Bits Bucket And Craigslist Finds For December 28, 2007
Please post off-topic ideas, links and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
About Me
Name:Ben Jones
Location:Northern Arizona, United States
To donate by mail, or to otherwise contact this blogger, please send emails to: thehousingbubble@gmail.com
PayPal is a secure online payment method which accepts ALL major credit cards.
Links
-
November 2024 M T W T F S S « Sep 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Photo Submission: hbbphotos@gmail.com
View the HBB Photo Gallery *updated 4/13/2008
Buffett starts bond insurer…
http://www.bloomberg.com/apps/news?pid=20601103&sid=ae9j2cJX0m3g&refer=news
Perhaps he and his foundations could start a mortgage securitizer after all the existing ones go under.
Hey - notice he didn’t buy one of the existing insurer such as MBIA.
I imagine he sees current insurers in a bad situation. Having to hold on to losses for years to come. He’s starting something with a clean slate. He’ll eat those guys up.
Buffet is on record saying many of the securitized mortgage packages and associated derivitives are so complex that even he can not understand them. That, I bet, is why he is starting with a clean slate, because he can’t evaluate the existing companies’ books. Frightening indeed.
This type of start-up is exactly why many failures should have already occured.
I am getting the feeling we are about to see “strategic Bankruptcy” playing out across the landscape of real estate. From builders to securitizers….. similiar to the way United Airlines (and other assorted entities) from ages past WIPED THE SLATE CLEAN and were reborn, with a new and improved capital structure.
These activities will be treated with much fan-fare after all the legal mambo-jahambo is all settled and the stock is once again pricing in strong growth in earnings…under a new symbol of course.
next bubble: Strategic Bankruptcy
anybody remember after the Aug credit blow-up and the rumors circulating on Buffet taking a stake in Bear Stearns or other such hogwash…and the market had a serious frothy rally on the rumor…
well Mr. Buffet has announced two deals in two days…..how frothy is the the market after a REAL INVESTMENT??
Im ready for the pushing and shoving…..I know several monied leveraged idiots who are hitting the phones trying to unload the crown jewels….a la’ fancy old cars, motorcycles, RV’s, Bus Conversions…….the race for cash is pathetic. Big time high falootin jackasses are about to get the boot heal right on the old nutsack.
got gold?
Dec. 28 (Bloomberg) — Gold rose in London, heading for its best year since 1979, as higher oil prices and a weaker dollar spurred demand for the metal as a hedge against inflation and as an alternative investment. Silver also advanced.
Crude oil is on course for the biggest annual appreciation in eight years, while the euro gained against the dollar for a sixth consecutive trading session. Gold will probably average $800 an ounce next year, compared with $696 this year, according to the median estimate of 37 traders, analysts and investors surveyed by Bloomberg News.
“The major driving force for gold this year has been the weaker dollar,” Bernard Sin, chief gold trader at MKS Finance, one of Switzerland’s four precious-metals refiners, said by phone from Geneva today.
http://tinyurl.com/2scf4x
yes I got APA, NEM, and PAAS although minning stocks still off the highs a month ago though. I have been told deflation is in the bag however and holding dollars is the way to go because they are not making any more of them you know, uh no you’re right they are making billions of them and where they end up nobody knows.
“got gold?”
yep.
Gold price will be manipulated by the central banks. They won’t allow the gold to go much over $1000.
They’ll try valiantly. Still, big buyers (like China and the Emirates) love the stuff, and the central banks will eventually be overrun by the market. Bummer for them. I guess they’ll be left with currency controls and making it illegal to own the stuff - or trying to.
china says rate cuts will hammer dollar;
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.
The dollar’s fall against many currencies has prompted investors to sell dollar-denominated assets, Hu Xiaolian, director of the State Administration of Foreign Exchange, wrote in the Financial News, a newspaper published by the central bank.
“If the (U.S.) federal funds rate continues to fall, this will certainly have a harmful effect on the U.S. dollar exchange rate and the international currency system,” Hu wrote.
http://tinyurl.com/2ro8hf
I think thats the idea, you owe alot of dollars to someone so devaluate the dollars and now you don’t owe so much. Kind of like buying a house in the past 30 years with borrowed money, started out hard but after years of inflation and wage gains the mortgage that was so expensive is now less than renting. The good old days.
Actually the US has just imposed a hidden tax on China. We are taking all the value of the dollars they own. Thanks for working for nothing you comie idiots!
One of the signs of the apocalypse will be the day when the US can no longer borrow in it’s own currency.
$$$ What IS a dollar?
Everybody “sort of” knows what a dollar is until they have to define its substance. Then even Mr. Webster’s finest dictionaries come up short.
“Dollar - A paper money, silver or cupro-nickel coin, and monetary unit of the United States. Equal to 100 cents.”
A coin containing a troy ounce of pure silver and marked “one dollar” is equal to a piece of paper with “one dollar” printed on it? Think about it!
–
“A coin containing a troy ounce of pure silver and marked “one dollar” is equal to a piece of paper with “one dollar” printed on it?”
No. “A coin containing a troy ounce of pure silver” is NOT a currency coin but metal just like copper and tin. Its value fluctuates in “paper” dollars, or credit-created dollars.
“Think about it!”
It doesn’t require much thinking. You just need to get on with the idea that we don’t have a currency backed by, or denominated in, silver and gold. Got it? Until the global financial collapses, and one day it will, the paper currencies are here to stay. You can buy more gold with the paper dollars (US T-Bills rolled over at maturity) today than 25 years ago. Had you bought long-term US Treasury bonds with your paper dollars 25 years ago you could buy more than 5 times the gold today!
