Bits Bucket And Craigslist Finds For November 19, 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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Name:Ben Jones
Location:Northern Arizona, United States
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On The Edge…
http://www.businessweek.com/magazine/content/07_47/b4059054.htm?chan=rss_topStories_ssi_5
From the link…
“So far, the subprime mess is more of a human tragedy than a stopper for the economy. It’s being felt most by the lower middle class, which isn’t the driving force in economic growth. The bottom 40% of the population by income accounts for just 21% of consumer expenditures. Julia L. Coronado, a senior U.S. economist at Barclays Capital (BCS ), says that in terms of spending power, and taking into account stock market gains, “Consumers haven’t lost any wealth at all. In fact, consumers are better off than they were a year ago.”
Some analysis. Folks at Bizweek have not heard of problems with Alt-A paper, just for a start. Haven’t looked at the Zelman reset chart either. So ignore 40% of the population, and their lousy 21% of consumer expenditures, and given the terrific stock gains this year, and the expansion of 10 buck an hour service jobs sans benefits, and “consumers” are better off than a year ago. I guess they mean “some consumers” as that 40% cannot possibly be “better off” . Nice to know that all those 1099 workers, RE agents, mortgage brokers, construction workers, title guys and the like have all found gainful service econ jobs…and are now happily better off. In fact, thanks to the stock market and the gains distributed thru the population, we are all better off and charging blissfully ahead. I am so reassured.
“It’s being felt most by the lower middle class, which isn’t the driving force in economic growth.”
O’Neal and Prince don’t quite qualify as lower middle class. Whether the firms they worked for are a driving force in economic growth is anyone’s guess.
Prince’s and O’Neal’s jobs are still there, they just aren’t in them. The spending they would have done is still funded.
Hey, if the lower middle class isn’t a big engine of consumer spending - they why the orgasm/rally over WMT last week?! Isn’t that where they shop?!
Walstreetmart Nation
Strange how the “lower middle class” isn’t a driver of the eCONomy according to these clowns after they just got done looting the lower middle class for trillions AND using that money to fund much of the “illusion of wealth” economy.
I guess what they meant to say was “now that we’ve looted the lower middle class blind, they aren’t much use to us!”
Exactly, spike. And if that were the case, the Fed wouldn’t have made rate cuts, so there’s more holes in that theory than Swiss cheese.
I swear, in its heyday, Pravda couldn’t have done a better job than the MSM and financial press in this country.
Don’t you mean Pravda could have done a better job?
Seriously, didn’t the Party put the best and the brightest on that kind of stuff? I thought they were masters of propaganda!
This crowd is a bunch of bumblers!
As soon as I read this “The stock market is still up by 4% for this year,”
I quit reading. Why waste another second on such cheerleading drivel when I know it’s BS.
Especially when the US dollar is down by more than that! A few years ago, when it got easier to buy foreign stocks through mutual funds and ADRs, I decided to put half of my stock investments outside the US, split between Europe, non-EU nordic, Canada, and Asia. I’m glad I did.
Now I have to figure out how to buy foreign bonds directly.
Nov. 19 (Bloomberg) –…”Affluent consumers, pinched by shrinking stock portfolios, falling property values and smaller bonuses, are behaving like their less-well-off peers: They’re reining in spending.
That portends a steeper slowdown than originally forecast for the U.S. economy, or even a recession, because the richest fifth of American households accounts for almost 40 percent of consumer spending, the main engine of economic growth.
“Upper-income consumers are the bellwether,” says Joseph Brusuelas, chief U.S. economist at IDEAglobal Inc., a Singapore- based research firm that advises central banks. “When they begin to capitulate, that’s when we all head down.”
I thought the top 20% just stuffed their earnings in off shore bank accounts and didn’t contribute to the economy.
How the heck are we supposed to raise their taxes if they stumble over the whiff of a recession???
Well, the only way to fix the “problems” of the upper 20% is to loot the lower 80%, right? Yeah, that’s work… not!
Two for me and one for you…whoops I need that one back…let’s start over. Three for me…
“Shareholders in the securities industry are having their worst year since 2002, losing $74 billion of their equity. That won’t prevent Wall Street from paying record bonuses, totaling almost $38 billion.
That money, split among about 186,000 workers at Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos., equates to an average of $201,500 per person, according to data compiled by Bloomberg. The five biggest U.S. securities firms paid $36 billion to employees last year.”
http://tinyurl.com/3xxtdo
And this is why we need interest rate cuts??? We get $3+ gal a gas and food prices up 20% so that they can collect billions in bonuses????
Bernanke should say, if you dish out these bonuses, no more rate cuts!!!!
If I were a shareholder, I’d be looking for an attorney.
i woulda thought all that was in the prospectus..
So what? I like to rabble rouse.
heh.. yeah.. it does get the blood pumping and creative juices flowing.
The shareholders are in large part the ones who bear the responsiblity for this. If people didn’t invest with these turds, then they might actually have to work for a living. Screw the stupid prospectuses anyway, you can’t even read the dang things unless you’ve got an accounting or finance degree, and even then.
hehe ., i really am lol.. thanks palmetto.. laughter is good for the soul .. i think it adds time to one’s life on earth as well.
I wasn’t dissing you, joey, I thought your comment about prospectuses was meant to be sarcastic anyway…
i didn’t feel dissed.. i know the frustration.
But what made me laugh was “Screw the stupid prospectuses anyway..” and the irony of it all, in relation to a thread below about a FB who didn’t read or understand her loan paperwork..
http://loanworkout.org/
Yeah, I read that. I agree, it is a good idea to read something you’re going to be subject to by contact or whatever. I waded through a bunch of HOA docs one time before I purchased a property and got laughed at by the RE agent. I guess what I meant was, if you can’t read and understand the prospectuses, don’t invest.
just to make things clear, i recommend that people Read the Prospectus!
i don’t like going against the grain.. so rarely mention how i feel about it.. but i do feel these complaints about CEO compensation are no more valid than complaints by greedy FBs who are suprised to wake up with suicide loans.
CEO walks away with $100 million? There, but for the grace of God, go I.
Well, I agree with you, joey, wholeheartedly. That’s why I say if you can’t understand it, don’t invest.
Actually, I’d like to see a strike by investors and “consumers”. What would happen to the markets, if, for one day, people did whatever they could not to buy or invest in anything? BTW, someone wanted to try this on ebay, couldn’t get the movement going, though.
Most investors are not the ones to blame, they have no say on what happens in the corporate offices.
The blame should be apportioned to the mutual funds, the hedge funds etc. They control 85% of the stock. These funds are also a “scratch my back, I’ll scratch yours.”
This November 23rd, concerned citizens in as many as 65 countries will hit the streets for a 24-hour consumer fast in celebration of the 15th annual Buy Nothing Day, a global cultural phenomenon that originated in Vancouver, Canada.
includes credit card cut up, zombie walk and whirl mart.
http://adbusters.org/home/
That’s why I say if you can’t understand it, don’t invest.
I had had been taught, “If you can’t afford it, don’t invest.” Too many people have been lured into the stock market, most notably during those boom years of the late 90s, but also with 401k’s. Telling people to “not invest” when they see/read about thousands of people profiting, I think, is asking people to go against human nature and natural (American?) instinct. I don’t think it’s a tin-foil hat mentatlity to believe that think such things as 401Ks and low mortgage interest rates were all a set-up for the financial savvy to profit at the expense of the ignorant. As I’ve said before, it’s like professional poker players playing with newbies. There’s something morally wrong with it.
When asked why he wasn’t investing in the dot com explosion in the late 90’s, the great Warren Buffet said:
“I don’t invest in anything I don’t understand.”
Joey,
Thanks so much for posting the link to “pimp on a corner” mom. I don’t think she got quite the response she was anticipating, but I thoroughly enjoyed it!
My wife is perennially quoting me some decision or other that says that if you lose more than $20k you can sue your financial advisor (or something similar.) My goal is to have a large enough reasonably diverse portfolio to experience that much of a swing. Of course, the old proverb of “Be careful what you wish for” springs to mind.
“got laughed at by the RE agent.”
That is a badge of honor.
If I was a consumer, I would be looking for a resignation….(BB)
–
No, you wouldn’t. They are doing nothing illegal. That is what happens when crooks take control of the system — they legalize their actions. They are like feudal lords.
Jas
Jas -
I love your posts; I always agree with them.
Darrell —
It’ different this time, so relax…
The Weak Dollar Isn’t the Inflation Driver It Once Was
By Sudeep Reddy
Word Count: 903
http://online.wsj.com/article/SB119542708759397293.html?mod=hpp_us_whats_news
Um… right. Because we don’t import anything to this nation, well, there oil, and all our products… oh, and food these days… yep, nothing at all!
http://www.cnbc.com/id/21876990
“Minneapolis Federal Reserve Bank President Gary Stern said on Monday he expected the U.S. housing market to weaken further because of a large pool of unsold homes.
But employment and incomes were still rising, Stern said, and that would underpin consumption.”
First, there was no bubble. Well, maybe there is a bubble, but it is all contained to sub-prime.
So now, it isn’t contained to sub-prime, but it is contained to the overall housing market…. yeah. Right.
$500 billion in annual equity extraction / 100 million households = $5000 per household.
Medain income of $50K. Thus the saying that the U.S. consumer is spending 10% more than they make… Savings rate and total debt growth confirm this “spending 10% more than we make”.
So, if we stop borrowing that money, we need to get a 10% wage increase… Yeah right.
No, actually we need a 10% rise above headline inflation of… what is it? 5%? 10%?
But, really, that is to just stay as in debt as we are with interest rates flat. To actually start paying off the debt or save for retirement, we need an even bigger wage increase. Let’s assume that to become a healthy economy we need to devote 5% to debt reduction and 5% towards saving for retirement…
If the credit crunch (or if the short-term interest rate cuts used to fight it, causes inflation) causes higher inflation, then we need even faster wage increases just to pay the increasing interest on our debt.
So wage increases need to be 10% (to stop getting further into debt) + 10% (needed to start paying off debt and saving to retirement) + inflation + increases in interest on our existing debt… JUST to keep spending at the current rate (spending increases equal to rate of inflation).
In short, it is SOOOOOOOO not contained to the housing market.
I agree Darrell.
Equity needs to be infused at the bottom in order to sustain the pyramid but with the triple combination of wage increases viewed as inflationary, offshoring of jobs, and importation of illegals—-fat chance.
Well put, Darrell!
Well of course wages are unlikely in increase in real terms. This leaves reduced spending. How anybody can believe that we’re not headed for a serious recession is beyond me. Maybe it’s “faith-based” investing.
It’s an entire faith-based economy. Since at least 2001. At some point, business cycle theory was erased from the texts. There’s two things that you won’t learn about in school now. Evolution, and recession.
Further to the point, no new REAL jobs, falling wages (inflation adjusted), an out of control,corrupt borrow and spend govt. who just can’t plain admit that their economic policies are a complete and utter failure, etc.
In many ways, there is nowhere to go but up.
More like since 1992. When Clinton said “It is the economy stupid” the politicians vowed there would never again be a recession… unless terrorist enduced, and very shallow and short… within 2 years of a congression election (which are held every 2 years).
Not laughing out loud, per Mr. Alan Greenspan in 2005 at the Jackson Hole conference in August 2005.
The US economy has been going through Asset inflation bubbles since 1980.
“There’s two things that you won’t learn about in school now. Evolution, and recession.”
I am sure you meant Creation and Recession.
I suspect getting to and through the heart of the recession will be painfully slow. Wages may not be growing, however, once the consumer clears the foreclosure, they once again have money to spend on other things. This could create an elusion that the economy / Walmart appear to be firing on most if not all cylinders for awhile while the financial / housing sector continues to bleed.
Bingo!
You hit the nail on the head. This is why the madness will end and why “inflating away the problem” won’t work unless we’re all getting huge and immediate pay increases WITHOUT any attempts to use those wage increases as a way to drive up more inflation and debt.
For those out there with an interest in nutrition and subprime mortgages - an article that intertwines the subjects:
‘Cholesterol and the subprime mortgage crisis’
‘First things first: The term “meme” (which originated with the biologist/philosopher Richard Dawkins) means a “unit of cultural transmission”- in other words, a shared cultural concept or notion that everyone basically buys into and is in the general storehouse of “common knowledge”.’
‘One “meme” is the idea that home ownership is always better than renting. Think of all the things you’ve heard over the years: renting is like throwing money away. You’ll make more money on your home. The real estate market always goes up. Owners are always better off than renters.’
(Warning: it’s mostly focused on alternatives to the current orthodox in cholesterol theory which is why it’s in the bits bucket! It’s well worth the read, though.)
http://www.jonnybowden.com/2007/08/cholesterol-and-subprime-mortgage.html
I find this extremely dubious - even though I am sympathetic to his views on cholesterol. He asserts that there are no studies of the effects of statins on women. A quick google reveals this to be totally false. How can he make such a blatantly untrue statement?
Well, what exactly do you find dubious about his statements other than one that you have not backed up yourself? I did warn all that it was alternative view on current cholestrol theory. I find that I’m sympathic to it because the current orthodox view of cholestrol has many theorical holes and has been useless in controling heart disease.
