January 21, 2008

Bits Bucket And Craigslist Finds For January 21, 2008

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

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Comment by wmbz
Comment by exeter
2008-01-21 05:13:09

I think everyone concurs on the $800/taxpayer “fix”… It won’t do anything….. It’s not a bd idea considering the cost of previous tax shifts mammothly dwarfs this real one time tax rebate to folks who pay far more of their income in taxes. I’m amazed at the contempt and anger of Wall street types towards this tax rebate. If some type of govt. giveback isn’t directed toward big money interests, it’s no good.

Comment by SDGreg
2008-01-21 05:32:33

I think it was Nouriel Roubini that said a 30% decline in housing prices nationally would equate to $6 trillion in lost equity. In that context, a $150 billion stimulus package isn’t much and isn’t likely to have much impact no matter how it’s composed. While better than the 2001 package, this is much too little too late - a tiny band-aid for a gaping wound caused be years of bad policy and lax regulation.

Comment by GH
2008-01-21 06:14:00

“I think it was Nouriel Roubini that said a 30% decline in housing prices nationally would equate to $6 trillion in lost equity”

The 6 trillion was mostly paper money, and unless actuall transactions are involved, current prices only got there through massive loan fraud, so it is like finding your bank accidentally deposited Microsofts money to your account one day, then corrected it the next. There is no loss, since it was never really your money.

I used to hear the press harping on how Enron Investors had lost piles of money, but the fact is that you only lose what you bought to the table. But yes, $150b will not go far, given the downward pressure on wages by offshoring which is tearing the United States apart at the seams.

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Comment by palmetto
2008-01-21 06:21:10

“the fact is that you only lose what you bought to the table.”

People have a tendency to forget this.

Comment by Beer and Cigar Guy
2008-01-21 06:42:43

“the fact is that you only lose what you bought to the table.”

What if you borrowed/leveraged against this ‘paper’ wealth and actually pissed-away the implied value of those paper gains?

Comment by yogurt
2008-01-21 07:15:10

Then you lost what you borrowed from the “house”.

Comment by oxide
2008-01-21 07:24:19

You never count your money,
While you’re sittin’ at the table,
There’ll be time enough for countin’
When the dealin’s done.

Comment by Former FB
2008-01-21 07:28:17

“it is like finding your bank accidentally deposited Microsofts money to your account one day, then corrected it the next”

More like deposited it, left it there for years, went so far as to suggest that it really was your money on multiple occasions. Here it is a few years later and MS accountants finally got around to submitting the paperwork to get it back and everyone is shocked (shocked!) that it’s not all there.

Comment by Professor Bear
2008-01-21 07:50:02

“More like deposited it, left it there for years, went so far as to suggest that it really was your money on multiple occasions…”

… and encouraged you to borrow it in order to treat yourself to new cars, expensive toys, vacations and lattes.

Comment by Pondering the Mess
2008-01-21 10:14:42

That’s the key part - the money doesn’t just vanish like play money in a stock account - a few thousand here, a few day, no big deal. Nope - this money allowed people to leverage themselves deeply into stupid-debt that they could barely hope to service if housing prices continued to climb. With prices falling, well… I think “toast” is an appropriate description.

As for Enron, think of the poor sods who had their retirement money in the company stock. And I STILL see people doing that today in the “Post-Enron” world! Argh!

Comment by Evil Capitalist
2008-01-21 13:41:09

It is like paying for something with a credit card. Are you truly telling me that people did not know they would have to pay back the money to the credit card company? Come on, that position is clearly inconsistent with “Americans aren’t -that- stupid”

Comment by WT Economist
2008-01-21 06:44:37

(The 6 trillion was mostly paper money)

I put it at about $5 trillion, but that’s about the ballpark. The question is how much of that unreal money is now encumbered by debts, especially debts that cannot be repaid or can only be repaid if the debtor has a miserable standard of living.

The rise to unreality and future fall to reality in the value of my house doesn’t matter, because I never HELOCed the place. The question is, how many did.

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Comment by Lip
2008-01-21 07:16:25

Very true. I owe (x) on my house, but a friend Heloc’d his way to a mortgage (2.3x) for the same house. He’s screwed and is getting ready to mail in the keys. But he’s driving two new vehicles and has an in ground pool.

How many did use Heloc’s? The number or the % will be huge, especially here in AZ, CA, NV, and a few others.

FLA seems to stick out in my mind because they don’t just have the housing/credit bubble to deal with, they also have to deal with the cost of living in hurricane alley. Insurance companies aren’t in the business to give away their money and it costs a lot to do businss in FLA. IMO FLA will take longer to recover from this mess.

Comment by flatffplan
2008-01-21 07:26:51

judging by the cars in my hood-lots of folks
many levered into stock in 06- as of tomorrow that will be gone too

Comment by Professor Bear
2008-01-21 07:29:02

To put a microeconomic perspective on your point, I recently estimated the owner of the median-priced SD single-family home has been losing net worth at a rate around $9000 / month since last August, when the credit crunch sent housing prices rolling down hill. How does $150 bn / 114 m households = $1300 or so per household stack up to home equity declines in bubble markets?

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Comment by GH
2008-01-21 08:40:35

I have a co-worker who is in process of buying (new wife etc…) I told him that he can increase his income by $10K per month this year without working a minute extra, simply by not buying a home right now. Given the old addage “a penny saved…”

Comment by Pondering the Mess
2008-01-21 10:23:05

Agreed! (though I accidently read that post as a “co-worker who is in the process of buying a new wife…”) Oops!

Comment by Troy
2008-01-21 13:49:21

I’m looking at $550K condos right now. A 3%/year pricedrop rate means FREE RENT on my current 1B apartment.

Comment by Professor Bear
2008-01-21 18:03:18

“a penny saved…”

$10,000 saved, $10,000 earned…

Comment by CA renter
2008-01-21 23:39:38


You’re a good friend/co-worker.

Let us know if he listens.

Comment by JJ
2008-01-21 17:41:17

Well, there were some people who worked their entire lives for that Pacific NW utility company. Enron bought them out and converted their retirement funds to Enron stock (something I believe they could not do anything about w/o leaving their job) and poof! it was all gone.

Those people got the shaft. But most don’t fit this category.

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Comment by flatffplan
2008-01-21 05:36:21

stimulating yourself only goes so far
the new deal failed in1937
3-4 years then you have to face the music

Comment by will
2008-01-21 06:25:50

This money should be invested in a renewable energy infrastructure, solar and wind. We are going to run out of oil anyway, and cheap energy will help us compete globally. This bailout money will flow to China and Wall Street.

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Comment by palmetto
2008-01-21 06:38:25

With all the economic “bad news” coming out, I’d love to be a fly on the wall in the McCain war room, especially if he’s on the phone to shrub. “Listen, shrubby, you promised me if I kept my mouth shut and bent over for you in 2000, I’d get to be the king in 2008.”

Comment by Bill in Carolina
2008-01-21 06:43:03

This fits right in with the prediction, which I echo, that renewable/alternative/green energy is going to be the next bubble.

Comment by will
2008-01-21 06:50:11

I wish we would get a renewable bubble, at least we would end up with something useful.

Comment by NeilT
2008-01-21 06:55:38

“This bailout money will flow to China and Wall Street. ”
I’ve suddenly developed a lot of respect for the Wall St types when I heard that a major bank in China has suffered losses due to US subprime. I thought the Chinese were smart, but we’ve managed to swindle them good. In Germany, netherlands, Ireland, France, Australia and UK etc. there have been massive losses due to US subprime. Anyone that created such a huge balckhole to suck in wealth from everywhere deserves to be admired. I tip my hat to Wall St.

Comment by dagan68
2008-01-21 07:10:32

In this month’s Harper’s is a most fascinating article -

I am not sure that is available to non-subscribers - but try it. The writer of that article is predicting as well that green renewable energy will be the next bubble. He also goes on to say that our economy is so screwed up that the only choices there are is depression or a journey through one bubble after the other. Very well written - and makes one think.

Comment by geeah
2008-01-21 07:30:01

I think we’ve already had some bubbles in alt-en… ethanol first and last year solar stocks have gone nuts, all uber expensive, still trading at 150-300x earnings… though a few weeks ago those PEs were doubled. I wouldn’t be looking at alt-en stocks right now either.

Comment by aladinsane
2008-01-21 07:41:47

My buddy is in the solar biz, and solar panels are made all over the 1st world and there isn’t much variance between them, aside from panels being made here, being cheaper than anywhere else, because of the greenback plunging…

Products quite naturally seek the highest profit potential, so many panels produced here are being exported, meaning that there are shortages starting to occur, in our country.

Comment by reuven
2008-01-21 08:12:39

I think we’ve already had some bubbles in alt-en… ethanol first and last year solar stocks have gone nuts, all uber expensive, still trading at 150-300x earnings… though a few weeks ago those PEs were doubled. I wouldn’t be looking at alt-en stocks right now either.

I’m a big believer in solar grid-tie PV for certain areas. Use it to take the edge off the grid during peak air-conditioning hourse, etc.

But I wouldn’t touch any of those “solar stocks” Just look at the P/Es! (Of course, I don’t buy any stock with a P/E over 18, ever, and usually like them lower than that.)

Comment by nhz
2008-01-21 08:23:44

P.S.: regarding the presumed bubble in alternative energy / solar stocks: anyone knows why they have plunged lately? many of them lost 30-40% over the last few months (or weeks), with the current high oil prices that seems a bit odd.

I’m interested in investing in solar (for the longer run, like 5 year horizon), but this is just as difficult as investing in gold(stocks) at the moment …

And what about new companies like nanosolar that claim to make solar (film) panels at 10% of the cost of others? Wouldn’t that hurt the existing companies, or are they all switching to cheaper technologies at the same pace, or is it mostly hype to pocket some more investor money?

Comment by aladinsane
2008-01-21 08:28:43

One bit of climate change that doesn’t get talked about much, is the amazing wind damage, that is occurring in many places.

I wonder about the feasibility of flimsy film panels holding up, in such environments?

Comment by geeah
2008-01-21 08:41:03

stay away nhz, look at what those same stocks gained over the past year. Just another bubble fueled by unrealistic expectations, absurd forecasts and price targets by the analysts and massive speculation.

Keep in mind solar (after 20+ years) is still inefficient, expensive and is currently losing some government subsidies. U.S. subsidies left out of the last energy bill, expire this year I believe, Germany passed legislation to start cutting subsidies 5% a year starting in 2009.

Now Nanosolar is really an interesting company and a possible investment if they do indeed come public, but until it’s something that we can put onto our homes and get immediate ROI (not 10, 15 years) it’s still too expensive compared to traditional energy.

Comment by kckid
2008-01-21 08:55:39

Go Nuclear! Electric cars. 2.5 cents per KWH.


Comment by nhz
2008-01-21 09:13:05

regarding the Go Nuclear:
I live close to the only big Dutch nuclear power plant (also most likely location for the next plant, if it is ever built). Before the reactor was built, government promised the citizens in my area that all electricity meters would be removed from homes because electricity would be SOO cheap that they would provide it for free. That was 35 years ago or so, the meters are still running and the cost is now 10-20x higher than before the construction of the reactor. And that is while most of the additional cost (like long term storage) is paid by the taxpayer and through the electricity bill. I won’t even start talking about the lies they keep telling us regarding environmental performance …

Comment by aladinsane
2008-01-21 09:18:38


You live in Spliffield, Holland?

Comment by WAman
2008-01-21 09:34:38

geeah - oil would be inefficient without the massive government subsidies. As far as solar power being inefficient that is just plain nuts. Once solar is in place on a roof it will deliver 100% of its power generated to the house or business. Any other power generation loses energy as it is transmitted over a distance. The greater the distance the larger drop off in power delivered. Coal power is only about 15% efficient when the power plant is far away. Not to mention all of the carbon dioxide released. Solar is more efficient than coal with the same subsidies that the fossil fuels get.

As far as a stimulus plan what could be better than having the government fund the construction of plants that would make solar power available to all! That could put construction workers back to work within weeks. Community colleges could start training laid off people how to install these products. Lastly have the government give consumer’s tax credits to install these solar products. I could be generating 4.5 kW by late summer from my roof!

Comment by Kime
2008-01-21 09:34:54

“Keep in mind solar (after 20+ years) is still inefficient, expensive and is currently losing some government subsidies.”

I checked out solar energy and gave up on the idea when I saw it took something like 20-40 years to break even on the costs. I don’t even know if the equipment would last that long! The only way to use solar energy efficiently is to be a plant.

Comment by Skip
2008-01-21 09:39:28

nhz if you think that is bad - here in Texas we built a nuclear power plant (Comanche Peak in Glen Rose) that originally was going to cost $800 million USD. The final cost was over $11 billion USD. This of course, was during the time when oil was $10/barrel.Texas consumers will be paying off the cost of this plant for 40 years. Then of course, there will be the cost of disposing of the radioactive building and spent fuel.

Comment by aladinsane
2008-01-21 09:52:25


We Heloced on our house for our array, and were paying so cal edison around $200 a month before, and now are paying $250 a month.

Our electrical grids are powered by oil, and somehow I get the sneaky feeling that oil will be priced at market value soon, not the faux under-pricing we’ve been seeing as of late.

Our net extra cost for going solar, is $600 a year.

(full disclosure: the energy to send this message comes from the Sun)

Comment by nhz
2008-01-21 09:52:48

Skip: yeah, that sounds even worse, unbelievable …

We have something similar going on here with the cost of nuclear waste disposal. It is stored in a bunker at 6 meters below sea level (some 200 meters or so from the dikes that keep the North Sea out). The private company that arranges the storage says this facility is safe enough for semi-permanent storage. To pay for future maintenance, surveillance and processing of the waste, the power company has made a deposit of a few millions that is ‘enough to pay all storage cost for the next 300.000 years’. They do this by assuming a 14% ROI on the deposit for the indefinite future. The nuclear waste will be reprocessed and possibly moved elsewhere in 100 years or so when it is less hot. By that time the small deposit will have magically multiplied by a factor of 500.000 to cover all the costs. And if not, the taxpayer of the region have a small problem, who cares … none of the current politicians will be alive by then. My calculation is that if they cannot get this 14% ROI forever, every taxpayer in the region (just 350.000 citizens) will go bankrupt to pay for this stupid mistake. I wonder how many pension funds here assume 14% ROI forever, that would sure make all pension and government spending a lot easier.

Comment by Rental Watch
2008-01-21 11:40:00


I’ve been following NanoSolar with some interest for a couple of years now. If they can deliver on their promises, it is an exciting company. At a consumer cost of $1 per watt (with still fat margins to NanoSolar), this is truly disruptive compared to current technology. So far, to my understanding though, they are producing primarly for power plants today, and have the first 12 months of production sold out.

The nice thing about their technology is that it can be incorporated into other building materials. I’m excited to see what they produce next…perhaps consumer roofing that doubles as a gigantic solar panel? I’d buy that in a second if the price was $1 per watt. Correct me if my math is wrong, but 1 watt x 8 hours per day producing x 365 days per year = ~3 kilowatt hours per year produced for a $1 investment. What does a kilowatt hour cost in your neck of the woods? $0.10 (where I am, the number is much higher for the last marginal kilowatt)? Excluding the cost of converters, etc., this is a 30% return on investment. Let’s assume you only get 4 good hours per day. It’s still a 15% return.

Now if we just figure out a way to store excess power generation in homes during the day for use at night, and develop some electricity based cars, we’d be in pretty good shape…

Comment by arlingtonva
2008-01-21 12:28:24

FSLR’s ‘thin film’ solar technology and trade secret processes are revolutionary. Unfortunately, the investment world already knows this and had raised the price of their stock to dizzying heights.

Comment by JJ
2008-01-21 17:56:14

Speaking of solar energy, yesterday I was watching some type of show on the Weathern Channel. The lady on the show said, “Even if we could extract 100% of the solar energy reaching the US, we would barely meet our energy needs.” Meanwhile, there was a graphic on the TV showing: Total US Sunlight in a Year: 10^25 joules. Total US Energy Use: 10^20 joules.

I suppose she thought that meant we would need to use 80% of the sunlight as useful energy! :))

You’d think someone on the Weather Channel would understand exponentials…

Comment by nhz
2008-01-22 03:16:35

Rental Watch: thanks for the info. I think ROI for this thin film solar technology in Europe could be better despite less sun, because electricity is far more expensive here. Also, I keep hearing about people in Spain (farmers and other private persons) who invest in solar panels for electricity - probably because of subsidies, but the major factor is that they get a fixed price for returning excess electricity to the grid. Probably returns are even more favorable in very remote areas where hooking up to the grid (or having your own generator) is expensive.

Yes, we need some kind of cheap and reliable storage facility to balance day/night production and use, and hooking up to electric cars to that would be great.

Comment by AnnScott
2008-01-21 06:58:48

Stop repeating historical falsehoods.

The neo-cons with their mindless chants of untruths get so-o-o-o-o boring. They make up list and keep repeating them - trying to rewrite history if it does not conform to what they want to have happen rather than what did happen.

Go get a degree in the history of that period and then discuss the matter - complete with citations to historical documents and data. (Of course the datadoes not support the lie the neo-cons and rightwingers so desperately want to believe.) In the meantime - if you can’t discuss something substantively, spare the rest of us the chanting of Rush-the-drug-addict-lies.

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Comment by Mugsy
2008-01-21 07:08:55

Maybe you need to mellow out. As nobody can validate your bona fides (which you manage to mention on almost all of your posts) maybe you could lighten up with the anti-Limbaugh rhetoric and simply state your case.

The wonderful thing about this blog is that most people check their atttitudes at the door and keep it civil. Regardless of our opinions, the ad hominem attacks are kept at bay. Maybe you should be over at daily koz?

Comment by exeter
2008-01-21 07:17:24

“The neo-cons with their mindless chants of untruths get so-o-o-o-o boring. They make up list and keep repeating them - trying to rewrite history if it does not conform to what they want to have happen rather than what did happen.”

