Bits Bucket And Craigslist Finds For September 14, 2007
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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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–Mortgage Fraud/Fraudulent lending/Misrepresentation–
Will anyone be held accountable for the mess behind us and the looming wreckage in front of us or are we just going to shrug our shoulders and say something ignorant like “it’s a free country”? If I sold a product that brought harm to the buyers, you can guarantee I’d be brought to justice. The various criminal individuals who led us down this path need to do the perp walk with cameras rolling, and do serious jail time and face repatriation of the massive profits they stole.
U.S. Rep. Ron Paul, R-Texas, a candidate for the Republican presidential nomination, has told journalist Peter Brimelow that the central banks are manipulating the gold market and all sorts of markets besides.
Paul’s comments came in an interview given in New Hampshire last month and posted today at http://www.vdare.com/misc/070912_paul.htm
**************************************************************
“…and all sorts of markets besides.” Hmmm…. Like the stock market?
“Like the stock market?”
The evidence in the data is overwhelming, IMO. Even an undergraduate economics student at a weak program who failed econometrics could probably spot it by overlaying the charts for today’s DJIA, Nasdaq, S&P 500, Russell 2000 and Nasdaq 100 indexes. They are basically all moving at a similar degree of synchronization in response to a price plunge as the Blue Angels fighter plane squadron. The only question is who is the man behind the curtain who drives the manipulation, and how.
http://www.marketwatch.com/tools/marketsummary/
and even in Europe the stock market dances faithfully to the tune of the S&P futures, real economic facts/news are irrelevant.
May be all the quant programs are following the same algorithm for trading - I am not denying any manipulation, but one thing may be that all those automated trading programs are behaving exactly same way and there by giving hedgies a wedgy. My 2 cents.
yes, I’m sure that is part of the explanation. Plus the fact that it requires relatively little money to manipulate futures, so they can be used to steer the market - at least over the short term.
I’ve said this before, not everything is a conspiracy. I’ve assisted in several trades myself and witnessed several others that cause lockstep movement through quant trades.
hedge fund managers move from firm to firm. it stands to reason that though it’s a black box from an outsider’s perspective, insiders all know what the trade is that’s making money, and all jump on that trade.
“I’ve said this before, not everything is a conspiracy.”
What do you mean by ‘conspiracy?’ The Fed has openly announced that it ’supplies liquidity to the stock market’ in times of trouble at least dating back to Alan Greenspan’s response to the 10/19/87 Black Monday crash (the birth date of the Greenspan put intervention policy). Posters such as yourself equate outright market manipulation with ‘conspiracy’ to turn attention away from strong empirical evidence of systematic intervention in response to fundamental conditions that would otherwise send the market down. Thanks to a hardwired bailout policy of making sure the market doesn’t drop by much on bad news days, the stock market always goes up, in the long run.
Yes, they are all correlated. I don’t believe it is due to outright manipulation. It would be more believable that the flow of information has had a leveling effect.
Now, it is obvious that the correlation is an indication that risk can no longer be avoided by moving to another index. DJIA to risky? Move to S$P, but when the DJIA drops 1.5 % the S$P also drops 1.5%. You now have risk leveled through the indexes.
There is no place to really hide. I foresee terrible trouble from this.
Roidy
All of these flat earth / hedge fund & quant herding behavior explanations depend heavily on the assumption that there is very little independence among the various large drivers of the stock market. I frankly find this assumption implausible.
One more thing. Without outright manipulation of U.S. stock prices today, the chaos butterfly effect sparked by Northern Rock exposure would have sent the DJIA southwards. Even my wife, who is no financial expert, is worried about news of a high-profile bank on life support from across the pond (she just called me to relay the story).
Market Scan
Europe Rocked By Northern Rock
Parmy Olson, 09.14.07, 1:20 PM ET
LONDON -
The sight of British mortgage lender Northern Rock going cap in hand to the Bank of England for emergency funding sparked a wide sell-off of banking stocks across Europe on Friday.
http://www.forbes.com/markets/2007/09/14/europe-shares-rock-markets-equity-cx_po_0914markets04.html
From the Forbes article linked in above:
A lot depends on what happens Tuesday when the United States Federal Reserve decides on American interest rates. Most economists and analysts believe Fed Chairman Ben Bernanke will announce a cut in the federal funds rate target, but the debate is over how much. Some say a cut by 50 basis points, to 4.75%, is what’s needed to prevent the economy from sliding into recession, while others think a 0.25%, cut to 5.00%, would be enough.
It’s a marked contrast to Europe, where central bankers are choosing to simply hold, rather than cut rates, and in the cases of Sweden and Switzerland, even raise them. Still, institutional investors in Europe are keeping a close eye on the United States — whatever happens there will have an even greater effect on the market than even a situation as dire as that of Northern Rock.
They may not be held accountable in a court of law, but the mortgage brokers/companies are paying a heavy price by being put out of business by having their warehouse lines pulled , the amount of lenders shrinking, new mortgage laws in many states, and correspondent area being cut off. Many “bank owned” lenders are going retail in order to put confidence back into the secondary market for Wall Street. This is putting the squeeze on brokers who are finding not only their sources of lending being cut off but their ability to lend money themselves on lines they were given.
http://blownmortgage.com/2007/09/13/countrywide-tries-to-assuage-broker-fears-with-latest-email/
Basically Countrywide and many others are telling brokers its either you or us..and well we don’t plan on going anywhere…
I have too many emails in my inbox and get too many calls from lenders too agree with that.
“Will anyone be held accountable for the mess behind us and the looming wreckage in front of us or are we just going to shrug our shoulders and say something ignorant like “it’s a free country”? If I sold a product that brought harm to the buyers, you can guarantee I’d be brought to justice. The various criminal individuals who led us down this path need to do the perp walk with cameras rolling, and do serious jail time and face repatriation of the massive profits they stole. ”
Exeter, are you “speaking truth to power”? Sorry, power already knows the truth because they created it. Greenspas did the dirty deed under the watchful eye of the corporate frat boys that own this country. Will they throw some guillotine fodder to the masses? Maybe, but only if we make enough noise. I’m gonna go watch TV now.
Exeter, You can make the difference. Take action.
Drowning Pool, if you go watch TV, nothing will happen.
There are hundreds of opportunities out there to report abuses, help put fraudsters in jail, track the market, buy foreclosures in 2010 and create good rental pools for people who need good housing with responsible landlords.
The fun has just begun. We are seeing the FBI bust a lot of people lately. The fraudsters are starting to quake in their boots as the housing market tumbles and the law moves in. Many landlords will soon be tenants in a very exclusive, private, gate community. Why they will even get 3 sqaure meals a day. Just look at http://bakersfieldbubble.blogspot.com/
There is no hiding the paper trail on real estate transactions. Notarys, thumbprints, loan apps…… it is all there.
More troubles in England:
The Bank of England said Friday it had approved emergency funding for the nation’s fifth largest mortgage lender, to head off a liquidity crisis.
Northern Rock PLC warned market turmoil sparked by a mortgage crisis in the U.S. would cut profits to between 500 and 540 million pounds ($1 billion and $1.1 billion) — which is as much as 147 million pounds ($298 million) lower than expected.
Northern Rock shares plunged 20 percent to 514.5 pence ($10.43) on the London Stock Exchange.