If you have a stronger arguement other than a quick google (and I would be interested in the links you saw and I suspect so would the author) than I’m all ears (or eyes). Most of the people I read in this field have dedicated a large portion lives to research and constantly chanellege their own theories on the subject.
Funny enough, my 75 year old father has been debating this point for quite some time. Go figure, I thought he just made this idea up!
Danni
“4) To the extent that statins do any good, it is not by lowering cholesterol, but by lowering inflammation (a far more important goal than lowering cholesterol)”
In fact inflammation seems to be the culprit in many conditions such as heart disease, Alzheimers, arthritis, etc.
LOL - nope! Alternatives to cholestrol theory don’t get much press for the same reasons that the housing bubble didn’t get press: too much profit for the players involved. Realtors aren’t the only source of income for the media.
Think back over how many commericals you’ve seen for “low-fat” (ie. highly processed, high margin) food or cholestrol lowering drugs. If we could solve the heart disease problem by simply eating the right (low margin) whole foods where would the media/agribusiness/big pharma be?
Anyway, I can recommend some blogs/books if you have any interest in further reading.
“If we could solve the heart disease problem by simply eating the right (low margin) whole foods where would the media/agribusiness/big pharma be?”
Exactly, especially big pharma. I’ve done some reading on the inflammation issue and it works for me.
Inflammation has also been linked to cancer. Interesting…
Do you really need me to put ‘women’ and ’statin’ into Google scholar for you? I pointed out that he made a false statement that there are no studies on women and statins. I said nothing else about his cholesterol theory.
I think here on the housing bubble blog you are going to find people who don’t let a thing like that pass.
His definition of ‘meme’ is also pretty lacking (you can look this up in a dictionary if you’re curious. I’m not going to do it for you.)
I mean seriously, a statement like that should set off your alarm bells. How does that register on your common-sense meter, that there would be zero studies of the effects in women of a drug prescribed to millions upon millions of people?
Actually for a long time there was almost no medical research done on women. The researchers were worried that hormone cycles would interfere with their data. This happened even when the drugs were for diseases that primarily effected women.
No, I don’t have a cite. The professors in the public health class I took told us about it when talking about flawed research methods. If research that specifically focussed on how women react to statins happened much later than the research of how men react to statins, that wouldn’t surprise me at all. I would be stunned if it didn’t happen that way.
Yes, I am aware of that. For a long time all heart disease research was based on males only. I’m sure there is more research on statin effects in males. I just think it was foolish to make such a blatantly false statement. I actually agree with the guy regarding cholesterol, but would not give someone a free pass to say something false (and easily checked out) just because I agree with some of their views or their overall point.
So you have never, ever gotten a fact wrong or typed up something you believed to be true at the time and so didn’t require research only to discover it was wrong?
The statement that didn’t set off alarm bells in my head, because, as polly pointed the *decades* worth of research done on heart disease was male only. There still are precious few double-blind long term studies that include women. It’s getting better but as a woman who has some clue of how the medical studies work, it is a totally believable statement.
I’m glad you agree with his general premise. Your orginal comment felt to me more like a “gee, this guy is soooo dumb (or dishonest)” than any real thought or analysis on his article. I’m glad you caught the error but I have to admit that discussions over problems in minor points (which I define as subtract from the whole and see the premise still stands) get old very quickly.
“So you have never, ever gotten a fact wrong or typed up something you believed to be true at the time and so didn’t require research only to discover it was wrong?”
Of course not. Does my pointing out an error somehow imply that I make no errors?
I don’t like it when people point out errors I’ve made, but I am glad that they do because ultimately I’d rather not persist in an error.
This guy is promoting an alternative, non-mainstream view so he should be careful to get things like that straight. There are lots of people on the internet making medical claims. Why disrespect your audience and give people a reason to write you off?
Here is a meme for you:
“Real estate is the worst investment.”
“…a shared cultural concept or notion that everyone basically buys into and is in the general storehouse of “common knowledge”.
“The more you eat …the more you sh@t”… Woody Guthrie
Wall Street eat a lot of sh@t…now comes the indigestion combined with the “runs”…next… the phone call saying: please come into the doctors office as soon as possible…she needs to speak to you.
Ah, this Monday morning…homemade joe, watching the suv’s lined up dropping the kids off…stock market should be up today… as all is well in Bedford Falls.
Lol, it’s a down day again!
What happened to the pump monkeys? Last week’s “rally” was a real let-down.
At least all my positions in ultra-short ETFs are up. Hehehe.
That is sloppy at a couple critical points at least. First, regarding mortgages he talks about some facts related to the potential customers for such mortgages. The history of subprime mortgages is far more benign, especially prior to appraisals and the whole rest of the market going haywire around 2003 depending on exactly where you are looking. This is really important because subprime itself is likely to stick around as a way of getting as many customers as possible who are ready for ownership into homes. Even bigger is the issue that many prime loans that don’t have these issues with the target market are set to explode because of the mania.
Regarding cholesterol the main controversy is about dietary intake as compared to serum levels. Cholesterol in the blood is related to a range of maladies, but the relationship between serum levels and diet is much more complex. Cholesterol in the diet does not result in cholesterol in the blood because it cannot be digested. High fat content in the diet, especially saturated fats, is related to high cholesterol levels.
Oddly enough, the comparison may be even better with these additional points taken into account.
I am a physician - I would like everyone to understand - that the ENTIRE cholesterol “meme” that we have today - has been perpetrated by Big Pharma on a nation of willing boobs.
There are a very very few people - and I mean few - who have genetic hyperlipidemias who benefit from therapy. Serum cholesterol levels and all the subsets of cholesterol - LDL - HDL - VLDL etc are the best reflection of your lifestyle that we as physicians have to use. In other words, your cholesterol levels - should be used ONLY as a mirror into your lifestyle choices and habits. It SHOULD NOT BE TREATED with medication. For every article about the 1 or 2 % risk reduction that Lipitor offers - there are dozens even hundreds showing the 20-30% risk reduction that exercised and getting off your ass offer - as well as steering away from the Ding Dongs and Krispy Kremes.
Indeed, for anyone over 70 still taking statins - PLEASE NOTE — ALL THE AVAILABLE DATA SUGGEST THAT TAKING THEM OVER 70 INCREASES YOUR ALL-CAUSE MORTALITY SUBSTANTIALLY - please discuss with your doctor immediately - of course - you may be going to a doctor who has been brainwashed by Barbie and Ken — but believe me there are a few out there who have not.
Just had to comment - Americans who get their health info from MSM get it straight from PHARMA - and that means pills pills and more pills. One day in my shoes - seeing all the disasters this has wrought in people’s lives - and you would understand - why I will think twice or three times ever about taking a single pill.
I find your point of view interesting and as a health care professional, and part time conspiricy theorist, I have thought much the same thing. As a matter of fact I was recently discussing why I thought the whole thing was a scam to my father. He was talking about how his Dr. was putting him on another medication (of course more expensive than the one he was taking) to lower his levels. Funny thing is he was just fine untill they revised and lowered the level for acceptable cholesterol. I told him that I beleived that it was just a way to sell more medications and that the “old” (inexpensive) medications are just as effective as the “new and improved ones” for most people. However, I did not have data to support my thesis just my observations. I was raised in Nebraska and one of my observations to him was that the old farmers had diets that were loaded with cholesterol and many items prepared with Lard or fried in it. Now those old boys lived very long lives as long as their machinery did not do them in first. So as I see it there is either a shakey corolation in reguard to foods high in cholesterol being problematic OR that having an active life style is the key. And, by the way what makes people think that they can become such fat slugs without ramifications? or to that note when did becoming such a tub of lard become a handicap? Looks like there are alot of “handicap” 300 pounders parking in the front at the wall mart as they scoot around with their electric scooters shouldering the burdon of excessive flesh.
ok this is a HBB so i will end my rant.
Thank you thank you thank you. As you state, the statin rage is a marketing ploy. My (much older) brother, over 70, swallows the things, tho he’s in possession of an excellent brain. Unfortunately, he also implicitly trusts PHARMA. Aarrrgh.
“… and that means pills pills and more pills.”
Thanks for the friendly reminder of why I don’t take any pills, and also why I distrust the majority of the members of your profession, who seem eager to promulgate the urban legend that lifestyle imbalances can always be remedied by popping an appropriate pill.
The markets are encouraging more inflation and a weaker dollar:
Bond Market to Fed: Recession Threat Means More Cuts
http://tinyurl.com/2apjzr
While the record low dollar and the fastest inflation in 14 months give policy makers reasons to keep the target rate for overnight loans between banks at 4.5 percent, traders expect 3.75 percent early in 2008.
I think we’ll get another .25%. No way is the Fed going to let the markets crash 3 weeks before Christmas.
Another .25%? Can you say, good bye dollar?
It’s already priced in. The dollar will crash as February’s cut gets priced in.
I theorize the Fed, PPT, whoever, will do what they can to keep things going until the next election. Then it is “Apres Moi, Le Deluge”.
But I’m not sure they can really keep up pretenses that long. And anyway, the longer the administration occupies the White House, the more scope for further disaster. shrub’s a loser any way you look at it, like him or not, he’s just one of those folks who attracts disaster, we’ve all known people like that. They usually don’t make to high office, but there have been a few examples in history and their installation in high office almost always, if not always, spells doom for their country.
après - After.
Moi - French for “me”.
le - a word derived from the Latin ille and used in French, Spanish and Italian, as a definite article and a pronoun.
deluge - a flood.
Sheesh, you’re makin’ me work too hard, palmetto.
I agree (I think).
Shrub’s (and our country’s) biggest problem is that the voice he hears in his sleep telling him what to do is not God’s, as he believes.
It is Dick Cheney doing a spot-on Jesus impersonation.
Sweeny, that was a comment of Louis XIV.
He was right, too.
The only Louis I ever heard of was Joe Louis.
Clarence the barber: Joe Louis was the greatest boxer who ever lived. He was better than Cassius Clay, he was better than Joe Frazier, he was better than - who’s that new boy, looks like a bulldog…Mike Tyson! He’d whup all their asses!
Old Jewish guy: What about Rocky Marciano?
Clarence: Oh! There they go, there they go! Ever time I start talkin ’bout boxing, a white man got to pull Rocky Marciano out their ass. That’s their one! That’s their one! Rocky Marciano. Rocky Marciano. Let me tell you something once and for all. Rocky Marciano was good, but compared to Joe Louis, Rocky Marciano ain’t shit!
the flood is dollars coming home.
I’m a great fan of Marciano, remember seeing him fight when I was a kid (my dad loved boxing). Since then, I’ve looked at all his filmed bouts many times.
This man was a weird fighter. He had absolutely no style or finesse. None at all. In the ring at the bell he’d walk up to you and start hitting. Where ever you went he’d follow still hitting you. The problem being that he had a punch that’d drop you if/when he connected. Go toe-to-toe with him he’d beat the living hell out of you. More than that he expected to be hit and it didn’t bother him one bit.
If someone did decide to fight him they’d better be in the shape of their life. Marciano was an absolute demon re training, ran 7-12 miles a day, sparred up to 250 rounds (ie, 25 fights) before the actual match, no one was in the shape he was.
His punch was ferocious, sent several people to the hospital, several quit after boxing him. Try the jab with him, after a few rounds you wouldn’t much feel like that any more, he’d break your arm or your elbow with his counter-punching, break your veins as well. He hit Jersey Joe Walcott so hard (knockout) that you could see Walcotts face deform from the punch.
Joe Louis lost to him but late in his career. Even Joe said he’d have had a tough time with Rocky if he’d fought him years earlier. Although he only weighed 185-190 (light for a heavyweight), I’m not sure anyone could beat Marciano - I think Ali might have (if Ali stayed away from punching head-on or rope-a-dope), Foreman possibly (the 1st time around not the 2nd).
But I’m not sure they can really keep up pretenses that long.
Or if they can, the situation becomes more dismal for average people, and takes longer to correct (whether by market mechanisms or other means). I think they’ll continue to try to manipulate the markets and cook the numbers. We’ll see how long that works.
… like him or not, he’s just one of those folks who attracts disaster, we’ve all known people like that …
Yeah. At this point, we’re beyond ideological issues (or we should be) — this clown has poisoned the roots of our society at many levels, both practical and philosophical levels. It’ll take a long time to unwind the damage, regardless of who’s in power.
I had a friend like that in college (who fortunately never made it to high office). All you had to do was hang around with him to get sucked into the disasters which stalked him each day of his existence on this planet.
The bond market is saying that the coming down cycle will be deflationary, not infaltionary. The bond market is considered to be reasonably accurate…
“The bond market is considered to be reasonably accurate… ”
Of course, this was back in the day when the financial system was not as rigged.
Oil quickly came off its highs as well. At least for now, the hot money sees deflation in its future.
If you follow in ka-poom theory, this would be the expected deflationary “ka” phase, before the hyperinflationary explosion.
Hyperinflation (Argentina scenario) is still very possible because of our foreign obligations.
