Bits Bucket And Craigslist Finds For January 22, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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good morning all; Ben is getting up earlier every day
cheer up everyone, EU stockmarkets opened 5-6% down today but erased all losses within an hour or so on rumours about a ’surprise’ FED rate cut today (or an even bigger rate cut end of the month).
The FED magic still works
Morning, nhz. They do have timers on these things. But, yeah, I couldn’t sleep. Should be a big news day.
I can’t sleep either. Too worried about the future. It’s eerie to watch things play out.
Good Morning Sunshine!
As I drink my morning java and scan cnbc, I keep thinking that I’m very excited to see what the day brings. They all look kinda dumbstruck, don’t they?
I don’t watch horror pictures and aside from x-file reruns, I get a little anxious watching suspenceful shows but today…..today I’m starting to understand the sick fascination of watching a train wreck or, dare I say it, a blood bath.
Happy viewing everyone!
The amazing thing is how many people are blissfully ignorant of the train wreck in their own back yard!
I speak with some very educated persons daily, Phds, scientists, VPs, etc. The greatest majority are clueless on any macro economic indicators. They are in for an unpleasant surprise on their next 401k report.
I made my husband move everything in his 401k to less risky/more conservative 6 months ago. He thought I was nuts but did it….we’ll probably still lose money no matter what but =shrug= whatcha gonna do?
I pulled everything I had in stocks out in 8/2007 & put it into CDs or Treasury notes, am so glad I did. I’ve made a little on interest, have lost nothing so far. My niece (an MSEE) was badly burned in 2000 with her retirement funds (lost many 1000’s) & apparently learned nothing from the experience. I talked to her a few days ago, she is aware her 401k has suffered in the last few weeks but wasn’t interested in taking any protective measures. She is neither clueless nor inexperienced, don’t know how to describe her beyond that.
Got news for you - these same people probably don’t pay much attention to their 401k either. They’ll just be blissfully unaware until it’s time to retire, then take a good look then, and exclaim - “Dang, I thought I was saving more than that. Guess I’ll have to work a few more years. Honey! - we can’t take that vacation I promised! Sorry!”
Unfortunately most people with 401(k) plans can’t move to Treasury funds all they can do is move to conservative funds but those still have a lot stock in them and until very recently many had a ton of money allocated to the housing market, because as we all know housing is “safe”.
I was fortunate that I recently changed jobs and did a 401(k) rollover early last year so I too moved things into a Treasury fund last October and it has since been a brilliant move.
I commend those who were able to liquidate and store in something safe are but I believe generally that timing market moves is more luck than skill (unless you’re an insider). I didn’t move anything and am continuing to buy in consideration that my tax deferred accounts have a 20 year horizon. I wouldn’t suggest that to anyone planning to retire in the next 5-8 years but I bet my account will outperform those who attempt to time given the same time horizon.
I don’t trust my luck or expertise to be doing market timing with a 401(k). If, like me, the niece’s retirement horizon is some 25 years in the future, than I can understand a refusal to muck around with it. I trust dollar-cost -averaging more than my ability to be right about when to move.
What I did in August 2007 didn’t seem like market timing, just common sense.
Everyone who thinks that these “tax deferred accounts” are a good are foolish. You will pay your taxes in the future, but the tax rates will be higher (or the dollar worthless). With the amount of debt we have you can rest assured that the promise of tax deferment is really just a carrot to get you to give up control of your financial future.
Thank you for wheeling out the daily boogeyman Dan. See you tomorrow.
I think he’s right, at least as far as those employee contribution plans (401k, 357b) are concerned. No control over “your” money (even though this is supposed to replace the loss of pension), HUGE fees to Wall Street (much more than pension funds ever paid them per capital invested), all for minor tax savings. The fees eat up the tax savings! Go, go gadget 401k plan administrator!
I have Roth IRA’s… I’ve thought about using the 357 plan at work… but it sucks… so no-go. I’d rather pay my taxes and have roads, NWS, GPS, and a few tactical nukes AND the return of my capital!!
RE: I speak with some very educated persons daily, Phds, scientists, VPs, etc. The greatest majority are clueless on any macro economic indicators.
I have numerous friend’s who are employed in the health care and public education fields.
They are virtually oblivious to the world having any sort of a financial crisis.
The money rolls in from a bankrupt
Medicare & Medicaid system; a dysfunctional health insurance system; skyrocketing property tax takings and for them everything’s hunky dory. WTF do they care.
When I make mention of the stories and insight derived from this blog-they look at me like I’m the creature from outer space.
It’s the what no bread?-why can’t they eat cake mentality.
I`m with tresho, I cashed out in sept. because of what I saw happening. You got hedge fund guys playing billions like they are jelly doughnuts and you got the google boys joy flying in 767 jets and on and on. Its the same thing I told my wife 2 years ago in Miami, I said ” this really freaks me out” shes like what, I said all these cranes, these earthmovers, dump trucks, this is too much. There will be problems! I timed the 2000 market also. But I will say on this one… I don`t know when I will dive back in.
Lane
We sold our stocks in March…
By holding stocks & 401k’s now, one aligns themselves with the imbeciles that got us into this mess.
Is that where you want to be at this point of the game?
ChristinBirmingham,
We’re in the same boat. Wife changed jobs last year, so we rolled all into an IRA, and sold equity positions to go into cash. The only thing we did with her new 401k (since I didn’t like the bond fund option) was to more gradually put in the $15k to dollar cost average a bit better. In a “normal” market, I generally like to get $ into the 401k quickly, since on average, prices go up over a long time horizon.
And VirginiaTechDan, there are ways to invest your IRA into interesting private investments–you need to hire a specialized custodian to do so, but it is possible. I just hope we have the option of paying our tax on our Traditional IRAs in 2010 to convert them to Roth IRAs. The next trick will be to invest those in my primary business…which is possible.
You get into 401ks because of company matches, not because of the tax benefits. That is just a side perk.
I hate to see this discussion of market timing. Once your AA (asset allocation) is determined then you stick with it. You do not lose money when the market declines!!! Only when you sell a security in a down market. Guaranteed in the long run those that try to time the securities market will lose.
Cheers,
Mdsn
“By holding stocks & 401k’s now, one aligns themselves with the imbeciles that got us into this mess.”
Imbeciles — a great description!
pubsky-
While the match is very nice, I think that Roth 401ks are beneficial regardless of the match…you get to grow after tax money for 30 years and get to take it out tax free? IMHO, the match is a perk, the 30 year growth without ever paying taxes is the main point for me.
Regarding Roth IRAs and Roth 401(k)s, I agree that the tax free growth trumps the tax deferred traditional IRAs and 401(k)s, but there are income limits as to whether you can invest in the Roth side of things. In fact, there are income limits on how much (if any) of your traditional IRA can be made with pre-tax dollars.
It`s what Joseph Conrad called, “the fasciation of the abomination”.
Beautiful turn of the phrase.
I’m putting $50,000 into equities this year. Right now, I am 31% government securities and cash and 9% precious metals. Human creativity will not turn off like a light switch, and most of you don’t understand that concept. The products of man’s mind will continue to make equities a better investment in the long run than metals and securities.
Future human creativity is already priced into equities.
“already priced into”
Human ingenuity is going on sale today…
http://finance.yahoo.com/q/bc?t=5d&s=GOOG&l=on&z=m&q=l&c=aapl
Dump-and-pump
http://finance.yahoo.com/q/bc?s=GOOG&t=1d&l=on&z=m&q=l&c=aapl
“in the long run ”
Like Japan? How long is long?
“How long is long?”
When we are all dead.
It doesn’t make sense to be pointing at Apple and Google as examples of human ingenuity. Apple’s latest product has turned out so far to be a dud, and their latest OS release is getting modest adoption by the installed base. Google hasn’t been able to come up with something new without buying it from an outside source for a while. By the time increasing profits bring storms of hype and high stock prices to a tech company the process of innovation has almost always been stopped for a while. If it weren’t that way then we wouldn’t need such emphasis on venture capital.
If Steve Jobs and the Google wunderkinds are not the poster children for human ingenuity, then nobody is. But thanks for weighing in with your opinions, Mole Man — I always enjoy your contrarian view of the world!
Human creativity won’t go away, true. After all, CDO’s were very creative. As were derivatives. As was Enron’s accounting. And so on.
The problem isn’t a lack of creativity, it is a lack of honesty and integrity - basic moral values. When we have an economy based upon a Ponzi scheme of debt and scams, ruled by a bunch of fat cats who contribute nothing and who get paid astronomical sums of money even for failure while the average worker can barely make ends meet, what end can there be other than a painful one?
“I’m putting $50,000 into equities this year.”
Bill, you need a couple of children: a daughter with an “-ism” or two, and a son to wreck your car.
From the end of the movie Little Big Man
[Old Lodgeskins] “I am going to die now, unless death wants to fight.
And I ask you for the last time…
…to grant me my old power to make things happen.
Take care of my son here. See that he doesn’t go crazy.”
[Old Lodgeskins lays down to die and closes his eyes. Rain starts to fall, landing on his eyelids, which continue to flutter.]
[Little Big Man] “Grandfather?”
[Old Lodgeskins] “Am I still in this world?”
[Little Big Man] “Yes, Grandfather.”
[Old Lodgeskins] “I was afraid of that. Well…
…sometimes the magic works,
sometimes it doesn’t.”
Ah, I love that movie.
A clip from the movie with that scene in it may be found here.
I recommend reading the book, as well. It’s a bit longer and ISTR includes more about the time he spend back with his ex-foster mom after her fall from grace.
Almost makes one believe it was just a tempest in a teapot, almost.
there is even more magic in the air … the rumour in Europe is now that the big central banks will be doing a coordinated rate plunge of 75-100 pb very soon (maybe today).
Can you believe it? They have learned NOTHING and are going to make the mess even bigger. I guess they hired Uncle All for this great plan…
“Can you believe it”?
Oh yea! You know the mid-night oil has been burning, I would very surprised NOT to see an emergency rate cut of at least .50 today. Of course they will not use the word “emergency”.
Has there been an unannounced attack on U.S. shores?
THE FED
Fed cuts rates 75 basis points in emergency move
By Rex Nutting, MarketWatch
Last update: 9:07 a.m. EST Jan. 22, 2008
WASHINGTON (MarketWatch) — Hoping to prevent a market meltdown and recession, the Federal Reserve lowered its overnight lending rate by three quarters of a percentage point to 3.50% on Tuesday in a rare move between formal meetings.
http://www.marketwatch.com/news/story/fed-cuts-rates-75-basis/story.aspx?guid=%7B6D70F269%2D5B6F%2D46AE%2D80D1%2DC79AEF777BBF%7D&dist=SecMKTW
I’m going to go out on a limb here and suggest that by this move, the Fed wants to convey a sense of panic, thereby encouraging the needed correction. That’s actually extremely clever on Bernanke’s part.
The only part about the cleverness that worries me quite a bit is that the Fed may be creating a “boy who cried wolf” problem for itself. By responding to a little dip in global stock with “emergency rate cuts,” they have wetted lots of powder which might have come in handy in a real future emergency. They are too-clever-by-half IMO.
P.S. I was not sure if wetted was a word or not (my spell checker said no), so I looked it up in Merriam-Webster online:
wetted
One entry found.
wet[3,verb]
Main Entry:
3wet
Function:
verb
Inflected Form(s):
wet or wet·ted; wet·ting
Etymology:
Middle English weten, from Old English wǣtan, from wǣt, adjective
Date:
before 12th century
transitive verb 1 : to make wet 2 : to urinate in or on intransitive verb 1 : to become wet 2 : urinate
It is whetted - as in to whet (sharpen) one’s appetite for something
I meant ‘wetted’ as in ‘gunpowder becomes useless when wetted.’
Yes! They just launched another missile! The “War On Savings” is having a surge!
Let’s see–our economy was screwed up buy people borrowing and spending $$$ they don’t have. Let’s try to fix it by taxing folks who have saved money and are trying to live on a fixed income.
Makes me want to vomit.
But… but saving is UNAMERICAN! Remember the Decidicator said to go out and spend or the terrorist will have won.
I am wondering if the “give money to people so they can spend it” program will end up being gift cards to certain stores, or money that can only be used to buy junk on certain credit cards, and only if you don’t pay off the balance for a year. That’ll work!
Also remember the Fed has *always* encouraged savings — on Mole Man’s own authority…
According to Jean-Claude Juncker, it’s “better” there. No need to panic, stay the course.
wow - you guys called it. The talking heads (or is it butts) on CNBC were so excited … but the futures are still down
Why not just dispense with the formalities and go straight back to 1%? That’s what I’m expecting. It only makes the mess bigger if there are enough people still left to borrow. Eventually we run out of borrowers even at 0% and you can’t lower rates any less than that.
Is this economy exhausted of willing and able borrowers now? No way to tell for sure, but if so, continued reductions of rates will not result in significant increases of liquidity.
“erased all losses within an hour or so on rumours about a ’surprise’ FED rate cut today ”
ah, and here I was blaming the PPT
I’ll make more money on an erasure of the gap down on the S&P than I did on the CFC. And will give every dime of it away. That’s ill gotten gains if there ever were such a thing.
Why not save some of that cash so you can finally buy that nice $99k house in Texas?
lol. nah. I can already do that.
They’re not making any more Texas.
If txchick is taking suggestions, I vote you use it to buy more land for the birds. Seems like a good use for something you feel is ill gotten.
I don’t have it yet ;0 The Fed needs to step up for the birds. Seriously, if you can’t make someting buying a 60 point S&P gap then the world has gone mad.
When did you cover CFC? I remember you saying you did many months ago when it was in the 20’s — but I think you shorted way earlier than I did. I shorted it in March, and have yet to cover.
I didn’t. I got $3.30 a share long on a 10K piece last week on that crazy speculation day following along with Hoz when he got in. I sold the long stock I had in my IRA in the summer of ‘06
Strongly disagree with the “ill gotten gains” part. Still will be fun to give away nonetheless, I’m sure.
nhz, any comment on why Spain wasn’t onboard w/the loss reversal? (down 7.13% around 7 am EST)
I think that is a glitch in your data - from what I’m seeing Madrid is just barely in the red, like most other EU exchanges. Dutch stock exchange (one of the most speculative of course) is even in the green today.
Watching yahoo fiance which I know is behind, what 20 min? 1/2 an hour after my first post to you, its already changed to -4.79 but it sounds its really even better than that.
Has the sky stopped falling yet? I am wondering whether it is safe to buy the dip today?
Sincerely,
Chicken Little Bull
By the dip — tomorrow?
MARK HULBERT
Shall we do the time warp again?
Commentary: Several similarities between today’s market and 1987 Crash
By Mark Hulbert, MarketWatch
Last update: 7:26 p.m. EST Jan. 21, 2008
ANNANDALE, Va. (MarketWatch) — The parallels between today’s market and those preceding the 1987 Crash are several — and disturbing.
