Bits Bucket And Craigslist Finds For October 31, 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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Buffett Testifies That He Saw Early Signs of Freddie Mac’s Woes
By David S. Hilzenrath
Washington Post Staff Writer
Wednesday, October 31, 2007; Page D03
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/30/AR2007103002292.html
Billionaire investor Warren E. Buffett sat in front of a video camera in Omaha, spelled his name for the record and minced no words as he testified for the government yesterday in its case against former Freddie Mac chief executive Leland C. Brendsel.
Brendsel is accused of presiding over accounting manipulations and running Freddie Mac in a reckless manner. Buffett, one of the most successful and revered investors, sold a huge stake in the mortgage funding company before the manipulations came to light, and the government wanted him to explain why.
Warren Buffett says he was worried by a Freddie Mac investment unrelated to its mission and its forecasts of mid-teens earnings growth.
Buffett said he was troubled in part by a Freddie Mac investment that had nothing to do with its business.
“I follow the old dictum: There’s never just one cockroach in the kitchen,” Buffett said.
http://business.guardian.co.uk/story/0,,2202020,00.html
I should pay more tax, says US billionaire Warren Buffett
What’s stopping him from writing a check to the Treasury?
Nothing is stopping him. His point is that he believes everyone at his level of income should pay the same rate as the rest of us. One person’s contribution would only be a drop in the bucket–even if he is one of the richest men in the world.
I do not care what WB believes. I care only about what he does. One of the things that he is NOT doing is cutting extra money to the IRS. When he was asked if he would like to pay more taxes he REFUSED to say he would like to do that.
WB’s point just flew over your head.
Of course he could give all his money to the IRS, leaving only the rich people that would never do that with any money. And since government is owned by them, he would basically be giving his money to them. Might as well keep it until someone wakes up and make people with his income pay their fair share, which is basically his current stance.
Ya but he’s cutting huge checks to charities that bypass the parasites in Washington. Warren B is okay in my book. I heard him say that he gave his kids enough money so that they could do anything they wanted, but not enough to do nothing.
My lib family gives me a hard time because I advocate for private univerities and remind me I went to public ones. Thats not hyprocritical, its just smart. The money they’ve taken, I had no choice about it. All I can try to recoup as much as I can, and this gives me more resources to fight for the right causes.
“His point is that he believes everyone at his level of income should pay the same rate as the rest of us.”
As they should. This perversion of capitalism needs to come to an end very quickly. These creeps have been defrauding the US Treasury and leaving us to make up for it for 26 years now.
Not to mention those mysteriously powerful entities called corporations, which seem to gather more and more rights (and tax breaks) as the average citizen is shorted time and again.
So start your own corporation. It’s not rocket science.
Right! the corporations now exist as if they are human beings with the same rights as an individual citizen. They do NOT have the same rights as a citizen. They are to be controlled and regulated by the people. Sadly this is not the case.
They are to be controlled and regulated by the people.
OMG they’re controlled and regulated by aliens?
Just tax the snot out of them. If they no longer wish to benefit from the advantages of incorporation, then go to a sole proprietership.
Thom Hartmann’s book “Unequal Protection” provides a good history of the perversion of the 14th Amendment in the Gilded Age, when railroads stocked the courts with judges who ruled that corporations are “persons” with rights equal to humans. Many, many more lawsuits were brought by corporations than by humans, seeking protection under the 14th Amendment. The Santa Clara Railroad decision was a fraud.
“OMG they’re controlled and regulated by aliens?”
no not by aliens either i’m afraid. that probably would have been better than the situation we’re in now.
In case you haven’t been paying attention, the corporations (see Banking, Military, Oil, Big Pharma, Big Agri) pay off our House of Congress, and our Executive branch,our State Governments ‘legalized’ bribery. and in case one hasn’t noticed they control our airwaves, news and information.
What does this have to do with the Housing bubble? Alot. perhaps there should have been regulations in place to prevent these unfair lending practices. Perhaps there should be regulations in place to prevent these slimy hedge fund activites which threaten our well being. Unless we take back our government this kind of s@it is going to get worse. I hold out little hope.The sheeple are asleeple.
A book? Think? Faux Noise and Larry Kudlow do all that for me…. /sarcasm off
the corporations (see Banking, Military, Oil, Big Pharma, Big Agri) pay off our House of Congress
and my original point was: Since the advantage is with the corporations, then incorporate! There’s nothing stopping anyone from doing so. There are many benefits.
And if everyone incorporates, the playing field will be leveled. So to speak.
so to speak yeah.
“and my original point was: Since the advantage is with the corporations, then incorporate! There’s nothing stopping anyone from doing so. There are many benefits.
And if everyone incorporates, the playing field will be leveled. So to speak.”
That’s just silliness. These super corporations stomp out start ups like unwelcome ants at a picnic. You’re naively assuming the competition is fair.
Not really. And once you build your own company, there’s no going back.
Ok troll. Tell us how you “built your company”.
[with my troll fangs dripping]
1. Got a software idea. (My last was hardware; that requires raising a ton of money and you spend too much time on investors.)
2. Built a product.
3. Sold product.
4. Customers ask for improvements. They also get pissed about bugs.
5. Built improvements. Fixed bugs.
6. Sold to other customers, for more money because of improvements.
7. Go to 4.
It’s a process, but it’s quite rewarding. And it gets you past complaining about evil corporations, unless you’re evil of course.
It’s a new world out there. There’s no reason to work for a monster like our fathers did. The trade-off is that you must have enough saved to ride out unsteadiness in your paycheck, which can also cause some lost sleep.
So you mentioned nothing about this “corporation”. What is the name of this “corporation”. How many employees. Revenues?
Back up your anecdotes with evidence my man.
Alas, although Ben could figure out my ID (I’m sure he has better things to do, like cut his toenails) I prefer a level of anonymity while posting here for various reasons. So no more info about the my current company.
The last company went from 0-75 people over the span of 4 years. Among other things, it was a learning experience… as will be your first corp. But it gave me the bug, and there’s no going back.
Back to the topic at hand: If you think that corps have the advantages, then don’t let anyone stop you. But don’t do it for the monetary advantages, because the hours and stress are not worth the money. In fact, not even close.
You do it because you like building things.
You also do it because you think you can run things better than you currently see it done. You might also do it because you’re trying to leave the planet a teeny bit better than when you showed up.
[steps down from soapbox into loving arms of the men in the white coats.]
The more you type, the more skeptical we are.
The more you type, the more skeptical we are.
I detect “drooling envy,” to paraphrase a term from Ayn Rand. Amazing how a few weeks ago a lot of bloggers here were fans of Ayn Rand, yet you come onto threads against corporations. Corporations are not necessarily bad, just because they have limited liability. There are a few “evil” ones, but for the most part, corporations are the way to go. A friend of mine just incorporated. Those who knock corporations are more often than not the lazy people who have no gumption to use the system to protect their wealth, then they spit venom at those who have the gumption. Go figure!
“Those who knock corporations are more often than not the lazy people who have no gumption to use the system to protect their wealth, then they spit venom at those who have the gumption.”
Another completely baseless assertion with absolutely no merit.
Bantering…. whats worse is typically it is the troll behind both names.
I think, actually, he does write large checks because of the way he structures his business. If I recall correctly, Bershire Hathaway is one of the single largest tax payers in the US. Most large US coporations manage to avoid most taxation because of how they’ve structured themselves.
At any rate, his material point is that unearned income in the form of capital gains and dividends are taxed at significantly lower rates than earned income. If you want people to work, payroll taxes should be significantly lower than any unearned income. The current tax code directly rewards people who earn a living off of the efforts of others.
I’m not saying that we should hike up the dividends tax - I think we should tax consumption and let people earn money in any legal manner possible. As it stands today, though, the tax code encourages speculation and discourages work.
Sounds like you’d like to get rid of that exclusion for home sale profits (the $250k/$500k). Profits from a home sale are taxed at 0% for most people. That’s money people didn’t “work” for. Should that be the first loophole to go?
I’m all for getting rid of exclusion for home sale profits! And no, I’m not an “angry renter”. I own a (paid for) home in Sunnyvale, California.
In general, I don’t support tax hikes, but I do support eliminating deductions–including Mortgage Interest Deduction.
The mortgage deduction should go as well. All loopholes should be closed and the rate would come down for all of us (theoretically)…
No if was the 2 year rule helped fuel this mess but say if it was changed to: you must live in your primary residence continuously for the last 5 years then cap gains will not be taxed…that would be fair to everyone.
If we got rid of income, payroll, and cap gains taxes, and replaced it with consumption tax, first of all, the price of stuff–and food–would go up, meaning that houses would go down proportionately, which is probably a good thing. (We buy too much stuff and food anyway.) Furthermore, if there were a sort of transfer tax, equivalent to the consumption tax, on real property and investments, the transfer tax bill when a house was sold would rather dampen the enthusiasm for overpaying on houses–or mutual funds or whatever.
Another thought–property taxes and capital gains taxes combined with a government policy of inflation are really a kind of ruinous stealth tax, but transfer taxes and consumption taxes expressed as a fixed percentage of the purchase price will float with the value of the currency and the wealth of the district. Thus, the old and the young, the newcomer and the native, are treated evenly.
Furthermore, if there were a sort of transfer tax, equivalent to the consumption tax, on real property and investments, the transfer tax bill when a house was sold would rather dampen the enthusiasm for overpaying on houses–or mutual funds or whatever.
I’m confused, in our state we pay a transfer tax per thousand on all houses and property that’s sold. The more you sell your house for, the more tax you pay. Is this what you’re talking about, or is it something else.
I’m confused about gains on home sale. I thought that it was taxed at 0% only ONCE ($250K single, $500K married); thereafter it was taxed at the capital gains rate (as long as you lived in it 2 yrs+). In other words, you only get a onetime tax-free exemption.
Also, even if you sell your current house with the new rules, if you sold a previous house under the “old” rules where you had to keep rolling the gain forward, you have to include the previous gain into the total gain. This is a bummer by the way. My accountant did this when I sold my house in 2005. I had the gain on that house PLUS the gain on the house I sold in 1989. That pushed me over the exemption limit.
It wouldn’t be “fair” if you get a tax exemption each time you sell a house now if you still have to count the house you sold prior to the change in the gain calculation.
I hope this makes sense I found it quite confusing. Any info would be appreciated.
Thanks.
“I think we should tax consumption and let people earn money in any legal manner possible.”
