The Housing Bubble

If they downgrate the monolines now because of the performance of bonds that they insured then they HAVE done a poor job. The only question is did they do a bad job then or now. The current mortgage crisis is NOT some exogenous event. It is wholely and predictably the result of the mortgages that were written during the RE bubble.

Hoz, I understand whay you are saying, there are repercussions for downgrading. That being said, why is that the concern of the ratings company? Is not their job that of analysis of bonds? Does the bond have to “default” in order to have deserved a BBB rating? The fact of the matter appears to be that the ratings agencies are more concerned about the outcome from one of their calls then what the actual analysis tells them. Just my opinion of course.
So, they have now put themselves in a no win situation where they are damned if they do and damned if they don’t. It was never supposed to be their job to rate AAA just because those bonds are easier to for the IB’s to sell.

You forget, as long as the credit cards keep working, the people will keep spending…did someone say credit bubble?

Jas:

You would be amazed at how much electricity a computer/monitor/ printer etc. uses if its on 24/7

Most people have no idea how to set the power save mode to go into standby in say 30 minutes of non-use. Just my 19″ monitor goes from 140 watts to 8 watts in standby

Our electric bill came in yesterday, @ precisely One Dollar.

(This message is brought to you by the power of the Sun)

Damn - beat me to it. Glad I’m not the only one who thought that at first glance…

Water = the oil of the 21st Century.

HAL is incorporated in America; “It is based in Houston, Texas, in the United States. Halliburton opened a second headquarters in Dubai, in the United Arab Emirates, in March 2007.

http://en.wikipedia.org/wiki/Halliburton

They operate a subsidiary corporation in Dubai, as they do in other countries.

HAL: I know I’ve made some very poor decisions recently, but I can give you my complete assurance that my work will be back to normal. I’ve still got the greatest enthusiasm and confidence in the mission. And I want to help you.

Corporate offices have moved from the US. Corporate offices are in Dubai. There is not yet a test lawsuit, but there will be one and then we will see if it is an American company.

The Wikipedia site has numerous factual errors and needs to be updated.

Interviewer: HAL, you have an enormous responsibility on this mission, in many ways perhaps the greatest responsibility of any single mission element. You’re the brain, and central nervous system of the ship, and your responsibilities include watching over the men in hibernation. Does this ever cause you any lack of confidence?

HAL: Let me put it this way, Mr. Amor. The 9000 series is the most reliable computer ever made. No 9000 computer has ever made a mistake or distorted information. We are all, by any practical definition of the words, foolproof and incapable of error.

witness the limit of communication.

TECH TOP IS IN.

microsoft trying to garner 16% of the tragic says,
“this is so.”

now, HAL being a contractor of oil services, says oil is still so…. that means intolerant. no supply side help.pay as you go.

“Hillary is refusing to release the “donors” list to the Clinton library…said to be heavy with Saudi and Chinese names. It ain’t just her non-existent skill set, it’s whose money is running these people.”

There was a great deal of questionable donations and campaine contributions made to the Clinton war chest during his presidency. I used to have a enormous amt of listed illegalities i had saved on my old CPU till i switched computers and the data dissappeared but the gamut ran from loreal to lincoln bedroom to whitewater to the FBI files Hillary purloined . I actually think to this day that the Clinton presidency was the most corrupted in US history, equalling the Harding and Grant presidencies for sheer corruption and selling of favors.

All this stuff is no doubt kept under presidentail seal and is unavailable to the public, and the ugly truths may never see the limelight. I followed the shennanigans of the Clintonistas for eight years and believe me Monica was just small potatoes and a useful diversion from the real blantant corruption of the Clinton era, where everything and anything was for sale from national security data to white house dinners.

The Chinese and Saudi’s will no doubt be rooting for billary.

I actually think to this day that the Clinton presidency was the most corrupted in US history, equalling the Harding and Grant presidencies for sheer corruption and selling of favors.

Laugh.

While I am no Clinton apologist, no administration in our 200+ year history comes even close to the corruption and mendacity displayed by Bush, Cheney and their minions.

Tricky Dick Nixon and Warren G. Harding, the previous recordholders in the Modern Presidential Criminal Sweepstakes, look like rank amateurs compared to the current administration.