Then, the dollar was in a free fall against foreign currencies. Today, as well. And then, as now, the U.S. government showed no signs of being particularly concerned.
Furthermore, over the October 1987 weekend prior to what would eventually become known as Black Monday, foreign stock markets plunged. The same is happening today too. ( Read full story.)
It was obvious to almost everyone, prior to the market’s opening on Oct. 19, 1987, that the Dow would have a terrible day. And sure enough, it did, losing 508 points.
http://www.marketwatch.com/news/story/market-crash-1987s-offing/story.aspx?guid=%7BC34E308D%2D1D8F%2D468C%2D98D4%2DC43B017EA6F9%7D
bybuy (still waiting for first cup of joe)Interesting that the byline location is Annandale, VA — a suburb of DC, and where I spent most of my youth.
Not a hotbed of financial journalism, as I recall. (Though plenty of economists, writers and DC policy wonks live there.)
The big difference between now and 1987 is the state of the economy in general. In 1987 we had already been through the fallout of the early 80’s and had purged most of the bad out of the economy - and so the 87 crash was more just a pure purge of market exuberance. Today is almost the opposite - the whole economy needs to be purged of all the excesses that have been built up over the last 20 years and the market is just predicting the painful purge to come.
Back in Oct 1987 it was not so clear that we ‘had purged most of the bad out of the economy’.
The WAR on SAVERS begins……………….
RE-inflation of the asset economy starts in earnest today!!
Cheap money will get the bulls running again with more malinvestements, but I don’t think the markets will hold up.
There may be some “temporary” runs up, but there are severe problems with fundamentals. More debt won’t make solvency problems go away.
Nonetheless, my “savings” are being eroded to try and force me back into the market.
Screw Paulson, Bernanke, Bush and the CONgress!!
Don’t fight the Fed — buy the dip!
Cat is out of the bag now…
Looks like US stock markets still down. If 0.75% can’t even “save” us, then it is confirmed that Helicopter Ben is truly pushing on a string.
IMF…
What slow down in the U.S.? I thought everything was Hunky-Dory! Just a soft patch on the way to a butter soft landing.
http://money.cnn.com/2008/01/21/news/international/europe_econcrisis.ap/index.htm?section=money_latest
yes, the older pattern of getting up earlier is manifesting in me also. pretty soon I’m going to be rising at 4am, dennys early bird by 5, pedal my trike over fred n ethels for some canasta, then a good fiber lunch followed by a long nap …. maybe some shuffle board, then call some grandkids, dinner at the clubhouse by 4pm, a little evening news w/walter cronkite, then bed by 6pm.
and keep of my grass you young whippersnappers!
Lucky, you. Someday I want to be able to go to bed after watching sunset and then wake up as sunlight streams in. It can be arranged in 8 to 10 years, I think.
When you do, get a rooster. Really.
Works wonders for readjusting the diurnal cycle. (As well as that of anyone within earshot…but then, that’s the trick isn’t it…?
“The best plan is to profit by the folly of others.”
Pliny the Elder
Folly of others….. He loaded up his ships and raced across the bay, just in time to be trapped in a pyroclastic flow.
He should have been more worried about the folly of his own.
There are many of us on here that are attracted to danger in the same fashion as Pliny, to better understand it.
I’ve been to Pompeii and Herculaneum many times and his account of what happened, is the only one.
Folly?
I have been there too. He died, and therefore did not survive to give his account of events. We know what happened to him due to Pliny the Younger… who did not rush across the bay in an rescue effort, and was therefore NOT killed.
He was an amazing man and you’d do well to study about him, before casting judgement about his motives.
You’d do well to jump in and study Pliny the Elder. They’re not making any more Plinys you know.
IIRC, Pliny was a Roman naval officer or bureaucrat of some kind & used his ships to rescue some trapped residents from the shoreline during the eruption of Vesuvius. I am thankful we still have people like that.
Indeed. In this era he would have mismanaged the ship, created false accounts that made it look like he had 10 ships (leverage, you know), sold the fake ships, then after failing in the mission, he’d get a huge golden parachute to leave. Meanwhile, the oarsman on the boat would be sent back to save the people and they’d be killed by the volcano.
That just goes to show you the perils of sailing in vulcanized waters in the pre-seismometer era.
Pliny the Elder
I’ve been wanting to try that beer.
Tasty beer…
Bonus Pliny:
“The lust of avarice has so totally seized upon mankind that their wealth seems rather to possess them than they possess their wealth.”
BeerAdvocate’s review:
http://beeradvocate.com/beer/profile/863/7971/
Yes, Pliny and the other Belgians make the trip to Santa Rosa quite worthwhile…and if your into hops, the Double IPA festival is Feb 9th at the Bistro in Hayward, if your local to the SFbay it’s worth dropping by. Last year was great Pliny the Younger, DogfishHead 90 and 120 min IPAs…etc many others. This year with the hop shortage it should be interesting and of course tasty…at the end of the day, “housing bubble, who cares…”
What’s the address? In Santa Rosa I’ll usually drop by 3rd Street Aleworks in down town, but I’m up for something different. If you make a trip to Santa Rosa though, gotta try 3rd St Aleworks… get the beer sampler… and a black and blue burger.
Russian River Brewing Company is at 725 4th st in Santa Rosa, enjoy the visit…good stuff
The Rules Don’t Change… B. Bonner
http://www.dailyreckoning.com/
The face of the mortgage crisis in Cleveland - http://blog.cleveland.com/plaindealer/2008/01/the_foreclosure_crisis.html
A factory stiff, Collins represents a surprising but increasingly prominent face of the foreclosure crisis. He makes more than $75,000 a year but cannot afford to make the payments on his $109,000 home.
He claims he did not understand the reality of an adjustable-rate mortgage. Now the rate has reset. His payments have increased from $829 a month to just over $1,300, and he has missed several installments.
He spends $40 daily on the lottery. It’s eating him alive.
The truly staggering fact to me in the whole story is that this guy is being paid $75,000 a year.
Anyway, IMHO there really is a workout solution here (legalities permitting). Switch over his loan to something like a 10-year fixed, and at the same time allow the lender to garnishee his wages for the payments.
He’s only buying $40 of lottery tickets a day because he HAS that amount in his pocket.
$40 a day? unbelievable
in nyc they have $20 scratch off tickets now
20 freaking bucks!
and you always see the poorest of the poor in line to buy those things
well crap for brains $40 x 30 days in a month = $1200
go take a long walk off a short cliff
$20 is crazy for a scratch off ticket! I might have seen a few here too. I think the last time I bought a scratch off ticket was last year for $1. I play the Florida lottery about twice a month on average and spend $1 or $2. Don’t count on the lotto beyond very remote hope.
RE: I play the Florida lottery about twice a month on average and spend $1 or $2.
Mazzland has about 20 lottery games with ticket prices ranging from a $1 to $20.
What blows me away, is when I trundle down to the corner convenience store for coffee and a newspaper, @ 6:30AM, I usually have 2 or 3 people in line ahead of me at the cashier’s counter loading up on scratch tickets…I mean WTF? It’s 6:30AM!
No doubt in my mind, lotto tix are an addiction.
$40 Dollars a day. He needs to get serious and double down his wager!
I never play the lottery.
(points finger) Tax dodger.
Hehe. It’s only a tax on the innumerate. HBBers need not pay.
Voluntary Tax
“Given his personal testimony, it’s hard to tell whether he’s the victim of a predatory loan or simply a financial illiterate.”
Regardless of the loan terms, he’s a financial illiterate. No way he shouldn’t be able to make a $1300 per month housing payment on a $75k annual salary nor is there any reason he should be spending $40/day on the lottery if he isn’t making his housing payments.
$1 a week on the lotto is fine, $40 a day is a huge waste! It only takes one ticket to win and buying more than 1 ticket, you know the other tickets are not going to be winning tickets
You are absolutely right.
Back in the pre-history days when a fabulous fixed interest rate was 10%, we had a mortgage payment (with tax escrow) that was that much and had around that income. Not a problem at all.
Why can’t they set him up with direct deposit from his paycheck to his checking account, and then to autopay his mortgage from his checking account, like normal people? He’ll never see the money and he won’t be able to gamble it away. (Unless he times his trip to the ATM just right between transactions, but how likely is that?) This isn’t rocket science here.
He’s spending 800-1000 a month on lotto tickets. I don’t want to hear about how he can’t cover the increase in the MTG rate, he could stop buying lotto and still have FAR more disposable income then he did before his rate reset.
This guy needs to be in debtors prison; no doubt about it.
I’m boggled by the fact that the Plain Dealer is even covering this story. Mr. Collins has obviously chosen to put himself in this situation and could easily extricate himself any time he wanted to. If his is the most sympathy-inducing story to be found in Cleveland, then Cleveland’s in pretty good shape. Unbelievable.
MD, that is a great point. He might actually be better off after a foreclosure, and renting for a few years. He might enjoy the care-free existence of the renters life more…
He’ll be featured in fewer newspaper articles, but those are the breaks.
His biggest problem is that he’s a gambling addict. The fact that he has an adjustable mortgage is secondary. Fifteen grand a year on lottery tickets? If he was renting an apartment this would be a story about a guy making $75K who couldn’t pay his rent.
And if he says he’s spending $40 a day on the lottery, he’s probably lying. I’d even wager a guess that he’s understating his gambling.
I think you’ve got it. Something very fishy about him not being able to make the payments on his house with the pay he gets.
“Something very fishy about him not being able to make the payments on his house with the pay he gets. ”
This is not surprising at all. The new “Plan” to save the over-extended is to allow people who are “unable” to make their payments when the mortgage resets to get a FEDERALLY FUNDED new mortgage FIXED RATE, with lower payments.
I’m sure the talk on the street amongst all these people is to poor mouth and complain about how they have been taken avantage of and need the government to intervene and save them from the higher payment costs.
They get to live in a nice house cheaper than rent, and when the bill comes due, it’s time to walk……….or get some Liberal politician to steal our money to pay their bills.
This person is not a FB. He’s just a loser, period.
$40 a day is approximately his mortgage payment. He’s got a gambling problem is what he’s got.
Interview with Jürgen Stark from the ECB:
http://www.dradio.de/dlf/sendungen/interview_dlf/727773/
Engels: Wie steht es um weitere Zinssenkungen?
Stark: Ich sehe hier nicht das Wort “weitere” als angemessen, denn es ist ganz klar, dass wir ein eindeutiges Mandat haben. Die EZB hat nach dem EG-Vertrag und nach ihren Statuten das Mandat, prioritär Preisstabilität zu gewährleisten, und augenblicklich haben wir es mit einer relativ hohen Inflationsrate von über drei Prozent zu tun, die noch über die nächsten Monate des Jahres anhalten wird. Wir werden genau beobachten, wie sich diese Inflationsrate entwickelt und wie sich die Marktteilnehmer auf diese neuen Bedingungen einstellen, und werden entsprechend handeln.
Engels: Was erwarten Sie von den europäischen Regierungen zum Umgang mit dieser Krise?
Stark: Zunächst einmal müssen die Ursachen und die Wirkungszusammenhänge der Turbulenzen und der jetzt erfolgenden Korrekturen identifiziert werden. Diese Ursachen und Wirkungszusammenhänge sind sehr vielschichtig. Deshalb warne ich vor Schnellschüssen, die zu mehr Regulierung führen.
Es mag zwar hart klingen, aber ich sage noch einmal: diejenigen, die riskante Investitionen getätigt haben, müssen die Konsequenzen ihres Verhaltens dann auch tragen. Auf keinen Fall sollten die Regierungen zu mehr Nervosität beitragen.
In English: Stark says the ECB will keep watching inflation and will not cut rates now. The mandate is clear: price stability. He adds that governments should not make the markets more nervous. And finally, he says:
It may sound hard, but I say it again: Those who risky investments, must now face the consequences.
The last sentence should read:
“It may sound hard, but I say it again: Those who made risky investments, must now face the consequences.”
Stark is right, but I’m afraid he represents a small minority in the ECB council now. And outside the ECB - dumbocrat circles in Brussels and national governments - I think about 95%, from left to right, is in favour of additional (huge) rate cuts. I’m even wondering if they keep releasing these hawkish stories lately to increase the effect of a surprise ECB rate cut …
latest news from Netherlands: Dutch inflation is just 1.6% instead of the 3.1% in most other EU countries. The statistics office publiclyl explains that inflation in Netherlands is very low thanks to 12% lower prices for consumer electronics and computers. Don’t worry about the 15-25% increase in food and energy prices, and 8-15% increase in gov. taxes, healthcare, tuition etc.; nobody spends money on that these days. I predict even more tampering with CPI calculations now that banks and government are getting in crisis mood.
Yeah, the dumbocrats all are in favor of rate cuts. Their problem: Their influence on the ECB is minimal. The ECB does not take orders. They cannot even threaten Trichet and Stark not to propose them for a second term, because there never is a second term at the ECB anyway.
So far, whenever politicians and dumbocrats tried to tell the ECB or the Bundesbank what to do, these central banks did the opposite, in order to display that they are indeed independent.
We shall see…
Inflation numbers: Does anyone still believe the official numbers? Even Germans are very sceptical about the official numbers, even though they are not skewed by hedonics. As a response, the German statistics office has created a web site, where everyone can calculate one’s own inflation numbers. Mine, no surprise, is 7.2%.
And, I think, computers and electronics have become cheaper across the borders as well. So, why is it 1.6% in the Netherlands and 3.1% in Germany?
I’m pretty sure that if ECB does not cut rates soon, they will no longer exist in their current form within 1-2 years. Some countries may abandon the euro, or simply totally ignore the current ECB budget rules, or set their own rates that are deemed appropriate by the dumbocrats (plus currency controls or something similar).
answer to last question: the Dutch statistics office DOES use hedonics (and all the other distortions invented in the US).
Of course price of electronics in Netherlands and Germany is nearly the same, the borders are open. I think real CPI in Netherlands is 8-10% for most people.
Changing the EU treaty still requires an unanimous vote of the member countries, and I don’t see that (yet?).
On the other hand, it is perfectly clear now that the “one rate fits all countries” approach doesn’t work that well.
Technically, there is no way out of the Euro, other than leaving the EU entirely. Things will have to become much worse before that happens.
Spain might be a candidate. Leaving the EU, they could reintroduce the Peseta, which would fall from a cliff. The Spanish central bank would then have to raise rates, because Spain has a severe current account deficit, so they need foreign capital.
Old school Euros…
“The Latin Monetary Union (LMU) was a 19th century attempt to unify several European currencies into a single currency that could be used in all the member states, at a time when most national currencies were still made out of gold and silver.”
http://en.wikipedia.org/wiki/Latin_Monetary_Union
Thanks for that post, I need the practice. I’ll be in Berlin for a couple days this spring for the first time.
