Bits Bucket And Craigslist Finds For December 18, 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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Fell to 14 year low…
http://www.bloomberg.com/apps/news?pid=20601103&sid=asGMhLhURSsM&refer=news
Not low enough. They still started 1.3M homes, and, in all likelyhood, they needed to start about 0. They have robbed themselves of a market for the next 2-3 years by the gross overbuilding during the boom. They can keep building and cutting prices, it brings us to the bottom faster, which is the first productive thing they have done in years; but there is no NEED for them to build anymore.
We have enough houses, we now need to find a way for anyone to afford the homes that we have today!
“We have enough houses, we now need to find a way for anyone to afford the homes that we have today!”
Eureka! Lower the price!!!
I am firmly in the camp that they DON’T want people to really buy the homes, at least not to live in for years. There is far to much money to be made selling the same house every 2-3 years to flippers or “helping” some F’d buyer hop from one toxic loan to another until he loses the house and they get to make more money on the next sucker.
Owning stuff is bad from the viewpoint of the financial masters. They want a society of renter-serfs who own nothing so they can collect fees and change contracts terms on a whim.
If they let people buy houses at fair market value, that would royally screw up the comps (I refer you to SD home prices, which are already back to 2004 levels). Like the Superfund SIV plan, a key purpose of housing bailout proposals is to forestall price discovery.
I was thinking the same thing, Michael. At this point how can they still be adding over a million new units in inventory? And will there be another million (or close started in December?) Are they planning on undercutting existing home prices to the point where it won’t be them holding the bag? Are they aiming at BK? Could there really be buyers behind all these starts? I just can’t imagine what the game plan is behind these numbers.
My bad-that is an annualized rate. Can’t place parentheses this a.m. either. Sheesh!
game plan?
crisis management in a flat world that knows no bounds.
(We have enough houses)
The only “starts” that should be going on are subdivisions of McMansions into four family homes or eight apartments.
I don’t know why you’d want to subdivide McMansions. It doesn’t seem like there are enough people to even occupy them all as SFHs.
Plow ‘em back into productive farmland. I hear.wheat is really valuable now.
–
The data is out and it is more or less as expected, 1.15-1.2M for starts and permits is still above the demand. There are enough vacant housing units that we can do without building for five years. During the depression the demand will be negative (it happened after the last three recessions, usually a year after the recession began). I know that it is very hard for people to believe that the housing demand can go negative (more people sharing homes/apts) but it does and it will.
Jas
Speaking of what people have a hard time believing reminds me of a figure that jumped out at me from yesterday’s front page WSJ piece on the demise of the Inland Empire real estate market:
40% of the IE went to rental in the early 1990s bust.
I am sure it will be different this time, though, thanks to bailout measures designed to help people hold on to their $700,000 alligators.
I cannot get over the news that the House is trying to push through an increase in the FHA loan guarantee up to $700,000 or so. Why can’t the American voter just say NO to taxpayer-provided giveaways to bad actors in the lending industry? Down the rat hole the money goes…
–
“Why can’t the American voter just say NO to taxpayer-provided giveaways to bad actors in the lending industry?”
LOL!!!!!!!
Who asks the “American voter?” Do voters matter in these matters? There is more, but I will let people figure it out on their own.
Jas
Glad you caught my sarcasm there, Jas
What got me in that story was the chart. NODs running and 2-3 times 2006 levels, but foreclosures running 5-10 times 2006. When you consider that the levels are rising and foreclosures lag NODs, this means that a FAR FAR higher percentage of NODs end up in foreclosure.
And people dying. Not enough babies being born. That is why they want immigration. The problem is, the immigrants might start migrating back to wherever they came from if they can’t find jobs.
Which is precisely what happened during the last great wave of immigration to the US(during the late 1800s to early 1900s). There were also more than a few immigrants who decided that the Old Country wasn’t so bad after. So, they turned around and went home.
Had she not been taken care of by my grandfather and his wife’s family, my great-grandmother would have done this. She never cared for the States.
Virtually all of the Chinese that came to Gold Mountain (San Francisco) and beyond in the 19th Century, went back to China…
I wonder why the Chinese left…
“Thus, during the financially unstable 1870’s, the Chinese became an ideal scapegoat: they were strangers, wore queues, kept to their own kind, and were very productive (conditions not inspiring great love, especially among the American laboring class). Legislation, including immigration taxes, and laundry-operation fees, passed in order to limit the success of the Chinese workers. Cartoons and other propaganda reinforced the view that the Chinese “worked cheap and smelled bad” (Daniels 52)”
“Racial tensions finally snapped in 1882, and Congress passed the Chinese Exclusion Act of 1882, barring immigration for ten years; the Geary Act extended the act for another ten years in 1892, and by the Extension Act of1904, the act was made permanent.”
Starts historically bottom at about 700k, housing still has more to go to the downside.
Given the size and length of the boom creating a huge inventory of vacant homes, my target is well under 500K in starts.
I persoanlly hope they keep building. That will keep employment up LOL.
Bad news on Main Street must obviously be good news on Wall Street…
Far Fewer Starts Would Be Start To End of Slump
By Justin Lahart
Word Count: 505 | Companies Featured in This Article: Best Buy, Microsoft
Bad news in today’s housing report could be good news for the economy.
Economists polled by Dow Jones Newswires estimate that home builders broke ground on projects at an annual rate of 1.16 million homes in November, down from October’s 1.23 million and a million shy of the January 2006 peak rate of 2.23 million. Economists estimate permits for new construction fell to an annual rate of 1.16 million, down from 1.17 million in October and the September 2005 peak rate of 2.26 million.
http://online.wsj.com/article/SB119793771341935389.html?mod=todays_us_nonsub_money_and_investing
BTW, for comparison, the October 2007 new home sales figure was 728,000. Not sure if this is directly comparable to the 1.16 million housing start figure for November, but I am guessing the implied excess construction rate of 432,000 homes per year might nonetheless have value in deciding whether to buy Justin Lahart’s hint that a bottom is in place for the home building industry. I don’t buy it, but then I am a confessed bear.
(Caution: .pdf file)
http://www.census.gov/const/newressales.pdf
–
Prof, the new home sales number is for SFH only while the other data is for single and multiple units.
Jas
Thx. Perhaps things are not as bad as I feared?
I’ll take your 14 year low and make it 16 tons and what you get?
http://news.bbc.co.uk/2/hi/business/7150311.stm
Another day older, and deeper in debt.
Here’s agood story about buyers remorse from the V.C. Star.http://venturacountystar.com/news/2007/dec/18/errant-golf-balls-disrupt-familys-life-camarillo/
OT — later date:
“Bits Bucket And Craigslist Finds For
NovemberDecember 18, 2007″anyone have an estimate on how much “loan forgiveness” is going to cost the taxpayer ?
I could be very little, if almost no one qualifies for a bailout because the house is worth less then the mortgage.
And if the IRS goes after short sellers for back taxes on the forgiveness amounts, it could be even less.
And don’t forget that some % of the mortgages are really re-fi’s and HELOC’s, and I just don’t see any government forgiving those in any way.
Probably not much. The current law already exempts you if you are are insolvent or bankrupt. So it might not even matter.
“anyone have an estimate on how much “loan forgiveness” is going to cost the taxpayer ?”
More than it would cost to do nothing and let the loans default.
My estimate is a priceless cost in inflation ,and regarding money paid ,oh about 300 to 500 billion ,maybe more .How can you put a price tag on future business costs and the price of useless vacant tracts and
eye sores and increased crime and foreclosures across America .
Anything the government gets involved in ends up being done half-assed for twice the price.
Unlimited Extra Cash…
http://www.bloomberg.com/apps/news?pid=20601085&sid=a.nb8d8_aJK8&refer=europe
Most unfair. Below market rate to banks = Bailout for the rich
Oh yeah? If someone gives me a 1% teaser rate on a mortgage, have I really been bailed out, or tricked?
BTW, inflationists, with all this cash dripping out of every central bank on the globe, how come gold isn’t at $3000 and interest rates over 15%?
“…how come gold isn’t at $3000…”
Is it perhaps because one cannot eat gold? (I still personally think putting energy fit for human consumption into one’s gas tank is a misallocation of resources…)
http://news.bbc.co.uk/2/hi/in_depth/7148880.stm
perhaps people don’t price everything in units of sugar either??
All in due time…
It’s best not to rush history.
It’s best not to rush history.
Rush history? Sugar has probably gone up more than gold in the past 20 years.
Gold has properties quite unique in times of despair, that aren’t there otherwise.
The price of sugar is blatantly manipulated in this country with price supports. Worldwide sugar prices would look completely different.
“BTW, inflationists, with all this cash dripping out of every central bank on the globe, how come gold isn’t at $3000 and interest rates over 15%? ”
Are you serious? You KNOW the reason interest rates are not there, because there is nobody like Volker at the helm! And if liquidity wasn’t being pumped into the markets at such an exorbitant rate, the indices would be falling like rocks. If there is no crash, there is no flight to safety, therefore, no rush to gold. Plus, M3 numbers are not published, so increase in the money supply is not for public viewing. Further, official inflation figures are completely distorted. As far as sugar goes, take a look at historical charts (not inflation adjusted) for sugar #11 and gold in December 1987. You will see that they have both risen about 63 to 66% since then, almost tracking one another.
ahhh ‘87, years after the Moscow boycott..
Im wondering if anyone is looking forward to 7 foot Swimmers from China. female and male. wingspan of a ocean bird.
Im calling the Chinese Olympics “the single feed”
make of these predictions what you will.
I don’t know sure looks deflationary. I still think the central banks will try hard for inflation. I don’t think they are done yet. Don’t be suprised if Bernake taxes savings
with negative savings in AMerica, that may not be such a cash cow.
You give central bankers too much credit. The ECB is still fighting the shadow of inflation and Bernanke told congress the subprime mess was contained and may cost 50 - 100 billion dollars. Mervyn King ate his own moral hazard speech hours after the Northern Rock run began. What’s more, despite all the evidence, comrade Greenspan insists Russian savers caused the subprime mess.
The debt spiral is upon us. There are many more Centros out there waiting to fail.
Sorry, can’t squeeze blood out of a turnip (but taxing savings could make the U.S. savings rate go farther into the hole than it already is). Besides that, the conundrum (no yields to speak of on anything except for high risk gambling ventures) is already an implicit tax on savings.