Chief executive Adam Applegarth said Northern Rock expected to borrow substantial amounts of money from the Bank of England at a penalty rate, but did not specify how much. The bank said it was having trouble borrowing from other banks, and that the liquidity problem was likely to continue for the rest of the year.
http://www.businessweek.com/ap/financialnews/D8RL6DQG0.htm
The credit problem is contained. It’s contained to planet earth. For now!
Yes, I hope it doesn’t affect those of us on Mars.
You better hope it doesn’t affect Uranus. Many FBs won’t be so lucky.
Leave Uranus out of this.
I hear you NYCB. Right now I have “The Impaler” on cold-standby.
No worries for Uranus… The new “Liquidity Quickie Lube” will be released concurrent with Greenspan’s book.
I can’t help it. I have to tell a sophomoric joke …
What do the Starship Enterprise and toilet paper have in common?
They both circle Uranus looking for Klingons …..
fergive me fer that one Lord ….
No! Thou art smoted!
My Joshua trees are shivering with excitement.
ROTFLMAO
… appropriate for this thread.
Neil
“My Joshua trees are shivering with excitement.”
So far, I see no evidence that Martian banking institutions have a credibility problem.
The Venusians on the other hand…
“More troubles in England:
The Bank of England said Friday it had approved emergency funding for the nation’s fifth largest mortgage lender, to head off a liquidity crisis.
Northern Rock PLC warned market turmoil sparked by a mortgage crisis in the U.S. would cut profits to between 500 and 540 million pounds ($1 billion and $1.1 billion) — which is as much as 147 million pounds ($298 million) lower than expected.”
Sorry about that old bean, but you know what they say, “monkey see, monkey do, monkey gets ground to a paste…”
Well at lest sunny Spain isn’t impacted…
Got popcorn?
Neil
Nobody ever expects the Spanish Liquidation…
Wow, everybody’s in rare form today. Must be because it’s Friday…
global CB overnights are now the “norm”
I continue to ask associates, friends, and family what the think, and they say “global growth” “low unemplyment” “housing rices coming down”
The drones are listenting, its all good, nothing to worry about.
rices=prices
my apologies to the post nazi.
I likr housing rices.
same story all over Europe: it’s contained, central banks will NOT bailout the big speculators, etc. In the mean time, both the BOE and ECB are providing record amounts of liquidity on a daily basis to keep the big speculators alive and give them time to pass their bad investments to the unsuspecting public (pension funds etc.) or have them purchased or bailout by government supported entities (like with the German banks that went under last montt). And home prices in Europe keep rising as if there is no problem at all; everything is according to plan …
What’s interesting is that BoE is making these emergency loans at a penalty rate to banks that are finding themselves in a tough spot, while the Fed takes the opposite tack and offers cheap, fast money. I’ll take the BoE approach. But what do I know.
http://www.federalreserve.gov/newsevents/press/monetary/20070817a.htm
In the European newpapers (online versions) I’m getting the impression that some conflict is brewing between the BoE approach (relatively tough) and the ECB approach (without a doubt the most easy of all the central banks). Hopefully this will make it less easy for the ECB to keep throwing record amounts of money at the markets …
Adam Smith said the same many, many years ago.
Heard on the radio here in NOVA that a local developer thats been around for about 50 years will wind down & go out of business due to the sudden downturn in the condo market here. So basically a company that weathered the 90’s downturn (until this RE bust, the most severe) has not survived this one and its only 2 years in.
I think just about every town/city is OC ed “Over Condoed” The next section 8 housing is my best guess.
I have never understood why someone would want to buy an apartment.
That’s the thing, very few (outside of NYC) actually do. But condo’s are sold as the first step on the property appreciation ladder.
Condos are primarily marketed to empty nesters and retirees up in CNY.
Condos are not that bad of an idea in densely populated areas where housing prices are high even in non-bubble. It works if you’re young, you have a down payment, you’re living in an apartment setting anyway, and mortgage on a condo is the same as rent on an apartment. At least you’re not “throwing money away” while you start a family, get started in the career, whatever. Then you’ll have equity when it’s time for a SFH.
But how many people fit all those criteria? Not that many. By the time you save the down payment, you want the yard and bedrooms for the kids. Oh, but the profit margin was so so high that they massively overbuilt the things, even in places where you don’t need them. Condos are fine for places like DC and the immediate Md/Va suburbs, or the deep city downtowns for the city slickers. But the outskirts of, say, Nashville? Ridiculous. I hope they crash and burn.
Whether the “downpayment” is sitting as equity or in a savings account is rather immaterial to the borrower, really.
And it’s important to realize that condos don’t necessarily have to “cash-flow” at any given time vs. renting to be a good move.
Here in the Bay Area, condos have usually been 10-20%+ more expensive on a monthly basis, but the people who locked in 1995 housing prices with a condo purchase are “styling” now, while renters like me are saying “next time, I’ll bite bullet”.
Hey! I represent that remark! Just by my handle though. I agree with you and JJ as I cannot fathom “buying” an apartment.
Here are some numbers on a condo just up from me $164,000 for a 1 bedroom and $550 a month condo fee which includes heat & hot water &insurance& RE taxes …the building is 40+ years old. and NO off street parking, but it has a community backyard And this is in queens.
where in queens? 164k 1 bedroom??
woodside, jackson heights?
offer $125k
sunnyside, but they are small 1 bedrooms, you barely can fit a king size bed in the BR and a 4 seat kitchen table in the “kitchen”. These are not for people who want to acquire things. Sparse living at best.
I’ve been checking out that area some. Any bigger places in that bldg? Not such a bad price for a 1 bed … guess you could combine 2 units.
look into kew gardens for that matter
a little further east but they have lirr and huge aprtments
alot or prewar stuff, but the parking is god awful
“where in queens? 164k 1 bedroom??
woodside, jackson heights?
offer $125k ”
We bought our 1BR in Rego Park in 1995 for $40K. The previous owners bought it in 1988 for $95K. I don’t see any reason to pay more than $60K for a 1BR apartment. The monthly maintenance on a 1BR is $400-$500, with mortgage it’s already approaching $1000/month. Anything more than that is overpriced.
i lived in rego park for awhile.
it sure has changed
1 br in rego park go for 160-220k depending on condition and location but tha local transfer at roosevelt does stink
if you work in the city
“i lived in rego park for awhile.
it sure has changed
1 br in rego park go for 160-220k depending on condition and location but tha local transfer at roosevelt does stink
if you work in the city ”
Squeezing onto the E train is a b1tch, it’s only tolerable if you’re squeezed between two good looking asian chicks…
Yes, joe, I’ve been asking myself why various businesses and governments are all of a sudden taking a dump, despite a prior record of longevity, which would indicate they’ve been there through good times and bad. Furniture stores, for example, that have been here in FLA since the 1970s are going out of business because of the bust. WTF? I mean, the bubble really only started in FLA in 2000 and lasted until 2005. All of a sudden they have no business? What did they do before that? The same for the Florida governments, state and local. What is their problem? They operated on smaller budgets before the bubble. In fact, IMHO, they were better and more efficient. I didn’t have any complaint with services.