It’s better known as a game called Wheeling Out The Boogeyman. Bill Maher said it best and I qoute: “If you’re sinking or even barely treading water and you think our biggest threats are ’socialized’ medicine, dem dar turrrrists or the gays, then it isn’t the system that keeps you down….. it is YOU that keeps you down.”

Comment by yogurt
2008-01-21 07:18:49

That’ s funny, nobody here gets asked to check their attitudes towards people like Mozillo, Greenspan, Lereah, Yun, etc.

Is there something special about Rush the Junkie that people aren’t allowed to knock him?

Comment by Blue Skye
2008-01-21 07:19:30

“datadoes” in the headlights?

Comment by Satchel
2008-01-21 07:30:40

I’m not so sure, AnnScott. Many policies of FDR IMO were extremely ill-advised, and probably led to the Depression being much worse than it need have been. Just as one for instance, the Agricultural Adjustment Act of 1934 had to have been one of the most foolish acts of governmental idiocy an economy in deep recession could encounter. Paying farmers not to produce food was not smart - and even going so far as to plow under fertile fields in order to prevent cheating, and all this while people were hungry. This was done in the name of protecting farmers’ income. The corollary today (which I fully expect, BTW) will be to pay homebuilders to raze their developments in order to keep equilibrium housing prices from falling too rapidly, thereby keeping people employed in the building trades.

You might find Amity Shlaes’ “The Forgotten Man: A New History of the Great Depression” an interesting read.

Putting aside whether FDR’s policies actually extended (or worsened) the Depression, many people (wrongly) credit FDR’s policies for pulling us OUT of the Great Depression. I strongly believe that it was the exogenous demand shock of WWII that did it. First, through the increased orders from Britain (and related shipping) flowing from the “Lend-Lease” programs from around 1938/39, then through the changeover to massive war production within the US, and finally through the removal of 10 MILLION men (at the peak) from the civilian workforce in the US to build our overseas armies, raising equilibrium wage prices for those men (and women - who entered the workforce in size for the first time) left behind.

As I am sure you know, wage pressure became so intense that FDR institited wage controls, another foolish attempt to get in the way of market forces (that attempt led to the beginning of the mess we now have in health care, where employers who were unable to raise wages to attract workers, instead offered “free” health insurance benefits).

P.S. - I do have a degree in US history :) (But it was from one of the Ivies, so beware - LOL! - maybe I am still rebelling against the liberal orthodoxy of the institution even now!)

Comment by Beer and Cigar Guy
2008-01-21 07:37:13

Is there something special about Rush the Junkie that people aren’t allowed to knock him?

I thought that most liberals considered addiction a “disease” and its “victims” worthy of pity, understanding and government support? Is that only true of Democratic addicts?

Comment by exeter
2008-01-21 07:50:21

Actually BCGuy, PEOPLE consider addiction an illness of the spiritual variety. You know…. one that requires compassion so clearly absent from Rash Limbaughs character…….. But that same compassion mysteriously emerged when he himself turned out to be a junkie in trouble with the law. He begged for the very mercy and compassion that he suggested should be withheld from others.

Isn’t live strange.

Comment by Professor Bear
2008-01-21 07:55:07

What did Rush himself say we should do with junkies (before he joined their ranks, that is)?

Comment by cynicalgirl
2008-01-21 08:12:13

Professor Bear - He wanted to “send them down the river”. Also, he fought the release of his medical records (which I happen to agree with) when they were going after him for doctor shopping. At the same time, he said he didn’t believe Jessica Lynch’s claim that she wasn’t raped, and they should release her medical records to prove it.


Comment by reuven
2008-01-21 08:27:05

You might find Amity Shlaes’ “The Forgotten Man: A New History of the Great Depression” an interesting read.

I read this book a couple of months ago, and can highly recommend it! It’ll prepare you for the “Greater Depression” that’s just around the corner.

Comment by txchick57
2008-01-21 08:29:05

I’m a huge Rush fan and listener since the early 1990s. I don’t agree with a lot of what he says but it is entertaining and thought provoking.

Comment by spike66
2008-01-21 08:32:27

informative post, many thanks. Also, thanks for the Shales rec…I’m looking for Depression studies to read. OT, but I wish Molly Ivins and Mike Royko were around and writing today, how I miss them both.

Comment by Sammy Schadenfreude
2008-01-21 08:36:30

Rush can be entertaining and thought provoking, but he’s also a Judas Goat for the “monied interests” and corporatists who have co-opted both political parties and are destroying the productive middle and working classes in this country.

Comment by Professor Bear
2008-01-21 08:43:59

Despite the fact that I find Rush revolting on a personal level, I applaud his (and other shock jocks’) collective efforts to exercise their First Amendment rights. A lack of exercise leads to flab.

Comment by Sammy Schadenfreude
2008-01-21 08:46:13

Wait a minute - I thought the First Ammendment only applied to porn.

Comment by Beer and Cigar Guy
2008-01-21 08:52:44


“He begged for the very mercy and compassion that he suggested should be withheld from others.”

Exactly. And now there are people who profess to embrace “mercy and compassion” withholding those same things from him? There seems to be a lack of consistancy in a lot of people’s ideologies, including Limbaugh and liberals. Life is strange, isn’t it?

Comment by aladinsane
2008-01-21 08:55:13

We like to roadtrip, and driving across middle America, quite often the only radio reception one can receive, is that of rush, sean and others of their ilk.

And their whole game plan is lifted from little Joe Goebbels:

“If you tell a lie big enough and keep repeating it, people will eventually come to believe it. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State.”

Comment by RMB
2008-01-21 09:08:21

I would highly recommend Dependent on D.C. by Twight, for anyone who wants to see how these programs were passed and what the people actually wanted at the time. Most of the gov’t giveaway programs were not wanted by the population, they were forced down the peoples throat by FDR in order to grab more power for the govt.

Oh how this country has change in just 60 years. Go watch “Cinderella man” and then compare and contrast that to the way people live in the inner cities today. Any economic shock on par with the depression will lead to total dictatorship in this country. The people can no longer handle hardship, they have become infants their entire lives.

Comment by exeter
2008-01-21 09:14:05

“And now there are people who profess to embrace “mercy and compassion” withholding those same things from him? There seems to be a lack of consistancy in a lot of people’s ideologies, including Limbaugh and liberals. Life is strange, isn’t it?”

Did he not go to rehab? Did he not get off the criminal charges without jailtime? Did he not return to his old stock in trade?

Who withheld the compassion and mercy from old RottenRush? The boogeyman librullls?

Comment by Beer and Cigar Guy
2008-01-21 09:31:51

“Who withheld the compassion and mercy from old RottenRush? The boogeyman librullls?”

It looks like you did, for one. Or are your comments consistent with your definition ‘compassionate and merciful’? When it comes to venom and intolerance, it looks like you could sell Rush some of your excess inventory. Remember, “we become what we loathe”.

Comment by exeter
2008-01-21 09:39:28

You appear to be confusing compassion and mercy with forgiveness. Further to the point, I had nothing to do with his crimes or his recovery. I wasn’t the judge, prosecutor or rehab caseworker. So now you reserve Rush-type judgement for me because I point out his hypocrisy? My observation of his clear cut case of extreme hypocrisy has little to do with venom and intolerance but your veiled effort to defend Rush is quite obvious and rather humorous.

Comment by not a gator
2008-01-21 10:23:05

Rush is a masterful entertainer. He’s also an outrageous liar. He kissed the Blarney Stone (just like Bill Clinton).

I can enjoy Rush for about 5 minutes. By this time he’s usually said something so mendacious that my (normally very low) blood pressure skyrockets and I have to change the channel.

Air America was an attempt to do liberal radio, Rush style. The problem is, a lot of liberals–or those who had called themselves that until Air America convinced them otherwise–are disgusted by partisanship, mendacity, and bullying. What worked so well for the Angry White Male was an utter flop for the intelligentsia and the Grand Coalition. I grew up on boring, wonky, CIVIL policy debates … the tiger doesn’t change its stripes.

I respect Rush for being a radio genius. Few personalities on the air really understand how to entertain and delight on the radio any more. Even if he is a lying pig.

PS: Al Franken, go home. You aren’t funny … and nobody likes you … you are a loser … just suck it up.

Comment by exeter
2008-01-21 10:42:11

The fact that he’s a masterful distortionist but mostly just a plain old lying blowhard should be enough to air a disclaimer at the beginning of his show. Much of what people take as news is merely commentary without any hard evidence to support their wild claims.

I think Al Franken is hilarious very much in the same way Bill Maher is.

Comment by hd74man
2008-01-21 14:20:12

RE: Oh how this country has change in just 60 years. Go watch “Cinderella man” and then compare and contrast that to the way people live in the inner cities today. Any economic shock on par with the depression will lead to total dictatorship in this country. The people can no longer handle hardship, they have become infants their entire lives.


Comment by Professor Bear
2008-01-21 07:41:51

“new deal failed”

Looking on the bright side of the picture, who ever said this is the last stimulus that will be employed in this cycle. (In fact, hasn’t there been a lot of monetary stimulus already since last August?)

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Comment by CarrieAnn
2008-01-21 07:51:03

“the new deal failed in1937″

That probably depends on perspective. The men who could work and feed their families probably wouldn’t say that.


Also didn’t taking care of the indigent prevent communist/more heavily socialist ideas from gaining acceptance? I was under the impression that the real goals were preventing anarchy and saving capitalism.

“Mission from Moscow: American Communism in the 1930s”

Capitalism certainly did live on.

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Comment by CarrieAnn
2008-01-21 08:04:28

I know its only anecdotal and not the result of any degree but the stories I’ve heard from my older relatives is that they knew people who wouldn’t have had an income if it weren’t for these programs. I guess those stories left a deep impression on me.

Comment by Mikey(2)
2008-01-21 08:46:00

That probably depends on perspective.

Exactly, What good is a “good economy” when you’ve been laid off and your job has, e.g., reassigned to some foreign country? And how bad is a “bad economy” when you have a job and are able to pay your bills? What good is a prosperous nation when its people are living in poverty?

Comment by awaiting wipeout
2008-01-21 09:01:48

Paying your bills is one thing. Watching your essentials like food, energy, and medical inflate to barely getting by eventually is another. Salaries aren’t keeping up. Welcome to the NAU (i.e. all these God awful trade agreements), the gateway to the NWO.

Comment by CA renter
2008-01-22 00:00:49

THANK YOU, Carrie Ann!

My dad grew up during the GD, as did a number of other relatives and family friends.

I’ve never heard any of them put down these programs. Quite the contrary, they were **extremely grateful** that these programs existed and those who did not live on farms said they would not have been able to make it without those “socialist” programs.

Comment by aladinsane
2008-01-21 06:43:36

Into the valley of debt

Rode the $800

Comment by flatffplan
2008-01-21 07:28:56

keep em coming
charge of the lite brigade was a multicultural effort

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Comment by aladinsane
2008-01-21 07:50:59

Ours was not to re-fi

Ours was but to shop or die

Comment by jckirlan
2008-01-21 21:06:27

oh thats good aladinsane. very wity.

Comment by ACH
2008-01-21 07:31:22

Awww! That’s just wrong! Aladdin.

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Comment by ozajh
2008-01-21 07:51:35

Bills to the right of them,
Bills to the left of them,
Resets in front of them,
Could they spend onward…

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Comment by 45north
2008-01-21 08:28:43

Into the valley of debt
Rode the 800

good one!

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Comment by SWAMI_E
2008-01-21 11:00:19

Instead of the government giving everybody $800 I think they should give us all $800,000. Then we would all be rich and nobody would be upside down on their mortgages anymore.

Comment by aladinsane
2008-01-21 12:11:21

We need this more than ever…


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Comment by motepug
2008-01-21 07:15:14

Ben Bernanke is doing exactly as he said he would, dropping money out of helicopters. And throwing the dollar under the bus, simply amazing. I would suggest spending the $800 on gold or silver coins, pretty little trinkets.

Comment by nhz
2008-01-21 08:26:26

it works like magic!

the Dutch TV news is blaming todays stock exchange crash (-7% around lunch time, recovered a bit now) first of all on the suggestion that investors did not like the latest Bush/Bernanke rescue plan :)

Comment by aladinsane
2008-01-21 08:44:56

If only you had a MLK holiday, you could have put off the inevitable, if only for a day…

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Comment by nhz
2008-01-21 08:55:13

I think they are hoping to make a spike bottom in Europe today and then continue with the bull like nothing happened; but I don’t think it is going to be as easy as it was over the last six years, even the small investors (that are still very bullish over here) could get a bit scared after todays plunge.

Comment by WAman
2008-01-21 10:01:36

Yes, Yes - silver coins. I am about to start selling on Ebay again!

Comment by AdamCO
2008-01-21 10:40:57

doesn’t the 5% you have to pay in various commissions wipe out a lot of the gains?

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Comment by AK-LA
2008-01-21 14:30:54

Let us know when you do. We’re in the market for oh…, about $1600 worth.

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Comment by Pondering the Mess
2008-01-21 10:36:11

Indeed: Helicopter Phase 1 has begun.

After Phase 1 fails, we’ll move on to Phase 2: negative Fed rate, where you simply won’t be allowed to save money. Savers will become “hoarers” who are “bad for the economy because they refuse to embrace debt like everyone else.”

Somewhere along the line, Phase 3 will begin, the removal of gold from the hands of the people and elimination of any access to secure investments with half-way decent returns. Your new choices will be: failing stocks or failing mortgage backed securities.

The dollar will of course tank during all this, but we’ll never, EVER enter a Recession, Depression, Panic, etc. - not officially.

Comment by nhz
2008-01-21 11:14:27

phase 2 will be a monthly or yearly tax on savings accounts, producing a negative nominal rate on savings (of course the real rate went negative long ago if you use realistic CPI numbers). Bernanke has mentioned the concept several times already.

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Comment by Mole Man
2008-01-21 15:48:34

These speculations don’t make any sense. The Federal Reserve has always encouraged savings. There is a lot of information provided by the Fed about why saving is a positive thing. It is also the case that some of the strongest regulations and insurance available are for savings accounts. The dollar is falling for many reasons, but there is no plot involving the Fed to punish savers.

Comment by fubarrio
2008-01-21 17:50:59

you’re wrong….it’s called inflation

Comment by Professor Bear
2008-01-21 18:15:22

“The Federal Reserve has always encouraged savings.”

The Fed apparently accepts no culpability for discouraging savings. If they go so far as to claim they encourage savings, then I would suggest they go back to the drawing board.

K.C. Fed head puts happy spin on tornado
By Al Lewis
The Denver Post
Article Last Updated: 01/18/2008 02:44:59 AM MST

“Consumer debt as a percent of (the nation’s gross domestic product) . . . and as a percent of income for the consumer . . . is as high as it’s been,” he said.

We also have a negative personal-savings rate. In other words, Americans are mostly just saving credit-card statements.

This is perhaps the most dismal sign of all since consumers are responsible for more than 70 percent of the nation’s economic activity. And what began as a rash of subprime- mortgage defaults is swiftly expanding into rising credit-card and auto-loan delinquencies.

“The debt that the consumer is carrying right now can be serviced,” said Hoenig. “But there is still an absence of savings. Therefore, the cost of capital . . . will increase . . . over time. And as the cost of capital increases, our ability to bring investment forward is decreased.”


Comment by Professor Bear
2008-01-21 21:32:16

Will Economy Lose Support From Abroad?
By Scott Patterson
Word Count: 523

As the economy reels from the busted housing bubble, questions loom about whether overseas investors’ hunger for U.S. assets will weaken.

For years, the U.S. has run a steep trade deficit with the rest of the world. The so-called current-account balance, broadly speaking, measures the difference between goods and services imported and exported.

The scale has lurched toward the import side of the equation for the U.S., which means the country has been consuming more than it has been saving. Foreign purchases of U.S. assets such as Treasurys have helped finance that spending.


Comment by Professor Bear
2008-01-21 07:44:05

The economy
Stampede to stimulus
Jan 17th 2008 | WASHINGTON, DC
From The Economist print edition
Politicians want to give the economy a boost. They’re likely to make a hash of it


Comment by wmbz
Comment by Roger H
2008-01-21 07:39:28

Thanks for posting this article.

I agree - the tax rebate checks are a joke. First off, many will go people / areas that are not affected by the housing bubble crisis. For example, in West Texas, the economy is booming thanks to oil production. Giving these people extra money is not really appropriate. The same is true with rich people - they’re doing great, why increase the national debt so, they can buy a new handbag.

Secondly, as mentioned in the article, many people, including myself would just put the money in the bank or pay off credit cards. Some would send it overseas to relatives. This is wasted ammunition.

It’s a pathetic idea and what is really sad is that it came from people who are supposed to be out great economic minds - obviously, an embarrassment to our national educational system.

Comment by aladinsane
2008-01-21 08:06:16

We were in northern NM last year and drove through Farmington, whose livelihood is all based upon oil…

Why was there 30+ pawn shops along the main drag, in these “prosperous” times of oil?

Comment by krazy bill
2008-01-21 11:23:52

Farmington borders the Navajo Indian reservation hence all the pawn shops. Pawn shops are not allowed on the rez.

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Comment by Professor Bear
2008-01-21 08:41:25

“great economic minds”

One should refer to the consulting gigs which compensate the ‘great economic minds’ advocating the stimulus package in order to understand their recommendations.

Comment by Professor Bear
2008-01-21 08:15:02

“People like Ed here should have been responsible and saved their money…”


Comment by dennisd
2008-01-21 09:01:22

“The main benefit of a tax rebate would seem to be political — giving politicians a way of appearing to be doing something about the nation’s economic problems that is superficially plausible.”

Some things never change.

Comment by frankie
2008-01-21 04:27:28


Catch a falling knife, never let it get away,
put it in your foot, be a proper muppet.

I think I may have read something similar about the US market but it’s different in the UK

Affordability improves

Rightmove said there were some signs that the market was improving in early January despite the fall in asking prices.

“Some homebuyers are now able to find properties that have fallen into their affordability zone, and are bagging what they see as bargains against previous prices,” said Miles Shipside, commercial director of Rightmove.

“Some properties have had their prices dropped by 10% or more and are now within reach, satisfying some of the pent-up demand from previous disenfranchised buyers.”