I think the biggest thing in favor of the curious yellow metal, is it’s transparency.
It is what it is.
Everything else financially looks a little Mad Hatter, right now.
Imagine what happens when some Cheshire Cat spills the beans to Alice(the public), that he is mad, and the Hatter’s eccentric behavior verifies this?
(Sigh). I can’t believe some people still think there’s deflation in our future. There are too many houses, the direct result of speculation. That’s why their prices are falling. Certain other commodities (e.g., gold) also saw too much speculation. But there is not too much oil, not too much wheat, not too much corn. The stuff we NEED (food, fuel) is going to continue to rise in price.
The stuff we NEED (food, fuel) is going to continue to rise in price.
Except shelter, that will deflate.
Note that annual shelter costs dwarf food+fuel+other necessities.
Now, you have one huge deflating item and several small inflating items. Which dominates?
Yes but the US has the capacity still to product wheat and corn on a massive scale. We just need to decide as a country to do so.
(Sigh). I can’t believe some people still think there’s inflation in our future. There was too much money. That’s why prices are rising. Money is now being destroyed as the credit bubble unwinds. Prices will fall. There is a lag between the creation of money/credit and the effect on prices. This is why those first in line to get new money (the banks) are the ones who benefit most from it’s creation. There is also a lag between the destruction of money and people’s realization that the ability of consumers to pay has gone down. But prices will adjust.
Expect the unexpected.
And also, Bill, definitions of inflation and deflation that people commonly use here refer to supply of money, and are only loosely correlated with actual prices.
Well, gold is near its’ nominal all-time high, and it is outperforming stocks again this year. The trend should continue.
I don’t think we can use interest rates to measure inflation any more; they are too distorted by the central banks’ parking money from their trade surplus in US treasuries. Clearly, inflation is greater than the rate on a 10-year.
So you’re coming to the deflationary dark side too? We saved you a seat Ben >; )
Deflation? When does the bill for the War on Terror come in? When does the bill for the $560 billion Prescription Medical Benefit come? When is Medicare going bankrupt?
Well the treasury plan is FICO limited to actual subprime. Mostly, those folks weren’t getting 1% neg-am teaser rates. THEIR teaser rates were were in 6-7% range before they reset to LIBOR + (something obscene). At least that’s what I understand.
America’s Pastime was laid low last week with 80 ballplayers being named as cheaters…
It dovetails nicely with the cheating epidemic that has been going on for quite awhile on Wall Street.
The bambinos of finance have created: America’s passed time
To be fair, both baseball players and wall streeters for have been cheating FOREVER!
Baseball had it’s share of cheating back in the day…
Signs and bases were stolen regularly, and nobody ever went to jail.
When scrawny guys that could never muster more than 10 dingers a year, started hitting 30, about 10 years ago, all the warning signs were there.
Baseball worships the home run, just like Wall Street does in a financial vein.
And it looks like it was all ok, as long as you did it by any means possible.
Say It Ain’t So
Shoeless Joe Jackson was the only man to bat .382 in his last season in the major leagues. After that he was banned for life for his role in the “black sox scandal,” the deliberate throwing of the 1919 World Series.
All the ballplayers accused of throwing the 1919 World Series were acquitted in a court of law — and all were nevertheless banned from baseball for life anyway by the commissioner of baseball.
In a sense, that ban applied not only for life but beyond death. None of those players has been put in the Baseball Hall of Fame, even though Shoeless Joe Jackson hit .408 at his peak and left a lifetime batting average of .356
http://www.creators.com/opinion/thomas-sowell/say-it-ain-t-so.html
The last player thrown out of the game for gambling, will share the same fate as Shoeless Joe…
A Rose by any other name, would smell sweeter.
acquitted in a court of law
In a criminal case that does not mean you have been declared innocent; merely that you have not been found guilty beyond reasonable doubt.
There have been several business “leaders” here in Australia who have either failed to grasp that distinction, or more likely deliberately used the acquittal to muddy the waters.
Ozajh – replying to your correct observation yesterday that I must have gotten something wrong with my dimensions/math about the Ghawar “cube of oil.” I should have read my notes rather than try to remember them. This is the quote, from an article on the topic, that I should have posted:
“Alone to have produced the amount of oil to date that (Saudi Arabia’s) Ghawar field has produced would have required a cube of fossilized dinosaur detritus, assuming 100% conversion efficiency, measuring 19 miles deep, wide and high.”
The quote is attributed to Dr. J. F. Kenney. He is quoted as one of the very few Western geophysicists who taught and worked in Russia and studied under Vladilen Krayushkin, developer of the Dnieper-Donets Basin. Here is one of many references to his work:
http://www.csun.edu/~vcgeo005/Energy.html
Very sorry about the misleading math. The point for which it was posted, which remains valid nonetheless, was that fossil detritus cannot possibly have been responsible for the vast amount of oil that has been and continues to be discovered.
Unfortunately, this means that I have been unmasked as the guy behind the quant math that hedge funds used to market all those handsome MBS CDOs. I confess.
Noted.
Thanks for the follow up.
Unreal
http://www.thestreet.com/s/report-regulators-in-bear-hunt/newsanalysis/banking/10394946.html?puc=_tscana
“U.S. attorney’s office in Brooklyn are investigating allegations that Bear insiders were given preferential treatment and allowed to exit the beleaguered funds while the exit doors were shut for others”
You don’t say, well now that comes as a shock… Not!
It’s a rotting onion, Wall Street.
As we peel back yet another layer of deceit, i’m not too surprised to hear this.
Isn’t it meet, right and proper to help the richest clients on board the life rafts before the rest of the passengers discover they will have to go down with the ship? I see no impropriety here — business as usual.
But but but…. we “need” the wealthiest of elite to stay wealthy. Don’t you know the wealthy lords give us wage slaves our jobs so we can pay the taxes they aren’t paying?
And don’t forget the big salaries we pay them because of their “talent” - such as the “talent” required to lose billions upon billions of dollars in short order. I could do a better job than those bums by just not showing up! Where’s my million dollar bonus?
This is the sort of ‘normal business parctice’ that got some people into big trouble when the music stopped in 1929.
Didn’t one of the NYSE insiders finish up doing time?
Richard Whitney, NYSE President in 1929.
http://en.wikipedia.org/wiki/Richard_Whitney_(financier)
Do time? I’d rather see them jump.
The same thing was done during the Argentinian financial crisis of a few years ago. When the banks closed their doors to the public during the bank run, “others” where seen walking in and out of the banks through the back doors.
Got 10% down?
Fed to Unveil Home Mortgage Plan
http://biz.yahoo.com/ap/071218/fed_mortgage_crisis.html
“barring or restricting lenders from penalizing subprime borrowers — those with tarnished credit or low incomes — who pay their loans off early”.
Wonder what percentage of these borrowers pay their loans off early? I can’t imagine it’s very many, if any.
“pay off early” is a relative term in the mortgage biz. You “pay off” a current lender by re-fi’ing with someone else.
Right, I forgot about that re-fi biz.
So they’re going to try to get rid of prepayment penalties?
Everyday they come up with some new plan. When will they ever stop meddling in the markets?
Never. All this talk about free markets is just to pull the wool over the sheeple’s eyes.
Barn door left open
All the horses ran away
Hurry, shut the door!
Greenspan, oh Greenspan
The pretty horses are gone
What a legacy …
Looks like Wall Street is pumped to the max about the Euro helicopter drop. Should be another 275 point monster rally day. This is getting tiring.
Dec. 18 (Bloomberg) — The European Central Bank loaned 348.6 billion euros ($501.5 billion) for two weeks to banks to bring down the cost of money at year-end.
The reluctance to lend money after the collapse of the U.S. subprime market pushed interbank euro rates for two weeks to the highest level at least six years earlier this week. The rate banks charge each other for two-week euros fell to 4.45 percent from 4.94 percent, the European Banking Federation said today.
”It won’t fix the actual problem of banks not lending,” said Michael Schubert, an economist at Commerzbank AG in Frankfurt. ”It also raises the moral hazard question for the ECB, whereby banks could start relying on getting cheap cash.”
“Father Christmas, give us some money
Don’t mess around with those silly toys.
We’ll beat you up if you don’t hand it over
We want your bread so don’t make us annoyed…”
The Kinks
Oh the memories!
We are sick and tired
Of being promised this and that.
We work all day, we sweat and slave
To keep the wealthy fat.
Should be another 275 point monster rally day.
Right now its only up 36 points.
Came across something interesting on the teevee, last night. A commercial by a law firm that specializes in personal injury and nursing home abuse cases now has a whole new field they’re going after: home builders! They’re looking for people who worked for home builders on “salary”, but had to work more than 40 hours a week and may be owed overtime. Lots of overtime. Their “hook” was that during the boom, the builders made a ton of money, but stiffed their employees. Interesting.
The name of the law firm is Morgan & Morgan, btw. They mainly practice in Florida and Georgia. Anyone interested can contact them here:
http://www.forthepeople.com/
Remember, they’re “for the poeple,” not for Morgan and Morgan.
(If you believe this, I’ve got a 4/3 on the beach in La Jolla for you for only $145,000.00!)
Oh, of course they’re for Morgan and Morgan. Most attorneys are out for themselves, that’s nothing new. But what I find interesting is that there must be a bit of money in it for them, or they wouldn’t be soliciting those potential clients. Anyway, I mostly trust personal injury attorneys, believe it or not. Because they work on the come and have an incentive to settle the case favorable, unlike attorneys who bill hourly and have a vested interest in keeping the case going and draining their clients.
Most attorneys are out for themselves
I’m not a lawyer, but I go to work every day strictly because I get money by doing so, not out of charity for my employer.
If people think lawyers cost too much, they are free to do it on their own. In most places/situations, people without lawyers get additional benefits that people with lawyers don’t. Have a great idea? The Patent Office charges you less AND gives you free advice and explanations. The people with lawyers can’t pay for those services, because the Patent Office thinks your lawyer ought to know everything already.
My husband is a patent and trademark lawyer and I can tell you that most people who think that they can do that with the info provided by the USPTO fail and end up paying him to fix their screwups.
TxChick: exactly
2/3 for the people, 1/3 for morgan and morgan
2/3 and 1/3 is so 20th century. Now it’s 40% and 60%, and some law firms are pushing toward a 50/50 split.
