December 27, 2007

Bits Bucket And Craigslist Finds For December 27, 2007

Please post off-topic ideas, links and Craigslist finds here.




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229 Comments »

Comment by Lostcontrol
2007-12-27 04:49:59

“Yesterday, I took advantage of this (hopefully) quiet week to share some things I have come across that affected how I view the world.

I can’t recommend strongly enough that you view the four-part 2002 BBC documentary, The Century of the Self. Creator Adam Curtis said, “This series is about how those in power have used Freud’s theories to try and control the dangerous crowd in an age of mass democracy.” It focuses on how Freud’s ideas were used by business and government, far more deliberately and extensively than one might imagine, during the 20th century to achieve what Curtis calls “the engineering of consent.” This term was first used by Edward Bernays, the father of the public relations industry and nephew of Sigmund Freud. In Bernay’s words:

The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society,…Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country. . . . In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons . . . who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.

This series describes how this “invisible government” came into being and operates.

“Yesterday, we encouraged readers to watch the first segment, “Happiness Machines.” Part 2 is “The Engineering of Consent.” I encourage you to watch a few minutes here, and then go over to Google Video, since you will see it in a larger scale format there.”

http://tinyurl.com/2g59aj

Comment by Lostcontrol
2007-12-27 05:01:08

I guess we really are caught in a “Matrix” and not even aware of it, except for the very few on this and other like minded blogs!

Happy New Year!

Comment by awaiting wipeout
2007-12-27 05:41:54

Lostcontrol-
Thank you for this documentary. Edward Bernays was the invenor of the American breakfast, Bacon & Eggs(using a doctor’s hardy breakfast survey as manipulation. His client was the Bacon Co.), tied a woman’s right to vote to smoking, gave us lead in gasoline, and a host of other morally bankrupt “advantages”. Many so called “Think Tanks” are his creations too.

I am very familiar with Edward Bernays, an evil genius.

Comment by Jas Jain
2007-12-27 06:06:06


Unless my memory fails me Edward Bernays was a nephew of Freud. Can anyone confirm/deny?

BTW, I am fully aware of the manipulative nature of our current system and how we got here. The advantage in our system goes to those who are “experts” at deception and manipulation, or propagnda machine. Some old hag in NYC named Ellen makes a good living with “phototherapy.” Looks like most, if no all, of her clients are women who are not happy with their looks, or sizes.

Jas

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Comment by Jas Jain
2007-12-27 06:33:19


I juts started to watch the documentry and it does confirm that Edward Bernays was a nephew of Freud.

I wonder at what point the control of the masses by corp/gov blows up.

Jas

 
 
Comment by Lostcontrol
2007-12-27 06:59:11

I think that this country should ban TV and advertisments. These are the means by which we are controlled in our thinking, etc. Books are still the best means of dispensing information. Besides, when you read a book, you have to have your mind actively engaged in the effort as opposed to passively absorb what is being provided.

Give a friend a book today!

Disclaimer: I am not in anyway involved the writing, publishing or distribution of books for any person other than their enjoyment.

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Comment by dude
2007-12-27 07:53:40

“Books are still the best means of dispensing information.”

What about the blogs?

 
Comment by Lost control
2007-12-27 10:12:32

The blog is an excellent source of information and the opportunity to test your ideas. I am not sure how the idea of democracy has survived. I guess, it must have occurred in the public square. Now that we are a nation of 300+ million and the media is increasely controlled by a few individuals, the blogs on the internet are the counterforce. Until the Govt/private business filters information on the blogs, democracy will survive! Finally I would to say that I am an Idealist, however what I have learned on this Blog scares the S*@t out of me. I really hope you all are wrong, however I have a plan A, a plan B and a fall back plan C.

Wish you all the best in the new year!

 
Comment by hd74man
2007-12-27 14:50:43

RE: Books are still the best means of dispensing information.

58% of the US populace hasn’t read a complete book since HS.

 
Comment by awaiting wipeout
2007-12-27 16:17:17

That’s depressing. We haven’t watch TV in 12 years, and read every night (weeknds too). We read a minimum of 25 books a year (each).

 
 
Comment by Chip
2007-12-27 07:46:54

“Edward Bernays was the invenor of the American breakfast…”

I like his steak sauce. :)

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Comment by AnnScott
2007-12-27 08:10:05

Uh….I think you mean “Bernaise” and it is French. (Considered one of the ‘difficult’ sauces to make along with Hollondaise.)

BERNAISE SAUCE

2 egg yolks
3 tbsp. lemon juice
1/2 c. firm butter
1 tbsp. minced onion
1 tsp. tarragon leaves
2 tbsp. white wine

In small pan, stir yolks and lemon briskly with wooden spoon. Stir in one half of the butter and all of the onion and tarragon over low heat until melted. Add the rest of the butter. Stir briskly until butter is melted. Be sure butter melts SLOWLY. For Hollandaise Sauce, omit the onion, tarragon, and white wine.

 
Comment by sweeny texas
2007-12-27 08:38:12

It is truly amazing what you can learn on this blog… :)

 
Comment by awaiting wipeout
2007-12-27 08:42:59

“inventor” - sorry. Evidently, I am the product of “grade inflation”. (Actually, it was a typo.)

 
Comment by phillygal
2007-12-27 09:10:27

It is truly amazing what you can learn on this blog…

You can even learn the correct spelling of bearnaise .

And hollandaise.

 
Comment by Joe Schmoe
2007-12-27 10:52:30

Yikes! I think Chip was being tongue-in-cheek.

 
Comment by Incredulous
2007-12-27 12:30:27

Comment by AnnScott
2007-12-27 08:10:05
Uh….I think you mean “Bernaise” and it is French. (Considered one of the ‘difficult’ sauces to make along with Hollondaise.)

BERNAISE SAUCE

2 egg yolks
3 tbsp. lemon juice
1/2 c. firm butter
1 tbsp. minced onion
1 tsp. tarragon leaves
2 tbsp. white wine

In small pan, stir yolks and lemon briskly with wooden spoon. Stir in one half of the butter and all of the onion and tarragon over low heat until melted. Add the rest of the butter. Stir briskly until butter is melted. Be sure butter melts SLOWLY. For Hollandaise Sauce, omit the onion, tarragon, and white wine.

Actually to make Hollandaise, I would cut the butter back a little, increase the lemon a little, and be sure to add a little salt (it tastes metallic without it), and –optionally–pepper, and and red pepper. I think Hollandaise is one of the easiest sauces to make, but restaurants generally screw it up, and never use enough lemon. And the pre-prepared stuff in the groceries is sickening. I think they use flour or something for thickeners, instead of egg yolks.

 
Comment by pismoclam
2007-12-27 13:45:09

Only about 50,000 units of cholesterol in each sauce per tbl spoon. Bon apatite

 
Comment by potential buyer
2007-12-27 14:42:41

True Hollandaise uses vinegar, which is heated and then reduced - no wine at all.

 
 
Comment by jim A
2007-12-27 09:20:54

Well, while tetra ethyl lead has turned out to have alot of negative health effects, it DID make gasoline engines MUCH more efficient than before we started putting additives into the refined product. Interstate speeds, the birth of comercial aviation etc. would not have been possible without it.

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Comment by awaiting wipeout
2007-12-27 16:12:20

OT-, but about Edward Bernays link to lead in gasoline. A well connected MD, was also on the board of GM, and knew that lead would increase horsepower. Thanks to the PR machine, co-conspirators, and lots of nefarious back room stuff, lead was allowed in gasoline. So jim A, you’re so right. Its been a long time since I visited this subject, but that’s the jest of it. They knew it was a carcinogen.

 
 
 
Comment by NoVa RE Supernova
2007-12-27 06:45:42

http://www.larouchepub.com/lym/2007/3431videowars_future.html

How the financial oligarchy is using “virtual reality” video games and social networking sites to dehumanize, monitor, and program the sheeple.

 
Comment by slorenter
2007-12-27 08:58:41

All the canidates besides ron are stuck in the matrix(status quo). Ron is our neo people and everyone is bliss to what is going on. Lets address this currency crisis before this nation is completely sold out to globalism.

Got Ron Paul?

 
 
Comment by NoVa RE Supernova
2007-12-27 06:40:09

Speaking at the California Medical School in San Francisco in 1961, Aldous Huxley announced: “There will be in the next generation or so a pharmacological method of making people love their servitude and producing dictatorship without tears, so to speak. Producing a kind of painless concentration camp for entire societies so that people will in fact have their liberties taken away from them but will rather enjoy it, because they will be distracted from any desire to rebel by propaganda, or brainwashing, or brainwashing enhanced by pharmacological methods.”

I don’t know about “pharmacological methods,” but I’d say the controlled mass media/”entertainment industry” has served the same function.

Comment by ric
2007-12-27 07:10:43

Karl Marx said “Religion is the opiate of the masses”. Today, television has taken that role. Mindless entertainment to suppress actual constructive thought.

Comment by Lost control
2007-12-27 10:47:08

I believe that the Romans referred to it as “bread and circuses.”

Anyone got Superbowl?

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Comment by awaiting wipeout
2007-12-27 16:29:13

I’ve always respected that quote. If you want some worthwhile escapism, this is George Carlin on religion. (Personally,I go to the wholesaler, and skip the retailer, religion.)
http://video.google.com/videoplay?docid=3595159758696320986&q=carlin+religion&total=84&start=0&num=10&so=0&type=search&plindex=0

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Comment by Earl 288
2007-12-27 07:28:19

Like CNBC, advising people to be “long term investors”. It`s ok for you to loose money in the stock market, as long as they don`t loose any. Their endless parade of paid liars is sickeing. I`ve quit watching them.

Comment by Earl 288
2007-12-27 07:31:56

should be sickening

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Comment by oxide
2007-12-27 09:03:23

Long term investing, short term fees and bouses.

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Comment by zeropointzero
2007-12-27 12:47:54

Retail stock brokers still try to push crap they are obviously trying to unload on my octagenarian parents. Tried to get them to buy fannie mae and washington real estate investment trust in recent months. Obviously, they are trying to peddle lousy institutional holdings - and no doubt the brokers get bonuses for pushing this kind of hot garbage. their bank (SunTrust) tried to sell them a truly inappropriate annuity, as well.

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Comment by Not_In_Montana
2007-12-27 09:33:42

I don’t know about “pharmacological methods,”

You don’t? What about Prozac, Paxil, Zoloft etc? When I first heard of Prozac I immediately thought of the Soma everyone took in Brave New World. Of course, there were precursors to antidepressants back in the 60s but these opened up a whole new world.