So, an individual makes a billion dollars a year, and buys (paid in cash) a $200,000 car, pays 25% “consumption” tax ($50,000), and J6P making $30k a year buys (takes out a loan with interest) a $30,000 car, and pays 25% “consumption” tax ($7,500).
Sorry, but a “consumption” or “fair” use tax only benefits the wealthy… the ratios of billionaires to J6P’s just don’t equate.
A “flat” tax on income and no “tax deductions” is the only solution in everybody paying their “fair share.”
I tend to agree. Also, from a practical matter, a consumption tax is hard to enforce.
Also, we can get closer to the goal of a flat tax by simply and gradually eliminating tax deductions. (I don’t get any of them anyway because of AMT. Even mortgage interest goes away, via a mechanism separate from AMT, when income exceeds 150K.)
I’d rather the government explicitly write a check to people that it decides need help than to give tax deductions. It would make it clearer to the recipient that they’re receiving a gift from the taxpayers of the United States of America.
Nothing is stopping him. He’s a great investor, but his stance on this is totally hypocritical. Sell all your Berkshire stock, pay the capital gains, and then put it all in CD’s where you’ll pay probably 50% tax on the interest every year. Problem solved.
If he’s trying to make the point about dividends and capital gains being taxed lower than earned income, that’s fine. Personally, I haven’t seen that yet from him. That’s a legitimate political debate. In the meantime, nothing is stopping him from practicing what he preaches.
Not just capital gains. Social Security is capped at around $100k, so his effective tax rate is lower compare to someone making less than $100k.
All the more reason to remove the cap. It is outrageous that I pay as much into SS insurance as Buffet and Bill Gates.
First of all, many lesser execs, like Steve Jobs pay less than you in Social Security tax. You should be outraged that Steve Jobs, with is $1/year salary, pays NO social security tax.
Second of all, SS *benefits* are capped, too! So it’s completely fair.
Then how do you address the underfunding and raiding of SS?
Eliminate or raise the cap.
Arguable about the “fair” part.
Interesting to look at how the SS ret benefit is actually calculated. The calculation is relatively straightfoward. SS website has fill in the blanks vs actually showing the formula.
If I earn the SS wage base max (which increases every year), and you earn say, 1/2 the max, I (and my employer) will pay a total of Y into FICA, while you will pay Y/2. Suppose we both crank it out at that ratio for the 35 years of work used for the SS benefit calculation. Your benefit will be far more than 1/2 of my benefit because of the two stepwise breakpoints in the benefit calculation.
Three linear factors (slope of the lines) over portions of the avg wage last time I looked, IIRC: 90%, 40%, and 10%. I haven’t looked at where the avg wage breakpoints are where those factors kick in for awhile. I estimated one time that by not working and paying into SS for like the next 10 years, my benefit was reduced by some very small amount. Amounts used in the avg wage calculation over 35 years are inflated over time.
Ooops, mistake, didn’t mean slope of the lines. The factors are constant (slope=0) over the given region and jump at the avg wage breakpoints.
You address the underfunding and mishandling of SS by getting rid of the program. Give the people back the money the put in and stop taking money from my cheque. Consider it a free loan to the goverment from the greatest generation that thought a government sponsered Ponsi scheme was an awesome idea. My beef isn’t that Steve Jobs doesn’t pay enough SS, its that everyone else pays it at all. Good for Steve Jobs, he’s stickin’ it to the man.
Ok, quick link to show relevant calc details. This particular one is for those born in ‘45, but it gives you the idea. Factors have changed.
http://www.ssa.gov/pubs/10070.html#estimate
Calculate Avg Indexed Monthly Earnings based on highest 35 years of indexed earnings.
First $680 mult by 90%
Amount from $680-$4100 by 32%
Amount over $4100 by 15%
Sum the above to get Est Benefit at 66, Full Ret Age
Mult by 75% to get benefit at 62
So,
AIME = $1,000 gets $714/mo
AIME = $2,500 gets $1194/mo
AIME = $5,000 gets $1841/mo
Bottom AIME put 5x top AIME, and 2x middle AIME into the system.
Cricky - you all apparently are looking for perfection.
If Warren Buffett sells his stock then what does he give to his charity work?
The reality is that warts and all, Warren Buffett is one of the few people who has managed to accoumulate large amounts of wealth without selling his soul out in the process. We need more business leaders like him, not less. He brings up a very valid point about the tax code when most CEOs are busy pillaging their own companies.
Nope, not looking for perfection, since you won’t find it with me. However much he’d have, it would be billions. Would that be a good business decision though is another matter.
I agree with what you’re saying about him. And that we could use more like him in business and govmint. The effect of the tax code is a legitimate discussion and could definitely use some tweaking.
If Warren Buffett sells his stock then what does he give to his charity work?
Wait… his charity work is more important than him paying taxes to fund this bloated goverment? I thought the government knew best how to spend the money in the interest of everyone?
Plenty of inefficient and bloated charities, and the pay is better at the top, trust me.
I think it is so funny how people idolize Warren Buffett. He has never started a company himself that actually made something useful. He has made his money playing the stock market. I have a lot more respect for a average hardworking person.
The biggest companies he has acquired are in INSURANCE!!!! Do you respect INSURANCE companies??
Check out the book Perfectly Legal if you want to read about taxes; what they were intended to do, and what they actually end up doing. How the legal crooks do it.
Galveston County: A Model for Social Security Reform
http://www.ncpa.org/pub/ba/ba514/
The current debate over Social Security reform is reminiscent of the discussions that occurred in Galveston County, Texas, in 1980, when county workers were offered a retirement alternative to Social Security: At the time they reacted with keen interest and some knee-jerk fear of the unknown. But after 24 years, folks here can say unequivocally that when Galveston County pulled out of the Social Security system in 1981, we were on the road to providing our workers with a better deal than Franklin Roosevelt’s New Deal.
Upon retirement after 30 years, and assuming a 5 percent rate of return — more conservative than Galveston workers have earned — all workers would do better for the same contribution as Social Security:
Workers making $17,000 a year are expected to receive about 50 percent more per month on our alternative plan than on Social Security — $1,036 instead of $683. [See the Figure.]
Workers making $26,000 a year will make almost double Social Security’s return — $1,500 instead of $853.
Workers making $51,000 a year will get $3,103 instead of $1,368.
Workers making $75,000 or more will nearly triple Social Security — $4,540 instead of $1,645.
Galveston County’s survivorship benefits pay four times a worker’s annual salary — a minimum of $75,000 to a maximum $215,000 — versus Social Security, which forces widows to wait until age 60 to qualify for benefits, or provides 75 percent of a worker’s salary for school-age children.
In Galveston, if the worker dies before retirement, the survivors receive not only the full survivorship but get generous accidental death benefits, too. Galveston County’s disability benefit also pays more: 60 percent of an individual’s salary, better than Social Security’s.
Does the Galveston system pay the same length of permanent disability payments as Social Security? The difficulty with Social Security is that it covers people who are permanently disabled - many who were born with disabilities and have never paid into the system. Does Galveston cover its citizens who are born in the county to a non-county worker with, say, severe mental retardation? Social Security covers that person - it’s a safety net for everybody.
And Reuven, I never thought about the fact that individuals who make all their income in dividends/capital gains don’t have to pay Social Security taxes. I wonder how much that cheats the system.
It also covers children of deceased.
The number of people that would agree to raise their own taxes is few and far between. Buffett and his friend Bill Gates are two people who believe the tax system should be more equitable, and have argued for raising some of their own taxes, for example the “inheritance tax” (which Bush managed to dupe Nascar Dada into worrying about)
I’d also support raising taxes, which would include my own taxes, in the form of eliminating dependent tax deductions, mortgage interest deduction, and exemptions for profit on sale of home, except for the money that’s spent on another home within, say, two years.
(Disclaimer! I own BRK.A stock
)
“The lowly cockroach can teach us a few things about how to structure and regulate markets in order to better avoid systemic risk. The cockroach has existed over hundreds of millions of years, surviving as jungles have given way to deserts and deserts have been turned into cities. And it has survived with a simple, coarse defense mechanism. The cockroach does not make its escape by seeing, hearing or smelling. All it does is move in the opposite direction of any gust of wind hitting its legs.”
Richard Bookstaber
A Cautious Market Awaits Fed’s Move on Rates
By Michael M. Grynbaum — New York Times
Published: October 31, 2007
http://www.nytimes.com/2007/10/31/business/31econ.html?_r=1&ref=business&oref=slogin
The market played it safe yesterday, but will the Fed follow suit today?
That was the question on Wall Street’s mind as investors sold off oil, driving the price down by over $3 a barrel, and generally hunkered down in expectation that the Federal Reserve will fulfill the market’s wish and cut interest rates by a quarter-point this afternoon.
“They’ve laid their bets,” said James Paulsen, chief investment officer at Wells Capital Management. “People now are going to wait and see what happens.”
It was a day for traders to minimize risks. Crude oil prices retreated from record levels, falling $3.15 to close at $90.38 a barrel after Goldman Sachs advised clients to pocket profits from last week’s rally. Stock markets dipped, with the Standard and Poor’s 500-stock index closing down 0.65 percent, or about 10 points, at 1,531.02.
Traders are expecting the Fed to cut its benchmark interest rate by a quarter of a point, to 4.5 percent, making it slightly less expensive for banks, businesses, and consumers looking to borrow money. That would ease investors’ concerns that the Fed in not indifferent to the continuing risks of a credit squeeze.
But analysts say a cut has already been priced into the market. If central bankers are persuaded to keep rates steady because they think the economy has reached equilibrium, stocks could be primed for a sell-off.
“…In 2007 the housing bubble finally burst, causing credit to crunch as the market struggled to out the owners of dud mortgages and mortgage-linked contracts. The Fed reacted with cheaper dollars, which did precisely nothing in that regard. Credit risk fears remain unabated. But the market duly dumped dollars for harder assets, pushing the euro, shares, oil and gold to record dollar prices.”
Financial Times
Oct 29, 2007
History’s warning about the price of money
http://tinyurl.com/3bmwhk
Guess I’ll find out today if my November gambling puts are confetti or maybe a nice winter vacation.
