Bits Bucket And Craigslist Finds For January 27, 2008
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e to the u du/dx e to the x dx sec tan cos sin = 3.14159
formula for pi?
staying up late reading your old math book?
“Time for Plan B, Road trip!” Time to go back to my college roots. The hard sciences maybe my future career going forward, if I should live as long as my generation is suppose to live, ie., 80+ years!
Never met a road trip I didn’t like.
@ Colorado
I agree the H1B visas are a great way of lowering salaries, not by just increasing the pool of applicants, but by having a class of workers they can treat badly.
However, I thank the idea that science / engineering is a dead end carrier is also not valid. The truth is Indian salaries are moving up fast, and the rapidly sinking dollar is hurting outsourcing.
I believe there will be a global rate for most engineering talent eventually, and it will be pretty good. The supply will stabilize but the demand will continue growing. I think this effect is already happening in software.
It is getting harder to hire in the Valley right now, as people can demand more money because the embedded and web 2.0 companies are making money, and they need talent faster than it is coming online.
I am not saying that things will be perfect moving ahead, just that the systemic shocks of India and Eastern Europe entering the world market are ending.
Oliver
Oliver, very well put! This is the reality - there are jobs, plenty of them but it involves a lot of smarts and hard work. Plain vanilla CS majors raking in 6 figures starting isn’t going to happen, but if you are really talented and have a higher degree then the sky’s the limit.
Unless you are young, you might want to rethink your career choice. There is no shortage of science majors in the US, contrary to the claims of the H1-B crowd who want be be able to import even more low paid scientists from abroad. You will find yourself competing with countless 20 somethings, for homegrown and from abroad.
I believe that in the upcoming recession and depression, “as time goes by”, these individuals will leave the USA for better opportunities in their own other countries. Someone has to stay in the US to rebuild our economic infra-structure (manufacturing).
While I will never be the smartest person, It seems that this would be my positive contribution to future generations.
This is not mean as a political statement of my party of choice, however, we will need sacrifice, skills and knowledge to make our economy successful in the future.
Well, that’s my plan B! I just believe that anyone who thinks that they have a “lock” on their current income is fooling themselves. Most of the jobs, in my opinion, are tied into consumer consumption.
The only reason I posting these comments is that I think everyone needs to evaluate their own sources of income in a new world!
The earth beneath us has shifted, and nothing will change that!
Our country has never experienced a brain-drain, until recently.
If E = MC squared, then E is but a wee bit of M and M is a whole bunch of E, and they are interchangeable.
IE=MC squared
Inland Empire = Mortgage Capitulation squared
LOL! We have physics humorists in our midst!!
…and some molecules are heavier than their composite atoms
oh, and sometimes … kaBOOM!
LMAO you people slay me.
on math side…
2 + 2 = 5 for very large values of 2
e^(i pi) + 1 = 0
Greatest math formula in the world. Links the 5 most important numbers in math, 0, 1, e, pi and i.
what does i represent?
i is the square root of negative one
does this begin to give you an idea of how extraordinary this relationship is?
Thanks to all the math/engineers! It seems in my recent review of my calculus self review, i skipped the infinite series section. Time to go back and review same.
I must say, either my age or my ability to retain info after numerous years must be the cause of my difficulties.
Side note: Not being the smartest tool in the shed may also have something to do with it!
I have a PhD in Computer Science, and nearly failed my calculus courses. Discrete math (logic) and even statistics I can do with no problem.
But to this day, the phrase “Taylor series” makes me wince!
LostControl - don’t worry about forgetting it. Since I started working in 1985 I have used only a little of the math I learned back in college. However, I do remember proof by induction was the key to success in several courses: Advanced Calculus, Modern Algebra (particularly rings, fields), number theory, and so on. You also improve your analytical ability, which you never really lose.
Bill in Maryland,
I started out as a physics major for 2 years, interrupted by a war and graduated in political science. I have a lot a work to do it i am serious about math/science.
Side note: I signed up and attended a “physics for engineers course at my local jc. God, the youngsters are smart! Also, kids now days need to know calculus before any physics courses. When I took my first college course at the university, the highest math course required was trig.
What the heck, I don’t plan on spending my remaining years in a retirement home.
Pure-math major here. One of the happiest times of my life, studying with my bud for hours every day while we worked out proofs and ate pizza.
I took a risk one day and called up Walter Rudin. He thought I was going to ask for homework help, but was flattered when I asked him to sign my copy of Principles of Mathematical Analysis. It still rests on my shelf.
Have a degree in engineering, took 2 years of calculus, did really well until I had to apply it, then it was hard. Engineering wasn’t my best field, so I later switched careers. Now I don’t have to worry about bridges collapsing because I blew it. I’m in a nice low-responsibility field (archaeology). I admire anyone who is adept at applied physics and math.
Lost in Utah,
In re-acquainting myself with math(from algebra to calculus), to me the theory is simple and easy. Its the application and remember the + and - signs that screws me up! Also, just keeping it straight in your head can be difficult.
An aside, have you looked at college math and science texts recently? The texts are more detailed than anything that i remember! Unfortunately, texts are extremely expensive. You can spend up to $250.00 in text books for a single class. As a poly sci major, I use to select by the price and extent of required texts for a class.
I really feel sorry for students and their parents for the cost of an education!
Ironically, if I’d stayed in engineering, I’d probably would’ve been designing subdivisions, as I was a civil engineer.
God, the youngsters are smart! Also, kids now days need to know calculus before any physics courses.
I think that what we are seeing today is that only the truly dedicated are opting for the hard sciences, mostly because they are not as financially rewarding as other “difficult” professions.
Many of us that are old enough learned math, (which is Pure Reason) using only a number 2 pencil and piece of paper.
Calculators have allowed young minds to not think for themselves, which is why we all regale ourselves with tales of young adults, that can’t add simple numbers together.
From one Ph. D. computer scientist to another. It all depends on the specialization. Mine is data mining and pattern recognition, which requires a heavy dose of mathematics and probability theory. Software engineering specialties tend to require a smaller dose of mathematics, just from observation.
As for job related stuff, I’ve been mostly courted by Google and the NSA (spook work I presume).
Walter Rudin, ha never thought I would see that discussed on this blog. I loved the way he had a trick for everything. His proof selection was more a chess openings and traps book than a normal math book.
I should also add I never expected to see anything I worked on in my PhD showing up in the WSJ. But on page B1 they had some work by the Unabomber after he was caught. So I guess you never know
Oliver
It represents the fact that e^(i pi) = cos(pi) + i sin(pi) is a fancy way of writing -1.
#$%@! You beat me to it!
I always found the concept of “unity” the most profound.
“infinity” (both the countable and uncountable sorts)…
Or “nothingness”.
Since I started investing, I like PERT - principle * e to the Rate times time.
Another neat fact is that i^i (i to the i’th power) is not only real but also has an infinite number of values!
“Greatest math formula in the world.”
Yensoy, what would you call this?:
http://en.wikipedia.org/wiki/Compound_interest
In comparison? Simple arithmetic
But honestly, they ought to teach compound interest in school. That’s one thing they should teach whether or not they do geometry or set theory.
I rate that comment e to the pi i.
Just got a taste of what a high end science blog would read like .
Yesterdays news, todays update…this just doesn’t pass the smell test?
http://www.bloomberg.com/apps/news?pid=20601087&sid=aY1GmyC9KlL4&refer=home
It’s embarrassing–
This does not bode well for jounalism or financials.
Grrr…
Leigh
The frogs have got a lot of Gaul, to try and pin the tail on a rogue donkey.
LOL! Je suis heureux que mon café n’est pas encore fait.
yes, it’s been that kind of morning on here, hasn’t it? not complaining, though X-D
Rogue Entrepreneur?
Not bad French. Better if you use the subjunctive mood in this case: que mon cafe ne soit pas encore fait.
Beignet, done that.
Dreyfus II.
Before you J’accuse me, take a look at yourself…
Is what I would tell the French bank, If I could be so rogue?
Rogue Trip
MSM reports that Jerome was “borrowing” other coworker’s passwords? WTF! in the 20+ years I have worked in engineering 1 attempted swipe of account would be considered a felony, subject to immediate dismissal. Societe Generale’s culture leaves the impression of a lunatic asylum. AND his boss didn’t know he had an €50 billion trading position? Societe Generale has earned itself the #1 position of my financial Darwinism awards LIST.
Yesterday’s news, with a new twist…Lawd.
http://benbittrolff.blogspot.com/
From the article:
…The Growth Package Includes Measures To Bolster Both Business Investment And Consumer Spending, Which Are Critical To Economic Growth…
Ahem, yeah, and I have a bridge…er…can conjure up empty promises!
Ya just can’t make this stuff up!
Leigh
I wonder if the architects of stimulus were carefully thinking through the eyes of J6P when they figured out how best to make it all good again?
“Bottom Line: The average Joe six pack is a baby boomer quickly running out of time. His single largest asset, his primary residence, is deflating rapidly. This single largest asset is also the primary collateral for his single largest liability. His balance sheet is rapidly deflating as all his assets, from his home to his equity portfolio, all simultaneously deflate while his debt outstanding may actually still be increasing. His debt servicing costs are not dropping, despite aggressive rate cuts, and may actually be rising. It has also become damn near impossible to refinance certain mortgages as easy credit evaporates. On top of that, Joe six pack should now be seriously concerned about his job security. So when a cheque for $300 to $1500 arrives in the mail, Joe six pack is not going to spend it on a $200 steak dinner or a new computer or on a vacation. Got it?“
No he will spend it on. A new exhaust for his 4 wheeler, tires for the F-250, X box 360 and games, A trip to Vegas, New sound sys for the Boat, Rifle for hunting. Saving money or paying down debt is neither fun or cool. Got it?
Ask not what you can do for your country; ask what your country can do for you.
He may have to spend it on tires for the F-250 if he has been to tapped to replace the threadbare ones on it now. Some of this money will go into consumption as J6P has been stretched so thin that he has put off some purchases to make ends meet. Once the HELOC cash is gone and the CCards are maxed J6P has to make it on the salary and if his reset gift has arrived he ain’t gonna have enough to cover all the bills AND pay for the replacements like tires. He could “miss” a ccard payment to buy tires one month, but gubmint money is a windfall he will put to use.
To him, saving money, or paying down debt, is like throwing money in the garbage can.
Or like throwing away money on rent…
The thought has occured to me, that the $150 billion that is being directed to consumers to prime the spending pump, is a “set-up” so that it won’t seem so bad when the Federal Gov’t spends several times that amount bailing out their Wall Street friends down the line (monoline insurers, investment banks, etc.)
This thing could grow into something really ugly, really fast….
Things doe not get better for the compulsive gambler while he is sitting at the table. It doesn’t stop the game to give him a few more chips on the house. It just makes him feel good. Things start to get better when his a$$ gets thrown out on the street.
Skye, Excellent !!
If you wanted to replenish the banks lending abilities, Why not give say 75 million Americans(under $100K income) $2000 that can only be used to pay off credit Card debt which will go back to the banks and businesses (think Sears). AND lower the credit limit by $2000 as well. So most people will save $40-60 a month in payments month after month.
And those that have no cc debt and spend the $2000 as a gift for being FRUGAL.
Wow, Prof, you just made me feel better. Have been feeling the pain of not having my own place, but I do have many things to be thankful for: no debt, own my vehicles, I can move wherever and whenever I want, and I have a nice chunk of cash in CDs for maybe even buying a house for cash, if not, big downpayment. Thanks for helping my optimism.
If you were a good Utah Mormon (not sure whether this is the case), you could enjoy the further satisfaction of knowing that you are one of the chosen few following that church’s General Authorities’ admonition about not burying one’s self in debt. My all-time favorite (and I wish I knew whose talk it was) was a conference talk where the speaker explained interest in layman’s terms:
“Them that understands interest, gets it. Them that don’t understands it, pays it.”