Geez Peter, welcome to 2008. Where have you been the past 7 years?

And what has been happening this past 7 years..Peter peter its time to wake up..this admin is taking away all your constitutional liberties.
What Other ever held hands with the Saudis?

I actually think to this day that the Clinton presidency was the most corrupted in US history, equalling the Harding and Grant presidencies for sheer corruption and selling of favors.

Crystal ball says Hillary Clinton will be our next president with Obama as running mate. After 8 years, Obama will be next president, the “new” JFK. Clinton will run against McCain and Rom, a tight race, but will lose biggest states.

Spike all the recent presidential libraries (reagan,bush,clinton) got big gifts from the Saudi’s ect. Our gov is for sale you know

http://www.washingtonpost.com/wp-dyn/content/article/2007/12/14/AR2007121402124_pf.html
Washington post says donations from Saudi’s to Bush1 =Clinton.

I remember Reagan breaking all kinds of records for speaking fee’s after he left office.

Even more ominous is gov officials who become lobbiests or go to work for firms like the Carlyle group which make money by having insider information and manipulating gov.

Should be “The smart move for McCain …”

Should read Rudy’s a dragQUEEN on the GOP ticket.

RE: Rudy’s a drag on the GOP ticket. The more people see him, the less they like him.

Yeah, that story about him usin’ his security detail to walk his Long Island mistress’s dog and then using obscure city accounts to bury the expenditures totally torpedoed his boat. Whatta loser.

What amazed me about Rudy was, he had glaring liabilities that weren’t exactly well hidden, and still tried to make a run for the highest office in the land, despite all of it.

Thanks for your perspective, auger. Until blogs came along, information like yours never saw the light of day.

It’s still “standard ops” in some places I know………:)

At the place I used to work, there was the “Christmas Party” that you took the wife to. Then there was the (by verbal invitation only) “Year-End Party”, which was the REAL party.

Nothing is funnier than getting 50-75 half-lit aviation types together in one bar. Laughed so hard and long one night, my ribs were sore the next day.

If votes were weighted by enthusiasm the race would certainly be Barack vs. Ron. Those who vote for the “ordained” candidates are the types that don’t want to be bothered with thinking too hard and cling to idealized visions of a very dubious past.

I think there’s more than a little chemistry between Barack & Ron.

As much as I like Ron, he’s going nowhere, fast.

Obama needs a mentor in matters economic, and they’d be a great fit together, and provide much needed unity politically, as an added bonus.

Obama/Paul ‘08

In 2000, I was involved with the Libertarian party and its Ohio candidates. Amazingly, the candidates that stumped hard and the candidates that did nothing but sit on the ballot had a small margin of vote difference in the election. I am talking every Libertarian got between 2% and 4% of the votes in Ohio from school board candidates to Senatorial races. So, Ron Paul getting lots of enthusiasm and little vote does not surprise me for an underdog candidate.

I thought about doing that, or voting for myself.

Blano, if you vote for yourself, I’m going to vote for you, too.

Oh, Behave!

There’s a famous doc in W. Colorado who took out his own appendix.

do-it-to-yourself-appendecotomy?

Yeah, for real, and he survived, old-time cowboy type. He was my dad’s doctor’s dad (not quite a palindrome).

A man, a plan, a canal, Panama.

I thought co-payments were supposed to discourage this. But, if medical costs were actually based on reality, an MRI wouldn’t cost much (once the overpriced machine is paid for, it’s mostly profit from that point forward), and what now costs 800K for six more weeks of living would probably cost less than 1% of that. Turning medicine into an ubergoldmine for providers was a mistake.

