestions? Barter? Gold standard?
a real gold standard looks like a better system to me, but it probably has its own problems; at least it seems far more honest than the current scam.
‘has its own problems’
Problem number 1: We are running out of gold! (Just compute ozs of gold / world population if you don’t believe me…)
Problem number 2: There is no reason a dishonest govt could not manipulate public perceptions about its gold store.
Although I don’t believe it would ever happen, I believe an American Silver Standard is much more realistic. We could probably get away with that. I don’t think the U.S. has enough gold for a gold standard.
“No, my friends, that will never be the verdict of our people. Therefore, we care not upon what lines the battle is fought. If they say bimetallism is good, but that we cannot have it until other nations help us, we reply, that instead of having a gold standard because England has, we will restore bimetallism, and then let England have bimetallism because the United States has it. If they dare to come out in the open field and defend the gold standard as a good thing, we will fight them to the uttermost. Having behind us the producing masses of this nation and the world, supported by the commercial interests, the laboring interests and the toilers everywhere, we will answer their demand for a gold standard by saying to them: You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”
Problem number 3: The supply of whatever PM you tie your currency against is subject to change with discovery and extraction, not to mention world population growth (refer to Problem number 1).
GetStucco: I agree that if the people in charge are dishonest, they will find a way to use every system for their own advantage and rob the citizens. But in some systems fraud is much easier.
problem number 1 and 3 exist, but there are all kind of practical limits that make a gold standard far more stable than the current inflate-away banking system. At least as long as there is no economical technology for producing gold from scratch (from other elements - we discussed that some time ago I think). I think a gold standard can function very well despite issues 1 and 3.
“Although I don’t believe it would ever happen, I believe an American Silver Standard is much more realistic. We could probably get away with that. I don’t think the U.S. has enough gold for a gold standard. ”
In the digital age, what is to prevent gold from being divided electronically into whatever amount, ex. .00001 grams?
Well the reality is that it DIDN’T work particularly well before. The fact is, moving actual specie around is a rather inconvenient way of doing transactions. Which is why in the pre-fed days banks issued currency. And sometimes runs destroyed banks and their depositers. Just as in It’s a Wonderful Life, it’s simply not possible to hold deposits sufficient to repay every depositor in a vault and lend it out at the same time. Without the federal reserve and the FDIC, bank runs and the loss of deposits are a periodic problem. Heck, I remember the run on Maryland and Ohio thrifts in 1985. Everyone lined up to take all their money out and not enough money to pay off all the depositors. The govenor instituted emergency withdrawal limits of $1,000/mo. Eventually Maryland issued bonds to pay off the depositors, so we, the taxpayers paid for that mess. And of course this affected only a small fraction of the money deposited in the state.
And of course, as I’ve posted before, the only way to go to a gold standard is to instantaneously destroy ~99% of the money supply, because the government only has that amount of gold. This seems an extreeme solution for inflation* running at 10-20% /year.
*actual inflation of the M3 money supply which is arguably the too much money chasing too little goods that is at the root of the RE and stock market bubbles that we are suffering from.
Problem number 4: A dishonest govt can promise its citizens their currency is redeemable in (or backed by) gold, then break its promise when push comes to shove.
Gold or no gold, at the end of the day, what you need is an honest banking system (versus a perpetual confidence scam).
…but there are all kind of practical limits that make a gold standard far more stable…
Right up until the moment that scientists figure out how to cheaply synthesize it.
“Because lead is stable, forcing it to release three protons requires a vast input of energy, such that the cost of transmuting it greatly surpasses the value of the resulting gold.”
The current situation is not fractional reserve banking, it is no reserve banking. Current rules allow banks to run their own presses. That is one of the reasons the Fed cannot easily reel this in. They are not the ones printing the money, and just shutting it all off could be catastrophic.
“Trouble is brewing at the bottom of the housing pyramid, government has to invent a new subsidy soon to keep the game going…”
That is the problem for the U.S. govt.