Sadly, my wifes’ siblings generally seem to ignore much of this sage advice (right along with a broad swath of the Utah Mormon fold), even while being careful to never tip a glass of wine to their lips nor to sip a cup of freshly brewed coffee.
Somehow the church fosters in its members an “all-or-nothing” mentality, which treats some rules as hard-and-fast (like “drink no coffee”), and others as malleable without limit (like “don’t get yourself overhead in debt”). This tendency, of belonging to a powerful group, to destroy one’s capacity for independent judgment and follow the herd’s movement is one reason I don’t join.
Thanks to Google, I did find one good example of the inherited wisdom from LDS General Authorities on the subject of debt:
‘Perhaps no counsel has been repeated more often than how to manage wisely our income. Consumer debt in some nations of the world is at staggering levels. Too many in the Church have failed to avoid unnecessary debt. They have little, if any, financial reserve. The solution is to budget, to live within our means, and to save some for the future. Nowhere is the oppressive burden of debt more clearly taught than in the graphic counsel of President J. Reuben Clark, Jr.:
“It is the rule of our financial and economic life in all the world that interest is to be paid on borrowed money. May I say something about interest?
‘Interest never sleeps nor sickens nor dies; it never goes to the hospital; it works on Sundays and holidays; it never takes a vacation; it never visits nor travels; it takes no pleasure; it is never laid off work nor discharged from employment; it never works on reduced hours. … Once in debt, interest is your companion every minute of the day and night; you cannot shun it or slip away from it; you cannot dismiss it; it yields neither to entreaties, demands, or orders; and whenever you get in its way or cross its course or fail to meet its demands, it crushes you.” (In Conference Report, Apr. 1938, p. 103.)’
http://deseretbook.com/mormon-life/curric/story?story_id=5197
OT - Prof, no I’m not Mormon, and I wouldn’t be a good one if I were. I’m from Colorado, from a long line of free thinkers, not socialists. There are areas in Utah not settled by the Mormons, though rare, and I’m currently living in one. Utah has some awesome country and I love it, but I wouldn’t fit into any place with a dominant religion. I’m spiritual, but not religious, and there is a fidderence - whoops, difference (calling Dr. Spooner). I’ll refrain from my opinion of the Mormon religion itself (read “No Man Knows My History” for more on that), but the Mormons are in general good people. Too bad Utah has one of the highest bankruptcy rates in the country, the pressures to be prosperous are very strong here, along with the huge families and it adds up to being difficult financially.
If you really are thinking about buying a place in the next few months why use all of your cash? You could probably get a 5% 30 year fixed rate mortgage soon. Do you really think that you will not be able to get more than a 5% return on your cash in several years once this mess settles down?
Not to mention the potential negative home equity wealth effect due to catching a falling knife in the worst housing downturn since the 1930s?
“Bottom Line: The average Joe six pack is a baby boomer quickly running out of time.”
Struggling Joe Sixpack is more likely to be a late boomer (born in the mid 50’s), or Gen-X’r; they missed Vietnam, and also missed out on the 20-yr mortgages typical before the Great Society expenses were realized, and also missed out on those defined benefit pensions too.
DEAN CALBREATH
Only thing tax rebates will stimulate is our debt
January 27, 2008
http://www.signonsandiego.com/uniontrib/20080127/news_1b27dean.html
No more talk about what or what not Bush’s package will stimulate or not stimulate. It’s Sunday morning.
glad I wasn’t drinking anything–I snorted, but that would have been a keyboard spewing, for sure
thanks for the smile
LOL, Tim. As an American who has had to endure Bush’s package for going on eight years, I thank you.
“But there’s something worrisome about a society that meaasures itself not by how much it makes but by how much it spends.”
There. It. Is.
That ’something’ is unsustainable.
I wish people in our country would “spend” more time getting in touch with Mother Nature.
Hardly costs anything.
Or get in touch with themselves.
combo:
When you take your 1st step from any trailhead, money is just ballast, as it won’t buy you a thing in nature’s realm.
You get to exercise your body and mind, and get in touch with yourself.
Thank heavens it’s Sunday…shining my halo :0
“Or get in touch with themselves.”
Just don’t do it on the subway. There are already enough weirdos doing that. Keep that thing to yourself.
ROFL
“Or get in touch with themselves.”
Or go stimulate themselves, for that matter.
I am with aladinsane. I have never felt richer then when I have been in the mountains, far away from roads.
“I am with aladinsane. I have never felt richer then when I have been in the mountains, far away from roads.”
My view of mountain/ desert trips is the farther away from civilization & crowds U get the better. My ideal trip would be a backpack trip into the remotest section of the sierras , maybe headwaters of kern river/lake South America or in the Monarch Divide area north of Kings Canyon centered around Marion Lake. Or Chagoopa plateau region beyond the great western divide.
One of the goals of the environmental movement is to set aside true wilderness areas in the US/world where U can trek up to 10 days without seeing any imprint of civilization or evidence of intrusion by man. Where in US are there such places besides Alaska wilderness?
Many foreigners come to the USA to see our crowning glory, our National Parks.
It’s the one thing we largely left alone, in our country.
“Many foreigners come to the USA to see our crowning glory, our National Parks.”
This is about all the US has to offer the world now, large expanses of set aside wilderness areas, which is why corporations have outsourced their production to Mexico and China where the evironmental costs of doing business is far less. Why pollute our soil, air & water when we can just dump all manufacturing off shore while keeping our land pristine.
China is right now having severe polution problems and razing, bulldozing their county to put up factories, power plants & transportation infrastructures and gladly allowing corporations to set up shop using abundant cheap labor , good for Corp bottom lines but bad for environment. They are exactly where the US was in late 19th century, the era of the robber barons and gross polluters which raped the US landscape till we got enviromental awareness in the latter half of the 20th century.
Lad, you are so right. I spend a lot of time in the redrock deserts of Utah and also in W. Colorado as an archaeologist. When it’s time to come back to ciVILEization, I can’t tell you how sad it can be to see people so out of touch with the peace and quiet the outdoors brings, seems they try to find that happiness in the mall, and it sure as H-E-doublehockeysticks ain’t there. Lots cheaper going for a hike, better for your body and soul.
Go to the northwest corner of Rocky Mountain National Park. My wife and I did a backpack into the Mummy Range about 10 years ago and did not see another person for about 5 days.
This is a remote location far away from the crowded east side and Grand Lake area.
Lost…
I love Ancient Indian wall art, as i’m sure you do as well.
Utah’s got more than it’s fair share of it…
Lad, rock art is my speciality, did my PhD in it. Cool excuse to explore. Don’t make a lot of money, but what a great profession. Not much for digging old bones, makes me melancholy.
Last year @ Calf Creek, not far from Escalante, Utah…
I saw my favorite, so far.
3 humanoid figures on a wall, each about 7 feet high, and the trio was around 10 feet wide. About 1,000 years old.
Each new discovery of the old ones, whets my appetite for more.
Utah,
I wished I had studied archaeology. I think that would be a great profession, even if it didn’t pay much!
Never too late, Lostcontrol! Get a degree online, or just study it on your own for fun, actually the for fun way is best. There are jobs here in Utah and Colo. that don’t even require degrees, summer only, usually. Check out Crow Canyon (google it).
Lad, I’m currently working in the San Rafael Swell. You probably know it, if not, google it. Awesome country.
Lost, while your idea of an online degree is easy, I am not only looking for an easy way out, but actually I enjoy learning from others in a formal setting-college class room. I have found that the instructor/professor does actually bring something to the class that is beneficial. While the recent text books are great, they are somewhat restricted in that they must be accepted by all schools of higher education. (dumbing down, in my mind). Finally, the instructors do add to the class room educational system that can not be gotten simply by reading a textbook.
I am self studying my math because I have taken the calculus series twice and at least my understanding has already been built-in.
What ever, I still like your profession! I remember taking a course in cultural anthropolgy, as close as my education got to your field of expertise. It was thoroughly enjoyable.
Lost (squared)
I could spend weeks just traipsing around places like the San Rafael Swell, the vibe of wall art is quite addictive…
Trying to decipher what somebody wanted to be remembered by, a thousand or 2 thousand years ago, beats the heck out of modern art worth millions of Dollars, that people with too much money and not enough brains, clamor for.
I have fun trying to figure out what must be maps. Lots of Barrier here, maybe 5 to 8,000 years old. Have to go visit your Calf Ck guys, haven’t spent as much time down there. The San Rafael is as wild as it gets, see wild horses and burros quite a lot. Saw a cougar chasing an antelope the other day, but no go for the cat.
Good article, well said. Thanks, PB.
I hope the honchos at the SD Union-Tribune realize that at least some readers (this one for sure) might cancel their subscriptions if outstanding journalists like Calbreath stopped writing their weekly columns.
http://en.wikipedia.org/wiki/Hair_of_the_dog
Who Has The Optimism?….
http://www.nytimes.com/2008/01/26/business/worldbusiness/26charts.html?_r=1&ref=business&oref=slogin
“In the United States, just 27 percent of the people questioned in the Gallup International Voice of the People survey said they expected the next generation to be more prosperous than the current one, while 43 percent expected less prosperity.”
Attempting to draw conclusions from such data is questionable. You and I realize that the more prosperous this generation is the less likely the future generation will be even more prosperous and vice versa, but I doubt most ppl pick up on this.
“One Chinese speaker said a recession on the United States might bring China’s growthdown to 9 percent a year, from the 10 to 11 percent he expected otherwise.”
Dream on. This recession will not be contained to the US but only to planet earth. No country will escape.
All human creativity will shut down. No new labor-saving inventions. We will return to the stone age. No one will dream anymore.
I’m just thumbing through a August 1933 National Geographic, and for $1600, you could go on a 130 day, 32 port cruise around the world.
Those that saved for a rainy day, got to go out and play.
Life goes on…
That $1600 adjusted for inflation is about $23,000 today.
Would 23K buy a 130 day cruise today?
Bill, dreaming and creativity take a back seat to survival when things get rough. Think Middle Ages.
Asian economies have decoupled from the US, however financial systems have not decoupled. Our recession won’t hurt China much.
I guess you are saying the recession ‘will be contained’ to the U.S.?
IMHO the recession in the US will marginally impact Asia and the Middle East.
China’s goal is to create 10MM new jobs every year. Without the jobs, there will be riots.
China has $1.4T to spend to insure creation of the jobs. Japan has 800B to spend, India has 500B to spend and Korea,Vietnam, Malaysia et al have another 500B. The growth engine in Asia is independent of the US - impacted, absolutely; but reliant on the US for growth. Not.
Get off the US centric mentality and look at the world party going on that we weren’t invited to attend.
If you wish to partake in the party from the US side strictly as a gamble, buy GM. Generous Motors will be a prime beneficiary of the growth in China.
I sincerely hope that their party keeps going while we clean up over here from ours. It will keep them distracted. The history of these people concerns me. Centuries of successful brutal conquest. Like you say, if they don’t keep the expansion going at, what in our sphere, would be considered an unsustainable rate, there will be riots. When a billion people are pissed off and want to break something, the easiest thing to do is send them across borders.
The population of the U.S. is 300 million. China can put 300 million under arms.
Hoz,
This is my first post, even though I am a long time reader of this blog. I greatly appreciate your posts. I learn something new everyday.
As far as I know India is still running trade deficits. I think they have foreign reserves around 250B (most of them is investments IMO). May be I am wrong. Can you point me in the right direction regarding this 500B figure?
With regards,
SY
Reserves of foreign exchange and gold:
$239.4 billion (31 December 2007 est.)
You are correct only 200B, my bad
CIA world fact book.