The whole problem, IMHO, is one of point of view. The bubble should have been treated as an unusual event and the money generated should have been used to pay down debt, repair and improve existing infrastructure and build up reserves. Instead, everyone (individuals, businesses and govmints) went hog wild, incurring more debt, doing buying and hiring that wasn’t really needed, etc. Gambling on a future that didn’t have a solid foundation, instead of shoring up creaky foundations. And now, instead of taking careful stock of what has happened, and putting in place workable remedies to fix the situation, everyone (individuals, businesses and governments) seems to be throwing tantrums and making threats like spoiled children who have had their Elmo dolls taken away. Well, what do you expect? This country has at the helm one of the biggest spoiled brats ever in history.
When I logged on this AM, one of the headlines that greeted me was “Recalls Could Push Toy Prices Higher”. Oooooh, I’m scared! It’s almost like the headline was saying “See what you’ve done, you folks with standards, if you’d just accept the dangerous crap from China everything would be OK, but no, you want it to be safe. So now we’re going to punish you for the recalls. Prices are going up! Take that!”
Well I’m sure that some people did get off on the top floor before the cable broke. They’re not the one’s in the news though.
Palmetto: The bubble should have been treated as an unusual event and the money generated should have been used to pay down debt, repair and improve existing infrastructure and build up reserves.
Right you are!
Had people taken that approach there would have been no bubble!
That’s exactly what I thought re: toy price increases. God forbid one of these corporate slimeballs decides to eat the costs incurred for the recalls and their lack of quality control.
Agree, Companies- American and Chinese should eat a $h*t sandwich. The price increase was 0.10 cents though. thus the price will not chage much.
For a toy that retails for $10 USA the Chinese manufacturer gets $1.25. Most of the blame should be on the USA toy retailers.
Could be that these longtime owners, wise to what’s coming–having experienced it in past downturns– are just cashing out and retiring while they can. After thirty-seven years of doing battle, perhaps one simply gets tired.
Winding down and go out of business sounds like a successful strategy. The broke-but-never-bankrupt businesses that still owe me small sums were rather more sudden…
Joe: Which developer was it?
Here is the news story related to the bankruptcy Joe mentioned:
http://washington.bizjournals.com/washington/stories/2007/09/17/story2.html?b=1190001600^1519984
Note this company developed the Metropole, 1010 Mass, and other condo developments. Looks like buyers will have to contend with additional delays…
BOE… How about that, they did exactly what they had just said was not a good idea. Question, when the Central banks lend out money what are the re-payment terms? I have never read those details anywhere.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aj1QmTl9Y0u4&refer=worldwide
Asked a similar question last week. You have visibility to the fed outflow, but no idea as to who paid what back and when.
At first, I thought King caved. However, NR is borrowing at the penalty rate. It is exactly what King told British bankers to expect. As a result, NR will most likely fail or be acquired by some bigger fish.
Like CFC, Thornburg, GMAC et al, NR got cut off from the commercial paper market. It means no one wants to lend it any money. The BOE is fulfilling its role as lender of last resort.
Unlike CFC et al, the BOE is letting everyone know NR is receiving a bailout. The stock is plunging and customers are queuing to withdraw cash as a result. Without BOE intervention, things could get messy.
ZURICH, Sept 14 (Reuters) - Northern Rock Plc’s (NRK.L: Quote, Profile , Research) share price plunge after needing a lifeline from the Bank of England has turned the mortgage lender into a stricken target, more likely than ever to fall prey to a takeover bid.
And with customers forming queues to withdraw their savings at Northern Rock branches across Britain, some analysts said on Friday the Bank of England may already be taking to others in the industry with a view to encouraging a bid for Britain’s eighth-ranked lender.
“They (the Bank of England) will seek to calm this down. It would not surprise me if they are talking to every bank. It will not be inactive in making sure there is financial stability,” said an analyst who asked not to be identified.
http://tinyurl.com/22f2oh
London, UK prices fall
London house prices fell the most in three years in September after five interest rate increases in a year and financial market turmoil sapped buyers’ confidence, according to a Rightmove Plc report.
The average asking price for a home in the U.K. capital declined 2.5 percent from August to 384,439 pounds ($774,000), according to Britain’s biggest real-estate Web site. The reading is taken from a survey conducted from Aug. 12 to Sept. 8. For the U.K. as a whole, prices fell 2.6 percent, Rightmove said. (from Bloomberg)
The Bank of England says they wont be bailing out banks but then it looks like they just bailed out a bank.
Rival banks were handing out fliers to anxious Northern Rock customers today as they queued on the street outside some branches to withdraw money.
Northern Rock, which has confirmed it has received emergency funding from the Bank of England, has stressed that investors’ money is safe and Downing Street said the Financial Services Authority had judged the bank was solvent.
But some customers were concerned at the bank’s future and were withdrawing funds online and at branches, particularly in the north, where the majority of Northern Rock’s customers are based.
People in the queue burst out laughing when one staff member asked them: “Does anyone want to pay money in?”
I am listening to the BBC World Service, and this story was the lead and is getting a lot of attention. Sure sounds like a run on this bank. The even interviewed a guy who said he was going to bury his money in a hole somewhere. Lulz.
Got systemic risk?
lol in a hole somewhere? I hope he makes a map to his buries treasure.
Spanner in the works…
The hugely invisible bank run, online.
But of course~
“Northern Rock, which has confirmed it has received emergency funding from the Bank of England, has stressed that investors’ money is safe and Downing Street said the Financial Services Authority had judged the bank was solvent.
But some customers were concerned at the bank’s future and were withdrawing funds online and at branches, particularly in the north, where the majority of Northern Rock’s customers are based.”
Looks like sixes and sevens.
we have some recent experience with failed banks in the Netherlands. A year or two ago one of the smaller banks went bankrupt, taking lots of cash of relatively rich savers with it. The financial authorities (the Dutch central bank) knew for more than a year that things were wrong there, but told the public nothing until after the fact. Keep in mind that Dutch savings accounts are only protected up to 20.000 euro (10.000 euro at that time) while many savers had 6/7 figure amounts on their account with the bank. The central bank even reversed some transactions of savers who tried to convert their savings into treasuries when they smelled something was wrong.
This time the savers were relatively lucky, in the end they will probably receive 70-80% of their money instead of just a few % (partly because their lawyers could put some part of the blame on the central bank and had a good position for negotiating). At the next bank run I expect savers will be lucky to get the maximum insured amount of 20K euro …
I can’t remember exactly (someone help me out) but I think in the UK, deposits were only insured at about 80% of value. Might have been only the first GBP 30k or so, hmmm… In any case, I remember back then that you might actually wanted to get your money out of precarious banks because while you’d not lose all of it, you could lose some. So a run on a bank could still happen.
Bank of England says they won’t be bailing out any banks.
And then this gets reported in the paper.
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article2451069.ece
http://business.guardian.co.uk/story/0,,2169348,00.html
I love this, BOE talks a tough line, no bailouts yesterday, while knowing that this Northern Rock bailout was already in the pipeline.
Liar,Liar.
Anyone else got any money in Emigrant.direct? I’m thinking of pullling it today, as they have no physical bank for me to run to. Love to hear someone else’s thoughts.
pulled mine out of emigrant 5 months ago. put it in u.s. treasuries.
Pulled our money out of Emigrant Direct about 3 months a go and stuck it in Treasuries as well.
We’re in California; I’ve been looking for a decent, local bank or credit union that is FDIC/NCUA insured whose assets are a bit more valuable than a Stockton 3/2. Our stupid credit union decided to go with private credit insurance.