I work in the health care field so here would be my take on diagnostic testing: This problem IMO is two fold, the first being that there is such a CYA mentality out there, due to litigation, that doctors are ordering these tests to avoid the lawsuits from not looking deep enough. Yes, looking deeper is a boon to finding the obscure and seldom encountered but the application to garden variety problems is a gross misallocation of resources. I remember when the first MRI’s were being put into hospitals and they did NOT use them to see that your ACL was torn as they could and can diagnosis this without the MRI. The second is that the doctors you see today do not posess a 10th of the diagnostic skills that the old doc’s do/did. Simply due to the fact that there was no way to look into the body without actually opening it up. They had to be expert at knowing where to look and how to put together the clues. In this age of medicine they are slowly but surely being relegated to the status of a tech. May I also add that the complete lack of personal responsability is the number one factor in the cost of health care. Don’t beleive me? Look at the rates for diabeties and heart disease/cardiovascular disease and the risk factors. The number 1 risk factor in both of these is being fat with the second being lazy. So…eat less, exercise more and these problems diminish as well as the cost of care.
Just one opinion among many and please forgive me for the off topic nature of this post.

http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20080108%5cACQDJON200801081401DOWJONESDJONLINE000571.htm&

I don’t think this study looked at infant mortality, US ranked dead last.

So you have to go to a hospital or trauma center to get (mimimal, emergency) care if you don’t have insurance? Where’s the economic logic in that?

If universal care DOES work in many, many countries, there’s no reason to assume it cannot work here. There will always be idiots who misuse it, just as they misuse their insurance and HMOs.

If one visits an emergency room, it instantly becomes obvious that tons of uninsured people in this country are getting outrageously expensive (albeit mimimal, emergency) medical care at taxpayers’ expense. I would rather these people go to doctors’ offices than emergency rooms’ for minor problems, but the doctors’ offices would turn them away.

A sweet friend of mine (21 years old) just died because she could not afford a heart/lung transplant (pulmonary hypertension). Such problems don’t exist for rich Arabs jetting in and buying organs for themselves whether they have insurance or not. When the best care goes to those with tons of money, however undeserved, while really good people are needlessly allowed to die, something is seriously amiss.

Incidentally, is megamoney the only incentive for doctors to do anything? Shouldn’t HELPING people and SAVING LIVES be incentives?

want cheap immediate care—go to an outpatient urgent care office. Hospital ERs are for suckers.

Dont have insurance–work out a deal with you doc for cash pay, he will be happy to not deal with insurance company.

United, aetna BCBS are all very profitable biz. Look at the stock for United healthcare over the last 10 years…if only I had bought….

U want luss utilization of medical resources by docs, let them ration care….cuz there is not enough for all to have everything and somebody has to do it eventually. But that will never happen under the status quo. Legal system and hardcore liberals won’t allow it. In europe the doc decides if your grandma/wife/child gets taken off the ventilator etc…..they ration care…docs have immunity. I always ask those who want less spending who in their family should we sacrifice when the time comes.

yes healthcare is expensive, but what will it cost you when it is free?

I think it would be beneficial to have a basic level of care that is provided by the government. If people want something more than that, they should be able to buy insurance or pay out-of-pocket for high-level care.

Also, I’d offer govt grants for drug research (including incentives) and let the govt develop drugs — maybe they’d actually find cures instead of “treatments”.

Currently, if they found the “cure” for cancer, but the ingredients could not be patented, you’d not likely see that cure in the marketplace. Too much money being made by the big pharma companies to allow a cure for cancer.

Call me cynical…

People without healthcare present with later stage disease and as a result have higher mortality. You may become one of them for exactly the reason you addressed. Not my opinion but fact.
Most doctors are overworked and would rather do less than more. Some are greedy but there are better ways to make money without 10-15 years of school to pay (and no income)

–
LUUV, the volatility, Prof. That is the life-blood for a speculator like me and I am sure for Chick. This will last into 2010 if my scenario pans out.

Jas

Wow! Praise Linus, no more crap OSes from MS would be a true blessing.

I really liked MS back in the late 80’s, but it soon became apparent that profit motive completely snuffed out any semblance of concern for their fellow man, being actully productive and benficial to society as an organization, or even concern for their customers beyond how much money can they worm out of them.

As a fairly seasoned IT professional, it simply became an insult to my intelligence. And considering that I only consider myself of average to slightly above average intelligence, it takes a lot to insult it.

So I started playing with Linux back around ‘95 ro ‘96 and pretty much switched to it completely around 2000.

I still keep an XP install around, but pretty much only for certain games.

Thanks for the great info sm_landlord!

Jas

I think you should reread the effects of $8T in demand notes in a reduced commodity environment.

Or as long as the US does not raise interest rates, inflation is here to stay. Do you think the Federal Reserve will raise interest rates in a slowing economy?