Hoz, Aren’t you shorting China? (FXP) I personally think Chinas stock market is similar to the NASDAQ in the late 90’s. The P/E multiples are out of line and the coming recession in the US will spook their market to the point it falls in line with more appropriate growth. I think they will falter but not fall like the US for similar reasons you state. I would not be a buyer in China right now as your post may lead one to believe it would be good to do so. Just trying to clarify your position on China.
Thanks Shakes
Do not confuse stock markets with how well an economy is doing.
IBM was in the DJIA in 1930 and was removed because it kept going up and had higher earnings. It did not reflect the economy. Stocks go down even when the economy is still growing.
I would not be a buyer of China equities at these levels, I believe there are better opportunities available in Asia.
Thanks Hoz, I understand what you say about economy/market. I believe there will be some good buying opportunities ahead in China in the medium term once we flush out a lot of speculation.
China suffered for almost 2 centuries under the influence of opium, and we might suffer for just as long, if we don’t wean ourselves from the opiate of religion, and lack of reason.
lad, i agree with most of what you post, but calling out the USA as a religious country? We are not even on the radar compared to the Middle East.
Oh really?
How do you explain the evangfascism i’ve been watching for 7 long years?
“I think one of the problems today is that society has moved into a multicultural relationship that renders archaic these culture-bounded mythological systems - like the Christian, the Jewish, the Hindu.”
Joseph Campbell
pales in comparison to what you would experiene in Saudi Arabia
The Saudis don’t have a leader that wants to see the end of the world, sooner than later.
We do, and he has access to almost 10,000 nuclear weapons to make it so, to please somebody that’s been dead and gone for over 2,000 years.
I’m ok rogue traders, compared to the rogue traitor in the White House.
aladinsane, you sound just like me. We probably even crossed paths hiking in the southern Sierra about 12 years ago. Did you find Galt’s Gulch in the Sierra! LOL.
Chavez urges withdrawal…
http://biz.yahoo.com/ap/080127/venezuela_alba_summit.html
Dang wmbz,
Love him or not, Chevez may be our saving grace, in some weird tin-foil hat way!
Need Java!
Leigh
The guy is a kook but that was the first time I heard him say something that I could understand. Having South American money invested in American Financials DOES appear to be financial suicide.
I would not like to live in Venezuela, but I’ll say this much for Chavez, he does what he can to keep his people at home, which is more than I can say for Calderon. I have yet to run into an illegal who is from Venezuela. Nor is he trying to mess with our domestic policy. He did try to extend a hand of friendship to the US and was severely rebuffed, at a time when we need all the friends we can get.
It should be obvious to the HBB, but you can’t believe everything you see in the MSM regarding the loonacy of Chavez.
He’s not a dictator. He overwhelmingly won a Venezuelan election characterized by massive voter turnout; in an election judged to be free and fair by the U.S. State Department.
He remains extremely popular due both to the policies he implements and the favorable comparison to the notoriously corrupt Venezuelan ploitical class that preceeded him. Incidentally, the MSM had no problems with his predecessors. He does have a habbit of verbally highlighting the ‘arrogance’ of U.S. elites - perhaps they deserve it. Sorry about the political tangent.
http://en.wikipedia.org/wiki/Venezuelan_presidential_election,_2006
Absolutely correct. One lone ongoing supportive voice is Dean Baker, who disects the economic realities our MSM will not reveal. Gotta demonize anyone who won’t get with the program of enriching Goldman Sachs, et al
I stopped buying gas at his Citgo stations long ago.
It’s more expensive anyways, but I wouldn’t buy a water bottle there if I was on fire :).
I continue to buy most of my gas at Citgo because it is one of the very few stations in my town that doesn’t treat me like a criminal. I can pump first, then pay, with cash.
Mogambo Guru…dang, a great dance or rich coffee? HA!
Need coffee!
http://www.atimes.com/atimes/Global_Economy/JA26Dj01.html
Excerpt:
…A relevant piece by Paul Gores of jsonline.com had the headline, “Bank robberies on the rise”, with the subhead, “And more criminals are getting away, FBI statistics show”. The point is that not only is bank robbing 40% more popular than last year, but the FBI used to solve 75% of bank robberies in 2003, but only about half now…
Yeah, it get’s better! Avert eyes if tipping coffee (liquid) to face!
Smiles,
Leigh
I can name a whole bunch of bank robbers from the 1930’s, without breathing hard (John Dillinger, Pretty Boy Floyd, Ma Barker, Bonnie & Clyde, Machine Gun Kelly, etc, etc.)
But I can’t tell you the names of any bank robbers from the 1940’s, 50’s, 60’s, 70’s (Patty Hearst, aka Tanya), 80’s, 90’s or 00’s.
Bad times breed crime, keep that in mind.
You’re funny this morning Aladin!
I need to take my own advise and avert eyes when tippin java to face!
Leigh
Woke up funny, I guess.
Watch for a rerun on the history channel of the gangs in the 30’s. Saw it last week. Almost all occurred around 1932-1934 in an 18 month time span; public loved it because of their hatred of the banks. Great preview of what lies ahead if we slip into a depression. Small towns will look real good then providing you have some land and a job.
My wife and I have chose to remove ourselves from “polite” society, far away from the maddening crowd.
You don’t want to be anywhere near a big city, soon.
“You don’t want to be anywhere near a big city, soon.”
U have to watch your back from two directions if u live in a big city. From above there will be attempts at wealth confiscation from State, counties and local Municipalites upon middle class working citizenry. There is talk of raising fees for all kinds for city services in Long beach, traffic enforcemnent ticketing is rising exponentially ,ect.
From below U have to look out for rising assaults, store robberies, carjackings, warehouse thefts, all this in the lovely city of angles which regulartly tops the list of most crime/fraud infested, tax evading, illegal- alien criminal syndicate fraud activity in the US. Only the middle class gets screwed here in LA. The illegals get freebies galores and pay no taxes, the extreme weathy in their hollywood hills/brentwood/ bel arie enclaves can hire armies of Bev hills lawyers to game the tax system.
70’s, also the Weathermen. 70’s saw a lot of violent crime and I guess some of the social unrest hangover of the 60’s, with violent radicals deciding that now was the time to attack “the System” at the root…
the black members went to jail in short order. the white ones were on the lam for a long time … however, eventually they did go to prison … both the Weathermen and Katherine Ann Powers (although she turned herself in)
Powers has actually apologized and expressed remorse for what she did (shot and killed a cop outside a Brookline, MA bank). I know this because she was writing some pieces for the Boston Globe from Framingham MCI Women’s Prison. However, according to what I saw on cable, the son of the imprisoned Weathermen, who were finally busted somewhere in the Northeast in the 1990’s after living very quietly for years, swears they are innocent, innocent! Yeah, whatever, buddy.
Hmm, weird, I always hated that Powers got to live her whole life and then choose when she went to prison (wtf?) but at least you can say she accepted her guilt and her punishment… these other folks seem totally unrepentant.
interesting you should bring up Bonnie & Clyde, Aladinsane, because I was writing up a list on the bus on Friday about the sort of ‘behaviors’ we might expect to see in this recession–including armed robbery.
not a gator:
Some key societal differences between the 1930’s and now…
1. In virtually every photo of the Great Depression, people still dressed well, as they had respect for themselves and others.
2. Violence was uncommon. (compared to today)
3. Guns were few and far between.
4. A large number of Americans lived on the farm, as did my mother in Canada. As bad as things got, she never went w/o a meal.
5. The bank robbers of the 1930’s were considered to be neo- Robin Hoods, I doubt we’ll look at the upcoming crop in the same light.
I’m going to strap ammo belts over my shoulders and pack heat for the next 5 years. We’re going in for the dark ages. No more inventions, no new gadgets to improve our lives, no new medicines. No one will want to get wealthy and have financial freedom.
Lad, you’re right, this depression will be very different, if we sink that far. My dad lived on a farm in NW Colorado during the GD and he wrote a book about it (available on Amazon, The Ozark Clan of Elkhead Creek, his family was from Missouri - disclaimer, I get nothing from sales of the book). The book is a pretty accurate portrayal of what the Depression was like if you lived on a farm - they seldom went hungry, though times were hard in other ways.
I’m going to strap ammo belts over my shoulders and pack heat for the next 5 years. We’re going in for the dark ages. No more inventions, no new gadgets to improve our lives, no new medicines. No one will want to get wealthy and have financial freedom.
For a self-proclaimed libertarian, you don’t seem to know much about Austrian economics. If you did, you would know that there are only two possible ends to a great inflation such as the one that is going on right now: a deflationary depression or an inflationary depression. Whichever one we get is going to be very unpleasant, regardless of the human desire to improve one’s lot.
“And now that it has been a decade since that idiot Bill Clinton repealed the Glass-Steagall Act that prevented the damned banks from acting like idiots again and profiteering in the securities markets, we are paying for Clinton’s corruption and stupidity.”
How will the Cl!nton apologists excuse this one away? I’m sure there will be attempts. As a founding member of the Non-Partisan Truth League, I think they all stink, including good ‘ol Bill.
NYCitboy,
I enjoy your posts, but I don’t think Presidents repeal laws.
Clinton joyously signed that repeal in ‘99
Bank Robberies may get the headlines, but they are a lot of work, high risk, and low reward compared to identity theft.
Identity theft is already a severe problem, and I expect it will get a lot worse in the next few years. In addition to how easy it is to do, there is a lack of concern on the part of corporations in preventing and detection of that sort of activity. As for law enforcement and the legal system, they are behind the curve in dealing with it. “Small time” identity thieves have a good chance of not suffering any consequences, even when caught by their victiums.
And lastly, it is real easy for a desperate person to rationalize to themselves that committing identity theft doesn’t really hurt the person whose identity they are “using” or borrowing, and thus down the slippery slope they go. Think of people starting out by using their parent’s identity to get utilities turned on, or their minor children’s credit info to get a loan. Next step is pilfering the neighbors mail and finding credit card cash advance checks… and off it goes.
Bank Robberies may get the headlines, but they are a lot of work, high risk, and low reward compared to identity theft.
too bad Jérôme Kerviel didn’t realize that … you don’t even have to rob a bank to remove some serious amount of money there
Last time I saw my brother he was in the copshop - his identity had been stolen twice and he was getting a card to carry in his wallet in case he’s ever arrested for someone else’s crime, he can prove his identity was stolen. What a world.
OT: I like to see words like “thrashes” and “routs” in my headlines. It looks like it might be time to play the crying card once again.
http://www.signonsandiego.com/uniontrib/20080127/news_1n27carolina.html
http://news.yahoo.com/s/ap/20080127/ap_on_el_pr/south_carolina_primary
“Later, he seemed to be targeting Clinton when he said, “We are up against the conventional thinking that says your ability to lead as president comes from longevity in Washington or proximity to the White House.”
He knows that political gangsters like Carmela Cl!inton value that time near the Don. The consigliere often becomes the new Don. Sometimes the dimwitted son takes over, too. We need to say goodbye to the heads of the two families altogether.
She will have lots more time to bake cookies for Bill if she is fortunate enough to not end up in the WH.
I would bet that it’s been years since Bill has seen her cookie.
Good morning Professor Bear. I always like your posts, and now I must agree with you about Hillary. I no longer support her. Obama’s huge win in South Carolina show that he has energized the democrats. In a republican state more people voted democrat (over 100,000) then republican. President Obama will also have long coattails and many republicans will lose their seats. I can see a new America with 65 or more democratic senators and 300 or so democratic representatives in the house.
I saw a bumper sticker that read;
Monica Lewinskys Ex-Boyfriends
Wife for President
“It’s about the past versus the future.”
“We are up against conventional thinking that says your ability to lead as president comes from longevity in Washington or proximity to the White House. But we know that real leadership is about candor, and judgment, and the ability to rally Americans from all walks of life around a common purpose — a higher purpose,” Obama said.