Comment by azrenter
2008-01-21 04:29:49

OT. tuesday is going to be a bad day for stocks.

Comment by ozajh
2008-01-21 05:23:33

Down under we’ve had 11 ‘bad day for stocks’ in a row, and I’m not hopeful about tomorrow given what’s going on in Europe. :(

Comment by txchick57
2008-01-21 06:31:51

nah, will probably get what the market needs, big gap down and flush out then recovery.

Comment by cougar91
2008-01-21 08:13:07

Tip-toeing into financials on Tue… anyone? MER and MS maybe.

Comment by txchick57
2008-01-21 08:18:48

Biotech has good r/s at the moment.

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Comment by FB wants a do over
2008-01-21 08:00:54

Earnings call -
BAC on deck for Tuesday.
COF on deck for Wednesday.

Comment by david cee
2008-01-21 10:38:19

Gold below $870 today. Do I smell another bubble in the making?
Quite a correction in less than a month.

Got popcorn?

Comment by nhz
2008-01-21 11:20:08

quite a correction? it’s near $ 860 now, down 5% from its all time high from just a moment ago. And 5%, thats close to the daily fluctuations for gold lately.

Some EU stock exchanges are down 25-30% from their highs of last year (around 50x the daily fluctuations of last year), that sounds more like a correction to me.

Comment by sagesse
2008-01-21 04:33:13

Morning, not that I am the first one up, it’s evening in Asia.

From Spiegel online: Dax in free fall. It lost five percent in three hours and 1/8th since three weeks. “Biggest daily loss that was ever seen.” The article quotes insiders as saying: “Massive sellout”. “No one trusts the banks”. “The scepticism regarding financial stocks is justified.” “Sense of panic”. “The US recession should have been priced in already”.

Comment by Huck
2008-01-21 05:17:15

It lost more than 7% in four hours.

Comment by sartre
2008-01-21 05:45:17

Indian stock market has its biggest fall ever dropping over 7%. Take a look at US futures, methinks it will be interesting tomorrow.

Comment by ozajh
2008-01-21 06:27:59

Dow 11765? NAS100 1788? Holy Toledo!! That is not currently a link for the faint of heart.

Wonder what the talking heads on CNBC are going to be saying this time tomorrow if those numbers haven’t changed or have gotten worse. Cramer should be fun to watch. Not to mention Kudlow.

Prediction: Txchick’s not going to have a lot of free time for posting tomorrow.

Comment by txchick57
2008-01-21 06:44:49

Actually, I won’t do anything. I have a medium long position already and won’t add until a bottom is in. This is what the market needs. Every day there has been a gap up which was immediately shot down. This is better.

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Comment by Professor Bear
2008-01-21 08:01:17

TxChick — I am counting on you to let us know when a market bottom is in :-)

Comment by Bill in Carolina
2008-01-21 06:48:03

Good entry point at 4 PM tomorrow? My 401k “powder” has been dry on the sidelines for too long now.

What’cha think?

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Comment by txchick57
2008-01-21 07:48:45

I’d say 9 a.m. before 4 but if you’re buying mutual funds, you get the closing price anyway.

Comment by Professor Bear
2008-01-21 08:18:34

Don’t you guys think a lot of “dry powder” is waiting on the sidelines to buoy the U.S. stock market? Why do you think this time is different? I frankly would be surprised, though not shocked, if the stock market has another down day tomorrow.

Comment by txchick57
2008-01-21 08:24:40

No, I think cash levels are pretty low and short intensity is also low (Erlanger) which has probably exacerbated this decline. Still, I’d also be surprised if the markets don’t gap down and recover tomorrow.

Comment by WAman
2008-01-21 09:51:34

This is no time to play around in the market. Stocks will be going much, much lower. The bottom will not be reached until company earnings have stopped falling and start rising again. I think we will see Dow 10,000 before Dow 13,000.

Comment by Rental Watch
2008-01-21 12:04:29

WAman, I generally agree. I moved to cash over the past several months, and as of today (other than a single, small 401k (representing less than 0.5% of my NW), I am in cash, and cash-flow producing real estate. Until the next housing related impact begins to be felt from Option ARM adjustments (later this year), I will stay in cash.

Consumer spending is going to bring down corporate earnings, which will bring down public stocks pretty much everywhere. Not to be a doom-and-gloomer, but as I think Mish said, my goal is to lose as little as possible as this mess unravels. While I could speculate on gold, keeping my money in cash seems safest to me.

Comment by tj & the bear
2008-01-21 15:23:58


Yes, they’ll go lower, but they *never* go in a straight line.

Comment by Max
2008-01-21 09:35:37

S&P is awesome, a -4.3% to 1267. They are probably overreacting, but it shows how scared everybody is.

Comment by Professor Bear
2008-01-21 07:58:43

Sounds like fundamental reforms are on the way in the global banking sector.

Comment by nhz
2008-01-21 08:31:06

yes, even Dutch banks (you know, from tulip bubble country where the economy is extremely resilient and there is NO housing bubble) are now going to be priced more realistically on the stock exchange. Financial ING (from ING Direct fame in the US, check the stock value of the parent company from time to time because they are leveraged to the max in RE) lost 11% in a few hours. More to come for sure (although probably not in the next 1-2 months).

Comment by bill in Maryland
2008-01-21 04:58:12


Today is Monday. The “donation bomb” (or whatever it is called) is today - to make another big additional source of campaign funds for Ron Paul for President.

I saw a young woman wearing a “Who is Ron Paul” t-shirt on the airplane from Phoenix to Baltimore yesterday. I hardly ever see anyone wearing a campaign slogan on their shirts. No one is that supportive of the mainstream candidates. Ron Paul supporters have the passion that ClintObaMitThoMcCainHuckEdwards supporters lack.

Comment by phxis2hot
2008-01-21 05:18:55

OMG Bill…a blonde…and the shirt was an off green…right? I saw her too. I was going from PHX to CLT.

Comment by bill in Maryland
2008-01-21 06:03:27

Yo! She is indeed a blond - hot looking. (and inspired me). Umm…I had a direct flight to baltimore. Did you go from BWI to CLT? If you were on my plane you forgot the shirt color (kind of easy to forget details). It was either pink or orange and the letters were green. I did talk with her very briefly as we boarded in Phoenix. She mentioned the 14% second place Nevada result that Ron Paul got.

Comment by phxis2hot
2008-01-21 09:23:25

Oh…we were two ships passing in the A concourse. I had just gotten off the inbound LAX flight that parked at A5 and was headed to A30 for the CLT flight. I just saw this nice lookin thing stollin’ the other way and pulling the space-time continuum with her. The letters were hard to read and they looked like they were purposefully faded. She was probably 5′9″ or so, cup size B. Perfect. Nice way to start the day. Wish I were on the BWI flight. Dang, it’s a small world!

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Comment by bill in Maryland
2008-01-21 09:40:15

That sounds about right. My flight was boarding at A10. You and I are very observant of beutiful young things wearing Ron Paul t-shirts!

Comment by John
2008-01-21 11:57:42

I know my wife’s Ron Paul t-shirt seems to inspire hundreds of men to stare at her chest. I hope it at least creates a few converts.

I voted for the first time in a primary yesterday. It took nearly 20 years for a non-independent candidate to inspire me.

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Comment by Earl The Vagabond
2008-01-21 16:48:03

Nono.. We’re all just slow readers.. hehe

Comment by palmetto
2008-01-21 05:49:20

“Ron Paul supporters have the passion that ClintObaMitThoMcCainHuckEdwards supporters lack.”

Amen, brothah! I see plenty of Ron Paul bumper stickers and even yard signs, when I don’t see the same for other candidates. I think it is a little weird he’s not showing up more in the polls and in the voting when you see this kind of support.

Comment by JMS
2008-01-21 07:25:39

I heard about Ron Paul through a youtube link I got about 3 months ago. Since then I have been telling everyone I know about him. One thing that is crazy is that people listen to me! People are sick of the typical politician who is in the race for the fame or career advancement. I’m rather young (26) and I think this country has derailed and we are headed to our doom. Most people my age have a similar pessimistic view. Maybe its just my circle of friends. This country needs change and not the hillary/obama kind.

On a side note. I have voted every election since I have been 18. I have never been inspired to promote a campaign or donate money before until I heard about Ron Paul. Ron Paul is the first candidate (hopefully not the last) to get me motivated to try to do my part.

Comment by Pondering the Mess
2008-01-21 10:43:20

He isn’t allowed to show up - the mainstream media would do anything to make him go away. The Truth hurts!

Comment by Sammy Schadenfreude
2008-01-21 08:44:41

Wait a minute. Ann Scott, in one of her numerous tirades, assured me that no women support Ron Paul. She’s also accused me of slapping the wenches around, while keeping company with big-haired trailor trash, but that’s another story.

By the way, Ann, in High School I used to work at a restaurant with “big haired trailor trash.” I’d trust their integrity over any lawyer’s, any day.

Comment by Sammy Schadenfreude
2008-01-21 08:50:01


This goes out to you, Ann.

Comment by NeilT
2008-01-21 08:54:36

In my personal experience, lawyers are scum. Your mileage may vary, but I try to keep away from them. I’d try to settle or even give up my claim rather than get a lawyer involved.

Comment by aladinsane
2008-01-21 09:13:35

Lawyers in our country, tend to not know the excesses they have caused through their tort-sure methods…

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Comment by phillygal
2008-01-21 09:33:19

I must be the fortunate one who has had a longtime great experience with an attorney who has evolved into being considered a family friend.

However, I do have numerous acquaintances who have been scalped in one way shape or form by attorney-generated malfeasance or just plain incompetence.

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Comment by wolfgirl
2008-01-21 09:43:15

I’m certain there are honest, ethical lawyers. I just don’t think my brother is one of them.

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Comment by txchick57
2008-01-21 10:13:53

Not all lawyers are litigators. My husband does patents and trademarks.

Comment by aladinsane
2008-01-21 10:16:46

Not all lawyers are bad news, just most of them.

Comment by Sammy Schadenfreude
2008-01-21 10:38:53

I have the utmost respect for lawyers who conscientiously use their legal training and knowledge of the law to protect wronged clients - especially those who lack the means to pay. I have total contempt for lawyers who scheme to get the most possible billable hours out of clients who are already in distress, and craft their defense strategy based on profit, not justice.

Comment by Rental Watch
2008-01-21 12:23:31

In my experience (mainly with business counsel), a good business attorney is worth every penny–for they generally help you avoid litigation.

Litigation attorneys are, by their very nature, nasty. If anyone has been through a legal fight, they are brutal–you want the toughest, smartest guy on your side.

But, there is a difference between tough and unethical. I have been fortunate and experienced very little unethical behavior from the attorneys with which I’ve had dealings, but must say, I can see how if your experience is with an unethical attorney, you would have a pretty poor view of the whole profession.

The problem is this, very few stories come out about the skilled business attorney who helped you navigate a complex situation to avoid litigation and get to settlement quickly. You only hear stories about overbilling, conflict of interest ignoring, mean-spirited, ambulance-chasing attorneys, which paint the entire profession in a bad light.

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Comment by aladinsane
2008-01-21 12:50:05

Our last visit to New Zealand, we para-sailed, climbed glaciers, rode jetboats up and down class 3-4 rivers, dove off of diving boards into swimming pools @ motels, and some of the pools had slides as well.

And never once signed a waiver of any sort.

Lawyers are lonely, there.

Comment by Anon In DC
2008-01-21 09:42:11

Saw a bunch of Ron Paul sign here on Capitol Hill over the weekend.

Comment by Sammy Schadenfreude
2008-01-21 10:08:01

When the sheeple start to realize that Ron Paul is the ONLY candidate who is speaking truth to power, and the only candidate to warn of the ruinous effects of the “Wall of (counterfeit) Money” being gushed out by the Fed, he’s going to pick up a lot more popular support.

Comment by aladinsane
2008-01-21 12:36:12

This presidential race is setting up nicely, for a dark horse to come from far back and win going away.

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Comment by fubarrio
2008-01-21 18:09:58

unfortunately it already happened al’…his name is john mccain

Comment by mrktMaven FL
2008-01-21 05:13:51

I hope you were prepared for the stock market downward adjustment.

Comment by John Fleming
Comment by spike66
2008-01-21 05:18:06

Europe Enters Bear Market, Asian Stocks Slide in Global Rout
Jan. 21 (Bloomberg) — Global stocks tumbled, led by banks and mining companies, as concern that the U.S. will fall into a recession caused equity benchmarks in Hong Kong, India and Germany to drop the most in more than three years.
Europe’s Dow Jones Stoxx 600 Index extended its decline from a June high to more than 20 percent, the common definition of a bear market, as Allianz SE and BNP Paribas SA slid. Hong Kong’s Hang Seng Index fell the most since Sept. 11, 2001, after BNP Paribas said Bank of China Ltd. may write down overseas securities by $4.8 billion because of losses from U.S. subprime mortgages.”

Comment by nhz
2008-01-21 08:32:30

part of Europe was already more than 20% down from the top before todays crash started.

Comment by spike66
2008-01-21 05:29:37

US Recession Fears Sink Global Markets

(’TOKYO (AP) — Asian and European stock markets plunged Monday following declines on Wall Street last week amid investor pessimism over the U.S. governments stimulus plan to prevent a recession.
India’s benchmark stock index tumbled 7.4 percent, while Hong Kong’s blue-chip Hang Seng index plummeted 5.5 percent to 23,818.86, its biggest percentage drop since the Sept. 11, 2001, terror attacks.
Investors dumped shares because they were skeptical that an economic stimulus plan President Bush announced Friday would shore up the economy, which has been battered by housing and credit problems. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.”

Comment by palmetto
2008-01-21 06:24:38

“$145 billion worth of tax relief to encourage consumer spending.”

Sheesh. I think we need a consumer spending “strike”. Everybody buy as little as they possibly can. Save what you can.

Comment by michael
2008-01-21 07:26:29

was listening to “money talk” radio show yesterday. they were talking about california…budget shortfallss etc.

the host referred to the negative impact a tax increase would have on california consumers…not citizens…consumers.

Comment by awaiting wipeout
2008-01-21 07:39:20

Was that Flanigan (who I can stomach), or was that Brinker?

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Comment by michael
2008-01-21 07:55:07

i can’t remember. i just know i have heard him before and he is not that bad.

Comment by awaiting wipeout
2008-01-21 09:40:31

Brinker was good back in the dot com bubble (he called it right,we got out with profit) but he sure back tracks and mis-informs. He pumped the housing bubble, belittles smart informed callers, and loves Wall St. He could care less about Main St. I can’t stand him.

I think Peter Schiff and Jim Puplava are on the right track.

Comment by kckid
2008-01-21 08:25:22

Brinker said the rebate should only go to the people who will spend it. I would like to declare if they give me the rebate(actually my money before it was confiscated)) I will spend it. Unfortunately, it will be means tested and will not be a rebate but a hand out to garner votes this election cycle.

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Comment by geeah
2008-01-21 07:33:32

I guess i’ve been on strike for almost 2 years then.

Comment by oxide
2008-01-21 07:43:54

I think we need a consumer spending “strike”.

We already had one, just after 9/11 when everybody elected to stay home with their families. Service workers were laid off within weeks. How many small businesses won’t survive even a few weeks of low revenue..retail, car dealerships, casinos, movie theatres, etc?

Comment by packman
2008-01-21 05:32:35

Here’s a question - regarding Bush’s $145 stimulus package - and in general regarding the tremendous amount of spending increases going in in Washington - where the heck is this money coming from?

Seriously - there’s something that doesn’t make sense to me, and I’m looking for someone to fill me in. The Federal Government of course is deep in debt, with the debt greatly increasing all the time. So they have to borrow money - lots and lots of money - from somewhere, right? Isn’t that “somewhere” primarily treasuries?

Treasury yields have been going through the floor the past few months. 10-year is 3.6%, 30 year is 4.3%, 2-year is 3.25% etc. etc. These rates are barely enough to even keep up with official inflation, let alone real inflation. The dollar is tanking big-time, with all indications it’ll just get worse due to continued rate cuts. In general - treasuries seem to be a *horrible* investment right now.

So my questions are:

- Who the heck are these people buying all these treasuries? Are there really that many clueless people and/or countries out there?

- Surely the demand for these treasuries must be going through the floor. If so - then shouldn’t the price be going through the floor as well (and therefore the yield through the roof)?

What am I missing?

Comment by Al
2008-01-21 06:03:27

Foreign countries (China +) have a whole bunch of $US and nothing much better to do with them. My question, which investment is worse today, US treasuries or US banks?

Comment by palmetto
2008-01-21 06:43:45

“Foreign countries (China +) have a whole bunch of $US and nothing much better to do with them.”

Here’s a concept: how about China uses that money to detoxify the country, put in place a clean energy infrastructure, reward its citizens, etc. In other words, do what we should have been doing here in the US. Now, if that happened, then I’d believe China was really going places. But I was talking to a fellow the other day who just got back from China. He said you just about needed a HazMat suit to survive there.

Comment by Al
2008-01-21 07:11:06

The Chineese gov’t and business elites seem to be intent on playing catch up on the road to social and environmental purgatory.

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Comment by aladinsane
2008-01-21 07:27:24

They want to be us, circa 1962.

Leave it to Beijing, not starring Jerry Mathers.

Comment by awaiting wipeout
2008-01-21 07:37:13


I think the UCI (Irvine) Professor of Econ. wrote a great book on the Chinese economy and their environment. Also, he did/is doing great China current event updates on google video.

It is a ’small world’ of toxic air and water.

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Comment by Bill
2008-01-21 07:27:27

Beginning last Nov and until two weeks ago, I was selling mutual equity funds in retirement accounts and buying money market and bond funds. Trust me, gaining or losing a percent or two on bonds feels a lot better than being long equities.

Comment by FB wants a do over
2008-01-21 08:17:20

Similiar situation here. Couldn’t see the markets holding up after Jan 1st so we converted all retirement holdings to money markets / bond funds. Very thankful I had my eye on the ball. Timing the re-entry will be another story.

