Bits Bucket And Craigslist Finds For January 31, 2008
Please post off-topic ideas, links and Craigslist finds here.
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The Scam Market: S&P500 Futures Down 40 Points (were down more than 50) From Yesterday’s Fed-Stimulated High
Burn-ass-ke is bears’ best friend. He keeps on proving again and again.
No need to cover your shorts as long as Burn-ass-ke is in the chair with fire underneath and his hands tied behind his back. His ass is on fire, so he can’t think. All he can do is to re-act. We have at least two very good years ahead for the bears.
Jas
Seems that’s the general consensus.
“Sell short, reallocate assets, use leverage and whatever other tools and techniques are needed. Protect your own retirement savings and don’t count on the government for support.”
http://tinyurl.com/2ved87
“…don’t count on the government for support.”
Is this dude suggesting the Fed is not part of the government?
I thought technically it is not. The Fed is owned by private entities and commissioned by the guv. Anyone correct me, please, if I am wrong.
Fair enuff… it seems to be neither fish nor fowl, which actually serves to increase its power as it at least appears to be outside the realm of Constitutional separation of powers.
P.S. I don’t personally see anything wrong with that, provided the Fed agressively and convincingly pursues its mandate (what was that mandate, BTW?)…
Something scares me about private interest with public money. Oh yeah, complete irresponsibility.
The Fed is supposedly “independent”, although “independent” is a relative term. It is regulated in regard to how it can behave. It is owned by member banks and can make a profit. However it only pays a set amount of dividends, which is supposed to be in compensation for the reserve requirement. Also, any net profit it makes is turned over to the treasury.
I think the idea with the Fed is that since it isn’t part of the government that it would be outside of political influence. You wouldn’t have the congress or the senate or the president doing the manipulation.
The banks have a voting interest in the board members and are required to participate in treasury auctions. The representation structure isn’t proportional to bank size though.
Its all pretty much on the internet on their web site. Way less sinister than some would portray.
There are substantial checks and balances in the system with the treasury department and other bank regulatory groups.
For example the treasury can demand larger cash reserves be held by the Fed and restrict loan/reserve requirements.
It is my understanding, I read this but don’t have a link, that US gov’t officials are not allowed to be titled (knighted, for instance) by foreign gov’t while in office. Sir Greenspan was knighted while serving as FED chairman, ergo proof that it is not a US gov’t position OR he broke the law.
I don’t know about Greenspan in particular, but in general I thought the law was that no citizen can have foreign titles (or perhaps military titles). I think it is legal for any U.S. citizen to be knighted. However, some are “honorarily” knighted, which means they aren’t officially knights and so aren’t effected by the U.S. law prohibiting such.
I’m not a lawyer, but I believe that you can have any title you like under any circumstances in the US. It just can’t carry any weight politically. So basically, you can call yourself whatever you want, or have someone else give you any designation you like, as long as it is not part of public policy.
So greenspan could call himself the king of France, and even be given that title officially by the French Government, he just can’t use it to get his food stamps sent to him any faster than the bum next to him.
Titles in this country are simply rendered null and void from a political power / privilidge standpoint. You can call yourself or be called anything you like and it doesn’t mean squat here.
I’ve always wondered if the practice of attorneys calling themselves “esquire” in this country was meant as a subtle irony - it’s a meaningless title(just means “country gent”) in a country where titles are meaningless to begin with.
Any lawyers out there please correct me if I’m wrong.
Oh just a thought -
As far as being knighted or designated the King of France(KOF), I think there would be legal issues if Greenspan or any other public official was to actually go to WORK for a foreign government.
That, I believe, is prohibited, and probably for good reason - conflicts of interest, national security, etc.
This self-designation of titles, such as Emperors and the like, must stop.
Here is some stuff from wikipedia on usage of the letters associated with being knighted:
Most Americans have tended to only use the attached letters after their name - e.g. Steven Spielberg KBE and not use the full title Sir Steven, although it must be stressed there is no legal or constitutional reason preventing its use. It is only prevented (under the US constitution) for “person holding any office of profit or trust” ie Federal Government officials.
Article One of the United States Constitution, Section 9: Limits on Congress states:
“No title of nobility shall be granted by the United States and no person holding any office of profit or trust under these United States shall accept any present emolument, office or title of any kind whatever from any king, prince or foreign state without the consent of Congress.”
This is the reason for example the current President George W Bush cannot be Knighted, but his Father George Bush Sr. has been and is fully entitled to use whatever title he wishes.
I have no idea what the phrase “office of profit” might mean. Also, I wonder if Greenspan would qualify as a federal official, since the Federal Reserve isn’t technically an office or branch of the government.
Thanks for dutifully going to the source, the US Constitution. They can, but Congress must consent.
The relationship of the Fed and the government is meant to appear that it is both part of the government and separate from the government. It can claim either one, depending on the circumstances.
If it is a part of the government, it is unconstitutional. If it isn’t part of the government, it is constitutional, although it severely undermines the premise of individual and state sovereignty.
It is similar to the term, “Federal Reserve.” It neither is Federal, nor does it really contain any reserves-in relation to its liabilities. It is for appearance. Nothing really sinister about it. It is there for all to see, in plain english. Most are too blase to care.
“This self-designation of titles, such as Emperors and the like, must stop.”
It’s OK if they’re purported emperors of not so much…
Another confusing message from the FOMC? As I have repeatedly said, talk is the cheapest commodity on earth, and actions speak much louder than words.
Fed’s Message….
3:19:27 PM January 30th, 2008
With its half a point rate cut today, along with the bias toward more cuts and the slice in the discount rate cut, the Fed is saying in no uncertain terms that things are REALLY bad. That’s the only interpretation you can come away with, other than the other message: That the Fed is more sensitive to the stock market rather than inflation.
http://blogs.marketwatch.com/greenberg/2008/01/feds-message/
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“the Fed is saying in no uncertain terms that things are REALLY bad.”
That was my view before Fed panicked that Fed Panic would be the best indicator that things are really bad. Looks like we get confirmation after every Fed action. When Fed goes to ZERO we are in depression. The so-called “problem of zero” will play out. We are in for history making events in the US economy.
Jas
Well Jas,
You will get to see what it is like when the good ole ruskies, China and India are running the show.
Then get back to me about how amoral the US hedgemony was.
Should be an interesting comparision.
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“Well Jas, You will get to see what it is like when the good ole ruskies, China and India are running the show.”
Every dog has his day! Complacency breeds future disasters. Empires have tough time dealing with decline. Grow or die, or win at any cost, attitude is common.
Jas
“You will get to see what it is like when the good ole ruskies, China and India are running the show.”
“The people have always some champion whom they set over them and nurse into greatness. This and no other is the root from which a tyrant springs; when he first appears he is a protector.” –Plato
http://tinyurl.com/2ved87
Apologies for double posts this morning. Patience needed.
At some point there’s going to be a rally that sticks. My guess would be after one more stab down (long Feb puts at the moment)
Me too!
Same same.
10:00 bounce - looks like it might have legs.
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“At some point there’s going to be a rally that sticks.”
There are rallies all the time, but how big (%) and how long. What % and duration would qualify for “a rally that sticks?”
In high volatility, anything less than 10% on SPX and remaining there for at least couple of days is not very meaningful to me. I would love to accumulate some puts if that happens.
Jas
I wonder if we are on the wrong end of a carry trade at this point. So, as the Fed lowers rates the money goes out of the country where the returns are higher.
Deflation a la Japan
Another similarity to Japan would be the attempt to raise the GSE loan limits. Japan did this trick as well. Never wrote off the bad debt and kept rolling it over into new bad debt. They still have a bunch of bad debt on the books.
“S&P500 Futures Down 40 Points”
Dow futures, NOT S&P - let’s not get shorts too excited this early in the AM
Why did Cramer lie to us? The Fed cut 1.25 points in 9 days and the stock market is plummeting today. Anyone hear if he is complaining about the never before in history rate cut being too small? I don’t watch him.
Condo dev in N San Jose that I’ve been watching for about 2 years reached a milestone . . . first 1B listing reduced to under $400K . . . peak wishing price was $450K, peak sales were $400K+. Original listing for this one was at $420K back in September, now sitting @ $390K. FMV is probably $350K given area rents etc. but Yahoo just pink-slipping 1000 is not a good sign for rents.
*YAWN*
Wake me up when they’re $250k (two-fitty)
Every journey begins with a single step
(two-fitty)
Ha. First laugh of the day. Thanks colonel.
Did anyone else notice yesterday that the markets bounced off their old support levels. The Dow, once it got above 12,600 or 10% off peak, lost its steam. it tried twice to push through and it was a mini double top. The S&P got just above the1375 mark before it started selling off again. Then were floors that are now ceilings that will take a multitude of good news to push past. I think the market falls at least 10% more prior to the next scheduled Fed rate cut at the end of March. If MBIA and others lose their AAA rating I think we can be in for some good profits - well if you are short that is!
To protect your wealth, you have to confidently and objectively keep in mind what will rise in value in today’s crisis. Sell short, reallocate assets, use leverage and whatever other tools and techniques are needed. Protect your own retirement savings and don’t count on the government for support
http://tinyurl.com/2ved87
Again, apologies for double posts this morning. Patience needed.
Logically this should work well, unfortunatly there is so much artificial manipulation going on that logic goes out the window, I guess the question is how much more does the PPT have to keep markets proped up and how long till fed goes to 0 percent intrest and has nothing left to do…I mean I really don’t understand who is buying shares of Target(resession will hurt them), Bank of America(cfc debt), and any of the homebuilders but they are all going up, are there that many moron’s out there or is this the single handed work of the PPT?
“If MBIA and others lose their AAA rating …”
I would think determining a credit rating would be a matter of independently applying objective criteria, rather than fending off a barrage of immoral suasion.
‘MBIA is seeking to convince Moody’s Investors Service to retain the highest ranking for its insurance unit as Chief Executive Officer Gary Dunton tries to shore up capital through stock and bond sales. Without the Aaa stamp, MBIA’s business would be crippled and throw ratings on $652 billion of securities into doubt. The threat of losses prompted the New York State Insurance Department to call a meeting of banks last week to discuss a rescue.
“In the absence of a credible bailout plan, I think investors and issuers need to assume that MBIA, along with all of the other companies, will face continuing, worsening downgrade pressure all year,” said Matt Fabian, a managing director at Concord, Massachusetts-based consulting firm Municipal Market Advisors.’
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZigOJfgnaB0&refer=home
P.S. $652 bn is on the same order of magnitude as the back-o-the-envelope estimate I threw out a couple of weeks ago of the size of the overall divergence of overall U.S. mortgage debt from l-t fundamental trend since the onset of the housing bubble mortgage debt inflation in 1998 (I think I estimated $800 bn, but what’s $148 bn between friends?). Note that if you add in bank writedowns already eaten, it gets you closer to $800 bn. (I am sure the accountants in the virtual room can put much sharper pencils to work on getting these figures right than I would be willing to do.)
That’s quite the pencil whipping…
Just say no the financial torture.
Most of that $650 billion is munis, a whole bunch of mortgage paper was structured but didn’t get enhancement from the monolines.
Peebee, don’t forget that there is a vast mutual/pension fund industry that depends on the magic “AAA” letters. AAA = good, not AAA = bad.
This story suggests that we should anticipate a higher opening tomorrow on the headline U.S. stock market indexes, as bad financial news habitually and perversely results in higher share prices.