Calm waters right now, tho’.
I disagree. If interests rise were to continue to rise (triggered byt the bond market) the housing market would truly be dead and buried.
It’s funny that not many people talk about it on this board but could you imagine 8%-9% 30 year mortgages coupled with the housing market today? Talk about about killing the market. The powers that be have rigged the inflation numbers and hence can continue to kill the dollar and drop rates. What a scam.
Or say, the 18% mortgages like back in 1981. If the dollar truely plummits we could see that again.
Crime Story…
http://www.canada.com/nationalpost/columnists/story.html?id=39d470d5-e383-4991-bdb5-0abb1f6a94bd
We’re going to have to time-share the jail cells…. You get this bunk, but only for the first week of May and 3rd week of October.
“time-share the jail cells”
Clinkominiums.
Stop it! Stop it! I can’t take it anymore! There goes another key board with coffee all over it!
Always avert eyes when tipping liquid to face!
LA celebrities are already able to buy jail bed-credits and offsets.
Spiegel online today: ‘The Swiss government decided this summer to change the laws which make it illegal for foreigners to buy RE there. Russians, Chinese stand in line to pay any price.’ Something tells me that in this case, foreigners really will snap it all up.
Switzerland is a weird duck of a country.
It’s horribly expensive, the people aren’t exactly warm and fuzzy and really haven’t liked foreigners, for an awful long time now.
All amidst spectacular beauty, in the Alps…
Agreed, but I think the Russians and Chinese with serious money are looking for a bolt hole, not a friendly neighborhood.
I have always found Switzerland and the Swiss very pleasant and correct, but distant. They are superb hoteliers, but as for outsiders moving in…they are by nature insular.
“I have always found Switzerland and the Swiss very pleasant and correct, but distant. They are superb hoteliers, but as for outsiders moving in…they are by nature insular.”
Wish we could become like that. Let the Swiss borrow money so they can give it away in foreign aid. Let the Swiss fight everybody’s wars and ensure that all countries have democracy, especially the ones that can’t handle it. It’s their turn. We need a century-long time-out.
Amen, Chip!
Well, I’m heading out to Austin. I have the Iphone with me so if I see anything bubble worthy to photograph, I will. Ya’ll keep control of this market.
Yes ma’am. Like foxes in a henhouse.
You have a nice Turkey Day there chick and we’ll do the same. I wish we could roast some of the turkeys on Wall Street this week.
When I was a kid, on occasion they’d bring in movies from 20’s and 30’s to give us an idea of what life was like. Comedy, like Laurel and Hardy seemed to shine some of the best light since humor requires it highlight the most.. ummm…common yet shocking aspects of life. People need to relate to it, yet realize how out of place the aspect of life is.
In the future, will “Over the Hedge” be that movie?
Animals wake up from hibernation to find that 99% of their forest has been turned into a sub-division of oversized McMansions. One of the villans is a single lady living in what must be 4000 sqft. She’s the head of the HOA, and is heard calling one of the neighbors to inform them the grass in their yard is too long.
Huge SUVs, “Wow, how many poeple do those hold?” “Usually 1.”
Even the animals want a giant flat pannel tv with 500 channels of HDTV coming off the satelite, and UNIVERSAL REMOTE.
The animals steal food from the houses, but hardly a fruit or vegitable in sight. It is chips, cookies, pizza, canned cheese, snack cakes, energy drinks… People have giant kitchens with granite and stainless, yet every meal is brought by the delivery guy. The only time a human is shown actually cooking it is on an enormous BBQ grill in the back yard.
SOOOOO accurate, and yet soooooo biting!!!
LOL I just watched that with the kids!!
My thoughts vaguely ran along the same line as I watched it but I couldn’t have articulated the thought quite as well….just an overall feeling of nausea.
Danni
In the future, will “Over the Hedge” be that movie?
What’s interesting is that calling attention to the outrageous aspects of peoples’ lives oftentimes spreads rather than stems the outrageous behavior. For example, remember that scene in “LA Stories” where Steve Martin orders a “a double half-calf cup of decaf with a twist of lemon”? That was in 1991, and look at the Starbucks craze 15+ years later. Remember “the Money Pit” with Tom Hanks and Shelly Long? How many FBs saw that one and laughed and laughed and laughed?
It’s the sheeple (so over used a term, yet so appropriate) mentality that seems to overcome peoples’ sense of reason.
Easily one of my top 5 movies. I can’t never get that movie out of my mind every time I visit LACMA. The best part is when Hugh Grant says he lives in the valley and the vallets snicker.
I loved “Over the Hedge” - the hyperactive squirrel Hammy was great!
Another example of a movie spawning a nightmare of an idea: “The Trueman Show.” I remember watching the movie, thinking it was interesting, but surely humanity would never degenerate to the point where just watching other people live would be considered a high form of entertainment. Ooops… it wasn’t 5 years after that the reality TV crazy began!
The soundtrack for that movie has some most excellent songs. This one I often sing to my son. He’s only 13 months old, so I don’t think he gets it yet, though.
Ben Folds: All U Can Eat
Son, look at all the people
In this restaurant
What do you think they weigh?
And out the window
To the parking lot
At their SUVs taking all of this space
They give no f***
They talk as loud as they want
They give no f***
Just as long as there’s enough
For them
Gonna get on the microphone
Down at Wal-Mart
Talk about some s***
That’s been on my mind
Talk about the state
Of this great nation of ours
People look to your left
Yeah and look to your right
They give no f***
They buy as much as they would want
They give no f***
Just as long as there’s enough
For them
Son, look at the people
Lining up for plastic
Wouldn’t you like to see ‘em
In the National Geographic
Squating bare-assed in the dirt
Eating rice from a bowl
With a towel on their head and
Maybe a bone in their nose
See that a******
With a peace sign on his license plate
Giving me the finger and
Running me out of his lane
God made us number one
‘Cause he loves us the best
But he should go bless
Someone else for a while
And give us a rest
(They give no)
Yeah and everyone can see
(They give no)
We’ve eaten all that we can eat
Take a look at this.
http://loanworkout.org/2007/11/18/worse-than-a-pimp-on-a-corner-i-havent-even-pulled-my-pants-up–their-looking-to-fk–me-again.aspx
that link is toast..
Here ya go………
http://loanworkout.org/
Sorry for the dead link I should have tested it first.
no problem..found it with hanky’s guide to the front page, which i shouda tried..
I was just this close to walking, even though I didn’t understand it all. Something just didn’t feel right.
But, she went for it anyway. I’d like to get her into a poker game..
“America is a capitalistic society and the middle class has always been the enemy. The rich love the poor, who they use to keep their pockets fat.”
Well, she may not have been the sharpest tool in the shed, but I do agree with this particular quote of hers. Every time I see or read about some terrorist or immigrant group, legal or illegal, salivating over bringing down the US, I feel that they’re speaking about is not so much the death of the US, but the death of members of the middle class. They want our ass and they want it badly, for some reason. Rich, poor, politicos, terrorists, immigrants, lobbyists, all these groups have decided that members of the middle class must either descend to poverty, or die. That’s the impession I’m getting, anyway.
You are viewing these issues as an American, but the world the people you are talking about live in is quite different. I strongly recommend Amy Chua’s “World On Fire” for insight regarding this. An extremely short take on this is that over most of this world the majority are ruled over by a tiny and recognizable minority, and the US plays a similar role in global systems as the recognizable minority who dominates all the rest.
I think a lot of this could be solved with a universal pre-loan disclosure statement of all pertinent info — rates, terms, resets, pre-payments, neg-am, and other major loan conditions. Any change beyond this document — which folks would get at least 15 days before closing (and preferably, immediately upon application or having application “approved”) — would have to be very explicitly explained in advance of closing.
The whole problem with the loan application process is that it’s designed to keep you in, and keep you from jumping to another loan. You can’t stop the process, because you’ve maybe already sold your old house, or given rental notice, or are moving to new town.
Oddly enough — I actually got better loan terms than I agreed to when I bought — they forgot to charge me a quarter point that was agreed to when I made my loan. Saved me $700. Kept looking for it settlement docs, and then waiting for some kind of notice after closing that they had forgotten it — but never heard a thing about it.
I’d like to get her into a poker game
joey, the more I read your comments, the more I believe that your perspective on life is that it is a game of survival of the fittest. I think it’s a sad when people in a civilized society of great wealth act as predators against the ignorant, less-privileged, or less-worldly. But for our laws, I think such people would resort to outright thievery with the attitude, “Hey, if you’re stupid enough to leave your door unlocked, you deserve to have your television taken from you.” I hope I’m misinterpreting your perspective.
“sad when people in a civilized society of great wealth act as predators against the ignorant, less-privileged, or less-worldly”
Mikey, I think Joey is a realist. Market-based capitalism has always been a Darwinian struggle, for nations,for companies and for individuals. In the marketplace, the rule has always been, caveat emptor. There are some government-imposed regulations meant to ensure a level of fairness, but whether these are understood by all, or even enforced, is a matter of debate. If the alternative is the nanny state or the ” it takes a village to plunder your wallet and savings”, then capitalism is the choice for folks who value personal freedom.
I think Joey is a realist
Hey spike -
There’s a difference between being a realist and being a snake. Many people govern their behavior based on a moral compass, as opposed to a legal tightrope. Just because the rules technically permit one to take advantage of others does not mean that this is the preferred way or inevitable manner in which life whould be lived, business should be conducted. Reality is not the reason that business can no longer be conducted on a handshake; it is because of the declining moral standards of the people conducting business. We shouldn’t need government to ensure fairness; we have the moral capacity to regulate ourselves. Those people whose “success” is legal, yet based on duping the people who are trusting, ignorant, elderly, or otherwise vulnerable are the lowest of the low in society.
mikey.. i see little to add to what spike66 said. My reference to poker does bring the situation into focus.
Be careful. Count your change. Read before signing. Treat your money with respect. Know your limits.
Be careful. Count your change. Read before signing. Treat your money with respect. Know your limits.
joey - I’ve no objection to being defensive in business transactions; caveat emptor, indeed. But your suggestion to invite a novice to play poker makes you an aggressor willing to stoop to ever new lows to make a buck off of the unsuspecting and the vulnerable: “Woo-hoo, made a few hundred off the rookie.” There’s absolutely no dignity in that, and it’s that kind of immoral conduct that spawned the phrase, “caveat emptor.”
Deception is not immoral conduct in poker. Deception is the heart and soul of poker. Poker without deception is unthinkable.
I did not say i’d like to trick her into signing a bad contract, or to pick her pocket.
She is not careful. She doesn’t trust her instincts. She seems like easy money in a poker game, and no doubt would be if she had any money.. which she doesn’t.
There’s not a not of love for the FB mom, judging by the comments replying to her post.
The next post was interesting, about another 27 foreclosures being dismissed by Judge Rose:
In a decision piggy-backing on Judge Boyko’s recent Deutsche Bank ruling (announced on this site Tuesday), Judge Rose has thrown out another batch of foreclosures,
NYT link
Now, the Ohio ruling indicates that the intricacies of the mortgage pools are starting to create problems for lenders as well. Lawyers for troubled homeowners are expected to seize upon the district judge’s opinion as a way to impede foreclosures across the country or force investors to settle with homeowners. And it may encourage judges in other courts to demand more documentation of ownership from lenders trying to foreclose.
Tried to comment on this one a few times (posts always seem to get eaten on this topic). This *is* my wife’s area of practice (not foreclosure, but real property), and it’s anything but “minor”. Even at a minimum it will have a major impact on the costs incurred during the foreclosure process, making “investors” even less enthusiastic about “investing”. It will likely have far more of an effect then that though. We’re talking PORPERTY LAW here, and it is a tad bit more then “sorta” hammered out. It’s some of the oldest, most established & hence soundest law out there. There is a *serious* question on if they (the bond diced and sliced into pieces owners whi in reality are looking like not legally transferred any rights owners of said paper) can show any “right” to anything.
And no, I don’t wan to see any of the parties escape their “just due”. Playing fast and loose with well established law principles is, however, a good way to get yourself screwed. We’ll see how screwed the paper trail is over time. But these are not “minor” laws nor do they come with out some rather sharp teeth for those who failed to follow them.
Lowe’s Companies 3rd Quarter Net Falls, Hurt By Housing Market.
http://www.marketwatch.com/news/story/lowes-companies-3rd-quarter-net/story.aspx?guid=%7B9A47CD33%2DD499%2D4B40%2DB650%2D98D6EBB6767E%7D&dist=hplatest
I read on CNN this morning, though, that Lowe’s performance wasn’t as bad as forecast. And yet, there’s no rally in the market today. Go figure.
“And yet, there’s no rally in the market today. Go figure.”
Wait for the last 1/2 hour.
Went to Lowes tonight.
“Self Checkout” + bad hardware and software = dying business.
I hate self checkout. I need a worker to suck up to me on my way out of the store. Actually, I just need some way to GET THE HELL OUT of the store.