Oh, and if it’s a class action suit, it’s more like 20% to the class and 80% to the attorneys.
ecpt now they don’t have any- how do they collect from Levitt et. al
Many of these are simply shakedowns.
Contract Compliance is an independent organization funded by the various trade unions. A toll free number is set up for any non union employee to make a claim and almost every time the employee will be assigned a labor attorney. I’ve been bled by these scams - been in the right but still it wasn’t worth the effort to continue the fight.
I don’t think any of the big HB’s are union. I’d be curious who is funding these claims?
500 billion dollars
http://www.bloomberg.com/apps/news?pid=20601087&sid=abY98bxmZTOU&refer=home
Brother, can you spare half a trillion?
Don’t worry…we’ll make more!
It makes one wonder just how bad all this really is. I knew things were out of whack but now I’m getting very worried.
BOE’s Mervyn King warns of downward spiral in credit.
http://www.reuters.com/article/ousiv/idUSL179588120071218
You can lead a banker to a bundle of helicopter-dropped money, but you can’t make him lend.
Right, these guys aren’t just pushing on a string, they have thrown a yarn factory at the markets and still nothing will budge. Someone mentioned ‘why are they trying something new every day?’ Cuz nothing is working.
Basing an economy on selling each other houses doesn’t look too smart now.
Central bankers can’t fix this. They are simply rearranging the deck chairs. It’s a desperate attempt to buy more time.
“…they have thrown a yarn factory at the markets and still nothing will budge…”
Don’t make me laugh so loud — the kids will wake up!
“Cuz nothing is working.”
I guess I will keep repeating this until the MSM finally gets a clue and starts saying it, but the problems facing the global central banking cartel cannot be fixed by engineering solutions (e.g., helicopter drops of cash). Once trust is gone from the banking system, no amount of additional hands in bankers’ greedy little hands will make them want to lend it out.
Everyone should watch “A Christmas Carol” this holiday season to see how Ebenezer Scrooge handled money in hard times.
(eBENezer) is my new moniker for the FED majordomo, til xmas…
In truth, I’d rather have Scrooge running the show than the current clowns. He would not be in favor of bailouts, and he wouldn’t have lent Cratchet thousands of pounds for a house he couldn’t afford - and then expect somebody else to pay for it. Scrooge was not a nice guy, but at least he did his job, which is more than I can say for the current crop of screwballs.
Cratchet would be my choice as well, but he doesn’t have BEN right in the middle of his name, all handy-like.
…additional
handsmoneys in bankers’…Everyone should watch “A Christmas Carol” this holiday season to see how Ebenezer Scrooge handled money in hard times.
IIRC he says: Christmas is harvest time for money lenders.
grocery bill to grow:
For cash-strapped consumers already beset by higher gasoline prices and escalating mortgage rates, the hits just keep on coming. This time, it’s food.
The sharp rise in food prices seen in 2007 is expected to be followed by another higher-than-normal jump next year, the USDA said Monday. And 2008’s punch will be to the bread basket.
Items made with wheat (breads and crackers) and soybean oil (cooking oil and fried foods) are expected to rise so much next year that they’ll boost the cost of cooking at home by up to 4.5 percent – half a percentage point more than predicted just a month ago.
http://tinyurl.com/3ay4qy
“Items made with wheat (breads and crackers) and soybean oil (cooking oil and fried foods) are expected to rise so much next year that they’ll boost the cost of cooking at home by up to 4.5 percent –”
A good reason for American to cut back on the carbs and slim down.
cost of growing “green”
crops plowed under by commie farmers to get corn- a -hole
what a scam
the only renewable is NUKE
The driving force is not gasahol. Since early this year, ethanol has gone down in price and there is more available than we use.
some basic conversions
corn 180 bu/ac
soybeans 50 bu/ac
pigs 2.5lbs Cn/ lb of pork
Feeders 7lbs Cn/ lb of beef
The driving force is Asia buying anything that we produce at any price that meets their purity standards. Fortunately for us, most meats do not meet Asia’s standards.
Exactly. Do you work in Ag?
Fortunately for us, most meats do not meet Asia’s standards.
Hmmm, that’s one way to look at it.
I think we could stand to make a number of reforms in terms of feed additives / antibiotics, as well as some changes at the end of the line in meat packing and processing.
But the staus quo is keeping Europeans and Asians from buying up all our meat, eh?
Starvation is the ultimate weight loss plan.
OT, but carbs ain’t the problem; if anything, it’s the opposite. Most fit people have a high-carb diet and most unfit people eat a lot of protein and fat. You can live off potatoes and green vegetables and fruit and do pretty well - almost 100% carb. BTW, all oils are approx. 100% fat. The problem is too much fat and lack of exercise.
The body needs protein to rebuild itself and fats to absorb essential minerals. Many of us consume too much empty carbs plus sugar and not enough fiber.
True about the empty sugar carbs and not enough fiber, but many people also eat way more protein and fat than they need. I mean, meat three times a day - very few people need that level of fat and protein. In some ways I think it’s a lot like housing, while you do need a place it doesn’t need to be a 400k McMansion. We seem to live in excess in all areas of our lives, IMHO.
65-20-15 are good percentages for those burning at least 500 more calories per day than the average individual. Less carbs if more sedate. The carbs are more easily converted into energy and you still get adequate amounts of fat and protein. And of course quality of carbs matters.
OT, but carbs ain’t the problem; if anything, it’s the opposite.
Yeah, still off topic. This is myth pushed by the US Government and plays into the profits of large corporations including agribusiness and big pharma.
We are mostly carnivores - we are designed to run off fat and
Excessive carbs intake (mostly the processed kind and especially sugars) is the far and way the more probable cause of heart disease and diabetes than fats that occur naturally in whole foods.
protein, with carbohydrate processing as a way to prevent starvation when the herds run thin.
I have personal experience with carb restriction (as you probably guessed) and it’s improved my health dramatically. If you eat carbs and feel great, it’s a good thing. However, I think it’s disservice to repeat this myth when most of the medical evidence (and most cutting edge research) points to my POV.
VTer - I’m not repeating a myth. I have no idea what the government says or how conspiracy theorists interpret it. Most endurance athletes do just fine on a low protein-low fat diet. I’m six years older than my father was when he had his first heart attack and I probably eat 1/5 the meat he ate. But I have to come clean - I’m also not comfortable torturing animals just to eat.
We hadn’t been to Trader Joes in about 3 months and stopped in one last week…
We noticed a couple things:
Less variety of food from overseas.
Everything we’ve been buying for years seems to be a Dollar or 2 Dollars higher, now.
It’s pretty pathetic when the bag of tater tots in the back of my freezer generates a higher return than a bond backed by the good faith and credit of the US Government .
lol. that’s funny
If you want to think this way then read the ‘Alpha Strategy’. Google it on line - it is free. The book talks about storing items due to their value increases faster as a real commodity (Tin foil) then it would as a bond It was written in 1980 and if you would have followed his strategy since 1980 you would have lost a tremendous amount of opportunity since inflation has been kept extremely low. It is a good read - especially for the survivalist types. I just go to Costco and get most of the benefits he talks about since this is their founding principal. Buy in bulk to save $$ and store until you need it. It also does a great job outlining basic economic principals. Why prize freezes don’t work, about how if you help one group in a population you are essentially taking (stealing) from another. The first 5-6 chapters educates one on this and then he goes on in nausim about price per square foot storing items etc.
Good news. People should be eating less. At least in the US and Europe, way too many overweight people. No wonder there is so much inflation in food prices. It’s eat, eat, eat. Nonstop.
And exercise too little. I see 26 yr olds that are fat. You should be stellar at 26. I’m older, and a size 2/3. I treadmill against my will every morning and eat decent.
Eating healthier would help reign in the runaway medical costs too.
Yep. I pay $100 per month for my health insurance. I’m 48 and get aches and pains every now and then, but work out through them. Glucosomine Chondroite is helping a lot though (turning over the mattress when I start to feel back pain helps tremendously) I have worked out regularly since 31 years ago. Staying slim is the most important thing I can do. Moderation in diet is very important too.
The US has a one hundred trillion calorie reserve, carried around on the waistlines of 80% of its adults. Probably more energy than what’s left in the middle east oil fields. We could go on a diet for a few years and we’d all be fine. Maybe if a Whopper cost more than a dollar people wouldn’t stuff so many in their faces.
“Maybe if a Whopper cost more than a dollar people wouldn’t stuff so many in their faces.”
Which do you favor: price controls or tax surcharges?
A web site I recently came across is called SimplyLivingSmart.com
Free registration and lots of good videos on inexpensive ways to build food storage.
SimplyLivingSmart
Added to my favorites. Thanks for the suggestion, BV!
Wait, how can that be? We’re heading into deflationary times, aren’t we?
Got Food?
“In an “unforeseen and unprecedented” shift, the world food supply is dwindling rapidly and food prices are soaring to historic levels, the top food and agriculture official of the United Nations warned Monday.”
http://www.iht.com/articles/2007/12/17/europe/food.php
(disregard if you aren’t a eatateran)
midwest bubble denial:
DETROIT - Michigan and Ohio share something with Florida and California — some of the nation’s highest rates of foreclosed homes and delinquent mortgages. But the reasons for their woes are as different as their climates.
Battered by a declining manufacturing base, stagnant population growth and low demand for housing, Michigan and Ohio rank No. 1 and 2 on mortgage finance company Fannie Mae’s list of states with the largest credit losses through Sept. 30
http://www.msnbc.msn.com/id/22300698/
the gang of five:
Dec. 17 (Bloomberg) — Representatives of five of Wall Street’s dominant investment banks gathered around a blonde wood conference table on a February night almost three years ago. Their talks over take-out Chinese food led to the perfect formula for a U.S. housing collapse.
The host was Greg Lippmann, then 36, a fast-talking Deutsche Bank AG trader who aspired to make mortgage securities as big a cash cow for Wall Street as the $12 trillion corporate credit market.
http://tinyurl.com/32r59v
I assume what these guys did was all legal and above board, right?
Yeah, a bunch of moron wet-behind-the-ears traders were allowed to play a marginal game that affected the global economy. Just outlaw Wall Street, period. It’s sick when it comes to something like this.
I am having a flash back in time…
http://en.wikipedia.org/wiki/Barings_Bank
It’s like not 1, but 5 Nick Leesons conspiring to get rich quick, or lose trying.
http://en.wikipedia.org/wiki/Barings_Bank_collapse
It occurs to me that the Street may need five young traders on whom to blame the mess that happened on subprime lending kingpins’ watch — something like the Ollie Norths of the financial world.