In his introduction to this story, Kai Ryssdal said it is too early to tell whether this bond insurer “accident” is a fender-bender or a train wreck.
KAI RYSSDAL: Bond insurance is nobody’s idea of a good time. We’ll grant you that. But it’s the newest and possibly most troubling wrinkle as the subprime squeeze plays out. These guys have traditionally been in the business of insuring regular old municipal bonds. Then they started insuring mortgage-backed securities. And we all know what’s been happening there.
Now there’s real concern those insurers don’t have the cash to pay up if enough mortgage-backed bonds default. This morning the world’s biggest company that insures bonds for a living, MBIA, posted a quarterly loss of more than $2 billion. MBIA CEO Gary Dunton did the traffic-cop bit. He said he’s confident the company will find the cash it needs. But Standard and Poors doesn’t think so. This afternoon the credit rating agency announced it’s considering a downgrade to MBIA’s triple A rating.
Ashley Milne-Tyte has more from New York.
http://marketplace.publicradio.org/display/web/2008/01/31/bond_insurers/
Anyone remember this guy?
http://news.yahoo.com/s/afp/20080130/pl_afp/germanyuseconomygreenspan
From the link:
Die Zeit quoted him as saying he found it hard to understand that “the Federal Reserve policy had somehow allowed housing and stock prices to rise.”
Fallout from the crisis, which began with a meltdown of the US market for high-risk, or subprime, mortgages, continues to rock international financial markets and now threatens the US economy with a recession.
For Greenspan however, the turmoil was “entirely the result of market forces at a global level.”
What a disingenuous punk!
For Greenspan however, the turmoil was “entirely the result of market forces at a global level.”
That turmoil at the global level was the result of the unwinding of the Greenspan Fed’s housing/debt/credit bubble. There’s a direct link between the Greenspan policies and the current market reactions.
Anybody else notice how distant weird Al Greenspankovic, is getting geographically.
I fully expect his next dispatches from the front, to come from Greenland.
Maybe, but he was probably in Davos last week. In that context, there was a reason for the apparent distance. As for the changing nature of his interviews…???
Interesting note and one that I have mentioned before..
Our MEDIA is not the least bit interested in being journalism at the core.
Example, while in Argentina and England all over the news was interviews of those in attendance in DAVOS.
What they thought etc AND parts ( long parts) of their speeches.
Now, who would think the US citizen MIGHT want to know what the PTB think about the current situations???
I thought not.. lets talk about Brit and Heath etc. and who is preggers. Oscar show or not…
If I want to know what is going on in the WORLD, globalization?, then I watch and read the media in OTHER countries. Geeze loueeez.
By the way, those speeches and interviews were really really interesting in Davos.
Greenland may be a great place to hang out for the next century or so in an era of global warming.
yes, should be beautiful farmlands and beach resorts.
This is a guy who is desperately trying to protect his legacy.
Greenspan is the type of guy who wants to be liked and wants to be respected. Being liked and being respected are often incapatable qualities. As Fed chief he chose being liked over being respected.
Now his legacy is paying the price. What was once remembered as wonderful Greenspan years by many is evolving into memories of financial blunders. Greenspan’s legacy is screwed; Unfortunately at his age his legacy is all he’s got left.
Greenie is my mom’s age, and i’d hate to be a scapegoat, in my 80’s.
Greenspan’s not the scapegoat, BB is.
They are both scapegoats for an utterly fraudulent system, that had a undeserved veneer of respectability.
greenie helped to engineer this debacle and BB is the scapegoat.
How does his wife like him now. She got the face lift and he declined? That, of course, is just an observation.
Not meaning to be nasty so early in am.
I think Greenspan’s dramatic reduction of interest rates merely accelerated the inflation and subsequent unwinding of the housing/credit bubble, not caused it.
The herd was driven to house purchasing by the dramatically dropping interest rates.
However, a fire was already smoldering in the background - namely, the securitization of debt .
Much of the money for suicide loans came from the buying and selling of debt securities. Brokers sprung up to generate and market those securities. The gears were turning already in the heads of the financiers, logically progressing from the basic concept of the securitization of debt, to create the mortgage debt securities market that appeared in the early 2000’s.
Had interest rates been kept are a more reasonable rate, I think this bubble would have been much slower to inflate and then to deflate. But it would have done so, based on the smoldering fire, the securitization of debt.
Greenspan and the government over the past several years has almost has done the world a favor by accident. They helped create a giant boil which is now in the process of being lanced. Had they not done that, this could have been a low grade infection that took a lot longer to peak, and took a lot longer to disappear.
It’s like ripping a bandaid off a wound rather than pulling it off millimeter by millimeter.
Hard to believe that Greenie might have accidentally done the market a favor. The pain is going to be great in the short term, but the recovery should come that much sooner too.
This is just a thought that occurred to me this morning. YMMV.
The problem with Greenspan’s policy was not that he reduced the interest rate rapidly. It is that he kept it there for too long. There are two other places where the Fed miserably failed (and continues to fail):
1. Poor oversight of banks, and allowing the widespread fraud to continue the way it did during the boom years
2. Fraudulent inflation numbers
If greenie had the mildest bit of integrity he would have stood up at some point in time. Even now, he is shirking responsibility - when everything works he is to praise, and when it all fails blame it on the “forces of globalization” or some such bunk.
Greenspan is a charlatan
I wouldn’t say that entirely. People were loving the guy for a long time.
The greenspan school of thought seems to be from a velocity of money standpoint. The velocity of money guys did not seem to realize that leads to exponential growth of debt and burns out fairly quickly.
So, it spurs economic activity till the point where the debt levels and money creation (financial activity) dominate the systems. At that point real economic activity collapses.
We are more or less at that point. It can be fixed by substantial inflation of hard money supply (print money) along with deflation of asset classes (less loan availability).
Preferably the TREASURY would print money and hire up a lot of people and it would go directly to the middle class and be used for some infastructure that has at least some value.
I think its highly unlikely that we persue the other avenues such as a hard money policy while allowing large commercial banks to face the consequences of their behavior.
I think the ratings agencies had a big hand in this as well. They rated stuff they didn’t understand AAA on the weakest of all criteria… computer models.
Also they are just another example of the ethical decline in this country. The too close relationship between rating agencies and big banks was something the SEC should be looking at. That is our current Enron/Miliken/LTCM like problem.
REWhat a disingenuous punk!
In other political cultures he’d be arrested by now and charged with being a subversionist of public order.
He’s detestable.
FBI targets senior bankers in far-reaching sub-prime fraud inquiry
Tom Bawden in New York
America’s Federal Bureau of Investigation is investigating senior banking executives for insider dealing and fraud as part of a criminal inquiry into the sub-prime crisis, the agent leading the inquiry said yesterday.
Neil Power, the head of the FBI’s economic crimes unit, is heading the most far-reaching criminal investigation into the practices of the mortgage industry since it began to melt down last year, after years of increasingly lax lending finally fed through into an increase in defaults on home loans.
The FBI is investigating every level of the conspiracy that it believes perpetuated the housing boom and ultimately resulted in millions of Americans losing their houses, investment banks losing billions of dollars and the chief executives of Citigroup, Merrill Lynch, Bear Stearns and UBS resigning.
Mr Power said: “We’re looking at the accounting fraud that goes through the securitisation of these loans. We’re dealing with the people who securitise them and then the people who hold them, such as the investment banks.”
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3279691.ece
Sorry to have double posted this. After posting I noticed that there was an International Bits Bucket section. Still not sure where it belongs…
Don’t forget the appraisers, real estate brokers, bond raters, mutual fund companies, politicians promising excessive returns from pension funds, and the borrowers themselves.
And don’t forget to identify the victims — everyone else.
Another dog and pony show, when a reporter or anyone asks a question you’ll get the old “we don’t answer questions about ongoing investigation”.
Alberto “we don’t answer questions about ongoing investigation” Gonzales?
question for people with some knowledge about the FL real estate market. Dont’t laugh, this is dead serious! Support your country and help sell some US real estate to foreigners flush with cash
A friend of mine from Belgium wants to invest in Florida real estate and is looking for some property that he always wanted to buy, but now at a nice discount (after hearing my HBB stories). He wants a good quality detached property in friendly neighborhood (no crime areas etc.). Certainly not a condo, should have a nice swimming pool, to be used on vacation to the US or rent out for other tourists. Probably FL West coast between Clearwater / Fort Myers or Orlando - Kissimmee (definitely not Miami).
Any suggestions for RE websites where he can look, good deals, other attractive FL areas? Some pointers to websites tracking RE prices of these areas would also be welcome (as a warning, but I think he wants to buy anyway).
Maybe North Port or Cape Coral?
” and help sell some US real estate to foreigners flush with cash ”
lol
very good, nhz. Sorry, I know nothing…
but your post was chock full of humor.
Thanks
Miami Beach
http://miami.craigslist.org/hsw/
Naples is a really great area and this guy is a straight shooter about the market there.
http://www.swfl4u.com/
Also Sanibel and Captiva are unreal if he has a lot of money to spend.
See the blub about foreign buyers on the left
http://www.swfl4u.com/CurrentReport.htm
“For example since year 2003 the Canadian buying power in the US has increased by 50%. Making a $500k purchase in 2003 the same as a $250k purchase today.”
Those bad bad RE people, still twisting the numbers.
Let’s look at the flipside…
There are boucoup Canadians that own property in Florida, and let’s say they bought 5 years ago, when the Loonie was worth around 70 Cents, and translated into U.S.$’s, combined with the Fla. market tanking, they’ve taken a double whammy, as the Loonie is about par now, and their 2003 purchase is worth less than they paid.
I’d argue that many more Canadians are leaving Fla., than coming in.
He also uses the term “delusional sellers” on his website. When was the last time you saw that?
my brother-in-law (Canadian) just bought in Cape Coral. If the market bottoms at the 8% trendline then he looks really good. I think that as long as it doesn’t go too far below he will be happy.
If nothing else, he timed the loonie right. That’s a 20% gain right there.
I am in Orlando. It is still MUCH too early to purchase anywhere in Florida, unless your friend wants to lose a great deal of money. I believe that in 1 year, some neighborhoods which are currently “good” will be decidedly “BAD”!
That’s a great point to consider. I’m also in Orlando and am seeing some fairly “good” neighborhoods turning to crap. And as the situation in Orlando continues to deteriorate, more and more neighborhoods are going that way. Having said that, there are some areas that I think are probably less likely to go bad. But I’m talking about older, more established neighborhoods, where your friend is not likely to get a good deal. And there’s no guarantee those won’t turn “bad” either.
Also, if I were looking for a vacation home, it wouldn’t be in Orlando. At least on the coast you get a breeze. Orlando is an oven most of the year.
Is Florida as grim as Carl Hiaason made it out to be, on The Colbert Report, last night?
DO NOT BUY now!Jeesh we have a long way to fall. I mean a long way.
dimedropped: I was going to ask you about buying in Cape Coral but figured you would say “DO NOT BUY now”. I remember your post “it’s really quiet here right now” quiet in the sense on ominous.
MUCH too early: yes, I think so too …
thanks all for the suggestions! My friend is a bit disappointed that the sales prices are only back to the trendline (from 2001, up 8% for every year). As long as it stays there he thinks FL real estate is not attractive enough. Just imagine how difficult it must be then to sell FL real estate to the Dutch, as they always buy on the cheap …
At some point, Florida real estate will make sense. But the problem is, will what is going on in the property next door destroy the value of yours?