Thanks to you both, moved funds from Emigrant to USAA. I guess I will go with Treasuries, when the funds clear.
Is there something wrong with emigrant? Should I be looking to pull my cash out?
“Bank of England says they won’t be bailing out any banks.”
A time-tested propaganda technique is for a policy institution to claim they are undertaking the exact opposite action from what they are actually executing. This approach flummoxes the sheeple (esp. MSM reporters) every time!
Read the man behind the curtain’s lips!
Out damn bold!
Wisconsin would ban credit reporting agencies from selling the names, addresses and phone numbers of recent mortgage applicants to outside solicitors, under legislation that two Milwaukee-area lawmakers proposed Thursday.
The Mortgage Privacy Protection Act, as Assembly Bill 502 is called, would curb the growing sale of what are called mortgage trigger leads - lists of recent loan applicants whose credit reports were pulled to check bill-repayment history.
The credit check triggers a notation in the records of credit bureaus, which have developed a lucrative sideline in selling loan-applicant lists to outside marketers. The practice has provoked invasion-of-privacy complaints from consumers and deal-poaching complaints from lenders.
http://www.jsonline.com/story/index.aspx?id=661921
trigger leads also let bill collection agencys the names of people trying to buy a house, then they place collections on there credit reports. that way you have to pay in order to close your housing loan
interesting piece on NPR this morning about nyc construction deaths - they have spiked, as NYC has issued a record # of building permits in the last couple of years. The big reason cited is a large # of small, nonunion contracting outfits that don’t take proper safety measures.
This should be an alarm bell for potential homebuyers as well (and another strong indicator of a big shoe yet to drop in the nyc housing bubble): If the contractors can get away with unsafe conditions, that means buildings under construction are not getting routinely inspected. So the contractor is likely getting away with construction done poorly, and done too fast. This is going to come back to haunt NYC in a huge way in the years to come.
non-union labor/unskilled trades have long been notorious for lost time accidents and deaths just about everywhere but especially in NYC.
There are no inspections in NYC. The builders get to “self-certify” that their buildings meet code.
The self certification process was enacted without any after the fact penalties for violation. Any “good faith” system can only work if the penalties for violation are draconian. Here, they do not even exist.
WT, only on private money project. Any taxpayer funded construction gets inspected and the designers certifies that the structure was constructed in accordance with the contract documents. Nevertheless, the builder self-certifying is like the fox guarding the henhouse.
yes, here in FLA, the developers and builders “self-certify”, what a joke. Their buildings go up overnight, while some poor schmoe who had a fire and has to rebuild gets inspected and coded to death.
WT
There are no inspections in NYC. The builders get to “self-certify” that their buildings meet code.
There are controlled inspections required for all new construction including interior work. Builders do not get to self certify unless they are acting as the architect of record. Architect can have the option to self certify their plans, of which 20% are audited by the NYC DOB. But there are still inspections for fire proofing, structural, firestopping, mechanical, sprinklers, plumbing, C of O, fire alarm (class E), etc…..the list goes on and on. the jobs cannot be signed off until the list of inspections is complete. you can not get a C of O for new work until the inspections are complete. Most of the inspections above must be performed by coty or licensed professionals.
The architecutral self certification process has been abused bya few builders and architects, and they can lose their license as a result, and correstive work sometimes must be performed.
that’s not true
I was a building trades union laborer in my youth and now when I walk past a non-union site I cringe when I see uncleaned lumber thrown into piles, scaffolding that I wouldn’t climb, and untethered workmen on high. I know that unions are not perfect, but I have to say that it was a safer job site when it was a union site. I worked on a 46 story office tower and to my knowledge we only lost one man in a tragic accident.
I was in the trade too here in NY. I walk buy sites in my neighborhood in Queens and I need both hands to count the safety violations. I haven’t seen a worker wearing the proper equipment for years.
Most crews seem to be made up of immigrant workers. Sometimes I see the whole crew arrive in an old bus. This is not to bash immigrants, since many of the guys I worked with were from elsewhere. But that was a union shop and we knew our job. I see a lot of barely skilled workers now.
I was reading about the skyscraper boom here in Chicago… Apparently they are drawing in a lot of the skilled union workers from around the country. With more than 60 high rises currently under construction, there just isn’t enough skilled manpower available. Crews fly in on Monday and fly home on Friday.
Since 1999, about 130 high rises have been completed and that was considered to be an insane number, so that puts the 60+ currently under construction in perspective. So far, financing and/or lack of sales have not stopped any high rise construction - so the worker shortage isn’t letting up.
Highly skilled construction crews are in huge demand - China, Dubai, etc are still building. These “smaller” projects probably couldn’t land a union construction crew even if they wanted one.
Has construction started on the Mandarin Oriental in Chicago? Anyone know??
Thanks
Has construction started on the Mandarin Oriental in Chicago? Anyone know??
They’ve finished site preparations - rerouting utility lines, etc. I guess it depends on your definition of “construction started” but they haven’t started drilling caissons yet. My bike route to get to the lake front trail takes me past the site - no machinery is currently on site.
Thanks Brian. My gut tells me this is one to watch as there seems to be some funny stuff going on with the players involved and in pre-sales.
oc-ed, much of this is part of an effort, whether planned or accidental, to reduce the US to the level of the third world, where building, bridge and road collapses are routine. We used to watch such spectacles happen in Latin America and Asia with wonderment. But now, they are happening here.
It’s the side effect of a specific strain of the pro-business mindset — one that rationalizes governmental agencies don’t need to regulate, inspect, set standards, or impose penalties for substandard work. Believers say that corporations can “self-regulate” just fine without outside oversight. (Riiiiiight.)
This goes for government agencies, too: they need outside watchdogs or independent oversight by other government entities, otherwise we end up with $1,000 hammers and no-bid contracts and levees that don’t work right and God know what else.
As far as I can tell, whether it’s housing construction or big public works or automobiles or food, the consumer always loses in the “let the company police themselves” scenario.
ET-Chicago,
great post.
I have to say that as much as I try each and every day to keep telling myself that it just cannot be like you say I am pummeled with evidence to the contrary. I am simultaneously angry, outraged, and really saddened that it seems to be coming to this. The only thing that makes sense to be is either those who lead us are complete imbeciles or they are setting us up for one helluva fall. In either case it is my increasingly growing belief that I do not want any of em making any decisions that effect me. Now, how do I go about changing things? hmmmm.
just yesterday i was walking to my office and there was police amd ems outisde the new tower on 24th and 6th (the one with 1 million $ 1 bedrooms), when i got close there was a young guy sitting on the curb calmly, upon closer inspection he was missing the tips of 3 fingers
and this is a “union job” too many unskilled workers in construction and many accidents waiting to happen
Most of the NYC deaths are from scaffold falls: suspended (cable hung rigs) and supported(frames & plank) scaffolds. Guys who are not trained, cutting corners. I have taken the safety course for both types, of which the suspended h has a written exam. When I took the test, I would say 30% of the class did not speak english and they were trying to cheat off each other. The instructor rightly flunked them.
gee - is this contemplated in inflation? And if so, maybe kids could substitute a stuffed sock for a doll.:
http://biz.yahoo.com/ap/070914/toy_prices.html?.v=9
Inflation is putting its squeeze on us all, and the Fed will still lower rates.