Comment by txchick57
2008-01-21 08:22:01

I must have posted 50 times in Nov and Dec that I expected a big dump after the first of the year. Didn’t expect it to be THIS big obviously.

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Comment by tresho
2008-01-21 08:24:40

I don’t have your stock acumen, but I am expecting THIS is be even worse than it looks so far.

Comment by RoundSparrow
2008-01-21 09:42:36

Could be a lot bigger… give it a few weeks.

Comment by VirginiaTechDan
2008-01-21 07:38:19

The Federal Reserve buys them with “borrowed” money and thus increases the money supply and drives down the dollar.

Comment by BubbleViewer
2008-01-21 07:38:51

You don’t understand how the Mandrake Mechanism works, as explained by G. Edward Griffin in “Creature from Jekyll Island.”
The Treasury Dept creates fancy pieces of paper, with ornate lettering, very official looking. These fancy pieces of paper with ornate lettering are sometimes called “Treasury Bonds.” They take these fancy pieces of paper, or Bonds, to the Federal Reserve. The Federal Reserve gives the Treasury Department a check in exchange for the Bond. This check is not debited against any account. The money is simply created out of thin air, on the spot. The Bond now becomes a “reserve.” The government takes the check and deposits it into its account, as if it was “real money” and begins paying govt. employees, contractors, weapons makers (especially weapons makers), etc.
The whole thing is a scam from the get-go.
Just as the “insurance” offered to bond holders by AMBAC and MBIA was always a scam.
Who cares what the interest rate is. It’s all funny money, counterfeit.
Were you not aware of that?

Comment by awaiting wipeout
2008-01-21 07:50:02

Great book. Ed Griffin is an intelligent man, who I have the utmost respect for. I heard one of his speeches, and he had my undivided attention.

That book truly was a 180 from my government endorsed textbook.

Comment by Professor Bear
2008-01-21 08:59:20

Gold is counterfeit, too. You cannot eat, live in, play in, or get medical or education services from a yellow piece of medal. The whole idea that gold has value is the oldest scam in the history of mankind.

Comment by Tutto Incognito
2008-01-21 09:21:53

True, but it is the oldest scam known to Man. Oldest gold worn by some types of priests is around 9,000 years old. At least that is a proven scam. Never heard of someone going to buy bread with pounds of gold in a cart…

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Comment by Tutto Incognito
2008-01-21 11:47:56

well, gold does not make anything and it is a terrible investment if you can even call it that. But when everyone else is losing money and you are getting richer compared to others because of your gold, then maybe it is worth it…
Come on people, a fancy suite is worth an ounze of gold. Can’t you see that it is the only asset that seems like it is underpriced…

Comment by Faster Pussycat, Sell Sell
2008-01-21 09:30:38

Like DUH, you can’t eat gold but cars, houses and currency can’t perform surgery either so this is a completely fatuous argument, and not terribly illustrative either.

Both are ultimately claims against the future productivity whether it be of an immediate consumable like surgery, or the future produce of a farmer, or the future manufacture of something you want, a car or a house.

The only interesting question is how do you store your current productivity, and transfer it across time.

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Comment by watcher
2008-01-21 10:05:53

Here, here. Who eats rectangular paper?

Comment by BubbleViewer
2008-01-21 10:13:53

Hey, no argument here. In fact, “money” is nothing but a web of illusion designed to control us, and sap our energy, a la the Matrix.
Gold is not a panacea. But it is what it is. An ounce of gold is an ounce of gold. Nothing more, nothing less.
What is a dollar?

Comment by aladinsane
2008-01-21 10:30:16


Cultures all across this orb, all gravitated towards Gold as being the ne plus ultra financially.

The ones that didn’t, used Tally Sticks, Yap Stones, Wampum and other odd and curious forms of money.

Got Wampum?

Comment by Faster Pussycat, Sell Sell
2008-01-21 10:59:09

No, cultures in the trading sphere (of the ancient world) all gravitated towards gold because a natural currency always arises when entities trade with each other.

You can still hear periodically of ancient Greek Roman coins being found in India, and ancient Indian coins being found in Java. The point is that they all traded with each other, and gold has nothing to do with it.

In jails, and various concentration camps, it is observed that cigarettes emerged as the tradeable currency.

The important point is you may not be able to predict what will emerge but that the market will provide a mechanism to trade.

However, none is “superior”, and a good trader will allow you to trade in any (naturally for a premium, of course.)

Do not confuse the medium of exchange, and the convenience of the medium of exchange (”you can’t eat gold”) with the store of wealth.

These are two utterly different concepts.

The fact that you refer to them both as the “dollar” is part of the problem. You might want to try “current dollars” and “future dollars” and you will rapidly realize that it is no different from “current gold” and “future gold”.

Man, and I thought this was a smart bunch!

Comment by packman
2008-01-21 11:27:32

Sorry - got to disagree with you FPSS (and PB) - when you say “nothing is superior”.

It’s true the virtually anything *can* be used as currency. Even the spoken word can and is used frequently for currency - e.g. if my neighbor agrees to give me his used car, and I promise to do a year’s worth of yard work for him, then my promise to him is currency.

However all currency has risk. My promise has risk - I might decide not to keep it, or I might move away, or I might die - etc. Cigarettes have risk - ala your example - when the war ended all of the sudden it was much easier to get cigarettes, and thus they became essentially worthless. Or someone could bring in a whole case of cigarettes to the camp, reducing the value of the existing ones.

Paper dollars as currency have risk - inflation may reduce their worth, government turnover may make them worthless, they can be counterfitted, lost in a fire, stolen from my wallet, etc.

Even gold has risk - it’s price is subject to supply and demand pressures as well, including artificially-introduced pressures like government action (e.g. 1933). It can be stolen, etc.

I would submit however, that when the SHTF - e.g. times of significant war and/or financial crisis - gold (and other PM) inherently are the lowest-risk form of currency, and therefore *is* superior to other forms of currency.

Mainly this is due to these things:

- Virtually impossible to counterfeit
- Virtually indestructible
- Limited supply

Note the qualification though - “when the SHTF”. During normal economic times, gold is not superior any more since other methods have emerged as more efficient means of currency exchange. Heck even paper cash has been knocked down a few notches recently on the currency totem pole by credit/debit cards (debt component of those aside), and online transactions (paypal etc.).

Comment by Faster Pussycat, Sell Sell
2008-01-21 11:28:20

Just to be clear this is not a “should I store my money in dollars or should I store it in gold” argument?

Do what you think is best.

This is a clear rebuttal to “you can’t eat gold” which is true but irrelevant.

But what you can do is buy “current gold” which will then become “future gold”, and in that “future”, you will be able to pay the market price of that “future gold” and will be able to convert it into to the future trading currency, and buy your food or pay your surgeon.

Do not confuse “storage of wealth” with “medium of exchange”.

Comment by Tutto Incognito
2008-01-21 11:52:47

now I can buy one fancy suit with one ounze of gold, say in the future I can buy 4-5 fancy suits with one ounze…. Clearly my future gold is “worth more”… But if I want to buy one ounze of gold, it is all the same.. true… What is the argument here? I thought I was smart…

Comment by aladinsane
2008-01-21 11:56:29

Gold has magical properties in times of crisis…

My father was a displaced person (dp), in Europe after World War 2.

The difference being, that his family had Gold and he was able to go to University in Switzerland and get a degree in economics and go skiing on the weekend, while 10’s of millions of other dp’s were wondering where the next meal was coming from…

Comment by Faster Pussycat, Sell Sell
2008-01-21 13:46:54

Agreed about the risk with the posters above.

The point is money has three uses — as a yardstick (like “inches” or “kilometers” measure distance everything is measured in the local money); as a “medium of exchange”, and as a “store of wealth”.

Do not confuse the three; they are separate and distinct (although 1 and 2 are linked at the hip.)

The point was a clear rebuttal of “you can’t eat gold” — well “stock certificates can’t perform surgery”.

See the point?

How you “store your wealth” is different from “how to can exchange it for anything”.

That having been said, I am mostly in agreement with the risk component, etc.

Comment by packman
2008-01-21 14:12:54

Got to disagree that gold can only be used as “storage of wealth”. It can very easily be used as a medium of exchange as well - and was for thousands of years. Not all gold is stored in huge bars. $20, $10, $5, $2.50, and $1 gold pieces were very often used as medium of exchange right up through the early 1900’s.

Aside from that - the same principle applies to silver, which was used as a common medium of exchange up until 1964, all the way down to 25-cent pieces. So if the granularity of gold isn’t good enough (smallest feasible exchangeable coin these days would probably be about $20), silver can be used. Then copper for even finer granularity. It’s not until you get into your zinc and nickel that we’re talking essentially worthless metals.

Comment by Professor Bear
2008-01-21 18:25:10

You guys can keep convincing yourselves that gold is the be-all, end-all currency, but at the end of the day, until Uncle Sam goes out of business, U.S. fiat currency will hold the upper hand on gold because of fiat, period. Please refer to U.S. govt gold confiscation in the 1930s for Exhibit A. And for the change in the price of gold in the early 1980s for Exhibit B. Like other bubbles, the X bubble will pop around the very time there is a ubiquitous belief that X is a superior asset class. (X = gold at the moment.)

Comment by simiwatch
2008-01-21 09:54:33

I was in a museum in Europe. They had all the gold coins under lock and key. Other artifacts you could get close to and see. Look at some old wooden ship wreck. The recovered gold is shown under lock and key. The wood is out in the open.


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Comment by aladinsane
2008-01-21 10:46:55

Does anybody notice 10 buyers for every seller of stocks, currently?

“Australian investors who bought early and often have done well. The yellow metal went through the local $1000 mark on January 9 and the Perth Mint has been finding no buyer resistance at that level. In fact, business is up this week, with gold buyers outnumbering sellers by 10 to one in Perth.”


Comment by de
2008-01-21 08:25:22

Demand is up because of a flight to quality (out of stocks), which means bond price is up, rates are down.

As far as the rate being less than inflation, even a very small interest payment is better than a large loss.

Comment by Tutto Incognito
2008-01-21 09:15:16

I have been asking myself the same thing… I also got in the mail an ad from B of A credit card. Spend 250 in three consecutive months and get 60 dollars back. Not a bad deal actually. Maybe the goverment is B of A? I would not be surprised (read I am pretty sure) that someone has sat up phanton offshore organizations that just buy things with printed money. That, taxes, ads in the paper for buying newly printed sheets of dollars for less than face value (cutting needed) are all measure that slowly but surely put money in the hands of the people

Comment by Tutto Incognito
2008-01-21 09:24:37

“set up”

Comment by WAman
2008-01-21 10:05:39

Sounds like you are long stocks.

Comment by packman
2008-01-21 11:08:31

Actually no - I have a few stocks, but in general I’m quite short; I have about twice as many short positions as long. I expect a really good day tomorrow as a matter of fact :-) (for me anyhow). Being long stocks in general is insanity right now IMO.

No - I was thinking more about CD’s and/or foreign currencies. Things that have essentially the same risk as treasuries (very low), but now higher gains. CD rates are generally about 4-5%, with some better rates even on foreign exchange CD’s (e.g. South African Rand @9%).

Comment by spike66
Comment by awaiting wipeout
2008-01-21 09:22:25

Looking for Great Depression books?

I am reading Murray Rothbard’s “America’s Great Depression”, and it is an amazing book. It is Austrian School of Econ based.

I read “The Forgotten Man” . It was excellent too.

Comment by RoundSparrow
2008-01-21 10:23:05

Looking for Great Depression books?

I think it will first appear as comments on blogs, then in the blogs, then in FAQ’s, then in entire forums on the subjects with dozens of categories, then newspapers, next weekly magazines

Books will be in 2012, at least the ones that are well written and can describe most of it.

Comment by spike66
2008-01-21 12:08:29

awaiting wipeout…
thanks for the heads-up. i’m going to do a little buying on amazon tonight.

Comment by WantsOut
2008-01-21 05:39:12


Why do the Nasdaq futures vary so greatly while the Dow and S&P trace relatively closely?

At close Friday

Dow 12,099 futures 12,100
S&P 1,325 futures 1,325
NAS 2,340 futures 1,849

Comment by B-W
2008-01-21 05:54:49

Should be NASD100 futures. Different from the NASD index you know and love (to hate). Yep, out here in Asia things got really nasty, picking up speed throughout the day. Just look at HSI in the afternoon.

Comment by cynicalgirl
2008-01-21 05:57:19

Which is worse? Squatters or Hoovervilles?


Comment by krazy bill
2008-01-21 06:21:53

I would think the PTB would prefer Hoovervilles; Hoovervilles would be easier to police.
When the need arises, having the FBs comcentrated in one place would facilitate the harvest of their organs and essential oils.

Comment by bizarroworld
2008-01-21 06:29:53

Soylent Green! Where is Charlton Heston when you need him?

Comment by Max
2008-01-21 10:08:01

Soylent green is stucco!!!

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Comment by aladinsane
2008-01-21 07:01:27

“The thieves broke into the house and cut the copper pipes out of the basement and managed to cut a gas pipe, he said. Natural gas spread through the building and out into the street before the fire department was called.”

You’ll see tons of these sorts of crimes against home-anity, all of them profoundly stupid, as the copper booty they seek, is worth probably less than $100 (the amount they’ll receive from their artful dodger), and renders a house worthless and uninhabitable…

Comment by cynicalgirl
2008-01-21 07:23:12

There was a house here in NJ that blew up because of copper thieves. It killed a construction worker and took down the house next door.

Comment by Snapfroze
2008-01-21 09:36:26

Some of thievery in Russia is even bolder and more creative. Local papers had a story of an elevator service guy who was stealing the counterweight cables from the elevators he serviced, the stories stressed, it didn’t affect the safety of the lift, but made for a bumpy ride. There was another one of a municipal worker that used a crane and a truck from work and stole a bridge. When this fraud unravels, anything with a pecieved value will be attempted to be lifted.

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Comment by Sammy Schadenfreude
2008-01-21 09:58:26

People who endanger public safety and private individuals through stealing things like manhole covers, telephone cables, copper pipes, etc., should be summarily hanged, in public.

Comment by Matt_in_TX
2008-01-21 20:21:53

Heinleinian Equalization: You drive drunk and a kid loses a leg, they lay you down and drive over your leg a few times.

Comment by Arizona Slim
2008-01-21 09:14:25

Here’s a funny Hoover story.

Seems that my aunt’s next-door neighbors were very good friends with Herbert Hoover. In fact, my aunt met him in the neighbors’ house when she was 5 years old. That would have been in late 1932 or early 1933.

What stood out for my aunt was the fact that Hoover was dressed in white from head to toe. Wasn’t something she saw every day — her father (my grandfather) wasn’t a wearer of light-colored suits.

Oh, I should also note that the neighbors’ dog walked up to Hoover and lifted his leg.

Comment by flatffplan
2008-01-21 06:05:06

can someone post a timeline of
no national bubble
contained to subprime
slow but no recession to
2 weeks ago rebound in spring

yikes this is fast !

Comment by cynicalgirl
2008-01-21 06:28:19

One of the blogs had a sales chart that showed Learah quotes. Damned if I can remember which one.

Comment by NotInMontana
2008-01-21 06:25:26

A friend of mine who used to be a banker said that the only bank with real exposure to subprime was CITI. This isn’t right, is it? I thought WF, HSBC and others were in deep to. “Subprime” as a placeholder for the whole damn mess of course.

My thought was he hadn’t been reading HBB.

Comment by GH
2008-01-21 06:40:53

BOFA just bought CountryWide… I would call that exposure!

Comment by DD
2008-01-21 07:13:09

Technically BOA hasn’t bought Countrywide yet. It will take about 9 months for this to go through. So their exposure right now is limited to the $2 billion investment that they already made. NO telling where all that subprime exposure will be by then; i.e. on Countrywide’s books or spun off.
It’s been a while so my recollection is fuzzy, but back during the S & L crisis one bank would take over another, then spin off their bad assets to another bank (known as the “bad bank”). Amresco comes to mind as one of the bad banks. I wouldn’t be surprised to see something like this with Countrywide.

Comment by SDGreg
2008-01-21 07:44:10

What I’m trying to understand from this deal is if there’s a way BofA is able to acquire assets it might be able to use in some way without incurring all of the liabilities that Countrywide has incurred?

For example, if BofA were trying to expand “traditional” mortgage lending in the future, perhaps there are things they might be able to acquire from Countrywide cheaply enough to be assets in the future, IF there was enough sheltering from potential liabilities.

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Comment by SDGreg
2008-01-21 07:36:21

Still laughing at that. Keyboard survived as I’ve learned to never consume beverages within range of the keyboard while reading this blog.

Is BofA’s “exposure” like exposure to the cold or exposure to something more serious? Is it like buying a meat packing plant that’s sending out E. coli-contaminated beef and then consuming said beef?

Comment by chicagorefugee
2008-01-21 18:49:23

You need one of those keyboard condoms - or are they only for laptops?

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Comment by Not_In_Montana
2008-01-21 09:24:56

“BOFA just bought CountryWide… I would call that exposure!”

Yeah and that was the first thing I said, but he said he thought that was a smart move on their part. He also said buy financials 3 months from now. Not that he knows everything, but it was as if he really wasn’t paying attention which I found strange because he’s a money guy.

Comment by tresho
2008-01-21 06:29:00

Double Dealing within Goldman Sachs
“Their own traders and salespeople in subprime mortgages and related securities had put Goldman in exactly the same position as every other Wall Street firm: long subprime mortgages.

The only difference between Goldman and everyone else was that Goldman had, in effect, an entirely separate enterprise, sitting on top of the firm, with the power to reverse the judgment of its own supposed experts in various markets. They were able to do this, apparently, without ever saying a word about it to their own traders. Instead of telling the fools trading subprime mortgages that they are wrong, and that they should unwind their positions, they simply offset their trades…a lot of these so-called risk managers never really had the power to manage risk. They had to consider the feelings, for example, of the guys who ran subprime mortgages….