Testimony of Richard Bookstaber
Submitted to the Congress of the United States, House Financial Services Committee
For the Hearing: “Systemic Risk: Examining Regulators Ability to Respond to Threats to the Financial System”
October 2, 2007
“…We observed this in the subprime market meltdown. Subprimes were included in various CDOs along with other types of mortgages and corporate bonds. Like a kid who brings his cold to a birthday party, the sickly subprime mortgages mingled with these other instruments. The result was contagion between markets. Investors that have to reduce their
derivatives exposure or hedge their exposure by taking positions in the underlying bonds will look at them as part of a CDO. It doesn’t matter if one of the underlying bonds is issued by an AA-rated energy company and another by a BB financial; the bonds in a given package will move in lockstep. And although subprime happens to be the culprit this time around, any one of the markets involved in the CDO packaging could have started things off….”
caution pdf
http://tinyurl.com/2vcv6n
I would like to see a Federal Reserve statement that read, “Ok, we gave you enough moneys last time; now that you are out of trouble, we have to worry about inflation and maintaining the dollar.”
Flashback to 1 Year ago, October 2006 the dollar index was 92503 today it is 76740.
I’ll bet Bernanke wishes he could do that.
Last post afore I go fix more potholes as I prepare for winter.
“The consumer is getting squeezed right now between falling home prices and rising oil prices,” said David Wyss, chief economist at Standard & Poor’s in New York. “They have got to slow down. It is just a question of how much and how fast.”
This is the stated reason for lowering Fed Fund rates.
Mssrs. Bernanke et al are fully cognizant that a lowering in the Fed Funds rate affects a grand total of $45B. They are also aware that the price of oil and other important commodities will rise as the dollar gets pummeled. As for the beleaguered home owners, will this reflect in lower ARM payments? NO. Will it make it easier for wanna be home owners to get a loan? NO.
This morning $60B in super prime CDOs became worthless. Super Senior Tranches the highest rated and generally regarded as the most secure are offered at $0.30 on the $1, the current bid is $0.10. Mark it to Fantasy, Mark it to model - it does not matter. Reality bites the big one.
November 1st could be A.P.R.il Fools Day
Hoz, if you’re still around, where are you getting your CDO/Tranches info from??
probably Markit
I’d like to see you get that vacation txchick. Two headlines I’ve seen today have said strong GDP growth and higher than expected non-farm payroll growth. Could they be setting up the data for no change in the rate?
How about 25 bp and a statement implying that further cuts will be subject to evidence of signfiicant economic weakness? I doubt that would be well received!
My thought exactly hobo. I think the pressure to hold is equal to the pressure to cut.
Fed funds probabilities implied by futures:
15% prob of 0% cut
75% prob of 0.25% cut
10% prob of 0.5% cut
IIRC, your bet was no cut… and the odds have gotten better over the past few days. Presumably, the bet is already in the money.
Good luck in any case.
The reaction is the thing. Maybe the market has priced a 50 bp cut. Yes, it’s slightly in the money.
Poor them… only .25%…
“Guess I’ll find out today if my November gambling puts are confetti or maybe a nice winter vacation.”
Wow, talk about extremes. Hope you get the vacation.
Guess I’ll find out today if my November gambling puts are confetti or maybe a nice winter vacation.
I’m in the same boat.
P.S. If you want to read the article in it’s entirety, simply copy the title, open google, go to news, hit the business tab on left, and paste the title into the business browser. Viola!
Smiles,
Leigh
Many people often mistake the viola for the violin not realizing that the viola is slighly larger with a more full bodied timbre. I hated playing the viola because all the good music is written for the violin.
And here I thought the viola was a flower….
Just sat no to domestic violins…
Q. What’s the difference between a violin and a viola?
A. A viola burns longer.
p’cola - priceless!
Voila!
Hello,
I recently read Peter Schiff’s “Crash Proof”. To put it mildly I am spooked.
DOes anyone on this forum have experience investing with Schiff’s firm - Euro Pac? Are they good? Is it just like putting money in a mutual fund?
thanks.
I’m not an investor with EuroPac but I would say, no, it is not just like a mutual fund. I believe you would have an account with his brokerage firm. His firm recommends which stocks you should buy and earns the commissions on the trades. Schiff focuses on dividend-paying foreign stocks, such as Candian energy trusts. He also has many clients buy gold through the Perth Mint.
Check out his web site and listen to the radio archives. His show is really good.
Better yet, check out some of the video archives from six months or a year ago to see how right he turned out to be versus how wrong.
The main reason I’m not an investor is that I’m already heavily invested in most of the things he recommends.
I think we are headed into a “possession is 9/10’s of the law” economy.
Let me ask you a question…
Do you trust yourself, more than others?
If so, just buy physical Gold and be creative as far as your hiding spot is concerned.
But if the gov’t decides to confiscate gold, is it still money? If you can’t bring it out of hiding to spend, you might as well be hiding a rock (or worse, paper money).
What if your Gold was all overseas already, in the best hiding place you thought of, as you had planned for this eventuality…
Like I did?
I love this country, but don’t trust it.
And confiscating things or banning things, only makes people want things more (see coors beer, east of the Rockies in the 70’s, or Cuban cigars presently)
you might as well be hiding a rock (or worse, paper money).
Personally, I prefer scissors. (Sorry, I’m currently cracked out on all the Halloween candy that is floating around).
Run with em’, I double dog dare you~
Confiscate my gold? They’d better have more guns than me.
I concur with this comment - you can pick enough out of his book and his radio show to invest on your own. Also check out James Puplava’s radio program (www.financialsense.com) weekly. Very very good and very very scary! If you have 50k to invest with Puplava, I’d go with him over Schiff.
I have invested with them (for about a year now). You’ll have to make your own financial choices, but as for me I am quite pleased with having done so. As for the value of the investments, they shot up, dove back down again to near break-even in August, and have since shot up again to the tune of 30%, just since August. Seems pretty good with the 20% decline in the USD during the last year. Has also outperformed DJ average quite handily.
The foreign companies they guide you into tend to be dividend-paying conservative companies, but there’s a few modest speculative plays in there if you want.
Would I recommend them? Sure. But it’s geared toward dollar bears, so keep that in mind.
As for the way EuroPac works, it’s not a mutual fund. You send them money (actually to their clearinghouse), they recommend a list of stocks, you agree or disagree to those stocks, and if you agree, they purchase them for your account. You can log in to see what’s in the account, but transactions are made by them. If you call them up they can explain it to you. If you call them you may get the “sell” from them, but you won’t get the “hard sell”.
I invest some with him. he specializes in dividend paying stocks that hopefully haven’t been discovered by the masses. I only use them to invest in foreign stocks on foreign exchanges that aren’t available here.
They charge a percent of each trade and are more expensive than a self service brokerage account so I do all my regular trades through another account. I have done pretty well with them and would recommend them.
Alan
I have invested 120k with them.. so far as the market drops so does my investments.. all foreign dividen stocks.. 3% charge on new money.. take your time and wait till a big drop then buy in.. got in in aug and lost 16k on the big drop and now almost even.. I would invest with rich tascono http://www.piggingtons.com.. he has made me more and did not drop when the market fell.. I do like the ideas in crash proof.. I also purchased perth mint and merck currenancy fund.. 50% hedged against dollar and the rest in cd’s
Big, Fat…
http://www.msnbc.msn.com/id/21548791/
(Posting problems)
Does anyone have investing experience with Peter Schiff’s firm - EuroPAC?
thanks.
I love Yun’s comment in this story. He is an amazing guy, there is no statistic and no evidence of any kind that he can’t interpret as a plus, as a sign that things are good and getting better.
I know this is some kind of phsychological issue, but also quite impressive in it’s own way.
Yun is spokesperson for the NAR. It is his job to place a positive spin on every news item relating to real estate. If he did not do this then the NAR would remove him replace him with someone else.
Yep its like “hey, things will get better when they get better, and I think we are close to getting better”
“More than 100,000 homes sit on the market in the Los Angeles area, giving it the country’s biggest housing inventory, up 21% from last year. And sellers are cutting prices to unload their homes — nearly half of all currently listed homes in L.A. have reduced prices, whether they’ve been on the market for a few weeks or for months.”
And Hollywood is about to go on strike and the defense industry’s run has been good for profits, but one can easily see the endgame there.
So take away it’s 2 biggest profit centers and combine it with bulbous inventory and what you get?
“Day Of The Loan Cost”
(1939 novel by American author Nathanael West, set in Hollywood, California during the Great Depression, depicting the alienation and desperation of a disparate group of individuals whose dreams of success have effectively failed.)
http://en.wikipedia.org/wiki/The_Day_of_the_Locust
The day of that locus is over?
Good one~ ha
As that book’s hero might say,”Interest rate cuts: the cause of - and solution to - all of life’s problems.”
Tighter lending standards, which are dampening sales, aren’t helping housing inventories, though the NAR thinks mortgage availability is starting to improve. “Once the pent-up demand begins to move, we’ll see housing supplies begin to ease and then prices will edge up,” said NAR Senior Economist Lawrence Yun in a statement issued Oct. 24.
Possibly in 2012
tighter lending standards … still no sign of that in Europe, on the contrary. I get the impression that the banks that are getting help from the BOE and ECB are getting even more reckless. Crazy lending is still dominating the scene which shows that the RE mob, banksters and politicians have not learned a thing. We need some SERIOUS casualties before they wise up (besides, why wise-up if you can cause billions of losses for the company and can still cash a couple hundred million when you are fired?)
And yet, we’re hours away from Bernanke dumping a fifth of vodka into the punch bowl.
in the punch bowl? More like dumping vodka in the airco system, hoping that when the cops come to stop the party that got out of hand looong ago, they won’t notice because of all the intoxicating fumes.
A fifth of vodka into the kool-aid.
Can anybody PLEASE show me the evidence for this pent-up demand???
pent-up demand???
I believe its just the opposite….Easy money over the past several years “Front Loaded” the buyers IMO….
“Tighter lending standards, which are dampening sales, aren’t helping housing inventories, though the NAR thinks mortgage availability is starting to improve. ‘Once the pent-up demand begins to move, we’ll see housing supplies begin to ease and then prices will edge up,’ said NAR Senior Economist Lawrence Yun in a statement issued Oct. 24.”
Evolution of a FunYun statement…
NAR President Pat V. Combs: “Lawrence, the J6P sheeple are beginning to show signs of capitulation, and their braying is keeping me awake. Please do something about it.”
Larry FunYun: “Consider it done, ma’am. I shall issue posthaste a statement that will surpass the wildest disingenuities of my predecessor.”
Pat Combs: “Do you think any of these pitiful commoners would understand us even if they could overhear our conversation?”
FunYun: “A most excellent joke, ma’am.”
Pat Combs: “A dash more vermouth in my next martini, Lawrence.”