I’m assuming your screen name suggests a location, not a relationship to the famous Irving. Would you mind giving me a local’s list of the top 4 things to see while we are there on our whirlwind tour?
Yes, I live in Berlin, Germany.
Top 4 things:
- Brandenburger Tor, holocaust memorial, Reichstag building (all very close to each other)
- probably Checkpoint Charlie
- museum island
- Kurfürstendamm and memorial church
Have a look at
http://wikitravel.org/en/Berlin
Thanks Frank, I bookmarked that page.
And when at Checkpoint Charlie make sure to eat at Snackpoint Charlie! Well, not that it’s really any good, but I had to eat there because I love a bad pun.
And stay at either the Grand Hyatt Potsdamer, Ritz Potsdamer, or Hotel De Rome.
Yeah, compared to the same brands in other countries, the Ritz and the others are very, very cheap…
“Wirkungszusammenhaenge”. Don’t you love German language. Sorry for those who can’t understand that word, don’t bother. It says what is talked about here, without saying it.
I’ve been studying German for about two years as a hobby; those endless German adjectives still amaze me. They come up with language combinations that we’d never think of in English. Still can’t understand their meaning unless I read them…
HBB Predicition Comes True.
Illegal Boarding Houses Now Spreading In NYC Despite Laws…
http://www.nytimes.com/2008/01/22/nyregion/22homeless.html?_r=1&th&emc=th&oref=slogin
spike this is a very widespread problem and will lead to fires and many other problems as well
i predict a major blackout in nyc area possibly this summer
the grid is so strained and a real heatwave will do the trick
Het Nostrodamus, predicting a blackout in NYC in the Summer is like predicting snow in Buffalo in winter.
mgnyc99,
many of the worst fires in nyc, the ones that kill firemen, are started by folks in illegal boarding houses-all with gimcrack heating plates and other plug-ins overloading aging wiring.
Love that the government is sending the poor to illegal and dangerous shelter.
Also in Toronto.
http://www.thestar.com/News/GTA/article/295263
The ones in NYC sound cheaper and nicer!
Funny Chinatown always seemed to have this type of boarding houses, but then they usually were recent immigrants with a job. Not the minority homeless and addicts. Can’t stay in Harlem, its being upgraded quite a bit, so these people are not welcome there anymore.
The HBB question is when are the Mc Mansions going to taken over by cities for this purpose, seems to make more sense then stacking bunk beds in a tenement apartment.
even the homeless don’t want to be stuck out in the burbs. Without a car they will have absolutely no mobility.
Illegal boarding houses have been around in NYC forever. Recall that the Census Bureau suddenly “found” an additional 500,000 people in NYC in 2000? Well, our population did not grow that much. Lots of one-family houses converted to twos and threes, and twos and threes (and old factories) converted to boarding houses.
NYC has very liberal zoning laws. Not Houston, but if you take into account non-enforcement, close. And NYC government is heavily privitized — the contract budget is huge. Don’t believe the reputation.
The tight conditions are due to a large low and moderate income population (including lots of people working, including college graduates) and high real estate costs. The question is, will lower real estate costs cause this to spread to the suburbs, where the zoning is more exclusionary? That’s going to be a hell of a fight.
If by “found” you mean they came out with 2000 numbers that were 500,000 larger than the 1999 estimates, then that happened in Chicago as well. Except that the difference was a little under 200,000 (if I remember correctly) - about the same ratio as NYC. Since they went back to saying Chicago was losing people again when they went back to the yearly estimates in 2001 on, I figured it was a Census Dept problem with urban area estimations more than anything else. They probably just bought into the “everybody wants to live in Vegas, Florida, North Carolina, Arizona, California, Montana, etc” scam.
RE: Illegal Boarding Houses Now Spreading In NYC Despite Laws…
Simply more evidence we’re becoming a 3rd World country.
How long until the New Hoovervilles (Bushvilles) become Brazil-styled favelas that are larger than the “real” cities?
There really oughta be a place for dow corning enhanced homeless women, eh?
Hooterville
We’re walking into foreclosures on Long Island that have been cut up into 3-7 housing units. These were all built as SFRs.
During the last housing bust I recall seeing the same thing in alot of foreclosures in So Cali. Alot of the homes were SFR, and were divided up into multiple housing units, complete with hastily thrown up drywall walls, insides of the houses were trashed and filthy. Most of them would have required in the tens of thousands of dollars to rehab them to make them safe and liveable for an actual single family!!!
Interesting analysis of the impact of the “birth-death” model on the official employment statistics:
http://tinyurl.com/3bkvms
“San Diego taxable sales for the second half of 2007 were 2.4 percent lower than they were for the same period in 2006. This indicates a pretty serious slowdown in retail activity.”
“I called Mr. Whalin to get his take on the latest EDD retail job growth figures. He was very skeptical, saying that he talks to many retail sector participants and that the anecdotal evidence presents little doubt that the industry is weak. He ascribed this frailty to the housing downturn, unsurprisingly, and summarized his take without equivocation: ‘Hiring in the retail sector has not been good this last fall, and it’s certainly not expected to be good for the foreseeable future.’”
BAC reports earning down 29% at .05/share. Analysts expected .21/share.
Ouch!
Sorry, I don’t know where I got 29%. Correct number is down from $1.16/share last year. That’s 96% decrease in profit.
Double ouch.
How’s that merger with CFC looking now?
Rumor is BAC has plenty of outs on that merger . . . don’t count on it just yet.
They should exercise their outs and then buy it later at $4 mil instead of $4 bil.
Are you kidding? I’m betting against it.
BAC (+4.39%) and CFC (+7.46%) both up at the moment.
Sell the pops buddy, sell the pops.
all the news channels are reassuring the public that “all is well; do not panic.”
could you really expect otherwise?
Just imagine the panic going on, as the powers that be on Wall Street try to shock the patient back to life, by giving it a 1% shot of pure adrenaline, which might backfire.
Like that scene in Pulp Fiction:
“Get the shot!, Get the shot!”
Bank of America’s quarterly net income plunges 95% to $268 million, or 5 cents a share, far below estimates. More soon.
money.cnn.com
With this kind of news why take over CFC? A glutton for Punishment! What will be left of CFC once they subtract out the subprime loans & the broker originated loans? Plus credit card receivables are weakening too?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aIEOzwhG8itA&refer=home
Bank of America’s quarterly net income plunges 95% to $268 million, or 5 cents a share, far below estimates.
Should be good for an extra 25 bps from Ben…
Tumultuous Tuesday…
This really does remind me of Oct. 8 1998 which I think was also a Tuesday. Lots of panic, talk of falling into the abyss, etc.
yen; strong like bull!
Jan. 22 (Bloomberg) — The yen rose to a five-month high against the euro as a slide in global shares prompted investors to cut holdings of assets funded by loans from Japan.
Japan’s currency gained to the strongest since May 2005 against the dollar on speculation a report this week will show sales of existing homes in the U.S. fell in December, adding to concerns global growth will slow. The yen advanced the most against the New Zealand and Australian dollars, targets of the so-called carry trade, as Asian stocks extended a global decline on pessimism the U.S. will enter recession.
http://tinyurl.com/2l7dv9
What happens when you unwind $1 trillion in carry trade? We will find out.
Move the carry trade to USD.
yes, excellent point …
Yha, which is only going to dump the USD lower. As people borrow USD at low rates to buy other currencies. they then sell those USD to buy others.
Exporting inflation. Our bet “made in the USA” product.
fear the option arm:
The no-worries lending that inflated the housing bubble is resulting in a flood of soured option-ARM loans, adjustable-rate mortgages that allow borrowers to pay so little every month that their loan balances rise rather than fall, sometimes sharply.
Numbers from industry trackers suggest that these borrowers, most of whom boast respectable and often top-tier credit scores and appear to have substantial incomes and home equity, are starting to create a second tide of defaults for lenders swamped by the meltdown in subprime loans made to people with bad credit or overstretched finances.
http://tinyurl.com/3cydh5
I think the more interesting comment and one we’ve heard before on this blog is “More disturbingly, almost 60 percent of the stated amounts were exaggerated by more than 50 percent,” the institute reported, saying the mortgages clearly deserve their “liar’s loan” handle.”
60% of the loans exaggerated income by 50% or more. WOW! So, if they only make half of what they say they make and can’t sell the house for more than their loan, life is going to get really really ugly for these people.
I call this “predatory borrowing”?
In addition, something does not add up in the Chicago area either. The amount of McMansions going up around here boggles rational thought. Only 1% of the population has an income of 300K+ to support the loans. Where is the $ coming from? LIER LOANS
The guadiest McMansions in the Chicagoland area can be found in a small subdivision in South Barrington. Take IL-72 westbound and just after you cross over I-90 on a sizeable green painted girder bridge make a right at the first street and then go up a few hundred feet and turn right.
HUGE, the biggest McMansions I ever saw while mapping the region. There’s even a pink one - and tons of columns and other garbage. They all have to be car dealers and contractors living there.
I’m familiar with the area. Those aren’t McMansions… they ARE mansions. You would definitely need a staff to maintain those. And where the income comes from to support those beasts… heaven knows. There might be a a couple such jobs in Schaumburg, but the rest would have to come from Chicago, which is easily an hour commute even though its a fairly straight shot down I-90.
“predatory borrowing”?
How about LOAN FRAUD? It’s like robbing the bank without using a gun, so you won’t go to prison for the hold-up.
We just need to see some more prosecutions for this crime and it will be stopped.
The Bush Administration has been very lax in enforcing our laws, while worrying endlessly about the freedoms of people far removed from America.
If laws were enforced, this mess could have been stopped.
As always, the mainstream media is a dollar short and a day late with most of their press releases but this one removes the idea that house owners are somehow segmented according what type of mortgage they have. I’ve always stood by the fact that it isn’t the credit quality of the borrow that is the problem and this proves it as it states that those with “equity”, good credit quality and high income are in same position as those who didn’t have high cashflow. Although credit quality is now taken more seriously, the common thread stringing all these people is the mis-valuation of the underlying asset.
A note to NAR, MBA, Wall Street and J6P; Wrap your empty skulls around the last sentence.
Talk about a day late and a dollar short:
LATimes reports today on the Virtual Bank that disappeared six months ago in Virtual Life.
RE: the common thread stringing all these people is the mis-valuation of the underlying asset.
But the NAR, MBA, Wall Street and J6P all wanted, no…DEMANDED- the bogus appraisal number-and this was the basis upon which the entire bubble was built.
Liar loan?
BFD…it wouldn’t amount to crap if the contents of the appraisal were misleading and fraudulant.
It’s all exactly like Enron’s cooked books.
The MBA’s proclamation of ignorance is particularly nauseating.
These chucks knew exaactly what was going on.
That it is all collapsing should surprise no one.
Asia enters a bear market:
http://www.thestreet.com/s/asia-enters-bear-market/markets/worldmarkets/10399638.html?puc=_tscana
It’s about time. There was way too much speculation there. I was talking to a Chinese friend today. He says most of his friends and relatives had put ALL of their savings in individual stocks. Unbelievable. The J6P there is extremely naive as far as stock market is concerned.
Yes, India has been experiencing a major stock market boom, especially financials. Land prices in big cities have made San Diego price increases look like Cleveland.
I have tried to tell my friends from India it is impossible to maintain. Their counter is that this time it is different, and India is different, and even though house prices in major met areas are many THOUSANDS of times the average income, it is only going to increase.
Entire families are forming pools to invest all their money in land and the market because of the guaranteed fantastic riches awaiting them. All objects are met with kind smiles at my naivete.
Indians have always been ga ga about Gold, and it’s a natural fallback position for them, in lieu of land & stocks…
Should be interesting what develops~
I have been saying for a couple of years now the china of today reminds me of the USA in the late 20`s. When we and a few other large nations slow down, they are going to be like, who the he11 pulled the rug out from underneath us. Damn, this is painfull, and what about the thousands of new building be built. I say, well, we can turn them into starbucks, nothing like a 500,000 sq. ft. starbucks.
Lane
When the Economist commented that a lot of Chinese growth was generated internally, it was right. The problem is that a lot of this internal growth was generated via a massive real estate and stock market bubble. Real estate in particular is going nuts. The largest mall in the world is located in China, and it is not only half-empty, the aisles aren’t exactly swimming in customers. See-through office buildings are a recurrent feature of Chinese cities.
Nikkei is 31% off its recent highs. Butchered!
Stucco, remember how you used to complain that the Dow could never go down even 100 points?
Isn’t it amazing how fast things go from Goldilocks to Freddy Kruger? You start to see how ephemeral these “gains” were and how easily they are stripped away. 18 months or so of market gains gone in 3 weeks? And of course, those wacky hedge funds being blown out. Those things are the scourge of the earth.
LOL after I see the rate drop, the futures rally, I cannot help but hope that the hbb’ers took some profits.
A very busy day next post in 4 hrs
Good luck TX!
If this rally of 75 does not hold…..look out below.
The market has the appearance of having undergone a “change of regime” over the past 1-year. I am not sure whether this is due to a change in the rules of the game, or a change in infester behavior. Please correct me if I am wrong, but I think there was a move to eliminate trading collars a couple of months ago. Nonetheless, it appears that discretionary stock market price plunge protection is still in full force (witness the 75 bps overnight “emergency” rate cut…).
Can we talk about house price crashes some more? How overpriced is the Pittsburgh suburbs? How good is Penn Hills? If I buy a 3/1 1000 square feet house for $50k there, how much will it depreciate once the market bottoms out? It’s much cheaper to buy than rent in that location.
a 50k house? how long do you plan on staying?
that is dirt cheap, what does it rent for $500 a month?
Its funny how people say $50k is dirt cheap but that was the normal market price in most locations before this insane house bubble. In a few short years, no one is going to think $50k for a starter 1000 square feet house is “cheap”
The disparity between locations is way too large, this will rapidly shrink. I will be staying in Pittsburgh a while, maybe forever depending how cheap houses become elsewhere and how safe the other locations are.
$500 is too much for rent when a $50k house costs far less and I might be able to simply buy that in cash.
Please recommend some good, safe suburbs. Penn Hills is the biggest
Why don’t you rent for a few months in the area & start exploring the suburbs so you can learn for yourself? I realize it’s hard to move, but you will be able to make a much better selection of housing if you live close by.
I don’t think your question can be answered in the present situation, no one can really know. It’s not just the housing market that may bottom out. If I were a renter, I would just continue to rent until the situation clears up.
Well said. Great rewards await those who can wait for a few months before they even consider buying. Folks, the drama is unfloding exactly as we predicted on this blog. Patience!
Bye,
The mere fact that you are considering a $50K house in Penn Hills proves that you do not know the area at all and are not prepared to make a smart choice. You need to know why there is a cheap house in a cheap town surrounded by much more expensive towns. Why so cheap, a few miles from “miracle mile” and on a major artery to downtown?
What changed your mind from rural to suburban? I was in Monroeville a few weeks ago, McMansions popping up like daisies.