But at Goldman there were two intelligences at work: one, the ordinary Wall Street intelligence, which was allowed to get itself in trouble, just as at every other Wall Street firm; the other, more like an extremely smart hedge fund that made its living off the idiocy of big Wall Street firms, including its own people…And this second, higher intelligence was allowed to make a mockery of the labors of the first. I can’t think of another example of a big Wall Street firm saying so clearly through its trading positions as Goldman Sachs did over the past year that it thinks the rest of its industry, including its own people, is a bunch of idiots. They have obviously designed their firm to take into account their idiocy — without ever having to put too fine a point on it.”

Comment by auger-inn
2008-01-21 07:05:28

The article might have mentioned that the “separate enterprise” sitting on top of the firm is directly connected to both the Treasury and FED thus alleviating the need to guess about certain policies. It sure makes the investing game a bit easier. If GS had moved all their minions to the other side it would have been a bit too obvious that they were dealing with inside info. As it is they are still getting a bit too much visibility on this, even though the MSM has chosen not to pursue it. All my opinion of course.

Comment by palmetto
2008-01-21 07:08:24

Bingo, auger. Brilliant comment.

Comment by tresho
2008-01-21 07:16:54

What ‘insider info’ are you talking about? The short-selling done within Goldman Sachs could as well have been motivated by someone following the HBB or Russ Winters, just by following Wall Street idiocy.

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Comment by auger-inn
2008-01-21 08:33:30

Well Tresho, like I said, ” all in my opinion. However, I follow an analyst that likes to keep an eye on GS and noticed a common theme has emerged, GS and JPM both seem to be carrying out gov’t policy for this administration and perhaps previous admins as well. No conclusive evidence of course because that would be submitted to authorities, oh wait, that wouldn’t work either.
At any rate, here (links) are just a few of the questions that have arisen in the blogging community from the actions of GS. Naturally the fact that so many GS alums have ended up in powerful positions also raises eyebrows out here in “tin foil” land.
JPM is another issue altogether. Check out their derivative position/exposure. What sane institution would/could grow derivatives at this rate? It has been suggested (without proof, of course) that this derivative position serves to allow the FED to act as counterparty to the losing position (JPM doesn’t just collect a fee but actually acts as counterparty to both sides of the derivative). Some analysts have also posited that the derivatives are being used to support/control the bond market. Who knows?

Regardless, I can’t prove anything since I have no firsthand knowledge. Of course in hindsight it would have been prudent to take a large hedge position against a subprime contagion. It is odd that no other IB’s found it compelling to do so, just GS.




Comment by Graspeer
2008-01-21 08:05:04

I wonder how their regular customers will feel as they find out that Goldman/Sachs was betting against the very advice that Goldman/Sachs was giving them?

Didn’t the Wall Street companies have to pay a billion in fines after it was found out that they were pushing certain stock on their customers while at the same time telling each other that they were dogs. Maybe this time they learned their lesson and deleted the E-mails that laughed at their customers for buying such bad stock.

Comment by Xenos
2008-01-21 09:19:14

Golden Slacks made out due to sheer luck. As reported in the WSJ, they brought an outsider in to run the mortgage department a year before the sub-prime crisis began. This outsider (I knew him in college, a smart guy then, but wow, no-one would have thought he had this in him) had to drag the leadership of GS into supporting his making a huge short position on mortgages.

The story had the ring of truth to it. The scandal is not insider information, but that, again, the smartest guys on Wall Street knew a lot less than they claimed to know. And a small-college hard-drinking hockey player who never went to graduate school kicked the ass of all the MBAs and PhDs out there.

Comment by cheezbubbler
2008-01-21 06:35:35

After a record year for foreclosures, a stunning 1,000 Milwaukee County properties already have been scheduled for sheriff’s sales in the first nine weeks of 2008, with a record 200 put up for sale in just one day earlier this month, records show.


Comment by ghostwriter
2008-01-21 06:46:05

Here’s another example of when a bank agrees to a short sale. Note the price jumped back up $25k. I always look at zip realty because many times they have the reductions listed. This is another reason this thing is going to drag out.

Price Reduced: 12/07/07 — $499,000 to $399,000
Price Reduced: 12/19/07 — $399,000 to $350,000
Price Increased: 01/19/08 — $350,000 to $375,000

Comment by WT Economist
2008-01-21 06:51:30



“Neighbors said the Buczynskis had recently endured hard times. ‘He said to us two weeks ago, ‘My company just went bankrupt. I’ve got to look for another job,’ but he didn’t seem worried,’ said close friend and neighbor Beverly Bernstein, 41. ‘They were the all-American family, that’s why we’re so shocked,’ neighbor Bernstein said.”


Comment by aladinsane
2008-01-21 07:15:58

Subprime killer
Quest que cest
Fa fa fa fa fa fa fa fa fa far better
Run run run run run run run away

Comment by mgnyc99
2008-01-21 07:49:07

bom bom bom bom bom bom
good one

Comment by ET-Chicago
2008-01-21 08:43:59

Nice, AladinSane.

Of course, David Byrne has several songs already dedicated to housing, architecture and consumerism ….

Comment by bluprint
2008-01-21 09:01:48

ET-Chicago: You made a comment on Friday about how the U.S. could get to sound money. I wanted to make sure you saw my reply, thought you might be interested.

Yes, I’ve often wondered how a modern government would get itself back on the gold standard. My little brain doesn’t understand all the ins and outs, but any scenario I can dream up seems catastrophic at best.

As far as I know, the consensus is that it would be difficult. There was a lecture at the mises university about this very topic that I found interesting. http://mises.org/multimedia/mp3/MU2007/61-Reisman.mp3

It can also be found via this link http://www.mises.org/media.aspx?action=category&ID=17

Follow the “Mises University 2007″ and then the second to last link “The Path to Sound Money”.

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Comment by ET-Chicago
2008-01-21 09:55:24

Hey, thanks for the link, Bluprint. I’ll check it out.

Comment by reuven
2008-01-21 08:23:23

The note found inside his SUV, parked on the bridge, said his wife would be found at home, that he had jumped from the bridge and that his children were safe.

He even had the requisite SUV!

I hope his wife didn’t stain the granite countertop with her blood.

I think it’s fair to say that “get-rich-quickers” in general have flawed personalities. I don’t know how anyone can be a part of the borrow-and-spend industry and be a moral, balanced individual.

You’ll see a lot more of these, unfortunately.

Comment by awaiting wipeout
2008-01-21 08:57:04

‘I don’t know how anyone can be a part of the borrow-and-spend industry and be a moral, balanced individual.’

As someone who has to deal with these thugs, you are right. They like to pretend they are moral, you know, a wife, kids, organized religion and charity. Well, the Mafia has all those fine attributes too.

Comment by aNYCdj
2008-01-21 09:21:22

Calling Dr Phil Calling Dr. Phil

Amazing how many people commit suicide because they can’t apologize to another person, aka wife!

Comment by Blue Skye
2008-01-21 09:38:16

“he that maketh haste to be rich shall not be innocent.”

Proverbs 28:20

Things don’t change.

Comment by Sammy Schadenfreude
2008-01-21 10:04:51

Everyone should read Proverbs and Ecclesiastes at least once a year. The distilled wisdom of the ancients is as relevant now as it was 7,000 years ago. Human nature never changes.

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Comment by WAman
2008-01-21 10:50:19

Just another history book! That many sheeple read daily.

Comment by Blano
2008-01-21 12:05:45

Geez WAman, and people say Christians are closed minded….too funny!!!

Comment by ET-Chicago
2008-01-21 12:53:13

Just another history book!

I’m agnostic and proud of it, but I have to agree with Sammy regarding the wisdom and beauty of Proverbs.

Comment by Sammy Schadenfreude
2008-01-21 13:44:10

I don’t pretend to know if the Proverbs, or the rest of the Bible, are divinely inspired or not. I do know there is some very sound wisdom contained therein.

Comment by Not_In_Montana
2008-01-21 15:35:48

I used to laugh out loud reading Eccliastes - basically it’s a preacher saying everything sucks and it’s all a waste of time..

Comment by Arwen_U
2008-01-21 20:29:56

Proverbial Wife of Noble Character:

“She sees that her trading is profitable, and her lamp does not go out at night.”

An ancient Txchick.

Comment by reuven
2008-01-21 06:52:03

Well, my shift to asian stocks last year (along with Eurpoean and Canadian) didn’t save me. All the asian indices have plummeted today. (US markets are closed)

Comment by NeilT
2008-01-21 07:14:21

When the US goes down it takes others with it. The value of goods & services produced by India & China can probably be cut in half if the indebted US consumers didn’t do what they do best, i.e., consume.

Comment by Bye FL
2008-01-21 07:20:27

Not all foreign stocks are dropping. Besides don’t panic and sell, it’s unlikley this recession will last “forever” just sit tight, ride those paper losses and they will rebound in a few years. Now is actually the time to be buying funds on the cheap ;)

Comment by reuven
2008-01-21 07:53:19

I never panic and sell! I always move by small increments.

Though at the end of the year, I usually sell my losers to offset gains (to buy them back in 31 days the following year.). I’m especially glad I did that in 2007!

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Comment by NeilT
2008-01-21 08:47:40

I like what is happening. I am sure many cash-horders like me don’t mind becoming buyers when others flee from the housing market and the stock market. Still need about 20% drop in house prices and ~5 to 10% drop in stock indices from the current levels for me to consider putting to work the savings generated by renting. Cash is king. Renter is king because he/she owns cash!

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Comment by ChicagoANT
2008-01-21 16:50:37

“I like what is happening. I am sure many cash-horders like me don’t mind becoming buyers when others flee from the housing market and the stock market.”

As much as I’d like to see the “cleansing” of the U.S.,
it won’t be a Depression until many in this forum (the best of us) will be affected by job loss and hardship. That’s when we know the worst is here. Just because mainstream is now starting to be doom & gloom, is it the right contrarian indicator? I think this could get much worse….more than can be imagined. Cash is good, but if you don’t have religion, life would be difficult.

Comment by CA renter
2008-01-22 01:13:02

Agree, Chicago.

Hate to admit it, but when I saw the overseas markets, I started to cry. Not because we’re losing money (we’ve made more money than ever being 100% short in our “trading” money), but because our being right means there will be a lot of suffering.

This could have been largely avoided if someone (Greenspan) had the balls to do the right thing in 2002/2003 (and before!).

I’ve been one of the most extreme bears, but this is scaring me. :(

Comment by Professor Bear
2008-01-21 09:02:07

Now is actually the time to be too-clever-by-half and catch falling knives in the stock market ;-)

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Comment by aladinsane
2008-01-21 07:22:57

It’s a one size fits all collapse.

We go down, the rest of the 1st world tanks.

Monetarily Assured Destruction

Comment by nhz
2008-01-21 09:04:27

I think the world economy just failed for its first decoupling test.

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Comment by Bye FL
2008-01-21 07:02:26

Portland Oregon 45.4 latitude.

Wow it got to 105 degrees in July 21, 2006. Seems like most summers there will be dangerously hot days with 90-105 degree days.

Seattle, Washington has milder summers with the occasional 90-95 degree day. The average winter Jan temperatures is 47/36 which means the high is almost always above freezing and the low is above freezing most of the time. People can grow palmetto palm trees on the west coast

I would like summers not to exceed 80 for a high nor go below 40 for a low and winters to be a little cooler than that.

I consider a mild winter if it rarely gets below 0 for a low. I checked Pittsburgh and it only got below 0 at -2 once in the last 10 years. USDA map rates Pittsburgh as zone 6a and the west coast as zone 8a and 8b depending where.

Very, very little snow on the west coast as it just doesn’t get very cold. 20-25 is about the lowest it gets. It’s winters are as mild as Tallahassee, Florida regarding minimum temperatures. Of course the average temperatures are lower on the west coast.

Look at the weather map now. Notice how the actual temperatures in the north midwest is minus 20s with windchill in the minus 40s! Pittsburgh is going to get down to around 10 degrees with windchill of near zero. That is cold but nothing compared to -40 windchill!

(it’s early and no one may read this, ill repost it again tonight)

Comment by Blue Skye
2008-01-21 07:14:40

The Siberian Express visits Oil City from time to time as well.

Comment by Arizona Slim
2008-01-21 09:16:19

And we had snow in Tucson last year.

Comment by bill in Maryland
2008-01-21 18:19:12

I remember in Tucson in 1998 or 1999 on April 1. It snowed. About 3 inches and it stayed for a couple of days at my apartment.

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Comment by tresho
2008-01-21 07:27:30

The only time I visited Portland, it was 102 stifling degrees & it had been that way my entire drive down the Columbia river in an un-airconditioned RV. I stayed only long enough to get gas & supplies, then beat it out of town, not stopping until I got to a state park on the Pacific coast, about 40 degrees cooler there. What a relief! At least there wasn’t far to go for a break in the weather.
My recollections of Portland are otherwise blank, melted away by the searing heat.
The first thing I did after returning home was have A/C put into my RV.
Dang cold here in OH today. I’m going to a local sauna until I feel warm again. Paying for visiting the sauna is way, way, way cheaper than moving to a more temperate clime. It’ll be warmer soon in any case.

Comment by exeter
2008-01-21 07:41:47

You can always buy a McMansion with gym and suana located just below the upper floor housing the industrial/institutional sized appliances. lmao

Comment by Bye FL
2008-01-21 07:43:13

Where was it 40 degrees cooler if portland was 102 and near the pacific coast? Isn’t portland close enough to be moderated so the summers normally should be around 78 average?

Seriously is there anywhere besides arctic/alpine tundras and Antarctica that has nice, cool summers without the very harsh winters?

I guess I could be a snowbird in the near future, live somewhere like north Alaska or north Canada for 4-6 months of the year then somewhere south like north Florida(south FL is too hot even in the winter) Georgia, Carolinas or some other cheap southern location.

Comment by SDGreg
2008-01-21 08:04:28

“Where was it 40 degrees cooler if portland was 102 and near the pacific coast? Isn’t portland close enough to be moderated so the summers normally should be around 78 average?”

For areas along the Pacific coast, it matters if the flow is onshore (off the ocean) or offshore (from the land to the ocean). Typically, in the summer, the flow is onshore and the moderating influence of the ocean extends some distance inland. Please also note that while Portland is along the Columbia River, it is some distance inland from the Pacific Ocean and not adjacent to a large Bay as is Seattle. In San Diego County, for example, it might be 70 at the coast and 110 less than 60 miles inland (in the desert) in an onshore pattern in July. In an offshore pattern in the early fall, those 100+ temperatures will be much closer to the coast. Those very warm temperatures don’t extend close to the ocean too often each year, but a few days is typical though rarely more than 90’s at the beaches.

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Comment by tresho
2008-01-21 08:17:45

Yes, during my visit to Portland I was caught in a weather pattern with offshore winds blowing terrific heat into Portland. Average temperatures are one thing & extremes are another.
If it had been 90 degrees at the Pacific shore, I could have relieved the heat fairly quickly by wading in the water for a few minutes.
I camped on the shores of Lake Superior in the summer of 1987 or ‘88 at Porcupine Mountain State Park. It has a ridgeline with a terrific view of the lake. I was hoping to take a hike to enjoy the view. Unfortunately it was 98 degrees, humid and calm that afternoon, most unusual for that area & definitely a bad time to hike a mountain, no matter how small. I went down to the beach. It was even hotter down there with the sun reflecting off the sand. People are seldom able to swim in Lake Superior at any time of the year, it’s usually too cold. The water temp near the shore was 68 degrees (I measured it), a most pleasant change from the air. I had a delightful swim. No one else at the campground joined me.
Yesterday 25 miles from my house they had 22 inches of snow fall the other day, called “lake effect.” Zero snow fell in my town.

Comment by WAman
2008-01-21 10:55:51

Portland has the coast range to the west that blocks cool ocean air during the summer time. Any air that does come down the slope warms by compression. The same thing happens with the Cascade range to the east. I lived in Hillsboro, OR (just west of portland) for several years and yes 102 in Portland and low - mid 60’s on the coast a lot.

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Comment by Mary Lee
2008-01-21 19:38:06

Portland gets weather funneling down the Columbia river that smacks the coastal mitigation firmly back from time to time. Mostly moderate, but when those east winds blow, they bring heat or snow, depending on the season.

Absolutely can be 30+ degrees cooler at the beach.

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Comment by Matt_in_TX
2008-01-21 20:34:56

My 2 yo Seattle car cost me $2000 for a a/c upgrade when I moved to Texas. A friend pointed out that I was unlikely to be able to resell a used black car without air conditioning in Texas ;)

Comment by SDGreg
2008-01-21 08:11:13

“I would like summers not to exceed 80 for a high nor go below 40 for a low and winters to be a little cooler than that.”

For that, you probably want to be near the coast in Southern California or northern Baja. Summer temps are mostly 80 or less and winter temps rarely fall below 40. However, go 10 to 20 miles inland and you will have summer temperatures 90+ and sometimes 100+ (though mostly absent the humidity of Florida except occasionally in July and August) and winter lows sometimes as low as the 30’s.

Comment by RoundSparrow
2008-01-21 11:16:47

“I would like summers not to exceed 80 for a high nor go below 40 for a low and winters to be a little cooler than that.”

Arica, Chile. On the Pacific coast, inexpensive. Lived there for 12 months…

On the pacific coast (repeat), but never ever rains. Dirty, dusty.

Comment by yensoy
2008-01-21 08:26:08

Do you know it rains two or three times in Seattle over the winter? It works this way - it starts raining on say the 15th of December, and then it stops raining 20th of January. That’s one. Then it starts raining again on the 23rd of January and goes on till mid February, making it two… You get the point.

Comment by SDGreg
2008-01-21 09:00:32

How’s that sunny day every July?

Comment by SanFranciscoBayAreaGal
2008-01-21 09:25:53

Oh yes I remember those days. That’s why Washington is called the Evergreen state. :)

Comment by SteveH
2008-01-21 10:12:22

Yensoy, you nailed it but forgot to mention the darkness. It gets light dark here at 8:30 and dark 4:15 pm. Moss grows on your toes. You see Mt. Rainier once every month or so and are amazed that it’s there. The water is so cold you can cool beer in it. Summer traditionally starts right after the 4th of July rainstorm and ends August 28th. But we, who grew up here, love it. If you didn’t grow up here, be warned; many can’t take it. Which is good, because I wish you would all leave and give us back our lives. Too many people anymore.