Yeah that’s what it sounded like to me reading it… give me a break it was just five young traders who put this all together and the heavy hitters then who innocently had the wool pulled over their eyes.
This took place in February of 2005. We were already close to a market top by then. The products they marketed certainly had an impact on the pensions and other funds which bought it, but blaming either the bubble or the bust on these products seems pretty farfetched to me.
Too early for Weekend Topics thread at this point, but while I am thinking about it, how about a thread on “non-bailout” measures passed to date and why they will not have any effect?
why they will not have any effect?
No one can repeal the laws of supply and demand…
We’ve been seeing mostly “Butterfly Effect”…
Little tornadoes created by individuals and small groups, which will lead to “Chaos Theory”, when it becomes a fully fledged movement.
http://en.wikipedia.org/wiki/Butterfly_effect
Quote of the year, my friend.
“No one can repeal the laws of supply and demand…”
But they can sure throw a monkey wrench into the gear box to prevent the engine from functioning properly!
Exactly! Even the most stubborn man will eventually acknowledge the sea when he is drowning.
…or who ultimately profits and who pays for the various bailout plans.
This is ultimately the effect of all gov’t intervention– transferring money from one group of citizens to another. Whether such is a good idea or not depends on ones values and politics and what not.
FBI Probes Virginia Mortgage Scam:
http://tinyurl.com/2vhwyq
There’s a lot more fraud to be discovered in NoVA. I noticed it was a lot of Pakistani names and posted some of their transactions on this blog several months ago. It sparked a debate on their nationality — now we know.
The comments left after the article were interesting — one’s not by a native English-speaker:
I liked this comment: “Schoeni defended his appraisals in the neighborhood, saying they were backed up by comparable sales and buyers’ willingness to pay the higher prices. ”
Uh huh. Maybe if folks were putting down 20% downpayments — otherwise, their opinion matters for very little.
A lot of good quotes in that article — either the Post reporter is pretty good at extracting them, or these folks are real newbies in the scam game, and don’t realize that you don’t say anything concrete to reporters if you know what’s good for you.
Calgary housing market to cool to “normal”. Of course you shouldn’t wait too long to buy. 2-3 bedroom condos in Calgary are being advertised for $450K.
http://calsun.canoe.ca/News/Alberta/2007/12/18/4729882-sun.html
Greenspasm Cash Rewards
http://www.stockmania.com/index.php?showimage=115
Whatcha drinking there, kahunabear? I could use one, too.
Beer.
Have Alan Greenspan and Mr. Magoo ever been seen together at the same time?
Just wondering…
Hmm, Mr. Magoo, The Movie. I think you found the perfect person for the lead.
I agree. They’re both blind, or nearly so.
Warnings of subprime market bust were ignored
By Edmund L. Andrews
NEW YORK TIMES NEWS SERVICE
December 18, 2007
WASHINGTON – Until the boom in subprime mortgages turned into a national nightmare this summer, the few people who tried to warn federal banking officials might as well have been talking to themselves.
Edward Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.
But when Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.
http://www.signonsandiego.com/uniontrib/20071218/news_1b18subprime.html
I wonder if Alan mentions this little detail in the autobiography he is flogging around the world?
This is a guy who knew a thing or two about history. In my opinion, the mess we have now is pretty much what we should have expected when we collectively decided to put a bunch of mathematicians and physicists in charge of our financial system and the course of economic thought in our universities. I’m a pretty big math geek myself, but when you have “economists” who understand nothing about how our money and banking system actually works and fund managers who are 100% confident that investment returns are a random walk, normally distributed, can be modeled as if the price movements of each security are physical phenomena totally independent of anything else going on in the world (including other securities)… Well, you’re bound to run into trouble at some point.
What we have been sorely lacking is historical perspective and an admission that economics as a field of study is more about political philosophy than anything else. Every professional economists I’ve ever met has an agenda, whether he or she admits it or not.
Recently, I’ve been reading Herbert Hoover’s memoirs. I was surprised to find how proactive he was in trying to scale back the extraordinary growth in credit in the ’20’s. It seems to me that if he were alive today, he would be on this blog. (These are his own memoirs, so you have to be on the lookout for revisionist history, but he cites a lot of letters and speeches he made before the crash.) He was fighting an uphill battle, and he ultimately lost to the President of the New York Fed, who was greatly influenced by business and foreign interests. (There was no Board until 1935.)
Despite everything we supposedly know about economics, we repeated the biggest mistake in financial history. In his memoirs, Hoover says somewhat fatalistically that without control of the Fed there was nothing to be done about credit inflation except warn against it since it was a storm the U.S. hadn’t dealt with on that scale before. No one could believe that the consequences could be so bad. We don’t have the same excuse this time. We should have stopped the partisan supply-side versus Keynesian versus whatever arguments long enough to listen to common sense warnings from people like Gramlich.
Anonymous Coward,
I completely agree. Physicists should not be considered economists. They aren’t. I disagree that their work is not valuable. It is. It just means that physicists work should have input from experienced and competent economists. I know, I’m a physicist. Of course, I’m sticking to my lab. I know what I’m doing there: it’s my ball, my bat, and my backyard.
Roidy
Juiciest Bear Food…
http://www.atimes.com/atimes/Global_Economy/IL19Dj02.html
I am rapidly beginning to develop an understanding of macroeconomic budget constraints — except for the smoke and mirrors part, that is…
…
Overall, 2008 looks to be a good year for bears. The US Federal Reserve has been walking a tightrope since August between the precipices of a collapsing financial system and resurgent inflation. With a 3.2% November Producer Price Index rise (7.2% over the previous year) announced on Thursday and a 0.8% Consumer
Price Index rise (4.3% over the previous year) announced on Friday, it can now be officially confirmed that the tightrope has vanished into thin air.
I must confess to feeling so engorged after this fall that I would rather just stop eating and go hibernate for a while.
Roach: ““This recession will be deeper than the shallow contraction earlier in this decade.”
This recession will not end until we have a depression that would cleanse the blotted American economy of all its excesses. Yes, “liquidate everything,” as Treasury Secretary Andrew Mellon said during early1930s. Finally, Americans will be FORCED to liquidate. There are enough vacant homes that none need to be built for the next five years. There are enough cars that no new ones are needed for the next 2-3 years, etc.
Also this –
“This Economy Is Credit Junkie; There Is Absolutely No Doubt That US Is Going Into Recession”
That was the comment of David Roche from Hong Kong when he was asked, on CNBC-World from Singapore, if the recession in the US is a given. He also asked a rhetorical question: If there was no excess consumption from the US China and India will be doing well? He continued, “We will see something close to recession in Asia. Asia is in denial.” He said that the reason the USD is so low relative to the Euro is “because US central bank is stupid.” I agree. Bernanke would have not taken the job had he not been stupid (he will be blamed for the depression).
Jas
-x-x-x-x-x-x-x-x-x-x-
http://www.nytimes.com/2007/12/16/opinion/16roach.html?_r=1&oref=slogin&pagewanted=print
December 16, 2007
Op-Ed Contributor
You Can Almost Hear It Pop
By STEPHEN S. ROACH
THE American economy is slipping into its second post-bubble recession in seven years. Just as the bursting of the dot-com bubble led to a downturn in 2001 and ’02, the simultaneous popping of the housing and credit bubbles is doing the same right now.
This recession will be deeper than the shallow contraction earlier in this decade. The dot-com-led downturn was set off by a collapse in business capital spending, which at its peak in 2000 accounted for only 13 percent of the country’s gross domestic product. The current recession is all about the coming capitulation of the American consumer — whose spending now accounts for a record 72 percent of G.D.P.
Consumers have no choice other than to retrench. Home prices are likely to fall for the nation as a whole in 2008, the first such occurrence since 1933. And access to home equity credit lines and mortgage refinancing — the means by which consumers have borrowed against their homes — is likely to be impaired by the aftershocks of the subprime crisis.
Consumers will have to resort to spending and saving the old-fashioned way, relying on income rather than assets even as mounting layoffs will make income growth increasingly sluggish.
For the rest of the world, this will come as a rude awakening. America’s recession is likely to shift from homebuilding activity, its least global sector, to consumer demand, its most global.
There is hope that young consumers from rapidly growing developing economies can fill the void left by weakness in American consumers. Don’t count on it. American consumers spent close to $9.5 trillion over the last year. Chinese consumers spent around $1 trillion and Indians spent $650 billion. It is almost mathematically impossible for China and India to offset a pullback in American consumption.
…
“There are enough vacant homes that none need to be built for the next five years.”
Well, if I get the money and land together, I have every intention of getting a house built if it’s feasible. I’m not living in bubble-built McShitAttachedProduct, no matter how many of them are empty. Not permanently anyway. (unless they are SO cheap that I have carte blanche for repairs and stuff.)
More mortgage fraud. I have a feeling we’re going to be reading about this kinda stuff on a daily basis for a while….
http://www.nytimes.com/2007/12/18/us/18fraud.html
Well, we should have been reading about it daily in the MSM for the last 5 years. Instead, you had to read about in the comments on this blog. Now that they’ve discovered fraud, what’s next?
BBY up 4% near its 52 week high on good earnings.
Hope the dude who wanted puts on that waited.
Yeah, closing out my position for a wash. Closing out some other retail shorts (decent gains) and index puts. Feel they might run up to the old highs on the djx.
I actually just got my price this morning. I’m feeling pretty good about it.
I’m also looking for a double bottom from CDE today. We’ve gotten some detachment between PMs and miners. That will probably slingshot the miners in the next few days as the PM effect is sometimes elastic.
RE: Butterfly Effect and the inept Chicago Bears on MNF
NYCityBoy,
Seems to me that I need to converse with you about paying off our bet. Man, watching that game last night was painful.
Lip
That was a good game on many levels for me. I even have a couple extra bucks in my pocket because of those Vikes.
What was our bet, again?
Case of Leinenkugels, but I have no idea how to get it there.
According to the website, they cannot mail it to you.
http://shop.leinie.com/page.htm?PG=BeerShipments?
If you want, send me your address and I can send you the cash.
web4swedes@hotmail.com
Lip
I am looking forward to a relaxed holiday weekend of watching old movies with the kids. On the top of the to-rent list:
1. It’s a Wonderful Life
2. A Christmas Carol
3. Trading Places (After the kids go to bed).
4. Wall Street (also post-bedtime)
“Greed is good.”