I do favor gold backed currencies, but that is not the reality today and I deal with the reality that exists. I have been recommending people to put 5-10% of their networth in gold mostly as insurance and not for speculation. I have also given more gold and platinum in gifts than anyone I know and my 5-year old grandson’s college fund is in all gold. But, a good part of my savings is in USTs. The US has a “controlled inflation” regime now and deflation is much more likely going forward than high inflation (above 5% for more than a year). The worst thing to own is Scams. And as a speculator I am short Scams via long-term puts.
Jas
No. “A coin containing a troy ounce of pure silver” is NOT a currency coin but metal just like copper and tin. Its value fluctuates in “paper” dollars, or credit-created dollars.
The point was the definition… A U.S. Silver Eagle is marked One Dollar and if you walk into a store,bank,Etc… it is “worth” one paper dollar in trade. The definition of a dollar is not clear in many ways.
Jas, thanks for sharing your thoughts with us. I always enjoy reading your posts.
I just don’t see the value of gold holding up over the long term if we do have a financial armageddon as you seem to think. It’s not like it’s a basic necessity of life, and it’s perception as something of value will eventually diminish.
–
“I just don’t see the value of gold holding up over the long term if we do have a financial armageddon as you seem to think.”
Please note that I recommend gold as an INSURANCE. What is the residual value of insurance? Gold is the longest term insurance there is. Hopefully, you never need to cash in the insurance.
Jas
amen.
There has been, and is, a misunderstanding of money. It is a medium of exchange. You don’t eat, reside under, drive in, etc., federal reserve notes. Nor do you do any of the above with gold, or any other form of money (commodity money, credit money, or fiat money). It is a medium of exchange to acquire or sell all those other things.
Some forms of money outlast others because of their characteristics. Whether Fed Notes, oil, gold, etc. are the ideal form of money has been advertised and sold to people for literally millenia.
Have you ever wondered why all the civilizations of the past have left testaments to their existence, yet none of the great civilizations have had their form of money survive? Or, perhaps it did. Gold and silver have been used as money for millenia. They were written in our Constitution as the only form of money that the states could declare legal tender. That doesn’t mean others can’t be used, only that a state can’t declare any of the others legal tender.
That stipulation should require an automatic check on reckless lending. If a private bank is known to be devaluing their notes, people will stop using them. The bank’s solvency will be in doubt. They either rectify the situation, or go out of business. That is the cornerstone of a market economy. The individual makes the rules instead of a central body. Yes, we have veered from that principle drastically.
“Congress shall have the power to COIN money, and regulate the value thereof.”
“No state shall…. make anything but gold and silver coin a tender in payment of debt.”
The architect of those constitutional prohibitions and limitations, Roger Sherman, knew precisely what they were intended to mean. And for those who read the history, it’s clear that Sherman and other like-minded signers, expressly intended for these United States to be different from all the other failed currencies — all of which failed due to transition from commodity-based money to fiat money.
Read “A Caveat Against Injustice” to see that Roger Sherman knew well what the intent was when those words were written into the Constitution — it was to prohibit worthless FIAT MONEY!
http://www.geocities.com/Heartland/7006/caveat.html
Gold not a basic necessity of life? Well, no, but is it more a less a necessity than a paper dollar? Historically? What do you think?
At least with a paper dollar, you have the guarantee of the government issuing it. Granted, that guarantee might not be worth much depending on the government.
The deliberate purpose of the 1787 Constitutional Convention was to stop the ravages of a fluctuating medium of exchange by obligating government to maintain reliable medium of exchange. President Andrew Jackson validated this fact in his Eighth Annual Message to Congress, December 5th, 1836, just 47 years after the Constitution was ratified by the states.
“…It was the purpose of the convention to establish a currency consisting of the precious metals. These were adopted by a permanent rule excluding the use of a perishable medium of exchange, such as of certain agricultural commodities recognized by the statutes of some States as tender for debts, or the still more pernicious expedient of paper currency.”
The “permanent rule excluding the use of the pernicious expedient of paper currency” is an exquisitely framed piece of legislative machinery. In article I Section 8, the Framers gave Congress the power
“…to coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standards of Weights and Measures.”
In Article I Section 10, the Framers denied the states any power to coin and issue money. More importantly, they denied the states the power to ordain-in payment of debts-the use of anything but the money Congress was empowered to coin. The substance of that coin is named in the denial:
“No State shall coin Money, emit Bills of Credit, make any Thing but gold and silver Coin a Tender in payment of Debts.”
http://www.geocities.com/Heartland/7006/caveat.html
Scams are those stocks that you don’t like? Like what Enron was?
–
No. My conclusion, reached in 1997, is that long-term most stocks end up being scams. The stock market allows systemic scamming of the general public. Long-term, only those who manufacture stocks, or those who don’t buy them on the open market at the price public buys at, are the winners and public investors, as a group, are big time losers.
You need to read the history going back to England to see how the scam operates in decimating the savings of the middle-class.
Jas
That is a seriously weak conclusion. You seem to be distracted by stocks that don’t pay much or any dividends and get caught up in bubbles. The biggest winners are early investors in companies that do well for a long time and pay good dividends. Pulling back a bit that is the lesson of the bubble: Do your math or you end up investing poorly.
In Jas’s defense:
In the long run, stocks track corporate profits and corporate profits track nominal GDP. (Profits either trend around a fixed percentage of GDP or else they go to 0 or 100% of; there is no other long-term or “steady-state” solution.) The only way stocks as a group can provide returns above nominal GDP is if publicly-traded companies consistently and systematically outperform private ones.