FunYun: “But of course, ma’am. My sole wish is to serve the NAR.”
I luv (fun)Yuns for breakfast.
Can people who are dumb enough to take Yun’s mindless pronouncements at face value still qualify for mortgages to buy $500,000 homes?
I noticed that rich dad poor dad Kiosaki is promoting buying silver in the face of this recession.
http://finance.yahoo.com/expert/article/richricher/51335
This worries me, because I agree with him, and he’s normally wrong….
Even broken clocks are right twice a day…
Nice of him to just gloss over the housing explosion in that article.
I read his book, and although I do agree with some of the ideas presented, it all boils down to essentially one strategy. Leverage land/housing, and then leverage some more. Leverage until you can’t see straight, and then, when everything seems hopeless, take on even more debt.
The thing that I can’t argue is that for the past ~15 years, his strategy would have been very effective. However, long run, I think that we will be shown the wiser.
I hope.
It’s the Cramer approach; tell people to buy 100 different things. At least one or two of them will be right.
Y’all can have silver … I’m done with it. I sold last week. It’s done nothing all year, seems poorly correlated with gold, if at all, and there are serious questions as to whether the investment “silver” out there is backed by any physical at all.
Silver seems to be riding on the hope of an exogenous event, like ASEAN countries going on the silver standard. Whatever. It’s an industrial metal sailing into an economic headwind. Toodle-loo.
I hold physical silver as a hedge. I also play the nicely volatile miners both ways.
Remember that weird thing called photographic film, that nobody uses anymore?
Used to consume a s-load of Silver, once upon a time…
Things Change
Good point!
Also what about the gajillion Silver Coins the U.S. Mint made from 1794 to 1964?
In just one year: 1964, 545 Million Troy Ounces of Pure Silver were used to make Dimes, Quarters & Half Dollars…
Do you think that Silver vanished into thin air?
And that was just one year’s output…
Silver is almost an industrial metal and barely a precious one
And what about all the new uses for silver and its antibiotic properties? Now used in pens, underwear, sox, and there are a few clothing lines with silver threads for the germ-phobic.
But think about the reason that silver was taken out of coins in the first place: it became too valuable compared to the face value of coinage. Though it is not much more difficult to harvest silver out of physical supplies than gold, it is not as cost effective, therefore it is done little (why would you bother putting the same amount of work, and more money into harvesting silver when it is trading at 54 or 55 to 1 with gold?) Except for silver in X-Rays (which is STILL being used as only few hospitals / clinics have gone to all digital) and in flatware, most of it is gone, in the trash, wherever, and probably will never be seen again. When it is used as an antimicrobial, in teenie, tiny amounts at each interval, it does add up to a big number, eventually, which, yes, does “disappear”. Silver does have historic monetary value, though not as strong as gold. I agree with the assertion that it is borderline industrial, and barely precious. Though, demand is increasing, and production isn’t, and stockpiles are dwindling, quickly. So, though I don’t see it happening tomorrow, I do think there is a possibility of a silver shortage. Plus, coins are pretty. That’s why I have some. No bogus silver ETF’s for me.
ps: My single silver stock (a mining company) that I own has done 31% for me in the last month and a half.
Procter & Gamble Co. said Tuesday that it would raise prices 5% or more on certain products over the next several months as it passes along some of its rising costs for oil and raw materials….
http://tinyurl.com/3c2h8v
Not to worry. I’m sure the 1/4 of one-percent cut by the Fed will make everything OK.
Goldilocks lives!!
No………Goldilocks is dead…….she found herself contained and couldn’t cope.
More good inflation news… But hey, the “core” rate is contained, don’t ya know.
_____
Kraft Profit Drops 20 Percent on Higher Dairy, Grain Costs
By Chris Burritt — Bloomberg News
October 31, 2007
http://www.bloomberg.com/apps/news?pid=20601087&sid=aGRwqq3e0uuI&refer=home
Kraft Foods Inc., the world’s second-largest food company, said profit dropped 20 percent on soaring dairy and grain costs.
Third-quarter net income fell to $596 million, or 38 cents a share, from $748 million, or 45 cents, a year earlier. Revenue increased 9.8 percent to $9.05 billion, the Northfield, Illinois-based company said today in a Business Wire statement.
Kraft, the maker of Cracker Barrel cheese and Honey Bunches of Oats cereal, didn’t raise prices enough to counter wheat costs that climbed 82 percent in the third quarter. Chief Executive Officer Irene Rosenfeld, who has vowed to accelerate growth since taking charge in 2006, spent more to market new varieties of DiGiorno frozen pizza, Maxwell House coffee and Barnum’s Animals Crackers.
Kraft is “slow growing and squeezed by costs,” Donald Yacktman, who oversees $1.1 billion at Yacktman Asset Management, said yesterday. His Austin, Texas-based firm owns Kraft shares.
None of the food producers are going to make as much moneys as they made in the past. The American consumer has switched to generics, a lower profit. Profit shortfalls will also occur in the pharmaceutical industry where ever there is a reasonable generic drug. Huge profits will be made in pharmaceutical generic manufacturing.
any good plays on “inferior goods” manufacturers ?
especially food and H&B aids ?
Huge profits may well be made, but how many will die or be injured in the process. Generics are largely sourced from China and India, as are generic fakes, unregulated, with ingredients that can and do kill and maim.
“Chinese chemical companies made the journey to the annual show as well, including one manufacturer recently accused by American authorities of supplying steroids to illegal underground labs and another whose representative was arrested at the 2006 trade show for patent violations. Also attending were two exporters owned by China’s government that had sold poison mislabeled as a drug ingredient, which killed nearly 200 people and injured countless others in Haiti and in Panama.
Yet another chemical company, Orient Pacific International, reserved an exhibition booth in Milan, but its owner, Kevin Xu, could not attend. He was in a Houston jail on charges of selling counterfeit medicine for schizophrenia, prostate cancer, blood clots and Alzheimer’s disease, among other maladies.
While these companies hardly represent all of the nearly 500 Chinese exhibitors, more than from any other country, they do point to a deeper problem: Pharmaceutical ingredients exported from China are often made by chemical companies that are neither certified nor inspected by Chinese drug regulators…”
http://www.nytimes.com/2007/10/31/world/asia/31chemical.html?_r=1&hp&oref=slogin
So you’re saying that generic corn pops are from China?
Surprisingly, many foods now come from China. Check the apple juice next time you’re in a Kroger’s.
Check out Twinkies.
Apple juice I am aware of. Of course even name brand juice contains Chinese juice.
I SERIOUSLY WANT TO KNOW:
Other than apple juice, what is sourced in China? I will promptly never buy it again….
(Twinkies are evil regardless of where they are made: pure chemicals)
Agree. Pay more for organic. Not toxifying your body, and you know it comes from THIS COUNTRY. Shorter shelf life is the driver of this.
Kraft cheese was on sale for 2006 prices last week at Publix, as were Cheez-its. Apparently at 2007 prices, consumers stopped buying, so the manufacturers and the grocery store are trying to trim margins to up the volume. Either that, or Publix is trying its hand at a loss-leader, even though market research has shown (to the detriment of everyone frugal) that loss-leaders don’t work.
Publix seems to run a higher margin business than their competitors, so I suspect that the food companies blinked.
..
Check out Kraft stock today…
UP UP UP !!!!
Bad news is good news.
Party on sheeple !!
..
HEY even PAUL NEWMAN has got into the corporate act of making his sokarooni and vodka sauce with 2 ounces less then last week and the price is the same!!!!!
I’ll just hedonically switch from Pantene to Sauve
UK housing market teeters on the edge:
Oct. 31 (Bloomberg) — Nick Collins, an independent London real estate broker who’s had record profits every year since 2003, took a hit in September — and that may be bad news for a U.K. economy built on a housing bubble. Five of his 50 buyers pulled out of purchases, spooked by a run on mortgage lender Northern Rock Plc that left it 2 billion pounds ($4.1 billion) poorer.
http://tinyurl.com/2ycfvc
The most important thing to come away with, in regards to the Northern Rock bank run, is this…
It isn’t in the nature of the English to panic, and the withdrawal of perhaps 10 Billion Pounds certainly sounds panicky, to me.
Once you’ve slipped the bounds of whatever it is you fear…
More panic sets in, always.
Human nature never varies
aladinsane,
Why is the withdrawal of $10B from N Rock considered a panic? It looks to me that people are doing what they feel is in their best interest. I just can’t see the “panic” angle in all of this.
Roidy
taiwan housing market slipping:
Wednesday, Oct 31, 2007, Page 11
The nation’s housing market is on a downtrend after rising for the past four years as supply and turnover contracted in the third quarter, according to a report released by Cathay Real Estate Development Co (國泰建設) yesterday
http://tinyurl.com/25lqtm
A Halloween Double Feature
Trick or Cut?
http://www.stockmania.com/index.php?showimage=82
Lu’s Pitstop
http://www.stockmania.com/index.php?showimage=81
latest news from the currency depreciation front: official EU inflation number for october strongly increased to 2.6% (way over the ECB target, up from 2.1% previous month). Yep, the euro is falling too, just not as fast as the US$; the gold charts are telling the story.
The 2.6% number is coming from the Eurostart slizzards, if they admit it is above target something must be seriously wrong. On the bright side, offical inflation in the Netherlands is still only 1.3%, despite nearly everything necessary for life going up by something like 10% per year. I think Eurostat needs to borrow some manipulative criminals from another agency to make their numbers look good too. The remaining question is if the ECB will decide to totally ignore inflation for the next years, just like the FED.
Moin,
AMEN to your comment NHZ.
At least they have promised to be vigilant……..
What a farce…..
They really should adopt the US way of reporting….
Despite rising worries about commodity prices, the GDP price index, the broadest measure of price changes in the economy, rose just 0.8% annualized, matching a nine-year low. Inflation hasn’t been lower since John F. Kennedy’s administration.”
It seems on Wall Street they have a “Fool´s Day” at least every month….
BOJ held rates flat, despite the fact that gold has doubled in yen in 2 years. It’s a race to the bottom with Japan and US in the lead.
yes it is … euro gold is 2-3% from an all time high. When it gets past EUR 560/ounce (could be today), investors have all the proof they need that for the ECB too inflating away is the only option left. Their decisions in the last year or so already point in that direction. Just wonder what will happen to the few vigilant Bundesbank-bankers in that case …
Everyone thinks that the Germans were more conservative about money because of Weimar, but the truth is that they were ruined all over again in the 1940’s because of the war. Thus, the generation who last remembers hyperinflation is 15 years behind the generation in the US who would remember the Crash of 1929.