1) Invent new subsidies, and push home prices even more out of sight.
2) Also encourage more overbuilding when there are 5m or so homes already on the national used home market.
3) Bring back the flippers who recently stimulated massive overbuilding at the high end of the quality distribution (we don’t have enough millionaires to populate all of our $500K+ homes!).
If our govt could just mint a lot more millionaires, I guess we would be just fine…
“If our govt could just mint a lot more millionaires, I guess we would be just fine…”
In the end, are there any other realistic solutions to this mess?
Fire up the printing presses…or just add a $1M tax credit on every 1040 form one year and reserve the printer for China. In the end every solution ends up a variation of that, doesn’t it? What can we realistically make cheaper/better than China can that we can sell to them (or whoever) in large enough volumes to pay our bills as a nation without inflating the debt away?
“Richard Bernstein, a Merrill Lynch strategist, says excessive lending has been fuelling the growth in financial markets in recent years. But he fears that now liquidity is drying up. That means no cushion when the punch lands.”
Comments like this one ignore the role of Alan Greenspan in legitimizing the Fed’s role of deluging the markets with ‘liquidity’ just when the punch bowl starts to run dry. As long as the Fed’s helicopter squadron can shower the markets with ‘liquidity,’ what is there to worry about?
I pull in resolution, and begin
To doubt the equivocation of the fiend
That lies like truth: ‘Fear not, till Birnam wood
Do come to Dunsinane:’ and now a wood
Comes toward Dunsinane.
A great deal of data and informative articles give insights into the imploding debt markets, but it’s still uncertain as to when and how the fat cats are going to unload the toxic debt.
Will Bernanke drop cash from helicopters to try to save the big banks? If he does, inflation will ensue. Inflation hurts older folks living on fixed income. I’m surprised the AARP doesn’t weigh in on this.
Forums like this are an aberration.
99.99% of the population has no idea that government actions create inflation.
If you don’t know what’s causing the problem there’s no way you can do anything to fix it.
Milton Friedman, RIP. Long live Milton Friedman!
Friedman is dead, monetarism is dead, but what about inflation?
By Niall Ferguson
Last Updated: 12:01am GMT 19/11/2006
“Inflation is always and everywhere a monetary phenomenon, in the sense that it cannot occur without a more rapid increase in the quantity of money than in output.” I can think of few sentences in economics that have engraved themselves more deeply in my memory than Milton Friedman’s famous line in his Encyclopaedia Britannica entry for “Money”. It was a kind of mantra for the Thatcher generation. The question is: Does anyone still believe it?
http://www.telegraph.co.uk/opinion/main.jhtml?xml=/opinion/2006/11/19/do1904.xml
Many homeowners are already in trouble. Figures from MacroMavens, an economic consultancy, suggest that 23% of adjustable-rate mortgages, covering loans with a value of $693 billion, are already in negative equity, where the loan is worth more than the property. But the full impact of defaults may not be felt until the low “teaser” rates on mortgages expire and push up borrowing costs. These teaser loans were done on a “two and 28” basis (with low rates applying for the first two years, and higher rates for the next 28). So the worst news from the 2006 vintage may not be felt until 2008.
So when the FB finds out he has no equity in the house he won’t even try to sell it. I see thousands of vacant houses that will become party houses for teenagers and gangbangers. What a nice neighborhood that will be!
I see thousands of vacant houses…
Hm. Maybe we should keep track of where we saw lots of for-sale signs in ‘06-’07 and avoid those neighborhoods (renting or buying) in the future.
WSJ on-line:Martha Stewart sold her Westport, Conn., estate for $6.7 million — 26% below the asking price.
She owns a bunch of condos at the 165 Charles Street development by Richard Meier. I think she will be taking losses on those if she holds on to them too long. Check it out at 165charlesstreet.com . I used to live down the street from those eyesoars (they built 3 identical towers). They overlook the West Side Highway and are completely awful, in my opinion. They are completely out of touch with the West Village. I hope she chokes on her granite and hardwood.