We (wife and I) are doing things to lower the grocery bill as it has skyrocked in the last year. We are buying more store brands, buying things on sale, and buying london broil instead of ribeye steak. It is not the grocery bill was breaking us, but when it climbed to $200 a week we made the decision to try to rein it in.
Inflation is starting to crush J6P, and yet the fed is coming to the rescue of wallstreet ( when the market is up 7% this year).
Consumingly, everything J6P can do without… is falling in price
Everything J6P needs, is going up in price
Where do you buy groceries? There is a Publix about a mile away from my house. My wife used to go shopping there and each time she came home the bank account was $200 lighter.
Well we put an end to than and now drive the 7 miles to the super walmart. $200 magically turned into $150 for essentially the same things.
Even more obscene example: Rite Aid down the street. Every now and then I’ll go there and buy milk. Price used to be $4.19 a gallon. A little high, but convenience factor made it worthwhile. Now it’s $4.99. Crazy inflation right? No, crazy Rite Aid inflation. At WM, that same gallon is still $3.69, same as it has for as long as I can remember.
To each, his own. I have found that, with careful planning, my Publix shopping bills can be contained. I prefer Publix, it is one of the finest businesses I have ever seen and I am happy to support them. They have pride and quality in their products and their personnel.
“They have pride and quality in their products and their personnel.”
Things that cannot be said by any credible person regarding Wal-Mart.
I honestly could not care less about having pride in their employees. The milk, bread, cheese, and cereal I buy from WM is the exact same milk, bread, cereal and cheese available at Publix, except at 25% less.
Publix can have all the pride it wants, I’m going where things are cheapest.
Wal mart over Publix? Never. The cleaniless of the store, ease of ingress/egress, the clientelle difference and the personel make me shop at Publex any day of the week. And I am super frugal.
“Publix can have all the pride it wants, I’m going where things are cheapest.”
That’s what the corporatistas are counting on.
You have a 2 minute shorter walk to and from your car and Buffy is next to you in the checkout aisle. Fine. If that’s your thing, go for it. But please don’t complain that your grocery bill is high.
I was once like you. I didn’t enter a Walmart until I was 28 years old. I was too good for it. Then I was what the prices were like and suddenly my nose was pointed a lot lower.
Back in the 1950’s, when I was very young, maybe three years old, my Mother was shopping at the Publix in Clearwater. Back then Publix had maybe 20 to 30 stores mostly around Central Florida. She had me in the cart and was waiting in line to check out when she had a sudden miscarriage. She was several mouths pregnant at the time. The store manager and several employees got her (and me) into his car and drove to Morton Plant Hospital. He called my Dad and her doctor within several minutes. Mother was at the hospital overnight. The Manager stayed at the Hospital until late that night and came back the next morning! George Jenkins, the founder of Publix, called Mom at home the next day to ask how she was doing.
Needless to say, I’ll drive way out of my way to shop at Publix.
The checker out my youth was a multi-tasker of the highest order, until bar codes came along…
They could be the checker anywhere, now.
I keep reading about skyrocketing milk, but I can still find it here in AZ for under $2.00/gal. It’s meat that I can’t afford anymore. I’d say all meat across the board is up at least 50% over a year ago.
With grain prices skyrocketing, meat prices can only go highter.
With grain prices skyrocketing, meat prices can only go highter.
And my fruity pebbles too.
Here in Colorado its approaching $4 even at Sams Club.
At the farmer’s market in downtown DC, milk is $8/gallon. It was all grass-fed and local etc, and came in glass bottles which you return each week. It was worth it for me, but I only got a quart. If you have a family…*shudder.*
At the farmer’s market in downtown DC, milk is $8/gallon. It was all grass-fed and local etc, and came in glass bottles which you return each week. It was worth it for me, but I only got a quart. If you have a family…*shudder.*
I’d say all meat across the board is up at least 50% over a year ago.
Its a good thing that inflation is under control and we don’t need pay raises.
And a good thing that CPI doesn’t include food, energy, or housing (mortgage and property tax) costs.
Milk here is $3.46 gal at Wal Mart and we live 25 mi south of Youngstown OH, one of the cheapest cities in the nation.
Our Wal Mart is spotless, but the one the next county up is crummy. It all depends on the managers.
How about Aldi’s?
Great place for staples. Skim Milk: under $3 per gallon. Used a coupon at the local OPEC station (Mobil) got 2 gallons of milk for $4.00 (total) and $0.30 off each gallon of gas for my Honda Fit (38MPG) for a net of $2.55 per gallon of imported petrol.
After shifting slowly but surely to organic, I seriously can’t even contemplate what passes for food at places like Wal-Mart, et al. I sure as hell wouldn’t feed it to children! Humans weren’t designed to digest the debris commonly part and parcel of our corporate food supply.
“The Bank of England says they wont be bailing out banks but then it looks like they just bailed out a bank.”
Ignore the man behind the curtain.
T D R…
http://www.dailyreckoning.com/Writers/Mogambo/DREssays/MG091307.html
Dumbo Mortgages
http://www.stockmania.com/2007_09_14_archive.html
A few excerpts from a NYT article on pawnshops. I was struck by how reasonable the terms were — better than credit cards!:
“The customer has four months to pay back the loan and interest. The National Pawnbrokers Association, of which Mr. Rosado is a member, says that the typical pawnshop loan is $75 to $100. State law limits interest rates charged at pawnshops to 4 percent per month for four months. Mr. Rosado charges 3 percent of the original loan per month.
“With Mr. Rosado’s rates, someone who received a $100 loan would owe $119 in four months — $12 interest plus a $5 service fee and a $2 vault charge. In other states where pawnshops flourish, like Florida and Texas, the interest rates are much higher. As a result, the number of licensed pawnshops in New York City is considered low by industry standards.
“If a customer does not repay the loan after an additional two-month grace period, Mr. Rosado takes ownership of the item….”
Also:
“One customer recently pawned about 50 items to help pay her mortgage….”
Cash to Get By Is Still Pawnshop’s Stock in Trade
Pathetic that someone has to pawn something for $75 - $100. I find that hard to comprehend that they can’t get their hands on that piddly amount of money some other way.
I know a pawnbroker in the bay area, that told me in the early 1990’s, people would hock their vcr’s for $25 on a Monday, and get it out of hock on Friday, to be able to watch videos on the weekend…
And then bring it in on Monday for another go-round
Chick, I think we have to go way back to put our minds in a place where that seems possible. For me it was undergrad, when I was living on the Campbells chicken noodle soup special at 4/$1.00. I for one and grateful that I have had and taken advantage of the opportunities that have come my way. I also know that there are many folks out there who are just not as lucky and to those I suspect that $100.00 is a whole lot of money to find in a hurry. I also suspect that many FBs are joining that group every day. And this is where you are right on because it is pathetic for people to put themselves in this position out of pure greed. I keep wondering WTF were they thinking, but then I come back here to HBB and it is clear - again - that they were not thinking.
I’m going to a pawn shop today to see what I can find LOL!
Not everyone is as fortunate as you. Don’t belittle people for being poor.
i do not think she was being mean towards poor people.
it is just in this day and age how far is $75 doallrs going to go?
it is just in this day and age how far is $75 doallrs going to go?