The US started to deregulate in the early 1980’s. Thus, one would expect that Germany would embark on looser economic policies around the mid-to-late 1990’s. Not sure, but this effectively happened anyway by sharing a currency with France and Spain. Also, some have made comments here that the ranks “old line” conservative German bankers seem to be diminished. This is simply to be expected.
You would think that examples like Argentina would dissuade the Fed from their ruinous path, but then again, most historians think that the Europeans ought to have taken a lesson from the US Civil War w/r/t trench warfare, but, of course, they most certainly did not.
Alright are we dealing with a world wide bubble/recession here?
If so How can I preserve my savings? Also If America crashes before EU asia. Then wont we recover first?
I’m pretty sure the US will recover first, because it still has (slightly …) more market action, instead of clueless politicians and burocrats trying to prevent the market from doing its work.
Supply side Voodoo Priest Larry “I don’t do drugs” Kudlow had Shiller on last nite. Some amazing things rolled off the Kudlows lying tongue. He, Battipaglia and Shiller stated, “housing prices need to come down significantly”. They even harped against NAR for a bit. Battipaglia was the most adamant. They discussed some new accounting or FASB rules and they seemed to imply that the enormous losses on CDO’s will have to be reported come Jan. 1 2008. Does anyone know anything about this?
I should note that Cocaine Larry is always the first to adamently deny a problem and then act as if it was self-evident when said problem implodes.
Not long ago Kudlow was saying the Fed should raise rates to save the dollar. Then he totally changed his mind and said ease. Then I was listening to a montage of his quotes and he said easing rates would strengthen the dollar. Now it’s Iran, Iran, Iran. I’m so sick of propaganda.
Well… The outfit in DC has “The Gallery of Asshats” to wheel out and spew lies as needed. Kudlow just happens to be one of them.
Sometimes I miss cable TV. Sounds like it can be entertaining at times;-)
“Mr. Mortgage” by Peter & The Test Tube Babies
The 80’s brought a wave of greed
You all bought flats you didn’t need.
You really thought you’d got it made
You fell into the trap they laid.
Mr Mortgage, now you’re poor
Bailiff’s knocking at your door.
Climb inside your cardboard box
Squatter’s in and changed the locks.
Mr Mortgage, Mr Mortgage
With your pokey little flat.
Don’t you know I’ve got a big house
And the council pays for that.
With each recession brings the sack
You know your wife ain’t coming back.
Monthly repayments are a must
Now all your dreams have turned to dust.
Peter and the Test Tube Babies– nice pull!
The new bubble commodities? I’m seeing more and more commodities related news. Grains go up in price and dry bulk shipping rates are really high and the pressure builds in an over populated world.
http://tinyurl.com/ywcy4n
Ocean shippers sold off bigtime yesterday. Looks like a nice entry point and I will be picking some up.
New report — the economy boomed 3.9% in the third quarter. Yet profits are not looking good.
Labor has had it’s ass handed to it for 30 years, with “jobless recoveries.” Maybe the current environment will include less unemployment, but lower profits.
municipal union employees are boomin- you’re payin
municipal union employees are boomin ??
Its one of the best jobs you can get in our valley….From the “Water-Meter-Reader” ($60,000 +) with every other Friday off plus ground-hog-day and all other friggen holidays off to the $11,000./Mo firemen who work 11 days a month and live in other states….Getting a muni job is like hitting the job Lotto….
Hey, we bus drivers in this union-busting state get paid a fabulous $20.5K a year to huff diesel fumes, navigate hellacious traffic, and get screamed at by crapulent losers all day.
That said, the meter readers over at GRU actually get paid more than we do (so much for skilled labor). The reason is that GRU is run “like a business”. It’s nice work, if you can get it. I seem to recall that the last director left with a cool billion.
The recoveries were not jobless. Its just that the new jobs were not created in the US.
Or they are not “REAL JOBS” at all …….
I will say Pres Bush is the Greatest Pres in creating Underground jobs i have ever seen…..I have made more money off the books then on in the last 3 years….so i guess its their plan for me to collect a lot less Social Security since i cant pay into the system with off the books jobs.
I know what you mean. I know so many people who hustle these days. They have several part time “enterprises” where they are paid under the table: masseuses, photography, DJ’s, yard work, painting, plumbing, PC repair, pet grooming. The key is that the customers are individuals who do not need invoices.
There is even a name for this: career portfolio-ing. Since a single one won’t provide enough gigs, you wear many hats: You are a masseuse from 8:00-10:00, repair someone’s PC from 10-11:00, you take pictures at a kid’s soccer game that after noon and DJ a private party that evening.
Reminds me of “Hey Mon” from In Living Color.
seattle housing numbers:
Home-price appreciation in the Seattle area led the nation for the 12th month in a row in August, but indications were not entirely positive, according to a national index report released Tuesday.
Prices in the Seattle area were up 5.7 percent from August 2006, according to the S&P/Case-Shiller Home Price Indices. That put the area just ahead of Charlotte, N.C., which had a 5.6 percent jump, making it one of just five areas where values did not decline
http://tinyurl.com/288djn
Video: Mortgage Industry
“Here’s a video that offers Karaoke style accompaniment for some clever lyrics about the mortgage industry. In light of the fact that the credit market is still in worry, I though this was kind of fun:”
http://www.loanshak.com/2007/10/video-mortgage-.html
The economist groupies have figured out why housing prices go up.
http://economistsview.typepad.com/economistsview/2007/10/subprime-forecl.html
I haven’t read the article or the research they are licking, so I will just summarize and say that it has been determined that housing prices have gone up because underlying land values have gone up.
“By far, most of the variation in home prices have actually been changes in land prices.”
When challenged on this assertion, one poster explains grandly:
“Check the graph above. Construction costs haven’t moved. House prices have.”
I’m sure that is total bullshit (like most research coming from economists), at least in my country.
Land prices, construction cost (simple workers in the Dutch homebuilding business have higher wages than many academics; wages is about 2/3 of total construction cost here) and materials (1/3 of total cost or lower) have all gone up a lot here. And all kinds of new stupid government regulation keeps construction costs rising too, without any payoff in quality. Home prices have appreciated FAR more than can be explained by rising land prices. Most homes in my country are sitting on tiny lots, homes on big lots have probably relatively low appreciation compared to 15 years ago.
Oh yes, we theoretically still have about 88% of the Netherlands available for building (farmland, unused/old industrial zones, a few tiny bits of remaining nature etc.), except that building is not allowed there by shrewd politicians who want to keep land prices sky-high; no doubt that land prices are in a bubble
just imagine what happens when all these bubbles start deflating at the same time …
You misunderstood the conversation. The prices were clearly not up because of construction costs because those weren’t up. The answer they came up with is essentially speculation on properties. That makes this boom the same as the farm land booms we had when agriculture dominated the economy. Because you are grumpy about economists you took this as “because land prices go up” instead of “because land prices got bid up in a storm of asset speculation”.
Furthermore these graphs also show that the badly performing subprime loans are the recent ones. That highlights speculation rather than subprime itself as being the problem. Historically subprime loans have done only slightly less well than other loans, but for most of that period there was at least some level of regulation over lending.
sorry, could be - I could only finds lots of comments and not a common theme; seems to me there are many misconceptions floating around there. I can’t believe that construction cost has not really increased in the US with surging materials prices (as to the wage part: we have cheap labor in Europe too, but it has zero effect on the prices charged by the builders, they just keep going up).
If the conclusion is that land prices are up because of speculation, I couldn’t agree more (but I still have to find the first economist in my country who dares to agree with such a bold statement).
I believe that materials prices did surge during the boom (copper, and wood products, etc.). Now that housing construction is down, material prices have also dropped (copper and wood products reported on this blog).
Lots of wasted discussion then, fixating on loose estimates of land price based on price - structure value and so on. Maybe those posters with this fixation were from San Fran where the land fraction is 90% of the price.
I would have liked to see more discussion of speculation and less about “this city is so special” (e.g.: land prices).
I _was_ happy to see that problems with all types of loans were recognized, not just sub-prime (well at least some alt-A mention.) Although perhaps still a bias toward ARMs as the driver, rather than prices themselves.
Well it looks like San Jose had a 5.6er. I know folks were waiting for another quake to shake the market up. This is nicely on the heels of the wildfires. How much will these naturally occurring events spook the BA market?
ps. please to do not spend the spooked this way.
It was in my backyard….Mild one…Very short…
I slept through the 7.2 LA shake as a kid. I agree it was whimpy but some people get freaked by the earth moving at anytime.
I think the small quake was related to the DQ numbers and happy Bubble believers jumping up and down in the BA (a’la Science Made Stupid).
Bernanke is finally getting criticized for not standing up to Wall Street.
http://www.washingtonpost.com/wp-dyn/content/article/2007/10/30/AR2007103002092.html?hpid=moreheadlines
US$: “Come with me. There is still good in you, I feel it.”
Darth Bernanke: “You do not know the power of the dark side. I MUST obey my master.”
US$: “Then you will be forced to destroy me…”
Fear leads to the dark side …
And besides, whiskey is the drink of the true Jedi.
That’s an excellent column. Could not agree more.
I would not be surprised if they don’t cut….Maybe try to send the message that they are not going to allow the tail to wag the dog….Get some credibility back…
Actually, that would be a remarkable show of independence and care for the public interest. We must remember, however, that the Fed is nothing more than a banker’s cabal, composed of the presidents of banks. I was shocked by the 50 bp cut last time and the resulting effect on the dollar, and I expect to be shocked again by another similar cut. Why? The banks are in *trouble*. They are really looking at huge losses from this debacle and if it doesn’t turn around dramatically in 4q, they’ll have to report gigantic losses at year-end, which is never good for bonuses, stock options or anything else. No, good readers, I think it would be asking too much for these bankers to put aside their personal interests and the interests of the banks to which they have each devoted thirty or more years to do the “right thing” by holding fast. The time has come for them to take care of the institutions which put them into these positions of power and authority, and I have very little doubt that they will cover the tab.