5. Boiler Room
“Anybody who tells you money is the root of all evil doesn’t have any. “
LOL, one of the most misquoted items in the bible.
The true quote is
“The pursuit of money….” Pursuit is the subject matter not money.
6. Glengarry Glen Ross
“Coffee is for closers.”
http://en.wikipedia.org/wiki/Glengarry_Glen_Ross_(film)
7. Bunny in Platoon.
“diju see that fr*#kin head come apart”
Lifetime Memories in the making. You’re a good dad.
Grandma use to take me down Gershwin & Irving Berlin Lane, along with Artie Shaw and Benny Goodman Dr. I play piano now.
To this day, I treasure those special times. Maybe, not so much at the time, but looking back….
But, Mr. Scrooge, they’ll starve to death!
If they’d rather die, they had better do it and decrease the surplus population.
Its a Wonderful life?
Come on Prof GS Bear, the movie is about a poor banker that just wants his loan repaid. The scummy S&L owner’s uncle pocketed the money and drank it up.
In the meantime good old George has a girl on the side “Why, the whole town knows you’ve been giving money to Violet Bick. ” Then in true Wall Street spirit he gets bailed out by the public. All the time uttering inanities to con the poor folks: Annie- “I been savin’ this money for a divorce, if ever I got a husband.”
Even Clarence gets disgusted “Ohh, there must be some easier way for me to get my wings.”
A Wall Street view. Bailouts
Thanks for ruining the movie for me for the rest of my life, sheesh. LOL
Professor, I wonder if you’re interested in reading Dicken’s original to the kids. I just finished last night. Mine are 9 and 11 and loved it. (Lots of vocab explained on that one but we read it by the Christmas tree and fire. My husband said even he enjoyed listening though he knew the story so well.)
Thanks for that suggestion. I was actually thinking along those lines this morning after my post.
Holiday Inn
Christmas in Connecticut
White Christmas
Is that a haiku?
Or a movie list?
I had a call yesterday from loss mitigation of a major national lender as I had reported to their local folks a few fraud instances on their loans. I found it thru research in another matter and thought I should let the other lenders know about my findings.
The guy was amazed at the depth of the effort made by the fraudsters as I was able to trace a couple of loans to three sugar cane workers in Clewiston, Fl. These guys live in a camp of migrant workers and have 2 condo investment units totaling $500K in Orlando.
In any event this bank which puts loans into their portfolio has several million dollars of exposure in just this one little condo project. Imagine the REAL exposure they face.
I got the distinct impression that this news was not news to him. I explained that these conversion guys are simply using rental income to keep the mortgages current until they “sellout” the remaining units and then the whole project will go bust all at once. He really seemed surprised at that scenario. It screamed from the rooftops for me. I’m 58 and my guess is he is about 30-35. The wolves are among the sheep and they see them not.
Housing Construction Drops in November With Single-Family Activity at Lowest Level Since 1991
http://tinyurl.com/2ycxge
In a bad sign for future activity, the government reported that applications for building permits fell for a sixth straight month, dropping by 1.5 percent to a seasonally adjusted annual rate of 1.15 million units, the slowest pace for building permits since June 1993.
And the market is ready to open up on the back of this good news?
Financial Gangsters Of Wall Street are getting busy this morning before the opening, stealing as much as they can with a “gap up” (after a period following a big “gap down”) as they continue on their merry way, plundering mom and pops portfolios and the 401k funds, collecting the money (mom and pops and the 401k money) they have lost through sub-prime gambling. All with a smile and a knowing nod from their co-hort pals at the SEC.
Your mission today, as a trader, is to try and work out how far they will take the market up before they take it down - stealing and plundering as they go of course. Hey! You didn’t think those $60 million bonus payouts on Wall Street was their money did you! (lol)
Out of whose pockets does this mysterious “liquidity” come which bankers the world over are now delighted to discover gift-wrapped under their Christmas trees? Or is it possible with modern printing technology to create moneys out of thin air?
ECB pumps €350bn into money markets
By Ralph Atkins in Frankfurt
Published: December 18 2007 11:38 | Last updated: December 18 2007 13:57
The European Central Bank on Tuesday allotted nearly €350bn in Europe’s money market as part of a co-ordinated attempt by the world’s central bank’s to restore confidence in the global financial system.
The extra liquidity - €170bn above the bank’s normal auction levels - was lent at level below market interest rates in a special operation to head off a year-end liquidity crisis.
http://www.ft.com/cms/s/7ba8f586-ad5b-11dc-9386-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F7ba8f586-ad5b-11dc-9386-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
U.S. may lose millions of high-wage jobs due to protectionist trends.
“Last year the United States attracted $180 billion in foreign direct investment. This is extremely important since inbound investment creates millions of high-wage, high-skilled American jobs that support our growing standard of living. But protectionist trends could disrupt this.”
“In 2006, 20 bills were introduced in Congress that, if implemented, would have restricted foreign investment in the United States. What’s more, they could have prevented Abu Dhabi Investment Authority’s $7.5 billion investment in Citigroup in late November.”
http://english.pravda.ru/business/finance/18-12-2007/102953-high_wage_jobs-0
Hmmmm. I would be interested to know what these “high paying” jobs are? Do they mean six figure income jobs? Most high paying jobs (excluding lawyers and doctors) can be outsourced to India and a few other places. I heard someone say the other day that corporations are even starting to move their key accounting jobs to foreign shores. Many medical billing companies already have. Also many other insurance companies for claim processing.
It’s far cheaper for a company to set up a company in somewhere like India and send a key employee over there to show them what they want done. We already had “high paying” jobs in the US and a lot of them are already gone to other countries - so how can we lose what we don’t have anymore? Of course, our high paying jobs have been replaced under the Bush administration. Maybe we could export some of the “high paying” jobs Bush has created.
1. WalMart greeters.
2. Hamburger flippers.
3. Thousands of new Federal works.
4. Shop assistants.
5. Delivery drivers.
My company (a HUGE nationwide corporation)
- Customer Service - outsourced to Phillipines
- Computer Support - outsourced to India
- Subscription Services - outsourced to middle-of-nowhere America where all employees are part time workers at $6/hr.
- Rapidly replacing longtime full-time workers with part-time college students willing to work for 1/2 standard pay with no benefits. Management doesnt seem to care or understand that YOU GET WHAT YOU PAY FOR! Cheap labor in a highly technical field is barely better than useless. I end up doing MY work and RE-DOING work the kids do!
- Our annual pitiful pay increase (union contracted) coincides EVERY year with an employee increase to our health benefits, negating any raise completely for the past 6 years!
Just Great America! Good Job!
Why are you still there? Must be that the coffee’s good (from an old Dilbert strip).
“…with part-time college students willing to work for 1/2 standard pay with no benefits.”
Anything gained by this is TEMPORARY. True, all you have to pay them now is enough to buy an iPod, an XBox, and a Scion - but someday they’ll run head on into reality and that’s when the fun starts.
I friend of mine was telling me the other day that his brother’s radiology work is increasingly being outsourced to India.
Yes, see http://www.msnbc.msn.com/id/6621014/
Radiology makes a lot more sense than customer support. Professionals are dealing with professionals. The more of this we see the better off I am, as it is puts downward pressure on health care costs. Or do you think American radiologists should make $500K for reading charts and typing findings?
Same happened at my company (worldwide, not just nationwide) Since I started here about 7 years ago, our total worldwide headcount has gone down 49%.
The hiring freeze just went into effect this week. Corporate stock buy back program has been renewed. Pay increases for the non-management will range from 0 to 3%, and medical has increased 18% again this year.
This is just an extension of Global trade. A good book I read a few years back is “The world is Flat” and one could see the global forces in play today. The flattening of the world is allowing a global workforce compete on a much larger scale. America has been a high wage country for decades due to we were the producers of our consumption. As we exported the work and the manufacturing jobs we held inflation at artificially low levels due to the advantage this provided. People shifted to service industries as money supply expanded and inflation in check. This coupled with expansion of credit created a wealthy effect for the average American. We are now to the point were this advantage is no longer purely an advantage. The longer term effect is we now have a population who has consumed its future and sold off its jobs so little to no safety net established for the coming recession. This globalization is going to disproportionately affect high wage countries as has been evident by our growth rate VS the emrging markets. 1 of 2 things will happen.
1. We will turn toward isolationism since we can no longer compete in the global workforce since our labor costs too much relative to other countries or our wages are going to have to come way down and other countries up in order to balance this wage gap between countries.
2. Our wages are going to have to come down or stagnate for several years while other nations wages rise. The dollar devaluation helps bring our wages down relative to the global market which makes our products cheaper and thus more desirable to foreign markets. Companies who export will be the ones who benefit the most and thus if one works for an exporter they will have a better chance of keeping their job than someone in the service industry in the recession.
6.Assistant crack whores
What goes up…
http://www.marketwatch.com/tools/marketsummary/
Somehow I have this feeling that lots of those helicopter drops of liquidity which are intended to thaw out the credit markets will wind up in Wall Street traders’ hot hands…
T-bond yields flashing red alert right out of the gates…
http://www.marketwatch.com/tools/marketsummary/
Quick — buy the dip, no sell the rally, no…
Money supply growth at 16%. Got gold?
http://www.shadowstats.com/cgi-bin/sgs/data
It doesn’t help when people take the cash and bury it in the backyard.
no liquidity problems exist.
the ECB flooding the sink with more liquid does not unclog the mass of paper cloggin the drain…
“The Colorado Financial Services commissioner says his division will handle the seizure of Zion United Community Credit Union “differently from what I would say is normal.”
“It’s an asset to the people who live in the Capitol Hill area,” Chris Myklebust said. “We’ll see if we can save it.”
Myklebust’s agency seized the credit union Friday, removing its board of directors.
Rather than turning the institution over to the National Credit Union Administration, as is typical, Myklebust has appointed a new six-person local board….”
By David Milstead, Rocky Mountain News
Tuesday, December 18, 2007
It is insolvency not a crunch
Got some cheap Jan. BKX calls. There’s got to be a bounce in here somewhere!
Playing amr for a bounce.
I’m putting half of mine on “red” and the other half on “don’t pass.”
Maybe it’s just me but, feels like another short squeeze is coming.
yeah, January should work after everyone purges these suckers from their accounts.