That’s my candidate! Go, Barack, go!
=Shrugs=
Not saying he’s good….
Not saying he’s bad…..
But talk is cheap and vague talk is even cheaper
How can anybody get excited about any of these candidates? Have you heard Barack talk about the need of people to save, not act like victims, work hard to control their own destiny, or get rid of massive government spending and the Federal Reserve? Or has he just promised “change” and a “new way”. All any of these fools has is a bunch of buzz words.
“All any of these fools has is a bunch of buzz words”.
Yep, One sad crowd to pick from. I had a teenage fellow tell me he was voting for Obama because we need ‘change’ I asked change to what? No answer just random BS. Kinda sad how many millions really haven’t a clue what is happening to our Country. The Empire is collapsing.
“Yep, One sad crowd to pick from. I had a teenage fellow tell me he was voting for Obama because we need ‘change’ I asked change to what?”
Sounds like when Kennedy was running for president in 1960 . Barrack does have a Kennedy- like appeal but may be even more to the left than JFK.
I still think the Clintons will come up with some dirty tricks or dredge something out of the slimebucket against Obama to snatch the Nomination. They may be holding back now as it would create a schism in the Democractic party which IMOP is guaranteed a presidency come November if the dem’s hold together. If Clintons become desperate however look for them-or their operatives- to air the dirty laundry.
I am independent and do not support either candidate but based on past history of US elections the administration in power in time of recession usually loses the Presidency.
‘Or has he just promised “change” and a “new way”.’
“Respectfully submitted for your perusal: a Kanamit. Height: a little over nine feet. Weight: in the neighborhood of three hundred and fifty pounds. Origin : unknown. Motives? Therein hangs the tale, for in just a moment we’re going to ask you to shake hands, figuratively, with a Christopher Columbus from another galaxy and another time. This is the Twilight Zone.”
“How can anybody get excited about any of these candidates?”
Agreed. I’m a Republican but bring back Zell Miller out of retirement for the Democrat candidate and I’ll cross over.
Gotta admit, it’s thrilling to have a presidential candidate who writes and speaks English so well. Endorse the sentiments he expressed, as well. Great win for him.
I first read of Barack in the New Yorker, about 6 years ago and thought, this guy is for me…
We are so used to dumbed down leaders, that when a highly intelligent one comes along, it’s a little frightening for some people.
The only downside to him is, I don’t think he’s as savvy as he needs to be, on financial matters.
So: Obama/Paul 08′
Heard that Ted Kennedy just endorsed Obama. That may cost him some votes.
Watch the movie Sicko and your ambivalence and doubt will be replaced with rage, focus and a sense of urgency.
I watched Obama’s victory speech, and he’s great speaker with pretty good pitch. Part of the pitch is the “let’s all work work together to build a better America” line.
What worries me is this: What if he is elected and actually succeeds in getting the politicians to all work together? The potential for unintended consequences is frightening.
What, me cynical?
BTW, did anyone else see Huckabee’s pitch for the “Fair Tax” today? He managed to put a middle-class populist spin on it by pointing out that the underground economy would be taxed, while the “66,000 pages of IRS rules” would be thrown out.
I’m wondering how this pitch will go over with J6P.
Analysis of two groups indicates bullish market
By Mark Hulbert
NEW YORK TIMES NEWS SERVICE
January 27, 2008
Investor sentiment suggests that the bulk of the stock market’s decline is now behind us.
CLICK!
http://www.signonsandiego.com/uniontrib/20080127/news_1b27market.html
Fergit your opinion survey results: Actions speak louder than words.
What does this story suggest about sentiment among company insiders, not to mention their ability to catch the bottom in their own share prices?
Usually dependable buybacks rare in lull
Most companies not repurchasing shares
By Karen Richardson and Gregory Zuckerman
THE WALL STREET JOURNAL
January 27, 2008
In past market stumbles, investors could count on one thing to help stabilize the situation: a round of share buybacks.
This time around, there are even higher hopes for such repurchases, given that the stock market rout has made prices cheaper and falling interest rates make it less expensive to borrow money to buy stocks.
But most companies aren’t biting. Many bought back shares in recent years when they were much more expensive, leaving them with less ability and leeway with their investors to jump back in now.
“Companies are realizing that you can’t fight the market with buybacks,” said Howard Silverblatt, a Standard & Poor’s senior analyst who tracks buybacks for the Standard & Poor’s 500-stock index. “It’s like using your fist to hit a brick wall. You just keep hitting and hitting, and it just doesn’t move.”
http://www.signonsandiego.com/uniontrib/20080127/news_lz1b27buyback.html
Look at the buybacks the homebuilders were making on the way down. Money pi$$ed out the window at a time when they need it most. Just ridiculous! Share buybacks are a joke. It just means that management has no better idea how to invest earnings. I’d much rather see investment in the future of the company than stock buybacks. But I’m not a dip$hit Wall Street analyst.
I have a question about the HBs. They were recommended yet again on Fux News yesterday. Why are people still jumping into THESE homebuilders? It seems like the next few years would be a perfect time for new builders to emerge. They would start with a clean balance sheet. They could truly buy land at cheap prices, after a crash. They would have no association with the Housing Mess. It seems like a great time for a group of knowledgeable people to round up financing (if they can) and undercut all of the existing homebuilders. To pump companies like Centex, Lennar, Pulte, etc. now seems to be looking in the rearview mirror. Is this not a great time for the Next Generation to emerge? Is it not time for the Next Generation in a lot of industries as so many established companies have committed hari-kari?
I agree. Someone should start up a “New Builders” mutual fund in the next boom cycle. I bet it could be a winner (they could also pick up whatever haggard skeletons are left standing from the current crop of downtrodden builders before the next boom breathes life back into their carcases).
but can we please insist the engage architects with at least a semblance of taste?
The share buy backs are a feel good smoke screen designed to offset the dilution caused by the excessive options given to executives.
Look at the options in the severance packages of CEOs that were recently let go.
When the company repurchases the shares it’s really a bunch of executives quietly stealing from the company in a round about way without directly hurting the investor through dilution.
RANT OFF.
You need to look at what’s in the severance packages of defunked CEOs to see how this works.
Spot on! Use share buybacks to give infesters the impression that top management is optimistic for the company’s future while insider stock sales tell the truth about the Enronesque “take-the-money-and-run” business plan.
Where are the companies going to get any moneys that they can pay back? Aint gonna happen.
There is not a single US corporate bond trading above par even though fed fund rates are at multi year lows.
–
I am sure Prof knows that buy backs were/are Crooks’ game — Insiders and VCs have been the largest sellers and the management were buying on behalf of the sharecroppers. This should be illegal (conflict of interests), but it is not.
Jas
I think corporate executives would love to do buybacks but nobody wants to buy the junk bonds used to finance such purchases (and no IB will underwrite on spec).
The Fortune 500 bought back over $500B of their own stock last year - goosing stock prices by increasing demand and “improving” EPS. That market catalyst, along with the frenzy in private equity deals, was ended when the credit markets finally began pricing risk more rationally.
So many people who will wake up with egg on their face! So many more who will wake up with no $$$ if they listen to this bull.
Rudyard Kipling’s timeless investing advice has much more heart and less fear and trepidation than does Clements’:
“If
If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you
But make allowance for their doubting too,
If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:
If you can dream–and not make dreams your master,
If you can think–and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same;
…
If you can make one heap of all your winnings
And risk it all on one turn of pitch-and-toss,
And lose, and start again at your beginnings
And never breath a word about your loss;
…
Getting going
Five reasons not to jump ship on stocks despite market woes
By Jonathan Clements
THE WALL STREET JOURNAL
January 27, 2008
How do you keep your head when everyone around you islosing (SIC) theirs?
On Tuesday, investors weren’t at their finest. A tsunami of selling drove the Dow Jones Industrial Average down 464 points, only for shares to bounce back smartly, with the Dow finishing off 128 points.
Then on Wednesday, the market plunged 250 points at the open, jumped around most of the day, then had a late rally to finish up nearly 300 points. Despite a decline on Friday, Wednesday’s gain was enough to help the Dow end the week with a gain of 108 points.
Clearly, many folks are rattled. Looking to maintain your investment sanity? Breathe deeply, keep these five maxims in mind – and start buying stocks.
http://www.signonsandiego.com/uniontrib/20080127/news_lz1b27going.html
Jonathan Clements is the WSJ columnist who, in the late 1990s, advised his readers not to save money in savings accounts but to put it all in the stock market.
Keeping the stock ponzi game going, is job # 1, for some.
Now the big push is to put your savings in your home via a CMG HOA. It’s a great way to add cash in a falling investment and feel good about it. Kind of like a 401K with your whole paycheck going to your house thats dropping in value.
It took an “emergency” FED rate cut of 3/4 percent (largest single cut in 24 years!) and the promise of a rapid bipartisan government rescue package to get the market to “…end the week with a gain of 108 points.” Yea - that’s a bullish signal. What gifts will they bring next week?
“It’s easy to grin
When your ship comes in
And you’ve got the stock market beat
But the man who’s worthwhile
Is the man who can smile
When his pants are too tight in the seat”
- Judge Smales (Caddyshack)
–
Prof, I have followed Rudy’s insight except on the bearish side of the Scam Market for the past ten years. Scams always get exposed and blow up; it is only a matter of time.
Jas
Last comment in the article says you should be throwing in more good money after bad.
“My advice: Calculate what portion of your portfolio is in stocks and stock funds. After the recent market carnage, you probably have far less in stocks than your original allocation called for, which means it’s time to start buying. What if stocks keep falling? You keep buying, so you maintain a full stock-market weighting. That’s what I plan to do.
There are no winners in a race to the bottom.
I am advising friends who are facing resets on their Jumbo ARMs to wait for stimulus before acting, especially given the move to raise the Jumbo limit. Can anyone see potential drawbacks to waiting rather than currently jumping on the “falling rates” bandwagon for someone whose credit is good enough so qualification is a given?
NATION’S HOUSING
KENNETH HARNEY
Low interest rates spur surge in refinancing
January 27, 2008
http://www.signonsandiego.com/uniontrib/20080127/news_1h27harney.html
Well…if much worse news comes out while waiting, and investors (lenders) decide there’s even more risk than previously believed, rates could move higher.
Who knows?
You never know how narrow a window of opportunity is until it slams shut.
You are talking about the opportunity to wait until Jumbo loans become affordable once again to those facing resets up to $730,000, right?
Perhaps I spoke out of turn, I didn’t consider the Jumbo thing. I suppose it is next to impossible to refi a Jumbo at present into a fixed rate? If that is the case, what do you mean by waiting, what is their option?
I meant that rates may ratchet up and that it is better to act too early than too late. Banks are pricing mortgages like the worst is behind us. Realization might spread like panic at some point, and low Fed overnight rates will have no impact. A Jumbo adjustable would be a very scary thing to be stuck in, JMO.
I should have clarified: They are trying to time when to lock in a fixed rate loan in order to get the lowest possible rate going forward. My main arguments for waiting are the following:
1) Plummeting long term T-bond yields are sending the suggestion that we may be heading into a recession (I know subprime is contained and stimulus is on the way, blah, blah, blahhhh…).
2) The correlation between l-t T-bond yields and fixed-term mortgage rates is very strong (maybe 99 pct or so between the 10-year T-bond yield and conventional mortgage rates).
3) Interest rates normally fall heading into a recession, as most households delay purchasing big ticket items (houses, cars, etc) when job security is in question, and hence demand for loans declines. Similarly, businesses delay investment in new plants and equipment when the orders are not en queue.
4) When and if the conforming loan limit is increased, it will represent a large implicit wealth transfer from red state taxpayers to blue state taxpayers; as long as a flood of money is headed your direction, why not consider going in for a swim?