About 8-12 items in the grocery cart.
Many people clear 300-400 every two weeks for a grand total of 600-800 a month. $100 is a huge chunk of their budget which is probably already committed to the max. If you spend $400 a month on food, half your budget is gone and that doesn’t include housing, insurance, utilities, gas, misc expenses such as clothes, medicines etc. If you have children too, I’m not sure how anyone could make it. That’s why there’s so many without health insurance. It would take a month’s salary for a family policy.
i do not think she was being mean towards poor people.
it is just in this day and age how far is $75 dollars going to go?
I worked in a pawnshop in Fort Worth when I was in high school (I kept the books!) and it was the worst job I ever had. Incredibly depressing to see people at the end of their ropes. Old men would pawn their boots.
I know a few higher end pawnbrokers in el lay, and talk to them once in awhile and was on the phone with one, the other day…
This sort of pawnbroker tends to lend on bullion/jewelry/art, no iPods or Snap-on tools, please.
He told me that more and more people are hocking this, that and whatever, to pay the mortgage.
And redemption (there’s that word again) rates, or the percentage of people that come back and pay the loan back, and get their goods back… are falling quite a bit.
He figured his rate was around 65%, whereas it should be closer to 90% historically, as this is where you go to hock your Patek Philippe, to somebody that actually knows it’s value, and can loan money on it.
I have ebay searches for things like that. There’s a jeweler in Orange County CA that has had a number of excellent high end watch deals lately. Has to be for mortgage payments.
Interesting that you mention that, txchick. My grandfather, during the Great Depression, learned to recognize valuable watches that were broken or tarnished and being sold for dirt cheap. He would the fix them and sell them for 10-100x what he bought them for. Harder to fix a modern watch, but very interesting that you’re noticing the same phenom that he noticed way back when.
Ebay has really been killing pawnshops. If you can afford to wait seven days, you can get 100% of the value of your item, rather than the pittance the pawnshop will give you. If you can’t afford to wait out a seven day auction, then you have got some big damn problems.
What’s happening to all the foreclosed homes?
Would be interesting to know what the banks are doing
with all the REO’s. Hold / Sell? And if sell, at what prices?
BTW
I understand from the radio news (KFWB in LA) that Mr. Greenspan
is going to be on “60 minutes” this Sunday explaining why he didn’t
see low interest rates fueled the housing bubble.. Saving a fresh
VCR tape for that one! Will be tuning in Monday morning to the
HBB to get everyone’s take. Should be most entertaining!
I asked this question on Tuesday, but it may have been to late for you folks. The same houses are on zip for roughly the same outrageous prices. We KNOW the banks are taking back houses at a pretty good clip. When do they put them up for sale and for how much? Do they go through the auction phase first? I think once these houses hit the open market, prices will plummet. Thoughts?
My experince from the RTC foreclosure days, was the bank’s non performing assets (REO’s) get audited the last week in Jan.
Based on this, there should be some real disocunts available early jan, 2008. I might also suggest you don’t “low ball” a bank’s REO department. You make a decent offer, then negotiate the fix up, clean up, repairs.
“You make a decent offer, then negotiate the fix up, clean up, repairs.”
I would like to lowball the sh*t out of bank REO department or FB. I’m and equal opprtunity lowballer
Try realtytrac
The “Maestro” knew precisely what was going on. That’s why he bailed out to let someone else clean up the mess. If we are to believe he didn’t know how this would turn out, it means that we had someone with Casey Serin-like intelligence running the show over the past 20 odd years.
Ask Al where he’s got his retirement money.
Oh that would be sweet! Can you imagine what the reaction would be when he says “gold bullion”?
BB must hate AG
That’s my impression too. I keep having fantasies that consist of BB in front of his mirror, having fantasies about pulling a Volker just to teach everyone a lesson, but then knowing what would happen to him if he did, and pulling out another hair. Poor BB.
Yeah, pull a Volker! That’s my vote. A funny side-note:
A friend of ours a few years ago bought a used Porsche as a way to impress unwitting females. It needed to pass smog, so he brought it to a German mechanic named Volker. This mechanic gave said friend an illegal smog fix, which he and the friend both knew was illegal.
After passing smog, the friend called the credit card company and disputed Volker’s charge, on the grounds that the work was illegal. Volker’s response to friend was “Don’t be greedy.”
Ha. Ha.
DON’T BE GREEDY!!!
IMO, they are waiting with fear and trembling for the outcome of the Congressional vote next week on Schumer’s lender bailout measure. Even if it passes, lenders sitting with bubble-zone REO on their books are toast, as too many loans were made to people without the means to repay them at prices north of the highest conceivable level the GSE conforming loan limit could be raised to (ostensibly to help the GSEs achieve their affordable housing mission @#%&$!!!). The conditions for a price avalanche will not be mitigated.
“…The conditions for a price avalanche will not be mitigated.”
The water is changing color, running deeper & swifter…that mist & rumbling sound…up yonder a ways?…best paddle quick & hard to the shoreline and grab on to a strong branch…the longer you “think” about it, the less time you’ll have to avoid the “next” coming “cascading” event…which will be extremely damaging to everything you currently “value”
We need to be making some calls saying “VOTE NO!” on that thing.
OK – I’ve had a big ”tin foil hat” moment and I want to share.
In “Atlas Shrugged” the basic premise of the book was the rich producers and doer’s of the world abandoned society because so many leached off the doer’s. Some actually tried to hasten the demise of the corrupt society, such as the copper magnate with a Spanish name that I forgot.
Alan Greenspan was a supporter and devotee of Ann Rand in the 1960’s.
An article I read last week suggested the Greenspan more or less acquiesced to the powers that be and promoted accelerated growth. (No reference, either in Prudent bear or Fiend Bear references).
So, could Greenspan have done what he did – knowing that it would hasten the demise of our corrupt society?
Who is John Galt?
Eh, I read that book again recently.
I can agree that the rail people, the coal people, the copper people provide worth to society. I don’t think there are any visionaries left in the world, the truly rich are making their cash off of financial transactions. In short, our entire economy is moochers.
I hope Alan agrees with me.
“rich producers and doer’s of the world abandoned society because so many leached off the doer’s”
I was a fan of Ayn Rand back in the day. Idealistic. How would you classify that Blankenship fellow up in West Virginia? Is he a “rich doer”? Is it a good idea to blow up the mountaintops and poison the environment and kill off the communities?
The point is, I admire “rich doers” who can produce without damaging people and places.
Greenspan wrote lucid, concise papers in the 60s. Then he sold his soul to the devil, started speaking in riddles and inflating bubbles. Janus would be proud. IMO Rand wrote a turgid screed in favor of hyper-capitalism.
Much to harsh on Ayn Rand. You have to put her work in the context of the great society/socialism of the 50’s and 60’s (or even in the context of Hillary’s ‘it takes a village’) to really appreciate it. In the context of today’s extremes of financial capitalism, it is too easy to see Rand as being on the wrong side.
The Fountainhead hit home, when we were in Buffalo, visiting The Martin House, a 1904 creation of Frank Lloyd Wright…
A home that screamed the future, and across the street stood a house built the very same year, and built how you’d expect for the time.