Comment by aladinsane
2007-12-27 10:43:58

I saw many intersections in Tucson that had drug stores on 3 of the 4 corners…

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Comment by sagesse
2007-12-27 13:30:18

Prozac?

 
 
Comment by Incredulous
2007-12-27 08:26:32

Yes, thanks for the link. What a shocker. And to think we bombed Guatemala under Eisenhower/Nixon because of a hoax perpetrated to protect a banana company. I wonder how much of everything we’re told is rubbish also.

Comment by Lost control
2007-12-27 11:12:08

I guess it depends upon whether a true believer, a sceptic or a cynic.

I wish you all the best in the new year, no matter how it turns out in 2008.

Be safe and take care of those that you care about. This, and I hope you are wrong, could be a very rough ride.

Best wishes,
Mike Murphy

 
Comment by sagesse
2007-12-27 13:32:54

That speech by Nixon reminded me so much of…can you tell what it reminded me of.

 
 
Comment by SFMechanist
2007-12-28 02:30:53

Silly as it was, I watched the whole thing because I have a personal interest in psychoanalytic theory. Basically the series is pushing a socialist agenda. If you want to spend four hours watching paranoid socialist propaganda then be my guest.

 
 
Comment by packman
2007-12-27 05:16:37

Local bank failure in Leesburg VA, due to credit problems:

http://tinyurl.com/yoa42k

“Charlottesville-based bank to take over Founders lease in Leesburg”

The banking center in the downtown historic district dates back to the 1800s. The banking floor has been completely renovated and Sonabank will open a branch there as soon as its branch application is approved by its regulator, the Office of the Comptroller of the Currency.

Founders had received both Federal Deposit Insurance Corporation and Federal Reserve approval, as well as a Conditional Charter from the OCC to open a bank subject to conditions including the raising of $29 million in net capital, according to a press release from Sonabank.

Given the current turmoil in the financial markets, Founders was unable to raise the minimum amount of capital it was expecting from institutional investors, the release said. As a consequence, it has returned to its local investors the funds that were in escrow.

Comment by NoVa RE Supernova
2007-12-27 06:51:22

http://www.larouchepub.com/other/2007/3450foreclosures.html

Loudoun Country (where Leesburg is located) is Ground Zero in the US Housing Bubble implosion. Even though it is one of northern Virginia’s wealthiest suburbs, currently one in 46 households there is in some stage of foreclosure.

Comment by Abuyer
2007-12-27 08:23:12

I do not understand why the foreclosure rate in Fairfax (Next to Loudoun) is significant lower than Loudoun. The average income is similar and the bubble levels are similar too. Maybe it is just an issue of time?

Comment by UtterDisaster
2007-12-27 09:44:28

A lot of Fairfax County was built out long ago, while Loudoun has relatively new housing stock. There are lots of foreclosures in Fairfax, but that’s balanced out by people who bought 10/20/30 years ago and have no mortgage or maybe a small, manageable one. Just my $0.02.

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Comment by zeropointzero
2007-12-27 12:58:06

Bingo. Much higher proportion of new (or recent) construction in Loudoun. And, while there are still some new home developments in Fairfax - prices generally start lower in Loudoun for similiar-quality homes (on account of longer commute to DC) - and, this probably encouraged more speculators/flippers (easier to take the plunge on a $650,000 new-construction SFR and think you could flip it a year later at a 75/110k profit than to try it in an $850,000 version of the same idea).

Same idea as to why Orange County, Ca. is probably holding up better than Riverside or San Bernardino, in terms of forclosure rates.

 
 
 
Comment by Professor Bear
2007-12-27 11:17:46

“Ground Zero in the US Housing Bubble implosion”

How many Ground Zeros are there?

Comment by San Diego RE Bear
2007-12-27 16:02:49

Don’t you know? MY area is different - it’s ground zero! :D

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Comment by NOVAwatcher
2007-12-27 07:00:40

It’s not really a bank failure: investors were trying to start a new bank and the money fell through.

Article on trying to start the bank last year: http://tinyurl.com/2p2xp7

 
 
Comment by ozajh
2007-12-27 05:46:18

Question for the blog:

Do HOA’s in gated communities ever have veto rights on resales?

It would surely be the ultimate irony if you bought into such a community to get away from “them”, and then see prices fall to the point where “they” can buy next door.

Comment by Bill in Carolina
2007-12-27 07:45:10

So-called co-ops (usually multi-family buildings) often have the right to reject a buyer. I doubt that HOAs, even for gated communities, do. Ours doesn’t.

 
Comment by Chip
2007-12-27 07:52:53

“Do HOA’s in gated communities ever have veto rights on resales?”

Actually, they can, but it is pretty rare. In Brevard County, Florida, a subdivision named Indian River Colony Club restricted membership, originally, to active duty and retired military officers. Later the covenants were modified when there were too few qualified buyers. 55+ communities are a form of such restriction. More commonly, a gated and guarded community may restrict signage and entrance such that it is near impossible for looky-loos to cruise a neighborhood house-hunting without being in the company of a real estate agent.

Comment by phillygal
2007-12-27 10:03:50

impossible for looky-loos to cruise a neighborhood house-hunting without being in the company of a real estate agent.

ha ha that’s funny…how long before realtors are not allowed to roam free in public unless accompanied by a “minder”?

 
Comment by ugh
2007-12-27 12:34:49

IIRC Nicole Ritchie was vetoed by a gated community.

I wonder why?

Comment by zeropointzero
2007-12-27 13:00:16

Because she was skinny enough to slip between the bars on the gate?

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Comment by Jas Jain
2007-12-27 05:57:34

Refi apps down from 2879.8 to 1915,3 in two weeks! Purchase index down from 472 to 394.5 in the same period. The numbers are seasonally adjusted.

Jas

-x-x-x-x-x-x-x-x-x-

http://www.mortgagebankers.org/NewsandMedia/PressCenter/59045.htm

WASHINGTON, D.C. (December 27, 2007) — The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending December 21, 2007. The Market Composite Index, a measure of mortgage loan application volume, was 603.8, a decrease of 7.6 percent on a seasonally adjusted basis from 653.8 one week earlier. On an unadjusted basis, the Index decreased 8.2 percent compared with the previous week and was up 9.9 percent compared with the same week one year earlier.
The Refinance Index decreased 8.5 percent to 1915.3 from 2093.6 the previous week and the seasonally adjusted Purchase Index decreased 6.6 percent to 394.5 from 422.2 one week earlier. On an unadjusted basis, the Purchase Index decreased 7.8 percent to 292.3 from 317.1 the previous week. The seasonally adjusted Conventional Index decreased 7.9 percent to 859.1 from 932.8 the previous week, and the seasonally adjusted Government Index decreased 5.5 percent to 178.3 from 188.7 the previous week.

The four week moving average for the seasonally adjusted Market Index is down 1.5 percent to 715.3 from 725.9. The four week moving average is down 0.5 percent to 438.2 from 440.4 for the Purchase Index, while this average is down 1.8 percent to 2412.5 from 2456.9 for the Refinance Index.
The refinance share of mortgage activity decreased to 53.0 percent of total applications from 53.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 10.4 from 9.9 percent of total applications from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.10 percent from 6.18 percent, with points decreasing to 1.05 from 1.12 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.66 percent from 5.78 percent, with points decreasing to 1.09 from 1.10 (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs decreased to 6.03 percent from 6.48 percent, with points increasing to 1.01 from 0.95 (including the origination fee) for 80 percent LTV loans.

Comment by exeter
2007-12-27 06:09:29

mba numbers=worthless metric

Comment by Jas Jain
2007-12-27 09:03:08


True, but some information can be gleaned from the data.

Jas

 
 
Comment by sfbayqt
2007-12-27 19:21:33

Hey, Jas….did you forget your lead hypen (-) before your post? Hmmm…are you the REAL Jas? :-D

Just messin’ with ya! ;-)

BayQT~

 
 
Comment by Leighsong
Comment by bill in Maryland
2007-12-27 06:13:32

I’ve always wondered where the source of that money is that goes to the poorest countries. My assumption is that the money is created out of inflation. Being an objectivist and a Darwinist, I never had confidence in the IMF giving money to the needy. I read accounts where much of the money was filtered to crooked leaders and drug kingpins anyway. It’s just another reason to buy precious metals bullion.

Comment by slorenter
2007-12-27 09:07:40

I hear ya! We actually export most of our inflation over sea’s. That way it takes years for it to come back and hit us in the face, and in the short term it keeps the global economy up and running. The reality my friends is we(the dollar) is getting crucified for the greater good of globalism.

Vote Ron Paul to TRY to stop this BS

 
 
Comment by wmbz
2007-12-27 06:27:16

The bank is happy when cash flows smoothly from taxpayers, through its coffers, to the governments and projects it supports. But sometimes development is better served by restraint than by largesse. Free money can stifle a country’s own tax-raising efforts—and private enterprise. It can also underwrite misgovernment and malfeasance. The bank’s staff and shareholders balked when Mr Wolfowitz shifted course to focus more on corruption. After that experience, will their new helmsman ever dare to rock the boat?

I love the last paragraph!Outside of the U.N. the World Bank ranks as one of the most corrupt groups on the planet. Of course they regularly complain that the U.S.A. does not contribute enough. Imagine that.

Comment by yogurt
2007-12-27 07:22:23

The bank’s staff and shareholders balked when Mr Wolfowitz shifted course to focus more on corruption

Corruption? Like giving his girlfriend a fat raise and a cushy job? Yes they did.

At least Bill Clinton didn’t give Monica a payoff in exchange for her favors.

Comment by fran chise
2007-12-27 15:17:38

I seem to recall some cushy job working for a make-up company?

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Comment by spike66
2007-12-27 07:33:49

The International Olympic Committee is right up there.

Comment by edgewaterjohn
2007-12-27 07:50:32

Wonderful, they’ll get along just swimmingly with Chicago’s city gov’t.

Go Rio or Tokyo 2016!

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Comment by Jay_Huhman
2007-12-27 11:46:04

Don’t forget Cook County officials too!

Go anywhere but Chicago in ‘16.

 
 
 
Comment by Joe Schmoe
2007-12-27 11:09:24

I used to date a girl whose dad was a bigwig in the World Bank. Conversations with him were pretty surreal. He told the craziest stories about how difficult it is to travel with bodyguards, how much the airlines have improved their First Class wine lists, etc. Those World Bank officials live pretty well.