That article completely misses the point. They are talking about a short to medium term game with Wall Street calling the shots. This is a completely baseless manufactured fantasy. The reality is that Ben Bernanke is making judgement calls based on how this will look 15 years out which is roughly how far the ripples go when the Fed starts skipping stones. What Ben Bernanke is betting is that the next fifteen years of growth are going to be tepid and bedraggled by inflation. The only questions he as an academic has to solve are just how tepid and how much inflation there will be. It is fascinating to me that the author of this article, many on the street, and many here refuse to even engage with the vocabulary that Ben Bernanke is using. It would be far better for us to be driven by our vision of the results of our actions 15 years in the future, but most market followers are primarily interested in this quarter of this year.
MM, do you have any data/studies that indicate the 15 year time effect you mention?
This may be the weirdest rent house I’ve ever seen:
http://austin.craigslist.org/apa/463113452.html
..
Whoa, dude !
I think I just had a flashback.
Like, WOW, man………………
..
Looks like a cob house on acid. I like cob houses, some day I want to build a small one for a studio space since they are highly flame resistant. I even like acid.
But some things should be used in combination. ewww
LOL should _not_ be used in combination
and I should not be allowed near a keyboard before coffee >; )
You trip on acid?
jk
Of course I like acid! Doesn’t everyone?
http://en.wikipedia.org/wiki/Citric_acid_cycle
The 2nd home of Timothy Leary ??
What is it suppose to be? Abstract or a dino skeleton?
Some artist built a whole slew of these things all over the west. PBS did a special on him years ago, but I can’t recall his name. I love these houses, but worry that I’d wake up some morning with a bony fetal alien clamped onto my face.
It kinda looks like Zero from The Nightmare Before Christmas.
Love it.
good article, but it seems to me that the inflation horses are already out of the barn (and the FED should know). So they will probably perform some more verbal magic from behind the green curtain and buy their Wallstreet buddies more time to raid the worldwide economy.
in reply to the 06:53:43 item with washingtonpost article above …
Exactly what inflation horses are out of the barn? That is like saying property values always go up. Prices for machine tools and computer hardware are dropping all over the world. Are you saying that our economies used to be driven by technology and machines, but suddenly we have become agrarian again such that the prices of milk and fuel are all that count? In the real world prices on a broad range of manufactured items have had a sustained fall and that has an impact on inflation and expectations.
I know that the most important things, those one cannot do without, have been going up in price - medical/dental, food, fuel, transportation, utilities, education, even clothing. You don’t have to be agrarian for them to count.
Mole Man: normal people (as opposed to geeks) spend 90% or more of their income on things that are going up, instead of on useless trinkets and toys that are going down in price (or at least are going down in the manipulated statistics because of more MHz, MPixel, more fancy buttons etc.). The situation in the US and in Europe is exactly the same, real inflation is around 10% yoy or more - but some people (probably economists and other geeks) are still in denial.
“Exactly what inflation horses are out of the barn?”
Black gold, for one. Other PMs and commodities for some others. But not wage inflation nor (at least since a couple of years ago) housing, which raises the question of how J6P will fill his Hummer’s gas tank after oil price inflation flows into the pump price.
Crude hits new record above $95 in after-hours trading
By Polya Lesova
Last Update: 5:05 PM ET Oct 31, 2007
NEW YORK (MarketWatch) — Crude-oil futures hit a new record high in after-hours trading on Wednesday, surging as high as $95.28 a barrel on the New York Mercantile Exchange after the Federal Reserve cut interest rates and the Energy Department reported a much higher-than-expected drop in crude supplies. Crude oil for December delivery was last up $4.84, or over 5%, at $95.22 a barrel on Nymex. Earlier, crude settled at $94.53 a barrel in the regular trading session.
http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BBF4BE17A%2D4051%2D4DA6%2DA1EF%2D8B7900AD3528%7D&siteid=mktw
Mayor Bloomberg Tightens Budget, Prepares for Recession, Housing Fall
(now that’s leadership, notably absent from the Feds).
“Bloomberg yesterday ordered agency heads to stop hiring except for positions paid for by the federal or state government, or jobs with an immediate impact upon public health and safety. He also called for budget cuts of 2.5 percent this year and 5 percent next year for a savings of $1.5 billion.
Housing prices in the New York City metropolitan area may start to drop beginning in the current quarter and continue falling 1 percent to 7 percent per quarter through 2008, Mark Zandi, co-founder of Moody’s Economy.com, an economic forecasting agency and unit of Moody’s Corp. in New York, said last month.
“This slowing of the national economy and the local real estate market has a direct impact on the amount of the city’s tax receipts,” Page wrote in the memorandum distributed by the mayor’s office. “Credit tightening and hedge fund losses are expected to cut into the profits of the financial services sector of the city’s economy, further eroding our revenues.” (per Bloomberg, this a.m.).
Oh no, Bloomberg must have heard that the Fed might keep rates steady. He has to precipitate a crisis — and FAST! — so that the Fed voting members can see the error of their ways and turn around and goose the economy with another undeserved and inflationary rate cut. At least that will help bail out some of the financial boys that Bloomberg relies on for taxes. To heck with a dollar crash and inflation’s effects on Middle America.
NoVa Sideliner,
You have completely misread the post and the situation. Bloomberg has, alone of any major city mayor, been warning that that city spending must be curtailed, the public pensions are underfunded and that shortfall made up and accounted for, and that the future includes falling city taxes revenues as Wall Street profits slow.
Has elected leadership become so rare that people can’t recognize it when it is evident? Bloomberg is financially savvier than most on Wall Street, he is intimidated by no one, and funds his own campaigns with a personal check and is beholden to no one. Which is something for a kid from the Bronx. It’s also why he was reelected by such a huge margin, across all ethnic and racial lines, and all economic groups. He simply calls it like he sees it.
Agreed. Thanks for posting.
I’m with ya on Bloomberg. He’s very apolitical, speaks with knowledge, experience and sincerity. I heard his announcement this morning on WBBR and thought that he’s giving far warning for a reason.
I don’t want to like Bloomberg, but I do — for precisely this reason. There are relatively few politicians with this kind of foresight or big picture viewpoints.
(Mayor Daley of Chicago is far from a bad realpolitik forecaster, but Bloomberg leads the mayoral pack by several furlongs.)
Bloomberg’s stewardship of the Big Apple makes Guiliani look like the ass clown he really is.
The price of gasoline (what’s with those 9/10’s of a Cent endings, anyhow?) will be the very first thing that is reflected by a plunging Dollar neckline, as luck would have it…
Every last person that wants a better life on this orb, craves it, and as it get pricier for us, it gets cheaper for them. Consumption rates go down for us, and up for them.
$ee$aw eCONomy
Expect $6 to $10 a gallon prices at the pumps soon.
The “Norton Line” * is about to be breached.
* The cost of getting to and from work is less than your net take home pay, per day.
I thank Emperor Norton II, for pointing this out.
Look at the bright side. You’ll be able to snap up a gas guzzler for a bargain.
..
Already did that in June.
Bought a 2006 Chevy Silverado 4X4 short bed w/ 5.4 L V8 with 31,500 miles for $ 14,500.
He11, the trade-in value is around $19,000; maybe a tat higher. Dealer that sold it to me said it was a “loss leader”…My Dad, retired from the auto biz after 38 years( Dealer Principal ) said I would never be upside down on that deal. We’ll see. Especially if gas hits $4.00 /gal.
Of course, I only commute 7 miles per day to my very secure job doing research at a University of Florida experiment station.
I basically bought it to tow my boat; which I paid cash for in March 2007. Bought it from one of the Beautiful People, a Realtor(tm), in Pompano Beach.
There are toys lying around here everywhere in Florida….soon they will be going for pennies on the dollar. I look to buy a small, pull-behind travel trailer sometime next spring.
I am happily renting, with a nice Vulture Fund to by the “Rich Man’s” toys as they become available.
..
I track RV shipment and sales closely as I’ve been looking for a 5ver for 3 years now but prices have held on new stuff until very recently. Used stuff is priced so delusionally high that many times a new rig is cheaper than used prices. I’ve noticed dealers coming off their BS 10% less than MSRP lately though.
p.s.
Emperor Norton II’s namesake:
http://en.wikipedia.org/wiki/Joshua_A._Norton
Another victim of commodities speculation. It’s insane.
Got rice?
Rice is nice, been there, done that.
(full disclosure: Rice is giveaway cheap, a 20 pound bag will set you back $7 and feed you forever, and we are sitting on about 100 pounds)
Emperor Norton II, of the Inland Empire and Protector of Mexico and adjacents
consumers pulling back..
business spending pulling back..
hard landing baked in, accomodating FED waiting in the wings…
everybody watin for the tooth fairy to arrive around 2:15is?
shiny quarter or folding type unde the pillow? The dissapointment is going to be a joke as the FED has now made itself impotent in the face of the massacre on FB Homestead. Banking and finance are sure painting the tape green this morning…… that surely must continue.
..
Wonder what would happen if the Wall Street Kiddies woke up and found that the Tooth Fairy didn’t come; and that there was nothing under the pillow ?
Think that they would throw a hissy fit and tear up the bed looking for the “Lost Quarter” ?:)
..
no need to wake up, B-52 Ben ensures that sweet Wall Street dreams continue forever. There is always the next rate cut around the corner, even if that means rates are getting in negative territory.
Interesting…
the sweet spot, no more shock and awe, just steady accomodation….
market climbs the wall of worry, while the dollar goes lower, and oil and gold move higher…lets put the focus back on the emerging markets…bubble boy lives…
It sounds as if loose monetary policy is overheating the economy above its long term sustainable growth rate. The FOMC ought to think long and hard before dropping interest rates further to bail out Wall Street.
GDP Grew 3.9% in Third Quarter On Exports, Consumer Spending
By Jeff Bater
Word Count: 810
The U.S. economy sped up last summer despite a much heavier drag from the housing sector thanks to as surging exports and stronger consumer spending.
Gross domestic product rose at a seasonally adjusted 3.9% annual rate in the third quarter, the Commerce Department said Wednesday in its first estimate of growth for the July-September period. GDP climbed at a 3.8% pace in the second quarter and 0.6% in the first.
http://online.wsj.com/article/SB119383320102877592.html?mod=hpp_us_whats_news
Also on the WSJ home page (but there is no link to the article on oil price inflation):
Stocks advanced early Wednesday on encouraging third-quarter economic data ahead of the Fed’s interest-rate decision this afternoon. Markets were higher in Europe and mixed in Asia. 10:33 a.m.
• Oil May Not Stop at $100
I think skyrocketing oil prices, like the current real estate correction, would be painful in the short term but beneficial in the longer term.