The only deflationary times in history, Japan and the great depression occurred because of rising interest rates.

I would argue that currently money is disappearing through RE price declines and defaults by borrowers more quickly than it is being pumped in by the Fed.

Jas — I am still waiting for “The Great Depression of 1990″ myself. Is it going to hit any day soon?

–
“The only deflationary times in history, Japan and the great depression occurred because of rising interest rates.”

Thanks, but no thanks, for very bad (wrong) history lesson. I see why there are so many disagreements among Americans as well as around the world. Everyone has his, or her, view of the world that has little relationship to reality, especially, historical lessons that can be drawn.

I could be wrong but not because of wrong, or distorted, view of history.

Jas

Then you better get a new history book. Whatever story you are reading is giving you incorrect information.

From the Federal Reserve
“The experience of the U.S. economy during the mid-1930s, when short-term nominal interest rates were continuously close to zero, is sometimes taken as evidence that monetary
policy was ineective and the economy was in a \liquidity trap.”

Close examination of the historical policy record for the period indicates that the evidence does not support such
assertions. The incomplete and erratic recovery from the Great Depression can be traced to a failure to pursue consistently expansionary policy resulting from an incorrect understanding of monetary policy in an environment of very low short-term nominal interest rates.

Commonalities with the Japanese experience during the late 1990s, and the inadequacy of short-term interest rates as indicators of the stance of monetary policy are discussed
and a robust operating procedure for implementing monetary policy in a low interest rate environment by adjusting the maturity of targeted interest rate instruments is described.”
Monetary Policy in Deflation: The Liquidity Trap
in History and Practice
Athanasios Orphanides
Board of Governors of the Federal Reserve System
December 2003

There are plenty of other supporting documents from the Federal Reserve, The Bank of Japan, Riksbank among others. Do your research.

Trusting the Fed and other central banks when they talk about money and the economy is like trusting pharmaceutical companies when they talk about restless leg syndrome.

Consider the source.

The facts are the Federal Reserve RAISED rates in the depression and The Bank of Japan RAISED rates in the 90’s.

Fighting the fed is a money losing proposition. The fed is going into lowering the rates faster than you can sell dollars mode.

We are all $inner$ and we have been $aved by a Frenchman.

Thank heavens it’s all over. It’s all behind us.

I see they’ve already got their post petition financing in place and expect an uneventful reorganization. LOL. All I can say is I worked on the General Homes bankruptcy in 1990 and that was anything but uneventful. Filed in the S.D. Fla court.

St. Clair County actually. Though I spent a lot of time at MCCC (not as a student though) over the years and worked in Roseville during my college years..

Macomb county really is Detroit suburbs as opposed to halfway between Detroit and Flint. Had relatives in Flint and that city was a truly depressed place… it never recovered from the ‘78-82 recession and auto industry downsizing.

Its rarely that cold here ()daytime) on the front range. Here in Loveland they do use some funky chemical to melt ice, but only use it in choice spots.

Ice isn’t as big a problem here as in places like Oklahoma or the Carolinas. In fact, its pretty rare for roads to ice over here.

The frozen tundra in el lay, is people not getting to know their neighbors…

A very anonymous place.

Also, as you approach the state line, elevation increases.

I used to drive to Laramie from Fort Collins on US 287. Same story. Roads dry and clean on the Colorado side, snowpacked as soon as you crossed into Wyoming. As far as we could tell, prompt plowing made the differnce. The remnant left over would quickly melt and evaporate if the sun was out. Snow pack on the other hand lasts for days.

a 2% paper cut adjustment is a major drop?

Chicken little is better served, referencing real estate.

brings back some old memories from the times, just some months ago, when the gold bashing efforts would start every friday as soon as the London market had closed …

So, no one here really believes gold could be echoing the 1980 collapse?

For those p*king up long gold positions:

From Reminiscences of a Stock Operator:

Turkey: “Why, this is a bull market!”
(The old fellow said it as though he had given a detailed explanation.)

Elmer: “I know this is a bull market as well as you do. But you’d better slip them that stock of yours and buy it back on the reaction. You might as well reduce the cost to yourself.