Comment by SteveH
2008-01-21 10:16:41

Needless to say, meant ‘It gets light here at 8:30 and dark at…”

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Comment by Matt_in_TX
2008-01-21 20:46:39

I used to work 6am to 2:30pm in Seattle to get an hour of sunlight in during the winter. Traffic was better too.

Comment by SDGreg
2008-01-21 10:26:04

“I wish you would all leave and give us back our lives. Too many people anymore.”

That could be said about a lot of places. (sigh)

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Comment by bizarroworld
2008-01-21 11:02:21

As Yogi Berra put so eloquently, “nobody goes there anymore; it’s too crowded.”

Comment by samk
2008-01-21 09:08:33

It was 6 degrees here when I woke up this morning. I am ~ 30 miles SW of Pittsburgh.

Comment by Not_In_Montana
2008-01-21 09:44:11

It’s 6 below in Missoula. Don’t come here if your sole criterion is cold-avoidance.

Comment by WAman
2008-01-21 10:03:59

Seattle is a great place from June to October, but after that you better like rain. 18 inches in December 2006. It also rained for 40 some days in a row from Nov. - Jan.

Comment by Crash and Burn
2008-01-21 11:52:05

If you want weather like that with 40 degree swings you could always live here in Upcountry Maui. It helps to be surounded by warm water. It is a bit humid though.

Comment by cactus
2008-01-21 07:11:06


Jan. 21 (Bloomberg) — Crude oil fell to a one-month low as stock markets tumbled in Asia and Europe on concern the U.S. will lead a global economic slowdown.

Deflation ?

Comment by exeter
2008-01-21 07:23:22

Oil/Gold is far closer to the ceiling than the floor. It’s gonna be a painful crash landing for the bulls.

Comment by Tom
2008-01-21 08:10:56

Commodity Bubble is the next to pop? They can’t print money fast enough.

Comment by Professor Bear
2008-01-21 08:29:31

And despite all present appearances, I still have a kernel of faith that it is not really in CBs’ self-interest to destroy the fiat currencies that legitimize their raison d’être. (Pardon my French…)

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Comment by FutureVulture
2008-01-21 09:26:19

Commodity prices may fall from here, but it’s a mistake IMO to view the prices of 10 years ago as their fair value (i.e. that they’re now in a bubble). Prices were abnormally low, and there was major under-investment in productive capacity for decades. If anything I think the commodity bull has another decade to run (although I think stocks will become better investments within a few years). Secular bear markets can run a long time, but economic activity tends to keep growing, albeit with relatively short drops. In other words, longer term, supply and demand for most commodities is still favorable, until we get a big shift in priorities away from finance and toward infrastructure.

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Comment by Blue Skye
2008-01-21 10:08:01

You’re right. Commodities shouldn’t fall any farther than say, houses or stocks, and we can expect a continuing expansion of economic activity into the foreseeable future.

If underinvestment in productive capacity kept commodities abnormally low, then the future overinvestment cycle will boost commodities, right? Based on our high rate of savings, right? We do have a shortage of productive capacity (and offices and houses) in the world, right?

Comment by fubarrio
2008-01-21 18:31:43

it’s interesting because people have been on this blog saying oil or gold or (fill in commodity) was in a bubble getting ready to pop for at least a couple of years.


staying away from something you see as overvalued might be smart. i just hope none of the more vocal detractors were top calling or trying to time a reversal. In a macro trend like we’ve seen you can enter a trade with the trend 1000 times and be right. you’ll only be right on the reversal once.

did gold see another multi-decade high? i would be shocked, quite frankly.

i also think it’s a big mistake to lump all commodities into one group and think they will all move together forever. they might get liquidated by weak hands and people needing to raise cash during a total market route….but then what? 3% 10 year notes when we’re dropping money from helicopters?

Comment by Tutto Incognito
2008-01-21 09:30:19

Oh, they will…

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Comment by Bye FL
2008-01-21 07:17:49

Looking at Loxahatchee/acreage in south FL prices are dropping nicely. Theres now a whole page of homes for under $200k(cheapest is $160k) where at the peak, the cheapest was a 1000 square foot shack for $250k and you needed $350k minimum to touch a decent 3/2 house. Prices are still at least 100% overvalued and must drop another 50%.

Doesnt matter as theres so much better for cheaper in Pennsylvania and ill enjoy the four seasons and it’s beauty. Theres beautiful hills, lakes and forests as well. I am bored with Florida and also refuse to pay those prices or risk the crime and hurricanes. Theres good reason 1000+ a day are leaving FL.

Comment by geeah
2008-01-21 07:26:54

“The Stock Market Ruined My Life”

Anatomy of the collapse of a young day trader, took some loses, went “all in” over the weekend betting the Rusell 2k would inexplicably rally on Tuesday… down 30k or so and was kind enough to videotape it for everyone.

Comment by Professor Bear
2008-01-21 07:38:51

If you can make one heap of all your winnings
And risk it on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;

from ‘If’ by Rudyard Kipling

Comment by geeah
2008-01-21 07:43:13

The real meltdown is around the 4:40 point.

Comment by txchick57
2008-01-21 07:51:28

Whatever. People like that give real day traders a bad rap. Every large down move flushes those idiots out. The only way to survive as a day trader is to practice risk control. Even a good trader is going to be wrong half the time. The key is to know when you’re wrong and cut it. Ego must leave.

Comment by txchick57
2008-01-21 07:55:07

I’ve stopped myself out twice trying to catch the bottom of this down move on the indicies and saved a boatload of money in doing so. I posted it on here when I did it because I know there are people here trying to learn the stock market and trading. It’s like taking the wrong highway. How many miles are you going to drive out of your way before you turn around and go back just because you can’t stand having your back seat driver wife know you made a mistake.

Comment by geeah
2008-01-21 08:10:18

txchick, just curious, would would you be watching tomorrow? I’m curious to see how the “defensive” names like MO get beaten down, would think of buying if they drop a good amount, but maybe just a 1/2 lot or something as I do think there are other drops coming and the “bounce” doesn’t seem to be materializing.

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Comment by txchick57
2008-01-21 08:26:26

Beta. It’s been beaten with an ugly stick but stocks like AAPL and BIDU were up on Friday.

Comment by P'cola Popper
2008-01-21 08:17:45

I’m glad the ES/Futures are open today.

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Comment by txchick57
2008-01-21 08:20:09

yep. gotta alleviate the itch somehow and make enough for the daily pizza ;)

Comment by P'cola Popper
2008-01-21 08:38:29

Pizza? LOL.

I gotta cover the loss I’m gonna take on some SPY calls when the market opens on Tuesday. So far I got net 22 pts. which is pretty good for me.

Comment by txchick57
2008-01-21 10:16:41

uh, yeah, that’s a good day for anyone.

Comment by Max
2008-01-21 10:56:14

Coming from an engineering background, I can say that you’ve just described the Fano decoding algorithm, sometimes used in telecomminications.

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Comment by SDGreg
2008-01-21 08:48:13

Good thing I didn’t have a shot for every f*** or mf or I’d be passed out til Wednesday if not dead. Apparently one doesn’t need a big vocabulary to lose big.

Comment by FB wants a do over
2008-01-21 08:58:34

Ouch - would have been better off as a no money down ARMster attemtping flips with no skin in the game.

Comment by FutureVulture
2008-01-21 09:31:48

30k is a ruined life? Get a job…

Comment by FutureVulture
2008-01-21 09:43:15

I love one of the comments:
“other than the occassional blow up, he’s consistently making money every day”

Time to quit the day trading, and go read some Warren Buffett.

Comment by Xenos
2008-01-21 10:42:02

Mr Stock Market was mean to him? And he is angry that too many people are selling, and not enough people want to buy, so *his* money is being stolen from him?

This guy should go into real estate!

Comment by Left LA Behind
2008-01-21 09:59:53

Funny stuff.

Comment by Little Al
2008-01-21 07:28:15


Germany down 5.35%. We’ve been speculating about the big fall for a long time. It’s kind of surreal when it actually happens.

Comment by Professor Bear
2008-01-21 07:31:52

Just buy the dip and don’t worry.

Comment by mgnyc99
2008-01-21 07:52:44

hey pb i have buying dips for a week and they keep on dippin?

what gives?

just kidding

Comment by ACH
2008-01-21 08:00:35

Don’t buy “dipped”, but those new “dots”. I saw them at the ice cream shop in the mall the other day.

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Comment by Professor Bear
2008-01-21 08:24:40

You just gotta keep the DCA faith, bro’

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Comment by P'cola Popper
2008-01-21 08:55:13


Comment by Troy
2008-01-21 13:58:21

Wonder what happened to our DCA acolyte in Phoenix (?) . . .

Comment by Tweedle Dee
2008-01-21 09:12:19

“Buy the dips and don’t worry” ?

You must be kidding ! SELL ! Its going to take a year or more to hit bottom. Don’t worry about catching the little rallies.

Comment by Max
2008-01-21 11:01:09

You need to take a course in Sarcasm 101. Professor Bear is going to be your instructor.

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Comment by Professor Bear
2008-01-21 07:34:24

I begin to wonder if bond insurance for 2008 may turn out as subprime did for 2007.

Financial stocks sink across Europe
By Neil Dennis
Published: January 21 2008 09:32 | Last updated: January 21 2008 14:20

FTSE 100European equities sank on Monday, tracking sharp losses across Asia, after financial stocks seen as being exposed to the bond insurance market were stung.


Comment by Max
2008-01-21 11:08:31

If you think about it - during the crazy years, nobody made a bet contrary to the “houses will forever appreciate 7% a year”. And since everybody was on the same side, there is no difference between subprime lenders and the insurers. It’s all just a big mud ball of subprime.

Comment by oxide
2008-01-21 07:33:36

Lots of commercials for E-trade during the football games yesterday. Aren’t they the ones with all the subprime exposure? They must be needing cash infusions. No thanks.

Comment by Roger H
2008-01-21 07:41:47

Yea - and those commercails weren’t cheap either. We’re talking playoff football here. I hope the network got their money in cash before the air time.

Comment by mgnyc99
2008-01-21 08:08:24

was talking with my buddy who is a cerberus employee and he said his buddies like e-trade once they seperate from the loan diivison they have a great business
this is in no way an endorsement to buy them

Comment by Anonymous Coward
2008-01-21 09:12:16

I agree. Their balance sheet is killing them, and I wouldn’t touch it with a 10-ft poll right now, but someone willing to clean that up would probably get in return a business that generates a decent stream of cash. Too bad E*TRADE management wasn’t happy sticking to their core business. They just had to become a subprime lender/structured credit hedge fund.

Comment by WAman
2008-01-21 11:04:17

Kinda like keeping up with the Joneses.

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Comment by Professor Bear
2008-01-21 07:35:39

Where do the big thinkers in economics stand these days on the simple-minded notion that less regulation is better for economies?

Comment by exeter
2008-01-21 07:38:26

Excellent point GS. Whats worse is when they begin tinkering to skew the flow of money upwards, they somehow excuse themselves from the very own mantra.

Comment by Professor Bear
2008-01-21 07:47:05

On top of that, one could easily look at the current rush to stimulate as a rush to intervene — quite the opposite of the “free markets do best with less govt intervention” one often heard during happier times.

Comment by housegeek
2008-01-21 09:15:23

Or when they beg for government intervention to save them from themselves on the way down.

We’d have saved the country from a whole lot of parasitic damage if we’d simply acknowledged that “men are no angels” and designed an economic system with some decent checks and balances to ensure transparency and fairness. Seems every time we ignore the truth and hand over to “free” marketeers (where the most devious animals are always “freer” than others), we get our fiscal ass handed to us.

Comment by cynicalgirl
2008-01-21 07:45:07

Larry Kudlow, et al is still drunk from the kool-aid. I’m hoping that as part of the “stimulus” package, they will put a cap on credit card rates. 30% interest should be illegal.

Comment by exeter
2008-01-21 07:53:17

On a brighter note, I wish to see Kudlow doing the perp walk for his complicity in this. Sharing a cell with Bubba would do him good.

Comment by Bill in Carolina
2008-01-21 10:36:46

With Bubba? Why is Bill Clinton going to jail?

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Comment by exeter
2008-01-21 12:09:39

When all else fails, blame BC. lmao.

Comment by Earl 288
2008-01-21 11:38:43

Stupidity should be illegal.

Comment by vozworth
2008-01-21 07:51:30

they are not standing, they are curled up in the fetal position desperately asking themselves, why have I failed to protect the uneducated and hapless consumo-tards?

You just cannot hand out credit to people who have no conscience regarding doing more with less, when they have been trained to only do the same with more.

Comment by VirginiaTechDan
2008-01-21 07:55:49

The problem is not how much or how little regulation you have. It only takes 1 “regulation” to screw the whole market. In this case it was allowing fractional reserve lending. Eliminate that ONE regulation and force people to honor contracts for gold like they do for wheat and you could never get this much debt.

It is my belief that 0 regulation at all would be better than even that little bit of regulation. At least then everyone would be put “on notice” that they need to be on the look out for fraud. The free market will then provide competing services aimed at reducing fraud.

Instead we have given the government a monopoly on regulating and “fraud prevention”.

Comment by Professor Bear
2008-01-21 08:06:48

We have these pesky “regulations” here in California which have resulted in thousands of individuals getting sent to prison, wasting years of their productive lives. Are you suggesting it would be better for the market if these folks were freed en masseto conduct their “business activities” without the distortionary effect of “government regulation”?

Comment by exeter
2008-01-21 08:59:39

Lmao….. Maybe we should rescind all laws too. You know…. Those thingies the deter people from robbing banks and driveby shootings. Wouldn’t it be great?

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Comment by aladinsane
2008-01-21 09:21:23

Methinks it was more for high crimes, than misdemeanors.

Comment by ReverendDave
2008-01-21 09:06:27

My little brain suggests that less regulation is better, if (and only if) everyone involved acts in their own enlightened long term interest.

It’s sort of like communism… It sounds like a nifty idea to anyone who hasn’t experienced it first-hand, but it doesn’t work in real life, it has failed in the places it has been tried, and it’s impossible to explain this to the true believer.

Comment by Max
2008-01-21 11:18:49

Less regulation is better if and only if infomation is open. But since this will never be the case because it is in the best interest of everyone to hide the ugly truth to the very end, regulation is necessary.

A free market paradise can only function with informed parties. If I were the king, I would force the Kudlows and the Cramers (and countless other Wall Street snakeoil/bullshit salesmen) to completely disclose their personal financial standings. I would force the realtors and other brokers to explicitly say everytime they open their mouths peddling their advice that they work on commission, and they benefit from the higher-priced sales.

Comment by CA renter
2008-01-22 01:38:29

Not only that, but the public would have to have the **very same** information, at the very same time as the execs.

NOT gonna happen; therefore, we need regulation.

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Comment by Groundhogday
2008-01-21 11:23:59

Bank and financial market regulation following the 1930’s collapse worked for a very long time. Dismantling that regulation has led to speculative excesses that rival the 1920’s, and now a big whopper of a bust. Personally, I think a bit of regulation is in order, particularly since we all pay (to some extent) the price for this craziness.

Comment by fubarrio
2008-01-21 18:44:54

here’s an idea for starters….get the govt out of the business of setting short term interest rates….

not saying it’s a silver bullet but i have to believe interest rates below the real rate of inflation and the yield chasing mess it bred would have been less intense.

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Comment by fubarrio
2008-01-21 18:46:28

sorry i should say “quasi-governmental quasi-private” central planners, rather than “govt” above.

Comment by CA renter
2008-01-22 02:12:05

Definitely agree with that!

Comment by tresho
2008-01-21 07:38:19

Leelanau County [Michigan] officials are appealing a [Michigan] state commission’s decision to shut down the [county] building inspection department.
The county’s building department “failed to adequately protect the health, safety and welfare of the general public in the built environment,” according to a state Bureau of Construction Codes report. [A month after he was fired by the county in June 2007, former building inspector Robert] VanDyke filed a complaint with the [state] bureau that alleged county officials “failed to support the enforcement of state codes, licensing laws and general construction practices,” the report states. VanDyke refused comment because of his pending Whistleblower Protection Act lawsuit against the county.

Comment by Matt_in_TX
2008-01-21 20:53:20

Hahaha. Shoot the fall guy. Uh oh, HE DIDN’T FALL DOWN!

Comment by michael
2008-01-21 08:23:44

had a conversation with a condo developer in mid-atlantic bubble area. he was saying it just needs some time to work out and that prices will stabalize. he said they can’t just sell a condo for less than it cost to build it.

i didn’t have the heart to tell him that they have already invented a word for that…bankruptcy.

Comment by mgnyc99
2008-01-21 09:19:08

Who doesn’t want to hold onto excess condo inventory in a crashing market with a recession looming.
it is a no brainer!
a veritable license to print money.

Comment by An Observer
2008-01-21 09:08:54

After observing what’s happening around the globe, I would say tomorrow would be a good day for a surprise Fed rate cut. Of substantial proportions… However, I believe it would only make things much worse, as it will have the look of obvious panic.

Comment by arroyogrande
2008-01-21 09:46:09

European, Asian Markets Plunge
“The U.K. benchmark FTSE-100 dropped 3.9 percent to 5,673.1; France’s CAC-40 Index plunged 4.5 percent to 4,861.2, while Germany’s slumped 5.35 percent to 6,922.7.”

Comment by nhz
2008-01-21 09:57:06

just for the record:
Dutch stock market closed 6.14% down, German DAX -7.2%, EuroStoxx -7.3%.

let’s see what the Asians think of this tomorrow.

Comment by edgewaterjohn
2008-01-21 10:56:45

Asians will have two full days of mayhem before the boyz wake up on Wall St. Somebody over here has got to come up with an awfully big headline to offset that.

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Comment by takingbets
2008-01-21 09:21:23

forgive me ben for posting this link here, but i thought it was very interesting and your regulars might also.