There’s simply been too little economic and legislative incentive to improve fuel efficiency, improve mass transit, improve traffic patterns, increase our use of alternative energies (whatever they may be) and wean ourselves from foreign energy sources — I sincerely hope that exorbitant oil prices could produce some long-term, transformative innovations for America.
I agree with you on this. While personally, I am feeling the pinch a bit ($3.27 per gallon at last fill-up), it may be what we need. There are simply too many cars in this country, and it’s time for a more effective mode of transportation. The gridlock on our highways and byways is ridiculous. I don’t complain about gas prices because EVERYBODY is dealing with it. If gasoline goes to $10 per gallon, so be it. I’ll adapt.
An interesting anecdote. We were in So Cal last week on vacation (talk about timing, it was smokey). Something that I noticed was that I see a lot more Hybrids in me neck of the woods than in enlightened SoCal
There are simply too many cars in this country
Too many gas guzzlers. An interesting trend of the past 10 years or so are more and more powerful engines in cars. These days you are lucky to get 30 mpg from an automatic 4 cylinder compact car.
I just finished “Crash Proof (How to Profit from the Coming Economic Collapse)” By Peter Schiff.
It was very thought provoking, but is also a very extreme perspective. Although I’d like to see a much needed correction in house prices, I would hate to see the most dire of his predictions come to pass.
Let me know if you would like to be the next one to get the book
carrcommercial (at) aol.com
This is the book that nyCityBoy has given to this blog destined for the master of ceremonies….Ben Jones.
I hope you signed the front rich, its a great book..I have implemented a couple of the strategies in this book, including a precious metals position, as well as, non $USD assets.
PLEASE EMAIL RICH IF YOU HAVE NOT READ THIS BOOK.
nice to see you are still lurking here….
There is a long, mostly-laudatory article about BB’s crisis management skills on the front page of today’s WSJ. Missing from the story (unless I overlooked them) are the following unpleasant details:
1) The credit crunch is not resolved; in fact, only the tip of the iceberg has been exposed thus far.
2) There is no mention of the Fed’s political need to make sure the stock market keeps going up, nor of what means it might be using to ensure this occurs.
3) There is no mention of the Fed’s role in creating the mess at hand; however, the WSJ’s editorial in yesterday’s paper (Wall Street Reckoning) does address this in the closing paragraph:
“And speaking of Washington, that’s one place where no one is being held accountable for the subprime boom and bust. That includes in particular the Federal Reserve, whose far too easy monetary policy created a subsidy for debt that fueled the housing and subprime mortgage excesses.”
Bernanke, in First Crisis, Rewrites Fed Playbook
By Greg Ip
Word Count: 3,559
WASHINGTON — On the afternoon of Thursday, Aug. 9, with a panic driving up short-term interest rates in Europe and the U.S., Federal Reserve Chairman Ben Bernanke’s office became a war room. His closest advisers took seats in the burgundy leather chairs around a coffee table or telephoned in from their now-aborted vacations.
http://online.wsj.com/article/SB119374975769376194.html?mod=hpp_us_pageone
4) No mention of the fact that savers continue to get f*(&(%d up the a&% unless they are willing to speculate in the stock market.
can’t read the article but they probably also don’t mention that foreigners get f*(&(%d up as well by the current FED policy. There is nothing like a free lunch, I’m sure somehow the US is going to pay for this…
Uh, sorry. Letting emotion get the better of me.
This is an emotional time for anyone who is expecting fixed dollar commitments over the next thirty years (such as retirees like my father on fixed income pensions). Such a massive, poorly understood transfer of wealth has not been executed by the Fed since the 1970s.
In fairness to the Fed, the poorly-understood inflation/dollar-devaluation tax is about the only remaining politically feasible avenue to bail out the Wall Street banks from their ruinous subprime gambling activities. The D-rat’s direct bailout proposal went over like a lead balloon. More generally, openly taxing the populace to pay for Washington and Wall Street excesses has been political anathema ever since Ronald Raygun permanently demonized the practice of honest taxation. The only politically viable forms of taxation left are inflation and cleverly-disguised “free” insurance programs (e.g., turning the FHA into a govt insured subprime lender).
Grandson is Colbert for Halloween and was reading the definition of truthiness this am - it so fits the housing bubble: that which one holds to be true regardless of what is supported by fact.
If I see another power ranger outfit…
Aren’t they over yet? My 19 year old was entranced by the pink ranger when she was 5.
I went as Voodoo economics - I posted below somewhere >; )
I’m still entranced by the pink ranger and I’m 27…sproing!
It’s funny seeing these two headlines on Yahoo finance:
* Economy Logs Brisk 3.9 Percent Growth
“The economy picked up speed in the summer, growing at a brisk 3.9 percent pace, the fastest in 1 1/2 years and an impressive performance”
* Fed Rate Cut Expected Wednesday
“With oil prices soaring and the housing market sinking, the Federal Reserve is likely to combat the economic turmoil with more interest rate cuts.”
Economy picking up speed? Well, let’s cut the rate!
I’m betting on a 100 basis point cut this time around…why not, that number is as good as any other number…
* Fed Rate Cut Expected Wednesday
“With oil prices soaring…
Yep, cutting rates will sure lower the oil prices.
The construction spending numbers came out up .3% vs. expected -.1%.
#1 I couldn’t find this in any news feeds, too unimportant? Doesn’t fit the market profile today?
#2 Are these idiots still building out the boom?
“Are these idiots still building out the boom?”
The Fed is still dropping rates, against a backdrop of ab unsustainably strong GDP number. I guess they think it is a good idea to jump start the residential construction industry, against a backlog of 17m vacant homes?
Slightly off topic
I came to work today as Voodoo Economics - grey pinstripe suit, borrowed my DH’s red silk power tie, and a very big and impressive african mask made from papermache’ to replicate one I own which is too heavy to wear. My prop is a little black book that says “STANLEY O’NEAL FINACIAL PLAYBOOK” on the outside.
Now to stuff my pockets with phoney mortgage deeds, stock certificates, etc.
“psst ! hey lady, I have house in Florida I’ll sell you real cheap…. ok you don’t like Florida, how about South Sacramento, Bakersfield, or maybe Tucson? OK you’re sour on RE, how about some Pets.com stock, I have a special running.”
I’ve done this off and on since 88. This seemed a good year to trot it back out again. I already have one person not speaking to me - her husband was a realtor.
I already have one person not speaking to me - her husband was a realtor.
Sounds like a win-win!
The Voodoo that you do, I approve.
I had some ideas for a costume this year — a Realtwhore, a cheezy Realtor or a House Flipper. Needless to say, I chickened out. The Halloween party I was going to was being hosted by a Flipper who has friends who are mortgage brokers. Maybe an idea for next year.
Interestingly, the Flipper mentioned a house that they cannot get rid of for $100K. Mind you it’s in a bad part of town where there are lots of forclosures. I told them we aren’t considering looking for a house until at least next fall. The mortgage broker friend gave me his card anyway which we won’t be needing since we have great credit and can get a better deal ourselves.
Interesting home remodel story:
My brother and sister in-law (double-income professionals, no kids) decided to remodel the upstairs of their Queen Anne district house in Seattle. I suggested that they wait a year or two for construction costs to go down, but they decided that costs were never going to go down in Seattle (”it is different here”).
Work: Remodel two small bedrooms and a tiny bath. New hardwood floors, two new wood-framed double windows, new ceiling in the bedrooms, additional fiberglass insulation. New bathroom sink, toilet, tub and tile floor. No structural work at all, no wall removal, additions or moves.
A close friend, high end contractor, offered to do it just for materials and labor. He gave them an estimate of $70k, which seemed quite high for the work involved. But my BIL is convinced that you get a higher quality product if you pay more, so let’s just bite the bullet and do it right.
Fast forward 6 months and they now have the bill: $200k!!! And the kicker is that he didn’t even finish the job. They are staining and treating the woodwork themselves, finishing some trim, and repairing a bunch of damage to the stairs and stairwell walls due to careless workers.
I’ve helped my dad on a similar remodel (three medium-sized bedroooms and one bath), and it took him (a weekend carpenter) all of a couple months working part time. But I would like to get some estimates from the more experienced folks out there as to just how much this contractor ripped them off. What would a reasonable price for such a remodel be in a major city? Now, and 10 years ago before the bubble craziness?
This is not just a hypothetical question. They haven’t paid the guy yet, and actually don’t have a contract. I’m suggesting that they refuse to pay and negotiate a more reasonable price. (But get this, my BIL is concerned abou losing a close friend. He apparently isn’t concerned about losing your friendship!)
The time to negotiate is before the job starts.
JMO, but you could add a whole new second story to most houses for less. Is this the same friend who at first said $70K? If so he should be able to ask what the mysterious other $130K is for.
That’s the most ridiculous thing I’ve ever heard. There’s got to be more to the story. I do my own remodel work, and am familiar with materials prices as well as the time required to complete the job. I’d assume their upstairs is no larger that 800 square feet.
Materials alone (very generous estimate):
2 new wood clad double pane DH windows- $3000
3/4″ solid Hardwood flooring with tile or stone in the bath (including tub and wall surrounds- $8000
Fiberglass insulation- $1000
Tub- $1500
Sink and vanity- $750
Plumbing materials including fixtures- $1000
Toilet- $500
Wall and ceiling materials - $600
Paint, primer, caulking- $1500
Crown molding and base- including door and window trim- $2500
Lighting (including electrical supplies)- $1500
So, a little over $20k for materials, and that is EXTREMELY generous using high end stuff. I could do the entire job, by myself, in less than 8 weeks. I’d imagine a professional crew should be able to do the job in 3 weeks, EASY. Even with the high dollar materials, I’d say that this should cost no more than $40,000 and that’s still WAY too much. Either something’s missing here, or they were taken to the cleaners.
Bear,
That’s pretty reasonable and about the same of central valley prices. Hell you could do a decent kitchen reno on 20k in materials. This is why flippers make me nuts. 15k in materials and 3 months does not equal 125k extra.
Thanks Bear (and others),
My guess is that the contractor saw a patsy and took advantage. When my Dad was building his house, he would say “if anyone claims to be a friend or a Christian, I keep my hand on my wallet to make sure nothing goes missing.”
In the late 1990’s, Dad built his whole monster, custom, granite, radiant heat, rammed earth adobe, 4000+ sq ft home for $200k outside Santa Fe (not including the 5 acre lot for $100k). Kinda puts things in perspective. $300-$400k used to be a very high end home.