I think it is incorrect that you can buy cheaper than rent in PA. There is a huge gain in knowing some of the local secrets before you hand over your life savings.
When I transferred to Pittsburgh years ago I found the best value for dollar in points north, Butler/Beaver. I suspect things have shifted further north, which is where you were looking before.
A 3/1 in Penn Hills?
Run away. Far far away. It will be the crappiest 3/1 you’d ever see.
“Almost two- thirds of Countrywide’s loan originations in 2007 came from mortgage brokers and other third parties, a practice that Lewis has said Bank of America expects to curtail.”
Isn’t that business mostly gone? There can’t be much left to “curtail”.
According to the NY Times and several mortgage brokers I know, CFC never sent 1099’s to all the brokers they paid to bring them the neutron bomb loans (house remains standing, borrower dies, with a half life decay hanging over the scarlet letter asset). CFC did $400,000,000,000 in loans through the brokers during the last 5 years. If they paid them 1% rebates, that is $4,000,000,000 in compensation. I sent a complete report to the IRS about 3 months ago completely outlining this issue. They have confirmed an investigation in progress and want me to keep them informed of pertinent information. The penalty for failure to issue 1099’s is 5% of the unreported income! I look for the IRS to slap CFC, now BAC?, with a fine for $20,000,000 or more. Here is the interesting part…..the IRS pays a finder’s fee of 15-30%, so if they truly get busy, there could be a whistle blower reward of somewhere between $3,000,000 to $6,000,000 headed my way. If that happens, the world of mortgage fraud will be turned on its head, as I will have unlimited funds for PaladinReports.com and hire a small army of investigators to privately pursue the fraudsters. It will be the equivalent of Charlie Wilson’s war, only on the mortgage fraudsters and real estate brokers. And Ben will have a little expansion capital of his own, if PayPal can handle a $100,000 donation! The same goes for Bakersfield Bubble, since he suggested the idea.
2008 will be very interesting.
Paladin
Have Gun, Will Travel
Wire Paladin, San Francisco
Paladin!!!
So good to see you old friend, you have been sorely missed.
Paladin,
you amaze me. If the IRS coughs up the dough, make sure you pay yourself well. You deserve every nickel. Congrats!!
Paladin, even though I’m from the other side of the pond, I enjoy all your messages. Keep up the cleanup work
too bad we don’t have IRS finder fees in the Netherlands, I would love to arrange something similar here. After some preliminary questions I only got the recommendation not to get involved in the subject - not sure if that was because of all the white collar criminals involved or because our government has too much at stake.
I am all for catching fraud, but the fraud you need to catch is the IRS itself. Not all income is “taxable” under the constitution and it has even been upheld in courts (when you get a fair trial). Seeking revenge by helping the IRS commit fraud doesn’t help anyone but yourself.
Everyone has heard the horror stories of government audits and yet no one questions the invasion of privacy without a warrant! Everyone has heard of tax liens and seizures of property, but few stop to ask “where was the trial by jury that proved the tax liability and guilt before denying someone the right to their life, liberty, or property?”. Everyone knows that the government must reimburse people at fair market value for property seized by eminent domain, but few ask why the government can seize property (tax) simply because you made a private exchanged with another! (If you cannot make exchanges with others then your property is “worthless” and the government owns it).
The power to tax is the power to destroy and taxing power is automatically limited by the jurisdiction of a government. The federal government has no jurisdiction within the States. If the federal government cannot legislate a ban on working then they cannot tax it. To give such magical power to the word “tax” undermines the entire constitution because then all congress would need to do is pass a detailed set of regulations and highly tax all deviations from it.
There are so many things wrong and illegal with income tax that it deserves particular attention of every citizen and it has NOTHING to do with not liking “taxes” or “greed”.
If you want to read a legal case that was upheld in court you should read this:
http://www.truthattack.org/cryer_MEMORANDUM.pdf
VTDan, I’m with you there. Nothing at all against Paladin, but the IRS is the biggest bully on the block.
That the IRS should be reformed, replaced, or removed does not make it fair for some people to skip their tax obligations while the rest of us pay.
If I have to pay taxes, you can bet I want the IRS harassing other people to make them pay their taxes, too. Otherwise, I end up having to pay more.
Exactly AC. And there is some big money players out there who’ve been cheating the system for a very long time. I applaude the IRS in their efforts to bring justice to us and the system by going after the frauds and cheats.
Send this helpful advice to Wesley Snipes.
Paladin, you have no idea how much I appreciate what you are doing. You deserve every penny you can get and then some. Rock on, bro’!!!!
Paladin, so good to see you are still there, watching out for Uncle Sam
and trying to give the fraudsters some sleepless nights. I haven’t seen you post a comment in a long time. The 1099 things seems like a very good idea. From what little I understand, you are not obliged to report the income unless the person who paid you sends you a 1099, so all those brokers have not broken the law, yet. If I report every last penny, so can they. I hope you get a lot of money to go on with your work. Good luck.
Don’t believe it. You have to report all income, 1099 or not.
Exactly right. You owe income tax on the income.
The 1099 is just a tried and true method for the IRS to keep track of most of these payments.
Paladin, glad to hear from you! Glad you’re okay. Keep fighting the good fight!
Just make sure Ron Paul doesn’t get elected and elminate the IRS before you get it.
5% of 400bn is 200m not 20m. : )
No, 5% of 400 billion is 20 billion, but the money in question here is the 4 billion Countrywide paid in broker commissions, not the amount of money it lent to house buyers. Whether all brokers did or didn’t report the full amount of their commissions is unknown, so the amount of “unreported” income is simply a guess. 5% of X cannot be determined without knowing the value of X.
Opps, 5% of 4billion is 200million. ; )
It is .5%. One half of one percent of the income not reported. I left out the decimal. My appologies.
Since you caught your type, cancel the above correction to your original post.
Interesting information. However CFC is not “now” BAC. The sale is projected to close until about the 3rd quarter, and BAC isn’t going to just step into a monster fine from the IRS. If you can read it in the NYT, you know that the people at BAC doing the research are talking directly to the IRS.
Maybe they could take any IRS fines out of Mozilo’s payout. Wouldn’t that be justice?
Paladin — You are my hero. Thanks for staying the course.
Good old Paladin. Hope we see some more of your reports from the trenches going forward. Seeing this stuff brought to light is satisfying as hell (although equally troubling).
Paladin!
Good to see you parting the saloon doors again. Glad you’re still intact and kicking arse out there. Tell us a good story about life on the trail?
You know, I get the feeling that a year or two from now, the only place to look for optimistic opinion will be this blog. The lemmings are changing direction.
Mr. Tice of the Prudent Bear was on Bloomberg this morning. He looks for the Dow to fall 5000 points over the next 2.5 years.
Finally, someone more bearish than me.
I just bought his fund a few weeks ago, so I hope he is sorta right. But not maybe quite so much. 5k would put a crimp in my plans. Long on too much. (Looooong time horizon)
Gold bounced off $850. It’s a buy here.
I’m already in. Waiting now to see how people process this rate cut.
The Trend is Your Fruend. Gold was dropping last week, before the market crash. What was that all about? Commidities are going thru a retraction.
Gold was down $20-25 the past day, and is now up a Dollar…
How are any country’s stocks doing, in comparison?
Now up $35. It was a screaming buy at 850, hope some people got in.
The one day gold is down, the market is closed to Americans.
So much for the thesis that the asians and arabs are buying up all the gold. It looks like the major buyers are the rats on the sinking ship.
There it is… the .75 cut.
OMG! They did it!
YEeehaw! Cha ching!
I will be reloading on the bounce (if there is one.)
Yep!
Futures not reacting very positively. Whatcha think TxChick?
I set a stop and went out to get a bagel. I dunno. We’ll see what happens after the open.
When all you’ve got is a hammer, everything looks like a nail.
And when this cut doesn’t “fix” the problem, they can always cut another 1.5 points when they meet next week. Pretty soon Ben is going to run out of magic bullets.
1984 the last time they did .75?
The panic is palatable at this point. A 75 emergency rate cut, does anyone know the last time that happened?
Futures are all over the place after the news..
euro gold price is back at its all time high now. New all time high probably in the cards for later today. But we know the central banks no longer care about inflation …
euro/dollar rate unchanged on the news; I smell a rat :((
I was afraid the FED would freak out. Lets see what GOLD does now
Wondering if I got the balance right between physical and miners. I’m worried that if the herd decides we’re in for a depression that the miners might get hammered.
computer blip gold might just suffer the same fate as the other blips…
Trader on MSNBC just reported that his peers are disappointed it wasn’t more. They were looking for a whole point, he says.
More? MORE!?! Greedy ba5+ar6s!!
So what’s the next bubble they’ll feed with all this cheap money?
after this B-52 dropping there is not much left to do for Uncle Ben … Let’s hope that next time Shrub doesn’t start dropping nukes (on Iran) instead of dropping rates, to keep the party going.
today Uncle Ben’s Viagra is still working, Dutch stock exchange now up more than 7% from this mornings low; some other EU exchanges still a bit in the red.
Band-aids on gangrene. Here comes the hyper-inflation. Got gold?
Picture the bad guy after Superman (the REAL Superman, George Reeves) breaks the door down and stands there arms akimbo. The bad guy empties his revolver, bullet after bullet bouncing off the Man of Steel’s center of mass. Then the bad guy give a quick puzzled peer at his piece, and then in desperation throws the gun at Superman.
The Fed is emptying its bullets, with no effect. Any rate cut was already priced in, and the clowns are ignored. The market has bypassed any hope that the Fed could handle things.
Desperation, even panic moves, while we are told “All is Well.” The Fed is all-in, and it is now seen as powerless.
The oldtimers saving all their lives are jettisoned as the value of their savings are decimated. The middle class and its efforts to feed, house, raise a family, save for retirement, and pay for taxes is jettisoned.
From all the clowns on the campaign trail, is there a single one that can display any leadership skills?
Holly molly! The dollar is TRASH
http://www.bloomberg.com/apps/news?pid=20601087&sid=aEgwdDHD5Fbs&refer=home
not at all, the euro/dollar exchange rate is totally unchanged from yesterday. Probably the big currency traders expect the ECB to cut too.
“…Treasury Secretary Henry Paulson called the Fed’s move …`confidence builder.” He said it was a sign to the rest of the world that the U.S. central bank is “nimble.”
Ben be “nimble”…Ben be quick…Ben jumps over the “candle stick”
“Confidence builder”, for whom? Goldbugs?
Let’s have central banker’s olympics - first event…JT jumping.
Ben be “nimble”…Ben be quick…Ben jumps over the “candle stick”
Ben/Fed jumps the shark? And now what, Mr. Bernanke, when housing resumes it’s steep decline and the economy continues to stumble?
The FED is in panic mode. Things must really be bad……
“There it is the .75 cut.”
It the saver’s version of the tet offensive!
Right…. Drive rates on CDs below the rate of inflation so that you HAVE to give your money to the crooks on Wall Street so they can siphon it off to cover their losses.
Last Firday Kudlow had a guy on saying teh Fed owed it to them to drop rates to the point that people have no choice but to buy MBS.
Holy CRAP!!!! How low do interest rates have to be to make it worth buying a bond that is going to lose 80% of its face value.
His point was that we HAVE to stop house prive declines…..
Yeah, like that will happen!
That is what this is all about - FORBIDING people from finding a way to keep their hard-earned money out of the hands of the Wall Street pigs who will just squander it (after taking most of it for fees).
I may have been wrong about gold, but was right on when I said yesterday there would be an emergency rate cut. Go BB! Stoke inflation. Time to buy all those mining shares today.
Best to stick with what you know…
Bloomberg: “Treasury notes rose the most since the Sept. 11 terrorist attacks in the U.S. as plunging global stocks drove investors to the relative safety of government debt…The two-year Treasury yield fell 27 basis points to 2.08 percent as of 7:20 a.m. in New York…The plunge in stocks “greatly raises the chance of an emergency inter-meeting easing from the Fed,” Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, wrote in a note to clients. “Anything can happen today.””
What a day for me to be be bidding on T-bills. I’ll be in the 4-week Tbill auction tomorrow, be lucky if I get 2%, but it’ll only be for 28 days. The funds I’m using were drawing 5.4% on a CD that matured today.
rates on certain savings accounts and short term (1-month) deposits were down 0.5% last week in Europe; I guess a lot of this is coordinated action from the central banks.
you got 3.1%
Central Banks Must Cut Rates Today - Larry Kudlow
“There’s a global stock market tsunami gathering force. It may hit US shores very hard this morning.”
“Importantly, central banks must work together and cut rates together. They must coordinate to avoid major financial consequences. They must show investors, financiers and business people that they are in charge.”
“In this deflationary environment, plunging commodities, stocks and credit risk-free government bond yields are all signaling central bankers to take charge. That means lower rates and more money creation.”
http://www.realclearpolitics.com/articles/2008/01/central_banks_must_cut_rates_t.html
Uh oh, when LK uses the word “deflationary” you know things must be bad.
sounds like Mad Cramer and LK dictate FED policy nowadays …
The minute the Democrats are in, Kudlow will be calling for pain, sacrifice, and rate increases. Might as well get even more drunk, and be an even more popular party animal, if you know the designated driver is about to take the keys.
You’re right WT but shouldn’t Cocaine Larry Kudlow be facing criminal charges?
Hey Crudlow, you`re so God Damn smart, why didn`t you predict all this? You lying shill bastard, you deserve to be mobbed, and beaten to death.
hey tx what’s going to happen now with the rate cut??
lots of red out there right now
goog -35
bidu-28
will this reverse the trend if only for a short while?
I don’t know. Was out the last 30 minutes. Let’s see the first hour play out and then take a look.
A friend has relatives that were behind last summer on their house payment. He lent them money to catch up the payments. He said they are not financially savvy people. They thought they had a 30 yr 5.50% fixed mortgage. This month the mortgage rate went up to 7.50%. They had an ARM that could go as high as 13.95%. He called Chase for them and asked where to mail the keys and told Chase they could only stay in the house if they had a 5.00% fixed 30yr loan. He said Chase agreed to convert the loan to a 5.00% 30 year fixed. He said Chase was very cooperative and understanding.
Must be one of the 5% of loans that wasn’t securitized. If the loan had been sold off, they would have gotten no help.
“He called Chase for them and asked where to mail the keys and told Chase they could only stay in the house if they had a 5.00% fixed 30yr loan. He said Chase agreed to convert the loan to a 5.00% 30 year fixed. He said Chase was very cooperative and understanding.”
The tail wags the dog!
Fed bounce not holding, Ben may have been a little premature with the cut.
Maybe he just needs to cut the rate to 0%
This morning on Worldwide Exchange they were interviewing someone from Japan (gov?) and asked if they were considering lowering interest rates. This look of disdain quickly crossed her face and she said it was more likely they’d be considering raising rates. She looked like she had been through the ringer hair hanging into her face and in a semi daze.