Against these arguments are the following concerns:
1) If inflationary pressures suddenly seemed as though they were running out of control, the Bernanke Fed could find itself morphing into the Volcker Fed before anyone knew what hit them. This could send T-bond and related interest rates skyward (I believe the long term T-bond topped out north of 14 pct in the early 1980s as the Fed chased down inflation).
2) Gold is up by maybe 50 pct since last August ($600 to $900), suggesting that inflationary pressures are building.
3) The Fed has thus far seemed willing to abandon its mandate to maintain stable prices in favor of a bias towards leaning into the growth slowdown.
4) The Fed behaves as though it intends to respike the punchbowl before recession worries become a self-fulfilling prophesy. One possible price to pay for this strategy is living with “higher-than-expected” inflation and interest rates heading forward.
all the blue states already pay more taxes than they get back so any perceived wealth transfer is just taxes coming back
all this nonsense about red republican states being more self sufficient or whatever the republicans make up is completely the opposite of the fact that red states get more handouts than the blue states
I think gold has risen because the dollar fell so much. If we have a recession where GDP is -2% for a year or so that will be deflationary. I am also fairly certain that the stimulus will not work. I am going to save my rebate and from a CNN poll it looks like most will be paying off debt or saving (61%).
Gold gained nothing, in terms of Euro price, until fairly recently.
Europeans, the French in particular, have a long history of hoarding Gold…
And i’d suspect that the 2nd largest bank in France being under the cloak of dishonesty will cause many a Frenchman to bury more than few Napoleons, in their backyard.
Some writers argue that the Fed’s primary mission at present is to keep the banking system breathing long enough for them to absorb their losses and consolidate, avoiding actual collapse. If that is the case, it will take some time!
I lived through the Volker time. Bought a house with 17% mortgage and was busy playing husband and daddy and career guy. I have no idea what was going on then with the banks and the Fed. I wonder if there are any good books about that time and the dynamics.
“I wonder if there are any good books about that time and the dynamics.”
Yes. And this thoughtful review is a good place to start before you decide whether to add this tome to your future reading list. Although I do not fully agree with Greider’s take on the era, much can be learned by reading his account.
One of my objections is that he does not seem to understand that Volcker’s hand may have actually been forced by circumstances. Greider almost seems to believe the Fed chairman does whatever he pleases in some kind of autonomous political-economic vacuum chamber.
http://findarticles.com/p/articles/mi_m1316/is_n12_v19/ai_6306539/pg_1
“…all this nonsense about…”
If you cannot come up with an intelligent critique of someone’s argument, then by all means call it nonsense and move right on.
Thanks Professor
Tax breaks enacted in ‘07 offer homeowners some relief
Marcie Geffner
SCRIPPS HOWARD NEWS SERVICE
January 27, 2008
Homeowners found three attractive tax breaks among their holiday presents, thanks to the federal Mortgage Forgiveness Debt Relief Act of 2007, which was enacted in December.
http://www.signonsandiego.com/uniontrib/20080127/news_1h27taxbreak.html
Lumber futures down to $220. The price of lumber has cratered to new lows, the last few months. It looks like builder activity continues to slow. Cheaper land, cheaper labor, cheaper lumber, less expensive new homes coming soon.
I would like to see smaller homes being built as well. Let’s stop the 5,000 square foot B.S.
Need them for the modern day 3 family deckers.
You can’t eat lumber. Oh well, maybe we can burn it for warmth if oil prices get too high.
or feed it to some of the newer bio-ethanol plants now that corn is getting too expensive
Lumber is a value added product, manufactured and treated. Timber is an agricultural product and can be manufactured into edible products.
Paper mill fines are fed to cattle.
I am trying to imagine how one of these parasite-funded counseling sessions might play out:
“Now that we’ve helped you get yourself in hock up to your eyeballs, we would like to provide counseling to help ensure that you keep paying interest through your nose until the day you die.”
Mortgage lenders pledge millions to help counsel homeowners at risk of defaulting
By Alex Veiga
ASSOCIATED PRESS
January 27, 2008
LOS ANGELES – Major mortgage lenders have pledged $4.6 million to hire more mortgage counselors in California to help homeowners at risk of defaulting on their home loans, an advocacy group said recently.
Eight mortgage lenders, including Merrill Lynch, Wells Fargo Bank and Countrywide Financial Corp., pledged funds along with the San Francisco Foundation and the California Community Foundation, according to the California Reinvestment Coalition.
http://www.signonsandiego.com/uniontrib/20080127/news_1h27counsel.html
The article says “this money is all for counseling to avoid foreclosure.” You are correct in that appears they are providing money for counseling on how the debtor can continue to protect the lender’s best interest. How generous.
I was in Baltimore over weekend seeing family and old friends. On four different occassions someone pulled me aside to discuss that they believed housing prices were down over 10% in their neighborhood and asked me when I thought it would stop. These same ppl told me that there was no way housing would go down in value where they lived when i came out last year.
The numbers I am hearing from ppl on the ground as to prices in their actual neighborhoods seem much worse than the numbers being reported. Is anyone else experiencing this?
To be honest, I just don’t see anything selling in order to see a decline.
Wishing prices have gone down maybe 15-20% in but the same ole listings are sitting there so ……
However, I AM excited that a house that I’ve been eyeballing (ex-marine original owner passed away, kids started to do minor updates because the place had all original 1950s EVERYTHING) was going to go on sale but the kids figured the market stinks and maybe they’ll rent for a couple of years)
I’m leaving a note on their door today before they get too outa hand with the updates and jack up their rental wish price.
“To be honest, I just don’t see anything selling in order to see a decline.
Wishing prices have gone down maybe 15-20% in but the same ole listings are sitting there so ……”
Same in my hood. This is why we really need the conforming loan limit to be increased: To help knifecatchers establish the comps at current market values.
Stagnant prices have occurred in LA for awhile but recently started to drop. Hanging in there another 2 years as a renter is the wise approach. They will probably decide after two years that prices are falling fast and they may wait another year or two after that. A roof over your head looks very much the same, whether paying rent to a landlord or paying rent to the property tax collector.
Yes. This is the MSM hard at work trying to keep the game going. It won’t work. They could rely on short memories until the age of the internet and blogs. Now they are always behind the curve.
I see good times ahead for those who hold precious metals, money market funds, short term CDs, 5 year (or few years) notes, and T-bills. But most of you think we ALL will suffer for some reason. Real estate prices falling fast means there will be good values ahead. If you bought gold for $50,000 in 2001, it could buy you a well-built 2000 square foot house pretty soon. What’s so gloomy about that?
If consumption goes down it may take gold down with it along all other commodity prices. The macroeconomy is in a really strange place because some things are still inflating (oil, precious metals, agriculture) while others are deflating (real estate, equities). I think eventually all roads lead to deflation even of most commodities as is evident with the precipitous fall in lumber prices. It will be interesting to see if gold and other precious metals buck the trend during a typical slowdown. I suspect we’ll be spending more of our money on the things we need (food and energy) and less on the things we want (consumer discretionaries, precious and non precious metals etc).
I think sometime recently Ben Bernanke and his group determined already we are in the first stages of a depression and are thus pushing more credit. Since few people own gold compared to those in 1929, there is little chance of gold confiscation. And by pushing more credit and lowering interest rates, gold will go higher for the forseeable future. I won’t stop buying precious metals until the 10 year note yield gets above 4.5%. At that point I will hold. Then at 6% I’m dumping metals.
Bill — I can’t help but admire your planning efforts (including an exit strategy for PMs).
My exit strategy is simple, play along if you’d like…
I plan to trade over-priced Gold for under-priced real estate.
Got a ways to go, before the zenith and the nadir.
We have a winner folks!
I’ve been thinking about the legal, taxation and constitutional issues of trading American Eagles at $50 face for F&C real estate, where the owner has a very low basis. It could be an interesting case. The buyer, Fred, gets real estate at a price based upon legal, US Mint gold coins at face and establishes a price level well below assessors value. The seller triggers a minimal capital gain or even a loss.
Old $20 Libs & Saints get you a lot more bang for the buck, with your scenario…
You appear to assume it’s J6P buying gold. It’s not. It’s the BRIC countries, and other deep pockets who prefer their balance sheets stay balanced.
I see good times ahead for those who hold precious metals, money market funds, short term CDs, 5 year (or few years) notes, and T-bills.
I see less bad times ahead for those who hold precious metals, especially gold. I see the rest of those “investments” ending up as wallpaper.
“when i came out last year”
When you came out to Baltimore, or when you “came out” (of the closet) as a housing bubble believer?
Housing Market Gives Hints of a Thaw
http://tinyurl.com/ywss7j
Yesterday’s news, but still entertaining;
In Atlanta, Jerome Anderson, 43, said he saw on TV that interest rates were dropping and said to himself, “Now’s the time.”
He said he planned to invest “probably about $400,000” into three duplexes in the transitional neighborhood of Vine City. “The rental market is very hot,” he said. “That’s my plan — to buy cheap, rent to families cheap.”
Mr. Anderson’s agent, Otha Greer with Coldwell Banker, said he was not alone.
The drop in rates “has lit the fire in my business,” Ms. Greer said. “I actually had an investor that called yesterday and she’s interested in buying five homes.”
Knife catchers with optimism.
A Merrill Lynch report this week said housing prices were “likely to remain in free fall.” The report predicted a drop of 15 percent this year, 10 percent next year and “more depreciation likely beyond the forecast period” — despite an expected series of rate cuts.
In an uphill battle to combat such attitudes, the National Association of Realtors started a print, radio and television ad campaign this month that emphasizes real estate as an investment. “If you purchase one of the millions of homes that will be sold this year, the National Association of Realtors wants you to know that you’re making a good move,” says one of the TV ads.
Buying up rentals in transitional areas declining in value while we are heading into a horrible recession sounds like a great idea. Just think how much he can raise rents next year . . . oh wait.
I predict there will be people walking away from their rentals soon in some inner cities due to job losses and heading for homeless shelters. The falling tide lowers all boats.
Demography and the Democratic Race
http://www.realclearpolitics.com/horseraceblog/2008/01/demography_and_the_democratic.html
Way OT, but for an interesting read, and some insight into the Dem’s primary race, I think this is a great article. The question have to ask is:
Once Hillary and Bill pound Obama into the ground, are the African Americans going to turn out for Hillary in the general election?
The Clintons play hardball and as Obama continues to get better traction you have to know that they’ll be reverting to their old playbook. What do you folks think?
“Obama continues to get better traction you have to know that they’ll be reverting to their old playbook.”
They’ve already started. That said, I’m so weary of Bush Clinton Bush PLEASE, GOD, as another poster said, no more of either of these two families.
I think the more interesting point is that Carmela C is probably the first candidate in history that possesses no race, no gender and no sexual orientation. I don’t see her as white. I don’t see her as a woman. I don’t see her as straight. What the heck is she? Others may disagree but she seems as close to a robot as anything I’ve ever seen.
The Clintons have lost me in the past week. So don’t bet on them pounding Obama into the ground. Read Caroline Kennedys op-ed in the NY Times today.
Their tactics scrape the pail and reveal buckets about their character issues. Aren’t y’all looking forward to another eight years of this family unit and their wealth of accumulated negative baggage in the WH?
Op-Ed Contributor
A President Like My Father
By CAROLINE KENNEDY
Published: January 27, 2008
http://www.nytimes.com/2008/01/27/opinion/27kennedy.html?em&ex=1201582800&en=68dbeb8e37c848ac&ei=5087%0A
Save our homeowners…er…future renters.
http://www.jsonline.com/story/index.aspx?id=711410
Ya just can’t make this stuff up! (Are they making this up?)