My then-girlfriend’s dad did seem very intelligent and mostly honest. I got the impression that the World Bank does try to improve the standard of living in the countries it deals with, but because most of them are basket cases with widespread illiteracy, tribalism, and institutionalized corruption, there is only so much that the World Bank can do. It’s not like Somalia and Ethopia would be economic powerhouses today but for the World Bank’s meddling; it’s really hard to develop Third World countries.

Personally, I think what the Third World needs is a good RE bubble. Once California flippers start buying up mud huts in Kenya and begin renovating them with granite countertops, crown molding, and spa tubs, these countries should really take off. Before long, the cascading wealth effect natives will be trading in their water buffaloes for Hummers and C-Class Mercedes-Benzes. Maybe Donald Trump should become the next head of the World Bank.

Comment by spike66
2007-12-27 12:59:23

Those microloans pioneered by Grameen Bank have turned hundreds of destitute women into businesswomen. He won the Nobel Prize, and the bank’s loan repayment rate beats Citibank. And those women are able to support themselves and their children. The World Bank effectively supports the power structure and its attendant corruption. The microloan business changes lives and keeps families fed and independent.

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Comment by RoundSparrow
2007-12-27 13:09:38

Suggested reading: “Confessions of an Economic Hit Man”

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Comment by charliebrown
2007-12-27 06:21:41

The whole bubble started with debt creation. Debt=Money. Money=Spending. Spending=Growth. Lend money to lots of people and you get lots of spending. The economy booms and everyone gets drunk. Really drunk. People feel rich and spend. Business make lots of money and spend. Government gets lots of money and spends and borrows even more.

The problem with borrowing a lot, spending a lot, and getting really drunk, when you have to pay it back the next day, there is usually a really bad hangover.

In this case, it could be really really bad. Houses getting foreclosed. Businesses shutting down. Cities running out of money. Bankruptcies all over the place.

What’s that light at the end of the tunnel?

Comment by Professor Bear
2007-12-27 06:38:58

“What’s that light at the end of the tunnel?”

Helicopter drops of liquidity fuel another bubble. Happy New Year :-)

Comment by charliebrown
2007-12-27 06:45:11

Professor,

People keep telling me about this helicoptor and that printing machine. They keep bringing up Zimbabwe of all places.

The problem is the solution. Short of giving a bag of money to each bag holder, printing money doesn’t solve the problem. As a matter of fact, the more you print the higher inflation, the more likely people will default without offsetting wage increases(Asia is doing a good job keeping that one in check).

I think this helicoptor has no rotors.

 
Comment by yogurt
2007-12-27 07:25:13

To compensate for a deflated bubble, you have to inflate an even bigger one. Not possible - nothing comes close to housing.

In any case, a future bubble would likely be in something like gold, energy, or commodities, which would represent a flight from the USD and would be negative for the US economy.

Comment by alta
2007-12-27 12:46:45

The price has been constantly manipulated by central banks. FED, ECB and BoE made deals in the past to control the gold price. They will do so in future, because an exploding gold price causes trouble in the financial system. Also a moderate gold price lets appear the dollar stable and the economy at low inflation. The new gold is energy or better solar.

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Comment by slorenter
2007-12-27 09:13:17

Light at the end of the tunnel is just a freight train coming your way!

I believe a metallica song said it all. I cant remember which song it is, anyone???

Comment by SanFranciscoBayAreaGal
2007-12-27 10:06:21

slorenter,

Googled the phrase “Light at the end of the tunnel is just a freight train coming your way”, came back with No Leaf Clover by Metallica.

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Comment by WT Economist
2007-12-27 06:39:25

In the end we (in the U.S.) will all be fed, will all receive the most useful and cost effective health care, and will all be housed. And new businesses will arise providing goods and services that are actually useful.

I spoke with a former boss at a professional function. I’d describe him as a realistic optimist. Worst case scenario, he said, we’ll be like Brittain after the collapse of the empire. They got over it, and so will we.

Comment by spike66
2007-12-27 07:36:54

WtEconomist,
have you been watching the deterioraton in commercial RE? Still think there will be no problems there?

Comment by vozworth
2007-12-27 15:00:03

IYR
this one is about to implode a big way.

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Comment by Former FB
2007-12-27 08:17:57

How much money did Britain owe the rest of the world when their empire collapsed? If it was a lot, did they pay it back, or default on it? I can see what you’re saying if we stiff the rest of the world.

 
Comment by hwy50ina49dodge
2007-12-27 09:09:20

“In the end we (in the U.S.) will all be fed…”

Daffy: “Wow, where did you get all those funny looking carrots Bugsy?”
Bugs: “Martin the Martian made them with his x-gamma ray-gun, but they just don’t taste right…he calls then: “soylent orange” :-)

http://en.wikipedia.org/wiki/Soylent_green ;-)

 
Comment by hd74man
2007-12-27 15:06:50

RE: I spoke with a former boss at a professional function. I’d describe him as a realistic optimist. Worst case scenario, he said, we’ll be like Brittain after the collapse of the empire. t over it, and so will we.

Not many guns floatin’ around in the Empire.

My guess is 180 million firearms will not go quietly into the night after having middle class living standards looted by the con’s of the Wall Street gangsters and pigmen aided and abetted by their whore’s in DC..

 
Comment by maddog80
2007-12-27 17:50:23

Yes, we all hope that our Slavic and Occidental masters will be gentle with us.

 
 
Comment by ugh
2007-12-27 12:41:47

The heaviest fastest mofo freight train in the world

 
 
Comment by aladinsane
2007-12-27 06:43:43

Back from a trip to Tuscon for xmas…

My 1st trip there was in 1977, and it bears no resemblance to the city it was, back then.

Phoenix seems even more of a basket case, just doing a drive-by of it.

And there are casinos everywhere, along interstate 10.

Comment by WT Economist
2007-12-27 07:20:18

Lots of places are putting their faith in casinos as a source of economic and fiscal salvation. If that doesn’t scare you, I don’t know what will.

Comment by aladinsane
2007-12-27 07:31:09

Casinos teach their employees how to count to 26, stack chips by colors and other fun things more suited to 6 year olds…

And then there is the customer base, which can ill afford to lose any money, but there there are, blowing the mortgage check, trying to play catchup.

 
Comment by Jas Jain
2007-12-27 09:08:30


I am sorry but the fact that our local govts depend upon casino revenues, especially, for education says a lot about what kind of society and govt. we have created. Not to mention the lotteries.

Gambling and speculation as economic nirvanas?

Jas

 
Comment by Not_In_Montana
2007-12-27 09:45:45

Yup, we’re getting one on every block here. Seems to be a place for old people to go and spend their home equity. I spent a few years working in Nevada and never loved gaming that much, thought it was for losers, but at least you could win big there. Here the max payout is 800 I think. The lobby keeps pushing for more of course.

Comment by ugh
2007-12-27 12:54:28

Dude, you took the wrong pill. Gaming??????

Oh, my bad, you’re a consumer, not a citizen.

Game on!

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Comment by Not_In_Montana
2007-12-27 13:50:20

Say what?? The only pill I take is Prilosec.

 
Comment by SpacecoastFLRenter
2007-12-27 18:58:46

Gambling is an intellegence tax….on those that don’t understand math. :)

 
 
 
 
 
Comment by Maria
2007-12-27 06:54:02

Report from Best Buy Clarksville, Indiana.

I was shopping at Best Buy yesterday , it was packed. I was talking to the LCD/Plasma TV sales person. He mentioned that they were busy on Dec 26 that was surprising for them and he mentioned that people were buying traditional tube TV (another surprise) and they had only four left.
At the end of the conversation he added that they had sold lot of LCD/Plasma TVs., 10 times what they had sold last year, did not believe him on this part.

I went checked the aisle for the regular tube TV and it was nearly empty and did not see the empty aisles for LCD /Plasma TV.

Comment by not taken for granite
2007-12-27 07:03:41

The tube tvs supposedly work better with the game consoles. I imagine the risk of excited kids knocking them over is lower, too.
Our Best Buys are always busy. It amazes me.

Comment by Affordability
2007-12-27 08:02:17

best buy being busy amazes me too. They are usually 10 to 20% higher than other technology stores but people seem to like to shop there anyway.

Comment by Central Valley Guy
2007-12-27 08:42:56

I saved $1500 last month buying our new TV from Amazon rather than Best Buy. Why anyone would shop there is beyond me.

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Comment by Captain Credit Crunch
2007-12-27 09:11:57

Ah, ah, ah, careful with those words.

You didn’t save $1500. You merely spent $1500 fewer than you might have.

 
Comment by hwy50ina49dodge
2007-12-27 09:24:42

Ricky: “Lucy what with all these hats honey?”
Lucy: “Oh now Ricky…think how much money I saved…look 30% off!” ;-)

 
Comment by Anon In DC
2007-12-27 10:41:16

Grandpop who been in wholesale and retail would always say “How can you save if you spend ?” :)

 
 
 
Comment by SGA
2007-12-28 00:59:47

Thats why I bought my HDTV with a tube. The PS2 has a warning right in the documentation about LCD screens.

 
 
Comment by Kim
2007-12-27 09:11:57

I was in Wal-Mart yesterday. Stocked up enough food so that I wouldn’t have to venture into a store the four days before Christmas. I wasn’t expecting it to be so crowded at 2PM the afternoon after the holiday, that is to say, after the morning crowd got done chasing the 50% off sales. I found a parking space four spots from the back of the lot… all registers open with 7+ people in each line. It was hell.

Comment by crash1
2007-12-27 09:33:42

The nice news person told them to shop today. Big bargains. And shop we must.

 
 
 
Comment by Wasatch Dude
2007-12-27 07:09:46

Here is a little news from Utah. Last month I commented that there was
a group of high living would be real estate moguls who had come to the
end of the line. They were starting to get rid of their luxury cars
and a couple had moved out of their fancy houses. They have just taken
the next step down. The ring leader of Atlas Capital, Wade Sleater,
moved out of his house in the middle of the night. The Ferrari 430 he
bought for $260K disappeared last month. The Porsche GT (about $500K)
is parked in the back of a neighbor’s garage. Whether it was handed over
to settle debts or is an asset being hidden is a good question.

One of his employees moved out of a another house in the same neighborhood
because it was owned under Sleater’s name. His wife was scared by all
the phone threats from people who assumed Sleater lived in the house.