Night & Day
The docent showed us a xerox of a 1904 Buffalo newspaper with the lead article in a story about it saying “Martin Abomination almost complete”
People resist change with all their might…
I don’t know if I’d agree that she’s on the wrong side, but then again I’ve only read Atlas Shrugged and a few of her short essays. Regarding the book, I find many of her points appropriate and topical in this day and age. Perhaps unbridled capitalism isn’t the ideal (that’s a pretty large debate to be had), but the underlying points regarding overly taxing the more successful and productive members of society, people being “owed” things rather than earning them, etc, are spot-on. Just look at our current situation regarding home ownership and this bubble, bailing out people who made bad decisions, etc.
I’m certainly not saying that the “wealthy elite” in this country are equivilent to the heros of Atlas Shrugged, as I don’t believe they’re producing things for the good of society. However, I think the book really drives home the idea that taxing/punishing those with money just because they are successful and have money ultimately will harm society as it takes away the incentive to be productive and succeed. For example, the “War on Savers” certainly is taking away the incentive to make sound financial decisions.
I have never understood why people are so harsh on Ayn Rand’s ideas, but I can’t say I have an extremely solid grasp on the intricacies of her overall ideals and objectivism. I guess I need to read more of her writings.
J
It’s too easy to dismiss or misunderstand her early life. Couple a powerful intellect with a devastating early life and don’t be surprised if a strong stand emerges.
Saw her decades ago at Reed. She calmly and cheerfully dissected hecklers. Beautiful.
In addition to Greenspan on Sunday and the rate setting on Tuesday, many of the major Wall Street firms have earnings pre-announcements next week.
Ben, there is no rule that says you can only have one Washington and Wall Street post per day.
Hello Everyone -
Check out the following video. It’s a CBS 60 Minutes interview clip with Greenspan. He claims that he “didn’t get it until very very late in the game”.
http://cosmos.bcst.yahoo.com/up/player/popup/?rn=49750&ch=334515&src=news
Wow! Good catch. Maybe now that Greenspan admits he didn’t “Get It” the reality may settle in with others in that strata. Can we hold out any hope that the Fed will hold the line and not cut rates because it will reward the moochers or, sadly, are they all moochers?
It’s interesting that this interview is airing two days before the Fed holds its most anticipated meeting in as long as I can remember. Given the sway he still holds, what are the odds the Fed will cut if Greenspan says something like “a rate cut right now could crush the dollar”? Maybe Easy Al will do the right thing for once.
Nah!
think “Li-globe-quidy”
it the newspeak for global rate cutting, I picked it up at WalMart, it was on sale.
Yesteday I spoke with a personal bankrupty lawyer who rents space in my office suite. She said that she is noticing a definite trend: Realtor bankruptcies. She said she has retained two former realtors for bk this month so far. One guy called to file BK because he got in an uninsured auto accident and smashed up his leased luxury vehicle. He smashed up a few other cars in the process and did I mention he also got charged with DUI? In my state the unwritten rule is that if you are uninsured YOU take responsiblity for the accident regardless of who is at fault. DUI with no insurance is now a felony as of January 1 2006.
Apparently some realtors aren’t selling houses like they used to and their expensive commission-to-commission lifestyle is making them go broke!
btw in the last week i have been at 2 family functions and was told by people at both that my decision to rent instead of buy was a good one. (now i feel better lmao)
one of those was by a cousin (by marriage) who is a mtg. bkr
oh how times have changed
This little gem just showed up on money.cnn.com. “Luxury for Middle Managers”. The whole thing is about how you should treat yourself to the good stuff - “it only costs a few bucks more”. And I quote:
“And if you end up spending an extra, say, five or 20 or 30 grand on all this stuff? The cheese, the wine, the things that made you smile? Dudes! Who needs a million bucks? Give me $25,000 and the will to spend it right, and I am in heaven!”
Wow. Now I know for a fact that this is not going to end well. At all. I’m already cryogenically numb to the pathetic whining of the former upper middle class who spent all their savings (and home equity) on a really great scotch and danish butter. This is beyond the pale.
Let’s try it with the correct URL attached, eh?
http://tinyurl.com/22kbn4
There were a time, in this country, when the affluent felt the need to prove to the world they deserved to be better off than the poor through the outward display of prudence, thrift and charity.
And then there were the debauched eras, like this one.
Yeh, I lived next door to people like that. He’s jeweler being sued for theft and fraud. They’re now divorced because she entertained herself with shopping until she couldn’t think of anything else to buy and decided to entertain herself with a new playmate, which the hubby came home from work and caught her in bed with. She now lives in a rental. He’s had a continuous garage sale all summer trying to keep the McMansion. Ah, the life of the not so rich and famous.
On yahoo home page, “Confessions of a broker”, a clip from ABC news.
Sept. 14 (Bloomberg) — Confidence among U.S. consumers held near the lowest in a year, weighed down by concerns that turmoil in housing and credit markets may force them to rein in spending….
Eroding home values and harder-to-get credit are prompting Americans to scale back the spending that accounts for two- thirds of the economy. A weakening labor market may further depress consumer sentiment and purchasing power.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aTTZL3sxzvm4&refer=home
Here’s a question for the more experienced (aka “older”) HBBers: Was there ever a time where you weren’t worried about inflation eating away at your savings?
As I’ve gotten to learn more about our global financial systems and central banks, it has really started to bother me (to put it mildly) that I have to make risky investments with my savings just to retain the purchasing power I originally had. I’m relatively young (28) and perhaps it’s just that the wool is just being pulled from my eyes, but has this always been the case, or is this a somewhat recent development?
I just can’t seem to understand why everyone accepts that the purchasing power of their dollars will erode over time, and can’t see that the gov’t inflation numbers are cooked and one needs to net close to 10% just to keep even. Obviously this is related to the removal of the gold standard in the US, so has this only been a concern since 1975? Why does this not bother more people? Is it because few people in this country are saving outside of 401ks and other tax-favored brokerage accounts?
J
Here’s a question for the more experienced (aka “older”) HBBers: Was there ever a time where you weren’t worried about inflation eating away at your savings?
Yes, before I understood the repercussions of central banking and fiat money.
Can you elaborate on that, Toast?
I think he’s saying that “ignorance is bliss”. Of course I’m taking a guess (and basing it on my thought process), but I would think that if you’re not aware of the system, and that inflation is an inherent part of it, you might believe that inflation is a temporary condition, and might even believe the government numbers. However, once you understand what fiat money is and how it works, central banking, reserve requirements, etc, the term “inflation” has different implications.
Am I close?
I need to lay off the caffeine. Too, many, commas, in, my, run-on, sentence =) Sorry
The 3 things to consider for long term investing…
1. Asian growth.
2. Peak oil.
3. Global warming.
For anyone who is not aware of it, the Motley Fool’s Macroeconomic Trends and Risks discussion board is rife with potential answers to this question, and is generally a great place for discussion of its subject matter: http://boards.fool.com/Messages.asp?bid=114903
It’s simple really. Inflation is simply an increase in the supply of money. When the supply of money increases, the demand for it falls as it does with any commodity. The value of money then decreases. A fiat-based money system is inherently inflationary as the urge to print more money is always present.
Inflation is really a tax on the poor. Those who get newly-created money first before the effects of increasing the supply of money are felt in the economy benefit. Those who have to deal with rising prices pay the price. For example, imagine that you suddenly have access to a billion dollars. You are able to buy whatever you want at low prices. However, eventually that money makes its way into the economy and prices rise accordingly to account for the increase in money. Those who never had access to the additional money are left to deal with its effects (higher prices). That’s why governments and bankers love central banks. They always get first access to the money.