I really don’t want our country in that same boat.
viagra does not solve all problems
CNBC reports the market is disappointed! They just want 0 rates forever or they will hold their breath and turn blue.
They can go right ahead and do it. Even at 0% overnight rate there is only so much the world can borrow. That would stall things a bit. But that’s about it.
Pre-announced cuts are already priced in. It will take more than interest rate cuts to get the prices to hold up.
The Tao of Bugs: Jan 22nd 2008:
Daffy: “Hey Bugsy, what will happen with the Dow today?”
Bugs: “eh, it could be that the “Flush” is in Daffy”
Porky the Pig: “Hey, what is Bugsy saying Daffy?”
Foghorn Leghorn: “Well look here son, what he means is this: in some places in the world the toilet water swrils around thisa away…in other parts of the world it swirls around thata way..but either way… it goes down to the main drain, get it boy?”
Elmer Fud: “I think I used too much toilet paper Foghorn…”
Martin the Martian: “Uh Oh…”
Wiley E. Coyote: (Frantically turning the ACME catalog pages..) “Rubber boots… page 332, super sized plunger…page 978, toxic waste absorbent…page 1027”
Daffy: “That’s despiiiiiiiiiiccccccccccable! …page 39, Daffy gets latrine duty again!”
Pepé Le Pew : (sings) “Affair d’amour? Affair d’coeur? Je ne sais quoi … je vis en espoir. (Sniffs) Mmmm m mm … un smella voo feenay … (Hums)”
Yosemite Sam: “thats the worst thing I’ve seen…north, south, east, aaaaand west of the Pecos”
Sam Sheepdog: (takes his time card and punches out of work) “See ya tomorrow Ralph”
Porky the Pig: “Th-th-th-that’s all folks!”
Bugs: (munching on a carrot, resting in a row boat going down the river) eh, I guess the writers are still on strike?…(singing) “row, row, row your boat gently down the stream…“
Daffy Duck’s…. DDD index:
Dow
Delusionally
Done!
NYSE Volume: 8,000,000,000 + today?
Bugs: “eh, could be Daffy…who’s striking the gavel at the closing today Daffy?”
Daffy: “It’s a team effort today Bugsy, Harley Davidison / Strarmucks / Krispy Kreme”
very funny. coffee on keyboard.
What happens when this rate cut does nothing?
Things get real cheap
“What happens when this rate cut does nothing?”
Bread and circuses for the masses.
Another little war followed by the stupidbowl ought to do it!
Bet on hearing the phrase “quantitative easing” as the rate approaches zero. And no, that didn’t work either in Japan.
The Tao of Bugs: Jan 22nd 2008:
Daffy: “Hey Bugsy, what will happen with the Dow today?”
Bugs: “eh, it could be that the “Flush” is in Daffy”
Porky the Pig: “Hey, what is Bugsy saying Daffy?”
Foghorn Leghorn: “Well look here son, what he means is this: in some places in the world the toilet water swrils around thisa away…in other parts of the world it swirls around thata way..but either way… it goes down to the main drain, get it boy?”
Elmer Fudd: “I think I used too much toilet paper Foghorn…”
Martin the Martian: “Uh Oh…”
Wiley E. Coyote: (Frantically turning the ACME catalog pages..) “Rubber boots… page 332, super sized plunger…page 978, toxic waste absorbent…page 1027”
Daffy: “That’s despiiiiiiiiiiccccccccccable! …page 39, Daffy gets latrine duty again!”
Pepé Le Pew : (sings) “Affair d’amour? Affair d’coeur? Je ne sais quoi … je vis en espoir. (Sniffs) Mmmm m mm … un smella voo feenay … (Hums)”
Yosemite Sam: “thats the worst thing I’ve seen…north, south, east, aaaaand west of the Pecos”
Sam Sheepdog: (takes his time card and punches out of work) “See ya tomorrow Ralph”
Porky the Pig: “Th-th-th-that’s all folks!”
Bugs: (munching on a carrot, resting in a row boat going down the river) “eh, I guess the writers are still on strike?…(singing) “row, row, row your boat gently down the stream…“
Daffy Duck’s…. DDD index:
Dow
Delusionally
Done!
NYSE Volume: 8,000,000,000 + today?
Bugs: “eh, could be Daffy…who’s striking the gavel at the closing today Daffy?”
Daffy: “It’s a team effort today Bugsy, Harley Davidison / Starmucks / Krispy Kreme”
Oil and mine stocks down hard pre open, maybe its too late to Inflate ?
really? I can’t find many stocks that went down so little over the last days as the gold miners… but that’s comparing mostly with general EU stocks. Gold is showing extreme resilience today, exactly the opposite of the FED fraudsters.
Has anyone else seen this: Three hugh RE signs advertising the property, in this case $199K. Two years ago they would have asked $650K. On one sign in the middle in very small print “FRACTIONAL OWNERSHIP”. I’ll get the number later after the rain stops and call to see what’s going on. My best guess at this time is ‘AFFORDABLE HOUSING’.
It’s the J6P version of a timeshare. Basically, you purchase a quarter-share or so of a condo from the ‘owner’ at an inflated price. Saw this for the first time in Pensacola Beach, FL about 6 months ago at a high-rise condo complex called The Portofino. Must be nice to have dropped 800K - 1M on a condo at the peak and find out that your neighbors are timeshare cowboys. Amazed that the condo agreement would allow it. Yet another reason to avoid Fl condos.
What if the FED threw a party and nobody came?
No Buyers?
http://www.stockmania.com/index.php?showimage=138
January 22, 2008 11:13 A.M.EST
BULLETIN
Buyers return
After opening down 460, Dow now off less than 200
Shares fall hard at open despite Fed’s emergency intervention but begin trimming losses in mid-morning action.
http://www.marketwatch.com/
Rick Sintelli gave Cramer a huge smack down on CNBC this morning. Rick basically called him a perma bull, stupid for cheerleading stocks day after day when all this was playing out.
I wonder how Rick Santelli keeps his job at CNBC, being the only straight shooter and all that. I get the feeling the rest of the “reporters” are mildly patronizing towards him.
I was on the hbb but thought I heard a bleep out during that exchange.
Yha, I confirm that rick seemed to cuss at Cramer.
He specifically was calling Cramer out on his perma-bull attitude 6 months ago and his current denial / attempt to re-write history that he ’said it was going down all along’
FED is a joke - lets create another BUBBLE!
this is simply a bank bailout and an attempt to keep the system going..nothing more nothing less. Consumers will be unaffected by this rate cut because it won’t change the credit and risk pools of the banks.
No kidding ! What ever happened to price stability ? As soon as the Fed sees weakness they cut, cut, cut. When are they going to fight inflation ?
When are they going to fight inflation?
Can anyone tell me what is a good hedge against inflation?
Gold you say.
Ah Thanks
Didn’t the BOJ essentially cut to zero in the early 1990s? How did that work out for them?
INDICATIONS
U.S. stock futures point to heavy losses
Fed rate cut limits selling, but doesn’t eliminate it
By Steve Goldstein, MarketWatch
Last update: 8:47 a.m. EST Jan. 22, 2008
LONDON (MarketWatch) — U.S. stock futures pointed to heavy losses on Tuesday, with an emergency move by the Federal Reserve not enough to prop up sentiment as fears over a recession grow and as overseas stock markets dropped sharply over the last two days.
http://www.marketwatch.com/news/story/us-stock-futures-point-heavy/story.aspx?guid=%7BE5A56BAA%2DEC63%2D48FA%2D94CF%2D67AAB6BF3A40%7D
Awesome gap down on the nasdaq! The downside of beta! I don’t have the cajones to step into that one.
It appears as though the marketwatch.com Market Overview page is short circuiting…
My data which is direct feed is scrambled.
RE: It appears as though the marketwatch.com Market Overview page is short circuiting…
Yup-I haven’t been able to connect all morning.
“don’t have the cajones”
Glad to hear that
Go long the NASDAQ juiced up ETF’s??
I’m not interested. Maybe at S&P 1175 I would be but those nasdaq stocks are still way up, some of them anyway
Market Overview
Active Server Pages error ‘ASP 0115′
Unexpected error
/tools/marketsummary/Default.asp
A trappable error (C0000005) occurred in an external object. The script cannot continue running.
http://www.marketwatch.com/tools/marketsummary/
Http/1.1 Service Unavailable
Ho, too much server traffic.
Still down @ 10:15 am CDT.
My stock widget is also lagging on indices.
Somehow, the phrase “trappable error” seems to sum up the whole housing bubble, scam economy, and everything else of the past 10 years or longer.
Fed cuts. Think I will start a business now.
Here’s an idea - you can import cheap cr@p from China and sell it at large super stores all over the country!
How does this sage advice help those who are leveraged out the wazoo?
BULLETIN
DOW INDUSTRIALS DOWN MORE THAN 300 POINTS; NASDAQ SURRENDERS 5% AT THE OPEN
In managing your finances, keep courage under fire
Advisers say keep funding your 401(k) and cut your credit-card debt
By Robert Daniel, MarketWatch
Last update: 7:46 p.m. EST Jan. 21, 2008
…
The answers, financial advisers say, include resisting the urge to sell into the tidal wave, continue funding 401(k) accounts, and paying down credit-card debt.
“If you’re going to invest in stocks, this kind of volatility comes with the territory,” says Greg McBride, senior financial analyst at Bankrate.com in North Palm Beach, Fla.
“If you live in Wisconsin, you’ve got to expect subzero temperatures now and then. If you invest in the markets, you have to expect a bumpy ride, especially when the economy is slowing.”
A key point that advisers make right now: Don’t follow the market into the tank.
http://www.marketwatch.com/news/story/amid-global-market-turmoil-keep-courage/story.aspx?guid=%7B3DDC3794%2DE1BD%2D4165%2DA694%2D4D6388C47211%7D
Does Cramer ever not cheerlead stocks?? What an ass!
I cannot get the data feed from Marketwatch.com on stock and bond prices. I am wondering if an information blackout is the best thing for a herd of bulls already on the verge of a stampede?
Dow down 302 at the moment of this post.
Rallying nicely. Now down 210.
history all over again…the market may go deeper with the curbs. The manipulation is ending. The powers to be must have had a meeting this weekend. this is just like 87..down 500…10 before 12 now…
I can’t get bloomberg.com.
I think bloomberg.com crashed. I can’t get it either.
Same here.
Special Delivery for Jas Jain:
Greed and the Faustian bargain made by millions of Americans
Like mortgages, Faustian bargains have due dates:
“…We didn’t learn that lesson. Now, with the subprime-credit meltdown rapidly metastasizing, we have another chance to get it right during the 2008-2011 recession.
But don’t hold your breath. Why? Because the grand drama painted in “Supercapitalism” and “Richistan” is not really as new as Reich and Frank want you to believe. It’s timeless. Back in 2000, at the peak of the last insane bubble, gurus told us “this time it’s different.” Fortune published “Investing Wisely in an Era of Greed,” a classic Jack Bogle column: “There is no ‘new paradigm.’ Hope, greed and fear make up the market’s eternal paradigm.” In short, Bogle reminds us, money always rules individuals and nations.”
http://www.marketwatch.com/news/story/how-greed-supercapitalism-richistan-changing/story.aspx?guid=%7B651A424C%2D1DDC%2D47EF%2D9DC1%2D1A8C4C42E59E%7D
–
Thanks.
And who is the Devil that offered Americans the Faustian bargain? Bankrupters and Fraudster of New York City (BFNYC) ably assisted by their manipulator servants at the Fed and the Federal govt.
Jas
CNBC cheerleaders cheering like crazy ! Rah, rah, rah !
The way they talk you would wonder who controls the financial levers. They are already counting on another 50 bps cut on Friday ! Cramer is talking about backstops and bailouts and consumer spending rebounds ! Sheesh !
YEah - ass clown Cramer “buy buy..”
Actually, he is saying he hopes today stays down, because that will be proof that it is nothing but up from here. Finish flat to up, and it just means we will retest bottoms again.
What a fool!!!! We are no where NEAR the bottom.
They keep chanting the lie hoping people will buy it, but reality is slapping them in the face every day.
HOLY CRAP!!!! Now Kudlow is saying this was needed and overdue… just weeks ago he was saying they should not cut anymore since more cuts would be panic.
“more a financial event than economic event”…. is this butt head even paying attention??? Consumer spending slowing and consumers are defaulting like crazy. Unemployment up. Monoline insureres about to pop. Commerical mortgage paper about to crash!
This is SOOOOO an economic event.
I think Cramer has a point. The DJIA is on sale today — at 2006 prices! (Pay attention to the numbers, as the chart does not reflect today’s bungee drop…)
http://finance.yahoo.com/q/bc?s=%5EDJI&t=2y&l=on&z=m&q=l&c=
Its going to be on sale at 2001 prices in about a month. Don’t try to catch a falling knife !
Why are you so gloomy? The DJIA is already rallying, and the emergency rate cut has barely had time to take effect…
Its going to be on sale at 2001 prices in about a month. Don’t try to catch a falling knife !
What I am waiting for is the Fed to run out of rate cuts and the Gov’t to run out of props, then watch the market have to work on its own. No more coddling the market.
Just think about it… we’ve had the mortgage package, the Bush package, several rate cuts, etc. And even that hasn’t stopped the falling market. What happens when there is nothing left to concede ?
It will be time to buy the dip…
COS, prof.
Time for the Windex.
Damn Prof B, I made 2% in the stock market last year and I wasn’t even in the market! I bailed last Jan. I’m too chicken.
Roidy
Taking the ES trade off. That was a good one. Would like to buy back around 1250 or less.
Looks like my wife’s and my votes for Barack were not enough… why are California voters so racist and sexist?
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/01/22/MNSNUJ0JA.DTL
Two weeks is an eternity in a modern election cycle.
Wait until Flyover Country weighs in on that witch.
20% undecided is the key number there.
There’ll be a lot of movement before Feb. 5th.
>
I guess all those new hispanic voters in Calif haven’t learned to sing kumbaya yet.
IMO: they’re both completely objectionable based just on their ridiculous housing bailout plans. Yes, I’ll vote for you so you can use my tax dollars to pay the mortgage of some idiot.
Crammer begging for government bailout of the monoline insurers…
F’ him!
As I pointed out yesterday, his proposal makes no sense from an insurance standpoint. It is about as sensible as calling for the govt to provide retroactive hurricane insurance in the week following a Katrina-sized event. What he is really asking for is that NY financier’s gambling losses be dumped onto the U.S. tax base. This is exactly the sort of fool’s bailout which would set the table for tomorrow’s foolish financial gambles.
Now they are talking about a flat market today. Financials rallying ? WTF ! Totally silly. Its like the mortgage debt doesn’t exist and the homeowner is flush with cash !