IMHO it will not be safe to buy an individual property for a long time. You have to have enough money to buy a whole development or sizable condo tower, at enough of a discount for a positive carry.
Get something on a cul-de-sac full of military officers.
Near a base. Politley decline to attend hastely put together bon fires. Otherwise make friends.
When the SHTF, they will definetly protect their own.
Look at Sarasota.
Weak Growth… We will be deep into a recession before it is recognized in the press by the ‘experts’.
http://www.ft.com/cms/s/0/9aa381ac-cf45-11dc-854a-0000779fd2ac.html
What is thoroughly infuriating is how no one seems to know when a recession starts or when a bubble has burst - yet - there is an enduring and absolute certainty that it is always the best time to buy a building or that one’s retirement funds should never be touched/moved or otherwise protected.
Recent history:
- There is no bubble!
- There may be some softening, but only regionally.
- There will be a “soft landing”.
- There is a housing “correction”, but we needed it to stabilize the market (buy now!).
- Jobs are still good, there won’t be a recession.
- There may be a mild recession, but we aren’t in one yet.
And the latest from a talking head (can’t remember who) on Bloomberg this morning:
We may be in a recession, but the Fed will take care of everything and it will be over by the end of the year.
Any predictions for nex months MSM mantra?
Last year’s mantra (until around August): “Subprime is contained.”
This year’s mantra (until ???): “We expect a slowdown but no recession.”
It’s a buyers market.
You can get a great deal on a foreclosure.
If you don’t buy a house, the terrorist have won.
Any predictions for nex months MSM mantra?
We are in a mild recession, but it will be over soon.
By Summer: We are in a moderate recession, but there is ligh at the end of the tunnel.
By Years end: We are in an extended recession (avoid using the D word at all costs), no one saw it coming and we expect it will be over sometime in 2009.
Remember you are not allowed to open a safety deposit box except in the presence of an agent of the IRS.
James, are you serious? I’ve never opened a SD box before.
That was a headline from the depression era. There was a gold seizure act and privately held gold was stolen by the FDR gang. They gave you back devalued dollars.
There were lots of wealth confiscation policies.
People put their gold in banks so they issued an edict that you could not get in to your security deposit box with out the presence of an IRS agent to check for valuables to pocket. You have to figure the amount of bribery to bank owners, IRS agents and the like was stagering.
So, suddenly your property was taken in violation of the bill of rights.
I’m guessing that Libertarians were shot on sight in that era.
We are witnessing a new event.. a dot run, the kids are calling it;.
Shockingly poor standards of ratings @ Standard & Poor’s and the other rating companies…
They will all soon be history in an Arthur Anderson fashion, every last one of them, as fingers start getting pointed.
yes, I think something is brewing in Europe. The Dutch central bank president yesterday blamed all the EU banking problems on lack of oversight from US financial authorities, ratings agencies that are biased in favor of the people that pay them, creative financing run amok and outright fraud. He also said something like that this would be changed soon.
er, doesn’t that also imply lack of oversight on the part of EU financial authorities as they monitored US financial status?
We implied that stuff was AAA rated, when in reality, it was minor league crap, that should have never made it into the big leagues.
He should have been listening to Jim Chanos last summer about the rating agencies. How many times do you have to spot a monumental scam way ahead of time before people take you seriously? There are no better analysts than the dedicated short community.
“There is something wonderful in seeing a wrong-headed majority assailed by truth.”
John Kenneth Galbraith
Where are you getting all these lovely JKG quotes?
Internets…
Here’s another:
“The conventional view serves to protect us from the painful job of thinking.”
Internets?
Is that those tube things, Sen TED from Alaska was talking about…tubes.
RE: lack of oversight from US financial authorities, ratings agencies that are biased in favor of the people that pay them, creative financing run amok and outright fraud.
He’s pretty much on target.
The process began with the coercion of appraiser’s to lie on their appraisal reports and ends with the rating agencies throwing out their AAA’s on the debt issuance.
All rotten from the beginning to the end.
Posted this late last night, but Paulson gave an interview on Charlie Rose last night (PBS). First thing he said, “let’s not point fingers, and leave history to the historians” in response to Charlie’s “how did we get in this mess” question. And Rose let him slide with that. No follow thru, no accountability, no asking what role Goldman or the other ibanks played, nada.
Failed to even ask what happened to Goldilocks.
Paulson, though,is a nervous man, he squirms, his fingers flail, he looks spooked.
Too bad Ben didn’t do the interview.
The architects of this disaster are treated like princes of the realm.
It’s funny how the guilty never want to play the ‘blame game’.
because they know they’d win.
I guess, in the end, reputation means more than money.
Paulson reminds me of “Lurch”, from the Addams Family tv show of the 60’s…
You rang?
Rose is very good when having a more serious discussion with an actor or author.
But when it comes to politicians, he let’s them say what ever they want and never challenges them.
“They will all soon be history …..every last one of them”
I was wondering (and this is a straight question) what you thought would be replacing them.
If you haven’t quite cottoned onto what’s happening, we are on the verge of a greater than normal financial depression, and all the corporations we know and detest, will be be swept aside with the tide.
Not such a bad thing, really.
yeah right…..and then I’ll grow 6″, lose 40 lbs. and Vogue will come ask me to do a Liebowitz shoot.
Me too, Carrie Ann… Vogue. Strike a pose..
And breasts will re-rise.
“Not such a bad thing, really.”
It feels like time is standing still, things are moving fast enough.
Despite the others, I agree with you, A. (As if that is a surprise)
In horse racing, sometimes they’ll put “blinkers” on a horse, so it can’t look behind it to see what’s catching up on it.
Lots of people have blinkers on…
They used to be called blinders, Lad, blinders, more appropriate term, too.
test
More rate cuts please…
http://biz.yahoo.com/ap/080131/fed_interest_rates.html
It’s a drug and Wall Street is addicted to it.
After they get off the initial high… they crash and burn and start begging for more.
You don’t give an addict more drugs do you? No way! You put them in rehab and take the drugs away.
Anyone checking on what’s happening to foreign dollar reserves? Any sign yet of increased divesting? Is there still a decent market out there if a country did plan a major sale?
I was just saying this to my wife.
The rate cuts and the stimulus give away are like an alcoholic waking with a hangover and grabbing another drink. It takes the edge off for a bit, but in the long run just makes things worse.
Q: Which high is the best high?
A: The first one.
My wife is more and more annoyed as every day she exchanges USD the rate she gets is less. Down 2.2% in the last week since we have been on vacation in the Philippines.
Got Pesos?
Investors Demand More From Federal Reserve Despite 2 Big Rate Cuts in 8 Days.
WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke, criticized last year for being too tentative in cutting interest rates, has shown he can act boldly. But the Fed’s two aggressive rate cuts in the past eight days have left investors demanding still more.
http://biz.yahoo.com/ap/080131/fed_interest_rates.html
Got rate cuts?
Aye Cap’n, we are running out of FEDlithium crystals and the warp drive cannot take much more of this, and our $hields are down…
No problem. At 50 bps a week we can keep this party going for six more weeks - greenspan could die by then.
Then what Captain?
You assume that he can only lower rates to 0%? He could drop it to -2% and pay the banks to take his newly printed money. If that doesn’t work, there’s probably a section in the Patriot Act that forces each household to buy 3 flatscreen TVs a year.
BTW, have you noticed how the pictures of Bernanke’s face get more and more gloomy. I love the one where Bush introduces him, big smile. On the latests he looks like he’s thinking about what he’s going to do when he’s not chairman anymore.
“Uhura, signal our surrender” — Kirk
“Captain!!??” — Uhura
“We surrender!!” — Kirk
KAAAAAAAAAAAAAANNNNNNNNN!!!!!!!!!!!!!!!!!!!!!!!
So I just want to be clear. Increased borrowing and spending got us into the problem, and increased borrowing and spending is the solution.
Got it.
Yes, and Mastercard is up today. Why? Because people put more on their cards in the fourth quarter. Isn’t that great?
We had a less than stellar holiday shopping season, and the credit cards balances are going up!? Credit card borrowing is the ultimate in subprime. I see a correlation with these two, unsecured or decling collateral and high interest rates. It’s all the same to the FB when bankruptcy is around the corner.
But mastercard doesn’t hold the debt. It just takes a cut as the money is passed from the bank to the merchant.
Not only does MC & VISA not hold the debt.
They sell each months debt as a CDO to the market makers. OOOPPPSSS can’t do that anymore.
What are they gonna do now?
Subprime Lenders Get Big Accounting Break at SEC: Jonathan Weil
Commentary by Jonathan Weil
Jan. 30 (Bloomberg) — Just when it seemed as if the mortgage mess had hit a new low, now comes this: The Securities and Exchange Commission’s staff has granted the subprime-lending industry a huge exemption from the normal rules for off-balance- sheet accounting.
In effect, the move will let home lenders keep their balance sheets looking much smaller and less leveraged, even while the off-the-books loans they made get a makeover.
For months, banking regulators and politicians have been pressing lenders to freeze the interest rates on many adjustable-rate subprime mortgages that are scheduled to reset soon at higher interest rates. The idea is to minimize defaults and foreclosures.—–>
http://www.bloomberg.com/apps/news?pid=20601039&sid=aPSScH5rRBLM&refer=home
So Enron is legal now? Can Jeffrey Skilling appeal on these new rules now?
24/7, a virtual bank run has been going on in our country, at the click of a mouse.
Bank runs used to look like what happened with Northern Rock, late last year, but this one is different.
Just because you can’t see panic, doesn’t mean it isn’t happening…
24/7, a virtual bank run has been going on in our country, at the click of a mouse.
Bank runs used to look like what happened with Northern Rock, late last year, but this one is different.
Just because you can’t see panic, doesn’t mean it isn’t happening…
Give me 7% APY and I’ll be happy to park some money. Oh but I only do credit unions.
Hope they’re not in Orange County…
SACRAMENTO (AP) — California’s state senate narrowly defeated a bill Wednesday that targeted the growing problem of foreclosed homes sitting vacant for months, drawing squatters and creating blight.
Republicans in the sharply divided Senate said during debate that the bill would unfairly burden banks and mortgage companies.
Let me repeat REPUBLICANS said the bill would “unfairly burden banks and mortgage companies” Ah yes, same bat time, same bat channel, good old GOP!
“This bill will make a bad situation much worse,” said Sen. Dave Cox, a Republican from the Sacramento suburb of Fair Oaks. He predicted the bill would scare lenders away from California.
California has the nation’s largest volume of foreclosures and a foreclosure rate among the top five.
Sen. George Runner, a Republican from Lancaster in Southern California, said the Legislature should focus on homeowners who lied about their income to obtain larger loans and on unscrupulous lenders who enticed borrowers into loans they couldn’t afford.
The measure, which needed a two-thirds majority to pass because Perata submitted it as urgency legislation, failed with 26 votes in favor and 14 opposed.
This doesn’t really explain the terms of the defeated bill. How do we know the Republicans were wrong, unless we know what it is about?
From http://www.fox6.com/news/state/story.aspx?content_id=c4b6321e-c3fa-4eac-965f-14a59b778887&rss=tick
“SACRAMENTO (AP) - The state Senate has narrowly defeated a bill that targeted the growing problem of foreclosed homes sitting vacant for months.
Lenders would have been fined $1,000 a day for failing to maintain vacant properties, and they would have had to give four months’ notice before mortgage payment increases of 10 percent or more.
Republicans in the sharply divided Senate said during debate that the bill would unfairly burden banks and mortgage companies.