And the house that Sleater moved out of turns out not to have been owned
by him. It’s owned by a sucker in New York. Sleater, without
permission, had a pool put in along with some landscaping. He somehow
forgot to pay for the work and now there is a $100K lien on the house,
which has prevented the house from being sold to a buyer who is very
interested in the house.

Link to a site with info about Sleater and Co. in the comments about a
news story on another group of Utah scammers:

http://www.ksl.com/index.php?nid=316&sid=2315625&comments=true

It looks like it is only a matter of time before the mothership, Franklin
Squires, goes down. Check out http://www.franklinsquires.com for a good laugh.
One of Sleater’s neighborhood friends who works for Franklin has not been
paid in seven months. He still working there, thinking that everything
will be okay. It reminds me of the dot-com era when employees would work
without pay as their companies foundered; some were even stupid enough to
lend the companies their credit cards to pay company expenses.

Here is another site with interesting gossip about what is going on with
Sleater and Franklin Squires. Tons of interesing stuff here.

http://activerain.com/blogsview/106839/Fraud-Alert

That page has the following conjecture about how Franklin Squires works:

Marvin, that sounds the closest to the things I have heard from friends over the years. Interestingly enough tens of millions of dollars seem to have been raised without a stitch of printed marketing material leaving a great deal of plausible deniability for anyone but the “downline investor” whose left holding the bag (the exorbitant loans taken out to fund all this). Here’s a little conjecure (and bad spelling) as things MAY have occurred, in part. I’m sure the actual events were much more complicated and may not have happened at all as I’ve imagined below, this estimate is therefore hypothetical.

I imagine an investment company, let’s call it HardMoney Company, as a hard money lender charging above market rates to borrowers who are in need of alternative funding (non-bank) for time sensitive projects like land development and are willing to pay extra for it in the form of high “points” and interest rates. A good business to be in, but to make such loans you need lots of unencumbered cash. So below HardMoney Company I imagine a bunch of Holding Companies put together to gather up funds to be sent to HardMoney Company (or another investment), each Holding Company being “owned” by an individual who largely subscribes to the idea that real estate equity is useless until it’s removed (through loans) and invested someplace (HardMoney Company would be one such place). The owners of the Holding Companies go out to family, friends, acquintances, referals, seminar attendies, whatever, and find people willing to give them money to invest by extracting equity from their existing properties and/or proactively buying properties, having them appraised as high as possible, take out additional cash loans based on new appraisal, send these new loan proceeds to Holding Company, Holding Company sends it to an investment, perhaps like HardMoney Company, investment like HardMoney Company in turn pays money from it’s legitimate projects back down-the-line to Holding Company, Holding Company pays money down-the-line to “investors”, each level skims a little off the top from the actual investment proceeds being paid by HardMoney Company or other investment. Even though the investment money in such a scenario is all encumbered at the investor level (is loaned by a bank against personal colateral), by the time it makes its way all the way to HardMoney Company THEY have no encumberances and can invest it however they want with no expectations of collateral or transparency, just agreements with the Holding Companies.

All the debt being taken out by the downline investors to generate investment funds has to be paid by somebody and although that appears to have often been worked out by agreement so that the investor didn’t always service their own loans to begin with, the downline investors are the names on the loans — and as agreements disolve and interest payments stop the lowest guy on the totem pole is left with near all the liability and no longer is getting the interest payments to service the debts that (s)he incurred for the money they invested. As it falls apart, if it falls apart, the investment company (like HardMoney Company) can say they didn’t raise any funds, go talk to the Holding Company. The Holding Company can say they didn’t tell anybody to be aggressive on their valuations or their loans or to be less-than-honest on loan apps (there’s no paper trail of how they solicited money), go talk to the investor. The investor is dying a slow death as the leinholders get nastier and nastier in hopes of not having to foreclose on the collateral.

Just an idea from what I’m seeing and hearing and it may be WAY off. I’d love to hear it told by someone with real experience if there is such a person (again, I may be wrong), no need for names if you’re not comfortable with them, but I really have no dealings with any of these entities and am just hypothesising.

Comment by dude
2007-12-27 08:21:45

Sounds like the scam capital of the US of A is poised to regain it’s top spot.

I’m an optimist, but a majority of Utahns take optimism to ridiculous heights. I think that many mistakenly believe that living well before God absolves them of any responsibilty in finance. They pay their tithing and assume “God will provide”.

The mistake is in thinking that they have a God given right to the mcmansion, luxury SUV, yearly getaways, mall shopping sprees etc.

My relatives in Utahr have a hard time believing that the economy can crash. From what I can see it’s going to crash and crash hard.

But hey, I’m an optimist, what do I know?

 
 
Comment by Professor Bear
2007-12-27 07:19:50

I love how these MSM-quoted bottom callers pull future dates out of their @$$es without ever bothering to offer a so much as a single reason their crystal ball is to be trusted. We are currently at the maximum rate of house price decline since 1991, with no evidence the rate of decline has bottomed out yet.

Prices did not stop bottoming out during the last bust for until five years later — 1996. And home prices are still wildly out of line with incomes in local markets formerly known as ‘a bit frothy.’ Unless this time is different, no bottom will be reached until at least 2007 + 5 = 2012.

Pace of Decline In Home Prices Sets a Record
By JAMES R. HAGERTY and KELLY EVANS
December 27, 2007

A closely watched gauge of U.S. home prices shows they are falling sharply across most of the nation, as a deepening slump in the housing market threatens to damp consumer spending.

Home prices in 10 major metropolitan areas in October were down 6.7% from a year earlier, according to the S&P/Case-Shiller home-price indexes, released yesterday by credit-rating firm Standard & Poor’s. That exceeded the previous record year-to-year decline of 6.3% in April 1991, when the economy was emerging from a recession. (See a PDF summary of the report.)

New statistics from the Census Bureau, meanwhile, indicate a slowdown in the number of Americans moving to states that led the housing boom, including Nevada, Florida and Arizona. (See related article.)

The silver lining behind the latest home-price data is that they signal the market is making what most economists see as a necessary adjustment, dragging home prices back into closer alignment with Americans’ ability to pay. The market is working its way “back to reality,” says David Seiders, chief economist of the National Association of Home Builders. He thinks house prices will bottom out by early 2009.

http://online.wsj.com/article/SB119867779499850669.html?mod=hpp_us_pageone

Comment by dude
2007-12-27 08:25:28

Yep, my local zip tracking has been showing increasing YOY % decline each month since it turned around.

Link that fact to exponentially increasing foreclosures and there is no way we are close to a turnaround.

 
Comment by Professor Bear
2007-12-27 09:04:40

BTW, the linked S&P’s Press Release (.pdf file) shows current rates of price decline in 20 major U.S. metro areas. The most rapid rate of decline from Sept 07 to Oct 07 is for San Diego:
-2.6% change in one month, which represents a 27 percent annualized rate of decline:

(((1 - .026)^12) - 1) * 100 = -27.1

Try not to catch yerself a falling knife by buying a home in San Diego while prices are falling by 27 percent a year.

Comment by Professor Bear
2007-12-27 09:20:20

I know that all real estate is local, but nonetheless one coincidental similarity across local U.S. city markets jumped right out of the page at me from the p. 2 table in the S&P Press Release:

Home price changes in all twenty U.S. cities listed in this table were negative from Aug 07 through Sept 07. Moreover, they were all negative again from Sept 07 through Oct 07.

Not to worry, though — as all real estate is local, I am sure this is just a freak coincidence. :-) :-) :-)

 
Comment by Professor Bear
2007-12-27 10:15:13

The Sept 07-Oct 07 changes to the 10-city and 20-city composite indexes were both -1.4%, which represents a 15.6% annualized rate of price dcline in U.S. cities.

 
 
Comment by Professor Bear
2007-12-27 09:14:02

This quote from the article highlights the reason that I don’t believe the housing market will bottom out by 2009, as I am guessing it will take longer than that for prices to realign with incomes.

“But the recovery of the housing market is likely to be a gradual process. That’s partly because the boom left prices so far out of whack with incomes. As measured by the S&P/Case-Shiller national index, home prices jumped 74% in the six years through 2006. During the same period, U.S. median household income rose 15%. (Neither figure is adjusted for inflation.) That made housing unaffordable for many Americans.”

 
Comment by hwy50ina49dodge
2007-12-27 09:31:03

“And home prices are still wildly out of line with incomes in local markets…”

Hey Mr. Bear… I take it you see that the “Emperor” is still “modestly dressed” in this on going “Parade” ;-)

Comment by Professor Bear
2007-12-27 11:14:30

immodestly dressed”

 
 
Comment by Professor Bear
2007-12-27 09:33:54

Housing prices’ picture still grim
Only 3 cities show greater decreases than San Diego
By Stephen Bernard
ASSOCIATED PRESS
December 27, 2007

A broader Case-Shiller index of 20 metropolitan areas fell 6.1 percent. Among the 20 metropolitan areas used in the broader index, 11 posted record monthly declines and all 20 declined in October compared with September.

Miami posted the largest decline among those 20 markets, with prices down 12.4 percent in October compared with the same month last year. That surpassed Tampa as the worst-performing city.

Tampa posted a year-over-year loss of 11.8 percent, while prices were down 11.2 percent in Detroit. Las Vegas and Phoenix also showed double-digit year-over-year declines.

Atlanta and Dallas, which had previously posted price appreciation, fell in October. Prices fell 0.7 percent in Atlanta and 0.1 percent in Dallas compared with a year earlier.

Only three areas – Charlotte, N.C.; Portland, Ore.; and Seattle – posted year-over-year home price appreciation in October. Charlotte posted the largest gains at 4.3 percent.

The index, set at 100 in January 2000 for all areas, rose to a peak of 250.34 in November 2005 for San Diego before falling back to October’s 217.02, the lowest since May 2004.

That means that the prices of single-family resale houses gained 150 percent from 2000 to the peak but have since fallen 13.3 percent.

http://www.signonsandiego.com/uniontrib/20071227/news_1b27homes.html

Comment by JimAtLaw
2007-12-27 14:05:18

Seems like this should be called best performing rather than “worst-performing” - I’m sure enjoying the performance! :D

 
 
 
Comment by Lostcontrol
2007-12-27 07:23:56

Could this be the “black swan”?

Pakistan’s Bhutto assassinated
Suicide bomber kills opposition leader, at least 20 others at rally

Comment by txchick57
2007-12-27 07:35:00

Could be a whole pond full of them before long.

Got index puts?

Comment by SubKommander Dred
2007-12-27 09:01:37

Would that be something like Black Swans coming home to roost?