Equities probably outperform nominal GDP most years, but calamities drive equities to near zero. Calamities became much rarer in the last 70 years, and real GDP growth and stock price performance have been abnormally high. Even though I enjoy trading them and often park some money there, I don’t have a lot of long-term faith in equities as a superior investment class.
–
“That is a seriously weak conclusion.”
I don’t have the time and the space to provide detailed historical evidence that supports my conclusion. Therefore, why don’t we wait for 3 more years and see what develops.
Jas
“Comment by Mole Man
2007-12-28 12:01:47
That is a seriously weak conclusion.”
Back into your mole hole.
No, I think you mean a cupro-nickel shiny coin marked “one dollar” is equal to a piece of paper…
dollar decline worst in 13 months;
LONDON, Dec 28 (Reuters) - The dollar was on track for its worst weekly performance in over a year on Friday, hit by soft U.S. data and a rise in risk aversion following the assassination of Pakistani opposition leader Benazir Bhutto.
More bad news for the U.S. economy, and thus for the dollar, could come with the release of the new home sales figures for November at 1500 GMT.
“All the expectations (for the data) are on the soft side so I think the dollar is at risk of further decline,” Jones said.
http://www.reuters.com/article/usDollarRpt/idUSL2836198920071228
Not sure about the cause and efect in the above article, but if true, it would represent a fundamental shift in the perception of the dollar. Until very recently, a rise in risk meant a flight towards the dollar, rather than a running away.
risk is debt fueled expansion of the “save the desert”project undertaken by BUSHCO…..fire up the presses, we are gonna find a way to piss away some more money in Pakistan.
write down:
Softness in the housing market has prompted Capital Bank to write down the value of its assets between $2.6 million and $2.8 million, it said late Wednesday.
Raleigh-based Capital Bank Corp. (Nasdaq: CBKN), the parent of Capital Bank, said it also will recognize between $1.3 million and $1.4 million in reorganization charges.
http://www.bizjournals.com/triangle/stories/2007/12/24/daily11.html
furniture stores hit by housing slump;
December 28, 2007 - 1:03AM
Some furniture stores in the Victor Valley are shutting their doors because of lack of sales sparked by the housing slump.
The Home Gallery, Jonathan’s Furniture, Levitz and Really Living Furniture are all going out of business.
“The rent where we’re at is too high and the sales are too low,” said Jonathan Tobon, owner of Jonathan’s Furniture, which has been in business for three-and-a-half years and will close on Sunday.
“The housing sector causes several parts of the economy to ebb and flow,” said John Husing, Inland Empire economist.
http://tinyurl.com/2puhkv
Levitz furniture has been “going out of business” for YEARS!!
Levitz has been opening Ashley Furniture franchises in the DFW area in addition to their Roomstore business.
2008 COULD BE AN INCREDIBLE YEAR
We all wake up and learn the problem is not just subprime. Many can’t afford to pay off their debt whether the be consumer, municipality, or company. We learn that many were servicing debt with more debt. Now that debt is cut off, many can’t meet debt obligations. The ripple effect will be widespread and powerful.
“Now that debt is cut off, many can’t meet debt obligations.”
So, uh, cash - that worthless fiat thin-air stuff - is king?
Yup. Until the government fires up the printing presses and starts flinging it in all directions.
“We all wake up and learn the problem is not just subprime. Many can’t afford to pay off their debt whether the be consumer, municipality, or company. We learn that many were servicing debt with more debt. Now that debt is cut off, many can’t meet debt obligations. The ripple effect will be widespread and powerful”
State of Ca is in deep Debt , municipalites in debt, consumers running up massive CC debts, US in debt, it seems as if Massive debt in entire US economy is the theme here. Lets just allow the chinese, Saudi’s, Dubai, Singapore, Hong Kong, to buy up our massive debtload lock ,stock and barrel. They might do a better job running the CA economy than the current Idiots in Sacto.
Heres a better Idea. Open the floodgates to massive immigration from the 3 upper-tier advanced East Asian nations of Japan. Korea and China and bar futher immigration from neolithic age 1st grade uneducated donkey cart pulling peasants from Mexico.
100% Guaranteed that East Asians will improve overall US productivity ,savings rate, educational level and respect for law.
Educated Indians should be allowed in as well.
Why outsource when we can have them here In US. Sure it will mean wage stagnation for h-tech jobs but anyway we are in deep S*it as it is with global wage arbitrage why not just have it here in US with an imported highly skilled educated Asian immigrant class .
US immigration policy is pure idiocy!
I’m all for it. I think part of the fear is wage arbitrage and part of the fear is subsidizing non-citizens in terms of social programs. I’d prefer to eliminate most social programs altogether. That would take care of one problem. As for wage arbitrage, not much can be done about that.
Ha ha, the assumption is that those from the Orient are all smart, educated, and disciplined savers. We have been seeing a lot of that, because of structured immigration policies.
To make the leap that all from the Orient are smart, educated and disciplined is to say that all Americans can be engineers. The reality is that there are tons and tons of uneducated, unskilled folks in Oriental countries living the existence of a peasant.
Other than US Treasuries and insured-CDs (for US buyers), what US debt sector doesn’t have big problems? The debt to avoid appears to be home loans (1st and 2nd mortgages), auto loans, credit card debt, corporate junk bonds, uninsured bank debt, LBO debt, GSE debt, and commercial paper. What’s left, banker acceptances? (By-the-way has the BA market disappeared?)
Oh, I forgot income property loans - another problem sector.