California has the nation’s largest volume of foreclosures and a foreclosure rate among the top five.
The measure failed with 26 votes in favor and 14 opposed. It needed a two-thirds majority to pass.
—
On the Net:
Read the bills at http://www.sen.ca.gov“
What exactly would the bill have forced REO property holders to do?
that’s not going to help the witch. She’s a Republican in a dress. She can’t hide her record and Obama is on to her.
“She’s a Republican in a dress.”
Wow, I’d have never thunk that. I always thought the other way, that McCain would be her running mate if he didn’t win the nomination.
My girlfriend first saw Barack Obama many, many years ago. When she recounted that meeting to me, and more importantly who was there, the recent endorsements he received came as absolutely no surprise.
It seems some pretty big folks have grown weary of the upstart opportunist you speak of.
your message is so non-specific it has no meaning. Maybe you know what you are saying, but nobody reading it does.
Yeah, but there’s specific names and business relationships involved so that’s all ya get - sorry. Suffice it to say, believe what you want, but one presidential candidate, whom the MSM wants so badly to thrust upon us, is really not as the “sure thing” she and the MSM thinks she is.
Oh, I think Edgewaterjohn was transmitting pretty well.
“Republicans in the sharply divided Senate said during debate that the bill would unfairly burden banks and mortgage companies.”
Boo hoo. Maybe they’ll be more careful in lending money in the future. I wonder who’s getting campaign contributions from banks and mortgage companies? It wouldn’t be those same Republicans would it? And, yes, many Democrats are just as sleazy.
I agree that both parties are responsible. Last I checked Hillary wanted to bail everyone out and freeze all rates. That will reward bad behavior and make things worse.
Still… the banks and mortgage companies KNEW what they were getting into. They just chose to look the other way.
Changing the rules after after the fact will cause dramatically increased risk premiums in the future.
I think that is the point. So, lending standards would tighten further and cause even more forclosures.
Normally in these situations (extreemly dangerous) its best to be cautious. Fing the banks/investors sounds good BUT long term consequences on that are not good.
Banks should be required to keep up and maintain properties but excessive fines will cause a massive hemorrage of REO that will crush prices resulting in more REO and more suffering.
Its hard for me to resist that as its what I want to happen. However, long term it is a very bad precident.
America’s Federal Reserve writes a new economic script
http://tinyurl.com/ysxod9
Investors expect the federal funds rate to be as low as 2.25% by the end of the year. That highlights the danger in Mr Bernanke’s new strategy. In trying to prevent financial-market calamity, the Fed may find itself pushed by Wall Street to leave interest rates too low for too long.
C’mon zero!
ZIRP - Here we come!
Before everyone panics and goes out and buys a home or two as inflation insurance, let me caution all that it is different now than in 2002, when AG used rock-bottom interest rates in his attempt to rescue the U.S. financial sector from the tech stock crash. Home prices were relatively low then, and mortgage loan underwriting standards were already lax and trending towards debaucherous. Conversely, though home prices across the national U.S. real estate market are currently trending back down towards affordability, they are still much too high, especially when the FBI is trying to crack down on mortgage lending fraud and lending standards are reverting to prudent historical norms.
And then we have the additional issue that back in 2002, sentiment towards the wisdom of investing in extra houses was just heating up, while the practice is currently starting to look like a great way to lose one’s shirt.
And then there is the matter of a housing inventory overhang, turned into a severe flood by a record number of foreclosures coming back onto the market plus an overhang of new inventory from builders who continue to build at a rate that exceeds new home demand.
And then there is the matter of a so-called credit crunch, which followed last August in the wake of a near-complete collapse of the U.S. subprime lending industry, which in retrospect appears to have been a very important prop supporting unaffordably high U.S. housing prices.
In light of the above factors and others too numerous to detail in a single post, an attempt by the Fed to reflate housing prices by reducing the Fed Funds Rate given current underlying housing market conditions and trends would amount to pushing on a string. Gold and other inflation hedges may do nicely for the foreseeable future, though.
Dang I was gonna buy houses for all of my kids and G’kids today. ’til I went to the bank and they said “I would have to pay the moneys back” . So much for that idea.
As opposed to the recent past when Fed Funds dropped so did Mortgage securities. Mortgage securities which are what mortgage rates are tied to are rising. Higher int rates.
‘…they said “I would have to pay the moneys back”…’
That really svcks.
The nerve of those banks. What do they think we are, rich?
“Higher int rates”
I am personally having a very hard time discerning which way the rate trend is breaking…
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TYX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=3&freq=9&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
It is quite helpful to take a longer-term perspective…
http://www.marketwatch.com/tools/quotes/intchart.asp?submitted=true&intflavor=advanced&symb=TYX&origurl=%2Ftools%2Fquotes%2Fintchart.asp&time=13&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
Maybe these were the interest rates Hoz referenced?
January 31, 2008 10:10 A.M.EST
BULLETIN U.S. MORTGAGE RATES EDGE UPWARD AFTER FIVE WEEKS OF DECLINES
At the end of the day, I am feeling OK about closing out the last of a Vanguard l-t T-bond fund I have owned since the first week of November 2004. I am quite worried about rising l-t bond yields if the Fed’s punchbowl respiking operation continues much longer.
In other words, PB is saying the bloom is off the rose. It is time to prune, plant, fertilize and apply systemic pesticide. Trying to spray the old bloom with water does nothing.
Trying to spray the old bloom with water does nothing.
That’s the most adequate description of my personal houseplant tending technique I’ve heard to date.
I never thought anything in California was affordable, not even “relatively.” Now I find median incomes weren’t all that much higher either. People must have been off the books there.
Got a message on my local community list serve last night warning everyone that the town is checking parking meters until 8 p.m. I guess the guy who does the job used to go home or something around five or six.
When asked about it the guy (can’t exactly call him a meter maid), said the town is doing it to boot revenue. I’m sure overtime is going to kill any extra money they get.
I watched the meter maid in town ticket the same car four times in a three hour period on Tuesday. She just made a nice little stack of tickets under the passenger side windshield wiper.
Have noticed that there have been more cops and sheriffs pulling sppeders over than usual here in Ransho Santa Margarita. At least is appears more often than usual and I ahev lived here for 2 years. Also, about two weeks ago a CHPer driving right alongside pulls me over on the 5 North. Gives me the usual question about why he stopped me. I was dumbfounded. I knew I wasn’t speeding. Said he didn’t see my seatbelt on.
I know this sounds crazy, but I think we will def. see a large uptick in local goobermints trying to squeeze the local populace since tax revs and housing values are falling.
Can sheriff’s dept really ticket speeders? I always assume that’s not their jurisdiction and blow right past them.
They can, but they usually don’t give a sh!t.
Just an anecdotal story, a week ago I drove about 2,000 miles, from E. Utah through Salt Lake through Nevada, over Carson Pass, into Yosemite, then back down through Calif. on 99 into Vegas and up I-15 through Utah. Didn’t see ONE cop, sheriff, or patrolman. Not ONE. It was actually kind of weird.
Awesome. Did you zoom through Utah on I80? Last time I did it I went 127.
Yup, the northern route. I went pretty fast, but not 127, not exactly.
Look for massive increases in penalties and code enforcements (stealth taxes) from every corner of the state and local governments”
The local municipalities will be calling on their PD’s to step up traffic ticketing enforcement. Look for speed traps set up al over CA along favored roads in which the speed limit is 35-40 MPH on empty wide thoroughfare lane and U are going 45 or 50 mph and boom, motorcycle cops are hiding in a hidden turn- off with radar gun and hits U for speeding over 10 mph. $200 ticket min and increases exponentially for each mile over the posted speed limit. Add $33 for court fee and $20-40 for traffic school. Red light cameras even better for city revenues :$400-450 per ticket including school and court fees, which is why U are seeing them everywhere now.
Cities are calling on the local PD’s to be revenue fee collectors extracting money from normally law-abiding citizens who may ocasionally rush thru traffic late for work or race thru that light turning from yellow to red. Especially in Car-crazy SCal 9 in 10 drivers goes 5-10 mph over speed limit on fwys and roads.
Meanwhile 40 % of LA city drivers ,many of them immigrants, drive without auto insurance.
CA state and local gov’ts only exist to screw law-abiding taxpayers out of their hard-earned income while the state employee unions , CA bureacrats ,political hacks and assorted pasasites are all sucking off the gov’t dole, and sticking it to the average middle class citizens and small business owners.
I wouldn’t worry about them using police for revenue in CA. The state and counties have plenty of other agencies to nickle and dime us to death.
Be honest, cops write as many tickets as needed to reach the goals in performance evaluations (modern morph of quotas) going past that has no incentive for them.
Watchout for the County Assesors, any agency that gave you a permit and local code enforcement. All of their budgets are in peril. The only way to keep your budget is to show results.
How quick will it happen that everyone in CA gets slapped with a use tax audit for their office equipment. Really fast if you ask me.
Here in Norfolk, Virginia they just implemented the exact same thing. The line I heard was they were having issues with employees that work in nearby restaurants parking in the neighborhood. I don’t really buy it.
Same here meters in Queens used to be till 7 or 8pm are now till 10pm even on friday and sat night, (In exchange for FREE parking all day sundays)so at 930-945pm they write a lot of tickets
Well the MORONS who can’t read or need that extra 75 cents an hour for drinkin money….cost them a $45 ticket
“Well the MORONS who can’t read or need that extra 75 cents an hour for drinkin money….cost them a $45 ticket.”
It’s a low stakes form of gambling to see if you can beat the meter reader.
It’s officially a New Era. Gold has supplanted housing as the “best investment.” (I snuck in a couple of parenthetical comments to the original version of the article posted below, set off in italics.)
PAGE ONE
Investors Rush to Gold
Metal Hits New High;
Fans in the Mainstream
By E.S. BROWNING
January 31, 2008; Page A1
The new gold rush is on.
As inflation has picked up and the stock market has tumbled, investors seeking a safe haven have piled into gold, driving the metal to all-time highs. (This is only true in nominal dollar terms; the inflation-adjusted gold price was highest around 1980 or so.)
Since mid-August, New York gold futures have risen more than 42%. After finishing down at the early-afternoon close yesterday, they shot above Monday’s record of $927.10 in later electronic trading. The peak occurred after the Federal Reserve cut its target lending rates, which sent the dollar — gold’s big competitor — lower.
Historically, the world’s most enthusiastic buyers of the metal have been catastrophe-fearing “gold bugs” in places like India, where banks aren’t always trusted and currencies can be unstable. (IT’S DIFFERENT THERE.)
Today, a different class entirely is powering gold’s rise: mainstream investors and money managers who once shunned it. They hope adding gold to their portfolios will help soften the blows of inflation, possible recession, the sagging dollar and gyrating stock prices.
“What we have seen in the last few years is a fundamental shift in attitudes toward the gold markets” by Western investors, says Paul Walker, chief executive at London precious-metals research firm GFMS. (And a few years before that, we saw a “fundamental shift in attitudes” by Western investors towards the financial genius of owning multiple residences.)
http://online.wsj.com/article/SB120174306415930617.html?mod=googlenews_wsj
Oh boy. Top can’t be far away.
Sell me some April calls
I’m not sure, given the magnitude of undisclosed bad debt that remains to be written down. It appears that fundamentals align quite well with sentiment for the near term, at least.