Don’t you hate it when they stop you out and then reverse?
I’m looking at going long the vix around 20, out to jun or better.
This just in from MSN MoneyCentral:
“WASHINGTON (Reuters) - U.S. lenders would have to determine that a borrower can afford a mortgage before making the loan under a Federal Reserve staff proposal on new regulations released on Tuesday.”
Wow, what a concept! Lenders determining that a borrower can afford a mortgage before making the loan. Now, let’s see if we can get that horse back in the barn…
The guys at New Century are shaking in their Crocs (yanking air).
Local paper says housing prices are expected to rise 15% next year, with only a 2% decrease in number of sales.
*repeatedly stabs bubble with a fork* DIE DIE DIE!
Then again, why trust a market survey released by a real estate corporation?
“Local paper says housing prices are expected to rise 15% next year,…”
Would that paper perhaps be The OC Register quoting Gary Watts? I feel as though I am in a time warp…
Nah, I live in one of the current bubblicious areas in Canada.
China Will Allow Banks to Invest In U.K. Market
By J.R. Wu and Aaron Back
BEIJING — “China’s banking regulator said it will allow Chinese banks to invest client funds in the U.K. stock market under an agreement with U.K. regulators.”
WSJ
Southwest Florida’s real estate woes have bled through to business lending. In part it is because of overly speculative development and construction lending. Examples are the loans made by Coast and First Priority, two community banks in Bradenton.
Coast collapsed and was acquired by First Banks Inc. of St. Louis. First Priority booked a 500 percent increase in bad loans and had to boost its reserves, thus tightening its lending capacity.
Small community banks are a good source of financing for fledgling small businesses. But those that were aggressively lending to home builders are finding that defaults are impairing their other lending services….
Tightening has become apparent in the Small Business Administration’s loan guaranty program. Portfolios of the guaranteed portion sold in the secondary market are decreasing in value.
“This probably reduces the lender’s yield by 15 percent,” Michael Thomas says. He is the CEO of Atlanta-based United States Arbitrage Finance II and buys government guaranteed loan portfolios nationwide. “Some may exit the (SBA) program.”
Robert Coleman publishes SBA-industry newsletters and is hosting a phone conference on Wednesday about how to value SBA assets.
He says the “impact of the subprime real estate meltdown on SBA (is) significantly deeper than originally thought.”
Coleman believes that lenders will earn less and may even lower financial incentives to their loan originators. “Any time you have that dramatic decrease in revenue, something has got to give.”…
http://tinyurl.com/23ex2o
Herald Tribune Southwest Florida
Failed hedge fund now able to repay banks
By James Mackintosh in London
Published: December 17 2007 17:22 | Last updated: December 17 2007 17:22
Banks that lent to failed hedge fund Basis Yield Alpha, run by Australia’s Basis Capital, are likely to get all their money back and there could be a payment to investors, the fund said.
Yield Alpha, which started the year with about $700m, has returned to solvency and can afford to repay banks which seized the fund’s assets when it missed margin calls earlier this year.
The stronger than expected financial position resulted from continued payouts by structured credits in which Basis invested, and appears to remove one of the few situations in which lenders to a hedge fund lost money….”
Financial Times
http://tinyurl.com/2q85dn
sorry if this is a double post. i think the timing of this bubble collapse is terrible. by reading the following article, i feel that too much damage might be done by these very stupid politicians!!!
Calls Grow for Housing Crisis Response
Monday December 17, 6:24 pm ET
By Alan Zibel, AP Business Writer
Broader Response to Housing Industry Mess Pushed As Election Approaches, Economy Worsens
Several proposals are already being floated:
– Alan Greenspan, former chairman of the Federal Reserve, suggested in a TV interview over the weekend that more government intervention was needed to help borrowers. “Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this,” Greenspan said Sunday during an appearance on ABC’s “This Week,” offering few specifics.
– The Center for American Progress, a liberal public policy think tank, last week proposed the creation of a new government agency, the Family Foreclosure Rescue Corp., that would help borrowers whose home value has declined to less than that of their mortgage by providing fixed-rate loans and issuing government-insured bonds to pay for the efforts.
– Democrats and consumer groups are advancing legislation to bar abusive lending practices and to allow bankruptcy judges to reduce the size of a borrowers’ home loans in court. Advocates say this change could help 500,000 borrowers or more, compared with around 250,000 likely to be helped by the Bush administration’s plan to freeze introductory interest rates for some borrowers.
http://biz.yahoo.com/ap/071217/risky_mortgages.html?.v=2
AG: “I recommend helicopter drops of cash moneys targeted to land in FBs’ living rooms.”
Goldman 4Q Profit Beats Expectations
Tuesday December 18, 11:12 am ET
By Joe Bel Bruno, AP Business Writer
Goldman Sachs Pushes Past Credit Crisis, Beats Expectations for Fourth Quarter, Year
http://biz.yahoo.com/ap/071218/earns_goldman_sachs.html
Goldman hints record run could be ending
By Ben White in New York
Published: December 18 2007 16:27 | Last updated: December 18 2007 21:02
Goldman Sachs prepared the market for a possible end to its remarkable run of record-breaking profits in defiance of the credit squeeze, warning on Tuesday that difficult market conditions in November had clouded its outlook.
http://www.ft.com/cms/s/8e882404-ad80-11dc-9386-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F8e882404-ad80-11dc-9386-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
The Fed must not play Santa to the markets
By Kenneth Rogoff
Published: December 17 2007
“….It is true the Fed has been repeatedly wrong-footed by the subprime crisis. It badly underestimated both the size of the losses and the virulence of the ensuing global contagion.
Of course, few market analysts have been much further ahead on the curve, which is why so many private forecasters have been tripping over each other in recent weeks to knock down their overly optimistic projections for 2008 US growth.
The real town/gown problem is one of horizon rather than perspective. Monetary policy has long and variable lags, particularly on slow-moving inflation expectations. Sharper Fed interest rate cuts today might well mute the housing price collapse, at least in nominal terms. However, if the Fed should ease too far, too fast, it could get hit by a boomerang a couple of years down the road, in the form of sustained higher inflation.
For the Fed, two to three years is the medium term, and it matters. For many financial market participants, two to three years is an eternity, and it does not matter…..
Unfortunately, we live in an era where trend US productivity growth is clearly down and the housing bubble could be deflating for years.
We are no longer in the technology boom years of the 1990s Greenspan era. No matter how much the Fed steps on the gas pedal, it is going to be hard to keep US trend growth much above the 2 per cent levels Europeans and Japanese have come to think of as normal. With baseline growth lower than it was 10 years ago, it takes less to push the economy into recession.
This is hardly a fun message for the Fed to have to deliver, particularly when markets seem to believe that central banks are virtually omnipotent, at least when it comes to ramping up year-end bonuses.”
The writer is professor of economics at Harvard University and former chief economist at the International Monetary Fund.
Financial Times
http://tinyurl.com/2fjt84
“For the Fed, two to three years is the medium term, and it matters.”
I call BS on this. They are in crisis control mode, and only the present matters for the moment.
Quadrant I management is very costly for the global economy at large, but also highly profitable for those who are positioned to reap the benefits of bailout measures.
http://c2.com/cgi/wiki?FourQuadrants
“The federal government’s fiscal exposures totaled approximately $53 trillion as of September 30, 2007, up more than $2 trillion from September 30, 2006, and an increase of more than $32 trillion from about $20 trillion as of September 30, 2000,” Walker said. “This translates into a current burden of about $175,000 per American or approximately $455,000 per American household.”
http://www.yubanet.com/artman/publish/article_72998.shtml
Here I sit broken hearted, tried to sift through the wreckage, of the late departed…
“…approximately $455,000 per American household.”
I guess it is a good thing that so many American households have their wealth saved up in McMansions valued north of $500,000, then?
First major foreclosure article in the Mail Tribune, Southern Oregon:
http://www.mailtribune.com/apps/pbcs.dll/article?AID=/20071218/NEWS/712180308
This was on the first page of the paper, and will be the first time many people here in Ashland are confronted with the fact that things aren’t quite as different here as they think.
Greenspan: Efforts to get mortgage rates up failed
Ex-Fed chief says he’s not to blame for subprime mess
“…He noted that 20 to 30 other countries have experienced housing bubbles, adding that these were “all caused by the same thing, this global sharp decline in long-term interest rates, specifically mortgage rates.
“We tried to get mortgage rates up. We failed. The reason we failed is global forces are overwhelming,” he said. …”
Assuming Mr. Greenspan is correct in that The Federal Reserve “tried to get mortgage rates up,” the ineffectiveness of the Federal Reserve shows several things.
First it is readily apparent that by removing bank reserve requirements for home loans in 1994, all banks became able to create free moneys.
The second item is that by having a captive bidder of US Treasuries (the SSA), interest rates were kept artificially low.
And finally by removing Glass-Steagall in 1999, the banks were allowed to participate in risky investments.
The Federal Reserve has no powers other than to regulate the $45 B in its hot little hands. If the Federal Reserve could not stop a housing bubble from forming, there is no chance that the Federal Reserve can stop it from deflating.
“If you wish to be a success in the world, promise everything, deliver nothing.”
Napoleon Bonaparte
I am trying to remember how the Frankenstein monster story ends. Can someone please remind me?
‘Did I request thee, Maker from my clay
To mould Me man? Did I solicit thee
From darkness to promote me?’
- (X.743-5), John Milton’s Paradise Lost.
http://en.wikipedia.org/wiki/Frankenstein
Have you looked at this one, Ben?
http://www.bloomberg.com/apps/news?pid=20601109&sid=aj3K4H7aXnBM&refer=home
..
So let me get this straight.
Lehman Brothers sold the Florida government investment fund a bunch of bad debt paper last summer; knowing that it was worthless.
Then, after the latest run by depositors on the Florida government investment fund, Lehman steps in and loans them real money to cover up the sh!t they sold Florida earlier.
I can’t believe this sh!t is happening to the tune of billions of dollars.
Folks, we are doomed.
..
No worries — BlackRock has stepped in to manage the mess…
“That’s when Stipanovich officially turned in his resignation. State officials selected BlackRock to manage the pool the next day.”
From just plain stupid to downright insane…
Sorry, link is there, it’s just invisible.
http://www.mlive.com/news/grpress/index.ssf?/base/news-39/119798920498340.xml&coll=6
Democracy Corps Survey
Oct 21 -23 2007
Q.58 I am going to read you some more phrases that people use to describe why our country is going in the wrong direction. After I read the list, please tell me which TWO come closest to your own views of why the country is going in the wrong direction.