Anti-rape condom with TEETH ready to hit market - and rapists


Comment by CA renter
2008-01-22 02:42:59

Love it!

Comment by jim
2008-01-21 09:28:40

So is it a coincidence that today, with markets crashing around the world, Osama bin Laden is the front page of CNN.com? I dont remeber seeing him on there for months. Time to bring out the boogymen.

Comment by nhz
2008-01-21 10:00:13

isn’t the Obama etc. circus enough distraction then?

Comment by Sammy Schadenfreude
2008-01-21 10:15:21

The MSM may have to deploy Britney and Paris, as the sheeple are starting to lift their heads from the grass and sniff out the panic in the air.

Comment by Earl 288
2008-01-21 11:46:36

Britney sans panties?

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Comment by shakes
2008-01-21 12:36:12

Today’s Britney won’t do it. Our only hope for the sheeple is a video of Paris and Britney together. Otherwise, I think this drop will be enough to start a stampede unless we get a video or a speech letting us know that the fundamentals are strong and we have a healthy economy - wait that didn’t work last week - That leaves the lesbian video of the 2 as the only option that can work.

Comment by Shane
2008-01-21 09:34:05

I know it is off thread but-The often overlooked economic linchpin is energy prices: everyone always assume that they will go up. Yet, if you look at each and every recession or depression in our nation’s history, the result is often that energy prices “unexpectedly” decline. I am not predicting a collapse in oil prices, but they often decline, in real terms, when the world is in recession. Being a lifelong Alaskan, and, as a result, someone who pays attention to gas/oil/gold, it is not inconcievable that a world-wide recession could collapse oil prices again. Maybe not to $10-15 per barrell, like they were in the late 1980s, but perhaps back to the $30-40 range. One thing that i have learned: when everyone expects a certain outcome, lookout for the contrary result, and try and figure out how it may impact us. As for the argument that there is limited oil, and that the resource has reached the peak of the supply curve and is now permanently on the decline; well, that argument has been postulated since the 1970s, and it comes up every time that energy prices spike. The subsequent recessionary period causes the theory to retreat back into a cave, only to re-emerge when the next spike in prices threatens the economy. We are, no doubt, moving into a severe recessionary period, and I, for one (and I may be one of only a few) expect oil & gas prices to retreat. There is a similiar argument about timber prices (limited supply=permanently higher prices) and look at where wholesale lumber prices are today! Historical lows!!

Comment by BubbleViewer
2008-01-21 10:11:36

Yes, but that was when the U.S., and Europe to a lesser degree, were the only games in town.
Now we have 2 billion new oil users in China, India, and other parts of Asia industrializing.
Take a look at the growth in Japan and Korea’s consumption as they industrialized. They went from 1 bbl per person per year to about 17 bbl per person per year.
As China industrializes, their citizens will also use more bbl per person, per year. Do the math.
Have you read Jeffrey Brown’s work on the Export Land Model?
Basically, consumption is growing strongly in many of the biggest exporting countries, such as Saudi, Russia, Venezuela, etc.
As the mega fields decline, and domestic consumption increases, there is less and less available.
I’m not saying that there won’t be a drop in oil prices at some point, but in an environment where the govt. is prepared to give the citizens “free money,” and where the four largest super fields are in confirmed decline, how long will that drop last? One year, two years?
Admit it, if gas went back to $1.50 a gallon, who in their right mind would not take advantage of it, by taking a driving vacation, etc, thus increasing demand.
We are on the plateau now. What we are likely to see is recession with drop in demand and drop in prices, followed by some type of recovery, with increase in demand and increase in prices, repeated over and over, but always with higher lows and higher highs.
You do realize that there are 500,000 new cars sold in China each month, don’t you? And that these cars are almost all internal combustion? If prices went down to $30-$40 per gallon, there would probably be a million new cars sold each month.
That’s my .02 worth.

Comment by Shane Cunningham
2008-01-21 11:41:18

I agree with your analysis. Certainly, China, India, and the other less notable “emerging economies” are adding to the demand equation. However, emerging countries have always been adding to the equation. In economics, there are always “Black Swan” events. Sometimes it is a change in consumer behavior (unexpected); in other instances it is an impact from an unexpected technological advance. Perhaps we are on the cusp of a breakthrough in energy technology that will either vastly improve efficiency, or move away from traditional fossil fuel solutions. Whatever the case, I agree with the increasing “valley-to-peak-to-higher valley-to higher peak” scenario that you describe. In the longer run, it is not certain, and probably not likely. We are probably in for a few more surprises.

Comment by shakes
2008-01-21 13:07:17

I have been overweight oil for the exact reasons you state. I have recently paired back my oil investments for a couple of reasons. If we have a global recession it will lower demand in the short term. The current prices are based upon expected increase in demand and a falling dollar so we easily have $70 dollar a barrel possibility in the near future. I plan on going overweight (once again) once this recession/depression plays out. I have been following currencies pretty closely in order to determine the currency trade issue. We talk about $100 a barrel oil as though the price has skyrocketed but when you overlay the price and convert it to other currencies the price has not risen to near the extent and in some cases it has fallen in their own currency. Oil is traded in dollars and the direction of the dollar is the X factor that many do not include in their discussion. If demand goes down but the dollar tanks faster then oil prices will remain high in dollar denominations. If demand goes down but the dollar rises against other currencies then prices will fall and finally if demand goes higher and the dollar tanks then prices will easily shoot to $200 a barrel. I think we will get a slight global decline in demand for the next few years as the US will lead the world into a recession. This is short term negative for oil. The dollar appears to have another year of falling based upon BB’s only choice to lower rates. This is positive for oil prices. I think oil at best will be flat and thus no money to be made which is why I took some off the ‘oil table’ and am placing into other areas. If the global economy can decouple from the US then oil prices will jump but I am not willing to take this bet-yet. On a side note Zap motors has quadrupled their plant in China to build electric cars. I am closely following them, TaTa motors in India and others to see how those 2 countries respond to the current situation.

Comment by Max
2008-01-21 09:39:01

Anyone looking for a place to live? How about Charles Prince’s pad in Greenwich, up for sale, $6.5 million, (Bloomberg link) http://tinyurl.com/2olypa.

Comment by crispy&cole
2008-01-21 09:45:15

Will the PPT arrive tommorow?

I have some cash and I think we will gap down HARD and then it will be a good time to buy stocks - or am I just an idiot???

Comment by Professor Bear
2008-01-21 10:45:16

No, I’m an idiot — already bought the dip last Friday! (Or was I trying to catch a falling knife?)

Comment by P'cola Popper
2008-01-21 12:57:07

No, I’m an idiot.

I bought February SPY 135 calls. I’ve been short for a fkcn year and finally decided to try something on the long side so naturally we get a crash on the next trading day. I’m SOL on those calls.

Comment by txchick57
2008-01-21 13:28:46

I have calls too but they’re June expiry. No concerns at all about them.

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Comment by P'cola Popper
2008-01-21 13:05:21

BIP/BIM probably went short last Friday. LMAO!!!

Comment by txchick57
2008-01-21 10:48:23

no, you’re not. Today is a joke. Very thin trading on Globex. Meaningless.

Comment by nhz
2008-01-21 11:24:41

and very heavy trading in Europe ;-)

Comment by Xpovos
2008-01-21 10:51:39

You’re not an idiot, or if you are, you’re in an idiot in the company of smart people.

Comment by Professor Bear
2008-01-21 13:13:28

Some times it feels better to do idiotic things in smart company than to be the lone bear who happens to be right. Bulls get affirmations and bears get heaps of scorn.

Comment by crispy&cole
2008-01-21 11:05:42


Comment by crispy&cole
2008-01-21 09:50:05

Our guy Chris Thornburg is “stunned” by the rise in Ca unemployment:


Comment by arroyogrande
2008-01-21 10:04:32

Unemployment rising while not in a recession…

Wow, it’s not like any of us predicted this two years ago, right crispy?

Off topic, but have Crisp and Cole been charged with anything yet? I’d like to see a perp walk…

Comment by crispy&cole
2008-01-21 10:14:43

Nothing yet. I think the FBI moves at a snails pace.

Comment by Darrell_in _PHX
2008-01-21 13:12:37

In CA: “Unemployment is now up 1.4 percentage points from where it was one year ago – and at it’s highest level since 2004, he says.”

Try AZ. We are up 1.1% from where we were in OCTOBER!!!!

Oct: 4.5% Nov: 5.1%. Dec: 5.6%

Now, I suspect some of ours is due to the new employer sanctions law (employ an illegal and lose your business license). Businesses were letting go a lot of illegals as Jan 1 approached.

However, the big hits were retail (sales tax receipts up less than 1% despite 4% inflation meaning fewer transactins) that hired less than 1/10th expected holiday help, construction (commercial finally slowing), and government (state is facing $1+ billion short-fall and every county and city is having budget problems as tax receipts fall well below projections).

AZ, if not the U.S. yet, is in full blown recession.

Comment by FP
2008-01-21 09:53:08

I just saw an episode “My First Place” on HGTV last night. It was very interesting and actually comical. One couple was in their “20 somthings” were looking for a place in the mountains of Denver. Their budget was around 200K. They were looking for a year and in this show they looked at three places. The guy was more concerned about the kitchen and the wife was interested in the Bathroom. They finally found one 2/1 1100 listed at 235K. Wife was concerned that it was too much so they offered 212K. There was a counter offer at 225K. They took it. The comps showed 220K for 3/2 but they were distressed sales. Here’s the kicker. When they signed the loan, it was an ARM at Interest only for full 100% financing. Payment starts at $1475 not including PTI and Taxes. They got taken by the Realtor, they got FU&cked with the ARM, and previously they rented a place with roomates to “keep the costs” down. I don;t need a crystal ball to see where this was going.

Another couple lived in the Silicon Valley. They owned a townhome and wanted a bigger place. They said they can afford an $800K house. But get this. The wife doesn’t work and they have two small kids. He is a Respiratory Therapist which on average they make 60-70K. I don’t know how much they owe on the townhome but they bought it just two years ago so not much. Okay they were looking at 2 houses at 700K. Let’s just say they have 100K in equity (if they sell their townhouse and if they got that much), that leaves with 600K. That is 10X income. WTF. Anyways, they did not buy because of some quirks in the house but how in the hell can they afford it. Hilarious.

Comment by arroyogrande
2008-01-21 10:01:02

“That is 10X income. WTF.”

People have conditioned themselves to think of this as “normal” (at least in the high priced areas). Just like buying a house for half a million dollars is “normal”…”that’s just how much houses cost”, they tell you.

I was watching another show, Property Virgins, where a couple with NO jobs, was pre-approved for a $200,000 loan with 5% down. The husband will look for a teaching job when they move into the house. It seems that the woman’s father co-signed, so that’s how they got the loan.

Just married, no job, hey we need to buy a house.

The prevailing “logic” has gotten way out of kilter during this whole “buy now, pay never” period of American history.

Comment by sleepless_near_seattle
2008-01-21 11:03:20

The first time I was “pre-approved”, I was making ~$50K and was told I could “easily” finance $280K. I was floored. It seemed like such an insurmountable amount of money. That was in 2001. My, how perceptions have changed.

Comment by reuven
2008-01-21 10:07:16

They only care about “howmuchamonth”. And our crashing economy won’t make them think again.

There are many people who care only about how others–in their circle of shallow friends–perceive them. So they will feel embarrassed if they don’t have the biggest home and the most expensive car that they can possibly *finance* (not afford!)

Comment by Faster Pussycat, Sell Sell
2008-01-21 12:44:58

If you want to be sociable at all, you are forced to associate with some or even many of these people.

My sister (who’s the greatest but lives on the wrong coast :-) ) often tells me not to mess with them because I say things like “I can’t afford that” to some restaurant which is really shorthand for “Not spending that” because they know I can, of course, afford it.

I love that phrase; it’s like rubbing their snotty little faces in. Gives me so much pleasure, and drives my sister crazy.

Heh heh!

Comment by mgnyc99
2008-01-21 10:07:27

want real comedy on hgtv watch “property virigins”

ooooh ss appliances and granite where do i sign?

some of those shows are very dangerous if you are a naive idiot

they should have a new show next year, foreclosure virigns

Comment by 45north
2008-01-21 11:05:27

property virgins

new show Property Pimps, staring Mort Broke and Realette Agente

Comment by Anthony
2008-01-21 10:46:56

I was watching HGTV’s “Sleep on It” last night and it was almost an identical story: a young hispanic couple with two kids in San Jose, Cal. looking to buy in the $750-850K range. Looking at what could possibly be affordable, it realistically takes $250K-350K annual income to afford such a place (or in the top 2% of the national income distribution). I am appalled that so many 20-somethings feel entitled to such a house; since there is no downpayment typically for these people, it isn’t really their money, and when they stop making payments, they will get 6-9 months rent free (or far more if Hillary gets elected). Call me old fashioned, but most households that contain two doctors wouldn’t even be buying something this high priced, so what is going on here?

Also, I was looking to see if HGTV is owned by the NAR. Nothing said as much on their website, but does anyone know the answer to this? I am always amazed that almost everyone on HGTV can “afford” a $1m house, and I figure that NAR or one of its subsidiaries must have a hand in promoting this RE propaganda.

Comment by Max
2008-01-21 11:34:50

What bewilders me is that we supposedly have a credit crunch. Where is it?

Comment by Faster Pussycat, Sell Sell
2008-01-21 12:46:53

Umm… it’s everywhere.

Look at the ABCP issuance; or just commercial paper in general. Look at the spreads. They’ve all but blown out.

Maybe you’re not looking at the right stuff.

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Comment by lars39
2008-01-21 12:41:20

Also on HGTV are two shows that always have me shaking my head in disbelief: “My House is Worth How Much?” and “Designed to Sell” Showing a ’50s 2/1 ranch with 1000 sq ft with area comps of $550,000 to $650,000. WTF is that?

Comment by reuven
2008-01-21 09:59:19

NPR just ran a story about how subprime mortgages are “victimizing” the latino community.

They had a sob-story about a cleaning woman from El Salvador who “lost everything” when here adjustable rate went up.

I still fail to see how, if you’ve started with no savings, put no money down, and can walk away from the house with no recourse (and no tax impact), you’ve “lost everything”. I’m clearly not getting NPR’s agenda here.

Comment by An Observer
2008-01-21 10:23:05

There agenda is:
1. Everyone is a victim
2. Victims need help
3. Government must take money from non-victims to give to victims
4. Your an especially deserving victim if you are non-white.

Comment by nhz
2008-01-21 11:32:02

sound like Europe (except for 1. maybe, because we always have preferred victims over here, they come in many flavors).

Comment by Sammy Schadenfreude
2008-01-21 13:50:35

Let’s face it: a lot of Latino borrowers were mercilessly, relentlessly screwed by their own kind, who they naively trusted. Nothing pisses me off like seeing unsophisticated people - especially those with a language barrier - get ripped off by unscrupulous financial predators. A lot of these folks worked their fingers to the bone for what little they had, and didn’t deserve to get conned that way many of them did.

Comment by Mole Man
2008-01-21 16:32:49

Is this really a victimization thing, or is it just stupid? In our lawyer enhanced society most toxic products at least have a warning label. Is there any good reason why it was legal to sell this person an exploding, toxic loan?

Comment by Anthony
2008-01-21 10:02:20

Looks like aladinsane’s “mello yellow” is taking it in the shorts overseas today, actually all the PMs are. Wonder if this is the start of a much awaited deep correction in gold, silver, platinum, et al? The runup from $640 to $900+ was far too quick, and even looking back at the 1970s, these 50% gains were often followed by 25-40% drops. Hold on!

Comment by aladinsane
2008-01-21 10:14:20

Idiots selling off wealth to keep up the semblance of wealth elsewhere, is all part of the plan…

I’m more of a decade trader, than a day trader.

Sorry to disappoint.

Comment by tuxedo_junction
2008-01-21 10:49:26

Gold’s only down now about 1% while European stocks are down 6%. At best the decline from 912 is one of those frequent 5-7% minor corrections that occur frequently. The big correction, 15-20% will occur when gold breaks 1000. Expect a repeat of Spring 2006. I expect gold to end the year at 975.

By the way I sold about 15% at 900-905. Will buy back at 840. If gold doesn’t drop that far I’ll hold off until the major correction that I expect.

If you’re a nervous type just follow aladinane’s buy and hold strategy. Sell when J6P is buying 1/10 ounce Eagles, at Walmart, with credit cards.

Comment by nhz
2008-01-21 11:34:57

P.S. Gold priced in euros is holding steady around EUR 600,- today, just 1% below its all time high; no correction at all!

Comment by Pondering the Mess
2008-01-21 10:06:07

I’ll just be happy when E-mortgage Solutions, the local scum-ball real estate group, goes under. They’ve been funding Faux News for a while now, with their sleazy CEO telling people to “buy a big house, refinance, and then buy a second big house with the equity,” and “If you’re living paycheck to paycheck, you need to make your equity work for you: take the money out of your house and buy investments (stocks, mortgage backed securities, etc.)”

ARGH! There should be a law to prevent that level of sleaze! Now, their latest gag is to run a 1/2 hour show in the mornings giving people “advice” on real estate and how to make money off foreclosures, etc. Right!

Comment by brian
2008-01-21 10:41:52

The dow is currently sinking 520. It’s going to be rough on Tuesday when the market opens.

Comment by Professor Bear
2008-01-21 10:43:45

Very curious to see this story break on a day when (1) the U.S. stock markets are closed, and (2) so far as I know, no major terrorist attacks have occurred.

Shares suffer biggest fall since September 11 2001
By Michael Hunter and Robert Orr
Published: January 21 2008 09:09 | Last updated: January 21 2008 16:52

FTSE 100 The FTSE 100 on Monday suffered its biggest one-day fall since the terrorist attacks on the World Trade Centre more than six years ago as fears about the prospects for the global economy took hold.

In a tumultuous session, the index fell as much as 5.6 per cent as dealers capitulated following sharp falls on Asian markets overnight.


Comment by Shake
2008-01-21 11:00:42

Maybe Wall Street Firms/Traders are working today by shorting overseas markets ?