I would beg to differ. A top will be at hand when my dumb-ass relatives start asking me about the best way to buy gold and when my neighbors start bragging about the gold they purchased. So far, no one in my family and no one whom I talk to in my neighborhood even knows how to spell gold. Mention gold and you get a look as if you are standing there with your head on fire.
The top will come when the general public jumps in. So far, I don’t see that.
Sure, there will probably be a battle royale at 1,000, but until the public jumps in, I say, no top yet.
The track record of fiat currencies is pretty clear if you read history books. They are debased until they implode.
You sound fairly confident that Uncle Buck is on his death bed.
I’m a financial market lurker, sorta like I like to watch people play blackjack in the casinos. I was into RE prior to the bubble; at that time no one that I knew had even considered investing in RE: it was all foreign to them. I neednot mention how familiar many of them became. Similarly, I can see the same thing happening with gold. Heck, reading about it here, I’m thinking of getting in on the gold bubble. The big question, I think, is whether the general public will have any money to invest.
Ah - excellent point. Up to now - it’s very difficult or impossible to buy gold on margin, unlike stocks or especially housing. Correct me if I’m wrong - but about the only way to buy gold on margin is via mining stocks. Not sure, but can ETF’s be marginalized? Even if they can - I’m guessing it’s rare that people do so.
At any rate - it’ll be interesting to see if new methods of buying gold come about soon, allowing for margin buying, and if they start becoming popular - if that happens then we may *really* see a gold bubble. Until then - gold prices will indeed be limited to a great extent by the amount of liquid capital people have. The real estate bubble had no such limitation.
Right - need to get the housing market back on track so the FBs can heloc and buy my gold at a bazzilion an once
“it’s very difficult or impossible to buy gold on margin,”
I recently bought some gold coins and they wouldn’t take my credit card but took a check. Is that a rule, and is that what you mean?
You can very easily buy gold on thin margin if you feel like committing financial suicide. It’s called the futures market.
Well, my nephew in Hawaii just took his money out of the stock market, then called me to ask about buying gold. He’s pretty much as illiterate financially as it gets. He plays by the mania book, so I say it could be reaching the minds of the masses.
I know you know markets, but I’m afraid a part of your brain is brainwashed, as Richard Russel refers to in his recent letter.
“Below we see a monthly chart of the bull market in gold. How could gold, how could any item, rise from 250 to over 930 without attracting intense interest from the public? Damned if I know, but I can tell you this - somewhere ahead, rising gold will attract the interest of the public. I’ve never seen a rising market that didn’t, at some point, bring in the public. But the higher gold rises without public participation, the higher gold will ultimately go.
I guess decades of anti-gold nonsense and ignorant propaganda has left Americans “brain-washed” when it comes to real money. It really does seem like the ultimate irony - Americans have faith in fiat junk paper - but they distrust real tangible money - gold. Americans will “get it” somewhere ahead. I’m in no hurry, and you shouldn’t be either. Meanwhile, let gold “creep” higher. I continue to call it the “great stealth bull market.”
Richard Russel
People are now trained to call every price rise a bubble. Commodities, including precious metals, had been way UNDERpriced for years. Their prices have gone up a lot now, but that may just mean they are fairly valued now.
Not all commodities are the same though. I’d agree that certain things were bubbly, like lumber. And gold looks to be on the expensive side of fair value, to the extent there even is a fair value for gold:
http://en.wikipedia.org/wiki/Image:Longtermdowgoldlogtr1800.png
Silver still looks like a bargain to me. Three quarters of silver production comes as a byproduct of economically sensitive metals like copper, lead, and zinc. And much silver usage is insensitive to silver price. For these reasons silver prices got way too low, and for the same reasons they will go way too high as supply falls increasingly short of demand.
You sound like our realtors. “Our market was underpriced for years, now we are just catching up.” Supply and demand, no? There is no underpriced.
[gold] Oh boy. Top can’t be far away.
Have you learned anything from the stock and housing bubbles you have been watching? Gold is just now making the peak of the last bubble (1981).
It is more liquid than say housing…. but no reason that people won’t pile on and go for those 100% gains in 1 or 2 years just like housing people did.
Investors / speculators are now joining the party. Those who opened up stores before the party started are the ones now cashing in.
Speaking of the WSJ, there should be a full page ad in the money section today accusing the US Gov’t, et al, of manipulating the gold market in order to support the idea of a low inflation rate and the dollar as THE reserve currency. http://www.gata.org
Before I get to serious work.
I have no position in gold.
Why believe a minor rally is a bubble? Gold is in a minor rally.
The same analysts that project a gold bubble could not recognize the stock bubble, the housing bubble or a real investment.
Gold is in a relatively narrow trading range and has less risk than owning almost any stock in the US. Citigroup drops 35% and every mope thinks is it safe to buy. Gold drops 8% and the analyst are screaming to “get out, the bubble is bursting”.
If gold were my trading tool, I would be accumulating as much as I could. It will go to a bubble, but maybe $3,000 higher.
Why aren’t you buying if you are confident of a $3,000 top price? It seems like you are leaving moneys on the craps table…
I thrive on disparity between markets. I play the 4% rule, buy ground beef at $4/lb, sell 1lb hamburgers at $4. 4% rule. lol
The gold market is used by the Federal Reserve and other central banks to determine inflation. As a result to keep inflation expectations down, the worlds central banks have interfered in the free and orderly transfer of gold. As a trader, the easiest way to lose moneys is to be in a manipulated market. The foreign currency market is to large for CBs to manipulate. I also think there are better performing metals than PMs.
“…the easiest way to lose moneys…”
Exactly why I avoid gold investing like the plague, even though I agree with other posters here that fundamentals and sentiment look quite strong for the moment.
I trade gold stocks from time to time and own some physical gold but would not buy it at these prices. But OTOH I thought the RE market was overpriced in 2003 and look what happened to it.
So P-bear you don’t think the treasury markets are manipulated?
“I play the 4% rule, buy ground beef at $4/lb, sell 1lb hamburgers at $4. 4% rule.”
Should read - I play the 4% rule, buy ground beef at -$1.00/lb-, sell 1lb hamburgers at $4.00, 4% rule.
Hope it makes some limited sense.
uh, isn’t that the 25% rule?
Hm. How is 4% involved in that at all?
It is what a multi millionaire said when describing his restaurants and asked how he got so rich. “I buy ground beef at $1.00/lb and sell hamburgers for $4.00.. I get about 4 hamburgers per pound. So I make 4% on my investment.”
Not great at math, but that 4% really adds up.
Same question to you PB. If you think the top is near, why aren’t you selling short?
My guess is most commodities will edge higher as the dollar goes down and third world money buys more verus dollar. Like a big Ebay bid out for stuff. Gold is just more news worthy I guess. When this is over we Americans will be poorer and hopefully wiser.
Well said as always, Hoz.
“You sound fairly confident that Uncle Buck is on his death bed.”
I go to a husband-wife dentist team. She will not let him email me, meet with our local investing group or otherwise have contact because of my ‘wild’ financial ideas (e.g., ‘RE is in such an obvious bubble, anyone who can’t see it is a moron’; ‘the US dollar is backed by uranium, depleted and otherwise’).
Two years ago (2/06), he said gold was only good for filling teeth. I asked him if he would be willing to put a price on that opinion. I offered him US$150 for every ounce of gold he had (melted down froom old crowns, etc) if gold failed to close above US$1000 spot in 4 years (2/10), essentially selling a covered call. Gold was trading ~US$550, so this seemed like a sucker’s bet from his point of view. After his wife approved, he said ‘fine’.
He’s very interested in the gold market now.
The inflation adjusted ‘peak’ 1980’s gold? It depends on whose inflation index you use. The pre-Clinton index puts it at ~US$3000-4000.
http://www.statesman.com/search/content/business/stories/realestate/01/29/0129fourseasons.html
Austin Four Seasons condos break ground … it’s 40% sold … not sure how this one will turn out.
“The enemy of the conventional wisdom is not ideas but the march of events.”
John Kenneth Galbraith
Conventional wisdom: It’s a New Era, as gold has supplanted houses as the best investment.
Just a thought- unless you’re actually buying bars of gold and stashing them in a “safe”, well-constucted (and secret) place- you’re still trusting some middle-man about there being real gold at the other end of your purchase. Do gold dealers ever lie, especially during a rush? Just a thought.
Those that lazy’d out and bought etf’s, in lieu of the real deal, must wonder once in awhile, just who was it that I gave my money to, for a promise that they’d be a worthy custodian?
Apparently, the luxury real estate market is holding up well thanks to foreign knife catchers:
http://www.newsweek.com/id/106188
Why do they even try to insinuate that’s a meaningful trend?
Everyone knows foreigners make the best bagholders. One example: historians here can probably recollect how many European investors were left holding worthless railroad stocks during the great panics of a century ago.
Ditto for the early cattle markets in the US (late 1800s).
I have fond memories of standing atop Rockerfeller Center last Christmas recalling to friends that Japan bought this perch high and sold low and also gazing at the Empire State that was sold after decades of losses for pennies on the dollar (adjusted).
In chaos there is opportunity….
MBIA Posts Biggest Loss, Considers New Capital Plans (Update3)
By Christine Richard
Jan. 31 (Bloomberg) — MBIA Inc., the world’s largest bond insurer, posted its biggest-ever quarterly loss and is considering new ways to raise capital after a slump in the value of subprime-mortgage securities.
The fourth-quarter net loss was $2.3 billion, or $18.61 a share, raising concern the Armonk, New York-based company will lose its top credit ratings. The loss came a day after FGIC Corp.’s insurance unit became the third company to be stripped of its AAA grade.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aZigOJfgnaB0&refer=home
War on Savers continues to discourage U.S. households from saving. I advise anyone looking for higher-yielding CDs to be sure there is a government insurer backing up the principle.
What Savers Should Do as Rates Drop
As the Search for Yield Gets Tougher,
Consider Bond Funds and High-Paying CDs
By SHEFALI ANAND and JANE J. KIM
January 31, 2008
Even before the Federal Reserve’s latest rate cut yesterday, yields on money-market funds were dropping, leaving savers in a pinch. Now, the situation looks to get even uglier.
Still, a few attractive alternatives remain. These include higher-yielding certificates of deposits and, for those willing to take on a bit more risk, some short-term bond mutual funds.
Yields of money-market funds have been sliding since the Fed began a series of rate cuts in September to jump-start a slowing economy. The average seven-day yield for taxable money-market funds has dropped to 3.4% from 4.7% since then.
It gets worse. The Fed has slashed rates twice in the past 10 days, and those cuts have yet to be fully reflected in money-market-fund rates. By the end of February, the average taxable fund yield could be around 2.4%, says Connie Bugbee, managing director of iMoneyNet, a money-fund research firm.
There are other factors besides rate cuts that are pushing down yields on money-market funds. Such funds have been flooded with new cash as investors have become more risk-averse, which forces managers to buy more securities, even lower-yielding ones.
http://online.wsj.com/article/SB120174825941430963.html?mod=todays_us_nonsub_pj
There is one peculiar Certificate of Deposits, whose backing will never be questioned…
Quadruple 9 rated, as well.
Here come’s arson.
http://articles.moneycentral.msn.com/Insurance/InsureYourHome/BrokeHomeownersTurnToArson.aspx?ref=patrick.net
“Authorities in economically stressed cities see an increase in torched houses. Is the nation’s mortgage mess transforming more Americans into criminals?”
“Those working in the field hear their own stories. “I have heard of builders torching incomplete homes that can’t be sold,” says Vince Brannigan, who teaches in the University of Maryland’s department of fire-protection engineering.”