Total
Our morals and family values are being eroded……………… 43
Big businesses get whatever they want in Washington …… 35
Our leaders have forgotten the middle class………………….. 33
America is doing nothing about our problems at home ……. 29
Our national leaders are ineffective and can’t get anything right…………………………………………………………….. 21
We face growing dangers in the world ………………………….. 12
America is acting like it is powerless to do anything about
so many problems …………………………………………….. 11
(Other) ……………………………………………………….. 1
(None) ………………………………………………………… 1
(All) ……………………………………………………………. 1
(Don’t know/ refused) …………………………………………. 3
I have no idea if it is Big business gets whatever it wants, screw the middle class or our leaders are incompetent jackasses. Interesting that
global dangers in the world is below survey results from 2000.
Question 57 deals with illegal immigration if interested.
I agree with “Our morals and family values are being eroded”– things like, I don’t know, “fairness,” “taking responsibility,” “honesty,” “hard work,”– passe concepts like that in this new economy.
–
Ohio AG (on Bloomberg minutes ago):
“Everyone up and down the chain, including the rating agencies” were involved in the mortgage fraud. He said that Wall Street financed the mortgage companies that were pushing fraudulent loans.
The whole financial system is infested with Conflicts Of Interests. Charlie Gasparino: “Goldman is the king of conflicts.”
Jas
Am I remembering correctly that stock prices are a leading economic indicator?
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=LEN&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=8&freq=1&startdate=&enddate=&hiddenTrue=&comp=tol+kbh+cfc+bzh&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
BZH and TOL appear to have achieved a permanently-low plateau, while other REIC share prices look like they are still sliding…
Oh, come on Stucco, you know what I think of those permanent plateaus…
Better version w/ home construction index superimposed (only off 60 percent since March — surely a bottom must be in by now!):
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=LEN&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=8&freq=1&startdate=&enddate=&hiddenTrue=&comp=tol+kbh+cfc+bzh&compidx=aaaaa%7E0&compind=3728%7E171546&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
IRWIN KELLNER
Get ready for a long haul
Commentary: Markets, policymakers, average Americans all must contribute
By Dr. Irwin Kellner, MarketWatch
Last update: 11:47 p.m. EST Dec. 17, 2007
PORT WASHINGTON, N.Y. (MarketWatch) — The way out of the subprime mess and the ensuing credit crisis will not be easy, quick or painless - no silver bullet, in the words of Treasury Secretary Henry Paulson.
Lots of things have to fall into place for this crisis to go away. Some of these can be taken care of by policymakers, some by the markets - but a lot is in the hands of the people, themselves.
Take home prices, for example. They are much too high in relation to household incomes. See Dec. 3 column
The proof is the huge overhang of unsold homes. Prices need to fall enough to boost demand so that these inventories will shrink to more normal levels.
Once supply equals demand, housing prices will stabilize.
http://www.marketwatch.com/news/story/get-ready-long-haul/story.aspx?guid=%7B3404831A%2DD956%2D4514%2D93D5%2DFDE9EDEE8AA3%7D
IRWIN KELLNER
How low must housing prices go?
Commentary: Figure at least another 20% before families can afford to buy
By Dr. Irwin Kellner, MarketWatch
Last update: 11:23 p.m. EST Dec. 3, 2007
PORT WASHINGTON, N.Y. (MarketWatch) — Housing will revive when prices come down to the point where demand rises enough to reduce the huge supply of unsold homes now overhanging the market. That said, this point is a long way off.
http://www.marketwatch.com/News/Story/how-low-must-housing-prices/story.aspx?guid=%7B501755BA%2D5015%2D43E7%2DB2A3%2DE2A3536ADF71%7D
–
http://www.nytimes.com/2007/12/18/business/18subprime.html?_r=2&oref=slogin&ref=business&pagewanted=print
December 18, 2007
Fed Shrugged as Subprime Crisis Spread
By EDMUND L. ANDREWS
WASHINGTON — Until the boom in subprime mortgages turned into a national nightmare this summer, the few people who tried to warn federal banking officials might as well have been talking to themselves.
Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.
But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.
In 2001, a senior Treasury official, Sheila C. Bair, tried to persuade subprime lenders to adopt a code of “best practices” and to let outside monitors verify their compliance. None of the lenders would agree to the monitors, and many rejected the code itself. Even those who did adopt those practices, Ms. Bair recalled recently, soon let them slip.
And leaders of a housing advocacy group in California, meeting with Mr. Greenspan in 2004, warned that deception was increasing and unscrupulous practices were spreading.
John C. Gamboa and Robert L. Gnaizda of the Greenlining Institute implored Mr. Greenspan to use his bully pulpit and press for a voluntary code of conduct.
“He never gave us a good reason, but he didn’t want to do it,” Mr. Gnaizda said last week. “He just wasn’t interested.”
…
Trading collars actually are effective in quelling volatility. Who’da thunk?
MARK HULBERT
Choppy waters?
Commentary: The stock market really hasn’t been all that volatile
By Mark Hulbert, MarketWatch
Last update: 12:01 a.m. EST Dec. 18, 2007
ANNANDALE, Va. (MarketWatch) — Monday was yet another day in which the Dow Jones Industrial Average rose or fell by more than one hundred points.
http://www.marketwatch.com/news/story/how-volatile-has-stock-market/story.aspx?guid=%7B9FCE5350%2DD78F%2D44B0%2DA0FA%2DAA7A3BFC0C47%7D
These guys are pikers. 1997-2002, now that was volatile.
Since banks now can tap unlimited funds, is it safe to assume that housing prices and stock prices will soon start always going up again?
We have Japan to thank for conducting this experiment. The assumption by the finance industry has been that more credit equals increased asset prices, and this relationship can go on forever. This can go on for awhile, but not forever, until a new equilibrium is reached where one can no longer borrow their way to wealth or borrow themselves out of having to pay off debt.
Debtors will hope that those who control our money supply will inflate our way out of their mess, but so long as banks have the tallest buildings in society, I wouldn’t bet on that.
Sure if you like the rates of 12% on a mortgage. They offered the moneys, then changed lending regulations. No prepays, verified income and assets. In a 12% world why loan to a scum prime?
I don’t see that 12% rate with the recessionary Sword of Damocles suspended above the U.S. economy like a knife about to fall. But then I don’t guess many foresaw what happened during Volcker’s tenure at the Fed, either.
METALS STOCKS
Gold rallies; platinum soars to new record high
By Polya Lesova, MarketWatch
Last update: 2:46 p.m. EST Dec. 18, 2007
NEW YORK (MarketWatch) — Gold futures rallied to close above $800 an ounce on Tuesday, while platinum futures soared to a new record high on supply concerns.
Gold for February delivery closed up $8.10, or 1%, at $807.40 an ounce on the New York Mercantile Exchange.
“Gold prices improved nicely on Tuesday as first a surge in crude oil prices managed to overpower continuing strength in the U.S. dollar and as physical demand ahead of the lunar New Year from China began to manifest itself,” said Jon Nadler, an analyst at Kitco Bullion Dealers, in a research note.
“Also helping gold was the spike in platinum values to new records on the back of feared supply disruptions from Russia,” Nadler said.
Platinum for January delivery advanced as high as $1,526.40, a new all-time record high, in electronic trading on Tuesday. The contract finished up $11.70 at $1,515.30 an ounce on Nymex.
http://www.marketwatch.com/news/story/gold-rallies-platinum-soars-new/story.aspx?guid=%7BE39E3F57%2DD113%2D40A6%2DA31E%2DE10931B399EE%7D
Actually most of the metals stocks are down with the market over the past month, but the metals are holding up.
Look for gold miners to post never-seen-before types of profits in Q4 - should bring interest back.
One in Five Expect to Borrow to Heat Homes This Winter
http://tinyurl.com/yuq2zx
For perhaps as many as 27 million American adults, keeping warm this winter will mean borrowing money and 20 million will use credit cards to be able to afford their heating bills, according to a CreditCards.com poll.
And:
Poll: Gas Prices Will Make ‘08 Economy Sputter
http://tinyurl.com/yw3zf8
Two out of three Americans say they’ll cut back on spending for other things as a result of higher energy costs in 2008, with nearly a quarter saying they’ll cut back significantly on other spending.
Those McMansions and their energy guzzling ways may be sitting on the market longer than expected. Downsizing may be the next trend.
Now that the planet’s currency presses are running full tilt w/o constraints, I am thinking the stock market is headed for a strong finish this year. Buy the dip! (And think about buying some food for storage while you are at it…)
December 18, 2007 4:06 P.M.EST
BULLETIN
U.S. STOCKS BREAK TWO-SESSION LOSING STREAK
Bulls work through losses
Stocks climb higher near the close, hoping to snap a two-session losing streak. Best Buy and Goldman post solid quarterly results.
MarketWatch.com
This is the first I’ve seen.
http://lasvegas.craigslist.org/apa/495170887.html
High-rise, near-strip, 2br condo for rent for under $1500. (They’re actually lying in the ad, this is Turnberry Towers, Las Vegas, NV. On Paradise, one block east of the strip, across the street from the Las Vegas Hilton)
There are others, but they are way south-strip and in more trouble (Boca Raton, Park Avenue). I mean, If you’re going to live in a high-rise on the “Strip”, you want to actually be on the part of it that most people think of when they think of Vegas. Or, at least a short walk from it.
This place is up for rent I’m sure, because a brand-new project is going in between it and the strip. When the new project was announced, all the people who paid for Turnberry condos whose strip-views are going to be eclipsed were livid.
Can’t tell from the details, but what you want to bet this place is owned by a specuvestor on the 6th floor who paid upwards of $500k?
This one, on the other hand…
http://lasvegas.craigslist.org/apa/471869917.html
…is north of the strip “proper” in a war zone called “murder alley” by the locals. Your neighbors are dealers, addicts, prostitutes and the bail bonds and law firms who cater to them.
“Home Prices Stall in South Korea … In Seoul’s most popular neighborhoods, three-bedroom apartments now routinely cost $2 million, about 100 times the average national income.”
Like that’s normal!
http://www.nytimes.com/2007/12/18/business/worldbusiness/18frozen.html
If Hatzius is right, then we are only 1/8 of the way there. Problem is that if a consensus forms that suggests he is correct, the magnitude of the problem will increase endogenously.