My understanding is that Martha sold her pad at the Richard Meier development, but that her daughter Alexa apparently bought several units. I know that Martha is worth tons of money, and justifiably so given her homemaking empire. But please tell me what economic value her daughter has contributed that allows her to afford or even finance such extravagance.
Anyone else ready for bank earnings to start next week?
That should be fun. The financials have been lagging the market, in a big way. Bank stocks have been awful. This usually indicates a weak market but the market has ignored this. It will be interesting to see if a few scares from the likes of Citi or HSBC can cause Goldilocks any harm.
Off topic: Who else is embarrassed when Kudlow keeps bragging up “this Goldilocks economy”? It seems to me a great nation that has to rely on a “Goldilocks economy” might not be so great as it thinks.
I suspect mark to market and the death of some of thier competitors could make thier earnings look good for now.
IMHO, you are correct because banks do not have to “mark to market”. A par bond can be kept on the books at par.
I just don’t understand why anyone watches him. He’s so shrill, he literally makes my ears ache.
I leave CNBC on when I go out, just so when I come home and Kudlow is on I can have the pleasure of turning it off.
Last night I called Bank America about a balance transfer that I was going to do from a 0% rate that expires soon. Wow what a telephone call. They would not let me off the phone. At the beginning I told them I needed x. Which was less than 1/2 of my credit limit. They raised my credit limit without me even asking. They then said that they can transfer the whole amount of my credit limit to my bank account. I said I need to talk to my wife. Then they said if I do it right now there would be no transfer fee. I knew at that point it was time to put the phone down. They were desperate!
Happy Blogiversary
It’s been 10 years since the blog was born. Love them or hate them, they’ve roiled presidential campaigns and given everyman a global soapbox. Twelve commentators — including Tom Wolfe, Newt Gingrich, the SEC’s Christopher Cox and actress-turned-blogger Mia Farrow — on what blogs mean to them.
By TUNKU VARADARAJAN
July 14, 2007; Page P1
http://online.wsj.com/article/SB118436667045766268.html?mod=home_we_banner_left
How to blog and not get too fat…I’ve been reading HBB and Mish’s blog for two years now. I spend hours reading every day, and at least I *feel* I’ve learned a lot, and I’m really grateful for all the various views, opinions, and advice. But so I don’t get too fat spending that much time reading blogs, I lift hand weights while reading. the weight-lifting does seem to make a difference!
Foreclosure bargain hunters in DC metro:
http://tinyurl.com/2yu2da
“It just keeps dropping, dropping, dropping,” Murphy said. “There are a whole lot more now under the $300,000 mark, which is where I want to be.”
>300K is where most first time home buyers should be.
I think you mean
[don't know how that got chopped off above]
I think you mean
oy! You can’t use less than signs! Doh!
Try again:
I think you mean less than $300k. Interestingly, WUSA9 did a series last summer (or was it 2005?) looking for affordable houses in the metro area. The could find only one SFH home that was listed for
This is the Washington Post’s second pessimistic article on the “problems of buying foreclosures”. They talk about buying them on the courthouse steps (which nobody does) as opposed to buying them through REO’s through the MLS system.
I was in no less than three foreclosure properties last week (all within a mile of my house) and they were all in *perfect* condition. They were also all priced at 30% off their sales prices in 2005.
Most of the foreclosures I find for my blog were built in 2004-2006, when prices were highest and are leading to the most defaults. Yes, some stripping and damage might have been done. But not that I’ve witnessed personally.
Yes, they are 30% off but are they that much cheaper than other SALES that go through? I suspect that they’re not generally tha great of a bargain compared to other property.
OTOH, banks don’t gen “insulted” by lowballs. They accept them or not, but you don’t have to listen to the whining, even if their balls are in a vise.