“This much is true: the most selfish of all things is the independent mind that recognizes no authority higher than its own and no value higher than its judgment of truth. You are asked to sacrifice your intellectual integrity, your logic, your reason, your standard of truth—in favor of becoming a prostitute whose standard is the greatest good for the greatest number.”
John Galt
aladinsane …….Had people listened to their inner voice about how absurd the real estate prices were ,and they refused to commit to loans they could not afford ,the real estate boom would of ended in 2002 .
IMHO …As the housing boom showed ,it’s far more dangerous for a society to have sheep being directed by the greedy than it is to have people who can think for themselves . The Authority of the NAR/CAR/WALL STREET/LENDERS/RATING AGENCIES , is going to go down in history as the greatest hype/spin the commissioned sales people ever pulled off .
“This much is true: the most selfish of all things is the independent mind that recognizes no authority higher than its own and no value higher than its judgment of truth.
BS.
Don’t ‘independent’ minds include delusional minds? Are they equally ’sovereign’ as well?
John Galt is a cartoon character. Here’s a quote from a real person:
“Thus, power - not liberty or reason - was the central thrust of the Randian movement. The major lesson of the history of the movement to libertarians is that It Can Happen Here, that libertarians, despite explicit devotion to reason and individuality, are not exempt from the mystical and totalitarian cultism that pervades other ideological as well as religious movements.”
– Murray N. Rothbard
Devotion to reason and individuality leads to totalitarian cultism? Now that is a contradiction if ever I read one.
Nonetheless, I see his point. However, at some point, individuality would need to evolve into collectivism for the statement to be true. Yes, that could happen, and most certainly could. However, it wouldn’t be defined as individualism anymore.
“Devotion to reason and individuality leads to totalitarian cultism? Now that is a contradiction if ever I read one.”
No. It means that Rand’s professed devotion to reason was at best shallow and insincere, and more likely disingenuous and hypocritical.
If you want to learn what Ayn Rand and her movement were really all about, I recommend Whittaker Chambers’ 1957 review of “Atlas Shrugged,” aptly titled “Big Sister Is Watching You.” Google it.
In the context of the whole paragraph, you are correct. I was only pointing out the oxymoron in the single sentence, on its own. Thanks for clarifying.
I am a savvy shopper, get most of my Christmas stuff after Christmas. Went to Target yesterday (live in a nice middle-class area of LA) and was stunned at what I saw. Target usually marks down all their holiday merchandise 50%. It’s always chaos there the day after and the stuff that’s left usually flies off the shelf. This year I didn’t go the day after but went yesterday and expected to not find that much left. Well, to my amazement EVERYTHING was still there. The shelves were full. Not even many customers in the store. It really looks like they didn’t sell more than 10% of that stuff this year, if even that. As I was standing there, looking at all the stuff, almost by myself, I felt the “R” word all around me.
Did the same and notice the same thing. I brought four wine glasses and left. Funny things was the glasses was on “sale” with red tag, but I remembered buying those same glasses a few months ago for the same price of $12.
Cinch
To my mind, any lower end store that offers sales on their clothing has, in all reality, priced their goods at what they should be sold at normally. The quality is not good enough to be worth more. Its a scam and they all do it.
I once saw a bedside table on sale for more money than what I had seen it selling for 3 weeks earlier. I pointed this out very, very LOUDLY…………..
Clothing, unlike, say, jewelry, is subject to rapid obsolescence due to hanger burn, fading, and excessive handling and must be marked down until it is sold or else thrown out.
I went to Fry’s Electronics at 6 pm on Wed. It was jammed.
Driving by Valley Fair (local mall) every night this week there’s been huge backups.
Staples was pretty empty though.
I did some after Christmas shopping this year and noticed sparse crowds as well. My wife and I have a tradition of getting a Christmas ornament each year (marked with the year) for some day in the future when we have kids and a tree. Picked up a nice sterling silver bell with 2007 engraved in it for about 75% off. Now that I think about it, I might have to weigh it to see if I came close to purchasing for silver bullion prices… If so, I should go back and buy a few more.
If they were made in China, I kinda doubt any silver made it into those ornaments.
The merchandisers seem to be trying a “head fake” to consumers and are delaying the best mark downs. Perhaps this is to snare gift card shoppers or impulse purchases by those making returns?
It is, after all, their last hope.
JC Penney ad watching has become a joke in our house.
Last week we received one for the prior week (gee thanks, arrived 5 days after the sale was over). Then they sent us one that arrived on the Friday before Christmas touting their after Christmas 50% off sales. Made me want to rush right out and buy before Christmas at only 30% off…
I think many Target stores just re-stock for the after Christmas rush.
Experts predictions for house prices in the UK for 2008, most of them seem to be bathing in De Nile.
http://news.bbc.co.uk/1/hi/business/7150229.stm
The UK property market is in a strange situation. It might get hurt somewhat by the credit meltdown but I doubt if it will see what we see happening here in the US. London is now THE money center for the world and, as well as clean money flowing in, there is a lot of dirty money flowing in. The US tax payer, via Bush, has been pouring billions of freshly printed dollars into places like Iraq and Pakistan and other places. It’s no secret that a LOT of that money has gone missing through corruption, mis-management and just simple theft. Those involved range from politicians in those countries to anyone involved in supplying the US forces. That money does NOT come back to the USA. Too risky. If some government bean counter wakes up long enough, he might discover that some Iraqi politician has a $5 million property somewhere in California and attempt to seize it. Much better to put those ripped off US tax payer dollars it into a country where there’s little chance of it being traced. Like several european countries. France and the UK being just two. I would imagine there are a lot of safety deposit boxes in London and Paris, bursting at the seams with US tax payer dollars.