Turkey: “My dear boy, if I sold that stock now I’d lose my position; and then where would I be? And when you are as old as I am and you’ve been through as many booms and panics as I have, you’ll know that to lose your position is something nobody can afford; not even John D. Rockefeller. I hope the stock reacts and that you will be able to repurchase your line at a substantial concession, sir. But I myself can only trade in accordance with the experience of many years. I paid a high price for it and I don’t feel like throwing away a second tuition fee. But I am as much obliged to you as if I had the money in the bank. It’s a bull market, you know.”

Nice reversal! 1400 S&P is going to be tough to crack.

Some great reflation opportunities present themselves on days when the news is very grim. What I personally don’t understand is why bad news some times leads to massive stock market selloffs, and other times results in very green numbers. Some times I take the impression that Wall Street has turned into a giant headless chicken running around the barnyard.

The gold price bears watching today. I am not an expert on coordinated asset price dynamics, but my intuition tells me that while the Fed cannot control all the prices all of the time, they can control a subset of the prices (e.g. gold price) some of the time, and use these controls to drive other prices (e.g. headline stock market indexes) the direction of their choosing.

All comments are welcome

Seems like the plan is to keep those headline indexes as green as possible until Goldilocks feels better. She was last seen accompanying Dorothy on the way to the storm cellar.

Fair nuff… good luck with DCA into gold (seriously — I would do it myself if it did not seem late in the game to me…)

Actually isn’t too late Prof…..

“I have no idea why anyone would buy bonds at these levels.”

That’s what my post was trying to explain.

How do you manipulate the USD over the short run? Really, the forex market is by far the largest market in the world and I am supposed to believe there is some contingent that can manipulate the dollar in the short-term? Puuuuhhhhleeeezzz!

How do you manipulate the USD over the short run?

You trade it, you buy or sell.
http://www.google.com/search?q=bank++japan+intervention

Japan made it public they were doing this… and did it in large bulk. Just do at a slower pace and don’t make it public.

Japan, China, Malaysia, Thailand and a few other Asian countries manipulate their currency. The only (known) time the US manipulated its currency was to support the Euro. It has happened.

The risk in manipulation is when the supporting nation is wrong as an example when Great Britain tried to support the Pound, Mr. George Soros slammed it. Great Britain did not have ammo to hold its position, Soros won.

The current treasury position (ignoring what the mopes say but looking at what the mopes do) is to devalue the dollar by 15%. It is not profitable to fight the fed.

OK. So maybe my definition of short-term is not the same as someone else. My short-term is under 24 hours. Soros, Japan, etc. were “manipulating” over a much longer time frame.

Crediting Soros with sinking the Pound is ridiculous. Soros was short in a big way and he happened to be right. People are constantly attributing reason to market moves in retrospect, even when the reasons have been proven wrong over and over (ie. correlation of oil price and the stock market). How many people are trying to find a “reason” why homebuilder stocks rose recently with continued bludgeoning of home sales/price on this blog? Sometimes (most times IMO), it’s all technical ebb and flow.

spike–

Thanks. I don’t know a foolproof way to post without being spammed… I mentioned a few posts up that I opened a gmail account using the name of the site (forepaws) as the user name, so if you can email me there with your contact info, that would probably be the safest bet.

Set up a yahoo account just for the contact, make contact, then never use it again, yahoo will shut it down eventually. Good way to make contact with someone, then you can trade real email accounts.

Great idea for the webpage, once you get it going, contact Best Friends and tell them about it and my guess is they’ll work with you on rescues and advice as much as they can. Best of luck, if I can help any, contact me at gumshoereporter@yahoo.com, though I’m out in the backcountry a lot with no internet.

i rode this last few days of gains up in my 401k and put the last cash i had in those funds over to the 4.25% rate which is good for all of 2008

at worst il get 4.25% on my money this year

that rate may not be that high this year given the Fed rate is now 3% and likely going lower in March. They are really trying to force everyone to take the risk of catching a knife.

Lots of people played fast and lose.

“I’m relly not a speling nazi,”

Good thing you’re not.

LOL!! sorry about that, ive had a lisp most of my life!

Spike, that was supposed to be ironic - lol.

And as for you, Lad, that should be lots of people played fast and LOST,as in FBer. LOL.