SubKommander Dred

Comment by aladinsane
2007-12-27 10:47:49

I hear Black Swans prepared in a Bearnese sauce, are quite delicious…

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Comment by dude
2007-12-27 10:28:17

rats-a-frackin’

I got bumped out at a 5% trailing stop from my long CDE on this decline today. I made 16% on the cycle, but at yesterday’s close I was up 22.5%

Why couldn’t the extremists wait ’til January when I pull my stops closer?

Comment by Shakes
2007-12-27 17:32:47

That’s funny when I read CDE I thought of “Collateral Damage Estimate” not CourD’alene. I think my version of CDE is a better fit based upon the circumstances

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Comment by Matt_in_TX
2007-12-27 19:02:41

Spelling Police: Coeur d’Alene

 
 
 
 
Comment by Professor Bear
2007-12-27 07:52:39

Busy day today for the PPT, no doubt…

http://www.marketwatch.com/tools/marketsummary/

 
Comment by Lip
2007-12-27 07:53:23

LC,

To be honest it’s very sad, but I wasn’t that surprised. She wrote this article on Dec 10th and it might give us a hint into why she was murdered.

“Why the World needs Democracy in Pakistan
Dictatorship fuels extremism, which reaches far beyond Pakistan”

http://www.csmonitor.com/2007/1210/p09s02-coop.html

Comment by ronin
2007-12-27 10:44:53

Is this the same Bhutto who was run out of the country for corruption, and accused of one European supplier after another of accepting kickbacks on government purchases? The one whose Swiss Bank account was grabbed for money laundering, and whose husband, also implicated in the same corruptions schemes, served time in prison for same?

None of these Pakistani leaders seem to be saints, and all seem bent on secular political power.

Democracy is a good word to use when trying to sway public opinion. My sympathy through it all is with the poor Pakistani J6P, just trying to get by and live their lives with the political instability spurred by power hungry leaders swirling around them.

 
 
Comment by Arwen U.
2007-12-27 08:01:46

I’m visiting extended family and we were all sad to hear the Bhutto news.

Comment by SubKommander Dred
2007-12-27 09:10:49

Yes, it is sad, but not unexpected. While I was no fan of Benazir Bhutto (not much of a fan of any politician, for that matter) Pakistan is undergoing some major problems at present, and this will only make things worse. In addition to Musharraf (sp?) making a bid to become “President for life” and shutting down whatever is left of an political opposition, it would appear the real threat of hard care Islamic Fundamentalists taking over increases with each passing month. Add in the fact that Pakistan is having very serious energy supply issues (with electricity cut backs occurring on a dialy basis now, and large sectors of the country going without deliveries of motor fuels), and you have a truly dangerous combination of factors. Oh, and by the way, regarding the issue of refined petroluem products, it is my understanding the the US/NATO effort underway currently in Afgahanistan relies extensively on fuel largely imported from Pakistan. Any loss of supply, even for a short term, could have devastating results (for our side) on the war against the Taliban.

SubKommander Dred

Comment by sweeny texas
2007-12-27 12:56:02

Thanks, Dred.

I am now even slightly more depressed.

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Comment by hwy50ina49dodge
2007-12-27 09:48:30

Note to the World:

What you are witnessing used to be called: a “Religious War”
In the “Current Era” it has a different moniker.

But hey, it’s all about 6 Billion + people trying to self-actualize their existence right?

http://en.wikipedia.org/wiki/Self_actualization

 
Comment by yensoy
2007-12-27 10:52:18

The state of Pakistan is fundamentally flawed, and this is only a sign of things to come. The best we can hope for is a modicum of normalcy and some miracle that will pull the country out of its downward spiral into the black hole of terrorism, militancy, overpopulation and civil war. Too bad about the assassination and all that, but the lady was no angel either.

However I don’t see why this incident has anything to do with oil prices or the world market at large. With BB gone, the army is more firmly in charge. Hell, even if Pakistan were to go into full-scale civil war, what difference would this make to the global economy (apart from a temporary setback to the Afghanistan effort, which frankly should be brought to completion anyway)? There would be some humanitarian fallout, and I would also assume that the nukes would be secured by the US in the event of a total collapse. But it would end there.

Comment by hwy50ina49dodge
2007-12-27 12:00:30

“…I would also assume that the nukes would be secured by the US in the event of a total collapse. But it would end there.”

You must eat at fast foods joints…everything… fast, easy & cheap. What happen to our 100 day wars?

“Just because you got chicken to go…your in luck” …Gordon Lightfoot

 
Comment by Evil Capitalist
2007-12-27 13:33:02

It is going to be much worse… you are forgetting that Pakistan and India have nukes and love each other much less than Lieberman likes Lamont.

 
Comment by spike66
2007-12-27 16:28:42

” and I would also assume that the nukes would be secured by the US in the event of a total collapse. But it would end there.”

Pakistan’s army is famously tilted towards the Islamists, and the bad boy himself and friends are said to be at home in the Northern Territories…and we can’t go after them, after basically buying the country. Its has a huge population, many times that of Iraq, and homegrown fundamentalism, plus a welcome mat for some of the world’s most dangerous terrorists. And you think we would just “secure the nukes”’?? Yeh, just like that. Easy as pie. Just consider that the US armed forced are already overstretched and undermanned. Assuming of course that Iran does not choose to secure the nukes themselves, where do you suppose we will get the extra, trained soldiers? You ready to volunteer?
There ain’t gonna be any democracy in Pakistan…the best hope is that Musharrif can keep the screws to the general population, and that US Funds can bribe enough Pak army soldiers to stand with the dictator.

Comment by Magic Kat
2007-12-27 22:15:48

Oh man, I’m seeing a lot of parallels between Pakistan and the US. Could it be that Pakistan is the beta test site for the US? I’d keep an eye on this story. Ask yourself, “why was Halliburton recently awarded a $385 million dollar contract by Homeland Security to construct detention and processing facilities in the event of a national emergency?” Now that Prez Bush signed an executive order saying that he can declare a national emergency and remain “prez for life,” should we be worried? Where’s my 3 ft high tin foil hat?

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Comment by Professor Bear
2007-12-27 07:26:27

Durable-Goods Orders Rose 0.1% Last Month, Weaker Than Expected
By Jeff Bater
Word Count: 566

WASHINGTON — Demand for expensive goods barely grew during November in a surprisingly weak performance, while a barometer for capital spending by businesses fell again.

Orders for durable goods increased by 0.1% last month to a seasonally adjusted $214.67 billion, the Commerce Department said Thursday. Durables, which are goods designed to last at least three years, dropped by 0.4% in October, revised from a previously estimated 0.2% decrease. Durables also retreated in September and August.

Wall Street expected a much bigger gain in durable goods orders during November, with economists forecasting an increase of 3%.

http://online.wsj.com/article/SB119876201103952607.html?mod=hpp_us_whats_news

Comment by dude
2007-12-27 08:28:49

They just can’t bring themselves to print a minus sign in front of negative numbers, can they?

 
Comment by vozworth
2007-12-27 10:30:10

the speakwrite machines are having a hard time keeping the appearance of the “real” economy being just fine.

thats OK though, as soon as big Pharma gets a SWF injection the pills will just go straight to the water supply….

Ahhh, thats better…..everbody happy.

 
 
Comment by Xpovos
2007-12-27 07:32:08

For shakes (from yesterday’s BB) a continuation:
Re: An online broker. I use Scottrade. They’re reputable, insist on having a local branch for you to use in addition to all the online stuff, and are cheap and consistent on the online side of things $7/simple trade +% for stocks under a buck. +$0.xx per contract on options. All-in-all I recommend them. They even give you interest on a balance, which is pretty rare. Granted, it’s minimal, but hey, pennies count.
As for the mutual-fund vs. self direction debate.
I have owned mutual funds for many years. My personal favorite of the lot, the one that I put -cash- into, as opposed to my 401K options is DODGX. It’s performed very well for me, despite obviously following the market more than I’d like during the downturns. I like the mutual funds I own because they quickly divirsify me, whereas the -cash- stocks I invest in with my Scottrade account are limited in their divirsity. In about two and a half years of investing I’ve owned four stocks. All high risk plays because it was my ‘mad money’. Basically tax refunds plus a little extra. After all that time I’ve about broken even. Definitely didn’t beat the market. So that’s why I’m wary of self-directing, even if I had the option. My results have gotten better (all my losses came in the first year), but I’m playing around with that mad money at about a 1:20 ratio compared to my total mutual fund holdings.

Comment by Shakes
2007-12-27 17:52:16

Got it thanks!!! I was about 1/3rd in mutuals and 2/3rds in stocks when the Dot com bubble blew up. I found that I had much better luck with my picks then did the mutual funds ability to navigate in and out of stocks. I used stops to prevent my losses on individual stocks whereas you can’t do that on mutual funds. I still have a few index funds in areas I am not as smart on but I am mostly in indiviual stocks that I have held onto since the Dow went below 8,000 I follow macroeconomic trends and these trends take time to develop (oil-still long, real estate-shorting now, retail-sold all semirecently). Continue to dip your toes into the waters and learn your mistakes with “mad money” If you keep educating yourself you will gain understanding and will feel comfortable being wasit deep if not more after several years. I think we have a lot of headwinds ahead and if one leaves things to the professionals they will wonder what happened to their money.

 
 
Comment by aladinsane
2007-12-27 07:56:40

http://www.usagold.com/gold/coins/pics/gold-bullion-kim-thanh.jpeg

Passports are usually made out of paper, traditionally…

The graven images above were a fleeing Vietnamese National’s Papers, in the guise of thin 24K Gold Taels (about 1.25 troy oz) that allowed safe passage to the wilds of Westminster and beyond.

How do I know this?

A company I worked for, loaded up a 747 with as much cash as they could carry, as there was going to be an unusual bit of bullion business going on, for they were strictly buyers~

Guam, 1975.

They ran out of cash real early in the venture…

 
Comment by Little Al
Comment by edgewaterjohn
2007-12-27 08:08:38

The PTB must work with the MSM to determine a requisite number of these types of stories to run each week. It is absolutely their foremost goal to keep the sheeple’s 401k/pension money from bolting.

They’re always talking about the “long run” - but what use is that to someone who is retiring next year - or needs to eat tomorrow?

 
 
Comment by edgewaterjohn
2007-12-27 08:01:05

My nieces came up from TX (Waco & DFW) for the holiday.