With a commodity-based money, such as a gold standard, the supply of money is fixed and the value of money inevitably increases as a constant supply of money chases an ever-increasing amount of goods and services. This has some interesting effects that are completely foreign to us today such as slowing falling prices and salary decreases instead of pay raises. Also, credit must be pulled way back because money cannot be created out of thin air as debt. Only money on hand can be loaned out. It cannot simply be wished into existence as our current system does. The government and bankers are constrained the same as everyone else. That’s why governments hate commodity-based monetary systems. In order to pay for their pet projects, they are forced to extract wealth from the public via taxation instead of being able to extract it stealthily through inflation.
It all comes down to whether or not you favor the tortoise or the hare. Central banking and fiat money are the hare: booms and busts. Free markets and commodity-based money are the tortoise: slow and steady wins the race.
That’s helpful.
I hadn’t ever thought about this inherent advantage of access to pre-inflationary money.
Thanks.
Another question to ask yourself is why is counterfeiting illegal? You haven’t taken money from anyone, you’ve simply created new money. And why doesn’t the bank let us add a few zeros to our accounts every now and then? We aren’t taking money from anyone, we’re just adding to our own personal money supply.
Of course, if you give a minute’s thought to the effects of allowing people to make their own money on the economy, you quickly see the insanity of it all. And yet, that’s exactly what central banks do.
Another thing to consider is the relative ease in counterfeiting currency nowadays, compared to the past…
“With a commodity-based money, such as a gold standard, the supply of money is fixed…”
I used to work in a gold mine. Judging from the fact that we found some, apparently the supply of gold increases, too, over time. And extraction technology is ever improving… so a commodity-based currency is not necessarily free of inflation.
Somewhat OT, but as Tricky Dick said “the currency may be in its last throes”.
From Bloomberg: the Euro is rising, allowing the yuan to depreceiate against it while appreciating against the dollar. As long as the dollar falls faster than the yuan, the Chinese have the best of both worlds, and can start dumping the dollar.
http://www.bloomberg.com/apps/news?pid=20601039&sid=af6setTpU2SA&refer=home
Is this the end?…. say goodbye…
This is a great question.
You are right to be horrified. I’ve spent the last 40 years that way, since my early 20’s. I couldn’t (still can’t) believe people I encountered didn’t seem to be aware, or to care.
Probably best explained by the median IQ of 100…. can’t solely be attributed to phony numbers, magical thinking, deficient education, incuriosity (aka GWB syndrome). Takes self-responsibility to a whole new level….
Sept. 14 (Bloomberg) — Retail sales in the U.S. rose less than forecast in August, adding to the case for an interest-rate cut by the Federal Reserve next week.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a91V64SHMy4o&refer=home
Whoa, hang on - this needs to stop. Just two weeks ago the MSM was touting the strength of this year’s last minute “back-to-school” shopping. Today they report August retail sales were down.
Face it, the consumer is sputtering, at this stage - faced with unprecedented uncertainty - only the stoopid are still shopping and buying garbage. Yes, the CBs are trying to get money back into the hands of the stoopid so they can buy more crap - but it ain’t working. We’re about to see what happens when an entire global economy stakes its hopes on the hyper-consumptive habits of nitwits.
Memo to Corporate America: Crack open the check book and give your employees decent raises. Sure it might hurt your bottom line, but it will hurt even more when we stop buying your products altogether.
Greenspan admits fault ?
http://www.canada.com/nationalpost/financialpost/story.html?id=22f20613-98fc-4ab9-a310-07645ba9b2dc&k=70028
What is the movements of gold and oil prices telling us? Hyperinflation? PTB will keep the markets up at all costs. The market indexes are their report cards to the clueless, who unfortunately, outnumber the informed by a large margin!
But, but…
The talking head said the index was doing so good?
I listen to Dave Ramsey a bit in the evening as I am shuttling the kids around to their different events. While I agree with him on the no debt living, I think Dave was drinking some of the kool aid during the real estate boom. I do enjoy the calls of those upside down in their house. Dave usually pushes them to a short sale, which isn’t bad advice, but where I take exception with him is what he tells them to set the price at. Last night, a caller from Merced, CA who was a divorced mother with kids had bought the house for $410,000 and owed $410,000 and hadn’t been able to sell it. Most of her income was going to the house payment. Dave told her to list it as a short sale at $375,000. I sure wish he would get with reality as far as what the price needs to be set up to sell the thing. I would be more a fan of his if he would tell them to list the house at $205,000 and see if you can get some offers to take to the bank for approval.
WIth all that I have read on this blog, I am not sure that it is as easy as Dave Ramsey makes it sound as there may not be a bank to talk to if the loan is held by wall street. The “owners” of the house may not have any choice but to go through forclosure or bankruptcy.
He’s telling them right 205k on 410k is not going to happen the bank will take it back before that happens.
I guess either way they aren’t getting rid of the house and they may as well take Cramer’s advice and just walk away.
Last night on I read an article stating that 74% of the hedge funds reporting earnings yesterday posted losses. Hedge funds are not required to post earnings, and thousands of them chose not to. Isn’t that bad news for the stock market? Sheesh, I’ve got to find that article.
Here’s the article. It was posted by Ernest yesterday.
http://www.reuters.com/article/fundsFundsNews/idUSN1339735420070913
where art thou B.i.P.?
And Hoz?
And Deron
Pro-Wrester Ric Flair has his own mortgage brokering company
http://ricflairfinance.com/
Tired of getting the runaround and turndown from all the big lenders?
Now with Ric Flair Finance will do all the work for you.
Just complete a simple application and in seconds
Ric Flair Finance will connect you to a lender who is right for your financial situation.
“We Compete, so you don’t have to”
“Forget the rest. Just work with the best! Wooooo “
I guess he is now a jet flyin’, limo ridin’, kiss stealin’, wheelin’ dealing, mortgage brokerin’, son of a gun. WOOOOO!
I will ALWAYS be a huge Ric Flair fan. I wonder if Fifi will be his processor?
FRANKFURT, Sept 14 (Reuters) - British banks have been borrowing unusually large amounts from the European Central Bank due to the Bank of England’s reluctance to make extra funds available, a German newspaper reported on Friday.
http://www.reuters.com/article/bankingfinancial-SP/idUSL1464844320070914
NEW YORK, Sept 14 (Reuters) - Bank of America Corp (BAC.N: Quote, Profile, Research) on Friday won approval from the U.S. Federal Reserve for its $21 billion acquisition of LaSalle Bank Corp from Dutch bank ABN AMRO Holding NV….
The purchase would also add $59.1 billion of deposits, giving Charlotte, North Carolina-based Bank of America $674.5 billion. That equals 9.88 percent of the $6.83 trillion of deposits nationwide, according to the Fed order, just under the 10 percent federal cap.
http://www.reuters.com/article/bankingfinancial-SP/idUSN1421505920070914
“Thus, the recorded sales price was $340,900, but the actual price was 9% less.”
IDIOT!!!! You have to pay property tax on the higher recorded price. Why don’t you people get an education? DUMB,DUMB, DUMB…..