There comes a time when enough is enough. Pigs get fat, hogs get slaughtered. This may be the end of the first leg down of a new bear but there will be rallies.
the Dutch stock index was up around 8% today, now a little less. You should read the big websites for the small specuvestors, they sound more bullish than ever: there never was a better time to buy !! (does that sound familiar?) Whatever happens, the central banks will come to the rescue and lower rates even more.
I’m pretty sure most of the small speculators have not sold and are thinking the next leg up in the bullmarket is just around the corner (just like everyone here is still convinced that housing can only go up, after 20 years of continuous gains).
From MSNBC: “BREAKING NEWS: White House says Bush isn’t ruling out economic stimulus larger than $150 billion.”
From Bloomberg:
“President George W. Bush is poised to leave the federal government in worse financial shape than he found it, making it harder for whoever succeeds him to deliver on the promises of this year’s election campaign. Bush may end his eight years in office with a larger-than- forecast budget deficit approaching 2004’s record $413 billion, as an increasingly likely recession slashes tax receipts and raises spending. He’ll also leave behind a host of thorny, longer-term problems — from the expiration of his big tax cuts in 2010 to spiraling spending on senior citizens — that will dog his successor’s budgets for years.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=aFRluJ5sabGw&refer=home
J6P has bankrupted out country, with their choices at the kitchen table and in the voting booth, IMHO. Iraq? Tough call. But this President will be remembered for selling out the future of the United States and those who will live in it.
“larger than $150 billion”
Reassuring to learn we have not run out of moneys (Hoz — want to weigh in on this one?)
Lets give everyone a million bucks so everyone is a millionaire - problem solved!
Witness the limits of communication.
This is not gonna end well.
Next week cut - 75bps more????
Now Larry Kudlow is on. I like how CNBC keeps cheerleading and day after day stocks are going down. They have been deny, deny, deny all along. They have been wrong, wrong, wrong !
Larry just said he isn’t worried about inflation ! $90 oil, $9 wheat, $3 gas, $300K houses … no inflation here !
Now he is going on and on about how great the Fed is !
Brings to mind the string quartet playing the refrain of “Nearer my God to Thee” on the deck of the titanic…
Again…. Shouldn’t Kudlow be serving time?
T-bond market in duck-and-cover mode (again…)
http://finance.yahoo.com/q/bc?s=%5ETNX&t=5d&l=on&z=m&q=l&c=%5Etyx
With this size of a gap down, there are bound to be margin calls. You tend to see the worst of those between noon and 2 p.m. CST.
Enough margin calls to cause a big selloff in the second half of the day?
Dunno. It usually works that way but I see a lot of folks waiting for that.
I’m thinking one of the reasons for the 75 bps “emergency cut” is to limit the number of margin calls?
What a day to sit back an watch the fireworks.
Back in the beginning of September I converted our entire IRA to cash. It drove my “adviser” at Merrill Lynch nuts. He was animated that I should be “putting it in something”. I told him I was convinced that Q4 would suck. I finally got him to agree to wait for 120 days. I think I should have heard back from him by now… I wonder what happened….
Just curious, why do you use ML? That’s a full service brokerage isn’t it?
And why did you have to get him to agree to wait?
Just now attempted to increase my holding of SKF with C. Schwab, denied trade of a buy of 25 shares, stated that I have o.oo funds to trade. This account has almost 100,000 dollars in cash!
WTF!
RE: Just now attempted to increase my holding of SKF with C. Schwab, denied trade of a buy of 25 shares, stated that I have o.oo funds to trade. This account has almost 100,000 dollars in cash!
WTF!
I’d say you’d better give Chuck the boot!
they probably did you a favor. Get rid of Schwab and get a real broker.
mbtrading had quote failures too, feeds died.
Yea, well…I can’t even get logged on to TDAmeritrade.
No problems at all with Siebert
(except, of course, getting raped by commissions - working on that one, though)
CNBC wants people to email them. youropinion@cnbc.com Let them know how you feel.
Retailers are rallying ! Talk about denial ! Its like J6P is alive and well ! Sheesh !
Possible short covering?
Retailers are rallying ! Talk about denial ! Its like J6P is alive and well ! Sheesh !
“We are the number 1 consumers in the world”
Cramer just said that “we are up a lot more than the rest of the world !” We are just not down as far !
Bed Bath and Beyond is up, for Pete’s sake. If anything is consumer discretionary, that has to be it !
I don’t know. Yesterday my family and I were at Fashion Valley Mall in Mission Valley, and judging from the experience, retail is holding up just fine in the face of recession concerns. It took me twenty minutes just to find a parking spot (and I am an expert at finding parking spots in crowded parking lots).
you know the drill. Now we need to figure out the fibonnaci retracements
Just because people are at the mall doesn’t mean that they are spending like they used to.
People are so clueless about what’s going on that they won’t realize there is trouble in the economy until they are laid off themselves, or they have to close up the candle shop. Until then, business as usual. If they haven’t planned ahead or ever denied themselves a purchase before, why should they start now?
J6P just got the FB equivalent of a tax cut. CC rates will fall a bit now.
Maybe. Or maybe they’ll just go up a little less than they otherwise would have.
There’s so much static out there right now it isn’t even funny.
We know the truth…our neighbors aren’t just broke, they are worse than broke - they are in the hole. Consumer discretionary will be toast.
Couldn’t the government just do something pro-business like pass a law cutting wages and requiring people to spend more?
Because the ability of business to induce people to spend more despite lower real wages appears to have run its course.
Now the Pundits are calling for OTHER central banks to cut rates ! They keep mentioning that the Bank of Canada cut this morning… that was because today was a scheduled meeting for them ! Sheesh !
This is lunacy !
Apparently everyone is happy because they finally got the big Fed cut that they wanted. Nevermind that the last several cuts did nothing to stop the losses. Nevermind that nothing really changed as far as all the bad debt is concerned.
I think they will keep providing ’surprise’ rate cuts for some time; probably a small cut from the UK or Oz tomorrow, and another one from the ECB on thursday; euro/dollar rate still stable (while gold is up 4% from todays low), definitely more cuts in the air.
until now gold is reacting more than the general stock market …
“Uh..Uh…..I know what your thinking…did he shoot six shots…or only five. Well come to think of it - in all this confusion - I kinda lost track my self…..Now, seein’ as this is a ‘44 Magnum…the most powerful handgun in the world…and capable of blowing your head..clean..-off…you gotta ask yourself just one question….’Do I feel lucky?’….Well do ya PUNK!”
only about 350 bullets left benny boy. then what?
Now there is a more powerful hand gun:
http://www.popularmechanics.com/outdoors/sports/1277336.html
I think the chance to buy the dip may have already passed…perhaps my instincts were correct last Friday?
http://finance.yahoo.com/q/bc?s=%5EDJI&t=1d&l=on&z=m&q=l&c=
The DOW is going to 10K or lower before this is all over. Right now we are just talking about a recession. Wait until it actually hits.
“10K”
How do you know?
The Fed has overtly committed to a policy of stock market price support. Why would anyone boldly assume DJIA = 10K is coming in the face of this policy? I would be more inclined to assume gold prices are headed higher at this point than the (nominal) stock market levels are headed lower.
Stay in line children, single file, no running.
(sigh). I’m buying more gold this weekend. Pundits on CNBC are talking about further rate cuts this year, in addition to today’s 75 basis. I have nearly enough in safe investments and can afford stock price plunges. I hope stocks drop much more, because I’m drooling about buying more shares at lower prices over the next 6 years. The stock market “timers” will be eating canned dog food.
Gold is up $35 in the past 7 hours!
is this what they mean when they say “don’t fight the fed”?
I am “fed up” with our economic system.
What economic system?
Circuit breakers
http://bigpicture.typepad.com/comments/2008/01/nyse-dow-circui.html
How reassuring to know the PPT is on automatic pilot…
there are a lot of george soros wannabees out there and we will a
circuit breaker down the limit day in my opinion!! for this quarter that is a 4,000 pt decline in a day!
new all-time high for euro gold price today (by a wide margin).
new all-time high for $ gold can’t be far off.
Ben’s magic is working like a charm.
I suspect he won’t be long for the job, but book-smart academians are a Dime a dozen, so they’ll find another one on Craigslist, perhaps?
Saved by Bed Bath and Beyond ! :shakeshead: This has to be the stupidest market I have ever seen.
adding another 20% to idex call positions
S&P index??
yeah, spx and dow. not interested in nasdaq or russell anymore
Saved by Bed Bath and Beyond ! :shakeshead: This has to be the stupidest market I have ever seen.
CNBC went 45 minutes without a commercial break this morning. Pumping at its best. Pump, pump, pump !
Cramer is now throwing out that subprime is worth 50 cents on the dollar. But yet its time to buy !
Now they had a female trader on saying its time to short things and to look at the S&P500 at 1200 for the next 6 months. That made Cramer sad. :rollseyes:
Rah, rah, rah !
where was this female trader on Dec. 10 when it was obvious to anyone who wasn’t blind that the market was a screaming short?
Maybe she shorted it then. Who knows ? Who knows who CNBC will give air time to. I suspect they don’t give bears much of a say.
She was hot!!
Must have been those two sets of cappucino glasses I bought at BB and Beyond yesterday that made the difference-
Logging on to TDameritrade is agonizingly slow right now. It’s not on my end because other site are still popping up quick.
As I don my tin foil hat I think to myself, “That’s one way to slow down the sellers!”
You also need to get a real broker if you’re going to trade like that.
I know, I know. Ihad all my orders place before the open and I did OK. Well, maybe a bit better than OK.
Sloth is probably the least respected vice in terms of the damage it can do to one’s existence.
thinkorswim.com, right?
depends on what you’re doing. you might look at MB Trading also.
txchick57,
Who would you consider a real broker? Any suggestions would be welcomed.
MB Trading, Think or Swim, Terra Nova, Interactive Brokers. Ones that cater to people who are more active traders. Some are direct access.
Thank you.
Do any of these brokers allow for multiple accounts to be viewed under 1 login? I manage 7 accounts and can view multiple account from the 2 brokers I currently use.
Thanks, Shakes
interactive brokers
Meanwhile, the quest to build overpriced houses continues in Tucson:
http://www.azstarnet.com/metro/221603
However, local newspaper readers just aren’t getting with the program:
http://regulus2.azstarnet.com/comments/index.php?id=221603
Now Cramer is saying its time to buy a house ! He is looking at foreclosed properties !
Why is Cramer full time on the morning show now ? Funny how they bring out the biggest permabulls on the big down mornings. Funny they haven’t brought out Kudlow more. “The greatest story never told !”
What is Crammer’s job title? “Falling-knife-encouragement specialist”?
LMFAO!!!!!
Cramer’s tell all comment today:
“We tell the truth the best we can without causing panic”.
Wow,wow,wow. The real truth for all the money men in the country is finally seeing the light of day.
I heard that too. Wow.
Now he’s into RE? I hope that whatever foreclosure(s) he buys have had cement poured in all the toilets.
Newsflash: Fitch cut AMBAC’s rating. AMBAC’s CFO says they will do less business now. Question: how does a bank write mortgages without a hedge/loss insurance ? Must increase the pucker factor to do business like that.
Downgrade of ABK - TIME FOR ANOTHER RATE CUT.
Is anyone willing to predict when the global stock market will bottom out?
2008?
2009?
2010?…
Today! 75 bps cut next week and then DOW 36k will be in sight!
I’m wiped out already and it’s only 2 hours into the day. Wiped out as in tired, not money wise. Looking for a retest of the lows of this a.m. to buy the ES again, if I don’t get a good entry, que sera. I’ll bet a few bull market geniuses were dumped out early this a.m.
with these central banksters at the helm better you ask when gold will top out … stock market bottoms are no longer allowed.
Dutch AEX stock index up 9% from this morning and still climbing …
I am placing bets on 3rd quarter 2009. I have recently reviewed the DOW chart looking at historical Bear markets. We have had 13 bear markets of 25% or greater decline since 1900. Of those bear markets. They last an average of about a year. The longer bear markets;1906-1908 (2 yrs), 1929-1932 (3 yrs), 1940-1942 (2 yrs), 1969-1970 (1.5 yrs), 1973-1975 (2 yrs), 1976-1978 (2 yrs). We have not had a long bear market since 1978. I believe we are at the end of a long running secular bull market and are entering a correction with a secular consolidation period (sideways period) for the next 10 years or so. The excesses in our system will take time to unravel due to the FED, congress and other Wall Street pundits trying to fight the inevitable thus lengthening the bear period. If one looks at the historical chart and overlays the current situation over the top, one can see that the buy and hold strategy of the last 17 year secular bull market will not work well in the coming decade for the stock market. I say buy on Nov 1st 2009 as a buy and hold investor but be prepared to oly hold for a a year or 2 since it will be a wee saw market for the next 10 years or so. Obviously many things can happen between now and then but If history is any guide I won’t be too far off.
I am placing bets on 3rd quarter 2009. I have recently reviewed the DOW chart looking at historical Bear markets. We have had 13 bear markets of 25% or greater decline since 1900. Of those bear markets. They last an average of about a year. The longer bear markets;1906-1908 (2 yrs), 1929-1932 (3 yrs), 1940-1942 (2 yrs), 1969-1970 (1.5 yrs), 1973-1975 (2 yrs), 1976-1978 (2 yrs). We have not had a long bear market since 1978. I believe we are at the end of a long running secular bull market and are entering a correction with a secular consolidation period (sideways period) for the next 10 years or so. The excesses in our system will take time to unravel due to the FED, congress and other Wall Street pundits trying to fight the inevitable thus lengthening the bear period. If one looks at the historical chart and overlays the current situation over the top, one can see that the buy and hold strategy of the last 17 year secular bull market will not work well in the coming decade for the stock market. I say buy on Nov 1st 2009 as a buy and hold investor but be prepared to only hold for a a year or 2 since it will be a wee saw market for the next 10 years or so. Obviously many things can happen between now and then but If history is any guide I won’t be too far off.
As usual, fear runs rough shod over most mopes. I see fear and it’s time to add a little extra to my dollar cost averaging of equity. No one knows the lows, but it’s fact you’re getting shares at better prices than before the recent price plunges. Keep your sights on the market in the last hour of trading. Disregard this opinion if you don’t save much of anything like most Americans, go back to your big screen TV and those other credit card debtor toys.
Why don’t you buy a few houses too while you’re at it… I hear they’re discounting new houses by 30% in Florida.
I want to comment on TXchick’s comment from yesterday. She was providing guidance to someone who was asking when to buy into the market tommorrow.The poster said he was going to wait until the end of the day, others commented that they were going to wait for a couple of months. TXchick57 replied to buy at 9am. Considering the events of the day, DOW open almost 500 down and is only 40 down now at 11:30 am, I would have to say that I am glad I read this board regularly and I have the exposure to people like TXchick57 and many many others, who have considerable intelligence and knowledge. Good call TXchick57. Thanks for this baord and all on it. America is not lost but has a bright future. It gives me solace to know that there are others out there that are not materialistic and live a happy simple productive life within their means.