Sounds like the D.R. Horton condo project in Escondido that went up in broad daylight on a weekday with a cause of “unknown origin”. Generating a little “cash flow” to complete other projects in the area?
“Brisco tells of a couple of evicted homeowners who are suspected of breaking into their foreclosed home before the new owners could move in, spraying the interior with angry graffiti before setting it on fire.”
The MSM allowed the image of Ron Paul to be broadcast today on a news segment this morning, I have yet to hear his name spoken, they say he is, “just not viable”. It is almost as if they are ashamed or embareAssed to say his name or discuss his platform.
Matt Lauer on NBC just described the rate cut as a, “non-event” due to bond insurer issues.
Weeks ago a major news reporter called Obama the first “viable” black canidate for president. I guess Jesse jackson and that other guy were never “viable”.
The efforts to bail out the FBs must be “viable”.
What the heck does “viable” mean?
‘I guess Jesse jackson and that other guy were never “viable”.’
If you are confused about this point, and why it does not apply to Obama, then there is no use explaining to you what “viable” means.
They were sarcastic remarks.
Bailing out FBs with 300 checks is viable?
They are afraid the sheep might raise their head, look around, and god forbid think a little bit.
Negotiated my new lease yesterday morning. Pretty much demanded a renewal with no increase and for 11 months (end of December is a better time for me to move than end of January because of requirements to use up accumulated vacation above a certain level at that time). Got both, though I admit I’m not really very proud of my negotiation style. I feel a little like I let the board down.
I was talking to one of nycdj’s “chickipoos.” This one wasn’t entirely brain dead , but she didn’t have the authority to actually give me what I wanted - she had to check with someone in a central office. But I didn’t get to talk to him.
She kept pointing to Montgomery County’s recommended level of rent increases (what the f–k is my county doing wasting money by doing that!) and magic numbers that they pulled out of thin air that she said was the “market value” of the apartment. I countered by telling her that market value was what someone was willing to pay, not a number out of a computer. I also pointed out that the previous two year’s increases had been outrageous which is irrelevant, but seemed appropriate to counter her irrelevant magic numbers.
Mostly I showed her an offer I had from a complex a block away with better amenities that offered me a 2 bedroom (I’m in a one bedroom) for $4 a month more than they wanted after the proposed increase. She tried to tell me that the other place gave better rates because they were desperate because they are newer and have more vacancies. I pointed out that they were now setting the market price, though I don’t think she really understood that. I also pointed out the problems with my apartment (most of which I don’t care about, but other people might) that would make it hard to rent to another person.
In the end, I wrote out a check for my current rent rate to “prove that I wasn’t trying to get out of anything” - who knows, her taking the check might have had a meaning under the county landlord tennant rules. Her last point was that their expenses kept going up - extremely irrelevant. I did not retort that lower profits was the innevitable result of increased competition in the area. By that time I was just sick of the conversation.
A few hours later, she left a message on my office phone that they would renew with 0% increase and for the 11 months I requested. I’m satisfied, though not necessarily extatic. I’m nearly certain to move next year, hopefully with less stuff than I have now. Time to do some more purging.
Bravo well done !!
Congrats (I think?). The Montgomery recommended numbers (WTF?) are really a wonderful waste of money, as if the county can keep better track of the market than the market can.
I’d love to know more about these county ‘recommended level of rent increases’ as well.
Sounds like it’s time to do some research.
Insane. There’s absolutely no merit to it, and I’m sure it does all sorts of things to confuse people, just like your ‘chickipoo’ there was.
Thanks for the leg work, buddy. I am going to have to set aside a long hour or so to have a talk with someone at the county landlord/tennant affairs office. There are a number of issues I am curious about. Especially their rules that any landlord (not just a small one) has the right to at least two calendar months notice before a tennant leaves an apartment. Why the heck does a commercial landlord with hundreds of units need that sort of protection?
And the idea of using county established guidelines for rent increases? In an area that has has had an additional 400+ units come on line at the same level of amenities in the last 2 years? Dumb, dumb, dumb. Even if their assesment of the county as a whole was correct, it wouldn’t apply to an area with new buildings going up.
“Before everyone panics and goes out and buys a home or two as inflation insurance, let me caution all that it is different now than in 2002, when AG used rock-bottom interest rates in his attempt to rescue the U.S. financial sector from the tech stock crash.”
Yes, that’s a bad idea. But so, as far as I can see, is everything else.
T-bill funds are going down in yield.
Any money market with higher yields probably has CDO or credit card debt in it.
Long term bonds face both rising defaults and possible inflation.
Stock PE’s are high, unless you believe profits are going up this year. I’d consider them the least overpriced asset, but prices are still not low enough for me.
Metals, including gold, have already run up, and gold produces no economic return.
The dollar has already collapsed, and many other countries have some of the same problems we do.
Stay in T-bills and swallow the inflation hit? Does anyone have a better idea?
“Metals, including gold, have already run up, and gold produces no economic return.”
Do I have to give up last year’s 45% return?
You could ask a similar question of a real estate FB: Should a FB have to give up the previous year’s return?
I think what he means is that gold only appreciates (or depreciates), but does not generate an income stream.
How is that any worse than owning Google stock with no dividen?
Gold is striclty a store of value. That is the part I have having trouble with just dismissing gold bugs.
In the next few years, I see myself with a few limited choices.
Deflation is everywhere.
Fed is at 0% or even negative.
Stocks are bouncing around like a kid full of sugar and ritalin.
My 401K that is trapped by law and Corp policy in the US market bounces from breadlines to bling bling on a weekly basis.
The USD is making a bee line for Zimbabwe.
Can’t find work because we don’t make anything in the US anyone would want to buy.
Nothing ” Mitt McHussien-Rodham” says makes a difference in my life.
I’m not gonna buy anything I don’t need to use today, because it will be cheaper tomorrow.
Bank won’t lend me money for the same reason.
You people gonna tell me to leave my money in a bank or the matress? I think not.
If you think it won’t get that bad. Do yourself a favor. Find out how many of your customers and vendors need access to the commercial debt market to keep the lights on?
“But so, as far as I can see, is everything else.”
The Greenspan conundrum has indeed morphed into the Bernanke conundrum.
yes
Fire BB.
P.S. Here is my short- and long-term strategy:
1) Unload the l-t Treasury share of my asset allocation once the U.S. recession worries have spread from the pages of The Economist and the Financial Times to the mainstream consensus;
2) Buy into that reverse l-t Treasury mutual fund Hoz mentioned recently;
3) (Long term) Develop an autopilot portfolio rebalancing strategy that frees up my time for more productive pursuits than hand wringing.
“…mainstream consensus…”
COVER STORY
The U.S. Economy Faces the Guillotine
America is on the road to recession, and many predict a worldwide slowdown. But it’s a new economic order, and the emerging markets could take the lead.
By Daniel Gross | NEWSWEEK
Feb 4, 2008 Issue
http://www.newsweek.com/id/105558
PG I forgot, are you in equities at all?
4) Save money by not buying more hand lotion for your hand wrining.
wrining=wringing
I have a very large bottle of lotion sitting on my desk, purchased at Big Box Mart, and I only use a little bit each day.
“Buy into that reverse l-t Treasury mutual fund Hoz mentioned recently”
Name of the fund please?
RYJUX
Inverse ETFs
Buy 10 condos.
Stay in T-bills and swallow the inflation hit? Does anyone have a better idea?
If you see inflation coming, buy commodities! At least enough to hedge your Treasuries. You have to filter out all the cries of “bubble” from people who never had the foresight to get into commodities in the first place.
Reflux-Reflex
“Metals, including gold, have already run up, and gold produces no economic return.”
Gold does not need to pay interest because it is money already.
I am beginning to think today may offer a great chance to buy the dip.
January 31, 2008 8:36 A.M.EST
BULLETIN JOBLESS CLAIMS SURGE 69,000, BIGGEST JUMP SINCE KATRINA; SPENDING, PCE AS EXPECTED
Street following bear tracks
A slew of data ahead on inflation, incomes and spending, and jobless claims will help set Thursday’s mood. Earnings and bond insurers hold the spotlight for now, overshadowing Fed’s latest rate cut.
http://www.marketwatch.com/
Higher-than-expected jobless claims are great for stock prices! Guess I will have to wait a few months before there is another good dip buying opportunity (like the one two Fridays ago)…
I know for a fact that they’re hiring at Jack in the Box.
Jobless claims rise by 69k. WOW - 375,000 weekly claims. Only 25k from recession level.
That is an important number and has me and probably every fundamental analyst reviewing the last 3 months data.
faster, please
We’re beyond recession level. A good portion of the REIC is/was paid on 1099s, not eligible to collect unemployement.
The new Florida dichotomy:
I’ll Buy Your House
If You Buy Mine
By JENNIFER LEVITZ
January 31, 2008; Page D1
Eager to move closer to their grandchildren in Tennessee, retirees Allen and Wilma Sawtelle put their home in the Southwestern Nevada town of Pahrump up for sale in August. They got nowhere. “The market is just dead,” says Mr. Sawtelle. At their open house, he says, “I think one guy came, and he’d been drinking.”
Article from WSJ: http://tinyurl.com/294fzr
This is a way for home-owning Floridians’ to keep owning houses, since with the new tax structure, no one who doesn’t currently own would have any incentive to buy.
Sounds like a great plan for a pair of sellers both facing a dearth of buyers who understand why houses are still worth the same amount they sold for in 2005…
I think one guy came, and he’d been drinking
Must be a new NAR campaign… It’s a great time to go have a few drinks and then buy a house! Works better for me than housing always goes up every 10 years.
“I think one guy came, and he’d been drinking”
i wonder how he knew i’d been a drinken!
U-Haul index 24′ truck:
Pahrump, NV –> Nashville, TN: 2653.00
Nashville, TN –> Pahrump, NV: 1012.00
I’m planning on selling my house in Nashville this spring or summer. I still can’t figure out if prices are falling here. I never hear anything about a Nashville housing bubble. In my neighborhood houses on the non busy streets are selling in normal times (less than 2 or 3 months). One even sold in a week. A low priced major fixer. It sold above asking and probably wasn’t worth it, because it was neglected, needed a new roof, bath, kitchen, no central air, mold, etc.
The house on the busy streets are selling slow (3 months or more, with “new” prices). My theory is that people want to live in the neighborhood, but investors are selling and the houses on the busy streets, may be investment. My house is on a very quiet street, but I still don’t know what to expect given all the bad news. The rent and buying cost are similar though.
Sold above asking? Cash back split between seller and buyer. Classic scam.
The house was offered at 165k. House that size start at around 190k or 200k, so this one looked cheap. I’m guessing that above asking was 170k. If there was an inspection, a lot of problems would have come up due to neglect. I don’t think there was a scam. Possibly a buyer lured in by the low price and not thinking they were getting a good deal and assuming it was just a cosmetic fixer.
last nite on cramer!!! jim says now is the time to buy a home. we still have a long way to go down.
I sincerely hope he buys the biggest, most expensive mansion his family budget allows and catches a falling knife.
P.S. Speaking of high-profile dispensers of bad infestment advice, does anyone know whether DL ever sold his Florida infestment condos?
DL = ???
Blanco,
David Lehear, was the National Association of Realtors chief economist.
Oh yeah, him…….thanks!!
There was a guy on 60 minutes on Sunday who said that he feels the housing situation hasn’t even reached the 40% mark yet. I wish I could remember his name. I think someone posted a link to the video yesterday.