Jim,
Yes, they are the cheapest listings on the block. Inexplicably, there are always a handful of buyers out there who pay more. But even the 30% (over 2005) asking prices are selling sporadically if not at all. The biggest asking price cuts started just about four weeks ago, after Memorial Day. That’s the way these yearly cycles have run since 2005 anyway. Asking prices early this Spring were ridiculous, and the ones that didn’t reduce were not sold.
Forrest Gump: “Stupid is as stupid does.”
Major Texas Pension Makes a Big Push Into Hedge Funds
By Craig Karmin
Word Count: 1,036
Pension funds — traditionally among the stodgiest investors around — are starting to dabble in hedge funds, real estate and other “alternative” investments once considered too dicey. Now, a major fund in Texas is about to place a much bigger bet.
The Teacher Retirement System of Texas is planning to shift about one-third of its $112 billion in assets to alternative investments. It’s one of the largest-ever pension-fund wagers on investments like these.
http://online.wsj.com/article/SB118437229639666370.html?mod=home_whats_news_us
These state pension fund managers are behaving as though they believe an endless bull run on Wall Street will make their risky bets look smart a few years up the road. Do they know something we don’t?
This is all beginning to remind me of that clown treasurer in Orange County who bankrupted the municipality in the early 90’s (?) on his buying of junk bonds.
Perhaps there’s going to be a few pension fund managers with the same (or worse) mud on their face in the coming years.
Dutch pension fund ABP (much bigger that the one above and one of the biggest by capital in the world) has been using their own hedgefunds for several years now. They are known for their appetite for US (and EU) mortgage paper; now word yet about their CDO exposure
This is rich!!!
Mortgage Bets Trip Up
Main Street Investors
– And a Group of Nuns
By MICHAEL HUDSON and JUSTIN LAHART
July 14, 2007; Page B1
Big investors aren’t the only ones getting burned by mortgage investments. Some brokerage firms who put their customers in risky mortgage investments now have small investors fighting to get their money back.
That includes customers of Irvine, Calif., brokerage firm Brookstreet Securities Corp., which shut down last month after the value of some of its mortgage securities fell sharply.
It also includes the Sisters of St. Joseph of Carondelet in California. The nuns thought they were making safe investments when they parked some of their money with Los Angeles-based Wedbush Morgan Securities.
http://online.wsj.com/article/SB118436942164166333.html?mod=home_we_banner_left
Looking for subslime in all the wrong places…
Hunting Toxic Holdings
July 13, 2007
By Diya Gullapalli and Shefali Anand
A SMALL NUMBER OF MUTUAL FUNDS have invested in subprime-mortgage related securities, either directly or through collateralized debt obligations, which are securities that package different kinds of bonds. It can be difficult to tell if your fund makes such investments, but here are some ways to start–
http://online.wsj.com/public/resources/documents/info-fundfolio0707.html
Gag me…
Martha Stewart, KB Home Lure
Buyers Despite Housing Slump
By Michael Corkery
From The Wall Street Journal Online
All across the country, home builders are gasping for air as sales plunge, inventories rise and profits disappear. But in one small corner of the housing market, the sales picture is a little brighter: There is steady demand for houses designed in part by Martha Stewart and built by Los Angeles-based KB Home.
“I love all her things,” says Menyon Green, a 42-year-old nurse who bought a Martha Stewart-KB Home in this Atlanta suburb earlier this year. “I just knew this was going to be a good subdivision.”
http://www.realestatejournal.com/indinvestor/20070712-corkery.html?mod=RSS_Real_Estate_Journal&rejrss=frontpage&rejpartner=wsj_hpp
I was going to comment on the article but having read it I just want to throw up. My comments would contain too many 4-letter words to get by Ben’s filters. Just stupid!
That exterior is surprisingly ugly for something that Martha put her name to, with windows of random size scattered unevenly across the facade. Obviously the rear was not a priority. And what do you want to bet that one of the side elevations is totally devoid of fenestration, as is the modern practice?
Has a nice prison-y feel to it.