Also, a visit to London will tell you that London does not belong to the Brits anymore. It’s been taken over by foreigners. Foreigners are the only ones who can buy or afford to buy property. Added to that, the USA has vast amounts of land but the UK is small and over crowded. Land is at a premium.
So Mike your basically saying they’re not building any more
land in the UK. how did that work out in Japan again?
Europeans are not rushing to buy land or live in Japan. Neither are wealthy oil rich arabs. London is home to plenty of Japanese businessmen at the moment. Paris is 1000’s of miles away from Tokyo. London is a 45 minute journey. So is Rome. These are the places where people want to live and do business. Not Japan.
Im sure everyone was rushing to buy in Japan circa 1990.
Rich people are not stupid, once the market stalls your
Russians, Sheikhs and Japs will think twice about buying in the UK. Most of the UK is a very overcrowded, unpleasant place to live. Once the investment potential
goes south, lots of real estate will hit the market.
“Added to that, the USA has vast amounts of land but the UK is small and over crowded. Land is at a premium.”
The UK is not as small and overcrowded as you might think, though it is more densely populated than the USA. Have you ever been away from the big metro areas like London? The Brits have lots of land. Unfortunately, it is either unavailable because it has an owner which does not want it disturbed, or it cannot be developed because of zoning restrictions. The “running out of land” argument does not work in the UK, either.
While I was there last year, I would constantly hear radio spots encouraging me to buy property in the Canary Islands or on the southern coast of Spain. Going out and about, ads for real estate were EVERYWHERE. Yet, the overbuilding was obvious, as I saw a number of new apartment/condo buildings which were less than 25% occupied. I can only imagine that this is how California appeared. This will not end well for the Brits either.
RE: Have you ever been away from the big metro areas like London? The Brits have lots of land.
You are so right, BinN
My intellectual and travel hobby is exploring all the old
WW II USAAF 8th Air Force bases in East Anglia and the Mid-Lands.
I never go to London.
Nothin’ like boppin’ around the Cambridgeshire countryside listenin’ to Manfred Manns’ Do-Wah Diddy on the BBC.
Regards.
Just finished a book called Agent ZigZag. Interesting read, somehwhat on your subject.
The UK has always been ‘taken over by foreigners’, its really nothing new.
For decades now, the wealthy from the Commonwealth and a lot of arab countries, have used UK banks and bought UK (especially London) property.
Try finding a property in the West End (W1 postal code) that isn’t either owned outright by a foreign national, or held by a foreign business/institution/bank. They did it years ago.
IIRC, Mr Fayed has owned Harrod’s for the last 25 years…..
Its a red herring - in much the same mould as the NAR blaming the housing situation on ‘bad press’…
Bhutto’s assassination is almost identical to Archduke Ferdinand’s of 1914…
The spark?
Wow, thanks for that happy thought.
I was thinking the same thing yesterday. The analogy isn’t perfect though. Pakistan can’t declare war on a neighbor for this. It would be a civil war, which makes it less likely that a cascade of alliances will get pulled into it.
However, I do find it interesting how Russia has been posturing and positioning over the past twenty years. A lot of things look like they’re ready to come full circle.
The nukes change it from a ho hum civil war so far away, to much higher stakes…
We’ve kept the Pandora’s Box shut for 62 years.
Weaponry is so futile in the end.
The problem with it, is that for every advance in technology, the other side always catches up.
See bow & arrow or guns, for instance.
But the people who are happiest about the assassination are the ones who ostensibly control the nuke. There’ll be some rioting and some general uproar, and it’ll be a worse place than usual to live for a decade or so (and that’s saying something), but why would anyone want to nuke themselves?
It gets dangerous when, for a lack of opposition, he starts picking on his nuclear neighbors like India. Thankfully, I don’t think he’s insane enough to try that at this point.
“Weaponry is so futile in the end.”
Sounds great, but, for starters, only a vegetarian could say this and not be a hypocrite.
what makes you say that? Assasinations are a way of life in that part of the world. This one is no different than others….
“Bhutto’s assassination is almost identical to Archduke Ferdinand’s of 1914″
Can’t see any analogy to the 1914 assasination but do see a possiblility of India getting extremely nervous over the possibility of civil war in pakistan and Islamist extremists getting their hands on Pakistani nukes. That could pull major regional powers of Russia, Iran, Saudi Arabia as Well as US into some wirepulling efforts . Who is allied with who is the question, but US may have treatys with both India and Pakistan involving use of nukes on eiher side. China may have stakes as well.
Pakistani Civil war could result in backlashes and renewed outbreaks of terrorist activities all over middle east, southeast asia, and India . At any event, oil will surely shoot up again .
Looks like a nice skimming job by Da Boyz coming up at the opening this morning. Your mission, if you trade, is to try and work out if this is just a short squeeze and if so, how long will it last. 2 hours? 2 days? 2 weeks?
The Financial Gangsters of Wall Street have been making some big moves up and down lately as they skim as much as they can and as quickly as they can, trying to recover their losses. A guarantee: By the end of 2008 they will have totally recovered their losses by stealing from the 401k funds and every other fund they “manage” (lol). When you own the casino it’s easy to fix the roulette wheel and mark the cards. Especially when you have the watchdog (the SEC) giving you the okay wink. Had Bush got the Social Security bill passed where workers would have private accounts on Wall Street, just imagine how much Da Boyz would be skimming off the top of those funds by now.
I was always suspicious as to why Bush changed the bankruptcy laws and the only thing I could think off, was that the Bush administration knew the “fit was going to hit in shan” in the next few years (which it obviously now has). Now his pals on Wall Street are in trouble which is why he probably brought in one of the Financial Gangsters Godfathers into his administration. It also looks like his plan to bring in private accounts legislation to replace government run Social Security, was just a plan to give Da Boyz another treasure chest to steal from.