Leigh
Lets see 5.4 mill for 58 homes = $94,000 per home. Rent averages $800 a month, 94k at 6% for 15 years is $817 a month. So how do these tax breaks and 0 interest loans help the poor.
“Melody Jones found her two-bedroom apartment was running out of space after her third child was born. But her job as a nursing assistant doesn’t provide much income to save up for a down payment on a house.”
I couldn’t read any further. It may have been a great article but I will never know.
You captured it exactly. That’s happening to me a lot today - maybe I should stop reading and go for a walk near the water.
I wonder if “Melody Jones” is related to Ben Jones?
That opening paragraph is something! It sounds like a parody written for a racist newsletter.
Believe it or not, I’m a liberal! But I’d be much happier if the government (i.e., we the people) helped her out by providing education so she can advance her career, rather than simply feeding her money so she can get her American dream house.
She’s already gainfully employed as a nurses assistant. Good for her. Don’t you think it would be best for her and our Nation if she was able to get some training to become a Nurse or some more skilled medical job (pharmacist assistant, phlebologist, lab technician) etc? Then we all win.
Bad idea! These will really be POS in 15 years and then who will want to buy them?
An academic paper on the impact that Save our Homes (FL homestead law) has had on tax policy. This is a dissertation, so, be forewarned, it’s a bit dry.
Around page 195-210 is where the conclusions are… Surprise, surprise, if you cap the taxes for the those who vote, and not for those who don’t, that overall tax burden will increase dramatically. Have to say, I’m just shocked.
http://jwaynemoore.net/Documents/MooreJDIS9017B-1.pdf
It actually took 195 pages to come to that conclusion? It should have been on page one.
So Many Places to Live, but So Far Out of Reach
http://tinyurl.com/2bwu7y
Part of New Orleans’s allure used to be that it was possible to live well on little because a lot of cheap, if rundown, housing was available — a result of years of slow migration from the city. Much of that housing was destroyed; many remaining properties need expensive repairs.
Construction and insurance costs have soared, and borrowers need better credit records to get a housing loan because of problems in the national mortgage market, said Mtumishi St. Julien, executive director of the Finance Authority of New Orleans.
Before Hurricane Katrina, most people in the city were renters, not owners, and more than 50,000 rental units in the metropolitan area were damaged or destroyed when the floodwaters rose. Rents at the remaining apartments shot up by almost 50 percent; a two-bedroom apartment that might have rented for $660 a month in 2004 now costs close to $1,000 a month, according to federal data.
Just a reminder that the Katrina nightmare continues today.
SCOTT BURNS
In Southwest Florida, an eerie sense of emptiness
By Scott Burns | January 27, 2008
FORT MYERS, Fla. - Here, people don’t ask whether we are headed for a recession. They know a recession is here. For those who live here, the questions narrow down to two.
How much worse will it get?
How long will it last?
For residents, virtually everything hangs in the balance. And I mean everything.
http://www.boston.com/business/personalfinance/articles/2008/01/27/in_southwest_florida_an_eerie_sense_of_emptiness?mode=PF
link to original…
http://assetbuilder.com/blogs/scott_burns/archive/2008/01/25/slider-land.aspx
Great article. I read it far enough to read the bulleted advice. If you consider buying near a canal, be prepared to pony up cash to pay for cleanup fees when hurricanes occur.
I’ll take the stifling heat of Phoenix any day. No hurricanes, no earthquakes, no tornados, no icy roads. I figure there are going to be terrific bargains in two or three years in Phoenix similar to what the article mentioned in Florida. I predict in two or three years in Phoenix, $200,000 will buy you what you could get in 2001.
There may not be any water in Phoenix by then either. Water will be the foremost issue in places like Phoenix and Vegas where there was lots of growth of infrastructure but little in the way of central investment by those cities. What would happen if California decided to stop letting Nevada and Arizona use its water or increase their own consumption at the expense of others ?
As with anything moderation in all things is the best course of action. The extremes are where the most problems occur. This applies to climates, housing bubbles, and just about everything else.
You have a point there. 13 years of drought. Too many people in Phoenix. A free market approach to water should have been in place for the last six decades or so for Phoenix and Southern California. The subsidies create extreme waste and overpopulation.
Why should Phoenix hold up to 2001 prices? What is going on there that will support households in the increased number of houses at the level of 2001?
london calling (collect):
LONDON (Reuters) - As many as 20,000 jobs in London’s financial district are likely to be wiped out due to the financial crisis, a survey showed on Sunday.
The Sunday Telegraph reported that Experian, which provides data and forecasts to government and private bodies, had slashed its predictions for job growth in the City of London and Canary Wharf to a fall of up to 5 percent from its previous forecast of flat net employment this year.
http://biz.yahoo.com/rb/080127/britain_jobs.html?.v=1
fortis losses:
BRUSSELS (Reuters) - Fortis looks set to be under pressure on Monday after a media report that the Belgian-Dutch bank would write down up to 2 billion euros ($2.9 billion) off its subprime portfolio and after its shares fell on talk of profit warnings.
http://biz.yahoo.com/rb/080127/fortis_subprime.html?.v=1
euro hedgies in crisis?
A RAFT of European hedge funds have been forced to introduce emergency measures to protect their businesses from collapsing in the wake of the turmoil in financial markets.
Up to 10 European hedge funds have suspended redemptions after investors clamoured for their cash when the managers made severe losses.
A London prime broker told The Sunday Times that even before last week’s extreme gyrations, nearly two-thirds of London-based hedge funds had lost between 4% and 10% of their value. A “significant number” had lost much more, he said.
http://tinyurl.com/3cfklc
‘A London prime broker told The Sunday Times that even before last week’s extreme gyrations, nearly two-thirds of London-based hedge funds had lost between 4% and 10% of their value. A “significant number” had lost much more, he said.’
How is this even possible? Me thunk the risks were all ‘hedged’?
Don’t be mislead by the class name of those funds, Prof. In a less obfuscated world, many would be referred to as WALB Funds.
as in Wild A$$ Leveraged Bet
Massachusetts Healthcare Plan Costs Skyrocket
According to recent reports, the cost of Massachusetts’ health insurance mandate will rise 85 percent, or $400 million, in 2009. Former Massachusetts Gov. Mitt Romney (R), meanwhile, has been on the presidential campaign trail praising the program he put into place.
http://www.cnsnews.com/ViewPolitics.asp?Page=/Politics/archive/200801/POL20080128a.html
Soros seems to be above the law and above media scrutiny.
In fact, a review of the public record for the 2008 election cycle shows that Hillary Clinton and Barack Obama are in the top five of all politicians, on the presidential and congressional levels, in receiving financial contributions from the controversial, mysterious and secretive hedge fund industry. Overall, data from the Center for Responsive Politics shows that hedge funds prefer Democrats over Republicans by a margin of 79-21 percent. Democrats have received $4.2 million and Republicans $1.1 million from hedge funds. What the hedge fund operators want from the politicians is what all of us desire-less taxation, regulation and oversight. But they have the money to get their way, even though they can hold the fate of entire nations and their economies in their hands.
Coming across as concerned about the meltdown, the Associated Press is quoting Soros as calling for “a massive injection of regulation and oversight of financial markets whose excessive freedoms” have led to the current financial crisis. The AP reported from Davos that Soros is saying that “Authorities ought to go in and examine the books” of financial institutions involved in the subprime mortgage scandal. What about Soros’ books? What about the books of the secretive hedge funds that are manipulating currencies and economies and pouring millions of dollars into the political campaigns?
http://canadafreepress.com/index.php/article/1555
MSM never questions Soros’ political motivations, which irritates me. They also love to report his calls for higher taxes on wealthy people and investment firms but never mention that Soros runs his business from Bermuda, and pays no US taxes.
Soros is so palindrome.
LOL
Well anyone who is on both Putin’s and Bush’s enemies list has to have something going for him IMHO.
Oh BTW, how do you know that Soros doesn’t pay any US taxes? US citizens have to pay income tax no matter where they live, or where their assets are. Given the IRS is part of the Executive Branch, I would think he’s about the last person on the planet who’d be able to get away with not paying his taxes.
“Authorities ought to go in and examine the books”
Hear hear! Why aren’t the authorities doing this, BTW?
Great editorial piece in today’s NYTimes
http://www.nytimes.com/2008/01/27/magazine/27wwln-lede-t.html?ex=1202101200&en=eb2609bda2ff3e62&ei=5070
From the editorial.
“The future is now, as the late Redskins’ coach George Allen used to say. The promise that prosperity is just one more tax cut or one more rescinded regulation away is a rapidly depreciating rhetorical asset. “
How many Super Bowls did Coach Allen win, using that strategy?
I came across this letter to the editor in the January 25, 2008 hard copy of the Arizona Republic. I did not find a link to it using Google News, so here is the last of its three paragraphs (which is a fair representation of the whole thing):
“I say ignore the media! If we want this country to do well, act. Buy a house you’ve been wanting - don’t wait. Buy a car. Buy things in general. Don’t wait for some possible recession, because purely by waiting you are contributing to the problem. Ignore the media scares and let’s get this country back on track!
-Cori Lorts, Phoenix”
Dummy thinks that a small post in an editorial will change anyone’s mind. He seems enraged and already put on the tin foil hat. “The media is out to get us!!!”.
Any Triangle Fraternity brothers and sisters out their?
not sure if it has been posted already (difficult to keep up with the blog nowadays): As safe as houses? Dutch history suggests not
http://tinyurl.com/yq83ev
A bit strange that Mr. Eichholz (a real estate professor) still does not recognize the big downside risk for the Dutch housing market … The mentioned home at nr. 150 that was purchased for 310.000 guilders in 1993 (= 140K euro) would sell for 1.2-1.5M at least nowadays; even the smallest homes there are above 1 million. That is quite something else than home values have more than doubled since a slump after the 1979 oil crisis. These pricegains are very similar to what I see in my city: the smallest gains are around +600% over the last 15 years, but many homes have even passed the +1000% mark now.
Of course I forgot … that the Dutch market IS special and many factors will prevent the downdraft in world markets from spreading to the Netherlands. Keep dreaming …
Ok, folks, here’s what’s happening to the crapbox neighborhoods of Central California.
Check out this “vandalized repo.” (Montebello Way)
http://pmz.com/mypmz/search/results.asp?data=st:p|pt:res|at:ci|ct:Lodi|bd:1|ba:1|pp:180-275&cp=8
DOC
We are not now in a recession. We may go into a recession, but that has yet to be determined.
As of the 19th of January, the numbers from layoffs as well as the numbers from unemployment/ continuing unemployment are not even half of the last 4 previous recessions first month.
This result is not what I expected. We are far from a national recession, maybe 6 months, Maybe not at all - just do not know.
A month ago I felt there was a 75% chance of recession - not calculated. Using the Fed’s DIY recession indicator the numbers have dropped to 30%. This is calculated the same way the Federal Reserve calculates recession probabilities.
This is posted as a FYI
Not trolling or even suggesting that anyone be silly enough to buy a house or condo. Different dilemma than a recession.
isn’t the problem that all statistics are far different now (mostly down-manipulated) compared to previous recessions?
In AZ, unemployment rate jumped 1% in 2 months as the new employeer sanctions law took effect.
Take the jobs away from illegals and watch the unemployment rate jump… They count as employees but not population, and therefore drag down the unemployment rate.
They also do no file for unemployment.
This recession is first hitting construction… they are largely illegals and don’t apply for unemployment benefits.
We also had retailers not bother to hire extra sales staff. That upped the seasonally adjusted unemployment, but did not up the filings for unemployment benefits.
Realtors that haven’t collected a comission? No unemployment benefits.
Mortgage brokers that aren’t making comissions? No unemployment benefits.