My husband just said it looked more like military housing. I have to agree. Then he asked if it’s a “Martha Stewart” design because it uses Kmart paints and products in its decoration. There’s something wrong with this picture. I find it really hard to believe MS would put her name to this unless she herself is running into some financial difficulties. herself.
Now that the housing piggy bank is running out of money, I am sure many people are building up their CC balances.
Does anyone have any stats/links on the number of people who are now maxed out or the increase in consumer debt over the past two years?
Housing is one leg of the economic stool, CC debt is another leg. The housing leg has collapsed . When many find their CC debt is maxed out, I think this stool may topple over taking the stock market with it.
sure and why not, they can just refi, when the market moves up again next spring.
‘When many find their CC debt is maxed out, I think this stool may topple over taking the stock market with it.’
Don’t you think the Fed and their friends will work hard to prevent this? Gotta keep the party rolling by respiking the punch bowl whenever necessary…
“Economists” seem so surprised gas prices haven’t had an effect on the economy. That’s because everyone is buying their gas on credit cards. There won’t be any effect on the economy until the credit cards are maxed.
This is a nice investment.
Citigroup is licensed to sell.
“China will issue 38.38 billion yuan of book-entry treasury bonds, the Ministry of Finance (MOF) said in a statement on Friday.
The three-year T-bonds with an annual interest rate of 3.53 percent due to mature on July 16, 2010 will be on sale from July 16 to 19 in authorized banks and local stock markets.
This is the 11th batch of book-entry T-bonds to be issued by the MOF this year. China issued book-entry treasury bonds totaling 652.7 billion yuan in 2006, 150 billion yuan more than the 2005 figure.
The Chinese government pledged earlier to cut the issuance of treasury bonds in 2007 by a “modest” amount in a bid to reduce its financial deficit and expand channels for direct financing.”
but what if the yuan starts to depreciate instead of appreciate as the US would like?
LOL
What is going to allow the US dollar to appreciate? Are there fewer dollars? Does the US have excess oil for export? Did we find a way to extract gold from sea water? Did we nationalize Canada? What fundamental change has occurred in the faith in the US monetary system?
“Did we find a way to extract gold from sea water..” profitably ?
question: There’s near an estimated 6 billion tons of gold in the oceans. Near as i can figure, it now costs at least about $1000 per ounce to extract it.
Can gold’s price ever rise far above $1000 / oz?
LOL
The price of gold or any commodity is in direct ratio to its usefulness. If gold can be profitably extracted from sea level in any quantities, it will be useful as an industrial metal making it even more expensive. Golds usefulness is limited by lack of supplies - keeping its price low.
So, if (when) I perfect my “Gold Magnet” and am able to extract a virtually unlimited supply of gold at will for pennies per pound, gold’s price will rise?
Why is that?
hmm… reading a bit about the history of Aluminum. I don’t think it’s price has kept up with it’s much expanded and exploited usefulness since methods of extraction were revolutionized..
$$ cost per ounce of aluminum was equivilant to the cost of a day’s labor in 1884.
It is no different than cortisone in 1948 or corn in 1965 or Aluminum in 1884. If you read the history of Aluminum it was very expensive as its improved mining and smelting improved, yes the price came down, but relative to its abundance and ease of refining it became cheap! The Reynold’s family and others made their fortunes from selling a cheap and abundant material for a lot more than its cost. Gold is far rarer than aluminum. You are describing a potential situation of being able to mine 6B tons of gold from the oceans of the world. That number is not even 4 years of iron ore production. It is not going to happen overnight. If there was enough gold to suck up $8T at 100% of double todays prices or $1400/oz, it would be sold! The total amount of gold in all the worlds reserves. all the known jewelry is less than $4T at todays prices. “In 2001, it was estimated that all the gold ever mined totaled 145,000 tonnes.” Large quantities of gold for sale are not available.
By the time someone figures out how to refine gold from sea water for less than $1000/oz, the cost of the refining procedure will have risen along with other prices.
comeon.. not exactly fair to compare iron to gold..
i’m still not convinced that gold has some special qualities that exclude it from the basic laws of supply and demand.