Be thankful for being lucky…
US and Emerging Markets are Linked at the Hip
http://www.minyanville.com/articles/MER-C-db-BSC-HBC-UBS/index/a/15608
three words…dead cat bounce
Cramer wants the Fed to buy AMBAC and MBIA. Never mind that we already have Fannie and Freddie !
I think the market has lost all rationality. These dips are going to play out again and again until the Fed and the CNBC cheerleaders lose all their influence. I can easily see the DOW down at 8000 when that happens.
I don’t understand why the market keeps denying the inevitable. Why don’t we take a nice big drop, wipe the board clean and get on with life ?
Now they are talking about moving the 417K limit on the GSEs ! Basically what is going to happen is that the Fed and Gov’t is going to do everything they can to make $500K houses a reality so that we can live on that.
The only thing they haven’t fixed yet is affordability. With enough inflation that too may happen.
Of course they should move it: DOWN to 317! (To match the 25% nationwide drop in house prices!)
The cat is out of the bag, people are catching up. All I can say is (but I have no idea about the timing) that gold is going to 3 thousand and the big questions everyone should be trying to asnwer is: Will the financial system survive as we know it?
Maybe this was talked about above, but with 375 comments I can’t search. What does it mean that the NYSE invoked Rule 48 this morning? Rule was made 12/6/07 and used once before on 12/12/07.
This morning the NYSE has invoked Rule 48, a rarely-used rule that allows the NYSE to suspend the requirement to disseminate price indications at the open. This makes it easier and faster to open stocks.
This was only approved by the SEC on December 6, and was only used once–on December 12, 2007. The rule suspends the requirement to disseminate price indications at the open. This makes it easier and faster to open stocks.
Here is the statement from the NYSE:
Today, New York Stock Exchange has invoked Rule 48, which provides the exchange with the ability to suspend the requirement to disseminate price indications and obtain floor-official approval prior to the opening when extremely high market-wide volatility could cause floor-wide delays in opening of securities on the exchange.
Bubbles Ben Bernanke strikes again! The helicopters are flying: more money for the Wall Street pigs, more debt and inflation for everyone else! “Mission Accomplished!”
So, that’s Phase 1. Phase 2 will be another big cut next week or whenever the Fed normally meets. Phase 3 will be driving the rates to zero so we can feel the “Japanese Experience” of a declining market, crumbling economy, and no ability to save our money. I assume Phase 4 will be negative Fed rates, confiscation of gold and foreign investments, etc.
Gotta keep the sheeple in debt!
Bernanke says we have to spend less and save more…..
Oh, but that is for later. Right now we need people to borrow and spend.
These criticisms are way off. Bernanke did more to pop this bubble with his rate increases than anyone else. The Fed strongly encourages personal savings and always has. The bubble and the flood of liquidity that came with it have very little if anything to do with the spending habits of ordinary people. As far as this particular cut goes, growth is gone for now and is expected to be modest when it returns. How exactly do you go from recession to low growth while rationalizing relatively high interest rates? You don’t, no phased plotting required.
It does get a little tiresome.
And how exactly does trashing the dollar in an import dependent economy encourage us to go from recession to low-growth? We produce very little here, most of our jobs are gone, and most people are underwater. The few who are not underwater are being punished by the lower rates on their savings.
We won’t be growing in a real way until there is a huge shift in culture in this nation that ends the reckless consumption, outsourcing or insourcing of jobs, and king’s ransoms paid to crooked executives as rewards for losing billions of dollars. A lower Fed rate just encourages the gamblers to come back to the table: it’s not like these corrupt executives are going to think, “Hey, maybe I should make sure my workers are paid a decent wage and have some job security instead of buying a second yacht?”
The Fed strongly encourages personal savings and always has.
Lip service, the Fed cut rates to the bone and starved seniors for years. The .gov just announced last week that inflation was 4.1% last year and now rates are 3.5%. Yeah, that really encourages savings. And why do they want you to spend your $800 instead of saving it.
Sorry Troll man, the world doesn’t buy your schtick. Just look at the markets.
>>”The Fed strongly encourages personal savings and always has.”
This is probably satire, right? Because my parents had saved for years and got 4-1/4% interest in passbook savings accounts through the 60s. By the 90s they were lucky to get 0.8%, not in passbooks, but in CD’s, Money Markets, and TBills.
In other words, they were punished for saving for their old age.
It is much easier to declare ‘encouragement of savings’ than it is to implement it.
Millions of individual savers were sacrified to fund the money markets. banks, and done deliberately by Greenspan.
Ignore what people say and pay very close attention to what they do.
(I’d like to think that the above is original but it’s probably an old Chinese or Yiddish proverb.)
“The bubble and the flood of liquidity that came with it have very little if anything to do with the spending habits of ordinary people.”
This is without a doubt the most witless comment ever posted on this blog.
I will not say more, as it is rude to laugh at the folks riding the short bus.
I just know we can hit 500 posts today, I know it, I know it.
Here’s my contribution as I have nothing intelligent to say at this time.
More California news
Making painful cuts
Schwarzenegger proposes pair of reforms for tackling shortfalls
By Matthew T. Hall
UNION-TRIBUNE STAFF WRITER
January 18, 2008
SAN DIEGO – Gov. Arnold Schwarzenegger stopped in San Diego yesterday to promote a budget proposal with far-reaching cuts and push for two spending reforms he says will end Sacramento’s all-too familiar shortfall drama.
http://www.signonsandiego.com/news/state/20080118-9999-1m18budget.html
I guarantee you that cutting CDF and police salaries won’t be among those cuts. In fact, in Humboldt county, they just approved a 20% increase in pay for firefighters and sworn police officers. Perhaps they can use that extra $$ to further prop up our housing market.
I’m a very conservative investor. The US Equities I hold are established dividend-paying companies with low P/E. No AAPL or GOOG in my portfolio. (I avoid mutual funds because even broad-market based ones were too top-heavy with things I thought were too risky–and was right, like banks, etc.)
Since I’m a frugal saver, my portfolio is of the size that the amount I’ve actually lost–with my conservative investing–exceeds the sum that many of the FB “Victims” we read about here have claimed to have “lost”.
But these “Victims” get to go “Boo Hoo Hoo” all over the newspapers and elicit sympathy! They get Congress to give them a great big hug! Bush signed the “Deadbeat Specuvestor Tax Relief Act” to get them off the hook for taxes.
My question is, why does nobody feel sorry for me? Hillary and the rest are simply plotting ways to take more money from me, to pay for all these “poor victims.”
I don’t think lowereing interest rates to give the market a temporary boost really does anything. It just taxes people trying to live on a fixed income. Sure, the market may tick up for an hour or so, but so what.
It’s outrageous that forgiven debt isn’t taxed. Why shouldn’t some speuvestor be forced to sell everything he owns and give the proceeds of the sale to the US Treasury?
Small businessmen have had to do things like that countless times over the years. Since most of these FBs went in thinking this was a new way of earning a living, and that they were going to get rich quick and be like Donald Trump, they should be treated just like any other businessman, and be forced to liquidate if things go bad.
(And I’m sure the “Deadbeat Specuvestor Tax Relief Act of 2007″ will open the door to many a tax-avoidance scam, where you set up a legal entity to pay you in forgiven mortgages! It was a horrible idea, and both democrat and republicans alike were solidly behind it.)
I am sorry life is not fair. So, you are putting 2 and 2 together. They need ways to put money in people’s hands. Just like shippping crates of crispy bills… People will carch on to what is going on. Yes, I bet the Fed is buying the dow with offshore money… People would do anything for a profit….
Being responsible is boring and not sexy, so nobody cares about people like you. Sorry to break to you the cold hard truth.
Housing market still going up here in Regina, Saskatchewan. Average (not median?) selling price was reported at $200,407 in December 2007, up 45.6% from December 2006. Seems we are late for everything, so I hope the housing merry-go-round will slow down soon. The Demographia International Housing Affordability Survey apparently still rated us as affordable (12th place actually), but they used a median price of $154,300 and median household income of $63,200.
I would also note that local builders tend to build single-family homes on demand from buyers. Right now it takes about a year from ordering to move-in for a new house. Not sure I would say the same about multi-family homes though (condos in particular). There it seems more like “build the stuff and wait for buyers to come”. Also there certainly are speculators in the game (perhaps 30% of buyers?) helping to drive up prices. Maybe they think housing is “cheap”, but right now it’s only cheap compared to other bubble markets (Calgary, Edmonton). I would say greater than 2.5 times median income hereabouts is unaffordable.
On an unrelated note, I have a question about Davis, California. Renting is still better than buying there, right?
Davis? Actually, you are even better off renting in West Sac and commuting in. While rents are down, houses here are pretty craptastic. The money will get you would spend in Davis will get you glorious place in West Sac.
Yes, you can rent a macmansion in West Sac (probably pretty cheap right now with so many FB’s), but if you have kids in school, I recommend the dumpy rental in Davis. Vacancy rates are at about 0.5%, last I checked, but there is a lot of turnover with all the students.
Thanks to both of you for the advice. I have no kids and I’m not moving there myself, but I do know someone who’s looking at law school at UC Davis.
I thought that the Fed’s stated mission was to prop up the economy, not the stock market…so why the “emergency” rate cut just seven days before their next meeting? Is that seven days going to make a difference in the economy? Or is it all about perception, sending a message, and the ‘wealth effect’ of the stock market.
Yes, these are just rhetorical questions, we all know the answers…
You need to make a mental switch when you hear that the Fed or the government is doing anything to prop up the ‘economy.’
When you hear the words ‘the economy,’ mentally substitute the words “Money center banks,” or “Wall Street,” since to those entitities that is synonymous with “the economy.”
People are consumers. Banks are citizens. The citizens are falling down. The Fed doesn’t want to see dead citizens all over wall street.
This isn’t about your stock portfolio or our poor widowed mothers.
The electro-shock therapy has been applied…we have a pulse…the flat line is gone…now about that heart tissue…that might take some time to fix… I don’t think he’ll be “Bull” riding for a while, but at least we’ve “bought” enough time to preserve his sperm for the next “regeneration”
…”get someone in here to stitch him up”…”Calling Doctor Bruin…you’re needed stat!”
Hehehe… if you click on the 5-day view inside the plot window on this Google Finance page, you actually see a flatline.
I’m going to send a T-shirt to Ben Bernanke with the text:
“I cut the rate 3/4%, and all I got was this stupid T-shirt”.
lmao…
“I cut the rate 3/4%, and all I got was this stupid T-shirt”
Be a good fellow, and remove the: made in China, assembled in Vietnam label
I see that you sent it to him and he’s standing in front of the Treasury, with one of his helicopter’s behind him, modeling it!
http://flickr.com/photos/tppllc/2212977810/
I thought the volume would be much higher today - but I don’t know much about this stuff.
The .gov just announced last week that inflation was 4.1% last year and now rates are 3.5%? That is negative .6%.
Check out the homebuilder stock prices today! This is a sure sign that a bottom is in.
http://www.marketwatch.com/quotes/quotes.aspx?symb=tol+kbh+len+ctx+dhi+fnm+aapl+goog+bzh+phm+sbux+peet
Are you serious? Are you in a good mood because you are listening to piano all day long?
Why do you believe I am listening to a piano? (I wish you were correct…)
Your wife plays it, no?
There are lot of angry foreigners out there. I just breezed through a Korean website and people are very shocked, confused, and scared of what had happen within few days. Few weeks ago, some of the analyst were predicting Kospi to hit 2,000. Instead, It went the other way. Lot of foreigners have sold their stocks and got out of the Kospi,which is reflected on the currency movement between won and the dollar. Today all eyes on Wall Street. It’s a nervous time for many. It’s getting scary….
Correlation rules the headline U.S. stock market indexes:
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=INDU&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=1&freq=9&startdate=&enddate=&hiddenTrue=&comp=NASDAQ&compidx=SP500%7E3377&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
Feeling Misled on Home Price, Buyers Sue Agent
http://www.nytimes.com/2008/01/22/business/22agent.html?_r=1&pagewanted=1&hp&oref=slogin
(just in case you need a break from the market talk)
BEAUTIFUL!!!! I’ve been waiting for a court and judge to set the precedence for taking down NAR. This could be good. Very good indeed.
Big gap up on the DJIA makes me wonder if it will be up on the day. Short covering move? Mother of all DCBs expected tonight in EurAsian markets…
http://www.marketwatch.com/quotes/djia
What could be interesting is when it does bounce in earnest, all the neubears trying to short every little move. I’d say this is definitely a new bear starting here but it’s gonna take a little time before nobrainer entry points on the short side present themselves again. I did expect a down move in January, just not this much, this fast. I figured we’d be seeing these numbers some time in late March or early April.
Hey Prof:
I’ve gotten out of trying to judge what will happen next just based on what’s happening right now in the markets. These short-term trends are too harrowing for me. Makes more sense to just realize that Ben’s pushing on a major string (world-wide markets only regained 1/2 of their losses today) and stick in there for the long haul. Remember, inflation kills the economy too, and we can expect this type of hap-hazard mismanagement at least until 2010. Frankly, if HC becomes President, I don’t think she will cure it. I think we should hope for Obama.
How come CA voters are against Obama? Are they racist or something?
No, they just like Hillary’s promise of “free” health insurance for everyone. There are a lot of uninsured people here. I guess people just don’t realize that mandatory insurance will only push the cost of medical care to new highs, which will in turn drive up the cost of the mandatory insurance. I really don’t think HC is a good capitalist.
She suffers from a typical attorney’s top-down, command-and-control view of economic policy.
“just don’t realize that mandatory insurance will only push the cost of medical care to new highs,”
Ya know what? A Joseph Goebbels quote was posted here just yesterday and it really is fitting but the gist of it was basically this…. If you repeat a big lie frequently enough, people will believe that lie regardless of how obvious the truth is.
Nice Story on Bill Clinton and his 20million dollar payday. He wants to sever his ties with Burkle and Dubai, before it impacts Hillary’s “just folks” prez run. That’s right Bill, bank the cash before you resume telling folks “you feel their pain”.
http://online.wsj.com/article/SB120097424021905843.html?mod=fpa_mostpop
Why does every MSM commentator assume the Fed’s policy tools are limited to rate cuts? I would think it would take a lot more to move the market back up like happened today, especially given that rate cuts are already fully priced in, thanks to glasnost.
The Fed Blinked: Now, What?
9:25:16 AM January 22nd, 2008 Permalink | Comments (64)
With news this morning that the Fed is cutting the Fed Funds rate by three-quarters of a percent, it’s official: Things are worse than they seem with the economy.
The Fed, pushed by shattered worldwide investor psychology, is pulling out all stops to shore up confidence. Treasury chief Hank Paulson went so far as to call this latest cut a confidence builder.