The eldest reports animal shelters taking mounting number of pets from FBs who had to go into motels or apts where pets aren’t welcome.

The younger reports a major TX state agency is abruptly cancelling contracts - very unusual like - there’s worries about funding all of a sudden.

They both know something is up and they don’t follow this at all, so as the crazy uncle I took it upon myself to urge them to build their reserves ASAP.

2008 will not be a good year.

Comment by txchick57
2007-12-27 09:17:02

I am seeing that on the front line as a rescuer. I took in 5 rescue cats last year personally that were going to go down if I didn’t take them. Our breed rescue organization which used to get one a month now gets several a week. This is the one reason I wish this recession would not happen.

Comment by novasold
2007-12-27 09:55:44

Me too.

Although I don’t want another dog I can see from my friend who does rescue work that I may at least be fostering some from time to time.

 
Comment by Desertfox
2007-12-27 10:06:19

We are in southern Arizona, but do Siamese cat rescue with organizations in both Texas and Colorado as well as locally and they have more than their hands full and this recession has hardly begun.

 
Comment by Chad
2007-12-27 11:02:13

TX, is there a Great Dane’s breed rescue? Which rescue do you help out?

Comment by SanFranciscoBayAreaGal
2007-12-27 13:05:17

Chad,

Yes. Here’s the web page: http://www.danerescue.org/

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Comment by octal77
2007-12-27 14:42:10

txchick:

Similar situation here in Ca.

Visted my sister (Valencia, Ca) this Christmas day.

She took in two cats from friends who can no
longer afford them. (For a total of six).

Very cute cats and a joy to be around.

 
Comment by tj & the bear
2007-12-27 22:57:48

No doubt. Our rescue’s already slow on adoptions, and we get calls constantly from people looking to dump their dogs.

 
 
Comment by StuckinHouston
2007-12-27 09:45:06

Yes, and TX-Dot is broke, they think they can finish what they started on I-10, sure hope so.

 
Comment by Matt_In_TX
2007-12-27 09:47:34

Saw somewhere (congressional snail mail?) TX transportation dept lost money for our local (DFW) freeway upgrades due to federal war spending priority.

Comment by Matt_In_TX
2007-12-27 09:49:50

And the even-more-local DFW train system being 1 “billion with a B” over budget due to construction project inflation higher than expected over the last 4 years or so. Glad they finally mentioned it.

 
 
 
Comment by spike66
2007-12-27 08:05:13

Bribed Regulators Deceiving FBI Roil U.S. Insurance Customers
Dec. 27 (Bloomberg) — Zelphoe Maloney, who owns three hair salons in Albuquerque, New Mexico, knew she faced a battle when a doctor said in May 2004 she had a 50 percent chance of dying soon afterward unless she had a bone marrow transplant.
What she didn’t expect was a fight with her health insurer- -and then with the state insurance department.
Lovelace Sandia Health System Inc., Maloney’s insurance company, told her the transplant procedure wasn’t covered against a life-threatening form of lupus, a disease in which the immune system backfires and attacks the body.
Maloney, 42, appealed Lovelace’s decision to the New Mexico Insurance Division, which is supposed to help consumers get fair treatment from insurance companies. A panel appointed by then Insurance Superintendent Eric Serna recommended rejecting her appeal in September 2004, and Serna affirmed the panel’s decision.
What Maloney didn’t know at the time was that Serna wasn’t just a state regulator: He was also a founder and president of a nonprofit corporation, Con Alma Health Foundation, which had received $60,300 in contributions from Albuquerque-based Lovelace from 2002 to 2004, according to Con Alma’s tax returns.”

How depressing is this? More corruption, apparently everywhere.

Comment by dude
2007-12-27 08:33:56

Who would sell themselves for $60,300? This guy obviously has no idea of the value of a dollar.

 
Comment by Captain Credit Crunch
2007-12-27 09:59:05

I have $60,300. Anyone want to be my pet?

Comment by SanFranciscoBayAreaGal
2007-12-27 12:48:58

Meow?;)

 
 
Comment by JimAtLaw
2007-12-27 14:15:00

Denying life-saving and earned coverage for bribery? If there’s not a lot more to this story (e.g., the operation really shouldn’t be covered under the policy), this scumbag deserves the death penalty and should at the very least be criminally prosecuted for negligent homicide or worse, not just corruption of a public official…

 
 
 
Comment by Arwen U.
 
Comment by Abuyer
2007-12-27 08:16:21

Goldman Sachs Suggests Citi Could Cut Its Dividend 40 Pct, Sees Larger Writedowns for Merrill

NEW YORK (AP) — Citigroup Inc. could cut its dividend by 40 percent and write down billions of dollars more than expected in the fourth quarter, Goldman Sachs analysts said, forcing it to raise even more capital than it already has.

http://biz.yahoo.com/ap/071227/apfn_citigroup_ahead_of_the_bell.html

 
Comment by Abuyer
2007-12-27 08:25:28

Goldman Sachs Suggests Citi Could Cut Its Dividend 40 Pct, Sees Larger Writedowns for Merrill
http://biz.yahoo.com/ap/071227/apfn_citigroup_ahead_of_the_bell.html

Comment by vozworth
2007-12-27 10:53:57

NEW YORK (Reuters) - Merrill Lynch & Co (MER.N) plans to announce about 1,600 layoffs after disclosing fourth-quarter write-downs, CNBC reported on Thursday

 
 
Comment by aladinsane
2007-12-27 08:28:21

I managed to not say 1 word about my 2 sisters 5 houses, during xmas…

I scare myself.

Comment by ACH
2007-12-27 19:51:46

Post their email addresses. We’ll do it for you.
Roidy

 
 
Comment by exeter
2007-12-27 08:35:16

To funny…. Just had a conversation with a RE koolade drinker in upstate. He’s also a Christian…. a decent guy for the most part but suffering from the ongoing manufacturing decline. Here’s what he said;

“I suspect this whole housing crisis will end soon, that the depressed market will be an opportunity for foreigners to invade our country, to escape their oppressive economies/gov. Sound stupid, but things have a way of working in our in a free market paradise, at least as compared to other countries situations.”

I mean…. where do you start with this kind of delusion? Broke penniless Ugandans will save the housing market? And the housing market is “depressed”? I’d say it’s going back to normal. Also, this is the same guy who speculates that there will be another 9/11 event which will create another “run for the hills” scare a’la 2001. Anyways, I respect this guy but when he says stuff like this, I just don’t know what to think.

Comment by Professor Bear
2007-12-27 09:22:03

“He’s also a Christian”

I have noticed that those with the strongest religious faiths are also among the most scam-prone. This helps explain why Utah is the scam capital of the U.S.

Comment by exeter
2007-12-27 09:30:05

Yeah GC…. tons of boogeymen behind every tree with some brothers and in particular this guy. His sphere of influence and wealth has continued to shrink, year after year. These guys talk of many fears, gloom and doom, etc. Muslims, immigrants, “the liberal media”, gays etc. I’ve told some of them that if they really think the system has them down for the count and hollywood is the problem, it’s not the system that has them down, it is their own thinking that has them cornered. Yet, they continue to vote on this stuff instead of their own wallets, even while their own economy is in complete wreckage mode.

It’s sad. There’s alot of harm done to religion by the fear mongers. Some of these people just eat it up and run with it.

Comment by MEaston
2007-12-27 11:33:31

The corporate elite have used religion to maintain power. They provide the cash and the religious leaders provide the manpower and the votes. They distract the voters with gay marriage abortion, prayer in school and keep them from voting their economic interests.

Blind the sheep with religion, then the elites rape the sheep.

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Comment by aladinsane
2007-12-27 11:54:44

$heep Thrills…

 
Comment by exeter
2007-12-27 12:43:50

MEaston…. you hit the bullseye.

 
Comment by fran chise
2007-12-27 15:48:54

Sounds kinda Marxist…opiates of the masses, etc.

At the bottom, there are always some that will use any means available to convince others that whatever kookie idea they have as a solution should be supported (and of course, since they are in charge, the rule is different for them), whether it is religion, or secularism, or marxism, or national socialism or capitalism or whatever. And in a world that values primarily “the one who dies with the most toys wins…,” why mess things up with morality or doing the “right thing” (which is supposedly arbitrary anyway)? We’re a long way from a time when a person’s most valuable commodity was their integrity.

 
Comment by exeter
2007-12-27 16:12:47

It may sound like a Franz Gruber waltz but it’s an undeniable fact that there is an element willing to vote against their own economic interests in the name of some far out ideology.

 
 
 
Comment by Robert in florida
2007-12-27 13:01:07

Hear what you are saying and have seen this on several occasions. My best guess is that they are suckers for the smooth talker, reminds them of being in church. But than I think that is a scam also.

 
 
 
Comment by wmbz
Comment by Darrell_in_PHX
2007-12-27 04:46:20

Counter party risk.

This will be another wave of write-downs to the financial companies. With the SIVs back on the balance sheets, the writedowns could be very big.

Comment by Larenter
2007-12-27 05:23:26

Yet Wall Street continues to party like they are on the deck of the Titanic?? Nothing seems to faze them! The market’s just going up for the sake of it.

Comment by txchick57
2007-12-27 06:16:29

Nobody’s at work. You’ll see the real market after next week.

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Comment by matt
2007-12-27 06:47:28

Very light volume until next wednesday, flipped and went short yesterday, bby, cvx and djx out to mar and jun.

 
Comment by Tom
2007-12-27 06:59:17

I’ll be in Manhatton this weekend : )

 
Comment by txchick57
2007-12-27 07:33:14

I could have sold my spring puts a week or so ago for a profit but no way do I want to be unexposed to the downside.

 
Comment by matt
2007-12-27 08:17:37

Flipped again and bought into the morning drop (feb), still holding mar and jun puts.

 
Comment by lars39
2007-12-27 09:32:50

Maybe the Saudis and the Chinese can do better with Wall Street.
http://tinyurl.com/23qt8p

http://tinyurl.com/2brahq

 
Comment by tj & the bear
2007-12-27 23:01:23

I could have sold my spring puts a week or so ago for a profit but no way do I want to be unexposed to the downside.

Same here. I’ve been riding my LEAP puts up & down like a friggin’ rollercoaster, but I don’t dare get off and miss the big event.

 
 
Comment by slorenter
2007-12-27 08:54:10

I call the market a inflation machine, plus the dollar falls and the dow goes up cause it priced in dollars. I think wall street and rest of america loves a falling dollar, its good for the markets in the short term. Short term is all that matters right?