Besides, the real damage that unemployment does to the economy is loss in wages. People are losing wages without counting as unemployeed, but more importantly, marginal sales weren’t being driven by sales anyway. They were being driven by access to debt. Cut off the access to debt and it will damage the economy just as much as job losses in past recessions.
Maybe it is just because I’m in AZ, but I think we are so in a recession.
Car sales down, credit card usage up, cash-out refi down, sales tax receipts down, attendance at Suns and Coyotes games down, restaurants that used to always have waits are now walk-in.
This is a matter of semantics. IMO, the economy never really recovered after the bust in 2001/2002. Now we are down 40% on our currency and inflation is a lot higher than the stupid CPI number the government puts out. The classic definition of a recession doesn’t do justice and really won’t do justice to this slowdown. Has the NBER changed the definition of a recession yet ?
Then why is the FED cutting interest rates so fast ?
Because it is the only way to save the financial institutions. And nobody is even sure that this will work.
Finance is 40% of the US economy. Losing a bunch of small banks will not impact the economy (the small banks will be absorbed into larger banks); losing a large Wall Street Bank has ramifications far beyond the 40,000 laid off.
The Federal Reserve will do and SHOULD do everything in its power to preserve these inept banking institutions. My Humble Opinion
I agree they have no choice, and yet by making the choice that circumstances are forcing upon them, they also worsen the too-big-to-fail moral hazard problem going forward which dropped the current mess into their laps. MHO…
So we front run this fact and buy Gold. Are you listening Prof Bear?
I think this will work but….. what do I know?
’cause nobody explained Jerome to them
What do you make of this time-tested recession warning sign?
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=tyx&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=12&freq=1&startdate=&enddate=&hiddenTrue=&comp=tnx&compidx=aaaaa%7E0&compind=aaaaa%7E0&uf=7168&ma=1&maval=50&lf=1&lf2=4&lf3=0&type=2&size=1&optstyle=1013
Or this one?
http://www.marketwatch.com/tools/quotes/intchart.asp?symb=XOM&time=20&freq=1&comp=&compidx=aaaaa%7E0&compind=&uf=0&ma=&maval=&lf=1&lf2=&lf3=&type=2&size=1&txtstyle=&style=&submitted=true&intflavor=basic&origurl=%2Ftools%2Fquotes%2Fintchart.asp
I just happened to be thumbing through a well-written tome that I am working off, and came across this interesting passage:
“All but one of the economic recessions in the United States since World War II have been preceded by a sharp increase in the price of crude petroleum. Does this mean that oil shocks are a cause of recessions?
One possibility is that the correlation is a fluke — it happened just by chance that oil shocks and recessions appeared at similar times, even though the actual processes that generated the two series are unrelated. We can investigate this possibility by testing the null hypothesis that oil prices do not Granger-cause GNP. This hypothesis is rejected by the data — oil prices help predict the value of GNP, and their contribution to prediction is statistically significant. This argues against viewing the correlation as simply a coincidence.
To place a causal interpretation on this correlation, one must establish that oil price increases were not reflecting some other macroeconomic influence that was the true cause of the recessions. The major oil price increases have been associated with clear historical events such as the Suez crisis of 1956-547, the Arab-Israeli war of 1973-74, the Iranian revolution of 1978-79, the start of the Iran-Iraq war in 1980, and Iraq’s invasion of Kuwait in 1990. One could take the view that these events were caused by forces entirely outside the U.S. economy and were essentially unpredictable. If this view is correct, then the historical correlation between oil prices and GNP could be given a causal interpretation. The view has the refutable implication that no series should Granger-cause oil prices. Empirically, one indeed finds very few macroeconomic series that help predict the timing of these oil shocks.”
I am not sure that it is a fluke as much as how insignificant oil is to the entire size of the economy today as opposed to years past.
We regard Mssrs. Warren Buffett and William Gates as incredibly wealthy individuals, which they are. They are not even close to previous wealth ownership in this country. President George Washington owned 1% of all assets in the US at the time of his inauguration. This was dwarfed in 1918 by the Rockefeller fortune in oil of 1.2B up 400M in the yr or 5% of the entire GDP. 1 out of every 4 dollars in the US was Rockefeller’s.
“1 out of every 4 dollars in the US was Rockefeller’s”
Yeah, well even so…he never got to go kite surfing.
Here is another indicator of where things are and where they are headed…
No relief so far from corporate earnings
S&P 500 companies faring worse than forecast; technology is a highlight
By Laura Mandaro, MarketWatch
Last update: 12:23 p.m. EST Jan. 26, 2008
SAN FRANCISCO (MarketWatch) — What was expected to be a stormy season for U.S. corporate earnings has turned into a blizzard, at least as far as financials are concerned.
Fourth-quarter earnings for companies in the Standard & Poor’s 500 are on track to fall 20.5% from the same quarter last year, the most severe drop since the fourth quarter of 2001. By contrast, analysts were expecting a 9.8% drop in profits heading into this month’s round of earnings reports, according to Thomson Financial.
http://www.marketwatch.com/news/story/corporate-earnings-track-worst-drop/story.aspx?guid=%7B80EE0FC6%2D62B7%2D4104%2DA124%2DC52C7710F1A6%7D&dist=TNMostRead
The 4th quarter earnings reflect the disaster that was self inflicted by financial institutions upon themselves. Since that is going to be an on going concern for the next year or 3, any predictions on earnings as a group are without merit. While the S&P500 earnings go in the sewer, many individual companies will do well .
Banks are in so much doodoo and it has just started.
Hoz, you could be right - no question. But I’m wondering ; how you explain the FED’s largest move in 20+ years; the emergency 3/4% rate cut?
I understand BB could just be rescuing the market from meltdown. On the other hand, could it be possible the FED discounts official stats ad much as the rest of us?
If I may, I would like to make one final post on this subject, because I do not want to “beat this horse to death!”
Learn for the enjoyment of knowledge! To learn to make money will never satisfy you!
If you are enjoying life and not chasing after wealth, you will be happy person and maybe to help the next generation!
I apologize for tying up this thread, I will attempt to not broach the subject again.
Ben, may I make a suggestion?
What a the members on this blog’s plans for the future. I suspect we all know that the world has changed.
How are people adjusting to the changes that are occurring in their future.
This something that I would like to know!
Subprime mortgage crisis hurts pets
Terri Sparks, a spokeswoman for Chicago’s largest shelter, the Animal Welfare League, said 15 to 20 foreclosed families are dropping off pets every week, and police bring in more found in empty homes.
http://www.nydailynews.com/news/2008/01/27/2008-01-27_subprime_mortgage_crisis_hurts_pets.html
RUBEN NAVARRETTE JR. THE UNION-TRIBUNE
Waiting for someone else to come to our rescue
January 27, 2008
Worried that Americans are on the brink of a recession – or perhaps already in the middle of one – the Bush administration and the House of Representatives have reached tentative agreement on an economic stimulus package.
Glad to hear it. A stimulus may not work exactly as expected, but it’s worth a try. Americans are overtaxed as it is, and anything that gets more of their tax dollars back into their hands is a good thing. And if they spend what they get, it’ll be good for the economy.
http://www.signonsandiego.com/uniontrib/20080127/news_lz1e27navarre.html
The moral economy
By Victor Davis Hanson
January 27, 2008
In this heated campaign season, housing prices are plummeting. Banks write off billions of dollars in unrecoverable debt. The stock market wildly fluctuates almost hourly. Candidates promise painless and near instant relief.
But despite the politicians’ rhetoric, it is not hard to understand why America is in trouble.
First, there has been too much madcap real estate speculation. In recent years, housing prices were driven sky high on the expectation that almost anyone, often with little security, could profit by borrowing easy money to buy and sell property.
Too many investors lost the old pedestrian notion that the purpose of a house was to be a home in which to live, to raise a family and to take pride in ownership. Its acquisition used to be a multi-year, if not once-in-a-lifetime, investment – not quite comparable to the easy buying or selling of volatile paper stocks and bonds. Others did not have the means to afford the type of home they purchased, once risky variable interest rates climbed.
http://www.signonsandiego.com/uniontrib/20080127/news_lz1e27hanson.html
So is he an ex-warhawk now?
Flip-Flopper
Here’s a CRAIGSLIST FIND!
http://www.msnbc.msn.com/id/22850384/
Anecdotally, the denial out there still rages strong. I haven’t talked to anyone who believes we are headed for a housing crash. The people who last year insisted “real estate never goes down,” are now in the camp of “well, it will come down 10% and then continue to go up.” They are still being hand-held by the MSM. Knowledge of the harsh reality to come remains limited to a fine sliver of our population. The lack of logical thinking continues to boggle the mind.
Bronco, That has been exactly my experience, nearly word for word. After finally conceding real estate in fact goes down, the words changed to “it will just go down a little bit for a year or two and keep going back up”.
That denial is stronger in Humboldt county California than anywhere else. Perhaps because in this backwoods, most of the people who live here don’t work…they are speculators in real estate along with commercial pot growers. You take away either one in this county, and home prices will crater.
Sonoma county house median has fallen from approx $600K to $410K in just two years; the drop here has been from $350K to about $325K. Very disappointing so far considering the carnage in the market.
Same in the SF Bay area. The same work colleagues who insisted “there was no bubble”, “prices will never go down” and “it’s stupid to rent” - now have know problem insisting, “ they always knew there would be a correction” and “now is the best time to buy.” Doesn’t seem to matter how patiently one explains the many negative market factors still remaining – their eyes glaze over as they continue to claim, “You can’t go wrong buying real-estate!” I’m aware many are vested in the bubble’s return so I normally avoid the subject unless provoked.
I personally think they have to cut 50 bps or more, or else risk crashing the equity market. And last week’s “precautionary” 75 bps overnight cut gives a strong indication of their level of concern about equities.
THE FED
Fed watchers at a loss about Fed move this week
Rare uncertainty: Estimates range from aggressive half point cut to no change
By Greg Robb, MarketWatch
Last update: 12:01 p.m. EST Jan. 27, 2008
WASHINGTON (MarketWatch) — Given the awe-inspiring events of the past week, including a surprise rate cut of once-in-a-generation magnitude — which might have been instigated by a rogue trader’s losing $7.1 billion of his French bank’s capital — maybe it shouldn’t be a surprise that experts are at a loss about what the Federal Reserve will do at the conclusion of its two-day meeting Wednesday.
“Everyone’s confused,” admitted Joel Naroff, president of Naroff Economic Advisors in Philadelphia. “So am I.”
http://www.marketwatch.com/news/story/fed-watchers-loss/story.aspx?guid=%7B6AD02F1D%2DBA12%2D4F01%2D8817%2DB596E43D2C84%7D&dist=TNMostRead
Yesteryear’ stimulus plan…
Monday, Dec. 02, 1929
Prosperity Pledgers
http://www.time.com/time/printout/0,8816,738193,00.html
On “60 Minutes” tonight Steve Kroft used the word “bubble”.
Folks, our day has finally come!
Damn liberal media!
Anybody wish to own Countrywide now?
“…In the merger agreement itself, Countrywide represented it didn’t face major undisclosed litigation or liabilities.
Some attention has been focused on the agreement’s “material adverse effect” clause, a common provision that can let a buyer back out or renegotiate if conditions worsen.
“The merger agreement generally appears highly conditional and contains several Countrywide representations that may increase uncertainty around closing,” Lehman Brothers risk arbitrage analysts Evren Ergin, Amit Dholakia and Nathaniel Pollack wrote in a Jan. 18 report….”
Told you it was a sham bid. lol
Reuters
http://tinyurl.com/24m8pm
The Federal Reserve
Going it alone
Jan 24th 2008 | WASHINGTON, DC
From The Economist print edition
The gap between the Fed and other big central banks widens. For how long?