Jim Cramer is an idiot.
First, he has underperformed the market for the last 7 years and people think he is God when it comes to stocks???
Second, he acts like the FED cut rates because of him and now he thinks they are geniuses. He acts as if rate cuts are all good and nothing bad.
The slowdown we are seeing now is inflation based. People have less money leftover after buying food and paying for gas.
It will only go higher and make things worse irregardless of the FED’s statement that “they expect inflation to moderate in coming quarters in the face of lower interest rates.”
And that is an oxymoron. The FED is run by a bunch of morons.
Cramer is a classic narcissist.
Weekly jobless claims surge
http://tinyurl.com/yvs5aw
The number of workers filing new claims for jobless aid jumped by a much larger-than-expected 69,000 last week to the highest in over two years, government data on Thursday showed, but the numbers were likely skewed by the timing of a public holiday.
There goes that containment wall.
“…were likely skewed by the timing of a public holiday.”
I suppose if there were any weather in that number, they would have mentioned it.
I’m not going to look to buy until banks start requiring down payment. And I mean a real down payment, not this nonsense about just paying a higher interest rate or a higher fee to Fannie Mae, or an 80/20. That all gets rolled in and the result is the same. No, I mean CASH MONEY UP FRONT. That’s when prices will really fall, fast.
How do you know the market will get there before reflation kicks in? (I was recently advised by a wise advisor to buy a home before the effect of helicopter drops kick in over the next 9-18 mos, but I am personally quite skeptical that housing prices can be so easily resuscicated, given the BOJ’s experiments with ZIR policy in the early 1990s.)
He maybe right ? I have always heard Don’t fight the FED.
Watch long term interest rates if they head up after all these rates cuts then the FED has lost. Don’t buy. If they stay low and head lower ? well the party will start again. IMO
I have detailed many of the reasons I disagree with my esteemed advisor in a long post higher up in the bits bucket.
Gelded bulls have no use for rate cut viagra…
January 31, 2008 9:33 A.M.EST
BULLETIN DOW INDUSTRIALS DROP 100-PLUS POINTS IN FIRST MINUTE; NASDAQ DOWN 1.5%
Wall St. swoons over data
Sour data on jobless claims set an equally dour mood, eclipsing latest corporate earnings. Fed’s rate cut seems a distant memory.
http://www.marketwatch.com/
I was thinking that today might be a good day to buy the dip, but I am having flash backs to the amazement I felt back in 2000 when I saw the ticker screens flash red day-in, day-out for months on end. I may have to sit on my hands for a few months or so until it becomes more obvious that the Fed is pushing on a string…
Damn, sorry I missed the chance to cash in large this a.m. but I am still up a bit and am stopping myself out of puts. Calling it a month and it was a darn good one.
And a most excellent month t’was.
Now for next month:
As the credit crunch deepens in the US banking system, more and more US companies will be borrowing dollars from the overseas banks. (US banks are tapped out). There will be pops in Middle East banks, Asian banks especially Japan. Thems with moneys set the rules.
I just can’t see Feb and early March being like this month. Nobody will be alive! Hoping to see volatility calm down so we can find another good place to short for more than a day or two.
“You mean I’ve been a capitalist for three hours and already I owe $10,000?
That’s what makes our system work: Everybody owes everybody.”
From the movie One, Two, Three w/ Mr. james Cagney
“…Thems with moneys set the rules”
“They” better increase their deposits in their “private” blood bank…and increase their “disposable income” investment along with Bill gates to this cause:
Barney D. Gill
University of Washington School of Medicine
Department of Molecular Biotechnology
Our department was started by a large funding from Bill Gates (of Microsoft fame). He founded our department, and his first step was to lure Lee Hood from the California Institute of Technology to the UW
http://library.thinkquest.org/28599/interviews_gill.htm
Bill Gates / Warren Buffett / WalMart / Taxes / Genetics / Stock Market movements / China / “A Fourth Day”
The past year has been very productive for UW Medicine. I am delighted to inform you of a new milestone. The Bill & Melinda Gates Foundation has announced funding of a $105 million grant proposal to create a new Institute for Health Metrics and Evaluation, to be based at the University of Washington. Dr. Christopher Murray, who joined our faculty in the School of Medicine in May as a Professor of Global Health, will serve as Director of the Institute. Dr. Murray, a prominent global health economist,
That’s B as in: BILLIONS $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Where is the WALTON FAMILY when you need a donation?????
AT the end of 2005, the Gates Foundation endowment stood at $35 billion, making it the largest in the world. Then in June 2006, Warren E. Buffett, the world’s second-richest man after Bill Gates, pledged to add about $31 billion in installments from his personal fortune. Not counting tens of billions of dollars more that Gates himself has promised, the total is higher than the gross domestic products of 70% of the world’s nations.
Like most philanthropies, the Gates Foundation gives away at least 5% of its worth every year, to avoid paying most taxes.
http://www.latimes.com/news/nationworld/nation/la-na-gatesx07jan07,0,6827615.story?coll=la-home-headlines
“Bill Gates’ foundation, the largest in the world with $29 billion on hand, has put less than $2 million into research on human embryonic cells–at a lab at Peking University in China. Researchers there are implanting human cells in mice to look for better ways of making vaccines against aids and hepatitis C”
http://pimm.wordpress.com/2006/10/27/what-would-happen-if-bill-gates-invested-2-billion-dollars-to-embryonic-stem-cell-research/
If you prefer an “economist point of view:
“But there was almost no genetic influence on age of death before 60, suggesting that early death has a large random component — an auto accident, a fall. In fact, the studies of twins found almost no genetic influence on age of death even at older ages, except among people who live to be very old, the late 80’s, the 90’s or even 100. …”
http://economistsview.typepad.com/economistsview/2006/08/the_weak_link_b.html
And yet another point of view: About the Author
You Can Live Long Enough To Live Forever
Ray Kurzweil is one of the world’s leading inventors, thinkers, and futurists. Called “the restless genius” by the Wall Street Journal and “the ultimate thinking machine” by Forbes magazine. Kurzweil’s ideas on the future have been touted by his many fans, who range from Bill Gates to Bill Clinton.
http://www.enotalone.com/article/4493.html
Something for Txchic
The Perfect Baby: Parenthood in the New World
http://books.google.com/books?id=hCReRQ9ERjcC&printsec=frontcover&dq=The+Perfect+Baby:+Parenthood+in+the+New+World&sig=cCgvnPWP9FaZda9vYW_S0OLy6d4#PPP1,M1
can’t wait
BULLETIN AMAZON, STARBUCKS, GOOGLE AMONG BIG-NAME DECLINERS AS NASDAQ SLUMPS
Oil may hit $70 as weaker economy lowers demand
Consumers may see little benefit with gas prices supported by driving season
By Moming Zhou, MarketWatch
Last update: 7:11 p.m. EST Jan. 30, 2008
http://www.marketwatch.com/news/story/oil-may-hit-70-weaker/story.aspx?guid=%7BF2C0E9BB%2D0F06%2D4056%2D9567%2DF32923CD81D5%7D
Meanwhile, back at the bond insurance ranch…
January 31, 2008
MBIA (MBI) Takes A Torpedo In The Boiler Room
Wall St. thought things would be bad when MBIA (MBI) reported earnings, but they were worse. The largest bond insurer posted a loss of $2.3 billion, or $18.61 a share, compared with profit of $181 million, or $1.32 a are in the same quarter the prior year. No wonder the company made its announcement at midnight.
…
The simple argument is that banks should put up the money to keep MBIA in business. If the insurer fails, that value of many of the muni bonds it insures will drop, leading to more write-offs at banks which hold these securities. The banks may not have the capital, but their arms will be twisted by regulators using their self-interest as an excuse.
If the bond insurers are the keystone keeping the financial system from crumbling, then the states and federal governments should find another way to back these pools of debt. It will save local and state treasuries billions of dollars and save tax-payers from having to make up the borrowing costs of municipalities.
http://www.247wallst.com/2008/01/mbia-mbi-takes.html
Mr. Warren Buffett has already applied and been approved for underwriting Muni’s in New York. This week he received “expedited status” for the rest of the country and territories. That is why Aladinsane commented earlier this week about Mr. Buffett saving America, Jas Jain completely missed it and I replied. Mr. Buffett said to Mr. Wilbur Ross. “Shove it up your A@@” (Mr. Ross was investigating the purchase of MBIA)
“Buffett poised to cash in on bond insurer woes”
Bring it on “fat boy”…
http://www.reuters.com/article/ousiv/idUSN3021550320080130
Yeah, what the f*ck does “he” know?… Buying railroads… what an as$
“He” could be throwing a party in Italy…with naked ice sculptures…what does “red” always say in that 70’s show…”you’re a dumbas$” …Warren…Hey… “SNAP OUT OF IT!”…”get a life” put down that cherry coke…and become like all the wizards here…”A HAPPY CAMPER”… does anyone think Warren has ANY “rental properties”? O.K., it’s … “A Fourth Day” 
Yesterday Joe Lavorgna, who is Deutsche Bank’s Chief US Economist, was on CNBC. He said that if the bond insures get rescued in the next couple of weeks, he would not want to be a fixed income investor because the market is mis-priced because it is really saying that Armageddon is going to come. He would want to be short fixed income.
Whenever someone on CNBC uses the word “Armageddon” it gets my attention. What is the best way to short fixed income?
US junk bonds hit a trough
By Michael Mackenzie in New York
“…The collateralised loan obligation market remains shut for business. Prior to the credit squeeze, which began last summer, this had been a key source of demand for buying risky corporate loans.
“The $250bn overhang is significant and while US Treasury yields have fallen sharply, junk bond spreads are wider,” said Kevin Cronin, head of investments at Putnam Investments. “There is no doubt the default rate will rise this year.”
High-yield, or junk bond, issuance was $850m in January, according to data from Thomson Financial, against $8.5bn in the same month last year. The current figure is the lowest since $251m was issued in January 1990….”
http://tinyurl.com/2mlkwa
FT
Can corporate BKS be far behind?
Any thoughts on the right point at which to get long junk? (I was early on this move during the last cycle…)
Dear Mr. Bear,
For the last time… take you “cash” and start a “trout” farm in Texas…and “if” you need to “supplement” your “profits” …get an eBay store and offer “Joshua Tree” seeds…starting bid: 99 cents…”no reserve”
PB, “long junk” LMFAO!!
“He would want to be short fixed income.”
Well then the FED will have lost control and interest rates will go higher. A nightmare for Ben Bernake and all who hold dollars and bonds. Gold should rocket higher. But who knows this guy could be wrong? Could be right too so place your bets……
MBIA Loses $2.3 Billion on Write-Downs
Thursday January 31, 10:08 am ET
By Stephen Bernard, AP Business Writer
MBIA Posts 4Q Loss of $2.3 Billion on Derivatives Write-Down, Growing Loss Reserves
http://biz.yahoo.com/ap/080131/earns_mbia.html
I agree with sentiment above on gold. There’s a long way to go in the bull market. We still have the speculative blow off phase to go, where J6P will start buying. Personally, i’ve been trading gold for a long time. When I sold my house in late ‘04, I put the entire chunk in gold. 3 years later, I had enough moolah to pay cash for a much nicer home. Take a look at how many ounces of gold it takes to buy a median priced home. That’s a true currency. I have friends in Asia that come to house closing with bags of gold.
Americans have no idea…yet.