OMG, DJIA to the moon! Dow 20,000 TODAY! Everybody buy, the FED will ensure that the stock market only goes up.
everything up except the dollar, to be exact.
the sorcerer apprentice is showing off this black magic again today; too bad he studies the wrong magic books (about the Great Depression instead of the Weimar Era).
Howdy savers. How do you like ‘em cuts?
My sails are set, to take advantage of easterly winds of change…
I’m gonna take all my cash and go party - what’s the point of saving?? Thanks, Heli Kommander Ben… many thanks. May your chopper hit a severe crosswind and take you to your own personal inflation hell.
They suck, but I anticipated it and locked in a 6-month CD rate at 5.3% last week. Would have gone longer but I might need the money then.
Unfortunately, I just heard the ending of a Dr. Laura call today. Basically, the call went like this from a woman in Las Vegas who was torn regarding unable to move to be with husband (I believe that was the problem).
LV Woman: I am unable to afford a realtor to sell my house.
Dr. Laura: Huh? You don’t pay the realtor until the house is sold.
LV Woman: We can’t make enough on the house to pay the realtor and the bank.
Dr. Laura: Huh? How much do you owe on your house?
LV Woman: around 250,000
Dr. Laura : how much can you sell it for?
LV Woman: around 250,000
Dr. Laura: Give it back to the bank and tell them to do an immediate forclosure.
end of call
We are “surrender monkeys” here at home, when we should be making our stand…
And continue to run in place, going nowhere fast in the middle east, bleeding lives and wealth away in a daily double going on in a 2 front war, that has long ago, lost any meaning…
UnimpresSIV
By Holman W. Jenkins Jr.
Word Count: 880
With the holidays approaching, a Wall Street colleague may sidle up and suggest a contribution to the SIV Superfund. Your esoteric reading is likely to lead you astray here. This is not a campaign to cure the simian immunodeficiency virus, a subject that recently occupied you for hours on Wikipedia. It’s a self-help bailout fund organized by banks for their friendly neighborhood “structured investment vehicles.”
http://online.wsj.com/article/SB119377701493476654.html?mod=opinion_main_featured_stories_hs
FOMC outvoted in court of public opinion…
Q. Did the Fed make the right move in cutting rates one-quarter point?
A1. Yes, one-quarter point is the right move. 327 votes (32%)
A2. No, the Fed should have raised rates. 119 votes (11%)
A3. No, the Fed should have left rates alone. 522 votes (51%)
A4. No, the Fed should have cut rates further. 67 votes (6%)
Total Votes : 1035
http://forums.wsj.com/viewtopic.php?t=952
“The Forgotten Man”
I’m about halfway through the new book “The Forgotten Man: A new History of the Great Depression”
Interestingly the “Forgotten Man” of the depression and its aftermath wasn’t who I thought it would be. Instead it refers to the opening paragraph of an essay by William Graham Sumner:
The type and formula of most schemes of philanthropy or humanitarianism is this: A and B put their heads together to decide what C shall be made to do for D. The radical vice of all these schemes, from a sociological point of view, is that C is not allowed a voice in the matter, and his position, character, and interests, as well as the ultimate effects on society through C’s interests, are entirely overlooked. I call C the Forgotten Man.
It’s amazing how history repeats itself here. Groups “A” and “B” are the Banks and the Politicians. They want to help “D” the F—-d Borrower. And who pays for it all? Person “C”, the forgotten man.
People who saved, didn’t buy more house than they could afford, and have contribute more than their fair share of taxes are the ones who are going to be paid to bail out the irresponsible.
It’s even worse than this, of course, because I don’t think A and B’s motives are pure…they want to help themselves, too, because the more money that gets confiscated from C and handed to D, the better it is for them, too.
I strongly recommend this book.
It’s the bonuses, stupid!
US earnings rush ‘counterproductive’
By Francesco Guerrera in New York
Published: October 31 2007 22:01 | Last updated: October 31 2007 22:01
US companies’ rush to boost year-end earnings by discounting products and delaying payments is counterproductive and leaves their balance sheets more than 20 per cent worse off in the ensuing three months, according to a study out on Thursday.
The research, by the financial consultancy REL, found that in the last fiscal quarter of 2006, America’s 1,000 largest companies boosted their working capital – a yardstick for short-term financial health measured by the difference between assets and liabilities – by $100bn. However, the gains were more than erased in the first three months of their fiscal 2007, with working capital decreasing by a combined $122bn. A similar trend was seen in 2004 and 2005
http://www.ft.com/cms/s/7a86bf88-87f6-11dc-9464-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F7a86bf88-87f6-11dc-9464-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
http://tinyurl.com/ypfk93
needful things…….
Oct. 31 (Bloomberg) — South Korea will start a 20 trillion won ($22 billion) fund to invest in global oil and gas projects, vying with China, Japan and India for resources as prices soar.
The state-run National Pension Service, South Korea’s biggest investor with $235 billion in assets, is in talks with the commerce ministry and government agencies to start the fund by the end of this year, the service’s chief said in an interview.
South Korea imports 97 percent of its energy needs and is following China, India and Japan in tapping sources in Asia, Africa and Russia. Shifting pension money from bonds to oil, which rose to a record this week, will also help boost returns.
“We have great interest in resource commodities, such as oil, gas and metals,” National Pension Service President Kim Ho Shik said yesterday. “We want to invest a lot in assets with higher risks and higher returns.”
China, the world’s biggest consumer of coal, copper and iron ore, said in January it may use its $1 trillion foreign- exchange reserves to buy “strategic” resources.
Oil & Natural Gas Corp., India’s biggest explorer, said earlier this month it will seek a stake in an exploration area on Russia’s Sakhalin Island. Japanese government and business officials will visit South Africa next month to get supplies of metals for use in automobiles and steel alloys.
`Security of Supply’
“This is all about security of supply, this is all about getting access to supply at a reasonable price,” said Mark Pervan, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. “For somewhere like Korea, which is very much a big consumer of commodities, this would make a lot of sense.”
Crude oil prices have more than tripled since October 2002, reaching a record $93.80 a barrel on Oct. 29. Gold, which has more doubled in the past five years, reached $794.70 an ounce on the same day, the highest since January 1980, and platinum reached a record. Prices for copper on the London Metal Exchange have jumped more than fourfold in the past five years.
“Maybe they are buying are at the top of the market,” said Peter Chilton, who helps manage the equivalent of $1.4 billion at Constellation Capital Management in Sydney. “Maybe this is the last thing they should be doing from an investment perspective.”
The pension service hasn’t yet decided how much it will contribute to the resources fund, Kim said. The service had 82 percent of its assets in bonds as of the end of August. Annual returns from bonds have more than halved since 2001, according to the service’s Web site.
South Korean regulations bar the pension fund from buying and selling commodities directly, while they permit investing in development projects through a fund, Kim said.
Race for Resources
“Instead of investing directly in the company that does the development, the fund will form a special-purpose company with them specifically for the project,” Kim said.
The commerce ministry said in August that South Korea will spend 10 trillion won on overseas oil and gas fields in the next decade as competition for supplies with China and India intensifies. Those plans are “not related” to the resources fund mentioned by Kim, the ministry said today in an e-mailed statement.
South Korean-owned fields provided 3.2 percent of the nation’s oil and gas imports last year and the government said in August it wants that to increase to 28 percent by 2016. The country is the world’s fifth-biggest importer of oil.
“Korea had been lagging behind in the race for resources,” said Lim Jin Kyun, an oil-industry analyst at Daewoo Securities Co. in Seoul. “It sounds like a plan to improve returns and help the country secure what it needs at the same time.”
Rapid economic expansion is fueling developing nations’ appetite for resources, driving energy and metals prices higher. China’s growth is running at an 11.5 percent pace and India’s at 9.3 percent, the fastest rates among the world’s major economies. South Korea’s gross domestic product rose 5.2 percent from a year earlier in the third quarter.
Hopefully this is the start of a new trend…
Citi executives sacked over credit turmoil
By David Wighton in New York
Published: October 31 2007 23:35 | Last updated: October 31 2007 23:35
Citigroup has sacked two senior executives responsible for its mortgage-backed investments business amid concerns that it could face further heavy writedowns on its holdings of subprime-linked securities.
Michael Raynes, head of structured credit, and Nestor Dominguez, co-head of collateralised debt obligations, both left on Wednesday, the company confirmed.
http://www.ft.com/cms/s/cefdfa30-8810-11dc-9464-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fcefdfa30-8810-11dc-9464-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Credit markets sure seem spooked these days. Happy Halloween!
Fall in ABX sparks fresh credit fears
By Stacy-Marie Ishmael in New York and Gillian Tett in London
Published: October 31 2007 22:03 | Last updated: October 31 2007 22:03
The ongoing crisis in the US housing market is pushing a key mortgage-linked derivatives index to new lows, threatening to unleash a further bout of credit market upheaval.
The price swing in the index, known as the ABX, is particularly significant, since it is starting to reduce the value of credit instruments that carried high credit ratings, and were therefore supposed to be ultra-safe.
http://www.ft.com/cms/s/8d5c20e0-87e1-11dc-9464-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F8d5c20e0-87e1-11dc-9464-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
What’s to stop the Fed from using freshly printed fiat money to prop up the ABX indexes?
http://markit.com/information/products/abx.html
I think the FED is just about powerless to stop this Housing bubble bust, all the money is flowing into other things. Gold up, oil up, etc, what can they do at this point? Drop money out of helicopters and it won’t go into housing it will go straight to stock market speculation.
It seems to me as though the FFR cuts are having a rather dramatic effect — towards inflating the prices of gold, oil, stocks and fraudulent art works…
Arts & Culture
‘Child Prodigy’ Film Revives Question: What Is Art?
http://www.npr.org/templates/story/story.php?storyId=15811817
I almost forgot to mention beer keg inflation. J6P must be outraged!
Cashing in on kegs
Scrap value of the metal has led some people to sell rented kegs to scrap yards, in turn boosting the rental price.
http://www.ydr.com/newsfull/ci_7201881
Check out the beautiful waterfalls. Subprime SIV debt, anyone?
http://markit.com/information/products/abx/history_graphs.html
Notice those graphs only begin at 19-Jul-07. They would be far more dramatic with a starting date around 31-Oct-06. One suggestion given by the graphs is that these ABX indexes really started to tank when the toxic subprime SIV Superfund idea was floated.
How many times does a dead cat bounce before it bounces no more?
Did you guys see this :
http://www.cnn.com/2007/SHOWBIZ/11/01/stein.obit/index.html