Trouble, as has been pointed out here previously, is the “what if they give a party and nobody comes” syndrome. In this case, what if they do a big-bath cut and it doesn’t help?
http://blogs.marketwatch.com/greenberg/2008/01/the-fed-blinked-now-what/
T-bond market is casting a strong vote today on the economic status quo…
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TNX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=2&freq=9&startdate=&enddate=&hiddenTrue=&comp=tyx&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
Bear in mind that 0 pct is a lower bound on potential rate cuts, and also that rational expectations suggest this preannounced policy bias towards future easing will be already priced in before it occurs.
THE FED
Fed isn’t finished by a long shot
Economists, investors are confident there’s more easing in the pipeline
By Greg Robb, MarketWatch
Last update: 12:29 p.m. EST Jan. 22, 2008
WASHINGTON (MarketWatch) — Tuesday’s surprise interest-rate reduction by the Federal Open Market Committee doesn’t mark the end of U.S. rate cuts by any means, Federal Reserve watchers say.
“Don’t take today’s move … to mean that the FOMC is through,” said Richard Moody, chief economist at Austin-based Mission Residential, in a note to clients. “We expect another funds rate cut at the scheduled January 29-30 meeting, with possibly more to come in the spring.”
http://www.marketwatch.com/news/story/fed-isnt-finished-rate-cuts/story.aspx?guid=%7BFE058836%2D414C%2D4CC9%2D8F04%2D866CF0AB29DE%7D
Ya know, all of this crap can be avoided if the banks, lenders, etc. will do one very “simple” but painful thing: list the bad debt on their balance sheets. Trying to finesse this is not going to work. The Japanese tried this in the 1980’s and got “nada”. This will keep going until that debt is disclosed. Just pushing money at this will not work because of the uncertainty in the scope of the credit problems, so banks won’t lend. The Fed should not hesitate in really pounding on these corp.s to be honest and forthright with their balance sheets. All these little games are causing this problem to be as bad as it can get. Sure, it will be bad, but it should not be global meltdown - mushroom cloud bad.
The Fed has inflation started with these methods. I went to the store yesterday and bought groceries. Need I say more?
Roidy
I look at today’s stock market action as a perfect opportunity for the Fed to create stealth inflation through flooding the market with liquidity in the name of staving off a financial crisis. Higher stock prices (relative to fundamental value) represent asset price wealth effects, not inflation, according to the Fed’s epistemology.
I’m doing my part to remove the inflation causing excess liquidity from the market by trading the gaps. I’m hoping everyone else here is doing their part to help as well.
So *you’re* the guy who is giving the Fed the sensation of pushing on a string?
Will “Mr. Market” do a “purge” at the end of today? Inquiring minds want to know.
Roidy
Elmer on derivatives:
Alan Greenspan: “The reason that growth has continued despite adversity, or perhaps because of it, is that these new financial instruments are an increasingly important vehicle for unbundling risk.” “In short, the value added of derivatives themselves derives from their ability to enhance the process of wealth creation.”
Amazing how you can speed up wealth creation if you remove the reserve from reserve banking.
Put money in the bank and 90% of it gets lent back out…. 10% reserve = 10 factor multiplier. $1 becomes $10.
Use money to buy securitized bonds and 100% goes back into the economy, repeat as many times as desired. Multiplier factor = infinity.
Oh…. can’t really go forever since eventully you reach the point where the borrowers can’t even pay minimum interest payments…. then the ponzi shceme comes tumbling down…. to negative infinity.
Put money in the bank and 1000% of it gets lent back out. $100 in creates $1000 in loans, thus your $100 becomes the 10% backing of $1000. Thus inflation.
How clear and concise!
Well put, Alan.
Roidy
P.S. Anyone seen my Prozac?
Dear sdsurfer:
Can you please tell us what your opinion is of AG’s statement?
Thanks,
Big V
“keeping the nations economy afloat” or sinking it?
from 2003 on derivatives…
http://query.nytimes.com/gst/fullpage.html?res=9407E2DC113FF93BA35750C0A9659C8B63
vs. The Oracle
“But Mr Buffett argues that such highly complex financial instruments are time bombs and “financial weapons of mass destruction” that could harm not only their buyers and sellers, but the whole economic system.”
Yes, we have that down.
Devilish details…
Market Diaries
Issues: NYSE Nasdaq
Advancing 1,213 967
Declining 1,963 2,010
Unchanged 53 84
Total: 3,229 3,061
Issues at:
52-Week High 14 3
52-Week Low 234 322
http://www.marketwatch.com/tools/marketsummary/
Here’s the margin call/redemption window opening for business with program selling “helping” it along the way no doubt.
If -125 on the DJIA qualifies as a rebound, I think the market is in trouble…
From rout to rebound
Fed helps the Dow erase bulk of 460-point opening fall
Shares fall hard at open despite Fed’s emergency intervention. Market still negative though off early morning lows.
http://www.marketwatch.com
Is this what the Fed had in mind?
BOND REPORT
Bonds rally as global stocks swoon on recession fear
By Polya Lesova, MarketWatch
Last update: 12:45 p.m. EST Jan. 22, 2008
…
“At first glance it would appear that the Fed has succeeded in injecting more volatility into the equation, though it is way too early to draw a conclusion,” analysts at Action Economics said in a note.
http://www.marketwatch.com/News/Story/Story.aspx?column=Bond+Report
what happens to the POG (price of gold) when other CBs follow suit?
gold is indeed a currency of last resort.
Dude, it goes up.
Great picture of
Bernanke.
(Sorry if it’s already been posted)
“I’m sorry Senator I was at 3rd St Aleworks last night and got the beer sampler… and then what the heck I got another. Won’t happen again.”
The prejudice against gold is getting hilarious. Link to story on front page of MarketWatch website says “Gold reverses to gains”
It’s the one barometer of truth in a financial landscape of lies.
It’s the one barometer of truth in a financial landscape of lies.
HUI bounced off the 420-430 range pretty nicely for those playing the miners
Hmm, I just saw that the DJIA gave up all gains since Sept ‘06 or thereabouts. How low can it go? Any predictions?
Roidy
P.S. Nice start to the new year.
a different kind of January effect
Looks to me like the DJIA is coming to another miraculous close, safely above its 52-week low set earlier today by a very wide margin.
Then on the other hand, it has been falling off its Oct 2007 high at about a 50 percent annualized rate:
((11,961.03/14,279.96)^4-1)*100 = -50.8 percent, annualized.
But no worries — like housing, the stock market always goes up, in the long run.
Did they mean ‘catch-up’ or ‘ketchup,’ as in the red stuff that tastes great on bull-meat hamburgers?
Fed move seen as insufficient catch-up attempt
By Mohamed El-Erian
Published: January 22 2008 19:20 | Last updated: January 22 2008 19:20
Rather than wait for its meeting next week, the US Federal Reserve implemented an emergency cut of 75 basis points on Tuesday. This took its key interest rate, the federal funds rate, down to 3.5 per cent compared with 5.25 per cent just six months ago.
Yet what would have been interpreted a just few days ago as a bold policy measure to get ahead of the curve is now seen by some as an insufficient attempt to play catch-up with a rapidly deteriorating situation.
http://www.ft.com/cms/s/4664ce96-c91b-11dc-9807-000077b07658,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F4664ce96-c91b-11dc-9807-000077b07658.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
who cares what the brits say. they love to see the Yanks in the tank.
Americans lose faith in Citi and Merrill
By Francesco Guerrera in New York
Published: January 22 2008 05:05 | Last updated: January 22 2008 05:05
Citigroup and Merrill Lynch’s standing among US citizens has plummeted as a result of multi-billion dollar capital injections by sovereign wealth funds, according to new research that highlights simmering public opposition to investments by foreign governments.
Over half of the 1,000 people polled by the market research group Strategy One said they “trusted Citigroup less” after its recent decision to tap Middle Eastern and Asian sovereign funds to ease its financial constraints.
http://www.ft.com/cms/s/393efaea-c86f-11dc-94a6-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F393efaea-c86f-11dc-94a6-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
A long profitable day with over 500 posts! Hope there is a Cal section tonight. Nap time.
Almost 60 points available today on ES. I didn’t get that many but did very well. Saw no reason to buy back at the close so nap time for me too. I’m exhausted.
I can’t keep up anymore.
That’s a great idea.
Stephen Roach shoots a hole-in-one in Davos…
01/22/2008
Will the Fed rate cut work?
From Stephen Roach, Chairman, Morgan Stanley Asia
…
I do not believe that aggressive Fed rate cuts will resolve the extreme imbalance between supply and demand in the US property market that will be pushing housing prices lower for some time. Nor do I believe that recent Fed actions will restore the functioning of credit markets to their pre-crisis state. As a result, pressures are likely to remain intense on housing - and credit-dependent US consumers - a sector that accounts for a record 72% of US real GDP.
In essence, the Fed is “pushing on a string” here - unable to stop the recessionary dynamic now unfolding. But there will be consequences in the next recovery. Unfortunately, the US central bank can’t seem to break out of the market-friendly trap it fell into nearly a decade ago. Panicking over the possibility that yet another bubble is bursting, the Fed is once again injecting liquidity into an asset-dependent US economy. That won’t arrest the recessionary dynamic now unfolding but it could well set the stage for the next asset bubble in America’s bubble-prone economy. Have we learned anything from the mess of the past seven years?
http://blogs.ft.com/davosblog/
I hadn’t seen that Q4 S&P 500 YOY earnings growth graph before. It looks pretty bad…
Global equity markets
Published: January 21 2008 21:20 | Last updated: January 22 2008 08:46
The world is decoupling from the US, just not in the way the optimists hoped.
http://www.ft.com/cms/s/77f96344-c863-11dc-94a6-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F1%2F77f96344-c863-11dc-94a6-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
CAPITOL REPORT
Odds are, U.S. is in a recession
Commentary: Three of 5 indicators flashing warning signs for growth
By Rex Nutting, MarketWatch
Last update: 9:14 p.m. EST Jan. 18, 2008
WASHINGTON (MarketWatch) — It’s much too soon for an official judgment on whether the U.S. economy has fallen into a recession, but early indications show that a recession may have already begun.
http://www.marketwatch.com/news/story/odds-us-recession/story.aspx?guid=%7B80BE41BE%2DBCF3%2D4EFB%2D82F7%2DD2649FB6B67A%7D
Gold up to 893.4 and more rate cuts to come? A recession for banks and the consumer maybe yet will it affect all industries? I bet it dosen’t. Time to get out of foriegn mutual funds for me but I will stay the course on Miners and even oil.
I’m just posting this to try and get to 500 posts I don’t want this to be investment advice because “I really don’t know anything”
Lousy guidance from Apple. I’d say that story is over for now. Nasdaq was noticeably weak all day, wonder if the word was out?
jeez you mean people will actually spend their money on rising food and energy as opposed to the next IpodnanotouchTV
I love the British sense of linguistic propriety.
Tuesday, January 22, 2008
The Bernanke put: buttock-clenching monetary policymaking at the Fed
http://blogs.ft.com/maverecon/
His guy has a point: the markets will become more unstable due to the Feds rate cut. Skittish, very skittish. I wonder if this rate cut was the equivalent of the walk across the trading room floor in 1929? So, wait for it. The investors will think about it for a few days. Then what? I’m betting another crisis.
Roidy
The Fed cuts rates a whopping .75%, and the indexes are STILL down at day end. Not a good sign for the markets, eh?
Sounds quite dangerous…
The financial turmoil is like an elephant in a dark room
By Martin Wolf
Published: January 22 2008 20:02 | Last updated: January 22 2008 20:02
http://www.ft.com/cms/s/18083bfa-c8f8-11dc-b14b-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F18083bfa-c8f8-11dc-b14b-0000779fd2ac.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Does it matter that it’s a White Elephant?
Cramer is on.
1) He is about to recommend a retail stock.
2) He thinks that the new lower bank rate will allow the present homeowners to refinance their mortgages.
3) He is looking at buying a house !
Oh please, let him buy a house. Right now.
2008 - 60 = 1948. J M Keynes had only moved on to the next world two years earlier.
Is Soros suggesting Keynes’ long run has arrived?
The worst market crisis in 60 years
By George Soros
Published: January 22 2008 19:57 | Last updated: January 22 2008 19:57
The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.
However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.
http://www.ft.com/cms/s/24f73610-c91e-11dc-9807-000077b07658,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F24f73610-c91e-11dc-9807-000077b07658.html&_i_referer=http%3A%2F%2Fwww.ft.com%2Fhome%2Fus
Do you have a link to that that doesn’t require a login ?
Nevermind.
Google is your friend.
Here is a snippet:
“Until recently, investors were hoping that the US Federal Reserve would do whatever it takes to avoid a recession, because that is what it did on previous occasions. Now they will have to realise that the Fed may no longer be in a position to do so. With oil, food and other commodities firm, and the renminbi appreciating somewhat faster, the Fed also has to worry about inflation. If federal funds were lowered beyond a certain point, the dollar would come under renewed pressure and long-term bonds would actually go up in yield. Where that point is, is impossible to determine. When it is reached, the ability of the Fed to stimulate the economy comes to an end.”
Here is Russ Winter’s typically briliant-but-simple take on the status quo (viewed through Jerry Maguire’s manager’s eyes…).
Sounds to me like the world economy has a Hurricane Katrina storm surge issue. Meanwhile, enjoy the Fed-fueled stock market rally! The bankers, their regulators and ratings agencies will have to keep behaving like Mr. Poe in the Series of Unfortunate Events to pull us through the crisis unscathed.
Jerry Maguire: Show me the money! Show me the money!
The world economy has reached a new dangerous point. It is best explained in simple terms. Basically the blowup of fictitious capital has wiped out the leveraged capital Riskloves. Simply put, ABC Risklove or XYZ Pig Man once had $1.0 billion in capital, and made spread bets on $10 billion in suspect “assets”. He (she, it) took on $9 billion in liabilities to do so. Now hypothetically the assets are worth at best $7 billion (no one really knows, as market has broken), and that’s only if a further panic can be avoided. A panic is averted by pretending the assets are still worth $9 billion, leaving $2 billion in fictitious capital (FC) on the books. FC spins are conducted by spewing out propaganda that only subprime is the problem. The credit agencies meanwhile act like they are on the old case files playing some catchup, but ignore the next tsunami wave two feet off shore. Fitch, who moves quicker, is downgrading some of the second wave, but it is slow motion. All the other blowups like commercial mortgages, and unsecured consumer loans are largely ignored.
http://wallstreetexaminer.com/blogs/winter/?p=1356#more-1356
http://en.wikipedia.org/wiki/Lemony_Snicket’s_A_Series_of_Unfortunate_Events#Plot
Don’t read this, I just wanted to be post number 555.
558. Is this a record Ben?
BTW : Congrats on making your mark on history! You the man, BJones!