ALMOST as striking as the scale and timing of the Fed’s rate cut on January 22nd was the coolness with which other central banks reacted.
…Jean-Claude Trichet, president of the European Central Bank (ECB), went out of his way to squash market speculation that it, too, might soon cut rates. “Particularly in demanding times of significant market correction”, he said (to disappointment among investors), “it is the responsibility of the central bank to solidly anchor inflation expectations”.
At one level, this dissonance is no surprise. After all, it is America’s economy that is tipping into recession.
…
http://www.economist.com/finance/displaystory.cfm?story_id=10567551
It did not even take a fall on Wall Street to spook the Federal Reserve into slashing interest rates by three-quarters of a point on January 22nd; the American markets were closed for a public holiday the day before. The Fed reacted instead to a slump in global markets and the prospect, indicated by the futures market, that the Dow Jones Industrial Average would drop by more than 500 points at the opening. Small wonder that traders are now talking about the “Bernanke put”─the idea that, like his predecessor, Alan Greenspan, the Fed chairman will ride to the rescue whenever markets falter.
http://www.economist.com/finance/displaystory.cfm?story_id=10567544
That was as naked a resue as FED cuts ever get. Perhaps a better “stimulus” plan would be to just send a one year S&P put to all taxpayers.
IMF head in shock fiscal appeal
The intensifying credit crunch is so severe that lower interest rates alone will not be enough “to get out of the turmoil we are in”, warned IMF managing director Dominique Strauss-Kahn - 23:03
http://www.ft.com/cms/s/106230b0-cd29-11dc-9b2b-000077b07658.html
“It comes as the IMF is due to release new economic forecasts this week which, he said, would show a “serious slowdown and it needs a serious response”.
“This is the first time in 25 years that the IMF managing director has called for an increase in fiscal deficits and I regard this as a recognition of the gravity of the situation that we face,” said Mr Summers.”
Also, this a radical departure in regards to Global growth from what the IMF was saying only months ago. Oh My - Looks like Monday is shaping up to be an interesting day in the markets. BB we need another emergency cut.
Don’t worry — the markets are decoupled, you know. I expect the U.S. headline indexes to go up, as tomorrow is State of the Union day.
Decoupling?
latest news
Hong Kong’s H share index declines 3.8% in early minutes
ASIA MARKETS
Hong Kong, Tokyo retreat on Wall Street slide
By V. Phani Kumar, MarketWatch
Last update: 9:39 p.m. EST Jan. 27, 2008
HONG KONG (MarketWatch) — Asian markets took a tumble Monday in the wake of a pre-weekend slide on Wall Street and on concerns the Federal Reserve may not cut interest rates as aggressively as previously expected.
http://www.marketwatch.com/news/story/hong-kong-tokyo-retreat-wall/story.aspx?guid=%7B6834F01D%2D3BF1%2D4FF1%2DB8E3%2D2ECA9A64FFF2%7D
decoupling - the market’s version of all realestate is local.
I saw that. Check out Nikkei, down about 450 as I type.
Anyone else watching?
txchick?
“People are starting to worry about what’s happening around the world,” said Andrew Clarke, sales trader at SG Securities in Hong Kong. “If the U.S. slows down and goes into a recession, then China isn’t going to grow as fast. It may not go into a recession, but a sharp decline from a growth of 11% or more will in effect be a recession.”
DOW futures now down 91
That 60 Minutes story on Stockton was one of the best I’ve seen! They didn’t portray the FBs as poor victims; in fact they pointed out how they lied on mortgage applications, and didn’t lose any of their own money while being able to live in a nice house for a couple of years.
(I which they’s accurately identify the “true victims”: People trying to live on a fixed income with declining interest rates (caused by efforts to prop up housing) and increased property tax (based on assesed values from these phony home valuations)
A few years late, of course (horses have left the barn), but have to give them some credit.
Bush address to focus on economic concerns
By Andrew Ward and Daniel Dombey in Washington
Published: January 28 2008 02:00 | Last updated: January 28 2008 02:00
George W. Bush will acknowledge growing concerns about the US economy when he delivers his final State of the Union address tonight, but the president will also offer reassurance that the foundations for long-term growth remain solid.
The economy is expected to dominate the 45-minute speech, reflecting fears that turmoil in the housing and financial markets is tipping the US towards recession.
http://www.ft.com/cms/s/0/9b3d0a58-cd41-11dc-9b2b-000077b07658.html
Loan Adviser to Assist Bank Probe
By Carrie Johnson
Washington Post Staff Writer
Monday, January 28, 2008; Page A05
A company that advises Wall Street bankers who packaged and sold risky mortgages has agreed to cooperate with New York state investigators, advancing a months-long probe of the subprime home loan debacle.
New York Attorney General Andrew M. Cuomo and Clayton Holdings officials yesterday confirmed the deal, which affords the Connecticut information services company immunity from prosecution and was signed late Thursday after intense negotiation.
The agreement could provide state prosecutors with substantial new information on what major banks knew about the quality of thousands of questionable home loans — and whether such concerns were properly disclosed to investors and credit-rating agencies, according to two people following the investigation. The sources spoke on the condition of anonymity because the inquiry is ongoing.
…
Major banks have reported more than $90 billion in losses, and U.S. home prices have plunged as housing difficulties seeped into the broader economy, spurring the Bush administration and congressional leaders last week to propose a stimulus package.
…
Cuomo already has sued an appraisal company owned by title insurer First American. for overvaluing properties under pressure from Washington Mutual. The companies have denied wrongdoing and are challenging the state prosecutors’ authority.
In another important avenue of investigation, the attorney general last year directed mortgage financiers Fannie Mae and Freddie Mac to hire an independent auditor to review their dealings with WaMu, the country’s largest thrift.
http://www.washingtonpost.com/wp-dyn/content/article/2008/01/27/AR2008012701752.html
Due-Diligence Firm to Aid
New York Subprime Probe
By AMIR EFRATI and RUTH SIMON
January 28, 2008; Page A2
New York state prosecutors have secured cooperation from a company that analyzes mortgages for banks, aiding an investigation into the role of Wall Street banks in the subprime-mortgage-market turmoil.
Clayton Holdings Inc., which reviews loans for investment banks before they are turned into securities and sold to investors, reached an agreement last week to provide information and testimony to the office of New York Attorney General Andrew Cuomo. His office had subpoenaed several such businesses, known as due-diligence firms, last year.
The agreement, reported by the New York Times and confirmed by Clayton, provides immunity from prosecution.
The investigation’s focus is whether investment banks disclosed enough to investors and to credit-rating firms about the securities after receiving reports by due-diligence firms that showed an increasing number of loans in recent years didn’t conform to minimum lending standards, according to a person familiar with the matter. It also aims to determine whether the credit-rating firms asked enough questions about the quality of the loans that backed the securities they rated, this person said.
http://online.wsj.com/article/SB120148644240421371.html?mod=googlenews_wsj
Perspective
They ought to draw a go-to-jail card
By ROBYN BLUMNER
Published January 27, 2008
It’s the perfect crime, so big and so reeking of establishment that few recognize the inherent criminality, but the results are the same as if some street thug held us all up at gunpoint. This country is spiraling toward recession. Huge amounts of wealth have disappeared with upward of 2-million families in danger of losing their homes to foreclosure, all because of the corruption of people in suits.
When someone gets mugged for the few dollars in their wallet, the thief goes to prison for years. But when bankers, mortgage brokers, credit rating agencies and investment firms conspire to scam investors and exploit the naivete of borrowers in order to enrich themselves to the tune of billions of dollars, no one goes to jail.
It’s a story as old as the expression “money talks.” When the crooks maintain country club memberships, we call their actions misjudgments or “froth,” the way someone might get caught up in a pique of enthusiasm.
But there is nothing frothy about purposely putting unsophisticated home buyers into loan instruments that have interest rates that explode over time, with big prepayment penalties and “yield spread premiums” a.k.a. kickbacks to the broker. This is called setting up a pigeon. The broker knows the borrower doesn’t have the income to support the loan in the long term, so it’s not a matter of if he’ll default but when.
http://www.sptimes.com/2008/01/27/Opinion/They_ought_to_draw_a_.shtml
Loan Reviewer Aiding Inquiry Into Big Banks
By JENNY ANDERSON and VIKAS BAJAJ
Published: January 27, 2008
A company that analyzed the quality of thousands of home loans for investment banks has agreed to provide evidence to New York state prosecutors that the banks had detailed information about the risks posed by ill-fated subprime mortgages.
Investigators are looking at whether that information, which could have prevented the collapse of securities backed by those loans, was deliberately withheld from investors.
Clayton Holdings, a company based in Connecticut that vetted home loans for many investment banks, has agreed to provide important documents and the testimony of its officials to the New York attorney general, Andrew M. Cuomo, in exchange for immunity from civil and criminal prosecution in the state.
http://www.nytimes.com/2008/01/27/business/27subprime.html?em&ex=1201582800&en=e9faa78f9430204c&ei=5087%0A
It is looking pretty grim at this point for the subprime mortgage lending kingpins. Go Andrew!!!
Report: Cuomo Gets Cooperation in Probe
23 hours ago
ALBANY, N.Y. (AP) — A company that analyzed the quality of subprime mortgages for investment banks has agreed to provide the New York attorney general with information for an investigation, a newspaper reported Saturday.
The agreement involves Clayton Holdings, of Shelton, Conn., a publicly held company that is a major provider of mortgage due diligence services to investment banks, The New York Times reported. Clayton was provided immunity from civil and criminal prosecution although there was no evidence of its wrongdoing, according to the newspaper.
…
“We have complied with a subpoena to produce due diligence reports on various pools of loans that we had reviewed for clients and on loans that had exceptions to lenders/seller guidelines and were eventually purchased,” he said.
“This information that we provided to the attorney general is the same information that we provided to our clients.”
http://ap.google.com/article/ALeqM5g6f9Y9TcAUbI3qIpVPwweUYtm7DwD8UE27M80
Power brokers urge global effort to head off slump
By William L. Watts, MarketWatch
Last update: 12:39 p.m. EST Jan. 26, 2008
DAVOS, Switzerland (MarketWatch) — The annual meeting of the World Economic Forum moved toward a close Saturday, with powerful policy makers calling for global efforts to prevent a U.S. slowdown from turning into a worldwide catastrophe.
In a speech, Japanese Prime Minister Yasuo Fukuda warned of an increased risk of a global economic downturn.
“There is no need to take an excessively pessimistic view of the current situation, but at the same time we do need to have a sense of urgency as we engage in coordinated actions while each country also implements necessary domestic response measures,” Fukuda said.
http://www.marketwatch.com/news/story/davos-power-brokers-urge-coordinated/story.aspx?guid=%7B52793E49%2DFDBD%2D4167%2DB693%2DA3632A69AA26%7D
Banks may need $143 billion in fresh capital
If bond-insurer ratings are cut deeply, banks’ capital will be tested: study
By Alistair Barr, MarketWatch
Last update: 6:48 p.m. EST Jan. 25, 2008
SAN FRANCISCO (MarketWatch) — If bond insurers are downgraded a lot, banks will need as much as $143 billion in fresh capital to absorb the impact, Barclays Capital estimated Friday.
http://www.marketwatch.com/news/story/banks-may-need-new-capital/story.aspx?guid=%7B9663E5EE%2D9A01%2D4A82%2DAA4F%2D8B7CA9D24C8A%7D&dist=sp_inthis
Adding rebates for senior citizens living solely off Social Security checks — who are ineligible under the plan hatched by House leaders and the White House — would likely mean doling out smaller rebates overall, shrinking the size of the payments from $600 to $500, according to aides familiar with the emerging proposal.
What!! Old people? they will just blow it on nickel slots !! Just kidding I think the whole rebate thing is drama. Extend unemployment insurance and be done with it.