Comment by nhz
2008-01-21 11:28:46

(1) is not a coincidence but a likely explanation for the relatively big drops. Over the last few years, most of the declines in EU stockmarkets (especially declines below obvious support levels) were turned around by manipulation of the S&P futures. Out of the blue, someone starts buying big chunks of these futures and everyone starts buying stocks again, works like a charm every time. Apparently, the people who perform this magic were not at their desk today or not willing to repeat waste their magic powers.

Comment by joe
2008-01-21 10:45:23


Metro DC furniture store closes due to slumping demand for furniture tied to the housing recession

Comment by Xpovos
2008-01-21 11:34:20

Your link is self-refferential.

Comment by joe
2008-01-21 13:52:56

Oops sorry about that. Try this one:


Comment by sleepless_near_seattle
2008-01-21 10:48:04

Highly Skilled and Out of Work

Comment by Not_In_Montana
2008-01-21 14:26:17

Two people who left their jobs voluntarily…not a good move.

Comment by Jas Jain
2008-01-21 11:04:02

Subject: Jim Rogers “Its the end for America”


Rogers, a red-blooded American: “Yes, it is over for America.”


Comment by Xpovos
2008-01-21 11:28:20

Frontpage of MSN’s money, so I’m surprised no one’s posted it yet (that I’ve noticed, so I apologize if I’m doubling up on someone).
Why You’ll Never Own A Home

Comment by Darrell_in _PHX
2008-01-21 11:36:57

Stealing the ideas from the start of this thread….

Half a home’s value, half a home’s value,
Half a home’s value,
All in the valley of Debt
Rode the six Trillion:
‘Forward, the Debt Brigade!
Charge for the loans’ he said:
Into the valley of Debt
Rode the six trillion.

‘Forward, the Debt Brigade!’
Was there a consumer dismay’d ?
Not tho’ the underwriter knew
Some one had blunder’d:
Theirs not to make reply,
Theirs not to reason why,
Theirs but to do & die,
Into the valley of Debt
Rode the six trillion.

Debt to right of them,
Debt to left of them,
Debt in front of them
Volley’d & thunder’d;
Storm’d at with ARM and default,
Boldly they rode and well,
Into the jaws of Debt,
Into the mouth of Hell
Rode the six trillion.

Flash’d all their income bare,
Flash’d as they turn’d in air
Sabring the lenders there,
Charging an army while
All the world wonder’d:
Plunged in the default-smoke
Right thro’ the line they broke;
Broker and Banker
Reel’d from the default-stroke,
Shatter’d & sunder’d.
Then they rode back, but not
Not the six trillion.

Debt to right of them,
Debt to left of them,
Debt behind them
Volley’d and thunder’d;
Storm’d at with ARM and default,
While house & income fell,
They that had defaulted so well
Came thro’ the jaws of Debt,
Back from the mouth of Hell,
All that was left of them,
Left of six trillion.

When can their glory fade?
O the wild charge-offs they made!
All the world wonder’d.
Honour the charge-offs they made!
Honour the Debt Brigade,
Noble six trillion!

We have added $6 trillion in combined residential mortgage and comsumer debt in the last 7 years. Much of that debt will be going away, but through charge-off not pay-off.

Comment by CA renter
2008-01-22 03:06:04

Excellent, Darrell! :)

Comment by Darrell_in _PHX
2008-01-21 11:45:47

“The 6 trillion was mostly paper money, and unless actuall transactions are involved, current prices only got there through massive loan fraud, so it is like finding your bank accidentally deposited Microsofts money to your account one day, then corrected it the next. There is no loss, since it was never really your money.”

More like this. $10T got deposited into your account (increase in residential property values from $10T to $21T). You then loaned $5.5T of that out to people (increased residential mortgage debt outstanding from $5T to $10.5T). Now the bank takes $6T back from your account. CRUNCH.

AND, that assumes the $5.5T was loaned uniformly against the $10T deposited. It is actually 60 million little accounts where the $10K was deposited. Some of the little accounts withdrew nothing, so they are fine…. BUt a lot of those accounts took every penny and then some.

AND, that only assumes 30% net drop. I’m thinking it is more like 40% drop. ($250K median house price needs to be $150K) $10T deposited to your account, $5.5T loaned out and spent, and $8T they need to take back out of your account.


Comment by Blue Skye
2008-01-21 12:11:16


Do you think the Mother-of-all-Credit-Expansion’s collapse could result in a Mother-Recession which might bring down median income, resulting in a natural house price drastically below your number?

Comment by Darrell_in _PHX
2008-01-21 12:59:14

Yeah. Of course.

Our econmy is based on buying stuff from China, India and the oil states, then getting them to loan us the money back so we can buy more of their stuff. Once they realize that we can’t even make the minimum payments on all the money we owe them, they will stop lending us the money and… crash.

Inflation adjusted median income is going to come down, and therefore inflation adjusted housing prices will have to come down more than the 40% it is now inflated above historic normal affordability.

If the question is, “inflation or deflation?”, then I do not know since I do not know how fast govt. will be printing dollars. Will house prices sink like crazy in inflation adjusted dollars? Yes.

Comment by VirginiaTechDan
2008-01-21 13:35:36

As soon as people believe that the US cannot pay back its debt without inflation, then demand for the dollar will fall and you will get inflation.

If we have deflation then the banks must fail because they will not be able to pay off their debts.

If we have inflation then the dollar will fail.

Either way, your mattress is the safest place for your gold, silver, and paper dollars.

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Comment by nhz
2008-01-22 03:22:57

just wonder what will happen then with all those who purchased US Treasury Bonds for safety. Time for a big meltdown in the bondmarket?

Comment by aladinsane
2008-01-21 11:48:46

I have an American Dream!

(with apologies to MLK, Jr.)

Comment by Jas Jain
2008-01-21 12:34:37

S&P500 Currently Trading (In Futures Mkt) at up 2% in 2.5 years and up 6.5% in 9.5 years

Under performing the 3-Month US Treasury Bills for these periods!

For future reference, 9.5 years ago is when I posted my best advice (Avoid Scams) and best bearish Scam Market strategy called Six-Pack for those who can’t help but speculate in Scams. It is beating the crap put of “long-term bulls.” As an addicted speculator I have helped myself to the 36-Pack.

In another 6 months we could well have negative 10-year real return for S&P 500!

S&P500 is down more than 10% for the 8.5-year period and even more from the March 2000 peak. Long-term, Buy-and-Hope, eh?

Pigs and Goats are fattened to be slaughtered.


Comment by Jas Jain
2008-01-21 13:12:56

January 21, 2008

On Govt Bonds


George Ure: “Now doubt my deflationist friend Jas Jain will be mentioning this: “European government bonds rise as equity markets falls fuel demand for safer assets.” Credit where due: He’s got it right. Not corporate bonds, mind you. Government instruments.”

Sorry, George, your readers might misconstrue – ONLY the US Govt bonds. No munis and state, because many of them would be heading to bankruptcy, especially, CA, FL, NY and TX.

The best of the breed are Germanic countries sovereign debt (the only white population with reasonable level of discipline left and who are willing to take some pain for the long-term gain). Stick to the Swiss (very low yield) and the Fatherland. While Americans fiddle and propagandize Germans are willing to tackle the problems. For example, the reunification cost was absorbed.

The only English-Speaking govt bonds that I recommend are American (because we can “Print Money”). No UK gilts and absolutely avoid India. India maybe the first major country to declare bankruptcy.


Comment by packman
2008-01-21 14:37:27

Good advice.

What are your thoughts on South African Rand? It’s giving *really* nice yields these days - like 9%. High risk level though? I know it had stability issues in the months after 9/11, but seems relatively stable otherwise, and has run relatively flat with the Swiss Franc.

Comment by Jas Jain
2008-01-21 15:54:21

“What are your thoughts on South African Rand?”

I stick to what I know. Kruger Rands are nice, though. High yield is usually not a good sign, in general. The best (safest) are yielding the lowest!


Comment by Paul in Jax
2008-01-21 16:10:12

My advice is stay the hell away from South Africa. There is no country in the world declining as fast as this place. SA has been propped up by white guilt, esp. from European investors and tourists, even as the productivity of the economy has been declining. Well, ROW (rest of world) has got their own problems to worry about now. Only thing propping up SA is gold price, and its mines and share of world production is declining. SA has more in common with Zimbabwe than it does with the West. There is no significant country more likely to go into an inflationary spiral.

Comment by Jas Jain
2008-01-21 16:49:07

BTW, China took over SA as world’s top gold producer recently.


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Comment by Not_In_Montana
2008-01-21 15:44:48

I went home for lunch and scanned the cable networks and there seemed to be no coverage of the world markets’ plunge. CNBC was running some documentary for the holiday.

too boring for the sheeple or are they trying to prevent panic?

Comment by Paul in Jax
2008-01-21 16:13:38

CNBC is actually a fairly low budget operation with a rather small viewership. They always rerun their specials and documentaries on market holidays.

Comment by Sammy Schadenfreude
2008-01-21 15:47:09


Tyler Durden [FIGHT CLUB] on consumerism and modern society - brilliant!

Comment by txchick57
Comment by Sammy Schadenfreude
2008-01-21 17:20:09

I did like that.

Comment by txchick57
2008-01-21 16:20:00

Is Jumbo Crames getting ready to issue another call to get out of the market at the bottom? 10/8/98 II - the Revenge?

There’s Plenty to Fear
5:29 PM EST
Those who think I’m overreacting don’t understand what’s happening right now.

Comment by Hoz
2008-01-21 16:27:23

Let me know since I do not have the patience to watch TV.


“… Investors who took Cramer’s advice would have taken a 30 percent hit to their portfolios as the stocks of financial titans such as Citigroup and Merrill Lynch got hammered by the mortgage crisis.

On the other hand, investors savvy enough to follow Bolling’s bet on gold and oil would have hit the jackpot, as the hot commodities jumped over 60 percent in the same period. …”

At least he did not Weasel out of the small wager and say that on Mar 15, he revised his opinions.

Comment by Jas Jain
2008-01-21 16:47:06


The US economy was not in a recession or heading into a recession in the fall of 1998. 20% down (as the futures are indicating) on S&P500 means that 75-80% of recession has been built in the market.

A temporary bounce can occur at any moment and it means nothing. Fed, or the “Working Group,” will try to induce a buying panic and it is nothing to be afraid of.

I have GTC orders to buy Jan’10 puts if there is a melt up and also orders to sell puts during a meltdown. 30% of my puts got sold over the past three weeks and I am still holding the remaining 70%. The ratio of cash to puts will keep fluctuating with the market volatility. I am sure that you love volatility as much as I do.

Good luck to you on your trading. My orders were already in on Friday.


Comment by txchick57
2008-01-21 17:04:53

Yes, I do. And since we haven’t had any from 2003 through mid 2007, I am loving this.

Comment by Professor Bear
2008-01-21 17:53:23

Black Monday: recession fears spark global share crash

· FTSE suffers biggest fall since 2001
· Interest rate cuts predicted

* Larry Elliott, economics editor
* The Guardian,
* Tuesday January 22 2008

Fears that 2008 will see the looming recession in the US spreading to every other continent triggered a global crash in share prices yesterday, wiping £77bn off the value of the City’s blue-chip stocks in the biggest one-day points fall in London’s history.


Comment by Professor Bear
2008-01-21 17:57:09

Suddenly I feel rather foolish for having suggested there might be a PPT standing ready to buoy up the stock market on the first sign of weakness. I henceforth declare myself a PPT atheist.

U.S. stock futures point to major decline on reopen
Markets in Europe end day in bear-market territory
By Steve Goldstein & Sarah Turner, MarketWatch
Last update: 3:57 p.m. EST Jan. 21, 2008

LONDON (MarketWatch) — If futures contracts traded on a day when U.S. stocks weren’t even due to open are anything near accurate, then markets will be in for a major decline on Tuesday, with concerns about bond insurers and the health of financial institutions dragging markets lower.

The Dow Jones Industrial Average futures contract was recently off 520 points at 11,586, the Nasdaq futures were at 1773.25, down 76.25, and the Standard & Poor’s 500 futures recently were at 1265, down 60.3.


Comment by txchick57
2008-01-21 19:16:49

Stucco, I”m in the ES at -57.5 down. That may be the biggest gap I’ve seen in my career. I can’t remember a bigger one. If I can’t make money buying that gap, then the world must be coming to an end.

Comment by Professor Bear
2008-01-21 21:14:07

Oddly, I am feeling more upbeat about the stock market right now than I have in years. I guess it is just a matter of personal perception, but I have more faith in markets that respond to underlying real world conditions than to those which always go up.

P.S. What is “the ES?” And how can one ever know if the world is coming to an end?

Peter Brimelow
Bulls’ fear factor grows
Commentary: Newsletters increasing apprehensive that bears are taking over

By Peter Brimelow, MarketWatch
Last update: 12:01 a.m. EST Jan. 21, 2008

NEW YORK (MarketWatch) — Bad market, and the top letters are increasingly (but not universally) worried.


Comment by txchick57
2008-01-22 05:11:42

mini s&p futures contract

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Comment by Professor Bear
2008-01-21 19:05:38

Credit Scare Spreads in U.S., Abroad
By Timothy Aeppel
Word Count: 1,347 | Companies Featured in This Article: J.P. Morgan Chase, PNC Financial Services Group, Wells Fargo, Terex, Caterpillar, Deere

The credit crunch that was sparked by problems with residential mortgages is spreading to the broader economy — with banks making it harder and more expensive for some small and midsize businesses to borrow.

While companies with strong balance sheets still can borrow what they need at good rates, others are beginning to feel the chill. In particular, start-up and smaller companies are finding that banks are setting higher rates, seeking more collateral or lending smaller amounts.

This is the way it often unfolds when there is a squeeze on lending.


Comment by Professor Bear
2008-01-21 19:13:50

Irrational exuberance appears to be a two-way street after all…

Asian stocks extends losses into a second day
By V. Phani Kumar, MarketWatch
Last update: 9:11 p.m. EST Jan. 21, 2008

HONG KONG (MarketWatch) — Asian stocks came under relentless selling pressure for the second straight session on Tuesday, a day after fears the U.S. economy could slip into a recession triggered a sell-off that spread to Europe and Latin America.


Comment by Professor Bear
2008-01-21 21:15:38

Cost of insuring corporate debt soars
By Robert Cookson and Sarah O’Connor in London
Published: January 21 2008 19:34 | Last updated: January 21 2008 19:34

The cost of protecting corporate debt against default surged in Europe on Monday as fears intensified over the fate of global bond insurers and the $2,400bn of debt they guarantee.

The credit market was in its blackest mood since the height of the summer’s subprime panic after Ambac, one of the biggest bond insurers, or so-called monolines, was downgraded by Fitch Ratings on Friday.


Comment by Professor Bear
2008-01-21 21:17:30

The Short View: Global plunge
By John Authers, Investment Editor
Published: January 21 2008 19:49 | Last updated: January 21 2008 22:55

On days like Monday, there is little to do but wait for the casualty count at the end. Even with the US on holiday, the sell-off was the worst single day for global equity markets since the terrorist attacks of September 11 2001.

All the world’s most important equity indices have now suffered a “correction” – by falling at least 10 per cent. Japan’s Nikkei 225 was already in a “bear market” – having fallen more than 20 per cent. The FTSE Eurofirst 300 joined it on Monday. Other sectors in a bear market include global financials, global consumer discretionary companies and US smaller companies.


Comment by Professor Bear
2008-01-21 21:21:13

New Year, Old Problem: Buyout Debt
By Matthew Karnitschnig
Word Count: 751 | Companies Featured in This Article: Deutsche Bank, Bank of America, Harrah’s Entertainment, Alliance Data Systems, Tribune, J.P. Morgan Chase, Citigroup

Many on Wall Street hoped the new year would dislodge a pileup of debt commitments waiting to be moved off banks’ ever-constrained balance sheets.

But as February approaches, the logjam is still in place, likely sticking banks with more losses, while squelching lending, too. That could hurt companies with solid credit as well as those buyout loans needing refinancing.

“We’re in a credit crunch,” said one senior investment banker. “There’s no money around for new deals.”


Comment by Professor Bear
2008-01-21 21:22:57

Now, U.K. Banks Are Facing Housing Storm on Home Turf
By Jason Leow in Beijing and James T. Areddy in Shanghai
Word Count: 793 | Companies Featured in This Article: Royal Bank of Scotland Group, Barclays, Lloyds TSB Group, Bradford & Bingley, Standard Chartered

Banks in the United Kingdom, after spending the past six months coping with the repercussions of the U.S. housing bust, are facing a new challenge: navigating a looming housing crunch at home.

After tripling in the past decade, house prices in the U.K. are slipping, adding to rising consumer gloom and sparking fears the U.K. could be on the precipice of a crisis that would rival that of the U.S. With payments on some 1.4 million mortgages resetting to higher levels this year — up 52% from 2007 — banks and mortgage lenders are likely to face rising defaults…


Comment by Professor Bear
2008-01-21 21:24:50

Bank of China’s Subprime Hit: Up to $2 Billion
By Jason Leow in Beijing and James T. Areddy in Shanghai
Word Count: 750 | Companies Featured in This Article: Industrial & Commercial Bank of China, China Construction Bank

Bank of China Ltd. appears increasingly likely to report a large write-down on its investments in U.S. mortgage securities, illustrating the broadening reach of the global financial downturn — and how one of China’s biggest lenders was less astute at avoiding the problem than it initially thought.

Analysts estimate that the state-owned lender, traditionally the most international of the country’s big banks, may have to write off a quarter of the nearly $8 billion it holds in securities backed by subprime mortgages.


Comment by Awaiting Bubble Rubble
2008-01-21 22:58:19

It looks like Asia is having a second day of the plunge and the US markets will definitely have a Black Tuesday. Given the economic data that will come out this week and many banks reporting earnings, I predict there will be some federal intervention by week’s end to stem the losses.

Comment by nhz
2008-01-22 03:17:53

not sure about that yet … europe opened 5-6% down today, but all losses were erased within an hour or so.

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