This is for nhz in The Netherlands:
http://www.fundmasteryblog.com/2007/11/15/amsterdam-real-estate-is-close-to-high-point-from-1736/
Interesting post. My wife and I recently met a Dutch couple who are likely to become good friends. They are hunkered down, relative to house prices.
http://www.bloomberg.com/apps/news?pid=20601087&sid=a3RGkJIce3Rg&refer=home
Gotta love this. Citigroup falls from $54 to $34 and now the ANALysts put on a “Sell” rating.
Not exactly Nostradumus, are they?
Becuase they may have $11 billion in writedowns… SO the CNBC take is that is only $3 billion more than the $8 billion already announced.
Wait, that is the magical $3 billion that is good news..
To be followed immediatly by a floor trader announcing that this is what the traders have wanted. We want to know how big this is, and we’re finally getting a full picture of how bad it is and we’re reaching the bottom of the bad news… (Said with a straight face, even though this exact same thing has been said the last 14 multi-billion write downs).
What a bunch of cheerleading hacks!!!!
yep, Goldman hack just wanted on the record that he had citi on sell by the end of the year so he can keep he’s record in tack. Look, our guy had one of the worst performing dow stocks rated at sell. We’re good!
That does sound like a tacky record…
LOL. He might’ve missed that one.
Citi guy has been on for the last half hour trying to convince people it isn’t that bad. Wonder how big of a future advertising contract they had to sign to get their giy on as a guest host for this long on this particular day.
That is how they pick these guests….. One local company called Wealth Turst Arizona advertises on CNBC, and every few weeks, an analyst from Wealth Trust Arizona gets to do their West Coast wakey, wakey.
Flapping head dude says that the economy is fine… Doesn’t buy the stories about the consumer being tapped.
We stand in line for 40 minutes to pay $4 for a cup of coffee that is probably worth $.20. Condo market in Manhatten is slowing, so when a unit goes on the market there aren’t 70 people in the hallway waiting to see it, there are only 50.
40% of spending in the economy is done by the top 20%. The top 20% accounts for more spending than the bottom 60%. Wall Street bonuses will be down, but not that much, thank goodness (Greedy chuckle).
Freakin pig man. He says all of this as if it is good. The top 20% spend more money than the bottom 60%. Great, now DON’T you DARE to complair when we raise your taxes to provide survices to that bottom 60%! YOU have to pay the taxes becuase you’re the only ones WITH and freakin’ money to pay taxes.
ARGGGGGGGGGGGG.
I really wish I had an account at Citi so that I could go and close it after hearing this steamin’ pile of dung crow about how rich the rich are! So rich they can single handedly save the economy.
I expected him to start an evil laugh and rant on….
We ARE the economy… We own you… you exist to create a market for us to buy stuff from… back behind the retail counter you little person, and get me another mocha-frapa-lata-chino….and lick my choes clean while you’re down their you serf… Don’t you know I’m the master of your universe?
We ARE the economy… We own you… you exist to create a market for us to buy stuff from… back behind the retail counter you little person, and get me another mocha-frapa-lata-chino….and lick my c(s)hoes clean while you’re down their (re) you serf…”
wow, that is biting humor. i am lmao. many a true word spoken in jest. cuts to the bone. thanks phx
What’s funny is that Citi not only put a ’sell’ rating on e*trade lastweek, but recommended that e*trade customers find a more stable brokerage. Now the shoe is on the other foot. Which spells out the difference between real estate and finance: no one is covering for each other here. This is far more cutthroat.
C down 20%, i think this is a bit ironic since 7 days ago a Citigroup analyst sent out a sell warning on E*Trade. as they say, people in glass houses…
Half paying attention yesterday, I saw some sort of news blurb on the Discovery Times channel. “In some areas housing prices forecast to fall 40%” “Most places, however, will just have prolonged slow growth in prices.” “If you’re in Florida, Nevada, D.C., etc. prepare for a major correction” (accompanied by pictures of folks riding a roller coaster). I was surprised to see all this on t.v. I was even more surprised when they ended with something like, “so, in conclusion, the bubble is not bursting!” WTF? Wish I could find a copy to show you.
I intended to do some investigating of Biscayne Bay. My “buddy” keeps telling me his condo is going up $3000 per month. Maybe he meant the property taxes on his waterfront condo in Florida?
Swiss Re announce writedowns of only $1.1BN!!!
didn’t they get the “$3BN writedown” memo?
In a move of sympathy with its US counterparts, the Bank of China may take a 1 Billion dollar write down on subprime mortgages.
I guess after a massive writedown like that from the Bank of China, the Chinese goverment should just stop allowing lending for the rest of the year…hmmm,.
China just announced it. All Chinese bank lendings are frozen for 2 months. It’s in the Chinese newspapers and Wall Street Journal.
lol
That must be $1.1 Billion Euros…which is getting pretty close to $3 Billion USD.
One thing that HAS changed. Right up until August I was still seeing lots of ads for refi. Ditech, people are smart. 866-66-FASTER, you’ve got the Green LIght. Some other company with “we feature fix and flip loans”… on an on. Those have fallen off like CRAZY in the last 2 months.
Even our local hack with criminally bad advice, Mike Moore, the AZ Mortage Coach with his “unlock the equity” line has changed his tagline to the AZ Financial Coach.
Just saw a Ditech ad… first in 3 hours.. they used to be every commercial break or 2. 30 year fixed rate, full doc, with sufficient equity…. OHHHHHH how times have changed!
Darrell,
I was just noticing this the past few days. Used to be you couldn’t get away from the mortgage ads on radio, TV, internet, newspapers, etc.
Now? Not so much.
Our Texas mortgage lenders are cunning. Radio ad by the owner talks about how he and his wife have 10 year old cars and haven’t been in a mall for 5 years.
They can’t get hits with the normal bait, so they are shifting to HBB style lures
My fiancee’ and I started renting a place in preperation for the wedding so that she can get settled in now and I can move in more leisurely in December, after the wedding. One of the first pieces of mail we got was this:
“WHY RENT??
When will you buy a home of your own?
Why are you paying for someone else’s house?
FREE
Buyer Representation & Help
Join our growing list of customers
who have bought a home with
ZERO MONEY OUT OF POCKET!
The best buyer’s market in history is right now!!!
Call Burrell Realty Today
540-899-2277″
I of course about busted my ass laughing. First of all we negotated a pretty decent rent. Second that rent would never cover anyone’s mortgage in this area (based on current and recent prices). Third our landlord has owned this property since the early 80s, so we’re still not paying for his house; except in the very broad sense. Fourth, even if we wanted to buy into this ‘best buters market in history’, we can’t afford to. Young couple just getting started? No, sorry. Wait until we’ve got some of her debt paid down.
This zero money down stuff is still out there and scary. But also still a little funny.
Also, that area code is not mine, it’s west and south, by a good margin. Most of our real estate agents have numbers with that area code, though. I’ve always found that interesting.
“Wait until we’ve got some of her debt paid down.”
I suppose it can be better to marry negative equity than to buy into it in RE. At least she has potential to pay it all back.
A readers comment on a Low Income Housing Subsidy story in the San Diego Union Tribune:
“The government’s role is not to decide who is entitled to housing or interfere with the free market. An expensive cost of living is one of the factors that keeps San Diego so much nicer than other cities in the U.S. This helps keep poor and undesirable people from living here. ….”
Take that, you poor and undesireable non-San Diegans!
I am so glad to know that illegal immigrants from Mexico aren’t moving here because it is too expensive.
And love the line poor AND undesireable. To me undesireable are people who lie, cheat and steal, look down on those who work hard for a living, pretend some smug superiority because mommy and daddy handed life on a platter to them, or are rude and make life generally unpleasant. So someone undesireable may be poor, but hard-working, polite, strong valued people working to provide a better life for their kids are not undesireable simply because their incomes fall below a certain level.
Well, this week is the official kick off to the holiday season. Where people gather together with friends and loved ones (to get their xmas wish lists), to stuff themselves with food (to ensure food coma so that hey have plenty of energy and are plenty rested), to watch football (So that there are less big games on for the super important weekend)…
Chacking the paper, every other article relates to this major holiday…. Of course, I’m speaking of Black Friday… and the prepartion day formerly known as Thanksgiving… Where retailers get us to gether to say THANKS for GIVING us all of your money.
Seriously, my paper has more stories about Black Friady than about Thanksgiving. “Web sites leak Black Friday ads.” “Possible consumer slowdown prompts bigger Black Friday discounts than usual.” “Is this holiday the last stand of the U.S. consumer?” (aka: go out and spend, spend, spend because the credit card gets turned off in Feb.) “Why do people line up pre-dawn for Black Friday? For many it is fun.” “Shoppers may shun gold as it breaks $800 an ounce.” “Bargains always trump sleep for Black Friday.” “Free breakfast for Black Friday shoppers”
We need to put more giving into Thanksgiving. Give gifts on Thanksgiving! A new family tradition! A pre-Christmas holiday where you get presents! The kids will love it!
And the shopping season can start even earlier.. perhaps in August.
My sisters treat Black Friday as if it were an ultra shopping marathon, up @ 5 am, back @ 5 pm…
12 hours of proving your true worth, as a consumer.
A welcome respite for men all across the country.
Where I live they’ve just skipped over Thanksgiving completely. The trees are lined up outside the stores, the music is blaring everywhere you go, and the Salvation Army people are already out ringing their bells. A time to stop and give thanks?! Who needs that.
Some people I know do periodic “Free Stores,” where everything is used, found, recycled or donated. They’re great. I’ve donated stuff to them, but also found some really good stuff at previous ones.
They’re supposed to have one open on Black Friday as an anti-spending / anti-corporate alternative, but no location has been set (and i’ll be out of town anyway).
A blurb about a previous Free Store
I think the psychology of all of this will hit Florida extra hard. The “pay me in sunshine” people will no longer be able to ignore crime and awful planning. Florida is much less attractive if you’re not “being paid” to live in a house here.
At this point, I plan on leaving in 2-3 because I don’t want to live here when all of this mess bottoms out. I still believe we have a long way to go. It’s moving faster than I had planned, but it’s further than I originally thought.
This isn’t likely to help consumers shopping for the holiday. More like a Black Gold Friday:
OPEC Comments on Depreciating US Dollar Drive Oil Prices Near $95
http://tinyurl.com/34wd98
Oil prices rose Monday with more talk among OPEC members about converting their cash reserves to the euro and away from the U.S. dollar.
“Motivated seller”
http://www.phillyliving.com/buy/5115373-2028-Pine-St-Philadelphia-PA
http://www.phillyliving.com/buy/5115365-2028-Pine-St-Philadelphia-PA
Wow, who would have guessed that this palace would have to be marked down $400K? So what if it’s only 10 feet wide, it has granite countertops! Seriously, the footprint looks to be about 10′ x 35′, tops. With three stories, that comes to a big ol’ 1050sf. So at the new price, we’re looking at a mere $1,000/sf. Yeah, this baby should sell quickly.
It is actually bigger and the lot goes all the way to Addison? The inside is a total dump though.
That is the ugliest house I have ever seen.
I aim to please… though I’m sure this one is quite a bit better than some other ones …
“Tax abatement” is what grabbed my attention. Presumably, that $5K annual property tax will rocket up once the abatement ceases, n’est pas?
Heck is frosting over.
The REIC is sort of admitting there was a housing souffle…
The auto companies are sort of admitting that there is global warming…
And in the lead story in today’s WSJ, oil company executives are admitting that yes, we might be approaching peak oil.
Meanwhile, according to the Financial Times, Iran and Venazula want to drop the dollar, but Saudi Arabia doesn’t because it feels sorry for us. It wanted the whole discussion secret because it is afraid the dollar would crash, but it got leaked.
http://www.ft.com/cms/s/0/08d2f274-95ae-11dc-b7ec-0000779fd2ac.html?nclick_check=1
Also, prices at $100 per barrel are described as “fair,” because the price hasn’t risen in Euros.
Here is the “currency could collapse” article.
http://www.ft.com/cms/s/0/33a4f754-95b3-11dc-b7ec-0000779fd2ac,dwp_uuid=81f97690-812f-11da-8b55-0000779e2340.html
“Peak Oil” sounds like an accomplishment…
“term/oil” is a much better way to express what will be coming some day.
Doesn’t that just give the oil barons cover to increase the prce of oil? They can say that we have reached a peak, so now the prices will only go higher. Seems too convenient that they are admitting something that most didn’t believe would happen for 50-100 years. More market manipulation, in my opinion.
it makes one wonder what happened to the guy who forgot to shut off the mic? was it intentional?
In many countries, the custom is to be indirect, to get to what you really want in the 1st place.
Subterfuge
Spilling the beans, but not really saying all that much, is what I read into their spiel. Nobody leaves the microphone on for 1/2 an hour, please.
If that was a mistake, I have a McMansion to sell everyone…
Both Moody’s and MIT are saying that commercial real estate rates are slipping.
Commercial construction is going to be crushed just as hard as the housing bubble under the credit crunch and coming recession.
Not too late to get in to SRS then.