Right on the money Mikey.
Mike,
Do you really think the President is the one who writes the laws in this country?
One reason the bankruptcy laws were changed is to prevent people who can afford to pay back some of their debts from avoiding all of them. Hence the “median income” test in the law. You know about that, right? Right? Lots of people don’t seem to get it.
Most people railing against the updates to the law have no idea that for the typical poor person, the new law affects those folk pretty much like the old law. Now if you make over $100k, on the other hand, that’s when you get the courts forcing you to to pay back some of the debt out of your earnings. Seems fair enough — in most cases, it’s money you borrowed with a promise to repay! Where’s the problem with that law?
Nothing wrong with stopping people abusing the system, But my understanding was that
1) The bankruptcy bill had no exceptions for hardship, such as medical.
2) Individuals are subject to this law, while corporations still get away with strategic bankrupties — some of which are really just ploys to pass off their pension obligations.
Here’s a cast iron guarantee. If this administration changes the law it’s to help big business - not Joe Sixpack. This law was brought in to help the credit card companies. People who make over $100,000 a year, can usually get out of a financial hole if the debt is “personal” as opposed to business. For people making over $100,000 a year, it’s better to pay off the debt rather tha go bankrupt. The law hit hundreds of thousands of working class people who make UNDER $100,000 a year. Many making under $30,000 a year but who can probably pay (squeeze) something out of their paycheck. If you think Bush signed in a law to punish those making over $100,000 a year, you probably watch Bill O’Reilly and think Fox is a great tv channel.
I think you still don’t understand the law.
The law(s) are bought and sold by the powerful. Joe Sixpack isn’t powerful. He just THINKS he has a say in what goes on. The likes of Bush, Cheney, The Financial Gangsters of Wall Street and the banks are powerful. If you actually think you (an ordinary US citizen) are in a position of power - you not only do not understand how the laws work nd who works them or you don’t understand how the US works.
The bankruptcy law is pretty much the same as the old one for the majority of people. You have to make under a certain amount of money, which I can’t recall, but it was fair, and instead of discharging everything, you actually had to pay some of it back, and it wasn’t that much % wise. I don’t think there is any conspiracy here, yes it does help the cc companies to a degree, but also keeps people like you and me from supporting deadbeats who could pay, but just used BK to avoid paying anything.
Median income in the US is $48,200. And that is pretty close to where it is for nearly all states except for a few states that go up into the 60Kish - NJ, Conn etc.
“…stealing from the 401k funds…”
Why do so many of my coworkers, friends, and family have such complete confidence in their 401ks? They very much have the same view of their 401ks as they do RE prices - both will always rise and always be immune to plunder. My natural predisposition to pessimism and skepticism (ok, paranoia) just makes me look upon 401ks the same way I do Social Security - it ain’t gonna be there for me. So who is right?
I certainly do not have confidence that my 401k and IRA funds will always rise. You have a patronizing view of many long time retirement investors. Now stop that!
I’ve seen the same attitude of yours in reverse. The common fallacy that doom and gloomers as well as Pollyannas suffer from is the failure to recognize markets have cycles. Both camps say “it’s different this time, the asset class will keep on going that direction.” Fools.
High 401K fees are stealing a little off the top and won’t beat a low cost index fund after expenses. I always choose the low cost option in a 401K plan. If there isn’t a low cost fund I don’t participate except enough to get the employer match if their is one.
They have complete confidence bc why would their quarterly statement showing a 10% gain be false? On the statement they just see the gain, but all I see is the small print at the bottom of the statement that says ” past performance does not guarantee future results”. And any gain is unrealized until you actually retire. Lots can happen between now and then.
ANT
but all I see is the small print at the bottom of the statement that says ” past performance does not guarantee future results”.
That was the small print on every prospectus for Vanguard’s 500 index fund since inception in August 1976. Average rate of return PER YEAR over the last 31 years is 12%. The extremists on both sides of the issue (whether stock index funds are the best thing since sliced bread or the worst investment) are wrong. I take the middle route. Recession, depression, boom times, or stagflation, the one thing we can be sure of that will continue to produce is THE HUMAN MIND. GOT THAT FOLKS? Wealth is created and NOT a zero sum game. The human mind is limitless. To those who do not recognize the nature of man (listened too much to their preachers or to leftist socialists), I can understand why you types do not understand that stock indices go up in the long haul. I agree there will be severe recessions or depressions along the way, but human life and the standards of living get better in the long run because of the John Galts of the world.
Great comment, Mike.
Bush changed the bankruptcy laws!!
Last I heard, in the US Congress changes that sort of law. And this change was overwhelmingly bipartisan, supported equally by Demos & Repubs.
Commercial RE
http://www.minyanville.com/articles/spf-tous/index/a/15358
“Looking at the Washington DC market, even the most expensive CRE deals in recent months have strong tenants behind them, and, for the most part, very strong equity holders, owners who can easily backstop cash flow shortfalls…”
DC is the breadbasket of the money flow, money flows into DC as pre-requisite to access to policy makers. This particular market has a risk-prmium that is not measurable, and as such demands substantial deep pockets.
In fly-over land, however…..the premium is shrinking as service industry struggles to maintain employment relations and pricing power….
I stand firm on the notion that Commercial Real Estate is cracking. Every business owner I have ever known believes his “deal” is different…..turns out, it aint different. Deflation is gonna turn to clock backwards for a time as it relates to the RE cycle, and until we live through the pain, recognize the failures, establish new capital structures…..the pain will continue.