Sure, it’s very pretty .. makes a fine reflector.. a great conductor.. resists corrosion..
But it also has definite limitations, such as it’s extreme weight, weakness and softness… not that many situations where alloying gold improves a product’s desirable characteristics..
It’s present and potential industrial applications are nowhere near unlimited imo, and a huge, cheap supply could easily lessen it’s price.
Of course it’ll always make a fine ship’s ballast or perhaps bullet slugs despite an over-supply.
And it is the same manipulative thing at the Treasury, too, as we learn from “Global Exodus from the US Dollar in Motion”, by Gary Dorsch of Global Money Trends newsletter. He writes, “US Treasury chief Henry Paulson, and former chairman of Goldman Sachs, ‘monitors the financial markets closely,’ and has reinvigorated the infamous ‘Plunge Protection Team,’ which comes to the rescue of the US stock market whenever nasty revelations come to the surface.”
So what is the “big idea” now? Mr. Dorsch writes, “At the moment, Paulson’s grand strategy is to offset losses in the US housing sector with big gains in the stock market, to prevent the US economy from sliding into recession”, while the Federal Reserve provides the financing, in that “The Bernanke Fed is preventing borrowing rates from rising at a time of explosive loan demand for US corporate mergers and takeovers, by rapidly increasing the US money supply.”
Oh, and dont’ forget to buy gold!
Has Mr. Dorsch been reading my tinfoil hat posts, or do other sources support my conjecture that the Paulson-led PPT is blowing a stock market bubble to offset the housing bubble while suppressing the T-bond inflation risk premium with a flood of liquidity and killing gold prices whenever necessary to squash perceptions that inflationary pressures are building?
‘comes to the rescue of the US stock market whenever nasty revelations come to the surface.’
I can just picture these surges in the Dow as a smoke signal saying to the wise to take the money and run. “Let the greater fools with the capital come in and buy higher” they are trying to telegraph, I opine. All this cheerleading about equity market makes you wonder if it is really as safe as it is being built up lately. Time will tell, but it looks like a no brainer to just put money in the market and watch it beat the returns of a bond or money market account. This sound familiar?
http://www.safehaven.com/article-7954.htm
I should have posted the link. Gold bug central. I like CU better anyway.
Real Estate article, Akron Beacon Journal 14 July 2007
Q: My husband and I are able to pay more than a 20 percent cash down payment when we buy our next home. However, the mortgage lenders we consulted seem to be against our making a larger down payment. We prefer to make a large down payment to lower our monthly mortgage payment. Is there a valid reason for a 20 percent down payment or should we keep searching for better mortgage lenders? — Prastavna M
mortgage insurance is one of many good reasons to put 20% down. also, look at your amortization tables with lower downs - you’ll pay way more for the house when it’s all said and done.
So much for that attempt…
http://www.washingtonpost.com/wp-dyn/content/article/2007/07/13/AR2007071302015.html?hpid%3Dtopnews&sub=AR
“Last week, a rooster, hen and numerous chicks were seen in the Morales family’s yard. Neighbors claim the family is keeping the birds indoors, allowing them outside on occasion to peck and scratch in the yard.
But tolerance is running low these days among jittery Prince William residents who say they see too many houses for sale, too many foreclosures, and too many unkempt yards for their liking. That’s why Virginia Paris and her husband, Cavin Mooers, said they’re eager to sell. “We’re afraid our home will depreciate more, so now we want to make a run for it,” Paris said.”
Craigslist find from San Diego.
How to lose +$90K in just 8 months of homeowership.
Can someone please tell me what is going on with the granny playhouse on the side of this place? The “charming white picket fence” is just creepy to me.
http://sandiego.craigslist.org/rfs/373642477.html
2/bed 2/bath with unpermitted 3rd and 1040sq feet. I also like the way that it advertises having “Appliances! Paint! Baseboards!” as it is the “cutist spacious 3 bed 2ba single family detatched home in the neighborhood!”