I’m not sure of that. There has been virtually no speculative office construction in major markets such as NY, SF, Phil, Bos, even LA since the crash of the early 1990s. And inventory has fallen due to office to residential conversions. Moreover, rents have been falling relative to inflation since the early 1980s.
The fundmentals are good for office. If there is a crash, it is because (as in housing) the price investors paid for the buildings soared higher than the income available to support it, even with good fundamentals.
The current prices of the spreads on commercials are showing a dramatic slowdown. This, in the past, has always been ahead of the market. I would bet with the spread.
Ummm… Comcast building which was done by claiming that center city business district is “distressed” ghetto? Circa I. Circa II in the plans. Tons of vacancies in PHL.
Here’s a 24-hour late reply to JoeyinCalif, who was asking some questions yesterday about why gold is a worthwhile currency to protect the value of your savings. For some reason, he’s either baiting people and they’re ignoring him, or the majority of goldbugs just want to be silent on it.
Joey: I am a believer in the savings-power of gold. I would venture the opinion that gold will NEVER truly become just a commodity, since it has properties to it that have made it a medium of exchange for 5000+ years. Not only was it (one of) the first metals discovered, but over millenia it has stayed consistently favored as that bartering medium.
No other element that we know of is virtually indestructible. Nothing can destroy gold, nothing. The only chemical we know of that can “eat” gold can also be reversed in process. The other metals all can and will degrade, oxidize, or wither away over time. This is a key factor in gold’s security as a form of savings.
No other metal is as malleable or divisible as gold. Gold can be broken down to the tiniest of weights, and it can also be hammered flatter than any other metal while still having strength. This is a key factor in gold’s security as a medium of exchange.
Almost no other metal has the mass that gold does. It is inherently a VERY heavy metal. If you had gold fill up a simple backpack, you couldn’t move it. A forklift may not be able to either. Yet that amount filling up a backpack is also worth tens of millions of USD. This means gold is easily transported in common values (say, $100,000 worth of gold only weighing 8 pounds or so).
So why gold? Over all of history, man has always wanted a medium of exchange — a bartering agent. You sell corn, I sell houses. I won’t accept payment for a house in corn, because corn degrades, and I can’t use 300,000 ears of corn. Instead, we agree on a bartering agent. You sell your 300,000 ears of corn to 20,000 others, who give you the bartering agent. Now we can trade. Corn won’t work well as I said above (too bulky, degrades, not easy to store). Dirt won’t work. Silver and copper and iron all degrade quickly. Platinum is hard to divide or form. Sand is too common, so it would not be a good store of value. Water is hard to transport and store and exchange (not enough mass). Animals need maintenance and space.
There is no medium of exchange out there that has ALL the properties of gold. It isn’t just good for electronics and jewelry, it is also great as a form of money. We can take 1 ounce of gold, and divide up into 1 gram pieces (current USD spot value of $25). 1 gram is easy to recognize, analyze, and carry. Yet $25 is still a bit much for a minimum value. 1 gram of gold can still be divided to grains (worth about $1.50 per grain), and even smaller if we decide we need to divide down. For really small values, I do believe silver is an excellent medium of smaller exchange (down to pennies), but no one here is going to worry about a few hundred dollars of savings losing value versus thousands, or hundreds of thousands, in value that is stored in gold.
Yes, gold is a commodity. Yes, it has bubbled before. Yet gold, over thousands of years, has generally held its value versus other needs (food, shelter, water, labor, clothing, etc). It isn’t a good investment, but it is a very secure currency. I don’t look at gold as an investment, to me it is purely money. All our savings (short term AND long term) is in gold. The daily ups and downs means nothing to me because I’ve been graphing the price of gold versus other consumer goods each week for 7 years. Guess what? My savings hasn’t budged much in value, in fact it is very consistent with prices 2, 5 and 7 years ago. I can buy eggs, oil, water and more at approximately the same value in gold over the years. Yet while the eggs are rotten, the oil is used up, and the water is stale, my gold is shiny and ready to be traded for something I need.
Gold is also harder to spend frivolously, but easy to convert to fiat currency in a time of need.
i am just walking out the door but will read and respond later today..
i said i’d respond so here it is.. although after reading the whole thread, i’d rather not get involved.
Gold has value among like-minded people. Paper dollars have value among like-minded people.
And, simply reaching some agreement on the value of either is what determines their respective values aside from their utility value.
It works for seashells.. salt.. corn, and a lot of other currencies
So you like gold?
tee hee…
The daily gold bug post (and this one in particular) brought back memories of my favorite line in any Bond movie, ever. Bond’s tied up in Goldfinger’s lab and a laser is slowly inching towards his genitals…
Bond: “Do you expect me to talk?”
Auric Goldfinger: “No, Mr. Bond, I expect you to die!”
Gold had value in ancient times because of many of the properties you mention. It could be hammered into jewelry even in the days before we could forge it. It was hard to fake. It was easily transportable. Etc. It was certainly a status symbol for the wealthy.
However, once the food shortage hits, I’m not sure that people on the verge of starvation would trade their last ounce of rice for an ounce of gold.
Gold retains value only as long as people believe they will survive the current devistation and find better times where gold will have value on the other side.
However, once the food shortage hits, I’m not sure that people on the verge of starvation would trade their last ounce of rice for an ounce of gold.
Gold retains value only as long as people believe they will survive the current devistation and find better times where gold will have value on the other side.
Ok, so the question remains then — what do you feel would be a safe medium of exchange, if the fan gets hit? I don’t trust any government fiat currency in the long term. Nor do I trust most investments, as few of them issue actual dividends or profits to the shareholders.
The order of operations for my life has always been to pay off depreciating assets fast (house, car, clothing, electronics) and buy below my means or what someone of my income can afford. Our house is 1X our annual income. Our cars are all 1/20th our annual income. That’s easy to pay off, and then its not an issue other than maintenance and taxes.
For short term investment, I’ve never understood the stock market. A far better investment for me is to expand my market of a business, invest in a new employee or two, and find a near immediate profit on their labor. Market expansion and a new employee hire/training has generally been less than $15,000 put up, for an annual profit of far more than $15,000. Long term loss possibilities are slim. Why should I give my money to some shareholder who doesn’t pass my investment on to the company? I wouldn’t buy an IPO, either, unless the company was going to issue dividends that would pay me back in 3-5 years for my investment. Doesn’t happen.
For the long term, my investments are usually local (private farm, some land on a fresh water source, other local businesses that focus on items I need). One long term investment for me has been to reduce energy costs through solar power (not a good investment) and a ground source heat pump (excellent investment). Another long term investment for me has been life insurance, which I balance based on what my family would need for long term survival if I died or was disabled that year. I don’t dabble in the securities markets, and I don’t like my savings to be used as a fractional reserve for the fraudulent modern banking system.
My upside “risk” to saving in gold is reasonable, especially in the most recent commodity bull market. My downside “risk” to saving in gold is also reasonable, as my gold holdings are marked to market by me personally at the lowest price I paid for gold ($291 per ounce). I value all my gold savings at two prices: marked-to-market at that minimum value, and also at the current market price for gold. If gold was to fall to $290 per ounce, considering my current living overhead, I still have more than enough to live 5 years with no income, survive 19 years. If I had to sell it today, I have more than enough to survive 12+ years living no difference, and survive 40 years. I’d be very surprised if gold ever fell below its 20 year low, just based on demand from a variety of markets and people (both elite and common).
For ultra-short term profits, I can understand playing the securities market, but I see no value in terms of long term solidity. I’ve been charting the cost of living with my own pricing charts, and the stock market as well as a few select barrel of stocks doesn’t seem to keep up with my real cost increases.
Most Americans, including the housing contrarians on this blog, are generally clueless in terms of long term survivability because they’re focused either on a market bust, or a market rise. I look at both. I also don’t look at only the U.S. market, as we own property in both India and Western Europe (property we use each year and is cheaper than hotels). A move to either market is open to me, if things do get bad here or elsewhere. Most people who bought $600,000 McMansions have no clue that they could divest of a single economy for far less by approaching long term survivability from multiple views.
Of all my business clients, less than 33% of them have a reasonable history of surviving down markets. I’ve seen numerous millionaires go broke due to whatever bubble has surfaced in the past 60 years. The only ones that have survived the long haul were ones who divested of a single economy, who lived far below their means, who invested in themselves without oversaturating their free time, and who held a portion of their savings in gold.
Yes, gold is a terrible investment. I won’t deny that. But I do believe it is the safest form of savings. Invest elsewhere. Invest in yourself. Live way below your means or how your co-workers are living. When the down-cycles come, you’ll walk fine. When the up-cycles come, you’ll take less advantage of them than others, but the peaks and valleys of life are much smoother.
I just glanced over the thread yesterday. I don’t really have any wealthto store….
However, from my brief skim, my impression was that the two sides were kind of talking past each other. One side was saying “in an Armegeddon type end of society as we know it” gold won’t retain value. I agree with that (not that is going to happen, just that IF it does, gold won’t be of value). If people are starving to death, they are not going to swap food for gold. In that situation, how would I store wealth? In that situation, the concept of wealth will be whatever it takes to get through the day…. the wealthy will be the people with the biggest guns, most ammo, best aim, and tighest group ethic to work together to survive…
Now, I think the far more likely is something less drastic than end of the world. I see “end of the Soviet Union” type collapse…but reverting from capitalism to something more socialist. The tax base collapses, the govt goes bankrupt, the people that hold the $8 trillion U.S. debt get nothing, mass Social Security and healthcare reform, we stop importing as no one will accept our money, gold gets confiscated to refill the U.S. governments coffers to create a new money, and we return to a manufacturing economy based on a much lower standard of living.
Our military is used to secure vital assets, such as oil…. we just go and take it… Major assets owned by foreigners get “nationalized”.
The McMansions become bording houses and/or get torn down to return the land to agriculture. MUCH smaller cars and scooters.
What I HAVE no idea of knowing is if the current corporations will continue to exist, owning all the farms, factories, mines, railroads, etc…. Or if these assets will be confiscated and auctioned off to the friends and family of those in power.
My wife asks, why would ANYONE want to win this election? Well, it culd put people in power that have THE MOST power in the history of the world….
Darrell - personally, I think that gold will be only slightly easier to confiscate than our guns, this time around.
Gold is also in a price bubble, thanks to the fallout from the housing bubble. After its run is up, it will join real estates in the ranks of “worst post-bubble investments.”
Maybe we should have a betting pool on this. Gold bugs vs. gold bubble believers? I say gold will increase in purchasing power over the next 5 years.
In the earliest days of Ben’s blog, the discussion of gold most often, to my recollection, centered on its value as insurance against catastrophic miscalculation of the value of everything else. Thus, its “earning” ability was seen to be that of term life insurance - zero. It was to be held, as a small (5% or so) portion of assets as pure insurance. But as pure insurance against the worst outcome/effects of the bust, and assuming you hold bullion and not paper title, I think there is no equal. I’ve never thought of my gold as an investment.
Meme-mutation post runup?
“Gold is also harder to spend frivolously, but easy to convert to fiat currency in a time of need.”
The 1930s were a ‘time of need’ in the U.S. Too bad FDR issued an executive order to confiscate gold from private citizens.
http://www.wellsfargonevadagold.com/exec-order.html
Goes to show you that the Gubment understands the value of gold.
Also goes to show you that gold bugs don’t understand the risks ineherent in diversifying too heavily into their currency of choice.
“I am a believer in the savings-power of gold.”
I am a believer that most professed believers who post here have something they want to sell and are hoping to find greater fools to buy it. Good luck with that plan, pal!
I am a believer that…
What are you selling?
Nothing.
You forgot about peak gold:
The era of ‘peak gold’ has arrived.
Try as they might, miners cannot find enough ore at viable costs to replace their fast-depleting reserves, even if they dig miles into the centre of the earth.
There’s not much gold out there,” said Gregory Wilkins, chief executive of top producer Barrick Gold.
“Global mine supply is going to decrease at a much faster rate than people generally believe. Many of the new mines that people are anticipating will never come into production,” he told the RBC Capital Markets gold conference in London
http://tinyurl.com/2po3dm
While I appreciate your enthusiasm for the financial properties of gold, you are quite wrong on it’s physical properties.
- I can name at least half a dozen different ways to chemically attack gold. Some of them are difficult and energy intensive to reverse. There are more chemically durable metals out there. (Platinum is the first to come to mind.) No metal is impervious to chemical attack.
- There are denser metals, starting with Platinum and it’s cousins Osmium and Iridium.
- Gold does wear, that is why it is alloyed for jewelry. It loses mass as it wears, since it sticks to what wears it. It’s just too soft to really be used pure.
- Gold is a financial medium just because it is common, easy to handle and exists in nature in the metallic state. Not because it has the most extreme properties.
I appreciate the financial aspect, but the chemistry of gold isn’t what you think it is.
Thank you, Freshman.
I built a house on proceeds garnered from reducing transition metals to their monatomic state. I still have several speciman jars full of dark green liquid gold sitting on my bookcase.
You get an “A.
As part of the daily commentary on Gold around here, any thoughts on the current downward trend?
My take is that people are selling to prop up markets around the world, meet margin calls, etc. and they’re doing it in large quantities.