Where will J6P get the money to buy it? Selling their RE “investments”? No. Moving the money from his 401K? I don’t think that’s an option. Maybe those of us who missed out on the housing bubble will go for the ride on the gold bubble.
So, who here is predicting the top of the gold bubble so I know when to sell?
yeah how does J6P leverage in? maybe by CC?
Carol, most reputable companies will not let you place gold orders on CC.
Economists Dissect the ‘Yuck’ Factor
…“The problem is not that economists are unreasonable people, it’s that they’re evil people,” he said. “They work in a different moral universe. The burden of proof is on someone who wants to include” a transaction in the marketplace. (Mr. Roth, who acknowledges that “economists see very few tradeoffs as completely taboo,” did not take the criticism personally.)…
http://tinyurl.com/2wekdq
Ne York Times
The BBC flowchart on the mortgage business.
http://news.bbc.co.uk/2/hi/business/7073131.stm
An altenative flowchart, showing how every “independent check” has an incentive to go along with fraud.
http://seekingalpha.com/article/61932-a-beautiful-model-for-loan-fraud
January 30, 2008, 10:03 am
Behind Weak GDP: Inventory Liquidation
Fourth-quarter growth was weaker than expected, but not as weak as the headline suggested. Real gross domestic product grew at a 0.6% annual rate, well below the 1.2% consensus. But most of the surprise was in inventories, which actually declined.
It’s rare for the level of inventories to decline: it usually only happens in recessions.
http://blogs.wsj.com/economics/2008/01/30/behind-weak-gdp-inventory-liquidation/?mod=fpa_blogs
David Cee — It’s not too late, pal!
January 31, 2008, 12:36 pm
Volcker: I Endorse Obama
Former Federal Reserve Chairman Paul Volcker is the latest big-name endorsement for Democratic Sen. Barack Obama of Illinois, lending his gravitas in the financial world to a presidential candidate whose biggest hurdle is to convince voters he is experienced enough to be president.
“After 30 years in government, serving under five Presidents of both parties and chairing two non-partisan commissions on the Public Service, I have been reluctant to engage in political campaigns. The time has come to overcome that reluctance,” Mr. Volcker said in a statement today. “However, it is not the current turmoil in markets or the economic uncertainties that have impelled my decision. Rather, it is the breadth and depth of challenges that face our nation at home and abroad. Those challenges demand a new leadership and a fresh approach.”
http://blogs.wsj.com/economics/2008/01/31/volcker-i-endorse-obama/
Bush…Clinton / Clinton…Bush / Bush…Clinton?
Obama / Volcker / & 14% “home loans”
“Mission Accomplished” …geez…I really would like to know what happen to that banner…maybe it’s in the Smithsonian…Natural History Museum.
Amazing stuff…Volcker has never backed any political candidate.
Does Volcker have more details about Obama’s econ policies than i’ve seen…his speeches on fiscal policy still seem pretty nebulous.
Could be that PV simply has a visceral fear of HC (similar to my own). I am sure she is a lovely person up close and personal, but something about her makes my skin crawl.
I think I figured it out: I cannot handle the thought of a first female in the WH who tried much too hard during the campaign to out-macho her male rivals. There is something very disingenuous about her acting that reminds me of her failed attempt to fake a southern accent.
It was only ever a matter of when, never whether…
Has Starbucks buzz worn off?
Sluggish growth and stiff competition challenge coffee giant to regroup
By Michael Barbaro
and Andrew Martin
NEW YORK TIMES NEWS SERVICE
January 31, 2008
http://www.signonsandiego.com/uniontrib/20080131/news_1b31starbuck.html
Interesting. As a long-time Starbucks patron (back when they were Pacific NW only), I agree with the article about how much less appealing and more McDonalds-like their stores are now.
For me, the critical moment was the introduction of the Frappucino drinks. These made the stores seem more like a Dairy Queen and also had the effect of slowing drink production down to a crawl. I distinctly remember the first summer that Frappucinos were available, because I had never had to wait in those interminable lines before that. And that incessant roar of the Frappucino machines kills any connection that Starbucks has to a “real” coffee house. You can’t hear yourself think, let alone read the paper or a novel with your coffee.
I also agree with the article about how the relentless branding, with all of the CDs and piped-in music, kills the experience.
In the end, Starbucks would be well-served to refocus on their core competency, but ultimately there was no way that the company could maintain that level of growth. The stock is a bubble, and the company will be better off at a lower share price when analysts and investors no longer expect crazy, unsustainable returns.
If you want to experience something special, take a trip to Italy, where in little non-corp coffee shops, the baristas do about 6 things at once and are oh so animated with their body language.
The real deal, as opposed to the faux image portrayed @ a starbucks, near you.
Starbucks is way too corporate feeling and slick for my taste. I prefer the little mom and pop espresso shops.
You may be living in the wrong state, pal…
I saw the “coffee bubble” in the mid 90’s when I counted 6 coffee stands on my 4 mile drive to work in the Seattle area (West Seattle to the Duwamish industrial area). The last one being a drive thru with four 18 wheelers lined up.
Car sales figures fall to lowest since 1999
Dealers lay blame on slow economy
By Dean Calbreath
STAFF WRITER
January 31, 2008
Sales of new cars and trucks in California last year dipped to their lowest level since 1999, as debt-laden consumers stayed away from dealerships.
http://www.signonsandiego.com/uniontrib/20080131/news_1b31cars.html
Another nail in the decoupling theory’s coffin…
Mexico revises fiscal outlook amid U.S. slowdown
Officials expect 24% drop in growth rate
By Lisa J. Adams
ASSOCIATED PRESS
January 31, 2008
MEXICO CITY – Mexico indicated yesterday it expects the downturn in the United States will mean much slower growth this year for its own economy, which depends on its northern neighbor for the bulk of its trade and investment.
http://www.signonsandiego.com/uniontrib/20080131/news_1b31mexico.html
Much of Mexico’s economy depends on oil exports. Oil production in Mexico is on a steep decline, therefore they make less money.
The headline U.S. stock market indexes are moving in lockstep today as though driven by an invisible hand behind the curtain.
http://www.marketwatch.com/tools/marketsummary/
I think it’s possible volatility will calm down a bit next month.
Real estate group reports declines in local home prices
Batch Data Processor | Tuesday, Jan 29 2008 6:15 PM
Last Updated: Tuesday, Jan 29 2008 6:17 PM
The Bakersfield Californian
The median home price in Bakersfield was $250,000 in December, down 15.3 percent from $295,000 in the same month of 2006, according to a Tuesday news release from the California Association of Realtors.
The median home price for Kern County fell 14.3 percent, the statewide trade group reports. The local decline was gentler than the state’s 16.5 percent price plunge.
The figures include sales of new and existing homes and condos.
Florida subpoenas Countrywide for information on mortgages
http://www.bakersfield.com/119/story/349821.html
Summoned to the courthouse for jury yesterday in Washington county. As part of the juror questionaire, I was asked if I own or rent. Can someone shed some light on why it matters if I own or rent when it comes to being part of a jury?
Maybe they now look at us that rent as smart, knowing that we aren’t under the financial stress some homeowners are to work 80 hours a week to make the house payment??
Spending, income up slightly more than forecasts
Because income gains outpaced spending, consumers posted a narrowly positive savings rate in the month - 0.2 percent. That means the average household saved $2 on every $1,000 of after-tax income. In November, after-tax income essentially matched spending, leaving a zero savings rate.
http://biz.yahoo.com/cnnm/080131/013108_income_spending.html?.v=3
does anyone know how they come up with the savings rate figures? i really dont understand how they would come to the conclusion that every household saved 2 bucks last month.
http://biz.yahoo.com/ap/080131/wall_street.html
MBIA’s comments about its access to capital and the possibility of raising more seemed to dampen unease about recent moves by rating agencies relating to bond insurers. Fitch Ratings already downgraded Ambac Financial Group Inc., Security Capital Assurance Ltd. and Financial Guaranty Insurance Co. Meanwhile, Moody’s Investors Service and Standard & Poor’s said they are reviewing ratings on MBIA and other bond insurers.
S&P also forecast a widening array of financial institutions would ultimately face mortgage-securities losses totaling more than $265 billion.
MBIA, which had been down sharply after reporting a $2.3 billion fourth-quarter loss amid heavy write-downs, rose 75 cents, or 5.4 percent, to $14.71 after Dunton’s comments.
But MBIA’s comments won’t erase all of Wall Street’s concerns about the credit markets.
“It seems to be a tug-of-war between ‘Is this a systemic problem?’ or ‘Is this more of a cyclical problem?’ that can be corrected with sort of the standard fare of monetary stimulus,” said Kevin Gaughan, portfolio manager and equity strategist at Wells Capital Management in Milwaukee.
Gaughan contends the opaque nature of the investments made of bundled mortgage debt now deemed as risky will lead to further volatility.
test
This one’s for the Lad and anyone interested in solar. The only problem is it’s worth about 1/3 of asking and too high of altitude to grow anything much. Be prepared to buy a snowplow.
http://tinyurl.com/ynm2j8
Lost:
It bears some resemblance to our place, and our views are similar.
Thanks for sharing~
Home Depot to lay off 10% of HQ workforce
From the Boston Globe: “Wall Street brokerage Merrill Lynch & Co. late yesterday [1/31] agreed to reimburse Springfield [MA] for nearly $14 million in losses on risky investments [CDOs] its brokers sold to the city…In an unusual move, Merrill essentially admitted wrongdoing on the part of its brokers..The firm agreed to pay Springfield’s legal fees, which were approaching $200,000…The city didn’t actually lose the money because it didn’t sell the investments; rather, Merrill agreed to take them back and return the city’s cash.”
Sanctions blamed as Tucson rental vacancies rise.
If Salvadore Dali were alive, perhaps this is the way he would paint his houses…
Cover Story January 31, 2008,
5:00PM EST
Housing Meltdown
Why home prices could drop 25% more on average before the market finally hits bottom
http://www.businessweek.com/magazine/content/08_06/b4070040767516.htm?chan=top+news_top+news+index_top+story
Seeing this in print in a MSM journal makes me think it may be wise to wait two to three years before even thinking about buying a home (which would get you out to 2010 or 2011)…
And that could be just the start. Brace yourself: Home prices could sink an additional 25% over the next two or three years, returning values to their 2000 levels in inflation-adjusted terms. That’s even with the Federal Reserve’s half-percentage-point rate cut on Jan. 30
I am guessing there would be a lot more mortgage money if sellers would come down from the ledge and lower their prices back to affordable levels. But no — the burden lies on the new buyers to somehow stretch themselves to the financial breaking point against the looming risk of a recession in order to help the seller fulfill his dreams of getting 2005 wishing prices.
Mortgage money in short supply
Pullback in homes: Two new reports say the housing market is in trouble nationally as sales, prices plunge
James Temple, Chronicle Staff Writer
Wednesday, January 30, 2008
The housing market continues to crater locally and nationally, as the shortage of mortgage money keeps buyers at bay, according to a pair of reports released Tuesday.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/01/30/BUF1UOAE9.DTL
Sorry if this is old news, but the article is available in full text…maybe worth reposting just to recall how far and fast this has gone.
Home Prices Decline at Record Rates
By KATHY SHWIFF and KEVIN KINGSBURY
January 29, 2008 1:10 p.m.
A closely watched gauge of U.S. home prices shows they are falling sharply at record rates as a deepening slump in the housing market threatens to damp consumer spending.
http://online.wsj.com/article/SB120161580251125291.html?mod=googlenews_wsj