Im short IYR… so I guess Im jaded.
The DC commerical real estate market may be backed by more real money than most, but the outlying areas (Loudoun County, Fairfax County) have overbuilt office buildings and will feel substantial pain.
DC government is also trying their best to destroy the DC business community..latest effort involve mandating 10 paid sick days per year for all DC business (3 if under 50 employees).
I can see a time when business move out of DC in droves to class A office space around the beltway, sending DC commercial real estate down.
I own some commercial property and I am helping carry a tenant (restaurant) My last tenant I signed I had the choice of a furniture store moving in or a cosmetology school. After discussing the business plans I went with the cosmetology school. All they had to make it was 2 years before they would be allowed access to Federal money. Well they made it last year and they have the cheapest haircuts in the town and he is wanting to expand. He already rents 7,000 square feet. I felt they were more recession proof and were going to be a better long term tenant. I Despise turnover!!
Federal Monys paying for haircuts…..what finer subsidy could possibly exist? Ooops, I mean teaching persons how to cut hair, my bad.
The end of the food chain is the Federal Moneys paying to to teach persons how to cut hair. What planet is this?
by “carry” the resturant tennant, surely you must be eating well. You need to get the Coach serviced, and thun by the cobbler to pick up the new shoes you had broken in.
I think it is dangerous to have funds looking for a place to invest .
Whats interesting about the housing bubble is that you had borrowers that had no funds that were able to invest in the leverage of real estate .Talk about a set up for a bubble .
–
“Especially when you have the watchdog (the SEC) giving you the okay wink.”
SEC stands for Securing Entitlements for Crooks!
SEC was created specifically to keep public’s confidence in the stock market. The idea being that from time-to-time public can be fleeced big-time.
Jas
Choices
http://www.minyanville.com/articles/florida-real-estate-schwarzenegger/index/a/15361
This is why I think AZ is on the right path.
Next Tuesday our new employer sanctions law goes into effect. Knowingly hire illegals, lose your right to do business in AZ.
We spend $2 billion educating the children of illegals, and something like $5 billion for medical care for illegals. For what? To supress wages of citizens?
Drive out the illegals, cut govt. spending, drop tax rates, and lure all the CA businesses here for our lower taxes. Cha-ching.
CA is headed in the other direction. They are going to raise taxes. They will continue to welcome the illegals with open arms, only increasing the cost side. They will drive out thier businesses.
Amen brother!
This article is brief to the point of seriously distorting the facts. Relative to services being provided California taxes are currently competitive with most other states. All recent attempts to cut back services have been so politically inept that they failed utterly. That means taxes are almost certain to rise even if some cutbacks are made. It has been a while since that happened and we are in a crisis and also at war, so raising taxes should be expected because of known additional or rising expenditures.
The specific stuff he mentions as worthwhile are nothing more than distractions. There are always lots of wacky proposals and they pretty much always get trimmed away. Even the HIV funding that keeps people alive is getting pulled back with the awkward implication that the State will be watching people it had recently chosen to save die. All organizations have waste and making progress on that would be wonderful, but the unfortunate reality is that everyone who says the California budget is out of line and full of stupid hasn’t done the math and the spreadsheets to back me up on that are all available from the Legislative Analyst’s Office online if you want to see for yourself. California provides the usual services at roughly the same rates all the other states do.
Regarding immigration, illegals and the situation in AZ are not mentioned. The contribution and costs of illegal immigration are widely contested. The current situation has employers wanting to hire and workers wanting to immigrate being told to wait for around a decade or more for processing. As far as illegals being welcomed goes, that seems a big stretch even in the areas where they are most present. How exactly are illegals going to displace Hollywood, aerospace engineering, software, and genetics?
Immigration
We spend $2 billion educating the children of illegals, and something like $5 billion for medical care for illegals. For what? To supress wages of citizens?
To keep the serfs in Mexico from starting a revolution.
LOL ….and why are we willing to pay 7B to curb a Mexican “revolution” ? lol
Why don’t we pay the Canadians 8B and the Cubans 6B and Haitians 6B and Chineese 30B and Indians 40B and pay the Martians 500B and so on.
I really hope I misunderstud your comment.
Darrell,
Agreed, we’ve got a lot of good things happening here, and CA is probably going the other direction. I don’t think there’s anyone over there that has the ability or the desire to change their government’s spending habits.
Lip
I agree 100%. CA is so screwed when it comes to giving handouts and freebees to illegals. The LAUSD is spending billions putting up 20 primary schools in some really nasty ghetto parts of LA. All for educating the childen of illegals. This is a gigantic boondoggle and a huge waste of taxpayer money to put up all these schools , because the illegals from Mexico and CA do not inculcate educational values on their kids, and the dropout rate for LA unified school district is 50%.
BIg waste of money educating these illegal’s siblings, who in many cases would rather go gang- bangin and impregnate teenage latina’s rather than study.
I know Christmas is officially over, but one can never see this holiday classic too many times:
http://www.thestreet.com/video/index.html?clipId=10395912&channel=5+Dumbest+Things+on+Wall+Street&cm_ven=&cm_cat=&cm_ite=#10395912
–
New Home Sales (SFH) down more than 50% from the peak in July 2007. The data is seasonally adjusted.
Jas
–
Completed New Homes For Sale at all-time high of 193K, three times the normal.
Bottom line is that Hopebuilders are still building, starting, and permitting more homes than the demand. They keep piling on. Who will benefit? Those who are waiting to buy homes and have the patience.