Vote Ron Paul to stop all this BS

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Comment by Chad
2007-12-27 10:36:19

Planning to. I’m in Iowa and caucuses are very soon!!

 
 
 
Comment by vozworth
2007-12-27 14:56:56

IYR …..never been a better time to buy puts, if you think the Commercial is gonna fall just like the residential.

 
 
Comment by Brian in Chicago
2007-12-27 06:56:53

Oh don’t worry, they will just start a Warren Buffet rumor and everything will be OK. He saved Lloyd’s of London, surely he will come to the rescue of ACA.

Comment by matt
2007-12-27 07:01:45

He’s slipping. Why is he on a buying spree before a recession?

Comment by Jas Jain
2007-12-27 07:32:13


Great question. And he bought the company based on the earnings growth during the past 5 boom years.

His Scam should have been sold when he bought Gen Re in Apr’98 with Scam despite having tens of billions in cash. Guess what, his Scam has under-performed long-term US Treasury bonds since then, an under-performance for almost ten years. He is grossly overbought!

Jas

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Comment by Anon In DC
2007-12-27 10:23:44

Cause he’s a long term investor ? All the dollars he’s holding will be worth much less in a few years ?

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Comment by Professor Bear
2007-12-27 08:50:07

“S&P cut ACA’s rating by 12 levels last week to CCC after the company posted a $1.04 billion third-quarter loss in November.”

Is it fairly normal for the credit rating agencies to cut a rating by twelve levels in one shot?

 
 
Comment by Colorado Shadow
2007-12-27 08:39:16

Let the culling begin!

Housing bust claims Re/Max 2000
The Denver Post
Article Last Updated: 12/26/2007 11:10:55 PM MST

Re/Max 2000, one of the Phoenix area’s largest real-estate brokerages, shut down its 13 offices this week as the housing bust hits a city that was once one of the nation’s hottest markets. The franchise is part of Re/Max International, based in Greenwood Village.

Robert Kline, who started the franchise in 2000 and grew the business through acquisitions, said his decision to close was made after a particularly rough patch in December, when it became clear he no longer could afford to pay overhead expenses.

http://www.denverpost.com/business/ci_7816059

 
Comment by Mike
2007-12-27 08:43:43

To LostControl: Re: That link you posted titled, “The Century Of The Self.” I watched the whole four segments in one sitting yesterday. Possibly one of the best documentaries I have ever seen. Amazing stuff which explained so many things. Thanks very much for the link.

Comment by txchick57
2007-12-27 09:05:25

I’ve referred to this sort of thing the past few years here as my Truman Show theory. Very interesting.

 
Comment by Lost control
2007-12-27 09:59:34

Mike, and everyone else, I stumbled on to this website out of curiosity, Once I started to watch the video, “bells went off in my head”! I am not smart enough or maybe to damn lazy to cross check all that was said, however, I believe that there was enough truth in what was provided that it was worth sharing and a topic of discussion.

I suspect it may answer some of the questions posed on this blog as to how normal rational humans could be sucked into this housing mania. I am sure that greed played a role, however I strongly believe the public was manipulated. I may be wrong, but the documentary struck a chord.

 
 
Comment by Professor Bear
2007-12-27 09:47:02

US real estate outlook
Published: December 26 2007 15:25 | Last updated: December 26 2007 18:54

In a grim year, nowhere have things seemed bleaker than in US residential property. But might its woes be replicated in the commercial property sector in 2008?

Median home prices sank in 2007 for the first year since the Great Depression. Things are widely expected to get worse in the next 12 months, as the leverage boom that was fuelled by inflated home values unwinds painfully, driving prices down further. Mortgage loan defaults are likely to increase sharply, while even aspiring homeowners with good credit are struggling to secure mortgages. With little sign so far that the Federal Reserve’s interest rate cuts are easing the credit squeeze, potential buyers may not find much relief in the near term, which will keep sales activity paralysed.

http://www.ft.com/cms/s/e7413542-b3c3-11dc-a6df-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F1%2Fe7413542-b3c3-11dc-a6df-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus

Comment by hd74man
2007-12-27 15:13:42

RE: potential buyers may not find much relief in the near term, which will keep sales activity paralysed.

Relief?

My ‘08 monthly health insurance premium was just jacked 22%!

I guess the fook there will be no relief!

 
 
Comment by hwy50ina49dodge
2007-12-27 10:01:11

Bugs Bunny…Soylent Green…Maslow’s hierarchy of needs…Freud’s nephew…

I must have a bit of undigested genetically modified corn in my belly…have I missed Christmas yet? ;-)

Comment by vozworth
2007-12-27 10:32:03

your obviously not using the ethanol properly.

 
Comment by Professor Bear
2007-12-27 10:40:25

Don’t leave out Sweeney Todd and Mrs. Lovett’s delicious meat pies.

http://rogerebert.suntimes.com/apps/pbcs.dll/article?AID=/20071220/REVIEWS/712200305/1023

 
 
Comment by tgun
2007-12-27 11:25:59

Hope you all had a nice Christmas. I was doing some rather quick data analysis (CPI-U Inflation data and the U.S. Census Bureau estimated U.S. retail and food services sales for November 2007). Could you take a look at my analysis and please share your thoughts & observations?

I looked at the reported “Change in Sales $” for November 2007 compared to November 2006 and compared those to the CPI-U report for 2007 (Consumer Price Index- ie inflation rate). I then subtracted the CPI number from the Change in Sales $ percentage to hopefully determine a quick “snapshot” of an updated Change in Sales adjusted for inflation.

I used the corresponding category CPI number if available, otherwise the composite.

11/2007 vs 11/2006
Category CPI Change in Sales Inflation adjusted
ALL Items 4.3% 6.3% 2.0%
Food/Bev 4.7% 6.2% 1.5%
Apparel -0.40% 6.6% 2.3%
Transportation 9.6% 1.9% -7.7%
Energy/Gas 21.40% 25.0% 3.6%
Food (groceries) 4.8% 6.2% 1.4%

Understand that this listing is not all the categories, I abbreviated them. Now, I calculated the “average” of the inflation adjusted change in sales and came up with 0.25%. If you factor in some sort of an acceptable margin of error, you could have a range somewhere between -1.25 and 1.25%. This “indicator” I calculated leads me to believe that even using the Govt.’s own numbers that we are likely experiencing a recession now and 1Q08 will probably show progressively worse numbers.

Anyone have any other comments on my analysis?

Thanks!

Comment by vozworth
2007-12-27 12:52:18

no need, Inflation is higher than growth, period end of story.
On a better note:
China’s running the FED with the reserves.

“BEIJING (AP) — Further cuts in U.S. interest rates would have a “harmful effect” on the dollar and the international finance system, a Chinese finance official wrote in a commentary Thursday in an official newspaper.”

http://money.cnn.com/2007/12/27/news/international/bc.apfn.as.fin.china.us.dollar.ap/index.htm?postversion=2007122707

Comment by Matt_in_TX
2007-12-27 18:52:56

Let’s give them a lecture about US-China history, then feed them antibiotic beef.

 
 
 
Comment by Professor Bear
2007-12-27 11:59:01

Credit loss could hit $US1trillion
David Nason, New York correspondent | December 27, 2007

THE US economy could be heading into its blackest year since the Great Depression as estimates of losses from the housing slump and sub-prime mortgage implosion reach unprecedented levels.

The latest bank estimate of $US700 billion in losses made this week by Rob McAdie, the UK-based head of credit at Barclays Capital, is $US300 billion more than a headline-grabbing Golden Sachs estimate that jolted US markets just last month.

And it is light years from the $US50-100 billion in losses predicted by US Federal Reserve chairman Ben Bernanke to Congress in July. Expressed another way, the International Monetary Fund and World Bank say only 15 countries have a GDP higher than $US700 billion. Australia was 15th on both lists.

But even estimates of a $US700 billion sub-prime bloodbath may be conservative, with respected finance and economic blog sites like Calculated Risk predicting losses as high as $US1 trillion. The implications for global credit markets of losses of this magnitude would be horrendous, forcing banks and other institutions to slash lending by several trillion dollars.

http://www.theaustralian.news.com.au/story/0,25197,22973589-643,00.html

 
Comment by Professor Bear
2007-12-27 12:02:14

Top real estate stories of 2007
Downturn, downturn, downturn
Thursday, December 27, 2007
Inman News

“Downturn,” “subprime,” “foreclosures” and “credit crunch” are the top phrases that come to mind when looking back at the year in real estate news. 2007 will be remembered as the year the subprime mortgage market collapsed, causing a credit crunch whose effect on the broader economy is still to be determined. The credit crunch has caused everyone to wonder whether the housing market will now play a role in tipping the economy into recession in 2008. But even while housing markets were slowing substantially in some parts, a boom in online activity and innovation in real estate was happening this year. 2007 was marked by an explosion in real estate blogging along with some major media interest in a few newer online business models.

Here are our picks for the most memorable real estate stories of 2007:

http://www.inman.com/inmannews.aspx?ID=65604

 
Comment by Professor Bear
2007-12-27 12:42:21

Spaces and Places: Home builders’ solution for state’s housing slump
By Katherine Conrad
Mercury News
Article Launched: 12/25/2007 01:33:38 AM PST

As head of the Northern California Home Builders Association, Joseph Perkins has a plan to jump-start the state’s ailing housing market, but he’ll need federal action to succeed.

Perkins, executive director of the San Ramon-based, 1,000-member trade group, said he will work in 2008 to raise the so-called “conforming” loan limit from $417,000 to $600,000. That refers to loans eligible to be purchased by either Fannie Mae or Freddie Mac. Loans above that level are considered jumbo mortgages and typically have a higher interest rate.

“The conforming loan ceiling of $417,000 is totally inadequate,” Perkins said in an interview Friday. “If we can get an exemption for Californians, that will do more good than the governor jawboning lenders to extend the adjustable rate mortgages another year.”

http://www.mercurynews.com/realestatenews/ci_7804716?nclick_check=1

Comment by Groundhogday
2007-12-27 13:29:32

Fed, Fannie and Freddie to the rescue!

Isn’t it amazing how industry leaders continue to misunderstand the fundamentals. Without liar loans, negative-am, etc… raising Freddie and Fannie limits would have limited impact.

Comment by bill in Maryland
2007-12-27 14:03:58

Exactly, in addition to the Case-Shiller index, which shows the average house in 20 metro areas is priced (well, back in the first few months of this year) more 100% higher than what it should be priced at. Only a doubling of wages will save this bubble.