US housing crisis reverberates around the globe
by Rob Lever Tue Dec 18, 9:16 AM ET
WASHINGTON (AFP) - Few people knew at the start of 2007 the meaning of “subprime” real estate loans or how they might affect the US and global economies.
Today, worries are growing that the crisis that began with mortgage failures and spread to banks and brokerages may push the US economy into a downturn and put the entire global economy at risk.
…
Goldman Sachs economist Jan Hatzius says his “back-of-the-envelope calculation” now suggests “losses of around 400 billion dollars” for global banks and investors.
Although this may not seem large in the overall economy, Hatzius says the effect is magnified because banks need to scale back their lending to keep capital ratios intact after accounting for the losses. As a result, he said lending could be cut by two trillion dollars.
“Even if this occurs gradually, and even if there are some offsets from reduced credit demand and increased lending by other sectors, the drag on economic activity could be substantial,” said Hatzius in a note to clients.
http://news.yahoo.com/s/afp/20071218/ts_alt_afp/year2007worldeconomy
markets tops breached…
its a big slide now……WEEEEEEEEE
I feel much calmer already. Now where is that phone — time to call the wife and ask her to rush over to CostCo to stock up on food and other basic necessities.
Investors stunned by ECB’s €350bn
By Ralph Atkins in Frankfurt and Dave Shellock and Gillian Tett in London
Published: December 18 2007 11:38 | Last updated: December 18 2007 21:09
Short-term market interest rates in the eurozone plunged at their fastest rate for more than a decade on Tuesday after the European Central Bank stunned investors by pumping a record €348.6bn worth of funds into the markets.
The size of the injection – which was intended to calm the markets over the critical year-end period – was twice as big as the ECB had indicated would have been needed in normal circumstances.
http://www.ft.com/cms/s/7ba8f586-ad5b-11dc-9386-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F7ba8f586-ad5b-11dc-9386-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
shock and awe baby, get ready for some serious volatility…
today was just a warm up.
It’s apparently a great time to be a banker with outstretched arms…
Monetary rescue helicopters getting bigger
By Gillian Tett
Published: December 18 2007 21:15 | Last updated: December 18 2007 21:15
The monetary helicopters are getting bigger. When the European Central Bank conducted an auction Tuesday, it initially expected to inject €180.5bn ($260bn) of funding into the markets, based on its past benchmarks of what banks usually need.
In the event, however, 390 institutions demanded €348.6bn of funds. That is almost four times bigger than the funds dropped by the ECB helicopter into the markets back on August 9, when it first intervened (unsuccessfully) to stop the money market woes. Indeed, Tuesday’s drop equates to an average of almost €1bn, per bank.
http://www.ft.com/cms/s/73d95e48-adad-11dc-9386-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F73d95e48-adad-11dc-9386-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Insight: Painful adjustments ahead for banking system
By John Plender, FT columnist and chairman of Quintain
Published: December 18 2007 17:58 | Last updated: December 18 2007 17:58
Rarely have banks engaged in window-dressing on the scale now being contemplated for December 31. With confidence still at a low ebb in a global banking system where all manner of off-balance sheet contingent claims are coming back onto the balance sheet, the imperative to hoard cash is overwhelming.
Then, on January 2, comes a new dawn. Or so runs the optimists’ prayer. With the year-end out of the way, they hope a respectable volume of lending will resume, an end to the subprime crisis will finally be in sight and bank shares will start to recover from the battering of recent months. Free in one bound, so to speak.
http://www.ft.com/cms/s/d72ad9d4-ad91-11dc-9386-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2Fd72ad9d4-ad91-11dc-9386-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
The ECB
Prompt corrective action
Dec 18th 2007 | FRANKFURT
From Economist.com
Europe’s central bank dishes out some €350 billion
Shutterstock
THE European Central Bank (ECB) is keen these days to spew cash into troubled markets. On Tuesday December 18th it accepted bids from 390 banks for close to €350 billion in short-term money, at below-market rates (between 4.21% and 4.45%). Is this is a $500 billion Christmas present, or a justifiable measure to avert an unseasonal crisis?
Certainly, it was a response to a sudden jump in two-week rates to over 4.9% the day before—a sign that banks were hoarding more liquidity than usual at this time of year, to tide them over the Christmas period.
http://economist.com/daily/news/displaystory.cfm?story_id=10318960&top_story=1
I never imagined Friedman’s helicopter drop theory would get a real life test on such a massive scale…
“Mr. Gower cabled you need cash, stop. My office instructed to advance you up to twenty-five thousand dollars, stop. Hee Haw and Merry Christmas! Sam Wainwright. “
Paulson says U.S. mortgage relief plan not a bailout
Wed Dec 19, 2007 6:47am IST
By Glenn Somerville
KANSAS CITY, Mo. (Reuters) - U.S. Treasury Secretary Henry Paulson, on the second day of a tour seeking to build support for a government-sponsored mortgage relief plan, on Tuesday said it was not a bailout for people who made bad financial decisions.
“Foreclosures are very costly to lenders and investors as well as harmful to homeowners,” Paulson said in an interview on Fox News Channel. “There’s no bailout with government money, none whatsoever.”
http://in.reuters.com/article/businessNews/idINIndia-31040420071219
Economy
New Fed Rules to Protect Mortgage Holders
by Lorrie Grant
“Unfair and deceptive acts and practices hurt not just borrowers and their families, but entire communities, and indeed, the economy as a whole.”
- Fed Chairman Ben Bernanke -
NPR.org, December 18, 2007 · Consumers taking out home mortgages are getting new protections against questionable lending practices under a plan introduced Tuesday by the Federal Reserve.
The Fed unanimously approved new rules that safeguard subprime borrowers — those with bad credit and low incomes. Subprime borrowers were hit hardest by the housing and credit debacles. The rules apply to new loans made by banks, mortgage brokers and other lenders.
In a 5-0 vote, the Fed agreed to set parameters that would halt seemingly carefree lending practices by requiring banks and other mortgage issuers to both lend only to those who prove their income and to make sure conditions of the loan are understood by borrowers.
http://www.npr.org/templates/story/story.php?storyId=17357182
AP
Housing Construction Hits 16-Year Low
By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON
Tuesday, December 18, 2007 05:36:33 PM PT
Housing construction fell in November with single-family activity dropping to the lowest level in more than 16 years. Analysts said the recession in housing showed no signs of a turnaround.
The Commerce Department reported Tuesday that construction of new homes and apartments dropped by 3.7 percent last month to a seasonally adjusted annual rate of 1.187 million units.
Construction of single-family homes fell by 5.5 percent to an annual rate of 829,000 units. It was the eighth consecutive drop in single-family starts, pushing activity in this area to the lowest level since April 1991. Apartment building rose last month by 4.4 percent to an annual rate of 332,000 units.
In an ominous sign for future activity, the government reported that applications for building permits fell for a sixth straight month, dropping by 1.5 percent to a seasonally adjusted annual rate of 1.15 million units, the slowest pace for building permits since June 1993.
http://marketplace.publicradio.org/apheadline_detail.php?story_id=D8TK4LT80&group=ap.online.headlines.business
Ozajh - - replied above, in your baseball post, but wanted to add, relative to the link yesterday from Bubbleviewer
http://www.theoildrum.com/node/2470
According to the background of the writer, he is a computer security guy, not an oil guy.
Look up this link:
http://www.csun.edu/~vcgeo005/Energy.html
These are all geophysicists who specialize in oil exploration and discovery. Who is more likely to have the reliable handle on oil origins, probable locations and reserves? There is a lot of information about Saudi oil that will never be found on the Internet because it is not in the Saudi national interest for it to be known. Further, Ghawar was a subject not for the matter of known reserves but only as an example of why, due to its sheer size, there could not have been enough dinosaurs there to create the oil - - even if it had been Dinotoberfest and they all ate poisoned grass. Hubbert’s peak oil theory was based on blind acceptance of the 1700’s era premise that oil came from fossil detritus. The Russians were smart enough to say “maybe not,” and that is why they are in the catbird seat today.
its not gonna be a recession.
its not gonna be a depression.
its not inflation.
We are getting the Global Deflation.
why, all the PTB demand inflation. therefore the greatest path to destruction is deflation.
Define Deflation in the double aughts, and you have the key.
What I see lacking in this forum is a discussion of power. For the first time ANYONE can remember the little guy is in the drivers seat. This chaos cause by the idiots in charge has empowered US! Everyone that could have bought a home, bought one. Every one that could refinance and pull equity out did exactly that (except for the wise). Now “they” must rely on US to bail them out. Not on a FED scale, but on a consumer scale. You see, they are sooner going to give more $$$ to the incompetent borrower, now that the gig is up and people are watching, than they are going to give their daughter’s date to the dance a condom “to be safe”. PRICES ARE FALLING, end of the gravy train!
So who are they going to prey on next? Why us, silly. Be prepared for LOUD suggestions that the time is right. Just as in the depression, there will be a bounce, even a nice sized one, once the paper in the drain gets dislodged. We need to get the word out to friends and family! We need to post on Craigslist (a ton because RE agent will flag) that we should hurry up and wait. What will “they” do? Buy all the crap they import from China themselves? As I see it we are a frugal group, we have all lived thru rough times and have scrimped to survive. Well let’s do it as a concerted effort! Let’s vote when we as a group want to “spend their $”. I’ll smile from ear to ear to stand in a soup line with the cast of OC Housewives next to me. This is reality people. The next 5 years will not be pretty. Hell you all know this… the only thing we need is to act as a whole to hurt those that oppress us. This is our only chance to force a changing of the guard.
I must admit, I was a “fool” like others, thought that I’d never be able to afford a home so while credit was easy I took out a huge loan (for our area $310+K) and bought a river view home in a resort area (Aug 05) after inflating the price and incrementally dropping it over 2 years, I had to bring $18K to the table to close. No one made me do any of this… I signed on the line. Well, now I’m on the other side of the fence and I will not buy a home again until the are GIVING them away. 40% drop my ass, this will be a fall of 60-70% with a “little help from our friends” (fed). There will be a bounce, and it will be rosy for 1 year, then it will tank again- all the way to the bottom, watch for the bump, it will mean we are 1/3 to 1/2 of the way to the bottom. I won’t buy in war time either- ever again. That is a given.