Jas
–
December 28, 2007
“The [US Mortgage] Loans Were Bad From The Beginning.”
A Wall Streeter’s comment on CNBC. This could only be true if there was a systemic fraud that allowed bad loans to begin and continue for years, even encouraged in the name of “financial innovation.”
Former Dallas Fed President McTeer admitted that regulators failed but he asked, who? He said that he was not aware that he as the Fed district President had any responsibility. Yeah, no one can be blamed for allowing the biggest financial crime of all times.
Jas
–
December 28, 2007
ECRI’s WLI Growth Rate, -5.2%, Falls In the ECRI’s Recession Range of –5% to –6%
December 24, 2007 press release from ECRI: “The ECRI leading U.S. index’s growth rate has hit a 5-year low of -4.8%. Typically a -5% to -6% reading is needed for a recession.”
Latest Data (December 28, 2007):
Weekly Leading Index 135.2 -5.2
So, “the ECRI leading U.S. index’s growth rate” has fallen below -5%. One wonders why the ECRI econ-meisters are not issuing the recession forecast now that the data is screaming recession. My analysis of the long-term behavior of the WLI confirms a recession that will end up in depression.
Jas
Holiday Sales Wrap Up
http://www.stockmania.com/index.php?showimage=122
Let’s see, fuel and food count towards sales but not towards inflation.
Their manipultions are wearing thin.
crude up again:
SAN FRANCISCO (MarketWatch) — Crude-oil futures rose more than $1 to approach $98 a barrel Friday, extending the benchmark contract’s string of gains into a fifth straight session and on track for a weekly gain of more than $4.
http://tinyurl.com/2eml2x
stocks don’t only go up:
TOKYO (AP) — Japan’s stock market wrapped up a year of jittery trade with a sharp fall Friday, beset by fears about the U.S. economy and worries that global political instability will follow the assassination of Pakistani opposition leader Benazir Bhutto.
The Nikkei 225 index fell 256.91 points, or 1.7%, to 15,307.78 points, closing at the end of the morning session on the final day of 2007 trading.
It’s the first time in five years the benchmark ended a year lower than the previous year’s close. The Nikkei lost 1,918.05 points, or 11.1%, for the year. In 2006 the benchmark Nikkei gained 6.9%,.
http://www.usatoday.com/money/markets/2007-12-28-japan-nikkei_N.htm
–
BofA Cuts Soup and Bathroom Hand-soap for Employees!
Just reported on CNBC. They warned people to check who they shake hands with from BofA.
You know that things are really bad.
Jas
soup (as in lines) or soap (as in hand wringing?)
Wanted to post this link from the WSJ.
http://online.wsj.com/article/SB119881051300654741.html?mod=hpp_us_pageone
per WSJ…
Home prices were mixed. Over the year, median prices slipped by just 0.4% while average prices rose by 0.5%. Much of this “strength” reflects the changing regional mix of sales. In addition, home builders’ sales incentives are not included so actual transaction prices are even weaker. Bottom Line: New home sales plunged in November and the trend is definitely lower. In addition, there is absolutely no indication that home sales have reached a bottom. … Prices are falling, more sharply in some regions that in others. – Steven Wood, Insight Economics
It appears quite clear at this juncture that the consumer has reached a psychological point where expectations of future price declines have become entrenched. We consider this to be eminently rational behavior on the part of potential homeowners and until the new homes market observes a decline in the median price of homes and falling rates, there will be little incentive to step up purchasing activity. – Joseph Brusuelas, IDEAglobal
This was obviously a stunningly weak report, particularly given the aggressive price-cutting that homebuilders have been implementing …. However, with demand falling, unsold inventories remain high and the months’ supply at the current sales rate is quite lofty … . None of this bodes well for near-term conditions, and prices will need to fall further to help clear the market. … Interestingly, the relation between mortgage applications for purchases and reported sales of new homes seems to have broken down in the past year or so, with applications well above where they have historically been at current sales rates. This could be due to multiple applications being filed by potential homebuyers in order to try to ensure a mortgage approval. – Joshua Shapiro, MFR Inc.
The declines were spread across the country except in the west where they inched ahead. Winter storms may have played a small part in the decline but in December the storms were more severe and therefore another large decline is likely. The counter intuitive rise in median home sales prices is possibly explained by the fact that sales were up in the west where home prices are much higher on average than across the rest of the country. – Brian Fabbri, BNP Paribas
http://biz.yahoo.com/ap/071228/economy.html
“I think you can classify what we are seeing in the housing market as a crash,” said Mark Zandi, chief economist at Moody’s Economy.com. “Sales and home prices are in a free fall. The downturn is intensifying.”
I suspect by Spring Mark will classify what we are seeing as a “financial ass-pounding”. I can’t wait!
Hillary Clunton speaks out AGAINST affordable housing
http://blogs.wsj.com/washwire/2007/12/28/home-sales-clinton-to-the-rescue/
She wants to do something about “FALLING HOUSE PRICES”. What, on earth, is wrong with falling house prices?
She also wants to give cash (in the form of tax breaks) to FBs, which will only RAISE MY TAXES.
How about requiring any gov-backed mortgage to require 20% down and no more than 3x income financing? That’ll prevent foreclosures!
It seems that these politicians sit up thinking of ways to make the few Americans that have zero debt and pay taxes (less than 5% of Americans) bleed to death by rasing their taxes and devaluing their dollars.
My Ten Predictions for 2008
…
“10) The national real estate market will decline faster in 2008 than 2007, recording double-digit losses and we won’t see the bottom until at least 2009.”
http://seekingalpha.com/article/58478-my-ten-predictions-for-2008