That’s what I would have guessed, having no useful factual knowledge about these most recent selling events.
Corrections are buying opportunities.
Maybe gold investors beleive that the FED won’t lower rates and we will get a deflationary recession ?
Are you aware of the tax implications of selling bullion or GLD (assuming US citizenship)? See S. 1157 [109th]: Fair Treatment for Precious Metals Investors Act [dead].
Halifax — intriguing question, but useless to the great majority of us who don’t know the answer. Better, I think, to pose it as a rhetorical question and answer it in the same post. Just a suggestion, relative to future contributions.
Read your history! Silver has been used for money longer than gold.
Commercial RE is falling…
http://online.wsj.com/article/SB119544317917297651.html
Again, and my job is to research this stuff, the fundamentals for office buildings are strong — but the prices paid by investors has been far too high. This is expressed as a “cap rate,” the rate of return in the first year after a sale. The cap rates have been very, very low.
So the skank Paris Hilton is now endorsing CNBC….. Unbelievable…. So how low can they go?
No… she’s not endorsing CNBC.
For months they’ve been playing a clip of her saying “that’s hot” as a spoof.
Now she’s promoting a new perfume. I’m thinking somoene paid off CNBC because they sent a reporter the the launch, and he comes back with a report about how smart she is. How she’s just acting dumb. How she’s really a briliant marketing machine aimed at advertisers most coveted market, the teens.
While interviewing her, the guy got her to record a clip saying “Hay squak box, that’s hot…”. It is like an inside joke. Her making fun of them making fun of her… but really it is just a way to get the clip on the air since the name of the new perfume is plastered all over the backdrop while she says the joke!
They are promoting her perfume, she’s not promoting them.
TV news ran a segment reporting on “research” suggesting that blonde women make men dumber.
You can’t make this stuff up.
Commercial Property Now Under Pressure
By Peter Grant
Word Count: 559
The value of commercial real estate, which nearly doubled in the past seven years, is now starting to decline due to the credit crunch, according to a report set to be released today by Moody’s Investors Service.
The report found that the value of commercial property declined 1.2% in September from the previous month. Particularly hard hit were apartments in the West and office property in most states other than California.
…
No one is predicting that defaults in the commercial sector will come close to rivaling those in the housing sector.
…
Even a slight decline in values could make it difficult for property owners to refinance their mortgages, especially if they have been paying only interest on their existing debt and not paying down principal. Such interest-only morgages have become increasingly popular.
http://online.wsj.com/article/SB119544317917297651.html?mod=hpp_us_whats_news
I’m calling BS on this… “Such interest-only morgages have become increasingly popular.”
I have been on commercial finance for 5 yrs now and have not sold one interest only program. In fact, we only offer one and it is not attractive at all. I don’t know of any bank out there offering an interest only program, though I am sure a few exist. It is pretty rate I even am asked about such a program.
Another immigrant throwing in the towel.
http://chicago.craigslist.org/nwc/rfs/483214467.html
Lying in a den in Bombay
With a slack jaw, and not much to say
I said to the man, “Are you trying to tempt me
Because I come from the land of plenty?”
And he said,
“Oh! Do you come from a land down under? (oh yeah yeah)
Where women glow and men plunder?
Can’t you hear, can’t you hear the thunder?
You better run, you better take cover.”
Men at Work
480k for that? In hoffman estates? Good luck, sir.
Where in that is immigrant-sign? It smells to me like builder or Californicator scat. Maybe we should call in a real estate ranger to track this matter down?
“The house started its construction in march 2007″
Dayum — thought I’d seen it all. This house built itself. That ought to be worth an extra $100/s.f.
Can anyone comment on the likelihood of a connection between FNM’s change in how it accounts for credit losses and the amount of loans it can purchase and securitize? I am particularly interested how creative accounting for credit losses may have played into Fannie’s ability to increase its market share in recent months by continuing to buy or guarantee home loans as rival firms on Wall Street have retreated?
Fannie, Freddie Feel Default Heat
By James R. Hagerty
Word Count: 756 | Companies Featured in This Article: Fannie Mae, Freddie Mac
Fannie Mae and Freddie Mac are proving more vulnerable than expected to anxiety over rising mortgage defaults.
Nervous investors will be watching Freddie’s third-quarter results tomorrow for signs of how much costs related to mortgage defaults are mounting. Freddie’s results follow unease last week by Fannie investors over a change in how that mortgage titan reports credit losses.
The results also come amid growing unease over the impact of the fallout in the U.S. housing market on the two mortgage companies, until recently seen as fairly well-insulated against the full blast of the foreclosure crisis.
http://online.wsj.com/article/SB119543888140197587.html?mod=hpp_us_whats_news
Another downgrade…
(Dr. Evil: I demand the sum… OF 1 MILLION DOLLARS.)
has been lowered to:
(single-b rated)
The “kitchen sink theory” has been thrown out to be replaced with the “leaky faucet theory” which itself is soon to be replaced with the exploding “gas main theory”.
General anecdotal evidence from SF:
I was at the chi-chi bar of the Big 4 restaurant on Nob Hill (not my usual stamping ground) and was chatting w/our waitress. What should come up but the economy. I didn’t bring it up. Apparently, business is way down for her and her friends from other tony bars. Her house has also lost a lot of value and she started talking about gas prices as the culprit for the slow down. I mentioned that it also might be MEW and that these “rich” people might not be so rich after all. I could see a light go on in her eyes. Then I overheard the barkeep talking about euros.
On the other hand, at the bar before that, the bartender saw that I was looking at the RE section of the SF Comical. We chatted and he stated that his neighbor has reduced the price of his apartment and has gone from 460K to 390K and that it means that it’s a good time to buy. I said, “Um, I think that I’ll wait a while and watch prices come down even more” and left it at that. No lights on for him.
He’s from California and the waitress is from Poland. Not “dissing” the good ol’ US of A. Just sayin’.
MrBubble
Bernanke put strike price of DJIA = 13,100 is holding firm so far this morning…
http://www.marketwatch.com/tools/marketsummary/
I believe interested parties might do quite a bit to avoid letting the DJIA drop below the psychologically important 13K level (not that it won’t happen — just that the 13,100 DJIA level appears to be a precautionary resistance point to avoid flirting with the danger of dropping below 13K, then dropping a lot more…).
BREACH!
DJIA 13,100 — gone.
DJIA 13,000 — gone.
Look out below!
My moneys are on DJIA 11,000 before 13,500.
“The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”
Rudiger Dornbusch, MIT Economist
Also, I believe that the DJIA will hit 11,000 before year end.
Whoa, Hoz, seriously? I mean, I’d like to see that, but it’d have to fall far, fast. You’re talking a crash of sorts, before year end.
Very, very serious.
I guess you don’t buy into the Bernanke put theory, then? Or do you just think efforts to keep the DJIA propped up will eventually fail?
There is no moneys, there is no support and the credit conditions are deteriorating as I type.
Only three times in the history of the Federal Reserve have discount prices been dropped 3 times and had the stock market drop (the current market drop is 7%). The previous years this happened were February 1930; July 1982; March 2001. The average earnings drop in the following year was 35% (1930: -39%, 1982: -16%, 2001: -50%), however the markets reacted immediately.
52 years…19 years…6 years….
acceleration.
Drop in 2008, implosion in 2010?
“Only three times in the history of the Federal Reserve have discount prices been dropped 3 times and had the stock market drop (the current market drop is 7%).”
Historical evidence really hurts some times.
Hoz — I win a pizza if it hits 12,000 by 01/08 and an all-you-can-stand Indian hot curry buffet lunch if it drops to 11,000. Startin’ to smell pizza in the oven.
I think it will hold up thru jan, might not go up much just hold the 13k level. Feb to mar is going to be rocky.
My bet is that things will go south after Thanksgiving. The rational being that a lot of social information gets exchanged then as people go back and forth and family gatherings happen. Lightbulbs can go on pretty quickly when people realise they’re not the only ones in their mess.
True, if retail starts to pull the 401k and ira plug. Lot of boomers retiring, where will the money go? Metals, oil, govt bonds or cash?
Very true… I had my parents move out of stocks in their 401K about three months. Just this weekend, a close friend who tends to be very bullish told me he made some big changes in his 401K, going very defensive. Today, one of my co-workers said the same thing… the public is definitely picking up the signals.
where will the money go? Metals, oil, govt bonds or cash?
Based on my conversations, it seems all of the above. Have you noticed the yield on the 10yr? Down to 4.1% today. I’d say that is a flight to “quality”.
I recommended to my sister that she move out of stocks by mid-November. Her husband had lost a relative fortune in the dot-com bust. Somehow, I doubt that she took my advice. What do I know. Well, I sure as heck know what “take your money off the table” means.
“a lot of social information gets exchanged then as people go back and forth and family gatherings happen”
Also, family brawls. Might be best to keep HBB-related info to a minimum, self-preservation-wise.
Frank — that is an exceptionally astute observation. It’s appeared here in years past, but your timing is perfect.
Extra section in yesterday’s Detroit Free Press. Paid advertisement from Wayne County with over 120 pages of tax foreclosures. I couldn’t even begin to estimate how many properties involved (try to imagine a classified section with 120 pages and how many entries).
The NY Times on renters being evicted from investor-owed properties in foreclosure.
http://www.nytimes.com/2007/11/18/us/18renters.html?en=3c83e38&ex=1353128400&adxnnl=1&adxnnlx=1195484619-NiuXvzmFT05olyy4PJcpWQ
In my view, financial institutions should not be able to evict renters (so they don’t have disclose the negative carry on the rental property) and hold houses vacant (so they don’t have to admit the loss on the principal), thereby shrinking the housing stock and screwing renters.
Make them dump the houses at auction within 60 days if they evict a renter, and get that housing back into the inventory at real market prices. Faced with that, they might decide to keep the tenants, or sell with tenants in place.
Hypothetically speaking…
Which major city of ours, shows clear signs of civil disrest, 1st?
The same ones as in the 60s.
Greenwich, CT. Those are not the kind of people who take a decline in their standard of living very well.
Which major city of ours, shows clear signs of civil disrest, 1st?
I’m betting New Orleans. They are already dealing with an unchecked crime spree and daily demonstrations against the local government because of unaffordable housing and the displaced, working poor in the wake of Katrina. The embers have been lit. Now it is just a matter of the winds of discontent to fan the flames of civil unrest… economic weakness and stagflation should provide the fuel.
Detroit?
I will bet my left patootie that it’s not in any city patrolled by the Bakersfield Police Department/Kern County Sheriff.
Nor in Maricopa County.
Prof G.S. Bear,
Over the weekend you asked about ABX
“Can anyone who understands possibly explain the relationship between these ABX indexes and housing prices (if there is any)?
Or between the indexes and the market value of subprime loans?”
If the unit you were interested in valuing was the
ABX-HE-BBB 07-1
(currently 18.66, high 98.35 -issue date)
This issue is related to the value of the underlying property. The primary model used to value CDO’s (appropriately called “The Monte Carlo Model”, lol) has this worth approximately 15. The model has a built in bias of escalating RE prices. This particular issue is backed by MBS from such stalworthies as First Franklin, Fremont, Long Beach etc. Underwritten with ‘low doc, no doc”, This issue is likely to be (if not already) the equivalent of an out of the money call option with expiration near. The issue has extreme volatility. If the price of the underlying property stays the same or goes down the issue is worthless upon default. Should the property go back up through inflation, the issue will go up in value.
The Decline in the U.S. Personal Saving Rate:
Is It Real and Is It a Puzzle?
Massimo Guidolin and Elizabeth A. La Jeunesse
“…This leaves only two other possible sources of funds to finance gross investments:
personal saving and borrowing from abroad.
Consequently, because we have argued that it is sensible to think that a country would want to avoid large current account (external) deficits for
protracted periods (to avoid building up massive international debt positions),4 it is usually considered healthy (sustainable) that, at least in the long-run,
private gross investment is less than or equal to (personal saving
+ business saving) = private saving,
i.e., that total private saving should at least cover total gross investment, or
(1) private gross investment – business saving
is less than or equal to personal saving.
Given the presumption that the left-hand side will be positive most of the time, it is obvious that this inequality cannot be satisfied when personal
saving turns negative for long periods of time. In fact, Figure 2 shows that, since 1999, private gross investment has systematically
exceeded private saving….”
Federal Reserve Bank of St Louis
November/December, 2007
(caution 24pg pdf.)
http://tinyurl.com/23g8cs
I thought that it was OK that we weren’t saving any of our income, because of all the paper gains in the value of our homes and stocks.
That was true so long as stocks and housing always went up.
TOA delisted by NYSE….
http://sacramentolanding.blogspot.com/2007/11/foreclosure-violence.html
Domestic violence up 12% since August in Sac, CA. Not good news and supposedly hitting the middle class the hardest.
In an attempt to lighten the mood that this post will create, the MSM did mention the “ongoing mortgage crisis” w/o saying “sub-prime”. Not trying to gloss over the ills of domestic violence in any way, of course.