Comment by Professor Bear
2007-12-27 15:51:52

It’s a wonder the Congressmen who are pushing for this big increase in the size of loan the GSEs can guarantee cannot find any economists who are capable of explaining to them the problem of the disconnect between incomes and home purchase prices. Increasing the loan guarantee to $700,000 or $1 m for that matter would seem to have little impact if prospective buyers have to document their incomes going forward.

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Comment by Professor Bear
2007-12-27 17:27:28

What is it that our Congressmen do not understand about “Too many $500,000+ McMansions, not enough McMillionaires”?

Propping up the property values through Jumbo loan guarantees will have the unintended consequences of further decreasing affordability while increasing the supply of homes destined to rot into desuetude because there are not enough qualified buyers for Jumbo-loan-financed McMansions.

 
Comment by bill in Maryland
2007-12-27 18:21:06

And that’s a viscious cycle. I’m buying more gold this weekend.

 
 
 
 
 
Comment by reuven
2007-12-27 12:49:52

“ALONG CAME NORMA”

Article in today’s WSJ about how “Wall street wizardry” fueled Credit Mess

http://online.wsj.com/article/SB119871820846351717-email.html

Comment by Professor Bear
2007-12-27 16:00:22

“Norma illustrates how investors and Wall Street, in their efforts to keep a lucrative market going, took a good idea too far.”

Here I thought Norma was a recent hurricane. The only ‘good’ thing I can think of about the ‘idea’ was that it was a really ‘good’ way for Wall Street to make a killing off the collapse of mortgage underwriting standards over the past several years.

 
Comment by Professor Bear
2007-12-27 16:01:44

She nails it:

“Everyone was passing the risk to the next deal and keeping it within a closed system,” says Ann Rutledge, a principal of R&R Consulting, a New York structured-finance consultancy. “If you hold my risk and I hold yours, we can say whatever we think it’s worth and generate fees from that. It’s like…creating artificial value.”

 
Comment by Professor Bear
2007-12-27 16:04:20

Shades of the investing syndicates of the 1920s:

‘Also, these CDOs invested in more than simply subprime-backed securities. The CDOs held chunks of each other, as well as derivative contracts that allowed them to bet on mortgage-backed bonds they didn’t own. This magnified risk. Wall Street banks took big pieces of Norma and similar CDOs on their own balance sheets, concentrating the losses rather than spreading them among far-flung investors.’

And a quote to remember:

It is a tangled hairball of risk,” Janet Tavakoli, a Chicago consultant who specializes in CDOs, says of Norma. “In March of 2007, any savvy investor would have thrown this…in the trash bin.”

 
 
Comment by Lost control
2007-12-27 13:04:38

I am not a seer, however, a philosopher by the name of of Morris Berman, has produced two books, “The Twilight of American Culture” and “Dark Ages America, The Final Phase of Empire” has an opinion of America’s future. Again, I not sure of his politics, however he does provide a window into a possible future for us.

Again, I do not support this author, just putting his works out there for those who may be interested.

Best wishes,

Comment by bill in Maryland
2007-12-27 18:22:30

Nah! We’ll go the way of England. Look, England is no longer an empire, but it sure is thriving, isn’t it?

Comment by SpacecoastFLRenter
2007-12-27 19:38:14

England never was an empire. Britain/UK was an empire, The English would love you to think otherwise, but it never would have happened without the Scots. Thanks them for roads, pennecilliin the steam engine tires ..the list is long and distinguished. BTW they invented the modern banking system too—no won

Comment by SpacecoastFLRenter
2007-12-27 22:35:25

no womder their empire crumbled. :)

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Comment by Houston Observer
2007-12-27 14:41:37

And they say Houston doesn’t have a real estate problem.

I checked foreclosure.com for my ZIP code and came up with only one foreclosure, about 1/2 mile away. I cross-referenced to ZipRealty for the same street and asking price, and found this gem:

On Market: 167 days
38
ZipRealty Price Track:

Price Reduced: 08/03/07 — $863,900 to $850,900

Price Reduced: 08/24/07 — $850,900 to $837,900

Price Reduced: 09/13/07 — $837,900 to $824,900

Price Reduced: 10/04/07 — $824,900 to $812,900

Price Reduced: 10/25/07 — $812,900 to $800,900

Price Reduced: 11/15/07 — $800,900 to $719,900

Price Reduced: 12/06/07 — $719,900 to $708,900

18% haircut. Dive, dive, dive!

Lower down the price scale, in a different demographic neighborhood, is this one that I’ve been tracking on ZipRealty. It’s been listed three times; the current description says “Seller is firm on price.” Yeah, right. Of course, I’ve only been using ZipRealty for a little over a year, so it’s possible that this one has been listed more than three times:

On Market: 401 days

Listed 11/21/06 $274,900

Listing pulled

Listed 02/23/07 $274,900

Price Reduced: 05/01/07 — $274,900 to $248,000

Listing pulled

Listed 06/25/07 $248,000

Price Reduced: 08/22/07 — $248,000 to $239,900

Listing pulled

Listed 10/25/07 $239,900

Price Reduced: 10/24/07 — $239,900 to $219,000

Price Reduced: 11/28/07 — $219,000 to $209,900

Price Reduced: 12/15/07 — $209,900 to $205,000

25% haircut. Wheeeeeee!

LOL, then there’s this one in one of the yuppie cities that are completely landlocked by Houston:

Foreclosure.com says it’s 539.9K. Zestimate is 1.169M (guffaw!). HAR.com (the local realtwhore site) has it listed for 509.9K, with this precious bit in the description: “Needs a little work…Great Investment. Foreclosure,AS IS…Buyers Agents see ‘private agents remarks’ for bonus..” Likely translation: FB’s trashed the place before they disappeared.

Comment by fran chise
2007-12-27 16:00:22

West U?

Comment by Houston Observer
2007-12-27 17:37:02

Close — Bellaire 77401.

 
 
Comment by Houston Observer
2007-12-27 17:44:07

Bad form to follow up on one’s own posting, I know, but I forgot one.

The next door neighbor’s house. They bought the place and moved in about 5 years ago. In July of this year a moving truck pulled up one day, and just like that, they were gone, moved to suburbia, ostensibly so their small child would have more room to play. They put the ~2400 sq ft house up for rent around Labor Day at $3200. I nearly fell over laughing, because the house is 70 years old and architecturally a mess — from my side the cinderblock exterior looks like Early 1970s Bunker style. Since nicer houses in the area were listed at $1800 and not renting, understandably my neighbors did not find any tenants willing to pay that much. They dropped it to $2999, then $2750, then $2450, and now they are down to $2200. It’s still empty, almost four months after they put it up for lease, and 5-6 months after they vacated. I’m betting it will go down to $1500-1800 before it gets occupied, or else it will go up for sale first.

 
 
Comment by Ria Rhodes
2007-12-27 15:35:39

Comment by ronin:

“Democracy is a good word to use when trying to sway public opinion. My sympathy through it all is with the poor Pakistani J6P, just trying to get by and live their lives with the political instability spurred by power hungry leaders swirling around them.”

Substitute “Americans” for “Pakistani J6P” and you could be talking about us here in the good old US of A.

Comment by maddog80
2007-12-27 20:29:55

Can we shorten that to J6Paki ?

 
 
Comment by Professor Bear
2007-12-27 17:33:46

Subprime crisis hits US newspapers’ revenues
By Joshua Chaffin in New York

Published: December 27 2007 20:34 | Last updated: December 27 2007 20:34

The subprime mortgage crisis is tearing through the newspaper industry as US papers suffer sharp falls in real estate advertising.

The extent of the damage was visible this month when Tribune Company, which owns the Los Angeles Times and Chicago Tribune, reported a 40 per cent decline in November for its real estate classified advertising revenues.

Gannett, the largest chain, said recently it was on track for a 27 per cent drop in real estate advertising for the fourth quarter after reporting a 23 per cent slide in the third quarter.

Edward Atorino, an analyst at Benchmark Capital, said: “It’s spiralling downward at an accelerating pace.” He predicted that the problem would “get worse before it gets better”.

The crisis is reminiscent of the bursting of the dotcom bubble in 2000, which led to a sharp pullback by internet companies after years of heavy spending on newspaper advertising.

However, this crash has come at a worse time for the US newspaper industry, which is grappling with broader challenges. These include the flight of classified advertising – one of newspapers’ largest and most lucrative categories – to low-cost competitors on the internet, and the loss of younger readers.

http://www.ft.com/cms/s/0/d88582e2-b4a9-11dc-990a-0000779fd2ac.html

 
Comment by Professor Bear
2007-12-27 17:34:56

Bubble trouble
Published: December 27 2007 16:01 | Last updated: December 27 2007 18:50

Many a happy hour can be whiled away pondering which historical financial bubble most resembles today’s subprime crisis. The tulip mania of 1637? Japan’s 1980s property and stock market bubble?

All share one characteristic that is easy to identify in retrospect – an inflated estimate of the value of the underlying assets, whether flowers or houses. In many cases, this exaggerated optimism is encouraged by geographical distance – fictitious Latin American gold and silver mines lay behind the UK stock market crash of 1824-25 – or by enthusiasm for new financial instruments.

http://www.ft.com/cms/s/c9be8094-afb1-11dc-b874-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F1%2Fc9be8094-afb1-11dc-b874-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus

 
Comment by Tenquick
2007-12-27 18:28:24

I am a long time lurker on the board and wanted to mention a recent investment opportunity that came my way.

A good friend of mine who is a contractor in Oregon approached me about joining an investment group that buys foreclosed properties directly from banks. Here is the email that I received:

I’ll try and explain this investment via email although it’s going to be difficult. Attached is the list of homes being bought from the bank.
The deal is 130 homes for $2,000,000 ($15,385 / door). The partners are going to pay back the investors with profit first before any other money is distributed. What will happen is we’ll buy the 130 homes and w/in 5 days the bank will assign the notes over to the LLC which you would be apart of – your ownership would reflect the amount invested. Toby and his group would then go out and market the homes to builders, realtors, homeowners or investors. We’ll be trying to flip the homes for the best possible value knowing that we are investing in this for the short term (17 employees working on the sales side of this)
The appraised value of the homes is $8,000,000 and the current balance to the bank is $6,200,000 we’re buying them for of course $2,000,000.

Comment by JimAtLaw
2007-12-27 19:31:59

The crash will certainly bring about some interesting opportunities, but if it sounds good too be true, it usually is…

 
 
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