Recently, some friends from out of town had heard of some place they wanted to check out in this neighborhood while visiting. I warned them about what they might see, but watching the hair stand up on the backs of their necks as we drove around was priceless.
This wise investment was make in Nov. ‘06 for the absurd price of $565K. Now listed as a short sale for $475K.
It looks like it’s in an industrial area.
Residential neighborhood on this one, surprisingly. Built in 1926.
“November 2007 appraisal for $600,000!”
damn.. with my being perpetually wasteded i completely missed most of 2007…
I want a new drug.
One that won’t make me sick.
One that won’ make me crash my car or make me feel three feet thick.
If I was Hillary, I would say: “I feel your pain”:
http://www.atimes.com/atimes/Global_Economy/IG14Dj01.html
“The robbery of the century
By Chan Akya”
“This is one of the greatest robberies of our time, and it will go unreported in essence. Hard-working Asian savers will see their central banks post billions of dollars in losses on the US mortgage crisis in the next few years, but nothing can be done about it given the general lack of accountability across Asia. ”
“With more than $3 trillion in such reserves being invested (wasted) on low-return US and European securities just across Asia, perhaps it is time for citizens to raise the question with their central banks: Just whom are you working for, your citizens or American homeowners? “
“Just whom are you working for, your citizens or American homeowners?”
Neither. They are working for Wall Street (in exchange for negative investment returns).
Bank of America predicts 20pc probability of a ’severe crash’
“…In a note entitled “UK housing market: is it all over?”, Matthew Sharratt said: “Leading indicators and our own econometric work point to a significant slowdown in the UK housing market later on this year and into next. ”
Although a sudden price drop seems unlikely, he warned that there was a 20pc probability of a “severe crash” in 2008 and 2009 if market sentiment collapses. A severe crash is defined as a 10pc price fall over 18 months.
One area of particular concern is the buy-to-let market where higher interest rates could trigger a sell-off as unsophisticated investors struggle to meet debt payments. A more likely scenario, said Mr Sharratt, would be “very subdued house price inflation until 2010″. He estimates that house prices are currently 20pc overvalued and it could take until the next decade for prices to rebound.
There are already signs that the market is slowing…”
Telegraph (IMHO the telegraph is marginally better than Weekly World News but every major news service is running this item. The reason is that Mr. Sharrat’s track record for forecasting rates and bond yields has been spot on.)
http://tinyurl.com/2roetq
that ’severe crash’ would do nothing more than erase the gains of the last year; totally irrelevant compared to the huge gains from the start of the EU housing bubble (in countries like UK and Netherlands appreciation is in the 400-1000% range. much higher than in the US!0.
This is a screamer deal! “November 2007 appraisal “for $600,000!
November 2007 ???
From our local MLS (Grand Junction, Colorado), and still way overpriced:
PRICE REDUCED, SELLER MOTIVATED. PRICE IS FIRM.
As long as fingers are being pointed, I suggest considering the Fed’s culpability, with its overly-stimulative interest rates in the early 2000s spurring unprecedented levels of home price inflation and rampant speculation by homebuilders and flippers in response.
In subprime meltdown, lots of blame to go around
Fri Jul 13, 2007 4:15PM EDT
By Herbert Lash - Analysis
NEW YORK (Reuters) - A turn for the worse this week in the subprime home loan meltdown has pundits and investors playing the blame game.
http://www.reuters.com/article/gc06/idUSN1340018620070713
The answer to this question is clearly and emphatically NO.
Can Wall Street be trusted to value risky CDOs?
Sat Jul 14, 2007 9:33AM EDT
By Neil Shah - Analysis
NEW YORK (Reuters) - The complex models that Wall Street uses to analyze risky investments in subprime mortgages may be as suspect as some of the securities themselves.
http://www.reuters.com/article/gc06/idUSN0929430320070714