Not trying to gloss over the ills of domestic violence in any way, of course. If you won’t someone else will….so here goes!
I can see the scene in my head:
“I never should have listened to you!” (SLAP)
“But Suzanne researched it…”
“Take your HELOC’d SUV and boob jobs and go move in with Suzanne” (PUNCH)
“Boo hoo!”
“Don’t give me those tears, you greedy b*tch! You talked me into backruptcy!” (pushes down stairs)
etc.
Yikes. But I would assume that the scenario that you have detailed would occur regardless of whether the woman talked the man into the purchase or vice-versa. No matter whose “fault” it is, the women and the kids will get hurt.
MrBubble
“…supposedly hitting the middle class the hardest.”
Whoa, what a pun.
Oops. Not a punster, but that was a doozy/doozie.
Holy cow - CFC crashing today - down 15% right now. Anyone know what’s up? Market in general is down too, though doesn’t seem like enough to justify that big drop in CFC.
Buying CFC is betting that the Federal Reserve has decided it is to big to let fail. The market is saying there are other larger banks that are in trouble, why buy Countrywide?
Ha ha - yeah you may be right.
My guess is “Tanzillo” will end up being “Blackzillo” as he gets thrown under the bus, and obtains a few fat tire marks.
“Too big to fail” is relative to the size of the economic downturn. When all hell breaks loose - only the strong survive, but the list of who’s “strong” gets smaller and smaller.
My guess is that most of the “strong” can be found on this list - a veritable “Schindler’s List” of who will be saved:
http://opensecrets.org/orgs/list.asp?order=A
Goldman Sachs, Citigroup, Bank of America, JP Morgan are on the list. Countrywide is not.
NAR is #3.
There is also the question of whether the $1m guarantee of GSE-securitized debt is politically viable. If the answer turns out to be NOT, CFC could suffer mightily as a huge player in California’s market for Jumbo loans.
I take the 15 percent drop in CFC share prices as an encouraging sign that BB’s proposed $1m taxpayer-provided guarantee may not be politically viable for D-ratic politicians who claim to represent the economically disadvantaged. How do you reconcile $1m loans with helping low- and middle-income households to become homeowners? Any middle- to lower-class household who gets stucco with a $1m loan today is highly likely to turn up in tomorrow’s foreclosure stats.
CFC is directing all resources to generate GSE approved loans. Fan and Fred are under pressure lately. If they fumble, CFC is toast.
Pressure? Fan and Fred are under subpoena lately. You might say that NY Attorney General stole the Office of Federal Housing Enterprise Oversight’s thunder on this one.
Market Views November 8, 2007, 9:56PM EST
Why WaMu Got Walloped
In addition to the deteriorating housing market, the lender was hit by news of an investigation by the New York AG.
S&P rates the shares sell
by Stuart Plesser From Standard & Poor’s Equity Research
Investing
Conditions in the thrift and mortgage industry, for which Standard & Poor’s Equity Research has a negative fundamental outlook, took a turn for the worse on Nov. 7.
First, at an investor conference, Washington Mutual (WM) announced it believes industrywide mortgage originations will fall to $1.5 trillion in 2008, 25% below the consensus forecast of $2 trillion for 2008, and 37.5% below projections for 2007. The stock weakened on the news.
Allegations of Phony Appraisals
But there was more to come. Later in the day, New York State Attorney General Andrew Cuomo announced he has extended his investigation of inflated appraisals of home loans. He had already accused WaMu of pressuring a subsidiary of First American Financial (FAF) to supply erroneous appraisal information for homes for which WaMu was to write loans. Cuomo is now investigating the government-sponsored enterprises, or GSEs, Fannie Mae (FNM) and Freddie Mac (FRE) about their role in the process.
http://www.businessweek.com/investor/content/nov2007/pi2007118_140083.htm?chan=top+news_top+news+index_investing
To me, all this means that Cuomo wants to set himself up to run for governor of New York. Notches on his gun.
Paulson: currencies to reflect U.S. economic strength
Monday November 19, 11:22 am ET
http://biz.yahoo.com/rb/071119/paulson_africa_dollar.html?.v=1
Freddie Mac’s subprime losses may hit $5 billion: CS
http://biz.yahoo.com/rb/071119/freddiemac_research_subprime.html
“Freddie Mac (NYSE:FRE - News) may report a loss of between $1 billion to $5 billion on its subprime AAA portfolio, Credit Suisse said on Monday, sending shares in the second-largest U.S. mortgage finance company sharply lower.”
Subprime AAA? Shows how we got in this mess.
Any conspiracy theorists?
The NAR always releases metro area existing home sales data on 15th of the month.
But for third quarter, the data is coming out the day before Thanksgiving. Data processing delays?
Check out the ‘December 16th - Libertea is brewing’ ad on the right hand side of the main page.
Main page of what?
“Nov. 19 (Bloomberg) — Ethanol, the centerpiece of President George W. Bush’s plan to wean the U.S. from oil, is 2007’s worst energy investment.
The corn-based fuel tumbled 57 percent from last year’s record of $4.33 a gallon and drove crop prices to a 10-year high. Production in the U.S. tripled after Morgan Stanley, hedge fund firm D.E. Shaw & Co. and venture capitalist Vinod Khosla helped finance a building boom.
Even worse for investors and the Bush administration, energy experts contend ethanol isn’t reducing oil demand. Scientists at Cornell University say making the fuel uses more energy than it creates, while the National Research Council warns ethanol production threatens scarce water supplies. …”
Reality really sucks. Prices on grains shot through the roof on a bogus energy plan. Exports of food soared and Americans get to pay a lot more for food.
“Scientists at Cornell University say making the fuel uses more energy than it creates, while the National Research Council warns ethanol production threatens scarce water supplies.”
This has long been my suspicion. Agricultural production and delivery in this country is inherently energy-intensive, and I am guessing ethanol production is as well.
Hoz — a number of posters here were gung-ho ethanol earlier in the year. Some of us tried to point out that ethanol is a failed idea, at least to the extent it involves the use of corn, not to mention the water required. It cannot be transported by pipeline because it is corrosive. I cannot use much of it in my hot-rod because it is corrosive. Big clues in those two. The perpetual hallmark of do-gooder ideology is that they never learn. When they make a mistake, never mind the cost, they sniff and move on to the next project. They never pay a price, except in the collective sense that we all do — and that price they never acknowledge.
FWIW, ethanol, when not screwed with by gummint types, is nothing more nor less than gold old corn likker — IMO, they ought to bottle it and sell it with no taxes, to the Joe Sixpacks who can no longer afford to pay the tax on alcohol. All those good old boys in the South were making, in their stills in the woods, was ethanol. Makes yer trubbles go away, for a while.
UPDATE 1-U.S. puts $250 mln into new Africa investment funds
http://www.reuters.com/article/marketsNews/idUKL1927704720071119?rpc=44&sp=true
$250MM is a joke….to little to late
The Sunday Times
November 18, 2007
China builds African empire
The giant’s rush to secure resources
“…Few foreign investors have grasped the speed and extent of Chinese exploration and development in Africa.
China is engaged in mining in 13 African countries, singling out deposits of gold, copper, diamonds, titanium and manganese. Prospectors from the government’s geological and mining bureau are active in Namibia, Ghana, Congo and Mali.
The telecommunications flagship Zhongxing Communications, which began investing in Africa in 1995, has ploughed in more than £3 billion and now employs 1,100 people across the continent. In Egypt, Brother Shoes, a company based in east China’s Zhejiang province, claims to have captured 70% of the local market since it set up in 2001 and now sells 12m pairs of shoes a year.
In agriculture, the Chinese have carved out deals from Zimbabwe to Zambia and Kenya. The China Agricultural Cultivation group claims to have transformed grain production in Zambia and saved the country a fortune in transport costs by reducing the need to import grain from South Africa.
When a Chinese businessman gets off the plane in Africa � the number of flights is multiplying every year � he can count on full diplomatic support and state-directed financing.
One example cited by the Council on Foreign Relations paper is Angola, where China takes 25% of Angolan oil exports, and Beijing has a stake in future oil production, thanks to a £1 billion commitment of loans and direct aid. The package will fund Chinese companies to build railways, schools, roads, hospitals, bridges and offices, while technicians are installing a fibre-optic network and training local staff.
The boldest stroke so far came last month, when the Industrial and Commercial Bank of China (ICBC) agreed to pay £2.7 billion for a 20% stake in Africa’s largest bank, Standard Bank, which is based in Johannesburg.
The investment gives ICBC an interest in a continent-wide banking network with more than 200 branches in 18 African nations.
Investment analysts noted that unlike a western investor, ICBC did not appear to be linking its money to management changes or a shift in financial strategy….”
http://tinyurl.com/yu39ag
what i dont understand is, why now? our country is broke!! the only way to get into the game is by taking it.
We wasted our opportunities in Africa and South America over the last 6 yrs by focusing on a dubious war in Iraq.
A very simple rule to investing success. Buy what China buys, sell what China sells. China is heavily invested in South America and Africa. China invests in the same manner that Mr. Buffett invests, long term (decades even) value investing . Africa is China’s oil and minerals and South America is China’s farm and minerals.
When I was in the Caribbean this summer, there was evidence that the Chinease were spending a LOT of money there…. free soccer stadiums and new roads to any island that would support a “one China” policy.
“China is heavily invested in South America and Africa.”
Mr. Hoz…yer right, being that there are not any Hispanics or Blacks in China…they’ve found a way to make them slaves to communism in their “own” native countries. Now that’s using your head…verses… yer Yale “cheer-leading”, Shock & Awe, military expenditures with taxpayer money & taxpayers blood. Very sneaky those little commies, very sneaky indeed.
I wonder if “Dickey Boy” Cheney uses china made bullets when he goes Daffy Duck hunting.
I been on yer hiway. commie bastard money dont mean nuthin.
“U.S. puts $250 mln into new Africa investment funds”
Correct me if I’m wrong. We are deficit-spending. That means that each additional dollar spent must be borrowed. That, then, means that we had to borrow the money we gave to these people.
Why aren’t the Swiss picking up this burden, instead of us? They are filthy rich and have a busdget surplus.
FTSE skids as credit woes hit banks worldwide
http://www.reuters.com/article/marketsNews/idLTAL1926071020071119?rpc=44
Citigroup faces $15 billion writeoff: GS
http://biz.yahoo.com/rb/071119/citigroup_downgrade.html?.v=6
See the news on China:
http://online.wsj.com/article/SB119542008187297217.html?mod=hps_us_whats_news
When China thinks there’s too much lending going on, they put the brakes on it.
Goldman Sachs didn’t alert Wall Street to anything it didn’t already know, but was nonetheless effective in triggering a selloff, said Art Hogan, chief market analyst at Jefferies & Co.
“Every time the issue is brought up and quantified, the market rolls over,” Hogan said. “Today is no different.”
Weak results and a disappointing forecast from home-improvement retailer Lowe’s added to worries about the consumer’s ability to keep spending, ahead of Black Friday, the day after Thanksgiving and the unofficial kickoff to the holiday shopping period.
Also weighing on sentiment: more problems for the dollar.
“There are enough negatives out there that the market should be down, but I don’t know that it should be down to this extent,” Hogan said. “The punishment doesn’t quite fit the crime.”
Stock selloff accelerates
http://money.cnn.com/2007/11/19/markets/markets_1200/index.htm
What should one make of this:
3-yr T-bond coupon = 4.5 percent
” ” yield = 3.07 percent
My gut level inclination is to interpret this as a serious storm warning, but curious what other posters read into these tea leaves?
Notes/Bonds
COUPON MATURITY
DATE CURRENT
PRICE/YIELD PRICE/YIELD
CHANGE TIME
2-Year 3.625 10/31/2009 100-27+ / 3.17 0-10+ / -.175 13:54
3-Year 4.500 05/15/2010 103-12½ / 3.07 0-13½ / -.176 13:54
5-Year 3.875 10/31/2012 101-15¼ / 3.55 0-21¾ / -.150 13:54
10-Year 4.250 11/15/2017 101-15+ / 4.07 0-26+ / -.100 13:54
30-Year 5.000 05/15/2037 108-17+ / 4.47 1-01½ / -.061 13:53
http://www.bloomberg.com/markets/rates/index.html
3-Year 4.500 05/15/2010 103-12½ / 3.07 0-13½ / -.176
OK par = 100 coupon is 4.50
current price is 103.39 125/320
Yield to maturity when redeemed at par is 3.07%
It’s bunker time.
REMOVE THE CAPS
I guess Im really sayin, if China issued a dollar denominated bond at say 8.5% I would get interested. We are now in the hands on the Chinese, for even MORE dollars?
Im confused. China aint gonna lend for 2 months. Does that mean thay aint buyin Tresauries?
the lack of a spread across the swath of the US treasury says it all, the curve aint inverted, there aint no curve.
They will ride this out, take whatever losses happen and show up at the treasury auctions like a good boy.
they are the saudis…the OPEC moneys
what does it take to convince you its inflation?
It looks like investors expect a rate cut and have bid up the short term treasuries.
Flight to safety and expectations of a rate cut?
I anticipate job cutbacks in the human directional industry.
Housing Market’s Stench Means Cut Price to Sell: John F. Wasik
By John F. Wasik
Nov. 19 (Bloomberg) — Raffles, festive balloons, open houses, car giveaways. Will any of these incentives sell houses? Not at the moment.
You don’t have to be particularly creative in a market glutted with homes for sale. The painful reality is that homes are commodities. There are more than 4 million of them sitting out there unsold and more coming on the market every day due to foreclosures. If you really need to sell a house, price is the one lever that will move a property.
Almost everywhere your competition is abundant while buyers are waiting for prices to fall even more. U.S. existing-home prices are expected to drop almost 2 percent this year nationally, according to the National Association of Realtors, and are likely to fall further in areas oversaturated with homes for sale.
“Buyers just want price,” says Mike Morgan, a Stuart, Florida-based lawyer, real-estate broker and consultant who researches property markets for hedge funds and financial institutions. “Buyers have become educated and they can easily cut through the fluffy incentives.”
http://www.bloomberg.com/apps/news?pid=20601039&sid=as_1Syu9JPcA&refer=columnist_wasik
The different incentives offered were, in many ways…
Similar to what the winning contestant won on “The Price Is Right” showcase.
“Investors are trying to *catch a falling knife*”
http://online.wsj.com/article/SB119547618334997813.html?mod=hps_us_whats_news
“We are seeing a continuation of the unwinding of investor optimism that we have been seeing since October,” said Chris Johnson, chief executive of Johnson Research Group in Cincinnati.
…
“Investors are trying to catch a falling knife moving at terminal velocity with financials,” said Mr. Johnson. “They keep saying they can’t go lower. But a couple of write-downs later and, guess what, they can go lower.”
“…As the debt that was fuelling the asset bubble unwinds, people’s incomes will inevitably be pinched, Roach concludes. “We are seeing the bursting of the world’s biggest bubble – US property,” he says. The result is that “the US consumer is toast”, and will be unable to generate further economic momentum.
Roach says that current problems should have been foreseen, and that the dotcom crash of 2001 should have acted as the “canary in the coal mine”. Despite only accounting for 6% of US equity market cap, the S&P500 had lost 49% two years later. Roach says that the downturn then was far more serious than anybody initially expected.
“There were similar arguments in August, with some commentators suggesting that since securitised mortgages only represent 14% of outstanding mortgages, there was little to worry about,” he says, predicting that the credit fall out would continue to worsen.
Consequently, Roach also sees a recession in the US next year as being “more likely than not”.
A crash now could be far worse than in the early-2000s, since business capital spent by the dotcoms accounted for 14% of GDP at the time. But the current personal consumption bubble is many times as large, since consumption represents 72% of GDP.
Finance Asia
http://tinyurl.com/292ngh
“there was little to worry about,”
Does excessive leverage fall under the heading of little worries?
http://www.safehaven.com/article-8857.htm
Article above about the Yen and the possible end of the Yen carry trade and how that may affect the USA stock market. So far japanese investors have taken some big losses as the dollar goes down verus the Yen. So much for the Yen carry trade and I expect the US stock market. The future, a dollar carry trade? as desperate Americans reach for yield and hedge against a sliding dollar? Remember the Japanese went through a RE bubble and then banks that hide their losses and the resulting Deflation.
When will the U.S. get a free press like they have in the U.K.?
Global credit crunch
Last Updated: Monday, 19 November 2007, 12:19 GMT
Homes for sale in US
Sorting out the sub-prime problem
Can politicians sort out the sub-prime crisis before millions lose their homes?
Credit woes ‘need private action’
US backs lending clampdown
Loans crisis: Readers’ stories
http://news.bbc.co.uk/2/hi/in_depth/business/2007/creditcrunch/default.stm
Remember the little boy in the fable of The Emperor’s New Clothes who points out that the emperor is walking around naked? Meredith Whitney is serving a similar role in pointing out all the naked swimmers wandering along Wall Street’s beach now that the bubble tide is receding. She is a champion of truth in the age of opacity, IMO.
In a BBC interview I heard on the radio tonight, the interviewer asked her about death threats she receieved after she downgraded Citi. She rightfully responded to say that shareholders should not blame her for reporting problems, but rather the managers who created them. DON’T KILL THE MESSENGER, SHEEPLE!
UPDATE 1-RESEARCH ALERT-CIBC downgrades UBS, cuts ‘08 EPS view
Mon Nov 19, 2007 4:32am EST
Nov 19 (Reuters) - CIBC World Markets downgraded UBS AG (UBSN.VX: Quote, Profile, Research) (UBS.N: Quote, Profile, Research) to “sector performer” from “sector outperformer” and cut its 2008 earnings view for the Swiss bank by 33 percent, citing likely write-downs on credit exposures throughout the next year.
“We believe UBS will likely take roughly 8 billion Swiss francs in aggregate write-downs over the next five quarters but will do so by managing such against earnings from its Global Wealth Management division so as to not abruptly shock its capital base and therefore risk its highly coveted credit ratings,” analyst Meredith Whitney wrote in a note to clients.
http://www.reuters.com/article/bondsNews/idUSBNG3686420071119
Yawn…
ASIA MARKETS
Asian stocks drop on Wall Street sell-off
By V. Phani Kumar, MarketWatch
Last Update: 9:30 PM ET Nov 19, 2007
HONG KONG (MarketWatch) — Asian markets dropped Tuesday as financials in the region were hit by a sell-off on Wall Street, with Mitsubishi UFJ Financial Group in Tokyo, National Australia Bank in Sydney and HSBC Holdings in Hong Kong pacing losses on fears problems related to the subprime markets could spread.
Hong Kong’s Hang Seng Index dropped 3.6% to 26,464.84 in the early minutes, on heavy selling in China-related shares. The 43-issue Hang Seng China Enterprises index dropped 4.5% to 15,790.40. All 40 constituents of the Hang Seng and the 43 constituents of the China Enterprises index were in the red.
“I think we’re going to be in for a hard day,” said Miles Remington, head of trading at BNP Paribas in Hong Kong. “If you are sitting on a profit for the year, it has to be tempting to lock it up.”
http://www.marketwatch.com/news/story/asian-stocks-drop-wall-street/story.aspx?guid=%7B07A5C1B0%2D9CB6%2D4906%2DB560%2DA499AD9B672F%7D
China voices alarm at dollar weakness
By Mure Dickie in Beijing, Krishna Guha in Washington and Peter Garnham and Michael Mackenzie in London
Published: November 19 2007 19:14 | Last updated: November 20 2007 02:19
China on Monday expressed concern at the decline in the dollar, joining a growing chorus of global policymakers alarmed by the weakness in the world’s main reserve currency.
Wen Jiabao, the premier, told a business audience in Singapore it was becoming difficult to manage China’s $1,430bn foreign exchange reserves, saying their value was under unprecedented pressure. “We have never been experiencing such big pressure,” Mr Wen said, according to Reuters. “We are worried about how to preserve the value of our reserves.”
http://www.ft.com/cms/s/8b1c17dc-96d1-11dc-b2da-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F8b1c17dc-96d1-11dc-b2da-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Holy buried statue of St. Joseph — turns out CFC ain’t too big to fail after all (gulp!)…
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=CFC&time=20&freq=1&comp=&compidx=aaaaa%7E0&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
Whoa nellie — what happened to FNM? Here I thunked all along they were also too big to fail…
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=FNM&time=9&freq=1&comp=&compidx=aaaaa%7E0&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
Oh my!
Too bad I stopped carrying around those stubborn puts a year or more ago — as you probably are as well.
Bad timing svcks!
I used to joke that Wall Street playas behave like cargo cultists, but a more sobering realization has now set in that they are morphing into cannibals.
Goldman on Citi - SELL before the next $15bn hits
The golden child of the banking world has turned on the prodigal son.
Goldman Sachs - which will not, repeat not, be making significant write-downs - has had it with the cult of the disappearing dollars elsewhere on Wall Street.
The bank’s analysts have slapped a sell order on Citigroup, downgraded their estimates, and lowered their target price to $33. US futures fell on the back of the note. Citi were down 2.6 per cent at $33.11 a share in premarket trading.
Citi’s down 40 per cent this year, and 28 per cent over the past three months, but the team at Goldman believe that the rudderless banking behemoth has further to fall.
“We see four factors driving underperformance: (1) additional write-offs on its remaining $43 billion of CDO exposure, (2) pressure on the firm to shore up Tier-1 capital ratios which may need to come from an equity infusion, asset sales, or a reduction in the dividend, (3) deteriorating consumer credit trends and higher corresponding provisions and charge-offs, and (4) no clear leadership at the firm.”
http://ftalphaville.ft.com/blog/2007/11/19/9012/goldman-on-citi-sell-before-the-next-15bn-hits/
How do you outrun a bear? You don’t have to outrun the bear, just trip the guy stumbling away beside you.
Wealthy Nations In Gulf Rethink Peg to Dollar
By Joanna Slater and Chip Cummins
Word Count: 1,112
For many years, oil-rich Persian Gulf states have pegged their currencies to the dollar. Now that link is stoking a bad bout of inflation in their red-hot economies and putting policy makers in a dilemma: Break the dollar peg and risk undermining the U.S. currency, or keep it and face growing local discontent.
The dollar peg has “served the economy…very well in the past,” said Sultan Nasser al-Suweidi, the governor of the United Arab Emirates’ central bank, last week. “However, we have reached a crossroads.”
http://online.wsj.com/article/SB119552599363898773.html?mod=hps_us_whats_news
GCC states likely to abandon dollar peg
BY JOSE FRANCO
18 November 2007
DUBAI — Economists are seeing that the UAE and other GCC states will move away from US dollar peg to a basket of currencies, although no “dramatic impact” is expected, as they are gearing towards a stronger economic integration.
“I don’t see any choice but perhaps to move to a basket of currencies,” said Mark Mobius, executive chairman of Templeton Asset Investments, at the opening of the one-week DIFC Economic Forum. “With its booming economies, the region is moving towards a basket of currencies.”
http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2007/November/business_November503.xml§ion=business
Dollar is America’s Achilles heel
By Linda S. Heard, Special to Gulf News
Published: November 20, 2007, 00:28
Dump it or stay with it is a question being mulled over by private investors, financial institutions, major corporations and central banks around the world in relation to the weakened US greenback.
http://www.gulfnews.com/opinion/columns/world/10168914.html
PAUL B. FARRELL
17 reasons America needs a recession
Think positive, this ’slow motion train wreck’ is good for the U.S.
By Paul B. Farrell, MarketWatch
Last Update: 6:53 PM ET Nov 19, 2007
ARROYO GRANDE, Calif. (MarketWatch) — Yes, America needs a recession. Bernanke and Paulson won’t admit it. And investors hate them. We’re all trapped in outdated 1990s wishful thinking about a “new economy” and “perpetual growth.”
But the truth is, not only is a recession coming, America needs a recession. So think positive: Let’s focus on 17 benefits from this recession.
To begin with, recession may be an understatement. Jeremy Grantham’s GMO firm manages $150 billion. In his midyear report before the credit crisis hit he predicted: “In 5 years I expect that at least one major ‘bank’ (broadly defined) will have failed and that up to half the hedge funds and a substantial percentage of the private-equity firms in existence today will have simply ceased to exist.”
He was “watching a very slow motion train wreck.” By October, it was accelerating: “Train hits end of track at full speed.”
http://www.marketwatch.com/news/story/seventeen-reasons-america-actually-needs/story.aspx?guid=%7B08D803FF%2D60CE%2D4868%2DBDB8%2DD0CFFE9851B0%7D&dist=TNMostRead
I am proud to say that other than watching that YouTube rant on Bernanke, I have never and will never tuned in to Mad Dog Cramer’s show — not even 30 seconds while channel surfing!
P.S. Can anyone comment on how well Cramer’s picks held up to today’s stock market onslaught? I am hoping most of them were slaughtered like pigs.
PAUL B. FARRELL
Boo-yah this: ‘Lazy Portfolios’ beat ‘Mad Money’
Why waste 15 hours a week and lose a $72,000 ‘opportunity cost?’
By Paul B. Farrell, MarketWatch
Last Update: 9:48 AM ET Nov 13, 2007
This column, originally published Nov. 6, has been updated with a link to Jim Cramer’s response.
ARROYO GRANDE, Calif. (MarketWatch) — Last week I finally listened to the “Mad Money” show for a full hour. When channel surfing in the past I’d move on after 30 seconds. It’s about as educational as Saturday morning cartoons. What I heard was a manic distraction for addicted personalities.
But there I was, alone in the car on a five-hour trip back home. So I made a conscious decision to listen to the entire show, first time (and last!). “Oh god, what torture,” I screamed aloud somewhere near Gilroy, the garlic capital of the world: “This is crazy-making, what a waste of time!”
http://www.marketwatch.com/news/story/boo-yah-lazy-portfolios-leave-mad/story.aspx?guid=%7BB47FB1B5%2D27F6%2D4116%2DAB8E%2D70364A92B0D1%7D&dist=morenews